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Belt and Road in Central and East Europe: Roads of opportunities

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The second decade of the 21st century put the geoeconomic emphasis and cooperation within the framework of China’s “One Belt, One Road” initiative into the China – East European states relations.

The Chinese initiative is dictated by the understanding of the importance of the CEE countries as an important component of a unified Europe. Thus, asserting itself in the role of one of the centers of a multipolar world order, Beijing began transforming the economic and political space that developed in CEE with the promotion of favorable economic proposals to the countries of the region, without raising questions of the difference of ideologies and ways of life.

For the first time, a joint project was announced in 2012 in Warsaw, where Premier Wen Jiabao launched an initiative called “12 measures” of China to encourage friendly cooperation with the countries of Central and Eastern Europe.

Starting in 2013, the main content of the programs of each 16 + 1 summit is the development of tools for this regional format. Naturally, the format of China’s cooperation with the CEE countries is closely connected with the implementation of the global concept of the “New Silk Road” proposed by the Chairman of the PRC Xi Jinping. The concept consists of two parts: the land “Economic belt of the Silk Road” and the “Maritime Silk Road of the 21st Century” and potentially involves cooperation of at least 60 countries in Europe and Asia.

By 2015, China has become one of the largest investors in Eastern and South – Eastern Europe. In November 2015, the Eastern Europe-China ( 16 + 1 ) summit was held in the Chinese city of Suzhou, in which the leaders of the PRC and 16 Eastern European member states and the Balkan countries took part. The meeting resulted in the strengthening of China’s economic presence in Eastern Europe. Also at the trade and economic forum in Hangzhou between China and the countries of CEE in 2015 it was agreed that China is ready to provide financial support for the re-industrialization of the countries of CEE, in the case that it will be conducted using Chinese technologies and equipment.

In 2015 – 2016, taking into account the opportunities and potentials, each country in the 16 + 1 format chose its own direction. For example, Bulgaria will supervise agriculture, Poland– investment and trade. The task of Latvia will be identification of links and projects, cooperation in the field of logistics, Romania will deal with energy projects, Lithuania is responsible for educational programs, and Hungary for the tourism sector.

The 16 + 1 format , in a certain sense, prepared the transition to a more focused and integrated strategy “One belt – One Road” and successfully “fits” into its main components – the projects “Economic belt of the Silk Road” and “Marine Silk Road of the XXI century”, aimed at developing new land and sea transport, logistics and trade and production systems linking China to Europe. In the first project, the countries of CEE play a key role, in the second – an important transit role in the development of “China – Europe” trade and investment ties, and in the long term – in the formation of a broad Eurasian “economic space” and “political stability belt”.

The basic design of the first project is the development on a new technological and organizational basis of the traditional direction of trade and transport “Sino – European” ties, complemented by their investment cooperation. This Northern road includes land international transit to Western Europe from China and other countries of the Asia – Pacific region (primarily, South Korea and Japan) through Russia and Kazakhstan along the Trans – Siberian Railway and the Kazakhstan railway with access to the European part of Russia in The Urals:

  • Chengdu ( Sichuan province ) – Dostyk – Moscow – Brest – Lodz ( Poland )
  • Suzhou ( Jiangsu province, Shanghai region ) – Warsaw ( Poland )
  • Chongqing ( Sichuan region ) – Duisburg ( Germany )
  • Zhengzhou ( Henan, North China ) – Hamburg ( Germany )
  • Wuhan ( Hubei province, Yangtze belt region ) – Pardubice ( Czech Republic )
  • Wuhan – Zabaikalsk – Hamburg
  • Shenyang ( Liaoning, Northeast China ) – Hamburg
  • Yiwu ( Zhejiang, Shanghai region ) – Madrid ( Spain )

Nevertheless, the transit and logistical potential of the other CEE countries is still used slightly. Almost not involved in the “European part” of the Northern road are the ports of Poland and the Baltic countries that gravitate towards it. On the contrary, the main transport and logistics centers for Chinese goods (primarily German Duisburg and Hamburg) are already overloaded, and the possibilities for expanding their capacities are limited.

Such uneven distribution of cargo flows combined with insufficient technological level of the transport and logistics infrastructure of the CEE countries hinders the further development of China – Europe ties. There are also serious organizational and economic limitations of this development. Most of the provinces ( especially the western ones, remote from the sea ) tend to establish regular communication with Europe for both economic and prestigious reasons. The export potential of only the western provinces of China is estimated at $ 40 billion. Therefore, the full utilization of trains and partial financing of transportation costs are provided by local authorities on the basis of public – private partnerships (especially since many Chinese companies retain great state involvement) (see Figure 1 below).

Figure 1.:China`s infrastucture investments in the 16 + 1

Source: CSIS; FT Research

The April 9th CEE– PRC summit 2019 in the Croatian city of Dubrovnik marked a new beginning in the development of relations between China and Eastern Europe. Although the Belt and Road initiative (BRI) usually focuses on Asian (whether Central Asian, South Asian, or South– East Asian) or African participants, post-Communist countries in Central and Eastern Europe have begun to play not less significant role. In fact, the CEE region was one of the most represented regions in the 2017– 2019 BRI Forums: of the 28 heads of state or government, four were from this region (representing the Czech Republic, Poland, Hungary, and Serbia), and Romania was represented by a delegation led by the country’s Deputy Prime Minister. This list of forum participants reflected the intensive development of cooperation between China and CEE under the auspices of the BRI.

Humanitarian influence is also increasing – the leadership of the PRC encourages interpersonal contacts with the CEE countries, especially through tourism, student and youth exchanges, etc. China’s credibility in the region is also growing, because now almost any project of cooperation on a bi – versatile basis is served under the brand “One Belt – One Road”, which allows China to demonstrate real ( albeit small ) successes literally every year. This is especially noticeable against the backdrop of crisis phenomena in the European Union and the weakening of the ties between the CEE region and Russia.

Underlining the main opportunities of BRI for CEE and EU, should be mentioned the following :

  1. Chinese public and private sector bodies were willing to take construction risk, and to act quickly. It was suggested that this could be a major opportunity when embarking on major construction projects. However, the experience of COVEC (the construction of a 49-kilometre Polish section of the motorway from Warsaw to Łódź. The construction contract was awarded to a consortium – formed by China Overseas Engineering Group – is a subsidiary of China Railway Engineering Corp (Hereinafter CREC – Auth.)) as a contractor in Poland shows that Chinese companies have not always been able to work well in the EU.
  2. One interviewee suggested that Chinese investment in rail infrastructure was leading to rail being a viable alternative to both sea and air for trade between the Far East and Europe.The European Bank for Reconstruction and Development (Hereinafter EBRD – Auth.) expressed the opinion that “the rail mode has a huge potential” but did not provide specific forecasts of what goods would transfer to rail, or over what timescale, or what routes they would use.

Other interviewees considered that rail services would attract demand mainly from shipping rather than from air. One of them, responsible for air cargo services, argued that rail would not abstract demand from air because it could not offer the very short transit times required by the most time-sensitive air cargoes. This interviewee also suggested that, to remain competitive, China and other parts of Asia with rail services introduced as a result of the BRI would still need air freight connections to Europe. In this context, ownership of the capacity of a cargo airline such as Cargolux can be seen as a key element of the infrastructure connecting China and the EU.

A representative of the Community of European Railway and Infrastructure Companies (Hereinafter CER– Auth.) agreed that rail would attract demand from shipping but would not be able to compete with air services. The European Commission also suggested that, from China’s perspective, the maritime elements of the BRI were more important and that overland rail was a distraction. In their view, 90-95% of traffic between China and the EU was maritime and would remain so. This is broadly consistent with the analysis of maritime and air traffic. It should also be stressed that the most common investments by Chinese parties in the EU appear to be ports, principally in the Mediterranean and the United Kingdom.

Russian Railways (Hereinafter RZD– Auth.) has long operated rail services along the Trans – Siberian Railway between Europe and the Sea of Japan. These could, in principle, be used to carry goods from Japan and South Korea to Europe, but these would first have to be shipped across the Sea of Japan to Russia. In contrast, from landlocked north east China, long overland journeys are needed to reach any port, but may also be needed to reach a suitable railhead.

Thus, the commercial objective of growing rail services appears not to be to put pressure on maritime operators, which are already efficient, but to offer a higher speed service. This also helps producers and consumers along the rail routes used.

  • In principle, commercially viable rail services between China and the EU are a major opportunity for operators, shippers and industry.

One interviewee in the logistics sector said that subsidies granted by the Chinese Government to rail services between China and the EU are “tremendous”. They also stated that Kazakhstan Railways (Hereinafter KTZ – Auth.) had reduced tariffs in 2012 but now agreed with RZD to keep tariffs high. KTZ indicated that the Chinese Government provided subsidies to support westbound container traffic, but envisaged that these would be withdrawn by 2020 as balancing eastbound traffic was attracted to the route. These comments illustrate a number of issues relating to the commercial viability of the services.Also trains between China and the EU will be charged transit tariffs by operators such as KTZ and RZD. There is no uniquely correct basis for setting such transit tariffs, although  the principal applied in the EU is that they should be based on marginal costs. From the perspective of these transit railways, however, transit traffic is an opportunity to profit from third parties (A similar issue emerges in the provision of air navigation services within the EU, where national air navigation service providers (Hereinafter ANSPs – Auth.) may have incentives to overcharge for en-route services provided to overflying, and typically foreign, aircraft to subsidise terminal services provided to aircraft taking off and landing). The incentives on the transit states are typically to maximise their profits, rather than to maximise the economic, social and environmental value of the railway operation as a whole. For both the EU and China, however, there is the potential risk that a growing and successful rail service will be seen as a potential source of profit by the transit railways.

  • Another opportunity is the rebalancing of freight flows.

Figure2 and Figure 3below summarise the volumes of loaded containers which are loaded and discharged on flows between ports in the Far East and ports in the EU, measured in TEU. However, the EU Member States in which containers are loaded and discharged may not be the final destination states(The country where custom controls are executed is the country of discharge. This is the reason why Czech Republic is included in Figure 5 below despite it has not access to the sea.)

Figure2 below illustrates the recent growth in loaded containers from the Far East to EU ports, from just over TEU one million in 1996 to about TEU eleven million in 2016. Other than China, no state loads more than one million containers to Europe.

Figure2.:Loaded containers from the Far East to Europe: country of loading

Source: MDST World Cargo Database

Figure 3shows the points at which loaded containers are discharged in the EU. A large proportion are discharged at ports in the United Kingdom, Germany, the Netherlands and Italy, before travelling onwards to the points at which they are stripped. Containers discharged in Rotterdam in the Netherlands, or Genoa (Genova) or Trieste in Italy, for example, may continue by river barge, train or truck to other EU Member States or to landlocked and non-EU Switzerland.

Figure 3.: Loaded containers from the Far East to Europe: country of discharge

Source: MDST World Cargo Database

Thus, the analysis of Figures 2 and 3 and 4show that westbound loaded container flows of 11 million TEU exceed the eastbound flows of 5 million TEU. This creates a need fora large number of containers to be returned empty in the eastbound direction. A representative of the CER said that this represented an opportunity for the EU to rebalance imports and exports.

Of the Member States shown, the largest imbalance in flows is for the United Kingdom, which exports only just over one quarter as many loaded TEUs as it imports. Even in Germany and Sweden, exports are less than two thirds of imports. This appears to confirm CER’s view that additional containers could be carried eastbound, in principle at little additional cost.

Figure 4.: Balance in loaded container flows for selected EU Member States

Source : MDST World Cargo Database

  1. Among other opportunities there should be metioned improved customs coordination. Thus, one interviewee saw opportunities to use through rail services between China and the EU to improve and streamline customs arrangements. However, they did not suggest either that specific initiatives were required or how these should be organised. As already discussed, a number of the MoUs supporting the BRI relate to the development of improved customs arrangements with a view to enhancing connectivity.
  2. Opportunity: EU companies working in CAREC states. The EBRD suggested that there were good opportunities for companies from the EU to build railways, roads and other transport infrastructure in the CAREC[1] states. They argued  that, in addition to construction, there would be opportunities in the areas of harmonisation of regulation, information technology systems, developing reliable and sustainable energy supplies, and logistics.
  3. Opportunity: complementary skills in the EU and China. Thus, one interviewee said that the EU had greater skills in regional issues and planning than Chinese bodies, and that there were opportunities for each country’s skills to complement each other. At first sight, it appears likely that each party may benefit from the other’s knowledge of local legislation, planning and procedures.

Table 1 below summarises a number of the opportunities and challenges which appear to emerge from the BRI. None of these may amount to a clearly-defined “problem”, as outlined in the EC’s Better Regulation Toolbox. Nonetheless, this section briefly discusses the extent to which it might be relevant to consider legislation to address them.

Table 1.: Opportunities, challenges, and the need for legislation

Opportunity or challengeIssue(s)
Chinese investors may not always meet EU standardsProcurement and enforcement
China may subsidise products and transport
Scope for improved customs coordination  Multilateral coordination
EU standards must be maintained and harmonised
Wasted and misdirected investment  Transparency and coordination
Chinese parties may take over existing projects
Chinese dominance of rail transportChinese may limit transit traffic
China may focus its trade elsewhere
Changes in relative advantage within the EURegional and cohesion policies
New investment in transit countriesCoordination between EU and Asian railways
Making Asia’s infrastructure meet EU needs
Bottlenecks may emerge on rail and on TEN-TConsider EU and Far East flows

Source: Steer Davies Gleave analysis

Thus, it can be noted that the participating countries of 16 + 1 mechanism understood the scale, prospects and synergies of this interaction. It should be emphasized that the “Old” EU countries are wary of Chinese activity in the Central European zone of their influence and insist that all members ( and candidate members ) coordinate  their cooperation with China, and that the EU should speak with the PRC “with one voice”. Nevertheless the strategic concepts of the development of these states reflect the importance and priority of both bilateral relations with China and cooperation in the China – EU format. That is why most of the foreign policy strategies of the CEE states are oriented toward expanding foreign economic activity and trade with the PRC. It is necessary to emphasize the consistency and planning of work in this direction, conducted by the states of the 16 + 1 format. As we can see, pragmatic economic diplomacy started to prevail in the newest foreign policy history of Europe.

The ninth summit of cooperation between China and CEE, based on the results, was the last for the 16 + 1 format. In April 2019, it became clear that Greece would be invited to be part of this initiative. This actually turns 16 + 1 into 17 + 1. This move confirms claims that the importance of the CEE countries to China is closely linked to COSCO’s acquisition of a controlling stake in the Greek port of Piraeus. With this strategy, Beijing is partly paving the way for a resolution of the dispute between Greece and Macedonia, aiming to connect the port of Piraeus via Macedonia to the proposed high-speed rail link between Belgrade and Budapest, and then direct it to the Western part of the continent.

The appearance of 17 + 1 has a direct bearing on the cooperation between China and CEE. Greece’s accession is likely to weaken some regional aspects of cooperation between partners and re-emphasize the bilateral nature of China’s relations with individual countries. This is a strategic step that will bear fruit for both Beijing and the CEE capitals, and will also aim to allay EU fears that China is trying to split the continent.

The potential development of the 17 + 1 initiative demonstrates that China has already become a full-fledged “European power”. The growing number of Chinese investments and relations on the continent suggests a much broader and more complex “deepening” into European Affairs than expected by Beijing or any European capital. This reality requires China to own its position as a “European power”. At the same time, Europe needs to engage in a mature and meaningful debate about the growing influence of China’s power, which goes beyond simplistic divisions between friend / foe, rival / ally, and so on. As the evolution of cooperation between China and CEE shows, that we live in a complex world and interlocutors can simultaneously perform several contradictory roles. Due to the BRI initiative, Europe has realized that it is impossible to sacrifice China, and ignoring the fact that this country has become the “new power of the European continent” can cause significant damage to the Union, primarily economic.


[1] The Central Asia Regional Economic Cooperation (Hereinafter CAREC – Auth.) Program is a partnership of 11 countries  (Afghanistan, Azerbaijan, China, Georgia, Kazakhstan, Kyrgyzstan, Mongolia, Pakistan, Tajikistan, Turkmenistan, and Uzbekistan) and 6 multilateral development partners (Asian Development Bank, European Bank for Reconstruction and Development, International Monetary Fund, Islamic Development Bank, UnitedNations Development Programme, and World Bank) working to promote development through cooperation, accelerate economic growth, and reduce poverty. ADB serves as the Secretariat .

Dr. Maria Smotrytska is a senior research sinologist and International Politics specialist of the Ukrainian Association of Sinologists. She is currently the Research Fellow at International Institute for Middle East and Balkan Studies (IFIMES), Department for Strategic Studies on Asia. PhD in International politics, Central China Normal University (Wuhan, Hubei province, PR China) Contact information : officer[at]ifimes.org SmotrM_S[at]mail.ru

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Economy

The Blazing Revival of Bitcoin: BITO ETF Debuts as the Second-Highest Traded Fund

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It seems like bitcoin is as resilient as a relentless pandemic: persistent and refusing to stay down. Not long ago, the crypto-giant lost more than half of its valuation in the aftermath of a brutal crackdown by China. Coupled with pessimism reflected by influencers like Elon Musk, the bitcoin plummeted from the all-time high valuation of $64,888.99 to flirt around the $30,000 mark in mere weeks. However, over the course of the last four months, the behemoth of the crypto-market gradually climbed to reclaim its supremacy. Today, weaving through national acceptance to market recognition, bitcoin could be the gateway to normalizing the elusive crypto-world in the traditional global markets: particularly the United States.

The recent bullish development is the launch of the ProShares Bitcoin Strategy ETF – the first Bitcoin-linked exchange-traded fund – on the New York Stock Exchange. Trading under the ticker BITO, the Bitcoin ETF welcomed a robust trading day: rising 4.9% to $41.94. According to the data compiled by Bloomberg, BITO’s debut marked it as the second-highest traded fund, behind BlackRock’s Carbon fund, for the first day of trading. With a turnover of almost $1 billion, the listing of BITO highlighted the demand for reliable investment in bitcoin in the US market. According to estimates on Tuesday, More than 24 million shares changed hands while BITO was one of the most-bought assets on Fidelity’s platform with more than 8,800 buy orders.

The bitcoin continued to rally, cruising over the lucrative launch of BITO. The digital currency rose to $64,309.33 on Tuesday: less than 1% below the all-time high valuation. In hindsight, the recovery seems commendable. The growing acceptance, albeit, has far more consequential attributes. The cardinal benefit is apparent: evidence of gradual acceptance by regulators. “The launch of ProShares’ bitcoin ETF on the NYSE provides the validation that some investors need to consider adding BTC to their portfolio,” stated Hong Fang, CEO of Okcoin. In simpler terms, not only would the listing allow relief to the crypto loyalists (solidifying their belief in the currency), but it would also embolden investors on the sidelines who have long been deterred by regulatory uncertainty. Thus, bringing larger, more rooted institutional investors into the crypto market: along with a surge of capital.

However, the surging acceptance may be diluting the rudimentary phenomenon of bitcoin. While retail investors would continue to participate in the notorious game of speculation via trading bitcoin, the opportunity to gain indirect exposure to bitcoin could divert the risk-averse investors. It means many loyalists could retract and direct towards BITO and other imminent bitcoin-linked ETFs instead of setting up a digital custodianship. Ultimately, it boils down to Bitcoin ETFs being managed by third parties instead of the investor: relenting control to a centralized figure. Moreover, with growing scrutiny under the eye of SECP, the steps vaguely intimate a transition to harness the market instead of liberalizing it: quiet oxymoronic to the entire decentralized model of cryptocurrencies.

Nonetheless, the listing of BITO is an optimistic development that would draw skeptics to at least observe the rampant popularity of the asset class. While the options on BITO are expected to begin trading on the NYSE Arca Options and NYSE American Options exchanges on Wednesday, other futures-based Bitcoin ETFs are on the cards. The surging popularity (and reluctant acceptance) amid tightening regulation could prove a turn of an era for the US capital markets. However, as some critics have cited, BITO is not a spot-based ETF and is instead linked to futures contracts. Thus, the restrain is still present as the regulators do not want a repeat of the financial crisis. Nevertheless, bitcoin has proved its deterrence in the face of skepticism. And if the BITO launch is to be marveled at, then the regulations are bound to adapt to the revolution that is unraveling in the modern financial reality.

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Is Myanmar an ethical minefield for multinational corporations?

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Business at a crossroads

Political reforms in Myanmar started in November 2010 followed by the release of the opposition leader, Aung San Suu Kyi, and ended by the coup d’état in February 2021. Business empire run by the military generals thanks to the fruitful benefits of democratic transition during the last decade will come to an end with the return of trade and diplomatic sanctions from the western countries – United States (US) and members of European Union (EU).  US and EU align with other major international partners quickly responded and imposed sanctions over the military’s takeover and subsequent repression in Myanmar. These measures targeted not only the conglomerates of the military generals  but also the individuals who have been appointed in the authority positions and supporting the military regime.

However, the generals and their cronies own the majority of economic power both in strategic sectors ranging from telecommunication to oil & gas and in non-strategic commodity sectors such as food and beverages, construction materials, and the list goes on. It is a tall order for the investors to do business by avoiding this lucrative network of the military across the country. After the coup, it raises the most puzzling issue to investors and corporate giants in this natural resource-rich country, “Should I stay or Should I go?”

Crimes against humanity

For most of the people in the country, war crimes and atrocities committed by the military are nothing new. For instances, in 1988, student activists led a political movement and tried to bring an end to the military regime of the general Ne Win. This movement sparked a fire and grew into a nationwide uprising in a very short period but the military used lethal force and slaughtered thousands of civilian protestors including medical doctors, religious figures, student leaders, etc. A few months later, the public had no better options than being silenced under barbaric torture and lawless killings of the regime.

In 2007, there was another major protest called ‘Saffron Uprising’ against the military regime led by the Buddhist monks. It was actually the biggest pro-democracy movement since 1988 and the atmosphere of the demonstration was rather peaceful and non-violent before the military opened live ammunitions towards the crowd full of monks. Everything was in chaos for a couple of months but it ended as usual.

In 2017, the entire world witnessed one of the most tragic events in Myanmar – Again!. The reports published by the UN stated that hundreds of civilians were killed, dozens of villages were burnt down, and over 700,000 people including the majority of Rohingya were displaced to neighboring countries because of the atrocities committed by the military in the western border of the country. After four years passed, the repatriation process and the safety return of these refugees to their places of origin are yet unknown. Most importantly, there is no legal punishment for those who committed and there is no transitional justice for those who suffered in the aforementioned examples of brutalities.

The vicious circle repeated in 2021. With the economy in free fall and the deadliest virus at doorsteps, the people are still unbowed by the oppression of the junta and continue demanding the restoration of democracy and justice. To date, Assistant Association for Political Prisoner (AAPP) reported that due to practicing the rights to expression, 1178 civilians were killed and 7355 were arrested, charged or sentenced by the military junta. Unfortunately, the numbers are still increasing.

Call for economic disengagement

In 2019, the economic interests of the military were disclosed by the report of UN Fact-Finding Mission in which Myanmar Economic Corporation (MEC) and Myanmar Economic Holding Limited (MEHL) were described as the prominent entities controlled by the military profitable through the almost-monopoly market in real estate, insurance, health care, manufacturing, extractive industry and telecommunication. It also mentioned the list of foreign businesses in partnership with the military-linked activities which includes Adani (India), Kirin Holdings (Japan), Posco Steel (South Korea), Infosys (India) and Universal Apparel (Hong Kong).

Moreover, Justice for Myanmar, a non-profit watchdog organization, revealed the specific facts and figures on how the billions of revenues has been pouring into the pockets of the high-ranked officers in the military in 2021. Myanmar Oil & Gas Enterprise (MOGE), an another military-controlled authority body, is the key player handling the financial transactions, profit sharing, and contractual agreements with the international counterparts including Total (France), Chevron (US), PTTEP (Thailand), Petronas (Malaysia), and Posco (South Korea) in natural gas projects. It is also estimated that the military will enjoy 1.5 billion USD from these energy giants in 2022.

Additionally, data shows that the corporate businesses currently operating in Myanmar has been enriching the conglomerates of the generals and their cronies as a proof to the ongoing debate among the public and scholars, “Do sanctions actually work?” Some critics stressed that sanctions alone might be difficult to pressure the junta without any collaborative actions from Moscow and Beijing, the longstanding allies of the military. Recent bilateral visits and arm deals between Nay Pyi Taw and Moscow dimmed the hope of the people in Myanmar. It is now crystal clear that the Burmese military never had an intention to use the money from multinational corporations for benefits of its citizens, but instead for buying weapons, building up military academies, and sending scholars to Russia to learn about military technology. In March 2021, the International Fact Finding Mission to Myanmar reiterated its recommendation for the complete economic disengagement as a response to the coup, “No business enterprise active in Myanmar or trading with or investing in businesses in Myanmar should enter into an economic or financial relationship with the security forces of Myanmar, in particular the Tatmadaw [the military], or any enterprise owned or controlled by them or their individual members…”

Blood money and ethical dilemma

In the previous military regime until 2009, the US, UK and other democratic champion countries imposed strict economic and diplomatic sanctions on Myanmar while maintaining ‘carrot and stick’ approach against the geopolitical dominance of China. Even so, energy giants such as Total (France) and Chevron (US), and other ‘low-profile’ companies from ASEAN succeeded in running their operations in Myanmar, let alone the nakedly abuses of its natural resources by China. Doing business in this country at the time of injustice is an ethical question to corporate businesses but most of them seems to prefer maximizing the wealth of their shareholders to the freedom of its bottom millions in poverty.

But there are also companies not hesitating to do something right by showing their willingness not to be a part of human right violations of the regime. For example, Australian mining company, Woodside, decided not to proceed further operations, and ‘get off the fence’ on Myanmar by mentioning that the possibility of complete economical disengagement has been under review. A breaking news in July, 2021  that surprised everyone was the exit of Telenor Myanmar – one of four current telecom operators in the country. The CEO of the Norwegian company announced that the business had been sold to M1 Group, a Lebanese investment firm, due to the declining sales and ongoing political situations compromising its basic principles of human rights and workplace safety.

In fact, cutting off the economic ties with the junta and introducing a unified, complete economic disengagement become a matter of necessity to end the consistent suffering of the people of Myanmar. Otherwise, no one can blame the people for presuming that international community is just taking a moral high ground without any genuine desire to support the fight for freedom and pro-democracy movement.

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The Covid After-Effects and the Looming Skills Shortage

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coronavirus people

The shock of the pandemic is changing the ways in which we think about the world and in which we analyze the future trajectories of development. The persistence of the Covid pandemic will likely accentuate this transformation and the prominence of the “green agenda” this year is just one of the facets of these changes. Market research as well as the numerous think-tanks will be accordingly re-calibrating the time horizons and the main themes of analysis. Greater attention to longer risks and fragilities is likely to take on greater prominence, with particular scrutiny being accorded to high-impact risk factors that have a non-negligible probability of materializing in the medium- to long-term. Apart from the risks of global warming other key risk factors involve the rising labour shortages, most notably in areas pertaining to human capital development.

The impact of the Covid pandemic on the labour market will have long-term implications, with “hysteresis effects” observed in both highly skilled and low-income tiers of the labour market. One of the most significant factors affecting the global labour market was the reduction in migration flows, which resulted in the exacerbation of labour shortages across the major migrant recipient countries, such as Russia. There was also a notable blow delivered by the pandemic to the spheres of human capital development such as education and healthcare, which in turn exacerbated the imbalances and shortages in these areas. In particular, according to the estimates of the World Health Organization (WHO) shortages can mount up to 9.9 million physicians, nurses and midwives globally by 2030.

In Europe, although the number of physicians and nurses has increased in general in the region by approximately 10% over the past 10 years, this increase appears to be insufficient to cover the needs of ageing populations. At the same time the WHO points to sizeable inequalities in the availability of physicians and nurses between countries, whereby there are 5 times more doctors in some countries than in others. The situation with regard to nurses is even more acute, as data show that some countries have 9 times fewer nurses than others.

In the US substantial labour shortages in the healthcare sector are also expected, with anti-crisis measures falling short of substantially reversing the ailments in the national healthcare system. In particular, data published by the AAMC (Association of American Medical Colleges), suggests that the United States could see an estimated shortage of between 37,800 and 124,000 physicians by 2034, including shortfalls in both primary and specialty care.

The blows sustained by global education from the pandemic were no less formidable. These affected first and foremost the youngest generation of the globe – according to UNESCO, “more than 1.5 billion students and youth across the planet are or have been affected by school and university closures due to the COVID-19 pandemic”. On top of the adverse effects on the younger generation (see Box 1), there is also the widening “teachers gap”, namely a worldwide shortage of well-trained teachers. According to the UNESCO Institute for Statistics (UIS), “69 million teachers must be recruited to achieve universal primary and secondary education by 2030”.

From our partner RIAC

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