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Israel’s parliament passed a law on July 24, 2023, that limits the Supreme Court’s ability to rein in government actions, part of a broader proposal by Prime Minister Benjamin Netanyahu’s government to strengthen the power of the country’s executive branch. The legislation has divided the country for months, sparking massive demonstrations. Opponents say the law threatens democracy; supporters argue it protects the will of the electoral majority. Netanyahu has been a political force and survivor in Israeli politics since the 1990s. Yet it makes sense to assess his career now in light of his recent hospitalizations, the latest coming in the middle of the court reform crisis. As a scholar of Middle Eastern politics, I think that Netanyahu’s long-term legacy will be based on three major developments. He has shifted Israeli politics rightward. He has stymied the emergence of a Palestinian state. He has increased Israel’s links to nondemocratic foreign governments. From democracy to theocracy Netanyahu served as prime minister from 1996 to 1999. He returned to power from 2009 to 2021, and once again in 2022. A country once known for left-leaning politics now has a right-wing government dominated by Jewish religious nationalists who spearheaded the efforts to curb judicial checks on executive power. Netanyahu began his first term as prime minister in 1996 with two main qualities – experience living and working in the U.S. and a record focused on Israeli’s military security. The first quality meant he understood American politics and interest groups. That helped Israel keep and enhance its historic strong support from the U.S. government. The second set him up for political success in a country in which the army is a key – and revered – institution. Massive U.S. foreign aid and military assistance over many years, along with Netanyahu’s political backing, have ensured that Israel’s army is far more powerful and well equipped than the armed forces of any other nearby country. Netanyahu typically portrayed himself as the only leader who could keep his country and its economy secure. Like other elected strongmen, he and his allies have gained support from, and encouraged, right-wing nationalists and divisive politics. With Netanyahu, that meant allying himself strongly with Jewish settlers – many of them Orthodox – in the West Bank in what international law considers to be occupied Palestinian territory. Because Orthodox Jewish families tend to be larger than more secular ones, Israel’s demography has favored politicians and voters who skew towards Netanyahu’s consistent support for the settler movement and broader focus on security. The longer Netanyahu has held power in Israel, the more allegations of corruption and criminal conduct he has faced. His personal legal vulnerability has likely reinforced his autocratic tendencies. Netanyahu’s 2022 government demonstrated its authoritarian tilt with the push for the judicial reform bill that will hobble the Israeli judiciary’s capacity to review legislation and government action. This reform appeals to important sectors of Netanyahu’s supporters who see the Supreme Court’s power as an inappropriate secular check on Israel’s increasingly pro-settler and pro-Orthodox government. But it has been divisive: The mass protests against the reform have even spread to prominent military personnel. Today’s Israel is marked by growing splits between secular, urbanized citizens near the Mediterranean coast and Orthodox and other settlers in or near the West Bank. The two groups have different visions for Israel’s future, with the latter citizens pushing the country in a more theocratic direction. This divisive battle over Israel’s nature owes a great deal to Benjamin Netanyahu’s leadership. Distancing Palestinians Netanyahu has long pledged to avoid compromising with Palestinians over control of territory and security in the West Bank and Gaza, areas under Israeli military control since 1967. And he allowed rapid expansion of Jewish settlements in the West Bank. He has rarely wavered from these two policies. Among his most tangible legacies is the physical barrier now separating West Bank Palestinians from Israelis, which gives Israeli authorities great control over how West Bank Palestinians enter Israel. The barrier has kept Israeli Jews from much contact with Palestinians other than during military service. This physical separation and a strong Israeli military presence have decreased Palestinian attacks within Israel and increased misery in Palestinian-controlled areas, for example, by making travel into Israel and other countries difficult. Netanyahu’s approach has minimized pressure on Jewish Israelis to make a final deal that would trade occupied land for a broader peace based on separate Israeli and Palestinian states. It has also deprived Palestinians of some basic liberties and opportunities, particularly in Gaza, which human rights activists have called an “open-air prison.” In fact, Netanyahu has used his formidable military to strike hard when he deems necessary in Gaza, the area between Israel and Egypt that Israel unilaterally returned to Palestinian control in 2004. Hamas, a Palestinian group that advocates military action against Israel, is in charge of Gaza. Reflecting the sentiments of his right-wing base, Netanyahu has had a generally consistent response to Hamas, and Palestinians more generally. Israel, he says, awaits Palestinian consensus that Israel is a Jewish state, with Jerusalem as its capital, and with no right for Palestinians to return to their pre-1948 homes in Israel. Many Palestinians find these conditions unfair, particularly as a precondition to negotiations. Coupled with the Netanyahu government’s vast expansion of Jewish settlements, many veteran observers doubt that a two-state solution with Israeli and Palestinian states remains possible. Reshaping Israel’s alliances Bolstering the Israeli right and undermining Palestinian statehood have accompanied efforts by Netanyahu to reshape Israel’s foreign relations. Those efforts stem in part from his relentless drive to curb Iran’s influence in the Middle East. Tehran’s leaders are unremittingly hostile toward Israel. Netanyahu has played up this hostility to domestic and international audiences, even urging the U.S. to attack Iran. The prime minister’s anti-Iranian campaign connects to strengthening ties to other countries, whether or not they are democratic, with an interest in combating Tehran and its funding of pro-Iranian militant groups, which encourage anti-Israeli politics and attacks in many Arab countries. Shared security goals, perhaps more than anything else, explain the significant willingness of the United Arab Emirates and several other Arab countries to establish diplomatic ties with Israel through the Abraham Accords of 2020. More generally, Netanyahu’s long time in office and his willingness to fan racist flames have endeared him to other rulers who embrace authoritarian or divisive tactics, such as Russian leader Vladimir Putin, Hungarian Prime Minister Viktor Orbán and former U.S. President Donald Trump. Yet Netanyahu’s policies are also causing major cracks in support for Israel from its central ally, the U.S. In recent years, Israeli and American Jews have diverged increasingly on the ethics and importance of Palestinian autonomy. In turn, organizations working with the Israeli government have tried to silence pro-Palestinian voices in the U.S., often by calling them anti-Semitic. Moreover, Netanyahu’s authoritarian tendencies and his government’s rightist and theocratic tendencies have amplified American voices of those who have been skeptical that Israel is democratic and who have called for reductions in U.S. support. Netanyahu has helped reshape Israel and the broader world in profound ways. It’s clear that the country’s military security and cooperation with major Arab states in the Middle East have expanded. But I see the darker side of the prime minister’s emphasis on military and security solutions in the erosion of hopes for Palestinians and challenges for Israel to remain democratic.

A few years ago, the BRICS grouping – Brazil, Russia, China, India and South Africa – had lost salience because three of its members were in severe economic difficulty. Brazil, Russia and South Africa are primarily natural resource exporters and were badly affected by the global commodity price bust of 2014. Russia’s invasion of Ukraine has now given BRICS a new geopolitical salience as the members and their respective allies respond to events. In the emerging world order there is also now increased demand to join BRICS, in part as a countervailing power to “the west”. Argentina, Saudi Arabia and lately, Ethiopia, have expressed strong interest in becoming members. I have researched the political economy of globalisation in Africa over the last 30 years. I have specifically examined the scramble for Africa by the US and China, South Africa’s involvement in BRICS, the nature of BRICS engagement with Africa and market and resource access by BRICS in southern Africa. It would be a major coup for Ethiopia if it were able to join the grouping as it would raise its global profile, allow it to interact and coordinate more closely with some of the major world powers and move the discourse beyond the recent civil war there, potentially enabling it to attract more investment. Opportunities Ethiopia has cited its key role in founding the African Union and other institutions, along with its national interest as grounds for seeking BRICS membership. In my opinion, there are five key reasons why Ethiopia would want to join the grouping. Deteriorating relations with western powers: Ethiopia has historically depended on substantial western support through aid and security cooperation. But its relations with the west have soured as a result of the civil war, in which human rights violations were reported. Joining BRICS would make the country more geostrategically important, perhaps encouraging western powers to downplay human rights concerns, as they have in the past in the interests of “realpolitik”. Alternative growth frontier: Ethiopia remains one of Africa’s fastest growing economies, at over 5% a year. It has developed strong economic ties with China in recent decades. Similarly, Indian companies have been acquiring land in Ethiopia. China and India are now Africa’s two largest single trading partners (not counting the European Union as a single entity). Joining BRICS would signal openness and lead to greater cooperation through platforms like the business council and forum. It could also add impetus to the “resurgent Ethiopia” narrative, an image the authorities are keen to promote to attract investments. Negotiations over finance: The Ethiopian government is negotiating a financial package with the International Monetary Fund. Joining BRICS might give it greater leverage. Western powers, which largely control the IMF, might be more wary of alienating Ethiopia in BRICS and driving it further “into the arms” of China. The creation of a new BRICS currency, to challenge US dollar hegemony, is on the agenda and its existing Contingency Reserve Arrangement already partly competes with the IMF. Non-interference policy: BRICS powers rhetorically largely subscribe to non-interference in the sovereign affairs of other states, with the qualification that President Lula de Silva of Brazil talked about “non-indifference” to human rights when he was previously in power and Russia has violated the principle through invasions and election interference, amongst others. Ethiopia may be interested in the political cover that joining BRICS would provide. The Russian invasion of Ukraine has received political cover from China, and some would argue from South Africa. The Ethiopian government may be keen to avoid human rights governance conditions attached to new loans, aid or debt relief from the west. A prime minister seeking new friends: BRICS membership would help restore the tarnished image of Prime Minister Abiy Ahmed, who is a Nobel peace prize recipient. Ahmed was heavily criticised as a war-monger during the civil war in Ethiopia’s Tigray region. Joining the BRICS club would show that his government is still politically acceptable to some major world powers. The risks There would of course be risks in Ethiopia joining the BRICS. Western powers might perceive it as drifting into the alternative geopolitical bloc or alignment, which could reduce aid and investment from them. But this could also have advantages for Ethiopia’s relations with the west by making the country more geo-strategically important. Based on past experience, Ethiopia would be an unlikely addition to the grouping. The last and only country to be admitted after the group’s founding was South Africa in 2010. Other countries have applied and have not been admitted. BRICS now operates in what is sometimes described as a BRICS-plus format with countries such as Egypt already members of its development bank and all African leaders invited to the up-coming BRICS’ summit in South Africa. Ethiopia’s economy, estimated at around US$126.78 billion in 2022, is less than half the size of South Africa’s US$405.87 billion. South Africa is by far the smallest economy in the BRICS. But in some ways Ethiopia might be seen as a more representative African country in BRICS than South Africa. Ethiopia hosts the African Union headquarters and United Nations Economic Commission for Africa. Its capital, Addis Ababa, is sometimes described as the continent’s diplomatic capital. The outcome of Ethiopia’s application will likely be known after the next summit in August.

The tentative merger agreement announced in June between the PGA Tour, DP World Tour, and LIV Golf sent shockwaves through the sporting world. The commercial operations of the three organizations are set to form a “new collectively owned” entity exclusively funded by Saudi Arabia’s Public Investment Fund (PIF). The PIF will reportedly acquire a significant minority stake in the yet-to-be-named for-profit company by injecting an estimated $3 billion into it.  The controversial merger deal, which some have described as “Saudi Arabia’s de facto takeover of professional golf,” has provoked two separate inquiries in the United States Senate and is seen as the latest effort by the kingdom to implement its ambitious tourism and investment strategy. In fact, sport is but one of 13 “strategic” sectors identified by Saudi Arabia’s sovereign wealth fund (SWF). Yet succumbing to the temptation to focus narrowly on how the kingdom’s PIF has upended the professional world of golf risks missing the bigger picture: Gulf ruling elites, like their counterparts across the globe, are leveraging their SWFs to proactively drive nation-building projects, fortify strategic international partnerships, and assume a more prominent role on the world stage. When the COVID-19 crisis struck, Gulf SWFs snapped up stakes in distressed Western companies, capitalizing on market gyrations. As the world struggles to exit from the worst of the pandemic, Gulf SWFs have entered a new phase of dealmaking. Benefiting from massive capital injections derived from higher oil revenue, they have been spending vast sums at home and abroad. The rise of Gulf SWFs The number of SWFs around the world has grown steadily over the past two decades, from 62 funds in 2000 to 176 in 2023. During that time, SWF assets under management (AUM) have ballooned from a mere $1 trillion to $11.36 trillion. Four regions dominate the landscape in terms of the number of SWFs and aggregate assets: Europe (specifically Norway and countries in Central and Eastern Europe), North America, Asia-Pacific (specifically China), and the Middle East, with the latter two regions accounting for four-fifths of global assets. For resource-rich countries such as Gulf oil and natural gas producers, SWFs have emerged as promising tools to save for future generations, mitigate the effects of outsized economic shocks, and/or be deployed as reserve investment and strategic development funds to spend on human, natural, social, and physical capital. The Gulf is currently home to about 20 SWFs, with at least one such fund originating from each of the six Gulf Cooperation Council (GCC) countries. The various Gulf SWFs differ in terms of the size of their AUMs, investment strategies, as well as approaches to diversification, mandates and objectives, and governance structures. However, they share at least two broad similarities. The first is that the primary source of their funding is surplus revenues generated from the export of commodities, namely oil and gas. Second, they operate under the guidance and oversight of the government or ruling family. Gulf SWFs have deep pockets — collectively, they manage around $3.7 trillion. According to the Sovereign Wealth Fund Institute, the region’s seven largest funds have combined assets of over $3.2 trillion, amounting to about 40% of global SWF assets (see Table 1). In most cases, Gulf SWFs are directly controlled by members of the ruling families. Since March 2015, for example, Saudi Crown Prince Mohammed bin Salman has sat at the top of the PIF hierarchy. In March 2023, Reuters reported a reshuffling of wealth fund leadership, with UAE President Mohamed bin Zayed Al Nahyan naming his brother Sheikh Tahnoun — head of ADQ, Abu Dhabi’s third-biggest investment fund — to chair the ADIA. Another brother, Mansour bin Zayed Al Nahyan, leads Mubadala. In this way, Gulf monarchies can maintain close control over how resource wealth is spent and align that spending with their political, public, and personal objectives. Higher oil prices and ongoing market turmoil are the driving factors behind a windfall for Gulf oil and gas producers. To give just one example of the scale of the oil revenue bonanza, Saudi Aramco reported earnings of $161 billion in 2022, claiming the highest-ever recorded annual profit by a publicly listed company. The financial firepower generated by high oil prices has, among other things, translated into increased spending by the region’s SWFs. The top five funds — Abu Dhabi’s ADIA, ADQ, and Mubadala, along with Saudi Arabia’s PIF and Qatar’s QIA — deployed more than $73 billion in 2022 alone, according to online tracker Global SWF. Jihad Azour, the International Monetary Fund’s (IMF) director for the Middle East and North Africa, maintains that Gulf producers could earn up to $1.3 trillion in additional revenue through 2026. Patterns and trends in Gulf SWF dealmaking The current wave of dealmaking by Gulf sovereign funds, which began with the outbreak of the COVID-19 pandemic, features several notable changes in both the pattern and the destination of investments. Gulf SWFs’ spending targets reflect a shift toward alternative assets and “industries of the future,” an acceleration of domestic investments, a growing appetite for global startups, a heightened emphasis on co-investment with private equity (PE) and venture capital (VC) firms, and greater geographic breadth of focus. Diversifying into alternative assets and industries of the future Historically, Gulf SWFs have hunted for attractive opportunities in times of volatility and low valuations. However, Gulf wealth investors recently have shifted toward assets that yield returns and generate growth. Instead of parking wealth in low-risk, low-return assets, they have diversified their investments into more profitable areas such as PE and listed shares. Indeed, “alternative assets” constitute a large and increasing share of total assets from the region’s three largest funds. There is a concurrent shift underway in investment allocation. Gulf SWFs have shown a keen interest in investing in technology and innovation-driven companies, alongside high-priority sectors such as healthcare, logistics, renewables, broadband, and digital infrastructure. Accelerating domestic investments The number of strategic funds with a mission to attract foreign investment and co-invest in the domestic economy is increasing significantly. With the exception of ADIA, which solely invests abroad, Gulf SWFs are “flexible funds” that do both. Saudi Arabia’s PIF, one of the largest and fastest-growing sovereign financial investment vehicles, deploys most of its assets domestically, as is generally the case among Gulf SWFs. PIF is the driving force behind the development of the kingdom’s so-called “giga-projects,” most notably NEOM, the Red Sea Tourism Project, the Qidiyya entertainment city near Riyadh, and ROSHAN. The fund has investments across a wide range of industries, from Saudi Electricity to Saudi Arabian Mining and Saudi Telecom. Since 2017, PIF has established 79 companies across its 13 strategic sectors. PIF’s big domestic investment push began with the announcement in 2021 of a five-year strategy that aims to more than double the value of its AUM to $1.07 trillion and to commit $40 billion annually to develop Saudi Arabia’s economy until 2025. The fund now owns several strategic investments in the consumer goods and retail sector, such as Noon.com, Amazon’s Middle Eastern rival and the region’s leading online shopping platform. Recently, PIF agreed to purchase a 30% share of Tamimi Markets Co. in a bid to help transform the company into a national champion and major regional grocery and food supply chain. In February 2023, the fund invested $1.3 billion in four domestic contractors to improve local supply chains for projects in the country. The fund has set up dozens of fully owned subsidiaries to seek new investment opportunities and launch manufacturing facilities in the kingdom. The recently established Halal Products Development Company aims to localize the development of a wide range of halal products. The newly founded Aseer Investment Company will operate as the PIF’s investment arm, part of an ambitious effort to transform the southwestern region into a global tourist destination. Furthermore, in June of this year, PIF launched Lifera, a commercial-scale contract development and manufacturing organization, to boost biopharmaceutical industry growth. PIF has also taken steps to develop synergies between its investment holdings and build its global brand. For example, the player jerseys of Newcastle United F.C. — the English Premier League soccer club in which the PIF purchased an 80% stake — display the logo of sleeve sponsor Noon.com. Incubating new industries Gulf wealth funds have been increasingly active in the global startup scene, mainly in offshore markets. Sanabil, Saudi PIF’s private investment arm, has notably backed a lengthy roster of U.S. startups. At the same time, PIF and China’s Alibaba Group are raising funds to jointly back technology startups in Asia and the Middle East. QIA is leading a funding round for Builder.ai, a platform for businesses to create custom smartphone apps. It has also led and made a follow-on investment in the recent funding round of Singapore-based Insider Pte Ltd (Insider), an AI-enabled digital marketing platform. According to YourStory, a media tech company for startups, India has emerged as “an investment stronghold” for Gulf wealth funds. QIA has invested in Swiggy (a food ordering and delivery platform), Rebel Foods (an online restaurant chain), VerSe Innovation (a local language tech firm), and Flipkart (an e-commerce company). Abu Dhabi Development Holding Company has pumped millions into Byju (an ed-tech firm) and Spinny (a used car retailing outfit). Lastly, ADIA has purchased stakes in MobiKwik (digital financial services platform) and Jaipur-based DealShare (a social e-commerce startup). There also seems to be a slow but steady commitment by Gulf wealth funds to startups in the region. ADQ has invested in health-technology company Okadoc, while ADQ and Mubadala, together with the PIF-backed Riyad Taqnia Fund, have provided fresh financing to TruKKer, a startup focused on logistics in the land freight sector. PE rounds in 2022 included PIF’s investments in Almosafer, a travel services provider, and FOODICS, one of the largest cloud-based fintech platforms for restaurants in the Middle East. Expanding co-investment partnerships Gulf SWFs are teaming up with other wealth funds or financial investors through joint ventures (so-called sovereign-private partnerships, SPP). These collaborative strategies serve multiple aims, including cost saving, information sharing, and portfolio diversification. Importantly, by utilizing state funds, Gulf SWFs’ engagement in co-investment partnerships aims to bring companies to their shores to support domestic development plans. An increasing number of Gulf SWF investment partnerships have targeted Asian assets. QIA and ADIA are among the most active co-investors. ADIA, ramping up its exposure to Asia, has teamed up with Singapore’s SC Capital Partners to target data center investments across the Asia-Pacific region. In June, QIA joined a consortium led by Korea’s MBK Partners to invest $1.2 billion in SK On, an electric vehicle battery manufacturer. Mubadala, too, has formed strategic partnerships. These include forging an alliance with KKR Credit to tap into Asia’s growth potential, joining forces with BlackRock to fund Tata Power Renewable Energy’s aggressive growth plans, and co-leading a $315 million funding round for China’s Hasten Biopharmaceutic. PIF has teamed up with Bain & Company to develop an “India strategy” focused on the infrastructure sector, in particular on renewable energy, and it has joined with Japan Bank of International Cooperation (JBIC) to promote collaborative projects in decarbonization and digital transformation. PIF and Singapore’s SWF, the Government of Singapore Investment Corporation (GIC), have partnered to invest a combined $986 million in South Korea’s Kakao Entertainment Corp. QIA has parlayed its investment in Indian Edtech firm Byju to set up its wholly owned subsidiary in Doha to focus on students from across the Middle East. Widening the geographic scope Gulf SWFs are not just bankrolling ambitious projects at home to support diversification efforts but plowing billions of dollars into assets regionally and globally. Bargain hunting in the West North American and European assets have long been mainstays of Gulf SWF portfolios. Even during the 2008-09 financial crisis, Gulf investors held onto their major Western stakes, taking advantage of their long-term investment horizons to ride out the downturn and seek out undervalued assets. In 2022, Gulf SWFs spent almost $89 billion on investments globally, double the previous year. According to Global SWF, an outsized $51.6 billion of that amount was deployed in Europe and North America. The same source also reported that, out of the 60 SWF investments announced in 2022 that were larger than $1 billion, of which 26 were made by Gulf funds, 17 were invested in North American or European assets. This includes ADIA’s joint ventures with Rockpoint and Landmark Properties in the United States as well as Greystar in the United Kingdom. Other examples include Mubadala’s investment in British broadband provider CityFibre and acquisition of a stake in Scandinavian-based communications company GlobalConnect along with the deal by PIF that made it the second-largest shareholder of the luxury carmaker Aston Martin. Building bridges with neighbors Although the West continues to be the preferred destination of petrodollars managed by Gulf SWFs, the region’s wealth funds have been moving to diversify their overseas exposure. The Gulf states have been building economic bridges with their poorer neighbors, some of which they once considered adversaries. Three key regional destinations are Egypt, Iraq, and Turkey. Capitalizing on the withdrawal of foreign portfolio investments from Egypt, Saudi PIF last year launched the Saudi Egyptian Investment Company (SEIC) as its leading investment vehicle for acquiring stakes in local companies, with a focus on infrastructure, real-estate development, healthcare, financial services, food and agriculture, and pharmaceuticals. Soon after its establishment, SEIC purchased minority stakes for $1.3 billion in four Egyptian companies. Around the same time, Qatar’s QIA transferred $1 billion to the Central Bank of Egypt as part of a deal to buy stakes in local firms. QIA is reportedly negotiating with Egypt to conclude what could be a landmark investment deal to acquire stakes in seven historic hotels. The UAE’s ADQ, which established an office in Cairo in December 2021, has also taken steps to ramp up its investments in Egypt and support co-investment with The Sovereign Fund of Egypt (TSFE). After a lengthy period of estrangement, a cautious rapprochement between the Gulf states and Iraq appears to be gaining momentum, with clear evidence that Gulf wealth funds are interested in investing there. For example, Qatar QIA has said it plans to invest $5 billion in various sectors in Iraq over the coming years. Additionally, Saudi PIF has created a new unit to target investments in a number of Iraqi industries. The newly formed Saudi-Iraqi Investment Company, with a capital of $3 billion and headquarters in the kingdom, reportedly will seek investment opportunities in infrastructure, mining, agriculture, real estate development, and financial services. Gulf wealth funds, led by ADIA and ADQ, have also been scouting for investment targets in Turkey, amid signs of a political thaw in relations between Abu Dhabi and Ankara. And Turkish President Recep Tayyip Erdoğan is himself visiting the Gulf since July 17, partially in an effort to drum up investment in his country, having reportedly already secured a series of deals worth $50 billion with the UAE. The QIA last year bought a stake in the Eurasia Tunnel company in Istanbul and, more recently, partnered with Turkish firm Esas Private Equity to invest $105 million in Turkish artificial intelligence (AI)-powered marketing firm Insider. Pivoting to Asia Gulf SWFs are increasingly active in Asia, with China, India, and member states of the Association of Southeast Asian Nations (ASEAN) as the major beneficiaries. In addition to hiring specialist teams to study Asian markets, Gulf wealth funds have opened offices in the region — PIF has an office in Hong Kong, while Mubadala and QIA have set up shop in Singapore. The Private Equities Division (PED) of ADIA has deployed dedicated investment teams focused on “China and India-Southeast Asia.” As illustrated in Table 2, Gulf SWF spending targets in Asia span a wide range of sectors, including gaming and e-sports, agribusiness, renewables, and consumer tech and data services.  Recent deals in Asia map onto their overall investment strategies in interesting and important ways. PIF’s acquisitions in gaming and e-sports in Asia are complemented by its more than $3 billion worth of stock purchases in U.S. video game developers. These and other, similar investments aim to accelerate the growth of mobile e-sports, with a particular focus on the kingdom itself — a thriving market of 23.5 million gamers — and serve the broader objective of making Saudi Arabia a global industry hub. The purchase of a minority stake in Olam Agri by the PIF’s Agricultural and Livestock Investment Company (SALIC) serves the latter’s aim of achieving food security for the kingdom and follows other recent deals struck in the food industry, namely in Canada, Brazil, and India. QIA’s new venture, Bodhi Tree, is part of its big push to scale investments in sectors with deep consumer engagement — including media, healthcare, and education — in India and Southeast Asia. Gulf sovereign investors’ appetite for Chinese assets is strong. Yet it is also worth noting that Chinese venture capitalists and local officials are eager to access Gulf SWFs. Local officials from Shenzhen, Guangzhou, and Chengdu as well as the province of Sichuan are seeking to attract Gulf wealth funds to sectors prioritized by Beijing, including semiconductors, biotechnology, new energy, high-tech manufacturing, and infrastructure. These developments signify, in the case of Sino-Saudi ties and China-Gulf relations more broadly, a progression from a trade partnership to a “core investment relationship.” Conclusion Gulf SWFs have accumulated massive assets, developed seasoned teams, and crafted sophisticated investment allocation strategies. Although the region’s funds vary in the size, variety, and scope of their investments, all have become more active and expanded their international footprint in recent years. Gulf SWFs nowadays are not just caretakers of national wealth. They have emerged as a crucial financial resource for present and future needs and are an increasingly important tool for exerting their countries’ political power, both at home and abroad. Gulf states are using the latest windfall to serve not one, but multiple purposes. These include investing in industries of the future, in some cases preparing for the global energy transition, as well as increasing visibility, strengthening cross-border partnerships, erecting local platforms in underdeveloped sectors, and building national champions. The current phase of Gulf SWF dealmaking is marked not only by the funds’ expanding global footprint and growing influence, but by their mounting responsibilities. Most of the Gulf’s wealth funds today are asked to perform financially as well as create jobs, propel the domestic economy, contribute to decarbonization goals, and more. Aside from these responsibilities, Gulf SWFs have lately been exhibiting an increasing appetite for risk. The risks they face should not be minimized, and they include a track record marred by several big bets that underperformed, growing protectionism that threatens to curb inward investment, and the risk of getting caught in the escalating tensions over technology between the U.S. and China. Nevertheless, the ability of Gulf SWFs to surmount these challenges should not be underestimated. For despite being associated with their most eye-catching gambits in sport, Gulf sovereign funds have become sophisticated and flexible investors.

Pita Limjaroenrat has failed to secure approval as Thailand’s next prime minister. This underscores the stark reality: leaders in Thailand are not elected by the will of the people, but permitted to rise to power with the support or at least the acquiescence of the conservative establishment. In the prime ministerial selection process on 13 July, Move Forward Party (MFP) leader Pita Limjaroenrat was unable to secure the required parliamentary votes for approval as the prime minister. Despite having a strong electoral mandate and claiming the support of an eight-party coalition comprising 312 MPs, Pita encountered resistance from the appointed 250-member Senate. The Senate predominantly consists of handpicked loyalists affiliated with the generals who orchestrated the May 2014 coup d’état. Only 13 senators voted in favour of Pita’s candidacy. The outcome is not unexpected. Nonetheless, it signals a strong determination by the Thai conservative establishment to block Pita’s rise to power. The implications of this outcome remain unclear. The prime ministerial selection process is set to continue until its completion, with the next round scheduled for 19 July. During this period, General Prayut Chan-o-cha will continue to serve as the caretaker Prime Minister. General Prayut has already ruled himself out of contention with his resignation on 11 July from the United Thai Nation Party. He had recently announced his intention to quit national politics. Nevertheless, there are significant uncertainties surrounding Pita’s potential renomination as a candidate. Previously, a deputy speaker from Pheu Thai disclosed that the party intended to back Pita for the initial three rounds of voting before engaging in formal discussions with the eight-party coalition regarding other potential candidates. However, disagreements within the coalition could emerge due to concerns about the viability of supporting a candidate who has encountered significant opposition and experienced a substantial losing margin. Moreover, it is uncertain whether Pita and the MFP would be prepared to withdraw their pledge to amend Article 112 in exchange for backing from senators. Furthermore, there are pending legal cases against Pita that could potentially impact his prospects. These cases include the media-shareholding case, where Pita is alleged to own shares in a media company (this is prohibited under Thai law). The Election Commission submitted the case to the Constitutional Court on 12 July. There is another case regarding the MFP’s campaign to amend the lese majeste law, which has been accepted but awaits a verdict from the Constitutional Court. These legal proceedings could result in Pita’s suspension or disqualification from holding office, as well as the dissolution of the MFP. In effect, they could eliminate him from the race for the premiership. Given these challenges, a new contender may emerge. However, this depends heavily on the actions of the Pheu Thai Party, which is the second largest party in the MFP-led coalition. If Pheu Thai decides to remain a part of the eight-party alliance, it is possible that the party will nominate its own candidate, with Srettha Thavisin or Paetongtarn Shinawatra as likely options. Alternatively, if Pheu Thai foresees challenges similar to those faced by Pita in securing the necessary support, the party may explore the option of forming new alliances with other political parties in the Prayut administration. These alliances could serve two purposes for Pheu Thai: either providing it with the necessary support to advance its candidate for the position of prime minister or securing a stable footing and a sizable share of cabinet portfolios in a future governing coalition. Parties such as General Prawit Wongsuwan’s Palang Pracharath and Anutin Charnvirakul’s Bhumjaithai, among others, could be potential partners in such alliances. General Prawit, who served as the chair of the Senate selection committee, could potentially sway the support of some members of the Senate if he decides to extend his support to Pheu Thai’s candidate. However, General Prawit may also leverage his position to insist that Pheu Thai supports him as the prime ministerial candidate, rather than the other way around. Even without Pheu Thai’s backing, Prawit might command enough parliamentary support to secure the prime ministerial role, though this would result in a minority coalition government. In either scenario, if Pheu Thai decides to withdraw from the MFP-led coalition, it is likely to face significant backlash. Such a decision could further erode the party’s already dwindling support base, especially among those who voted for Pheu Thai based on its pro-democracy stance. However, if this strategic gambit were to materialise, it could be seen as an attempt by the party’s leader-in-exile, Thaksin Shinawatra, to reassert his influence in Thailand’s political landscape, even if this comes at the expense of his own party in the long run. Looking towards the medium to long term, the implications of these developments extend far beyond party politics. They have the potential to ignite substantial frustration and discontent, particularly among those who perceive Pita’s failure to secure the necessary support as evidence that the democratic process has been compromised by actors and institutions that prioritise their own interests over the popular will. This growing disillusionment among the public may intensify calls for political reforms and a thorough re-evaluation of the role and accountability of various power structures within the political system, such as the Senate, the Constitutional Court, and the Election Commission. However, the absence of a clear and effective pathway for formally addressing these grievances poses a significant challenge. For instance, to revoke the Senate’s authority to jointly select the prime minister, amending Section 272 of the Constitution is necessary. But amending the Constitution requires the backing of at least one-third of senators, as stipulated by Section 256. The limited avenues for meaningful engagement and redress can further erode public trust in the existing political institutions, leading to widespread mobilisation and street protests with ever-increasing frequency and intensity. That said, however, historical precedents have shown that social unrest and emergencies are often used as a pretext for the military to intervene in the name of maintaining peace and order. In conclusion, the political future of Thailand hangs in the balance. If the selection process fails to produce a successful candidate for the role of Prime Minister, Section 272 (2) of the 2017 Constitution allows for the possibility of an outsider being considered as a potential candidate for the position. This scenario remains unlikely due to stringent requirements; moreover, there is no guarantee that the candidate would serve as a neutral arbiter or independent third party. Ultimately, these developments underscore the stark reality that leaders in Thailand are not elected by the will of the people but rather permitted to rise to power with support or at least acquiescence of the conservative establishment. Now that the true nature of democracy, or the lack thereof, in Thailand has been revealed, it remains to be seen what actions and measures will be taken by the Thai people whose voice and choice seem to have been trampled upon.

Welcome address by Christine Lagarde, President of the ECB, at the 9th ECB conference on central, eastern and south-eastern European countriesFrankfurt am Main, 17 July 2023 It is a great pleasure to open the ninth ECB conference on central, eastern and south-eastern European countries. The CESEE region – which comprises 21 different economies – can overall be considered a European success story in recent decades, having enjoyed rapid convergence towards higher-income countries. Between 2000 and 2021, the economic size of the region almost doubled to 40% of the euro area aggregate. And this strong growth has led to rising living standards, with average GDP per capita jumping from 36% to 54% of the euro area aggregate in the same period. But the world has changed dramatically since we last held this conference in 2019. A series of shocks have upended our old reality and replaced it with new uncertainties. Devastatingly, one of those shocks has been the outbreak of war in Europe – an event that we once thought consigned to the history books. Russia’s unjustified war against Ukraine and its people is a human tragedy. And it has had deep economic consequences for the CESEE region in particular. In parallel, the world is changing in ways which make the growth models of many CESEE countries more vulnerable, as these models generally involve high levels of trade openness and integration into global value chains. But as Graham Greene once wrote, a “feat of daring can alter the whole conception of what is possible.” And the challenge now facing the CESEE region is how to continue its convergence story and ensure that growth remains resilient in this new landscape. Fortunately, CESEE economies can already look back on a strong history of resilience – be it mastering the transition from central planning to market economies in the 1990s or recovering from the global financial crisis with impressive speed. I therefore have every confidence that they will be able to adapt to these new uncertainties. A changing geopolitical landscape There are two broad shifts reshaping the global economy that may have profound implications for the CESEE region: rising geopolitical tensions and weakening global trade. After a long period in which the United States was the sole superpower, the world is becoming more multipolar, with greater competition between major powers, less respect for international rules and norms and a waning influence for multilateral institutions. In this environment, even deep commercial ties may be insufficient to prevent trading relationships from becoming adversarial. This makes the global environment increasingly prone to shocks and the task of macroeconomic stabilisation for all countries much harder. Unfortunately, the CESEE economies know this all too well. Russia’s war against Ukraine triggered a massive shock to the global economy – especially to energy and food markets – and CESEE economies have been particularly exposed, given their geographic proximity to the conflict. While inflation has now started to come down, over two-thirds of economies in the CESEE region saw annual inflation hit 13% or above last year, with several countries seeing markedly higher price increases. By comparison, annual inflation in the euro area was 8.4%. Geopolitical tensions risk accelerating the second shift in the global landscape: weakening global trade. Since the global financial crisis, trade growth as a share of world GDP has plateaued. And we are also seeing rising levels of protectionism as countries reconfigure their supply chains to align with new strategic goals. Over the last decade, the number of trade restrictions in place has increased tenfold. The CESEE region, and Europe more generally, may be vulnerable to such a shift. Last year, trade as a share of GDP was higher than the euro area average for two-thirds of CESEE economies. And while other major economies, such as the United States, have seen trade as a share of GDP fall since the pandemic, in the euro area it reached a record high in 2022. A new foundation for strengthening resilience A changing geopolitical landscape means that, in the euro area and the CESEE region, we need to build a new foundation for strengthening resilience. This foundation rests on further deepening the European Union and its ties to the surrounding region. I see three key elements. The first is reinforcing openness within our region. Trade fragmentation could see the flow of goods and services increasingly being pulled towards different trade blocs, at the expense of countries outside those blocs. By leveraging our regional strength, Europe and the CESEE region can recreate some of the benefits of globalisation on a smaller scale. The euro area is already the main trading partner for most CESEE economies. And we can capitalise on this existing momentum. Between the year 2000 and last year, the share of euro area imports from the CESEE region increased from 5% to 10%. And the share of euro area exports to CESEE economies reached 11% last year, almost double that at the start of the millennium. Moreover, CESEE economies in particular can benefit from changing global trade patterns as companies seek suppliers closer to home. Survey evidence shows that firms in the CESEE region, and especially those based in the EU, are seen as highly reliable trading partners. The ECB also has a key role to play here as the guardian of the euro. Our monetary policy plays an important anchoring role for the CESEE region, as the euro is widely used in trade invoicing and financing. Euro cash also serves as an important store of value – demand for it surged in CESEE economies following Russia’s invasion of Ukraine. The second key element is increasing our collective security. Europe and the CESEE economies have already taken substantial steps to increase their energy security, given the dangerous historical reliance on Russian fossil fuels in their energy mix. In February 2022, the EU was importing around 36% of its natural gas from Russia. Within the space of nine months, that fell sharply to 13% as the EU reduced its gas consumption and diversified towards imports of liquified natural gas. Most, though not all, CESEE economies have also made significant progress in substituting energy imports away from Russia and in building up gas storage levels. But we cannot stop there. We need to accelerate our efforts to decarbonise and increase our energy independence. That is why initiatives that help to build renewable energy sources are so important – such as Next Generation EU and the EU’s recent energy support package for countries in the Western Balkans. The third key element is defending and spreading our common values. The attack on Ukraine was also an assault on European values – such as the respect for international law and human rights. That is why Europe has imposed unprecedented sanctions on Russia and provided substantial support to Ukraine following the invasion. To date, the EU has made available €38.3 billion in economic assistance and over €21 billion in military support. The strength of the EU’s response demonstrates not only its capacity for action, but also its appeal as a political project that others see the benefit of joining – what the West German Chancellor Konrad Adenauer once described as the “Magnet Europa” effect. The push for EU enlargement has recently gathered momentum as a consequence of Russia’s war. Last year, the EU granted Ukraine, Moldova and Bosnia and Herzegovina candidate status. And it launched the process to open accession negotiations with Albania and North Macedonia, while also becoming open to granting Georgia the status of candidate country, conditional on reforms. Conclusion Let me conclude. A series of shocks have dramatically changed the global landscape in recent years. And today, rising geopolitical tensions and weakening global trade mean that economies in the CESEE region need to build a new foundation of resilience. But the record of past crises has already demonstrated just how resilient CESEE countries can be. Despite an exceptionally difficult 2022, the prospects for the CESEE region are encouraging. There are clear structural strengths that stand to benefit CESEE economies in the medium to long run, such as well-educated workforces and strong ties with Europe. So the task at hand is how to channel that spirit of resilience to counteract these new uncertainties. And by leveraging our regional strength and further deepening our economic and political ties, I have no doubt that Europe and the economies in the CESEE region can flourish together. Thank you – and I hope you enjoy today’s proceedings.

Work meeting with the German Chancellor Olaf Scholz in Salzburg "I am very pleased that for the first time in over 10 years a Chancellor of the Republic of Germany is back in Austria in an official capacity. We are not only neighbours, but also closely interwoven culturally or in matters of economic relations. If we look at our border regions, they are in fact no longer border regions, because people have long since overcome these borders in the realities of their lives - whether as business people or when starting a family. And so, we have grown together a bit," said Chancellor Karl Nehammer at a joint press conference with Olaf Scholz at the Mozarteum University in Salzburg. The German Chancellor made his first bilateral visit to Austria and was received with military honours. In addition to bilateral issues such as energy supply, the working meeting focused on the fight against irregular migration and border controls within the Schengen area. "The partnership with the Federal Republic of Germany is particularly important because we are very often allies in the question of how we want to shape European policy and further develop the EU, always bearing in mind that there may also be different interests. In addition to excellent economic relations, Germany is one of our most important partners in tourism. We therefore have many points of contact here," the chancellor noted. Strengthening security means gaining people's trust in the European project Politically and in terms of content, there are major challenges to be tackled together: on the one hand, the Russian Federation's war of aggression against Ukraine with all its consequences, and on the other hand, irregular migration. The two heads of government agreed that, in order to have efficient external border protection, we must be able to quickly return those who are not allowed to stay to their countries of origin. However, this also meant that stable and sustainable relations with the countries of origin had to be established and expanded and that prospects had to be created in these countries, the Chancellor said: "Germany and Austria are on the same side here. Because only if we have credible external border protection and fast and swift asylum procedures, and if we can ensure order and security within the European Union in an orderly manner, will we win people's trust in the European project." The topic of Schengen was also discussed. He said the chancellor presented the Austrian perspective and described how 112,000 asylum applications had been filed in Austria in 2022, 75 percent of which had been registered for the first time, even though the applicants had crossed an EU country. "In Austria, the numbers are decreasing, but at the same time they are increasing in Germany. We are a community of solidarity within the EU, so we care about the numbers. And as long as the current Schengen system does not work, as you can clearly see from the border controls from Germany to Austria, we need joint efforts in Europe to strengthen the external border protection. We will therefore stand by Germany when it comes to pushing forward the Commission's measures," Nehammer said. He said there were steps in the right direction, such as pilot projects at the Romanian and Bulgarian borders and an agreement with Tunisia, which the chancellor believes will be forward-looking. Securing energy supply for the future with green hydrogen from Africa But Germany is also an important partner in the question of energy security. This year, Austria had already managed to fill its own gas storage facilities to 90 percent in August, to secure its gas supply and thus to strengthen its independence from Russia, the Chancellor said happily. This had also been achieved with the help of Germany, which had helped to set up gas alternatives. Work is underway on connectivity between Austria and Germany in order to benefit from the liquefied natural gas terminals that have been built, which will subsequently play an important role in Austria's security of supply. Germany will continue to be an important partner for Austria in the future when it comes to bringing green hydrogen to Austria via a pipeline infrastructure. For example, he said, a southern corridor is specifically planned with Italy to bring green hydrogen from Africa via Italy to Austria and Germany. "These are the issues that move us for the future - with the aim of becoming more independent of fossil energy, establishing security of supply for the people and continuing to work to ensure that the good partnership and friendship between our two nations within the European Union is developed further," the chancellor concluded.

Ladies and Gentlemen, It is very special for me to be in Manila and once again to experience first-hand the famous Filipino hospitality. Each time I visit, I am struck by the warmth, intelligence, and honesty of the people I meet. You make everyone feel at home, even 10,000 kilometres from home. While visiting your beautiful country, I have also learnt a proverb of yours. It says: ‘Be like a rice stalk: the more grain it bears, the lower it bows'. I believe a country's proverbs can tell a lot about its people.  And this proverb certainly describes the people of the Philippines: always humble, especially in success. Right now, the Philippines is booming. Thanks to your resilience, dynamism, and work ethic, your economy grew by close to 8% last year. You are among the fastest growing emerging markets. Your Development Plan, as outlined by President Marcos, is prioritising good governance, cutting red tape, and speeding up permitting for strategic investments, for example in renewables and semiconductors. Not only does this make the Philippines an even more attractive trade and investment destination for European firms, but Filipino companies are also beginning to thrive in the European market. IMI, for example, has expanded its micro-electronics business to become the 14th largest manufacturing solutions provider in Europe. Or consider the Philippine port-handling giant, ICTSI. It operates a container terminal in the Adriatic Sea, and recently signed another 30-year lease to operate a port in the Baltic. It is worth mentioning, as well, that there are around 50,000 Filipino sailors manning ships with European flags. You make trade happen. And you never boast about any of this. So allow me to begin by thanking all the Filipinos who are contributing every day to the friendship and economic partnership between Europe and the Philippines. These examples show that the ties between our countries are already strong. But the time has come to lift our partnership to the next level. Because we have much more in common than our geographic distance would suggest. I see three main fields where we share interests and values, and we are just made to work together. First of all, international security. Both the Philippines and Europe believe in a global order that is based on the principles of the UN Charter, such as the respect for every nation's sovereignty and territorial integrity. And this order is now threatened, in both our regions. Second, economic transformation. We are both modernising our economies, with a focus on the green and digital transitions. And in parallel, we are de-risking our trade and investment. Europe and the Philippines are natural economic partners more than ever before. And third, on democratic values. Because economic progress can only be coupled with social progress, for all people in our societies. Let me begin with security. The Philippines have helped build the rules-based global order, as a founding member of the United Nations, ASEAN, and the World Trade Organisation. And last year, you stood up to uphold the global order, when Russia sent its tanks into Ukraine. Both the European Union and the Philippines – along with over 140 countries – have clearly condemned Russia's war of aggression against a sovereign, independent member of the United Nations. And we Europeans will continue to support Ukraine and to uphold the UN Charter for as long as it takes. But another permanent member of the UN Security Council – China – has yet to assume fully its responsibility under the UN Charter to uphold the sovereignty and territorial integrity of Ukraine. This is happening against the backdrop of China's more assertive stance in your region. Europe has constantly called on China to respect the sovereign rights of states within their exclusive economic zones. China's show of military force in the South and East China Seas and in the Taiwan Strait directly affects the Philippines and our other partners in the region. But it could also have global repercussions. And any weakening of regional stability in Asia, the fastest-growing region in the world, affects global security, the free flow of trade, and our own interests in the region. So whether we talk about Ukraine or about the South China Sea, our security is connected. That is why the EU has been enhancing its engagement in the Indo-Pacific. We aim to promote a free and open Indo-Pacific, to reinforce respect of international law and address global challenges. With the Philippines, we are deepening our security partnership, particularly on maritime security and on cyber cooperation. And we want to do more.  Ladies and Gentlemen, We cannot choose our neighbours, but we can choose who we do business with, and on what terms. This leads me to my second point. We, Europeans, are clear-eyed when it comes to diversifying and de-risking our trade and investment. We made the mistake with Russia, thinking that we could manage our geopolitical differences through business. Before the full-scale invasion of Ukraine, Europe relied heavily on energy imports from Russia. When the Kremlin started the war, Russia tried to blackmail us with cutting its gas supplies. 80% in eight months. This triggered a severe energy crisis, but we withstood. We saved energy, we diversified to like-minded partners, and we invested massively in home-grown renewable energy. Today, we are stronger than before and more independent. And we have learnt our lesson. We will not make the same mistake again. When it comes to the key inputs needed for our competitiveness, such as critical raw materials, we should never rely on one single supplier. This is the core of our de-risking strategy. And I know that this is not only Europe's strategy. The Philippines, for instance, exports 90% of its nickel ore to China, instead of processing it inside the country to create more jobs and added value. But this can change. That is also why I am here in Manila today. The Philippines and the EU have a major opportunity to step up our partnership on both trade and investments. Let me focus on investments, first. Europe has just launched a plan for boosting infrastructure investments in strategic sectors in partner countries. It is called Global Gateway, and for ASEAN, we have put forward an investment package worth EUR 10 billion in public funds until 2027. But it is not only about the money. It is also about the method. European investments come with the highest environmental and labour standards, as well as with a strong focus on creating local value chains. Take the raw materials examples. Unlike other foreign investors, we do not want to invest only in the extraction of raw materials. We can also support you in building local capacity for processing, powered by new clean energy infrastructure. Global Gateway seeks to create good jobs right here because this also strengthens our supply lines. Global Gateway seeks to promote investments that move Filipino sectors up the value-chain. And we look forward to working with the Asia Development Bank, based right here in Manila.  You are experts in the region, and we share similar priorities.  So it is only natural that we work hand-in-hand. Moreover, the Philippines are a natural leader in digital innovation. The Philippine Venture Capital Report of 2023 observed an explosion of new activity in the country's start-up ecosystem. Your e-commerce market value increased by 33% in the last three years alone. The people of the Philippines are five years younger than the global average. So it is no surprise that your economy is so dynamic. The Philippines can become a new digital hub in the region. But as entrepreneurs everywhere, Filipino entrepreneurs need infrastructure investment. This is where Global Gateway can truly make a difference. And we are already working on the ground, or rather, in space. Together with the Philippines Space Agency, we are building the first earth observation system in Southeast Asia. In parallel, Nokia is investing in 5G infrastructure. Why does this matter to Filipino innovators? Because the European Copernicus satellites will be made available for space-based services here in the Philippines, like disaster risk management against typhoons, or satellite navigation, which is fundamental for aviation, drones, and autonomous driving. This is part of a larger digital economy package that we are finalising with the government. We are even exploring a possible extension of the new fibre submarine cable that will connect Europe to Japan via the Arctic. We would create a direct data connection between our regions to de-risk and open up new opportunities for both our economies. New investments could also lead the way for more trade between Europe and the Philippines. The EU is your fourth largest trading partner, accounting for nearly 8% of your trade. This is thanks to our current trade preferences scheme. But there is much untapped potential in our trade relationship. Let me give you an example: A few months ago, I was in South Korea. There I saw the impressive positive impact of the trade deal we have concluded. In a little over a decade, EU trade with Korea has more than doubled. This is what happens when you give people and business the opportunity to work across borders. New doors open for innovation. And the most important: People benefit. So let us make progress. Our trade agreements with Singapore and Vietnam are already delivering. And Europe wants to conclude free trade agreements with other ASEAN countries. I believe, like President Marcos, that the timing and conditions are right for us to solidify our bilateral trade relations. That is why we have taken the decision to relaunch our negotiations for a free trade agreement between the Philippines and the EU. Our teams will begin right away a scoping process to identify what we need to do to overcome any remaining gaps before we can get back to negotiating. This should take no more than a few months. Let us seize this window of opportunity, and make it work. Trade agreements today are about much more than eliminating tariffs and quotas. They are about shared commitments, values, and principles, including on human and labour rights. And this leads me to my last point. Our democracies – all of them – are work in progress. None of them is perfect. But they are all perfectible. Your new government has taken some important steps for human rights here in the Philippines. Each one of our democracies is different. But we all share the same universal values, and the same direction of travel. The path towards better democracies is one that we can and should walk together. Ladies and Gentlemen, The Philippines and the European Union may stand at the opposite sides of the world, but our destinies are linked more than ever before. We see it with geopolitics and climate change. We see it in the connection of our value chains. We have a similar outlook on the Indo-Pacific. And we have strong economic ties. Europe wants to be a trusted partner to the Philippines as it grows into its economic potential. We want to be partners who stand eye to eye. Partners who put people and their values first. Having met so many wonderful people here in the Philippines, who are proud of their country, hardworking, and humble, I am excited for what we can achieve together. I know you are proud of your Bayanihan spirit. And I really hope that we can build the same spirit of community between us, in Europe and the Philippines. Salamat, thank you very much and have a wonderful evening.

Good morning.  I want to thank Speaker Kevin McCarthy, my friend Speaker Kevin McCarthy, for this occasion he gave me. I want to say that I’m very glad to be here in the heart of the American democracy and in the place that Thomas Jefferson, at the time Secretary of State of President George Washington, wanted to call Capitol Hill to commemorate the famous Temple of Giove on the Capitoline Hill, il Campidoglio - one of the seven hills of Rome. And I say it for it is another sign of the incredibly strong ties between Italy and the United States, ties that have become even deeper in recent times after the Russian war of aggression against Ukraine. More than ever, in this international juncture, our relations are essential. More than ever, we must be able to rely one on the other. Today we had the occasion to exchange views on many international issues, from the war in Ukraine and its effects worldwide, in particular regarding food security, to the stabilisation and development in the Mediterranean area, moreover in Africa, the Indo-Pacific, and Italy’s next Presidency of the G7. I was glad to have this debate with representatives of Congress because it gives me a complete picture of the foreign policy landscape from representatives elected by the American people. I’ve been in politics for most of my life and I’ve been a member of parliament for many, many years, so I perfectly know the importance of parliaments in democracies. That’s why I’m so grateful to Speaker Kevin McCarthy, whom I had the pleasure to meet already in Rome a few months ago, and to the representatives I met today, for the time they wanted to spend with me.  And last but not least, I’m happy to be here in a place decorated by these wonderful frescoes of Costantino Brumidi, another Italian, for this place represents and sums up also the stories of all the Italian-Americans who, with their lives, with their efforts, with their dreams, with their creativity, contributed to strengthening the bonds between our two peoples and contributed to make this democracy the great democracy it is. So, I want to say that I’m proud of these Italians, I’m proud of your grandfather too, Kevin, and I really want to thank them for the contribution they brought to the history and the culture and the identity of this nation. Many of them are today representatives and that shows the role Italy has had for the history of the United States, and that is one reason more to continue strengthening our relations, our cooperation, our friendship, particularly in this tough world, in this tough situation.  Many things are changing around us, but there is something others didn’t expect that we should perfectly prove: that the Western world is united and wants to defend the world based on rules, for without a world based on international law, we would live in a world of chaos, in which who is militarily stronger thinks he can invade his neighbour. That’s not the world we want to live in; we want to live in a world in which we can respect sovereignty and freedom. Thank you very much.

A week-long trip to Beijing by the Pacific’s most flamboyant statesman Manasseh Sogavare, was always going to cause concern in Canberra. The substance of the visit was as expected. The relationship between China and the Solomon Islands was upgraded to a “comprehensive strategic partnership” (on par with Papua New Guinea, the first Pacific nation to sign up to the Belt and Road Initiative). Nine agreements were also signed covering everything from civil aviation and infrastructure to fisheries and tourism. The Chinese premier, Li Qiang, who inked the deals with Sogavare, made a point of not mentioning the controversial policing cooperation agreement, the draft of which was leaked more than a year ago to New Zealand academic Anna Powles. Despite repeated calls from Australia and New Zealand to release the text of the policing agreement, there is no indication the Chinese or the Solomon Islands leadership will do so. There were also moments of theatre in Sogavare’s trip. The prime minister declared “I’m back home” when he arrived in Beijing in a clip posted by China Global Television Network. He then said in a longer interview on the same network that his nation had been “on the wrong side of history” for the 36 years it recognised Taiwan instead of the People’s Republic of China, and lauded President Xi Jinping as a “great man”. Sogavare saved his biggest serve for his return to the Solomon Islands, though. He accused Australia and New Zealand of withdrawing crucial budget support and hinted he would look to China to fulfil his ambitions to establish an armed forces, should Australia be unwilling to help.China’s slow start in the PacificSome key questions have been overlooked this week in the pantomime about what Australia should or shouldn’t do to shore up its relationship with an important Pacific partner. (We could start by accepting that Sogavare will never love us, and avoid getting into an arms race in the Solomon Islands with China.) What’s been somewhat lost, though, is how China has made inroads so quickly in a region that it still officially classifies as “peripheral”. China has certainly had to work harder to gain a foothold in the region. Relative to other regions, it has a lack of historical state ties with the Pacific. In Africa and Southeast Asia, China can draw on memories of shared anti-colonial struggles and aid projects like the Tanzam railway. In the Pacific, the Chinese Communist Party is a latecomer. Also holding it back is the remoteness and small population of the region. This has not made the Pacific a good fit for China’s Belt and Road Initiative, which has flourished in countries with rapid transport and communication links, substantial Chinese diasporas and leaders who are easily reached. Most of China’s own Pacific experts were baffled when the region was belatedly included in the project. Yet despite these obstacles, it’s clear the Chinese state’s approach in the Pacific has shifted, most remarkably in its diplomacy and the role state-linked companies are expected to play. Diplomats with serious intent China’s wolf warrior diplomacy has received plenty of attention, but the picture in the Pacific is less straightforward. The recently appointed special envoy to the Pacific, Qian Bo, undoubtedly styles himself as a wolf warrior. Under his tenure as Fijian ambassador, a Taiwanese representative was assaulted by Chinese diplomats for the crime of displaying a Taiwanese flag cake. Yet, other appointments suggest China is appointing higher-calibre diplomats to the region. These include Li Ming, the current ambassador to the Solomon Islands, and Xue Bing, the former ambassador to Papua New Guinea who now holds the challenging post of special envoy to the Horn of Africa. With experience in the region and good language skills, these diplomats have been more able to engage with Pacific communities than their predecessors, who largely focused on sending good news back to Beijing. More serious representatives suggest more serious intent.Chinese companies exerting influence, tooChina’s state-linked companies remain the driving force behind China’s engagement with the Pacific. Unlike the embassies, they are well-resourced and have skin in the game. Many company men (in construction, where Chinese companies dominate, they’re mostly men) are based in the region for decades, developing a deep understanding of how to win projects and influence political elites. Failed projects generate plenty of headlines, but many companies – such as COVEC PNG and China Railway First Group – are effective operators. They are building infrastructure cheaply in the Pacific and winning the favour of multilateral donors, particularly the Asian Development Bank. For larger state-linked companies, like China Harbor Engineering Company and the China Civil Engineering Construction Corporation (CCECC), the geopolitical game has shifted. In the past, they could rely on their standing within the Chinese political system (their parent companies often outrank the Ministry of Foreign Affairs) to resist pressure to act on behalf of state. Now, they are expected to carry geopolitical water for Beijing. Often this can benefit the companies. For instance, when CCECC lobbied the Solomon Islands leadership to switch their allegiance from Taiwan to the People’s Republic of China, it helped the company when it came to bidding for projects for the Pacific Games in Honiara. The leaders of these companies realise it can harm their image when they are seen as Beijing’s pawns. Yet, the companies, diplomats and Pacific leaders who choose Beijing’s embrace know times have changed. China is now a serious player in the region with a development philosophy to sell. It’s no longer enough to read Beijing’s talking points. You have to look like you mean it.

As mercenary troops bore down on Moscow on June 24, 2023, it likely wasn’t only Russian President Vladimir Putin and his governing elite in Russia who were looking on with concern. Over in China, too, there may have been some concerned faces.Throughout the war in Ukraine, Beijing has walked a balancing act of sorts – standing with Putin as an ally and providing an economic lifeline to Russia while trying to insulate China against the prospect of any instability in a neighboring country. A coup in Russia would upend this careful diplomatic dance and provide Beijing with a fresh headache.Joseph Torigian, an expert on China and Russia at American University, walked The Conversation through how Beijing has responded to the chaotic 24 hours in which mercenary chief Yevgeny Prigozhin challenged the Kremlin – and why that matters. Do we have any clues about how Beijing perceived events?It will be hard to guess what Beijing really thinks, especially as there has been little in the way of official comment. Russians understand that the Chinese media – like their own – are tightly controlled. Historically, Russians have strongly cared about how they are depicted in the Chinese press. As such, China will be careful about what is being printed so that Chinese officials don’t get an earful from Russian diplomats. However, real signs of worry from Beijing may get out. In a tweet that was later deleted, political commentator Hu Xijin wrote: “[Progozhin’s] armed rebellion has made the Russian political situation cross the tipping point. Regardless of his outcome, Russia cannot return to the country it was before the rebellion anymore.” Similarly, China Daily – a publication run by the Central Propaganda Department of the Chinese Communist Party – quoted two concerned Chinese scholars in its reporting on the Wagner Group episode. Such commentary may be a subtle way for Beijing to suggest to Moscow it needs to get its house in order. These views could also serve to remind the outside world that China and Russia are different political systems, and that Beijing will not always act in lockstep with Moscow. At the same time, the Chinese government will be at pains not to give any support to a narrative that Beijing is worried about the strategic partnership. Global Times, a state-run Chinese newspaper, has already dismissed Western media reporting that China’s “bet” on Putin was a mistake. Such claims will be framed in China as a plot to hurt Sino-Russian relations. So will the Wagner episode affect China’s support for Putin?The Chinese government likely believes that Putin is still the best chance for stability in Russia and that supporting him is a core foundation of the bilateral relationship. Some Chinese commentators have noted that Putin did emerge victorious quickly, and with little blood spilled. They may be right – although the insurrection is widely viewed as an embarrassment, many observers in the West also believe that Putin will survive the crisis. On the Russian side, given the importance of China for them during the war in Ukraine, officials in Moscow will expect the People’s Republic of China to clearly express support for Putin. During previous moments of intimacy in the relationship, such help was expected and valued. In 1957, when Soviet leader Nikita Khrushchev narrowly defeated a putsch, he was so grateful that the Chinese blessed his victory he promised to give them a nuclear weapon. There is a question of how Beijing would have reacted if the mutiny had escalated. History suggests that the Chinese might be tempted to intervene, but also that they understand the challenges any such action would face. For example, during the 1991 attempted coup by Soviet hardliners against then-President Mikhail Gorbachev, some of the leadership in Beijing contemplated providing economic support. Chinese leader Deng Xiaoping, a long Soviet skeptic, ended those incipient plans, and the coup failed. What lessons might the Chinese have drawn for their own system?It’s hard to overstate how what happens in Russia has historically shaped thinking in China about their own country. The birth of the Chinese Communist Party, the Cultural Revolution, the economic reforms of the “reform and opening-up” program from the late 1970s, policy toward ethnic minorities – all of these and more were shaped by what some in China thought the Russians were doing right or wrong. But many in China may wonder how much they have in common with Russia today. Presidents Putin and Xi Jinping certainly have a set of conservative, Western-skeptic and statist “elective affinities.” But Xi’s war on corruption and the Chinese Communist Party’s “command over the gun,” as Chairman Mao put it, mean real differences. The Chinese will likely take pride in their own system, where such a mutiny is hard to imagine, but will nonetheless be careful not to crow about it.