Abandoning Balance: Rapid Global Policy Changes Amidst Local Incongruity
With the goals in global politics, the conflicts between countries’ own local policies have been increasing recently. After the Ukraine War, policy changes started to be adopted and implemented more rapidly and aggressively.
We have witnessed major changes such as the escalation of the West’s policies to exert pressure on China and Russia, the potential establishment of a new economic structure within BRICS, and Saudi Arabia pursuing an independent policy from the United States. However, although all these changes may seem logical as a global objective, they do not serve the interests of every country. In fact, we see that even the private sector is becoming uneasy with the pressure applied to China.
We are transitioning from a period where politicians normally make intense efforts not to disrupt the global balance to a period where new balances are being sought to be created. Let’s take a closer look together at how incompatible recent policies have become.
De-Militarization??
Russia’s de facto army, Wagner, is being deployed in the most problematic fronts in Ukraine. We have started to frequently see videos shared by the Wagner leader criticizing the army and its commanders. Following the fierce battle of Ukrainian soldiers in Bakhmut, the Wagner leader claimed that they lost 20,000 troops. He criticized that although the Ukrainian operation was launched to disarm the country, now the country with 500 tanks has increased to 5,000 tanks and from 40,000 troops to 400,000 troops.
We see inconsistencies not only in Russia but also in Western countries in terms of similar calculations of cause and effect. I wanted to start from here because the Ukrainian war is the most concrete example of these inconsistencies.
We know that the US has been pressuring Russia by suppressing the price of oil, which is the country’s main source of income. When sanctions were added on top of that, Russia’s sources of income were severely affected. However, Russia still manages to sell its oil to Eastern countries. So, is Russia the only country where oil is the main source of income? Saudis have been following this policy for a few years, taking on the burden of US policy. However, they have also started to reconsider their decisions. They don’t want to incur more losses.
Saudi Arabia decided to reduce its oil supply independent of OPEC. They stated that they do not want the price of oil to fall below $70. The Energy Minister even said that those who want to lower prices will be disappointed and advised against trying. This statement can be interpreted as both a definitive withdrawal from the low-price policy and a challenge to Wall Street companies.
Furthermore, when China successfully reconciled Saudi Arabia and Iran, it aimed to transfer its success to Israel’s problems in the region. I mentioned in my previous article that this was a paradigm shift for China, which uses only soft power, against the negative image of the US in the Middle East.
The US must have wanted to take precautions against this, as Lindsay Graham first and then Jack Sullivan went to Israel and Saudi Arabia one after another, seeking to thaw the tensions between the two countries. According to rumors, the main request of the Saudis is to export weapons from the US. It is said that they want the lifting of the embargo on certain weapons after the events in Yemen, and the sale of high-tech weapons that were not being sold. If this claim turns out to be true, the theory that the Saudis no longer trust the protection of the US will become increasingly realistic. The Saudis are currently trying to establish a new balance in terms of which issues they can agree with the US and which issues they should seek alternatives for.
While the US tries to exert pressure on Russia on the one hand, it will also want to keep the Saudis on its side. The US Strategic Petroleum Reserve announced on May 15 that it had purchased 3 million barrels of oil from the market and would continue to do so. Is this a policy that will reassure the Saudis, or is it a move made to deceive appearances?
It is crucial at which point the two countries will strike a balance. If the Saudis start obtaining what the US is unwilling to provide from countries in the Eastern Bloc, the US will be quite uncomfortable. However, it is equally evident that it does not want a second Iran case.
European but not Union
Before the Ukraine War, the EU, which was partially aligned with US policies, was reluctant to be aggressive in its relations with Russia. Germany, in fact, went as far as to collaborate on pipeline construction. We are now seeing a similar situation with China. The decision that emerged from the G-7 summit was to adopt a nuanced approach of de-risking China in areas of perceived risk rather than imposing harsh sanctions.
This essentially means that the US is dictating its own policy. Because things are a bit more complicated in Europe. The map below shows the ports leased or majority-owned by China.
All these ports are commercial ports, but it is said that China also uses them for replenishment of its military vessels. So, there may be a military purpose as well. The US is quite concerned about this situation, but guess where China’s latest acquired port is? Cosco, a state-owned Chinese company, purchased a 24.99% stake in the Port of Hamburg. It became the second-largest investment after the Port of Piraeus in Greece. I see this as similar to the Russian pipeline connecting to Germany.
As the strongest country in the EU, Germany prioritizes its economic interests over US policies and has the power to do so. However, approving the policy of weakening China in the G-7 is not quite sincere.
Another G-7 country, Italy, announced its plan to withdraw from China’s Belt and Road Initiative along with Prime Minister Georgia Meloni’s traditionalist policies. This statement should be perceived as an indication that Italy is moving towards more West-oriented policies. It can be said that Italy acts somewhat more ideologically compared to Germany. China’s alliance with Italy marked the first support from a G-7 country for the project and received significant attention.
While Germany and Italy move in separate directions, France also has a policy similar to Germany’s. Macron made significant strides to strengthen relations with China following his visit, making it highly unlikely for him to support such a policy against China.
Let’s also look at the smaller members of the EU. Czech Republic and Lithuania are two countries openly opposing China. Taiwan finding support from these two countries and China even banning automotive parts from Germany that are imported via Lithuania.
The relationship between the Czech Republic and Taiwan is based on economic foundations. Since 2020, the Czech Republic has started military exports to Taiwan and is now in the process of reaching an agreement with Taiwan to sell unmanned weapon platforms. Taiwan is actually in talks with France and Türkiye for imports as well, but the possibility of reaching agreements with the Czech Republic is higher since both France and Türkiye have strong connections with China.
Overall, we can see that Germany continues its balancing policies in one way or another. Despite China’s strong reaction to countries with good relations with Taiwan, Germany deserves credit for how it approaches this issue. While Germany reached an agreement with the Chinese for the Port of Hamburg, they also shook hands with Taiwanese chip manufacturer TSMC to open a €10 billion worth factory in Germany. The German government will cover 50% of the investment. Considering the critical nature of chip production, this is a highly logical move.
Chip-less
The decision to mitigate the risks posed by China, taken at the G-7, had already been put into action in the chip sector, with mutual moves from both sides. China banned the import of American company Micron’s products, while the US used its influence to prevent South Korean companies from replacing Micron. This way, the cost of China’s ban on American companies was increased.
Radical decisions also came from the Netherlands and Australia. Netherlands banned the sale of lithography machines to China, citing China’s aggressive policy towards Taiwan as the reason. Australia, which alone produces 53% of lithium, sells almost all of this mineral to China in raw form. As a result, China manufactures batteries for electric vehicles.
Australia has announced that it will follow a new strategy of selling this mineral to ally and harmless countries such as South Korea or Vietnam. Australia does not want to process and sell it themselves because the production costs in Asian countries are much cheaper compared to Australia. If they were to process it themselves, it would cost 2.5 times more. However, Australia’s strategy is a long-term project. Although the costs are lower in the mentioned countries, it will take a long time to establish the necessary infrastructure and logistics for processing the mineral.
Up until this part of the article, we can see that the most harmonious policy is focused on chips. There doesn’t seem to be much inconsistency. However, that’s not entirely true because this time the opposing sector is not a country but the private companies themselves.
Following the G-7 decision, the Chinese Foreign Minister embarked on a tour of Europe. This was a test to see what changes or lack thereof would occur in the relationships. Similarly, the executives of private companies have been making pro-China statements to ensure that the relationships do not deteriorate. Jamie Dimon, Elon Musk, Tim Cook, and Ola Källenius are among the prominent names. They also know that they cannot abruptly shift their production centers to countries like India or Vietnam. Even if they were to shift, the question of whether they would achieve the same efficiency remains debatable. In the recent past, the trade wars initiated by Trump reached the point of rare earth elements. Company executives fear that the current moves could lead to a confrontation at the same level once again.
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The start of the Ukraine War has significantly changed the stance of politicians. In the various developments mentioned in the article, it is observed that the policies are not fully embraced. Normally, when such decisions are made, we would see that balances are taken into account and infrastructure is carefully established to adopt the policy. However, nowadays, decisions are being made rapidly and aggressively, as if we are right before a world war. If these decisions were local, they might not have been as significant. But the swift implementation of steps that will have global effects shows how politicians have become more aggressive.
Global policies must align as much as possible with local interests. Otherwise, finding alternative ways to bypass sanctions is not so difficult in today’s world.
