In Geopolitics Today: Thursday, September 28th
IMF Cites Revenue Worries in Delaying Sri Lanka Bailout Review, Germany Secures $3.5B Deal for Israeli Arrow 3 Missile Defence, and other stories.
Australia-Japan Hydrogen Supply Chain Gains Momentum
A wave of deals shows the Australia-Japan hydrogen supply chain rapidly taking shape. Numerous Japanese firms are investing in Australian hydrogen and ammonia projects, with major Asian energy events underscoring the partnerships. As Japan seeks to realize its decarbonization goals, Australian hydrogen resources are indispensable.
This “hydrogen rush” mirrors past drives for Australian commodities like gold. With hydrogen integral to Japan’s emissions strategy, Tokyo is securing suppliers in friendly countries like Australia. The emerging hydrogen links strengthen the Japan-Australia quasi-alliance amid Asia's complex strategic landscape. For Japan, sourcing hydrogen from Australia mitigates supply chain vulnerabilities. It represents the latest evolution of ties between maritime powers converging to shape Indo-Pacific affairs. As economic and environmental interests intersect with geopolitical calculations, hydrogen is becoming a new dimension of strategic interdependence.
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IMF Cites Revenue Worries in Delaying Sri Lanka Bailout Review
The IMF concluded its first review of Sri Lanka's $2.9 billion bailout without reaching a staff-level agreement, citing concerns over potential revenue shortfalls. While recognizing early stabilization progress, the IMF said full economic recovery is not assured yet. The delayed release of a second $330 million aid tranche depends on Sri Lanka demonstrating sustained reform momentum, especially on revenue mobilization and debt sustainability.
The IMF review highlights Sri Lanka's ongoing challenges despite initial gains. Boosting revenues through better tax administration and governance will be critical for securing further international assistance. However, reforms often face resistance domestically. With elections looming in 2023, the government may find it politically difficult to continue painful economic adjustments. The path to recovery remains difficult amid Sri Lanka's precarious financial situation. Managing public expectations and staying the course on IMF reforms appears to be the government’s chosen path.
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Russia Adapts Defensive Tactics
A new report provides an in-depth look at how Russia has adapted its defensive tactics and capabilities during the ongoing war in Ukraine. It highlights how Russia has implemented a “manoeuvre defence” strategy with multiple layered defensive lines to better withstand Ukrainian offensives. Key changes include more extensive use of mines, drones, and mobile anti-tank reserves to blunt the advances of Ukrainian mechanized forces.
The report notes Russia's defences have stiffened in recent months, slowing Ukraine's counteroffensive to more incremental gains. The report also underscores how both sides continue to evolve tactically, as Ukraine's modernized forces have forced Russia to refine its defensive approaches. Russia appears intent on turning the war into one of attrition. As the conflict drags on, Ukraine's path to regaining substantial territory likely depends on its ability to continually identify and exploit weaknesses in Russia's shifting defence posture. Finding battlefield success going forward, against quickly-adapting Russian forces, may require not just more weapons.
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Japan Identifies 33 Civilian Facilities for Potential Military Use
The Japanese government has identified 33 airports and ports across 10 prefectures that could be expanded to enable military use by the Self-Defense Forces (SDF) and Japan Coast Guard. This decision comes amid growing security concerns in East Asia following the Ukraine war and tensions around Taiwan. The goal is to enhance deterrence and enable quick deployment of forces in a crisis by utilizing civilian facilities alongside military bases.
Discussions with local governments on extending runways and expanding docks for potential SDF operations will soon begin. Japan's move highlights the increasing prioritization of military preparedness in its security strategy. Utilizing civilian infrastructure will afford a better position for more dispersed forces and greater flexibility in responding to contingencies like a Taiwan crisis. However, legal obstacles remain regarding SDF peacetime use of such facilities. Local government cooperation also cannot be guaranteed, especially in Okinawa. Balancing national security interests with local concerns will be key.
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3D Printing Provides Strategic Edge for US Military Needs
Additive manufacturing or 3D printing is emerging as an important tool for the United States military, enabling rapid prototyping, repairs, and production. Examples include overnight aircraft repairs after strikes and accelerated development of hypersonic weapons components. Advances in high-strength metal printing now allow more durable and complex-shaped objects to be produced additively. The ability to quickly print parts, tools, and even structures could provide new efficiencies across US operations.
The growth of additive manufacturing underscores the US military's interest in leveraging new technologies for strategic advantage. While traditional manufacturing still has an important role, the flexibility and responsiveness of 3D printing present distinct benefits for defence applications. Hypersonic weapons development highlights the utility of printing complex propulsion system parts that are challenging to produce conventionally. Additive manufacturing's evolution expands the range of available manufacturing solutions to meet evolving military requirements.
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Germany Secures $3.5B Deal for Israeli Arrow 3 Missile Defence
Germany has signed a deal worth $3.5 billion to acquire the Israeli-made Arrow 3 missile defence system, the biggest ever defence purchase for Israel. The long-range system can intercept missiles in space, providing protective cover for Germany and neighbouring countries. The US approved the sale of the jointly developed Arrow 3, paving the way for delivery by 2025.
Germany aims to integrate Arrow 3 into NATO's defences as part of the European Sky Shield initiative for collaborative air and missile defence procurement. The defence deal highlights the priority Germany places on enhancing missile defences. As nuclear-armed Russia modernizes its missile arsenal, Arrow 3 would strengthen protection against limited ballistic missile strikes. The sale also underscores increasingly close German-Israeli defence ties. This acquisition signals Germany's commitment to invest in next-generation military capabilities and boost deterrence posture in Europe amid a changing regional security environment.