In Geopolitics Today: Wednesday, March 27th
Russian Oil Firms Face Payment Delays Due to Sanctions, Argentina Shelters Venezuelan Opposition As Government Protests, and other stories.
Russian Oil Firms Face Payment Delays Due to Sanctions
Russian oil companies are experiencing payment delays of up to several months for their crude and fuel exports as banks in China, Turkey, and the United Arab Emirates (UAE) become increasingly cautious of U.S. secondary sanctions. Banks in these countries have recently enhanced their sanctions compliance requirements, leading to delays or even rejections of money transfers to Moscow. This development aligns with Washington's dual policy goals of disrupting the Moscow's revenue while maintaining global energy flows.
The heightened scrutiny by banks follows a U.S. Treasury executive order published in December 2023, which warned of potential sanctions against foreign banks for evading the Russian price cap and urged them to strengthen compliance measures. As a result, banks working with Russia have intensified checks, requested additional documentation, and trained more staff to ensure compliance with the $60 per barrel price cap. The increased due diligence has led to payment delays ranging from two to three weeks to as long as two months. Despite these challenges, Russian oil firms are turning to neighbouring Belarus for petrol imports to mitigate the risk of domestic shortages caused by unscheduled refinery repairs following drone attacks. Sanctions continue to shape the dynamics of Russia's energy exports and its efforts to secure alternative supply channels.
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France and Brazil Launch €1 Billion Amazon Bioeconomy Program
Presidents Emmanuel Macron and Luiz Inácio Lula da Silva announced a €1 billion investment program for the Brazilian Legal Amazon and French Guiana's portion of the Amazon during Macron's official visit to Brazil. The program, aimed at raising funds through public and private investments over the next four years, is part of the Action Plan on the Bioeconomy and the Protection of Tropical Forests signed by both countries. Beyond its environmental objectives, the initiative has significant geopolitical implications for France and Brazil. The €1 billion bioeconomy program is not only an environmental initiative, but also a strategic move by France and Brazil to strengthen their geopolitical positions in the Amazon and beyond.
The program strengthens the strategic partnership between the two countries, positioning them as leaders in global climate action and environmental diplomacy. By jointly investing in the Amazon's sustainable development, France and Brazil are asserting their influence in the region and potentially countering the growing presence of other global powers, such as China. The involvement of French Guiana, an overseas department of France, highlights its role as a bridge between Europe and South America in the context of the Amazon. The five key points of the program include fostering dialogue between French and Brazilian administrations on bioeconomy challenges, establishing technical and financial partnerships between public banks, appointing special coordinators for bioeconomy companies, creating a new scientific agreement between research institutions, and establishing a hub for research, investment, and technology sharing. The two leaders also signed the Brazil-France Call for Climate Ambition and launched a coalition to combat greenwashing in the voluntary carbon market.
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Argentina Shelters Venezuelan Opposition As Government Protests
Diplomatic tensions between Argentina and Venezuela have escalated following Argentina's decision to offer refuge to members of Venezuela's opposition coalition at its embassy in Caracas. The Argentine presidential office accused the Venezuelan government of deliberately cutting power to the embassy.
The deteriorating relationship between the two South American nations has been marked by a series of incidents, including Venezuelan President Nicolás Maduro's criticism of Milei's election victory last November and Venezuela's ban on Argentine-licensed aircraft from accessing its airspace. As Venezuela grapples with declining crude oil production due to sanctions and poor maintenance, Argentina's energy sector is undergoing significant changes under Milei's leadership, with plans to privatize state-owned companies and liberalize the market. The stark contrast in their energy policies and ideological differences has further strained the bilateral ties.
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China's Trade with Central Asia Reaches New Milestones
China's trade with Central Asia climbed to US$89.4 billion in 2023, a 27% increase from US$70.2 billion in 2022, as reported by China's Customs Agency. Chinese exports to the region made up US$61.4 billion of this total. Kazakhstan stood out as China's top trading partner in Central Asia, with bilateral trade hitting US$41 billion, a 32% increase from the previous year, and accounting for 46% of China's total trade with the region.
Central Asia's growing importance as a strategic trade and transit hub across Eurasia is evident from these figures. The region's active diplomatic efforts, participation in multilateral initiatives such as the Belt and Road Initiative and the Eurasian Economic Union, and sustained investments in infrastructure, have enabled it to play a role in the evolving global supply chain landscape. As China moves to diversify its trade routes and reduce reliance on maritime shipping, the expansion of efficient land-based corridors through Central Asia becomes increasingly crucial. The strengthening economic ties between China and Central Asia also mirror broader changes in the global economy, with the Global South playing a larger role in driving growth and trade as developed economies experience slowdowns.
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China Navigates Complex Dynamics in Myanmar
China's involvement in Myanmar's intensifying civil war reflects a delicate balancing act, as Beijing engages with multiple actors to protect its interests amidst shifting power dynamics. Chinese-built weapons have been found in the hands of both the military government and the anti-regime Three Brotherhood Alliance, highlighting China's hedging strategy of fostering ties with various factions to ensure its influence regardless of the conflict's outcome.
China's actions following Operation 1027 reveal its primary objectives in Myanmar: managing an unstable status quo by supporting the junta's survival in the centre, discreetly engaging with the anti-regime movements, and maintaining a quiescent border region controlled by ethnic armed groups aligned with its geo-economic interests. While the resistance movement is not inherently anti-China, Beijing prioritizes its own interests and believes the current government remains crucial to Myanmar's future. As such, China may interfere with US efforts to establish a federal democracy if it perceives a threat to its agenda.
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EU's Approach in the Indo-Pacific Faces Challenges
The European Union's ambition to foster a favourable security and economic environment in the Indo-Pacific through cooperative multilateralism faces significant obstacles. Despite the EU's stated intentions, as articulated by Josep Borrell, the high representative for foreign affairs, the cooperative measures proposed by Brussels appear ill-equipped to address the core tensions driving the region's instability. The options for establishing viable multilateralism in the current geopolitical climate exceed the EU's capabilities, raising questions about the effectiveness of its approach.
The EU's plans for Indo-Pacific cooperation primarily focus on engaging lesser powers and addressing lower-stakes political issues, which inherently limits its ability to tackle the fundamental challenges posed by the US-China competition for regional primacy. To truly reshape the rules of Indo-Pacific politics and promote multilateralism, the EU would need to either impose new rules through material dominance, institutionalize them through a preponderant coalition, or cultivate informal guidelines. However, the EU lacks the military strength, diplomatic influence, and economic leverage necessary to pursue any of these paths effectively. With its members focused on European security and its strategic partnerships in the region limited in scope, the EU faces an uphill battle in presenting a compelling multilateralist alternative.