Moscow

Why China is not bothered at the world screaming in its ears?

(This is a reprint from NewsBred).

There is a reason why China doesn’t give a damn to retaliatory measures by the United States, Europe, India or anyone else for that matter.

Individuals or nations don’t turn their back on overflowing coffers and even if they make noise, there is little by way of action on the ground—or ocean if you have South China Sea in mind.

The world today is a buyers’ market and China is stuffing yuan in mouths which open up with the honest intention of registering their protests against the Beijing.

The latest trade figures of China in June are breathtaking. When the world is said to be angry at Coronavirus pandemic and neighbours are traumatized by the Middle Kingdom’s bullying, China’s exports have picked up. The biggest shock though is that its imports have risen by 2.7 per cent too, implying that more money is reaching the pockets of distressed economies of the world.

This is not Cold War II—as analysts are fond of saying these days.  Soviet Union was an empire cut off by the liberal or western world. China, in contrast, doesn’t have an empire. It just has found a way to every central bank and command structure of the nations.

This is more than geopolitics. This is geo-economics.

We all had thought that it’s payback time for a boorish China, induced by the pandemic. Well, it imported $167.15 billion worth of goods in June 2020 and made a nonsense of the Bloomberg prediction of a 10 per cent slump. China meanwhile exported $213.6 billion which is a hike of 0.5 per cent.

If China could import as much as it exports—presently some $46.2 billion adrift—it could scoff at punitive actions by the rest of the world as not just economies but the global industrial chain and trade won’t move without its consent.

China’s imports have taken off since their domestic market today is worth 41.2 trillion yuan. It has grown at a breakneck speed in last six years, contributing 57.8 percent to GDP growth during this spell.

Interestingly, its trade surplus hasn’t dropped by much against the United States. In June, it was $29.41 billion compared to $29.91 a year ago at the same stage.

China’s imports of copper concentrate from the United States is its highest in nearly two years. It’s purchase of iron ore has jumped to 35.3 per cent since October 2017. The arrival of soybeans has climbed by 71 per cent. It has imported record meat, including offal, which is nearly 74 per cent up to the same period a year ago.

And this is cutting across all ideologies, without distinction between friends and rivals. For instance, China is about to open its money reserves for beleaguered Iran. Yet, the arch rivals of the Islamic Republic—Saudi Arabia—is the biggest exporter of oil to Beijing. China’s crude oil imports from the Saudi kingdom has risen by 15% in June. This record import is in the shadow of price war between Saudi Arabia and Russia, the world’s top oil exporters. This is when Moscow, as we know, is said to be the blood-brother of Beijing these days. On top of it, China has also boosted its inflows from Brazil, Norway and Angola.

India of course is a very minor trading partner for China since it imports a mere 3% of China’s overall exports. New Delhi could hurt mega business houses of China, especially the digital kind, but it’s not to say it is bringing beads of sweat on Beijing’s forehead.

India could feel that it has favourable neighbouring relations with the governments in Afghanistan and Bangladesh but China, against it, has brought Sri Lanka, Pakistan and Nepal in its fold. It’s planning to invest $50 billion in Bangladesh over the next couple of years.

China, further, has deployed its military infrastructure around Indian Ocean. It already has eight naval ships in these waters. It has sold 10 submarines to India’s neighbours—8 to Pakistan and 2 to Bangladesh. It has a naval base in Djibouti and a military surveillance capability on Myanmar’s Coco island. It’s offering land exchange to Myanmar.

So even though one keeps hearing the angst of world against China, in effect little is changing on the ground. It would take more than mere rhetoric to keep China honest. So far there is little to suggest that the world is walking the talk.

 

China moves to turn Iran into a client-state; stakes up for India

(This is a reprint from NewsBred).

India would watch with concern a blood-pact in the making between China and Iran which could mean trouble both at home and abroad.

China put an agreement in place last month which would virtually turn Iran into a vessel state. Tehran is already in bed in wild anticipation, once its parliament approves the union.

The 18-page agreement, accessed by the New York Times, involves 100 projects worth a staggering $400 billion. China would get discounted oil for next 25 years and in exchange would pepper the Persia of old with subways, high-speed railways and airports. There would be free-trade zones in strategic locations, including two which would overlook the critical Persian Gulf (Abadan) and the Strait of Hormuz (Qeshm).

Iran plans to hand over Jask, a port just outside the Strait of Hormuz, to China which is the vantage point through which most of the world’s oil transits. India, which imports 84% of its oil, has reduced its dependence on Middle East in recent years but it still accounts for 65 per cent of its needs. Saudi Arabia and Iraq are two of its biggest oil suppliers from the Middle East.

China has a string of ports in Indian Ocean, such as Hambantota in Sri Lanka and Gwadar in Pakistan, and now soon in Jask, which puts New Delhi at unease on its energy and security needs, if China was to block the free seas and give these ports a military makeover.

It also messes up the Chabahar port on the Gulf of Oman which India has helped build and now controls since 2018. India had soaring ambitions of turning this base into access to Central Asia and much of Eurasian landmass, through a mix of sea-land routes, not to say oil pipelines, bypassing the physical barrier of Pakistan on its north-western borders (see image).

Now India is hemmed in on its north and west flanks by two enemies and in between are the impassable Himalayas. It would be increasingly reliant on the military muscle of the United States for its freer access to seas upwards.

The United States would be no less alarmed by China’s move on Iran. It had sought-and controlled—the Middle East for decades since the World War II. Now its Fifth Fleet, based in Bahrain in the Persian Gulf, could face China’s build-up. Its warships have regularly tangled with Iranian fleets in the busy sea lanes of the Persian Gulf.

The proposed deal also makes a nonsense of the United States sanctions against Iran under the Trump administration, which had brought Tehran on its knees with crippled oil supply and blocked access to world’s financial highways. China, it seems, has braced itself too for the US economic sanctions which are inevitable in the wake of this agreement and would intensify the trade or covert war between two of world’s biggest powers.

Iran needs to produce—and supply—at least 8.5 million barrels a day in order to be relevant in the energy sector. China seeks to import at least 10 million barrels a day for its energy needs. It imports 75 percent of its oil from foreign oilfields.

The agreement also outlines China’s plan to help Iran build its 5G telecommunications network, riding on its major player Huawei. The Trump administration has barred Huawei from the United States and India is set to do the same under prime minister Narendra Modi.

The Shia Factor

India’s ties with Iran have plummeted in recent months. The Iranian foreign minister Javad Zarif had made inflammatory remarks on the CAA and on Delhi riots in February for which it was rebuked by the Modi government. India has the second highest number of Shias in the world after Iran. India’s Shias have been a moderating influence on a virulent Muslim section in India.

The document also outlines military cooperation, joint training, exercises and research besides intelligence sharing and manufacturing weapons. The military ties between China and Iran have only scaled up in recent years. The Chinese navy has participated in military exercises in Iranian waters at least three times since 2014.

Then there is the Russia factor. Moscow is India’s biggest defence importer but if asked to make a choice, it would look after China’s back than of India. It is India’s oldest and most reliable friend but the ties now are facing its litmus test. The clincher would be the supply of S400 missile system in 2021 which India is committed to buy and the United States is determined to prevent. It would be a make or break moment for India-Russia ties, at least in the immediate future.

The second Cold War is unfolding. In its first version, the United States and Soviet Union were ranged against each after World War II, in the battle-lines drawn by the NATO and the Warsaw Pact in the European theatre, their respective allies in the neighbourhood of Central-Latin America and Eastern Europe-Central Asia visible in plain view. The contours of the second Cold War is no less apparent. The United States and China are snarling at each other, with Indo-Pacific and the Middle East the two most likely flashpoints. The stand-alone moment for India is gone.

 

 

 

This is no soap opera that Russia would come and bail out India

(This is a reprint from NewsBred)

It’s not as much a matter of choice for India as it is for Russia. India media might be scripting a Russia factor in fractured Indo-China relations but you ought to know better.

India’s defence minister Rajnath Singh is in Moscow. The foreign ministers of two nations joined their Chinese counterpart for a virtual dialogue on Tuesday. Both are pre-arranged engagements, not an offshoot of Galwan Valley. Yet hopes are injected that Russia would play a peacemaker. I suggest you examine the evidence than suffer a hangover which is a druggie’s profile the morning after.

Sure, Russia is India’s biggest defence exporter. The two leaders Vladimir Putin and Narendra Modi share a rare warmth. They have reset economic ties to the extent that the target of $30 billion is revised to $50 billion by 2025. The two have a strategic partnership. Both need each other for trade corridors. Both have stood by each other on global forums. The two have not stopped liking each other in last seven decades.

But Russia is no big brother to India. India’s economy is more than twice the size of Russia. India’s arm buys are falling vis-à-vis Russia and leapfrogging with Israel, France, the United States etc. Tourism isn’t quite booming between the two nations.

On the contrary, Russia can’t do without China. Its’ trade with China is worth over a hundred billion dollars. It has a $400 billion energy deal with China. Both share a global vision in Indo-Pacific even though Russia, on its own, has little to lose on that sea expanse.  Both see in the United States an implacable rival. Both are looking after each other’s backs. You help us mate if submarines snarl in South China Sea. We look after you if NATO rolls down tanks in Eastern Europe. No formal pact, just a wink in the eye is good enough.

So, Russia could use its good offices to bring the two Asian adversaries on the table. But it can’t prevent a martial discord turning into a divorce. It doesn’t have that bargaining chip. If it was valued this big by China, the latter would’ve taken Russians into confidence before the Galwan Valley misadventure. And if they did take Moscow into confidence, and still went ahead, it’s worse.

It’s for Russia to plot its future in the 21st century. Its present woes began when it took control of Crimea after a referendum in 2014. The US-led sanctions in its wake are crippling.

It could choose to remember that India defended the referendum in Crimea while China didn’t.

It could turn a blind eye, if it wants to, China going big in elbowing it out in Central Asia which is so, so vital to Moscow.

It could choose to be a junior partner to China or retain the instincts which are genetic in a superpower.

It could ignore–if it could afford –the role India could play in linking the Eurasian Economic Union (EAEU) with Asian mass through Chabahar Port in Iran, now in India’s control.

It could miss, if it wants to, the critical role of India in the International North-South Trade Corridor (INSTC), a 7,200-km network of ship, rail and road which frees up Russian transportation across Europe, Central Asia, Armenia, Iran, Afghanistan up to India.

Nations today are guided by their own interests. Two countries could converge on one issue and diverge significantly on the other.  Russia discounts China’s role in the devastating Covid-19 spread on global forums but it has also shut its borders against China. Russia is indeed India’s friend for all seasons but it doesn’t stop them from selling arms to Pakistan and joining our arch rivals in military exercises since Afghanistan is vital. India too won’t let Russia come in the way of its growing convergence with the United States. But its adamant to buy S400 anti-missile system from Russia next year even though the United States is threatening crippling sanctions. There are camps, sure, but relationships are more fluid, unlike Cold War era. Look at Turkey, a member of NATO, but blackmailing Europe now and then on refugees.

So rejoice Russia is neutral but don’t expect them in your corner against China. Besides India itself is a power of considerable hulk. India’s issue with China won’t have a mediator. New Delhi would have to pack a punch of its own against China. Russia is no parent and India no child even though China decidedly is a bully. Call the bully out on your own. India could do it.

Indian media seeking Russia’s intervention is comical, if not tragic. On one hand you detest the United States offering mediation; on the other you seek one from Russia. It’s tragic for it betrays a sense of inferiority, a colonial hangover, which refuses to acknowledge India could hold its own. It distorts the immediacy India needs in its military preparedness. It injects a false sense of security.  It lets India down in its own eyes.

 

 

India going ahead with S-400 missiles from Russia

(This has also been published in NewsBred).

India doesn’t intend to scuttle its plans to buy S-400 Triumf from Russia despite the spectre of US sanctions.

The visit of India’s defence minister Nirmala Sitharaman to Moscow last month was a firm indication of India’s resolve to ignore CAATSA (Countering America’s Adversaries Through Sanctions Act) which Donald Trump’s regime had invoked last year on Russia for its alleged interference in 2016 US elections.

India has always relied on Russia for its military hardware and technology which remains undiminished despite Modi government’s increased military reliance on United States. Presently, it imports 62 per cent of its military needs from Moscow.

US is adviced to go easy on India in case the deal materialized for one, it’s a bulwark against China in the Pacific Ocean; (2) It’s world’s largest arms importer benefiting US directly; (3) It could push India into the arms of China and Russia and thus completely neutralizing influence of US in Asia.

New Delhi had expressed its caginess against US sanctions during a visit of foreign secretary Vijay Gokhale to US recently.

The S-400 anti-air missiles have been billed as US F-35 killers by Moscow. During the cruise missile strikes by US, French and British army on suspected Syrian chemical weapon sites recently, it was noticeable they avoided areas protected by S-400 systems.

Russia has already begun delivering S-400 missiles to China; Turkey has a $2.5 billion deal to purchase S-400s from Russia. Iraq has expressed its interest too rather than US Patriot surface-to-air missile defence system which was dubbed a failure to protect Saudi Arabian capital Riyadh against the missiles launched by Houthi rebels in Yemen.

S-400 is one of world’s best interceptor-based missile defense system. It has an estimated operational range of 400 kilometres and an altitude of up to 185 kilometres. It could intercept missile warheads in their terminal stage.

India is expected to announce the purchasing of S-400 missiles from Russia when the leaders of the two country, Narendra Modi and Vladimir Putin, hold a bilateral summit in October this year.

India & Russia seek trade in gold

Sberbank, Russia’s largest state-owned bank, is looking to finance the direct import of gold to India.

Aleksei Kechko, managing director of the bank’s Indian subsidiary, has made an announcement to this effect which is no surprise to those who have followed the gold-buying spree of BRICS nations, especially China and Russia.

India imports a lot of gold. Indeed, it’s the second largest importer of gold in the world. India imported $35 billion worth of gold in 2015. The direct gold trade between India and Russia would help both nations.

“We hope to sign the transaction by September or October this year,” said Kechko “We are also exploring the possibility of entering the gold loans sector as well.”

Russia has been keen of late to conduct business with BRICS nations in gold. Russia now has a yuan-clearing bank in Moscow and it’s Central Bank has opened a branch in Beijing to make for better communication between the financial authorities of the two countries.

The effort by BRICS nations is to work towards bypassing the dollar while also using gold for transaction commodity between member nations.

BRICS nations actively are moving towards creating a new financial architecture to tackle the dominance of the US dollar in global finance.

The initiative was taken in the eighth summit of BRICS in India last year. The new institutions set up by the BRICS include the New Development Bank (NDB), the BRICS-led Contingency Reserve Fund (CBF) and the Asian Infrastructure Investment Bank (AIIB).

Russia is world’s third largest gold producer behind China and Australia, as per the 2016 data. Still, it has been on a massive gold-buying spree in recent years. Hit by economic sanctions by West, Russia’s ruble is the most gold-backed currency in the world. Moscow sees it as a safeguard against western attempts to destabilize Russia’s economy.

The same is the case with China who wants to be ready for economic warfare by the West. Both China and Russia have added almost 50 million ounces of gold to their central banks while selling off more than $267 billion of treasuries.

As for India, it simply loves gold leading to its constant demand. Be it newly-wed brides or trinklets with peasants in countryside, Indians simply love gold.

However, importing gold is relatively a new phenomenon. Until 1990, gold imports were virtually banned. Bullion was smuggled and cost 50 per cent more at home than abroad. However, deregulation set off an explosion. Now most gold legally comes to India through banks.

 

 

Russia need be a India-China mediator

The Russia-India-China (RIC) meet of its foreign ministers in Moscow is unlikely to have thawed the freezing relations between two Asian giants, China and India.

 

The same is true of the simultaneous visit of India’s defence minister Manohar Parrikar to China where he met his Chinese counterpart Gen. Chang Wanguan and stated India attaches highest priority to its relationship with China.

 

Both China and India suffer from a trust deficit though the niggling issue is simple enough: Both China and India need to look at each other’s territorial claims on Arunachal Pradesh and Aksai Chin plateau in a spirit of cooperation and resolve the long-standing dispute.

 

As a nation which stands to gain the most through India-China alliance, Russia could offer its own example: the Russian-Chinese borders were formalized in 2004 after 40 years of bad blood between the two nations.

 

The last fortnight has been particularly frosty: China blocked India’s move in United Nations to have Jaish-e-Mohammad (JeM) chief and allegedly Pathankot terror attack mastermind, Masood Azhar be designated as terrorist,

 

India, on their part, went ahead a signed an agreement with the United States on sharing military logistics in Indian Ocean, the area which is strategically and economically lifeline to Beijing.

 

But the RIC meet is unlikely to have much influence. Despite it being a foreign ministers’ conclave, it largely deals with the economic, and not security, issues.

 

The economic prospects of trade between India and China are mammoth. It’s already worth $100 billion and given their market and areas of strength, it holds immense possibility.

 

India could offer its Information Services strength and avail China’s expertise to build high-speed rail network in India. China’s excess production could also be easily absorbed within India.

 

India is extremely touch on matters of terrorism and finds itself regularly frustrated by China on international forums. Last year, China had blocked India’s bid to question Pakistan over the release of Zaki-ur-Rehman Lakhvi, a commander in Lashkar-e-Taiba, which had carried out the deadly 2008 Mumbai attacks that claimed 160 lives.

 

A leaked cable of US State Department in 2010 had revealed that China had in the past blocked UN sanctions against Lashkar-e-Taiba and the al-Akhtar Trust (a charity front for Jaish-e-Mohammad). It had also blocked India’s request to list Syed Salahuddin, a terrorist wanted in relation to numerous Hizbul Mujahideen attacks.

 

Though China’s moves were procedural within the UN sanctions committee, it was in opposition to the stands of US, UK, France and Russia all of whom were willing to back India on the issue.

 

China has a history of shielding Pakistan-based terror groups from sanctions under resolution 1267 even though it hardly ever uses a veto—exercising it only 10 times in its 70-year history of UNSC. It parrots the same line in defence that Pakistan does: “Pakistan is a terrible victim of terrorism itself.”

Such acts hardly endear China to India. It also reveals the closeness between Pakistan and China in modern context. India feels hemmed in between its two nuclear-armed northern neighbours. All it is doing is to drive India into US’ arms which dread the prospects of close India-China relations.

It still is encouraging that RIC has shown its concern on terrorism and a willingness to use international forums, such as BRICS, SCO, East Asian summits and Conference on Interaction and Confidence-Building Measures in Asia (CICA) to get the three nations closer.

Russia is keen to play a mediator’s role between China and India. It won’t be Asia’s century unless India and China draw closer to each other. Joint enterprises, preferential trade system and a common trade currency offer a huge opportunity.

China’s Great Silk Road project involves a huge territory—from Southeast Asia to the Caucasus. Russia, like India, isn’t yet a part of it even though a cooperation between the Silk Road and Russia-inspired Eurasian Eonomic Union exists.

There is a need to cool down the tempers from both sides. Says NewsBred columnist Shen Dingli: “China actually has many ways to hurt India. China could send an aircraft carrier to the Gwadar port in Pakistan. China had turned down the Pakistan offer to have military stationed in the country. If India forces China to do that,” there could be a threatening navy at India’s doorstep.