In Geopolitics Today: Friday, December 1st
Brazil Deploys Troops Near Venezuela-Guyana Border, US Imposes Strict Limits on China's Role in US EV Industry, and other stories.
China, Vietnam in Talks to Upgrade Rail Link Through Rare Earths Hub
China and Vietnam are negotiating a potential major upgrade to their limited railway connections. The talks come amid preparations for a possible visit to Hanoi by Chinese President Xi Jinping to further cement Vietnam's key role in global supply chains. The railway slated for expansion stretches from southern China through northwest Vietnam to its main northern port of Hai Phong.
While details remain unclear, China likely aims to boost rare earth exports and integrate a part of its massive manufacturing sector with Vietnam. For Hanoi, the link promises economic gains but risks tightening dependence on China. Vietnam is also building ties with Beijing's rivals, suggesting its strategic position vis-à-vis competing powers is rising. With the US and others vying for influence, China seems driven to manage relations as a means of preventing Vietnam from aligning too closely against it.
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Brazil Deploys Troops Near Venezuela-Guyana Border
Brazil has increased its military presence along the volatile Venezuela-Guyana border in reaction to rising regional tensions. Venezuela is holding a November 3rd referendum to reinforce its territorial claims over the resource-rich Esequibo region occupied by Guyana. While Brazil stresses its neutrality and advocates diplomatic solutions, the defence ministry has “intensified defensive actions” and bolstered troop levels in border areas to discourage potential escalation.
The dispute stems from Venezuela's long-standing rejection of Guyana's control over the 160,000 km2 Esequibo territory awarded to it by a 1899 arbitration. Despite a 1966 UN agreement designating Esequibo's status “to be resolved,” Venezuela continues asserting rights over the region believed to hold valuable oil and gas reserves. Guyana maintains the upcoming referendum violates past accords and has sought an injunction from the International Court of Justice. However, with Venezuela defiantly proceeding, Brazil seems unwilling to risk being drawn into a conflict between its neighbours. Expanding military assets near the tense tri-border area allows Brazil to both monitor events and deter violence from spilling across.
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China Struggles to Balance Security and Sovereignty for BRI Projects
Since the launch of China's Belt and Road Initiative (BRI) in 2013, Beijing has grappled with how to protect its overseas infrastructure projects and citizens abroad. Initially, some Chinese private security companies sought to emulate the US firm Blackwater's operations in Iraq. But growing China-US tensions have made that model less appealing.
China remains reluctant to fully privatize security operations abroad or completely relinquish state control. However, the rise in BRI-related violence and disruption is forcing China's private security industry to rapidly expand overseas. Beijing recognizes the need for a pragmatic approach to safeguarding its global interests while still adhering to its core principle of “the party controlling the gun.” Going forward, China will likely utilize private security firms in more overseas operations while seeking to rein in their autonomy. Effectively balancing security imperatives and state sovereignty along the BRI will be an ongoing challenge.
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Panama's Top Court Deems Mining Contract Unconstitutional
Panama's Supreme Court has ruled that a contentious 20-year contract between the government and Canadian mining giant First Quantum Minerals is unconstitutional. The decision comes after weeks of widespread protests opposing the deal allowing First Quantum's Cobre Panama copper mine to continue operating in the country. First Quantum has vowed legal action.
President Laurentino Cortizo originally hoped to calm tensions by promising a referendum on the mining contract. However, unrelenting demonstrations and road blockades that isolated provinces forced the government's hand. With Panama lacking military forces, police crackdowns have led to over 1,200 arrests. First Quantum has “temporarily suspended” the contracts of 7,000 mine employees in response. Lengthy court battles between Panama's government and the Canadian company now appear inevitable.
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Entrenched US-Philippines Ties Divide ASEAN
Philippine President Ferdinand Marcos Jr. recently strengthened his country's alliance with the United States, including expanded military access, to counter China in the South China Sea. However, Marcos' forceful stance has unsettled ASEAN neighbours also embroiled in maritime disputes with China but hoping to avoid great power conflict.
Despite trying to ease bilateral tensions, Marcos has grown frustrated with Beijing's unrelenting actions against Philippine forces guarding disputed reefs. His predecessor Rodrigo Duterte had downplayed maritime disputes to court Chinese investment. But with little benefit realized, and his former allies now sidelined, Marcos seems set to more firmly defend Philippine sovereign rights with the full backing of the US. However, his thawed ties with China and the wider ASEAN bloc could further divide the already fractured grouping.
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US Imposes Strict Limits on China's Role in US EV Industry
The Biden administration announced major new restrictions Friday on China's involvement in America's electric vehicle supply chain. Starting in January, EVs containing battery components made in China or by companies with significant ties to Chinese entities will be ineligible for the full $7,500 tax credit offered under the Inflation Reduction Act. The rules aim to loosen China's dominance of global EV battery production and critical mineral supply chains. China currently provides over 50% of key battery parts and processes more than half the world's lithium, cobalt and graphite.
However, industry groups warn the limitations could reduce the number of EV models qualifying for subsidies in the near-term, hampering the transition away from gas vehicles. While the administration touts the rules as boosting domestic manufacturing, building fully independent EV supply chains could take years. And with many US battery factories facing delays, China retains leverage for now. Some climate advocates also cautioned against a strict stance, arguing continued Chinese industry collaboration will be key to lowering EV costs and accelerating adoption. But the administration appears set on leveraging the IRA to curb Chinese influence and spur a home-grown EV ecosystem.