How stable is the US-China relationship? - Ian Bremer (GZero Daily)

 How stable is the US-China relationship?

Ian Bremer

GZero Daily, April 11, 2024

   

The most geopolitically important relationship in the world is fundamentally adversarial and devoid of trust. Its long-term trajectory remains negative, with no prospect of substantial improvement.

And yet, ever since US President Joe Biden and Chinese President Xi Jinping met at the Asia-Pacific Economic Cooperation summit in Woodside, Calif., last November, US-China relations have looked comparatively stable amid a sea of chaos.

In the months that have followed, both sides have continued to seek steadier ties through frequent high-level engagement as well as new dialogue channels on a wide range of policy areas. In January, the US and China resumed military-to-military talks for the first time in nearly two years. On April 2, Biden and Xi spoke by telephone and ratified their ongoing commitment to manage tensions. The presidential call came after the third in-person meeting between US National Security Adviser Jake Sullivan and Chinese Foreign Minister Wang Yi in less than a year on Jan. 16-17. It set the stage for US Treasury Secretary Janet Yellen’s trip to China this past week – where she met with senior Chinese officials, local and provincial leaders, and top economists – as well as US Secretary of State Antony Blinken's upcoming visit. Both militaries are currently in the final stages of preparation for a maritime dialogue and a likely ministerial meeting at the Shangri-La Dialogue in June.

However, while better managed than they have been historically, US-China relations are coming under stress from a number of flashpoints that threaten to disrupt the relative calm that has prevailed since Woodside.

Second Thomas Shoal. This is the most likely, imminent, and dangerous tripwire for US-China military conflict, following an incident on March 23 in which Chinese Coast Guard ships fired high-pressure water cannons on a Philippine vessel attempting to deliver construction materials to the rusting BRP Sierra Madre – a symbolic Philippine warship, home to a small detachment of Philippine marines, that was intentionally grounded by Manila in the South China Sea’s Second Thomas Shoal in 1999 to assert Philippine sovereignty over the disputed territory.

Beijing refuses to allow any construction materials to reach the Sierra Madre, and Philippine President Ferdinand Marcos feels he must continue sending materials to prevent it from sinking lest he renounce Manila’s claim. The latest run-in injured several Filipino sailors but stopped short of causing fatalities. US defense officials believe that if a Philippine sailor were to get killed, Manila would invoke its Mutual Defense Treaty with Washington, prompting the US to send military escorts for Philippine resupply ships. Chinese contacts say that if that happened, Beijing would consider towing the Sierra Madre off the reef, setting up a showdown between the US and Chinese navies.

Tech competition. Xi views Washington’s ever-expanding restrictions on China’s advanced semiconductor and artificial intelligence industries – and its pressure on US allies like Japan, the Netherlands, Germany, and South Korea to follow suit – as an effort to curb his country’s technological and economic development. More than ordinary trade barriers, tech restrictions get under Xi’s skin because they hit at the heart of his strategy to shift the sources of Chinese growth away from real estate and infrastructure investment toward “new productive forces.” Insofar as the US containment policy persists – and it will, as it is driven by a bipartisan national security consensus to “de-risk” – Beijing will eventually be compelled to retaliate.

Trade. A sticking point for labor unions in an election year, Chinese industrial “overcapacity” was a central theme of both Biden’s call with Xi and Yellen’s China trip. Washington’s core contention is that China accounts for a third of global production but only a sixth of global consumption. As a result, China’s heavily subsidized (or outright state-owned) firms are flooding Western and global markets with low-cost goods, especially in key sectors such as electric vehicles (EVs), batteries, and solar photovoltaics, benefiting consumers worldwide through lower prices – and reducing emissions by increasing the adoption of renewables – but hurting the less competitive American manufacturers.

American accusations ring hollow in Beijing when the US is simultaneously granting TSMC, the world’s leading producer of semiconductors, billions of dollars in subsidies to expand chip manufacturing in America. Separate but related, the irony of the US (and Europe) complaining about China making the global energy transition cheaper while at the same time chastising the country for not doing enough to decarbonize their economy is not lost on the Chinese and many in the global South. But I digress.

From Washington’s perspective, overcapacity is a problem at the core of China’s industrial policy model that will be made worse by Xi's aversion to boosting domestic consumption. Given the election-year politics of the issue for Democrats, at least some market access barriers before November are likely – whether through the Section 301 review of China’s steel industry, the Chinese EV data security probe, and/or the likely realignment of Trump-era tariffs on EVs and other imports. Still, anything Biden might do on trade pales in comparison to the risk of major tariff escalation that Beijing will face if Donald Trump returns to the White House.

Taiwan. China’s leadership has concluded that Taiwanese President-elect William Lai is an irredeemable separatist, and Lai sees little upside in trying to persuade Beijing otherwise. Xi’s embrace of Lai’s Kuomintang predecessor, Ma Ying-jeou, in a high-profile meeting on April 8 didn’t help defuse tensions. Lai’s inaugural address on May 20 will accordingly set the stage for a gradual erosion of cross-strait ties over the next four years. The pressure will start as soon as this summer when China begins to regularly enter Taiwan’s contiguous zone, “erasing” the island’s territorial waters and airspace. While these moves will be calibrated and telegraphed to Washington through backchannels to limit retaliation, Lai could escalate and force Biden to respond with a show of resolve in support for Taipei that risks a dangerous cycle of escalation.

But while these irritants will strain the bilateral relationship, there are still plenty of reasons for both leaders to want to maintain relatively stable ties, at least through the US elections.

Biden can’t afford to start a new war when he’s already managing two abroad – one in Ukraine, one in the Middle East – and fighting another at home. Xi continues to face major domestic economic challenges that require him to be much more geopolitically cautious than he would otherwise. Tensions are further constrained from spiraling out of control by enduring interdependence between the world’s two largest economies, neither of which would benefit from faster decoupling let alone military conflict.

Of course, as we saw both in 2022 with former House Speaker Nancy Pelosi’s visit to Taiwan and in 2023 with the Chinese surveillance balloon incident, accidents and miscalculations can easily overwhelm leaders’ ability to manage the tensions. But the communications channels established since November make such flare-ups less likely.

Neither the US nor China want a free-fall in their relationship this year, and thanks to Woodside, they now have the tools to avoid one. The Woodside truce may bend, but it won’t break.

Amazon summit falls short GZero Daily

 Amazon summit falls short

GZero Daily August 9, 2023

Amazon nations can't agree on deforestation goal

Leaders of eight Amazon nations converged in Brazil this week for the first time in 14 years to devise a plan to save the Amazon rainforest, but they appeared to fall short of finding common ground on how to end deforestation. 

A joint statement released after the summit implied that countries would set out their own conservation goals rather than adhere to a shared regional policy. There was also no consensus on how to end illegal gold mining in the Amazon.

Ahead of the summit, Brazil's President Luiz Inácio “Lula” da Silva proposed an agreement to end deforestation by 2030.

But a key striking point has been oil exploration. Colombia’s leftist President Gustavo Petro has called for a complete end to oil exploration in the Amazon, which has been a point of contention in Brazil as the country’s state-run Petrobras company has been trying to get a license for an oil drilling project near the Amazon River.

Indeed, ending deforestation comes at a significant cost for Amazon countries, which will have to forgo profits from ranching, agriculture, and new oil and mining projects. Lula says he hopes some of these costs can be offset by international contributions and carbon credits. Norway and Germany are already funding Amazon preservation, and the Amazon nations believe they could convince other countries to contribute if they show a united front -- an effort that appears to have fallen short.

In addition to international contributions, Amazon nations hope to take advantage of the growing carbon market, where an organization that pollutes can buy a credit worth one ton of carbon dioxide, which then goes toward carbon-lowering efforts in Amazonian communities. The World Bank currently estimates that the carbon credit market in the rainforest is worth $210 billion a year.

Russia’s aborted coup, explained, by Ian Brenner (GZero Daily)

 Russia’s aborted coup, explained

 GZERO Daily , June 28, 2023

Ian Brenner

   

What was Prigozhin thinking?

Anyone who watched Wagner chief Yevgeny Prigozhin over the past few months knows that he had grown progressively unhinged in the run-up to his mutiny, just as his political position had become increasingly untenable.

Prigozhin was furious at the leaders of Russia’s Ministry of Defense, whom he repeatedly accused of sending tens of thousands of Russian soldiers to certain death through their corruption, incompetence, and cowardice. Over 20,000 of his own fighters were killed in the bloody battle for Bakhmut – a town of only 70,000 inhabitants before the war. He publicly blamed Defense Minister Sergei Shoigu and Chief of the General Staff Valery Gerasimov for Russia’s casualties and battlefield struggles.

Notably, Russian President Vladimir Putin had largely allowed him to voice his criticism – a remarkable show of tolerance in a country that punishes “discrediting” the army with 5-15 years of jail time. Prigozhin got this dispensation in no small part because it was Wagner’s seasoned troops that had achieved Russia’s most notable battlefield victories in an otherwise sputtering invasion. In part, it was because Prigozhin had always been extremely careful not to criticize Putin directly.

This started to change a couple of weeks ago when the Defense Ministry announced that all paramilitary forces fighting in Ukraine would have to sign contracts directly with the ministry by July 1, ending their autonomy and absorbing them into the regular armed forces. Chechen warlord Ramzan Kadyrov said he and his troops would comply; Prigozhin said Wagner would not, claiming his men didn’t want to fight alongside poorly trained conscripts or under the command of Shoigu and Gerasimov.

Then, at a rare public meeting with military bloggers, Putin reiterated the order, backing the ministry over Prigozhin. You’d think that would’ve been the end of it, but instead of taking the loss, Prigozhin doubled down on his refusal to give up control of Wagner – an unprecedented act of direct insubordination against Putin.

At that point, Prigozhin knew the clock was ticking for him. Knowing he was a dead man walking from the moment he disobeyed Putin’s order, he opted to roll the dice in a last-ditch attempt to force the president to reconsider and salvage his position (and possibly his life) – a decision that smacked more of desperation than of rational calculation.

Why did Prigozhin stop before getting to Moscow?

I think both starting and stopping the mutiny can be understood as desperate acts of self-preservation. This will be one for historians to debate, but I’m inclined to believe Prigozhin probably didn’t set out to overthrow Putin in the first place, as he had neither a plan nor the allies to do so. All he wanted was to prevent Wagner from being disbanded and himself from losing his power.

The biggest reason why I believe this is that Prigozhin couldn’t possibly have thought that an outsider like himself could topple the regime with fewer than 5,000 men. Let’s keep in mind that Prigozhin was a creature of Putin: He was built up by, loyal to, and entirely dependent on the Russian president. He was not a security council insider. He did not have a power base in Moscow. He had no one in or near the Kremlin who was prepared to side with him against Putin.

That’s surely one reason why as his Wagner column drew close to Moscow, we saw no defections in the military, the government, or among the elites. And it’s why when he got thrown a lifeline just as he and his men were about to face certain death at the hands of troops reporting to Putin himself (rather than the Ministry of Defense), he grabbed it with both hands.

Prigozhin likely never had a shot of taking the Kremlin – and he and everyone else knew it all along. What he did have was a modest amount of leverage, which explains why he didn’t get killed and why he thought he could pull the stunt off in the first place. The “march for justice” was an ill-advised bargaining tactic to force Putin to cave on the issue of Wagner’s autonomy.

Why did Putin negotiate a surrender instead of just killing Prigozhin?

I think this is mostly a matter of timing.

The war in Ukraine is at a critical juncture for Russia. The Ukrainian counteroffensive is only just getting started, with fewer than three of Ukraine’s 11 battle-ready divisions positioned to attack currently involved in the fighting. Ukraine has yet to attempt to breach any of Russia’s three defensive lines, instead biding its time while conducting shaping operations and probing attacks on the first line of defense. By contrast, the Russian military is already heavily committed to trying to hold back Ukraine’s counteroffensive, and Putin is highly reluctant to order another mobilization.

A battle against Wagner on Russian soil would have distracted – potentially fatally – from Russia’s defense of its front lines, handing Ukraine a unique window of opportunity to strike while Wagner troops, the Russian army, and Kadyrov’s forces were occupied elsewhere.

Plus, by backing down and refraining from killing Prigozhin immediately, Putin lost little that he hadn’t already lost when Prigozhin initially defied him and marched toward Moscow. At the end of the day, Putin got everything he could’ve wished for: Shoigu and Gerasimov are still in their positions, Wagner is coming under Defense Ministry control, and Prigozhin is defanged and in exile. All without televised bloodshed, and without sacrificing much in terms of warfighting effectiveness given that Wagner had already been rotated out of the front.

The only concession Putin made was allowing Prigozhin, whom he called a “traitor” and “terrorist,” to live – for now. But Prigozhin is (reportedly) in Belarus, essentially a non-sovereign vassal of Russia chock-full of Russian spies, soldiers, and assassins. Putin is free to renege on the deal and kill or arrest him at a time of his choosing. I’d be very surprised if Prigozhin is still a free man by the end of the year.

What are the implications for Putin and Russia going forward?

This was by far the most serious threat to Putin’s 23-year rule.

On the one hand, you’re not supposed to be able to defy Putin in Russia this way and get away with it. Yet the men who shot down and killed an estimated 13 Russian pilots on their way to Moscow were pardoned. And the man who openly defied Putin’s orders, discredited his rationale for the war in Ukraine, and whom Putin declared a traitor on public television, is still alive (even if not for long). Putin has jailed and killed people for a lot less, so this makes him look weak before the Russian public and the elites.

On the other hand, Putin’s regime was tested over the weekend, and the regime ultimately held together. Yes, there were a lot of people who didn’t fire to stop Wagner troops from advancing, but there were virtually no defections inside the Russian government, the military, or among elites. The government is still functioning normally, and the war in Ukraine is going the way it did before the mutiny. Putin is more vulnerable on the back of it, but that’s more a long-term than an immediate issue.

In a way, this feels a bit like an extreme version of Jan. 6 in the United States (pardon the comparison): an event that was previously unthinkable, that shook people’s faith in the system, that exposed a structural weakness in domestic institutions, but that changed little in the country the day after.

The likelihood of regime change in Russia remains near zero … until it happens. But these events show that the tail risks are fatter than we thought.

What does this mean for the war in Ukraine?

The Ukrainians will try to take advantage of Russia’s domestic turmoil to make gains in their counteroffensive. Indeed, just in the last two days, they’ve reportedly seen progress in the Zaporizhzhia and Kherson regions (although the significance of these gains so far is marginal).

However, I don’t see the events of the weekend dramatically improving Ukraine’s odds on the battlefield in the near future. With the Wagner threat dissolved, Russia won’t need to shift troops from Ukraine to Russia to deal with them. Likewise, Wagner was not operating in the south where the Ukrainian counteroffensive is focused. So in terms of the actual fighting, beyond the effect that the mutiny might have on Russian morale, the overall military impact at this point is limited.

That said, the incident is a problem for Putin’s credibility with elites and the Russian public, and this political vulnerability could make him more sensitive to major battlefield losses in the coming months. If we get to a point later in the summer or fall where Ukraine starts to threaten Crimea or the land bridge, the risk of a major Russian escalation (such as blowing up the Zaporizhzhia nuclear plant or using a tactical nuclear weapon) in response would go up. The only thing more dangerous than a strongman is a weak strongman.

The one lesson from this episode is that when push comes to shove, Putin is singularly focused on his own survival, and he is willing and able to accept any outcome to ensure it. This is an important revealed preference because it speaks to the credibility of his stated goals and so-called “red lines” in Ukraine, which in turn matters for how Ukraine and NATO countries think about escalation.

It means that Putin may be willing to tolerate more aggressive behavior from NATO and Ukraine than we imagined if he thinks retaliation would lower his chances of survival. It also means that Putin could consider any outcome for the war, including negotiations, as long as he thinks he can survive it.

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