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Tag: Foreign policy

  • Another Chinese Spy Balloon Reportedly Traveling Over Latin America

    Another Chinese Spy Balloon Reportedly Traveling Over Latin America

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    A second Chinese spy balloon is traveling over Latin America, the Pentagon’s press secretary said in a statement Friday to CNN.

    Officials said that it does not appear to be heading to the United States, where a similar balloon was first reported over Montana, home to one of the nation’s three nuclear missile silo fields at Malmstrom Air Force Base.

    “We are seeing reports of a balloon transiting Latin America. We now assess it is another Chinese surveillance balloon,” press secretary Brig. Gen. Patrick Ryder told CNN.

    The military is continuing to monitor the balloon as it moves eastward across the central section of America.

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  • What happens to Europe when the balloon goes up?

    What happens to Europe when the balloon goes up?

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    BERLIN — The saga of the Chinese spy balloon has plunged relations between Washington and Beijing into fresh crisis. For European governments, that spells all kinds of trouble.

    With relations worsening between the two superpowers, EU leaders seem likely to come under intensifying pressure from the White House to pick sides and join forces against China, just as they were hoping for a thaw in tricky relations with Beijing. 

    And then there’s the war. 

    Russia is preparing a major offensive in Ukraine over the next few weeks but EU diplomats fear the balloon incident risks distracting President Joe Biden’s team at exactly the moment when American support for Kyiv will be needed most. 

    “We never expected 2023 to be easy, but this is off to a really tough start,” one European diplomat said. 

    On Saturday, the U.S. shot down what it identified as a Chinese surveillance balloon off the coast of South Carolina with an air-to-air missile from an F-22 stealth fighter jet. 

    Secretary of State Antony Blinken indefinitely postponed a visit to Beijing that had been scheduled for this week, the first such trip planned for a U.S. cabinet-level official under Biden’s presidency.

    Images of the incident have circulated in dramatic video footage on social media, taken mostly by excited onlookers cheering the theatrical show of military might.

    Beijing insists the giant solar panel-powered object was a “civilian airship” that went off course while conducting “mainly meteorological” research. In response to the missile strike, the Chinese government expressed “strong dissatisfaction” and protested against the use of force by the U.S. to attack the unmanned, civilian craft. It added that it would “reserve the right to take further necessary responses.”

    U.S. foreign policy, while still heavily invested in supporting Ukraine militarily, may be distracted by the sharpening clashes with Beijing. Right-wing U.S. politicians have been calling for more attention on China since Russia invaded Ukraine a year ago. 

    As the “U.S.-China rivalry sharpens, there will be more pressure on Europeans, whose approach to China is very diverse, to pick sides,” said Ricardo Borges de Castro, head of the Europe in the World Program at the European Policy Centre, a Brussels-based think tank. “The reality is, if the world becomes increasingly dominated by two poles — U.S. and China — the EU and Europeans will need to pick sides for as long as Europe’s security and defense depends on the U.S. umbrella.”

    Russia, in the meantime, is expected to launch massive offensives in just a few weeks, when the harshest winter season comes to an end, according to Ukrainian officials.

    A plane flies past the Chinese spy balloon (top right) | Nell Redmond/EPA

    “Washington will be busy with Beijing for some time now,” a senior EU diplomat said on Sunday. “It’s not goodnews for the EU because Russia is still the main concern.”

    Bad timing

    For Europe, the incident also comes at an inconvenient moment as senior officials have been preparing to re-engage with Beijing.

    The EU’s foreign policy chief, Josep Borrell, is understood to be making plans for a trip to Beijing in April, when he would also be expected to travel to Japan for a G7 ministerial meeting. Separately, French President Emmanuel Macron has also announced his intention to meet President Xi Jinping in the Chinese capital early this year; he would be interested in taking a top official from the European Commission to join him, according to an official with knowledge of the plans.

    The latest U.S.-China flare-up “means that we would now have to be watching how badly China reacts, and whether these [planned] trips will be treated as a propaganda success by Beijing in splitting up the transatlantic ties,” a diplomat said on condition of anonymity as he was not authorized to speak on this subject.

    “In the wake of the Ukraine war, the China policy coordination between both sides of the [the Atlantic is] losing steam,” said Reinhard Bütikofer, chair of the European Parliament’s delegation on relations with China. “While Washington D.C. enhances pressure against Beijing particularly on the technological front and in the Taiwan context, Brussels, Berlin and Paris show new hesitancy.” 

    Further complicating matters is Beijing’s apparent lack of interest in helping the West put pressure on Vladimir Putin to end the war in Ukraine.

    Worse, according to a report in the Wall Street Journal, China has emerged as the dominant supplier of dual-use goods to Russia, providing technology that Moscow’s military needs to prosecute its invasion. Chinese state-owned defense companies have shipped navigation equipment, jamming technology and fighter-jet parts to sanctioned Russian government-owned defense companies, according to the article.

    European leaders have repeatedly warned Beijing not to aid Moscow militarily.

    China’s top foreign policy official, Wang Yi, has dropped a plan to visit Brussels even though he would be traveling to Germany for the Munich Security Conference in February, two diplomats told POLITICO. 

    Europe’s reaction to the balloon incident was muted. The EU merely noted the U.S.’s right to defend its airspace. “Safety and protection of airspace is an issue of national security and therefore a competence, responsibility and prerogative” of the specific state or states involved, an EU spokesperson said on Sunday. 

    China’s Vice Foreign Minister Ma Zhaoxu visited Moscow last week to reassure his Russian counterparts | Johannes Eisele/ AFP via Getty Images

    Few European countries supported the Biden administration’s decision in public, highlighting a general sense of reluctance to aggravate Beijing. One of the exceptions was Estonia, where Foreign Minister Urmas Reinsalu, retweeting a BBC report about the balloon’s downing, said: “I support USA operation to defend its sovereignty. I fully condemn provocations jeopardising USA national security.”

    Other U.S. allies did not hold back. Canadian Prime Minister Justin Trudeau praised the operation, tweeting “Canada strongly supports this action — we’ll keep working together … on our security and defense.”

    South Korea’s Foreign Minister Park Jin, during a visit to Washington, said “I sufficiently understand the decision to postpone Secretary [Blinken]’s visit to China and I think that China should make a swift and very sincere explanation about what happened.”

    Tom Tugendhat, U.K. security minister and a long-time skeptic of Beijing, called for concern over other forms of Chinese threats. “Worried about being spied on from the sky? Look at what some apps are collecting on your phone and consider your cyber security. Some risks are much closer to home,” he tweeted.  

    EU foreign policy in 2023 may be defined by which of these expires first: European  indecision over China, or America’s appetite for providing Europe’s defense. 

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    Stuart Lau

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  • Estonia and Latvia remove Russian ambassadors as tensions rise

    Estonia and Latvia remove Russian ambassadors as tensions rise

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    Tensions between Russia and Baltic EU member countries Estonia and Latvia escalated Monday after Moscow told Estonia’s ambassador to leave.

    The Russian foreign ministry said it had asked Estonia’s ambassador to depart on February 7, citing “Russophobia” and Tallinn’s reduction of Russian embassy staff in the country.

    “The Estonian leadership has been deliberately destroying the entire set of relations with Russia in recent years. Total Russophobia and the cultivation of animosity with regards to our country have been elevated by Tallinn to the rank of a state policy,” the Russian ministry said in a statement.

    Earlier this month, Estonia told Russia to cut the number of diplomats in Tallinn to eight to match the number of Estonian diplomats in Moscow. Because of this, the Russian foreign ministry said Monday it would downgrade diplomatic relations with Tallinn and each country would be represented by an interim charge d’affaires instead of an ambassador.

    Estonia responded in kind by saying the Russian ambassador in Tallinn must also leave the country on February 7.

    “Russia’s steps will not deter us from providing continued support to Ukraine, which has been fighting for its sovereignty and the security of us all for nearly a year now,” said Foreign Minister Urmas Reinsalu. “We will continue to support Ukraine as Russia is planning large-scale attacks, and we call on other like-minded countries to increase their assistance to Ukraine.” 

    Neighboring Latvia’s Foreign Minister Edgars Rinkēvičs later said his country would follow Estonia and also lower the level of diplomatic relations with Russia, effective February 24, “demanding Russia to act accordingly.”

    Lithuania’s foreign ministry voiced “full solidarity” with Estonia and said Russia’s “unfounded and unjustified” move was “a sign of simple desperation.” Vilnius already expelled its Russian ambassador in April after reports of atrocities by Russian soldiers in the Ukrainian town of Bucha. 

    The diplomatic row came as EU foreign ministers met in Brussels to discuss Russia’s aggression against Ukraine, among other topics. The three Baltic countries have been vocal about demanding tougher sanctions for Russia as well as better assistance for Ukraine, with the trio urging Germany over the weekend to provide Leopard tanks to Kyiv.

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    Emma Anderson

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  • Germany moves to send battle tanks to Ukraine

    Germany moves to send battle tanks to Ukraine

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    BERLIN — German Chancellor Olaf Scholz is expected to announce the delivery of German Leopard 2 tanks to Ukraine on Wednesday, an official with knowledge of the matter told POLITICO.

    That decision is a significant U-turn and potentially a decisive moment in the war as it should pave the way for a broader coalition of countries to send battle tanks to the fronts against the Russian invaders. As Leopard 2 tanks are made in Germany, Berlin has to give its permission for their re-export.

    Berlin has long resisted sending the Leopard 2s, wanting Washington to take the first step in sending heavy armor. That kind of joint action finally appeared to be imminent on Tuesday, with two U.S. officials saying the administration of U.S. President Joe Biden was leaning toward sending “a significant number” of M1 Abrams tanks to Ukraine. An announcement on the U.S. tanks could come as early as this week.

    Scholz’s expected announcement — which has not yet been officially confirmed — comes as the chancellor is scheduled to address the German parliament on Wednesday at 1 p.m. According to the official, Germany will also confirm that it will allow other countries such as Poland to send their Leopard tanks to Ukraine. Warsaw said on Tuesday that it had sent its formal request for those re-exports.

    German magazine Spiegel also reported Tuesday evening that the chancellor had decided to supply Ukraine with Leopard tanks, saying that Germany would send “at least one company of Leopard 2A6s” as part of a broader coalition of countries that would also send the German-made vehicle.

    A German government spokesperson could not be reached for comment.

    Ukraine had pressed hard for Germany to agree to send tanks at a meeting of defense ministers at the U.S. Ramstein air base in Germany in Friday, but German Defense Minister Boris Pistorius dashed Kyiv’s hope, saying no decision had been made.

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    Hans von der Burchard

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  • European allies will send about 80 Leopard 2 tanks to Ukraine, Germany says

    European allies will send about 80 Leopard 2 tanks to Ukraine, Germany says

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    BERLIN — Germany and its European partners plan to “quickly” send two Leopard 2 tank battalions to Ukraine — suggesting about 80 vehicles — the government in Berlin announced Wednesday, adding that Germany would provide one company of 14 Leopard 2 A6 tanks “as a first step.”

    Other countries likely to send Leopards to the war against Russia include Poland, Spain, Norway and Finland.

    The decision by Chancellor Olaf Scholz — which emerged on Tuesday evening — marks a decisive moment in Western support for Ukraine in its fight against Russian aggression, which entered its 12th month this week and could soon heat up further as Moscow is expected to launch a new offensive.

    German Defense Minister Boris Pistorius told reporters that the training of Ukrainian crews on the tanks will begin “very soon,” and that the Leopards will be arriving in Ukraine in about two months.

    Ukrainian President Volodymyr Zelenskyy said he was “very happy” with the promise of tanks from the U.S., Germany and Britain. “But speaking frankly, the number of tanks and the delivery time to Ukraine is critical,” he said, in an interview with Sky News.

    Andriy Yermak, the head of Zelenskyy’s office, welcomed the German announcement as a “first step.”

    “Leopards are very much needed,” he said on Telegram.

    Zelenskyy himself also welcomed the move on Twitter. “Sincerely grateful to the Chancellor and all our friends in” Germany, he said.

    Russia’s Ambassador to Germany Sergei Nechaev said in a statement the decision was “extremely dangerous,” and took the conflict “to a new level of confrontation.”

    Kyiv had long urged Germany and other partners to supply its army with the powerful German-built Leopard 2 tank, but Scholz hesitated to take the decision, partly out of concern that it could drag Germany or NATO into the conflict. He remained adamant that such a move had to be closely coordinated and replicated by Western allies, most notably the United States.

    During a speech in Germany’s parliament on Wednesday, Scholz sought to defend his long hesitations on tank deliveries, saying that it “was right and it is right that we did not allow ourselves to be rushed” into taking a decision but insisted “on this close cooperation” with allies, notably the United States. 

    Scholz also stressed that Germany would not actively engage in the war but would continue to seek to “prevent an escalation between Russia and NATO.” He also launched a direct appeal to German citizens who might be skeptical: “Trust me, trust the German government: We will continue to ensure … that this support is provided without the risks for our country rising in the wrong direction.”

    The news of an imminent announcement by U.S. President Joe Biden to send “a significant number” of American M1 Abrams tanks to Ukraine facilitated the chancellor’s decision. Scholz had come under huge pressure from European partners like Poland, as well as his own coalition partners in government, to no longer block the delivery of the German tank. Since they are German-made, their re-export needed the approval of the German government.

    NATO Secretary-General Jens Stoltenberg tweeted that he “strongly welcomes” Berlin’s decision | Dirk Waem /Belga Mag/AFP via Getty Images)

    “The goal is to quickly form two tank battalions with Leopard 2 tanks for Ukraine,” a German government spokesperson said.

    “As a first step, Germany will provide a company of 14 Leopard-2 A6 tanks from Bundeswehr stocks. Other European partners will also hand over Leopard-2 tanks,” the spokesperson added.

    The spokesperson also said the training of Ukrainian crews on the tanks “is to begin rapidly in Germany.” Berlin would also provide “logistics, ammunition and maintenance of the systems.”

    In addition to the 14 Leopard 2A6 tanks, Germany will also send two tank recovery vehicles, Deputy Defense Minister Siemtje Möller said in a letter to defense policy lawmakers, seen by POLITICO.

    Möller wrote that Ukrainian tank crews will undergo a six-week-training on the Leopards, in Germany which is supposed to start in early February. “This procedure should enable the Leopard 2 A6 to be taken over by Ukraine by the end of the first quarter of 2023.”

    Germany will provide partner countries like Spain, Poland, Finland and Norway, which “want to quickly deliver Leopard-2 tanks from their stocks,” the necessary re-export permission, the spokesperson said.

    The decision by Chancellor Olaf Scholz marks a decisive moment of Western support for Ukraine | David Hecker/Getty Images

    NATO Secretary-General Jens Stoltenberg tweeted that he “strongly welcomes” Berlin’s decision. “At a critical moment in Russia’s war, these can help Ukraine to defend itself, win & prevail as an independent nation.”

    Spain, which owns one of the largest fleets of Leopards in the EU, with 347 tanks, has previously said it would send tanks to Kyiv as part of a European coalition, according to El País.

    The Norwegian government is considering sending eight of its 36 Leopard tanks to Ukraine, but no decision has been made yet, Norwegian daily DN reported late Tuesday after a meeting of the parliamentary committee on foreign affairs and defense, quoting sources close to the deliberation.

    Portugal, which has 37 Leopards, could provide four tanks to the assembling European coalition, a source close to the government told Correio da Manhã late on Tuesday.

    The Netherlands, which is leasing 18 Leopards from Germany, is also weighing supplying some of their armored vehicles, Dutch newswire ANP reported, quoting a government spokesperson. On Tuesday, Dutch Prime Minister Mark Rutte said he was “willing to consider” buying the tanks from Germany and shipping them to Ukraine, but that no decision had been made.

    On Wednesday, the Swedish defense minister said that Sweden did not exclude sending some of its own tanks at a later stage, according to Swedish daily Svenska Dagbladet.

    Wilhelmine Preussen and Zoya Sheftalovich contributed reporting.

    This article was updated.

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    Hans von der Burchard and Nicolas Camut

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  • Germany ready to let Poland send Leopard tanks to Ukraine: foreign minister

    Germany ready to let Poland send Leopard tanks to Ukraine: foreign minister

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    PARIS — Germany “would not stand in the way” if Poland or other allies asked for permission to send their German-built Leopard tanks to Ukraine, Foreign Minister Annalena Baerbock said on Sunday.

    The remarks by the Green politician, who was interviewed by French TV LCI on the sidelines of a Franco-German summit in Paris, came in response to comments by Polish Prime Minister Mateusz Morawiecki, who has raised pressure on Berlin in recent days by saying that Poland is willing to supply Kyiv with Leopard tanks, which would require German approval.

    Morawiecki even suggested that Warsaw was ready to send those tanks without Berlin’s consent.

    Baerbock, however, stressed that “we have not been asked so far” by Poland for such permission. “If we were asked, we would not stand in the way,” she added.

    German officials have gotten increasingly frustrated in recent days by what they perceive as a “media blame-game” by Poland, as Warsaw has repeatedly suggested that Germany was hampering plans to send Leopard tanks to Ukraine, although it appears that the necessary request for export permission has not been made yet.

    Germany is, however, still dragging its feet when it comes to the bigger question of whether it would be willing to send its own Leopard tanks to Ukraine, for example as part of a broader coalition with Poland and other countries like Finland and Denmark.

    Pressed on that point during a press conference in Paris on Sunday, German Chancellor Olaf Scholz avoided giving a clear answer, stressing instead that Berlin had never ceased supporting Ukraine with weapons deliveries and took its decisions in cooperation with its allies.

    Poland’s Morawiecki said on Sunday that his country was ready to build a “smaller coalition” for sending tanks to Ukraine without Germany.

    Baerbock’s comments are therefore also raising the pressure on Scholz to take a clearer position on the tank issue — at least when it comes to granting export permissions to other countries.

    After Vice Chancellor Robert Habeck, also from the Greens, said earlier that Germany “should not stand in the way” of permitting such deliveries, the foreign minister’s even more definitive statement makes it even harder for Scholz to take a different position.

    Ukraine has been appealing to Germany and other Western nations to supply modern Western-made battle tanks in order to fend off an expected Russian spring offensive.

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    Hans von der Burchard

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  • Germany’s Scholz changes defense ministers — but not his reluctance on tanks (yet)

    Germany’s Scholz changes defense ministers — but not his reluctance on tanks (yet)

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    BERLIN — Olaf Scholz has once again rebooted his security policy, nominating a new defense minister to take the reins. But when it comes to his reluctance to send battle tanks to Ukraine, the German chancellor is still waiting for the U.S. to take the lead.

    Tuesday’s nomination of Boris Pistorius puts an end to a growing government crisis that had left Europe’s biggest economy for several days effectively without clear military leadership. But Pistorius — whom Scholz hailed as having “the strength and calmness that is needed in view of the Zeitenwende,” Germany’s historic military revamp — will have little time to get adjusted to the new role.

    Pressure is mounting on Germany to participate in a broader alliance of countries that would supply Ukraine’s army with modern Leopard 2 battle tanks. And moments after being sworn in on Thursday, the new defense minister is scheduled to meet U.S. Defense Secretary Lloyd Austin, who is coming to Berlin before a key meeting Friday in Germany where allies will discuss tank deliveries for Ukraine.

    Pistorius is replacing Christine Lambrecht, a loyal defender of Scholz’s cautious tank stance who resigned on Monday after a series of gaffes and missteps that weighed on Berlin’s reputation.

    That means expectations are high for the 62-year-old Pistorius, who is from Scholz’s center-left Social Democratic Party (SPD). Yet Social Democratic lawmakers say the appointment by itself won’t tilt the scales on supplying Ukraine with tanks.

    “I don’t think one has anything to do with the other,” Wolfgang Hellmich, the SPD’s defense policy spokesperson, told POLITICO.

    Kristian Klinck, an SPD member of the Bundestag’s defense committee and an army reserve officer, also said he didn’t see “any significant change in this regard because of the personnel change in the defense ministry.”

    While stressing that Pistorius will play a role in deciding on further military aid for Ukraine, Klinck said “this very important question of the delivery of battle tanks” would be decided “primarily in the chancellor’s office” and in coordination with other allies.

    Scholz himself reiterated his reluctant position during an interview with Bloomberg on Tuesday, saying that any decisions on further weapon supplies could only be taken in close coordination with allies.

    That argument for holding back tank deliveries has started to sound less convincing, however, given the calls from allies like Poland to jointly send Leopards, and after the U.K. announced it would supply Ukraine with its own Challenger 2 battle tanks.

    German officials have indicated, though, that Scholz would likely move if he received backing from the U.S., especially if Washington also agreed to send battle tanks.

    During a call between Scholz and U.S. President Joe Biden on Tuesday, both leaders discussed “effective, sustainable and closely coordinated” military support for Ukraine, according to a German spokesperson. This has raised expectations that a breakthrough on tanks could still be feasible.

    Pressure on Scholz

    Green MP Anton Hofreiter, chair of the Bundestag’s European affairs committee and a long-standing critic of Scholz’s cautious position, said it was time for the chancellor to act.

    “The decision to supply tanks ultimately rests with the chancellor. Behind him is his Social Democratic Party, which unfortunately is still often under the illusion that relations with Russia can be normalized again and that Moscow should therefore not be provoked too much,” Hofreiter told POLITICO.

    Anton Hofreiter, co-head of the German Green Party Bundestag faction | Sean Gallup/Getty Images

    Hofreiter, whose Green party is part of Germany’s government coalition alongside Scholz’s SPD and the pro-business Free Democratic Party, argued Germany was presenting “an unclear, wavering and hesitant picture” of its military support for Ukraine.

    “Allies are now watching Berlin very closely: If we continue to close our minds on the Leopard issue, Germany would be increasingly isolated in Europe,” he said.

    Scholz’s vice chancellor, Robert Habeck, also from the Greens, upped the pressure on the chancellor last week, saying Berlin should not stand in the way if allies like Poland, Finland or Spain want to send their own Leopard 2 tanks to Ukraine — an important demand because Berlin must authorize any re-export of the German-made battle tanks.

    The government’s deputy spokesperson later clarified that there were “no differences” on the issue between Habeck and Scholz, suggesting the chancellor would support his deputy’s line.

    The remarks raised expectations that Berlin may use Friday’s meeting to at least give its allies the green light on sending Leopard tanks. But it remains uncertain whether Scholz will join the coalition and offer Germany’s own tanks, either from the German army or defense industry stocks.

    Scholz said Tuesday that he would not debate these questions in public.

    There are also questions in Germany about whether the recent political crisis within the defense ministry has left Scholz weakened. Scholz personally chose Lambrecht and defended her until the end, despite concerns she had failed to properly spend a reject influx of defense funds and let Germany’s ammunition stockpiles run low (in addition to her gaffes and waning standing among the military).

    The SPD’s Hellmich, however, expressed optimism that these shortcomings would now improve with the newly appointed minister.

    “Boris Pistorius has been in the political business for a long time and is knowledgeable on the subject. He sits on the defense committee of the Bundesrat [Germany’s upper house of parliament] and is a member of the NATO Parliamentary Assembly,” Hellmich said.

    “That’s why the troops are in good hands with him.”

    This article was updated to include details of a call between Olaf Scholz and Joe Biden.

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    Hans von der Burchard and Gabriel Rinaldi

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  • Germany’s strategic timidity

    Germany’s strategic timidity

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    BERLIN — News this month that the number of German soldiers declaring themselves conscientious objectors rose fivefold in the wake of Russia’s full-scale invasion of Ukraine created little more than a ripple in Germany.

    For many Germans it’s perfectly natural for members of the Bundeswehr, the army, to renege on the pledge they made to defend their country; if Germans themselves don’t want to fight, why should their troops?

    Indeed, in Germany, a soldier isn’t a soldier but a “citizen in uniform.” It’s an apposite euphemism for a populace that has lived comfortably under the U.S. security umbrella for more than seven decades and goes a long way toward explaining how Germany became NATO’s problem child since the war in Ukraine began, delaying and frustrating the Western effort to get Ukraine the weaponry it needs to defend itself against an unprovoked Russian onslaught.

    The latest installment in this saga (it began just hours after the February invasion when Germany’s finance minister told Ukraine’s ambassador there was no point in sending aid because his country would only survive for a few hours anyway) concerns the question of delivering main battle tanks to Ukraine. Germany, one of the largest producers of such tanks alongside the U.S., has steadfastly refused to do so for months, arguing that providing Ukraine with Western tanks could trigger a broader war.

    Chancellor Olaf Scholz has also tried to hide behind the U.S., noting that Washington has also not sent any tanks. (Scholz has conveniently ignored the detail that the U.S. has provided Ukraine with $25 billion in military aid so far, more than 10 times what Germany has.)

    Germany’s allies, including Washington, often ascribe German recalcitrance to a knee-jerk pacifism born of the lessons learned from its “dark past.”

    In other words, the German strategy — do nothing, blame the Nazis — is working.

    Of course, Germany’s conscience doesn’t really drive its foreign policy, its corporations do. While it hangs back from supporting Ukraine in a fight to defend its democracy from invasion by a tyrant, it has no qualms about selling to authoritarian regimes, like those in the Middle East, where it does brisk business selling weapons to countries such as Egypt and Qatar.

    Despite everything that’s happened over the past year, Berlin is still holding out hope that Ukraine can somehow patch things up with Russia so that Germany can resume business as usual and switch the gas back on. Even if Germany ends up sending tanks to Ukraine — as many now anticipate — it will deliver as few as it can get away with and only after exhausting every possible option to delay.  

    Much attention in recent years has focused on Nord Stream 2, the ill-fated Russo-German natural gas project. Yet tensions between the U.S. and Germany over the latter’s entanglement with Russian energy interests date back to the late 1950s, when it first began supplying the Soviet Union with large-diameter piping.

    Throughout the Cold War, Germany’s involvement with NATO was driven by a strategy to take advantage of the protection the alliance afforded, delivering no more than the absolute minimum, while also expanding commercial relations with the Soviets.

    In 1955, the weekly Die Zeit described what it called the “fireside fantasy of West German industry” to normalize trade relations with the Soviet Union. Within years, that dream became a reality, driven in large measure by Chancellor Willy Brandt’s détente policies, known as Ostpolitik.

    Joe Biden, eager to reverse the diplomatic damage inflicted during the Trump years, reversed course and has gone out of his way to show his appreciation for all things German | Thomas Lohnes/Getty Images

    That’s one reason the Germans so feared U.S. President Ronald Reagan and his hard line against the Soviets. Far from welcoming his “Mr. Gorbachev, tear down this wall” demand, both the German public and industry were terrified by it, worried that Reagan would upset the apple cart and destroy their business in the east.  

    By the time the Berlin Wall fell a couple of years later, West German exports to the Soviet Union had reached nearly 12 billion deutsche mark, a record.

    That’s why Germany’s handling of Ukraine isn’t a departure from the norm; it is the norm.

    Germany’s dithering over aid to Ukraine is a logical extension of a strategy that has served its economy well from the Cold War to the decision to block Ukraine’s NATO accession in 2008 to Nord Stream.

    Just last week, as the Russians were raining terror on Dnipro, the minister president of Saxony, Michael Kretschmer, called for the repair of the Nord Stream 1 pipeline, which was blown up by unknown saboteurs last year, so that Germany “keeps the option” to purchase Russian gas after war ends.

    One can’t blame him for trying. If one accepts that German policy is driven by economic logic rather than moral imperative, the fickleness of its political leaders makes complete sense — all the more so considering how well it has worked.

    The money Germany has saved on defense has enabled it to finance one of the world’s most generous welfare states. When Germany was under pressure from allies a few years ago to finally meet NATO’s 2 percent of GDP spending target, then-Vice Chancellor Sigmar Gabriel called the goal “absurd.” And from a German perspective, he was right; why buy the cow when you can get the milk for free?

    Of course, the Germans have had a lot of help milking, especially from the U.S.

    American presidents have been chastising Germany over its lackluster contribution to the Western alliance going as far back as Dwight D. Eisenhower, only to do nothing about it.

    The exception that proves the rule is Donald Trump, whose plan to withdraw most U.S. troops from Germany was thwarted by his election loss.

    Joe Biden, eager to reverse the diplomatic damage inflicted during the Trump years, reversed course and has gone out of his way to show his appreciation for all things German.

    Biden’s decision to court the Germans instead of castigating them for failing to meet their commitments taught Berlin that it merely needs to wait out crises in the transatlantic relationship and the problems will fix themselves. Under pressure from Trump to buy American liquefied natural gas, then-Chancellor Angela Merkel agreed in 2018 to support the construction of the necessary infrastructure. After Trump, those plans were put on ice, only to revive them amid the current energy crisis.

    By virtue of its size and geographical position at the center of Europe, Germany will always be important for the U.S., if not as a true ally, at least as an erstwhile partner and staging ground for the American military.

    Who cares that the Bundeswehr has become a punchline or that Germany remains years away from meeting its NATO spending targets?

    In Washington’s view, Germany might be a bad ally, but at least it’s America’s bad ally.

    And no one understands the benefits of that status better than the Germans themselves.

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    Matthew Karnitschnig

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  • Japanese prime minister’s visit highlights cornerstone of Biden foreign policy | CNN Politics

    Japanese prime minister’s visit highlights cornerstone of Biden foreign policy | CNN Politics

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    CNN
     — 

    As President Joe Biden and Japanese Prime Minister Fumio Kishida met privately in Tokyo last year, Biden delivered a message that was as strategic as it was genuine.

    US support for a more assertive defense and security posture from Japan was understood, but Biden made clear that if there was anything he could offer to bolster – or provide cover for – that effort, it should be considered on the table.

    Eight months later, the product of that one-on-one meeting was marked by another. This time the backdrop was the Oval Office.

    “Let me be crystal clear,” Biden said as he sat beside Kishida surrounded by cameras. “The United States is fully, thoroughly, completely committed to the alliance.”

    For Biden and his national security team, Kishida’s visit serves as equal parts culmination and continuation of a foundational effort pursued since the opening days of the administration. It’s one that extends beyond a single bilateral relationship at a moment when geopolitical tensions and risks have converged with an approach to reshape the security posture of allies in Europe and the Indo-Pacific.

    China has rapidly expanded its military capabilities, while also being increasingly clear about its territorial ambitions. Russia’s invasion of Ukraine set off the largest armed conflict in Europe since World War II. Throughout, North Korea has rapidly accelerated missile tests and its own provocative actions.

    For Biden, a geopolitical climate trending toward instability has created an opportunity to support allies in their efforts to build out their security and defense capabilities – one that national security adviser Jake Sullivan framed as a new version of a central concept of President Ronald Reagan’s foreign policy.

    “For Reagan, it was peace through American strength,” Sullivan said in an interview with CNN. “For Biden, it’s peace through American and allied strength.”

    As the administration enters its third year, the groundwork laid has shown tangible, if sometimes uneven, advances with Germany, Australia and, most definitively, Japan.

    In December, Kishida unveiled a new national security plan that signals the country’s biggest military buildup since World War II, doubling defense spending and veering from its pacifist constitution in the face of growing threats from regional rivals, including China.

    The decision marked a dramatic shift for both the nation and the US security alliance in the Indo-Pacific region.

    “We believed that we could get significant movement, but I don’t think that anybody thought it would be this far, this fast,” a senior administration official told CNN.

    It also came at a moment when Kishida faces his own political challenges at home – challenges Biden was more than willing to try and help assuage.

    Kishida’s visit served as a window into two years of carefully calibrated work by Biden’s team, senior administration officials said – one that created an environment for dramatic shifts to bolster US alliances at an increasingly fraught moment.

    “We began laying the foundation for all of this long before Putin crossed the border of Ukraine,” Sullivan told CNN. “Above all, this has been a huge diplomatic priority.”

    It was a directive handed down by Biden at the start of the administration, with Sullivan as its central architect. The administration sought to build on existing alliances, both bilaterally and regionally, as officials urged their counterparts to accelerate spending and updates to their own security and defense spending strategies.

    They would ensure that it was understood that the US would be there to assist in any process undertaken, whether through boosts to defense capabilities, shifts in US force posture or Biden himself, with a clear statement of support, political cover or – in the case of Kishida – a coveted White House meeting.

    The convergence of geopolitical events dovetailing with that strategy has reshaped security strategies in ways that in prior years may have unsettled allies concerned about increasing regional tensions, or unsettled adversaries willing to match action with escalation.

    Yet the approach has managed to navigate a new willingness to test prior regional risk assessments. That hasn’t been lost on allies, Sullivan said.

    “We’re giving them the confidence that as they go out on a limb, we are not going to saw off that limb,” Sullivan said.

    In the days before Kishida’s visit, the US and Japan announced a significant strengthening of their military relationship and upgrade of the US military’s force posture in the region, including the stationing of a newly revamped Marine unit with advanced intelligence, surveillance capabilities and the ability to fire anti-ship missiles.

    It is one of the most significant adjustments to US military force posture in the region in years, one official said, underscoring the Pentagon’s desire to shift from the wars of the past in the Middle East to the region of the future in the Indo-Pacific.

    It also sent an unequivocal signal about the durability of US support for Japan’s strategic shift – one that administration officials made clear was a critical component of their regional strategy for years to come.

    “When you think about it in terms of longer-term impact, this is a huge increase in net security capability in a place that (is) geographically important,” the official said.

    For a president and an administration intensely focused on China, tending to – and building up – the long-standing critical alliance with Japan was a focal point from the start. Biden invited Kishida’s predecessor, Yoshihide Suga, for the first foreign leader visit of his presidency.

    The decision was made to elevate the Quad – the informal alliance made up of the US, Japan, India and Australia – to the leader level. The US included Japan in consultations over the Indo-Pacific strategy. Administration officials have looked for places across economic and technological sectors to find new areas of cooperation, officials said.

    But if China’s actions had started the steady shift in Japan’s overall posture, Russia’s actions accelerated it to a different level.

    Japan, throughout the US effort to rally allies in response to Russia’s invasion of Ukraine, has served a steadfast partner. Kishida has been explicit about his views of Russia’s actions not just in the context of Europe, but also for the Indo-Pacific.

    “I myself have a strong sense of urgency that Ukraine today may be East Asia tomorrow,” Kishida said in a keynote address in Singapore last June that offered broad outlines of the security strategy shift he was weighing.

    By the time Kishida met Biden in November in Cambodia, he would lay out the specific details to the US president during another one-on-one meeting.

    He also made clear he would take Biden up on his offer during their private meeting in Tokyo. The Biden administration would need to immediately put out a statement in support of the proposal.

    Biden agreed, and the day Kishida publicly announced his plans, an official statement from Sullivan followed in short order, calling it a “bold and historic step.”

    Kishida also requested an invitation to the White House shortly after the December 16 announcement.

    On January 3, the White House publicly announced plans for Kishida’s visit.

    Less than two weeks later, Biden was waiting outside the White House as Kishida pulled up in a black SUV.

    “I don’t think there’s ever been a time when we’ve been closer to Japan in the United States,” Biden said shortly afterward, as the two sat together in the Oval Office.

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  • Putin’s shake-up of Russia’s commanders won’t quell infighting

    Putin’s shake-up of Russia’s commanders won’t quell infighting

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    If Russian President Vladimir Putin hopes a quick reshuffle of generals can revive the fortunes of his faltering campaign in Ukraine and quell bitter turf wars among his commanders, he’s likely to be disappointed.

    After only three months as overall commander of Russia’s war, General Sergei Surovikin has been replaced by his boss, Chief of the General Staff Valery Gerasimov, the country’s most senior soldier. Colonel General Alexander Lapin was promoted to chief of the general staff of the ground forces.

    Both Western security analysts and pro-war Russian military veterans, however, are skeptical this game of musical chairs will trigger any game-changing tactics or help restore momentum to the Russian campaign. Surovikin will continue as Gerasimov’s battlefield deputy.

    They see the shake-up as largely political, and a sign of infighting in the Kremlin, with the defense ministry trying to reassert control of the management of the war and to curb the growing influence of paramilitary boss Yevgeny Prigozhin, founder of the mercenary Wagner Group.

    Prigozhin is seeking to seize the limelight by claiming to have made breakthroughs with a massive wave attacks in the east of Ukraine, using so-called penal battalions comprised largely of former prison inmates to deliver a rare Russian victory. This week, for example, Prigozhin claimed Wagner mercenaries had overrun the salt-mining town of Soledar. Ukraine retorts that fighting is still ongoing and that Prigozhin’s tactics are insane because of the huge casualties that he is willing to accept for negligible strategic gains.

    In a sign of the personality politics that seem to be looming larger in the splintered Russian military, Prigozhin is also keen to depict himself as a fighter in helmet and flak jacket with his troops on the battle fronts.

    The pro-war ultranationalist camp of Prigozhin and Chechen leader Ramzan Kadyrov has long been pushing for a restructuring of the top echelons of the command.

    It looks, though, like Putin is not giving them the new arrangement they want, but is instead strengthening the hand of the ministry men, who are often the target of the radicals’ most excoriating denunciations.

    General Armageddon

    Surovikin, known as General Armageddon for overseeing a vicious bombing campaign in northern Syria in 2016, has not been the butt of the hardline camp’s anger. They credit him with having brought more tactical coherence and focus to Russia’s ground campaign. They had been calling instead for Gerasimov, who they blame for failing to seize Kyiv in the early days of the war, Defense Minister Sergei Shoigu and Lapin, another of their bêtes noires, to be sacked.

    Ultimately, Putin has chosen to deal with the internal power fissures plaguing the military by elevating Gerasimov and Lapin, and demoting Surovikin.

    Rob Lee, an analyst at the U.S.-based security think tank Foreign Policy Research Institute, noted that Prigozhin had praised Surovikin, and suggested this week’s promotions may “partially be a response to Wagner’s increasingly influential and public role in the war.”

    Influential pro-war Russian military blogs such as Rybar, which has a million followers on Telegram, were also scathing about the decision to replace Surovikin. The Rybar blog, the work of several authors all apparently well connected to the Russian military, credited Surovikin with achieving much in his three months as overall battlefield commander and for starting to bring some order to a chaotic campaign.

    Russian President Vladimir Putin presents an award to Colonel General Sergei Surovikin on 28 December, 2017 | Alexei Nikolsky/AFP via Getty Images

    Rybar fumed Surovikin would be left taking the blame for recent debacles — including the Ukrainian missile strike on New Year’s Day on conscripts billeted temporarily at a college in Makiivka that may have left more than 400 dead. Western military experts say the Russians, who claim 89 died, laid themselves wide open to the devastating attack by crowding the soldiers in one building.

    Lapin’s promotion has drawn disdain from Igor Girkin, a former intelligence officer and paramilitary commander who played a key role in Russia’s annexation of Crimea and the war in Donbass.

    Girkin, who uses the pseudonym Igor Strelkov, said on his Telegram channel that Lapin’s new role must be “to put it mildly, a misunderstanding.” The appointment represents a “boorish” bid by the Russian defense ministry to demonstrate its invulnerability from criticism and impunity, he said. Lapin was sacked earlier this year after failing to rebuff a Ukrainian offensive that saw the Russians pushed out of the strategic town of Lyman, in the Donetsk region.

    Chechen leader Kadyrov publicly blamed Lapin for the loss of Lyman, saying he should be stripped of his medals and rank and sent to the front line barefoot with a light machine gun to “wipe away his shame with blood.”  Kadyrov’s outburst prompted a warning from the Kremlin to curb his criticism and to “set aside emotions.”

    Surovikin’s appointment in October as overall commander of what Russia calls its special military operation was greeted with delight by Russia’s hawks. Kadyrov praised him as “a real general and a warrior.” He will “improve the situation,” Kadyrov added in his social media post.

    Russia’s defense ministry said the reshuffle amounted to “an increase in the level of leadership of the special military operation” and said the change was needed to boost the effectiveness of the military. It specifically cited “the need to organize closer interaction between the types and arms of the troops,” in other words to improve combined arms warfare, the integration of infantry, armor, artillery and air support to achieve mutually reinforcing and complementary effects, something Russia has failed to accomplish.

    After his appointment, Russia made a conspicuous shift to pummeling civilian infrastructure in Ukraine, knocking out power stations and water facilities.

    The decision to keep Surovikin as Gerasimov’s No. 2 has gone some way to mollify the ultranationalists, but it hardly answers their calls for a root-and-branch makeover of the top brass of Russia’s armed forces. 

    Over to you, Gerasimov

    Whether Gerasimov, a veteran of Russia’s war in Afghanistan, can pull that off remains to be seen. He has experience as a battlefield commander in Ukraine: He oversaw Russian forces and pro-Russian insurgents in August 2014, outmaneuvering the Ukrainians at Ilovaisk in the Donetsk region, where more than 1,000 Ukrainian soldiers were killed. That battle forced then-Ukrainian President Petro Poroshenko to agree to peace talks. 

    Gerasimov is seen as an advocate of hybrid warfare and is the author of a doctrine, named after him, calling for combining military, technological, information, diplomatic, economic, cultural and other tactics to achieve strategic goals. In May, there were unconfirmed reports that he was wounded when visiting the frontlines, but Ukrainian officials denied the claims, saying he had left a command post shortly before they targeted it.

    The Chechen leader and other hawks looked to him to reverse a series of stunning battlefield Ukrainian successes and to turn the tide of war in Russia’s favor. The shaven-headed veteran officer, who has the physique of a wrestler, served in Chechnya and Syria. A ruthless and unscrupulous tactician, he oversaw the relentless targeting of clinics, hospitals and civilian infrastructure in rebel-held Idlib in 2019, an effort to break opponents’ will and to send refugees toward Europe via neighboring Turkey. The 11-month campaign “showed callous disregard for the lives of the roughly 3 million civilians in the area,” noted Human Rights Watch in a damning report.

    General Sergei Surovikin has been replaced by his boss, Chief of the General Staff Valery Gerasimov | Mikhail Klimentyev/AFP via Getty Images

    Since Gerasimov was part of a small circle of Kremlin hawks that advised Putin to invade Ukraine, his future likely now all depends on the outcome of the war. The job he has been given is “the most poisoned of chalices,” according to Mark Galeotti, an expert on the Russian military. “It’s now on him,” he added in a tweet.

    Ukraine’s defense ministry took a more laconic approach to Gerasimov’s appointment.

    Every Russian general “must receive at least one opportunity to fail in Ukraine,” it tweeted.

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    Jamie Dettmer

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  • Who’s not coming to Davos

    Who’s not coming to Davos

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    DAVOS, Switzerland — The World Economic Forum’s annual conclave in the Swiss Alps is the greatest intersection of wealth and political power on the global calendar, but this year the balance is shifting. 

    Each January, forum organizers became used to announcing another record-setting list of national leaders, global officials and royalty making their way to the exclusive gathering.

    WEF would attract even globalization’s strongest skeptics: from U.S. President Donald Trump to former Brazilian President Jair Bolsonaro and climate campaigner Greta Thunberg.

    While there are 52 heads of state of government heading to Davos this year, top-tier leaders are missing. U.S. President Joe Biden and his Chinese and Russian counterparts Xi Jinping and Vladimir Putin are all giving it a miss. 

    French President Emmanuel Macron, who promised to Make the Planet Great Again, is also skipping the talkfest, along with new British Prime Minister Rishi Sunak and re-elected Brazilian President Luiz Inácio Lula da Silva.

    Instead, it’s a European-heavy guest list: German Chancellor Olaf Scholz is the only leader from a G7 country, sharing top billing with European Commission President Ursula von der Leyen, another German.

    Even within European royal ranks, the forum this year is attracting the likes of Queen Maxima of the Netherlands — a U.N. financial inclusion envoy — rather than environmental campaigners such as King Charles and Prince William.

    Some of the most prominent tech companies are dialing back their participation amid rounds of heavy layoffs. 

    And the biggest party hosts in town — Russian oligarchs — remain forced out by sanctions levied since Putin’s invasion of Ukraine in February 2022.

    Ukrainian President Volodymyr Zelenskyy has unrivaled star wattage among the Davos crowd — but even a video appearance from him this year will be treated as below par, given how many of them he now does.

    It’s the C-Suite, stupid!

    With the global political elite mostly absent, WEF is this year choosing to focus on rising CEO numbers. 

    Among 2,700 participants in official WEF sessions, “we’re likely to surpass the old record from 2020 with 600 global CEOs — including 1,500 C-suite level overall,” said WEF’s head of digital and marketing George Schmitt, who added that 80 of the CEOs are first-timers in Davos.

    Those who claim Davos is dead are yet to be proven right, but WEF’s critics now spread beyond the activist world who have long disparaged the juxtaposition of private jet opulence with hand-wringing panels about global poverty.

    WEF would attract even globalization’s strongest skeptics: from U.S. President Donald Trump to former Brazilian President Jair Bolsonaro and climate campaigner Greta Thunberg | Jim Watson/AFP via Getty Images

    The U.S. delegation includes cabinet members such as climate envoy John Kerry, who will camp out in Davos for most of the week, but others such as Treasury Secretary Janet Yellen are skipping. 

    It’s not that Yellen has better things to do at home: She’s embarking on an 11-day trip with stops in Senegal, Zambia and South Africa, with no time for Davos. 

    Nobel Peace Prize winner Beatrice Fihn, who campaigns to eliminate nuclear weapons, said she “genuinely had forgotten that Davos is still happening.” 

    “The format seems slightly dated now. The private jets and oligarch parties are no longer in step with modern biz [business] life,” said Scott Colvin, a Davos veteran who is now public affairs director at Aviva. “The events around COP [the U.N.’s annual climate summit] now feel a bigger deal, given their focus on a specific global policy objective,” he added.

    WEF is a victim of its own success and stuck in a demographic bind.

    The forum’s operating model requires it to provide a place for the world’s most powerful and influential people to talk. 

    In 2020 Bloomberg calculated 119 billionaires joined the party, with a combined net worth of more than $500 billion. 

    WEF’s efforts to bring the uber-elite together is a stark annual reminder that they don’t look like the rest of us. 

    The best ratio of female participants in WEF’s 52-year history of in-person gatherings was 24 percent, in 2020. 

    Despite years of exhortations and incentives for members to bring more female colleagues, the number often hovers in the range of 18 percent to 20 percent. A WEF spokesperson said that 42 percent of speakers this year will be women.

    WEF aims for global reach — but often lands in the middle of the Atlantic instead. 

    This year Europe is supplying the most political leaders, while the U.S. corporate delegation will once again massively outweigh the others. The 700 Americans participating this year outnumber the Chinese delegation roughly 20 to 1.

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    Ryan Heath

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  • How Ukraine’s Zelenskyy went from comedian to wartime hero

    How Ukraine’s Zelenskyy went from comedian to wartime hero

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    Ukraine’s President Volodymyr Zelenskyy in Kherson, Ukraine, on Nov. 14, 2022.

    Ukrainian Presidential Press Service | Reuters

    When Volodymyr Zelenskyy became the president of Ukraine in 2019, it made headlines around the world.

    That wasn’t because he was a political heavyweight deemed ready to resolve Ukraine’s deep-seated challenges —ranging from an economic crisis to corruption and an entrenched, powerful oligarchy — not to mention the conflict between Ukrainian forces and pro-Russian separatists in the east of the country.

    It was just the opposite. Zelenskyy was a political novice whose closest brush with politics was playing the role of Ukrainian president in a well-known domestic TV series, before life imitated art and he decided to launch his own presidential bid on New Year’s Eve in 2018.

    When he won the presidential election in a landslide victory in March 2019, no one could have guessed that the erstwhile actor, writer and comedian would become one of the world’s most recognizable and respected politicians after Russia’s invasion of Ukraine.

    Ukraine’s President Volodymyr Zelenskyy on the cover of Time Magazine’s 2022 “Person of the Year” edition.

    Artwork by Neil Jamieson, Photograph by Maxim Dondyuk for TIME | Reuters

    But under his leadership, and with the fortitude of Ukraine’s armed forces and resilience of the civilian population, Ukraine has fought back and Zelenskyy has won plaudits (he was just named “Person of the Year” by both Time Magazine and the FT) for the wartime leadership he was thrust into.

    “I think Zelenskyy has proven to be a remarkable leader, and a remarkably effective one, both as a military leader and as a public figure — in terms of building support for Ukraine internationally, and also in terms of being able to at least keep some things going domestically despite the war,” Max Hess, fellow at the Foreign Policy Research Institute, told CNBC.

    “They have continued to pass legislation in line with previous reform packages for international support. And then, of course, I find the really interesting thing is just how [much of an] inspirational leader he’s been to almost everybody,” he added.

    Hess said though Zelenskyy certainly had his critics when he became president, their misgivings have been disproven.

    “There were plenty of people who were very critical of Zelenskyy [before the war], both in Ukraine and particularly the Ukrainian diaspora who saw him as too soft or weak or pro Russian, or primarily, potentially beholden to oligarchs … obviously, none of that has proven to be true,” Hess said.

    “The reality is, I wish we had politicians like Zelenskyy in the West at this point. But to temper that, does that mean he would be the perfect non-wartime president in Ukraine, if there is peace? That’s not for me to say, that’s obviously for Ukrainians to say. But right now, off the back of the … wartime leadership he’s demonstrated, I certainly think he will have universal support there for a long time.”

    ‘More responsible than brave’

    For his part, Zelenskyy has tried to play down his courageous stance toward Russia, telling the FT that he was “more responsible than brave” and just didn’t want to “to let people down.”

    From the start of the war, however, Zelenskyy has been a visible, physically present leader in Ukraine, visiting the front line and war-torn towns and cities. He famously refused an offer from the U.S. to evacuate him and his family from Kyiv, with the Ukrainian embassy in Britain tweeting that he’d responded that he needed ammunition, rather than a ride out of the country.

    Moscow was widely believed to have thought it could occupy its pro-Western neighbor without much pushback and it had reason to believe so — tepid sanctions had been imposed on Russia after its annexation of Crimea in 2014, and global business with Russia continued as usual despite Russia’s support for separatists in the Donbas in eastern Ukraine, where a low-level conflict had been ongoing since the annexation.

    As such, the seeds of the current war had already been sown by the time Zelenskyy took office but Ukraine’s president seemed reluctant to believe his country could be thrust into war with its powerful, nuclear-weapon-wielding neighbor.

    Even in late January 2022, Zelenskyy was playing down the threat of an invasion despite the presence of over 100,000 Russian troops along the border with Ukraine, saying there was no need to “panic.” He was looking to maintain economic stability amid heightened fears in the West that Russia was preparing to invade.

    The United States warned in January, however, that there was a “distinct possibility” the invasion could take place in February — a prediction that proved true on Feb. 24.

    Ukrainian President Volodymyr Zelenskyy Zelenskyy enjoys high approval ratings among Ukrainians for rallying both the country’s forces and public on a daily basis.

    Sergei Supinsky | AFP | Getty Images

    Now, Ukraine is holding its own and fighting back against Russian forces despite the fatigue and deprivation brought about by months of war and the bombardment of swathes of the country, particularly eastern and southern Ukraine.

    The country’s armed forces, armed with masses of Western-supplied weapons, have defied expectations as they continue to counterattack and defend their territory, regaining significant parts of east and southern Ukraine.

    Meanwhile, Zelenskyy, has had to get used to flurries of daily, global diplomatic meetings and briefings in which he has had to plead for assistance, weapons and financial aid, as well as updating civilians on a daily and nightly basis on the war.

    He’s also had to walk a diplomatic tightrope, knowing Ukraine relies on the largesse of its friends — in terms of billions of dollars worth of weaponry and the tolerance of higher food and energy prices as a result of sanctions — to keep on fighting Russia. That’s been an awkward path to tread at times.

    Ukraine’s President Volodymyr Zelenskyy visits Kherson, Ukraine, on Nov. 14, 2022.

    Ukrainian Presidential Press Service | Reuters

    There was a media report in June that U.S. President Joe Biden lost his temper with Zelenskyy with the report suggesting that Biden had barely finished telling his Ukrainian counterpart that he’d just greenlighted another $1 billion in military assistance when Zelenskyy started listing all the additional help he needed and wasn’t getting, leading Biden to raise his voice and to tell him he could show more gratitude.

    After the reported contretemps, Zelenskyy issued a statement praising the American public for its generosity and regularly voices his gratitude towards Ukraine’s allies for their assistance in Kyiv’s fight against Russia.

    Challenges aside from the war

    While the battle is far from over, Zelenskyy does face pressures on the domestic front that will have to be addressed at some point, according to Orysia Lutsevych, head and research fellow at the Ukraine Forum, Russia and Eurasia Programme at Chatham House think tank.

    The main three challenges the government faces relate to security, the economy and the health of Ukraine’s democracy, Lutsevych said in a recent Chatham House briefing.

    On the security front, for example, Lutsevych noted that there is a strong demand among Ukrainians for Ukraine to be a part of NATO, but it’s extremely unlikely that Ukraine will be able to join the military alliance for years — or ever — “so this is a challenge Zelenskyy has … because there’s demand for it [NATO membership] and it’s not an easy one” to deliver, she said.

    Firefighters conduct search and rescue operations after Russian forces hit a cultural center in Chuhuiv, Kharkiv Oblast, Ukraine, on July 25, 2022.

    Anadolu Agency | Anadolu Agency | Getty Images

    “Secondly, the economy, Ukraine is facing a serious economic downfall due to Russian aggression. Its economy might fall up to 40% this year and Ukraine heavily relies on Western assistance and its own ability to collect taxes and to have its budget filled with the necessary funds so here’s there’s a question of how to sustain that economic support. To be honest, Western assistance was coming but it wasn’t enough and it was quite slow,” she added.

    “Finally, on democracy, there’s a discussion about the quality of the media space [in Ukraine] as under Martial Law there’s a certain censorship and confidentiality of information, specially related to the military operation,” she said.

    Lutsevych added that some TV channels affiliated with former President Petro Poroshenko had been excluded from an umbrella news channel, prompting questions over whether that was done on purpose to limit the influence of the political opposition on national debate.

    Ukrainian President Volodymyr Zelenskyy in Kherson, Ukraine, on Nov. 14, 2022. The main three challenges the Ukrainian government faces relate to security, the economy and the health of Ukraine’s democracy, one analyst said.

    Ukrainian Presidential Press Service | Reuters

    Despite such challenges, Lutsevych noted that, overall, Zelenskyy enjoys high approval ratings among Ukrainians for rallying both the country’s forces and public on a daily basis.

    “Over 90% [of Ukrainians] approve of his performance, they think that he has managed to mount quite a substantial opposition to withold Russian aggression in Ukraine, but has also mobilized western support in this conflict and this is comething that is highly appreciated iby Ukrainians and they believe that his personal behavior — by staying in Kyiv and not fleeing the country — was able to stabilize the country.”

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  • Unloved at home, Emmanuel Macron wants to get ‘intimate’ with the world

    Unloved at home, Emmanuel Macron wants to get ‘intimate’ with the world

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    PARIS — When French President Emmanuel Macron’s party lost its absolute majority in parliament six months ago, many wondered what the setback would mean for an ambitious, here-to-disrupt-the-status-quo leader whose first term was defined by a top-down style of management.

    It turns out Macron 2.0 is a man about globe, pitching “strategic intimacy” to world leaders, as he leaves domestic politics to his chief lieutenant and concentrates on his preferred sphere: international diplomacy.

    The Frenchman’s past “intimate” moves have been well-documented: affectionate hugging with Angela Merkel, knuckle-crunching handshakes with Donald Trump, and serial bromancing with the likes of Justin Trudeau and Rishi Sunak. Now in his second term, the French president appears to be making a move on — quite literally — the world.

    Since his reelection, Macron has been hopping from one official visit to another: in Algeria one day to restore relations with a former colony, in Bangkok another to woo Asian nations, and in Washington most recently to shore up the relationship with Washington. The globetrotting head of state has drawn criticism in the French press that he is deserting the home front.

    “He is everywhere, follows everything, but he’s mostly elsewhere,” quipped a French minister speaking anonymously.

    “[But] he’s been on the job for five years now, does he really need to follow the minutiae of every project? And the international pressure is very strong. Nothing is going well in the world,” the minister added.

    Before COVID-19 struck, Macron’s first term was marked by a brisk schedule of reforms, including a liberalization of the job market aimed at making France more competitive. The French president was hoping to continue in the same pragmatic vein during his second term, focusing on industrial policy and reforming France’s pensions system. While he hasn’t abandoned these goals, the failure to win a parliamentary majority in June has forced him to slow down on the domestic agenda.

    Foreign policy in France has always been the guarded remit of the president, but Macron is trying to flip political necessity into opportunity, delegating the tedium and messiness of French parliamentary politics to his Prime Minister Elisabeth Borne.

    There are few areas of global diplomacy where the president hasn’t pitched a French initiative in recent months — whether it’s food security in Africa, multilateralism in Asia or boosting civilian resilience in Ukraine. Despite some foreign policy missteps in his first term including the backing of strongman Khalifa Haftar in the Libyan civil war, Macron is now a veteran statesman, eagerly taking advantage of Europe’s leaderless landscape to hog the international stage.

    The French president’s full pivot to global diplomacy in his weakened second term at home is reminiscent of past leaders confronting turmoil on the domestic front.

    “The Jupiterian period is over. He’s got no majority,” said Cyrille Bret, researcher for the Jacques Delors Institute. “So now he is suffering from the Clinton-second-mandate-syndrome, who after the impeachment attempts over the Lewinsky [inquiry], turned to the international scene, trying to resolve issues in the Balkans, the Middle East and in China.”

    But even as Macron embraces the wide world, the pitfalls ahead are numerous. Photo ops with world leaders haven’t done much to slow the erosion of his approval ratings at home. With a recession looming in Europe and discontent over inflation and energy woes, Macron’s margins of maneuver are limited, and trouble at home might ultimately need his attention.

    Man about globe

    The French president first used the words “strategic intimacy” in October, when he told European leaders gathered in Prague they needed to work on “a strategic conversation” to overcome divisions and start new projects.

    If the thought of 44 European leaders cozying up wasn’t bewildering enough, Macron double-downed this month and called for “more strategic intimacy” with the U.S.

    It’s not entirely clear what kind of transatlantic liaison he was gunning for, but it certainly included a good dose of tough love. Arriving in Washington, Macron called an American multi-billion package of green subsidies “super aggressive.” (He nonetheless received red carpet treatment at the White House, with Joe Biden calling him “his friend” and even “his closer” — the man who helps him bring deals over the finish line — even if he didn’t actually obtain any concessions from the U.S. president.) 

    Some of Macron’s success in taking center stage is, of course, due to France’s historical assets: a permanent seat on the U.N. Security Council, a nuclear capacity, a history of military interventions and global diplomacy.

    But for the Americans, Macron is also the last dancing partner left in a fast-emptying ballroom across the pond. The U.K. is still embroiled in its own internal affairs and has lost some influence after Brexit, while German Chancellor Olaf Scholz hasn’t filled the space left by Merkel’s departure.

    While Macron’s abstract and at times convoluted speeches may not be to everyone’s liking, at least he has got something to say.

    “[The Americans] are looking for someone to engage with and there’s a lack of alternatives,” said Sophia Besch, European affairs expert at Carnegie Endowment for International Peace in Washington. “Macron is the last one standing. There’s his enthusiasm, and at the same time he is disruptive for a leader and not always an easy partner.”

    “He can count on some reluctant admirers in Washington for his energy,” she said.

    The French touch

    In his diplomatic endeavors, Macron likes a good surprise.

    “Emmanuel Macron doesn’t like working bottom-up, where the political link is lost,” said one French diplomat. “He enjoys surprising people and marking political coups.”

    “The [French bureaucracy] doesn’t really like that,” the diplomat added. “We prefer things that are all neat and tidy.”

    Conjuring up new ideas — such as the European Political Community — that haven’t quite filtered through the layers of bureaucracy is one of Macron’s ways of pushing the envelope. The newly christened group’s first summit was ultimately hailed as a success, having marked the return of the U.K. to a European forum and displaying the Continent’s unity in the face of Russia’s aggression against Ukraine.

    It’s a technique that forces the hand of other participants but sometimes undermines the credibility of his initiatives, and raises questions about what has really been confirmed. Launching the European Political Community may have been a success; announcing a summit between Russian President Vladimir Putin and the U.S. president a couple of days before the full-scale invasion of Ukraine less so. (The summit, obviously, never took place.)

    Macron’s diplomatic frenzy has also raised speculation that he is already gunning for a top international job for when he leaves the Elysée palace. Macron cannot run for a third term, and speculation is already running high in France on what the hyperactive president will do next.

    The question at the heart of Macron’s second term is whether his attempts to be everything and everywhere — combined with his stubborn dedication to controversial ideas — is what will ultimately trip him up.

    Even as Macron’s U.S. visit was hailed a success, with him saying France and the US were “fully aligned” on Russia, he sparked controversy on his return when he told a French TV channel that Russia should be offered “security guarantees” in the event of negotiations on ending the war in Ukraine.

    “That comment fell out of the line in relation to the coordinated message from Macron and Biden, which was that nothing should be done about Ukraine without Ukraine’s [approval],” said Besch.

    Macron says he wants France to be an “exemplary” NATO member, but he still wants France to act as a “balancing power” that does not completely close the door on Russia. It’s a stance that may help France build partnerships with more neutral states across the world, but it does nothing to mend the rift with eastern EU member states.

    For the man about globe who presents himself as the champion of European interests, that’s an uncomfortable place to be in.

    When it comes to “strategic intimacy,” it’s possible to have too many partners.

    Elisa Bertholomey and Eddy Wax contributed to reporting.

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  • Asia’s year in review: Who had it good — and who had it bad — in 2022

    Asia’s year in review: Who had it good — and who had it bad — in 2022

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    Police officers step into the vandalized gateway to Sri Lanka’s presidential palace in July. The country has been hit hard by an economic crisis.

    Abhishek Chinnappa | Getty Images News | Getty Images

    Curtis S. Chin, a former U.S. ambassador to the Asian Development Bank, is managing director of advisory firm RiverPeak Group. Jose B. Collazo is an analyst focusing on the Indo-Pacific region. Follow them on Twitter at @CurtisSChin and @JoseBCollazo.

    As the new year approaches, we turn again to our annual look at Asia’s winners and losers. Government and business leaders in every major economy — China now included — may well hope 2023 is the year when draconian pandemic-related lockdowns become a matter of history.

    In our 2021 annual review, we awarded “worst year in Asia” to Afghan women and girls — a consequence of the U.S. and its allies’ chaotic withdrawal from Afghanistan and the return of Taliban rule. “Best year” went to Asia’s Cold War warriors, as social media, “wolf warriors” and politicians helped spark a return to Cold War rhetoric amid worsening U.S.-China relations.

    Now, with hopes that Covid is in retreat and that inflation will moderate in the year ahead, we take a last look at who had it good and who had it bad in 2022.

    Best Year: Southeast Asia’s comeback kids — Marcos and Anwar

    Perseverance proved a winner in 2022 as the year ended with Ferdinand “Bongbong” Marcos Jr. of the Philippines and Anwar Ibrahim of Malaysia becoming leaders of their respective countries. One salvaged a family legacy, the other moved from prison to power — storylines befitting a Netflix series.

    In the Philippines, Marcos — the namesake son of his authoritarian father — won a landslide election in May for president, despite what detractors see as a family legacy of corruption and impunity. More than 35 years ago, in February 1986, the senior Marcos and his wife Imelda fled to Hawaii in exile, driven out by a People Power Revolution and a loss of U.S. support.

    And in Malaysia, Anwar finally proved a winner in November, shedding the long-held descriptor of “prime-minister-in-waiting” to become his nation’s 10th prime minister. That followed decades marked by smear campaigns, imprisonment and backroom intrigue as the onetime deputy prime minister challenged vested interests with his vows to combat corruption.

    The two now face the challenge of governing and moving their respective countries forward. Stay tuned for the next episode.

    Good Year: Taiwan’s semiconductor chipmakers 

    TSMC headquarters in Hsinchu, Taiwan. The semiconductor manufacturer’s products lie at the heart of everything from automobiles to smartphones.

    Bloomberg | Bloomberg | Getty Images

    A rare bipartisan U.S. Congress has taken notice, passing in July 2022 the CHIPS and Science Act, which allocates $52 billion in federal funding to spur further domestic production of semiconductor chips. In December, the world’s dominant chipmaker, Taiwan Semiconductor Manufacturing Company (TSMC), announced plans for a second semiconductor chip plant in Arizona, raising to $40 billion what is already one of the largest foreign investments in U.S. history. 

    With numbers like those, Taiwan’s semiconductor industry ends the year on the move, still building ties and winning growing support from business and government in the United States and elsewhere.

    Mixed Year: Asia’s ‘love’ for crypto

    FTX founder Sam Bankman-Fried is led by officers of the Royal Bahamas Police force following his arrest.

    Mario Duncanson | Afp | Getty Images

    Bad Year: Sri Lanka, the (one-time) pearl of South Asia 

    Negotiations for an IMF deal remain complicated by large amounts of Sri Lankan debt held so by China, India and Japan.

    By September, nearly 200,000 Sri Lankans had left the island nation, and thousands of would-be emigrants were planning to do the same in search of a brighter future elsewhere. 

    An IMF deal to restructure Sri Lanka’s debt could provide much needed cash and economic stability, but negotiations remain complicated by large amounts of Sri Lankan debt held so by China, India and Japan.

    Worst year: China’s beleaguered, locked-down citizens

    While China has taken pride in an extraordinarily low number of (officially reported) Covid-related deaths, the nation has also become a showcase for the negative consequences of efforts to contain the virus. In what should have been a good year for Chinese President Xi Jinping, he has seen the year close with a wave of Chinese discontent. 

    By year-end, anti-lockdown protests were reported in numerous cities, including at the world’s largest iPhone assembly factory in Zhengzhou, as China’s zero-Covid policy took its toll on the economy and everyday people’s mental health.

    China will come through the Covid reopening, but it's going to be a bumpy ride

    “We want freedom, not Covid tests,” became a common chant of some protesters, according to Reuters, as individuals “pushed the boundaries by speaking for change in a country where space for dissent has narrowed dramatically.”

    The spark that set off the rare protests was news of the deaths of 10 people, including several children, in an apartment building fire in Urumqi in China’s Xinjiang province — in an area that had been locked down for several months. A storyline on social media that resonated across the country focused on the role that Covid controls might have played in those deaths.

    Chinese citizens can take heart that those protests may well have had an impact. The Chinese government has begun to relax zero-Covid restrictions. Still, the nation continues to lag the world in opening and moving forward, and worries continue about the nation’s rate of vaccination among the elderly.

    And so, even as hope has returned for a better year ahead, China’s beleaguered, locked-down citizens take the dubious honors of worst year in Asia 2022.

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  • China brings WTO case against U.S. and its sweeping chip export curbs as tech tensions escalate

    China brings WTO case against U.S. and its sweeping chip export curbs as tech tensions escalate

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    The U.S. has brought in sweeping measures to cut China off from high-tech semiconductors, hobbling the chip industry in the world’s second-largest economy. China has hit back against the measures, beginning an official complaints procedure against the U.S. through the World Trade Organization.

    William_potter | Istock | Getty Images

    China initiated a dispute against the U.S. at the World Trade Organization over Washington’s sweeping semiconductor export curbs that look to cut the world’s second-largest economy off from high-tech components.

    In October, the U.S. introduced rules that restricted chips made using American tools from being exported to China as well as any semiconductors designed for artificial intelligence applications. The move has effectively kneecapped China’s semiconductor industry.

    The Chinese Ministry of Commerce confirmed the trade dispute in a statement Monday and accused the U.S. of abusing export control measures and obstructing normal international trade in chips and other products.

    It said that the WTO dispute is a way to address China’s concerns through legal means.

    Washington has maintained that its export restrictions are in the interest of national security.

    China’s dispute on chips comes days after the WTO ruled that tariffs imposed by former President Donald Trump steel and aluminum imports violated global trade rules. China was among the countries that brought action against the U.S.

    Trade disputes via the WTO can take years to resolve. China has taken the first step known as a request for consultations. The WTO also has provisions in its rules that allow countries to impose restrictions in the interest of national security. This could make it difficult for China to win this particular dispute.

    “If this is the response to the export controls, it suggests that China has limited options,” Pranay Kotasthane, chairperson of the high tech geopolitics program at the Takshashila Institution, tweeted on Tuesday.

    “Given that WTO has exceptions for national security concerns, which can be defined broadly, it’s unlikely to result in any policy changes.”

    A spokesperson for the U.S. Trade Representative was not immediately available for comment when contacted by CNBC.

    But spokesperson Adam Hodge told Reuters on Monday that the U.S. has received the request for consultations from China in regards to the semiconductor export restrictions.

    “As we have already communicated to the PRC (People’s Republic of China), these targeted actions relate to national security, and the WTO is not the appropriate forum to discuss issues related to national security,” Hodge said.

    The global chip shortage will probably hit your everyday life

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  • Russia’s Ukraine onslaught shows zero signs of a winter lull as conflict rages

    Russia’s Ukraine onslaught shows zero signs of a winter lull as conflict rages

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    Ukrainian firefighters extinguish a fire after Russian army shelling of Bakhmut, Ukraine on December 7, 2022.

    Anadolu Agency | Anadolu Agency | Getty Images

    As the Russia-Ukraine war heads into winter, there has been some expectation that freezing temperatures on the battlefield could bring a lull in the conflict.

    Last weekend, a top U.S. intelligence official even said they expected to see a “reduced tempo” in the fighting and that this was likely to continue over the “coming months” with both the Ukrainian and Russian militaries expected to regroup and resupply, and to prepare for counter-offensives in the spring.

    There appears to be no signs in a let-up, however — with extremely intense fighting in eastern Ukraine, with the devastation in parts of the region reminiscent of World War I — and both Russia and Ukraine sending out smoke signals that there is no time, and no desire, for a cessation of hostilities.

    Russia President Vladimir Putin on Wednesday signaled that he was in it for the long-haul, saying the conflict could be a “lengthy process,” continuing attempts by the Kremlin to suggest to the Russian public that the war will not be over soon and that there will be no pause over winter.

    Ukraine has also showed no signs of letting-up, particularly as it tries to build on momentum that has allowed it to liberate chunks of Kharkiv in the northeast, and Kherson in the south, and now concentrates its efforts on defending its position in Donetsk, in eastern Ukraine.

    Night falls on a street where a destroyed building targeted during Russia-Ukraine war in Izyum City, Ukraine, December 07th, 2022.

    Anadolu Agency | Anadolu Agency | Getty Images

    Analysts at the Institute for the Study of War said neither Russia nor Ukraine are likely to implement an operational pause over winter, with mixed consequences.

    “Putin continues to seem unwilling to pursue such a cessation of fighting,” the ISW noted Wednesday.

    “The Russian military is continuing offensive operations around Bakhmut and is — so far — denying itself the operational pause that would be consistent with best military practice. Putin’s current fixation with continuing offensive operations around Bakhmut and elsewhere is contributing to Ukraine’s ability to maintain the military initiative in other parts of the theater,” they noted.

    NATO Secretary-General Jens Stoltenberg on Wednesday also appeared to believe that Russia would seek to “freeze” the fighting in Ukraine “at least for a short period of time so they can regroup, repair, recover … [a]nd then try to launch a bigger offensive next spring.”

    The ISW said that view supported its own assessment that an operational pause “would favor Russia by depriving Ukraine of the initiative.”

    “An operational pause this winter would likely prematurely culminate Ukraine’s counter-offensive operations, increase the likelihood that Ukraine loses the initiative, and grant degraded Russian forces a valuable three-to-four-month reprieve to reconstitute and prepare to fight on better footing,” the ISW analysts said.

    It could be to Ukraine’s advantage that Russia, or Putin, is not prepared to introduce any operational pause with the ISW noting that Kyiv’s continued operational successes “depend on Ukrainian forces’ ability to continue successive operations through the winter of 2022-2023 without interruption.”

    Ukraine is keen to point out it has no plans to lose momentum and is undeterred by difficult conditions brought about by freezing temperatures and energy shortages. It says its troops are well-equipped for hostile conditions.

    “We understand that the changing weather conditions are a factor that has to be taken into account and military operations will be planned accordingly,” Yuriy Sak, an advisor to Ukraine’s Defense Minister Oleksiy Reznikov told CNBC this week, “but the Ukrainian armed forces do not have any plans to slow down.”

    “We will adapt, we will continue our counter offensive, as always, in a smart way, carefully, and making sure that we use our military resources efficiently,” he said, adding that the pace and efficiency of Ukraine’s counter-offensive “will, as always, be also determined by how quickly we will continue to receive the military support from our partners.”

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  • China’s Xi to visit Riyadh as Saudi Arabia seeks to expand international reach

    China’s Xi to visit Riyadh as Saudi Arabia seeks to expand international reach

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    Chinese leader Xi Jinping

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    Chinese President Xi Jinping will be in Saudi Arabia on Wednesday to attend the first China-Arab States Summit and the China-Gulf Cooperation Council Summit in Riyadh, according to the Ministry of Foreign Affairs in China.

    The visit, which will span three days, followed an invitation from Saudi Arabia’s King Salman, and will be attended by other Arab heads of state.

    “Close relations between the two countries were initiated 80 years ago, encompassing various aspects of cooperation and development,” the official Saudi Press Agency said in a statement Tuesday.

    Saudi Arabia was the largest oil importer for China in 2021, accounting for 17% of the Asian giant’s oil imports.

    “The optics of a hospitable kingdom welcoming Xi and inviting host of US partners in the Middle East will prove important,” Eurasia Group’s analysts wrote in a note.

    “Saudi Arabia will adopt a similar model to US President Joe Biden‘s visit last July, presenting itself as the regional hub for heavyweight geopolitical meetings,” they said.

    Strained U.S.-Saudi relations

    “Riyadh sees a geopolitical order that is largely in flux, with an opportunity to enhance its leverage in the international system,” Eurasia said.

    Saudi’s leadership has assessed that its interests are served through broadening the kingdom’s international partnerships, they said, adding that it includes relations with “the UK, France, Germany, Greece, and Spain on the European side, Russia on the energy front, and many Asian countries on the economic front.”

    Expect ‘pomp and circumstance’

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  • Russian oil cap will work, EU ministers insist, despite Kremlin opposition and broad skepticism

    Russian oil cap will work, EU ministers insist, despite Kremlin opposition and broad skepticism

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    G7, the EU and Australia implemented on December 5 a cap on Russian oil prices. Market players have doubts the measure will be effective.

    Bloomberg | Bloomberg | Getty Images

    BRUSSELS — A price cap on Russian seaborne oil will work, EU ministers told CNBC, despite attempts from the Kremlin to escape sanctions and a broad market skepticism over the measure.

    The EU, alongside the G-7 and Australia, agreed on Friday to limit the purchases of Russian oil to $60 a barrel as part of a concerted effort to curtail Moscow’s ability to fund its war in Ukraine.

    The price cap came into force on Monday. In essence, the measure stipulates oil produced in Russia can only be sold with the necessary insurance approval at or below $60 a barrel. Insurance companies are mostly based in G-7 nations.

    However, Russia has already said it will not sell oil to nations complying with the cap and that it is ready to cut production to maintain its revenues from the commodity.

    In addition, reports suggested that it has been putting together a fleet of about 100 vessels to avoid oil sanctions. Having its own so-called “shadow fleet” would allow the Kremlin to sell its oil without needing insurance from the G-7 or other nations.

    When asked if the oil cap can work in reducing Russia’s oil revenues, Irish Finance Minister Paschal Donohoe said, “Yes, it can.”

    It is “the right message at the right time,” he said in an interview with CNBC on Monday.

    One of the big open questions is the role of India and China in the implementation of this price cap.

    Both nations have stepped up their purchases of Russian oil in the wake of the invasion of Ukraine, and they are reluctant to agree to the cap. India’s petroleum minister reportedly said Monday that he “does not fear” the cap and he expects the policy to have limited impact.

    However, France’s Finance Minister Bruno Le Maire told CNBC on Monday: “I think it’s worth trying.”

    “Then we will assess the consequences of the implementation of this oil cap,” he added.

    Market players remain skeptical

    The level of the cap will be reviewed in early 2023. This revision will be done periodically and the aim is to set it “at least 5% below the average market price for Russian oil,” according to the agreement reached by EU nations last week.

    European Commission President Ursula von der Leyen said over the weekend that the limit on oil prices will help the bloc stabilize energy prices. The EU has been forced to abruptly reduce its dependence on Russian hydrocarbons due to the Kremlin’s war in Ukraine.

    Market players, however, remain wary about the integrity of the policy.

    Analysts at Japan’s Mitsubishi UFJ Financial Group said in a note Monday that the scale of the price cap’s impact “remains ambiguous.” They added, “we have been sceptical on the practicalities of its success.”

    There is a risk that nations buy Russian oil at the agreed cap but then resell it at a higher price to Europe, for example. This would mean that Russia would still make money from the commodity sales while Europe would be paying more at a time when its economy is already slowing down.

    “The introduction of the cap on the price will probably not remove all the volume, some will find its way to the markets,” Angelina Valavina, head of EMEA Natural Resources and Commodities at the Fitch Group, told CNBC’s “Street Signs Europe” Monday.

    Oil prices traded higher Tuesday morning in London.

    Both international benchmark Brent crude futures and West Texas Intermediate futures traded 0.4% higher at around $83 a barrel and $77 a barrel respectively.

    Crude futures traded higher Monday morning, following a decision by OPEC+ nations to keep output targets unchanged, but moved lower in afternoon trading.

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  • A globally critical chip firm is driving a wedge between the U.S. and Netherlands over China tech policy

    A globally critical chip firm is driving a wedge between the U.S. and Netherlands over China tech policy

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    Netherlands Prime Minister Mark Rutte speaks with U.S. President Joe Biden. The U.S. has been putting pressure on the Netherlands to block exports to China of high-tech semiconductor equipment. The Netherlands is home to ASML, one of the most important companies in the global semiconductor supply chain.

    Susan Walsh | AFP | Getty Images

    Washington has its eyes on the Netherlands, a small but important European country that could hold the key to China’s future in manufacturing cutting-edge semiconductors.

    The Netherlands has a population of just over 17 million people — but is also home to ASML, a star of the global semiconductor supply chain. It produces a high-tech chip-making machine that China is keen to have access to.

    The U.S. appears to have persuaded the Netherlands to prevent shipments to China for now, but relations look rocky as the Dutch weigh up their economic prospects if they’re cut off from the world’s second-largest economy.

    ASML’s critical chip role

    ASML, headquartered in the town of Veldhoven, does not make chips. Instead, it makes and sells $200 million extreme ultraviolet (EUV) lithography machines to semiconductor manufacturers like Taiwan’s TSMC.

    These machines are required to make the most advanced chips in the world, and ASML has a de-facto monopoly on them, because it’s the only company in the world to make them.

    This makes ASML one of the most important chip companies in the world.

    Read more about tech and crypto from CNBC Pro

    U.S.-Netherlands talks

    U.S. pressure on the Netherlands appears to have begun in 2018 under the administration of former President Donald Trump. According to a Reuters report from 2020, the Dutch government withdrew ASML’s license to export its EUV machines to China after extensive lobbying from the U.S. government.

    Under Trump, the U.S. started a trade war with China that morphed into a battle for tech supremacy, with Washington attempting to cut off critical technology supplies to Chinese companies.

    Huawei, China’s telecommunications powerhouse, faced export restrictions that starved it of the chips it required to make smartphones and other products, crippling its mobile business. Trump also used an export blacklist to cut off China’s largest chipmaker, SMIC, from the U.S. technology sector.

    President Joe Biden’s administration has taken the assault on China’s chip industry one step further.

    In October, the U.S. Department of Commerce’s Bureau of Industry and Security introduced sweeping rules requiring companies to apply for a license if they want to sell certain advanced computing semiconductors or related manufacturing equipment to China.

    ASML told its U.S. staff to stop servicing Chinese clients after the introduction of these rules.

    Pressure on the Netherlands to fall in line with U.S. rules continues. Alan Estevez, the under secretary of commerce for industry and security at the U.S. Department of Commerce, and Tarun Chhabra, senior director for technology and national security at the U.S. National Security Council, reportedly spoke with Dutch officials this month.

    “Now that the U.S. government has put unilateral end-use controls on U.S. companies, these controls would be futile from their perspective if China could get these machines from ASML or Tokyo Electron (Japan),” Pranay Kotasthane, chairperson of the high-tech geopolitics program at the Takshashila Institution, told CNBC.

    “Hence the U.S. government would want to convert these unilateral controls into multilateral ones by getting countries such as the Netherlands, South Korea, and Japan on board.”

    The National Security Council declined to comment when contacted by CNBC, while the Department of Commerce did not respond to a request for comment.

    A spokesperson for the Netherlands’ Ministry of Foreign Affairs said it does not comment on visits by officials. The ministry did not reply to additional questions from CNBC.

    Tensions

    Last week, U.S. Secretary of State Antony Blinken hailed the “growing convergence in the approach to the challenges that China poses,” particularly with the European Union.

    But the picture from the Netherlands does not appear as rosy.

    “Obviously we are weighing our own interests, our national security interest is of utmost importance, obviously we have economic interests as you may understand and the geopolitical factor always plays a role as well,” Liesje Schreinemacher, minister for foreign trade and development cooperation of the Netherlands, said last week.

    She added that Beijing is “an important trade partner.”

    CNBC’s Silvia Amaro contributed to this report

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  • The U.S. wants the EU to be strict with China. But Europe can’t afford it

    The U.S. wants the EU to be strict with China. But Europe can’t afford it

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    U.S. President Joe Biden and Emmanuel Macron, France’s president, met at the White House.

    Bloomberg | Bloomberg | Getty Images

    The United States has stepped up its heavy rhetoric against China, and wants Europe to follow suit. But the bloc can’t quite afford to do the same.

    The U.S. administration has been particularly focused on China, having made the topic a dominant feature of international discussions shortly after President Joe Biden took office.

    Comments and actions have escalated in recent months. U.S. Commerce Secretary Gina Raimondo, for instance, said Wednesday that Beijing has become a growing threat to U.S. companies.

    This message has been shared and acknowledged in Europe. Reports suggested that American officials had told European counterparts to consider using export control restrictions on China. The U.S. Commerce Department was not immediately available for comment when contacted by CNBC Thursday. The U.S. in October imposed restrictions on Chinese access to certain U.S.-developed technologies.

    But while the European Union has dubbed China as a “strategic rival” on different occasions, it is pursuing a different approach from the U.S.

    “The EU is trying to carve out its own China strategy that is distinct from the U.S. This strategy is about ‘de-risking’ the relationship, rather than ‘de-coupling’,” Anna Rosenberg, head of geopolitics at Amundi Asset Management, told CNBC Thursday.

    De-coupling refers to the separation of economic ties between the two superpowers. But, for the EU this is not in its interest.

    Data from Europe’s statistics office showed that China was the third largest buyer of European goods and the most important market for imported EU products in 2021. The importance of China as a market for Europe becomes even more relevant at a time when its economy is struggling from Russia’s invasion of Ukraine.

    “While the U.S. is trying to pull the EU into its direction to distance itself from China, the EU is keen to maintain economic ties to China. This desire is accentuated by the economic fallout from the war which will affect European economies more acutely next year,” Rosenberg said.

    Hosuk Lee-Makiyama, director at the think tank European Centre for International Political Economy, also told CNBC that “there is a lot of suspended demand” in China due to its strict Covid-19 policy and “Europe doesn’t have many markets” to deal with.

    He added that European Council President Charles Michel visited China Thursday probably to try to negotiate being “first in the queue” when Beijing eases its Covid measures further.

    German Chancellor Olaf Scholz also traveled to China in early November.

    “We see the EU-China relationship actually improving in the short term and Michel’s current trip, coming so close after Scholz’s visit to China, is evidence for this,” Rosenberg said.

    This comes at a time when the relationship between the EU and U.S. is turning a little sour. Lee-Makiyama said “the transatlantic relationship is at its worst in 20 years.”

    European officials have complained about state subsidies that the U.S. administration is putting forward to support the adoption of electric cars. The EU said this challenges international trade rules and is a threat to European companies.

    France’s President Emmanuel Macron held talks with Biden on Thursday hoping to bridge some of these differences and avoid a new trade dispute.

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