Australia, China: Second mates
Also: Hong Kong, Israel, the US, the Caucasus, and Colombia.
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AUSTRALIA. CHINA. Second mates
A rapprochement comes at an awkward moment in the US alliance.
China’s foreign minister visited Australia for the first time since 2017, praising ties as "highly complementary" and "on the right track". Australia's trade minister last week said he was "not sure" the US was his country’s most trusted ally.
INTELLIGENCE. Beijing wants to sow doubt over the US’s commitment to Asia, particularly as Washington seeks to renew a pro-Taiwan coalition. It has several new points to leverage: Biden’s draft budget halved the US submarine program, imperilling (on paper) the AUKUS deal; Trump called Australia’s ambassador “nasty”. But it will take more to prise Canberra from Washington. Australia’s spy chief last month warned politicians not to get too close to Beijing.
FOR BUSINESS. Australia-China ties are cyclical, but the US alliance is structural. Canberra wants to show it can have a strong economic relationship with Beijing but its security links to Washington will always come first. AUKUS embeds this dynamic, but it goes back to the 1940s. Luckily for Australia, China seems not to mind. Having found a face-saving way to normalise ties at a political level, it wants to show Australia’s region the rewards of playing nice.
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HONG KONG. Shutting the gateway
The Special Administrative Region again puts internal control above external openness.
The Legislative Council unanimously passed sweeping security laws Tuesday, applying extraterritorial sanctions on "external interference", among other measures. China hit back at Western criticism of the so-called Article 23 package.
INTELLIGENCE. The amendments to the 1997 Basic Law’s Article 23 come after Beijing passed its own Hong Kong national security law in 2020. The update has been criticised by civil society, the US, and the UK, but it’s unlikely to change much on the ground. Hong Kong has already ceded its reputation as an open, diverse, and free-wheeling city. Many firms and expats have already left for Singapore and Dubai (which ironically have even more stringent laws).
FOR BUSINESS. The new Article 23 won’t help Hong Kong’s global image but nor will it harm it. The territory’s leaders (and their handlers in Beijing) doubtless consider the anti-China and anti-security legislation protests of 2019 to have done more damage. And whereas these brought millions to the streets, Tuesday’s passage has been met with barely a whimper. Hong Kong’s troubles are real but for most they are due to China’s slowdown and the high cost of living.
ISRAEL. UNITED STATES. There is no alternative
The bilateral covenant bends but won’t break.
Benjamin Netanyahu said Tuesday there was no alternative to an assault on Rafah but agreed to send officials to Washington to discuss options, as requested by Joe Biden. Donald Trump said Jews who vote Democrat "hate Israel".
INTELLIGENCE. It’s no surprise that during an election year, US policy toward Israel is dictated by domestic concerns. That said, behind the piecemeal sanctions, the token aid to Gaza, and the now increasingly overt calls for an early Israeli election, the fundamentals of the military alliance remain intact. The Biden-Netanyahu relationship is damaged, but like previously strained leadership ties, this will be outlived by more institutionalised habits of cooperation.
FOR BUSINESS. Self-sufficient in energy and extricated from its forever wars, the US no longer needs to carefully balance its relations with Israel and the Arab world. This doesn’t mean everything Israel does will be supported, but for as long as pro-Israeli voters outnumber pro-Palestinian ones, the US will align with the Jewish state. US investors, however, may remain wary of an isolated Israel, particularly if Gaza-related boycotts continue to hurt US brands.
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THE CAUCASUS. Tavush comes to shove
Armenia is set to cede four villages to Azerbaijan.
Prime Minister Nikol Pashinyan said Tuesday Armenia would delimit its border and return areas within Azerbaijan's internationally recognised territory, including four villages. Pashinyan said Armenia wanted to deepen ties with NATO.
INTELLIGENCE. The villages, adjacent to Armenia’s mountainous Tavush province, which is dotted by exclaves on both sides of the Soviet-era border, are highly symbolic, but like the already ceded Nagorno-Karabakh region, which was populated by Armenians but inside Azerbaijan, they have proven more trouble than they’re worth. As Armenia pivots from Russia and toward new partners like the EU and France, it wants to minimise the chance of another war.
FOR BUSINESS. Armenia also wants to plug into transit and energy corridors being built from Turkey to China via Azerbaijan and Central Asia. And now that Moscow has abandoned it as a Caucasian geopolitical barrier – choosing to instead privilege Azerbaijan as a partner and southwards route to Iran and India – Yerevan is making amends with Baku. It is building a dry port on the Turkish border and last week began a new cooperation agenda with Kazakhstan.
COLOMBIA. The narcotics of small differences
Petro pushes a dodgy peace deal.
The Gaitanista Self Defense Force, also known as the Clan del Golfo, said Tuesday it would accept President Gustavo Petro's offer of peace talks. Bogota Sunday suspended a months-long ceasefire with rebel group Estado Mayor Central.
INTELLIGENCE. The deal with EMC, a spin-off of the FARC rebel group, always seemed unwise and has arguably contributed to the violence in Peru and Ecuador, as Latin America’s underworld adjusts to Bogota’s permissiveness. The deal with the Clan seems worse. A previous ceasefire broke down. Petro’s son, Nicolas, remains under a cloud over gang-linked charges. The cartel is Colombia's largest and has deep ties with syndicates in Mexico and beyond.
FOR BUSINESS. Colombia is in respects both a narco-state and a sophisticated economy. While Petro's government has damaged confidence, GDP grew a respectable 1.6% year-on-year in January and is expected to accelerate into 2025.Cocaine may have replaced oil as the top export (data is unreliable), but domestically industries like electronics and chemicals are also important. China is assisting with investments in infrastructure and 5G telecommunications.