Chinese premier focuses on critical minerals and clean energy on final day of Australian visit

China’s Premier Li Qiang inspects a hydrogen refuelling truck as Executive Chairman of Fortescue Andrew Forrest (C) looks on at the Fortescue Hazelmere research and development facility in Hazelmere, a suburb of Perth on June 18, 2024.
| Photo Credit: AFP

Chinese Premier Li Qiang has ended his Australian tour on June 18 in the west coast city of Perth where he has focused on China’s investment in critical minerals, clean energy and business links.

Perth is the capital of Western Australia State, which provided 39% of the world’s iron ore last year. Iron ore is one of Australia’s most lucrative exports. Analysts say the commodity was spared the type of trade bans that Beijing imposed on other Australian exports as bilateral relations soured three years ago because the steel-making ingredient was crucial to Chinese industrial growth.

Last week, Mr. Li became the first Chinese premier to visit New Zealand then Australia in seven years. He left Perth late on June 18 for Malaysia, where he’ll be China’s first premier to visit since 2015.

While in Perth, China’s second-most powerful leader after President Xi Jinping inspected iron ore miner Fortescue‘s clean energy research facility.

Fortescue’s chairman Andrew Forrest said Mr.Li was interested in the company’s plans to produce iron ore without carbon emissions and potentially “green iron.” “I think China chose us because it’s not just the best technology to go green in Australia, it’s the best technology to go green in the world and we’ve got real examples of it in trains, ship engines, trucks,” Forrest told The Associated Press before the visit.

The Perth facility is testing technology on hydrogen, ammonia and batter power for trains, ships, trucks and heavy mining equipment.

Focuses on Critical Minerals

Mr. Li also visited Chinese-controlled Tianqi Lithium Energy Australia’s processing plant south of Perth to underscore China’s interest in investing in critical minerals. The plant produces battery-grade lithium hydroxide for electric vehicles.

Australia shares U.S. concerns over China’s global dominance in critical minerals and control over supply chains in the renewable energy sector.

Citing Australia’s national interests, Treasurer Jim Chalmers recently ordered five Chinese-linked companies to divest their shares in the rare earth mining company Northern Minerals.

Prime Minister Anthony Albanese wrote in an opinion piece published in Perth’s main newspaper, The West Australian, on June 18, that his government was acting to ensure foreign investment “continues to serve our national interests.”

“This includes reforming the foreign investment framework so that it’s more efficient, more transparent and more effective at managing risk,” Mr. Albanese wrote.

Mr. Forrest said the national risk from Chinese investment in the critical minerals sector was overstated.

“Australia should be producing all the critical minerals in the world because we’re a great mining country, so by all means let’s go in harder after critical minerals, but let’s not do it with panic because there is no reason for panic,” Mr. Forrest said.

Mr. Qiang and Mr. Albanese flew to Perth in separate planes late on June 17 from the national capital Canberra where the two leaders held an official annual meeting with senior ministers in Parliament House.

Both leaders attended a round table of business leaders in Perth representing resource companies including mining giants BHP and Rio Tinto.

Business Council of Australia chief executive Bran Black said business dialogue was essential to the bilateral relations between the two free trading partners.

“While there have been challenging times in the bilateral relationship between the two nations, I think it’s fair to say this is another positive point of progress,” Black told the meeting.

“It shows that whilst the parameters of a bilateral relationship are set by governments, they will always be sustained by the quality of the personal relationships and especially those personal relationships that subsist on a business-to-business level,” Black added.

Chinese premiers and Australian prime ministers met annually from 2013 until 2019, after which Beijing banned minister-to-minister contacts over the previous conservative government’s call for an independent investigation into the causes of and responses to the COVID-19 pandemic.

Relations had already been strained by Australian legislation that banned covert foreign interference in Australian politics and the exclusion of Chinese-owned telecommunications giant Huawei from rolling out the national 5G network due to securit

Beijing initiated a reset in relations after Mr.Anthony Albanese’s center-left Labor Party was elected in 2022.

The annual meetings resumed when Mr. Albanese visited Beijing in November last year.

Concerns over press freedom

Mr. Albanese revealed that his office had complained to the Chinese Embassy about the behavior of two officials during a media event with the two leaders after June 17th meeting.

Australia had “concerns” about two Chinese officials who stood in the way of cameras taking images of well-known Australian journalist Cheng Lei sitting with other reporters as the leaders spoke, Mr. Albanese said.

Mrs. Cheng spent more than three years in detention in China for breaking an embargo with a broadcast on a state-run TV network while she was based in Beijing. She was released last year after interventions by the Australian government and now works for Sky News Australia.

“When you look at the footage, it was a pretty clumsy attempt, frankly, by a couple of people to stand in between where the cameras were and where Mrs. Cheng Lei was sitting,” Mr. Albanese said.

“There should be no impediments to Australian journalists going about their job and we’ve made that clear to the Chinese Embassy,” Mr. Albanese added.

Chinese-born Cheng told Sky News on June 17 that the officials “went to great lengths to block me from the cameras and to flank me.” “I’m only guessing that it’s to prevent me from saying something or doing something that they think would be a bad look. But that in itself was a bad look,” Mrs. Cheng said.

The embassy did not immediately respond to a request for comment.

Mr. Li and Mr. Albanese made statements during the press event but neither took questions from the assembled journalists.

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‘Unfair competition’: French farmers up in arms over EU free-trade agreements

French farming unions are taking aim at the European Union’s free-trade agreements, which they say open the door to unfair competition from products arriving from overseas. At a time when the EU is urging farmers to adopt more sustainable – and sometimes more costly – agricultural practices, unions say these trade deals are making it hard for them to stay solvent.

French farmers say that one of their biggest fears is that Chilean apples, Brazilian grains and Canadian beef will flood the European market, thereby undermining their livelihoods. France’s farmers continued to demonstrate on the country’s motorways on Wednesday, protesting against rising costs, over-regulation and free-trade agreements –partnerships between the EU and exporting nations that the farming unions say leads to unfair competition. 

The EU has signed several free-trade agreements in recent years, all with the objective of facilitating the movement of goods and services. But farmers say the deals bring with them insurmountable challenges.

“These agreements aim to reduce customs duties, with maximum quotas for certain agricultural products and non-tariff barriers,” said Elvire Fabry, senior researcher at the Jacques Delors Institute, a French think-tank dedicated to European affairs. “They also have an increasingly broad regulatory scope to promote European standards for investment, protection of intellectual property, geographical indications and sustainable development standards.”

South American trade deal in the crosshairs

Some non-EU countries – such as Norway, Liechtenstein and Iceland – maintain comprehensive free-trade agreements with the EU because they are part of the European Economic Area. This allows them to benefit from the free movement of goods, services, capital and people.

Other nations farther afield have signed more variable agreements with the EU, including CanadaJapan, Mexico, Vietnam and Ukraine. The EU also recently signed an accord with Kenya and a deal with New Zealand that will come into force this year; negotiations are also under way with India and Australia.    

However, a draft agreement between the EU and the South American trade bloc Mercosur is creating the most concern. Under discussion since the 1990s, this trade partnership between Argentina, Brazil, Uruguay and Paraguay would create the world’s largest free-trade area, a market encompassing 780 million people. 

Read more‘French agriculture can’t be bartered away’: Farmers unite against EU rules and globalised markets     

French farmers are particularly concerned about the deal’s possible effect on agriculture. The most recent version of the text introduces quotas for Mercosur countries to export 99,000 tonnes of beef, 100,000 tonnes of poultry and 180,000 tonnes of sugar per year, with little or no customs duties imposed. In exchange, duties would also be lowered on exports from the EU on many “protected designation of origin” (PDO) products. 

At a time when the EU is urging farmers to adopt more sustainable agricultural practices, French unions say these agreements would open the door to massive imports – at more competitive prices – of products that do not meet the same environmental standards as those originating in Europe. French farmers are calling out what they say is unfair competition from farmers in South America who can grow GMO crops and use growth-promoting antibiotics on livestock, which is banned in the EU

Trade unions from various sectors went into action after the European Commission informed them on January 24 that negotiations with Mercosur could be concluded “before the end of this mandate”, i.e., before the European Parliament elections in June.      

The FNSEA, France’s biggest farming union, immediately called for a “clear rejection of free-trade agreements” while the pro-environmental farming group Confédération Paysanne (Farmers’ Confederation) called for an “immediate end to negotiations” on this type of agreement.   

A mixed record

“In reality, the impact of these free-trade agreements varies from sector to sector,” said Fabry. “Negotiations prior to agreements aim to calibrate the opening up of trade to limit the negative impact on the most exposed sectors. And, at the same time, these sectors can benefit from other agreements. In the end, it’s a question of finding an overall balance.”

This disparity is glaringly obvious in the agricultural sector. “The wine and spirits industry as well as the dairy industry stand to gain more than livestock farmers, for example,” said Fabry. These sectors are the main beneficiaries of free-trade agreements, according to a 2023 report by the French National Assembly.

“The existence of trade agreements that allow customs duty differentials to be eliminated is an ‘over-determining factor’ in the competitiveness of French wines,” wrote FranceAgriMer, a national establishment for agriculture and maritime products under the authority of the French ministry of agriculture in a 2021 report. The majority of free-trade agreements lower or abolish customs duties to allow the export of many PDO products, a category to which many wines belong.

However, the impact on meat is less clear-cut. While FranceAgriMer says the balance between imports and exports appears to be in the EU’s favour for pork, poultry exports seem to be declining as a result of the agreements. Hence the fears over the planned treaty with New Zealand, which provides for 36,000 tonnes of mutton to be imported into the EU, equivalent to 45% of French production in 2022. France,however, still has a large surplus of grains except for soya. 

‘A bargaining chip’

Beyond the impact on agriculture, “this debate on free-trade agreements must take into account other issues”, said Fabry. “We are in a situation where the EU is seeking to secure its supplies and in particular its supplies of strategic minerals. Brazil’s lithium, cobalt, graphite and other resource reserves should not be overlooked.”

The agreement with Chile should enable strategic minerals to be exported in exchange for agricultural products. Germany strongly supports the agreement with Mercosur, as it sees it as an outlet for its industrial sectors, according to Fabry.

“In virtually all free-trade agreements, agriculture is always used as a bargaining chip in exchange for selling cars or Airbus planes,” Véronique Marchesseau, general-secretary of the Confédération Paysanne, told AFP.

Michèle Boudoin, president of the French National Sheep Federation, told AFP that the agreement with New Zealand will “destabilise the lamb market in France”.  

Read moreWhy French farmers are up in arms: fuel hikes, green regulation, EU directives

“We know that Germany needs to export its cars, that France needs to sell its wheat, and we’re told that we need an ally in the Pacific tocounter China and Russia. But if that is the case, then we need help to be able to produce top-of-the-line lamb, for example,” she said.

Finally, “there is a question of influence”, said Fabry. “These agreements also remain a way for the EU to promote its environmental standards to lead its partners along the path of ecological transition, even if this has to be negotiated,” said Fabry. 

Marc Fesneau, the French minister of agriculture, made the same argument. “In most cases, the agreements have been beneficial, including to French agriculture,” Fesneau wrote on X last week, adding: “They will be even more so if we ensure that our standards are respected.”

Mercosur negotiations suspended? 

As the farmers’ promised “siege” of Paris and other major locations across France continues, the French government has been trying to reassure agricultural workers about Mercosur, even though President Emmanuel Macron and Brazilian President Luiz Inácio Lula da Silva relaunched negotiations in December. “France is clearly opposed to the signing of the Mercosur treaty,” Prime Minister Gabriel Attal acknowledged last week.

The Élysée Palace even said on Monday evening that EU negotiations with the South American bloc had been suspended because of France’s opposition to the treaty. The conditions are “not ripe” for concluding the negotiations, said Eric Mamer, spokesman for the European Commission. “However, discussions are ongoing.” 

Before being adopted, the agreement would have to be passed unanimously by the European Parliament, then ratified individually by the 27 EU member states.

This article has been translated from the original in French

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Taiwan’s new president: Five things you need to know about William Lai

TAIPEI — Forget Xi Jinping or Joe Biden for a second. Meet Taiwan’s next President William Lai, upon whom the fate of U.S.-China relations — and global security over the coming few years — is now thrust.

The 64-year-old, currently Taiwan’s vice president, has led the Democratic Progressive Party (DPP) to a historic third term in power, a first for any party since Taiwan became a democracy in 1996.

For now, the capital of Taipei feels as calm as ever. For Lai, though, the sense of victory will soon be overshadowed by a looming, extended period of uncertainty over Beijing’s next move. Taiwan’s Communist neighbor has laid bare its disapproval of Lai, whom Beijing considers the poster boy of the Taiwanese independence movement.

All eyes are now on how the Chinese leader — who less than two weeks ago warned Taiwan to face up to the “historical inevitability” of being absorbed into his Communist nation — will address the other inevitable conclusion: That the Taiwanese public have cast yet another “no” vote on Beijing.

1. Beijing doesn’t like him — at all

China has repeatedly lambasted Lai, suggesting that he will be the one bringing war to the island.

As recently as last Thursday, Beijing was trying to talk Taiwanese voters out of electing its nemesis-in-chief into the Baroque-style Presidential Office in Taipei.

“Cross-Strait relations have taken a turn for the worse in the past eight years, from peaceful development to tense confrontation,” China’s Taiwan Affairs Office spokesman Chen Binhua said, adding that Lai would now be trying to follow an “evil path” toward “military tension and war.”

While Beijing has never been a fan of the DPP, which views China as fundamentally against Taiwan’s interests , the personal disgust for Lai is also remarkable.

Part of that stems from a 2017 remark, in which Lai called himself a “worker for Taiwanese independence,” which has been repeatedly cited by Beijing as proof of his secessionist beliefs.

Without naming names, Chinese President Xi harshly criticized those promoting Taiwan independence in a speech in 2021.

“Secession aimed at Taiwan independence is the greatest obstacle to national reunification and a grave danger to national rejuvenation,” Xi said. “Those who forget their heritage, betray their motherland, and seek to split the country will come to no good end, and will be disdained by the people and sentenced by the court of history.”

2. All eyes are on the next 4 months

Instability is expected to be on the rise over the next four months, until Lai is formally inaugurated on May 20.

No one knows how bad this could get, but Taiwanese officials and foreign diplomats say they don’t expect the situation to be as tense as the aftermath of then-U.S. House Speaker Nancy Pelosi’s visit to the island in 2022.

Already, days before the election, China sent several spy balloons to monitor Taiwan, according to the Taiwanese defense ministry. On the trade front, China was also stepping up the pressure, announcing a possible move to reintroduce tariffs on some Taiwanese products. Cases of disinformation and electoral manipulation have also been unveiled by Taiwanese authorities.

Those developments, combined, constitute what Taipei calls hybrid warfare — which now risks further escalation given Beijing’s displeasure with the new president.

3. Lai has to tame his independent instinct

In a way, he has already.

Speaking at the international press conference last week, Lai said he had no plan to declare independence if elected to the presidency.

DPP insiders say they expect Lai to stick to outgoing Tsai Ing-wen’s approach, without saying things that could be interpreted as unilaterally changing the status quo.

They also point to the fact that Lai chose as vice-presidential pick Bi-khim Hsiao, a close confidante with Tsai and former de facto ambassador to Washington. Hsiao has developed close links with the Biden administration, and will play a key role as a bridge between Lai and the U.S.

4. Taiwan will follow international approach

The U.S., Japan and Europe are expected to take precedence in Lai’s diplomatic outreach, while relations with China will continue to be negative.

Throughout election rallies across the island, the DPP candidate repeatedly highlighted the Tsai government’s efforts at diversifying away from the trade reliance on China, shifting the focus to the three like-minded allies.

Southeast Asia has been another top destination for these readjusted trade flows, DPP has said.

According to Taiwanese authorities, Taiwan’s exports to China and Hong Kong last year dropped 18.1 percent compared to 2022, the biggest decrease since they started recording this set of statistics in 1982.

In contrast, Taiwanese exports to the U.S. and Europe rose by 1.6 percent and 2.9 percent, respectively, with the trade volumes reaching all-time highs.

However, critics point out that China continues to be Taiwan’s biggest trading partner, with many Taiwanese businesspeople living and working in the mainland.

5. Lai might face an uncooperative parliament

While vote counting continues, there’s a high chance Lai will be dealing with a divided parliament, the Legislative Yuan.

Before the election, the Kuomintang (KMT) party vowed to form a majority with Taiwan People’s Party in the Yuan, thereby rendering Lai’s administration effectively a minority government.

While that could pose further difficulties for Lai to roll out policies provocative to Beijing, a parliament in opposition also might be a problem when it comes to Taiwan’s much-needed defense spending.

“A divided parliament is very bad news for defense. KMT has proven that they can block defense spending, and the TPP will also try to provide what they call oversight, and make things much more difficult,” said Syaru Shirley Lin, who chairs the Center for Asia-Pacific Resilience and Innovation, a Taipei-based policy think tank.

“Although all three parties said they wanted to boost defense, days leading up to the election … I don’t think that really tells you what’s going to happen in the legislature,” Lin added. “There’s going to be a lot of policy trading.”

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We can tackle climate change, jobs, growth and global trade. Here’s what’s stopping us

We must leave behind established modes of thinking and seek creative workable solutions.

Another tumultuous year has confirmed that the global economy is at a turning point. We face four big challenges: the climate transition; the good-jobs problem; an economic-development crisis, and the search for a newer, healthier form of globalization.

To address each, we must leave behind established modes of thinking and seek creative workable solutions, while recognizing that these efforts will be necessarily uncoordinated and experimental.

Climate change is the most daunting challenge, and the one that has been overlooked the longest — at great cost. If we are to avoid condemning humanity to a dystopian future, we must act fast to decarbonize the global economy. We have long known that we must wean ourselves from fossil fuels, develop green alternatives and shore up our defenses against the lasting environmental damage that past inaction has already caused. However, it has become clear that little of this is likely to be achieved through global cooperation or economists’ favored policies.

Instead, individual countries will forge ahead with their own green agendas, implementing policies that best account for their specific political constraints, as the United States, China and the European Union have been doing. The result will be a hodge-podge of emission caps, tax incentives, research and development support, and green industrial policies with little global coherence and occasional costs for other countries. Messy though it may be, an uncoordinated push for climate action may be the best we can realistically hope for.

Inequality, the erosion of the middle class, and labor-market polarization have caused significant damage to our social environment.

But our physical environment is not the only threat we face. Inequality, the erosion of the middle class, and labor-market polarization have caused equally significant damage to our social environment. The consequences are now widely evident. Economic, regional, and cultural gaps within countries are widening, and liberal democracy (and the values that support it) appears to be in decline, reflecting rising support for xenophobic, authoritarian populists and the growing backlash against scientific and technical expertise.

Social transfers and the welfare state can help, but what is most needed is an increase in the supply of good jobs for the less-educated workers who have lost access to them. We need more productive, well-remunerated employment opportunities that can provide dignity and social recognition for those without a college degree. Expanding the supply of such jobs will require not only more investment in education and more robust defense of workers’ rights, but also a new brand of industrial policies for services, where the bulk of future employment will be created.

The disappearance of manufacturing jobs over time reflects both greater automation and stronger global competition. Developing countries have not been immune to either factor. Many have experienced “premature de-industrialization”: their absorption of workers into formal, productive manufacturing firms is now very limited, which means they are precluded from pursuing the kind of export-oriented development strategy that has been so effective in East Asia and a few other countries. Together with the climate challenge, this crisis of growth strategies in low-income countries calls for an entirely new development model.

Governments will have to experiment, combining investment in the green transition with productivity enhancements in labor-absorbing services.

As in the advanced economies, services will be low- and middle-income countries’ main source of employment creation. But most services in these economies are dominated by very small, informal enterprises — often sole proprietorships — and there are essentially no ready-made models of service-led development to emulate. Governments will have to experiment, combining investment in the green transition with productivity enhancements in labor-absorbing services.

Finally, globalization itself must be reinvented. The post-1990 hyper-globalization model has been overtaken by the rise of U.S.-China geopolitical competition, and by the higher priority placed on domestic social, economic, public-health, and environmental concerns. No longer fit for purpose, globalization as we know it will have to be replaced by a new understanding that rebalances national needs and the requirements of a healthy global economy that facilitates international trade and long-term foreign investment.

Most likely, the new globalization model will be less intrusive, acknowledging the needs of all countries (not just major powers) that want greater policy flexibility to address domestic challenges and national-security imperatives. One possibility is that the U.S. or China will take an overly expansive view of its security needs, seeking global primacy (in the U.S. case) or regional domination (China). The result would be a “weaponization” of economic interdependence and significant economic decoupling, with trade and investment treated as a zero-sum game.

The biggest gift major powers can give to the world economy is to manage their own domestic economies well.

But there could also be a more favorable scenario in which both powers keep their geopolitical ambitions in check, recognizing that their competing economic goals are better served through accommodation and cooperation. This scenario might serve the global economy well, even if — or perhaps because — it falls short of hyper-globalization. As the Bretton Woods era showed, a significant expansion of global trade and investment is compatible with a thin model of globalization, wherein countries retain considerable policy autonomy with which to foster social cohesion and economic growth at home. The biggest gift major powers can give to the world economy is to manage their own domestic economies well.

All these challenges call for new ideas and frameworks. We do not need to throw conventional economics out the window. But to remain relevant, economists must learn to apply the tools of their trade to the objectives and constraints of the day. They will have to be open to experimentation, and sympathetic if governments engage in actions that do not conform to the playbooks of the past.

Dani Rodrik, professor of international political economy at Harvard Kennedy School, is president of the International Economic Association and the author of Straight Talk on Trade: Ideas for a Sane World Economy (Princeton University Press, 2017).

This commentary was published with the permission of Project Syndicate — Confronting Our Four Biggest Economic Challenges

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Also read: ‘Dr. Doom’ Nouriel Roubini: ‘Worst-case scenarios appear to be the least likely.’ For now.

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The Middle East is on fire: What you need to know about the Red Sea crisis

On October 7, Hamas fighters launched a bloody attack against Israel, using paragliders, speedboats and underground tunnels to carry out an offensive that killed almost 1,200 people and saw hundreds more taken back to the Gaza Strip as prisoners. 

Almost three months on, Israel’s massive military retaliation is reverberating around the region, with explosions in Lebanon and rebels from Yemen attacking shipping in the Red Sea. Meanwhile, Western countries are pumping military aid into Israel while deploying fleets to protect commercial shipping — risking confrontation with the Iranian navy.

That’s in line with a grim prediction made last year by Iranian Foreign Minister Hossein Amirabdollahian, who said that Israel’s counteroffensive in Gaza meant an “expansion of the scope of the war has become inevitable,” and that further escalation across the Middle East should be expected. 

What’s happening?

The Israel Defense Forces are still fighting fierce battles for control of the Gaza Strip in what officials say is a mission to destroy Hamas. Troops have already occupied much of the north of the 365-square-kilometer territory, home to around 2.3 million Palestinians, and are now fighting fierce battles in the south.

Entire neighborhoods of densely-populated Gaza City have been levelled by intense Israeli shelling, rocket attacks and air strikes, rendering them uninhabitable. Although independent observers have been largely shut out, the Hamas-controlled Health Ministry claims more than 22,300 people have been killed, while the U.N. says 1.9 million people have been displaced.

On a visit to the front lines, Israeli Defence Minister Yoav Gallant warned that his country is in the fight for the long haul. “The feeling that we will stop soon is incorrect. Without a clear victory, we will not be able to live in the Middle East,” he said.

As the Gaza ground war intensifies, Hamas and its allies are increasingly looking to take the conflict to a far broader arena in order to put pressure on Israel.

According to Seth Frantzman, a regional analyst with the Jerusalem Post and adjunct fellow at the Foundation for Defense of Democracies, “Iran is certainly making a play here in terms of trying to isolate Israel [and] the U.S. and weaken U.S. influence, also showing that Israel doesn’t have the deterrence capabilities that it may have had in the past or at least thought it had.”

Northern front

On Tuesday a blast ripped through an office in Dahieh, a southern suburb of the Lebanese capital, Beirut — 130 kilometers from the border with Israel. Hamas confirmed that one of its most senior leaders, Saleh al-Arouri, was killed in the strike. 

Government officials in Jerusalem have refused to confirm Israeli forces were behind the killing, while simultaneously presenting it as a “surgical strike against the Hamas leadership” and insisting it was not an attack against Lebanon itself, despite a warning from Lebanese caretaker Prime Minister Najib Mikati that the incident risked dragging his country into a wider regional war. 

Tensions between Israel and Lebanon have spiked in recent weeks, with fighters loyal to Hezbollah, the Shia Islamist militant group that controls the south of the country, firing hundreds of rockets across the frontier. Along with Hamas, Hezbollah is part of the Iranian-led “Axis of Resistance” that aims to destroy the state of Israel.

In a statement released on Tuesday, Iran’s foreign ministry said the death of al-Arouri, the most senior Hamas official confirmed to have died since October 7, will only embolden resistance against Israel, not only in the Palestinian territories but also in the wider Middle East.

“We’re talking about the death of a senior Hamas leader, not from Hezbollah or the [Iranian] Revolutionary Guards. Is it Iran who’s going to respond? Hezbollah? Hamas with rockets? Or will there be no response, with the various players waiting for the next assassination?” asked Héloïse Fayet, a researcher at the French Institute for International Relations.

In a much-anticipated speech on Wednesday evening, Hezbollah leader Hassan Nasrallah condemned the killing but did not announce a military response.

Red Sea boils over

For months now, sailors navigating the narrow Bab- el-Mandeb Strait that links Europe to Asia have faced a growing threat of drone strikes, missile attacks and even hijackings by Iran-backed Houthi militants operating off the coast of Yemen.

The Houthi movement, a Shia militant group supported by Iran in the Yemeni civil war against Saudi Arabia and its local allies, insists it is only targeting shipping with links to Israel in a bid to pressure it to end the war in Gaza. However, the busy trade route from the Suez Canal through the Red Sea has seen dozens of commercial vessels targeted or delayed, forcing Western nations to intervene.

Over the weekend, the U.S. Navy said it had intercepted two anti-ship missiles and sunk three boats carrying Houthi fighters in what it said was a hijacking attempt against the Maersk Hangzhou, a container ship. Danish shipping giant Maersk said Tuesday that it would “pause all transits through the Red Sea until further notice,” following a number of other cargo liners; energy giant BP is also suspending travel through the region.

On Wednesday the Houthis targeted a CMA CGM Tage container ship bound for Israel, according to the group’s military spokesperson Yahya Sarea. “Any U.S. attack will not pass without a response or punishment,” he added. 

“The sensible decision is one that the vast majority of shippers I think are now coming to, [which] is to transit through round the Cape of Good Hope,” said Marco Forgione, director general at the Institute of Export & International Trade. “But that in itself is not without heavy impact, it’s up to two weeks additional sailing time, adds over £1 million to the journey, and there are risks, particularly in West Africa, of piracy as well.” 

However, John Stawpert, a senior manager at the International Chamber of Shipping, noted that while “there has been disruption” and an “understandable nervousness about transiting these routes … trade is continuing to flow.”

“A major contributory factor to that has been the presence of military assets committed to defending shipping from these attacks,” he said. 

The impacts of the disruption, especially price hikes hitting consumers, will be seen “in the next couple of weeks,” according to Forgione. Oil and gas markets also risk taking a hit — the price of benchmark Brent crude rose by 3 percent to $78.22 a barrel on Wednesday. Almost 10 percent of the world’s oil and 7 percent of its gas flows through the Red Sea.

Western response

On Wednesday evening, the U.S., Australia, Bahrain, Belgium, Canada, Denmark, Germany, Italy, Japan, the Netherlands, New Zealand, and the United Kingdom issued an ultimatum calling the Houthi attacks “illegal, unacceptable, and profoundly destabilizing,” but with only vague threats of action.

“We call for the immediate end of these illegal attacks and release of unlawfully detained vessels and crews. The Houthis will bear the responsibility of the consequences should they continue to threaten lives, the global economy, and free flow of commerce in the region’s critical waterways,” the statement said.

Despite the tepid language, the U.S. has already struck back at militants from Iranian-backed groups such as Kataeb Hezbollah in Iraq and Syria after they carried out drone attacks that injured U.S. personnel.

The assumption in London is that airstrikes against the Houthis — if it came to that — would be U.S.-led with the U.K. as a partner. Other nations might also chip in.

Two French officials said Paris is not considering air strikes. The country’s position is to stick to self-defense, and that hasn’t changed, one of them said. French Armed Forces Minister Sébastien Lecornu confirmed that assessment, saying on Tuesday that “we’re continuing to act in self-defense.” 

“Would France, which is so proud of its third way and its position as a balancing power, be prepared to join an American-British coalition?” asked Fayet, the think tank researcher.

Iran looms large

Iran’s efforts to leverage its proxies in a below-the-radar battle against both Israel and the West appear to be well underway, and the conflict has already scuppered a long-awaited security deal between Israel and Saudi Arabia.

“Since 1979, Iran has been conducting asymmetrical proxy terrorism where they try to advance their foreign policy objectives while displacing the consequences, the counterpunches, onto someone else — usually Arabs,” said Bradley Bowman, senior director of Washington’s Center on Military and Political Power. “An increasingly effective regional security architecture, of the kind the U.S. and Saudi Arabia are trying to build, is a nightmare for Iran which, like a bully on the playground, wants to keep all the other kids divided and distracted.”

Despite Iran’s fiery rhetoric, it has stopped short of declaring all-out war on its enemies or inflicting massive casualties on Western forces in the region — which experts say reflects the fact it would be outgunned in a conventional conflict.

“Neither Iran nor the U.S. nor Israel is ready for that big war,” said Alex Vatanka, director of the Middle East Institute’s Iran program. “Israel is a nuclear state, Iran is a nuclear threshold state — and the U.S. speaks for itself on this front.”

Israel might be betting on a long fight in Gaza, but Iran is trying to make the conflict a global one, he added. “Nobody wants a war, so both sides have been gambling on the long term, hoping to kill the other guy through a thousand cuts.”

Emilio Casalicchio contributed reporting.

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Trade predicts that Prabhas-starrer Salaaar’s Hindi version will cross Adipurush’s Hindi collections; Shah Rukh Khan-starrer Dunki will collect Rs. 220-225 crores in its lifetime :Bollywood Box Office – Bollywood Hungama

A lot was expected from the big Christmas releases, Dunki, starring Shah Rukh Khan and Salaar, starring Prabhas. Also, while Dunki was directed by Rajkumar Hirani, Salaar was helmed by Prashanth Neel of KGF fame. These filmmakers have a separate fan base. As a result, the hopes were immense. While the films did well, a lot more was expected from them. We spoke to the trade about their performance at the ticket window.

Trade analyst Atul Mohan said, “People expected more from Dunki as it was directed by Rajkumar Hirani. Also, Shah Rukh Khan’s dream run was going on.” He added, “The plot was superb. Unusually such films show characters struggling to reach foreign shares. But in this film, unko Dunki maarke wapis aana pad raha hai. This was quite fresh. With a plot like this, that too coming from Rajkumar Hirani, anybody would jump at it.”

Girish Johar, producer and film business analyst opined, “Dunki, in my opinion, is a fantastic movie. It is message-oriented and has a lot of soul. The film has to be watched with a heart and not with conventional logic. The mood of the nation was action-oriented. That could be the reason (why it underperformed). Also, the promotions could have been a little better. They underplayed the film, relying a bit too much on word of mouth.”

He also said, “Salaar affected the film more. If Salaar had not released, Dunki would have collected Rs. 30 crores more and would have had first-week collections of Rs. 180 crores.” Dunki collected Rs. 149.77 crores in its first week.

Atul Mohan further explained, “The jokes didn’t land well. But the big problem was that people had too many expectations. People went for a film like Zara Hatke Zara Bachke, for example, without much hope. And it worked. But with Dunki, people expected the moon. It’s not like it has faced outright rejection. Moviegoers don’t mind the film but they come out of the theatre and say, ‘Thoda aur accha ho sakta tha’.”

When asked how much the film will collect in its lifetime, Raj Bansal, the owner of Entertainment Paradise in Jaipur predicted, “Dunki will collect Rs. 220-225 crores in its lifetime. It’ll definitely cross the Rs. 200 crore mark. It doesn’t have strong competition until Republic Day when Fighter releases. Also, on New Year, people will want to watch light, masti waali film.”

Atul Mohan and Girish Johar also agreed and felt that Merry Christmas, starring Vijay Sethupathi and Katrina Kaif and which releases on January 12, is not a strong competition. Dunki, along with Salaar, has a clean run for a month, as a result. Girish said, “Dunki has a couple of weeks more to score. I hope it picks up over the second weekend. Rs. 200 crores plus is a given. Anything above Rs. 225 crores will be a bonus.”

Trade predicts that Prabhas-starrer Salaaar’s Hindi version will cross Adipurush’s Hindi collections; Shah Rukh Khan-starrer Dunki will collect Rs. 220-225 crores in its lifetime

Salaar collected Rs. 87.75 crores in week 1 and experts feel that it’ll cross the Rs. 135.04 crore collections of Prabhas’ previous film, Adipurush. Raj Bansal stated, “Salaar will 100% collect more than Adipurush’s Hindi collections.”

Girish Johar explained why it didn’t perform up to the mark, “Marvel superhero fatigue has set in. A similar scenario might emerge with these action films. Throughout Salaar, the tempo is so high that you are always alert while watching it. You are not consuming or feeling the film. Action, obviously, is praiseworthy. But the audience is saying ‘Ab ho gaya yeh sab. Thoda dil bhi chhu ke jaao’. Thankfully, the twist in the climax worked. Or else, the film would have fallen flat.”

Calling the fight scenes as ‘tappa action’, Girish complained, “How many times you’ll see heroes attacking baddies with such force that they bounce and fall? If you see the film from a particular point of view, it just has slow-motion action. Nothing else.”

As for the lifetime, he said, “The response is muted and not as big as was expected from the makers of KGF – Chapter 2 (2022). Rs. 90 crores toh ho hi gaya hai. Rs. 135 crores toh ho hi jaayega.”

Atul Mohan exulted, “Rs. 125 crores would be the best case scenario for Salaar. After delivering a film like KGF – Chapter 2, agar aap Rs. 125 crores mein nipat jaate ho, toh phir kya faayda?”

Film exhibitor and distributor Akshaye Rathi made his displeasure clear over the fight that erupted over the sharing of screens between the two films, “What happened last week was not business. It was ugly and uncalled for and showed our industry in a really bad light. It only led to a lose-lose situation. It hampered the business of both films. It’s not like one benefited over the other. Both lost out on the business because the advance just didn’t open on time beyond the national chains till the day of release. A lot of business, which could have happened due to these advance ticket sales, didn’t happen. I hope that we can leave aside our squabbles and egos and try to think a little more holistically and sensibly. Here, we literally witnessed a scenario where two production houses and distributors, who were at each other’s neck, ensured that hundreds of distributors all over the country, faced financial losses. That’s not healthy. I really hope we can be a little more sensible and mature in the year ahead so that such scenarios are handled with some dignity and grace.”

He signed off by saying, “I am not talking about these movies in particular. But movies that have hype and not-so-great content can benefit from advances opening up early and having a certain amount of sales. God forbid the advance don’t happen until release day and the content is not up to the mark, you miss out on a chunk of business that could have happened.”

More Pages: Salaar Box Office Collection , Salaar Movie Review

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How Houthi rebels are threatening global trade nexus on Red Sea

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The U.S. is mustering an international armada to deter Iranian-backed Houthi militias from Yemen from attacking shipping in the Red Sea, one of the world’s most important waterways for global trade, including energy cargos.

The Houthis’ drone and missile attacks are ostensibly a response to the war between Israel and Hamas, but fears are growing that the broader world economy could be disrupted as commercial vessels are forced to reroute.

On Tuesday, U.S. Secretary of Defense Lloyd Austin held a videoconference with 43 countries, the EU and NATO, telling them that “attacks had already impacted the global economy and would continue to threaten commercial shipping if the international community did not come together to address the issue collectively.”

Earlier this week, the U.S. announced an international security effort dubbed Operation Prosperity Guardian that listed the U.K., Bahrain, Canada, France, Italy, the Netherlands, Norway, the Seychelles and Spain as participants. Madrid, however, said it wouldn’t take part. 

The Houthis were quick to respond. 

“Even if America succeeds in mobilizing the entire world, our military operations will not stop unless the genocide crimes in Gaza stop and allow food, medicine, and fuel to enter its besieged population, no matter the sacrifices it costs us,” said Mohammed Al-Bukaiti, a member of the Ansar Allah political bureau, in a post on X

Here’s what you need to know about the Red Sea crisis.

1. Who are the Houthis and why are they attacking ships?

International observers have put the blame for the hijackings, missiles and drone attacks on Houthi rebels in Yemen, who have stepped up their attacks since the Israel-Hamas war started. The Shi’ite Islamist group is part of the so-called “axis of resistance” against Israel and is armed by Tehran. Almost certainly due to Iranian support with ballistics, the Houthis have directly targeted Israel since the beginning of the war, firing missiles and drones up the Red Sea toward the resort of Eilat.

The Houthis have been embroiled in Yemen’s long-running civil war and have been locked in combat with an intervention force in the country led by Sunni Saudi Arabia. The Houthis have claimed several major strikes against high-value energy installations in Saudi Arabia over the past years, but many international observers have identified some of their bigger claims as implausible, seeing the Houthis as a smokescreen for direct Iranian action against its arch enemy Riyadh.

After first firing drones and cruise missiles at Israel, the rebels are now targeting commercial vessels it deems linked to Israel. The Houthis have launched about 100 drone and ballistic missile attacks against 10 commercial vessels, the U.S. Department of Defense said on Tuesday

As a result, some of the world’s largest shipping companies, including Italian-Swiss MSC, Danish giant Maersk and France’s CMA CGM, were forced to reroute to avoid being targeted. BP also paused shipping through the Red Sea. 

2. Why is the Red Sea so important?

The Bab el-Mandeb (Gate of Lamentation) strait between Djibouti and Yemen where the Houthis have been attacking vessels marks the southern entrance to the Red Sea, which connects to the Suez Canal and is a crucial link between Europe and Asia. 

Estimate are that 12 to 15 percent passes of global trade takes this route, representing 30 percent of global container traffic. Some 7 percent to 10 percent of the world’s oil and 8 percent of liquefied natural gas are also shipped through the same waterway. 

Now that the strait is closed, “alternatives require additional cost, additional delay, and don’t sit with the integrated supply chain that already exists,” said Marco Forgione, director general with the Institute of Export and International Trade.

Diverting ships around Africa adds up to two weeks to journey times, creating additional cost and congestion at ports.

3. What is the West doing about it?

Over the weekend, the American destroyer USS Carney and U.K. destroyer HMS Diamond shot down over a dozen drones. Earlier this month, the French FREMM multi-mission frigate Languedoc also intercepted three drones, including with Aster 15 surface-to-air missiles. 

Now, Washington is seeking to lead an international operation to ramp up efforts against the Iran-backed group, under the umbrella of the Combined Maritime Forces and its Task Force 153. 

“It’s a reinsurance operation for commercial ships,” said Héloïse Fayet, a researcher at the French Institute for International Relations (IFRI), adding it’s still unclear whether the operation is about escorting commercial vessels or pooling air defense capabilities to fight against drones and ballistic missiles. 

4. Who is taking part?

On Tuesday, the U.K. announced HMS Diamond would be deployed as part of the U.S.-led operation.

After a video meeting between Austin and Italian Defense Minister Guido Crosetto, Italy also agreed to join and said it would deploy the Virginio Fasan frigate, a 144-meter military vessel equipped with Aster 30 and 15 long-range missiles. The ship was scheduled to begin patrolling the Red Sea as part of the European anti-piracy Atalanta operation by February but is now expected to transit the Suez Canal on December 24.

France didn’t explicitly say whether Paris was in or out, but French Armed Forces Minister Sébastien Lecornu told lawmakers on Tuesday that the U.S. initiative is “interesting” because it allows intelligence sharing.

“France already has a strong presence in the region,” he added, referring to the EU’s Atalanta and Agénor operations.  

However, Spain — despite being listed as a participant by Washington — said it will only take part if NATO or the EU decide to do so, and not “unilaterally,” according to El País, citing the government.

5. Who isn’t?

Lecornu insisted regional powers such as Saudi Arabia should be included in the coalition and said he would address the issue with his Saudi counterpart, Prince Khalid bin Salman Al Saud, in a meeting in Paris on Tuesday evening. 

According to Bradley Bowman, senior director of the Center on Military and Political Power at Washington’s Foundation for Defense of Democracies, a number of Middle Eastern allies appear reluctant to take part.

“Where’s Egypt? Where is Saudi Arabia? Where is the United Arab Emirates?” he asked, warning that via its Houthi allies Iran is seeking to divide the West and its regional allies and worsen tensions around the Israel-Hamas war.

China also has a base in Djibouti where it has warships, although it isn’t in the coalition.

6. What do the Red Sea attacks mean for global trade?

While a fully-fledged economic crisis is not on the horizon yet, what’s happening in the Red Sea could lead to price increases.

“The situation is concerning in every aspect — particularly in terms of energy, oil and gas,” said Fotios Katsoulas, lead tanker analyst at S&P Global Market Intelligence.

“Demand for [maritime] fuel is already expected to increase up to 5 percent,” he said, and “higher fuel prices, higher costs for shipping, higher insurance premiums” ultimately mean higher costs for consumers. “There are even vessels already in the Red Sea that are considering passing back through the Suez Canal to the Mediterranean, even if they’d have to pay half a million dollars to do so.”

John Stawpert, a senior manager at the International Chamber of Shipping, said that while “there will be an impact in terms of the price of commodities at your supermarket checkout” and there may be an impact on oil prices, “there is still shipping that is transiting the Red Sea.” 

This is not “a total disruption” comparable to the days-long blockage of the canal in 2021 by the Ever Given container ship, he argued. 

Forgione, however, said he was “concerned that we may end up with a de facto blockade of the Suez Canal, because the Houthi rebels have a very clear agenda.”

7. Why are drones so hard to fight?

The way the Houthis operate raises challenges for Western naval forces, as they’re fending off cheap drones with ultra-expensive equipment. 

Aster 15 surface-to-air missiles — the ones fired by the French Languedoc frigate — are estimated to cost more than €1 million each while Iran-made Shahed-type drones, likely used by the Houthis, cost barely $20,000. 

“When you kill a Shahed with an Aster, it’s really the Shahed that has killed the Aster,” France’s chief of defense staff, General Thierry Burkhard, said at a conference in Paris earlier this month. 

However, if the Shahed hits a commercial vessel or a warship, the cost would be a lot higher.

“The advantage of forming a coalition is that we can share the threats that could befall boats,” IFRI’s Fayet said. “There’s an awareness now that [the Houthis] are a real threat, and that they’re able to maintain the effort over time.”  

With reporting by Laura Kayali, Antonia Zimmermann, Gabriel Gavin, Tommaso Lecca, Joshua Posaner and Geoffrey Smith.

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Israel’s appetite for high-tech weapons highlights a Biden policy gap

Within hours of the Hamas attack on Israel last month, a Silicon Valley drone company called Skydio began receiving emails from the Israeli military. The requests were for the company’s short-range reconnaissance drones — small flying vehicles used by the U.S. Army to navigate obstacles autonomously and produce 3D scans of complex structures like buildings.

The company said yes. In the three weeks since the attack, Skydio has sent more than 100 drones to the Israeli Defense Forces, with more to come, according to Mark Valentine, the Skydio executive in charge of government contracts.

Skydio isn’t the only American tech company fielding orders. Israel’s ferocious campaign to eliminate Hamas from the Gaza Strip is creating new demand for cutting-edge defense technology — often supplied directly by newer, smaller manufacturers, outside the traditional nation-to-nation negotiations for military supplies.

Already, Israel is using self-piloting drones from Shield AI for close-quarters indoor combat and has reportedly requested 200 Switchblade 600 kamikaze drones from another U.S. company, according to DefenseScoop. Jon Gruen, CEO of Fortem Technologies, which supplied Ukrainian forces with radar and autonomous anti-drone aircraft, said he was having “early-stage conversations” with Israelis about whether the company’s AI systems could work in the dense, urban environments in Gaza.

This surge of interest echoes the one driven by the even larger conflict in Ukraine, which has been a proving ground for new AI-powered defense technology — much of it ordered by the Ukrainian government directly from U.S. tech companies.

AI ethicists have raised concerns about the Israeli military’s use of AI-driven technologies to target Palestinians, pointing to reports that the army used AI to strike more than 11,000 targets in Gaza since Hamas militants launched a deadly assault on Israel on Oct 7.

The Israeli defense ministry did not elaborate in response to questions about its use of AI.

These sophisticated platforms also pose a new challenge for the Biden administration. On Nov. 13, the U.S. began implementing a new foreign policy to govern the responsible military use of such technologies. The policy, first unveiled in the Hague in February and endorsed by 45 other countries, is an effort to keep the military use of AI and autonomous systems within the international law of war.

But neither Israel nor Ukraine are signatories, leaving a growing hole in the young effort to keep high-tech weapons operating within agreed-upon lines.

Asked about Israel’s compliance with the U.S.-led declaration on military AI, a spokesperson for the State Department said “it is too early” to draw conclusions about why some countries have not endorsed the document, or to suggest that non-endorsing countries disagree with the declaration or will not adhere to its principles.

Mark Cancian, a senior adviser with the CSIS International Security Program, said in an interview that “it’s very difficult” to coordinate international agreement between nations on the military use of AI for two reasons: “One is that the technology is evolving so quickly that the description constraints you put on it today may no longer may not be relevant five years from now because the technology will be so different. The other thing is that so much of this technology is civilian, that it’s hard to restrict military development without also affecting civilian development.”

In Gaza, drones are being largely used for surveillance, scouting locations and looking for militants without risking soldiers’ lives, according to Israeli and U.S. military technology developers and observers interviewed for this story.

Israel discloses few specifics of how it uses this technology, and some worry the Israeli military is using unreliable AI recommendation systems to identify targets for lethal operations.

Ukrainian forces have used experimental AI systems to identify Russian soldiers, weapons and unit positions from social media and satellite feeds.

Observers say that Israel is a particularly fast-moving theater for new weaponry because it has a technically sophisticated military, large budget, and — crucially — close existing ties to the U.S. tech industry.

“The difference, now maybe more than ever, is the speed at which technology can move and the willingness of suppliers of that technology to deal directly with Israel,” said Arun Seraphin, executive director of the National Defense Industrial Association’s Institute for Emerging Technologies.

Though the weapons trade is subject to scrutiny and regulation, autonomous systems also raise special challenges. Unlike traditional military hardware, buyers are able to reconfigure these smart platforms for their own needs, adding a layer of inscrutability to how these systems are used.

While many of the U.S.-built, AI-enabled drones sent to Israel are not armed and not programmed by the manufacturers to identify specific vehicles or people, these airborne robots are designed to leave room for military customers to run their own custom software, which they often prefer to do, multiple manufacturers told POLITICO.

Shield AI co-founder Brandon Tseng confirmed that users are able to customize the Nova 2 drones that the IDF is using to search for barricaded shooters and civilians in buildings targeted by Hamas fighters.

Matt Mahmoudi, who authored Amnesty International’s May report documenting Israel’s use of facial recognition systems in Palestinian territories, told POLITICO that historically, U.S. technology companies contracting with Israeli defense authorities have had little insight or control over how their products are used by the Israeli government, pointing to several instances of the Israeli military running its own AI software on hardware imported from other countries to closely monitor the movement of Palestinians.

Complicating the issue are the blurred lines between military and non-military technology. In the industry, the term is “dual-use” — a system, like a drone-swarm equipped with computer-vision, that might be used for commercial purposes but could also be deployed in combat.

The Technology Policy Lab at the Center for a New American Security writes that “dual-use technologies are more difficult to regulate at both the national and international levels” and notes that in order for the U.S. to best apply export controls, it “requires complementary commitment from technology-leading allies and partners.”

Exportable military-use AI systems can run the gamut from commercial products to autonomous weapons. Even in cases where AI-enabled systems are explicitly designed as weapons, meaning U.S. authorities are required by law to monitor the transfer of these systems to another country, the State Department only recently adopted policies to monitor civilian harm caused by these weapons, in response to Congressional pressure.

But enforcement is still a question mark: Josh Paul, a former State Department official, wrote that a planned report on the policy’s implementation was canceled because the department wanted to avoid any debate on civilian harm risks in Gaza from U.S. weapons transfers to Israel.

A Skydio spokesperson said the company is currently not aware of any users breaching its code of conduct and would “take appropriate measures” to mitigate the misuse of its drones. A Shield AI spokesperson said the company is confident its products are not being used to violate humanitarian norms in Israel and “would not support” the unethical use of its products.

In response to queries about whether the U.S. government is able to closely monitor high-tech defense platforms sent by smaller companies to Israel or Ukraine, a spokesperson for the U.S. State Department said it was restricted from publicly commenting or confirming the details of commercially licensed defense trade activity.

Some observers point out that the Pentagon derives some benefit from watching new systems tested elsewhere.

“The great value for the United States is we’re getting to field test all this new stuff,” said CSIS’s Cancian — a process that takes much longer in peacetime environments and allows the Pentagon to place its bets on novel technologies with more confidence, he added.

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BRICS wants an increased influence that the West cannot ignore anymore

Six new countries are set to join the BRICS to make their presence felt on the global economic stage. But the Western world’s sustainability goals might suffer the consequences.

A somewhat surprising mix of countries is about to join the BRICS, the economic grouping of Brazil, Russia, India, China, and South Africa – a decision made at the 15th BRICS summit, hosted by South Africa. In January 2024, the bloc will include developing country Argentina, Africa’s second-largest economy Egypt; Ethiopia, one of the fastest-growing economies in the region and oil giants Iran, Saudi Arabia, and the United Arab Emirates. What do they have in common? The only certain answer is that all six applied for membership.


From a ‘lazy acronym’ to an unavoidable trade partner

BRICS, which had no clear purpose and many difficulties co-operating among themselves, now started to recruit. And they are not finished. Including the newly recruited members, more than 40 countries want to join the bloc, according to the 2023 summit chair South Africa.

“The sanctions against Russia and China over the last 18 months have acted as a catalyst,” Christopher Weafer, the CEO of business consultancy Macro-Advisory Ltd, said. Moscow and Beijing are trying to lower the excessive reliance on Western economies, essentially both having been exposed to what happens if they are penalised.

The foundation of BRICS in 2001 didn’t cause too much of a headache to the West for a while. “The grouping has been around for many years but really hasn’t progressed into anything effective or coordinated,” Weafer said.

“It’s always been an idea, almost like a lazy acronym, I guess you might describe it.”

Since then, the grouping hasn’t had much of an impact on world trade, however, they created a jointly-owned development bank – the New Development Bank. The lack of visible purpose and co-ordination but tangible differences in political interests, and production standards, let alone currencies, left them unable to become a heavyweight champion on the world stage of economics.

One could argue that the G7 nations (the seven largest advanced economies in terms of GDP including Canada, France, Germany, Italy, Japan, US and the UK) were dismissive of some of the group’s demands and interests. However, lately, geopolitics started having an increased impact on economic ties. 

The continuing expansion offers the BRICS an opportunity to have a powerful voice on issues like climate management and the control of global financial systems.

The newcomers may see it as a way to diversify their business opportunities (and be less dependent on Western countries and their rules) with the promise of preferential trade terms between members and other incentives to increase trade and cross-border investments. 

The current members of the bloc represent about 42% of the world’s population and more than $27 trillion in accumulated gross domestic product. The enlarged grouping will account for 46.5% of the world population and using the IMF’s 2022 GDP data, we can calculate that it will account for $30.8 trillion of the global $100 trillion GDP. 

On the other hand, GDP based on purchasing power parity, or PPP (percentage share of global GDP based upon a common basket of goods which represents the actual purchasing power), shows a very different balance of forces. In total, this expanded BRICS now increases its share of global GDP to more than 36% on a PPP basis, surpassing that of the G7. 

What is next for the Sustainable Development Goals?

It is certain that the new grouping is hard to ignore as its members sit on 45% of the world’s oil production and possess significant iron ore, coal, and bauxite sectors let alone the key role they have in the world’s agriculture. 


Therefore, developed nations, typically the G7, rely to a great extent on trade with them and also on co-ordination on such issues as climate change and environmental issues. Therefore “the strongest economies can no longer ignore the newly-shaping bloc’s needs,” says Weafer.

The expert believes that while technology, investment, and trade are going to be important issues on the table, one of the corner points of the discussion between the strongest economies and the BRICS countries could be bridging the gap on their interests in environmental issues and setting priorities.

“Developing nations do not see the environment as big a priority as people in the developed world do,” explains Weafer.

Even though countries like Saudi Arabia and the UAE keep listing sustainable growth as a priority, they need time to adjust. “Their priority is about economic and social development, in order to create a more stable economic basis, like the G7 and the EU already possess,” says Weafer. “And the argument is that, ‘give us time’, but there isn’t time.”

“I think it is important to get some common ground on how to deal with environmental issues because there is an enormous chasm right now,” Weafer adds. “I mean, enormous because when I travel in China and the Middle East I see that they just don’t see it. They think this is a problem that’s exaggerated by Europe and a way that the G7 is suppressing the potential evolution and growth of the developing world. I’ve even seen an article written by somebody saying it was a modern form of colonialism.”


How realistic is a common currency for the BRICS?

One of the re-circling questions about the BRICS is whether or not they are working on a system to use a common currency. “The challenge is comparable to cutting the Gordian knot,” says Weafer. Creating the euro took decades and that was a bloc composed of far less physically diverse and distant countries.

Increasing bilateral trade and finding ways to settle that in bilateral currencies is a lot more likely. At the moment this works only with Russia and China after the countries’ central banks took years to set up a system to allow it. Recently Russian President Vladimir Putin said that 80% of the trade between Russia and China is settled in either Russian rubles or Chinese yuan. 

On the other hand, it has its risks. For instance, Russia is selling a lot of oil to India but the payments, which are in rupees, are being trapped in the Indian banks because of capital controls and the nonconvertibility of the rupee. 

Realistically, in the next 10 years, the members have time just enough to try to iron out some of these bilateral trade settlements. 

Where does further expansion lead the bloc?

The already peculiar selection of countries may well be joined by new members such as Kazakhstan and Thailand, who have reportedly applied already. The criteria is hazy, says Weafer. “I think the admission criteria is primarily the willingness of a country to join. The reason is that they’re just looking for diversification, eyeing countries with a reasonable size. For instance, Indonesia is definitely a target.”


Also, already existing groups could be invited to join such as the Eurasia Economic Union and the Shanghai Cooperation Organization. 

The expert believes that geopolitical events such as the existing conflict in Ukraine and the potential conflict with Taiwan are going to keep dominating the world’s economic stage. 

The next 12 months will reveal more about the challenges and potentials the BRICS is about to bring until the next summit. 

Since the Russian President couldn’t visit the summit this year after the International Criminal Court (ICC) issued an arrest warrant for him, Vladimir Putin announced that plans have been made to hold the next BRICS summit in Kazan in October 2024. 

By then, we may even learn the name of the new bloc which seems to be a challenge for the group that added every new member’s first letter to its name so far.

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Blockaded on all fronts: Poland and Hungary threaten to cut Ukraine’s export route to the West

As Russia once again bombards and blockades Ukraine’s Black Sea ports — through which the country exports its vast agricultural produce — Poland and Hungary threaten to cut off the country’s western exit routes.

Poland will unilaterally block trade with Ukraine if the European Commission fails to extend temporary restrictions on grain imports at least until the end of the year, Prime Minister Mateusz Morawiecki told a meeting of agriculture ministers from five Eastern EU countries in Warsaw on Wednesday.

“I want to make it clear,” Morawiecki told reporters, “we will not open our border. Either the European Commission will agree to jointly work out regulations that will extend this ban, or we will do it ourselves.”

Hungarian Agriculture Minister István Nagy echoed Morawiecki, saying his country would “protect Hungarian farmers with all its means.”

Days after killing a deal to allow Ukraine to export grain across the Black Sea, Moscow unleashed a wave of attacks on the Ukrainian ports of Odesa and Chornomorsk — two vital export facilities — damaging the infrastructure of global and Ukrainian traders and destroying 60,000 tons of grain.

The EU’s top diplomat, Josep Borell, called Russia’s escalating offensive “barbarian” on Thursday. “What we already know is that this is going to create a huge food crisis in the world,” he told reporters in Brussels, adding that EU countries needed to step up alternative export routes for Ukraine.

Ukraine is one of the world’s biggest exporters of corn, wheat and other grains. Following Russia’s invasion and blockade of its Black Sea ports last year, the EU set up land export routes through its territory.

In the year since, export corridors set up by the EU called ‘solidarity lanes’ have carried about 60 percent of Ukraine’s exports — mostly along the Danube to the Romanian port of Constanța. The remaining 40 percent has trickled through the country’s own ports under the now-defunct Black Sea Grain Initiative brokered by the U.N. and Turkey.

But the opening of the overland routes also led to an unprecedented influx of cheap Ukrainian grain into neighboring EU countries — Romania, Poland, Hungary, Bulgaria and Slovakia — which was bought and resold by local traders instead of being exported further afield. The glut has put the solidarity of the bloc’s Eastern members with Ukraine in its war of defense sorely to the test.

With an election looming this fall, Poland sought to appease local farmers — a vital constituency for the right-wing government — by closing its border this spring to Ukrainian imports. Hungary, Slovakia and Bulgaria followed suit while Romania, which didn’t impose its own restrictions, joined the four in calling for restrictions at EU level.

In May, the five countries struck a deal with the Commission to drop their unilateral measures in exchange for €100 million in EU funding and assurances that Ukrainian shipments would only pass through the five countries on their way to other destinations. 

It’s these restrictions, which will expire on September 15, that the five countries want extended.

Other EU countries have criticized the Commission’s leniency towards the five Eastern troublemakers, saying the compromise undermined the integrity of the bloc’s internal market.

Open the borders

Borrell said that, instead of restricting trade, the EU should respond to Russia’s Black Sea escalation by opening its borders further.

“If the sea route is closed, we will have to increase the capacity of exporting Ukrainian grain through our ports, which means a bigger effort for the Ukrainian neighbors,” he said before a meeting of EU foreign ministers.

“They will have to contribute more, opening the borders and facilitating transport in order to take the grain of Ukraine from the Black Sea ports. This will require from Member States more engagement. We have done a lot, we have to do more.”

Separately on Thursday, Ukrainian Foreign Minister Dmytro Kuleba called on the EU to make “maximum efforts” to facilitate grain exports from the country.

“While Russia destroys the Grain Initiative, attacks Ukrainian ports and tries to make money on rising food prices, Ukraine and the European Union should make maximum efforts to simplify food exports from Ukraine, particularly by increasing the capacity of alternative transport corridors ‘Solidarity Lanes’ as much as possible,” he said.

During Wednesday’s meeting in Warsaw, agriculture ministers from the five EU countries signed a declaration calling on Brussels to extend and expand the trade restrictions, amid concerns that Russia’s renewed Black Sea blockade could further pressure their domestic markets.

Only Poland and Hungary threatened to take unilateral action if the restrictions were lifted.


Despite the threat, a senior Commission official said on Thursday it was “premature” to say whether there was a need to extend the restrictions beyond the September 15 deadline.

In recent months, officials have stepped up surveillance and customs checks, and Romania and other countries have significantly increased investment in infrastructure and investment to facilitate the transit of grain through their countries and to other markets, the Commission official said.

But in the year since the land-based export routes were opened, Poland has taken no major steps to improve its own infrastructure or the capacity of its Baltic ports. Analysts say it is unlikely the country will be able to repeat the feat come this summer’s harvest. The Polish government has repeatedly blamed Brussels for not providing enough help.

Despite the ongoing trade dispute, officials in Kyiv have been careful not to openly criticize their counterparts in Warsaw.

That’s because Poland has played a leading role in supporting Ukraine since the war broke out, acting as the main transit point for Western weapons and sending plenty of its own. It has also taken in millions of Ukrainian refugees.

“We highly appreciate all the work done so far within the solidarity lanes by the European Commission and neighboring member states,” Ukraine’s ambassador to the EU, Vsevolod Chentsov, told POLITICO.

Still, he added: “Statements by some member states of the need to extend the ban on the export of Ukrainian agrarian production [cause] serious concerns.” Without naming Poland he said that this “politicizes” the practical reality of what is a logistical challenge “jeopardizes the effectiveness of the solidarity lanes.”

Jacopo Barigazzi contributed reporting

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