In Geopolitics This Week
ASEAN Summit Highlights Regional Divisions, Western Powers Pressure the UAE on Sanctions Compliance, Saudi Arabia and Russia Extend Oil Production Cuts, and other stories.
ASEAN Summit Highlights Regional Divisions
The Association of Southeast Asian Nations (ASEAN) recently concluded its annual summit in Jakarta, Indonesia. The high-level meetings revealed concerning divisions within the bloc over critical regional issues like the ongoing crisis in Myanmar and escalating tensions in the South China Sea. While numerous economic cooperation deals and integration initiatives were announced, major geopolitical challenges plaguing the region remained largely unresolved.
The civil war and turbulent political transition in Myanmar poses a major diplomatic test and threat to stability for ASEAN. The bloc has struggled to implement its five-point peace plan that Myanmar's military leaders agreed to back in 2021. At this latest summit, ASEAN took the modest step of stripping Myanmar of its planned 2026 chairmanship, but did not put forward or enact any concrete steps to restore peace or compel Myanmar's junta to adhere to the previous consensus plan.
Territorial and maritime disputes in the resource-rich South China Sea also continue to strain relations between ASEAN and China. Attempts by ASEAN over many years to negotiate a binding code of conduct with China to prevent conflict and manage tensions have made painstakingly slow progress at best. The absence of top leaders from major powers like the United States and China at this year's summit was notably conspicuous. While Vice President Kamala Harris attended for the US, Chinese Premier Li Keqiang went in place of President Xi Jinping. This hints at potentially waning influence for ASEAN as a forum to broker solutions involving both China and the United States.
Looking ahead, ASEAN faces growing criticism and concerns over perceived inaction and disunity on key challenges and crises. Its long-stalled negotiations with China over disputes in the South China Sea have essentially made no significant progress in decades. There are increasing signs that this paralysis within ASEAN could steadily push member states to bypass regional consensus and pursue bilateral partnerships and arrangements with outside powers like China and the US instead. As the US and China compete intensely for influence in Southeast Asia, individual ASEAN member nations may feel mounting pressure to align more closely with a major power.
Western Powers Pressure the UAE on Sanctions Compliance
Western officials recently visited the UAE amid rising concerns that sanctioned dual-use technologies are being shipped through the Gulf nation to aid Russia's war effort in Ukraine. This represents a critical front in the economic war with Russia, as advanced computer chips and electronic components produced primarily in the US and allies enable military equipment like missiles and drones. Complex supply chains and re-exporting allow banned goods to reach Russia, but views differ sharply on the UAE's role and enforcement.
The US and European allies are ramping up pressure on the UAE to increase transparency and tighten tracking to close loopholes enabling sanctioned dual-use items like semiconductors to reach Russia. However, while asserting adherence to UN sanctions, the UAE has maintained economic and political ties with Russia as a fellow OPEC+ member. Meanwhile, Russian investment and tourism have surged in the UAE since the war escalated last year. This raises complex questions on the UAE's willingness to restrict trade.
The outcome of this high-stakes diplomatic push remains highly uncertain. The UAE insists its export control framework prevents violations, but there is some evidence that banned items are still flowing to Russia, allowing the sustainment and potential modernization of weaponry. Tighter enforcement would strain UAE-Russia ties, but with the US, EU, and other allies controlling most chip and component production, their cooperation is indispensable to restricting Russia's military access.
The predicament highlights the immense challenge states face in controlling dual-use technologies that have both civilian and military applications. Even as sanctions expand in scope, loopholes persist. While pressure is rising on the UAE over enforcement, curtailing sanctions-busting flows to Russia will require a multilateral effort combining incentives, transparency, advanced tracking of goods and harmonized enforcement. As the economic war with Russia progresses, restricting access to these key enablers of its military will remain a central challenge.
Saudi Arabia and Russia Extend Oil Production Cuts
Saudi Arabia and Russia have jointly announced an extension of their voluntary oil production cuts until the end of this year, reducing global crude supply by 1.3 million barrels per day. This move has propelled benchmark Brent Crude above $90 per barrel. While these production cuts aim to stabilize energy markets, they have far-reaching implications.
One immediate consequence is the potential for increased inflation and higher petrol prices, affecting consumers and industries worldwide. The decision also adds complexity to Saudi Arabia's relationship with the United States, as US President Joe Biden previously warned of “consequences” for collaborating with Russia on production cuts. This is part of Washington’s efforts to limit Russian state revenues and hinder Moscow’s war effort in Ukraine. The extension of oil production cuts defies such calls from the US to pump more oil.
Saudi Arabia's Energy Ministry emphasized that they would closely monitor the market and take further actions if required. This additional voluntary cut aligns with the efforts of OPEC+ countries to ensure oil market stability at higher prices. Russia, the world's second-largest oil exporter, echoed this sentiment by extending its 300,000 barrels per day cut, emphasizing its commitment to “market stability.” Saudi Arabia and Russia have demonstrated unity and resolve in proactively managing oil market risks, with these cuts potentially driving crude oil prices above $90 per barrel over the coming weeks.
Higher oil prices could exacerbate global inflationary pressures while limiting the impact of sanctions on Moscow. For oil-dependent states like Saudi Arabia and Russia, maintaining high oil revenues is paramount, even at the cost of fraying alliances and fuelling inflation worldwide. This deal exemplifies how energy policy is increasingly weaponized between major powers. OPEC+ seems willing to tolerate further price rises to serve state interests, despite the cost to consumers and a growing chorus of Western criticism.