In Geopolitics Today: Monday, March 20th
Caspian Sea Trade Between Russia and Iran Booming, The EU Pledges €2 Billion to Help Ukraine Replenish Ammunition Stocks, and other stories.
Caspian Sea Trade Between Russia and Iran Booming
Russian-Iranian trade is shifting its focus from overland trade via the Caucasus or Central Asia to trade via the Caspian Sea. This change in strategy is the result of funding shortages for the rail links in Iran, the limited shipping and port capacity on the Caspian, and the lack of effective transportation connections with Iran's national rail network.
Despite these limitations, trade between the two countries has grown rapidly, with trade by sea having risen by 70% over the past year, making the Caspian route a potential prime route between Russia and the world's oceans. The shift in focus towards the Caspian Sea route could have wider geopolitical implications. This shift could lead to further expansion of Iranian trade with other littoral states, increasing Iran's influence in both the Caucasus and Central Asia. It could also lead to security cooperation between Moscow and Tehran, undermining Russia's dominance in the Caspian region. A Russian-Iranian entente on the Caspian will keep Turkey and NATO powers out of the region and serve as a balance to the increasing role of China in Central Asia.
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The EU Pledges €2 Billion to Help Ukraine Replenish Ammunition Stocks
The European Union has pledged two billion euros to help Ukraine replenish its ammunition stock. The move comes in response to Moscow's invasion of Ukraine and marks a major shift in the bloc's defence strategy. The EU's commitment to joint procurement of 155-millimetre shells is particularly significant, as it signals a willingness to invest in military production at a scale not seen since the end of the Cold War. The move may also incentivise European defence firms to increase production capacity.
The initiative has not been without controversy, however. Member states have debated the details of the procurement plan, including whether to purchase only from European producers and who should negotiate the orders. Nonetheless, the EU's move towards joint procurement and shared funding represents a significant step forward in the bloc's defence strategy. It remains to be seen whether the EU's efforts will be enough to help Kiev hold back Moscow's advances. Nonetheless, the EU's commitment to supporting Ukraine sends a clear message that the bloc is willing to take action to defend its interests and those of its allies.
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China to Supply Attack Drones to the DRC
China Aerospace Science and Technology Corporation will soon supply nine Caihong 4 attack drones to the Democratic Republic of Congo (DRC) to help Kinshasa fight the Rwanda-backed rebels. This move has sparked concerns about a potential regional conflict between Rwanda and the DRC. The Great Lakes region of Africa has been strongly affected by insecurities that date back to the Rwanda genocide of 1994, when hundreds of thousands of people lost their lives in massacres.
This move could be a way for China to expand its influence in Africa. The United States provides security assistance to Rwanda, which Kinshasa accuses of arming and supporting the rebels on the country’s territory. The situation between the DRC and Rwanda has been tense in recent months, with Rwanda shooting down a DRC fighter jet in late January over an alleged violation of Rwandan airspace. Attempts by the United Nations, the US, and other African states to normalize the situation have thus far been unsuccessful. The move by China to supply attack drones to the DRC could change battlefield outcomes and may even lead to a regional conflict between Rwanda and the DRC.
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The UAE Calls for Regional Normalization with Syria
The Syrian President has visited the United Arab Emirates, where he met with UAE President Sheikh Mohamed bin Zayed Al Nahyan. During the meeting, bin Zayed Al Nahyan called for Syria to be reintegrated into the wider Arab region, stating that “Syria has been absent from its brothers for too long,” and that the time had come for Damascus to return to regional discussions. The Emirati president also called for efforts to facilitate the repatriation of Syrian refugees and endorsed engagement between Damascus and Ankara.
The visit by Assad comes after a visit to Oman last month, his only official engagements in Arab countries since the start of Syria’s war in 2011. It coincides with amplified engagement by Arab states towards the Damascus government which has been politically isolated in the region since being expelled from the Cairo-based Arab League in 2011. The diplomatic momentum generated in the aftermath of the February 6 earthquake that struck south-eastern Turkey and northern Syria could also bolster Damascus’s relations with Middle Eastern countries, providing an opportunity for normalization after more than a decade of war.
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US LNG Capacity Surge Raises Concerns Over Market Saturation
The United States has become the world’s largest exporter of liquefied natural gas (LNG), overtaking Qatar and Australia. This was made possible thanks to the surge in LNG demand from Europe as it urgently sought an alternative to Russian pipeline supply. The US LNG industry is expected to grow further with plans for three new LNG production facilities tabled for approval this year.
By 2027, the US could have LNG capacity of 169 million metric tons, overtaking Qatar, which is expanding its own capacity right now by eyeing 110 million tons by the same year. However, continued robust LNG growth from both Europe and Asia may not persist. Even before most of this new capacity begins to be built, concerns are surfacing from threats of low-carbon alternative energy sources and the very reliability of global LNG supply. Global LNG export capacity could surge by 67 percent to 636 million tons annually by 2030, which could lead to market saturation and drive prices down.