In Geopolitics Today: Thursday, November 9th
Guyana Appeals to ICJ Against Venezuela's Essequibo Referendum, Corruption Probe in Portugal Threatens EU Energy Transition, and other stories.
Guyana Appeals to ICJ Against Venezuela's Essequibo Referendum
Guyana has appealed to the International Court of Justice (ICJ) to halt Venezuela's planned referendum on annexing the disputed Essequibo region, rich in oil and minerals. Georgetown calls the vote illegal under international law. The border feud has intensified since major offshore oil discoveries. Venezuela contends much of Essequibo should be its territory, a claim dating back to colonial times. The dispute is now before the ICJ, which Guyana insists is the proper forum.
The 160,000-square-kilometer territory, rich in oil, has been a source of contention for decades, with Venezuela asserting its claim. The dispute has escalated since ExxonMobil's oil discovery in 2015. In response to Venezuela's announcement of a December 3 referendum, Guyana labelled it as illegal and sought the ICJ's intervention to halt the process. The ICJ statement revealed Guyana's argument that the referendum aimed to undermine the ongoing ICJ proceedings and facilitate the formal annexation of Essequibo by Venezuela.
Read more about this story here.
Persistent Drought Continues to Paralyse Panama Canal
A severe drought is still causing major congestion at the Panama Canal, forcing ships to turn away. Canal transits rely on rainwater that has hit record lows, forcing gas carriers to reverse course due to reduced vessel bookings. Authorities are slashing daily slots by over 50% into 2024. The restrictions add further strains on supply chains already under pressure.
The canal's woes highlight the importance of critical infrastructure to global shipping. Re-routing the shipping to avoid Panama increases costs and delays. This means natural gas exporters in the region attempting to access Asian markets are finding business more challenging. While weather patterns shift, adapting the canal's operations is complex and costly. Episodes like this may increase, testing resilience. However, as seaborne trade expands, few alternatives exist to this narrow passage between the oceans.
Read more about this story here.
Poland and UK Sign $5 Billion Deal for Advanced Air Defences
Poland and the UK signed a $5 billion deal for extended-range anti-air missiles and launchers, the nations' largest defence contract. It aims to equip Poland with advanced air defences, including over 1,000 MBDA missiles. The collaboration also involves technology transfers enabling Poland to produce the missiles domestically. It comes as Poland rapidly upgrades military capabilities following Russia's invasion of Ukraine.
The landmark agreement reflects the strategic importance of strengthening NATO's eastern flank. Boosting Poland's air defences bolsters deterrence amid regional tensions. The co-production element points to deepening defence ties and supply resilience. As Poland modernizes its military, integration and interoperability will be key. The deal encapsulates the shifting defence landscape resulting from the Ukraine conflict. For NATO members, it highlights the urgency of security cooperation and collective readiness.
Read more about this story here.
Corruption Probe in Portugal Threatens EU Energy Transition
Portugal's government has collapsed amid a corruption probe into lithium mining contracts. With Portugal's political landscape in turmoil, Prime Minister Antonio Costa's resignation amid a corruption investigation raises uncertainties for key lithium and hydrogen projects crucial to the European Union's drive for strategic autonomy in critical raw materials and renewable energy.
The turmoil jeopardizes Portugal's critical role in Europe's energy transition as key lithium and hydrogen projects stall. The EU is relying on Portugal's mineral wealth to reduce dependence on China. But the licensing scandal casts doubt over expedited permitting for strategic minerals. Investor confidence may suffer from any policy shifts under a new government, despite Portugal's fiscal prudence. However, the shock may galvanize efforts to ensure oversight in securing vital rare resources. The scandal's broader impact on EU energy transition projects hinges on how quickly Portugal can resolve its political turmoil and continue its role in Europe's drive to decarbonize.
Read more about this story here.
Iraq and Turkmenistan Finalize Gas Deal Terms
Iraq and Turkmenistan have finalized the terms of a gas deal, solidifying a commitment made earlier this year. The agreement, reached during a meeting in Ashgabat, involves Turkmenistan supplying Iraq with 9 billion cubic meters of gas annually, to be transported through Iran over the next five years. This marks a crucial step for Iraq, which holds the 12th largest natural gas reserves globally but has struggled with insufficient infrastructure to harness and utilize these resources effectively.
This gas agreement holds importance for Iraq's energy security strategy. By reducing its reliance on Iranian gas, which currently constitutes around 40% of Iraq's power, the nation aims to enhance its energy independence. The move aligns with Iraq's broader efforts to diversify its gas sources, as demonstrated by its recent deal with TotalEnergies to harness gas flares for power generation. Iraq could potentially emerge as a key player in the global competition for natural gas. Meanwhile, Turkmenistan, with the fourth-largest global gas reserves, stands to strengthen its geopolitical position through strategic partnerships, as evidenced by its resumption of gas exports to Iran and ongoing negotiations for a long-term arrangement.
Read more about this story here.
Germany Eyes Economic Pivot to Thailand
Germany is actively courting closer economic ties with Thailand as part of its pivot away from China. German officials emphasize Thailand's potential as an alternative manufacturing hub for its firms amid growing disengagement from China. Enhanced trade and investment flows are a key priority, given complementaries between Thailand's labour force and Germany's advanced industrial base.
Strengthening economic links with Thailand allows Germany to diversify its external dependencies beyond China. For Thailand, German partnerships can expand industrial sophistication and bring advanced technologies. However, substantially expanding commercial ties requires resolving lingering impediments around infrastructure, regulation, and market access. While the opportunities are promising, turning potential into tangible gains will hinge on sustained political will in both Berlin and Bangkok as well as private sector enthusiasm. With the right foundations, Thailand could become an increasingly vital pillar of Germany's Asian strategy.