In Geopolitics Today: Tuesday, March 26th
Israel-US Tensions Flare, China Introduces State Guidelines to Phase Out US Chips and Software, and other stories.
Israel-US Tensions Surface
A public row has erupted between Israel and the United States following the UN Security Council's resolution calling for an immediate ceasefire in Gaza during Ramadan, which the US did not veto. Israel's Prime Minister Benjamin Netanyahu's office claimed that Hamas rejected a hostage deal in response to the resolution, suggesting that the UN vote had undermined efforts to secure the release of Israeli captives.
However, the US State Department directly contradicted Netanyahu's statement, with spokesperson Matthew Miller asserting that Hamas had prepared its response to Israel's hostage deal proposal before the UN vote. The blame game between the allies comes amidst rising tensions, with Netanyahu having threatened to cancel a senior Israeli delegation's visit to Washington if the US failed to shield Israel from international censure at the UN. The differences between the two countries were further highlighted during a meeting between Israeli Defence Minister Yoav Gallant and US Defence Secretary Lloyd Austin at the Pentagon. As the war in Gaza continues, the UN warns of imminent famine in the north of the besieged enclave. The US abstention at the Security Council, a rare instance of tangible leverage against Israel, has drawn criticism from Israeli politicians who accuse the US of making a mistake.
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Ukraine Seeks to Strengthen African Ties
Ukraine is making concerted efforts to bolster its alliances with African countries through a multipronged approach. The Ukrainian government plans to expand its grain shipment program, roughly double its embassies on the continent, and arrange President Volodymyr Zelenskyy's first state visit to Africa in the coming months.
Ukraine's deputy agrarian minister, Markiyan Dmytrasevych, revealed that more than 200,000 tons of grain have been delivered to African countries so far, with plans to extend the program to Mozambique, Mauritania, Djibouti, the Democratic Republic of the Congo, and Malawi. This initiative aims to maintain trade links for Ukraine's grain industry, which have been impacted by the disruption of grain transportation. Simultaneously, Ukraine intends to increase its diplomatic presence in Africa by adding 10 to 12 more embassies this year, nearly doubling its current count of 12. President Zelenskyy's upcoming visit to South Africa, as announced by the South African Foreign Minister, Naledi Pandor, further demonstrates Ukraine's desire to strengthening engagement with the continent.
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India Halts Venezuelan Crude Purchases as US Sanctions Waiver Expires
Indian refiners, both state-owned and private, have suspended purchases of Venezuelan crude oil as the expiration of a US sanctions waiver on April 18 looms, raising concerns about potential complications if the waiver is not renewed. Reliance Industries, India's largest buyer of Venezuela's Merey crude grade, and state refiner Indian Oil Corporation have halted their purchases to avoid any issues with cargoes should the US re-impose sanctions that were temporarily lifted for six months in October 2023.
The temporary sanctions relief, introduced by the US last year, allowed for the production, lifting, sale, and exportation of oil or gas from Venezuela, as well as the provision of related goods and services. This move saw top international oil trading houses resume business with Venezuela, and Indian refiners returned to purchasing the country's crude oil. India, the world's third-largest crude oil importer, welcomed the opportunity to buy Venezuelan oil, as some of its refineries are designed to process the South American country's heavy crude. However, with the waiver's expiration date approaching and uncertainty surrounding its renewal, Indian refiners are taking a cautious approach to avoid potential complications, highlighting the ongoing challenges in navigating US-imposed sanctions in the global oil market.
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South Sudan Faces Heightened Instability
South Sudan's fragile stability is under threat following damage to a crucial oil pipeline that transports the country's crude to international markets via neighbouring Sudan. The pipeline, which accounts for two-thirds to three-quarters of South Sudan's oil revenues, was ruptured in early February in an area controlled by Sudan's paramilitary Rapid Support Forces, currently engaged in a power struggle with the Sudanese army.
With ongoing fighting preventing repairs, there are potentially severe consequences for South Sudan, where oil generates around 90% of government revenue. The disruption could exacerbate the country's already dire economic situation, characterized by soaring inflation, unpaid civil servant salaries, and widespread hunger. While the impact may not be immediately felt by the general populace, prolonged halt in oil revenues could lead to further depreciation of the local currency, increased poverty, and a potential increase in lawlessness. As South Sudan grapples with this latest crisis, the government may seek financial bailouts from regional partners like the UAE to maintain stability.
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China Introduces State Guidelines to Phase Out US Chips and Software
In a significant escalation of the ongoing chip war between the US and China, Beijing has introduced new guidelines that will see US chips from Intel and AMD phased out of government PCs and servers. The move comes as China ramps up efforts to replace foreign technology with home-grown solutions, following US actions to prevent Chinese companies from acquiring advanced chips and chip making equipment from Nvidia and ASML.
The new procurement rules, unveiled by the Chinese finance ministry and Ministry of Industry and Information Technology in December, represent a major step in China's push for technological independence in the military, government, and state sectors. The guidelines require government agencies and party organs to prioritize “safe and reliable” processors and operating systems from domestic providers when making purchases. This shift is expected to have a significant impact on US companies operating in China, with Intel and AMD facing potential losses in their largest and second-largest markets, respectively. The transition to domestic alternatives is already underway, with state-owned enterprises required to complete the process by 2027, and some government offices already replacing foreign-made computers with fully Chinese ones.
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Kazakhstan and Italy Seek to Deepen Economic Ties
Kazakhstan and Italy have reaffirmed their strong bilateral relations and expressed a desire to increase economic and trade cooperation, as evidenced by recent high-level meetings between officials from both countries. The strategic economic partnership between Astana and Rome provides a foothold for deepening engagement with the European Union and Central Asia, especially as sanctions have compromised traditional Russian-dominated transit routes.
Kazakhstan's efforts to diversify its foreign relations have become more proactive. However, given Kazakhstan's geographic position and ongoing dependencies on Russia, the country must strike a delicate balance in its foreign policy. Italy, for its part, has long considered Kazakhstan a crucial priority in its engagement with Central Asia, with almost $10 billion invested in the Kazakh economy since 1991, primarily in the energy sector. The two countries officially signed a strategic partnership agreement in 2009, and Italy has sought to revive its ties in Central Asia as part of broader EU-wide efforts. Kazakhstan's shared principles with Italy, such as a focus on multilateralism and economic diplomacy, provide a foundation for strengthening their relationship beyond the energy sector. Despite the challenges posed by Kazakhstan's persistent dependencies on Russia, Astana's multi-vector foreign policy approach remains its trademark strategy for engaging with other power brokers.