In Geopolitics This Week
Europe Navigating the Fallout of the Russia-Ukraine Gas Transit Crisis, Shifting Sands in Southeast Asia, Emerging Russia-Iran-Turkey Axis, and other stories.
Europe Navigating the Fallout of the Russia-Ukraine Gas Transit Crisis
The European Union is bracing for a significant reduction in Russian gas supplies as a key transit agreement between Russia and Ukraine is set to expire at the end of the year. With Ukraine signaling its intention not to renew the five-year deal, which currently accounts for 5% of the EU's total gas imports, and the EU showing no interest in pushing for an extension, the potential loss of these gas flows, coupled with the risk of a harsh winter, has the EU warning member states to prepare for a worst-case scenario.
The countries likely to be hit hardest by the Russian gas shortfall are Austria, Hungary, and Slovakia, as they struggle to replace Russian imports with supplies from Germany, Italy, or Turkey. Berlin's recent decision to tax gas exports has further complicated the situation, making it more difficult for these countries to secure alternative sources of supply. Despite these challenges, Europe's gas storage levels are at historic highs, providing a buffer against potential supply disruptions. However, the long-term impact of the crisis may be felt in the form of lost industrial demand, as some industries permanently shut down or shift to other regions and feedstocks.
The Russian gas crisis is part of a broader pattern of energy-related tensions between Russia and the West, as highlighted by recent developments in Bulgaria and Turkey. Bulgaria has stopped importing Russian oil ahead of the EU's embargo deadline, despite being granted a two-year exemption. This decision reflects the country's efforts to diversify its energy sources and reduce its near-total dependence on Russia. However, Bulgaria's transition away from Russian oil may prove challenging due to the lack of adequate port infrastructure, the congestion of the Bosphorus Strait, and the design of the Burgas refinery, which is optimized for processing Russian Urals oil.
Similarly, Turkey is facing growing US pressure over its economic ties with Moscow, leading to the decision by the operator of the Dortyol oil terminal to stop accepting Russian-origin oil to avoid potential sanctions exposure. This move reflects the deterrent power of US secondary sanctions and marks a blow to Russia's efforts to redirect energy exports to friendly states as a means of circumventing restrictions imposed by the US and EU. As more Turkish companies bow to US pressure, Russia may increasingly struggle to find outlets for its discounted oil.
The EU's response to the Russian gas crisis will have far-reaching implications for the future of European energy security and global energy markets. In the short term, the EU will need to tap into alternative sources of gas and boost domestic production and storage capacity. However, these measures are likely to be insufficient to fully replace Russian supplies, forcing the EU to consider more drastic steps such as rationing gas to industry and households. In the longer term, the crisis is likely to accelerate Europe's transition to renewable energy and its efforts to reduce its dependence on fossil fuels from adversaries. This will require significant investments in clean energy infrastructure, as well as a more coherent and assertive foreign policy to navigate energy politics.
Shifting Sands in Southeast Asia
Southeast Asia is witnessing a period of heightened geopolitical tensions and strategic realignments, as regional actors grapple with the growing rivalry between China and the United States. Recent developments, such as the confrontations between Chinese and Philippine vessels in the South China Sea, the Maldives' pivot towards China, upgraded Australia-Vietnam ties, and South Korea's efforts to diversify its critical mineral supply chain, highlight the complex and evolving nature of the region.
The escalating tensions in the South China Sea have once again exposed the deep divisions within ASEAN and its inability to effectively address the territorial dispute. During the recent ASEAN-Australia Summit in Melbourne, the group's joint statement made only a vague reference to the issue, encouraging all parties to avoid unilateral actions that could undermine regional stability. This response is an example of the challenges ASEAN faces in presenting a united front, as its consensus-based decision-making process and the varying interests make it difficult for the bloc to take a strong stance on contentious issues. As a result, ASEAN's credibility and effectiveness in managing regional affairs are increasingly being called into question.
Meanwhile, the Maldives' decision to sign a military assistance agreement with China and order the withdrawal of Indian troops from its territory marks a realignment in the Indian Ocean. This move, which comes amid a cooling of relations between Male and New Delhi, highlights China's growing influence and its ability to attract smaller states into its orbit. The developments have stoked concerns in India, which considers the Maldives and the broader Indian Ocean region as its strategic backyard. As Beijing and New Delhi compete for influence in this maritime space, the Maldives' shift towards China demonstrates how small states are becoming key battlegrounds in a larger geopolitical contest.
In contrast to the Maldives' pivot towards China, Australia and Vietnam have taken steps to strengthen their bilateral relationship, elevating it to a comprehensive strategic partnership that will work to undermine Chinese power. This upgrade, which primarily focuses on deepening economic cooperation, reflects both countries' desire to diversify their partnerships amidst growing regional challenges. Australia seeks to gain greater access to one of Southeast Asia's fastest-growing markets and Vietnam aims to bolster its green energy ambitions. The partnership also includes a modest defence component, with plans to enhance intelligence sharing, cybersecurity, and coast guard cooperation.
South Korea, another key regional player, is also grappling with the challenges posed by its heavy dependence on imported critical minerals from China, which are essential for its thriving battery, semiconductor, and electric vehicle industries. To reduce its vulnerabilities and build resilience, South Korea is pursuing policies aimed at diversifying its critical mineral supply chain and positioning itself as a leader in advanced technologies. This includes an activist resource diplomacy, with the government offering support and incentives for Korean investments in overseas exploration and development projects.
As Southeast Asia navigates these shifting geopolitical sands, the region finds itself at the center of growing competition. The varying responses of regional actors to this contest, from the Maldives' embrace of China to Australia and Vietnam's efforts to diversify their partnerships, highlight the complex and often contradictory forces shaping the regional landscape. For ASEAN, the challenge lies in maintaining its centrality and relevance in the face of internal divisions and external pressures, as it seeks to balance the interests of its members and prevent the region from becoming a battleground for great power rivalry. Looking ahead, the geopolitical dynamics in Southeast Asia are likely to remain fluid and complex.
Emerging Russia-Iran-Turkey Axis
The Caucasus region is undergoing a transformation as Russia, Iran, and Turkey forge a strategic partnership aimed at reshaping the economic and political order in the region. This emerging axis, born out of a shared desire to counter Western influence and bypass the constraints of international sanctions, represents a significant shift in the balance of power not only in the Caucasus but also across the broader Middle East and Eurasia. The alignment of these three major regional players, each with its own distinct ambitions and spheres of influence, has the potential to alter the economic and security environemnt in ways that could have far-reaching consequences.
The ongoing conflicts in Syria, Ukraine, and Gaza have served as powerful catalysts for closer collaboration between the three powers, despite their historically complex and often contentious relationships. For Russia, the partnership offers a vital lifeline in the face of sanctions and a means to project its influence in the region, even as its strategic capabilities have been diminished by economic pressures and military setbacks. Iran, long isolated by sanctions and security tensions, sees the alignment as a chance to break free from its pariah status and leverage its strategic location to become a key player in Russia's efforts to pivot towards the Middle East and the Indian subcontinent. Turkey, meanwhile, is driven by a desire to assert its own regional ambitions and keep Western economic influence at bay, as it seeks to carve out a larger role for itself in the evolving international order.
The Caucasus, with its strategic location at the crossroads of Europe, Asia, and the Middle East, has emerged as a crucial link in a new value chain being forged by Russia and Iran to circumvent Western sanctions and establish alternative monetary systems and energy markets. This is part of a broader trend of shifting alliances and realignments in the region. While the United States remains the dominant external power in the Middle East, China's pragmatic approach of engaging with all sides, including rivals like Iran and Saudi Arabia, has allowed it to carve out a larger role for itself as a mediator and alternative partner. This, in turn, is empowering middle powers in the region to pursue more assertive and independent foreign policies, as evidenced by the long-standing rivalry between Iran and Saudi Arabia and the complex web of proxy conflicts that have emerged as a result.
Looking ahead, the evolution of the Russia-Iran-Turkey axis will have far-reaching implications for the stability and security of the Caucasus, the Middle East, and Eurasia as a whole. As the Russia-Iran-Turkey axis consolidates its presence in the Caucasus and beyond, it is likely to face significant challenges from Western powers seeking to maintain counter the growing assertiveness of regional actors. The ability of Russia, Iran, and Turkey to navigate these challenges and maintain a united front will be a key test of the durability and effectiveness of their partnership. As these three countries seek to advance their individual ambitions and shape the regional order in ways that serve their interests, they will need to carefully balance their own priorities with the collective goals of the axis.
Monday, March 4th
MENA Region's Hydrogen Industry Gains Momentum — Oil Price
Russia's Mercenary Industry Transforms — Jamestown
Allies Rally Behind Argentina in $16 Billion Judgment Appeal — Financial Times
Bulgaria Halts Russian Oil Imports Ahead of EU Deadline — Reuters
Russia's Arctic Strategy Reveals Ambitious Plans for Resource Expansion — Geopolitical Monitor
South Korea Pursues Diversification of Critical Mineral Supply Chain — ASPI
Tuesday, March 5th
EU Launches €1.5B Plan to Boost Joint Defence Procurement — Reuters
Maldives Pivots to China With Defence Pact — Bloomberg
China Bets Big on Green Hydrogen — Nikkei
Turkish Oil Terminal Halts Russian Imports Under US Pressure — Oil Price
Egypt Faces Gaza Crisis as Israel Threatens Rafah Invasion — Responsible Statecraft
Drones Reshape Ukraine Battlefield Tactics — War on the Rocks
Wednesday, March 6th
Brexit Continues to Weigh on the UK Economy — Stratfor
Europe Scrambles for Gunpowder — France 24
Rare Earths Market Rattled by Plunging Prices — Metal Miner
Egypt Liberalizes Currency & Hikes Rates — Middle East Eye
China's Growing Middle East Clout Reshapes Regional Geopolitics — FPRI
EU Braces for Russian Gas Shortfall as Ukraine Transit Deal Ends — Oil Price
Thursday, March 7th
Oman Adopts a More Assertive Diplomatic Stance — RUSI
ExxonMobil Files for Arbitration Over Hess's Guyana Assets — Reuters
India Pushes Rupee Payments for Gulf Oil Imports — Zero Hedge
Turkey and Somalia Sign Energy Exploration Deal — Middle East Eye
France and Moldova Sign Defence and Economic Agreements — Financial Times
The Emerging Russia-Iran-Turkey Axis in the Caucasus — Eurasianet
Friday, March 8th
Kazakhstan Emerges as Key Player in Lithium Market — Eurasianet
ASEAN's Divisions Undermine Response to South China Sea Tensions — Asia Times
Chinese Electric Car Exports Face Growing Western Barriers — German-Foreign-Policy
Kurds in Northeast Syria Fear a US Withdrawal — Middle East Eye
Australia and Vietnam Upgrade Ties — Stratfor
Confusion Surrounds Alleged Russia-Congo Military Agreement — The-Star
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