Tackling the South China Sea Together: British and French Navies Chart a Course

Journal of Political Risk, Vol. 7, No. 6, June 2018 

By Peter M. Solomon

At a September 2015, joint press conference at the White House, China’s President Xi Jinping stood beside U.S. President Barack Obama and said, “China does not intend to pursue militarization” with respect to “construction activities that China are undertaking” on the Spratly Islands in the South China Sea.[1] Since then, China has established several offensive capabilities in the region, including surface-to-air and anti-ship missile systems on three features in the Spratly Islands and the ability to deploy strategic bombers from the Paracel Islands.[2]  In comparison to the United States, which has been a consistent critic of China’s reclamation and militarization and has embarked on numerous freedom of maritime navigation exercises in the region, the European Union (EU) has historically been reserved in its comments regarding China’s activities in the South China Sea. Instead, the EU has limited itself to general comments about the importance of maintaining freedom of the seas and resolving disputes peacefully. While these statements are not without importance, the lack of a more critical, unified EU approach to China’s destabilizing activities has left missing a crucial voice. The tides could soon turn.

Embed from Getty Images

Continue reading

Reason, Imagination and Invention in the South Pacific: The Laser Beam Kiwi

Journal of Political Risk, Vol. 7, No. 6, June 2018 

By Bernard Cadogan, Ph.D.

Troops pose with the “Laser Kiwi” flag, submitted to the New Zealand Flag Consideration panel in 2015 by James Gray. Source: Reddit.

Address to the U.K. Defence Academy, Shrivenham, 7th February 2018

New Zealand is proof that nature does not always abhor, a vacuum. The country is truly, “the last, the loneliest and the loveliest” as Rudyard Kipling declared Auckland to be in his “Song of the Cities”. Strategic systems never tolerate vacuums. They punish confusion and ambivalence. New Zealand is no redoubt, nor is it overlooked.

The intention of this address is to consider New Zealand’s sense of geopolitical reality. Are we proof that the Versailles Conference unassociated Organisation for Economic Co-operation and Development (OECD) nation state has been outclassed in the 21st century Pacific? Are we a living fossil ?

Woodrow Wilson envisaged a world in which there would be no assemblages such as empires, nor alliance systems even. Sovereignty-pooling exercises such as the European Union and Mercosur or Caricom would have been anathema to Wilson. They are not an option for us.

When asked at the Versailles Conference, why we had made the effort we did in the Great War, our Prime Minister Bill Massey replied, “we did it for Civilisation”.

Continue reading

China’s $60 Trillion Estimate Of Oil and Gas In The South China Sea: Strategic Implications

U.S. hydrocarbon estimates imply a maximum of $8 trillion worth of oil and gas in the region, explaining part of the strategic divergence of the two superpowers.

Journal of Political Risk, Vol. 6, No. 1, January 2018

By Anders Corr, Ph.D.

China’s estimates of proved, probable and undiscovered oil and gas reserves in the South China Sea imply as much as 10 times the value of hydrocarbons compared with U.S. estimates, a differential that has likely contributed to destabilizing U.S. and Chinese interactions in the region. While China estimates a total of approximately 293 to 344 billion barrels of oil (BBL) and 30 to 72 trillion cubic meters (TCM) of natural gas, the U.S. only estimates 16 to 33 BBL and 7 to 14 TCM. Considering that the inflation-adjusted value of oil vacillated between approximately $50 and $100 per barrel (in 2017 prices) since the mid-1970s, U.S. estimates imply a hydrocarbon value in the South China Sea between $3 and $8 trillion, while Chinese estimates imply a value between $25 and $60 trillion. In addition to other factors, China’s greater dependence on oil imports and higher estimates of hydrocarbons in the South China Sea have driven it to invest more military resources in the region. An overly economistic approach by the Obama administration probably led the U.S. to allow China’s expansion in the South China Sea too easily.

Photo taken on June 13, 2015 shows the Xingwang deep-sea semi-submersible drilling platform at Liwan3-2 gasfield in the South China Sea. China’s largest offshore oil and gas producer CNOOC Ltd. announced on July 3, 2015 that its Xingwang deep-sea semi-submersible drilling platform started drilling at 1,300 meters underwater in Liwan 3-2 gas field in the South China Sea. Credit: Xinhua/Zhao Liang via Getty Images.

Continue reading

China Swaggers, But Time Not On Its Side

Journal of Political Risk, Vol. 6, No. 1, January 2018

By Arthur Waldron

I have some thoughts about the “year of doom” 2018 that appeared on the web yesterday. They are as follows:

(1) China has undertaken her dangerous policies for internal reasons. That is how China is. She has no pressing or other need for Scarborough Shoal in the Philippines EEZ, for example.

(2) We know (1) is true because Xi Jin Ping goes on an on about loyalty, reshuffles the army, creates the most boring flag raising ceremony in history, and was reported to get in a fight with a general about whether the army should be made national instead of party. Who after all is going to take a bullet for Xi? We need to get to the root of this domestic phenomenon, but how is an almost impossible question.

(3) China’s tactics have sought to win without fighting by overawing small countries (and not-so-small countries, like India and Indonesia) using their awesome military as no more than a threat and their awesome economy likewise. The problems are (a) even the Philippines is not overawed and China is very much on the wrong side of international law and (b) this is important: China overestimates her own achievements. Maoism was a cesspool. She has gotten out rinsed off, and started some large but financially dodgy corporations. Skyscrapers have sprouted and tilted.

Group of People’s Liberation Army (PLA) soldiers in China. Credit: Getty Images.

Continue reading

Perspectives for development of China-EU relations in the infrastructure investment sector: a case study of COVEC’s investment in Poland

Journal of Political Risk, Vol. 5, No. 8, August 2017

By Paulina Kanarek

In 2009 China Overseas Engineering Group (COVEC) was the first Chinese company to win a public works contract in a member state of the European Union. Two years later COVEC decided to withdraw from Poland and its failure to construct a section of the A2 motorway between Warsaw and Łódź brought up questions regarding access to the EU’s public procurement market by third countries.

This research explores the implications of COVEC’s investment for bilateral relations between China and Poland. Through analysis of this particular case study of the unsuccessful entrance to the EU infrastructure market, this work attempts to uncover whether the fault lies in the communication gap between European and Chinese actors and zero-sum mentality or it is a case of policy failure.

This study will reveal the particular model of operations that the Chinese companies try to pursue in Europe, basing on their previous experiences in the African construction market. By showing that the model which relies on offering the lowest bid and then renegotiating the contract cannot work due to the European Union’s legal framework and Polish domestic laws, this evidence-based research will argue that COVEC’s investment was a classic example of project management failure.

Furthermore, this research aims at casting light on the broader context of the political economy of China’s relations with the European Union. Following the national interest while adhering to its obligations as a member state of the EU, Poland serves as a good example to show the complexity of relations between the PRC and highly fragmented EU.

Through qualitative research, including elite interviews, this work intends to fill in the gap in academic research on China’s relations with the Central and Eastern European states, assessing whether there is space for progress in China-EU relations in the infrastructure investment sector.
Embed from Getty Images

Continue reading

Russian Military Force Structure in Ukraine Area

Russian Military in Ukraine Region

This official document obtained by Corr Analytics reveals the force structure of Russian military personnel and equipment in and around Ukraine, including in Russia, Ukraine, and Transniestria.

Journal of Political Risk, Vol. 3, No. 2, February 2015.

By Anders Corr, Ph.D

Corr Analytics received official documents yesterday that reveal the force structure of Russian military personnel and equipment in and around Ukraine, including in Russia, Ukraine, and Transniestria. The key document is republished here, and details 63,200 personnel, 755 tanks, 2,610 armored vehicles, 305 multiple launch rocket systems, 955 artillery systems, 355 combat aircraft and helicopters, 30 combat ships, and 2 submarines.

The released document shows the locations of forces, including in the Donbas region of Eastern Ukraine, Crimea, Russia near the Ukrainian border, and Transdniestria.  Of particular interest are Russian-flagged forces shown to be in the Donbas region, including 13,000 personnel, 290 tanks, 765 armored vehicles, 125 multiple-launch rocket systems, and 210 artillery systems.

The army arrayed against the Ukrainian military is clearly a powerful Russian force that surrounds the country. Yet, Ukrainian officials yesterday were optimistic about a Ukrainian win against Russia. Russian foreign reserves are running low and being burned at a remarkably high rate. The United States, United Kingdom, and Canada have finally broken with France and Germany, and put military advisors in Ukraine. Ukraine expects to receive Javelin anti-tank missiles, sophisticated artillery equipment, and other military assistance in the near future.

Ukraine will accept conditions imposed by the IMF for a $17.5B loan in the coming days. This will cause social unrest in Ukraine, according to officials. Ukrainian citizens are expected to denounce such conditionality when the country is at war. Russian intelligence will likely take advantage of such unrest, according to the officials. However, Ukraine will accept the conditions in order to maintain unity with its allies and to obtain the much-needed loan.

Anders Corr, Ph.D. is the founder and principal of Corr Analytics. JPR Status: Report, archived 2/28/2015. 

China Response to Hacking Indictment Indicates Rash Leadership and Need to Expand NATO to Asia

 

Russia and China are currently conducting naval  exercises near Shanghai. In 2013, Russia and China conducted similar exercises near Vladivostok. From right, China's Yantai Type-054A missile destroyer, Yancheng Type-054A missile destroyer, Wuhan Type-052B guided missile destroyer and Lanzhou Type-052C air defence missile destroyer take part in the fleet review during the "Joint Sea-2013" Sino-Russian joint naval drills at the Peter the Great Gulf near Vladivostok in Russia on Wednesday, July 10, 2013. A Chinese fleet consisting of seven naval vessels participated in the "Joint Sea-2013" Sino-Russian joint naval drills scheduled for July 5 to 12. The eight-day maneuvers focus on joint maritime air defense, joint escorts and marine search and rescue operations. (Photo By Sheng Jiapeng/Color China Photo/AP Images)

Russia and China are currently conducting naval exercises near Shanghai. In 2013, Russia and China conducted similar exercises near Vladivostok. From right, China’s Yantai Type-054A missile destroyer, Yancheng Type-054A missile destroyer, Wuhan Type-052B guided missile destroyer and Lanzhou Type-052C air defence missile destroyer take part in the fleet review during the “Joint Sea-2013” Sino-Russian joint naval drills at the Peter the Great Gulf near Vladivostok in Russia on Wednesday, July 10, 2013. A Chinese fleet consisting of seven naval vessels participated in the “Joint Sea-2013” Sino-Russian joint naval drills scheduled for July 5 to 12. The eight-day maneuvers focus on joint maritime air defense, joint escorts and marine search and rescue operations. (Photo By Sheng Jiapeng/Color China Photo/AP Images)

Journal of Political Risk, Vol. 2, No. 5, May 2014.

By Anders Corr, Ph.D.

China is using a very blunt and escalatory instrument — threatening general deterioration in military relations — to respond to a limited issue of Chinese individuals stealing trade secrets. On May 20, the United States Justice Department indicted five People’s Liberation Army members for hacking United States commercial data.  The remarkable speed with which China responded the following day, and at the highest level, suggests that commercial hacking is an officially-approved state policy on the part of China. The Chinese threat of reduced military cooperation and thereby deteriorating military relations is clumsy in that the Chinese would look better had they simply launched an investigation of the individuals — an investigation that they could later claim shows the indictment as baseless. The broad Chinese threat of deteriorating military relations invites an increase in US military attention to Asia — exactly what the Chinese should be trying to avoid. The clumsiness of the Chinese response to the indictments indicates a rash Chinese leadership prone to irrational military strategies, with consequent market volatility and political instability. The US and its Asian allies should respond with a measured forward deployment of military forces, and redoubled diplomatic energy towards greater alliance cooperation, including between Asian allies and NATO.

For legal and political reasons, the US will not be able to simply withdraw the indictment. It would increase the perception of an increasingly weak US foreign policy. This will lead Chinese diplomats to retaliate in some manner, further decreasing stability between the US and China. Expect mutual diplomatic retaliation to exert downward pressure on the Yuan (compensated by People’s Bank of China buying of Yuan), as well as downward pressure on Chinese stock indexes, including SHCOMP, CSI-300, Bloomberg China-US 55, and HSCEI. Expect Chinese index losses to increase with every additional diplomatic spat that ensues, and to slowly recover during periods of diplomatic quiet. Continue reading

Serbia’s EU bid and the Kosovo dialogue

A Serbian police officer guards a mass grave site in the village of Rudnica, 280 kilometers (170 miles) south of Belgrade, Serbia, Thursday, April 17, 2014. The mass grave is believed to contain at least 250 bodies of Albanian victims killed during the Kosovo war. (AP Photo/Darko Vojinovic)

A Serbian police officer guards a mass grave site in the village of Rudnica, 280 kilometers (170 miles) south of Belgrade, Serbia, Thursday, April 17, 2014. The mass grave is believed to contain at least 250 bodies of Albanian victims killed during the Kosovo war. (AP Photographer: Darko Vojinovic)

Journal of Political Risk, Vol. 2, No. 4, April 2014.

By Raquel Montes Torralba

With Serbia seeking to join the European Union (EU), as did Croatia in July 2013, European officials have advanced a pre-condition to be resolution of major disputes with Kosovo. In April 2014, Serbia and Kosovo celebrate the first anniversary of an agreement meant to normalize relations. Positive developments include the March 2014 election of a pro-EU majority in Serbia’s parliament, local elections in North Kosovo held in a generally peaceful manner, as well as progress on technical issues such as border control and police transfer. Nevertheless, the political context for 2014 could be derailed by upcoming general elections in Kosovo, the creation of a Kosovo Army, and establishment of a war crimes court for Kosovo’s ethnic Albanian rebels. More particularly, all these factors could impact the creation of a Community of Serb Municipalities, the keystone of the Serbia-Kosovo Agreement. Continue reading

Political Risk in Europe: A Quantitative Index Based on Measures of Corruption, Market Distortion, and the Shadow Economy

Journal of Political Risk, Vol. 1, No. 5, September 2013.

Figure 1: Political Risk in Europe 2012By Stoycho P. Stoychev, Ph.D.

This paper proposes a quantitative index of political risk in Europe, based for the first time on corruption, market distortion, and the shadow economy. It is constructed upon the idea that within a continuum between rule of law and corruption, the levels of political risk vary greatly. Institutional statistical data are used to allow for reliability in time and cross-country comparison. As a proof of reliability, the resulting scores are highly correlated with other applied indices of political risk. A major advantage of the proposed index, however, is that it differentiates between developed countries, which is not possible with existing risk indices.

Continue reading

Effects of terrorist veterans returning to the West from foreign wars

Thomas Hegghammer of the Norwegian Defence Research Establishment recently found that most terrorists originating in the West (Europe, Australia, or the US) conduct their terrorism in conflict zones such as Iraq or Afghanistan. These terrorists are defined as “foreign fighters”. When these foreign fighter veterans return to the West, they are more likely to complete attacks, which are more likely to be lethal (American Political Science Review, volume 107, no. 1, Feb 2013, “Should I stay or should I go? Explaining variation in Western Jihadists’ choice between domestic and foreign fighting.”)

As the wars in Iraq and Afghanistan wind down, we can expect countervailing effects on terrorism in the West. On the one hand, there presumably will be less reason to conduct terrorism, as terrorists use these wars as justification for their actions. On the other hand, foreign fighter veterans will be returning to the West, increasing the quantity, militancy, and experience of the pool of potential domestic terrorists. New justifications for terrorism — for example Western intervention in Mali and Syria — can always be found by those so inclined.