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122. A Scramble for Gas: Qatari LNG and EU Diversification Plans
- Author:
- Pier Paolo Raimondi
- Publication Date:
- 04-2022
- Content Type:
- Working Paper
- Institution:
- Istituto Affari Internazionali
- Abstract:
- Amidst a worsening geopolitical and energy crisis in Europe, the EU is scrambling to increase liquefied natural gas (LNG) imports as one component of its larger objective to reduce its overdependence on Russian gas. In 2021, the EU imported 155 billion cubic metres (bcm) of natural gas from Russia (140 bcm via pipeline and 15 bcm of LNG). Under its REPowerEU initiative, the European Commission aims to increase LNG imports to replace 50 bcm of Russian gas by the end of 2022.
- Topic:
- European Union, Geopolitics, Gas, Diversification, and Energy
- Political Geography:
- Europe and Qatar
123. The geopolitics of digital financial technologies: A chance for Europe?
- Author:
- Brigitte Dekker, Arief Hühn, Pim Korsten, and Maaike Okano-Heijmans
- Publication Date:
- 01-2022
- Content Type:
- Special Report
- Institution:
- Clingendael Netherlands Institute of International Relations
- Abstract:
- Geopolitical tensions are permeating the digital domain. During the 1990s, the emergence of the internet still involved optimism and high hopes for digital technology as a force for openness, connectedness and freedom for all. Yet contrary to these promises, a trend of centralization, is prevalent in the digital economy. This trend of centralization, with the subsequent problems of gatekeeping, ecosystem lock-in, disproportional rent-seeking and monopolists that set market rules, is now also evident in the financial industry. Whereas smaller financial technology (fintech) companies, including many European firms, revolutionized the financial sector in the 2000s – disrupting traditional banks and their vested interests – we now witness a concentration of power and data in this sector, either in incumbent firms or within Big Tech companies. In response, governments in China, the European Union (EU) and the United States (US) are devising regulations, while at the same time technology innovators are building a radically new infrastructure to underpin our financial sector: Decentralized Finance (DeFi). The geopolitical implications of this disruptive transformation of the financial sector – through both fintech and DeFi – require forward-looking government responses that protect and promote European interests in the long term. This Clingendael Report first reflects on these trends of centralization in digital finance and decentralization in ‘traditional finance’. The paper examines the relationship between geopolitics and finance and looks at the position of the EU and its member states. The analysis considers the medium to longer-term implications in the following three domains: economic competitiveness and innovation; financial–economic and social stability; and inclusivity and equality. Data governance, data protection and data portability between financial services are key concepts in each of these areas. Building on these insights, the report argues for a push towards greater awareness among European policymakers on the potentials of DeFi to counter Big Tech’s rising influence in the European financial system with a decentralized, human-centred and value-based system. At the same time, the regulatory and security risks of DeFi – and the trend of decentralization in general – must be addressed. The report also highlights the need to help people to develop digital skills and become responsible and resilient digital citizens, and calls for enhanced dialogues with officials and technology company executives in like-minded countries on current developments. New approaches, such as multi-stakeholder consultations and increased rapprochement with the open-source and crypto-communities, are needed to facilitate knowledge exchange and best practices that will improve (regulatory) responses.
- Topic:
- Science and Technology, European Union, Geopolitics, Internet, and Digital Finance
- Political Geography:
- China, Europe, and United States of America
124. Investors beware: Europe’s top firms are highly exposed to China
- Author:
- Ties Dams and Xiaoxue Martin
- Publication Date:
- 04-2022
- Content Type:
- Special Report
- Institution:
- Clingendael Netherlands Institute of International Relations
- Abstract:
- Europe’s top firms are highly exposed to China, and therefore to China-related geopolitical risk. This risk is only set to increase in the coming years, as geopolitical tensions between China, the US and the EU are not expected to decrease. Moreover, case studies of LVMH, HSBC, ASML and BMW show that some of Europe’s biggest listed firms could and should offer investors more transparency on their risk-management strategies. Intelligence on China and geopolitical risk exposure is key for investors, and investors that get ahead of the curve may have the edge in the long term. This report is aimed at investors in Europe’s biggest listed firms. It argues that investors have a growing need for transparency amongst European biggest companies with regard to their strategies in dealing with China-related geopolitical risk. Even investors without direct interests in China are or will be affected by China-related geopolitical risk due to the various forms of exposure of companies in the European home market. This means that investors may be increasingly exposed to the risks linked to great power competition, without having the knowledge necessary to anticipate geopolitical changes. As geopolitical tensions between China, the US and the EU are not expected to decrease, investors would be wise to seek greater transparency about European companies’ exposure to the Chinese market – and indeed get ahead of the curve and gain a competitive advantage by investing in those firms that have forward-looking geopolitical strategies in place. This report aims to put this point on investors’ strategic agenda by making the following three points: Europe’s top firms are highly exposed to China. China-related geopolitical risk is spreading. Case studies suggest that Europe’s top firms may not be sufficiently transparent about geopolitical risk management.
- Topic:
- Geopolitics, Business, Investment, and Risk
- Political Geography:
- China and Europe
125. The Economics of Great Power Competition: Why Germany Must Step Up on Defense
- Author:
- Markus Jaeger
- Publication Date:
- 05-2022
- Content Type:
- Policy Brief
- Institution:
- German Council on Foreign Relations (DGAP)
- Abstract:
- Without a sound economic foundation, political and military ambitions cannot be sustained. This also applies to the geopolitical competition between the United States and its rivals. So far, America and its allies are economically ahead of Russia and China. But where Russia’s long-term outlook is weak, China’s economic might is rapidly increasing. Despite the war in Ukraine, Washington will have to focus its resources on Asia. In Europe, Germany, with its large financial and economic base, should lead on military spending and enhanced security.
- Topic:
- NATO, Geopolitics, Geoeconomics, and Competition
- Political Geography:
- Russia, China, Europe, Germany, and United States of America
126. The Geopolitics of Digital Technology Innovation: Assessing Strengths and Challenges of Germany’s Innovation Ecosystem
- Author:
- Tyson Barker and David Hagebölling
- Publication Date:
- 08-2022
- Content Type:
- Special Report
- Institution:
- German Council on Foreign Relations (DGAP)
- Abstract:
- The COVID-era public and private investment influx into Germany’s digital technology R&D is reversing amid inflation, fiscal consolidation, and geopolitical pressures coming from the Zeitenwende. Germany’s future in an EU that is among the top-tier technology powers requires a profound and rapid transition of the country’s R&D strengths into data-intensive, systems-centric areas of IoT and deep technology that are linked to the domestic manufacturing base. New policy approaches in three areas – money, markets, and minds – are needed. New technologies such as robotics, artificial intelligence (AI), advanced material science, biotech, and quantum computing tend to have broad general-purpose applications. But uncoordinated funding vehicles, universities’ civil clauses, and restrictive visa and onboarding guidelines for skilled foreign workers slow innovation in these sectors and hamper German geo-technological competitiveness. In the mid-term, Germany could look at a scheme to bundle the Future Fund together with new institutional investment in a sort of embryonic German Sovereign Wealth Fund, with a proportion of funding specifically geared toward strategically important VC endeavors.
- Topic:
- Science and Technology, Geopolitics, Innovation, and Digitization
- Political Geography:
- Europe and Germany
127. NATO Allies’ geopolitical diversity and the cohesion of the Alliance
- Author:
- Thierry Tardy
- Publication Date:
- 12-2022
- Content Type:
- Policy Brief
- Institution:
- NATO Defense College
- Abstract:
- The Russia-Ukraine war has revealed a high degree of cohesion among NATO Allies, who largely converge on what the Alliance is about and how it should respond to the Russian threat. In the longer- term, though, NATO’s cohesion will be dependent on Allies’ success in knitting together a common vision from their varying strategic cultures and threat assessments. And indeed, from the United States’ global reach and first-class military to France’s strategic autonomy imperative and the UK’s renewed ambition for ‘Global Britain’; from the Baltic states’ and Poland’s geographical proximity to Russia, to Italy’s and Spain’s regional southern focus; and from Türkiye’s special defence and foreign policy posture to Germany’s Zeitenwende, the Atlantic Alliance brings together a wide range of geopolitical diversity. This Policy Brief draws on a study conducted by the author1 to build a typology of NATO Allies based on three sets of variables: the nature of the relationship between any given Ally and the United States; the Ally’s perception of the Russian threat; and the extent to which NATO is given exclusivity in the Ally’s defence policy. Against this backdrop, Allies can be classified into three groupings that reveal persistent fault lines running through the Alliance, making cohesion a permanent challenge.
- Topic:
- NATO, Geopolitics, Alliance, Diversity, Russia-Ukraine War, and Cohesion
- Political Geography:
- Europe and North America
128. China, the West, and the Future Global Order By Julian Lindley-French and Franco Algieri
- Author:
- Julian Lindley-French and Franco Algieri
- Publication Date:
- 09-2022
- Content Type:
- Journal Article
- Journal:
- PRISM
- Institution:
- Institute for National Strategic Studies (INSS), National Defense University
- Abstract:
- The primary purpose of this article is to respectfully communicate to a Chinese audience a Western view of the future world order. China needs the West as much as the West needs China. However, the West has awakened geopolitically to the toxic power politics that Russia is imposing on Ukraine and China’s support for it. China is thus faced with a profound choice: alliance with a declining and weak Russia or cooperation with a powerful bloc of global democracies that Russia’s incompetent and illegal aggression is helping to forge. The West is steadily morphing into a new global Community of Democracies with states such as those in the G7, Quads, and Quints taking on increasing importance as centers of decisionmaking.2 All three groupings reflect an emerging implicit structure with the United States at their core, European democracies on one American geopolitical flank, with Australia, Japan, South Korea, and other democracies in the Indo-Pacific region on the other American geopolitical flank. The force that is forging such a community is China as it morphs into a superpower. Specifically, China is choosing to be an aggressive putative superpower. President Xi Jinping’s aggressive worldview is of a China defined by its opposition to the United States and, by extension, America’s democratic allies and partners. A new world is being forged from within the increasingly hot cauldron of U.S.-Chinese strategic competition. However, does that mean this new world is inevitably now set on a crash course to conflict, something akin to a re-run of the collapse of pre–World War I Europe into systemic war? Or is it not too late for both sides to forge a pragmatic peace—a peace forged from respect, rather than destructive and disrespectful confrontation? On the face of it, President Xi seems to have made his choice, but in some very important respects siding with Russia in geopolitical conflict with the community of democracies seems counterintuitive when we look at China from a Western perspective (as this article does). This perspective also implies China’s “choice” might not be as firm as some would have it—a profound but essentially simple choice between siding with Vladimir Putin and confrontation with the West or continued growth, wealth, and power through collaboration with the West? The facts speak for themselves. Using the most favorable economic statistics for the combined Chinese and Russian economies—purchasing power parity—their combined economies are worth some $27 trillion in 2022. Using the same data for G7 countries, the core of the emerging Community, the total is $39 trillion.3 Add Australia and South Korea to the aggregate and the figure is $42 trillion. If nominal gross domestic product (GPD) is compared, the contrast is even more striking with the combined GDPs of China and Russia in 2022 totaling $20.2 trillion, while the combined GDPs of the G7 countries amount to $45.2 trillion, which when Australia and South Korea are added increases to $48.8 trillion.4 Critically, China’s trade with the democracies is over 10 times greater than that with Russia,5 while in 2020, China’s merchandise trade surplus with the rest of the world totaled $535 billion, with much of that figure due to surpluses with both the United States and Europe.6
- Topic:
- Security, Geopolitics, Strategic Competition, International Order, and Superpower
- Political Geography:
- Russia, China, Europe, and United States of America
129. The geopolitics of the European Green Deal
- Author:
- Mark Leonard, Jeremy Shapiro, Jean Pisani-Ferry, Simone Tagliapietra, and Guntram B. Wolff
- Publication Date:
- 02-2021
- Content Type:
- Policy Brief
- Institution:
- Bruegel
- Abstract:
- The European Green Deal is a plan to decarbonise the EU economy by 2050, revolutionise the EU’s energy system, profoundly transform the economy and inspire efforts to combat climate change. But the plan will also have profound geopolitical repercussions. The Green Deal will affect geopolitics through its impact on the EU energy balance and global markets; on oil and gas-producing countries in the EU neighbourhood; on European energy security; and on global trade patterns, notably via the carbon border adjustment mechanism. At least some of these changes are likely to impact partner countries adversely. The EU needs to wake up to the consequences abroad of its domestic decisions. It should prepare to help manage the geopolitical aspects of the European Green Deal. Relationships with important neighbourhood countries such as Russia and Algeria, and with global players including the United States, China and Saudi Arabia, are central to this effort, which can be structured around seven actions: Help neighbouring oil and gas-exporting countries manage the repercussions of the European Green Deal. The EU should engage with these countries to foster their economic diversification, including into renewable energy and green hydrogen that could in the future be exported to Europe. Improve the security of critical raw materials supply and limit dependence, first and foremost on China. Essential measures include greater supply diversification, increased recycling volumes and substitution of critical materials. Work with the US and other partners to establish a ‘climate club’ whose members will apply similar carbon border adjustment measures. All countries, including China, would be welcome to join if they commit to abide by the club’s objectives and rules. Become a global standard-setter for the energy transition, particularly in hydrogen and green bonds. Requiring compliance with strict environmental regulations as a condition to access the EU market will be strong encouragement to go green for all countries. Internationalise the European Green Deal by mobilising the EU budget, the EU Recovery and Resilience Fund, and EU development policy. Promote global coalitions for climate change mitigation, for example through a global coalition for the permafrost, which would fund measures to contain the permafrost thaw. Promote a global platform on the new economics of climate action to share lessons learned and best practices.
- Topic:
- Climate Change, Energy Policy, European Union, and Geopolitics
- Political Geography:
- Europe
130. New game in the (post)covid Balkans?
- Author:
- Engjellushe Morina, Florian Bieber, Vuk Viksanovic, Jovana Marovic, Faruk Ajeti, and Vedran Dzihic
- Publication Date:
- 03-2021
- Content Type:
- Video
- Institution:
- Austrian Institute for International Affairs (OIIP)
- Abstract:
- The global pandemic is changing the world. The Western Balkans were hit severely and are currently struggling with the rapid increase in numbers of Covid-19 infections. The state-of-the-play in the region is shaped by the dynamics of the pandemics but also by underlying structural problems, by the “return of geopolitics’ in the Balkans and question marks put behind the EU-Enlargement and new transatlantic relations. What we see at display right now is a sort of 'vaccine nationalism' threatening to replace the European solidarity. We see China rapidly increasing its influence, EU struggling to find a strong common policy towards the region and new expectations (for some) or even fears (for some others) related to the new Biden Administration. The debate seeks to explore this new game in the (post)covid Balkans. Are non-Western players using the pandemic with their ‘vaccine politics’ to fill Western’s gap or to challenge Western’s influence in the Balkans? What is the role of the EU and what the future prospects for enlargement? Will China’s increased influence in the Western Balkans hinder its transatlantic aspirations? How will the Biden administration meet the new challenges in the region? In cooperation with the Ministry of Defense (bmlv), the Austrian Marshall Plan Foundation, and the European Council on Foreign Relations (ECFR)
- Topic:
- Geopolitics, Transatlantic Relations, Vaccine, Pandemic, and COVID-19
- Political Geography:
- China, Europe, and Balkans