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Energy & Economics
South America Map with Shown in a Microchip Pattern. E-government. Continent Vector maps. Microchip Series

Polyglobalization, Big Tech, and Latin America, or what happens to the digital periphery when the center shifts.

by Carina Borrastero

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском So far in the 21st century, we are witnessing the consolidation of an international division of labor in which the levers of economic, political, and technological power are increasingly decoupled from local capacities for the vast majority of nations and relocated to the international arena. The cooperative competition among oligopolistic forces vying for control of key assets to secure global hegemony—energy, finance, digital technology, logistics, military, and space—is one of the fundamental vectors of this framework. The constant expansion of these forces is rooted in the constitutive interaction between giant corporations in strategic sectors and the core states of the new poly-globalization—namely the United States and China—whose geopolitical rivalry is intrinsically linked to the success of the accumulation regime. The oligopolies and their centers of origin appropriate the market and innovation rents generated by the new productive map, accumulating a structural and relational power (in Susan Strange’s terms) that is quickly and markedly outpacing the rest. In this way, both companies and states outside these core zones are being pushed into increasingly dependent positions regarding the technologies, goods, and basic services produced by the winning oligopolies. They are, we might say, being shifted to the new extended periphery. How does this happen? What role does technology play, and where is Latin America in this story? GEOPOLITICS Today, the United States and China sit at the center, while the rest of the world occupies the periphery. UNCTAD Secretary-General Rebecca Grynspan (2023) describes the novel emergence of “centers within the periphery” as part of a process she calls poly-globalization: both China’s rise to the top ranks of global power and the consolidation of highly productive and commercial hubs in other parts of Asia challenge the sustainability of the post–Cold War unipolar world and the traditional North–South divide. Within this framework, historical peripheral dependency does not disappear, but rather changes in form and geography—especially considering that a growing number of developed countries are becoming productively and technologically dependent on countries like China, more so than the reverse (a case in point is Germany in the automotive industry; Zhang & Lustenberger, 2025). However, the periphery is not a homogeneous entity, and not all regions and countries have the same capacities or room for maneuver within this scheme, where starting points significantly shape long-term trajectories. Developed countries (formerly located at the center) remain better equipped than developing countries to face the challenges of their new condition. We can conceptualize the peripheral configuration as tiers or peripheral rings: there is no “semi-periphery”, but rather tiers or rings within the periphery. From this perspective, we might say that Western Europe constitutes a first peripheral ring (1st tier periphery), and industrialized Asia a second ring (2nd tier periphery). Latin America, in this framework, occupies a third ring: it possesses certain accumulated productive capabilities, but due to being more "distant" from the center in terms of the criticality of its production, it receives fewer benefits from integration into major global value chains in terms of investment and technological learning (as Evolutionary Economics and Latin American Development Theory have long pointed out, producing semiconductors, AI, or green hydrogen technology —as in Taiwan, India, or Germany, respectively— is not the same than assembling automobiles as in Mexico and Argentina). In this scenario, the Latin American region—historically subordinated to a single center (the North-Center)—is now subordinate to two. China has been rapidly tightening its economic ties with the region, primarily through trade and financial assistance (Dussel Peters, 2021; Ugarteche & De León, 2020; Villasenin, 2021). Chinese foreign direct investment (FDI) in Latin America and the Caribbean, for example, rose from less than 1% of the region’s total FDI in 2012 to 10.8% in 2019 (although it still lags behind investment from the US and the European Union) (Dussel Peters, 2022). The Asian giant is already Brazil’s main trading partner, is rapidly deepening its ties with Mexico, and an increasing number of countries across the continent have joined the Belt and Road Initiative, including Argentina since 2022 (the other two major Latin American economies have not joined so far). However, the benefits of these relationships for the region remain ambivalent: on the one hand, they have reduced financial dependence on the US—a significant achievement—but they have not yet translated into higher value-added development such as export diversification or upgrading. On the contrary, they have tended to reinforce the trend toward re-commoditization of local economies (Wainer, 2023; Alami et al., 2025). DIGITAL ECONOMY The current dynamics of the tech industry are particularly illustrative of the broader landscape described above, and for that reason, we take it as a focal point of observation. Google, Apple, Meta, Amazon, Microsoft, Alibaba, Tencent, and Huawei—the flagship tech giants of the US and China, commonly referred to as Big Tech (BT)—operate collectively as a global oligopoly. This formation increasingly relegates Latin America to the role of data provider and accelerates the shift of other industrial powers from technology innovators to adopters—that is, to a position of subsidiarity. To this picture we must add Nvidia, the Musk ecosystem, and DeepSeek, among other firms whose products and executives carry significant weight in the global chain of technological decision-making, beyond even their specific market shares. No country outside of the US and China has leading firms in AI, cloud computing, advanced chip knowledge, or 5G champions (with the exception of Ericsson in the latter sector, which remains Swedish. It’s worth noting that Nokia is not included here, as although its production and brand profile are still centered in Norway, the largest shareholding stake belongs to BlackRock). An example of an interesting yet ultimately failed challenge to Big Tech dominance in large-scale projects is the European federated cloud initiative Gaia-X (European Association for Data and Cloud AISBL, https://gaia-x.eu/about/). Originally promoted by the Ministers of economic affairs of Germany and France, Gaia-X is a non-profit international association that brings together companies, state agencies, and third-sector organizations involved in European industrial and technological development (such as SAP, Siemens, the Fraunhofer-Gesellschaft, or Luxembourg’s National Data Service, alongside hundreds of SMEs). Its aim is to pool capabilities in order to create a large shared cloud infrastructure that allows companies and public bodies to store and develop applications securely—that is, independent of servers located outside the continent that fail to meet European data protection standards. In short, the goal is to enable competition with US tech giants and ultimately establish a “gold standard” in data security that tends to exclude them—driven by European governments’ stated concern over the region’s digital sovereignty. The conceptually appealing strategy of combining the complementary capacities of local companies of different sizes on a single platform and offering joint products, initially acted as a carrot for the industry (over 300 members joined, up from 22 at the beginning). However, over time, even the governments most vocal about sovereignty declined to adopt Gaia-X as a primary provider: Germany, for instance, signed a €3 billion agreement with Oracle Cloud (a strategic partner of AWS, Microsoft, and Nvidia) to provide cloud services in 2024. To this day, US tech giants continue to control 70% of the European cloud market (Gooding, 2024). Gaia-X remains a valuable project with over five years of development, but with frankly limited real-world reach—also, it must be said, due in part to the tech giants’ own offensive, as they increasingly offer services aimed at the “territorialization” of data (e.g., https://www.oracle.com/cloud/sovereign-cloud/what-is-sovereign-cloud/). As things stand, the European industrial powers do not control the supply, circulation, or demand of digital technologies, and major Asian players—such as India or Taiwan—occupy intermediate links in the value chains of either the Western bloc or China, depending on the case. This kind of displacement is not so surprising when we consider the oligopolistic dynamics that currently govern the global economy, involving the leadership of core countries across all strategic sectors. Particularly in the digital economy. Oligopoly is a market structure in which a small number of firms control the supply of certain goods and/or services—that is, a large-scale market dominated by a few major sellers, who are often interconnected. Oligopolies are everywhere (in oil, automotive, telecommunications, and more), but in certain sectors, structural traits such as the hyper-scale at which production is viable and profitable, the pace of innovation required for sectoral expansion, or the relevance of brand reputation drive the formation of so-called natural oligopolies (NOs): markets in which open competition (several smaller actors producing the same and rotating their market shares over time) would tend to hinder efficient production. In these markets, the number of firms capable of minimizing total industry costs is “naturally” low, due to the high entry barriers that are established. Each NO actor holds considerable market power, allowing it to develop productive and technological capacities in a privileged way over long periods. As a result, the minimum threshold for joining the oligopoly becomes increasingly difficult for outsiders to overcome. This is the case in sectors such as the extraction of scarce and critical natural resources (like lithium), energy generation and supply (e.g., wind farms), large physical and cyber-physical infrastructure for logistics (commercial ports and oceanic bridges, 5G, or submarine internet cables), or transversal digital technologies (like AI, big data, or cloud computing). All of these require massive upfront investments, accumulated know-how, strong commercialization capacity, and the ability to retain rents—which includes “artificial” legal barriers such as intellectual property rights, trade secrets, and various mechanisms to capture innovation rents. It’s not the same to have oil reserves in your territory and develop or invite companies to exploit them (which several countries do, with companies of varying sizes) as it is to develop powerful AI models using 20 years of data from the entire public internet (which only OpenAI-Microsoft of the US originally achieved with ChatGPT, even though the data came from millions of people around the world). In fact, comparable AI capabilities have only been reached by Google’s Gemini and the open-source DeepSeek model recently developed in China following US sanctions on Nvidia chip acquisitions. In a technological oligopoly, the ability to invest and innovate at scale grants companies significant prospective power: they can pour enormous sums into R&D and start-up acquisitions to develop innovations that will pay off a decade later—after numerous failed attempts costing millions—thus shaping future markets in the process (Google, for example, has heavily invested in AI development since the 1990s and has, at times, acquired one start-up per week). Additionally, NO actors actively exclude potential competitors outside the oligopoly through more questionable mechanisms such as collusion or lobbying, among others (Borrastero & Juncos, 2024). Today, given the broad productive and geographic scope of global value chains and the extreme concentration of investment capacity typical of financial capitalism, more and more markets are becoming structured as natural oligopolies. Especially in digital technologies. Only Amazon, Microsoft, Alibaba, and Google together dominate 75% of the global cloud computing market (with respective shares of 47.8%, 15.5%, 7.7%, and 4%, according to Gartner, 2024), a sector whose relevance is crucial for the development of technologies such as generative AI. In the years leading up to the COVID-19 pandemic, Google, Facebook, Amazon, and Microsoft also became owners or lessees of more than half of the world’s submarine bandwidth capacity—a market historically controlled by states and large telecommunications companies like NEC, Alcatel, and Fujitsu, which still make up the backbone of global data traffic infrastructure (Business Research Insights, 2025). Huawei is the world’s largest supplier of telecommunications equipment, particularly for 5G networks and smartphones, holding a 28% share of the global market and over 4,000 patents (Merino et al., 2023). This helps explain Donald Trump’s insistence on making it both a material and symbolic target in the US-China trade war. The fact that Big Tech companies share technological and market domains—beyond specializing in particular niches—fuels an intense internal competitive race that, unlike monopolies, drives continuous innovation. This means that, in addition to competing to outdo one another, these firms also cooperate extensively to maintain their global leadership far ahead of the rest of the market: each company develops interoperability features to ensure their apps function properly on others’ platforms, and they share open source projects on GitHub (now owned by Microsoft), for instance. Microsoft has contributed significantly to the development of AI in China through its Microsoft Research Asia lab in Beijing and collaborations with Chinese institutions such as the National University of Defense Technology (Hung, 2025)—efforts that neither the US nor Chinese governments have blocked. Long before the current reloaded geopolitical confrontation emerged, core-country governments had already been promoting initiatives aimed at the expansion and globalization of their tech firms, such as China’s Digital Silk Road (Borrastero, 2024) or Silicon Valley itself in the US (it bears repeating just how much state R&D funding is packed inside an iPhone; Mazzucato, 2013). And what each state has done to strengthen its own technological base has ended up, in some way, benefiting the other. Consider, for example, that what China’s customs agency classifies as “foreign-invested enterprises” are mostly US-based companies, which control three-quarters of the country’s most advanced high-tech products. These include large-scale electronics exports that often involve importing key components from the US, assembling them in China via foreign companies like Foxconn (which builds Apple’s iPhones), and then exporting them. At the same time, private Chinese firms have also expanded their role in these core exports, going from virtually zero in the 1990s to over 20% today (Kenji Starrs, 2025). The offshoring of US tech production has helped the US continue leading by producing more cheaply, and has helped China learn how to lead too. As can be seen, the actors of a Global Technological Oligopoly (GTO) are deeply interdependent. To this picture, we must add the increasingly blatant symbiosis between dominant governments and individual stakeholders, as exemplified by the Trump-Musk case. We are no longer simply talking about "public-private complexes", "revolving doors" or "intimate relations". These notions describe very close ties, but between separate entities. What we are seeing now is a kind of fusion (or confusion) between a tiny handful of public and private actors who are able to govern strategic global value chains and set the rules of the game for the rest of the world. In China’s case, the country is characterized by what Weber and Qi (2022) describe as a “state-constituted market economy”: a strong state deeply intertwined with a fundamentally marketized economy, resulting in a political-economic balance that differs somewhat from Western models but still yields a global power that is difficult to challenge. In sum, we are witnessing a competition scheme designed for the very few, that generates a spiraling cycle of leveraged success in which core states play a crucial role. LATIN AMERICA A scheme like this reinforces Latin America's historic peripheral condition. GTO companies operate directly within the territory (setting up data centers, having subsidiaries, providing services, among other things), but they also rely on regional actors to amplify the generation of indigenous data, the large-scale paid consumption of BT’s technological infrastructures, and the global dissemination of their business models. The free domestic use of email applications or social networks enables data capture, but not the monetization of digital assets, whose massive volume comes from services provided to businesses and governments (as someone aptly put it, Amazon is famous for its store but rich from its servers; Lacort, 2021). In Latin America, there is a handful of large technology companies – the so-called 'tecnolatinas' – that replicate the e-marketplace, fintech, or cryptocurrency development models characteristic of the BT, managing to stand out as champions in the regional league far ahead of the rest. However, they continue to be dependent users of the fundamental technologies produced by the GTO. Mercado Libre, originally from Argentina, is the largest and most widely used digital platform on the continent, the one with the highest market value, and the first to be listed on Nasdaq. Modeled after Alibaba, it is a marketplace with an integrated online payments and credit system, technology development and service divisions, and an extensive ground-based logistics infrastructure. For its data storage and management, Mercado Libre is a client of Amazon Web Services (AWS): it processes over 40 purchases per second across 18 countries and has migrated more than 5,000 databases to Amazon DynamoDB (AWS, 2021). As of 2024, it was using nearly a dozen services from the tech giant with which it had signed an agreement to reduce its data computing costs by 13% (AWS, 2024). The other two regional champions, both Brazilian in origin, also maintain strong ties with the BTs: the marketplace Magazine Luiza runs on Google Cloud; and the fully digital bank Nubank (of Nu Holdings) is an AWS client, has received investments from Warren Buffett, Tencent Holdings and Sequoia Capital, and many of its executives have worked at Google, Facebook, Amazon, and Alibaba. The following chart illustrates the stark imbalance in market value and profits between the GTO firms, other global tech giants, and two of Latin America's top champions, in descending order: Source: Own elaboration based on data from Forbes Global 2000 (2024).* Originally in Borrastero & Juncos (2024).** Magazine Luiza is not publicly traded.  Regional firms, in turn, capture data from countless Latin American users, acquire local start-ups, participate in scientific research networks, and work with governments to access tax and especially regulatory benefits—mechanisms that enable their gradual “giantization” (Borrastero & Juncos, 2024). In short, they are part of this kind of stratified oligopoly led by Big Tech, which tecnolatinas help sustain while securing their regional slice of the pie. Far from being a marginal arena, despite Latin America’s relatively low share in global cross-border data flows compared to Asia or Europe (UNCTAD, 2021), the region represents a key market to conquer. This includes sectors with crucial resources for Big Tech’s vertical integration strategies, such as lithium. For instance, Tesla is one of the main buyers of Arcadium Lithium, which operates in the salt flats of northern Argentina, and along with other tech moguls like Bill Gates, is planning new direct investments and investments in companies developing technologies related to extraction (such as Lake Resources, which works on reducing freshwater usage in lithium mining) (López King, 2025). Big Tech companies form true global ecosystems for resource capture and the monetization of informational assets, supported by states and firms across the globe. SYSTEMIC RISKS One of the main problems of the dynamics described so far is the deepening of the international division of learning which—already highly unequal—continues to grow at breakneck speed, while technological learning becomes increasingly fundamental to value creation, and peripheral states are less and less equipped to deal with ever-larger corporations. In this context, peripheral countries risk becoming mere providers of informational raw material for platforms developed in the global centers, and end up having to pay for the digital intelligence extracted from them. Meanwhile, industrial hyper-concentration makes it increasingly difficult for the market to address these structural issues on its own. Rent refers to income derived from control over a scarce and strategic asset. The oligopolistic control of such rent-generating assets by central countries drives an endogenous concentration of rent in the central regions, and the result, in terms of income distribution both between and within nations, is a deepening of inequality at all levels (UNCTAD, 2021; Milanovic, 2019; Torres and Ahumada, 2022). Another major issue stemming from the scale reached by dominant actors and the penetration of their digital infrastructures is how difficult it has become to reverse the technological path — in terms of how to generate and provide services in a different way, while maintaining the reach and quality. Just imagine, for example, trying to establish alternative global data traffic routes or to produce world-class AI for diagnosing and treating rare diseases, without at some point relying on the technological resources of the oligopoly. The key question is how societies across the globe can harness these accumulated technological capabilities for collective purposes, without depending so heavily on heteronormative political and market-driven decisions. The list of systemic risks is a long one, and there isn’t space here to delve into the broader political dimensions of the issue. But it is worth highlighting these two particular risks tied to the current techno-economic order, given their impact on the very possibility of building concrete alternatives. LOCAL INITIATIVE Latin America enjoys neither structural power (that is, the ability to shape the rules of the game in terms of production, finance, security, or the global control of knowledge and culture), nor relational power in relation to other regions with accumulated techno-productive capacities (the ability to influence other actors into doing something they otherwise wouldn’t, following Strange’s 1988 classification). This essay may lean more toward pessimism of the intellect than optimism of the will when it comes to the global order within which Latin America must forge a new place.  Yet it is clear that the continent holds bargaining potential, rooted in the fact that it remains a highly coveted region for all the reasons discussed above—and many more (including the fact that it is, for now, a territory free of military wars). In the context of a “divide and conquer” logic typical of today’s intensified inter-core battles, strategies of absolute alignment with any single power are far from the wisest. The global oligopolistic economy will only deepen Latin America’s peripheral status if countries in the region fail to adopt a solidary non-alignment—or poly-alignment—approach, one that allows them to consolidate minimum thresholds of technological sovereignty. From dependent adoption to sovereign adoption (deciding what and how to adopt in order to learn), and from there to emancipation (integrating and developing what is needed for the people’s well-being). In Brazil, multiple state-led projects are underway to develop a sovereign data economy in collaboration with small and medium-sized enterprises and the academic sector (Gonzalo & Borrastero, forthcoming), along with large-scale initiatives to build national tech and energy infrastructures by leveraging the techno-productive capabilities accumulated over decades by Petrobras, BNDES, the national research council, and public venture capital funds (Alami et al., 2025). Mexico and Colombia are currently undergoing political processes inspired by the ideals of a “common home” and the care of virtual lands, advocating for continental unity on the one hand and strict regulation of Big Tech on the other (BBC News Mundo, 2025; Forbes Central America, 2025; Government of Colombia, 2024; Colombian Presidency, 2025; Wired, 2025). Argentina has a range of digital development projects based on policy frameworks designed to autonomously leverage the productive capacity the country has accumulated since the 1940s (Gonzalo & Borrastero, 2023)—though these efforts have been obstructed by the pro-Trump government of Javier Milei. EPILOGUE As these lines are being written, stock markets around the globe are tumbling amid the tariff war unleashed by the United States, forcing everyone else to adjust. Even the “Magnificent Seven” (Google, Apple, Meta, Amazon, Microsoft, Nvidia, and Tesla) have lost billions in just a few days. 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Defense & Security
Philippines and China flags are waving in the sky. Double country Flag waving with mast. Philippines china national flag for agreement.

Geopolitical disputes: China and the Philippines in the South China Sea

by Eduardo García Torres

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском The South China Sea (SCS) is a strategic region in international geopolitics and a hotspot of disputes involving sovereignty, economy, and security. This text analyzes the positions of two key actors in the region — China and the Philippines — whose growing tensions have been a defining factor in the evolution of the conflict. Located in Southeast Asia, the SCS borders China, Vietnam, the Philippines, Malaysia, Brunei, and Indonesia, and connects the Pacific to the Indian Ocean through the Strait of Malacca, one of the busiest maritime routes. Its wealth in fishery and energy resources has intensified disputes over the Pratas, Macclesfield, Paracel, and Spratly Archipelagos, which are claimed entirely or partially by China, the Philippines, Vietnam, and Malaysia. In this context, the SCS holds significant geopolitical importance. From the classical perspective of Alfred T. Mahan, maritime control is essential for a country to consolidate itself as a power, as it enables access to strategic resources, trade routes, and the projection of military power. Today, this remains a key factor of political, economic, and military influence in the macro-region that authors such as Ulises Granados (2022) refer to as the Indo-Asia-Pacific. On the other hand, from the perspective of critical geopolitics, the SCS conflict is a dispute rooted in the construction of geographic and political meanings. According to Gerard Toal, space is not fixed but rather a construction shaped by power relations and discourses. One example is its naming: China calls it the South Sea, the Philippines refer to it as the West Philippine Sea, and Vietnam calls it the East Sea. Each name not only reflects a territorial claim but also a geopolitical imaginary. Interests in the SCS date back to the late 19th and early 20th centuries, when Japan exerted control over some areas through the state and its corporations. However, after World War II, sovereignty over these territories remained undefined, leading to competing claims from neighboring countries. During the Cold War, the United States strengthened its alliance with the Philippines and other Southeast Asian nations to contain communism, while China consolidated its presence in areas like the Paracel Islands. This context has been key in shaping the current competition over the sea. The Chinese government claims sovereignty in the SCS based on historical precedents going back to the Han dynasty. Beijing argues it recovered the Spratly and Paracel Islands after World War II, invoking the Cairo Declaration (1943) and the Potsdam Declaration (1945), which called for the return of territories occupied by Japan. In 1958, China issued the Declaration on China’s Territorial Sea, incorporating the Pratas (Dongsha), Paracel (Xisha), Macclesfield (Zhongsha), and Spratly (Nansha) Islands into its sovereign territory. Later, in 2009, it reaffirmed its claim through the Nine-Dash Line (NDL), a delimitation drawn in 1947 that encompasses nearly 80% of the SCS. Although this line is not clearly defined in international law, Beijing maintains that it holds sovereign rights within it and that disputes should be resolved without intervention from extra-regional actors — a stance that contrasts with the Philippines’ actions, which have sought international support to strengthen their position. From China’s perspective, its claims in the SCS are essential to its sovereignty and national security. For this reason, it has increased its naval, paramilitary, and civilian presence. Maritime projection and control of trade routes are also key aspects of its strategy to advance initiatives such as the Belt and Road Initiative, which is fundamental to its regional and international economic growth. In contrast, the Philippines has claimed sovereignty over the Spratly Islands since the 1970s and has resorted to legal and media avenues to denounce China. In 1995, it protested China’s construction of structures on Mischief Reef, and in 1997, it stationed the Sierra Madre ship in the Spratlys. Today, the Philippine Navy maintains operations in the area. Moreover, in 2002, the Association of Southeast Asian Nations (ASEAN) and China signed the Declaration on the Conduct of Parties to promote the peaceful resolution of disputes. However, tensions escalated in 2009 when China reaffirmed the Nine-Dash Line. In response, in 2013, the Philippines brought the case before the Permanent Court of Arbitration (PCA), arguing that China was violating the 1982 United Nations Convention on the Law of the Sea and asserting its rights over exclusive economic zones. In 2016, the Permanent Court of Arbitration (PCA) ruled in favor of the Philippines, concluding that China's claims lacked legal basis under international law. However, China rejected the ruling, stating that it does not reflect its interpretation of territorial sovereignty based on its history and legal frameworks. Moreover, Beijing considered the Philippine complaint a unilateral action. In 2024, the Philippines enacted the “Maritime Zones Law” and the “Archipelagic Sea Lanes Act,” which define its maritime rights in the South China Sea. In response, China’s Ministry of Foreign Affairs rejected both laws, arguing they violate its sovereignty. From the Philippine perspective, China’s actions represent a challenge to its security, prompting it to seek support from ASEAN for a joint response in the SCS. However, the bloc’s positions are divided: the Philippines actively denounces China, Vietnam takes a more pragmatic approach, and Malaysia avoids confrontation. These differences have led ASEAN to adopt a moderate stance, prioritizing diplomacy over conflict. In summary, the Philippines is strengthening its alliance with the United States under the 1951 Mutual Defense Treaty, which ensures assistance in the event of an attack in the Pacific, including the SCS. This cooperation aligns with the U.S. geopolitical strategy in Asia, which has evolved from Obama’s “Asia Pivot” to the “Indo-Pacific” vision, focused on a “rules-based order” and the security of trade routes. However, the exclusion of China has led to perceptions that this strategy is a containment mechanism against the world’s second-largest economy. For example, China’s Foreign Minister Wang Yi argues that the U.S. strategy aims to “besiege and contain China” through alliances that promote confrontation. He also claims it undermines regional cooperation, while the Asian giant promotes a “community with a shared future in the Asia-Pacific” based on integration and stability. Thus, China employs the concept of the Asia-Pacific and, although it remains cautious in its rhetoric, insists that its approach prioritizes cooperation and avoids a bloc-based logic in the region. In this context, during Balikatan, a joint military exercise between the U.S. and the Philippines in April 2024, Washington deployed Typhon missile systems in the northern part of the country. By the end of the year, Manila expressed interest in acquiring them, which Beijing perceived as a threat. In 2025, Ferdinand Marcos Jr. stated he would reconsider the U.S. military presence if China ceased its territorial claims. China has not officially responded, and these remarks could be part of Philippine political rhetoric, reflecting its perception of threat in the region. Additionally, the Philippines has strengthened security cooperation with Japan, which also faces territorial disputes with China. In 2024, they signed a Reciprocal Access Agreement to facilitate military deployments, and Japan supported the modernization of the Philippine Navy. In 2025, both nations reaffirmed their commitment to a free and open Indo-Pacific. While Manila strengthens its position through strategic alliances, Beijing views this as an attempt to internationalize the conflict. Another point is that the Philippines’ approach varies depending on the administration in power. During Rodrigo Duterte’s presidency (2016–2022), Manila prioritized closer ties with Beijing, favoring economic cooperation. In contrast, the arrival of Ferdinand Marcos Jr. in 2022 strengthened the alliance with the United States, increasing defense and security cooperation, but also escalating tensions with China. On the other hand, while the U.S. has expanded its presence in the Asia-Pacific region, Trump’s first term (2017–2021) had a more isolationist approach compared to the Obama (2009–2017) and Biden (2021–2025) administrations. The Philippine government hopes to maintain the agreements reached in 2024, although their continuity will depend on how the new Trump administration (2025–) manages its Indo-Pacific strategy. Moreover, the Philippines cannot fully align with just one actor, as both China and the U.S. are essential to its economy. The United States is its main export market, according to the Philippine Statistics Authority, while China is its largest source of imported goods, top investor, infrastructure partner, and shares agreements such as the Regional Comprehensive Economic Partnership (RCEP). Therefore, while Manila strengthens its defense cooperation with the U.S. and maintains strategic interests in the South China Sea, its relationship with China remains crucial due to its economic importance. Final Considerations From a geopolitical perspective, cooperation between the Philippines and the United States seeks to counterbalance China's presence in the region, while China reinforces its position in the SCS for sovereignty and security reasons. In this context, the relationship between Manila and Washington, along with the stance of ASEAN members, will be decisive in the evolution of the conflict. Thus, the dispute in the South China Sea reflects a geopolitical competition between regional and extra-regional actors for control of strategic areas, where each defends its own interests. Although none of the parties appear to seek open conflict, increasing militarization and patrols have raised the risk of incidents that could escalate tensions. In this context, the future will depend on the willingness of actors to negotiate concessions, although the lack of consensus and divergent interests make a definitive solution unlikely in the short term. In this way, Alfred T. Mahan’s theories on maritime power remain relevant in the SCS, although their application is not absolute. Beyond the control of sea routes, the competition also unfolds through the construction of narratives by regional and external actors. The way these narratives shape alliances and perceptions will be key in defining power dynamics in the region.

Energy & Economics
NEW DELHI, INDIA - February 25, 2020: U.S. President Donald Trump wife Melania Trump, Indian President Ram Nath Kovind, Prime Minister Narendra Modi during a ceremonial at the presidential palace

Trump's tariffs: an economic windfall for India

by Catherine Bros

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском US tariffs on Indian goods will rise from 17% in 2023 to 26% in 2025. Yet the world's most populated country can see this aggressive US policy as an economic boon for three reasons: its low level of integration into the global market, its ‘Atmanirbhar Bharat’ policy of strategic autonomy and its position as an alternative to China. The United States is India's biggest customer. It accounts for 19% of India's exports. India considered itself relatively unaffected by the new US customs policy unveiled on April 2. US tariffs on Indian goods will rise from 17% in 2023 to 26% in 2025, if President Trump does not postpone the implementation date once again... This 26% figure is much lower than the duties imposed on other South-East Asian nations, which to some extent compete with Indian industry. Bangladesh, for example, has tariffs of 37%, Vietnam 46% and Thailand 36%. Certain key sectors of Indian industry, such as pharmaceuticals, are even exempt from additional duties. This exemption underlines the strategic importance of India's exports of generic medicines to the United States. A variable geometry customs strategy. India, which has no plans to retaliate, is confident of concluding a relatively advantageous agreement thanks to the bilateral negotiations that began in February 2025, following Indian Prime Minister Narendra Modi's visit to the United States. Indian reindustrialisation? Some see this new customs policy as an opportunity for India to reindustrialise, something it badly needs to boost employment. Over the years, India has lost its comparative advantage in certain sectors to other South and South-East Asian countries such as Bangladesh, Thailand and Vietnam. The latter face customs duties that are higher than India's, and that are rising faster. Is this likely to boost the competitiveness of these Indian industries? However, they would require long-term investment. India's industrial strategy has preferred to focus on more technologically advanced sectors, by introducing subsidies for the creation of production capacity through the Production Linkes Incentive (PLI) Scheme. The aim is to reduce dependence on imports and boost exports in priority sectors. The semi-conductor sector, for example, has benefited greatly, with the hope, among other things, of turning India into a manufacturing hub for these products. It hopes to attract €27 billion in foreign direct investment (FDI). The task will certainly be made more difficult by the protectionist policies of the United States. Re-industrialisation in India will require regulatory reforms and investment in infrastructure. Despite the substantial progress made in these areas, more remains to be done. In any case, for US protectionist policy to encourage the development of Indian industry, it would have to be stable, which does not seem to be the primary orientation of the current Trump administration. Weak integration into world trade India's participation in world trade in goods is modest given the size of its economy: in 2023, India's market share in world trade was 2%. Despite its growing trade surplus with the United States, India has been relatively unaffected by the rise in tariffs, partly because Indian imports account for only 3% of total US imports. Its economy, which is very little integrated into global value chains, will de facto be less severely affected by the new US customs policy.  Although its economy trades few goods with the rest of the world, India has a comparative advantage in the service sector, which accounts for almost half of its exports of goods and services. Yet services are largely unaffected by tariffs and remain outside the perimeter of the new US policy. Indian protectionism: "Atmanirbhar Bharat" The protectionist stance adopted by the United States may reinforce the Indian government's conviction that it is right for its economy to be only marginally integrated into world trade in goods. The Indian economy is not very open and its trade policy has long tended towards protectionism. The latest industrial policy plan, "Atmanirbhar Bharat" ("Self-sufficient India"), aims to promote both exports and the strategic autonomy of the Indian economy in a number of sectors, including pharmaceuticals, solar energy and electronics. Since the ‘Made in India’ programme, India's industrial policy has not sought to create growth through exports, but to attract foreign capital to create production capacity in India, mainly for the Indian market. Foreign direct investment (FDI) has risen sharply, albeit from a relatively low base: it stood at 45.15 billion dollars in 2013. By 2022, it will have risen to $83.6 billion. India, more than ever courted India is strengthening its strategic position on the international stage. Its economy was already attracting the attention of investors, thanks to its potential market of 1.4 billion consumers and its position as Asia's alternative to China. The erratic behaviour of the Trump administration makes any partnership with India even more desirable, particularly for Europeans. There is no doubt that the trade talks for an agreement between the European Union and India, that began in 2022 and were brought back to the forefront by the visit of the President of the European Commission to New Delhi in February 2025, will take on a new dimension in the eyes of the Europeans. India's current nationalist government has worked hard to ensure that India becomes a pivotal player in the international community. This leading role on the international stage is a significant electoral asset that should strengthen Narendra Modi's influence within the country.

Diplomacy
Uyghur map flag grunge history

Opinion – The Colonial Roots of the Ongoing Uyghur Genocide

by Salih Hudayar

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском For over a decade, the world has witnessed mounting evidence of internment camps, forced sterilizations, family separations, religious and cultural persecution, organ harvesting, forced labor, and high-tech surveillance emerging from East Turkistan—an occupied nation China refers to as the “Xinjiang Uyghur Autonomous Region.” These atrocities, targeting Uyghurs and other Turkic peoples, have led multiple governments, including the United States, to designate China’s actions as genocide, while the United Nations has identified them as crimes against humanity. The genocide of Uyghurs, Kazakhs, Kyrgyz and other Turkic peoples is routinely framed as mere human rights violation or a symptom of authoritarian overreach. Such framing obscures the root cause: the illegal occupation and ongoing colonization of East Turkistan by China. To end the genocide and achieve lasting peace, dignity, and justice for the East Turkistani people, the world must recognize that this is not a question of human rights or religious persecution—it is a colonial crisis. And like all colonial projects, it demands not reform, but an end. East Turkistan, home to the Uyghurs, Kazakhs, Kyrgyz, and other Turkic peoples, has a long and distinct sovereign history, culture, and identity separate from that of China. While the Manchu Qing Empire occupied the nation in 1759, Qing occupation over East Turkistan has never been continuous or consensual. The people of East Turkistan persistently resisted, launching 42 uprisings between 1759 and 1864, and regained independence as the State of Yette Sheher (1864–1877), before being re-occupied by the Qing Empire in December 1877. In 1884, Beijing renamed the country “Xinjiang” (meaning “New Territory”)—a colonial term imposed to normalize its conquest, and Chinese settlers were encouraged to alter the nation’s demographics. These were not merely administrative measures—they were calculated steps in the construction of a colonial regime. Yet, the people of East Turkistan continued to resist the occupation and sought to re-establish their independence. The people of East Turkistan re-declared their independence twice in the 20th century—in 1933 and again in 1944—establishing the East Turkistan Republic.  before falling victim to geopolitical deals and military occupation. Both republics were short-lived, undermined by geopolitical maneuvering and military aggression. n 1949, following the Chinese Communist Party’s rise to power, the People’s Liberation Army invaded East Turkistan with Soviet support. Under the pretext of “peaceful liberation,” the PLA dismantled East Turkistan’s sovereignty and imposed a colonial regime that persists today. Since then, Beijing has implemented long-term strategies aimed at erasing East Turkistan’s national identity and integrating the nation into its Han-centric nation-building project. These strategies have included mass settlement of Han Chinese colonists, criminalization of East Turkistani history and identity, suppression of cultural and religious freedoms, the dismantling of native institutions, and the violent suppression of dissent. Although some observers refer to these policies as “assimilation,” such language understates the scope and violence of China’s actions. This is not cultural integration—it is national erasure and demographic replacement. The ongoing Uyghur genocide is the latest phase in this decades-long campaign. It has moved beyond political repression into a full-fledged effort to destroy the East Turkistani nation physically, culturally, and psychologically. Millions of Uyghurs, Kazakhs, Kyrgyz, and other Turkic peoples have been arbitrarily detained in concentration camps, where they are subjected to indoctrination, torture, sexual violence, and forced labor. Furthermore, experts estimate that at least 25,000 to 50,000 Uyghurs are being killed annually solely for their organs. Uyghur and other Turkic women are forcibly sterilized or forced to undergo abortions to prevent the birth of future generations. Over a million Uyghur and other Turkic children are separated from their families and placed in state-run boarding schools designed to sever their cultural and linguistic ties. Over 16,000 Mosques, cemeteries, and historic sites have been demolished, while Uyghur and other Turkic language instruction has been eliminated from public education. In international law, these actions meet the criteria outlined in the UN Genocide Convention. China’s campaign fulfills all five of the acts defined as genocide. This includes killing members of the group through executions, massacres, deaths resulting from torture and neglect in concentration camps, and systematic organ harvesting. It also involves causing serious bodily or mental harm, through forced labor, indoctrination, physical and sexual abuse, and long-term psychological trauma. The Chinese regime has deliberately inflicted conditions of life calculated to bring about the group’s physical destruction, including mass internment, surveillance, forced separation of families, and deprivation of basic needs. Additionally, China has imposed measures intended to prevent births, such as forced sterilizations, abortions, birth prevention policies, and the destruction of Uyghur family structures. Finally, it has forcibly transferred children of the group to another group by removing over a million Uyghur and other Turkic children from their families and placing them in Chinese state-run boarding schools and orphanages. What makes this genocide even more insidious is its bureaucratic and technological sophistication. The CCP uses AI surveillance, biometric data collection, and big data policing to monitor and control every aspect of East Turkistani life. Genocide in East Turkistan is not committed with bombs or mass graves—it is executed with facial recognition cameras, QR codes, “predictive policing” apps, forced sterilizations, forced abortions, organ harvesting, and crematoriums to hide the evidence. The answer lies not in ideology alone but in geopolitical calculation. East Turkistan is central to Beijing’s global ambitions. It serves as the strategic linchpin of the Belt and Road Initiative (BRI), through which China seeks to reshape global trade and influence. Over 60 percent of China’s overland trade passes through the region. Rich in oil, natural gas, gold, lithium, and rare earth elements, East Turkistan is not only a corridor—but a resource base essential to China’s industrial economy. Chinese strategists have long seen East Turkistan as a buffer protecting the Chinese state from perceived threats to its west and north. This logic continues to shape Beijing’s approach today: the occupation of East Turkistan is central to advancing China’s geopolitical ambitions, including control over critical infrastructure, access to Central Asia, and the stability of its broader colonial system. The erasure of East Turkistan is not about internal security—it is about imperial consolidation and expansion. The Uyghur genocide is therefore not a domestic or regional issue—it is an international one. It is rooted in a colonial model of domination that has broad implications for global security, trade, and human rights. Yet the international community continues to treat East Turkistan as a part of China’s “internal affairs,” even as it condemns the crimes taking place there. This contradiction lies at the heart of the global failure to stop the genocide. By framing the issue merely as one of “human rights” or “religious repression,” leaders obscure the core truth: East Turkistan is an occupied country, and the Uyghurs are not a “minority group,” but a nation under siege. This framing benefits Beijing by allowing it to invoke sovereignty and non-interference to shield itself from accountability. In reality, China is misusing the language of sovereignty to justify colonization. This distortion of international norms must be challenged. Addressing the Uyghur genocide requires a shift in global thinking. First, East Turkistan must be recognized as an occupied country, with its people’s right to external self-determination affirmed under international law. The UN Charter, the International Covenant on Civil and Political Rights, and other legal instruments affirm the right of all peoples to determine their political status. Uyghurs and other Turkic peoples have never chosen to be part of China; their subjugation has been enforced through military occupation, demographic engineering, systemic repression, and a campaign of cultural and national erasure—not integration or coexistence, but elimination. Second, the genocide must be understood as part of a broader colonial project, not merely an episode of repression. This includes recognizing mass enslavement, demographic engineering, and physical and cultural erasure as fundamental tools of colonial domination. Efforts to address these violations must be paired with political actions to end China’s illegal occupation of East Turkistan. Third, the voices of East Turkistani institutions and leaders in exile must be included in international discussions about the future of the nation. The East Turkistan Government in Exile, along with rights groups and diaspora communities, have been calling for recognition, justice, and decolonization for decades. Their perspectives are essential to any serious solution. Finally, international legal mechanisms must be pursued with urgency. This includes supporting East Turkistan’s case at the International Criminal Court and filing additional cases at the International Court of Justice, sanctioning Chinese officials and entities involved in the genocide, and supporting investigations under universal jurisdiction laws in national courts. The failure of the international community to stop the genocide in East Turkistan is not merely a failure of will—it is a failure of principle. So long as governments, media, and international institutions continue to treat this as an “internal issue” for China, the genocide will continue. Only by reframing this as a crisis of occupation, colonization, and national survival can the path to justice become clear. This work is licensed under the Creative Commons Attribution-Non Commercial 4.0 International License (CC BY-NC 4.0) https://creativecommons.org/licenses/by-nc/4.0/

Defense & Security
Hand grabbing the island of Taiwan on a map

Forceful Taiwan Reunification: China’s Targeted Military and Civilian-Military Measures

by Suyash Desai

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском This piece was originally published on March 11, 2025, by the Asia Program at the Foreign Policy Research Institute (FPRI). View the original publication on the FPRI website.https://www.fpri.org/article/2025/03/forceful-taiwan-reunification-chinas-targeted-military-and-civilian-military-measures/ Bottom Line China is systematically preparing for a forceful reunification campaign by redesigning and intensifying military and civilian-military measures such as military mobilization, amphibious capabilities, standardization of operations, and resource stockpiling. The People’s Liberation Army’s expanded and improved military exercises around Taiwan since August 2022 have been shifting toward more coercive and multi-domain operations to assert control over the region. These systematic and incremental military and civilian-military measures might provide China with the tools to successfully conduct a potential forceful reunification with Taiwan in the near future. For nearly a century, the People’s Republic of China (PRC) and Taiwan have largely avoided direct military confrontations across the Taiwan Strait. However, there have been four notable exceptions: the Taiwan Strait crises of 1954–55, 1958, 1995–96, and most recently, 2022–23. In the first three instances, the status quo was primarily restored following the crisis. However, recent events suggest worrying trends highlighting that Beijing is preparing for a forceful reunification with Taiwan. Chinese Communist Party (CCP) General Secretary Xi Jinping has already made reunification with Taiwan a part of his signature China Dream, announced during the 19th Party Congress meeting in 2017. However, this was not the first time Taiwan was featured prominently in speeches by top Chinese leaders. As political scientist Ketian Zhang highlights in her book China’s Gambit: The Calculus of Coercion, annexing Taiwan is considered a core interest of China, with official references to its significance appearing regularly since 2003. The most recent instance was Xi Jinping’s New Year’s speech on December 31, 2024, where he declared, “No one can stop the historical trend of reunification of the motherland” (誰也不能充實祖國統一的歷史大勢). But beyond rhetoric and political posturing, the Chinese People’s Liberation Army (PLA) has taken concrete measures over the past decade to advance Beijing’s reunification agenda. Since the COVID-19 pandemic, these measures have intensified, reinforcing China’s willingness to use force. This article highlights the PLA’s systematic and incremental military and civilian-military measures—capabilities that might provide China with the tools to successfully conduct a potential forceful reunification with Taiwan in the near future. These measures include changing the institutions and patterns of PLA mobilization, constructing and using civilian infrastructure in military exercises, and establishing a new status quo through increasingly coercive military exercises around Taiwan. They also include standardization of the PLA for greater efficiency, effectiveness, combat readiness, stockpiling resources, and re-enlisting veterans with specific skills. This article builds upon Oriana Skylar Mastro’s arguments in her piece “The Taiwan Temptation,” which contends that China’s expanding military capabilities and rising nationalism could drive Beijing to contemplate using force for reunification with Taiwan. It identifies granular military details, especially post-2020, but it doesn’t venture into arguments about the timing of the reunification, potential diplomatic backlash, or economic costs of the invasion. Recent Military-Civilian Measures Since 2015, the PRC has undertaken significant organizational, legal, and structural reforms to enhance the National Defense Mobilization System (NDMS) (國防動員系統). As China scholar Devin Thorne highlights in his recent testimony to the US-China Economic and Security Review Commission, NDMS enables the PRC to harness its political, economic, technological, cultural, social, and other civilian resources from peacetime to wartime. This helps China to address a wide range of threats, such as escalations on its border, domestic instabilities, natural disasters, and other crises. It also bolsters China’s military logistics. As Thorne highlights, the key developments include the enactment of the National Defense Transportation Law in 2017, the introduction of updated auditing and surveying data on natural resources protocols in 2018 and 2021, the establishment of new NDMS offices beginning in December 2022, the creation of a new type of highly trained and professional local militia force since 2021, and the enhancement of cross-militia training initiatives starting in 2024. The PLA can mobilize private and civilian resources through the NDMS during national emergencies. It highlights China’s determination to prepare for potential contingencies, including escalation activities on its borders with India, the Taiwan Strait, and the South China Sea. Lessons from the Russian-Ukrainian War and the Israeli-Palestinian conflict have further shaped these efforts. Once operational, the NDMS would ultimately allow the PRC to mobilize society and harness civilian and military resources more systematically and institutionally in case of a potential forceful reunification attempt with Taiwan. However, mobilizing resources and force is insufficient, as China would need to reach the other side of the Taiwan Strait during a potential escalation. Some scholars dismiss the idea that the PLA remains incapable of conducting amphibious operations at the scale needed to take control of Taiwan. Amphibious operations (landing assault) are one of the five most important campaigns (alongside anti-landing, island blockade, border area counter-attack, and counter–air-raid campaigns) discussed at length in the PLA’s first written doctrine on joint operations, Joint Campaign Outline, as operational requirements to take over Taiwan by force. Taiwan has 169,000 active military personnel, backed by 1.66 million reservists. As career naval officer Harlan Ullman explains, using the traditional three-to-one ratio of attackers to defenders taught at war colleges, the PLA would need to mobilize at least 507,000 soldiers. By extension, to cross the 106-kilometer-wide Taiwan Strait to conduct landing operations, China would need thousands of ships—far more than the current PLA Navy capabilities of 234 operating warships. However, China has long been working to mobilize its civilian infrastructure to support its military campaign. For instance, the PRC has emphasized the construction of roll-on/roll-off (RO-RO) (滾裝船) ships, which can use their power to set up ramps on docks or beaches to transport vehicles. Each RO–RO ship is estimated to carry at least three hundred vehicles and about fifteen hundred passengers. Since establishing the “strategic projection support ship fleets” in China’s major ship-building companies in 2012, the PLA has actively cooperated with local shipping companies to improve maritime “strategic delivery” capabilities by prioritizing the production of RO-RO ferries. According to naval strategist J. Michael Dahm, in January 2023, China had around thirty-one RO-RO ferries in operation. However, the Center for Strategic and International Studies pointed out that the mainland shipyards would deliver up to two hundred RO-RO ships in the four years from 2023 to 2026. Furthermore, the PLA has used these ferries in military exercises in the Taiwan Strait since 2019. For instance, the first fifteen-thousand-ton ferry, Bang Chui Dao RO-RO ship (棒槌島滾裝船), participated in an amphibious assault exercise in 2019. Since then, the PLA has conducted such military exercises regularly. In July 2020, the PLA experimented with launching amphibious assault craft from civilian ferries toward the beach rather than port facilities, and it conducted day and night exercises off the coast of Guangdong Province. August 2021 was the first time the PLA used a ten-thousand-ton–class civilian ferry ship to land military exercises. Furthermore, in August 2022, after then-Speaker of the House Nancy Pelosi visited Taiwan, six of these RO-RO ships, which are operated by the Bo Hai Ferry Group Company (渤海輪渡集團公司) and are affiliated with the PLA Maritime Militia 8th Transport Brigade (海上民兵第8運輸旅), headed south toward Xiamen—the closest point to Taiwan. The RO-RO ferries were used more frequently in cross-transportation military exercises in July and September 2023. Furthermore, it was also discovered in January 2025 that China is building at least five landing barges at the Guangzhou shipyard with unusually long road bridges that extend from the bow of the ship, which makes them relevant to amphibious landing operations. Although these vessels and barges are extremely susceptible to attacks from Taiwanese F-16s, warships, and submarines, they would be supported by the PLA Navy, PLA Air Force, and PLA Rocket Force. The Changing Nature of Coercion and Military Exercises around Taiwan On September 17, 2020, the Taiwanese Ministry of National Defense published its first real-time military update, documenting PLA incursions into Taiwan’s de facto air defense identification zone (ADIZ). As meticulously recorded by Ben Lewis and Gerald C. Brown, by January 2025, there had been approximately eight thousand PLA violations of the ADIZ, including multiple crossings of the median line. Notably, Chinese warplanes crossed the median line in 2019 for the first time since 1999. However, Nancy Pelosi’s August 2022 visit to Taiwan provided the PLA with a pretext to escalate its activities, culminating in multiple advanced military exercises conducted around Taiwan from all sides. Since August 2022, the PLA has conducted five large-scale military exercises around Taiwan. Most of them coincided with significant political events. For instance, the first military exercise in August 2022 followed Pelosi’s visit. This was succeeded by the inaugural PLA Joint Sword exercises in April 2023, coinciding with former Taiwanese President Tsai Ing-wen’s visit to the United States and her meeting with then-Speaker of the US House of Representatives Kevin McCarthy. Subsequent exercises included Joint Sword A in May 2024 and Joint Sword B in October 2024. These exercises aligned with the inauguration of President Lai Ching-te’s tenure and his National Day speech. The most recent military exercises, conducted in December 2024, were held shortly after President Lai Ching-te’s travels through the United States. Notably, President Lai did not engage with any major US leaders during his transit. However, the recent exercises display the opportunistic Chinese behavior of leveraging situations to establish a new normal through increasingly coercive activities in the Taiwan Strait. The Joint Sword A and B exercises and the December 2024 drills are particularly significant for understanding the evolution of China’s coercion pattern and the difference between China’s military posturing and its intentions in the Taiwan Strait. While the Joint Sword A and B drills were declared in advance and focused on anti-intervention and amphibious assault near Taiwan, recent December 2024 exercises intended to perform blockade, strategic deterrence, and anti-interventionism exercises. The latest exercises occurred across expanded locations like Fujian, Zhejiang, and the Western Pacific. Significantly, the December 2024 exercise, for the first time, witnessed all three of the PLA’s sea-facing theater commands—North, East, and South—jointly participating in an operation in the eastern waters of China, a key demand by the leadership to achieve multi-domain joint operations capabilities. Notably, these instances reveal that the Chinese leadership is keenly aware of the PLA’s pre-existing weaknesses, like amphibious assaults and anti-intervention operations, and has been pushing the PLA to address this gap gradually. They also leveraged elements of strategic deterrence and surprise while adhering to steps toward joint combat operations, a prerequisite for a forceful reunification. Geographically, these exercises extended beyond the Taiwan Strait to cover broader areas, including Fujian, Zhejiang, Shanghai, and the Western Pacific, indicating a shift toward controlling key maritime zones in the First Island Chain. Thus, with active participation from all major PLA services and the three sea-facing theater commands, and indulgence in numerous aspects of warfare targeted toward the PLA’s primary strategic direction—Taiwan—these exercises signalled a more nuanced and multi-layered operational focus. Multiple Standardizations within the PLA Over the past seven years, particularly in the post-pandemic period, China has prioritized comprehensive standardization of procedures with the PLA and its auxiliary support systems—non-combat systems and components that support and sustain military operations. PLA leadership has issued numerous directives to achieve uniformity across various domains, such as the construction of barracks, military equipment procurement, and the establishment of standardized military training grounds. These efforts are extended to standardizing resource allocation, engineering procurement, equipment support, logistical operations, medical services, communication infrastructure, cybersecurity systems, and intelligence gathering and analysis mechanisms. These initiatives highlight China’s attempt to enable standardization within the PLA’s military operations to enhance its overall efficiency, effectiveness, and combat readiness. Streamlining key processes, including operational logistics, equipment maintenance, and strategic communication networks, would help the PLA to accelerate achieving capabilities to perform multi-domain integrated joint operations. Standardization facilitates interoperability across services, theaters, and arms, resulting in seamless coordination among ground, naval, air, space, and cyber units. Developing these capabilities is a prerequisite for conducting multi-domain integrated joint operations, a requirement for forceful Taiwan reunification. They are also indicative of the PLA’s steps toward achieving operational readiness. It is particularly relevant in regional and near-regional escalations, such as those in the South China Sea and the Western Pacific Ocean, which could be possibilities during the Taiwan reunification campaign. Resource Stockpiling Resource stockpiling is an important indicator of a nation’s preparedness for a potential conflict. It involves the systematic accumulation of critical materials, energy reserves, food supplies, and industrial inputs essential during wartime. Such activities are often undertaken to ensure self-sufficiency, mitigate vulnerabilities, and maintain resilience in the face of potential embargoes, trade disruptions, or blockades. Agricultural economist Gustavo F.C. Ferreira highlights in his testimony to the US-China Economy and Security Review Commission that China has been significantly increasing its energy resource reserves, particularly coal, crude oil, and natural gas. The country has built an extensive storage capacity for crude oil, estimated to exceed 1.8 billion barrels, including strategic petroleum reserves and underground storage facilities. Additionally, he points out that China’s coal production has ramped up aggressively, with approval of expansion projects equivalent to the European Union’s annual coal production in just one year. He notes that beyond energy resources, the stockpiling extends to other critical areas such as food (grains and protein sources), strategic metals (rare earth, copper, and lithium), and technological components (semiconductors). These measures are supported by state policies to reduce China’s reliance on global markets and ensure continued operation during a conflict or escalation. Similarly, there are reports about China’s record 105.03-million-metric-ton import of soybeans in 2024. This marks a 6.5 percent increase from 2023. This surge is possibly due to China’s efforts to prepare for a contingency, particularly in anticipation of intensified trade tensions with the United States. Researcher Zongyuan Zoe Liu’s work highlights China’s strategies to shield its economy from potential Western sanctions by drawing lessons from sanctions imposed on Russia. She notes China’s attempt to increase economic and technological self-sufficiencies by immunizing its economy against sanctions and building financial resilience against potential sanctions by the United States. Re-enlistment of Veterans Since 2017, the PLA has notified several enlistment orders for veterans with specific skill sets. A key focus has been the integration of veterans into civil-military roles. This is supported by policies to re-enlist them in specialized units adhering to Xi’s stated and revealed military goals for the PLA. For instance, in the case of Taiwan-focused operations, the PLA’s re-enlistment efforts focus on operational readiness by re-enlisting veterans skilled in amphibious operations, cyber warfare, and missile systems. Since 2022, there has been an emphasis on integrating these veterans into critical roles, such as reserve forces, militia coordination, and rapid mobilization units. Beyond these six measures, several other developments—China’s heavy investment in dual-use infrastructure such as ports and airfields on the east coast, development of amphibious and airborne military capabilities like the large Type 075 landing ships and Y-20 aircraft, investment in offensive intelligence and cyber capabilities, deployment of strategic missile systems like the DF-15 and DF-21, training of the maritime militia with the PLA and their expansion to support the armed forces whenever required, and the integration of real-time battlefield awareness via the BeiDou navigation system—are additional factors to conclusively determine the PLA’s intention and readiness for a potential reunification campaign with Taiwan. Conclusion It is a political decision to pursue the reunification campaign. Western scholars dismiss such arguments on the basis of the PLA’s perceived lack of military preparedness and the significant economic costs China would incur during and after a reunification attempt. However, as this essay highlights, China is keenly aware of these considerations and is taking proactive steps to limit the fallout, if not eliminate it. This essay doesn’t argue whether China would attempt a forceful unification campaign or the cost of its campaign. Instead, it argues that through a combination of military and civilian measures, an effort has been made to address the possible critical vulnerabilities in military and economic sectors. The question remains about the PLA’s ability to execute and sustain complex cross-strait operations, especially after targeted military purges in 2023 and 2024. Every measure mentioned here can be seen in isolation and not as a part of a complex puzzle that indicates that the PLA is preparing to invade Taiwan. However, these measures involve systemic integration with military logistics, enabling rapid deployment and sustainability when required. A steady accumulation of capabilities indicates deliberate preparation for eventualities that may align with China’s political-military objectives across the Taiwan Strait.

Energy & Economics
US - 11.14.2024:

The Economic Impacts of Trump Administration's Tariffs

by World & New World Journal Policy Team

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском I. Introduction  We are only two and a half months into the new Trump administration. However, President Donald Trump's long-threatened tariffs have plunged the country into a trade war abroad. On-again, off-again, new tariffs continue to escalate uncertainty around the world. Trump already launched a trade war during his first term in office, but he has more sweeping tariff plans right now. The second Trump administration has embarked on a new and more aggressive tariff policy, citing various economic and national security concerns. His administration has proposed, imposed, suspended, revoked, and then reimposed various new tariffs. It could be difficult for average citizens to keep up with all the proposals. As of March 19, 2025, there are ten proposed or active tariff initiatives. They range from broad-based tariffs that cover all goods from a certain country (China, Mexico, Canada) to tariffs that cover certain types of goods (aluminum & steel), promises of future tariffs (copper, lumber, automotive, semiconductor, and pharmaceutical), and promised retaliatory tariffs (European wine and other alcoholic beverages). Moreover, although we have seen more tariff announcements in the first two months of the second Trump administration than in the entire first Trump administration, "fair and reciprocal" tariff rollout will overpower the tariffs imposed until today. The ten tariff initiatives that are proposed or in play are as follows in Table 1.   This paper aims to evaluate economic impacts of tariffs imposed by the Trump administration. It first explains the effects of tariffs imposed by the first Trump administration and then forecasts the impacts of the second Trump administration's tariffs.  II. Literature on Tariff Effects A tariff is a type of tax that a government adds to imported goods. Companies importing goods pay the tariff to the government. If any part of a product arrives with a tariff, whether it is an imported avocado or a car built locally with imported steel, its cost is part of the price everyday consumers pay before sales tax.  Economists reject tariffs as an effective tool to improve the welfare of U.S. citizens or strengthen key industries. In a survey conducted during the first Trump administration, 93 % of economic experts did not agree that targeted tariffs on aluminium and steel would improve Americans' welfare. Recent research has strengthened economists' opposition to this policy instrument. Numerous studies demonstrate that American consumers entirely bear the burden of tariffs imposed during the first Trump administration, with disproportionately large impacts on lower-income U.S. households. A framework for analysing the impact of higher import tariffs on the economy is provided by Mundell and Fleming. Mundell (1961) claimed that the country that raised tariffs on imported products may benefit because more people choose domestically produced products over imported ones. Protection from foreign competition could also benefit domestic industries. Large countries can also benefit from improved terms of trade. However, increased tariffs on imported products are assumed to lead to an increase in the current account balance by increasing savings relative to investment. Higher savings dampen aggregate demand. The situation of households deteriorates because of rising consumer prices. Domestic industries are also negatively affected by lower household demand and the need to pay more for imported input products.  Over the years, Mundell and Fleming's model has been developed further by other scholars such as Eichengreen (1981), Krugman (1982), Obstfeld and Rogoff (1995) and Eichengreen (2018). Overall, the theoretical literature demonstrates that higher import tariffs could affect the economy through various channels. The impacts of tariffs on the economy differ between a nation imposing the tariffs and nations exporting to the nation raising the tariffs. However, nations that are not subject to the increased import duties are also affected. Main effects of higher tariffs are as follows: Higher inflation: Higher import tariffs lead to higher prices for imported products. Depending on which tariffs are increased, this could lead to higher prices for both consumers and companies. Domestic firms may also raise their prices because of reduced competition from foreign companies (Cavallo et al. (2021)).  Higher consumer prices lead to a decline in real disposable household income, which hampers private consumption. Higher business costs have impacts on companies' profits, which in turn dampen employment and companies' willingness to invest. Companies are also more likely to pass on some of their higher costs to consumers in the form of higher prices. The rise in imported prices might be smaller in large countries, as they are more able to influence the world price of products. Increased consumption of other products: Higher imported prices can lead companies and consumers to increasingly buy cheaper domestic products. But it can also lead to increased imports of products from countries not subject to higher import tariffs.  Domestic industries are protected: Higher import tariffs improve the competitive position of domestic companies. These benefits can lead to increased investment, production, and employment in protected industries. However, the longer-term effect of protecting some domestic industries from foreign competition can be negative, as it might reduce incentives to improve production efficiency, thereby dampening productivity and GDP.  Decreased trade: Increased tariffs usually lead to reduced trade. This can lead to reduced knowledge transfer between nations in the form of less direct investment, reduced technology transfer, and reduced access to skilled labour. These factors in turn can lead to companies moving further away from the technological frontier, thereby hampering productivity (Dornbusch (1992) and Frankel and Romer (1999)).  Stronger exchange rate: When demand changes from foreign to domestic production, the exchange rate tends to rise to balance it out. One reason is that higher inflation often leads to higher interest rates relative to other nations. The nominal exchange rate might appreciate if imports decline significantly and demand for foreign currency drops. An appreciation of the exchange rate hampers exports but keeps imports cheaper.  Global value chains: Higher tariffs can lead to disruptions in global value chains by making imported inputs from abroad pricier. If firms are part of global value chains, higher costs for firms facing higher import costs may also lead to higher costs for domestic firms further down the production chain.  Uncertainty and confidence: Higher import tariffs may increase uncertainty about future trade policy and lead to increased pessimism among households and companies. Such uncertainty may hamper household consumption and business investment (Boer and Rieth (2024)).  III. Tariffs under the first Trump administration The first Trump administration's tariffs involved protectionist trade initiatives against other nations, notably China.  In January 2018, the Trump administration-imposed tariffs on solar panels and washing machines of 30–50%. In March 2018, the administration-imposed tariffs on aluminium (10%) and steel (25%), which are imported from most countries. In June 2018, the Administration expanded these tariffs to include the EU, Mexico, and Canada. The Trump administration separately set and escalated tariffs on products imported from China, leading to a trade war between the U.S. and China.  In their responses, U.S. trading partners imposed retaliatory tariffs on U.S. products. Canada imposed matching retaliatory tariffs on July 1, 2018. China implemented retaliatory tariffs equivalent to the $34 billion tariff imposed on it by the U.S. In June 2019, India imposed retaliatory tariffs on $240 million worth of U.S. products.  However, tariff negotiations in North America were under way and successful, with the U.S. lifting steel and aluminium tariffs on Mexico and Canada on May 20, 2019. Mexico and Canada joined Argentina and Australia, which were the only countries exempted from the tariffs. But on May 30, Trump announced on his own that he would put a 5% tariff on all imports from Mexico starting on June 10, 2019. The tariffs would go up to 10% on July 1, and then by another 5% every month for three months, until illegal immigrants stopped coming through Mexico and into the U.S. Then the tariffs were averted on June 7 after negotiations between the U.S. and Mexico. U.S. tariffs on Chinese products had been applied as follows: On March 22, 2018, Trump signed a memorandum under Section 301 of the Trade Act of 1974 to apply tariffs of $50 billion on Chinese products. In response, China announced plans to implement its tariffs on 128 U.S. products. 120 of those products, such as fruit and wine, will be taxed at a 15% duty, while the remaining eight products, including pork, will receive a 25% tariff. China implemented their tariffs on April 2, 2018.  On April 3, 2018, the U.S. Trade Representative's office (the USTR) published an initial list of 1,300+ Chinese products to impose levies upon products like flat-screen televisions, medical devices, aircraft parts and batteries. On April 4, 2018, China's Customs Tariff Commission of the State Council decided to announce a plan to put 25% more tariffs on 106 U.S. goods, such as soybeans and cars.  In the response, On April 5, 2018, President Trump directed the USTR to consider $100 billion in additional tariffs. On May 9, 2018, China cancelled soybean orders exported from the United States to China. On June 15, 2018, President Trump released a list of Chinese products worth $34 billion that would face a 25% tariff, starting on July 6. Another list with $16 billion of Chinese products was released, with an implementation date of August 23.  On July 10, 2018, in reaction to China's retaliatory tariffs that took effect July 6, the USTR issued a proposed list of Chinese products amounting to an annual trade value of about $200 billion that would be subjected to an additional 10% in duties. During the G20 summit in Japan in June 2019, the U.S. and China agreed to resume stalled trade talks, with Trump announcing he would suspend an additional $300 billion in tariffs that had been under consideration. IV. Economic Effects of the Tariffs from the First Trump Administration Changes in tariffs affect economic activity directly by influencing the price of imported products and indirectly through changes in exchange rates and real incomes. The extent of the price change and its impact on trade flows, employment, and production in the United States and abroad depend on resource constraints and how various economic actors (producers of domestic substitutes, foreign producers of the goods subject to the tariffs, producers in downstream industries, and consumers) respond as the effects of the increased tariffs reverberate throughout the economy. According to the U.S. Congressional Research Service (CRS), the following six outcomes came out at the level of individual firms and consumers as well as at the level of the national economy. 1. Increased costs for U.S. consumers Higher tariff rates lead to price increases for consumers of products subject to the tariffs and for consumers of downstream products as input costs rise. Higher prices in turn lead to decreased consumption, depending on consumers' price sensitivity for a particular product. For example, consider the monthly price of U.S. laundry equipment, which includes washing machines subject to tariff increases as high as 50% since February 2018. The monthly price of this equipment increased by as much as 14% in 2018 compared to the average price level in 2017, before the tariffs took effect (see Figure 1).   Figure 1: U.S. laundry equipment prices According to Jin (2023), many companies passed the costs of the Trump tariffs on to consumers in the form of higher prices. Following impositions of the tariffs on Chinese products, the prices of U.S. intermediate goods rose by 10% to 30%, an amount equivalent to the size of the tariffs. An April 2019 working paper by Flaaen, Hortaçsu, and Tintel not found that the tariffs on washing machines caused the prices of washers to rise by approximately 12% in the United States. A Goldman Sachs analysis by Fitzgerald in May 2019 found that the consumer price index (CPI) for tariffed products had increased dramatically, compared to a declining CPI for all other core goods. According to the Guardian, the Budget Lab at Yale University found that American consumer prices could rise by 1.4% to 5.1% if Trump implemented his comprehensive tariff plan, which would amount to an additional $1,900 to $7,600 per household. 2. Decreased domestic demand for imported goods subject to the tariffs and less competition for U.S. producers of substitute goods: U.S. producers competing with the imported products subject to the tariffs (e.g., domestic aluminium and steel producers) may benefit to the degree they are able to charge higher prices for their domestic products and may expand production because of increased profitability. Since March 2018, U.S. imports of steel and aluminium have faced additional tariff charges of 25% and 10%, making foreign supplies of these products more expensive relative to domestic products. Because of these tariffs, U.S. imports of these goods went down in 2018 and 2019 compared to what they were usually like in 2017 before the tariffs, while U.S. production went up (see Figure 2 and Figure 3). By the first quarter of 2020, real U.S. imports of steel and aluminium (adjusted for price fluctuations) had decreased by more than 30% and 16%, respectively, from their average 2017 levels. The quarterly production of steel and aluminium in the U.S. during this period, however, increased by as much as 13.5% and 9.0%, respectively, above average 2017 levels.   Figure 2: Domestic production and imports: Steel  Figure 3: Domestic production and imports: Aluminium 3. Increased costs for U.S. producers in downstream industries, resulting in a decline in employment U.S. producers that use imported products subject to the additional tariffs as inputs ("downstream" industries, such as auto manufacturers in the case of the aluminium and steel tariffs) might be harmed as their costs of production increase. Higher input costs are more likely to lead to some combination of lower profits for producers, which in turn might dampen demand for these downstream products, leading to some contraction in these sectors.  A study (2019) by Federal Reserve Board economists Flaaen and Pierce, which examined effects on the manufacturing sector from all U.S. tariff actions in 2018, found that higher input costs from the tariffs were associated with higher prices, employment declines, and reductions in output for affected firms. Another study (2020) by Handley, Kamal, and Monarch found that the higher input costs associated with the tariffs might have led to a decrease in U.S. exports for firms reliant on imported intermediate inputs. Handley, Kamal, and Monarch suggested that export growth was approximately 2% lower for products made with products subject to higher U.S. tariffs, relative to unaffected products. Another study (2019) by Federal Reserve Board economists Flaaen and Pierce found that the steel tariffs led to 0.6% fewer jobs in the manufacturing sector than would have happened in the absence of the tariffs; this cut amounted to approximately 75,000 jobs. A study (2024) by Ma and David concluded that the United States lost 245,000 jobs because of the Trump tariffs.  4. Decreased demand for U.S. exports subject to retaliatory tariffs  Retaliatory tariffs place U.S. exporters at a price disadvantage in export markets relative to competitors from other countries, potentially decreasing demand for U.S. exports to those markets. Since Q3 2018, after Section 232 retaliatory tariffs took effect in China, the EU, Russia, and Türkiye, U.S. exports to these trading partners subject to the tariffs declined by as much as 44% below their 2017 average values (Figure 4). U.S. exports to China subject to retaliation during the same period declined even further from their 2017 levels, falling as much as 68% on a quarterly basis. By contrast, during this same period, overall U.S. exports were as much as 10% higher each quarter relative to 2017, suggesting the retaliatory tariffs played a role in the product-specific export declines.  Figure 4: Declines in U.S. exports subject to retaliation A study by Fajgelbaum, Goldberg, Kennedy, and Khandelwal published in the Quarterly Journal of Economics in October 2019 estimated that consumers and firms in the U.S. who buy imports lost $51 billion (0.27% of GDP) because of the 2018 tariffs. This study also found that retaliatory tariffs resulted in a 9.9% decline in U.S. exports. This study also found that workers in counties with a lot of Republicans were hurt the most by the trade war because agricultural products were hit the hardest by retaliatory tariffs.  5. U.S. National Economy In addition to industry- or consumer-level effects, tariffs also have the potential to affect the broader U.S. national economy. Quantitative estimates of the effects vary based on modelling assumptions and techniques, but most studies suggest a negative overall impact on U.S. GDP because of the tariffs.  The Congressional Budget Office (2020) estimated that the increased tariffs in effect as of December 2019 would reduce U.S. GDP by 0.5% in 2020, below a baseline without the tariffs, while raising consumer prices by 0.5%, thereby reducing average real household income by $1,277. From a global perspective, the International Monetary Fund estimated that the tariffs would reduce global GDP in 2020 by 0.8%. Dario Caldara et al. (2020) also found that in 2018, investment dropped by 1.5% because of the uncertainty caused by U.S. trade policy. Moreover, a study (2019) by Amiti, Redding, and David published in the Journal of Economic Perspectives found that by December 2018, Trump's tariffs resulted in a reduction in aggregate U.S. real income of $1.4 billion per month in deadweight losses and cost U.S. consumers an additional $3.2 billion per month in added tax. Furthermore, Russ (2019) found that tariffs, which Trump imposed through mid-2019, combined with the policy uncertainty they created, would reduce the 2020 real GDP growth rate by one percentage point.  6. Trade balance  The Trump administration repeatedly raised concerns over the size of the U.S. trade deficit, thereby making trade deficit reduction a stated objective in negotiations for new U.S. trade agreements. Broad-based tariff increases affecting a large share of imports may reduce imports initially, but they are unlikely to reduce the overall trade deficit over the longer period due to at least two indirect impacts that counteract the initial reduction in imports. One indirect effect is a potential change in the value of the U.S. dollar relative to foreign currencies. Another potential effect of U.S. import tariffs is retaliatory tariffs. Economists argue that while tariffs placed on imports from a limited number of trading partners may reduce the bilateral U.S. trade deficit with those specific nations, this is likely to be offset by an increase in the trade deficit or reduction in the trade surplus with other nations, leaving the total U.S. trade deficit largely unchanged.  Figure 5 shows the relative change in the U.S. goods trade deficit with the world as well as the bilateral U.S. deficits with three major partners, China, Mexico, and Vietnam, from 2017 to 2019. Since the U.S. tariffs took effect, the overall U.S. trade deficit has increased, rising 8% from 2017 to 2019. However, the U.S. trade deficit in goods with China declined by 8% from 2017 to 2019, while the U.S. trade deficit in goods with Vietnam and Mexico significantly increased by more than 40% during the same period.  Figure 5: Changes in the U.S. goods trade deficits with China, Mexico, and Vietnam According to Zarroli (2019), between the time Trump took office in 2017 and March 2019, the U.S. trade deficit increased by $119 billion, reaching $621 billion, the highest it had been since 2008. American Farm Bureau Federation data showed that agriculture exports from the U.S. to China decreased from $19.5 billion in 2017 to $9.1 billion in 2018, a 53% reduction.  V. What are the Potential Consequences of Trump's Tariff Plan? Last year, the Peterson Institute for International Economics examined the impact of President Trump's proposed tariffs based on his campaign promises, which would impose 10 % additional tariffs on US imports from all sources and 60 % additional tariffs on imports from China. The major outcomes were lower national income, lower employment, and higher inflation. McKibbin, Hogan, and Noland (2024) at the Peterson Institute for International Economics found that both of Trump's tariff plans—imposing 10% additional tariffs on U.S. imports from all sources and 60% additional tariffs on imports from China—would reduce both U.S. real GDP and employment by 2028. But the former proposal damages the U.S. economy more than the latter. If other nations retaliate with higher tariffs on their imports from the U.S., the damage intensifies.  Assuming other governments respond in kind, Trump's 10 % increase results in U.S. real GDP that is 0.9 % lower than otherwise by 2026, and U.S. inflation rises 1.3 % above the baseline in 2025.  The 10 % added tariffs hurt the economies of Canada, Mexico, China, Germany, and Japan—all major US trading partners that see a lower GDP relative to their baselines through 2040. Mexico and Canada take much larger GDP hits than the U.S. The 60 % added tariffs on imports from China reduce its GDP relative to its baseline, much more than that of other U.S. trading partners. Mexico, however, sees a higher GDP than otherwise as some production shifts to Mexico from China. This paper focuses on Trump's universal 10 % tariffs rather than 60 % tariffs on imports from China because extreme 60 % tariffs on Chinese imports are not expected. McKibbin, Hogan, and Noland (2024) assume the 10 % tariff increase is implemented in 2025 and remains in place through the forecast period. They also consider a second scenario in which U.S. trading partners retaliate with equivalent tariff increases on products they import from the U.S.  Figures 6–11 show the results for the uniform additional 10 % increase in the tariff on imports of goods and services from all trading partners.   Figure 6: Projected change in real GDP of selected economies from an additional 10 % increase in US tariffs on imports of goods and services from all trading partners, 2025-40 (Source: McKibbin, Hogan, and Noland, 2024) When tariffs go up by 10%, the U.S. real GDP goes down by 0.36 % by 2026, and it goes down even more in Mexico and Canada by 2027 (see Figure 6). Chinese GDP drops by 0.25 % below the baseline in 2025. After the initial demand-induced slowdown, U.S. GDP recovers as production shifts from foreign suppliers to U.S. suppliers, leading to a slightly lower long-term GDP of 0.1 % below baseline by 2030 in the U.S.   Figure 7: Projected change in employment (hours worked) in selected economies from an additional 10 % increase in US tariffs on imports of goods and services from all trading partners, 2025-40 (Source: McKibbin, Hogan, and Noland, 2024) The results for aggregate employment are like the GDP outcomes (see figure 7). Employment drops in the United States by 0.6 % by 2026 but recovers due to a supply relocation towards U.S. suppliers. U.S. employment returns to baseline eventually because real wages decline permanently to bring employment back to baseline by assumption.  Figure 8: Projected change in inflation in selected economies from an additional 10% increase in US tariffs on imports of goods and services from all trading partners, 2025-40 (Source: McKibbin, Hogan, and Noland, 2024) The imposition of higher tariffs increases prices of both consumer and intermediate goods, contributing to a rise in inflation of 0.6 % above baseline in 2025 (see figure 8).  The higher tariff is inflationary everywhere except in China due to the tightening of Chinese monetary policy to resist change in the exchange rate relative to the U.S. dollar.   Figure 9: Projected change in the trade balance in selected economies from an additional 10 % increase in US tariffs on imports of goods and services from all trading partners, 2025-40 (Source: McKibbin, Hogan, and Noland (2024)) Figure 9 shows the change in the trade balance as a share of GDP. In theory, the trade balance can worsen or improve due to changes in exports and imports. From 2025 to 2028, the U.S. trade deficit narrows slightly but then widens as capital flows into the U.S. economy, appreciating the U.S. real effective exchange rate. By 2030, the U.S. trade deficit will worsen by 0.1 % of GDP due to capital moving from Mexico and Canada into the U.S. Government savings rise due to additional tariff revenues.  VI. Conclusion  This paper showed that tariffs imposed by the first Trump administration had negative impacts on the U.S. economy, particularly inflation, incomes, and employment. It also demonstrated that tariffs which will be imposed by the second Trump administration are expected to have negative effects on the U.S. economy. Then a question arises: "Why does Trump attempt to impose tariffs on products from abroad?" Today, more people mention tariffs as tools to protect U.S. companies and farmers. They are discussed as a tool for bringing back manufacturing businesses into the U.S. as well as a bargaining tactic in negotiations over the flow of fentanyl and immigration. Trump has used and promised to increase tariffs for three purposes: to raise revenue, to bring trade into balance, and to bring rival countries to heel. It is unclear whether Trump will achieve his goals. However, President Donald Trump believes that tariffs are a panacea. Trump believes that his tariffs would bring hundreds of billions—trillions— into the US Treasury. Moreover, Trump is confident that he can force countries to give up something he believes is in America's best interest. For example, his tariffs on Canada and Mexico have led Mexico and Canada to agree to expand their border patrols. Reference  Amiti Mary, Redding Stephen, David E, “The Impact of the 2018 Tariffs on Prices and Welfare,” Journal of Economic Perspectives. 33 (Fall 2019): 187–210. Boer, L. and M. Rieth, “The Macroeconomic Consequences of Import Tariffs and Trade Policy Uncertainty,” IMF Working Paper 2024/013, International Monetary Fund. Cavallo, A., G. Gopinath, B. Neiman, and J. Tang (2021), “Tariff Pass-Through at the Border and at the Store: Evidence from US Trade Policy,” American Economic Review: Insights 3(1): 19-34.  Congressional Budget Office, The Budget and Economic Outlook: 2020 to 2030, January 28, 2020. https://www.cbo.gov/system/files/2020-01/56020-CBO-Outlook.pdf.  Dario Caldara et al., “The Economic Effects of Trade Policy Uncertainty,” Journal of Monetary Economics, vol. 109 (January 2020), pp. 38-59. Dornbusch, R. (1992), “The Case for Trade Liberalization in Developing Countries,” Journal of Economic perspectives 6 (1): 69-85.  De Loecker, J., P.K. Goldberg, A.K. Khandelwal and N. Pavcnik (2016), “prices, markups, and trade reform,” Econometrica 84(2): 445-510.  Eichengreen, B. (1981), “A Dynamic Model of Tariffs and Employment under Flexible Exchange Rates,” Journal of International Economics 11:341-359.  Eichengreen, B. (2018), “Trade Policy and the Macroeconomy,” Keynote address Mun dell-Fleming Lecture, International Monetary Fund, 13 March 2018.  Fajgelbaum, P.D., P.K. Goldberg, P.J. Kennedy and A.K. Khandelwal (2019), “The Return to Protectionism,” The Quarterly Journal of Economics 135(1): 1-55.  Fitzgerald, Maggie, “This Chart from the Goldman Sachs Shows Tariffs are Rasing Prices for Consumers and It could Get Worse.” CNBC. May 13, 2019. Flaaen, A. and J.R. Pierce (2019), “Disentangling the effects of the 2018-2019 tariffs on globally connected U.S. Manufacturing sector,” Working Paper, Finance Economic Discussion Series 2019-086, Board of Governors Federal Reserve System, Washington DC.  Flaaen, A., A. Hortacsu and F. Tintelnot (2020), “The production relocation and price effects of US trade policy: the Case of Washing Machines,” American Economic Review 110(7): 2103-2127.  Frankel, J.A. and D.H. Romer (1999), “Does Trade Cause Growth,” American Economic Review 89 (3): 379-399. Handley, K., F. Kamal, and R. Monarch (2020), “Rising Import Tariffs, Falling Export Growth: When Modern Supply Chains Meet Old-Style Protectionism,” NBER Working paper 26611. https://www.nber.org/papers/w26611. Handley, K. and N. Limao (2022), “Trade Policy Uncertainty,” NBER Working Paper 29672.  Handley, Kyle, Fariha Kamal, and Ryan Monarch, “Rising Import Tariffs, Falling Export Growth: When Modern Supply Chains Meet Old-Style Protectionism,” National Bureau of Economic Research, NBER Working Paper No. 26611, January 2020. Jin, Keyu (2023). The New China Playbook: Beyond Socialism and Capitalism. New York: Viking. Kreuter, H. and M. Riccaboni (2023), “The Impact of Import Tariffs on GDP and Consumer Welfare: A Production Network Approach,” Journal of Economic Modelling 126.  Krugman, P. (1982), “The Macroeconomics of Protection with a Floating Exchange rate,” Carnegie-Rochester Conference Series on Public Policy 16: 141-182.  Ma, Xinru; Kang, David C. (2024). Beyond Power Transitions: The Lessons of East Asian History and the Future of U.S.-China Relations. Columbia Studies in International Order and Politics. New York: Columbia University Press.  McKibbin, W., M. Hogan, and M. Noland (2024), “The International Economic Implications of a Second Trump Presidency,” Peterson Institute for International Economics, Working Paper 24-20.  Mundell, R. (1961), “Flexible Exchange Rates and Employment Policy,” Canadian Journal of Economics and Political Science 27: 509-517.  Obstfeld, M., and K. Rogoff (1995), “Exchange Rate Dynamics Redux,” Journal of Political Economy, 103: 624-660.  Russ, Katheryn (December 16, 2019). “What Unilateralism Means for the Future of the U.S. Economy,” Harvard Business Review. January 2, 2020.  Zarroli, Jim. “Despite Trump’s Promises, The Trade Deficit is Only Getting Wider,” NPR. March 6, 2019.

Energy & Economics
Canadian and Chinese flag. Canada and China flag.

The Fruits of Trump Tariffs: Closer Ties Between Canada and China

by Dean Baker

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском With Donald Trump seemingly determined to push the US economy on a path towards autarky, our major trading partners will need to make alternative arrangements. This is especially the case with Canada, since its economy is so closely tied to the US economy. At this point, Mark Carney, the country’s new Prime Minister, knows there is little possibility of dealing with Trump rationally. Trump has bizarre and totally imagined grievances against Canada. His main complaint seems to be that the United States runs a $200 billion trade deficit with Canada, which Trump describes as Canada ripping off the United States. It’s hard to believe that anyone would say that selling stuff to a willing and well-informed customer is ripping them off. Presumably we buy stuff from Canada because it’s cheaper than the stuff we either produce ourselves or could buy from other countries. Also, the deficit is entirely due to purchases of oil from Canada, something Trump sought to promote in his first term. We have mostly balanced trade if we exclude oil. In fact, the claims of unfairness are based on a treaty that Trump himself negotiated in his first term. Trump can’t even get his numbers straight. Rather than being $200 billion, our trade deficit is less than one-third this size, at just over $60 billion. Trump’s erratic craziness makes the prospect of a real and lasting deal very dim. Carney has to look to secure stronger trade deals with more stable partners. Europe and Latin America are clearly part of the that story, but China needs to be too, as the world’s largest economy. There are opportunities for major gains from trade with China, especially in the auto sector, which had been thoroughly intertwined with the United States and Mexico. Carney has to work from the assumption that these links could be severed for the indefinite future. Here China’s enormous progress in developing electric vehicles offers a great opportunity to Canada. China now sells high quality, low-cost EVs. It has also developed battery technology to the point where a battery can be fully charged in six minutes, not much different than the time it takes to fill a tank of gas. Canada can in principle negotiate trade deals with China where it partially opens its market to its EVs, in exchange for a commitment to technology transfer. The plan would be that in a few years Canadian manufacturers would adopt the latest Chinese technology and supply much of the market themselves. Since Canada has more union-friendly labor law than the United States, they can structure their deal so that the factory jobs would be largely good-paying union jobs. This would be good for the environment, good for Canadian workers and consumers, and good for Canada’s economy, since it means car buyers will have considerably more money to spend on other items or to save. It would also set up a great contrast with the United States, where Trump is determined to try to lock the country into building and buying cars that rely on old-fashioned internal combustion (IC) engines. While Canadians are buying high-quality EVs, people in the United States will be buying IC cars for two or even three times the price. Furthermore, while we are paying $40 to $60 to fill our tanks every couple of weeks, Canadians will be able to power their vehicles for ten or fifteen dollars a charge. The move to EVs will also mean that Trump will have imposed a permanent cost on the US car industry, even if he eventually learns a little economics and discovers his tariffs were not a good idea. If Canada develops a vibrant EV industry, it will not be going back to the integrated production structure with the United States that it had with IC vehicle producers before the trade war. Trump is not going to be able to get Canadians to buy more expensive IC vehicles. The only way for the United States auto industry to go forward, if we move back towards more normal trade with Canada, will be for it to double-down on developing EVs itself. There obviously will be many other problems that Canada will have to deal with as it attempts to cope with unwinding decades of economic integrations with the United States, but working with China on adopting EV technology should be a no-brainer. In this area, Trump may have done Canada a big favor.

Defense & Security
Swat valley, Pakistan, 12 December 2017: An udentified Pakistani Soldier holding gun.

Pakistan bogged by growing ferocity of Balochistan insurgency

by Sushant Sareen

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском Escalating Baloch insurgency challenges Pakistan’s authority, as militant coordination grows and state repression deepens regional instability The insurgency in Balochistan is becoming ominous and has been palpable for a couple of years. But the gravity of the situation in Pakistan's biggest province failed to register in the Byzantine corridors of power in Islamabad. In Pakistan's capital city, the only thing that mattered was controlling and manipulating the state’s institutions to ensure the survival of the hybrid regime controlled by the military junta of General Syed Asim Munir and fronted by Prime Minister Shehbaz Sharif. The fires in Balochistan, Khyber Pakhtunkhwa, Sindh, and Pakistan-occupied Kashmir (POK) received cursory coverage in the media. The public discourse has predominantly revolved around Imran Khan and his trials and tribulations in prison, and the regime’s machinations in countering his narrative, and his popularity. Balochistan was too distant from Islamabad and even Lahore for anyone to bother about what was happening in the restive province. Latelast month, after Maulana Fazal-ur Rehman’s speech in the National Assembly where he said that “five to seven districts in Balochistan were in a position to announce independence” and the “United Nations (UN) would recognise them the next day,” Pakistani people and beyond started taking notice of the sharply deteriorating security situation in the province. Although Maulana may have gone a bit overboard over the UN recognising a declaration of independence in Balochistan, he has his ears and eyes on the ground in the province and has a very good understanding of how bad things are. Following the Maulana, the Leader of Opposition (LoP) in the National Assembly, Omar Ayub, said that the Pakistani state had virtually ceased to exist in more than half a dozen districts of Balochistan. According to Ayub, the Pakistani flag was not flying in these districts. Nonetheless, it was not only political leaders opposed to the hybrid regime who were flagging the alarming situation in Balochistan. One of the closest advisors of PM Sharif, Rana Sanaullah, warned that armed groups could descend from the mountains and seize control of Balochistan. After initially trying to deny that things were spiraling out of control in the province, the Chief Minister, Sarfraz Bugti, finally admitted the situation was alarming. However, the insurgents could not hold any area for longer than a few hours. That the insurgents could strike at will and seize control of major highways and small towns for even a few hours was hardly something that any responsible administrator could be sanguine about. If anything, the rising frequency of high-profile, high-impact strikes by the Baloch insurgents has completely undermined the authority of the state. Worse, it has fuelled so much uncertainty that it has put paid to ambitious plans to attract foreign investment in infrastructure and mining projects. It was against this backdrop that the Baloch Raaji Aajoi Sangar (BRAS), an umbrella group of four militant insurgent groups namely Baloch Liberation Army (BLA), Balochistan Liberation Front (BLF), Balochistan Republic Guard (BRG) and Sindhudesh Revolutionary Army (SRA) announced the formation of a Baloch National Army with a unified command structure and a shift of focus from "Scattered operations to an organised, coordinated and decisive force”. BRAS declared its intent to intensify the war against both Pakistan and its main patron, China and bring greater lethality in its guerilla operations. To hit Pakistan and China where it hurts, the BRAS decided to ‘intensify the blockade on all important highways of Balochistan to disrupt the logistical, economic, and military interests of the occupying state.’ Within days of the BRAS announcement of ramping up its operations, the guerillas hit the strategic Coastal Highway and set six gas tankers and police vehicles on fire. There was also a sudden uptick in Improvised Explosive Devices (IEDs) and suicide attacks on Pakistani security forces and Baloch collaborators. The sheer expanse of geography where these attacks took place was particularly notable–a suicide attack in Kalat city, an IED blast in Quetta, another IED in Khuzdar against a pro-regime tribal leader, targeted killings of two clerics in Zehri, the same town that was stormed and occupied for a few hours by nearly a 100 insurgents in January last. According to data compiled by the South Asia Terrorism Portal, in just the first nine weeks of 2025, there have already been 70 incidents, in which around 135 Pakistani security forces personnel have been killed as against 66 insurgents/extremists–a ratio of 2:1 which reflects the enormity of the problem. Some of these insurgent attacks caused serious damage in men and material to the Pakistani security forces. In early February last, insurgents ambushed a van carrying troops, killing 17 Pakistani soldiers in the Kalat district. Two weeks later, in attacks on a Pakistan army checkpoint and a convoy in the Mand area, another 17 Pakistani soldiers were killed. The insurgents also attacked a bus carrying mine workers in Harnai, killing 11. Although the  Pakistani media presented this as an extortion racket run by the insurgents, the fact that it was an attack on an economic target–the insurgents call it exploitation of Balochistan’s resources by Punjab–made it a legitimate target in their view. Similarly, the targeting of Punjabi businessmen and settlers the Baloch call them spies and collaborators–is also a part of the strategy of the Baloch fighters against the Pakistani state. Perhaps the most devastating attack was carried out in August 2024 when the Baloch insurgents launched Operation Herof, in which they carried out coordinated attacks across the length and breadth of the province. In 2024 alone, over 900 attacks were carried out by the insurgent groups, the bulk of them by BLA, BLF and under the label of BRAS. Except for the Pashtun-dominated districts of Northern Balochistan, the Baloch insurgents have been active in every district of Balochistan. This is a qualitative change from past insurgencies when the fighting was restricted to a few districts and tribes. Now, it is pan-Balochistan and cutting across tribal, linguistic, and gender divide. While the Baloch insurgents have upped their game, not just in terms of the ferocity, intensity, and organisational capability, the Pakistani state—which is a euphemism for the Pakistan Army—has not been able to evolve to respond effectively. Its playbook is the same decades-old one: increase brutality, offer blandishments to tribal chieftains, bribe influential politicians, browbeat the people, stifle all dissent, keep a very tight leash over the media, install puppets and Quislings to run the province under the garb of democracy. But it is proving counterproductive, and the more the Pakistan Army doubles down on its repressive rule, the more it alienates the Baloch people and swells the ranks of the insurgent groups with recruits, including women and young people from educated middle-class. Finding itself losing the narrative war, the Pakistan Army has responded predictably. It has started raiding universities and abducting Baloch students, keeping them in illegal custody and, in some cases, killing them and dumping their bodies on the roadsides or in the wilds. In just the first few weeks of this calendar year, over 250 students have forcibly disappeared. This enforced disappearances issue has only fuelled disgust and alienation against the Pakistani state, arguably becoming one of the central pillars around which Baloch public opinion has been mobilised. Apart from the brutal repression that has been unleashed, the Pakistan Army is trying to play catch up in the narrative game by using tactics which are now anachronistic. For instance, authorities often parade a ‘surrendered militant’ who recites a predictable narrative – accusing commanders of greed, claiming India funds them, and asserting they work against Baloch interests. The Pakistani media then plays up these stories to amplify them. But no one except perhaps people in Punjab are buying what the Pakistan Army’s disinformation wing is selling. Similarly, exaggerated and often utterly fictitious claims of the Pakistan Army’s operations either to repel an attack or to raid insurgent hideouts are not impressing anyone. In most cases, the Pakistan Army conjures up an imaginary number of insurgents killed just to show that it is fighting back, and hard. The BRAS declaration to restructure its organisation and intensify its operations makes it clear– the insurgents believe the struggle in Balochistan has entered a decisive phase. The political narrative is dominated by young leaders of the Baloch Yakjheti Council, such as the indomitable Mahrang Baloch, Sami Deen Baloch and other members spearheading massive protests across the province. Members of the legislative assembly and the ‘elected’ government in the province have become political pigmies who are in power only because they have been foisted on the people of Balochistan by the Pakistan Army. The political and democratic processes in Balochistan have become redundant because they have been completely compromised and rigged by the Pakistan Army, all of which feeds into the narrative of pro-independence voices. Militarily, the Baloch insurgents have demonstrated their reach, capability and ability to coordinate complex attacks. While there is some skepticism about how much the Baloch can achieve because they constitute less than 5 percent of Pakistan's 250 million population, the insurgents believe that they have the critical mass required to win against the Pakistani state. What they lack in sheer numbers, they make up because of the raging Taliban insurgency in Khyber Pakhtunkhwa province and the Pashtun belt of Balochistan, which is bogging down and bleeding the Pakistan Army. Add to this the sharp deterioration in relations between the Taliban regime in Afghanistan and Pakistan. The Taliban appear to be giving space to the Baloch as it gives them a certain leverage over Pakistan, which they suspect of flirting with Islamic State Khorasan (ISK) to undermine the Islamic Emirate. The situation in Sistan-Balochistan province of Iran is also proving conducive for the Baloch insurgents in Pakistan. Faced with the audacity and ferocity of attacks being carried out by the Baloch freedom fighters, and given that Pakistan’s antediluvian approach to tackling the restiveness in the province is not working, there are limited options available to the Pakistan Army. It can continue doing what it has been over the last 25 years since this fifth insurgency has been raging in Balochistan, perhaps intensify what it has been doing. But the result is unlikely to be any different. The Pakistan Army could also decide to carry out a scorched earth steamroller operation in Balochistan. Managing the operation’s political, military and diplomatic consequences could prove disastrous. A third option is to try reconciliation. This is, however, a long and difficult path to take and beyond the intellectual ability of Pakistan's Punjabi military elite because it militates against the colonial control fetish of Pakistan's ruling class. But regardless of what policy Pakistan adopts, the situation in Balochistan will continue to be fraught for the foreseeable future. And while intimations of Balochistan shaking off the ‘shackles of slavery’ (to use the evocative phrase of Imran Khan) might be highly premature and overly optimistic, Balochistan will remain the bone stuck in Pakistan's throat—one it cannot expel, yet one it struggles to swallow.

Diplomacy
Solomon Islands and China friendship flags are waving in the sky. Double country Flag waving with mast. Solomon Islands china national flag for agreement.

Pacific transactionalism: Art of the diplomatic deal

by Tess Newton Cain

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском Cook Islands' recent deals with China sees shift from soft to hard-edged diplomacy embedded in Pacific. Strategic engagement between the Pacific and its partners has now well and truly switched to overt security transactionalism, from soft to hard diplomacy. The explicit position emanating from the United States under the Trump administration reflects what has already been happening in the Pacific, particularly with the region’s largest aid donor Australia. When the Cook Islands and China signed deals this month, they sidelined New Zealand, leaving it to reassess how to do business with Pacific island nations. In recent years there’s been a flurry of agreements, MoUs, treaties and more between Pacific island countries and their partners, both established and emerging. The recently confirmed Papua New Guinea rugby league deal with Australia introduced “strategic trust” into the lexicon. Grafted on to the prized spot in the Australian National Rugby League competition is an undertaking by PNG to rebuff any kind of security agreement with China. Similar trade-offs form part of Australia’s deals with Nauru last year and Tuvalu in 2023.  How this transactionalism can or should be accommodated, or even countered, by Pacific island states has the region talking. Professor Transform Aqorau in his keynote speech to last week’s Pacific Islands Political Science Association (PIPSA) conference in New Zealand stated: “The question that we must ask ourselves is, ‘how do we assert agency in this space while we avoid being drawn into the conflicts that are not of our making?’” Many who spoke at PIPSA agreed that conversations about security and strategy must be led by Pacific voices and underpinned by Pacific norms. There were numerous calls for partner countries (of all stripes) to do better - listen, focus on relationships, work more ‘Pacifically’.  The other side of the asymmetrical power dynamic remained largely unaddressed – what can and should Pacific leaders and officials do to shift partners’ behaviour to what is wanted and needed? And if business-as-usual is already getting these partners what they want, where is the incentive for them to change?  Unlike the successes Pacific nations have had when taking a united regional posture, guided by the Pacific Islands Forum and advancing their Blue Pacific Strategy 2050, the bilateral deals see them operating without the benefit of collective support.  There are some ‘green shoots’ of Pacific assertiveness. In a Facebook post over the weekend, Vanuatu’s newly-elected Prime Minister Jotham Napa said, “climate change is very critical to our survival. Moving away from (the) Paris agreement by (the) Trump administration is like committing suicide. Climate change must be part of any security agreement in the future.” The message to the U.S. is clear. It is also a message to Australia, who have long sought a security agreement with Vanuatu and will no doubt continue to press that with Napat. That is not to say partners’ approaches are not evolving. When it comes to engaging with China, the overall picture is that the Belt and Road Initiative (BRI) is now focused on smaller projects with greater use of grant financing rather than loans. Of course, it is often the case that the exception proves the rule. The recent agreement (and associated MoUs) between Cook Islands and China envisages serious infrastructure investment in the maritime sector, including ports. Cue “dual-use” alarm bells in Canberra, Wellington and beyond. The New Zealand government is now contemplating a more transactional approach with Pacific partners. Its relationships with Kiribati and Cook Islands have deteriorated markedly in the last few weeks, following what could be termed “assertive” actions by Pacific leaders. After months of trying, New Zealand’s Deputy Prime Minister and Foreign Minister Winston Peters was all set to meet President Taneti Maamau in Kiribati in January. The arrangements were upended at the last minute resulting in a public diplomatic tiff. Peters has now initiated a review of New Zealand aid to Kiribati as an expression of his frustration. Meanwhile, Cook Islands’ Prime Minister Mark Brown also raised the ire of Wellington. Peters has claimed that there was insufficient consultation by Cook Islands (which is in free association with New Zealand) about entering into a strategic partnership agreement with China and signing of other MOUs. Peters has now called for a “reset” of the relationship. Whilst much has been made of the geopolitical aspects of these tensions, the most significant implications are in the domestic spheres.  In Kiribati, opposition leader Tessie Lambourne has argued that the falling out with New Zealand is part of a pattern of isolationism on the part of Maamau, which is harming the interests of the i-Kiribati population. His government switched allegiance from Taiwan to China in 2019 and has become increasingly withdrawn, including a ban on diplomatic visits last year. A New Zealand aid cut would have a significant impact on health, education, and climate resilience projects in Kiribati. In Cook Islands, Brown’s bullish approach has come back to bite him. Last week around 400 people marched in protest, and he faced a motion of no confidence in the Parliament, which failed. Whilst the strategic partnership with China was part of what prompted Cook Islanders to take the streets, they were also enraged at the debacle surrounding Brown’s attempt to introduce a Cook Islands passport, in addition to the New Zealand passport they currently hold. The geostrategic environment in the Pacific is becoming increasingly complex and the tempo of bilateral offers shows no sign of slowing. The calculated nature of relations offered by partners poses a huge challenge to Pacific leaders, negotiating in relative isolation, often in secret, while they try to maintain their “friends to all, enemy to none” positions. Pacific states will have to work harder than ever and expend precious resources to strike the right balance as they assert their agency while managing strategic partnerships. Copyright ©2015-2024, BenarNews. Used with the permission of BenarNews.

Diplomacy
Ottawa, Canada. August 14th, 2021.  End War in Afghanistan protest from local diaspora. Signs asking to Save the country and children

The Taliban’s long game out of isolation

by Kalicharan Veera Singam

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском In Brief Despite its increasingly repressive domestic rule, more countries than ever are engaging with Afghanistan’s Taliban rulers. India’s first official meeting with the Taliban in January 2025 encapsulates a broader global trend of once-reluctant countries now engaging with the Taliban. Credible terrorism concerns, worsening humanitarian conditions and geopolitical rivalries are pushing governments toward quasi-acceptance and recognition of Taliban rule. When the Taliban took over Afghanistan in 2021, the prevailing sentiment was that the regime would be an international pariah if it did not moderate its hardline positions. The Taliban’s violent past also made it inconceivable for some states to engage with it as the government of Afghanistan. Despite the Taliban’s repressive rule worsening considerably since it seized control in 2021, with restrictions on women taken to a new extreme and the reintroduction of brutal punishments for alleged moral crimes, the regime is overcoming its international isolation. More governments are prepared to look past the ethical dilemma of dealing with the Taliban and quasi-recognise it as the government of Afghanistan. India stepped up its outreach to the Taliban in January 2025, with India’s Foreign Secretary Vikram Misri and Afghanistan’s acting Foreign Minister Amir Khan Muttaqi holding their first meeting. This is the highest level meeting between the two sides since India began small and indirect engagements with the Taliban after its return to power in 2021. For the Taliban, its meeting with India’s foreign secretary is a major diplomatic breakthrough given its tense and fractious relations with India since the 1990s. After this January 2025 meeting, the Taliban referred to India as a ‘significant regional and economic partner’. The sea change in relations likely stems from New Delhi not sensing any significant terrorist threats from the Taliban or groups allegedly linked to the Taliban. Worsening Taliban–Pakistan relations may have played a role in India’s outreach to the Taliban. Pakistan firmly backed the Taliban when it was mounting a comeback in Afghanistan. But since the Taliban’s return, border disputes and the rise of Pakistani Taliban militancy inside Pakistan have sent their relations into a downward spiral. The souring Pakistan–Afghanistan relations suggest New Delhi’s interests may not be as affected as feared when the Taliban took over in 2021. Despite India’s growing outreach, its relations with the Taliban are still very calibrated and limited — paling in comparison to China’s. Yet India’s outreach may be more diplomatically significant for the Taliban than China’s as it sets a precedent for Western democracies that also seek to strike a balance between not recognising the Taliban as the legitimate government, while engaging with it on necessary matters. Western governments, particularly the United States, were unfazed by some of India’s initial engagements, but now seem to recognise the necessity of limited engagements with the Taliban. It was revealed in January 2025 that the former Joe Biden administration negotiated with the Taliban to secure the release of two US prisoners in Afghanistan. In 2024, the Biden administration debated expanding direct engagements and cooperation with the Taliban to mount more effective counterterrorist activities. The return of US President Donald Trump is likely to change US–Taliban relations. Under Trump’s first administration, the United States pursued talks with the Taliban, culminating in the 2020 Doha Agreement that facilitated the US withdrawal from Afghanistan. Trump’s return increases the possibility of greater US engagements with the Taliban, though it has also created uncertainties. President Trump was critical of how the US departure from Afghanistan was handled under the Biden administration. In January 2025, Trump said that the Taliban needed to return US military equipment in Afghanistan as a precondition for future financial assistance. The Taliban have also said that they seek a ‘new chapter’ in their relations with the United States under the second Trump administration. The biggest roadblock for the West engaging with the Taliban has been its repressive policies and human rights violations. But there are now compelling reasons for the West to engage with the Taliban. Western sanctions, in addition to having no effect on the Taliban’s draconian governance, have worsened humanitarian conditions in Afghanistan. Despite the sanctions’ ineffectiveness, it is unclear whether the West would go as far as to lift the sanctions. Instead, Western countries might find ways to work with the regime on specific issues. Foremost among these issues is addressing the growing presence of terrorist groups in Afghanistan — such as Al-Qaeda, a Taliban ally, and the reviving Islamic State–Khorasan Province. The growing Chinese influence in Afghanistan also has Western countries concerned that turning their backs on Afghanistan may work to China’s advantage. China perceives Afghanistan as a gateway for China’s Belt and Road Initiative projects in Central Asia and seeks to exploit the country’s vast and untapped natural reserves. Though more governments are now prepared to engage with the Taliban, the Taliban’s most strategic relationship will likely remain with China. China–Taliban relations are comprehensive and long-term, spanning economic, political and security cooperation. China does not recognise the Taliban but was the first to accept a Taliban envoy. China and the Taliban have inked several notable agreements, including China granting the Taliban tariff-free trade access in October 2024, which could provide an economic boost to the cash-strapped regime. But China’s relations with the Taliban are also not without problems. Some Afghanistan-based terrorist groups have China on their radar and pose security concerns in the sensitive Chinese border provinces. The Taliban’s affiliates have previously attacked Chinese interests in neighbouring Pakistan. Despite these concerns, Beijing appears committed to strengthening its relationship with the Taliban, focusing on mutual security, technological exchanges and investments. Another diplomatic breakthrough for the Taliban is its improving relations with Russia. Russia invited the Taliban to the Saint Petersburg International Economic Forum, among other meetings held in Russia in 2024. Russia also decided to remove the Taliban from its list of terrorist organisations. These overtures suggest Russia is seeking closer relations with the Taliban. The Taliban played a long waiting game, biding its time since the US invasion of Afghanistan in 2001. It ultimately prevailed by returning to power as soon as the United States withdrew 20 years later. Growing diplomatic engagements prove that the Taliban is again capable of playing a long game to wear down governments into a quasi-acceptance and recognition of its draconian rule. https://doi.org/10.59425/eabc.1741341600