From July 14th to July16th Brazil will host the 6th Summit of Heads of State and of Government of BRICS. This meeting will likely see the emergence of a BRICS Development Bank that will serve as an alternative to the World Bank, which the BRICS see as too heavily oriented towards Western interests. Though the idea for such a bank has been discussed since 2012 the impact of the Federal Reserve’s tapering on countries such as India and South Africa, Chinese unease over the fluctuation of the US dollar, and the challenges that Russia is facing due to its actions in Ukraine have accelerated this project. One country that could benefit from a BRICS Development Bank is Argentina.
Russia has invited Argentina to the BRICS summit and is supporting the possibility of Argentina joining the organization. This can been seen as part of Moscow's effort to generate good will in order to increase trade and enhance its presence in Latin America. To achieve this end Russia has also canceled 90% of Cuba’s $35 million debt and backed Brazil for a permanent seat on the United Nations’ Security Council. If Argentina joined BRICS, or at least had access to capital from the BRICS Development Bank, it could greatly benefit the country. The reality is that due to the default of 2001 Argentina is a relatively risky place to invest and has struggled to attract capital since the default. Access to the BRICS Development Bank combined with Russia’s efforts to build good will in Latin America via trade and investment could help Argentina attract the capital it so desperately needs.
Argentina will likely seek funding to improve their ports from either the Russians or the BRICS Development Bank. As things stand now the expansion of the Panama Canal and the creation of the Nicaragua Canal will likely make Argentine exports such as soy less competitive as compared to comparable US and Brazilian exports. The latter countries are both closer to the canals and have or are developing their infrastructure to capitalize on this shift in global shipping. The Brazilians in particular have been very active in developing their ports and improving transport from the interior to the coast. Argentina does not want to be left behind. In a worse case scenario the Argentines could find themselves dependent on Brazilian ports thus reducing profits from their exports while enriching their regional rival.
If Argentina is able to attract the capital it needs to be competitive on the global market it could help the country rehabilitate itself economically. A shift to a leadership that is more business friendly could facilitate this process though it is important to note that any attempt for the country to become more economically sustainable would presumably result in cuts to social spending which would likely lead to social instability and a heightening of political risk. That said, Argentines are tired of the country's economic decline and are no doubt acutely aware of how neighboring Uruguay has been flourishing due to its relatively pro-business policies. Argentina has seen political instability in the past. If Buenos Aires can attract capital and survive whatever unrest results from potential economic reforms we could see the country return to the level of economic development that its geography and resource base should afford it.
Showing posts with label India. Show all posts
Showing posts with label India. Show all posts
Friday, July 11, 2014
Friday, June 13, 2014
The Implications of Developing Sino-Bangladeshi Relations in the Indian Ocean on International Relations in the South China Sea
This week Bangladeshi Prime Minister Sheikh Hasina completed a three day visit to China. One of her primary objectives during the trip was to attract investment to develop a deep-sea port on Sonadia Island in the Bay of Bengal. Though an agreement is still pending such a development would serve as an additional stop along the so-called String of Pearls, a network of ports that the Chinese have helped develop which link East Africa, Southwest Asia, and South Asia to China. A further increase in China's presence in the Indian Ocean and the concomitant increase in trade that would presumably accompany it will be a positive step for Bangladesh even if it could complicate relations between Delhi and Dhaka. What garners less attention is the reality that an increase in China’s presence in the Indian Ocean could also exacerbate tensions in the South China Sea.
If there is a an increase in trade between the Indian Ocean and the South China Sea the route will become more valuable. Though the energy resources in the South China Sea are attractive Beijing's primary interest in the region is to have greater control over shipping lanes through which half of the world’s cargo by tonnage passes through each year. China wants to be a great power and great powers are Blue Water Powers (i.e. they have a global naval presence). The problem with a global naval presence is that sovereign powers resent foreign powers imposing themselves near their territory. We have already seen heightened tensions in the South China Sea between China and Vietnam and China and the Philippines with the former allegedly ramming Chinese ships and the latter having filed a case against China in the Permanent Court of Arbitration in The Hague accusing Beijing of violating the United Nations’ Convention on the Law of the Sea (UNCLOS). As long as China's neighbors are divided they cannot stand up to China in an effective manner. For this reason it will be important to note if the Philippines and Vietnam decide to cooperate to protect their interests in the South China Sea.
Though Manila and Hanoi have conflicting claims over the Spratly Islands there is evidence that the Vietnamese and Filipinos recognize that they can better protect their respective interests by cooperating. Last Sunday members of the Filipino and Vietnamese navies staged a symbolic display by gathering to play soccer and volleyball and drink beer on the Vietnamese held Southwest Cay in the South China Sea. Though such a gathering is hardly a concrete commitment to mutual defense it does send a message that cooperation is possible. It will be important to monitor if Filipino-Vietnamese relations develop beyond the symbolic and whether or not an agreement between the two countries will gain either direct or indirect support from Japan and the United States.
The so-called String of Pearls is a potential step to transform China into a Blue Water Power. This process will take decades and will be prone to conflicts. Whether or not these conflicts escalate to the point where diplomacy fails remains to be seen. What is important to note is that
what happens in the Indian Ocean can impact relations in the South and East China Seas. As countries in one region see China enhancing it power in another region they will question how this will impact their long-term interests. It is possible that we will see greater cooperation between the Philippines, Vietnam and a remilitarized Japan with either the explicit or implicit backing of the United States. Such a grouping might be able to provide a balance of power in the Western Pacific but it could also be viewed as a sufficient threat for Beijing to take action to protect Chinese interests. For this reason it is important to monitor factors which could unite countries in the South and East China Seas even if these factors are occurring in another region and their implications are not always immediately evident.
If there is a an increase in trade between the Indian Ocean and the South China Sea the route will become more valuable. Though the energy resources in the South China Sea are attractive Beijing's primary interest in the region is to have greater control over shipping lanes through which half of the world’s cargo by tonnage passes through each year. China wants to be a great power and great powers are Blue Water Powers (i.e. they have a global naval presence). The problem with a global naval presence is that sovereign powers resent foreign powers imposing themselves near their territory. We have already seen heightened tensions in the South China Sea between China and Vietnam and China and the Philippines with the former allegedly ramming Chinese ships and the latter having filed a case against China in the Permanent Court of Arbitration in The Hague accusing Beijing of violating the United Nations’ Convention on the Law of the Sea (UNCLOS). As long as China's neighbors are divided they cannot stand up to China in an effective manner. For this reason it will be important to note if the Philippines and Vietnam decide to cooperate to protect their interests in the South China Sea.
Though Manila and Hanoi have conflicting claims over the Spratly Islands there is evidence that the Vietnamese and Filipinos recognize that they can better protect their respective interests by cooperating. Last Sunday members of the Filipino and Vietnamese navies staged a symbolic display by gathering to play soccer and volleyball and drink beer on the Vietnamese held Southwest Cay in the South China Sea. Though such a gathering is hardly a concrete commitment to mutual defense it does send a message that cooperation is possible. It will be important to monitor if Filipino-Vietnamese relations develop beyond the symbolic and whether or not an agreement between the two countries will gain either direct or indirect support from Japan and the United States.
The so-called String of Pearls is a potential step to transform China into a Blue Water Power. This process will take decades and will be prone to conflicts. Whether or not these conflicts escalate to the point where diplomacy fails remains to be seen. What is important to note is that
what happens in the Indian Ocean can impact relations in the South and East China Seas. As countries in one region see China enhancing it power in another region they will question how this will impact their long-term interests. It is possible that we will see greater cooperation between the Philippines, Vietnam and a remilitarized Japan with either the explicit or implicit backing of the United States. Such a grouping might be able to provide a balance of power in the Western Pacific but it could also be viewed as a sufficient threat for Beijing to take action to protect Chinese interests. For this reason it is important to monitor factors which could unite countries in the South and East China Seas even if these factors are occurring in another region and their implications are not always immediately evident.
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