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Russia’s invasion of Ukraine has turned neighboring Moldova into a tinder box. Its border with Ukraine stretches for over 1,200 kilometers, and Russian missiles have entered Moldovan airspace on more than one occasion. Moscow has threatened to prevent Moldova from becoming another “anti-Russia,” while making fearmongering accusations that the Ukrainian army has plans to seize Moldova’s breakaway region Transnistria. The direct military threat to Moldova, however, receded after the Ukrainian army defeated Russia in Kherson, and the Moldovan government appears to have successfully adapted to the new situation and restored relative stability. Despite historically strong pro-Russian sentiment, the vast majority of Moldovans now agree that cooperation with Moscow has become too toxic, while the allure of EU integration—such as the opportunity to work there—is more tempting than anything Russia has to offer. Chisinau is accordingly taking increasingly decisive measures in its fight against Russian interference.  A state of emergency has been in effect in Moldova ever since Russia invaded Ukraine on February 24, 2022, affording the government and law enforcement agencies additional powers. So far, the authorities have not resorted to radical measures, but the fact that the state of emergency is extended every two months shows that they are seriously concerned about the threat of destabilization. Throughout the past year, Chisinau has condemned Moscow for the war, but avoided direct confrontation, and was initially reluctant to actively oppose Russian interference. Moldovans welcomed Ukrainian refugees, but declined Kyiv’s requests to sell it six MiG-29 fighter jets, which was a bitter pill for Kyiv to swallow, considering that the Ukrainian army had thwarted Russia’s attempts at the start of the war to carve a corridor through Ukraine to Moldova’s Moscow-backed breakaway region, Transnistria. If it were not for Ukraine’s counterattack, then Moscow would likely have already taken control of Moldova and installed a pro-Russian president there: Russia’s rhetoric about the illegitimacy of the current Moldovan leadership is getting louder and louder. It is unlikely that Moldova, neither a large nor wealthy country, would have been able to put up much of a fight. Chisinau’s caution is understandable: after all, there are 1,500 Russian troops stationed in Transnistria, both as peacekeepers and as guards for Soviet-era arms depots. Moldova only joined anti-Russian sanctions this spring. Before that, the government demurred, citing the country’s dependence on the Russian economy, even though Moldova’s main trading partner has long been the European Union. Last year, almost 60 percent of Moldovan exports went to the EU, while less than a quarter went to the entire Commonwealth of Independent States, including Russia. And while exports to the EU increased by a third in 2022, those destined for Russia decreased by about the same amount. Even Moldova’s long-standing and almost complete dependence on Russian gas supplies has significantly weakened during the past year, largely due to the actions of Russia itself. Last October, Russia’s Gazprom reduced gas supplies to Moldova from 9 million to 5.7 million cubic meters per day in a payment dispute.  Moscow also reduced gas supplies to Transnistria, which almost left Moldova without electricity, since until 2022 up to 70 percent of electricity supplied to the rest of Moldova came from Transnistria and its regional power plant, which runs on Russian gas. The rest was supplied by Ukraine. Due to the reduction in gas supplies, Transnistria stopped selling electricity to Chisinau, while Kyiv also stopped exports due to the Russian missile strikes against its energy infrastructure, which had caused severe energy shortages across the war-torn country. Soon afterward, Chisinau reached an agreement with Tiraspol, Transnistria’s de facto capital. Chisinau agreed to send its own Russian gas supplies to Transnistria in exchange for the resumption of electricity supplies from the latter. To meet its domestic requirements, Moldova began buying gas from the EU, which by January 2023 had enabled it to save $330 per 1,000 cubic meters compared with Russian prices thanks to the relative stabilization of the European gas market.  In the spring, Ukraine resumed electricity exports, and the Transnistria power plant returned to its prewar capacity. The energy crisis hit Moldovan consumers hard, but prod Chisinau to establish alternative gas suppliers, including Romania and Greece, with plans to add Azerbaijan to that list. This energy diversification has strengthened the Moldovan government’s position in its relationship with Moscow. By this spring, following the resignation of the government and a subsequent reshuffle, Moldova had begun to toughen its stance on Russia. New Prime Minister Dorin Recean was previously a national security advisor and interior minister, and his appointment was a signal that security issues are Chisinau’s top priority right now. A few days before the reshuffle, President Maia Sandu said that Ukrainian intelligence had intercepted a Kremlin plan to organize a coup in Moldova through opposition protests and the involvement of foreign mercenaries. It’s hard to verify the claims, but what is certain is that Russia has always had extensive influence in Moldova, and has traditionally enjoyed the support of about half the population. Even now, polls show that while the majority of Moldovans condemn the Russian invasion of Ukraine, about 30 percent still admire Putin. Since last fall, the Shor party has been leading Moldovans in anti-government protests, officially against high utility prices. Russian propaganda portrays the protests as anti-European and nationwide, and describes the party’s head, the fugitive oligarch Ilan Shor, as the leader of the Moldovan opposition. But in reality, the protests only attract a couple of thousand people, and those participants do not hide the fact that they are paid to attend.  Ilan Shor fled to Israel after being sentenced to fifteen years in prison in Moldova for his role in laundering $1 billion in three Moldovan banks. A change of regime in Chisinau to a pro-Russian government would allow him to avoid prosecution and return to Moldova. Many believe that the Kremlin has offered him precisely these guarantees. The Moldovan government was concerned by the protests, but did not dare to take tough action: the Shor party has six seats in parliament, and freedom of assembly is enshrined in the constitution. But the reports of Kremlin plans to destabilize Moldova, and then the emergence of a document titled “Strategic Goals of the Russian Federation in the Republic of Moldova,” which spelled out a plan for regime change, forced Chisinau to act more decisively. The new Moldovan cabinet has appealed to the Constitutional Court to declare the Shor party illegitimate for promoting the interests of a foreign state. Meanwhile, in response to the opposition rallies, Sandu has called on Moldovans to assemble on Chisinau’s main square on May 21 in support of EU integration. About 60 percent of Moldovans are in favor of their country’s accession to the European Union. The reshuffled government has also stopped the broadcasting of Russian TV channels, and stepped up its efforts to publicly refute dubious Russian claims, such as that Ukraine is preparing to occupy Transnistria. The powers of the Information and Security Service, Moldova’s main intelligence agency, have been expanded, and a number of Russian officials—including President Vladimir Putin—have been banned from entering the country. Chisinau’s position on Transnistria has also become tougher. In February, the Moldovan parliament amended the law to make separatism an offense punishable by jail time, prompting outrage in Tiraspol. Chisinau insists that the amendments will not be applied retrospectively: only to future manifestations of separatism. Still, it is not yet clear how the new law will work in practice, so for now, Transnistrian officials prefer not to be seen in Chisinau. Russia’s actions have also prompted a public discussion in Moldova about the country’s armed forces, which will not be able to put up much resistance to a serious security threat. At the Munich Security Conference in February, Sandu asked NATO countries to provide Moldova with air defense systems. The government has not yet abandoned neutrality, but is making it clear that it is ready to turn to NATO for help in the event of an escalation. Chisinau’s course toward more resolute resistance to the Kremlin doesn’t mean that the country will be able to rid itself of its dependence on Russia overnight, of course. Nor will Moscow relinquish its foothold inside the country without a fight. Most likely, the Kremlin will continue to interfere in Moldovan political life by financing pro-Russian parties, portraying NATO as a threat, and accusing Sandu of trying to drag Moldova into the war. It’s possible that the pro-Russian forces will be able to take advantage of the country’s socioeconomic problems to put in a decent showing in the next elections. Even that scenario, however, will not result in fundamental changes to Moldova’s foreign policy. Russia’s aggression against Ukraine is helping to consolidate Moldovan society in favor of EU integration and emancipation from Moscow. No matter who ends up leading the country in the future, they will not be able to ignore that consensus.

Located in southeastern Ukraine, Zaporizhzhia Nuclear Power Station (ZNPP) is Europe’s largest power plant that produced 23% of all Ukrainian electricity before Russia's invasion.  This critical energy source is amidst the chaos and destruction of the ongoing Russia-Ukraine conflict, a harrowing struggle that has wrought immeasurable suffering and upheaval upon the region. Following its capture by the Russian forces on March 4th 2022, there have been drastic disruptions to safe energy production and a heightened global concern for nuclear safety in the region. Introduction and backgroundZaporizhzhia Nuclear Power Plant (ZNPP), located in the Ukrainian city of Enerhodar, was built by Soviet design in the 1980s, with its last reactor being connected to the grid in 1995.  Amongst the ten largest nuclear facilities in the world, the Zaporizhzhia power plant consists of six water-cooling and water-moderating pressurized reactors. A global nuclear scare started on February 24, 2022, when Ukraine informed the International Atomic Energy Agency (IAEA) that “unidentified armed forces” have taken control of all facilities of Chornobyl Nuclear Power Plant located in the Exclusion zone. The IAEA appealed for maximum restraint to avoid any action that may put the country’s nuclear facilities at risk and stressed the IAEA’s 2009 General Conference decision that “any armed attack on and threat against nuclear facilities devoted to peaceful purposes constitutes a violation of the principles of the United Nations Charter, international law and the Statute of the Agency”. Later that week, on March 2nd, Russia stated that its military forces have taken control of the territory around Ukraine’s Zaporizhzhya Nuclear Power Plant. The next day, a large number of Russian tanks and infantry broke through the block-post into the town of Enerhodar, just a few kilometers from the ZNPP. Director General Grossi, appealed for “an immediate halt to the use of force at Enerhodar and called on the military forces operating there to refrain from violence near the nuclear power plant.” By March 4th, Ukraine informed the IAEA that the ZNPP had been shelled overnight, and a fire broke out on site. Although no essential equipment was affected, the first military action      resulted in the activation of the IAEA’s Incident and Emergency Centre in full response. At the end of the day, Ukraine announced that Russian forces had taken control of the ZNPP, but the power plant continued to be operated by its regular staff.  At the time, out of the plant’s six reactor units, two had undergone controlled shut down, two were being held in low power mode, one was shut down for maintenance and one was operating at 60 percent power. ZNPP’s dire situation since March 4, 2022Before the conflict, the ZNPP had access to the grid through four high-voltage power lines, but they have now all fallen victim to the fighting. The back-up power lines connecting the ZNPP to a nearby thermal power station are also down. The plant had also previously temporarily lost direct access to the electricity grid but could then still receive power through available back-up lines, or from one of its reactors that was still operating at the time. The Russian conquest was soon followed by disruptions in the electricity supply to the nuclear power plant, one of the seven indispensable pillars of nuclear safety. Less than two weeks after Russian forces seized the plant, Zaporizhzhia lost one of its three power lines. Since then, mainly as a result of shelling or other military action nearby, the nuclear plant has suffered numerous power cuts, mainly as a result of shelling. Although it has emergency diesel generators that are available to provide backup power, a secure off-site power supply from the grid is integral to ensuring nuclear safety.  Thus, following its first complete external power outage in August, Director General Rafael Mariano Grossi set off from the Agency’s headquarters on an IAEA Support and Assistance Mission to Zaporizhzhia (ISAMZ) to undertake vital safeguards activities at the plant.  That October, Zaporizhzhia lost its last remaining external power source due to renewed shelling, and had to rely on diesel generators again to cool the reactor and support other nuclear safety and security functions. In the next week, Zaporizhzhia lost all external power two more times, receiving electricity from a backup system for the third time in a span of ten days. Similar incidents unfolded in November as well, as the IAEA Director General continued to urge for the critical need to demilitarize the zone.  Based on historical data and industry experience, the nuclear industry aims for an average unplanned outage rate of less than 0.1 per reactor per year which statistically would mean less than one unplanned outage every 10 years. Zaporizhzhia Nuclear Power Plant experienced six in the past year alone. Cold shutdown of the ZNPP reactors doesn’t remove the risk – Spent fuel pools need constant coolingThe fission reaction that generates heat in a nuclear power plant is produced by positioning a number of uranium fuel rods in close proximity. Shutting down a nuclear reactor involves inserting control rods between the fuel rods to stop the fission reaction.The reactor is then in cooldown mode as the temperature decreases. According to the U.S. Nuclear Regulatory Commission, once the temperature is below 200 degrees Fahrenheit (93 Celsius) and the reactor coolant system is at atmospheric pressure, the reactor is in cold shutdown. When the reactor is operating, it requires cooling to absorb the heat and keep the fuel rods from melting together, which would set off a catastrophic chain reaction. When a reactor is in cold shutdown, it no longer needs the same level of circulation. It was announced on September 11, 2022 by Energoatom, operator of the ZNPP that it was shutting down the last operating reactor of the plant’s six reactors, reactor No. 6. The operators have put the reactor in cold shutdown and this shutdown has mitigated a risk. Spent fuel pools also need constant circulation of water to keep them cool. And they need cooling for several years before being put in dry casks. One of the problems in the 2011 Fukushima disaster in Japan was the emergency generators, which replaced lost off-site power, got inundated with water and failed. In situations like that you get “station blackout” – and that is one of the worst things that could happen. It means no electricity to run the cooling system. In that circumstance, the spent fuel overheats and its zirconium cladding can cause hydrogen bubbles. If you can’t vent these bubbles they will explode, spreading radiation. If there is a loss of outside power, operators will have to rely on emergency generators. But emergency generators are huge machines – finicky, unreliable gas guzzlers. And you still need cooling waters for the generators themselves. The biggest worry is that Ukraine suffers from a sustained power grid failure. The likelihood of this increases during a conflict, because pylons may come down under shelling or gas power plants might get damaged and cease to operate.  According to one of the IAEA’s latest updates (#154, April 21, 2023):  “As a result of the warmer weather, the operator has started to put reactor Unit 6 in cold shutdown which is expected to be reached by the weekend, leaving only Unit 5 in hot shutdown to produce hot water and steam for the site. The two reactors were in hot shutdown during the winter to provide steam and heating to the ZNPP as well as heating to the nearby city of Enerhodar, where many plant personnel live.” The cooling pumps for the spent fuel pools need much less electricity than the cooling pumps on the reactor’s primary and secondary loops, and the spent fuel cooling system could tolerate a brief electricity outage. Now, at least if the plant loses offsite power, the operators won’t have to worry about cooling an operating reactor with cranky diesel generators. However, the plant still needs a reliable source of electricity to cool the six huge spent fuel pools that are inside the containment structures and to remove residual heat from the shutdown reactors. The serious risk of military actions for spent fuel storage racksOne more important factor is that the spent fuel storage racks in the spent fuel pools at the Zaporizhzhia Nuclear Power Plant were compacted to increase capacity, according to a 2017 Ukrainian government report to the IAEA. The greater number and more compacted the stored spent fuel rods, the more heat they generate and so more power is needed to cool them. There is also a dry spent fuel storage facility at the plant. Dry spent fuel storage involves packing spent fuel rods into massive cylinders, or casks, which require no water or other coolants. The casks are designed to keep the fuel rods contained for at least 50 years. However, the casks are not under the containment structures at the plant, and, though they were designed to withstand being crashed into by an airliner, it’s not clear whether artillery shelling and aerial bombardment, particularly repeated attacks, could crack open the casks and release radiation into the grounds of the plant. The closest analogy to this scenario could be a terrorist attack that, according to a seminal study by the National Research Council, could breach a dry cask and potentially result in the release of radioactive material from the spent fuel. This could happen through the dispersion of fuel particles or fragments or the dispersion of radioactive aerosols.  This would be similar to the detonation of a “dirty bomb,” which, depending on wind direction and dispersion radius, could result in radioactive contamination. This in turn could cause serious problems for access to and work in the plant. According to the IAEA’s latest update at the time of writing this analysis (#155, April 28, 2023): “IAEA experts present at Ukraine’s Zaporizhzhya Nuclear Power Plant (ZNPP) were again forced to shelter this week after missile attack warnings, with the sound of continued shelling in the distance as military activity continues in the region. In addition, one landmine exploded near the site, Director General Rafael Mariano Grossi said today…The increased military presence and activity in the region again underlines the importance and urgency of agreeing on the protection of the plant, Director General Grossi added.”What is going on and what can be doneWe need to begin to realize and emphasize that the need for compromise extends beyond Russia alone. There has been a certain reticence around the acknowledgement that Ukraine, despite being the “aggrieved” country, must also be willing to make concessions.  To designate Russia as the sole provoker of hostilities at the Zaporizhzhia plant is an objective falsity. It would be illogical for Russia to shell the plant once it has already seized control, unless there were provocations from the Ukrainian side. Interestingly, in spite of countless calls to pacify the region from Ukrainian and international diplomatic leaders, The Times of London on April 7, 2023 published a report detailing a failed Ukrainian attack on the Russian-controlled Zaporizhzhia Nuclear Power Plant (ZNPP) that took place in October 2022. Ukrainian special forces launched an attack on the ZNPP, deploying US-provided HIMARS rockets at the site — an attempt that ultimately failed because of a stronger Russian counteroffensive. Any sort of projectiles nearing the site of a nuclear power plant is an inherently hazardous and potentially catastrophic assault, regardless of the origin of the launch.   Given the high stakes involved and the potential for irreparable harm, it is imperative for even Ukrainian forces to exercise restraint and refrain from any military action that could escalate the conflict, including airstrikes on Zaporizhzhia, even if it is under Russian control. Taking into account the tumultuous events that have transpired at Zaporizhzhia this past year, for the sake of preventing a global nuclear disaster, it is pertinent to prioritize nuclear safety. Counterintuitive as it may seem, it may be more prudent for Ukraine to strategically withdraw from the ZNPP site and attempt to repatriate it later in the war, when more comprehensive diplomatic negotiations can happen and Russia potentially depletes its resources.  War, in our opinion, is the worst enemy of nuclear safety. This is an unprecedented and volatile situation. Only through active, pragmatic engineering and nuclear diplomacy can an amenable and lasting solution to this vexing problem be found. In the foreword of President John F. Kennedy’s book, Profiles of Courage, his brother, Robert Kennedy said, President Kennedy was fond of quoting Dante that “the hottest places in Hell are reserved for those who, in a time of great moral crisis, maintain their neutrality” (December 18, 1963).  The potential catastrophic consequences of the Zaporizhzhia nuclear power plant conflict demand action and a willingness to take a stance.  For Ukraine, taking a stance can mean stepping back and protecting the world from a nuclear calamity. The failure to do so risks being condemned to the “hottest places in Hell,” not in a figurative sense, but in a literal one. As the memory of the Chornobyl Disaster of 1986 still lingers, the potential danger posed by Zaporizhzhia's six reactors far surpasses that of the single reactor that caused the Chornobyl disaster. In the unfortunate event of an explosion, the repercussions would be hexfold that of Chernobyl's catastrophic aftermath, marking a somber moment in the history of nuclear power. Despite the uncertainty surrounding the outcome of the  Russia-Ukraine conflict, the end of this protracted war is imminent. Even if we are facing problems that, as Robert Kennedy put it, people “fifty, even ten years ago, would not have dreamed would have to be faced,” it is of utmost importance to prioritize humanity above political objectives.  Following Dr. Henry Kissinger’s advice, Ukraine may like to exercise diplomacy, which “is the art of restraining power”, rather than brute force to repatriate its own Zaporizhzhia Nuclear Power Plant, considering the high risks associated with military action on site. Ukrainians should not shame their military officers if they retreat from Zaporizhzhia, but rather, commend them for their strategic investment into the future prosperity of their country, their continent and possibly, their planet. A true measure of a hero lies not in their victories, but in their willingness to fight for what is right, even in the face of overwhelming odds. Right now, possibly accepting status quo at Zaporizhzhia is, at least in our opinion, what is the most right, but most certainly what is imperative. With Russia’s adamant military politics, Ukraine would be bravely resisting aggression on behalf of the world, on behalf of a future.  We realize that the IAEA has called on Russia and Ukraine to set up a “safety and security protection zone” around the plant. However, the IAEA is a science and engineering inspectorate and technical assistance agency. Negotiating and establishing a protection zone at a nuclear power plant in a war zone is entirely unprecedented and totally different from all past IAEA efforts. Establishing a protection zone requires negotiations and approvals at the highest political and military levels in Kyiv and Moscow.  It could be accomplished through backchannel, Track II-type diplomacy, specifically nuclear safety-focused engineering diplomacy. In the meantime, the IAEA needs strong support from the United Nations Security Council in the form of a resolution, mandate or the creation of a special commission. Admittedly, this is only a stopgap measure. In parallel with the International Atomic Energy Agency’s effort under the leadership of its Director, General Rafael Mariano Grossi, we believe that the U.N. Security Council should immediately empower a special commission to mediate between the warring parties. It could be modeled after the United Nations Monitoring, Verification and Inspection Commission in 2000, and appoint a prominent, senior international statesman as its head. We believe the person should be of the caliber and in the mold of the legendary former director general of the International Atomic Energy Agency, Dr. Hans Blix of Sweden. Blix led the agency at the time of the Chernobyl accident in 1986 and commands respect in today’s Russia and Ukraine. The great Prussian military theorist Carl Philipp Gottfried von Clausewitz once said: “War is a mere continuation of policy by other means.”  These words still resonate today, reminding us that the quest for peace is not just about putting an end to violence, but about forging a path towards progress and prosperity. It is incumbent upon us to recognize that bringing an end to this conflict is not merely a cessation of violence, but a catalyst for the advancement of policy. As we strive towards resolving conflicts and achieving a lasting peace, it is our duty to recognize that this effort is not merely a tactical move, but a transformative one. By embracing a policy-driven approach, we can internalize the true nature of conflict, and use it as a means to move forward and effect real change. So let us be bold, but at the same time be pragmatic, and let us remember the words of Clausewitz as we work towards a brighter future for all. Let us see war not as an end in itself, but as a means to an end – a means to build a world where conflict is a thing of the past, and policy is the key to progress. President John F. Kennedy’s bold vision for political courage and making compromises in his aforementioned book, Profiles of Courage, also beautifully applies to this very context of Ukraine preserving its principles of sovereignty and territorial integrity while tactfully compromising with Russia over safeguarding Zaporizhzhia: “We shall need compromises in the days ahead, to be sure. But these will be, or should be, compromises of issues, not of principles. We can compromise our political positions, but not ourselves. We can resolve the clash of interests without conceding our ideas... Compromise does not mean cowardice. Indeed it is frequently the compromisers and conciliators who are faced with the severest tests of political courage as they oppose the extremist views of their constituents.”

With China increasingly assertive in pursuing its economic and geopolitical interests abroad, US–China tensions are rising, leading many traditional American allies to consider following Washington’s lead in pursuing economic ‘decoupling’ from China. Their strategy aims to reduce economic reliance on China through extensive export controls and re-ordered supply chains. Yet in Western Europe, France and Germany are showing an unwillingness to join their allies in decoupling from China. French President Emmanuel Macron’s recent comments that Europe should not get ‘caught up in crises that are not ours’ demonstrate this. If anything, their relationship with Chinese capital is thriving. China is one of France and Germany’s major trading partners outside of the European Union and a significant export market for goods such as luxury goods and pharmaceuticals. Exports to China made up 7.4% of Germany’s total exports and 4.21% of France’s in 2019, with these numbers growing over the last three years to record levels. Given China’s growing middle class, the country presents an enormous potential consumer market in years to come. According to recent reports, France’s bilateral trade in goods with China exceeded US$100 billion for the first time in 2022, an increase of 14.6% on 2021­. The recent signing of 18 cooperation agreements by 46 French and Chinese companies across numerous sectors further emphasises the gathering pace of these trade relationships. As for Germany, its total trade with China saw an increase of 21% from 2021. While exports increased by a modest 3.1%, Germany’s imports from China accounted for much of the growth, soaring by more than a third. Specifically, Germany imports from China about two thirds of its rare earth elements, many of which are indispensable in batteries, semiconductors, and magnets in electric cars. This shows that Germany and France will rely more on China as time passes for the critical raw materials needed to fuel their economic growth and energy transitions. Furthermore, various French and German companies would prefer to grow their established production facilities and extensive sales networks in China. With the trade relationship expanding so rapidly and estimates suggesting that more than 2 million German jobs depend on exports to China, the countries’ economies are set to become even more intertwined. German companies Volkswagen and chemical processor BASF, for instance, are significantly expanding their investments in China. Volkswagen, which already has more than 40 plants in China, recently announced that it will invest billions in new local partnerships and production sites. BASF, which has 30, says it will invest US$10.9 billion in a new chemical production complex there. Given all this new activity, making a show of decoupling from China could cause significant repercussions for France and Germany. Ultimately, the costs of decoupling outweigh the benefits for the two governments. While their allies might come to bemoan their inaction, they just won’t forgo such significant opportunities for French and German companies in China. Additionally, decoupling could trigger retaliation, as it did with Australia, with China halting exports to the two countries, increasing tariffs, or reducing market access to French and German goods. All in all, France and Germany are unlikely to shift from their stance. They’d prefer to let their markets flourish and work out the rest later.

It aims to signal its diplomatic ascendance and challenge Washington as the big shaper of outcomes. Late last month, Chinese President Xi Jinping finally made that much hoped-for call to Ukraine’s President Volodymr Zelensky and informed the world that his nation “always stood on the side of peace.” This was the first outreach by Beijing to Ukraine since  the latter’s invasion by Russia last February, and Zelensky was keen on this engagement, especially after Xi’s visit to Moscow in March. Ukraine views China as an important interlocutor that can engage with Russia and seems to have been encouraged by the “long and meaningful” phone call between the two leaders that in its view would “give a powerful impetus to the development of our bilateral relations.” Last week, Ukraine’s finance minister also suggested that Kyiv should use its bilateral relationship with China as leverage to bring an end to Russia’s full-scale invasion, though he refused to consider China as a friend. The Chinese President has been reported as saying that China, “as a responsible majority country,” would “neither watch the fire from the other side, nor add fuel to the fire, let alone take advantage of the crisis to profit.” But there was no suggestion that Beijing would be doing anything meaningful going forward. The call and associated choreography had more to do with positioning China as a global power that is willing to engage in resolving problems, as opposed to the US that is creating more trouble by continuing to support Ukraine and prolonging the war. China has already laid out its cards on the table when it comes to the Ukraine crisis. It had released a 12-point position paper on the political settlement of the Ukraine crisis earlier this February. In an attempt to present itself as a neutral peace broker, Beijing has enunciated a few standard principles, including respect for the sovereignty of all countries, resumption of peace talks, keeping industrial and supply chains stable and opposition to unilateral sanctions  as well as the use of nuclear weapons. Taking this forward, China has decided to send special representatives to Ukraine and hold talks with all parties in an attempt at peace-making. But beyond these principles, China’s credentials are hardly supportive of a larger role as a peace-maker, as it has long refused to view its ties with Ukraine and Russia at the same level. Russia has shown no inclination to step back from its aggression and Ukraine is seemingly preparing to launch a large-scale counter-offensive against Russian forces in a bid to retake territory in the east and south for which it has been preparing for months now. While Moscow has given no indication of backing down, perhaps assuming that it has time on its side and waiting for the Western consensus on backing Ukraine to collapse, Ukrainian forces feel that the weaponry delivered by the West over the past few months is likely to give them the momentum needed to shape battlefield realities in their favour. China is also unlikely to be viewed as an honest broker, given its ties with Russia that are increasingly becoming tighter. And despite repeated statements that the “sovereignty, independence and territorial integrity of all  countries must be effectively upheld,” Beijing has not only refused to acknowledge Russia’s violation of Ukrainian sovereignty, but has continued to privilege its partnership with Moscow. Though Xi’s visit to Moscow in March did not result in any concrete help to Russia, it did signal to the West that  the China-Russia entente can shape the global balance of power in ways that can be deleterious to Western interests. More than anything else, Chinese posturing in the Ukraine conflict is aimed at the West. In its position paper, Beijing talks about the need to abandon a “Cold War mentality” and argues that “the legitimate security interests and concerns of all countries must be taken seriously and addressed properly,” making it clear that it largely agrees with Moscow’s perspective that it was the West that created the conditions for this war with the expansion of the North Atlantic Treaty Organization (Nato). China has also been critical of Western sanctions on Russia, arguing that “relevant countries should stop abusing unilateral sanctions and ‘long-arm jurisdiction’ against other countries, so as to do their share in de-escalating the Ukraine crisis.” Both of these issues are germane for the long-term trajectory of China’s role on the global stage amid deepening tensions with the US. For China, clearly, this crisis is more about itself than it is about Russia. As China comes out of its covid- induced isolation, it would like to have a stable international environment for a sustained economic recovery. But it is also using an opportunity to emerge as a key global interlocutor by venturing into diplomatic arenas it has been shy of in the past, taking advantage of the West’s recent inward orientation. This effort was exemplified by its attempt to bring Iran and Saudi Arabia together in the highly volatile Middle East. China’s attempt at emerging as a global peace-maker is about presenting a diplomatic challenge to the US on the global stage. Beijing may not have much of an impact on the eventual outcome of the Ukraine crisis, but it is signalling that it is no longer shy of showcasing its growing diplomatic heft.

Chinese leader Xi Jinping was unanimously “reelected” for another five-year term at the Two Sessions, and the Chinese government approved significant changes in the party-state structure to counter the US-led West’s dominance and promote economic and technological self-sufficiency. At the same time, China is engaging in diplomatic activism in the Middle East and elsewhere, forcing Israel to reconsider regional dynamics and prepare for a protracted state of “struggle” between the two superpowers.  In March 2023, Chinese leader Xi Jinping marked several highly successful events. Internally, he was “reelected” for a third term as President, and externally, he brokered a normalization agreement between Saudi Arabia and Iran – without any American involvement. These two developments coincided with the Two Sessions, China’s annual parliament meeting, where Xi passed far-reaching reforms aimed at increasing China’s economic and technological self-reliance in the face of Western adversaries. Judging by his remarks, it appears that under Xi China will continue its proactive foreign policy directed against the US-led global order. This in turn will test Israel’s ability to continue to maintain a balanced foreign policy vis-à-vis the two superpowers. Israel must now account for China’s growing influence in diplomatic and security theaters in the Middle East, as well as Beijing’s closer relations with Iran and Russia. To ensure its own security and economic interests, it must reconsider the regional dynamic while engaging in dialogue with the relevant actors. Finally, the escalation of tensions between the superpowers forces Jerusalem to prepare for extreme scenarios, most notably war in the Taiwan Strait. After a decade as president, Xi Jinping was unanimously reelected by the Chinese parliament for another five-year term. The vote – in which Xi was the sole candidate – was held as part of the annual Two Sessions, the Chinese legislature’s most important political gathering. The main event usually takes place over a seven-day period in March, when approximately 3,000 delegates from the National People’s Congress (NPC) – the legislative body – and some 2,000 delegates from the top political advisory body, the Chinese People’s Political Consultative Conference (CPPCC), convene in Beijing. In the course of the gathering, the Premier delivers a work report, while the delegates pass legislation, make amendments to the country’s constitution, and approve appointments in various state bodies. This year’s events were especially significant because they occurred immediately following the 20th Congress of the Chinese Communist Party (CCP), held in October 2022. At that gathering, which takes place every five years, Xi was also appointed to a third term as general secretary of the CCP and Chairman of the Central Military Commission. Since the 1980s, every five years, the CCP has introduced widespread reforms in the structure of the party-state. Previous reforms included changes to the balance of power between the Party and the state in ways that conformed to the incoming leadership's priorities and vision, as well as domestic and foreign developments. This year, the NPC approved significant changes in the party-state structure, continuing the trend in which the CCP under Xi has been "swallowing up" the government, with the lines between the two becoming increasingly blurred. These changes reflect Xi's belief that only a strong and centralized party can deal with domestic and foreign challenges, particularly the United States, China's main strategic rival. Indeed, during a heavily-publicized meeting at the start of the Two Sessions between Xi and representatives of the Chinese business sector, the Chinese leader stunned the audience by launching a direct attack against Washington, which he blamed for "the unprecedented severe challenges" that China is facing, and for trying to "contain, blockade, and suppress" China. What made his remarks particularly noteworthy was that despite rising tensions between the superpowers in recent years, Xi avoided explicitly naming and shaming the United States, instead allowing Chinese diplomats to spar with Western hawks. As a matter of fact, an examination of Xi’s writings reveals that even early in his political life, he saw the West, and the United States in particular, through a Cold War prism. However, it was the trade war waged by the Trump administration, which later escalated into a comprehensive technological and geopolitical war, that reinforced for him the need for economic and technological independence. The Biden administration went even further in its efforts to prevent China from gaining access to critical technology, and unlike its predecessor, has been successful in securing allies’ support. The Chinese countermeasures can be found in its most recent reforms, which included increasing the powers of the Ministry of Science and Technology (MoST) through the establishment of a new decision making body, the Central Science and Technology Commission, which is likely to be headed by Xi himself. Some of the ministry's specialized functions were transferred to relevant government ministries as part of the restructuring. The changes will allow the ministry to focus on macro-management of competition in innovation and to foster local development of basic research, core technologies, and a solution to the problem of the "bottleneck" imposed by the West, such as restrictions on China's import of microchips and airplane engines. In addition, a new institution, the National Data Bureau, will be tasked with managing digital resources, under the auspices of the Chinese government’s top macroeconomic management agency, the National Development and Reform Commission (NDRC). This year's reforms likewise highlighted China's financial sector, with the establishment of the new National Financial Regulatory Administration (NFRA) and expanded powers for the China Securities Regulatory Commission (CSRC). It was also decided to cut 5 percent of the central government and party workforce. Beyond the economic rivalry with the United States, the ramifications of the war in Ukraine, and COVID-19 restrictions, Beijing faces a host of internal challenges: a skyrocketing debt-to-GDP ratio (at the end of 2022, it stood at 273 percent), a declining population, a real estate bubble, natural resource pollution, a slowdown in imports and exports, high savings levels among households, and income inequality. If the rivalry with the United States intensifies – for example, if China were to invade Taiwan – Beijing would have to anticipate the imposition of additional sanctions, similar to those that Russia has been struggling with for the past year. Yet until such time as the situation vis-à-vis the United States reaches a critical stage, if at all, and against the backdrop of increasing concern in the international business community about the direction China is heading under Xi, Beijing is attempting to project to the world “business as usual.” At the conclusion of the Two Sessions, the incoming prime minister, Li Qiang, appeared to be smiling as he told foreign reporters that the United States and China must cooperate, because “there are no winners in a conflict.” He also promised that he would ensure a competitive, market-oriented, and fair environment that would protect the rights of Chinese and foreign businesses. However, here too the Party’s “invisible hand” was evident when he added that “the role of the new government is to execute and implement the important decisions and plans laid out by the CPC Central Committee.” The new appointments of other senior positions reflected the same ambivalence that Li expressed in his remarks. On the one hand, the Congress decided to extend the terms of 24 of the 26 ministers and national commissions, among them the head of the China’s central bank, Yi Gang, and Finance Minister Liu Kun, even though they had reached retirement age. One of the two new appointees, on the other hand, is Minister of National Defense Li Shangfu, who has been sanctioned by the US since 2018 for purchasing Russian weapons. Unlike his predecessors, who had battle experience, Li is an aerospace engineer in training. He was the former director of the People's Liberation Army's (PLA) space and cyber programs, as well as the deputy commander of the PLA's Strategic Support Force, which was in charge of China's space, cyber, and electronic warfare capabilities. Aside from the obvious defiance toward the US, his appointment demonstrates the importance that China places on modernizing China's military technology, given the ever-increasing restrictions imposed on technological imports to China. Self-sufficiency should not be confused with isolationism. The agreement brokered by Beijing between Saudi Arabia and Iran on March 10 – while  the Two Sessions were in session – was the clearest indication that China intends to maintain its active foreign policy. Granted, China pushed through an open door, given the conflicting parties’ inherent need for an agreement to focus on their economies, and only time will tell whether the agreement will hold; nonetheless, this was the first time that Beijing has led any kind of mediation effort, let alone successfully, and the United States was not even in the room. In doing so, China has demonstrated that it can use its dominant economic and commercial position to advance diplomatic and security objectives, ostensibly as an "alternative" to the United States. China’s global ambitions are not limited to the Middle East. The Belt and Road Initiative (BRI), as stated in the government's work report, will celebrate its tenth anniversary in October. What began as a central-southeast Asian initiative has evolved into a global network of "silk roads" emanating from China and extending into space, with hundreds of massive infrastructure projects worth over $1 trillion in 146 countries. The BRI has had to deal with a number of implementation and funding challenges over the years, so it has been scaled back. At the same time, Chinese officials emphasize that it will remain a focal point of Beijing's foreign policy, with the emphasis shifting to smaller but more strategic projects such as bolstering global supply chains and cooperating in the digital domain, as well as healthcare, public policy, renewable energy, and people-to-people and diplomatic ties. Xi has unveiled other ambitious projects in recent years, most notably the Global Development Initiative (GDI), which is tasked with promoting the United Nations' goals for sustainable development, and the Global Security Initiative (GSI). At the conclusion of the Two Sessions, Xi announced the Global Civilization Initiative (GCI), the details of which remain unknown. As with the BRI, any success story that can be classified as development or security will be attributed to them, even if it occurred years before these initiatives. This is what happened with the Saudi-Iranian agreement or the Chinese peace initiative to end the Ukrainian war, both of which Beijing hailed as shining examples of the GSI in action. In practice, these initiatives reflect Beijing's desire to reshape the global order to reflect its interests and values, while undermining the United States-led West's dominance in its spheres of influence. For example, Xi described the GCI as "a new form of human civilization" that "shatters the myth that modernization is equal to Westernization. The bottom line is that the Two Sessions and the extension of Xi’s term of office indicate that China will continue to push itself to the forefront of the international stage. The next five years will be defined by a stronger push for self-sufficiency, financial stability, and technological advancement. At the same time, China will not close itself off to the rest of the world. On the contrary, China will not back down from "a struggle" against what Xi refers to as the West's and the United States' "attempts to blackmail, contain, and blockade" it. This spirit was evident during the first press conference given by China's new foreign minister, Qin Gang, who warned that "if the United States does not hit the brakes, but continues to speed down the wrong path...there will surely be conflict and confrontation." While Western doors are closing in on China, Beijing will continue to see Israel as a backdoor for securing core technologies that will help it achieve self-reliance, rendering Israel obsolete in the long run. This is evident in the recent influx of Chinese commercial delegations to Israel, following Beijing's lifting of travel restrictions. Simultaneously, the US-Israel Strategic High-Level Dialogue on Technology, launched during President Joe Biden's July visit to Jerusalem, will examine Israeli-Chinese cooperation, particularly in the less regulated hi-tech sector and academia. The agreement reached between Saudi Arabia and Iran, as well as Xi's recent visit to Russia, during which the parties agreed to "increase contacts over security issues in the Persian Gulf," indicates that China's diplomatic activism in the Middle East will only grow. The evolving situation in which China and the US both play key roles in regional geopolitics – against the backdrop of increased competition between the two countries and the war in Ukraine – forces Israel to reconsider regional dynamics. In order to prevent Iran from acquiring military nuclear power in peaceful means, Jerusalem must deepen its dialogue with Washington, Beijing, Moscow, and its Arab partners in the Negev Forum on regional security and economic interests. Finally, if a conflict between China and the United States is truly "inevitable," Israel must prepare for the worst-case scenario, in which two superpowers go to war in the Taiwan Strait, and consider the implications for its relations with Beijing.

Macron has raised doubts about how serious France is when it comes to managing the negative externalities of China’s rise. Just when it seemed the European Union was finally achieving strategic coherence as a global geopolitical actor, French President Emmanuel Macron’s recent visit to China has shattered that myth. The French president and the head of the European Commission, Ursula von der Leyen, headed to China last week, hoping to project a sense of unity vis-à-vis Beijing at a time when global fault lines are sharpening among major powers. The two leaders were aiming to stabilise an increasingly difficult trade relationship with their largest trading partner as well as try to push China into taking a more active role in ending the Ukraine war. Other European leaders, like German Chancellor Olaf Scholz and Spanish Prime Minister Pedro Sánchez, have also tried to engage Chinese leadership in recent months. But Macron went beyond others as he advocated “strategic autonomy” for Europe as a “third superpower.” Arguing that Europe faces “the great risk” if it “gets caught up in crises that are not ours, which prevents it from building its strategic autonomy”, Macron stirred up instant controversy by suggesting that Europe must reduce its dependency on the U.S. and avoid getting dragged into a confrontation between China and the U.S. over Taiwan. In case of an aggravation of the U.S.-China conflict, Macron advocated, “we [Europe] will not have the time nor the means to finance our own strategic autonomy, and we will become vassals, whereas we could become the third pole [in the world order] if we have a few years to develop this”. Though von der Leyen went to China at Macron’s invitation, the visit has been overshadowed by Macron’s posturing and Beijing’s apparent glee that it is indeed possible to drive a wedge in transatlantic relations. Macron was given a red carpet welcome in China, and his comments have received widespread coverage. The Chinese Communist Party-run Global Times said the comments were “clearly the result of Macron’s long-term observation and reflection” and represented a path that was “relatively objective, rational, and in line with Europe’s own interests”. Macron has described the visit as an attempt to “consolidate common approaches” over the war in Ukraine and to force China to acknowledge the costs of its ties with China. But it was hardly evident how this was achieved during and after the visit. Ursula von der Leyen, who has been largely given the cold shoulder in China, has been much more emphatic in her denunciation of the Chinese 12-point plan to end the war in Ukraine and has been underlining the need for “de-risking” in Europe’s trade ties with China. But Macron’s intervention has led to an intense backlash from all sides. The Europeans are making it evident that there is hardly any widespread support for the French leader’s position. The Inter-Parliamentary Alliance on China said in a statement that Macron’s comments are “severely out of touch” with sentiment across European leadership and that he does not speak for Europe. In particular, the officials of central and eastern Europe have been vocal in their dismay and opposition to Macron’s policy preferences. “Instead of building strategic autonomy from the United States, I propose a strategic partnership with the United States,” Polish Prime Minister Mateusz Morawiecki bluntly put it to his European partners. Those European nations that are on the frontlines of Russian military aggression see the challenges of today in existential terms. They have no time for a French philosophical treatise on statecraft. With France and Germany devoid of any significant military prowess, the reliance of the EU on the U.S. is a strategic imperative. Macron’s ill-timed comments have once again revealed the divergences between the “old” and “new” Europe, even though “old” Europe has not been supportive of Macron’s worldview. Reactions from the U.S. have been equally scathing. Though the White House has maintained that it is “focused on the terrific collaboration and coordination that we have with France”, the Republicans have latched onto this controversy. The Republican senator Marco Rubio rhetorically asked if, after Macron’s comments, the US should just consider focusing its foreign policy on containing China and leave Europe to handle the war in Ukraine. Mike Gallagher, the Republican chairman of the House of Representatives Select Committee on the Chinese Communist Party, described Macron’s comments as “embarrassing” and “disgraceful.” And of course, former President, Donald Trump was more colourful in his response when he said that Macron “is over with China kissing [Xi’s] ass in China.” Macron’s stance will be concerning to Washington as they are likely to embolden China, even as it reignites the debate about how much America should commit to European security. Macron has been under siege in France, with his approval ratings down in the dumps and his government narrowly surviving a vote of no confidence last month. So posturing on the global stage on an issue that has had a long pedigree in French politics perhaps makes sense for him politically. Ad he has made controversial comments in the past as well, such as NATO experiencing “brain death” and trying to offer Russian President Vladimir Putin “security guarantees” months after his invasion of Ukraine. But at a time when the West has tried with great difficulty to project a serious China policy and when Chinese aggression, especially against Taiwan, has been explicit, making remarks that end up doing exactly the opposite of what the visit was intended for in the first place betrays a lack of resolve that Beijing will be only too pleased to exploit. And for France’s partners in the Indo-Pacific, Macron has raised doubts about how serious France is when it comes to managing the negative externalities of China’s rise.

With relations at an all-time low, punitive actions targeting China have become politically popular, even if they have no analytical basis. Five years ago, then president Donald Trump launched a tariff-fueled trade war with China designed to reduce the bilateral trade deficit. His successor, President Joe Biden, then added a decoupling focus by restricting high-tech exports and curtailing professional and financial links. Both wanted to reduce imports of manufactured goods and bring home more jobs. How should one judge the effectiveness of their policies? Back then, and even more so today, the logic of Trump’s fixation on trade deficits made little sense. But security concerns have now become the rationale for reducing America’s trade relations with China and undercutting China’s growth potential. Against these yardsticks, the results are mixed but on balance unconvincing, given the costs in the form of inflationary pressures, repressed export growth, and a projected decline in global output. But U.S. politicians from both parties strongly support these restrictive measures because the costs are not obvious to their constituents, while the benefits from appearing to be tough on China resonate well with voters. Rising trade deficits The recent U.S. Census Bureau data indicate that the politically sensitive U.S. merchandise trade deficit with China was larger in 2022 than when Trump became president, while America’s overall trade deficit hit an all-time high of $1.18 trillion. This reinforces the views of nearly all the economists surveyed at the launching of Trump’s trade war: that the tariffs would not reduce U.S. trade deficits and the costs would be paid largely by Americans. For the Trump administration, the wild card was the “phase one” purchase agreement, which called for an increase of $200 billion in China’s imports from the United States. But state-to-state purchase agreements have no logical basis when global trade is largely shaped by the market-driven decisions of firms and consumers and subject to unpredictable events such as the coronavirus pandemic. Economic principles tell us that how much a country saves and spends determines its trade balance. The combination of Trump’s large tax cuts and Biden’s huge expenditure initiatives has led to soaring budget deficits, which are mirrored in record trade deficits. All this has little to do with China. Yet the Biden administration still insists that China honor the purchase agreement and links the removal of tariffs to its fulfillment. Asking China to honor an agreement that made no sense to begin with as a condition for dropping another equally ineffective policy defies logic. Trade diversification but increasing import dependence on other countries But this focus on bilateral trade numbers overlooks the sharp decline in China’s share of trade with the United States. Whereas China accounted for 47 percent of the U.S. trade deficit in 2017, it accounted for only 32 percent last year, with most of this decline offset by the increasing shares of other East Asian economies. Europe’s share of America’s overall trade deficit also declined from 21 percent to 18 percent. Only Canada and Mexico, via the United States-Mexico-Canada Agreement (USMCA), were able to increase their share from 11 to 18 percent. More insights can be gleaned from looking at the components of trade. Although the value of U.S. imports from China was essentially the same in 2022 as it was in 2017, total U.S. imports increased by about $900 billion during this period. As a result, China’s share of the total, made up largely of manufactured goods, fell from 22 to 17 percent. This decline, however, did not reduce America’s dependency on imports of manufactured goods. The share of imports relative to overall expenditures on manufactured goods rose steadily to 34 percent in 2022 from 23 percent two decades ago. The decline in China’s share of U.S. imports of manufactured goods was more than offset by imports from other countries, notably Mexico and Vietnam. These two developing countries, more than others, were able to import heavily from the United States based on their locational advantages and free trade agreements. Vietnam and China share a border and are linked by the ASEAN-China trade agreement, while Mexico and the United States also share a border and are linked by the USMCA trade agreement. Less noticed, however, is the behind-the-scenes role that China plays in supplying the components and materials for these other countries’ exports to the United States. Most of Vietnam’s increased exports were in product lines where U.S. imports from China fell, such as computer accessories and telecommunication equipment. China’s exports to Vietnam have more than doubled since 2017, and its trade surplus nearly tripled by 2022. China’s exports to Mexico increased by nearly 30 percent last year, on top of a 50 percent increase in 2021. China may be exporting less to the United States directly, but it is now indirectly exporting more. This explains why China’s share of global manufacturing production has continued to increase from 26 percent in 2017 to 31 percent in 2021. As for U.S. exports, the total averaged about $1.5 trillion from 2017 to 2020 but then jumped to $1.9 trillion in 2022. But this increase was not in manufactured goods but in exports of energy products and chemicals to Europe, spurred by the Ukraine crisis. The trade war did little to expand U.S. exports to China, the share of which fell from 8.4 percent in 2017 to 7.5 percent in 2022. Costs and benefits of decoupling According to one study, U.S. firms were handicapped by tariff-related higher costs of their imported inputs, and coupled with China’s retaliatory tariffs, this resulted in U.S. exports to China being 23 percent lower than they would have been in the absence of the trade war. The consequence is that America’s trade war policies generated very little growth in exports of manufactured products, despite the priority given to those policies by both the Trump and Biden administrations. If the purpose of the U.S. punitive actions toward China was to weaken China economically, there is no clear evidence of that happening. By developing alternative export markets and tapping pandemic-driven demand in the West for manufactured goods, China pushed its share of global exports to record levels in recent years. Meanwhile, China’s imports as a share of its GDP have been declining steadily, from a high of 28 percent in the early 2000s to 17 percent in 2022. One could argue that the world has become more dependent on China in trade while China has become less dependent on the world. The benefits of decoupling—if any—should be weighed against the costs imposed on U.S. consumers and producers and damage done to the export competitiveness of U.S. firms. To counter such tendencies, the Biden administration is promoting domestic manufacturing with subsidies in the Inflation Reduction Act. Such actions can be justified for strategic reasons, but the rationale is weakened by protectionist Buy America conditions. U.S. policymakers often counter by pointing to China’s use of subsidies to promote strategic industries, but Chinese firms were keen to import key technologies and components to ensure that their products were globally competitive on cost and performance grounds. The recent semiconductor and other U.S. restrictions on China’s access to high-tech products are also problematic because these products are “dual use,” with a much larger commercial market relative to military applications. Such restrictions hurt the many U.S. firms that derive significant revenues from selling to China and may contravene World Trade Organization guidelines. The costs of trade-related distortionary policies can be substantial. One oft-cited study estimates that taxpayers end up paying about $250,000 for each job saved in typical Buy America programs. At a broader level, a recent International Monetary Fund study estimates that a combination of U.S. trade and technological decoupling measures could reduce global GDP by some 7 to 12 percent. Ultimately, the problem lies in the lack of clarity on U.S. policy objectives. What does it mean to undercut China, and how will the United States know if it has succeeded? With U.S.-China relations at an all-time low, punitive actions targeting China have become politically popular, even if they have no analytical basis. The reality is that the United States and China have no choice but to continue trading with each other. But with security overriding commercial considerations, the economic interdependence built up over decades is now being reversed, leaving everyone worse off.

​Although the dollar continues to be the dominant global currency, Russia and China could dent this dominance. In the aftermath of global financial exclusion, Russia has had to make some strategic adaptations. The West’s sanctions had crippling consequences, and the Kremlin scrambled to find alternatives. In light of these developments, China became an important ally, and the Yuan—its currency—has taken on a more prominent role. It is telling that in Russia, the yuan has surpassed the United States Dollar (USD) in trading volume, a feat achieved a year after the Ukraine conflict, which triggered a series of sanctions against Moscow. As Russia and China band together, one wonders what other shifts will take place and how they will shape the future. Change is afoot, and the Russian market bears witness. The month of February saw a watershed moment as the yuan surged past the dollar in monthly trading volume for the first time. The momentum continued into March as the gap between the two currencies widened, showcasing the growing sway of the yuan. It’s an impressive feat, considering that the yuan’s trading volume on the Russian market was once quite insignificant. The winds of change blew through Russia’s financial system as the year progressed. Additional sanctions had taken their toll on the few remaining banks that still held power to make cross-border transactions in the currencies of countries that had been deemed “unfriendly” by the Kremlin. One such bank was Raiffeisen Bank International AG, whose Russian branch played a significant role in facilitating international payments within the country. However, the lender found itself under the watchful eye of both European and US authorities, which only added to the pressure. These events spurred the Kremlin and Russian companies to shift their foreign-trade transactions to currencies of countries that had not imposed sanctions.Converging coalitionsThe bond between Russia and China is growing stronger, with both nations seeking to bolster their positions on the global stage. Their alliance has spread across various spheres: military, economic, and political. With relations between Russia and the West crumbling, China has emerged as a key partner for Russia, providing it with the necessary support to counter economic and political pressure. On the other hand, China is keen on expanding its global reach, especially in the Eurasian region, and sees Russia as an important ally in this regard. President Xi Jinping’s recent visit to Moscow and his pledge to expand cooperation are likely to take this partnership to greater heights. Trade and investment ties are set to grow stronger, with both nations seeking to reduce their dependence on Western economies. Russia’s focus on infrastructure development and mega projects is also likely to benefit from China’s expertise in these areas. Energy is another significant area of collaboration, with Russia being a leading exporter of oil and gas and China being the world’s largest importer of these resources. Technology is also an essential domain, with both countries investing heavily in research and development to remain competitive in the global economy. While the alliance between Russia and China will likely have far-reaching geopolitical consequences, it is a complicated relationship with both nations pursuing their interests, even as they work towards common goals. As a result of Western sanctions, Russia has shifted its foreign trade transactions away from the dollar and euro to currencies of non-restricted countries. By doing so, the Kremlin and Russian companies hope to decrease their dependence on the Western financial system and explore new avenues for conducting their trade and economic activities. This shift in strategy reflects Russia’s determination to maintain its economic stability despite restrictions on its access to the global financial system. It also underlines the growing importance of alternative currencies in global trade as countries strive to minimise the impact of sanctions and safeguard their economic interests.Structural overhaulsThe Russian Finance Ministry was not immune to the winds of change either. Earlier this year, it made the switch from the dollar to the yuan for its market operations. It even went a step further by devising a new structure for the national wealth fund, earmarking 60 percent of its assets for the yuan. The Bank of Russia joined the chorus, urging its people and businesses to consider moving their assets to the rouble or other currencies considered “friendly.” This would help mitigate the risk of having their funds blocked or frozen. As the world undergoes a seismic geopolitical shift, it seems Russia is moving in tandem, searching for ways to secure its economic future. However, the dollar still reigns supreme in the Russian market. Even with all the changes taking place, it remains the most widely used currency, ceding its throne only occasionally to the yuan. This underscores the enduring dominance of the dollar, which has played a significant role in Russia’s financial landscape for years. However, as the world continues to evolve, one wonders how long it can hold on to its crown.

Annotation The features of the implementation of the industrial policy of the European Union aimed at achieving the goals of ensuring the functioning of green energy are considered, an assessment of the prospects for regional and global development in the context of rising prices for energy products is given The beginning of 2023 showed the correctness of scientists who have long warned about the strengthening of the negative impact on humanity of natural and climatic changes, natural disasters, man-made disasters and their consequences, which leads to a decrease in the sustainability of global economic and social development. The most incomplete list of them includes the earthquake in Turkey, the danger of a new pandemic, the strongest tornado in the USA. As for the problems of climate change for the European Union countries, at present the problem of drought and the increasing shortage of fresh water is becoming increasingly urgent there. Moreover, in the most unexpected places, natural hazards that are not characteristic of the region, including volcanic activity, may also occur. Clearly, overcoming this kind of problem will require, at a minimum, a reliable energy supply. However, the orientation of the region's industrial policy towards green energy, the creation of capacities for the production of alternative energy sources means, if we do not consider the negative environmental consequences of this, a sharp decrease in the reliability of energy supply. This is all the more important since the EU own energy production is at a rather low level. The prospective restructuring of regional gas supply means for the EU a significant decrease in the competitiveness of goods produced in the region, which, without the supply of cheap Russian natural gas, leads to the loss of the main markets.  At the same time, it is possible that regional crises, such as climate, environmental, migration, demographic, food, logistics, which continue to intensify, will one day lead to global consequences, including a financial crisis. And it will eventually lead to an exchange crisis, which will necessarily spread to commodity markets with appropriate consequences. In a natural way, ordinary EU citizens understand how the abandonment of a cheap and reliable source of energy supply will end, including its long-term consequences. And the companies of the global energy market are now confident that the time has come for long-term contracts. The fact is that modern competition, conducted by individual subjects of international relations in a very specific way, began to deny international law, primarily the UN Charter (at least Article 1.3). The result of all this will be serious disproportions in the development of the global economy and very many will have to refresh the survival skills formulated by Robert Baden-Powell (1857-1941) at the beginning of the twentieth century.

The political crisis currently experienced by Israel has its origins in the structure of the political system of this country, institutionalized since the twenties of the last century, in British Palestine, through the installation of an electoral system first adopted by the Jewish community authorities, which was growing with immigration, and then by the State of Israel since its establishment in 1948. It was a parliamentary proportional representative system, with a single national list, with an entry band for Parliament that varied from 1% of the votes to the current 3.25%. This system worked regularly while the big parties of the time –Labor and Likud (liberal nationalist)– received a large percentage of votes that allowed them to choose minor partners for the government coalition and at the same time they were led by politicians who possessed high levels of legitimacy by their foundational roles in Israel, such as were Ben Gurion and Begin. Around the 1980s, electoral parity began to emerge between the possible government coalitions led by both parties, and this situation gave rise to governments of national unity led by Shamir and Peres. Later, the big parties lose electoral support, and the government coalitions are increasingly weak. This is because the leader of the party that wins the first electoral majority wins just over a quarter of the votes, while to achieve a coalition that includes more than 50% of the parliamentary seats, he must pay high 'prices' to the small parties and depends more and more on them in order not to lose the government. This is the current case of the Netanyahu government. The attempt at electoral reform in the 1990s, which separated the election of the Prime Minister from the parliamentary election - from the coalition supporting the government - failed, as it reinforced both ideologically and electorally the smaller parties. Ultimately, at the beginning of this century, the previous system was restored with an increase in the percentage of votes required for entry into Parliament. At the same time, Israel lacks a written Constitution and instead has a series of basic laws that outline the structure of the State and safeguard the rights of citizens and minorities. In the 1990s, the Israeli constitutional void was filled through judicial activism by the Supreme Court, which carried out a process of judicializing politics and exercised its authority to limit government actions and legislation that it deemed contrary to the prevailing legal system. Some politicians viewed this as an attempt by the Supreme Court to assert supremacy and curtail the popular will expressed through parliamentary elections. Meanwhile, the weakness of the major political parties and the personalistic and populist tendencies - which were accelerated during the years when electoral reform led to the separation of the election of the Prime Minister from that of the Parliament (Knesset) - led to Israel holding five national elections between 2019 and 2022, in which the major parties had great difficulty in generating stable government coalitions. The latest election, on November 1, 2022, granted the first majority to the Likud, and its leader, Netanyahu, formed a government coalition that they themselves described as "completely right-wing." The coalition includes, outside the Likud, three ultra-Orthodox parties and two religious nationalist parties. One problem with it is that it contains many ideological contradictions among its members and also generates serious disputes over the leadership of each of the sectors. An additional problem is that it includes a party - the Jewish Power party, led by Ben Gvir - that is openly anti-Arab in racist terms. Among the electoral proposals of this bloc of parties, which make up the current government, the one for judicial reform stood out, whose central content was to remove from the Supreme Court of Israel its role and authority with respect to the revision of legislation, as well as over the actions of the Government and its power to curb everything that it considered undemocratic and in opposition to the existing basic legislation. This would be accomplished through a series of laws that would change the judge election commission, removing the Supreme Court's right to veto judge appointments, and introducing a representative majority of the governing coalition on this commission. Another proposed law would give Parliament, with a 61-vote majority, the power to override any political decision of the Supreme Court. Beyond these, it is proposed to weaken the control authority that the Attorney General's Office has regarding appointments and government acts, and a series of measures that would practically eliminate the political powers of the Judiciary within the current Israeli system of checks and balances (brakes and balances designed to prevent any of the branches of the State from acquiring supremacy over the other two). The argument of Netanyahu and his coalition allies is that they have the power to carry out this judicial reform or revolution, since the people have wanted it and have manifested it through their vote in the last election. Beyond this, Netanyahu and his allies make “identity politics” arguments, which maintain that Israel, although governed by Likud-led coalitions, remains in the hands of the former Ashkenazi elites originating from historic Labor; and this means the discrimination of Eastern Jews from the institutions of power, such as the Supreme Court and the judicial system, the academic elite, the financial elite, the high-tech elite, and even certain military elites. The speed with which Netanyahu and the government coalition attempted to legislate this reform caused an unexpected popular protest to emerge from civil society, without clear political leadership, as the parliamentary opposition was practically dragged along by the popular protest. In addition, it should be noted that the protest is focused not only on the reform itself but also on Netanyahu's personal interest, as he is facing three corruption trials and the disqualification of Deri, the leader of the ultra-Orthodox Sephardic party Shas, from serving as a minister in the current coalition. The massive protests and strong international criticism, especially from the US and the European Union, along with a climate of instability that weakens the value of the national currency - the Shekel -, the withdrawal of capital, and threats in the area of internal and international security, have strengthened the protests and created coalitions among sectors that seemed irreconcilable before these recent events. Thus, reservists in elite units have stated that they will not continue to serve in their military roles under a Netanyahu dictatorship since, if everything depends on a parliamentary majority without balance between the powers, that majority forming the government coalition would delegate its parliamentary authority to him and the government would be in the hands of the prime minister, whom the protest activists consider a future dictator. Faced with this, the massive protests have included blockades of central roads and the paralysis of activities. Added to all this is the fact that the Minister of Security (Defense), Gallant, demanded that Netanyahu stop the reform legislation because the security situation - facing Iran, Hezbollah, Syria, the West Bank, and Gaza - during this month of Ramadan is perceived as dangerous and it is a bad period to add internal instability. Netanyahu prevented Gallant from making a public statement explaining all of this, although Gallant did so while Netanyahu was on an official visit to London. Netanyahu reacted by declaring that Gallant would no longer lead the Ministry of Security (Defense), but he did not send him the dismissal letter. When Netanyahu fired Gallant on Sunday night, a large crowd took to the streets across the country to protest this measure, and the next morning, in a special meeting, the Histadrut (General Federation of Labor), in coordination with the associations of industrialists, merchants, and bank directors, declared a general strike that paralyzed Ben Gurion airport and large sectors of the entire country. As a result of all this and after a day of intense negotiations within the government coalition - facing the religious nationalist parties, who, due to past issues and settlement problems in the West Bank, were the ones who most demanded the reform, and alongside the Minister of Justice, Levin, who is the author of the reform plan - Netanyahu declared that the reform is on hold for the next month to make way for a conciliatory negotiation that produces an agreed reform of the Israeli legal system, in negotiations that will be guided by President Herzog. It is clear that legislating a Constitution at this time, with the multiple fractures of Israeli society aligning in two polarized blocs, is a pipe dream. It is also necessary to understand that behind the attempt at judicial reform-revolution, there is an ineffective political system that must be reformed and updated in order to face the multiple challenges of Israel in the 21st century, which are very different from those of a century ago when this system began to be institutionalized.