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한국어로 읽기Leer en españolIn Deutsch lesen Gap اقرأ بالعربيةLire en françaisЧитать на русском The concept of a multipolar (or polycentric) world order [1] was first coined by Academician Yevgeny Primakov in 1996 [Primakov 1996]. Like everything new, it was not immediately accepted, but ultimately became a significant contribution to both domestic and world theory of international relations, offering a compelling alternative to Western approaches, particularly the one proposed in Samuel Huntington’s The Clash of Civilizations [Huntington 1993]. It informed the idea of trilateral cooperation between Russia, China and India, implemented by Primakov and later embodied in the BRICS group. By now, the idea of multipolarity has been recognized in global political science, has entered the conceptual framework and the language of international diplomacy and is used in Russia’s doctrinal documents. In 2015, we proposed the scenario of a new bipolarity [2] as one of the possible trajectories for global development. Today, many scholars, both Chinese and American, [3] suggest that China-centric and U.S.-centric poles are emerging. This article discusses the “multipolarity — new bipolarity” dichotomy. Long Global Macro-Transformations World history shows that a new world order typically emerges after the end of a major war (see Table 1). Table 1. International system (world order)    Source: systematized by A.A. Dynkin, IMEMO RAS Europe was usually the “kitchen” where the world order was cooked. Take the last 200 years. After the end of the Napoleonic Wars, the Concert of Europe emerged and lasted for 100 years. The century-long stability of that system could be explained by the homogeneity of the political organization of its guarantor states. All members of the Concert of Europe were monarchies. World War I produced the Versailles system, which lasted only 20 years. One of the reasons for its short life was the exclusion of the Soviet Union, Germany and China. The Yalta-Potsdam system was formed by the victors in World War II. Its guarantors were the “Big Three” powers—the Soviet Union, the U.S. and the UK—along with France and China. The three defeated powers—Germany, Japan and Italy—were discriminated and disenfranchised. This system existed for 45 years and was initially thought to be polycentric, but quickly degenerated into a bipolar order, and the Cold War commenced. With the collapse of the Soviet Union and dissolution of the Warsaw Pact, the system became unipolar, dominated by the West, primarily the U.S. It disregarded Russia’s interests and, from 2018 onward, began discriminating against China as well. February 2022 can be considered the formal date of the unipolar world’s demise. However, today’s predictions suggest it will take at least 10 years before the new post-unipolar system becomes stable. The economic center of gravity is a spatial indicator of the economic strength of states, borrowed from physics. To put it simply, this is a geographical point of equilibrium for GDP, trade and investment flows of different countries. Figure 1 shows a map of how the world’s economic center of gravity shifted for over a thousand years. It appeared in Central Asia, on the territory of the Ghaznavid Empire (modern-day Afghanistan). The center then migrated northwest, while the devastation in post-war Europe forcefully pushed it (within just 10 years) to the West, toward Greenland. Then it turned east again. The sharpest shift, to the southeast, occurred in 2000–2010 and is associated with the rise of China. The economic center of gravity has almost returned to the same meridian but remained more than 2,000 km north of the starting point, which indicates a return to the millennial balance of economic power between the West and the East. Figure 1. “Journey” of the three-dimensional economic center of gravity    Source: Dobbs R., Remes J., Manyika J. et al. Urban world: Cities and the rise of the consuming class. McKinsey Global Institute, 2012. https://www.mckinsey.com/featured-insights/urbanization/urban-world-cities-and-the-rise-of-the-consuming-class. Statistic calculations by IMEMO RAS for 60 years of peace (1960–2021) indicate the stability of the center’s latitudinal (horizontal) position. This suggests a relatively consistent proportion of GDP production by the countries in the Global South and Global North, under the economic leadership of the Northern Hemisphere. The shift to the East has also been clearly confirmed. According to our projections up to 2050, the future position of the globe’s center of economic activity will lie on the border of India and China. This method of analysis reveals a high level of inertia in time and geographic monotonicity of changes in the balance of economic power of states. It also shows that wars can drastically disrupt the natural course of events. The center of gravity method can also be applied to the arsenals of strategic and tactical weapons (see Figure 2). For example, during the Cuban Missile Crisis, the U.S. had a huge advantage, but then there was a clear pivot to the northeast—the creation of superior nuclear capabilities in the Soviet Union. With the onset of arms control in 1993, a reversing loop emerged, heading southwest. This was followed by a curve to the east with an implied southward inclination, which reflects the growing nuclear stockpiles of India, Pakistan, North Korea, and the rapid buildup of strategic and tactical nuclear forces in China. The military center of gravity follows its economic peer with a lag of 20 years, reflecting the geopolitical ambitions of Asian powers. These interpretations also clearly demonstrate the end of unipolarity and point to the rise of multipolarity. Figure 2. Movement of the nuclear center of gravity Source: calculations by K.V. Bogdanov, Center for International Security at IMEMO RAS, based on the data from the Bulletin of the Atomic Scientists. https://thebulletin.org/nuclear-notebook/. Technology. Politicians tend to be techno-optimists. Barack Obama predicted that 3D printing would transform the entire world. [4] George W. Bush promised that decoding the human genome would revolutionize medicine. [5] All false starts. Economists traditionally measure the rate of technological progress (TP) using the total factor productivity (TFP) index. To put it simply, this is the part of economic growth driven not by an increase in inputs—labor and capital—but rather by improvements in the efficiency of their use. Technological progress means not only the generation of new scientific and technological ideas but also their mass replication. Without economic validation of the impact of wide dissemination of innovations, scientific or technological achievements remain in history as brilliant breakthroughs with only local economic effects, giving rise to journalistic generalizations at best, such as the “Fourth Industrial Revolution” or “the sixth techno-economic paradigm.” Statistical metrics rely on data of technologically advanced nations, while catching-up countries have room for growth by approaching the TP frontier, i.e. adopting and improving existing ideas and technologies. Technological leaders spend more resources pushing the TP frontier, while those catching up can accelerate at lower costs, effectively staying in the “wind shadow” of the leaders. The TFP index growth rate has been steadily declining in developed countries for many years, but this has been especially conspicuous since the mid-2000s. Today, the growth is below 1.5% and even 1% per year (see Figure 3). Figure 3. Average annual growth of total factor productivity, % Source: calculations by IMEMO RAS based on the data from the International Productivity Monitor. No. 38, Spring 2020. http://www.csls.ca/ipm/ipm38.asp#:~:text=Martin%20Neil%20Baily%2C%20Barry%20P.%20Bosworth%20and %20Siddhi%20Doshi%0ALessons%20from%20Productivity%20Comparisons%20 of%20Germany%2C%20Japan%2C%20and%20the%20United%20States%C2%A0; Innovative China: New Drivers of Growth. World Bank Group, and the Development Research Center of the State Council, P.R. China. 2019. Washington, DC: World Bank. https://doi.org/10.1596/978-1-4648-1335-1. License: Creative Commons Attribution CC BY 3.0. https://documents1.worldbank.org/curated/en/833871568732137448/pdf/Innovative-China-New-Drivers-of-Growth.pdf. A similar pattern of dramatic TFP deceleration was observed in China. The consensus interpretation of these figures is that the main effects of the Third Industrial (i.e., computer) Revolution have largely been exhausted, and no new general-purpose breakthrough technologies (such as electricity, internal combustion engines, or computers and mobile communications) have emerged. However, it seems that the intellectualization of technologies and approaches to project management, as well as informatization, simply do not fit into the traditional factor-based view of progress that was established many years ago. The scale of knowledge is growing, new professions are springing up, the role of emotional intelligence and cognitive functions is increasing. All this dramatically changes the structure of capital assets (see Figure 4). From the beginning of the 21st century and until the 2008 crisis (2000–2007), equipment accounted for over 50% of the increase in capital’s contribution (investment) to output growth, whereas in 2019–2021, almost 63% of this increase was attributable to intellectual property assets. This result of our research suggests a refocusing of technological progress from final products to intellectual technologies, enabling the production of a range of innovative goods and services tailored to highly segmented demand. Figure 4. Transformation of the capital structure in the U.S. private sector Source: Total Factor Productivity for Major Industries—2022. U.S. Bureau of Labor Statistics. https://www.bls.gov/news.release/archives/prod3_03232023.htm. There are now hopes that the pace of technological progress may accelerate due to the development of artificial intelligence (AI) technologies, which will spark a new industrial revolution. An indirect sign of its imminence is the sharp rise in the rate of business births and deaths in the U.S. economy in 2020–2022. [6] The spillover of labor from companies that are losing efficiency to corporations with increasing market shares has also accelerated. These are some sort of leading indicators that suggest the structural results of TP are approaching. Similar developments occurred 30 years ago, on the cusp of the computer revolution. The above-mentioned intellectualization of fi ed capital, where trusted AI will be applied, adds credibility to these hopes. In addition, AI is one of the critical areas of technological sovereignty. It is no coincidence that Vladimir Putin described AI as “crosscutting, universal and essentially revolutionary technology.” [7] The Russian President announced the preparation of a new edition of the National AI Development Strategy and a respective decree. I believe that this prioritization is justified. China’s experience in the semiconductor race is a good model to be emulated (see Figure 5). Its distinguishing feature is the focus on companies as drivers of development, with massive, cumulatively growing state support. Figure 5. Focusing on China’s priorities (nanometer chip race) Source: Systematized by I.V. Danilin, IMEMO RAS The U.S. strategy of curbing technological development of Russia (in all areas) and China (in semiconductors, artificial intelligence and quantum computing and electric cars) leads to stiff competition in high technology, which is fraught with fragmentation, diversification of technical standards, legal norms and rules. And this is another argument in favor of a new bipolarity. Demographic processes. According to UN projections, by the middle of the 21st century, Russia will drop from its current 9th place to 14th in terms of population, while remaining the most populous country in Europe. [8] A more significant problem for Russia is population aging. The proportion of elderly people, who are typically not part of the labor force, is increasing. Japan, Spain and Italy are leading this process today, but neither China nor India will be spared. Nigeria appears to be the only major country where population and the share of young people will continue to grow until the end of the 21st century. As of December 2023, one in 10 people worldwide was aged 65 or over, with health spending taking up 10% of global GDP. [9] In this context, the importance of medical technologies cannot be overstated, as they can extend not only people’s life expectancy but also the duration of their healthy and socially active life, thereby easing labor market pressures. Needs always steer technological progress toward overcoming economic growth constraints tied to the scarcest resource in any given historical period. A serious risk associated with the problem of aging is a slowdown in innovation, since it is people under 40—the age group that will shrink throughout the 21st century—who are the primary drivers and consumers of innovation. So far, this risk has been mitigated by the large youth cohorts in China and India. This is why these two nations are experiencing almost exponential growth in patenting, massive reengineering and, consequently, in middle-class numbers. Demographics give India an edge until around 2060, which is already evident in the growth rates of Indian economy. Combined with the influx of hi-tech investments and the contribution of the Indian diaspora, India has good prospects, making its position crucial to the future architecture of the world order, regardless of how it evolves. The U.S. understands this and has been figuratively “clinging” to this nation for the past 20 years. I believe that the Russian Academy of Sciences should significantly bolster scientific and educational ties with India and its dynamically developing neighbors in Southeast Asia—Vietnam, Malaysia and Indonesia. The anticipated tension in the global market of new generations of innovators aggravates inter-country competition for this scarcest resource. I think that the international reputation of the Russian Academy of Sciences is a powerful tool to attract and retain young people and foster their creative motivation. We should reassert this as we celebrate the 300th anniversary of the Academy of Sciences. Ideology. Dirigisme [10], or statism, is the main trend in both economic theory and economic policy of the West. A pivot to a more state-controlled economy began with the disappointing outcomes of the Washington Consensus, which aimed to guide post-socialist countries from planned to market economies. The 2008–2009 financial crisis cemented the trend toward statism, and the COVID-19 pandemic elevated it to unprecedented proportions. In the U.S., Democrats are among the most vocal proponents of greater government intervention in all spheres of life, but they are not alone. Republicans are also actively advocating industrial policy, repudiation of free trade, as well as strict control over Big Tech, among other measures. The popularity of the so-called cultural Marxism is on the rise. [11] Its origins go back to the critical theory of the Frankfurt School (H. Marcuse, E. Fromm and others). These ideas are moving from the realm of ideological and theoretical confrontations into political activism. For example, the leaders of the BLM movement publicly self-identify as “trained Marxist organizers.” The essence of the strategy inspired by “cultural Marxism” is the rejection of direct political struggle on the barricades, since the proletariat has been “bought off by the bourgeoisie and is no longer capable of anything,” and the ranks of the classic proletariat are rapidly thinning. The direction of social change is set, on the one hand, by intellectuals with personal power and, on the other hand, by marginalized groups seeking to assert their “right to identity.” The strategy of activists who form this paradoxical combination of intellectuals and marginalized individuals is the creeping takeover of the main institutions of power and society by planting “correct” ideas in the mass consciousness. In the U.S., the fighters for political correctness have already hijaked the school system, university campuses, major media outlets and the entertainment industry (Hollywood). Civil servants are forced to take courses in critical race theory, which postulates not only the socially constructed nature of race and the recognition of systemic racism [Delgado, Stefancic 2017: 45] but also a sense of guilt in one part of society toward another. This, in turn, allegedly requires addressing moral and material injustices by organizing public life in line with such an ideology. Similar concepts are being pushed into public discourse as well. It is already dominated by the ideas of radical feminism, cancel culture, anti-systemic racism and postcolonialism, the fight against global warming and the green agenda, which claims to be universal and non-negotiable. As a result, the energy transition is motivated more by ideology than by the comparative market efficiency of energy supplies. Different environmental-political discourses—eco-nationalism, eco-imperialism and green growth—are competing in shaping the green agenda, eroding the attractiveness of the dominant sustainable development model. Another universal weapon in fighting any dissent is political correctness. Large corporations, government agencies and universities are developing and implementing strategies to promote DEI (Diversity, Equity, and Inclusion) principles, which are nothing but tools of ideological control over employees. Universities are required to fi reports on their compliance with such principles and efforts to promote them, which causes mounting criticism as they violate academic freedom and cultivate ideological conformity. [12] However, ideological censorship has already taken deep root in various spheres of public life, and questioning its compatibility with democracy is deemed politically incorrect. Revising cultural norms has become a cultural norm in and of itself, deepening divisions in modern polarized societies, primarily in the U.S., but also in Old Europe [Semenenko 2023: 27-35]. Another curious phenomenon is associated with the new agenda. In the 20th century, the left championed progress, advocating faster economic growth, rapid technological advancement and better social welfare. Now the ideas of zero or even negative growth and post-growth are popular among them. [Buchs, Koch 2017: 218]. Such ideological narratives exacerbate the question of how to treat the poor countries of the South, but also their own poor: the welfare state for all no longer fit into this agenda. On the contrary, it becomes a selective tool of backing the “right” minorities. This creates a breeding ground for stronger positions of populist forces. Such contradictory internal political processes distort public consciousness as well as domestic and foreign policy decision-making. The new elites are extremely ideologized. The U.S. political system is becoming less effective at regulating the economy. Two rating agencies, Standard & Poor’s and Fitch Ratings, have downgraded the U.S. credit rating to AA+ from the top mark of AAA. In November 2023, Moody’s lowered its outlook on the U.S. credit rating to “negative” from “stable.” All three agencies agree on the main reason for the downgrade: the growing dysfunctionality of the political system. In foreign policy, the U.S. has withdrawn from 16 major international treaties and agreements on arms control, global trade, climate and the Arctic since the beginning of the century [Dynkin 2020]. In other words, the unipolar world order with its unbridled appetite for expansion has brought the world into a zone of extra-high risks. And the paradigms that are dominant in the West have proven incompatible with either Russian or Chinese value-oriented political projects. Therefore, the ideological sphere will inevitably see increased confrontation, marking another step toward bipolarity. IMEMO RAS researchers have repeatedly warned about the West’s miscalculated strategic hopes: 1) that Russia would face an economic catastrophe because of an unprecedented sanctions war in modern history; 2) that the unipolar world order would remain unchallenged; 3) that a global blockade of Russia’s export-oriented economy would be feasible. And we were not the only ones who made these warnings. In response, we only heard propagandistic clichés like “a gas station masquerading as a country,” “a regional power” and “Russia is isolated with its economy in tatters”. This kind of “expertise” led the Washington establishment to believe that Russia is a “declining power” whose strategic interests could be safely neglected. This “strategic lunacy” is a consequence of a universalist mindset—a product of the West’s political experience and culture, which tends to elevate Anglo-Saxon and European historical tradition to absolutes—and of a failure to understand the shifts in the balance of power in the 21st century. Today, Russia is the world’s fourth-largest economy by purchasing power parity (PPP), while the top fi e global economic powers include three BRICS nations and none from the blooming “garden” of Josep Borrell, the EU foreign policy chief who has recently been fired. Now a new narrative has been launched into the propaganda orbit: “Russia is about to attack Eastern Europe.” The logical gap between the image of a declining power and that of an “aggressive bear” is conveniently ignored. This primitive, one-dimensional perception of complex non-linear processes can only lead to disappointment—just as it did when the West lulled itself into believing that Chinese reforms would eventually lead to political pluralism. As a result, the West has an inexhaustible stream of surprises. It appears that their experts are increasingly out of touch with Russian (and any other non-Western) realities. Figuratively speaking, they are staring into a distorting rearview mirror constructed by their own rhetoric and propaganda. But the main real surprise was the fantastic resilience of the Russian economy. I dare say that no other economy in the world, not even China’s, could withstand such aggressive pressure. The high resistance of the Russian economy to external shocks can be explained by three fundamental reasons. First, it is the result of difficult, sometimes agonizing institutional and structural reforms. These efforts have ultimately produced a self-sufficient, adaptive and highly diversified market economy. Second, the crisis of 2022 was the fifth (!) in the history of post-Soviet Russia. The government, federal regulators and the Bank of Russia have accumulated hard-earned professional experience in crisis management and counter-cyclical strategies. The same can be said about business. Our economic entities have demonstrated time and again that there are always more effective solutions than there are problems. Finally, the West miscalculated its ability to isolate our economy. The dual containment of Russia and China, in fact, only strengthens ties between the BRICS member states. Transformations of the 2020s. The first half of the 2020s has fi y buried what was once known as “European security.” It is impossible to glue this “broken cup” back together without Russia. The unwillingness of the Ukrainian side and the West to stop the armed conflict at its very beginning, the dangerous escalation, NATO’s constant violation of its own “red lines” and the accession of Sweden and Finland to the North Atlantic Alliance are all symptoms of the European security system transforming into a transatlantic one. Meanwhile, the Eurasian security system is taking shape. The outcomes of Russian President Vladimir Putin’s visit to China hint that the “political East” is starting to form, if not as an alternative to the long-standing “political West,” then at least as an equal partner. Without considering its interests, any debate about “rules-based” global security will be mere fantasy. Indian Prime Minister Narendra Modi’s first visit to Moscow after his recent reelection is in the same vein. Of course, geography cannot be changed, and Russia has been and will remain a European power. However, it is also the geographic center of Eurasia, providing the infrastructure backbone for the Eurasian partnership—from the Northern Sea Route and up to the Trans-Siberian Railway, Baikal–Amur Mainline, Trans-Asian Highway and cross-continental pipelines. The “post-Ukrainian” world seems to be moving toward a new, indivisible Eurasian security architecture, relying on existing institutions: the Union State, CSTO, EAEU, CIS, BRICS, SCO and ASEAN. Minsk has put forward an initiative to develop a Eurasian Charter for Diversity and Multipolarity—a strategic vision for a new system of international relations to replace the “rules-based” world order. An important event of 2024 in this context is the expansion of the BRICS club (see Figure 6). Its combined economic power could potentially reach $67 trillion, surpassing the total GDP of the G7 countries. Figure 6. Economic potential of BRICS countries Source: calculations by A.A. Dynkin, IMEMO RAS, based on the data from the IMF, Food and Agriculture Organization, World Steel Association, Energy Transition Institute, Statistical Review of World Energy 2023, International Energy Agency. And there are still 28 more countries on the “waiting list”. In several important markets such as metals, automotive industry, oil and mineral fertilizers, BRICS already matches or exceeds the potential of the G7 nations. Russia, which took over the BRICS rotating presidency in 2024, faces the task of energizing the harmonized economic and technological policies of the members. This approach is the institutional cornerstone of the future polycentric world. What will the coming world order look like? It is difficult to say which of the two trends—bipolarity or polycentrism—will prevail in the end. It is more likely that they will coexist: for example, rigid bipolarity in the Global North and polycentrism in the Global South. Signs of military, economic and technological bipolarity are already visible in the North. Interestingly, New Delhi tends to categorize China as a country of the North [Jaishankar 2020: 240]. This viewpoint has substance, as China is far ahead of other countries of the Global South in terms of GDP per capita ($12,541). For comparison, India’s GDP per capita is $2,612. [13] The decoupling of the U.S. and Chinese economies has not affected trade flows yet, but only technology and investment. In 2023, China saw a reversal of foreign direct investment inflows, with funds previously invested being withdrawn. Negative trends took hold, and the outflow approached negative $1.5 trillion (see Figure 7). Meanwhile, the Asia-Pacific macro-region is gaining greater internal dynamics, unlike Europe or North America. Figure 7. U.S.–China Economic Decoupling Source: UN Comtrade Database. https://comtradeplus.un.org/; State Administration of Foreign Exchange (SAFE) of the People’s Republic of China. https://www.safe.gov.cn/en/. Meanwhile, the trend toward political polycentricity persists. For example, New Delhi and Ankara were initially poles apart on the Palestinian–Israeli conflict. This is also the dawning of post-unipolarity, where the new centers of power are increasingly guided by their own interests in decision-making rather than by any “rules” or advice from Washington, Beijing or Moscow. It would be unrealistic to expect that the future world order will be free of conflict. The world will retain its diversity, with different potentials of countries and their competition. It is crucial that, despite their differences, the interests of larger and smaller nations are respected, and problems are solved through constructive dialogue. Russia was the first to challenge the notorious unipolar world order. Today we can state that most countries in the Global South have responded to this challenge and refused to subscribe to the Western interpretation of the conflict in Ukraine . The future world order is taking shape right before our eyes. I am sure that a multipolar world is preferable for Russia as a developed, self-sufficient and sovereign nation. But this world also requires a new system of global governance, development and strengthening of its institutions, such as BRICS, G20, SCO and EAEU. For instance, the EAEU member states (Russia, Belarus, Kazakhstan, Armenia, Kyrgyzstan) are faring much better than the five other post-Soviet countries. In 2022, GDP per capita in the countries of the Eurasian Economic Union was 3.5 times higher than the average for the fi e other CIS states that are not part of the EAEU (Azerbaijan, Moldova, Tajikistan, Turkmenistan, Uzbekistan) (see Figure 8). Our strategy in these organizations requires a solid approach and “stereoscopic” vision from socio-economic, scientific, technological and political perspectives. Here, the Russian Academy of Sciences should play a major role as a leader of scientific and expert community. Figure 8. Economic trends of EAEU and CIS countries Source: EEC. https://eec.eaeunion.org/?ysclid=lr7rtdg7np631919243; IMF. https://www.imf.org/; World Bank. https://www.worldbank.org/.  Conclusion In conclusion, there are compelling arguments both for multipolarity and for a new bipolarity. Leading U.S. experts are asking similar questions: “What order will replace the crumbling US-led system is far from certain. Will China push aside the United States as the global hegemon to lead a world according to rules written in Chinese characters? Will the world become bipolar, divided between two more or less rigidly defined blocs led by the United States and China? Will a genuinely multipolar world emerge based on several states or coalitions of more or less equal strength?” [Graham 2023: 272]. These questions are yet to be answered, and definitive conclusions in this case are premature. Given this high uncertainty, one should be prepared for any scenario. The essential prerequisite for such readiness is Russia’s strategic autonomy based on military-strategic parity with the U.S. The fundamental question to which the author has no answer today is: how likely is the emergence of a new world order without a major war? In 2024, presidential or parliamentary elections will take place (or have already taken place) in 50 countries, which account for more than 45% of the world’s GDP and population. Perhaps their results will clarify our vision of the near future. Dynkin A.A. (2024). World order transformation: economy, ideology, technology. Polis. Political Studies, 5, 8-23. https://doi.org/10.17976/jpps/2024.05.02 This article was prepared with the support of a grant from the Ministry of Science and Higher Education of the Russian Federation for major scientific projects in priority areas of scientific and technological development No. 075-15-2024-551 “Global and regional centers of power in the emerging world order”. The author expresses gratitude to his colleagues at IMEMO RAS R.I. Kapelyushnikov, V.D. Milovidov, I.S. Semenenko, I.V. Danilin, S.V. Zhukov, K.V. Bogdanov, A.P. Guchanova for consultations and assistance in preparing this article. References Büchs, M., & Koch, M. (2017). Critiques of growth. In M. Büchs, & M. Koch. Postgrowth and Wellbeing: Challenges to Sustainable Welfare (pp. 39-56). London: Palgrave Macmillan. https://doi.org/10.1007/978-3319-59903-8_4 Delgado, R.,& Stefancic, J. (2017). Critical race theory. Anintroduction. New York: New York University Press. Graham, T. (2023). Getting Russia right. 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The world order or international system is a stable set of institutions and norms of military-political and economic relations, which is institutionalized and legitimate in the international legal sense. The world order remains stable during the active life of at least one generation—a universal measure of social time. However, in the wake of geopolitical macro-crises, illegitimate systems emerge, forcibly imposed by the winner. This was the case with the unipolar world order. 2. Dynkin A., Burrows M. Here’s the Playbook for Getting U.S.–Russian Cooperation Back on Track. The National Interest. 07.12.2015. https://nationalinterest.org/feature/heres-the-playbook-getting-us-russian-cooperation-back-track-14527. 3. For example, see: [Yan Xuetong 2016; Kupchan 2021]. 4. Remarks by the President in the State of the Union Address. The White House. President Barack Obama. 12.02.2013. https://obamawhitehouse.archives.gov/the-press-office/2013/02/12/remarks-president-state-union-address. 5. President Bush Calls on Senate to Back Human Cloning Ban. Remarks by the President on Human Cloning Legislation. The East Room. The White House. President George W. Bush. 10.04.2002. https://georgewbush-whitehouse.archives.gov/news/releases/2002/04/20020410-4.html. 6. Private sector establishments birth and death, seasonally adjusted. U.S. Bureau of Labor Statistics. 25.10.2023. https://www.bls.gov/news.release/cewbd.t08.htm. 7. Artificial Intelligence Journey 2023 conference. President of Russia. Official website. 24.11.2023. http://www.en.kremlin.ru/events/president/transcripts/72811. 8. World Population Prospects 2024, Online Edition. United Nations, Department of Economic and Social Affairs, Population Division (2024). https://population.un.org/wpp/Download/Standard/MostUsed/. 9. Global Health Expenditure database. World Health Organization. https://apps.who.int/nha/database. 10. Dirigisme is a policy of active state intervention in the national economy, pursued by France and the UK in mid-1940s. 11. Mendenhall A. Cultural Marxism is Real. The James G. Martin Center for Academic Renewal. 04.01.2019. https://www.jamesgmartin.center/2019/01/cultural-marxism-is-real/. 12. AFA Calls for an End to Required Diversity Statements. Press Release. AFA. Princeton, NJ. 22.08.2022. https://academicfreedom.org/afa-calls-for-an-end-to-required-diversity-statements/. 13. World Economic Outlook Database (October 2023 Edition). International Monetary Fund. 10.10.2023. https://www.imf.org/en/Publications/WEO/weo-database/2023/October.

한국어로 읽기Leer en españolIn Deutsch lesen Gap اقرأ بالعربيةLire en françaisЧитать на русском China's geopolitics and Russia's concessions While the Western media continues to speculate about China's role in the Russian war of aggression, Beijing is seeking to maximize its benefits: from China's point of view, the aim is to exploit Moscow's dependence on the People's Republic and expand cooperation in its own interests - and not just in economic terms. In geopolitical terms, this relates in particular to China's access to the Sea of Japan, but Beijing's plans extend as far as the Arctic. A paragraph from a joint statement by Presidents Xi and Putin, which at first glance seems inconspicuous, could have far-reaching geopolitical implications and become a serious security policy challenge for Japan and South Korea. New balance of power opens up room for maneuver for Beijing The North American Aerospace Defense Command (NORAD) experienced a premiere of a special kind on July 24: for the first time, fighter jets from the USA and Canada had to take off over the Bering Sea as two Chinese H-6K bombers approached the coast of Alaska. These were accompanied by two Russian Tupolev Tu-95MSs.[i] Just a few days earlier, Russia and China had held a joint naval and air force exercise called "Joint Sea-2024" near the southern Chinese province of Guangdong. But while these joint military exercises attracted media attention, Beijing and Moscow are creating facts in the background that could have far-reaching consequences for the security architecture in the Sea of Japan and around the Korean peninsula: Russia's ruler Vladimir Putin and China's President Xi Jinping recently published a joint declaration on deepening their strategic partnership.[ii] The background to the paper was the establishment of diplomatic relations between the two countries, or the Soviet Union and the People's Republic of China, 75 years ago. It contains the following resolution: "Russia and China wish to conduct a constructive dialog with the Democratic People's Republic of Korea on the navigation of Chinese ships across the lower reaches of the Tumen River." What seems inconspicuous could, from Seoul and Tokyo's perspective, change the strategic balance of power vis-à-vis China to their own disadvantage and have a decisive impact on the sensitive security architecture in the region. The Tumen River: will China's maritime impasse disappear? The 521-kilometre-long Tumen River forms the border between China and North Korea and becomes the border river between North Korea and Russia downstream before flowing into the Sea of Japan. At present, Chinese ships can only navigate the river freely as far as the village of Fangchuan at the eastern end of the inland province of Jilin. Permission from both Russia and North Korea is required for the remaining 15 kilometers to the Sea of Japan. A Soviet-era "Friendship Bridge" less than ten meters high also blocks the passage of larger ships. Historically, China held the area until the Russian Empire gained control in the 1860s. China has repeatedly called on Russia and North Korea to permanently allow Chinese ships to navigate the river to the Sea of Japan and has proposed the creation of a special economic zone along its banks. China's goal is clear: Beijing is keen to gain access to the Sea of Japan via the Tumen River. Japan and South Korea: concerns about geopolitical implications There is concern in Japan that the strategic balance of power vis-à-vis China could shift to Japan's disadvantage: In an interview with the daily newspaper Nikkei Asia, Chisako Masuo, professor of Chinese foreign policy at Kyushu University, warns that in the future, Chinese coast guard patrol vessels could enter the Sea of Japan via the Tumen River alongside larger ships. "This could force the Japanese navy to withdraw its coast guard vessels from the Senkaku Islands, which would weaken surveillance in the East China Sea."[iii] Japan and China are in dispute over the Senkaku Islands. Japan controls them, China calls them Diaoyu and claims them for itself. Recently, the presence of Chinese ships in the waters around the islands has increased again. "There are likely to be similar concerns in South Korea. Chinese ships could now reach the Korean peninsula from both sides. In addition, both Japan and South Korea are close allies of the USA. A deterioration in the security situation - even if it is only perceived - would therefore also have an impact on the plans of the US armed forces," analyses journalist Michael Radunski, who reported from Beijing as a correspondent for several years[iv]. The Sea of Japan: Gateway to the Arctic Beijing is pursuing a much broader goal beyond access to the Sea of Japan: access to the Arctic. In a paper published on May 13, 2024, researchers from northern China's Dalian Maritime University argue that access to the Sea of Japan could strengthen China's position in the Arctic and significantly advance Beijing's vision of a "Polar Silk Road."[v] If the Arctic is indeed largely ice-free by mid-century, new and shortened sea routes would open up for Chinese shipping. "With the Polar Silk Road, China is also embedding the Arctic region in the so-called New Silk Road (Belt and Road Initiative), a large-scale Chinese project to expand an intercontinental infrastructure and trade network. The potential shipping routes of the "Polar Silk Road" run west of Greenland along the Canadian coast (Northwest Passage), from Scandinavia along the Siberian coast of Russia (Northeast Passage) and centrally between Spitsbergen and Greenland (Transpolar Route) into the Bering Strait," states David Merkle, China expert at the Konrad Adenauer Foundation, in a comprehensive analysis of Chinese policy in the northern polar region. [vi] Currently, a significant proportion of Chinese trade has to pass through the narrow Strait of Malacca between Indonesia and Malaysia. A blockade of this strait, which is only around 50 kilometers wide at its narrowest point, would pose a serious threat to China's energy security. In addition, an ice-free Arctic would shorten the existing sea routes from Asia to Europe by around 8,000 kilometers and to North America by around 4,500 kilometers. Overcomeable challenges or deliberate uncertainty? Russia and North Korea have so far been extremely sceptical of China's plans. Moscow fears that China's influence in North-East Asia could increase. Meanwhile, North Korea also has a lot at stake: until now, all Chinese goods have crossed the Tumen River via a bridge and been transported overland to the port of Rajin. "Therefore, the idea of allowing China to ship directly to the Pacific via the Tumen River would make this port redundant. North Korea would lose a lot of revenue as a result," states Melik Kaylan from the business magazine Forbes.[vii] He points out that massive dredging and widening would be required to make the Tumen navigable for large ships. In his view, the idea of restoring Chinese access seems like a fantasy, "an improbable one". So why did Putin and Xi bring up this idea? His explanation: "The coastal strip was ceded to Russia by the Qing dynasty in the 19th century and the People's Republic of China has been demanding it back for decades. Putin is running out of incentives he can offer Beijing to support his war in Ukraine. Such an offer goes down well with the Chinese public - but triggers anger in Moscow among supporters of the Putin regime, who are filled with Great Russian fanaticism. (...) But Putin is making a certain point: if Beijing gains direct access to the Sea of Japan, the strategic equation will change radically. Currently, the Chinese navy has to sail around the entire Korean peninsula to get to this area. Suddenly, Beijing could directly threaten Japan (and various disputed islands)."[viii] Consequently, the burden on the US and its allies to expand maritime projection, protection, readiness and resources would increase dramatically. So is it all just a PR stunt designed to create uncertainty among the US and its allies - and also generate applause among the Chinese public? This theory is contradicted by the fact that there are hardly any reports in the state media of the People's Republic that address the issue. Furthermore, there is increasing movement in the matter: Chinese online portals have reported that Putin agreed further resolutions at his meeting with North Korean ruler Kim Jong Un in mid-June. Accordingly, North Korea and Russia are said to have already signed a bilateral agreement on the construction of a new bridge over the Tumen River. "It can be seen that cooperation between Russia and China is becoming ever closer in light of the ongoing Russia-Ukraine conflict and increasing Western sanctions. The redesign of this bridge is not only an infrastructure project, but also a symbol of strategic cooperation between the two countries [Russia and China] and heralds a new era of economic cooperation," judges Yi Dan Qing Cheng, who writes under a pseudonym and is one of the few commentators from China to have dealt with the issue in a journalistic capacity.[ix] Outlook There is no question that the Russian war of aggression against Ukraine has changed the balance of power and relations between Beijing, Moscow and Pyongyang. Russian President Vladimir Putin and North Korean leader Kim Jong Un signed a comprehensive strategic partnership agreement in Pyongyang in June. Putin traveled to North Korea for the first time in a quarter of a century to personally deepen relations between the two states. Meanwhile, Russia is dependent on Chinese goods: in 2023, goods worth a record value of more than 240 billion US dollars were traded between Russia and China, an increase of 26.3 percent compared to the previous year. These shifts in Russia's power and dependencies open up new opportunities for the People's Republic, including geopolitically. If the project to provide Chinese access to the Sea of Japan is successfully pursued, China could develop the Tumen Delta as a secondary shipyard for its naval and patrol vessels and position them strategically close to Japan's international maritime borders. The region appears to be preparing for growing tensions: The foreign ministers of Australia, India, Japan and the USA announced in Tokyo at the end of July that they would be expanding their cooperation within the framework of the so-called Quad. Specifically, this involves the area of cyber security - but also maritime security in the Indo-Pacific. References [i] Siehe ausführlicher: Zwerger, Patrick 2024: Uralt-Bomber aus Russland und China treffen auf US-Jets, abrufbar unter: https://www.flugrevue.de/militaer/tupolew-tu-95ms-und-harbin-h-6-uralt-bomber-aus-russland-und-china-vor-alaskas-kueste/, letzter Zugriff: 30.7.2024. [ii] Außenministerium der Volksrepublik China 2024: Gemeinsame Erklärung der Volksrepublik China und der Russischen Föderation zur Vertiefung der umfassenden strategischen Kooperationspartnerschaft im neuen Zeitalter anlässlich des 75. Jahrestages der Aufnahme diplomatischer Beziehungen zwischen den beiden Ländern, abrufbar unter: https://www.fmprc.gov.cn/zyxw/202405/t20240516_11305860.shtml, letzter Zugriff: 30.7.2024. [iii] Tajima, Yukio 2024: China eyes Sea of Japan access via Russia-North Korea border river, Nikkei Asia, abrufbar unter: https://asia.nikkei.com/Politics/International-relations/China-eyes-Sea-of-Japan-access-via-Russia-North-Korea-border-river, letzter Zugriff: 30.7.2024. [iv] Radunski, Michael 2024: Chinesisch-russische Partnerschaft: Wie Peking sich Zugang zum Japanischen Meer verschaffen will, China.Table, 28.06.2024. [v] Chang, Yen-Chiang, Xingyi Duan, Xu (John) Zhang & Ling Yan 2024: On China’s Navigation Rights and Interests in the Tumen River and the Japanese Sea, abrufbar unter: https://www.tandfonline.com/doi/full/10.1080/08920753.2024.2347817?src=exp-la, letzter Zugriff: 30.7.2024. [vi] Merkle, David 2023: Der selbsternannte Fast-Arktisstaat: Chinas Politik in der nördlichen Polarregion, in: Auslandsinformationen, abrufbar unter: https://www.kas.de/de/web/auslandsinformationen/artikel/detail/-/content/der-selbsternannte-fast-arktisstaat, letzter Zugriff: 30.7.2024. [vii] Kaylan, Melik 2024: Russia Offers China A River To The Sea In The Pacific, abrufbar unter: https://www.forbes.com/sites/melikkaylan/2024/06/25/russia-offers-china-a-river-to-the-sea-in-the-pacific/, letzter Zugriff 30.7.2024. [viii] Ebd. [ix] Yi Dan Qing Cheng 2024: Was er unserem Land versprochen hat, hat Putin eingehalten. Die Umgestaltung der Tumen-Brücke hat die Sorgen der chinesischen Seite gemildert, abrufbar unter: https://www.163.com/dy/article/J6JBCD8K0552P34A.html, letzter Zugriff 30.7.2024.

한국어로 읽기Leer en españolIn Deutsch lesen Gap اقرأ بالعربيةLire en françaisЧитать на русском MAY 2024.- Speaking about the spectacular growth of China's GDP, someone might argue that GDP is not the only indicator to observe in a country's improvement, and that is true. What explains that a country like China, with a per capita GDP ($25.02 thousand dollars per capita, in purchasing power parity) three times lower than that of the United States ($85.37 thousand dollars per capita, in purchasing power parity) has surpassed the latter in life expectancy of its inhabitants? The answer is none other than the quality of human rights enjoyed by Chinese citizens compared to that of American inhabitants. (Datosmacro.com. Expansión)   What explains that a country like China, with a per capita GDP ($25.02 thousand dollars per capita, in purchasing power parity) three times lower than that of the United States ($85.37 thousand dollars per capita, in purchasing power parity), has a much lower poverty rate than the United States? The answer is none other than the quality of human rights enjoyed by Chinese citizens compared to that of American inhabitants. (Datosmacro.com. Expansión)   What are human rights for the West? The most evident thing is that human rights for the West are a media weapon to attack China. Every time Western media mention China, they inevitably, as a self-imposed style guide, have to vilify China for its lack of human rights. “Tell me what you boast of, and I will tell you what you lack.” For the West, human rights focus on defending Western "Democracy" against what they term Chinese “Autocracy." If we look at this Western-style "Democracy," we see that it is characterized (primarily in Anglo-Saxon countries and to a lesser extent in other Western countries) by the alternation in government between two political parties that uphold the same political system. The exclusive dominance of these two parties over the state is built upon the absolute repression of organizations opposed to the system. This repression is executed through various means: Firstly, elections are designed on a marketing basis that requires mobilizing large sums of money to have any chance; secondly, the media, which shapes the population's thinking, is controlled by the same business groups that control the two parties; and thirdly, when any political force emerges with fresh air in this neoliberal jungle, the entire legal and illegal machinery of the state is unleashed upon it until it is annihilated. A system that has been working for two centuries now and has allowed the American empire to rise. The West fills its mouth with the word "Democracy" to cover up all its democratic shortcomings and deficiencies. A "Representative Democracy" based on elections every four or five years where the parties of the neoliberal system always "win" because other parties are prevented from having the necessary means to have any chance. And it uses this supposed legitimacy it claims due to its presumption of democracy to deny human rights to its citizens. (Of course, while the human rights of its citizens are denied, the human rights of citizens in the rest of the world are directly massacred. In addition to the hundreds of interventions in numerous countries, in Latin America and other continents, to manipulate and change their governments in favor of American interests, in just the current century, the United States has waged war with its military against the following countries or regions: Afghanistan -2001/2021-, Iraq -2003/2011-, Somalia -2007/2021-, Indian Ocean -2009/2016-, Libya -2011-, Uganda -2011/2017-, Iraq -2014/present-, Syria -2014/present-, Libya -2015/2020-, Mozambique -2021/present-, and Yemen -2023/present-.) The Political System of China Firstly, and it seems unlike the West, human rights in China consist of 30 rights (Universal Declaration of Human Rights by the United Nations), and not just neoliberal democracy. Let's start with "Democracy." In China, there are nine political parties with parliamentary representation, and all of them support the existing participatory democracy in the country: Ø Communist Party of China Ø Revolutionary Committee of the Chinese Kuomintang Ø China Democratic League Ø China Association for Promoting Democracy Ø China National Democratic Construction Association Ø China Association for Promoting Democracy Ø Chinese Peasants’ and Workers’ Democratic Party Ø China Zhigong Party Ø Jiusan Society Ø Taiwan Democratic Self-Government League The political membership of Chinese citizens in these parties is much higher than in the West, and the majority far exceeds one hundred thousand members. If we look at Article 21 of the Declaration of Human Rights, which focuses on the Right to participate in public affairs, we see that it establishes that: 1. "Everyone has the right to take part in the government of their country, directly or through freely chosen representatives." 2. "Everyone has the right of equal access to public service in their country." 3. "The will of the people shall be the basis of the authority of government; this shall be expressed in periodic and genuine elections which shall be by universal and equal suffrage and shall be held by secret vote or by equivalent free voting procedures." China's participatory democracy is based on People's Congresses, which currently have 2.77 million elected deputies. There are five levels of People's Congresses: municipality, county, city, province, and national. In last June elections, 921 million voters participated in municipal elections, representing 86.49% of registered voters, and 623 million voters participated in county elections, representing 85.63% of registered voters. The upper three levels of deputies (city, province, and national) are elected by deputies from the lower level. If we look at the XIV National People's Congress (NPC), it consists of 2,977 deputies. Some important characteristics to highlight about the composition of these deputies are as follows: Ø Ethnic minorities: There are 55 ethnic minorities in China represented by a total of 442 deputies. Ø Women: Their representation remains low. There are 790 female deputies, representing only 26.54% of the total NPC. Ø Workers and farmers: With 497 deputies, their participation reaches 16.69% of the total deputies. Ø Communist Party of China: There are 969 deputies, accounting for 32.55% of the total deputies. We can conclude that the North American political system is designed to perpetuate the neoliberal democracy upon which it is based. Similarly, the Chinese political system is designed to perpetuate Chinese socialist democracy. Both systems formally meet the three requirements of Article 21 of the Universal Declaration of Human Rights. From the perspective of effectiveness, it seems that the neoliberal system, on one hand, in the current crisis situation, is generating a level of confrontation between the two parties that alternate in power (Republicans and Democrats in the United States, Socialists and Populars in Spain) that is hindering the government's work and muddying the political situation with the goal of obtaining power above any principle. On the other hand, the electoral marketing style on which it is based enhances government actions on short-term needs at the expense of medium and long-term plans, which cease to be an electoral priority. Looking towards China, the Chinese political system centered on grassroots People's Assemblies has two important advantages: on one hand, electoral confrontation does not occur between two national machineries geared to compete and win, but between grassroots individuals known to and neighbors of the voters who will elect them, where the individual holds greater value than the party itself. On the other hand, this system based on individuals allows for their selection based on their capabilities and promotes the rise to power of the most qualified. This phenomenon has been referred to as "Meritocracy" or the government of the best, and China today represents the clearest depiction of this meritocratic system. The other 29 articles of the Human Rights Declaration Without going deep into each of the Human Rights due to space constraints, let's focus on those that are driving the quality of life of Chinese citizens. In general, the United States uses human rights as a political tool for interference in the internal affairs of other countries, to influence and overthrow governments in its strategy of global domination. The State Department periodically publishes reports that are disseminated by Western media. Mexican President Andrés Manuel López Obrador expressed a few days ago regarding the latest U.S. report that "The State Department is talking about the human rights situation in Mexico being gray. The only thing is to ask [the agency] to review its recommendations because they violate the sovereignty of peoples. They are no-one to extend letters of good conduct to independent and sovereign countries and peoples." In relation to this latest report, many voices have risen up to rebuke the United States and assert that it lacks the capacity, or even the moral high ground, to criticize what happens in other countries regarding human rights. They point to everything happening with Julian Assange, the brutal repression of students in the United States, or the military support for the genocide of Palestinians, to express that this country cannot speak about human rights because it lacks moral authority. The right to equality and non-discrimination. Articles 1 and 2 are about the right to equality and the prohibition of discrimination. If we use their representation in the highest legislative body of each country for various minority groups to compare their level of discrimination, the result is as follows:   While ethnic minorities in China are overrepresented in the highest legislative body, in the United States, Latinos and African Americans together are discriminated against compared to non-Latino white individuals in the House of Representatives. The situation of women in both countries in their legislative bodies is discriminatory and at a similar level. In China, only 26.5% of deputies in the National People's Congress are women, and in the United States, only 28% of congresswomen in the House of Representatives are women. The respect for ethnic minorities and their national integration in China is notable. The most evident case is the Uyghur minority settled in the Xinjiang region, which is of Muslim origin and for which the United States has been financing all kind of Islamist terrorist groups to destabilize China without any success and launching worldwide discrediting campaigns. The Right to the Satisfaction of Economic, Social, and Cultural Needs According to Article 22, every person has the right to the satisfaction of these needs. China's progress in poverty alleviation, as seen in the previous graph, is spectacular. It shows how, starting from extremely high poverty levels (over 50% in the year 2000), China outpaces the United States from 2014 until its elimination. Meanwhile, no progress is observed in the United States over the last 50 years. Never before so many people have exited poverty in such a short time in human history. This result is the consequence from the different objectives of both societies; while in the United States the focus is on maximizing the benefits of the capitalist system, in China, the focus is on meeting the social needs of the entire population. The Right to Social Security in the Event of Illness, Disability, Widowhood, Old Age, or Other Circumstances Beyond One's Control Article 25 speaks of this right. We have already shown above the evolution of life expectancy in the United States and China, which is the best indicator of the satisfaction of this right. China's advantage in healthcare and social services does not come from higher healthcare spending by this country. On the contrary, the United States is the world's largest spender on healthcare in terms of percentage of GDP, but this expenditure is not distributed evenly and solidarily among all its citizens. Nearly 30 million people in the United States lack health insurance and have had no insurance at all throughout 2022, and worse, they have also lacked the financial means to meet their healthcare needs, which in the United States are all paid for. The U.S. Census does not provide information on how many, in addition to these 30 million, have only had access to health insurance at some point during the year. The Right to Education Article 26: Everyone has the right to education. Let's see how the United States and China spend their budgets:   China has opted for the widespread and open generalization of education. For example, it has been sending nearly 400,000 students each year to American universities until Biden began to prevent their access, and another 300,000 students to other countries worldwide. The gross enrollment ratio in higher education in China reached 59.6% in 2022. Today, Chinese universities host most students worldwide enrolled in STEM (Science, Technology, Engineering, and Mathematics) fields. As a conclusión China draws its strength from human rights to drive its economy and progress. We find a country where the population shares the benefits of progress in solidarity, expanding social security, healthcare, and education nationwide. This has created the world’s most skilled workforce, setting annual records in patents, surpassing both the United States and all combined university systems of European Union countries in graduate students, with 11.6 million new graduates in the last academic year. And it's not just the labor force that the standard of living, healthcare, or education generate in a country; it's also the personal satisfaction of citizens with the respect of all their rights. The French company Ipsos is responsible for conducting worldwide studies on the level of happiness in different countries and has been pointing out China as the happiest country in the world. There is no doubt that Chinese society is a satisfied one. A satisfaction that hints at the pride of belonging to a country that has carried out the largest and fastest economic and social revolution in history.

한국어로 읽기Leer en españolIn Deutsch lesen Gap اقرأ بالعربيةLire en françaisЧитать на русском In a complex new multipolar world, a country’s allies and friends will determine the global pecking order. Despite its large population, Africa is a small global player. Its combined economy is less than 3% of the world economy, and Africa’s political heterogeneity makes it difficult to stand united on contentious issues such as China’s claim over Taiwan or the war in Ukraine. Although most African countries aren’t part of global value chains, external economic challenges and tensions affect them deeply. Africa’s most violent period since independence was in the years before the Berlin Wall collapse in 1989. At the time, tensions between the United States (US) and former Union of Soviet Socialist Republics (USSR) led to intense proxy wars in the Horn of Africa and Angola. Based on that experience, a new era of competition between the US and China doesn’t augur well for the continent. At its peak, the USSR’s economy was only half that of the US, whereas the US and China will be roughly equivalent in the next decade. China is already larger when using purchasing power parity. By 2050, the Chinese economy will be almost 30% bigger. China is the world’s factory, manufacturing cheaper and more than anyone else. It has flooded the world with affordable solar and wind products to fuel the green transition. China is the global trade destination for many and it builds much of Africa’s infrastructure. China and surrounding Asian countries are emerging as the most important source of economic growth globally. According to an in-depth study by The Economist in May 2022, ‘No other country comes near the breadth and depth of China’s engagement in Africa.’ In contrast, US trade and investment with Africa is declining. If the US wants to maintain its influence on the continent, it should find ways to collaborate rather than compete with China. The bill proposed in April by a bipartisan group of senators to renew the African Growth and Opportunity Act (AGOA) for another 16 years shows that influential US groups are willing to engage with Africa for the long haul. With its low levels of trade reciprocity, the AGOA trade model is well suited to Africa’s needs. The US should use AGOA as a carrot to boost Africa’s exports, not a stick for economic coercion to achieve political objectives. The rise of China in a crowded world means the future will be quite different to previous periods of competition and cohabitation. Many of Africa’s ruling elites cast longing eyes towards China’s autocratic development model as a means to reduce poverty. Democracy and the free market haven’t delivered development, they argue. There is a sense of restlessness in Africa, where the median age is only 19. The youth bulge is expanding with limited prospects for formal employment, a healthy life or meaningful education. To analyse the impact of various global futures on Africa’s development, the Institute for Security Studies’ African Futures and Innovation programme has examined recent and likely global power shifts. For the past century, the US has been the most powerful country in the world. It has successfully presented a narrative that equates global development, stability and progress with American interests and values. Many Africans look to the US, given its freedoms and opportunities – although positive views of the US are dropping in number. The image of a violent mob descending on the Capitol in January 2021 shattered the myth of American exceptionalism, exposing a country torn asunder by its political divisions. Rural America’s reaction to globalisation and the rise of domestic populism detracts from US soft power. At the same time, its declining ability to deter others is on display in the Middle East, which is on a knife edge. Instead of oil from Africa, the next commodities boom for the continent will come from minerals needed for the renewable energy transition. This is reflected in a recent United States Institute of Peace report exploring Africa’s role in diversifying US critical mineral supply chains and strengthening the rule of law, transparency and environmental and labour standards. The US faces an uphill struggle since China has already secured much of Africa's known supply of critical minerals. China’s dominant position regarding these resources reflects the extent to which it is in a different league to the former USSR. Instead of confronting China in Africa, the US must find ways to collaborate with it. Africa cannot again serve as an arena for proxy conflicts and competition, this time between the US and China. Plus, it is Russia, not China, that is now the spoiler in Africa. The extent to which Sahelian countries are experiencing a resurgence of military coups with regime protection provided by Russia’s Africa Corps (previously Wagner) augurs poorly for the continent’s future. The more significant challenge is that the West faces a much larger and more powerful cohort of detractors, perhaps most readily depicted as the G7 versus BRICS+. The impunity that the West has provided to Israel for its war in Gaza and further afield reinforces global south views that different standards apply to them compared to the developed north. Current indications point to China becoming more influential in Africa, with many countries turning eastward. Rather than a new unipolar or even bipolar order, the trend is towards a complex, multipolar global power configuration where one’s allies and friends will determine the international pecking order. Learning to rely on them will be a new experience for the US. This article was first published in Africa Tomorrow, the African Futures and Innovation blog. Exclusive rights to re-publish ISS Today articles have been given to Daily Maverick in South Africa and Premium Times in Nigeria. For media based outside South Africa and Nigeria that want to re-publish articles, or for queries about our re-publishing policy, email us.

한국어로 읽기Leer en españolIn Deutsch lesen Gap اقرأ بالعربيةLire en françaisЧитать на русском Summary • Since Russia’s full-scale invasion of Ukraine, the EU has made strengthening energy sovereignty – its own and that of its eastern neighbours – a strategic priority. • Along with Ukraine and Moldova, the EU has created an elaborate legal and institutional framework that provides a platform for energy cooperation. • Through this framework and other measures, the EU and member states have helped significantly strengthen the energy sovereignty of Moldova and Ukraine, in particular helping them to diversify away from Russian fossil fuels and synchronising their electricity grids with that of the EU. • But when it comes to the cleanness and efficiency of their energy, Moldova and Ukraine are still underperforming, despite their potential for green energy generation. Improving the cleanness of their energy would also help strengthen the EU’s energy sovereignty, increasing the mutual benefits of closer energy cooperation. • Ukraine’s vast gas reserves and extensive gas infrastructure, along with its potential for green hydrogen production and the significant development of renewable energy sources in both countries offer opportunities for cooperation with the EU, which could enhance both its energy security and decarbonisation efforts. Introduction Since the beginning of Russia’s war on Ukraine, strengthening energy sovereignty has become one of the most strategic foreign policy goals of the European Union, its member states, and many other countries. Before the war, Russia was the EU’s largest source of imports of crude oil and petroleum products and in 2021 the state-owned energy corporation Gazprom accounted for 41 per cent of the EU’s gas imports. In the aftermath of the invasion, the EU and member states scrambled to reduce their dependency on Moscow for energy supplies, diversifying their suppliers of oil and gas. In 2023, Gazprom’s share of the EU’s gas imports fell to just 8 per cent. But the EU also has a clear interest in strengthening the energy sovereignty of its neighbouring countries, especially of Ukraine and Moldova on its eastern border. The stable functioning of the energy systems of neighbouring countries is one of the cornerstones of their security, and therefore the stability and security of the EU’s immediate neighbourhood. The European Commission has thus identified supporting Ukraine and other countries that are directly or indirectly affected by Russian aggression through long-term international partnerships as among the most important objectives of the EU’s external energy policy. Energy cooperation is also a powerful tool for integration. Energy sovereignty should not be equated with state energy autonomy or autarky; international cooperation within alliances or integration relationships such as the EU is an important component. Political allies can be reliable and secure suppliers of energy resources to import-dependent countries – the United States and Norway, for example, play such a role for many EU countries. The development of energy infrastructure links for gas or electricity between partner states, such as the EU and its eastern neighbours, would enable them to provide mutual support in times of crisis. The EU’s desire to strengthen energy sovereignty throughout its neighbourhood is first and foremost related to the need to reduce dependency on Russia and aid the integration of its neighbours. But strengthening energy sovereignty will also require a reduction in fossil fuel consumption, and is therefore closely linked to achieving one of the EU’s other major strategic goals of climate neutrality by 2050. The diversification of fossil fuel supply sources, while important, is not a long-term solution to the problem of energy sovereignty. Amid the current geopolitical uncertainties and the growing threat of climate change, decision-makers in the EU and in neighbouring countries need to now consider green energy and efficient energy use for a comprehensive approach to energy sovereignty. By strengthening its and its eastern neighbours’ renewable energy potential and optimising energy consumption, the EU can reduce the overall dependence on external suppliers of fossil fuels. The commission’s external energy policy combines these two goals, stating that the EU’s actions should be oriented towards meeting both short-term needs and long-term goals regarding the implementation of the European Green Deal. For this reason, I propose a broader approach to assessing energy sovereignty, which goes beyond the typical prism of security of supply to encompass four elements: • The level of dependence on energy imports, both fossil fuels and electricity; • The cleanness of the energy sector, determined by the importance of renewable energy in a country’s energy mix and the level of decarbonisation of the energy sector; • The level of energy efficiency; • The energy sovereignty narrative used by the state authorities in policy documents, which reflects the strategic direction of the state’s energy sector. This policy brief uses these criteria to analyse the progress that the EU and its eastern neighbours have made towards strengthening each other’s energy sovereignty so far, and sets out the next steps that they should take. It finds that, to date, the EU and its member states have played an important role in strengthening the energy sovereignty of its eastern neighbours by increasing their energy independence, but that Ukraine and Moldova still underperform when it comes to cleanness and efficiency, despite the direction implied by the states’ energy narratives – in part due to setbacks related to the war. Strategic cooperation formats between the EU and its eastern neighbours Over the last decade, the EU has developed a legal framework for cooperation with Moldova and Ukraine, which enables closer cooperation in various spheres, including energy. This approach fits into the EU’s so-called Team Europe external action policy for the two countries, which means that both EU and member state structures and European financial institutions, including the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD), are involved in the process. In total, the EBRD has committed to investing $3 billion in 2022 and 2023 to address the Ukrainian economy’s challenges following Russia’s invasion. Both countries are also associated states of the EU, and their bilateral relations with the bloc, including on energy, are governed by the association agreements, which came into force in July 2016 for Moldova and in September 2017 for Ukraine. The European Council’s decision in 2023 to grant both countries EU candidate status and start accession negotiations has further strengthened the relationship. The EU also invited Moldova and Ukraine to join the Energy Community in 2010 and 2011 respectively. The Energy Community’s main objective is to extend the principles and rules of the EU’s internal energy market to the countries of eastern Europe, the Black Sea region, and the Western Balkans, effectively integrating these countries into the EU’s energy market. Members of the Energy Community are obliged to implement EU energy regulations into their own national legal systems and to strengthen energy cooperation with EU countries. Both Moldova and Ukraine have already adopted several important pieces of legislation on the functioning of the gas and electricity markets. Ukraine has successfully implemented regulations liberalising its energy markets, including certifying independent system operators in the gas and electricity markets, and an independent gas storage operator. Furthermore, at the beginning of 2024, the country’s certified electricity operator Ukrenergo joined the European Network of Transmission System Operators for Electricity (ENTSO-E). Meanwhile Moldova completed the certification of its electricity transmission system operator Moldelectrica as an independent system operator in July 2023 and has taken steps to certify the independent system operator of its gas market. Both Ukraine and Moldova have also adopted the EU’s Regulation on Wholesale Energy Market Integrity and Transparency, which prohibits insider trading and the abuse of market power. In December 2023, Moldova also amended the Law on Natural Gas to help strengthen security of gas supply and storage, further aligning it with the EU’s energy acquis. Towards energy independence The deepening of Ukraine’s and Moldova’s integration with the EU has helped to strengthen their energy sovereignty, helping them in particular to reduce their dependency on Russia. Ukraine and, to an even greater extent, Moldova are dependent on energy imports. In April 2020, Ukraine was able to meet about 65 per cent of its energy needs on its own, while Moldova could only meet about 20 per cent. Although Moldova’s situation has not changed significantly in recent years, Ukraine’s dependence on energy imports fell to 23 per cent in 2022 as a consequence of the decline in the country’s energy consumption due to the war.  Gas Both Moldova and Ukraine have significantly strengthened their energy independence in the gas sector, including through cooperation with the EU and member states. This is particularly the case for Ukraine, whose own gas production now accounts for more than 90 per cent of domestic demand. (As recently as 2010, Kyiv’s dependence on gas imports was over 70 per cent, amounting to 34 billion cubic metres (bcm), which it imported almost entirely from Russia.) According to the 2023 annual data, Ukraine’s gas consumption has fallen by 30 per cent since the start of the war and it now imports gas mainly through Slovakia, but also Hungary, Poland, and Romania (transiting through Moldova). Ukraine’s journey towards independence from Russian gas supplies was, on the one hand, a consequence of political decisions taken by the new authorities in Kyiv, which came to power in 2014 after former president Viktor Yanukovych was overthrown and, in autumn 2015, stopped buying Russian gas. On the other hand, it was made possible by the support provided by EU member states and European financial institutions, which became particularly important following Russia’s full-scale invasion. In the summer of 2022, for example, the EBRD opened a $300m credit line to Ukraine’s national oil and gas company Naftogaz for emergency gas purchases. It also began to cooperate with the Energy Community to provide regular support to Ukraine, including an agreement in June 2023 to guarantee €600m in support for Ukrainian companies operating in the gas, electricity, and hydropower sectors. Unlike Ukraine, Moldova does not produce gas, has no gas storage facilities, and has only trace reserves of its own gas (about 1 bcm as of 31 December 2022), making it completely dependent on gas imports. Chisinau’s success in strengthening its energy sovereignty has nonetheless been impressive: it has significantly diversified its supply sources and achieved complete independence from gas purchases from Russia in December 2022. The EU, European financial institutions, and select member states have played an important role in this regard. The EIB has been financially supporting projects in Moldova since 2008, including those to strengthen energy sovereignty, such as the construction of the Ungheni-Chisinau gas interconnector. But in view of the energy crisis occurring in Europe from 2021 onwards, the EU initiated anti-crisis formats with Moldova as well. For example, the EU-Moldova High Level Energy Dialogue was set up to provide support to Moldova to guarantee the supply of energy resources (especially natural gas) and electricity during the energy crisis, but also to implement long-term energy projects. So far, five rounds of consultations have taken place between the EU and Moldova under this format, through which the partners have discussed crisis support, energy sector reforms, and long-term projects. In October 2021, Poland began supplying gas to Moldova, marking Moldova’s first imports of non-Russian gas in history. In addition to imports from Poland, Moldova managed to launch reverse gas supplies from Slovakia, as well as via the Trans-Balkan pipeline from Romania, and gained access to Ukrainian gas storage facilities, where it could store about 200m cubic metres (m3) of gas. Chisinau’s diversification efforts are continuing, as illustrated by its gas supply agreements with the Greek company DEPA in 2023. Financial support from European institutions, including the EBRD, and member states has also helped to facilitate these diversification efforts by enabling Moldova to finance purchases of gas or electricity from alternative suppliers. In 2022, the EBRD offered a loan of €300m to Moldova, and in October 2023 an agreement was reached for it to provide a further €165m in gas support to the country in the form of loans, with Norway promising an additional €34m gas grant. In addition, in November 2022, the Energy Community Secretariat launched the Energy Community Rescue Scheme initiative to ensure that donors’ financial assistance for Moldova was channelled towards helping the country face the harsh winter ahead. Meanwhile, the Energy Vulnerability Fund, which was established in 2022 by the Moldovan government with support from the EU, Slovakia, and the United Nations Development Programme, played an important role in neutralising the effects of rising gas, electricity, and heating bills in Moldova. Support for Moldova under this mechanism was provided by several European countries including the Czech Republic, Sweden, Italy, and Switzerland. Finally, in 2022 the EU created the energy platform for member states and countries such as Moldova and Ukraine, which is supposed to combine demand, coordinate the use of infrastructure, and facilitate negotiations with international partners for joint purchases of gas and hydrogen. Through this initiative, Ukraine and Moldova have taken part in tenders organised by the European Commission and received 100 per cent and 80 per cent respectively of the volumes requested after the first round of purchases. Oil When it comes to oil, both Moldova and Ukraine are highly dependent on imports, but EU countries have gradually replaced Belarus and Russia as their main suppliers since February 2022, thereby helping to strengthen their energy sovereignty. Moldova is 100 per cent dependent on imports of oil and petroleum products from third countries, with Romania now mainly supplying it with oil products. As a result of the war and Russia’s continued attacks on critical Ukrainian energy infrastructure, including storage facilities for petroleum products and oil, Ukraine has not been able to produce petroleum products on its own – its last operating refinery was closed in April 2022. These products are particularly sensitive for Ukraine, not just for civilian use, but for military needs. Despite its consumption of petrol, diesel, and liquefied petroleum gas falling by 25 per cent, 30 per cent, and 40 per cent respectively from 2021 to 2022, Ukraine has become more dependent on imports – 93 per cent dependent in 2022 compared with 77 per cent in 2021.[1] In 2021, Belarus accounted for about 43 per cent of Ukraine’s gasoline imports, and Belarus and Russia together accounted for about 62 per cent of its diesel imports.[2] In 2022, Ukraine significantly reduced imports from Belarus and Russia, and increased those from Poland, Romania, Bulgaria (these three countries covered 51 per cent of Ukraine’s diesel import needs in 2022), Turkey, Lithuania, Moldova, Greece, Hungary, and several other countries.[3] In 2023, Ukraine did not import petroleum products from either Belarus or Russia.[4]   Electricity Although Moldova and Ukraine are in completely different positions in their efforts to ensure a secure electricity supply, the synchronisation of the two countries’ power grids with the EU system in March 2022 significantly increased their energy sovereignty in this area. This was particularly important for Moldova, where 80 per cent of electricity needs are met by the Russian-owned Inter RAO gas-fired power plant located in the separatist region of Transnistria. In October 2022, following Russia’s attack on Ukraine’s energy infrastructure, Kyiv halted electricity exports to Moldova, leading to some blackouts. Electricity supplies from Transnistria were then completely terminated at the beginning of November. Moldova’s synchronisation with the EU grid allowed it to import electricity from Romania, which in November 2022, met 90 per cent of Moldova’s electricity demand. In June 2023, ENTSO-E increased the capacity of interconnectors connecting the EU with Moldova and Ukraine from 1050 to 1200 megawatts (MW). During the 2022-2023 heating season, around 900,000 households also received subsidies for their electricity bills through the Energy Vulnerability Fund. Although Moldova currently once more imports 70-80 per cent of its electricity from Transnistria, it does so mainly because it is cheaper than electricity from Romania or Ukraine. But the synchronisation of its grid ensures access to alternative sources of supply, minimising the risk of energy blackmail from Russia. In the long term, support from European financial institutions will be important in strengthening Moldova’s security of electricity supply. From 2023 to 2028, the priority of the EBRD’s financial support to Moldova will be fostering energy resilience, including funds for the modernisation of electricity grids. Although Ukraine is essentially self-sufficient in electricity supply, synchronisation with the EU grid has proven important for Kyiv too, enabling it to import electricity from EU countries in crisis situations related to Russian attacks. This has been especially helpful given that in March 2022 Russia captured the important Zaporizhia nuclear power plant, which was responsible for 44 per cent of Ukraine’s total generating capacity from nuclear power plants. In 2023, Ukraine also completed the modernisation of a power interconnector with Poland. The EU Civil Protection Mechanism, established back in 2001, proved to be an important crisis mechanism in the context of meeting Ukraine’s short-term energy needs, especially for electricity. As of 31 January 2024, more than 5,900 power generators have been sent to Ukraine via the mechanism, including 2,347 from the EU’s own rescEU reserve stockpiles. In addition to generators, the EU has been delivering other vital energy supplies to Ukraine including transformers, autotransformers, high-voltage equipment, and LED light bulbs. The EIB – which has supported various energy projects in Ukraine since 2007 – has played an important role since the outbreak of the war, funding energy grid projects and repairing the damage inflicted by Russia to energy infrastructure. In December 2023, for example, it provided €133m to enhance the reliability of hydroelectric power plants. Within the Energy Community, the Ukraine Energy Support Fund and the Ukraine Support Task Force have proven to be extremely important in ensuring Ukraine’s energy security during the war, with the Ukraine Energy Support Fund alone providing over €400m in support by December 2023. Under the Ukraine Support Task Force, as of October 2023, 22 EU countries had made nearly 100 deliveries to Ukraine, including power transformers, cables, generators, transportation vehicles, and other equipment crucial for supporting the electricity sector. The Energy Community has also launched the Ukraine Energy Market Observatory, which will closely follow and review all developments related to the broader energy market and corporate governance in Ukraine. Finally, in March 2023, the Energy Community Secretariat signed two memorandums of understanding with the Ukrainian authorities: one on increased cooperation in rebuilding Ukraine’s energy sector and another on the coordination of activities in the area of humanitarian aid for the district heating, water supply, and buildings sector of Ukraine. Green credentials With the help of the EU, member states, and financial institutions, Ukraine and Moldova have been able to dramatically strengthen their energy sovereignty in terms of energy independence. However, their progress towards energy cleanness and efficiency – two other important components of energy sovereignty – has been less impressive. Cleanness Both countries, but especially Moldova, perform poorly when it comes to the share of renewables in their electricity generation. In 2022, renewables accounted for only 15.8 per cent of Ukraine’s electricity generation and 7.1 per cent of Moldova’s electricity – far below the EU and world average of 38.4 per cent and around 30 per cent respectively in 2022. The share of renewables in Moldova and Ukraine also includes the production of electricity from large hydroelectric power plants, whose operation is not fully carbon neutral. However, the development of the renewable energy sources (RES) sector in Ukraine was beginning to gain momentum before the outbreak of the war. At the beginning of 2022, the total installed RES capacity (connected to the grid) reached 9.5 gigawatts (GW) – excluding 0.6GW of RES capacity located in the territories temporarily occupied by Russia before 24 February 2022. About $12 billion was invested in the Ukrainian RES sector between 2009 and 2021 from a variety of sources, including the EBRD, the Black Sea Bank for Trade and Development, and the American International Development Finance Corporation. But, during the first six months of the war, Russia destroyed between 80 and 90 per cent of the generating capacity of wind power plants and around 30 per cent of the capacity of solar power plants in the country, as well as around half of the transmission lines and facilities for the production of electricity in Ukraine. Ongoing military activities, including Russia’s continued attacks on energy infrastructure, are significantly hampering Ukraine’s ability to rebuild these capacities. In an attempt to address this, the G7+ Coordination Group – established in November 2022 and including the Energy Community as well as the EU and its member states – has established a Clean Energy Partnership with the Ukrainian government to support the sustainable recovery and reconstruction of Ukraine, which was officially inaugurated at COP28 in December 2023. Its aim is to support the creation of a modern, secure, decentralised, and cleaner energy system in line with Net Zero in Ukraine and to better integrate the country into the EU. The parties are to support Ukraine in attracting private investors to develop projects to reduce Ukraine’s dependence on fossil fuels, in line with the EU’s energy and climate policy goals. In Moldova, the low share of RES in the energy mix results from a historic lack of interest in projects in this sphere on the part of the authorities. Under the pro-European government led by the Party of Action and Solidarity, which came to power in 2021, this situation has begun to change. The government has expressed interest in accelerating Moldova’s energy transition through the development of renewable projects and is gearing up to initiate the inaugural renewables auctions in the country (between April and June 2024), through which it aims to acquire 105MW of wind power and 60MW of solar projects.  When it comes to the levels of carbon in its electricity, Ukraine boasts much better results. In 2022 the carbon intensity of electricity generated in Ukraine was 271.4 grams of carbon dioxide-equivalents per kilowatt-hour of electricity (gCO2e per kWh), below the EU and global averages of 291.9 gCO2e per kWh and 490.1 gCO2e per kWh respectively. After two years of war, the carbon intensity in Ukraine has dropped further to 194.4 gCO2e per kWh. The large share of nuclear energy in Ukraine’s energy mix (60.5 per cent in 2023) – one of the largest shares globally – primarily accounts for the low carbon footprint of its energy sector. Moldova’s electricity has a much higher carbon intensity, 871.7 gCO2e per kWh in 2022, well above the EU and global averages. Moreover, the energy intensity (the amount of energy required to produce one unit of GDP) in Moldova is 3.4 times higher than the average in EU countries. Buildings account for 58 per cent of the total final energy consumption in Moldova, of which non-residential buildings account for 17 per cent. This makes improving energy efficiency in this sector of crucial importance.  Energy efficiency Both countries also face challenges to improve their energy efficiency, although Ukraine is doing much better than Moldova in this field. According to Energy Community reports, Ukraine’s primary energy consumption and final energy consumption in 2020 were below the targets set for 2030. In the case of Moldova, on the other hand, the 2021 statistics show that both primary and final energy consumption were just over 10 per cent above the 2030 targets. Ukraine’s good performance is largely a consequence of the war and the subsequent drop in electricity consumption of around one-third. Nonetheless, Ukraine is still struggling with high energy intensity in some sectors, notably related to residential buildings, 85 per cent of which date from the Soviet era. Before the invasion, the average level of energy consumption in households was two to three times higher than that in the EU. On top of this, gas plays a significant role in the heating sector, with around 80 per cent of households in Ukraine relying on heat supplies from gas-fired power stations. While the war makes it difficult for Ukraine to implement systemic measures to improve energy efficiency, Ukrainian authorities had integrated this aim into their energy strategy even before Russia’s invasion. In 2018, they established the Energy Efficiency Fund, in close cooperation with the EU and Germany. Since 2014, the EU has also allocated grants under the European Neighbourhood Instrument to support reforms in Ukraine, including those aimed at improving energy efficiency. Ukraine has made significant progress in fulfilling its obligations under the association agreement with the EU regarding the adoption of European energy efficiency legislation. For example, it has developed and enacted a legislative framework to support energy efficiency, including to establish energy-efficient practices across various sectors and reduce energy consumption in buildings. Ukraine is also aligning with European standards by promoting “nearly zero-energy buildings” through the adoption of the Concept and National Plan, which outlines the gradual implementation of regulations over the next five years, followed by new construction requirements after 2025. Moldova adopted an amendment to the energy efficiency law in May 2023, establishing a legal framework for comprehensive planning via the National Energy and Climate Plan. However, it is yet to implement energy efficiency measures, especially according to standards prepared by international institutions. For example, the UN Economic Commission for Europe (UNECE) has prepared a special guide for the implementation of energy efficiency measures and the valorisation of renewable energy sources for public sector buildings. The Energy Community Secretariat has played an important role in the creation of further instruments for energy cooperation between EU member states and the EU’s neighbours which encompass energy efficiency. For instance, EU4Energy – an initiative created jointly with the Council of European Energy Regulators and the International Energy Agency and launched in 2016 – is focusing on Moldova and Ukraine, alongside Armenia, Azerbaijan, Belarus, and Georgia, in the current second phase of the programme (2021-2025). The initiative is designed to support the aspirations of focus countries to implement sustainable energy policies and foster cooperative regional development of the energy sector. The European Commission’s Covenant of Mayors for Climate and Energy, which aims to bring together European local and regional authorities to voluntarily contribute to increasing energy efficiency and the use of RES, includes many cities and municipalities from Ukraine and Moldova. The EU and member states have also provided support within the framework of the Eastern Europe Energy Efficiency and Environment Partnership fund, a programme set up on Sweden’s initiative in 2009. Of the total budget (€1,355m), €982m was allocated to 25 projects in Ukraine and €114m to seven projects in Moldova. Funds disbursed under the initiative are used, among other purposes, to improve the energy efficiency of healthcare buildings and other public facilities. Energy narratives The current authorities in both countries have shaped a dominant narrative around strengthening energy sovereignty. In March-April 2023, the European Council on Foreign Relations’ network of associate researchers conducted a survey in all EU member states and Ukraine and Moldova on decision-makers’ approach to energy sovereignty following the outbreak of Russia’s invasion of Ukraine. Questions included the conceptualisation of energy sovereignty, the main challenges and threats in this area, and the measures taken and planned to strengthen it. Our researchers found that the issue of energy sovereignty gained prominence in political circles and public discourse in both countries after the outbreak of the war. The authorities of both countries are taking a comprehensive and innovative approach to energy sovereignty, viewing it not only through the prism of security of supply of raw materials, but also energy efficiency and climate goals. According to statements made by the Ukrainian government, Ukraine plans to become a leading green energy hub in Europe, integrating energy production with green technology development. Ukraine’s minister of energy has underscored the role of renewable energy in enhancing energy security, citing Ukraine’s experience during the war and its contribution to European stability through the synchronisation of power systems. Although the Moldovan authorities have placed special emphasis on the need to find alternative sources of supply due to their longstanding heavy dependence on energy resources from Russia, in the long term they also see energy transition issues as an important component of strengthening energy sovereignty. The government plans to significantly increase the pace of RES projects, aiming to increase their share to 30 per cent of electricity consumption in Moldova by 2030. The elites of both countries also seem to see cooperation with third countries, including the EU and member states, as an important means of strengthening energy sovereignty, not just responding to crisis situations. This is evident in their long-term plans to cooperate with the EU and member states on further projects to strengthen their energy sovereignty. (This applies in particular to the expansion of infrastructure connections.) Moldova is currently focusing primarily on the construction of a high-voltage line from Vulcanesti to Chisinau. This connection is expected to allow the import of electricity from Romania to Moldova on the right bank of the river Dniester within the next few years. (The completion of the line is scheduled for 2025.) Moldova is also interested in the development of joint power generation projects with Romania and in increasing the capacity of the Ungheni-Chisinau gas interconnector. Ukraine is focused on establishing a hydrogen corridor connecting it with Slovakia, the Czech Republic, Austria, and Germany. The corridor would enhance Ukraine’s energy security and integrate it into the European energy network, as well as stimulate the growth of Ukraine’s hydrogen industry and enable Ukrainian-produced hydrogen to seamlessly enter the European energy market. Furthermore, in 2024 both countries (along with Slovakia) joined the Vertical Corridor European gas transportation scheme, which brings together the gas transmission system operators of Greece, Bulgaria, Hungary, and Romania, and aims to enhance energy security and diversification by upgrading their networks to facilitate gas transport from south to north and vice versa. The mutual benefits of cooperation So far, the eastern neighbourhood countries have mainly benefited from the EU’s and member states’ actions in the context of strengthening their own energy sovereignty. However, they both – and especially Ukraine – have the potential to help strengthen the energy sovereignty of the EU and its member states, thanks to their raw materials, RES development, and infrastructure. Ukraine has great potential in the gas sector. Firstly, Ukraine is home to some of the largest proven natural gas reserves in Europe (after Norway), estimated at up to 1.1 trillion m3 in December 2020 (within the internationally recognised borders of Ukraine, that is, including Crimea and other areas occupied by Russia). Ukraine’s gas production is also the second-largest in Europe after Norway and, despite the war, remains at a relatively high level (18.5 bcm in 2022 and 18.7 bcm in 2023). Secondly, Ukraine hosts gas infrastructure that could be useful for the EU as it diversifies its sources of supply. Ukraine’s extensive gas network, which has already enabled the transit of Russian gas for European consumers, could transport gas from the Black Sea or Caspian region via the Trans-Balkan pipeline. This would especially be the case after the construction of a liquefied natural gas (LNG) terminal on Ukraine’s Black Sea coast – which has been under consideration for over a decade. Ukraine could also help Europe to store gas – the country has the largest gas storage system (30 bcm) in Europe and the third-largest by capacity in the world – behind only the US and Russia. This capacity not only ensures Ukraine’s energy security but could also potentially be used by European customers. Some EU companies are already doing this – at the beginning of 2024, around 2 bcm of gas in Ukrainian storage belonged to EU companies, but the potential for exploitation is much greater. Cooperation with Ukraine on hydrogen could further strengthen the EU’s energy sovereignty. According to Ukrainian researchers, with the appropriate development of wind power, Ukraine could produce up to 19.5m tonnes of green hydrogen per year, which would be twice as much as the EU’s annual production plans by 2030. The EU already considers Ukraine one of the three main potential green hydrogen import corridors (along with the North Sea region and the Mediterranean Sea), and in February 2023 signed a memorandum of understanding with Ukraine on a strategic partnership on biomethane, hydrogen, and other synthetic gases. Hydrogen projects that meet the EU’s safety standards can obtain the status of projects of mutual interest under the EU’s Trans-European Networks for Energy Regulation framework. The European Commission’s first list of projects of mutual interest published in November 2023 includes a generic corridor project aiming to transmit hydrogen from Ukraine to Slovakia, the Czech Republic, Austria, and Germany. Both countries, and especially Ukraine, also have high potential for RES development, which could allow the production of clean energy not only for domestic consumption, but in the case of Ukraine also for export to the EU. Theoretically, Ukraine has the greatest RES potential among south-east European countries, although estimates vary. The Ukrainian government assesses the potential for wind energy development in Ukraine off the Black Sea and the Sea of Azov coasts to be 140GW. Ukrainian scholars, meanwhile, calculate that renewable energy sources in Ukraine could provide up to 874GW in total, including solar (83GW), onshore wind (438GW), and offshore wind (250GW). At a conference on the reconstruction of Ukraine organised in June 2023 in London, the Ukrainian ministry for energy presented plans for investments in the energy sector, showing that by 2050 Ukraine wants to have 230GW of solar and wind generation capacity, 38GW of energy storage capacity, and 69GW of electrolyser capacity to produce green hydrogen. Regardless of which of the above estimates is more realistic, it is clear that Ukraine has the ability to produce large amounts of clean energy. According to the UNECE, bioenergy, hydro, solar, and wind generation could account for almost 80 per cent of Ukraine’s total energy generation by 2050. Moldova also has some potential for the development of RES projects, although significantly less than Ukraine. According to a 2017 report from the International Renewable Energy Agency, Moldova could expand its wind power to 21GW and total RES generation capacity to 27GW. From the perspective of the EU, while Moldova will not become a source of clean energy imports like Ukraine, the development of RES projects in Moldova would nonetheless be beneficial, reducing Moldova’s consumption of fossil fuels and thus also relieving the burden on the EU and member states of providing support to maintain Moldova’s gas supply during crises. Ukraine could also develop biomethane projects. According to the Ukrainian National Committee for Energy Regulation, the country could produce 22 bcm of biomethane per year, some of which could be exported to the EU. Indeed, Ukraine already has the necessary resources and infrastructure, including adequate transmission networks that would not require additional upgrades to transmit biomethane. Ukraine also has large feedstock resources and large areas of arable land to develop the potential for agricultural biomethane production. The EU plans to produce 35 bcm of biomethane per year by 2030 and it is estimated that Ukraine could meet up to 20 per cent of this demand. The EU could also benefit from access to Ukraine’s critical raw materials (CRMs), which are important for the EU’s own energy transition. Ukraine holds resources of most of the raw materials on the EU’s latest list of CRMs, including some that the EU recognises as CRMs of strategic importance. For example, Ukraine has the largest reserves of lithium in Europe, used, amongst other things in the production of batteries for electric cars. In 2021, Ukraine also accounted for around 7 per cent of global titanium production and was the world’s seventh-largest exporter of titanium ore. Titanium dioxide is a valuable chemical that can help to improve the efficiency of batteries by extending both their energy-storing capacity and their lifetime, and – alongside lithium – is one of the CRMs that the EU considers to be strategic. Moreover, Ukraine has some of Europe’s largest reserves of graphite, which is used in energy storage technologies like lithium-ion batteries, as well as deposits of nickel and cobalt, which are important in battery production. Its significant potential for green energy production and its status as the country with the largest nuclear generating capacity in Europe mean that Ukraine could also be a source of low-carbon electricity imports for EU member states. Over the last three decades, Ukraine has exported electricity, and continued to export small amounts to Moldova, Poland, Slovakia, Romania, and Hungary even in the first year of the war. Due to Russian attacks on Ukraine’s energy infrastructure, Kyiv was forced to suspend electricity exports in October 2022, but resumed exports of small amounts of electricity to Moldova and EU countries in April 2023. In the long term, especially when the war ends, the EU expects to be able to import clean electricity from Ukraine as part of its REPowerEU initiative. Finally, Ukraine can provide important insights into protecting energy infrastructure across Europe based on its experiences of Russian attacks, which could further strengthen the EU’s energy sovereignty. The security of the EU’s energy infrastructure has become an area of concern, particularly after the damage to the Nord Stream 1 and 2 pipelines, the Baltic interconnector, and the cyber-attacks on Danish energy infrastructure. Hurdles ahead Several factors clearly favour closer energy cooperation between the EU and member states and their eastern neighbours, which would strengthen the energy sovereignty of all parties involved. Both the societies and the current authorities in Moldova and Ukraine are unequivocally in favour of the closest possible integration into Western structures, including the EU. In Ukraine, this has been the case since the victory of the “Revolution of Dignity” against the government’s growing ties to Russia and the ensuing fall of the Yanukovych administration in 2014, while Moldova began to take an unequivocally pro-European course in 2021. Russia’s ongoing war in Ukraine and aggressive policy towards Moldova have further embedded this trend and mean it will likely continue in the long term. The EU has also re-evaluated its strategic thinking, prompting a new focus on its own energy sovereignty and that of its eastern neighbourhood. After Russia’s invasion of Ukraine, the EU worked rapidly to reduce its dependency on Russian energy supplies and to help its eastern neighbours do the same. However, the ongoing war in Ukraine is hampering the intensification of long-term energy cooperation. In the case of Ukraine, the key issue is the scale of the war damage and the estimated amount of money needed to rebuild Ukraine. The World Bank estimates the total cost of reconstruction at almost $486 billion, which is more than two times the size of Ukraine’s pre-war economy. According to the UN, rebuilding Ukraine’s energy sector alone, which has been seriously damaged by constant shelling, will require an outlay of approximately $47 billion. The EU has announced an additional €50 billion in support between 2024 and 2027 through a new financing instrument, the Ukraine Facility. However, these funds relate to investments in all spheres of state functioning, and it is unclear how much, if any, of this sum will be allocated to energy. Considering Kyiv’s plans regarding investments in green energy (RES and hydrogen) and the development of other sectors, including nuclear and gas, the Ukrainian authorities estimate that the country’s investment needs will reach $400 billion by 2050. Yet Moldova and Ukraine have relatively weak investment climates. Before the war, regulatory instability in Ukraine, including changes in taxation rules for the gas extraction sector, among other factors, made it difficult to attract investors. Moldova also finds it difficult to attract investment, particularly from private actors. And, although positive developments are taking place in Ukraine even during the war (for example, a law adopted in Ukraine introducing favourable conditions for investment in the biogas and biomethane sector, including exemption from income tax for five years, land tax, and VAT and customs duties when importing new equipment and components), it remains unclear how easy it will be to introduce and apply legal regulations after the war. Progress in the implementation of energy and climate policy will also be one of the fundamental challenges in the context of Ukraine’s integration with the EU. In addition to this, specific sectors face further challenges. Despite having great potential for hydrogen production, for example, Ukraine so far has neither a hydrogen strategy, nor a legal framework for the development of hydrogen projects, nor adequate infrastructure. The next steps To achieve the greatest possible synergy in the efforts of the EU and its eastern neighbours to mutually reinforce energy sovereignty, both sides will need to continue taking strategic steps in the coming years. For eastern neighbours Adopt a progressive approach to energy sovereignty Ukraine and Moldova need to translate their narratives about energy sovereignty into a determination to implement them in reality. The eastern neighbourhood countries should permanently change their approach to energy sovereignty and think of it not only in terms of security of supply – energy independence from Russia and diversification of supply sources – but also in terms of clean energy and energy efficiency. This applies especially to Moldova, which should aim to finally and permanently sever its energy relations with Russia not only in the electricity sector, but also in the gas sector, in particular by removing Gazprom from the ownership structure of its largest gas company Moldovagaz (in which Gazprom still holds 51 per cent of the shares). The EU and its eastern neighbours should make the improvement of energy efficiency one of their common strategic goals. Moldova and Ukraine should use the funds made available through the EIB and EBRD to implement steps to improve energy efficiency. In particular, they should exploit and expand the opportunities for projects under the Eastern Europe Energy Efficiency and Environment Partnership. They should also strengthen bilateral cooperation with selected EU member states that have declared their willingness to share their experience in this field. On a bilateral level, France, Germany, Poland, and Sweden are implementing or planning cooperation with their eastern neighbours to improve energy efficiency. Meet Energy Community regulations Ukraine and Moldova should continue to implement reforms in the energy sector, including those stemming from their membership in the Energy Community or related to the process of deepening their integration with the EU. Following the end of the war in Ukraine, it will be important that the two countries take measures against the monopolisation of markets by fully liberalising the electricity and gas markets, ensuring OECD-appropriate governance standards for state-owned energy companies, and making further progress in tariff reforms and subsidy provision by phasing out public service obligations and replacing them with social support for vulnerable energy consumers. These measures will serve to deepen the integration of Moldova and Ukraine with the EU and, consequently, help to increase the resilience of their energy systems. Make infrastructure flexible Both Moldova and Ukraine should prepare for new uses of their transmission infrastructure under the new geopolitical conditions. This is particularly important for Ukraine, which for a decade has acted as a transit country for EU countries’ gas and oil imports from Russia. In December 2024, the transit agreements between Russia and Ukraine will expire, and Ukraine will need to find a new use for its significant gas pipeline network in order to maintain it. The Ukrainian gas pipeline network could be used to export Ukraine’s surplus gas production or to transit gas from other sources. For example, Azerbaijani gas exported via the Trans-Balkan pipeline could travel via Moldova and Ukraine to Slovakia or other EU countries. The Ukrainian government was already considering using it to transport imported gas via a potential LNG terminal on the Ukrainian Black Sea coast before the war. Ukraine and Moldova also need to modernise and expand their electricity grids. In the case of Ukraine, this is necessary due to the continuing destruction associated with Russia’s aggression. However, Moldova also needs grid investments, especially if it is to expand its RES potential in the future. Indeed, the expansion of RES potential requires a sufficiently developed grid capable of absorbing electricity produced by wind or photovoltaic installations into the system. Make use of international cooperation formats Given the multiplicity of cooperation formats in which the eastern neighbourhood countries are involved, it is important to build synergies between them. In addition to the formats already in use in relations with the EU, Kyiv and Chisinau should make use of other, supra-regional cooperation formats that have emerged in central and eastern Europe in the last decade, within which some countries have placed a very strong emphasis on strengthening sovereignty. An example of this is the Three Seas Initiative, a project initiated in 2015 by the presidents of Poland and Croatia that brings together 13 central European countries with the strategic aim of preserving and strengthening the unity of the EU and the Euro-Atlantic space through three pillars: transport, energy, and digital. Poland and Romania have already declared their interest and political will to cooperate with countries such as Moldova and Ukraine under the initiative. For this purpose, Ukraine and Moldova could also make use of the European Political Community, to which 47 European countries belong, including non-EU countries such as the United Kingdom and Turkey. For the EU Ensure comprehensive support to Moldova and Ukraine prior to accession In the dynamic geopolitical situation related to Russia’s aggression against Ukraine, the EU should be determined not only to pursue the EU integration process of Moldova and Ukraine consistently, but also to strengthen its own capacities to respond to Russia’s attempts to destabilise these eastern neighbours. Only the accession of Ukraine and Moldova to the EU can create a sustainable foundation for strengthening cooperation and using the full potential of all parties to strengthen energy sovereignty. The EU therefore needs to demonstrate its determination to meet this political commitment to Moldova and Ukraine. It should use all existing multilateral formats available to it to tighten political and economic (including energy) cooperation with its eastern neighbours. Individual member states should also look to strengthen their bilateral cooperation with their eastern neighbours. Poland can play a special role in this respect, above all because it is Ukraine’s largest neighbour and is interested in participating in the reconstruction of Ukraine and particularly committed to supporting Moldova’s reform. The new pro-European government formed in December 2023 could also build a coalition for energy cooperation with its eastern neighbours together with Germany or perhaps more broadly with Germany and France as part of the recently reactivated Weimer Triangle. Initiate joint energy projects The EU should plan further joint energy projects with its eastern neighbours. It is a major weakness that, apart from the hydrogen corridor with Ukraine, the list of projects of common and mutual interest published by the EU in November 2023 does not include others concerning the enhancement of infrastructure links between the EU and Ukraine and Moldova. These are notably lacking in the electricity sector. The implementation of these projects will be important for electricity trade between the EU and neighbouring countries, which could strengthen the energy sovereignty of both the EU and its eastern neighbours. At the same time, it is in the interest of the EU and member states that progressive integration, for example in the sphere of electricity markets, is carried out under fair competition conditions between EU players and companies from Ukraine and Moldova. Contribute to security of energy supply Although the EU’s own raw material potential is limited, some countries have resources that could be used to meet part of the needs of the eastern neighbourhood countries. Romania, which has among the most energy resources in Europe, could play a particularly important role in this context. Its gas resources on the Black Sea shelf are estimated at 80-200 billion m3, which would allow it to secure its own needs for about 20 years or, in the medium term, act as an alternative to Russian supplies to other countries in the region, such as Moldova. When it comes to electricity production, Romania boasts a diversified energy mix and a well-developed network of interconnections with neighbouring countries that can operate in two directions (for import and export purposes). Due to its location, Romania could also play the role of a transit country for the transmission of energy resources (for example, gas via the Trans-Balkan gas pipeline) or electricity from third countries. EU member states should support Ukraine in continuing to diversify its nuclear fuel supply sources. Those that have nuclear power in their own energy mixes, including Bulgaria, France, Romania, Slovakia, and Sweden, can provide logistical support for the transport of nuclear fuel from alternative sources, and be partners for enhancing cooperation in the nuclear sphere after the end of the war. The so-called nuclear alliance that has emerged in the EU under the informal leadership of France could be useful in this regard, supporting partnerships with Ukraine to implement joint nuclear projects. Improve eastern neighbours’ energy efficiency In its external energy policy strategy, the EU calls for energy saving and energy efficiency to become priorities on a global scale. It should therefore support neighbouring countries to improve energy efficiency. As postulated, among others, by participants in the Green Deal Ukraine project, the EU and its member states should help their eastern neighbours to develop robust standards for energy efficiency and building materials for both new and renovated buildings, spanning residential and non-residential sectors and the entire construction process. These standards should include monitoring energy efficiency for components and the building process to align with evolving EU efficiency regulations, promoting sustainable practices and long-term decarbonisation goals. Increase investments in the region Energy should become one of the key areas of cooperation to strengthen Moldova’s and Ukraine’s sovereignty and thus their resistance to aggressive, destabilising actions by Russia. Although the EU has so far provided significant financial assistance to Ukraine and Moldova, both directly and in cooperation with European financial institutions, the scale of the needs (especially in Ukraine) requires further efforts in this area. Investment either directly by the EU or by companies from EU countries in Ukraine’s RES sector, the hydrogen corridor, or Ukraine’s gas infrastructure could strengthen EU energy sovereignty by ensuring a secure supply of clean electricity or gas supplies, which will still be needed by EU countries over at least the next decade. To this end, the EU should make use of and provide organisational and expert support for recently created instruments such as AidEnergy – an electronic platform established in March 2023, whereby the EBRD in partnership with other donors and international financial institutions and the Ukrainian Ministry of Energy create a centralised list of energy sector needs. The platform is intended not only to identify the current needs of the Ukrainian energy sector, but also more long-term needs. Considering the long-term investment needs of Ukraine’s energy sector, the EU could also provide support through financial guarantees for the most strategic projects. EU member states and institutions should also continue efforts to confiscate frozen Russian assets, which could be used for the reconstruction of Ukraine, including investments in the energy sector. The law adopted by the EU in February 2024 to set aside windfall profits made on frozen Russian central bank assets is a move in a right direction in this regard. Acknowledgments The author would like to thank experts and people working in the energy sector in institutions and companies in Poland, but also in Ukraine, Slovakia, and Germany, for discussions on the topic covered in this policy brief. Special thanks are also due to those who provided comments on the first version of the text, in particular Susi Dennison. The author would particularly like to thank Flora Bell for her pleasant and fruitful collaboration in editing the final version of the text, especially for her very valuable suggestions, questions, and comments. Thanks are also due to Nastassia Zenovich for the beautiful graphics included in the text. References [1] https://ecfr.eu/publication/energising-eastern-europe-how-the-eu-can-enhance-energy-sovereignty-through-cooperation-with-ukraine-and-moldova/#_ftnref1 Argus Eurasia Energy (https://www.argusmedia.com/en), weekly report, by subscription, 23 February 2023. [2] https://ecfr.eu/publication/energising-eastern-europe-how-the-eu-can-enhance-energy-sovereignty-through-cooperation-with-ukraine-and-moldova/#_ftnref2 Ibid. [3] https://ecfr.eu/publication/energising-eastern-europe-how-the-eu-can-enhance-energy-sovereignty-through-cooperation-with-ukraine-and-moldova/#_ftnref3 Ibid. [4] https://ecfr.eu/publication/energising-eastern-europe-how-the-eu-can-enhance-energy-sovereignty-through-cooperation-with-ukraine-and-moldova/#_ftnref4 Argus Eurasia Energy (https://www.argusmedia.com/en), weekly report, by subscription, 22 January 2024. This policy brief was first published on 11 March by the European Council on Foreign Relations (ECFR)

한국어로 읽기Leer en españolIn Deutsch lesen Gap اقرأ بالعربيةLire en françaisЧитать на русском In October 2023, the EU Commission identified four technology fields as critical: advanced semiconductors; artificial intelligence (AI); quantum, and; biotechnologies.[1] All four areas are greatly impacted by the U.S.-China rivalry in technology, making it essential for Europeans to understand the Sino-American competition. This article examines this rivalry from the Chinese and U.S. perspectives. It recounts their prevailing attitudes, which are shaped by recent events, and that, in turn, mold Chinese and American strategic approaches. From the Chinese policymakers’ perspective, its geo-technological competition with the U.S. is novel and passively learned. During Xi Jinping’s first term, the Chinese government still positioned technology under the economic-oriented strategy of innovation-driven development. This stance followed the idea that ‘science and technology constitute a primary productive force’ and the ‘peaceful development’ principles set during Deng Xiaoping’s era. However, around 2018, two sanctions incidents that targeted Chinese telecommunications giants shifted Chinese leaders’ understanding of tech strategy into the geopolitical context. The first sanction incident involved ZTE, China’s second-largest communications equipment manufacturer. In 2016, the Barack Obama administration accused ZTE of selling telecom equipment containing American chip technology to Iran, which violated U.S. sanctions. In 2017, ZTE pleaded guilty and paid a fine of $1.2 billion. However, in 2018, Trump’s government stated that ZTE did not comply with the settlement agreement, coupling previous sanctions with export controls on ZTE in April 2018. The second incident involved Meng Wanzhou, then Vice-Chairwoman and CFO of the Chinese telecommunications giant Huawei, who was arrested in Vancouver, Canada, during a layover in December 2018. Her detention was at the extradition request of the Trump administration, which levied charges related to alleged violations of U.S. sanctions against Iran. These included bank and wire fraud and outright violations of U.S. sanctions via a subsidiary called Skycom Tech, which allegedly concealed Huawei’s activities in Iran. The necessity of a strategic adjustment These two incidents caused an uproar in the Chinese media, followed by a surge in public patriotic sentiment. However, for the Chinese government, the impact and significance of the two cases were quite different. The essence of the ZTE case was commercial sanctions, which meant that ZTE violated business norms and deserved economic punishment. The official Chinese government stance was that ‘this is just an individual case of corporate violation.’ Despite this position, the fact that the government was actively involved nonetheless politicized the incident within China. It was Xi Jinping himself who negotiated with Trump to save ZTE from bankruptcy after which ZTE became a state-owned enterprise with absolute state control—a move that ultimately resulted in ZTE gaining a greater domestic market share than Huawei. At the international level, the top-level nature of negotiations prevented the ZTE incident from overly politicizing then-ongoing trade frictions between the U.S. and China. While the ZTE episode was resolved with little rancor, Chinese senior officials became concerned about the impact that the U.S. might have on China’s strategic technology companies.[2] In November 2018, Tan Tieniu, then Deputy Secretary-General of the Chinese Academy of Sciences, reported to China’s top leaders that they should learn from the ZTE incident. They should avoid overreliance on imports of core electronic components and chips, and they should not repeat mistakes made by ZTE. In the same month, Xi Jinping mentioned in a speech that ‘internationally, advanced technology and key technology is more and more difficult to obtain… forcing us to travel the road of self-reliance.’ Terms like technological security, technology ‘chokepoints’ (卡脖子), and core technologies in key fields (关键核心技术) began to appear frequently in Chinese official discourse. These reflected Chinese leadership’s views about the ZTE incident that were in turn shaping strategic thoughts on the geopolitical technology competition with the United States. It was the Meng Wanzhou incident at the end of 2018 that for Chinese leaders confirmed the necessity of a strategic adjustment. As in the ZTE case, Huawei was involved in a business violation that from the Chinese perspective should have resulted in corporate punishment. Instead, a personal arrest warrant was issued for Meng, thereby escalating a commercial sanction into a political and diplomatic incident. Le Yucheng, then Deputy Minister of Foreign Affairs, urgently summoned the U.S. and Canadian ambassadors to China and issued a stern protest. The Chinese government also arrested two Canadian citizens in China, sentencing one to 11 years in prison. The Chinese Ambassador to Canada wrote that the Meng Wanzhou case was a ‘premeditated political act in which the United States wields its regime power to hunt a Chinese high-tech company out of political consideration.’ Chinese Defensive Deterrence These two episodes shaped and reinforced Chinese leaders’ strategic thinking about its geopolitical technology competition with the U.S. The 14th Five-Year Plan issued by the CCP in 2020 proposed ‘making technological self-reliance’ a strategic goal. Soon all official documents established a new tone for China’s technology strategy based on self-reliance. Previously, China pursued a reassurance strategy, a strategy that showed goodwill towards the U.S. and the system it led. Thus, in theory, China had two strategic options: reassurance and/or deterrence. The former strategy involves showing friendliness towards the U.S. and its allies, thereby releasing tension, and maybe re-joining the U.S.-led system. A reassurance strategy allowed China more time for stable development—the logic of ‘keeping a low profile’ of the Deng Xiaoping era. The Xi Jinping government picked the second option, deterrence, which is to show strength or use countermeasures to reduce the likelihood of further U.S. trade or coercive action. To make a deterrence strategy work, however, Xi further believed China needed to gain strong capacity in key tech fields. Therefore, Xi first mobilized domestic R&D resources and tried to acquire advanced technologies before using diplomatic countermeasures. The core logic underlying this geopolitical technology strategy is one of ‘defensive deterrence.’ A typical example of this strategy in play concerns the semiconductor industry. Facing export controls on semiconductor equipment from the U.S., the Netherlands, and Japan, the Chinese government first increased R&D investment in the sector, trying to overcome ‘chokepoint’ technologies. As a result, China’s investment in semiconductor R&D grew from $10 billion in 2018 to $25 billion in 2022, an increase of 150%. At the same time, the Chinese government increased investment in the production of key raw materials (silicon, gallium nitride, etc.) and semiconductor production bases. It also guided industries upstream while also pushing for downstream integration through policies to improve and strengthen supply-chain security. Chinese policy also moved to increase international supply-chain dependence on China through its comparative advantages in the semiconductor industry (and even other industries) in a hedging move against the U.S. and its allies. For example, in the automotive chip sector, in the supply of vital raw materials, and in the semiconductor equipment markets, China sought to utilize its significant comparative advantages. In August 2023, the Chinese government announced export controls on gallium and germanium, two key materials for manufacturing semiconductors. China Seeking More Regulatory Power But in addition to responding to what was perceived as U.S. containment policies in the area of technology, China’s strategic use of technology followed another approach, one led by the Ministry of Foreign Affairs (MFA) and the Ministry of Industry and Information Technology (MIIT). This third approach sought more regulatory power, for example, in the areas of civilian AI where China has huge potential.[3] Starting in 2018, the Chinese government showed a strong determination to introduce and study AI ethics and technical standards.[4] Based on these domestic framework policies, various diplomatic initiatives, and standards proposals, the MFA and MIIT expanded China’s regulatory influence in the field of AI. For example, the MFA proposed the ‘Global Data Security Initiative’ in 2020 and the ‘Global Artificial Intelligence Governance Initiative’ in 2023. Minister Wang Yi explicitly stated ‘We hope to provide a blueprint for related international discussions and rule-making.’ The China Electronics Standardization Institute, affiliated with the MIIT, also actively participates in the formulation of international new technology standards. Selectively decoupling: U.S. Attitudes and Strategies When it comes to strategic technologies, the Joe Biden administration has generally maintained a stance toward China that aligns closely with the previous administration led by Donald J. Trump. This is especially the case concerning competitive technologies such as 5G/6G, the specialized processors designed to handle the computational demands of AI, quantum computing, and electric vehicles (EVs). Taking a page from U.S. President Ronald Reagan’s Cold War playbook of outspending the Soviet Union, president Biden initiated a $2.25 trillion infrastructure plan. This plan, not unlike China’s policy to increase domestic innovation and strength, allocated funds for sectors such as transportation, manufacturing, renewable energy, clean water, and high-speed broadband for both wired and wireless technologies. The justification for these investments, part of the Build Back Better Act (BBB) policy and later incorporated into the Inflation Reduction Act (IRA) and the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act, was that they were a response to Xi Jinping’s ambitious goals of doubling China’s economy by 2035, intending to establish China as a global leader in biotechnology, green energy, and AI. In addition to a spending strategy to boost U.S. competitiveness in strategic technologies, the Biden administration continued with some of Trump’s punitive measures. For example, Biden maintained tariffs amounting to approximately $300 billion. He also continued action against Huawei, which has the potential to outcompete in 5G/6G mobile network technology. The Trump administration used the Bureau of Industry and Security to exclude Huawei from global semiconductor supply chains and it placed the company on the Commerce Department’s Entity List, thus requiring U.S. companies to obtain a license before exporting to Huawei. As discussed above, Trump’s executive branch also brought fraud allegations against Huawei’s Chief Financial Officer Meng. While Biden kept in place Trump-era prohibitions on sales of U.S. goods to companies like Huawei, as well as maintaining restrictions on exports of U.S. critical technology, he did quickly resolve the dispute over Meng. Within hours of the deal for her release, the two men caught up in the game of hostage diplomacy left China on a flight back to Canada. Highlighting the political nature of the incident, when Meng returned to China, senior local officials at the airport met her. Encourage Multilateralism to meet Global Challenges Along with strident measures, the Biden administration also sought a more nuanced stance. Indications that suggest a less hawkish approach to China include emphasizing a collaborative approach toward global challenges like climate change and future pandemics. Biden further pushed for engagement in high-level meetings with, for example, Secretary of State, Antony Blinken, and National Security Advisor, Jake Sullivan, who held talks with their Chinese counterparts, Yang Jiechi and Wang Yi, in Anchorage, Alaska, in March 2021. These talks were frostier than U.S. officials would have preferred but they got the two sides to engage in some dialogue. Similarly, Biden sought to engage with China in multilateral forums and organizations where both countries are members, such as the recent Asia-Pacific Economic Cooperation (APEC) forum that Biden hosted in November 2023. Even the choice of San Francisco as the venue was designed to be conciliatory as it has historic ties to Asia as well as a central role in global technology as the home of Silicon Valley. Still, one must keep in mind that in deciding on a strategy towards China, Biden must also contend with a Congress and public opinion that are growing increasingly skeptical of doing business with China, which they believe steals good jobs and sends balloons over American territory to spy on U.S. critical infrastructure. One primary shaper of U.S. attitudes towards China are the leaders of the House Select Committee on the Chinese Communist Party, Republican Representative Mike Gallagher and Democratic Representative Raja Krishnamoorthi, who lead one of the last bastions of functioning bipartisanship in Washington, D.C. With their many investigations, subpoenas, and policy recommendations, the House China Committee has become the ‘beating heart’ of U.S. Congressional policy, which, with regards to technology, argues for selectively decoupling from China for national security reasons.[5] A way forward Faced with the U.S.’ decoupling or blunting strategies and China’s defensive deterrence strategy, what steps might European nations take to navigate through the choppy, contentious waters of strategic technologies? Are there also steps that Europeans can take to mitigate the impact on their own strategic technology vulnerability? First, recognizing the pivotal role of technology in the rapidly digitizing global economy, Europeans need to stress that it is in the collective interest of everyone to establish institutions, norms, and policies for effective global governance. Rather than engaging in reactive geopolitical maneuvers resembling a chess game, these institutions could concentrate on constructing a more cooperative foundation for crucial technology sectors. Second, along with this recognition, efforts could be directed toward the development of future institutions, policies, and norms that set standards for next-generation and sensitive technologies. Such efforts should take into account initiatives already made by the Chinese and the Americans. Such efforts could also coincide with a third approach of encouraging the Biden administration to adopt a comprehensive multilateral approach. The U.S. needs to push for collaboration beyond issues such as climate change and economic inequality to encompass the intensely competitive areas in technology like those discussed in this article. For one, Europeans could point out that U.S. blunting strategies are simply not working and may even be backfiring by accelerating Chinese technological advances. In September 2023, Huawei released the Mate 60 Pro smartphone equipped with a 7nm domestic chip, revealing that China has overcome some hurdles that U.S. bans were designed to stymie.[6] Since no one knows how long China’s defensive deterrence strategy will hold (and shift to what Chinese leaders believe is a more offensive deterrence), nor whether Trump or someone as equally anti-multilateral as Trump will be (re)elected, Europeans have many incentives to encourage a softer engagement between China and the U.S. Changing the narrative is a fourth important recommendation. It is essential to recognize that the essence of the Sino-American technology competition is more about narrative construction than a description of the current situation. One indication of this is that both sides believe that the other side started what has been described as the ‘new Cold War.’[7] It does not help that both sides have engaged in behavior that supports the other side’s narrative with some hawkish actors employing similar bash-the-other tactics to gain political advantage.[8] Typically, the factual basis for technological competition is grounded in industrial competition, corporate rivalry, or intellectual property disputes. However, the high-tech relationship between China and the United States has been one of complementarity as well as rivalry. Both China and the United States, as well as European stakeholders, need to be careful of the narratives they espouse, lest they become a self-fulfilling prophecy. This work has been funded by the REMIT project, funded from the European Union’s Horizon Europe research and innovation programme under grant agreement No. 101094228 Footnotes [1] EU Commission Recommendation of 3.10.2023 on critical technology areas for the EU’s economic security for further risk assessment with Member States. [2] Gregory C. Allen. 2023. ‘China’s New Strategy for Waging the Microchip Tech War.’ csis.org, May 3. [3] Jing Cheng and Jinghan Zeng. 2023. ‘Shaping AI’s Future? China in Global AI Governance.’ Journal of Contemporary China 32(143): 794-810. [4] See White Paper on AI Standardization, a Guide to the Building of a National Standard Framework for New Generation AI, a report on Ethical Norms for New Generation AI, a White Paper on Trustworthy AI as well as other regulatory documents. [5] Robbie Gramer. 2023. ‘The Masterminds: Washington wants to get tough on China, and the leaders of the House China Committee are in the driver’s seat.’ foreignpolicy.com, November 27. [6] Weiwen Wang. (2023). ‘China Breaks Through 7nm Chip Technology, Has the China-U.S. Tech War Entered Phase 2.0?’ (中国突破7纳米芯片技术 中美科技战进入2.0阶段？). Lianhe Zaobao (联合早报), September 17. Retrieved from https://www.zaobao.com.sg/news/china/story20230917-1433739 [7] Patricia M. Kim, Matthew Turpin, Joseph S. Nye Jr., Jessica Chen Weiss, Eun A Jo, Ryan Hass, and Emilie Kimball. 2023. ‘Should the US pursue a new Cold War with China?’ Brookings.edu, September 1. [8] Roberta N. Haar. 2020. ‘Will China replace the U.S. as the world’s predominant power?’ Atlantisch Perspectief 44(3):9-13.

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском As Beijing’s investment approach to Latin America focuses on industries of strategic importance, the EU and US will need to contend with growing Chinese competition China is pouring less foreign direct investment (FDI) into Latin America. But while this may seem like a sign of Beijing’s disinterest in the region, data suggests that Chinese companies are simply recalibrating, not retreating. In doing so, they are becoming important players in sectors key to Western interests: critical minerals, fintech, electric vehicles, and green energy. While the European Union and the United States have long been top investors in Latin America, increased competition with Chinese investment now jeopardises their interests in the Latin American industries that will become most crucial to the digital and green transitions. The number of Chinese projects in Latin America grew by 33 per cent from 2018-2023, compared with the previous five-year period of 2013-2017, even as the total value declined. In other words, Chinese companies are making more investments in the region but are pursuing smaller-scale projects on average. These investments are also more focused on what China calls “new infrastructure“ (新基建), a term which encompasses telecommunications, fintech, renewable energy, and other innovation-related industries. In 2022, 60 per cent of China’s investments were in these frontier sectors, a key economic priority for the country. Beijing also views smaller projects in these industries as incurring less operational and reputational risk, especially compared to some of the large-scale infrastructure investment projects often associated with the Belt and Road initiative. Like China, the investment priorities of the G7 grouping – particularly the US and the EU – are centring on critical minerals, fintech, electric vehicles, and green energy as they aim to grow and reinforce existing economic and political partnerships in Latin America. However, both the US and the EU risk falling short of China’s investment strategy in the region. The US has signalled want for greater economic engagement with the region, especially in sectors of strategic interest. However, to date, US efforts to compete with China remain largely focused on building US domestic capacity in these strategic sectors, even as some US companies, such as Intel, are increasingly focused on including regional partners in their supply chains. Some see opportunity for Latin America in Joe Biden’s landmark legislation, the Inflation Reduction Act (IRA), which is aimed at incentivising the energy transition while also de-risking critical supply chains. For example, certain countries in the region may benefit from preferential market access for their lithium or other key inputs to new energy and technology supply chains. However, the reach of the IRA – which remains a largely domestic policy – does not stretch as far as China’s current investment reshuffle. The Americas Act, announced by members of Congress in March could generate promising new investment opportunities for the region, as it encourages US companies and others to move their operations out of China, to which Latin America stands as a promising replacement. But Americas Act reshoring would primarily incentivise textiles and potentially medical equipment manufacturing, with less overall focus on the range of “new infrastructure” industries that China is prioritising. Chinese interests in information and communication technologies reveal a similar story. While the US has focused its policy on 5G equipment sales, China is undertaking a process of vertical integration in Latin American tech sectors that will dramatically boost its competitiveness. For instance, Chinese company Huawei is rapidly expanding its focus to include data centres, cloud computing, cybersecurity, and other services, especially in Argentina, Brazil, Chile, Colombia, Mexico, and Peru. (Computing accounted for a sizable 41 per cent of total Chinese information technology investment in the region between 2018 and the first half of 2023.) At the same time, Global Gateway, the EU’s proposal for a global investment initiative is yet to reach its potential in the region. Brussels is looking to be Latin America’s partner of choice by building local capacity for making batteries and final products like electric vehicles, as European Commission president Ursula von der Leyen noted last year. Yet even as the EU signals renewed commitment, China is becoming increasingly dominant in the electric vehicle market in Latin America and other regions. China surpassed the US in electric vehicle sales in 2023, with Chinese companies accounting for 45 per cent of total global sales and three times that of Germany’s. What is more, China has invested $11 billion in lithium extraction in the region since 2018, as part of a bid to control a third of global lithium-mine production capacity. Meanwhile the EU has secured some access to lithium as part of trade deals with Chile, alongside other nations, but this pales in comparison to what will be required to fuel the future of EU battery production. Latin America as a whole accounts for an estimated 60 per cent of the world’s lithium reserves. Based on its current levels of engagement in the region, the EU risks falling short of lithium, stalling its battery production and subsequently, its electric vehicle sales, just as China advances in this field. The window is closing for the EU, the US, and other partners looking to both maintain market share and compete with China in these Latin American industries, despite still-high rates of US and EU investment in and trade with the region. Indeed, US automakers increasingly see Chinese competition across the globe as an “extinction-level event.” Ensuring competitiveness in “new infrastructure” and related sectors will require a continuous commitment by partners to building and supporting project pipelines, and to delivering products and services at price points that can compete with China’s subsidised offerings. Both the EU and the US remain critical economic partners for Latin America and are contributing in ways that China is not. Still, complacency risks allowing China to take the lead in emerging industries in the region, some of which weigh heavily in the EU’s green and digital transformation. To protect their own future industries, the EU and the US need to first take a longer look at Latin America’s – especially as China vies for a dominant position.

한국어로 읽기 Читать на русском Leer en español Gap In Deutsch lesen اقرأ بالعربية Lire en français When U.S. President Biden and Chinese President Xi met in November 2023, Biden remarked that the countries must “ensure that competition does not veer into conflict.” A recent ODI report Hedging belts, de-risking roads: Sinosure’s role in China’s overseas finance illustrates the scale of the competition and reveals how one of China’s less-known institutions – Sinosure – has been giving China the edge. This blog offers some thoughts about how the U.S., through its U.S. International Development Finance Corporation (DFC) can better compete. Competing requires resources, but really not as much as you think Competing credibly requires money, dedicated staff, and creativity. It requires studying the competition. Infrastructure development requires low-cost financing, capacity-building, and getting everyone aligned. As Sinosure has demonstrated again and again, deploying guarantees and insurance – particularly from official financing – can de-risk overseas investment, reducing costs of finance and mobilising commercial investment from the private sector. When it comes to infrastructure, China has a far more robust, albeit imperfect, track record when compared to others. The U.S. and its G7 partners have not been much of a match for China in financing infrastructure worldwide. The G7 could successfully compete with China, and doing so does not have to cost hundreds of billions of dollars. The U.S. Congress, despite its strong desire to counter BRI, has yet to appropriate the resources necessary to compete credibly in a battle of influence against China in developing countries. There’s been plenty of rhetoric, repurposing of existing programs and resources into initiatives like the Partnership for Global Infrastructure and Investment (PGII) and the Global Gateway. Each time the U.S. launches a new overseas economic development initiative, however, it rarely dedicates sufficient resources to help it scale – examples include the Partnership for Growth, Power Africa, Prosper Africa, and PGII. When it was fully funded, Power Africa, which coordinated the efforts of 12 U.S. government agencies, helped 120 power projects in Africa get across the finish line in just a few years, building a strong brand for the U.S. in Africa for economic development for the first time in decades. Then the U.S. cut Power Africa’s budget by 75% because of political shifts. The initiative stalled in its progress on new infrastructure, while still helping 200 million Africans get access to more reliable electricity. PGII, which has no dedicated budget, involves a handful of smart people working hard to deliver on a G7 promise of $600 billion in global infrastructure by 2025. Other than the Lobito Corridor project, it has not been clear to date what PGII is able to deliver at scale in Africa without additional resources. That could be about to change, though. The State Department just requested another $4 billion from Congress to up its game against China, which should help tremendously if that funding is secured to support PGII. Why Sinosure has been such an effective tool for China, despite its low margins BRI has not been particularly innovative, but it’s been steady. Sinosure, along with other Chinese export credit agencies, offers highly favorable terms and longer-term finance – this approach has well suited Global South governments in advancing their development and political objectives. While some projects have been problematic, Chinese creditors have provided the low-cost, patient capital at scale that many countries need for long-term productive infrastructure investment. But as the report shows, this approach has challenged established regimes governing the use of public money (link to blog 2). Sinosure insurance covers non-payment up to 95% of the insured equity or debt for up to 20 years, but most OECD Export Credit Agencies (ECAs) only provide 85% coverage for up to 10 years – though this policy soon will soon change [link to blog 2] Sinosure can work anywhere, except where there’s a live conflict or in cases of repayment arrears. By contrast, the U.S. International Development Finance Corporation (DFC) has a list of over 100 countries where it cannot do business. Sinosure’s premiums max out at 7% of the total debt servicing cost of a project, making it relatively cost-effective. In this aspect, it is surprisingly transparent. DFC’s fees and costs are numerous and opaque, with DFC passing some of its own costs on to its clients. By the end of 2022, Sinosure had provided over $1.3 trillion-worth of insurance on export and investment, with a quarter of this going only to BRI countries. In 2022 alone, it supported a total portfolio of $900 billion through its insurance for over 170,000 clients, of which $80bn went to overseas investment and long-term finance, which mostly supports projects in infrastructure such as power, transportation, construction, telecoms and shipping. It received a total net insurance premium of $1.9 billion and paid out $1.5 billion in insurance claims. Despite its significant payouts, however, Sinosure continues to earn a modest profit of $102 million – not much of a margin, but enough to propel China’s global leadership on trade and infrastructure development.     By contrast, DFC’s current total portfolio-wide exposure is $41 billion, with just over $9.3 billion committed in fiscal year 2023 for 132 transactions – of which only around $3.5bn of this was for guarantees and risk insurance. DFC has many of the same tools available to it as the Chinese government, and DFC is not even legally required to earn a return on its investments. Yet DFC has not made full use of its capital resources and has not deployed its capacity for risk-mitigation finance in the same way. An unleashed DFC could make the U.S. more competitive It’s not too late for the U.S. and others to compete. The U.S. has an opportunity to further change how it conducts business to compete with China, while promoting sustainable development. DFC is starting to flex its competitive muscles with its own insurance product, recently using political risk insurance to support a $1.6 billion debt-for-nature swap in Ecuador and another $500 million debt-for-nature swap in Gabon, which support broader debt relief efforts, as well as channelling money towards climate and conservation goals. Moreover, those deals come at a very low cost to the U.S. government given DFC’s pricing models. DFC is up for reauthorisation in 2025. It has both foreign policy and development mandates. In a previous blog, we laid out 10 recommendations about how DFC could be more effective in achieving its development mandate. Here are 9 recommendations to help DFC be more effective in competing with China and achieving its foreign policy mandate: 1. Spend some money and spend it right All it took for Sinosure’s expansion in the early 2010s was a capital injection of $3 billion. To make its financial institutions just as competitive, the U.S. only needs to commit a few extra billion dollars of appropriated resources per year, just as State Department has proposed, not hundreds of billions. Sinosure, with its somewhat loose investment criteria, still managed to earn over $100 million profit on a $900 billion portfolio in 2022. Even if DFC were to spend $1 billion/year of additional budgetary resources – for the purpose of leveling the playing field with China and providing developing countries with the type of inexpensive financing they need – that could be money well spent for the U.S. taxpayer. That money could cover legal fees that DFC currently passes on to clients. It could be deployed through innovative instruments: to take on some of the currency risk on strategic transactions, to cover first loss on strategic investments, or to provide technical assistance that does not need to get repaid–comparative advantages that Chinese financial institutions still sorely lack. That funding also could be used, simply, to reduce interest rates and fees, at a time when borrowing costs for lower-income countries have risen astronomically. 2. Structure deals to outcompete China Encourage DFC to structure transactions to use its funding to maximize competition with China in a way that promotes a more level playing field. DFC should not crowd out competitively tendered and transparent private sector investment, but where inexpensive or even concessional DFC co-financing might help the private sector out-compete opaque Chinese investment, DFC should be equipped to support those projects. 3. Don’t obsess over returns Even though DFC is not legally required to earn a return on a portfolio-wide basis, most members of Congress expect DFC to be revenue neutral to the U.S. Treasury. If members of Congress would adjust their return expectations even slightly, DFC could significantly advance its development and foreign policy goals. Effective development and foreign policy are not free – especially when competing with China. Even earning back $.95 on the dollar on a portfolio-wide basis would be a significant leverage of 1:20 of appropriated resources to private investment – giving DFC broad flexibility to structure deals that prioritise development impact and foreign policy. 4. Remove DFC’s limits Eliminate ceilings on DFC financing – including the $1 billion transaction limit, the $10 billion annual portfolio limit, and the $60 billion total portfolio exposure. It really doesn’t cost anything to do this. It’s like raising its credit card limit. 5. Let DFC work anywhere when necessary Give DFC the authority to determine the countries where it can do business on a case-by-case basis, depending on what the foreign policy and development priorities are. DFC should be required to continue to prioritize investments in low and lower-middle income countries, but it should have flexibility to respond quickly and selectively anywhere that doing so will credibly advance a compelling U.S. national security interest, such as financing a strategic port or lithium processing. To prevent DFC from sliding into becoming just a national security tool, abandoning its development mandate, DFC should be required to clearly articulate the compelling national security interests of projects and should provide a detailed report to Congress each year on its investments in upper-middle income and high-income countries to explain these interests (even classified, if necessary). 6. Empower DFC to support “nearshoring” DFC can help the U.S. diversify its supply chains and reduce dependencies on China. To encourage companies to move operations out of China and into the Americas (if operating in the U.S. is not commercially viable), give DFC broader authority to support strategic transactions in the region. 7. Make it easier for DFC to support equity investments in strategic infrastructure When DFC takes an equity position in a company or an investment fund, it gets a seat at the ownership table. That allows DFC to drive decisions regarding sourcing of goods and services (i.e., making sure contracts do not always go to Chinese companies). Investing in equity funds that develop and finance a portfolio of infrastructure projects is an effective way for DFC to increase and spread its strategic influence -- except that DFC often struggles to make these types of investments because U.S. legal requirements make DFC a slow and clunky, and hence, an unattractive investment partner. DFC needs flexibility to bypass some of these requirements. 8. Help DFC scale its risk insurance instrument For years, DFC has been hugely innovative in deploying its insurance products to leverage capital from others. DFC used its political risk insurance tool to crowd in private investment in Ukraine, and to catalyze pioneering debt-for-nature swaps worth hundreds of millions of dollars in Ecuador and Belize. But according to recent reports, the U.S. Office of Management and Budget has been threatening to start treating insurance investments like guarantee instruments from a budgeting standpoint. This will make it more expensive for DFC to deploy this tool. If it ain’t broke, why fix it? As we’ve shown, one of the main factors behind China’s competitiveness abroad is through Sinosure’s expansive use of its insurance tool: OMB’s changes will make it more expensive and difficult for the U.S. to scale its own. OMB needs to read the room. We’re not going to suddenly balance the U.S. budget by tinkering with a formula that has worked for decades. Let DFC do more of what it does well. 9. Help speed DFC up Before committing any transaction over $10 million, DFC is required to notify Congress in advance. This “Congressional notification” requirement provides a valuable extra level of oversight to ensure that DFC does not doing anything out-of-whack with Congressional priorities. But the process slows DFC down, when Chinese financiers are known for their speed. Even though DFC only is required to “notify” Congress of its deals, and not seek “approval,” practically and politically speaking nobody wants to run afoul of any one of the 535 members of Congress. Consequently, DFC rarely moves forward on a project until it can resolve the concerns of members of Congress. DFC needs to work with Congress to come up with a reasonable alternative to the Congressional notification process that balances speed with continued close collaboration with Congress. In addition, DFC’s Board can help speed things up by focusing its efforts on high level policy guidance instead of individual transactions. The Board should delegate more decision making on individual deals to DFC’s CEO. It makes no sense for the Secretary of State, who chairs DFC’s Board, to dig into a $20 million investment into a healthcare fund, not to mention the hundreds of State Department staff with little development finance experience who review the documentation before it goes to the Secretary with a recommendation for a vote. U.S. taxpayers probably would prefer to have the State Department focus on resolving the Middle East conflict. From the perspective of many Global South countries, this competition between the G7 countries and China is not inherently bad if it brings them more desperately needed resources and improves the quality of their infrastructure. The U.S. could be more competitive if it empowered its development finance professionals to use DFC’s tools the way they were designed to be used. DFC must be properly resourced with enough people and enough money to allow it to grow its portfolio. While development impact remains the key priority for DFC, delivering for the needs of partner countries is what also will deliver long-term influence. That is how the U.S. can compete – and all at relatively low cost to the U.S. taxpayer.

Good afternoon everyone, if we’re talking about exploring opportunities, clearly one would have to address growth issues. The problem is that, when one encounters a deeply unbalanced macro situation, growing becomes very difficult, almost I would say impossible. And especially when for many years, relative prices have been distorted and the economy has been put in an imbalanced situation, trying to live in a sort of permanent boom, when the boom comes it’s much more violent. That is why when the correction of relative prices is carried out, it generates a contraction of activity and employment, and the more violent and prolonged the process of overstimulating the economy, the stronger the contraction becomes. In that sense, Argentina has lived – for more than 20 years – under a wild populist regime, which has led to the destruction of capital, the destruction of productivity, which is why we are in an absolute miserable situation. Yes, because populism is not free; wages, in dollars, on average, in the 1990s, were $1,800 and if you adjusted for American inflation that would imply that Argentinian wages, on average, should be $3,000, something like 3 million pesos. And today, luckily, if we exaggerate and become very optimistic, we could say they are $600, which is false because they are lower. This means that Argentinians in this populist adventure have lost 80% of our income, that is the real catastrophe. The consequence of this is that we have more than 50% in poverty and 10% in extreme poverty, or a little more as well. This means that the country, which produces food for 400 million people and has a tax burden on the food production sector of 70%, meaning that the State takes the food from 280 million people, and has 5,000,000 Argentinians who do not have enough to eat, which is the real catastrophe. But it is not only a catastrophe in terms of growth, well-being, employment, and wages, but the inheritance was very complicated, the inheritance we received. I am going to describe the inheritance we received and the measures we have been taking during these first 100 days of government, and it’s not to mourn it, because the reality is that if there was something that became clear with “the Chief”is that we truly managed to win the elections it was because we were truly in a disastrous situation, because for a libertarian liberal, who openly says it, to come to power, it is precisely because the situation was not going to be an easy one. That means they were going to leave us in a very, very difficult situation, because otherwise the populists would continue to win. And for people to wake up the way they are doing, evidently it had to be a very complicated situation. So, I would almost say, we were always prepared to receive this hot potato, and you can see that, because if we hadn’t taken quick measures, we would have blown up several times already. Specifically, when studying, you review the literature on early crisis indicators, when you have twin deficits, by 4 points of GDP, it's a yellow alert; if you have 8 points of GDP it's not only a red alert, but you're going to take a significant hit. We inherited twin deficits of 17 points of GDP, just to give you an idea of the magnitude of the disaster we received. In other words, the size of the hit was going to be colossal; basically, the inheritance had the worst of the three worst crises in Argentina. It had a monetary imbalance worse than what we had before the "Rodrigazo" in 1975; we had an imbalance in the Central Bank's balance worse than what Alfonsín had at the beginning of 1989, which ended in hyperinflation, and worse social indicators than in 2001, that is, before the crisis of 2002. In other words, literally, it was the sum of all evils. In that sense, that twin deficit, of 7 points of GDP, was composed mainly of a 15-point consolidated fiscal deficit. Of those 15 points, 5 corresponded to the Treasury and 10 corresponded to the Central Bank. Furthermore, to give you an idea of the magnitude of the disaster we received, basically, although during the entire previous government, monetary issuance was used to finance the fiscal imbalance, by 28 points of GDP. Of those 28 points, 13 took place in the last year; not a minor issue if you think about it because the monetary base is already - today - 2.6 of GDP, meaning they left behind a quintupling of prices, and if you also look at the Central Bank's balance sheet having holdings in Leliqs, ranging from 30 to 90 days, meaning 30, 60, and 90 days, all converted into overnight loans, which means there was the possibility of multiplying the money supply by 4 in a day. In that context, moreover, during the first week of December, prices were rising by 1% daily, which means that in annual terms, it is 3700% inflation. If it stopped in the first two weeks, that would be 7500% annually, and if you look at what wholesale inflation was in December, which was 54%, that annualized is 17,000%. So, facing hyperinflation, if the economy had already entered a recessionary path in the second and third quarters last year but was fueled by a lot of monetary issuances to try to force an electoral outcome that did not happen, and in that context, it was essential to avoid hyperinflation. But to avoid hyperinflation, it was necessary to implement a very tough stabilization program, a program that we had and that we were only able to announce on the third day, basically because we had the issue of appointments at the Central Bank. And basically, it had the three fundamental elements that any stabilization program has, which were fiscal adjustment, exchange rate correction, and the definition of a new monetary policy. In that sense, for us, the key was to end monetary issuance so that there would be no monetary validation of the price increases, and that it would not escalate and generate hyperinflation. In that sense, along with the devaluation, which was made because basically all we did was bring the exchange rate to the market exchange rate, adjusted by the PAIS Tax, and in that context, on the fiscal front, we decided to adopt what is called a zero-deficit policy. But a true zero deficit, not a lie, meaning a zero deficit in the line of financial result, that is, after paying interests. This is very important because if we achieve a zero deficit in the financial line, it means that the debt no longer grows. And if the debt does not grow anymore, the debt-to-GDP ratio does not increase more, and therefore one becomes temporarily solvent, and the consequence of this is that the PAIS Tax begins to fall, and the interest rate will decrease. Thus, the interest rate regains its essential function, which is to be a mechanism of inter-temporal coordination and for the growth process to be related precisely to the interest rate, the natural interest rate, that is, the market rate, not the rate that a bureaucrat comes up with by meddling from the Central Bank. I clarify to make it clear, this idea of being tinkering... Once, I remember telling someone: "you are worse than Moreno" because Moreno controlled the prices of today, but you want to control the interest rate, which means you want to control the prices of today and the future. Why? Because the interest rate is the relative price of present goods over future goods. So, this would be much more complicated. So, we also began a process of cleaning up the Central Bank's balance sheet, and the reality is that we believed and aimed to achieve a zero deficit by 2024, and we were truly and absolutely committed to carrying out a fiscal adjustment, which obviously involves a lot of chainsaw and a lot of blender, and if we wanted to do it quickly, we had to use both. There is a lot of blender and much more, actually, of chainsaw because we eliminated public works outright, something of which I am deeply proud, considering that public works are a major source of corruption and theft, which I imagine all decent people should oppose. (APPLAUSE). On the other hand, we also completely eliminated discretionary transfers to the provinces; we also laid off 50,000 public employees, not only that but we also terminated contracts, and you see, now, more contracts are being terminated, and 70,000 contracts will be terminated. We also eliminated 200,000 social programs, irregularly delivered, and at no time did we neglect social policy because – in the midst of it all – we doubled the AUH; we doubled the Food Card; we tripled assistance in the One Thousand Days Plan, that is, for pregnant women, and not only that, but we also quadrupled assistance for school supplies and created a mechanism for middle-income families, who attend low-cost private schools, to have a support mechanism so that the children wouldn't drop out of school, which they attended, and not have to suffer the shock of changing schools, that is, we also had a strong social perspective in what we were doing, and we also did something that, at the time, when Minister Pettovello designed it, the red circle, which is increasingly analog and doesn't understand anything we do, because the digital era has already passed us by, but the interesting thing is that, at one point, Minister Pettovello announced that social programs didn't have to be verified as working, that is, social programs are given and they were required to provide work in return, and obviously, let's say, no one explained how the whole situation was, and then we, knowing how tough the first months were going to be, while the adjustment took place, because apart from when you generate an increase in savings and there is no counterpart of investments, it generates a drop in activity and that makes employment fall and/or real wages fall and that could lead to social tension, which we wanted to cushion. And in that sense, it's very interesting because Minister Pettovello removed the need for them to verify that they had worked. Obviously, the large number of monkeys, and I apologize to the Society for the Prevention of Cruelty to Animals for insulting the monkeys, who look at Argentinian politics, where some obviously respond that they are very angry because they don't have a guideline, but let's say those monkeys – sorry to the monkeys, again – strongly criticized Minister Pettovello for this. What they didn't realize is that it was a way to end intermediaries, where all governments wanted to end intermediaries, but this government did it. So, basically, the people who receive social programs obviously receive a card and that goes to an account. So, they thought that with that they ensured that they would not be extorted, what they didn't know is that you must go to verify if they were working and there, when you were going to receive the verification that they had been working, the Bellibonis of life appeared, taking half of people's income. And they only validated it if you brought them the pretty ones, where they must validate that they were at the rallies. I mean, in reality, they stole half of the money and not only that, but they also had to go and work as picketers, so what you were doing was finance criminals and also ruining the functioning of the streets. In that sense, by eliminating the need for a counteroffer, until April, what happened, well, those criminals could not take away the money that people received from the social program. Therefore, without spending a penny more, this implied doubling the assistance and at the same time, we set up a phone line to report the pressures and extortions of these criminals and we have received close to 300,000 reports and today there are 18,000 cases in the courts. In other words, they are going to pay for having pressured people to go to the rallies. And furthermore, Belliboni threatened us that he was going to gather 50,000 people in the Plaza, so evidently, he planned to bring 100,000. From the Nation, we contributed with 12,000 officers, I don't remember the number that the City contributed, but it was tremendous because there were more police officers than people, as only 3,000 showed up, so it was a resounding success, coordinated at that moment between Minister Bullrich, Pettovello, and the Minister of Infrastructure. Additionally, in the public transportation, there was the announcement that fare-dodging wouldn't be penalized, and the lines for making complaints, and there we also started to organize the streets. In other words, we took away their firepower because now they can't extort people to do this, and we also started to enforce order. Therefore, one of the demands we received as a government, which was to put the streets in order, we are doing it. Because now, whoever blocks the streets doesn't get paid. And moreover, whoever does it... pays for it. And that is working perfectly. Not only that, but while we expected to achieve financial balance over the course of the year, the hard work of each minister allowed us to achieve that financial surplus in the month of January. And obviously, the "red circle" – it was logical – began to predict that we would have very strong deficits in February. And to the dismay of those who live betting against those of us who want to change, we again had a financial surplus in the month of February. Specifically, what we are doing is obtaining a result that, if you take the first two months, equivalent to half a percentage point of GDP, of primary surplus, that annualized would be 6 points. Therefore, we have over-adjusted what we needed, because we only needed to make an adjustment of 5 points of GDP. It's very funny because there are many who say that this is not sustainable, that this, that, when they said that the only thing that could be done was to adjust 1 percentage point of GDP, well, we adjusted 5 percentage points, but of course, that requires a dose of courage that others do not have. But that's not all because there's also the issue of the adjustment we made within the balance of the Central Bank, which generated a 10-point fiscal deficit, quasi-fiscal, and today that number is already 4. That is, with which there is no historical record – worldwide – of a government making an adjustment of 11 points of GDP in three months. And to the dismay of the "Helicopter Club" and all those who wish us ill, especially those whose schemes we've disrupted – which are quite evident, as you'll see them complaining. There's a saying that goes, "where there's a Kirchnerist kicking, there's a scheme that's been cut off," well, it's true. And not just Kirchnerists, but also, look at some other important economic groups. You can imagine who I'm talking about. Aside from that, they're very angry because Elon Musk has arrived. The important thing about this is that faced with the inflation disaster we had when we took office, in three weeks, inflation was at 30 percent, the retail figure, and it was expected to close the month at around 45 percent. I remember one weekend, journalist Gabriel Anello, a great journalist, and an even better person, asked me about inflation, and I told him the truth, that if it stayed at 30, it was a great number because it meant that by the fourth week, prices had stopped rising. And we found that it was 25, meaning there was a retraction in prices that had been fixed from the third week to the second. Then, in January, inflation was 20 percent, and in February, it was 13 percent. Now, when you strip out the statistical carryover effects related to one-time increases, like the tariff adjustments and prepaid health plans, that's equivalent to 6 points, so the true inflation rate for February was around 7%. In other words, we're bringing the inflation rate down to single digits. Furthermore, even if you were to include all these elements in the index, but somehow capture the effect of promotions, which can't be captured by the price index because it's a non-linear pricing scheme and depends on each citizen's consumption, then it's impossible to capture through the CPI due to the effects of "two for one," "three for two," and all those things. So, there's a sort of estimation of how much that weighs, but it can't be documented, and if that effect were considered, despite the previous factors, we would still be in single digits. Furthermore, in the third week of March, the price increase came to a halt, meaning we are moving in the right direction regarding anti-inflationary policy. In fact, some of the criticisms we receive are quite peculiar because, for example, if you look at the evolution of the inflation rate, the speed of the decline is stronger than what occurred during the convertibility period. When you examine the effects of stabilization during convertibility, prices are falling much faster today, or the inflation rate is declining much faster. This also makes sense, and what happens is that during convertibility, the money supply was endogenous, meaning that when there was an increase in the demand for money, the way to validate it was to bring in dollars and sell them to the Central Bank, which implied an expansion of the money supply and allowed for the re-adjustment of relative prices to occur with upward pressure on prices. Notice that since we took office, the monetary base has practically not changed, despite buying $11.5 billion in the market. Not only that, but we also had an expansion of the money supply due to the PUCs that the previous Central Bank administration used to try to control the exchange rate, and there was also expansion due to interest-bearing liabilities. However, the contraction due to BOPREAL has been so significant that the monetary base has barely changed or changed very little. So, we still have the same monetary base of $10 billion, but now on the asset side, we have $11.5 billion more in reserves. Therefore, we are undergoing a very strong process of balancing the Central Bank's balance sheet, and soon we will have net reserves close to zero, whereas the previous government left us with $11.5 billion in negative reserves. Not only are we achieving that, but also when the demand for money is restored, since the nominal money supply is fixed, this implies that to rebuild monetary holdings, people have to sell goods. Therefore, the deceleration of price growth is much more severe than in the convertible scheme because in the convertible scheme, the money supply expanded according to the demand for money and did not conflict with the goods market, which is what causes the inflation rate to fall much faster. I also find it very amusing to those who demand changing the pace of the exchange rate evaluation, which is ridiculous because today the free exchange rate shows no gap. If I take the reference exchange rate from the Central Bank and multiply it by 1.175, which is the PAIS Tax, it would be around 1,060. Therefore, I don't have a gap; I have a negative gap. So, if the market doesn't put it elsewhere, why would I arbitrarily modify it? Based on what? On a calculation made by clueless economists because they make that calculation of the real exchange rate, and the question is, have they never seen that during crisis periods, the real exchange rate is very high, and during boom periods, it is very low? Have they not seen the trend? Have the supply and demand conditions for all goods in the Argentinian and global economy not changed? How can they pretend to be so arrogant as to determine the price of something? Moreover, they average the average. Of what? If with the standard deviation they have, that average is ridiculous. I have an article about that, which says that the real exchange rate is when economists are part of the problem. Moreover, it implies a problem of fatal arrogance or rudeness because it would imply knowing the preferences, technology, and endowments, not only of our economy but also of the rest of the world. It seems quite pathetic to believe that they can have all that information to make all those decisions. Unfortunately, in Argentina, public education - because it's all public, it can be privately managed or state-managed - has done a lot of harm by brainwashing people and leading them to read authors who have truly been disastrous for human history and especially for Argentina. I always joke that if you go to the University of Buenos Aires, to the Faculty of Economics, and ask, "Who is Ludwig von Mises?" They will tell you he's the 9th of Holland, while for others, he's the greatest economist of all time alongside Murray Newton Rothbard. But, of course, they know the bearded one, the German impoverisher Marx, they know him. But beyond this situation, the other funny thing is that if I have the future dollar curve aligned with the Crawling Peg that the Central Bank is implementing, why would I need to devalue? It's incredible, it's ridiculous. They're looking at market data and no. The whole market is wrong, they resemble James. It's incredible because when Keynesians talk about what a great investor James was... He was involved in finance and went bankrupt like a rat and the argument... if you look at Damodaran's Valuation book, there's James’s quote saying he was so arrogant that he said, "It's no use being right when the whole market is wrong. You'll lose anyway." So, everyone was wrong except him, but when they all turned against him, he lost money and went bankrupt. He had to go ask his father, who was friends with Marshall, for help, took a 6-month course, and then got into Cambridge. And when they say he was a great investor, it was all a lie because in reality, as a person with a lot of influence in English politics, he was on both sides of the counter during the War and the Great Depression. I mean, he was in both England and the United States, and Mr. James, the fortune he made, he made through what today would put him in jail, which is the inside trading. That is, he would take information from the American government, which he would use on certain things, and trade with it. It's like the movie Wall Street, Gordon Gekko was a choirboy compared to James. So, it's also another myth that he was a great investor; the guy played with classified information. I mean, nobody else thought of it, but he did. That's why all the regulations on Wall Street came afterward. So, it seems quite comical that we have to change the crawling peg when the entire futures curve is aligned with monetary policy. And in this whole context, given the commitment we have to the deficit zero policy, I often say that I've been tied to the deficit zero policy like Ulysses to the main mast, with the advantage that I have my ministers shooting at the sirens. So, we're going, and we're doing it well. So, from receiving an economy that had a PAIS risk of 2,900 points, today it's already reaching 2,400. Analysts are seeing that we're heading towards 1,000. That's not insignificant because it opens up possibilities for us to enter the capital markets. Our credit rating has been raised, bonds that used to cost $18 are now worth $54, and Argentinian assets have appreciated significantly. When you look at the GDP data today, it's true that it fell in the first quarter, by about 4.5-points, but it's also true that analysts were expecting a 6-point drop. So, we're making a much stronger adjustment than analysts anticipated, and we're falling less. And that also encourages the idea of a "V-shaped" recovery. A very interesting piece of data from the Orlando Ferreres Consultancy emerged, which is that the seasonally adjusted figure for February was positive, just a little bit. So, we're not getting excited about that number, but at least it seems that we'll be finding the bottom at some point in the near future, and many analysts are already talking about a "V-shaped" recovery, which is understandable when you look at how quickly the PAIS risk is falling. At the same time, we are working on the issue of lifting currency controls, and as soon as we manage to clean up the Central Bank's balance sheet, when we can get rid of all the interest-bearing liabilities and put an end to this nefarious practice of remunerating liabilities, what this will imply is that the issuance of money through interest-bearing liabilities will be halted. Simultaneously, another thing we are working on is a reform of the financial system to move towards an integrated system with the capital market and build a banking system that is anti-runs. The truth is, that wouldn't be a problem today because credit to the non-financial private sector is 4-points of GDP, meaning we don't have a financial system; there is no financial system. Therefore, it's interesting that we start building a financial system that doesn't require a lender of last resort. So, if that reform includes integrating the format of banks with a format of the capital market so that we can move towards a system of free banking, that will allow us, when we have that reform, to open the financial system, lift currency controls, and in that context also pass the law against monetary issuance, where basically we consider seigniorage a crime, it's theft, it's counterfeiting, it's fraud. Issuing money is a scam. And in that sense, if there were to be monetary issuance, the President of the Central Bank, the board, the President of the Nation, the Minister of Economy, and deputies and senators who have approved budgets with fiscal deficits would go to jail. Obviously, you might say to me, "But this is Argentina," and surely another criminal will come along and change things and overturn that law. But we will give it the category of non-prescriptible, as if it were a crime against humanity. Therefore, yes, another criminal may come and change these conditions and return to the practice of issuing money, but then another may come and say, "You are a criminal, you did that," and put them in jail. So, we are going for a solution of these characteristics to end this scam of monetary issuance in Argentina. And obviously, as we can continue advancing in this system of free banking, of deep capital markets moving towards a complete system, and we have stopped issuance through rediscounts, issuance through remunerated liabilities, issuance to finance the treasury, we will have a free exchange rate, with the money supply fixed, and if it is necessary for more money to enter the system, it will be entered by the agents themselves. For example, they will open their mattress and start making transactions. Therefore, the monetization of the economy will be done by individuals themselves with the currencies they want to transact. Currency competition has a very interesting consequence. For example, if you're in the oil sector like Alejandro, you can transact with your peers in WTI, or if you're in the gas business, you can transact with others in BTU. If you're in the agriculture sector, you can transact with others using soybeans in Chicago, and so on. Each will have its own currency. This is equivalent to having a basket of currencies where the weights are determined endogenously by the people, instead of being determined by a bureaucrat at their discretion, which they will always get wrong. Even if they did it right, it would have to be this result, and that's what the agents do, so we don't need a bureaucrat sticking their finger in anywhere because they already know where the finger ends up, and often, it ends up being the arm, not the finger, where they stick it. If they had a vaseline business, they would be happier celebrating. So, once we achieve this, we'll be able to lift the currency controls. Currently, we have excess demand in the Foreign Exchange Market and excess supply in the rest of the economy, resulting in low bond prices, high interest rates, and high PAIS Tax. It also means oversupply in the goods market, leading to economic activity deterioration. In fact, our per capita GDP is 15% lower than in 2011, and we have the same number of jobs in the private sector as in 2011. This implies an increase in the number of poor and indigent people, leading to social pressure for support. Naturally, when we close this excess demand in the Foreign Exchange Market, all other excess supplies will close as well. This will result in higher bond prices, lower interest rates, closing the imbalance in the goods market, economic expansion, improvements in real wages, employment, and reduction in poverty and indigence. Then, the economy will start to rebound, despite the corrupt institutions we have and the economy's deep capitalization due to over 20 years of populism. Nonetheless, we can grow and generate genuine economic growth without inflation. And we can do all of this despite the politics, despite all the obstacles, and despite all the garbage they throw at us. But you know what? There's something wonderful, something that even the analog red circle doesn't see. Every DNU issued in Argentina, all of them were aimed at generating regulations, in other words, reducing market freedom, making markets more concentrated, giving businesses to cronies, huge scams, and above all, encroaching on individual freedoms. Remember what they did during the pandemic, this gang of criminals, and yet there were people applauding them for locking us up. No one opposed that deluge of DNUs. Our DNU is the first in history to restore individual freedoms, making markets more competitive. Look at the wonderful thing in the issue of rentals; you couldn't find a property. The number of rental properties doubled, prices in real terms dropped, and the real estate market expanded strongly during the month of February. Look at the interesting things the DNU achieved, which is still in effect, but had a setback in the Senate, which, by the way, isn't so bad because if we only have seven senators and we got 25 votes, it wasn't so bad, there's improvement, there are people betting on change. But obviously, since this also touches on political scams, evidently, since politicians don't want to give up their scams, don't want to lose their privileges, don't want to give up anything, they'd rather sink Argentinians into misery to maintain their caste privileges, that's why they overturned the DNU. And this is very interesting because if I had told you that in two or three months, we were going to be able to order the Argentine ideological spectrum, you would have said I was crazy. And after what happened with the Basic Law and what happened with the DNU, it's wonderful in terms of the principle of revelation; they left all their fingers dirty. On one side, there are the orcs, who are orcs and can't be expected to behave differently because they are orcs. Then there are the people who truly want change, and there are the fraudulent criminals who say they want change, but in reality, they disguise themselves as wanting change but are just as criminal as the orcs, but they are ashamed to be associated with them. So, they hide behind formalities and all those issues, but deep down, they are the same garbage as the orcs. It was very interesting because it became evident, both in the voting in the House, particularly on the articles, and in the Senate the other day, they were exposed. Today, with the vote, it became clear who is against progress, who the criminals are, who are in favor of scams and theft, and who are against returning freedom to the people, against competitive markets, and against letting go of the scams so that people can get their money back. So, it's wonderful because in three months, we ended up unmasking these criminals. And that's also very interesting because it won't come for free in the midterm election; they will pay with their votes, and those criminals will be left out. That will allow us to have a much better midterm election than the one we had last year. That's interesting because we'll have another composition of Congress, and all the reforms that we couldn't push through now, we'll do it at that time, starting on December 11th, 2025. Furthermore, we'll push through the 3,000 pending reforms that we couldn't pass because of this group of criminals who are the obstruction machine, who want the status quo to continue, where you pay the bill, and they benefit. Therefore, I am very optimistic about the future because we are achieving a lot of things despite politics, and people are seeing that. It's very interesting because even though we are facing the largest adjustment in the history of humanity, with 70% of Argentinians acknowledging that they are worse off... There are some very important data points. The first one is that when we took office, only 20% of Argentinians believed they would be better off in a year's time, but in January, that number rose to 30%, in February it climbed to 42%, and today it stands at 50%. This means that despite being worse off in the present, 50% of Argentinians are convinced that we will be better off from now on. Not only that, but 70% of Argentinians are convinced that we will defeat inflation, with 50% of them believing we will do it in the first year and 20% believing we will do it in the second year. When you look at what's happening in terms of a word that represents the sentiment of Argentinians, the word that appears most strongly and fundamentally dominates is "Hope". Yes, people have "Hope", people see that we are going to make it. There is light at the end of the tunnel, and people are seeing it, even though they are going through a tough time now. They've realized that populism leads nowhere, they've realized that the solution lies in embracing the ideas of Liberty, and that's no small feat. If today were the elections in a runoff, we would be getting 58%, that is, it would be 58, 42. Instead of +2, we are +16, and when you ask that group: Who would you vote for in the first round? They would vote for ‘Libertad Avanza’ with 48%, that is, we improved the voting strength by 60% compared to what we obtained. This means that with that alone, we would already win in the first round because the second person in voting intention is Mrs. Cristina Fernández Kirchner with 20%. But not only that, there are 10 points, which if we go for the most rudimentary case, half and half, 48 and 5 = 53. Therefore, what I want to tell you is that there is hope. Do you know why there is hope? Because people woke up, they decided to stop being sheep and decided to be Lions now. Therefore, there is hope because Argentinians are embracing the ideas of freedom, not only that I'm going to tell them that we're going to be better, but they also already know that we're going to be better. Therefore, Argentina does have a future because that future is liberal. Thank you very much.

Dear colleagues, Dear guests, This Summit, for which I thank the leadership of the United Arab Emirates, is a key moment in our efforts to contain global temperature rise to within 1.5°C. We have reached the first Global Stocktake, and while there are reasons to be optimistic, the goal remains far off. COP28 must be a turning point. We are called upon to set a clear direction and enact concrete actions – reasonable but concrete - such as tripling the world’s renewable energy generation capacity by 2030 and doubling the global rate of annual energy efficiency improvements, as also outlined by the Presidency. Italy is doing its part in the decarbonization process, and it does it in a pragmatic way, that means with a technology-neutral approach, free from unnecessary radicalism. My idea is that if we want to be effective, if we want environmental sustainability that does not compromise the economic and social sphere, what we must pursue is an ecological transition, and not an ideological one. We are gradually replacing coal-fired power generation with renewables, we have adopted a new Energy and Climate Plan, and we are investing resources and attention on biofuels, so much so that we are among the founders of the Global Biofuels Alliance. In the European context, we have charted a path to carbon neutrality by 2050 and to reduce emissions by at least 55 percent by 2030. But we are also committed to ensuring, through the EU "Fit for 55" program, a multi-sectoral approach that strengthens labor markets and mitigates the impact on our citizens. And this is an essential point, because if we think that the green transition can result in unbearable costs, particularly for the most vulnerable, we condemn it to failure. Italy intends to direct an extremely significant share of the Italian Climate Fund – whose overall endowment is 4 billion euro – to the African continent. Not, however, through a charitable approach, because Africa does not need charity. It needs to be put in the condition to compete on an equal footing, in order to grow and prosper thanks to the multitude of resources that the continent possesses. A cooperation between equals, rejecting paternalistic and predatory approaches. Energy is one of the cornerstones of the Mattei Plan for Africa, the cooperation and development plan on which Italy is working with great determination to build mutually beneficial partnerships and support the energy security of African and Mediterranean Nations. And we are also, in this way, working towards becoming a strategic hub for clean energy, by developing the necessary infrastructure and generation capacity, in our homeland and in the Mediterranean. After the Rome Conference on Development and Migration, two new financial instruments were established to address the root causes of migration, combat human traffickers, and guarantee the right not to emigrate. We will continue to support the Green Climate Fund also in the next cycle, and as I’ve already announced yesterday, we will contribute with 100 million euro to the new loss and damage fund, strongly pursued by the Emirates’ Presidency. And all these priorities will also be at the heart of Italy's G7 Presidency, in 2024. I want to thank, in conclusion, the Emirati Chair and Sultan Al Jaber and express my congratulations for a COP28 of absolute success. We are all aware, colleagues, that many of the efforts we are making today will likely produce visible results when many of us no longer have roles of responsibility. But doing it anyway – not for ourselves but for those who will come after us – defines the value of our leadership. As Warren Buffet wrote, "There is someone sitting in the shade today because someone else planted a tree long ago." Thank you.