In Geopolitics Today: Wednesday, March 15th
France Welcomes Iran-Saudi Arabia Diplomatic Normalization, Debt Dispute Threatens the Future of Baikonur Spaceport, and other stories.
Algerian Energy Minister Warns of Uncertainty and Supply Disruptions
Algerian Energy Minister Mohamed Arkab recently issued a warning that price caps on Russian crude oil could lead to uncertainty and supply disruptions. With oil prices heavily influenced by OPEC and its allies, any unilateral measures taken by Western countries could have significant implications for global oil markets. The comments by Arkab come at a time when there is growing concern about the impact of sanctions and price caps on Russia's oil export revenues.
The recent bank failures in the US and Europe have raised concerns about potential contagion effects on the broader market, with oil prices falling nearly 7% plunge in recent days. This underscores the interconnectedness of the global financial system and the impact that even seemingly isolated events can have on the oil industry. As geopolitical tensions continue to simmer, it will be crucial for policymakers to carefully balance the interests of producers, consumers, and the broader global economy in order to maintain stability in oil markets. Any unilateral measures taken by the US and its allies are likely to have a significant impact on geopolitical relations in the oil industry in the coming months.
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China’s Military Actions Pose a Challenge for the United States
The escalating tensions between China and the United States over Taiwan continue to be a major source of concern for geopolitical analysts. China has made it clear that the reunification of Taiwan with mainland China is a top priority, with President Xi Jinping ordering his military to be ready to successfully invade the island by 2027. However, any such invasion will be far from easy, as China must invade an island 100 miles distant across historically treacherous waters and land massive forces on a remarkably limited number of well-defended beaches—all while preventing or limiting interference from the US military.
These challenges have led China to invest heavily in building the world's largest navy, an increasingly modern air force, and thousands of missiles. On the other hand, American leaders have realized the critical role Taiwan plays for US global interests. Taiwan's geographic situation in East Asia anchors the First Island Chain, the linchpin to America's defence of Japan, South Korea, and the Philippines. Furthermore, Taiwan produces nearly all of the world's advanced semiconductor chips, accounting for 37 percent of all new computing power in the world every year. However, the question remains whether the United States will indeed defend Taiwan and what kind of response this will provoke from China.
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France Welcomes Iran-Saudi Arabia Diplomatic Normalization
The French Foreign Ministry's has welcomed the agreement between Iran and Saudi Arabia to renew their bilateral diplomatic relations. The ministry's spokesperson emphasized that while France supports measures that contribute to the region's stability, they have been closely monitoring Chinese regional activities, particularly in the Gulf and other parts of the world.
France has been engaged in efforts to stabilize the region through the Baghdad Conference for Cooperation and Partnership. However, it remains to be seen how this agreement will impact the broader regional dynamics, particularly the ongoing conflicts in Yemen and Syria, where Iran and Saudi Arabia are backing opposing sides. Additionally, France's cautious stance towards China reflects the increasing competition and rivalry between Western countries and China for influence in the Middle East.
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Australia, the US and the UK to Build Nuclear Submarine for AUKUS
Australia, the United States and the United Kingdom have announced a new agreement to build a nuclear-powered submarine for Australia, known as the SSN AUKUS. The US is offering an interim capability of three to five Virginia-class submarines, either newly built or used, in the 2030s. However, defense officials say the submarine industrial base is years behind schedule, and so far builders have not been able to keep up with that workload.
The US Navy has spent more than $1 billion between fiscal 2018 and 2022 on bolstering the two nuclear shipbuilding yards and their thousands of suppliers, and kicked off $2.4 billion investment in 2023. The US industrial base is facing a range of challenges after shrinking by about 70% when the Navy took a break from buying submarines following the end of the Cold War. AUKUS is expected to lift all three nations’ submarine industrial bases and undersea capabilities,. Before Australia acquires its own Virginia-class subs, a new collaborative entity known as Submarine Rotational Forces-West will establish a rotational presence of one UK Astute class and up to four US Virginia-class submarines at Australia’s Stirling military base near Perth.
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Debt Dispute Threatens the Future of Baikonur Spaceport
In recent weeks, a debt dispute between Kazakhstan and Russia over the Baikonur spaceport has attracted heightened attention. Kazakh authorities have impounded the property of TsENKI, a subsidiary of Russian state-owned Roscosmos, which owes a debt of $29 million to the Joint Kazakh-Russian Enterprise Baiterek JSC. The debt dispute has led to a travel ban on the company's head in Kazakhstan and a block on transferring assets and property out of the country.
The Baikonur cosmodrome is a crucial spaceport leased by Russia from Kazakhstan since the collapse of the Soviet Union. With the US mothballing its space shuttle program in 2011, Baikonur and the Russian Soyuz rocket became the only means of sending manned missions to the International Space Station. The current dispute between Kazakhstan and Russia could result in significant implications for the future of the Baikonur spaceport, as well as broader geopolitical relations between the two countries.