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한국어로 읽기Leer en españolIn Deutsch lesen Gap اقرأ بالعربيةLire en françaisЧитать на русском In March and April, Vietnamese Foreign Minister Bui Thanh Son’s nearly back-to-back visits to the U.S. and China highlighted Vietnam’s increasing penchant for delicate diplomacy with major powers amid the U.S.-China strategic competition in the Indo-Pacific and Vietnam’s territorial tussles with China especially in the South China Sea (SCS), which Vietnam calls the East Sea. Much of the (perceived) disorder in the Indo-Pacific hails from the SCS, and one of Vietnam’s principal challenges is fostering order on its maritime borders. Therefore, Vietnam—historically distrustful of major powers—has been diversifying its relations by seeking security and defense ties with Indo-Pacific partners like the European Union (EU), India, and Japan, as well as with Russia, a country that poses an “existential threat” to the transatlantic allies. At the same time, Southeast Asia is battling disunity within the region for resolving disputes in the SCS, for instance. The regional multilateralism embodied by the Association of Southeast Asian Nations (ASEAN) seems to lack teeth even as China ‘controls’ some of its members using its financial and economic heft. So clearly, efforts beyond Vietnam’s “bamboo diplomacy” that deepen international solidarity are required. In a similar vein, Europe’s reluctant rapprochement with China in recent times amid the EU calling China a strategic challenge but continuing to look for economic engagement is reminiscent of Vietnam and much of Asia’s predicament vis-à-vis China. Moreover, like in Southeast Asia, not every member-country of the EU is embracing the Indo-Pacific construct, led by the U.S. Or even if a member does, like France or Germany, it does not spell the end of a productive relationship with China. Nonetheless, it is clear that the EU has started to take a greater interest in the growing geopolitical situation in the Indo-Pacific, even as the disunity over the extent of the Indo-Pacific priorities, including China, is as apparent. In such a scenario, is it possible for the EU and Vietnam, and by extension ASEAN, to have greater convergence, if not congruence, in their policies? Revisiting Vietnam’s Lack of an Indo-Pacific Tilt The Indo-Pacific, the maritime space and littoral between the western Indian and Pacific Oceans, has become the world’s most geopolitically critical region. In this region, much of the focus and debate among the EU’s more proactive members, such as France, the Netherlands, and Germany, is in response to Chinese unilateralism, trade dependency, and unchecked Sino-U.S. contestation. Several of these EU members have come to understand each other’s positions on the Indo-Pacific. Gradually, there is a realization that it is not just about what the EU and its members seek to accomplish in the region but just as much the perspectives and priorities of key Indo-Pacific resident actors—and their views on European strategies and contributions. Vietnam is one such country that is worthy of greater European strategic attention. Vietnam is known for its “bamboo diplomacy”—a reference to the bamboo plant’s strong roots, sturdy stems, and flexible branches—balancing ties with the two big powers, the U.S. and China. In the words of Foreign Minister Bui Thanh Son, Vietnam’s foreign policy caters to “independence, self-reliance, peace, friendship and cooperation, and multilateralization and diversification of external relations and proactive international integration.” However, Hanoi has never officially and fully embraced the term “Indo-Pacific” nor the U.S.-led Indo-Pacific construct although it does recognize that some aspects of the Free and Open Indo-Pacific tenet advocated by the U.S. and its allies are compatible with its national interests. For instance, the order in the Asia-Pacific, a term that Hanoi prefers to use, should be rule-based. This speaks to one of Vietnam’s most important foreign policy priorities: finding peace and stability in the SCS disputes with China and other claimants. However, the order that Vietnam seeks is in more than just the security domain. The goal of development has been the highest priority since Doi Moi (renovation) in 1986. Economic growth is considered the backbone of national security and regime legitimacy. Hanoi’s development of foreign relations can be said to be grounded in its national development experience, with the stress on economic priority leading to national stability and international standing. Vietnam chooses to engage in the Indo-Pacific construct on its terms. Vietnam and EU Convergence On both economic and security fronts, Vietnam and the EU can find converged interests that align closer to each other. Even as Hanoi has not officially adopted the term “Indo-Pacific,” the EU’s Indo-Pacific strategy, if implemented well, could address both Vietnam’s economic and security needs. Despite its security and military power limitations in the Indo-Pacific, the EU can still play a crucial role in effectively addressing these needs, which are vital for the EU’s strategic interests as well. The two already have a Framework Participation Agreement. Vietnam is also part of the EU’s Enhancing Security In and With Asia (ESIWA) project, which covers crisis management and cyber security. This also aligns with the EU’s Indo-Pacific Strategy, where Vietnam is considered a “solid” partner. Notably, both the EU and Vietnam face (potential) economic coercion from China. As China is now Vietnam’s largest trading partner, sudden trade restrictions hindering Vietnamese exports to China would dramatically hurt the Vietnamese economy. In this vein, Hanoi welcomed the EU-Vietnam Free Trade Agreement (EVFTA), hoping it would give opportunities to diversify its trading partners and thus mitigate the risks of economic coercion from China. On the other hand, the EU and its member-states are also trying to increase economic resilience by diversifying trading partners as they wrestle with economic overdependence on China. So, strategically, Brussels presents an excellent opportunity for Hanoi and vice versa. However, challenges remain. For example, all the EU member-states are still to ratify the Investment Protection Agreement signed along with the EVFTA. Even though this is usually a time-consuming procedure, the imperative to reap benefits as soon as possible has taken a setback amid a challenging geopolitical landscape. Nonetheless, the two sides are concerned about more than just traditional economic development; they are concerned about sustainable development and green transition. For instance, under the EU’s Global Gateway framework, the EU and Vietnam have signed the Just Energy Transition Partnership (JETP), which looks to provide a multi-projects credit facility worth €500 million. This is supposed to be the EU’s primary focus in Vietnam now. Yet, Hanoi’s cautious approach for fear of falling into any potential debt trap could stymie smooth cooperation. Projects involving vast sums of money, such as the JETP, are also practically challenging to push at the moment as officials are afraid to be the targets of the Communist Party of Vietnam’s anti-corruption campaigns. Vietnam would also be keen for ASEAN and the EU as blocs to reinvigorate multilateralism and shore up security cooperation, particularly in the SCS disputes. ASEAN states, in general, are looking to the EU as a non-threatening balancing power to reduce the impact of the China-U.S. strategic competition. Among the potential areas of cooperation between the EU and Vietnam within the ASEAN are regional climate action measures, food security, digitalization, and tech innovation. The two sides must also use their partnership to realize an ASEAN-EU FTA. EU as a Security Balancer? The EU and Vietnam also share their commitment to upholding the rules-based order—an essential component of security cooperation because of the region’s strategic importance. However, improving communication and understanding of maritime incidents more effectively is challenging. The SCS territorial conflict is simmering, particularly between China and the Philippines. In 2016, an arbitration tribunal constituted under the United Nations Convention on the Law of the Sea (UNCLOS) overwhelmingly ruled in favor of the Philippines, which China rejected. However, the ruling bolstered Vietnam’s claims, which were not openly welcomed by other ASEAN states besides the Philippines. In the absence of an agreement for a code of conduct (CoC) between China and ASEAN, which has been dragging on for years, China’s violations of international law in the SCS, including the latest against Vietnam in the Gulf of Tonkin, have increased. Against this scenario, Vietnam and the Philippines have signed maritime security deals. At the same time, Vietnam would be reluctant to do anything more drastic, such as support the Philippines in its attempt to draft a “separate” CoC for fear of Chinese retaliation. While Vietnam is less discussed in major global media than the Philippines on the issue, Hanoi is actively using diplomatic means to internationalize the problem, bringing in more players to address complex territorial disputes to safeguard its sovereignty and promote regional peace. In this context, winning the support of the EU and its member-states would be strategically important for Vietnam. The Vietnamese side can facilitate this by providing foreign entities, including the EU, with more transparent and timely information when incidents occur. Naturally, using a media strategy like the Philippines might sensationalize the issue, which might be different from what Hanoi prefers as it walks a tightrope to balance its complex relations with China. However, Hanoi can at least offer foreign diplomats transparent and detailed information in a timely fashion to help them verify and assess the situation on the ground. This will speed up the EU’s and other potential like-minded states’ response to sea incidents and foster ways forward for more multilaterally agreeable forms of modus vivendi in the South China Sea. Ultimately, such a modus should serve China too. EU No Longer a Bystander The EU’s recent stance on the SCS issue has been its respect for a rule-based order and freedom of navigation, strong opposition to unilateral actions, and supporting the ASEAN-led “effective, substantive and legally binding” CoC while mentioning China but not singling it out. This is a change from the EU’s pre-Indo-Pacific embrace when it was a more divided, neutral house. The EU’s heavy dependence on maritime trade through the SCS mandates that the EU can no longer stand as a bystander. However, ASEAN claimant states, particularly Vietnam, would perhaps expect a sharper or clearer position, which the EU has indeed been moving toward. For example, in March 2024, the EU released a statement expressing concerns about the incidents involving “repeated dangerous maneuvers” by the Chinese Coast Guard and Maritime Militia in the SCS. This tilts to the U.S. line, even as the U.S. has been more vocal in directly criticizing China on the SCS, by calling China’s claims “completely unlawful” even before the current events. One could argue that despite the U.S. and its allies having been vocal, this has yet to lead to a concrete resolution of the conflict. However, if the EU cannot send clear signals on the issue, the division among like-minded countries will be seen as weak and exploitable in China’s eyes. Importantly, this is true not just for the SCS disputes but also for China’s coercive activities in general. Therefore, given the convergent non-confrontational, inclusivity-, and economic interests-oriented attitudes of both Vietnam and the EU toward the Asia-Pacific/Indo-Pacific region, both sides are primed to embrace the other’s strategic outlook and up their game in the face of a challenging China and efforts to foster order.

한국어로 읽기Leer en españolIn Deutsch lesen Gap اقرأ بالعربيةLire en françaisЧитать на русском Abstract: Since the beginning of the XXI century, the Indo-Pacific region has become the “focus” of strategic competition between the world‟s great powers. This area included many “choke points” on sea routes that are strategically important for the development of international trade, playing an important role in transporting oil, gas, and goods around the world from the Middle East to Australia and East Asia. The article analysed the geostrategic position of the Indo-Pacific region and the strategic adjustments in foreign affairs of some major powers in this region, specifically the US, China, and India. To achieve this goal, the authors used research methods in international relations to analyse the main issues of the study. In addition to reviewing previous scholarly research and reviews, the authors used a comparative approach to assess the interactions between theory and data. The authors believed that these data are important for accurately assessing the strategic importance of the Indo-Pacific region, and this area was an important trigger for the US, China, and India to make adjustments to its foreign policy. If the US proposed a strategy called “Free and Open Indo-Pacific” (FOIP), India‟s strategy was called the Indo-Pacific Initiative. China‟s Indo-Pacific strategy was clearly expressed through the “String of Pearls” strategy and the “Belt and Road Initiative” (BRI). As a result, in the geopolitical context of the Indo-Pacific region, the competition between major powers (the US, China, India...) is also becoming fiercer and more complex. It has a significant impact on other countries in the region. INTRODUCTION Nowadays, the conception of geopolitics has not received a consensus among generations of scholars, and it tends to increase complexity in the international context after the Cold War and create different schools in the study of political science and international relations. This diversity reflects the interplay between the development of theory and the development of international political status and shows the diverse nature of international politics and international political studies. Hans J. Morgenthau, a typical realist theorist (1948), said, “International politics, like every other kind of politics, is a power struggle. Whatever the ultimate aims of international politics, power is always the immediate aim” (p. 13). In geopolitics, this relationship is expanded into a highly complex tripartite relationship between three factors: geography - power - politics. The Britannica Dictionary defines geopolitics as “the analysis of the influence of geography on power relationships in international relations” (Deudney 2013). Geopolitics can be understood as a dialectical next step of the relationship between geography and power. Geography does not fully determine how a power interaction happens, but geography significantly affects any political analysis. It is one of the sources of hard power, but sometimes, it is the leading cause of disputes between powerful actors. Ultimately, increasing ownership of geographical factors will increase power/hard power. This is the last and perhaps the most significant factor enabling an international political actor to prevail in imposing their political will on one or more other political actors. In past centuries, powerful Western countries consistently sought methods to expand their colonies and garrisons, aiming to control major transportation routes worldwide and exploit natural and human resources in their areas of influence or occupation. Their objective was either to maintain hegemony on a global or regional scale or to challenge and contest existing hegemony. This approach is commonly used to explain peace, conflict, competition, and development through a geopolitical lens. Traditional German geopolitics, the birthplace of modern geopolitics, which rose during World War I and flourished under the Third Reich, was influenced by geographical determinism, especially theories that occurred in the mid-twentieth century. The German school believes that geopolitics is the study of space from the state‟s point of view. Specifically, Karl Haushofer asserted that “Geopolitics is the new national science of the state (...) a doctrine on the spatial determinism of all political processes, based on the broad foundations of geography, especially of political geography” (Cohen 2015, 15). In this way, geographical factors are believed to be objective actors that are relatively fixed in nature; the effects of geographical factors on the political policies of a country are considered intuitively cognizable through deductive methods, and their consequences to power interactions in a relevant region can be predicted accurately with the same method of thinking. However, it is more complex and ambiguous due to the diverse coexistence of geographical and non-geographical variables. In the early XXI century, one way to understand shaping theory was not to study geography or politics but from politics to geography or a bidirectional way between two factors. Saul Bernard Cohen‟s point of view is one of the most common conceptions of the impact of geography on politics. Cohen (2003): “Geopolitics is the analysis of the interaction between, on the one hand, geographical settings and perspectives and, on the other hand, political processes. (…) Both geographical settings and political processes are dynamic, and each influence and is influenced by the other. Geopolitics addresses the consequences of this interaction” (Cohen 2015, 16). The point of view of Yves Lacoste (French geographer) represents the opposite. He noted that: The term „geopolitics‟ is understood in a variety of ways. It refers to all things that involve the competition for power or influence over territories and the people living there, the competition between all types of political powers, which is not only countries but also political movements or secret armed groups, the competition for controlling or dominating large or small territories (Lacoste 2012, 28). We ignore the extension of the political interaction entities, and this definition shows that “competition” between political entities plays a leading role in this idea of geopolitics. There are two points we need to expand from this conception of geopolitics. The first is the purpose of the disputes, though often the manifest purpose rather than the latent purpose is to own natural and human sources. The second is competition between political entities, which is organic interaction, like what Foucault recognizes as power. These traditional ways of studying were challenged by the School of critical geopolitics, which occurred and developed at the beginning of the XXI century. the XXI century. According to critical geopolitics, which comes from the social structuralism approach, when experts in state administration create ideas about geographical locations, these ideas influence and underpin their political behaviour and policy choices. And these ideas affect how people process their concepts of place and politics. This tendency has led researchers to focus on analyzing geographical discourses to identify underlying assumptions about power. This aims to break the major concepts of international politics (Flint 2006; Toal 2006). The conceptual awareness of critical geopolitics has been abandoned (Fouberg et al. 2012, 535). In this article, we maintain a unified concept of terminology. Concepts that begin with the prefix “geo” are usually theories of behaviour or policies (military, economic, politics, etc.) of one or more states through geographical, natural, or humanistic aspects rather than focusing on the influence of geographical variables only. Prefix concepts (“geo”, short for geography) should be in the politics/political science sub-disciplines rather than in geography. THE GEOPOLITICAL IMPORTANCE OF THE INDO-PACIFIC REGION The Indo-Pacific region is situated along the coasts of the Indian Ocean and the Western Pacific Ocean, with seas connecting these two vast bodies of water. The Indo-Pacific region is home to more than half of the world‟s population and has abundant resources and strategically significant international sea lanes. It is one of the most dynamic economic regions, fostering cooperation and growth between developed and developing economies. Interestingly, the term “Indo-Pacific” is not novel but instead borrowed from the field of geo-biology, where it denotes tropical waters stretching from the western coast of the Indian Ocean to the Western Pacific Ocean. The term “Indo-Pacific” with a geopolitical connotation was first mentioned by Gurpreet S. Khurana, Director of the National Maritime Foundation in New Delhi (India). In the article “Security of Sea Lines: Prospects for India-Japan Cooperation”, published in Strategic Analysis in 2007, G. S. Khurana defined the Indo-Pacific as a maritime space connecting the Indian Ocean with the Western Pacific Ocean, bordering all countries in Asia (including West Asia, Middle East) and East Africa (Khurana 2007, 150). He argued that India and Japan‟s common and core interests in the maritime domain would be complex to secure if the Indian and Pacific oceans were divided in strategic perception. Thus, the term “Indo-Pacific” was born as a new regional strategic vision. Japanese Prime Minister Shinzo Abe, in his address to the Indian Parliament in 2007, restored an ancient geographical view of Asia called “The Confluence of the Two Seas” (Chandra and Ghoshal 2018, 34), considering it a “dynamic coupling as seas of freedom and of prosperity” (Ministry of Foreign Affairs of Japan 2007) in Asia, set the target of linking the Pacific Ocean with the Indian Ocean to become the “Indo-Pacific” region, replacing the term of “Asia-Pacific”. The “Indo-Pacific” concept is supposed to be a geopolitical concept associated with countries inside and outside the geographical boundaries of the Asia-Pacific. Since 2010, this concept has become increasingly prevailing in strategic and geopolitical discourse and is employed by policymakers, experts, and scholars worldwide. Besides the geographical reference to the connection between the Pacific Ocean and the Indian Ocean, the concept also has strategic and geopolitical significance, reflecting strategic changes, particularly in maritime security. Regarding geographical space, the “Indo-Pacific” term is a connecting space between the Indian Ocean and the Pacific Ocean, which combines these two oceans into a singular regional construct (Berkofsky and Miracola 2019, 13). This region mainly stretches from the east coast of Africa to the west coast of the US. Indo-Pacific is located along the Indian Ocean and the Western Pacific Ocean, with the seas connecting these two oceans, including Northeast Asian, Southeast Asian, and South Asian countries, as well as many Middle East and African countries. Regarding the roles, functions, connectivity, and interdependence of the two oceans, the Indo-Pacific has a diversity of ethnicities, religions, cultures, languages, and politics. This region has rich resources and important sea lanes, has the three largest economies in the world (the US, China, and Japan), is one of the most dynamic regions in terms of economy, and can support and promote each other between developed and developing economies. The Indo-Pacific has 9/10 busiest seaports in the world. About 60% of the world‟s maritime trade passes through this region, of which a third passes through the South China Sea (The US Department of Defense 2019). In addition, the sea route in the Indian Ocean is vital for transporting oil, gas, and goods worldwide, from the Middle East to Australia and East Asia. This is also a famously unstable sea with piracy and terrorism. Therefore, ensuring security for the lifeline of the world economy has received special attention from many countries. Almost 90 percent of global trade and 2/3 of hydrocarbons have been transported across oceans, most concentrated in the Indian and Pacific Oceans. The Indian Ocean, in particular, carries over half of all global container shipping capacity and accounts for around 70% of all transshipment hydrocarbons. The Indian Ocean is one of the busiest international maritime trade channels, accounting for 1/9 of global seaports and 1/5 of the world‟s import and export cargo (Zhu 2018, 4). Every year, more than 100,000 ships pass through the Indian Ocean, including 2/3 of the oil tankers, 1/3 of the large cargo ships, and 1/2 of the container ships in the world (Kumar and Hussain 2016, 151). Strategically, the Indo-Pacific is viewed as a seamless structure connected by the strait of Malacca, the leading trade route connecting the two oceans. Two rationales explain the Indo-Pacific‟s strategic potential: Firstly, China‟s footprint throughout this region; secondly, the relative weakening of the US alliance system and its attempt to revive it (Das 2019). With topographical tectonics, the Indo-Pacific is also an area that holds the world‟s most important sea lanes and is home to strategic “choke points” of the world - the Suez Canal, Bab-el-Mandeb and the Strait of Hormuz to the northwest, the Mozambique Channel to the southwest and the Strait of Malacca (the strategic connection point between the Indian Ocean and the Pacific Ocean), the Sunda Strait, and the Lombok Strait in the southeast and the Cape of Good Hope. In particular, the Strait of Hormuz accounts for 40% of global crude oil shipments. Between Singapore, Indonesia, and Malaysia, the Strait of Malacca holds half the world‟s merchant shipping tonnage (Kaplan 2010, 7). In the context of increasing tensions in the South China Sea, the strategic location of the Strait of Malacca has become the focus of attention of countries whose economies are heavily dependent on this nasopharyngeal shipping route. Currently, the amount of oil transported through this strait is three times higher than the Suez Canal and 15 times larger than the Panama Canal (Tan 2011, 93). It can be said that the Indo-Pacific region has the most critical position for international maritime trade and the intersection of the political and economic strategic interests of many powerful countries. This region plays an increasingly important role in the XXI century, becoming the focus and center of world power. However, the Indo-Pacific is witnessing geopolitical competition and competition of interests among major powers. The US, China, India, Japan, and Australia have all made strategic adjustments to increase their influence and protect their interests in this region. The XXI century is considered “the century of seas and oceans” and is accompanied by fierce competition among world powers to gain strategic interests in the seas. In the past, nations primarily focused on competition for military objectives, geostrategic bases, and maritime traffic routes. However, in contemporary times, countries worldwide have shifted their focus towards competing for economic advantages and marine resources. The advancement of military capabilities and endeavours to vie for resources at sea increasingly indicate a trend toward leveraging maritime control to influence continental affairs. The “sea power” theory of US foremost thinker on naval warfare and maritime strategy - Alfred T. Mahan, has generated a premise for nations promoting sea power: “Control of the sea, by maritime commerce and naval supremacy, means predominant influence in the world; because however great the wealth product of the land, nothing facilitates the necessary exchanges as does the sea” (Mahan 1897, 124). Maritime security in the Indo-Pacific region has therefore become a “hot” focus in the maritime foreign policy agenda of powers. For the time being, the Indo-Pacific region is by and large peaceful and secure; however, it is confronted with some maritime security challenges: Firstly, regarding maritime disputes, there are about 40 maritime disputes between countries in the region, which could be disputes over territorial sovereignty or sovereign rights over the waters. Many disputes, including those in the East China Sea, South China Sea, Indian Ocean, or Senkaku/Diaoyu Islands, are viewed as potential flashpoints for a Sino-US war or even a Third World War (Echle et al. 2020, 126). While direct armed conflicts have yet to erupt in these areas, they serve as the underlying cause of the region‟s escalating security challenges. These conflicts stem primarily from the diverse security needs of numerous countries in the region. Moreover, given their strategic significance, these areas represent complex issues in Indo-Pacific maritime security, highlighting the intricate nature of the disputes. Secondly, piracy and armed robbery have driven the Strait of Malacca, the South China Sea, and the Indian Ocean to the top of the list of the most dangerous waters. In 2018, the number of piracy and robbery cases in these areas was 8, 57, and 25, respectively, placing them second only to West Africa, which had 81 cases (International Maritime Organization, 2019, 2). While the number of piracy cases in the South China Sea and Indian Ocean decreased to 34 and 10, piracy cases in Malacca Strait increased to 45 in 2019 (International Maritime Organization 2020, 2). Another notable transnational maritime security issue in the Indo-Pacific is piracy off the coast of Somalia, which affects the waters of the Gulf of Aden, the Arabian Sea, and the Western Indian Ocean (Elleman et al. 2010, 210). In response to this threat, the United Nations Security Council has passed Resolution 1816, which states that cooperating countries may enter Somali territorial waters and use all necessary means to combat piracy and armed robbery (Klein 2011, 280). Thirdly, alongside piracy, the Indo-Pacific region serves as a focal point for terrorist organizations such as Al-Qaeda and Al-Shabab. Following the 11 September terrorist attacks (commonly known as 9/11), countries including Singapore, Malaysia, the United Kingdom, New Zealand, and Australia have consistently coordinated their naval forces to combat terrorism in the Strait of Malacca, safeguarding oil tankers traversing the area. Additionally, new maritime security risks are emerging, particularly in the Indo-Pacific region, as terrorists exploit the Malay Archipelago as a sanctuary to identify vulnerable targets in the region and collaborate with extremists, Islamic insurgents, or members of organized crime networks. This fear has become much more real since the 2002 Bali bombings (Tan 2011, 91). Furthermore, terrorist organizations like Al-Qaeda, Abu Sayyaf, and Jemaah Islamiyah have extended maritime terrorism into Southeast Asia, affecting the broader region. The bombing of Super Ferry 14 in the Philippines in 2004 stands as the deadliest maritime terrorist attack globally to date, claiming the lives of 116 individuals (Safety4Sea 2019). Lastly, drug trafficking and human trafficking are frequent transnational concerns in the Indo-Pacific. Many multinational organized criminal groups rely heavily on drug trafficking by water for a significant portion of their revenue. Drugs produced in Afghanistan, India, and Indonesia are transported by sea to other countries via illegal markets. The manufacture and transport of drugs are rising in the Indo-Pacific region, and criminal groups are exploiting the Malacca Strait as their primary distribution route to Southeast Asia countries (Zulkifli et al. 2020, 19). Moreover, the human trafficking issue remains unresolved as the coast guard, or the security department of port and ship facilities cannot predict the consequences. Furthermore, one of the threats to maritime security in the Indo-Pacific region is arms trafficking. Most of the arms trade was carried by criminal organizations by sea in containers from southern Thailand to Aceh, Bangladesh, India, and Sri Lanka via the Malacca Strait and the Andaman Sea (Zulkifli et al. 2020, 19). The increase in arms trade is a significant contributor to the rise in maritime crime, particularly in Southeast Asia and the broader Indo-Pacific region. Consequently, territorial and maritime sovereignty disputes, coupled with the intricate linkages between transnational crime, piracy, and terrorism, have heightened the complexity of security threats in the marine domain. These developments strongly influence the adaptation of foreign strategies by several major powers, including China, India, and the United States. THE STRATEGIC ADJUSTMENTS OF SOME MAJOR POWERFUL COUNTRIES FOR THE INDO-PACIFIC REGION The Indo-Pacific region, with nearly half of the Earth‟s population, is at the center of the world‟s political and economic strategic interests. Currently, being rich in resources, many “throat” sea routes, and most dynamic economic and trade activities, this region plays an increasingly important role in the XXI century and beyond. However, the Indo-Pacific has been experiencing intense geopolitical competition, increasing pressure on trade and supply chains, and tensions in the technology, political, and security sectors. Great powers such as the US, China, India, Japan, and Australia have all made strategic adjustments to increase their influence and protect their interests in this region. United States of America Although not the first country to propose the Indo-Pacific concept, the US pioneered executing and implementing the Free and Open Indo-Pacific (FOIP) strategy. In recent years, the power has responded to global geopolitical changes by developing an Indo-Pacific strategy that seeks to rebalance the US to Asia as a counterweight to China‟s rise, developing alliances and partnerships to strengthen the Washington authority‟s interests over a large area stretching from the west coast of India to the west coast of the country. The US first coined the term “Indo-Pacific” through Secretary of State Hillary Clinton‟s official speech in Honolulu in October 2010. In 2017, following his inauguration, President Donald Trump intensified the term “Indo-Pacific” in official policy discourse (Turner and Parmar 2020, 229). In early June 2019, the US Department of Defense officially announced the Indo-Pacific Strategy Report for the first time. This strategy aims to enhance the US‟s bilateral alliances and multilateral cooperation mechanisms across economic, security, and maritime domains, establishing a comprehensive network spanning South, Southeast, and Northeast Asia. Subsequently, in November 2019, the US Department of State released a Progress Report detailing the implementation of the Indo-Pacific strategy. These developments underscore the significance of US engagement in the Indo-Pacific region as a top priority in President Donald Trump‟s foreign policy agenda. President Donald Trump chose the Indo-Pacific to underscore India‟s historical and contemporary significance in the region while affirming US interests and those of other countries. During a press conference in early April 2018, Deputy Assistant Secretary of State Alex N. Wong elaborated on the concept, offering insights into how the Trump administration defines “freedom” and “openness”. According to Wong, “freedom” in the strategy primarily emphasizes international freedom, aiming for countries in the Indo-Pacific region to pursue their paths without coercion. At the national level, the US seeks to foster societies in the region that gradually embrace freedom, characterized by good governance, protection of fundamental rights, transparency, and anti-corruption measures. On the other hand, “openness” is primarily focused on expanding sea and air traffic. Maritime traffic is crucial to the region‟s vitality, as approximately 50% of international trade traverses the Indo-Pacific, mainly through the East Sea. Therefore, expanding sea and air routes in the Indo-Pacific is increasingly vital and significant on a global scale (Le 2018). The US‟s “Vision for a Free and Open Indo-Pacific” was born for two primary reasons. Firstly, it stems from the internal factors of the US that are associated with the vital nature of national security and the role of the US in the world. As an area adjacent to many oceans, gateways, and throats connecting the US with the world, the Indo-Pacific has always been considered by the US to be a critical geostrategic area, directly affecting national security and the world leadership role of America. Implementing the FOIP strategy is a way for the US to protect national interests, ensure the freedom and security of maritime traffic, maintain the balance of forces, and promote diplomatic activities and society-culture exchanges in the area. Second, stemming from the regional security situation, China‟s rise along with construction and militarization in the East Sea are seen as threatening the free flow of trade, threatening to narrow the sovereignty of countries, and reducing stability and security in the region. Not only that, but China‟s BRI is also challenging the US‟s leadership role in the Indo-Pacific region - where there is no multilateral mechanism on security, mainly based on bilateral agreements and arrangements, such as the US-Japan Security Treaty, the US-South Korea bilateral defense treaty (Pham and Vu 2020, 103-104). The US‟s Free and Open Indo-Pacific strategy is constructed upon three fundamental pillars: security, economy, and governance. The objectives of this strategy are multifaceted. Firstly, it aims to sustain long-term US leadership within the Indo-Pacific region and globally, particularly in light of China (and Russia) being explicitly identified by the US as America‟s primary strategic competitors in the National Security Strategy of 2017 and the National Defense Strategy of 2018. Secondly, the strategy promotes free, fair, and reciprocal trade. The US opposes trade deficits and unfair trade practices by other nations, instead demanding equal and responsible behaviour from its trading partners. Thirdly, it aims to uphold open sea and airspace within the region. Fourthly, it effectively addresses traditional and non-traditional security challenges, including North Korea‟s nuclear program. Lastly, the strategy strives to ensure adherence to the rule of law and the protection of individual rights (The US Department of Defense 2019). The US‟s Free and Open Indo-Pacific strategy focuses on ensuring the country‟s interests, focusing on the “4P” formula in a clear order of priority: prosperity, peace, power through the deployment of American power, and finally, influence through American values and principles – Principles (Nguyen 2021a, 49). US‟s Indo-Pacific Strategy is expected that the vital sea lanes of the Indo-Pacific will “create the foundation for the global trade and prosperity” (The US Department of Defense 2019). Therefore, the US strives to promote a Free and Open Indo-Pacific by promoting economic, governance, and security linkages. The core goal of the US‟s Indo-Pacific strategy is to build an alliance axis, Quadrilateral Security Dialogue1 (QUAD) (including the US, Japan, Australia, and India) to curb and prevent China‟s rise in the region, gain dominance, and control the entire region, thereby continuing to maintain the economic interests, political power, military and diplomatic power of the US (Pham and Vu 2020, 103). This is one of the main pillars that help to realize this connectivity strategy between the two oceans. The QUAD aims to foster the sharing of common interests, values, and perceptions of security threats among the four member countries. This collaboration aims to establish a balanced power dynamic that upholds a “rules-based” order in the Indo-Pacific region. On 12 March 2021, the QUAD officially convened online to reaffirm its primary maritime security mission. The overarching objective is to counteract China‟s growing regional and global influence (The White House 2021a). Besides QUAD, on 15 September 2021, the US, UK, and Australia officially announced establishing a tripartite security partnership in the Indo-Pacific region (AUKUS). The first step can confirm that AUKUS is a new structure prone to “triangle” security in the Indian Ocean. The Pacific Ocean space aims to protect and maintain the shared interests of the parties in this region. A joint statement by US President Joe Biden, Australian Prime Minister Scott Morrison, and British Prime Minister Boris Johnson affirmed the partnership in AUKUS “guided by the enduring ideals and shared commitment to the international rules-based order” (The White House 2021b). This alliance aims to “help sustain peace and stability in the Indo-Pacific region” (The White House 2021b). [1] The Quadrilateral Security Dialogue (QUAD) was established in 2007 with four member countries: the US, Australia, Japan, and India. Its primary objective was to establish a trans-Pacific economic mechanism, potentially serving as the nucleus of the Asia-Pacific Economic Forum (APEC). After a 10-year hiatus, the QUAD group officially resumed the four-way dialogue in 2017, elevating it to a dialogue of foreign ministers. This resurgence occurred amidst heightened tensions between the US and China across various fronts, with Beijing's assertive behaviour posing security concerns for Japan, India, and Australia (Buchan and Rimland 2020, 3; Brunnstrom 2017). Therefore, the US‟s efforts to promote strategic cooperation, enhance engagement across economic, political, and security domains, and forge partnerships and alliances with regional countries reflect its ambitions in the Indo-Pacific. The Free and Open strategy serves as an extension of the “America First” policy, gradually bolstering the role and preserving the influence of the US in the region. China As a major power in Asia and globally, China inevitably focuses on strategically significant regions like the Indo-Pacific. Since the Cold War, particularly in the first two decades of the XXI century, China‟s ascendance has profoundly impacted global development, reshaping power distribution worldwide. This perspective is echoed by Robert D. Kaplan, a professor at the US Naval Academy: “China is currently changing the balance of power in the Eastern Hemisphere. On land and at sea, its influence extends from Central Asia to the Russian Far East and from the East Sea to the Indian Ocean” (Kaplan 2012, 200). China has stepped up its presence in the Indo-Pacific with the “String of Pearls” strategy and the “Belt and Road” Initiative (BRI). “String of pearls” is a term coined by American analysts to describe China‟s network of shipping lanes extending from southern China to the Indian Ocean, traversing strategic points such as the Strait of Mandab, the Strait of Malacca, the Strait of Hormuz, and the Strait of Lombok. It also encompasses other fundamental naval interests, including Pakistan, Sri Lanka, Bangladesh, the Maldives, and Somalia. Within this network, notable installations such as the military base on Hainan Island, the container shipping facility in Chittagong (Bangladesh), the deep-water port in Sittwe, the Kyaukpyu port, the Yangon port (Myanmar), the naval base in Gwadar (Pakistan), and the Hambantota port in Sri Lanka are referred to as the “jewels” or “pearls”. This chain of “pearls” extends from the coast of China, through the East Sea, the Strait of Malacca, across the Indian Ocean, and to the reefs of the Arabian Sea and the Persian Gulf (Kaplan 2012, 200). Each “jewel” within the “String of Pearls” represents China‟s geopolitical influence or military presence in key regions such as the Indo-Pacific, the East Sea, and other strategically significant seas. Through this strategy, China aims to extend its influence from Hainan in the East Sea through the world‟s busiest sea lanes towards the Persian Gulf. The primary objectives include restraining India, ensuring energy security, and asserting control over vital shipping lanes (Tran 2012, 77). To implement the “String of Pearls” strategy, China has improved relations with most of India‟s neighbours, including Pakistan, Nepal, Bangladesh, and Sri Lanka. In that context, Myanmar is a place that China can use as a springboard for its ambitions to expand its sphere of influence into Southeast Asia and South Asia (Gupta 2013, 82). Myanmar has an important strategic position between two major Asian countries, China and India. Besides, Myanmar is a coastal country in the Indian Ocean, so for Chinese policymakers, Myanmar is increasingly of more strategic value to China. Myanmar is strategically important to India and a key player in China‟s ambitions to reach the Indian Ocean. Myanmar is the only neighbouring country that can give China access to the Indian Ocean from the east, namely the Bay of Bengal and the Andaman Sea (Myo 2015, 26-27). China’s moves in the Bay of Bengal and the Andaman Sea are the first steps to ensure China’s best interests in the Indian Ocean. China has also assisted Myanmar in developing naval bases at Sittwe, Hianggyi, Khaukphyu, Mergui, and Zadetkyi Kyun by building refuelling facilities and radar stations for Chinese submarines to operate on the Bay of Bengal (Singh 2007, 3). These facilities gather intelligence on Indian Navy activities and are forward bases for Chinese Navy operations in the Indian Ocean. With India‟s naval expansion efforts at a standstill, the Chinese Navy‟s growing presence in the region has had enormous strategic consequences for India because India‟s traditional geographical advantages are increasingly threatened by China‟s ability to penetrate deeper into Myanmar. According to US military experts, the “String of Pearls” is the basis for China to inspect and monitor all vital sea lanes in Asia and the world, curb India, Japan, and Korea, and gain the advantage of direct access to strategic locations in the Pacific. “String of Pearls” strategy, China strengthens ties with regional countries through aid, trade, and defense agreements and launches new cooperation initiatives. In 2013, Chinese President Xi Jinping launched the Belt and Road Initiative (BRI). This initiative consists of two main parts: (i) The Silk Road Economic Belt (also known as the Land Silk Road) is a roadway designed with three branches (from China to Central Asia and Russia to Europe, from China through Central Asia, West Asia to the Persian Gulf, the Mediterranean Sea, from China to Southeast Asia, South Asia and the Indian Ocean); (ii) Maritime Silk Road in the XXI century aims to build transport routes between major ports in different countries, including the development of an economic corridor across the Indian Ocean, connecting China with South Asia, the Middle East, Africa and the Mediterranean (Pham 2019, 31-32). The objectives of this BRI are: first, to expand the strategic space and create a backyard area of China to control the Eurasian - African continent, creating a counterbalance to the US‟s Indo-Pacific strategy; second, dominate the Indian and Pacific Ocean regions, control related shipping lanes and regional seaport systems, dominate oil and gas supplies, establish military bases in these areas through which these roads pass; third, create a socio-economic environment for the expansion of China‟s “soft power”; fourth, build a security perimeter around China to prevent the US and its allies from entering the area that Beijing considers its “backyard”, supporting China to go out into the world; fifth, promote regional economic cooperation, rely on economic cooperation to promote political relations, create a catalyst to solve problems in relations between China and countries in the region, prevent the contraction of countries in the region that have disputes with China, including the issue of maritime and island disputes; sixth, through the “5 channels” (through policy, communication (on land, at sea), trade, currency and people) to access, penetrate and control the regional economy in order to promote economic development in the region to take control of international trade, the right to evaluate and the right to distribute international resources; seventh, solve the problem of excess production capacity, find a market for stagnant goods, find an investment market, effectively use China‟s huge foreign exchange reserves, find a market for the yuan, speeding up the process of internationalization of the renminbi; Eighth, access to energy resources, especially oil and gas; Ninth, take advantage of the surrounding environment to create conditions for more equal development among regions in the country, especially the border areas, western China (Dinh 2021, 7-8). China‟s BRI prioritizes the maritime sector when it proposes the “21st Century Maritime Silk Road” to connect seaports, one of the two main connections between China and Europe (Kuo and Kommenda 2018). It can be said that the BRI aims at strategic goals in terms of politics, security, economy, territorial sovereignty, and building a new framework of rules of the game in the region and the world, in which China plays a leading role (Tran 2017, 100). In addition, to counterbalance the Indo-Pacific strategy of the US and the QUAD, China has strengthened its relations with Russia and Iran by strengthening the Sino-Russian alliance in the Shanghai Cooperation Organization (SCO) and admitted Iran to this organization on 17 September 2021. China, Russia, and Iran have formed a “new maritime power triangle” and are preparing to launch a joint maritime exercise in the Persian Gulf. Previously, in December 2019, these three countries also conducted a joint maritime exercise in the Indian Ocean and the Gulf of Oman in the context of tensions between Washington and Tehran showing signs of escalation. India As a continental power occupying a strategic position in the heart of the Indian Ocean, India has become a prominent player in the Indo-Pacific region and one of the countries deploying manoeuvres to adjust foreign strategy. India‟s “Look East” policy (implemented since 1992) has extended India‟s foreign strategy to Southeast and East Asian countries. Over the years, India‟s regional involvement has shifted from economic ties to security cooperation. Prime Minister Narendra Modi‟s “Act East” policy (implemented since 2014) underpins India‟s approach to the Indo-Pacific region, in which this foreign policy will strengthen India‟s participation through strategic partnerships. In addition, the country has its vision for the Indo-Pacific region. India wants to promote peace and stability through an equal approach at sea and air, freedom of navigation, combating maritime crime, protecting the marine environment, and developing a green economy (Ministry of External Affairs, Government of India 2018). In 2015, in the Report “Ensuring Maritime Security: India‟s Maritime Security Strategy”, India clearly stated that its strategic vision shifted from the Euro-Atlantic to the Indo-Pacific, associated with the “Act East” policy. In his speech at the Shangri-La Dialogue (June 2016), Indian Prime Minister Narendra Modi laid out India‟s vision for the Indo-Pacific region, emphasizing India‟s participation in organizations, taking ASEAN as the center of the region, such as the East Asia Summit (EAS), the ASEAN Defense Ministers Meeting Plus (ADMM+). Indian Prime Minister N. Modi first announced the Indo-Pacific Initiative during his speech at the Shangri-La Dialogue held on 1 June 2018 in Singapore. Prime Minister N. Modi affirmed, “The Indo-Pacific is a natural region (...) India does not see the Indo-Pacific Region as a strategy or as a club of limited members” (Ministry of External Affairs, Government of India 2018). On 4 November 2019, Prime Minister N. Modi once again mentioned this idea at the 14th East Asia Summit (EAS), held in Bangkok (Thailand), which “propose a cooperative effort to translate principles for the Indo-Pacific into measures to secure the shared maritime environment” (Ministry of External Affairs, Government of India 2019). This proposal also transforms India‟s conception of the Indo-Pacific region into practical and enforceable measures in the maritime domain. Regarding the policy, India has demonstrated its determination to implement the Indo-Pacific Initiative through the establishment of a Directorate-General for the Indo-Pacific under the Ministry of External Affairs (MEA) since April 2019, based on merging international organizations, such as ASEAN, the Indian Ocean Rim Association (IORA) and the QUAD including the US, Japan, Australia, and India. In September 2020, India continued to establish the Directorate for Oceania in the MEA to promote India‟s administrative and diplomatic fields, stretching from the Western Pacific Ocean to the Andaman Sea. India‟s Indo-Pacific Initiative consists of 7 pillars, including 1) Marine security, 2) Marine ecosystems, 3) Marine resources, 4) Capacity building and resource sharing, 5) Disaster risk reduction and management, 6) Technology and trade cooperation, and 7) Connectivity and shipping, which can be grouped into six groups: 1) Maritime security; 2) Marine ecosystems and marine resources; 3) Building maritime enforcement capacity and information sharing; 4) Manage and reduce disaster risks; 5) Science and technology cooperation; 6) Trade connection and sea transportation (Nguyen 2021). India‟s approach to this strategy is inclusive and transcends traditional security issues or geopolitical challenges. India also wants to promote cooperation in environmental issues related to the sea and ocean sectors. Through the Indo-Pacific Initiative, India wishes to lead, chair, and coordinate in cooperation inside and outside the region, especially with small and medium-sized countries. Compared to the US‟s Free and Open Indo-Pacific Strategy, India expands the geographical reach of the region under the Indo-Pacific Initiative, whereby the Indo-Pacific covers the African coast to the west of the Indian Ocean and the Arabian Sea, including neighbouring countries in the Gulf, islands in the Arabian Sea and the African region. By asserting “both geographical poles” of the Indo-Pacific Initiative, India emphasizes the balance between the two groups of policies, “Act East” and “Act West”, forming an integral part of the country‟s strategy in the Indo-Pacific region. For India, strengthening security cooperation with the US, forging a special strategic partnership with Japan, and maintaining the relationship with Australia are strategic focuses in shaping economic and security architecture in the region based on the “diamond quadrilateral” alliance. At the same time, to connect with the open Indo-Pacific space, India also strengthened ties with Asian, European, and African countries. CONCLUSION Due to the Indo-Pacific region‟s current structural makeup, the major regional powers have gradually turned it into a strategic area of power competition. Countries interested in the region actively participate in the Indo-Pacific regional architecture and seek ways to strengthen their positions to act as a counterweight in regional international affairs. Today, the Indo-Pacific is seen as a crucial element in the changes in global geopolitics and the focal point of numerous power struggles. In this region, besides the US, two Asian powers play a major role in regional security, China and India, because both countries seem to be putting all their efforts into improving regional security, greater competition than other areas due to their position. India is prepared and actively involved in a motivated strategy against China in the Indo-Pacific, in contrast to other regions where it has historically been more passive and weaker. India is moving toward the US in this competition but maintaining a neutral stance. Additionally, it is working to increase influence and fortify multilateral ties to close the power gap with China. With regard to China‟s growing influence in the region and its security implications for India and other regional countries, there exists a wide pessimism, particularly in Western analyses. It is quite pertinent to point out here that the India - China relationship is nicely balanced between the elements of cooperation and conflict, like that of the US-China relationship. Especially there is enough space in the Indo-Pacific region and beyond to accommodate both rising China and India. They can coexist and grow peacefully. However, the trends and issues will ostensibly continue to unfold in the region with greater worrying security concerns. In the coming years, maritime security within the Indo-Pacific region will be a key factor in the development of many countries. It, however, remains a major concern in the area because of the growing non-traditional security threats, in addition to maritime boundary disputes. Particularly, events in the SCS will continue to attract much of the regional and international attention. These could engulf the regional and international stakeholder‟s capability to maintain peace, security, and stability within the region in a sustained and effective manner. Most importantly, countries in the Indo-Pacific region share many of these common concerns. Invigorating greater cooperation and coherence in their strategy could help address the problems collectively. Moreover, establishing an Indo-Pacific Regional Security Architecture will be very handy in addressing common security concerns and threats. As a result, as the Indo-Pacific area is being shaped, the competition between the major powers is also becoming more complex and severe, significantly impacting the other nations in the region. In short, during the first two decades of the XXI century, the Indo-Pacific region has witnessed constant competition among numerous world powers. The region‟s strategic, economic, and commercial significance has positioned it at the heart of global contention, reshaping the character of international politics. The Indo-Pacific has become the focal point of international conflicts and power dynamics, heralding a significant new geopolitical landscape in the XXI century. It can be asserted that the power competition among these nations will shape the interaction patterns among Indo-Pacific countries in the ensuing years of this century. 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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 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском Moscow and Beijing likely worked together to sow disinformation globally that was propagated locally by political parties in the lead-up to Solomon Islands’ national and provincial elections on 17 April 2024. Both countries’ propaganda systems accused the United States, without evidence, of using its foreign aid and networks across the country to interfere in voting and of preparing to foment riots and orchestrate regime change in response to an unsatisfactory election result. This campaign adds to a growing body of evidence showing that China’s and Russia’s ‘no limits’ partnership extends to coordinating their disinformation campaigns in the Indo-Pacific. The narratives haven’t gained widespread attention or media coverage in Solomon Islands. Australia, the United States and other Pacific partners should nonetheless be concerned, as Russia and China can be expected to learn from this campaign and will likely use the lessons to further improve their influence operations in the region. Individually, China and Russia are adept and expert at pushing disinformation to disrupt other nations but, by coordinating their efforts, they have a force-multiplier effect. The campaign consisted of an alleged ‘leaked’ letter, articles published on authoritarian state-controlled media outlets and a fringe journal publication, which were then shared and amplified on social media platforms. A fortnight before election day, an unknown author by the name of Richard Anderson published an explosive article in CovertAction Magazine alleging that the US was seeking regime change in Solomon Islands. The US-based magazine was co-founded in 1978 by the late Philip Agee, a former CIA officer who after his retirement became a vocal critic of the agency and of US policy and had reported links with Soviet and Cuban intelligence. The magazine was set up ‘on the initiative of the KGB’, the Soviet Union’s main intelligence agency, according to a book by KGB defector Vasili Mitrokhin and British intelligence historian Christopher Andrew. Anderson had no previous history of writing for CovertAction Magazine. A week after that article was published, Russian state-controlled media agency Sputnik further fuelled the allegations, writing that the US was ‘plotting [an] electoral coup’. This article cited an anonymous source who had ‘intimate familiarity’ with the activities of USAID, the main United States foreign aid and international development agency. This mirrored how Anderson is described in his CovertAction Magazine bio, though Sputnik’s article did not explicitly mention him or his article. Sputnik’s claims were amplified four days later by the Chinese state-controlled tabloid newspaper the Global Times, which did directly reference Anderson’s article and has the potential to legitimise these narratives to an audience the Chinese Communist Party (CCP) is actively targeting. During the same period, a poorly fabricated letter from an unconfirmed (and potentially non-existent) IFES project consultant was circulated among Solomon Islanders by an unknown source claiming that the US was seeking a ‘democratic transition by violent means in necessary circumstances.’ The text in this letter mirrored language used by Sputnik’s alleged anonymous source. Figure 1: Paragraph from Sputnik article (top) and a screenshot of the alleged IFES letter (bottom).     To be clear, there is no evidence that the US, or any other country, is supporting violent riots or interfering in Solomon Islands. Ann Marie Yastishock, US Ambassador to Papua New Guinea, Solomon Islands, and Vanuatu, has strongly refuted these allegations. This is not the first time the CCP-controlled media has spread disinformation in Solomon Islands or accused the US of seeking to instigate riots in the country. Following the 2021 Honiara riots, the CCP falsely accused Australia, the US and Taiwan of organising the riots, fomenting unrest and discrediting the relationship between Solomon Islands and China. In contrast, Russian media outlets also covered the 2021 Honiara riots but didn’t promote any explicit accusations of US or foreign interference. This time, China and Russia have been in lockstep. In the lead-up to the April elections, Russian state media was more direct and damning in its reporting with the release of Sputnik’s original article and in the subsequent coordination and dissemination of false narratives alongside Chinese state media. While Sputnik published only one follow-up article to the initial investigation, China’s Global Times was more prolific and varied, with six articles alleging US meddling in Solomon Islands. Of these six articles, four explicitly referenced Sputnik’s claims and two referenced US influence operations in more general terms. The indications of Russia-China propaganda coordination in this campaign were further supported by China’s Ministry of Foreign Affairs (MFA) post on 19 April 2024 titled ‘The Hypocrisy and Facts of the United States Foreign Aid’. The post on their website claims the US is giving aid to Solomon Islands, among other countries, only because it sees it as a political threat. This was the first article ever published by the MFA to smear USAID. Moscow, however, has consistently campaigned against USAID since it ejected the US agency from Russia in 2012 for ‘meddling in politics’. Russian media has pushed a consistent narrative that the organisation is a US imperialist tool of regime change, accusing it of fomenting civil unrest and coup attempts as far afield as Belarus, Cuba, Georgia and Mexico. However, this latest attack against USAID appears to be the first where Russia’s narratives are working to the benefit of CCP interests. It’s been clear since at least 2018 that Russian and Chinese state media are converging on media narratives that serve their governments’ strategic and political interests. According to leaked documents from Russian state broadcaster VGTRK, Russian and Chinese propaganda entities also signed an agreement to ‘further cooperate in the field of information exchange, promoting objective, comprehensive and accurate coverage of the most important world events’. While previous ASPI research has demonstrated Russian and Chinese state-coordinated narratives on the Russia-Ukraine conflict, the repeated re-airing of Sputnik’s conspiratorial claims of interference in Solomon Islands’ elections in Global Times articles indicates this propaganda cooperation is now a global initiative. There was also some evidence of amplification by inauthentic accounts on social media of these narratives, but they were limited and it is unclear whether they were state linked. For example, one X account with the handle @jv79628 shared the original Sputnik investigation. The account posts links almost exclusively from Sputnik, Global Times, Australian website Pearls and Irritations and videos with artificial intelligence-generated voices from the pro-CCP YouTube channel Chinese Revival, which may be linked to the Shadow Play network previously uncovered by ASPI. Other accounts sharing the original Sputnik report, such as @de22580171, pose as pro-Russian US citizens. They share articles mostly from Sputnik or Russia Today. At the time of publication of this report, Russia’s and China’s state media articles, and the accusations contained in them, have had minimal reach into online Pacific communities. In the public Solomon Islands Facebook groups ASPI viewed, online discourse remains more focussed on the emergence of new coalitions and the election of a new Prime Minister than on discussion of foreign influence or interference. According to Meta’s social monitoring tool, CrowdTangle, none of the articles from the Global Times have been shared in open and public Solomon Islands Facebook groups. However, Sputnik’s first article may have been more successful in reinforcing anti-Western sentiments in outgoing Prime Minister Manasseh Sogavare’s O.U.R. Party, who are strong contenders to be part of the coalition that forms the next government. That article was posted on the O.U.R. Party Solomon Islands Facebook page, which is run by the party, on 10 April. It was reshared to several public Facebook groups in Solomon Islands, including news aggregation sites and local island forum pages. This is significant because it is the first time a news article has been posted on the O.U.R. Party Solomon Islands Facebook page, which typically shares positive images of the party’s activities and political campaigns. As of 1 May 2024, the post (below) has had over 180 interactions, which is higher than the average number of interactions a typical post has on this page. Figure 2: Screenshot of Sputnik article posted in O.U.R Party Solomon Islands Facebook page.     Sogavare, a founding member of the O.U.R. Party, has made similar remarks about ‘foreign forces’ previously. According to an article published in the Solomon Star, when US Ambassador Yastishock visited Solomon Islands in late March to present her letter of credentials to Governor-General John Oti, Sogavare claimed foreign forces were ‘intervening in the national general election’ and ‘may fund some political parties and plan to stage another riot during the election to disrupt the electoral process and undermine social stability’. Despite the low online interaction so far, the barrage of US regime change allegations lays the foundation for future narratives that may resurface if Solomon Islands experiences future unrest. Beijing and Moscow can be expected to learn from these disinformation efforts, leaving the US, Australia and their Pacific partners no room for complacency about the threat the regimes pose, nor the need for effective strategic communication. The Russian and Chinese governments are seeking to destabilise the Pacific’s information environment by using disinformation campaigns and influence operations to undermine traditional partnerships. In this digital age, leaders of governments and civil society across the region need to consistently confront and counter baseless lies pushed by authoritarian state media, such as accusations that the governments of Australia and the US are instigating riots. If they fail to do so, partnerships with, and trust in, democratic countries are at risk of deteriorating, which can reduce the development benefits provided to Pacific Island Countries by Western partners. Australia, the US, and other close Pacific partners, such as Japan, New Zealand and the European Union, must take a stronger stance against false and misleading information that is starting to circulate in the region as a result of authoritarian state-backed disinformation campaigns. These nations must also better support and encourage local media and governments to take further steps to identify and combat false information online. This includes providing more training packages and opportunities for dialogue on media-government communication procedures to tackle disinformation and misinformation. Countering the effects of disinformation requires ongoing efforts to call out false statements, educate the public, and build country-wide resilience in the information environment. Greater transparency and public awareness campaigns from the region’s partners can also help to ‘prebunk’—or anticipate and delegitimise—disinformation and alleviate concerns about malign activity.

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском Press statement on the occasion of the visit of French President Emmanuel Macron Full statement to the press by the President of the Republic, Luiz Inácio Lula da Silva, following the visit of French President Emmanuel Macron in Brasília (DF), on March 28, 2024 It is a great joy to reciprocate the hospitality with which my delegation and I were received in Paris when I participated in the Summit for a 'New Global Financial Pact' last June. Over the past three days, we have carried out an extensive agenda that included stops in Belém, home to COP30; Itaguaí, where we have Prosub; and now Brasília, for a State visit. This true marathon gives a sense of the breadth of the cooperation and friendship ties between France and Brazil. Among traditional powers, none are closer to Brazil than France. And among emerging powers, you tell me if any are closer to France than Brazil. In today's highly complex international landscape, the dialogue between our nations serves as a vital bridge connecting the Global South to the developed world, fostering efforts to overcome structural inequalities and achieve a more sustainable planet. Brazil and France are committed to collaborating in advancing a shared global vision through democratic dialogue. A vision grounded in the priority of production over unproductive finance, solidarity over selfishness, democracy over totalitarianism, and sustainability over predatory exploitation. President Macron was able to personally witness that our commitment to the environment is not merely rhetorical. In the past year, we have reduced illegal deforestation in the Amazon by 50%, and we aim to eliminate it entirely by 2030. As a symbol of the revitalization of our partnership, today we embraced a New Action Plan, broadening our collaboration into new arenas. These include financing the ecological and energy transition, advancing in bioeconomy, agriculture, public administration, digital issues, artificial intelligence, and reinforcing human rights and gender equality on our bilateral agenda. This range of topics is reflected in the more than 20 agreements we celebrate today. We discussed the success of the Brazil-France Economic Forum, held yesterday in São Paulo, which had not convened presentially since 2019. We explored ways to expand and diversify trade, which reached 8.4 billion dollars last year and has the potential to grow even further. France is the third-largest investor in Brazil, with a strong presence in sectors such as hospitality, energy, defense, and high technology, which generate employment and income in our country. I presented to President Macron the new investment opportunities in infrastructure and sustainability facilitated by the Growth Acceleration Program (Programa de Aceleração do Crescimento - PAC) and the Neoindustrialization Program. I presented our commitment to combating inequalities as the cornerstone of Brazil's G20 Presidency. Within this context, we are launching a Global Alliance Against Hunger and Poverty. As we mark the 80th anniversary of the Bretton Woods institutions this year, President Macron and I concur on the imperative for the G20 to send a clear message advocating for global governance reform and the reinforcement of multilateralism. We also agree that it is time for the super-rich to pay their fair share of taxes, in line with the proposal for fair and progressive international taxation that Brazil advocates within the G20. As strategic partners, we exchanged views on the major dilemmas facing humanity. Across the globe, democracy is under the shadow of extremism. The denial of politics and the dissemination of "hate speech" are growing and concerning. For this reason, Brazil joined, in 2023, the French initiative Partnership for Information and Democracy and will continue to work to promote and protect the circulation of reliable information. It is time to promote a truly multilateral debate on the governance of artificial intelligence. It is unacceptable for a new divide to emerge, segregating wealthy nations, possessors of this technology, from developing countries where basic internet access remains precarious. I reiterated to President Macron Brazil's unwavering belief in dialogue and the defense of peace. My administration will continue working diligently to ensure that Latin America and the Caribbean remain a conflict-free zone, where dialogue and international law prevail. The Security Council's paralysis in response to the conflicts in Ukraine and Gaza is both alarming and inexplicable. The arguments questioning the obligation to comply with the recent ceasefire directive in Gaza during the month of Ramadan once again undermine the authority of the Council. Discussing a world governed by rules that are not collectively agreed upon signifies a regression of centuries, reverting back to the law of the jungle. Brazil categorically condemns all forms of anti-Semitism and Islamophobia. We cannot permit religious intolerance to gain ground among us. Jews, Muslims, and Christians have always lived in perfect harmony in Brazil, contributing to the construction of the modern nation we see today. Dear friend Macron, the Strategic Partnership with France embodies our joint endeavor to modernize and invigorate our economies, prioritizing sustainability and upholding human rights. I am convinced that, even after three intense days, there is still much work ahead of us. The future holds countless possibilities for our countries to cooperate, develop, and create together I look forward to seeing you again soon at the G20 Summit in Rio de Janeiro. Thank you very much.

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.

한국어로 읽기 Читать на русском Leer en español Gap In Deutsch lesen اقرأ بالعربية Lire en français What is required of member states between now and the Alliance's anniversary summit in Washington D.C. from July 9 to 11 75 years after its founding, NATO is facing an unprecedented set of challenges. The global security landscape is changing rapidly - from the ongoing war in Ukraine to crucial elections on both sides of the Atlantic. The summit in Washington D.C. will not only be a celebration of the past, but also a crucial marker for the future direction of the Alliance.  NATO is in troubled waters ahead of its 75th birthday - on the one hand, it is not 'brain dead' but offers protection to new members - on the other hand, the challenges are enormous in view of the war in Ukraine.  In the third year of the war, the military situation in Ukraine is serious. The military is coming under increasing pressure and European partners are delivering too little and too slowly.  Western support must be stepped up in order to influence the outcome of the war - Russia's future behavior towards its neighbors also depends on this.  Elections will be held on both sides of the Atlantic in 2024 - the US presidential election in November will be particularly decisive for NATO.  Two thirds of NATO member states are well on the way to meeting the two percent national defense spending target - Germany in particular must ensure that this target is met in the long term.  Now it is up to the leadership of larger countries such as Germany, France and Poland to develop traction in European defense in order to present a future US president with a resilient burden-sharing balance sheet and not leave Ukraine - and the European security order - in the lurch. Return to the core mission In the 75th year of its existence, the North Atlantic Defense Alliance has returned to its core mission: deterrence and defense against a territorial aggressor. NATO defense planning will be reviewed for its resilience before the NATO summit in Washington D.C. from 9 to 11 July 2024. What challenges does the Alliance face in its anniversary year and what needs to happen between now and the NATO summit to make the summit a success? The state of the Alliance ahead of the summit NATO is in difficult waters ahead of its 75th anniversary. On the one hand, it has proven since the beginning of the Russian war of aggression that it is capable of acting and not brain-dead. The two new members, Finland and Sweden, have given up their decades of neutrality because their populations are convinced that they are better protected against Russian aggression within the 30 allies, despite the excellent condition of their military. On the other hand, the admission process has taken much longer than was to be expected given the high level of interoperability of both countries with NATO standards. It took a good twenty months since the application was submitted for both flags to fly on the flagpoles in front of NATO headquarters in Brussels - the internal blockade by Turkey and Hungary is an expression of the Alliance's challenge to maintain a united front against the Russian threat. The Vilnius decision of 2023 to adhere to the previous two percent target for annual defense spending as a percentage of national gross domestic product (GDP) as a minimum figure in future and even to strive for additional spending beyond this is an enormous effort for the members of the alliance - and the biggest point of criticism from its sceptics. The implementation of this goal goes hand in hand with the further development of the defense posture, which was also decided in Vilnius. This includes new regional defense plans that provide for more combat-capable troops that can be deployed more quickly. The Washington summit will show how far the Alliance has come in this respect in a year - gaps between targets and actual capabilities would consequently have to be covered by investments that go beyond the two percent GDP contributions. There are also a number of other important events and factors that will influence the summit. Ukraine's military situation In the third year of the war, the military situation in Ukraine is serious. The fighting has largely turned into a war of position, with high casualties on both sides. The sluggish supply of support from the West means that the Ukrainians have to make do with significantly less than their defense needs. The European Union has failed to meet its promise to deliver one million 155-millimetre shells within a year (by March 2024), while the Russian war economy is producing supplies in multiple shifts. This imbalance is making itself painfully felt in the Ukrainian defense - due to the material deficit, nowhere near enough Russian positions can be eliminated and Russian attacks repelled, and Ukrainian personnel on the front line are depleted. President Volodymyr Zelensky is coming under increasing pressure to mobilize fresh forces for the front. As a result, the Ukrainian military is having to give up some of its terrain in order to conserve material and personnel and take up the most sustainable defensive position possible for the coming weeks and months until relief hopefully comes. comes.1 The Czech initiative to procure half a million rounds in 155 millimeter caliber and 300,000 rounds in 122 millimeter caliber on the world market for Ukraine by June 2024 is urgently needed - but it does not change the fact that Europe and the West are delivering too little and too late, despite the efforts that have been made so far and must continue to be made.2 Even if the US and Europe were to produce at full speed, it would only be half of what Russia produces and receives in support from its allies. Western support therefore urgently needs to be ramped up, as it is of crucial importance for the outcome of the war - and for Russia's future behavior in its neighborhood. Upcoming elections A series of landmark elections will take place on both sides of the Atlantic in the run-up to the summit. The US presidential elections in November 2024 will be of the greatest importance for the future direction of NATO. To date, the USA has been the largest single supporter of Ukraine in the military field; in addition, the USA has decisive weight in the coordination of concrete support from NATO countries - the German Chancellor has repeatedly oriented himself towards US arms deliveries when it comes to the question of German support or even made this a condition for his own commitments.3 While the Democrats in the US Congress continue to support aid packages to Ukraine, the Republican Party is dominated by voices around presidential candidate Donald Trump calling for this "European war" to be left to the Europeans and for domestic challenges to be addressed instead.4 This has led to a months-long blockade of further aid amounting to 60 billion US dollars in the US House of Representatives, which is led by a wafer-thin majority of Republicans. Ukraine urgently needs these supplies to avert shortages in ammunition and air defense. At the time of publication of this Monitor, a release of the funds is not in sight. In terms of foreign policy, there is a bipartisan consensus that the real danger for the USA lies in a systemic conflict with China. Among Republican supporters, impatience with the continuation of the war is increasing, while approval for further support for Ukraine is decreasing. The mood among the general population is similar: between April 2022 and September 2023, the view that the US is doing "too much" for Ukraine increased (from 14% to 41%).5 On the European side, the most important milestone for further support for Ukraine is the election of the new European Parliament from 6 to 9 June 2024. Since the outbreak of the war, approval ratings in the EU for support for Ukraine have been remarkably stable.6 Even in the face of a sometimes difficult economic environment in the 20 eurozone states, approval ratings for the continuation of aid to Ukraine have only fallen slightly in a few EU states - starting from a high level. While the broad center of the EP groups (EPP, S&D and Renew) are united in their support for Ukraine and the transatlantic alliance, the foreign and security policy positioning of the far-right parties of the ECR and ID groups and the non-attached groups is not always clear. According to Nicolai von Ondarza and Max Becker from the German Institute for International and Security Affairs (SWP), while the ECR parliamentary group "largely plays a constructive and compatible role" in foreign and security policy, including with regard to NATO and Ukraine, parts of the ID parliamentary group such as the French Rassemblement National (RN) or the German AfD either voted against resolutions critical of Russia in parliament or abstained.7 According to Olaf Wientzek from the Konrad Adenauer Foundation, both the ECR and ID can expect significant seat gains in the upcoming EP elections.8 In terms of numbers, the ID and ECR groups are competing with Renew to be the third strongest force behind the EPP and S&D - according to current estimates, they all have between 80 and 90 seats. It would be conceivable for the currently non-attached Hungarian Fidesz (currently 13 MEPs) to join both the ECR and ID. In view of the increasing co-decision role of parliament - including for further Ukraine support packages - it is important for the EU how these parties and party alliances position themselves in terms of foreign and security policy.9 In fact, parties in the ID faction represent Russian propaganda within Europe in order to exert influence through disinformation, subversion and mobilization and thus undermine the social consensus with regard to Ukraine and NATO.10 This may also become apparent in individual elections, such as in the eastern German states in September 2024. Economic pressure - prioritizing defence? Global inflation averaged 6.2% in 2023. Current forecasts assume falling inflation rates in the Euro-Atlantic region over the course of 2024 to 2026.11 At the same time, however, global economic growth of 3.1% (2024) and an expected 3.2% (2025) compared to the previous year is well below the projections for the post-pandemic recovery.12 The combination of higher consumer prices and slower economic recovery continues to pose the risk of declining approval for strong support within the populations of the European Ukraine-supporting states. Protests in the face of announcements of cuts in various policy areas have demonstrated this in Germany and Europe over the past year. This does not make it easy to prioritize defence spending from a national perspective for the coming years. In the case of Germany, the defense budget is competing with all other departments in the budget negotiations for 2025, which are calling for an increase in social spending and investments in view of the current burdens on the population.13 At the same time, inflation does not stop at military procurement. As early as 2022, Germany therefore had to cancel a number of planned procurement projects due to increased costs.14 The cost increase also affects the maintenance of existing equipment and personnel. Even if Germany nominally reaches the two percent target in 2024, the increases in national defense spending within the Alliance will actually be lower when adjusted for inflation. Systemic threat from China The increasing systemic confrontation with China is not only identified in the US national security strategy; for the first time, China was classified as a concrete threat by NATO in its Strategic Concept of 2022. China is threatening to annex the democratically governed island of Taiwan to its territory, possibly by military means.15 This would have enormous global escalation potential and far-reaching effects on important international sea routes. Concerns about free trade routes are leading to a convergence of threat perceptions on both sides of the Atlantic. As a result, many European partners are rethinking their relations with China - as is Germany in its China strategy. China's global ambition to restructure the existing multilateral order according to its own ideas does not only affect Taiwan's independence. China's supremacy in key technical and industrial sectors as well as critical infrastructure, rare raw materials and supply chains would lead to a deepening of existing dependencies. Because the USA sees China as a systemic threat to international order, freedom and prosperity, it has been refocusing its efforts since President Obama took office. European NATO partners are therefore expected to invest in Europe's security themselves. Only greater burden-sharing by the Europeans would enable the USA to focus its attention more strongly on the Indo-Pacific. Challenges in new dimensions In addition to the geopolitical challenges outlined above, NATO designated space in 2019 as an additional battlefield to the existing fields - land, air, sea and cyberspace - due to its increased importance.16 In recent decades, China has rapidly expanded its presence in space in both the civilian and military sectors.17 The war in Ukraine has once again underlined the importance of satellite-based intelligence and the significance of connected weapons for combat. In addition, the effects of man-made climate change, which also have an impact on security in the Euro-Atlantic alliance area, have recently become increasingly apparent. At the 2021 NATO summit in Brussels, the Alliance set itself the goal of becoming a leading international organization in understanding and adapting to the effects of climate change on security.18 To this end, it adopted the "Climate Change and Security Action Plan". The NATO countries' homework A successful NATO summit in the anniversary year 2024 would send an important signal of the unity and defense capability of the Euro-Atlantic alliance in the face of Russia's breach of international law in a time of systemic competition. NATO member states are confronted with a complex threat situation ahead of the next summit in Washington D.C.. These give rise to various requirements: More NATO members must reach the two percent target In financial terms, the Washington summit will probably be considered a success if a substantial number of member states reach the two percent target. In 2023, this was the case for eleven countries (Poland, USA, Greece, Estonia, Lithuania, Finland, Romania, Hungary, Latvia, UK, Slovakia).19 In February 2024, NATO Secretary General Jens Stoltenberg announced on the sidelines of a meeting of the Ukraine Contact Group in Brussels that 18 countries would reach the target by the summit.20 Germany, the Netherlands, Czech Republic, Bulgaria, Denmark, Albania and North Macedonia are the countries that have recently reached the target.21 The newest NATO member, Sweden, increases the number to.19 Achieving the two percent target for defense spending is not an end in itself. The discussion within NATO as to whether one should deviate from the numerical contribution target and instead assess the actual capabilities contributed by the individual member states is not a new one. Amounts of money to measure collective defense remain the simplest way to approximate burden-sharing within NATO - and until all countries have achieved this, it will remain the relevant metric in the political discussion. From NATO's perspective, the gap between the desired capabilities listed in the defense plans and the troop contingents registered by the member states has widened steadily of late. In reality, there is no way around increased defense spending in order to adequately equip the required personnel, who would have to be subordinate to the NATO Supreme Allied Commander (SACEUR) in an emergency - from a military perspective, the demand is therefore increasingly being made that two percent should be the minimum target. In order to achieve all the required capabilities, larger contributions are needed from all nations. Due to the threat situation and political pressure, it seems possible that 21 countries, i.e. two thirds of the member states, will meet the two percent target by the NATO summit in Washington. In addition to the 19 countries mentioned above, these are France22 and Montenegro.23 Turkey wants to achieve the target by 2025,24 although this commitment is uncertain in view of the poor economic situation. Italy wants to spend two percent within the next two years25, while Norway should reach the target by 2026 according to Prime Minister Jonas Gahr Stoere26. Slovenia has set 2027 as the target date for meeting the commitments27, while Portugal, Spain and Belgium have set 2030 as the target date. Canada (1.38%), Croatia (1.79%) and Luxembourg (0.72%) have not provided any information. Reduce bureaucracy, speed up procurement In material terms, the main aim is to convert the increased defense spending into "material on the farm" in a timely manner. To achieve this, the planning and procurement processes in many European countries need to be accelerated, made less bureaucratic and at the same time better coordinated. The common European defense will require massive improvements in the coming years. Some announcements have already been made during the pre-election campaign for the European Parliament; here, too, what counts is how the announcements are implemented after the election. Progress must also be made in the area of research and development in order to invest scarce resources in state-of-the-art systems. The question of joint development versus off-the-shelf procurement of available equipment will also have to be decided in many cases. A rethink in European procurement is essential for this. This is primarily the responsibility of the European nation states: long-term contracts with the arms industry must be concluded urgently, cooperation initiated and loans granted for production. Strengthening EU-NATO cooperation and NATO partnership policy NATO's Strategic Concept and the EU's Strategic Compass show a strong convergence in threat analysis. The EU has effective starting points and tools, particularly for cross-cutting challenges such as combating climate change, the threat of hybrid attacks and the protection of critical infrastructure. With the European Peace Facility and other instruments, a concrete institutional framework has been created to strengthen the European pillar in NATO and contribute to fairer burden-sharing on both sides of the Atlantic. The EU and NATO should further intensify the exchange on common challenges and utilize the strengths of the respective forum. In addition to the partnership with the EU, the member states should continue to promote NATO's partnership policy. 2024 marks the 25th anniversary of NATO's eastward enlargement and the 30th anniversary of NATO's Partnership for Peace program. In view of a global confrontation with Russia and an increasingly aggressive China, it is worth taking a look at the instruments that were devised during the Cold War with a view to 'like-minded' partners outside the Alliance. NATO's partnership policy - adapted to the new circumstances - is an ideal instrument for forging close ties with democratic nations in the Indo-Pacific that share NATO's interests and values.28 Investing in interoperability NATO must continue to act as a "guardian of standards" in favor of military interoperability. This year's major exercises as part of "Steadfast Defender 2024" and "Quadriga 2024" will show, among other things, which weaknesses still exist in the various dimensions of interoperability in practical tests. In addition, care must be taken to ensure that military innovations from pioneers within NATO do not leave the Alliance's other allies behind in technical terms. This does not mean that technological progress is slowed down in a race to the bottom; instead, member states with lower expenditure on research and development must be enabled to catch up more quickly - especially in areas such as space technology and the use of artificial intelligence in warfare, it is becoming increasingly important to avoid the technological gap between the members of the alliance. What does this mean for Germany? The Federal Chancellor's announcement on February 27, 2022 that the establishment of the 100 billion euro special fund heralded a turning point in Germany's security policy was seen everywhere in Germany and within the Alliance as the right decision in view of Russia's aggression. In his speech, Olaf Scholz emphasized that Germany was not seeking this expenditure to please allies. The special fund serves national security. However, the acute threat to European security remains and although the NATO target will be reached in 2024, the future of Germany's defense budget is anything but certain. However, investment in the Bundeswehr's defense capabilities is essential to contribute to credible deterrence. The foundation for securing sustainable defense spending in Germany's medium-term financial planning must be laid now, otherwise two percent - depending on the spending status of the special fund - may already be unattainable in 2026, when the regular federal budget is once again used as the basis for calculating the NATO target. As the budget for 2025 will not yet have been decided at the NATO summit in July 2024, the Chancellor will need to make a credible commitment to the allies that Germany will not fall behind. The Bundeswehr will also have to stretch itself enormously in order to achieve the troop levels announced for the new defense plans. The number of servicewomen and men is currently stagnating at just under 182,000. 29 In order to be able to provide the brigade in Lithuania in addition to the nationally required forces and to meet the division commitment for 2026, the Bundeswehr must come significantly closer to the target figure of 203,300 active servicewomen and men by 2027.30 The questions of how many of the 182,000 soldiers available on paper are also willing to become part of the brigade in Lithuania and how many of the total number are actually deployable in an emergency have not even been asked at this point. What counts now - political leadership The security situation in Europe is serious and NATO has no shortage of challenges in its 75th year of existence. It is in good shape to meet these challenges and has welcomed two strong nations into its ranks, Finland and Sweden. However, it is now important not to let up in the efforts that have been agreed. A united external stance is key here, as the current NATO Secretary General Jens Stoltenberg never tires of emphasizing. His successor will have to continue this. Even more important, however, are actual, concrete and substantial actions - the English expression "put one's money where one's mouth is" must be the leitmotif of all European NATO nations in view of the US elections at the end of the year, regardless of the outcome. Ultimately, political leadership is what counts within the alliance in virtually all the areas mentioned - and it matters now. Many smaller countries in Europe look to the larger member states such as Germany, France and Poland for leadership. This applies both in terms of sustainable compliance with the two percent target and when it comes to political agreement and cooperation in the field of armaments. Here, the larger states have a role model and leadership function that can develop traction and pressure on the Alliance as a whole. This political leadership will be more important than ever for the European representatives in NATO in 2024. At the moment, however, it seems questionable whether the current leadership vacuum can be filled before the NATO summit. Germany, France and Poland have not yet been able to develop a jointly coordinated stance that could have a positive effect. It is therefore also questionable whether the NATO summit will be able to send important signals beyond the minimum objectives. The US presidential election hangs over everything like a sword of Damocles - the erratic leadership style of another US President Donald Trump could be difficult to reconcile with the strategic goals of the alliance. Imprint This publication of the Konrad-Adenauer-Stiftung e. V. is for information purposes only. It may not be used by political parties or election campaigners or helpers for the purpose of election advertising. This applies to federal, state and local elections as well as elections to the European Parliament. Publisher: Konrad-Adenauer-Stiftung e. V., 2024, Berlin Design: yellow too, Pasiek Horntrich GbR Produced with the financial support of the Federal Republic of Germany. References 1 Reisner, Markus: So ernst ist die Lage an der Front. In: Streitkräfte und Strategien Podcast, NDR Info, 12.03.2024, online unter: https://ogy.de/0ne7 2 Zachová, Aneta: Tschechische Initiative: Munition für Ukraine könnte im Juni eintreffen. Euractiv, 13.03.2024, online unter https://ogy.de/gofh 3 Besonders eindrücklich bleibt das Beispiel der Lieferung schwerer Waffen in Erinnerung: so rang sich Bundeskanzler Scholz zur Freigabe der Lieferung Leopard-Panzer deutscher Fertigung erst nach amerikanischer Zusage von Abrams-Panzern von militärisch zweifelhaftem Mehrwert durch. 4 Dress, Brad: Ramaswamy isolates himself on Ukraine with proposed Putin pact. In: The Hill, 01.09.2023, online unter: https://ogy.de/c9ow 5 Hutzler, Alexandra: How initial US support for aiding Ukraine has come to a standstill 2 years later. ABC News, 24.02.2024, online unter https://ogy.de/h0z6 6 Grand, Camille u.a.: European public opinion remains supportive of Ukraine. Bruegel, 05.06.2023, online unter https://ogy.de/ipbu 7 von Ondarza, Nicolai und Becker, Max: Geostrategie von rechts außen: Wie sich EU-Gegner und Rechtsaußenparteien außen- und sicherheitspolitisch positionieren. SWP-aktuell, 01.03.2024, online unter: https://ogy.de/a62v 8 Wientzek, Dr. Olaf: EVP-Parteienbarometer Februar 2024 - Die Lage der Europäischen Volkspartei in der EU. Konrad-Adenauer-Stiftung, 06.03.2024, online unter https://ogy.de/fv9b 9 s. Footnote 7 10 Klein, Margarete: Putins „Wiederwahl“: Wie der Kriegsverlauf die innenpolitische Stabilität Russlands bestimmt. In: SWP-Podcast, 06.03.2024, online unter: https://ogy.de/7i5s 11 Potrafke, Prof. Dr. Niklas: Economic Experts Survey: Wirtschaftsexperten erwarten Rückgang der Inflation weltweit (3. Quartal 2023). ifo-Institut, 19. Oktober 2023, online unter: https://ogy.de/wunq 12 Umersbach, Bruno: Wachstum des weltweiten realen Bruttoinlandsprodukts (BIP) von 1980 bis 2024. Statista, 07.02.2024, online unter: https://ogy.de/5ohz 13 Petersen, Volker: Ampel droht Zerreißprobe: Vier Gründe, warum der Haushalt 2025 so gefährlich ist. N-tv, 07.03.2024, online unter: https://ogy.de/9fcl 14 Specht, Frank u.a.: Regierung kürzt mehrere Rüstungsprojekte. Handelsblatt, 24.10.2022, online unter: https://ogy.de/71z3 15 Vgl. Wurzel, Steffen u.a.: Worum es im Konflikt um Taiwan geht. Deutschlandfunk, 12.04.2023, online unter https://ogy.de/ddc1 16 Vogel, Dominic: Bundeswehr und Weltraum - Das Weltraumoperationszentrum als Einstieg in multidimensionale Operationen. Stiftung Wissenschaft und Politik, 01.10.2020, online unter: https://ogy.de/c7m1 17 Rose, Frank A.: Managing China‘s rise in outer space. Brookings, letzter Zugriff am 18.09.2023, online unter https://ogy.de/374g 18 Vgl. Kertysova, Katarina: Implementing NATO’s Climate Security Agenda: Challenges Ahead. In: NATO Review, 10.08.2023, online unter: https://ogy.de/ho94 19 Vgl. Statista: Defense expenditures of NATO countries as a percentage of gross domestic product in 2023. Abgerufen am 18.09.2023 online unter https://ogy.de/wtsb 20 Neuhann, Florian: Ukraine-Kontaktgruppe in Brüssel: Eine Krisensitzung - und ein Tabubruch? ZDF heute, 14.02.2024, online unter https://ogy.de/rezf 21 Mendelson, Ben: Diese Nato-Länder halten 2024 das Zwei-Prozent-Ziel ein. Handelsblatt, 15.02.2024, online unter https://ogy.de/quiu 22 Kayali, Laura: France will reach NATO defense spending target in 2024. Politico, 15.02.2024, online unter https://ogy.de/7vdd 23 https://icds.ee/en/defence-spending-who-is-doing-what/ 24 Vgl. Daily Sabah: Türkiye’s defense spending expected to constitute 2% of GDP by 2025. 21.10.2022, online unter https://ogy.de/xtbr 25 Vgl. Decode39: Defence spending: Rome’s path towards the 2% target. 20.07.2023, online unter https://ogy.de/c0g3 26 Waldwyn, Karl: Norwegian defence chief sounds alarm and raises sights. In: Military Balance Blog, International Institute for Strategic Studies, 23.06.2023, online unter https://ogy.de/8b4a 27 Vgl. Army Technology: Russian threat driving Slovenia’s defence budget increase. 02.08.2022, online unter https://ogy.de/c5y7 28 Vgl. Kamp, Dr. Karl-Heinz: Allianz der Interessen. In: IP, Ausgabe September/Oktober 29 Vgl. Bundeswehr. Stand: 31.07.2023, abgerufen am 19.09.2023, online unter: https://ogy.de/m69j 30 Bundeswehr: Ambitioniertes Ziel: 203.000 Soldatinnen und Soldaten bis 2027. Online unter https://ogy.de/3pzs

한국어로 읽기 Читать на русском Leer en español Gap In Deutsch lesen اقرأ بالعربية Lire en français It has long been held that embassies should be treated as “off-limits” to other nations. Yet in a single week, two governments – both long-established democracies – stand accused of violating, in different ways, the laws surrounding foreign diplomatic missions. First, on April 1, 2024, Iran’s embassy in Damascus was bombed, presumably by Israel, killing several high-ranking commanders of the Quds Force of Iran’s Islamic Revolutionary Guard Corps. Then, on April 5, Ecuadorian police forced their way into the Mexican Embassy in Quito to arrest a former vice president of Ecuador who was seeking political asylum. Both actions have led to claims of international law violations and accusations that the Vienna Convention, which establishes the immunity of diplomatic missions, was contravened. As someone with a fair amount of knowledge of embassy life – I have served as Chile’s head of mission in China, India and South Africa and coedited The Oxford Handbook of Modern Diplomacy – I believe the two incidents are of greater concern than much of the international community appears to be viewing them. Contrary to the famous quip from late businessman and presidential candidate Ross Perot, embassies are not just “relics of the days of sailing ships.” Rather, in an increasingly complex world where geopolitical conflict, mass migrations, pandemics and climate change require careful and stable diplomatic management, any incidents that erode the sanctity of embassy rules could have serious negative consequences. In short, they make for a more dangerous world. Curious indifference to embassy attack Of the two recent incidents, the Iranian embassy bombing is the more serious, as it involved the loss of life and resulted in warnings of retaliatory attacks. Yet, Western countries, leaders of which often voice concern over upholding the so-called “rules-based order,” have been reluctant to condemn the act. It was notable that the three liberal democracies on the U.N. Security Council – the United States, the United Kingdom and France – all refused to condemn the strike on Iran’s embassy when the issue came up before them. Israel, while not officially acknowledging responsibility, argued that the Iranian ambassador’s residence was not really a diplomatic venue but “a military building … disguised as a civilian building.” As such, to Israel it was a perfectly legitimate target. But by this logic, nearly all embassies would be seen as fair game. Almost by definition, the vast majority of embassies – particularly of the larger countries – are populated with significant numbers of military and intelligence personnel. To suggest that for that reason embassies should lose their diplomatic immunity and become legitimate targets for armed attacks would bring the whole edifice of the Vienna Convention crashing down. And with it would come the structure on which worldwide formal diplomatic interactions are based. Bedrock diplomatic principles The case of Ecuador, though less serious because it did not involve loss of life, is a bit more complex and demands some unpacking. At the center of the diplomatic spat between Ecuador and Mexico is former Ecuadorian Vice President Jorge Glas, who served four years behind bars following a 2017 conviction on corruption charges. Glas is now facing trial on different charges, prompting his December 2023 application for asylum at the Mexican Embassy. Mexico accepted the request and conveyed this to the Ecuadorian government. The latter justified its decision to send police into the Mexican embassy on the grounds that it believes Glas cannot be granted political asylum as he is a convicted felon. There is some basis to this claim: Under the Organization of American States’ Convention on the Right to Asylum of 1954, political asylum cannot be given to convicted felons unless the charges behind such conviction are of a political nature. But at the same time, Article 21 of the Vienna Convention states that diplomatic missions enjoy full immunity and extraterritoriality, meaning the host government does not have the right to enter an embassy without the authorization of the head of mission. Ecuador argues that Mexico abused its diplomatic immunity, leaving it no option other than to send police in. Yet, here a crucial distinction needs to be made. Diplomatic immunity and the extraterritoriality of foreign missions are bedrock principles of the Vienna Convention. Political asylum is a separate matter that should be handled on its own. As such, if the Ecuadorian government considered Glas not to qualify for political asylum, it could have attempted to legally block the move or refuse safe passage for the asylum-seeker to exit the embassy and leave the country. Mexico would have strong grounds to counter such measures, however, as according to the Convention on the Right to Asylum of 1954, it is up to the asylum-granting state to decide whether the case is politically motivated. Implications for the future Regardless of the merits of the asylum case, sending in the equivalent of a SWAT team to storm the embassy represents a deliberate violation of diplomatic norms. There is a long history of Latin America politicians seeking asylum who spent many years holed up in embassy buildings because governments would not grant them safe passage – the most notable being Peruvian leader Víctor Raúl Haya de la Torre, who spent five years at the Colombian Embassy in Lima. Yet, with a few exceptions, not even in the darkest hour of Latin America’s military dictatorships in the 1960s and 1970s were police permitted to storm into embassy buildings to arrest asylum-seekers. And this highlights what makes Ecuador’s actions especially worrisome. Precisely because of Latin America’s problems with political instability and a tradition of military coup, the laws surrounding political asylum and diplomatic immunity are necessary. Undermining the Vienna Convention in the way Ecuador has risks setting a precedent that other governments might be tempted to follow. Political asylum in Latin America has traditionally worked as a safety valve, allowing deposed leaders to get themselves out of harm’s way. Weakening the diplomatic structures in place supporting asylum will make the handling of democratic breakdowns more difficult. It also risks exacerbating regional disagreements. We are already seeing this with Mexico breaking relations with Ecuador as a result of the embassy raid. Making diplomacy more difficult Of course, embassy violations are not unprecedented. Guatemala’s dictatorship attacked the Spanish Embassy in Guatemala City in 1980, killing several asylum-seekers, including a former vice president. And Uruguay’s military government sent security forces into the Venezuelan Embassy in Montevideo in 1976 to arrest a left-wing militant who had sought asylum, leading to the breakdown of diplomatic relations between the two countries. But those events in the relatively distant past were widely and rightly condemned at the time as the product of authoritarian regimes with little regard for international conventions. The comparatively relaxed international attitude to the embassy violations by Israel and Ecuador reflects, I believe, a failure to grasp the significance of eroding diplomatic immunity and norms. As global challenges increase, embassies and their representatives become more important, not less so. If the takeaway from the two latest embassy incidents is that the protection of diplomatic premises can be secondary to whatever is politically expedient on any given day, then it will be of great detriment to the management of international relations. Diplomacy will become much more difficult. And given the enormity of the challenges the world faces today, that is the last thing any country needs.

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.