Connect with us

Economy

Vienna Process for the Greening of Eurasia

Avatar photo

Published

on

On the historic date of March 08th – International Women’s Day, a large number of international affairs specialists gathered for the second consecutive summit in Vienna, Austria. This leg of the Vienna Process titled: “Europe – Future – Neighborhood at 75: Disruptions Recalibration Continuity”. The conference, jointly organized by the Modern Diplomacy, IFIMES and their partners, with the support of the Diplomatic Academy of Vienna, was aimed at discussing the future of Europe and its neighbourhood in the wake of its old and new challenges.[1]  

Along with the two acting State Presidents, the event was endorsed by the keynote of the EU Commissioner for European Neighbourhood and Enlargement, Excellency Olivér Várhelyi. Besides discussing the strategic neighbourhood and the Union’s approach to it, underlaying leitmotif was deliverability of the Union’s ambitious New Green Deal for Europe. Numerous panellists (nearly all of the Conference’s Panel II and III) warned that there will be no success in the EU Green Deal without balanced and politically unbiased approach to Energy, Infrastructure and Transport. Senior researcher and geoeconomics specialist from Ukraine, Maria Smotrytska, elaborated on the topic of greening, as follows:

Today the whole world is aware of the global problem of climate warming. Due to the increase in the concentration of greenhouse gases and harmful emissions into the atmosphere, this problem is getting worse every year. And the main question is how we can answer the fundamental challenge of global warming. The core issue is decarbonisation, but to ensure the economic growth in countries around the world, the link between the development of transportation and solution of the problem of global warming should be considered as the main.

The most inhabitant part of the world and the largest landmass of the Globe is Eurasia. Thus it is the biggest producer of CO2 and, hence, the most polluted part of the world. But we cannot leave it as it is right now. Also important to understand that the biggest countries-producers (Far East) and countries-consumers (West Europe) are located on the edge of the Eurasia. These countries drive world’s economies and may play crucial role in improving ecology and environmental standards.

Transportation logistics between Far East and Western Europe is vital for world’s economic development, but today we do not have reliable technologies and transport lines. Due to this it is necessary to think on few aspects, which may determine the development of environmental friendly economies in future :

  • reliable transportation (safe and environmentally friendly) ;
  • cheapest modes and transshipment lines ;
  • fastest modes of transportation

 The most reliable mode of the transportation is railway. It has certain advantages (compared to air and maritime transport) in the following areas: regularity (rhythmicity), reliability (guaranteed on-schedule delivery and cargo preservation) and the ability to deliver the cargo to any destination.

When comparing cargo transportation from the Far East to West Europe by sea and by rail, the delivery time is often the key argument in favor of the railway. At the same time, the amount of 14 – 15 days is often mentioned. In practice, it takes longer: 35 – 50 days by sea, 28 – 32 days by rail, 6 days by plane and 4 days by roads (See Figure 1). This difference in numbers is caused by the need to form a train, delays at some stations, etc.

Underlining the reliability of the railway transshipment lines in terms of  friendly environmental standards it is assumed that carrying a TEU between the Far East and West Europe using diesel trains would result in emissions of around 0.7 tonnes of greenhouse gas emission. However, the emissions from electric trains could be lower, possibly even falling to zero if they were powered entirely by renewable sources. This suggests that, by using railway mode, the Eurasian transshipment lines are likely to be beneficial to the environment.

While in theory, the implementation of railway electrification and the use of renewable energy sources can reduce greenhouse gas emissions, perhaps even to zero, in practice this process can take decades that our planet is unlikely to have.

This fact makes us think about other possible modes of transportation that are both “convenient” (speed, regularity and accuracy of delivery), and beneficial to the environment.

The cheapest mode of transportation is by the sea, but it also has some pros and cons. Thus, the warm waters (red) shipping line from Far East to the port of Rotterdam in Netherlands today has great logistics prospects. Currently, 80% of cargo from Far East to Europe goes through the Atlantic ocean to the ports of Northern Europe. The warm waters shipping line through the Arabian sea and the Suez canal to the Balkans reduces the transport time by 7 – 10 days: this is so far the shortest sea route from Far East to Europe. Thus, the cheapest in the cost, this transshipment line is not beneficial in terms of second criteria – time-frame (See Figure 1).

Another waters shipping line (cold waters – blue line), which emerged as a result of the rapid melting of the North polar icecap, opens the prospects of shortened transport waterways in the ice-free areas. There are basically three possible routes, each of significance :

  • The Northwest Passage, connecting the American Continent and Far East Asia;
  • The Northern Sea Route, offering a shorter way from West Europe to Far East along the Russian Arctic coastline ; and
  • The Arctic Bridge, connecting Canada and Russia (See Figure 2).

Geographically the position of the North waterways is very beneficial since they are cutting the distance between the edges of two continents, making it shorter by about 40% in comparison to the traditional, warm seas transport routes via the Suez or Panama Canal. The Arctic Bridge for now is a seasonal route. Nevertheless, the observation shows that it might be in reach earlier than expected due to climate change.

Thus, in terms of logistics, the cold waters shipping line (blue) will allow to deliver cargo to West Europe by sea faster than the 48 days (that it takes on average) to travel from the Northern ports of Far East to Rotterdam via the Suez canal, considering that the passage of a cargo ship along the North sea route is 2.8 thousand miles shorter than the route through Suez canal (See Figure 1).

The criteria of reliability also plays a positive role. In regards with the environmental issue, this means that, if maritime services lose their most time-sensitive cargo to rail, they might in practice sail their ships slower, extending transit times but reducing fuel costs and hence prices, and decreasing greenhouse gas emissions.

In addition to the time-frame criteria, a cold water shipping line is beneficial in terms of capacity. It is usually characterized as the shortest sea route between West Europe and Far East, the safest (e.g. the problem of Somali pirates) and has no restrictions on the size of the ship, unlike the route through the Suez canal. Current data makes it clear that the cold water transshipment line will allow to deliver cargo to Europe faster by sea, reducing the route by 20 – 30%, and hence being more environmentally friendly (by using less fuel and decreasing CO2 emission) and saving human resources. Nevertheless to capitalize on that opportunity requires much work in terms of improved navigation procedure and installation of safety-related infrastructure.

For now it can be seen that there are two possibilities for developing transport systems and economies in accordance with green standards :

  • Transcontinental railroad system (which requires huge amount of investments);
  • Optimization of the cheapest mode of transportation (maritime warm waters transshipment lines).

But while thinking on the best ways of the decarbonizing of transport connections, all the existing risks should be taken into account. The current warm waters transshipment lines present certain dangers, being high congested and unsafe (both for trade security and environment), and hence rather vulnerable. Due to this fact, it is crucial to consider other alternatives of connecting the biggest countries-producers (Far East) and countries-consumers (West Europe).

While summing up the data on the logistics, it may be seen, that Blue shipping line along with Green one (See Figure 1) will dramatically reduce the time between the most-producing countries of G-7 and advanced OECD markets. But to reach consensus in timing, price and environmentally friendly standards the growing push to decarbonize economies, implement the green construction methods should be done. Unfortunately this approach may take decades to be adopted, which our planet may not have. And understanding of this fact should underlie the development to all the countries of the Globe without exceptions.


[1] This highly anticipated conference gathered over twenty high ranking speakers from three continents, and the viewers from Australia to Canada and from Chile to Far East. The day was filled by three panels focusing on the rethinking and revisiting Europe and its three equally important neighbourhoods: Euro-Med, Eastern and trans-Atlantic (or as the Romano Prodi’s EU Commission coined it back in 2000s – “from Morocco to Russia – everything but the institutions”); the socio-political and economic greening; as well as the legacy of WWII, Nuremberg Trials and Code, the European Human Rights Charter and their relevance in the 21st century.

Figure 1. Transshipment lines from Far East to Western Europe

Source : EDB, 2019

Figure 2. Northern shipping. Major transport routes through the Arctic

Source: Centre Port Canada, 2008.

Chloé Bernadaux is an International Security specialist (Sciences Po Paris), prolifically writing on the neighbourhood policy, Euro-MED relations, and disarmament affairs. She is the IFIMES newly appointed representative in Paris (UNESCO).

Continue Reading
Comments

Economy

China-ASEAN Comprehensive Strategic Partnership: A Shared Future for Pursuing Regional Economy Integration

Avatar photo

Published

on

For ASEAN, China is a neighboring country as well as a strategic partner in various fields, especially in the economic field. China has become the largest ASEAN trading partner for 13 consecutive years since 2009 (Global Times, 2022).

A survey conducted by the ISEAS-Yusof Ishak Institute to more than 1,600 ASEAN citizens said that 76.7% of them chose China as the most influential economic power in ASEAN (Heijmans, 2022). China has also grown to become an economic giant in the Asian region and is predicted to surpass the US as the world’s strongest economy by 2030 (Jennings, 2022).

This mutual relationship between China and ASEAN is getting stronger after the agreement of the Comprehensive Strategic Partnership (CSP). In the economic aspect, the implementation of the CSP is carried out in line with the Belt Road Initiative (BRI) and the Regional Comprehensive Economic Partnership (RCEP) project. Both projects are grand plans that have been prepared for economic integration and encouraging a more inclusive trade between two parties.

On the other hand, ASEAN also has a similar agenda in the region, which is to build an economic community that regulates trade as well as delivers economic benefit to its members. The common vision between China and ASEAN certainly smoothes the process of this cooperation. Then, how can China and ASEAN achieve their common goals? Are there any obstacles and challenges that they will face in implementing this CSP?

China-ASEAN: Sharing The Same Economic Vision

In pushing its foreign policy agenda, China has made visits to various neighboring countries in recent years. Rather than building an image as an economic great power, China focuses more on a friendly approach by promoting “a community with a shared future” to its neighbors (Wei, 2022). As a close neighbor and strategic partner, ASEAN become the one whom China wants to share the future with.

For ASEAN, BRI and RCEP itself have an aligned purpose with the establishment of the ASEAN Economic Community (AEC). AEC aims to promote a single market and product base, a highly competitive region, with equitable economic development (ASEAN, 2020a). Through AEC, ASEAN also commits to a freer flow of goods and services, and eases the distribution of skilled labor and the flow of capital in the region (Asian Development Bank Institute, 2015).

ASEAN’s ambition to build an integrated regional economy sounds promising. However, building an integrated economy ecosystem doesn’t only require geographical proximity, but also an adequate infrastructure (Donghyun et al., 2008).

Even though Southeast Asia is rich in resources and manufacturing, some areas still suffer from infrastructure lack and slow industrial development. Several ASEAN countries still have poor transportation infrastructures. In fact, transportation is a key factor in fastening economic distribution.

At this point, China came up with a BRI project plan which mainly prioritized large investments in transportation infrastructure (Donghyun et al., 2008). This long-term project has ample potential to provide infrastructure and other development facilities, hence promoting the growth in the region (Iqbal et al., 2019).

The CSP also regulates the Regional Comprehensive Economic Partnership (RCEP) agreement that aims to broaden and deepen free trade activity between ASEAN-China, Japan, Korea, New Zealand, and Australia (“RCEP: Overview and Economic Impact,” 2020). The RCEP later marks the birth of the world’s largest FTA which surely opens up wider trade and market access for ASEAN.

The RCEP will also help both China and ASEAN forge mutually beneficial industrial chain and supply chain partnerships, also to shape more inclusive trade cooperation in the future (Bo & Jing, n.d.). This opportunity is expected to be an open door for ASEAN integration with global trade, which is also the initial mission of AEC. Also can attract other countries to plant their foreign investment in ASEAN countries (ASEAN, 2020b).

For China, BRI and RCEP are essential to strengthen China’s position in the region. China is contriving to build “literal and metaphorical” bridges as a connector and a highway to greater influence in global politics and economy (Lockhart, 2020).

Overcoming Challenge

Both China and ASEAN share great economic interests in the CSP agreement. This makes both parties find a smooth path in the negotiation and agreement process. However, in the implementation process, ASEAN and China need to be more serious and committed.

ASEAN is currently in the process of compiling the ASEAN Economic Community (AEC) Blueprint 2025. The mid-term review criticized the uneven implementation of the AEC blueprint, with “easier” initiatives prioritized over challenging commitments. Both policy-making processes at national levels and practice need to be in line in order to reach common goals (Chen & Jye, 2022).

The Covid-19 pandemic becomes another obstacle to realizing economic integration in the region. The pandemic hits ASEAN quite heavily, where currently the members are still concerned about restoring the stability of the domestic economy. The cooperation with China is used well by ASEAN countries at the national level, such as the proposal submission for building several economic infrastructures by Indonesia, encouraging digital development in Thailand, signing economic bilateral relations with Vietnam, etc. Yet for the regional purpose, it still needs to be maximized.

The CSP begins a higher level of relationship, as reflected in the deeper cooperation, shared normative frameworks and institutionalized cooperative mechanisms, and high-level political commitment and priority from China and ASEAN (Ha, 2022). It will be less than optimal if ASEAN only sees CSP as a bridge to strengthen bilateral relations with China. ASEAN needs to view CSP as a strategic relationship for an ideal future of regional economic integration.

For optimizing the common goals for both, mutual political trust is the basis and safeguard (Bu, 2015). CSP does not happen overnight, building connectivity and an integrated ecosystem is a large-scale and long-term project. In order to reap the rewards of this investment and agreement, active dialogue, healthy relations, and stable growth of the upbringing of China-ASEAN relations must be strived by both parties.

Continue Reading

Economy

How America Is Crushing Europe

Avatar photo

Published

on

America creates, imposes, and enforces the sanctions against Russia, which are forcing up energy-prices in Europe, and are thereby driving Europe’s corporations to move to America, where taxes, safety-and-environmental regulations, and the rights of labor, are far lower, and so profits will be far higher for the investors. Furthermore, America can supply its own energy. Therefore, supply-chains are less dicey in the U.S. than in Europe. There is less and less reason now for a firm to be doing anything in Europe except selling to Europeans, who are becoming increasingly desperate to get whatever they can afford to buy, now that Russia, which had been providing the lowest-cost energy and other commodities, is being strangled out of European markets, by the sanctions. Money can move even when its owner can’t. The European public will now be left farther and farther behind as Europe’s wealth flees — mainly to America (whose Government had created this capital-flight of Europe’s wealth).

Europe’s leaders have cooperated with America’s leaders, to cause this European decline (by joining, instead of rejecting, America’s sanctions against Russia), but Germany’s companies can also enjoy significant benefits from relocating or expanding in America. Germany’s business daily newspaper, Handlelsblatt, reported, on September 25th, “More and more German companies are expanding their locations in North America: Washington attracts German companies with cheap energy and low taxes. This applies above all to the southern states. Berlin is alarmed – and wants to take countermeasures.” (Original: “Immer mehr deutsche Unternehmen bauen ihre Standorte in Nordamerika aus: Washington lockt deutsche Firmen mit billiger Energie und niedrigen Steuern. Das gilt vor allem für die Südstaaten. Berlin ist alarmiert – und will gegensteuern.”) It says that “Numerous German companies are planning to set up or expand their U.S. locations. … U.S. states such as Virginia, Georgia, and Oklahoma, show increasing interest” in offering special inducements for these firms to relocate, or to at least expand, their production in the U.S. For example, Pat Wilson, Commissioner of the Georgia Department of Economic Development, tells German companies that, “Our energy costs are low, and the networks are stable. … Companies coming to Georgia [from Germany] are reducing their carbon footprint.” Considering that one of the major reasons why Germany’s Government is squeezing-out Russia’s fuel-supplies (other than to ‘support democracy in Ukraine’, etc.) is that those Russian supplies are fossil fuels, an important benefit by which America can attract European firms (even on the basis of ‘Green’ arguments) is by advertising bigger ‘energy efficiency’ than in Europe — not necessarily in a strictly environmental sense, but definitely in the bottom-line sense, of lowered energy-costs, since America’s regulations are far less strict than in the EU. 

Also on the 25th, the Irish Examiner bannered “European industry buckles under weight of soaring energy prices: Volkswagen, Europe’s biggest carmaker, warned last week that it could reallocate production out of Germany and eastern Europe if energy prices don’t come down.”

Also on the 25th, Oil Price dot com headlined “Europe Faces An Exodus Of Energy-Intensive Industries”, and mentioned especially that “the U.S. Steel giant ArcelorMittal said earlier this month that it would slash by half production at a steel mill in Germany and a unit at another plant, also in Germany. The company said it had based the decision on high gas prices. … ArcelorMittal earlier this year announced it had plans to expand a Texas operation.”

On September 26th, the New York Times bannered “Factory Jobs Are Booming Like It’s the 1970s: U.S. manufacturing is experiencing a rebound, with companies adding workers amid high consumer demand for products.” In total, “As of August this year, manufacturers had added back about 1.43 million jobs, a net gain of 67,000 workers above prepandemic levels.” And this is only the start of America’s re-industrialization and economic recovery, because the hemorrhaging of jobs from Europe has only just begun. These German firms are getting in on the ground floor in America, leaving Europe’s workers behind, to swim or sink on their own (the ones that can).

Also on September 26th, Thomas Fazi at unherd dot com headlined “The EU is sleepwalking into anarchy: Its sanctions are crippling the bloc’s working class”, and documented that this hollowing-out of Europe’s economies is being experienced the most by Europe’s lower economic classes, who are the least capable of dealing with it but are being abandoned by the higher-wealth group, the investors, who are sending their money abroad, like banana-republic oligarchs do, and who might easily relocate themselves there too. 

On September 19th, the New York Times headlined “‘Crippling’ Energy Bills Force Europe’s Factories to Go Dark: Manufacturers are furloughing workers and shutting down lines because they can’t pay the gas and electric charges.” For example, a major employer in northern France, Arc International glass factory, doesn’t know whether they will survive: “Nicholas Hodler, the chief executive, surveyed the assembly line, shimmering blue with natural gas flames [gas that came from Russia and that now costs ten times as much as just a year ago]. For years, Arc had been powered by cheap energy that helped turn the company into the world’s largest producer of glass tableware. … But the impact of Russia’s abrupt cutoff of gas to Europe [forced by the sanctions] has doused the business with new risks. Energy prices have climbed so fast that Mr. Hodler has had to rewrite business forecasts six times in two months. Recently, he put a third of Arc’s 4,500 employees on partial furlough to save money. Four of the factory’s nine furnaces will be idled; the others will be switched from natural gas to diesel, a cheaper but more polluting fuel.” The “Green” Parties throughout Europe, such as in the persons of Germany’s Foreign Minister Annalena Baerbock, and Germany’s Minister for Economic Affairs and Climate Action Robert Habeck, had led the European movement against importing Russian fuels, and could turn out to have led Europe actually to increase its carbon footprint, if the end result turns out to be to switch to more coal and diesel fuels, as they now are doing.

It could not have happened without the leaderships both in America and in Europe, who are leading the way for Europe’s economies to decline, and for America’s to boom from this — attracting more and more investors, and their investments, into America, from the U.S. regime’s vassal-nations (such as Germany and France), especially in the EU and NATO (these new banana-republics). The beneficiaries of all this are not only America’s weapons-manufacturing firms, such as Lockheed Martin, and extraction firms such as ExxonMobil, that are growing because of the plunge in Europe that’s due to Europe’s cutting itself off from the cheap energy that it had formerly enjoyed. The future is opening up again, for investors in the United States. It’s come-one, come-all, to investors from Europe, and leaving everyone else in Europe simply to sink, if they can’t get out. 

Continue Reading

Economy

The Historic Day of Euro’s Downfall

Avatar photo

Published

on

The date August 22 should be remembered as the day of the euro’s “official” downfall. After a long period of being one of the foremost currencies, the euro has now become cheaper than the U.S. dollar.

When the euro first came into existence, it fell sharply against the dollar. In 1999, the year that the currency came into existence, EUR 1 traded for USD 1.18. On October 26, 2000, the euro fell to a then-record low of USD 0.8228. However, it then appeared to have begun to experience a period of recovery. By early 2001, the euro had risen to USD 0.96. Then, it entered a period of relatively minor decline, with the lowest being USD 0.834 on July 6, 2001, after which the euro gained a firm footing.

The currency that had shown strength against the dollar at the start of this century. On July 15, 2002, the euro began to be close to 1:1 against the dollar. By the end of 2002, it reached USD 1.04 and then continued to soar. On May 23, 2003, for the first time, the euro surpassed the high of USD 1.18, the day when it was launched. This was a key turning point as it continued to rise since then.

The euro broke through USD 1.35 on December 24, 2004. On December 30, 2004, it hit USD 1.3668, a record high during that period. On August 13, 2007, it reached USD 1.37. On November 23, 2007, it was USD 1.49. Then, on April 22 and July 15, 2008, it reached its all-time high of USD 1.60 twice. Even after the 2008 financial crisis, when the euro entered a period of shocks, it still showed strong vitality. On February 8, 2014, EUR 1 at that time could trade for USD 1.3631.

Undeniably, the euro in the past was a rather strong currency in the world market, and it affected the economy and wealth of roughly 500 million people. However, during that time, the euro mainly benefited from the fact that interest rates in Europe were more attractive than that in the United States. This has all but changed now, as the Federal Reserve is raising interest rates continuously. The current interest rate level has far exceeded that of the pre-COVID-19 one. Fiscal deficits too, play a role in the euro’s decline. The U.S. fiscal deficit has long been a major problem. There have been numerous speculations that the scale of the U.S. debt would kill off its economy, yet this does not happen to this day. Hence, the debt of the U.S. government is not regarded as an absolute negative factor as it did in the past.

Europe is similar to the U.S. in many aspects. Whether it is the energy crisis or inflation, the problems felt by the U.S. are present in Europe too. However, Europe is currently experiencing the most tragic war in history after World War II, i.e., the war in Ukraine. On the basis of geopolitics, this war has fundamentally shaken the foundation of the euro. Although the euro will continue to fluctuate up and down against the dollar, the trend will undoubtedly be downward. Geopolitics has made the euro completely lost its advantages compared to the dollar. This is because the entire Europe itself is in a precarious state, close to losing its dominance over the European continent. Now, Europe can only assume a mere supporting role on the global geopolitical stage, no longer a protagonist.

The result of this is frightful. Euro is the most important symbol of the European Union, an aspiration of the EU for its future. It is not exaggerating to say that any major depreciation of the euro would signify the same for Europe as a whole. All euro assets will become worthless when that happens. As things stand, European lawmakers, intentionally or not, have ignored a crucial factor in deciding the fate of the euro, namely geopolitics. Its fundamentals have now been shaken, and it is no longer a reliable currency, but a risky one.

If the war represents the present, what will the future of the euro be?

Currency has a lot to do with credibility. The countries that are the main supporting pillars of the euro, such as France and Germany, have their real competency and moral level in regard to European affairs, being exposed in the recent war. This has severely hit the credibility of the euro. In the worst-case scenario, the two old European countries, France and Germany, will almost certainly request the U.S. for energy support in the future, and possibly even some kind of financial aid in extreme cases. Therefore, in the face of the weak prospect of the euro, it is completely understandable that these two European countries, which are the main countries of the euro, seem to be powerless and indifferent.

All in all, the realist attitude of France and Germany towards the war in Ukraine will only exacerbate the depreciation of the euro, and there is no other possibility. It is unfortunate that the politicians of these two countries have not only sold themselves to a certain extent, but they have also actually sold the future of Europe.

Continue Reading

Publications

Latest

Southeast Asia1 hour ago

AUKUS One-Year Anniversary, Indonesia’s Response During NPT Review Conference

The dilemma experienced by Indonesia in responding to the arms race in the region reaps many concerns. Australia announced plans...

Diplomacy4 hours ago

Helsinki Spirit Revisited

“DIPLOMACY IS AN ART”. “Bring young people to play leadership roles”.-H.E. Mr. Lamberto Zannier As part of the Geneva Lecture...

Science & Technology6 hours ago

Competition in 5G Communication Network and the Future of Warfare

The present era is experiencing a shift from 4G (4th Generation) to 5G (5th Generation) networked communication. This shift will...

Defense12 hours ago

Urgency of Reviewing India-Pakistan’s CBMs & Risk Reduction Measures

In an unprecedented event on March 9, 2022, India launched a missile, reportedly identified as the BrahMos supersonic cruise missile,...

Tech News16 hours ago

Battery-free smart devices to harvest ambient energy for IoT

By  MICHAEL ALLEN Tiny internet-connected electronic devices are becoming ubiquitous. The so-called Internet of Things (IoT) allows our smart gadgets in...

Intelligence18 hours ago

Ethnic War a Newfangled Pakistani Forward-policy for Afghanistan

According to the intelligence information, Pakistan’s ISI is trying to start ethnic and maneuvering war again in Afghanistan, of which...

World News20 hours ago

European ministers adopt “Dublin Declaration” on preventing violence through equality

Thirty-eight Council of Europe member states have committed to a “Dublin Declaration” outlining a series of steps to promote gender...

Trending