In Geopolitics Today: Tuesday, August 29th
China Unveils 24-Point Policy to Boost Foreign Investment, US Unveils Ambitious Drone Swarm Strategy, and other stories.
Talks Resume on Ethiopian Dam
Egypt, Sudan, and Ethiopia have recommenced discussions regarding the contentious Grand Ethiopian Renaissance Dam (GERD). While talks have restarted, the elusive final agreement on the operation and filling of the mega-dam continues to encounter obstacles. The recent round of negotiations in Cairo underscores Egypt's pursuit of a legally binding accord regarding the dam's operation and water management. Ethiopia initiated the filling of the dam in 2020, but Egypt and Sudan express concerns about potential water scarcity and lower Nile River levels in their territories.
The implications of the GERD negotiations extend beyond water management, revealing geopolitical complexities in the region. The Nile River is of vital importance to Egypt, which heavily depends on it for over 90% of its water supply. The dam's impact on downstream states underscores the intricate balance between regional development aspirations and shared water resources. External mediation, including efforts by the African Union (AU) and the United States, has so far failed to broker an agreement. Scepticism surrounds the renewed talks, as past challenges persist. As tensions continue, the outcome of these talks will have profound ramifications for regional stability.
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China Unveils 24-Point Policy to Boost Foreign Investment
China's recent release of a 24-point policy framework, formerly known as the “Opinions of the State Council on Further Optimizing the Foreign Investment Environment and Enhancing Attraction of Foreign Investment,” aims to address international business scepticism. The policy, issued on August 13 by China's State Council, outlines measures to enhance the business environment and promote foreign direct investment (FDI).
While China seeks to restore investor confidence, recent economic data reveals signs of vulnerability. Foreign direct investment (FDI) slightly declined in the first half of the year, indicating growing concerns among international businesses about China's business environment. Bridging the gap between policy intent and practical implementation remains a critical challenge. Overcoming past regulatory barriers, ensuring equitable treatment, and delivering tangible actions are imperative for China to reinvigorate the foreign investor trust necessary to stimulate economic growth. China recognizes the pivotal role foreign investment plays in its economic stability, and the successful execution of the 24-point policy will have far-reaching implications for its business ecosystem.
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Saudi Arabia's Nuclear Ambitions
Saudi Arabia's pursuit of uranium enrichment is emerging as a complex factor in ongoing US-Saudi-Israel talks, potentially leading the kingdom to deepen its collaboration with China. Saudi officials are reportedly exploring a Chinese proposal to construct a civilian nuclear power plant in the country, possibly to pressure the US into accommodating Riyadh's nuclear energy objectives.
The US-Saudi-Israel mega-deal holds significant implications for regional dynamics. By aligning with Israel and seeking closer ties with the US, Saudi Arabia intends to hedge against Iran's growing nuclear capabilities. However, Riyadh's simultaneous consideration of a Chinese nuclear plant and its willingness to collaborate with BRICS countries could indicate its intention to maintain diplomatic manoeuvrability and counterbalance its partnerships. While the US aims to restrict Saudi Arabia's enrichment activities, such a demand could push Riyadh towards strengthening its alliance with China. Additionally, the potential for Saudi Arabia to seek alternative enrichment powers like Russia could further entangle global interests in the region's nuclear dynamics.
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Canada Raises Diplomatic Stakes in the Caucasus
Canada is stepping up its diplomatic presence in the Caucasus region, particularly in relation to the Nagorno-Karabakh conflict. In September, Canadian Foreign Minister Mélanie Joly is set to open a new embassy in Yerevan, Armenia. Additionally, Canada is poised to join the EU Mission in Armenia (EUMA), contributing unarmed observers to monitor the Armenia-Azerbaijan border.
Canada's heightened engagement in the South Caucasus is intertwined with its diplomatic interactions with Turkey. The decision to join the EU monitoring mission follows discussions between Canada and Turkey regarding the export of Canadian defence technology. This comes after Canada cancelled military export permits to Turkey in 2021, citing evidence that Canadian-made technology had been used in the Nagorno-Karabakh conflict against Canada's foreign policy guidelines. Canada's intention to lift the embargo on defence technology exports to Turkey come as part of supporting Turkey's NATO demands. The ongoing diplomatic tussle and regional security dynamics underscore the intricate interplay between international diplomacy, defence technology, and conflicting interests in the Caucasus.
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US Unveils Ambitious Drone Swarm Strategy
The Deputy Secretary of Defense of the United States, Kathleen Hicks, has announced an audacious new drone program at a National Defense Industrial Association conference, outlining plans to deploy multiple thousands of drones across land, sea, and air against China.
The initiative aims to counter the People’s Liberation Army’s (PLA) numerical superiority with a massive drone swarm strategy that would be challenging for the PLA to predict, target, or defeat. The United States envisions potential uses for swarming drone strategy in a future conflict with China. The initiative will reportedly involve collaboration with both traditional and non-traditional defence companies. This ambitious drone strategy presents a win-win scenario for the US military-industrial complex, catering to both defence companies' interests and national security imperatives, while countering China's strategic mass advantage in the evolving global geopolitical landscape.
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Argentina and Brazil Strengthen Trade Ties
Argentina's Economy Minister and presidential candidate Sergio Massa announced a new trade agreement with Brazil after a meeting with Brazilian officials, including President Luiz Inácio Lula da Silva. The agreement includes financing imports worth US$ 600 million and aims to enhance cooperation in various sectors, particularly automotive and food industries. The two nations renewed the Santo Tomé-Sao Borja agreement to facilitate improved border crossing logistics. The financing initially intended to be guaranteed via Chinese yuan will now be provided by the Latin American Development Bank (CAF).
This trade agreement comes as both Argentina and Brazil face economic challenges and foreign currency access issues. The agreement seeks to maintain the flow of automotive and food products, crucial sectors for both countries. Argentina's inclusion in the BRICS group was also highlighted as a significant step that enhances its global economic engagement. The joint initiative to rebuild their river merchant navies is set to be resumed, and both nations are working on reopening markets for various agricultural products. The collaboration between Argentina and Brazil in this agreement and their broader economic ties underscores their commitment to maintaining strong bilateral trade relationships.