The New Cold War

Rusija je poslednjih nedelja ispunjavala svoje ugovorne obaveze o snabdevanju gasom, ali je odbila da isporuči dodatne količine za popunu skladišta u Evropi, izjavio je visoki predstavnik Evropske unije za spoljnu politiku Žosep Borel.

„Poslednjih nedelja, uprkos tome što se Rusija strogo pridržava svojih ugovornih obaveza, ruska državna kompanija Gasprom odbila je da izvrši dodatne isporuke za popunu evropskih skladišta, što je dodatno povećalo previranja na tržištu“, napisao je Borelj u svom blogu, uoči sastanka Saveta za energetiku EU-SAD, koji će biti održan sutra, prenosi Sputnjik.

Šef evropske diplomatije naveo je da su cene gasa u Evropskoj uniji šest do deset puta više nego pre godinu dana.

„Cene energenata porasle su zbog globalnih problema sa ponudom i potražnjom. Cene gasa u Evropskoj uniji su šest do deset puta više nego pre godinu dana, što stvara veći pritisak na cene električne energije zbog načina na koji se one određuju na tržištu u Evropi“, objasnio je Borelj.

On je istakao da su teškoće sa isporukama gasa u Evropi izazvane "krizom u odnosima sa Rusijom“.

"Energetika je oduvek bila jedno od najvažnijih geopolitičkih pitanja, a s obzirom na visoke cene i poteškoće u isporukama gasa izazvanih krizom u odnosima sa Rusijom, ova tema je na vrhu našeg dnevnog reda“, napisao je Borelj.

On je ukazao da je neophodno raditi na kratkoročnim izazovima, pridržavajući se pritom dugoročnog cilja prelaska ka nultim emisijama, i dodao da će Savet za energetiku EU-SAD u Vašingtonu ojačati transatlantsku saradnju na tom frontu.

Sergei Lavrov has a reputation for biting sarcasm - and it has emerged the veteran Russian foreign minister tripped up his UK counterpart Liz Truss with a question when they met behind closed doors today.

Truss was pressing for Russia to pull its troops back from Ukraine's borders and Lavrov was arguing that they were on their own national territory, Russia's Kommersant newspaper reports.

"You do recognise Russia's sovereignty over the Rostov and Voronezh regions?" Lavrov asked, referring to two Russian regions.

After a brief pause, the paper says, Truss replied: "Great Britain will never recognise Russia's sovereignty over those regions."

"Great Britain's Ambassador to the RF [Russian Federation], Deborah Bronnert, had to step in, delicately explaining to Ms Truss that the two regions [Rostov and Voronezh] are indeed Russian," Kommersant writes.

China's top offshore oil and gas producer CNOOC Ltd. is preparing to exit its operations in Britain, Canada, and the United States, because of concerns in Beijing the assets could become subject to Western sanctions. #OOTThttps://t.co/QTssLVRLIb

— CN Wire (@Sino_Market) April 13, 2022

China scrambles for cover from West's financial weapons
Spooked by sanctions on Russia, Beijing looks to build on its own international payments system

CISSY ZHOU, Nikkei staff writer
APRIL 13, 2022 06:15 JST

HONG KONG -- The Western-led freeze on half of Russia's gold and foreign exchange reserves after its invasion of Ukraine came as a shock to Moscow -- and an unwelcome surprise to Beijing. The move underscored a brutal truth for China, the world's largest holder of foreign reserves: One day, its international assets could be a tempting target, too.

Despite previous U.S. sanctions on dozens of Chinese corporations including Huawei and ZTE, Chinese policy advisers never believed Washington would go so far as to weaponize the entire world's financial system.

However, that thinking has changed. In the space of a month the United States went from seizing $7 billion from the Taliban regime in Afghanistan central bank reserves to sanctioning Russia and freezing -- according to the country's Finance Ministry -- around $300 billion of its $640 billion in gold and forex reserves.

As of January, China was holding just over $1 trillion of its roughly $3 trillion worth of foreign reserves in U.S. Treasurys, according to the U.S. Department of the Treasury. More than half of China's reserves are denominated in dollars, according to the latest data published by the State Administration of Foreign Exchange (SAFE), which put the figure at 59% as of 2016. The wisdom of this arrangement is now the subject of much internal debate in China, and efforts to sanction-proof its financial system could have far-reaching effects on the global economy.

"We are shocked," Yu Yongding, a prominent economist and former adviser to the People's Bank of China, told Nikkei Asia, referring to the freezing of Russia's reserves. "We never expected that the U.S. would freeze a country's foreign currency reserves one day. And this action has fundamentally undermined national credibility in the international monetary system.

"Now the question is, if the U.S. stops playing by rules, what can China do to guarantee the safety of its foreign assets? We do not have an answer yet, but we have to think very hard."

When the West reacted to Putin's unprovoked invasion of Ukraine by deciding to cut off seven Russian banks from the SWIFT messaging system for international payments -- a move generally considered to be the "nuclear option" among financial sanctions -- China was "a little bit surprised," although it had anticipated the possibility, former Chinese officials and government advisers told Nikkei.

China thought Russia accounting for 2% of global trade would have made the West more cautious about sanctions. Combined with the freezing of Russian reserves, the decision proved that Washington was willing to weaponize the global financial order in the name of geopolitics. China, clearly, would need to prepare a Plan B.

"Sanctions on Russia are a textbook example for China," said He Weiwen, a former Chinese diplomat to the U.S., currently a senior fellow at the Center for China and Globalization (CCG), a Beijing-based think tank. "If the U.S. intends to impose devastating sanctions on China, this may be the way. So we must be prepared."

The debate over an alternative to the U.S.-led dollar-based financial order had already begun in 2012 when Iranian banks were disconnected from SWIFT. Then came the threat of SWIFT sanctions on Russia in 2014 following its conquest of Crimea and part of eastern Ukraine.

China's closest brush with being disconnected from the global financial system came in 2020 when Beijing imposed a draconian national security law on Hong Kong, and Chinese banks were urged to switch away from SWIFT. While no Chinese banks were sanctioned as a result, the discussion has lingered about what China could do if it were to be booted out.

So far, alternatives are scarce. In 2015, China launched its own Cross-border Interbank Payment System (CIPS), which it said was to boost the global use of the yuan. The policy tool was widely viewed as an alternative to replace the SWIFT patchwork.

However, CIPS has advanced slowly, mainly due to Beijing's capital control economic model, which has resulted in a yuan that lacks full convertibility and is incompatible with CIPS' stated goal of internationalizing the currency.

Now, as geopolitical tensions rapidly intensify, Chinese experts are urging Beijing to diversify its dollar-denominated assets, accelerate yuan internationalization and the application of the digital yuan in cross-border payments, as well as endeavor to dismantle the dollar-centered financial hegemony in the long run.

Spoiler:

what can China do to guarantee the safety of its foreign assets? 

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Talason wrote:sa druge strane niko nije zamrzavao sredstva usa kada su napadali razne zemlje širom sveta

beatakeshi wrote:Aman, kakvi su to argumenti?!

Mór Thököly wrote:

beatakeshi wrote:Aman, kakvi su to argumenti?!

Simetrični

It’s time for a new Bretton Woods
Free and fair global markets require shared values
Rana Foroohar 7 HOURS AGO


Janet Yellen, the US Treasury secretary, did something important and, for the most part, underreported last week. She relinked trade to values.

In an address at the Atlantic Council in Washington, the secretary called for a new Bretton Woods framework and a revamp of the IMF and World Bank institutions, both of which are holding their annual meetings this week.

She also made clear that Vladimir Putin’s war in Ukraine and China’s failure to join the US and more than 30 other nations in sanctions on Russia was a pivot point for the global economy.

In the future, US trade policy would no longer involve merely leaving markets to their own devices, but rather would uphold certain principles — from national sovereignty and a rules-based order to security and labour rights. As she put it, America’s objective should be not just “free but secure trade”.

Countries shouldn’t be allowed to use their “market position in key raw materials, technologies or products to have the power to disrupt our economy or exercise unwanted geopolitical leverage”. That was clearly a nod to Russian petropolitics but could just as easily cover Taiwanese chip manufacturing or China’s hoarding of rare earth minerals or, during the pandemic, personal protection equipment.

Yellen coined a new word for this post-neoliberal era: “friend-shoring”. The US would now favour “the friend-shoring of supply chains to a large number of trusted countries” that share “a set of norms and values about how to operate in the global economy”. It would also seek to create principles-based alliances in areas like digital services and technology regulation, similar to last year’s global tax deal (which she spearheaded).

This isn’t America Alone or even America First. But it does acknowledge the existence of a political economy in which free trade can only really be free if countries are operating with shared values, and an even playing field.

That’s both different — and, in some crucial ways, not — from the neoliberal era that is passing. The term “neoliberalism” was first used in 1938, at the Walter Lippmann Colloquium in Paris, a gathering of economists, sociologists, journalists and businesspeople who wanted to find a way to protect global capitalism from fascism and socialism.

It was a moment that chimed with our own in many ways. Europe had been pulled apart by the first world war. A decade of easy monetary policy up to 1929 had been unable to paper over major political and economic changes that had created huge rifts in societies. Labour markets and family structures were changing. A pandemic, inflation, then economic depression, deflation and trade wars had left the continent economically wrecked.

Neoliberals wanted to fix these issues by connecting global markets. They believed that if capital and trade were connected via a series of institutions that could float over individual nation states, the world would be less likely to descend into anarchy.

For a long time, this idea worked, in part because the balance between national interests and the global economy didn’t get too far out of whack. Even during the Reagan-Thatcher era in the 1980s, there was still a sense that global trade in particular needed to serve the national interest. As US president, Ronald Reagan may have been a free-trader but he used tariffs against Japan and also supported industrial policy (as did, and do, most other Asian and many European nations). 

In the US, that began to shift during the Clinton administration, which orchestrated a series of free-trade deals culminating in the entry of China into the World Trade Organization in 2001, in the hope that the country would become freer as it got richer. That, of course, didn’t happen. And now, finally, leaders everywhere are acknowledging the reality of the “one world, two systems” problem.

Yellen says she hopes that “we don’t end up with a bipolar system”, particularly given how much China itself has benefited from the neoliberal system. “But real problems have emerged,” she acknowledges. “China relies in many ways on state-owned enterprises and engages in practices that I think unfairly damage our national security interests.” Multinational supply chains, “while having become very efficient and excellent at reducing business costs, have not been resilient”. Both issues, she says, must be addressed.

Today’s crossroads is not unlike the one that faced the neoliberal thinkers who crafted the original Bretton Woods system. They started not with an idea of laissez-faire markets operating for their own sake, but rather with a very human problem — how to patch together a war-torn world to make a safer, more cohesive society, one in which freedom, liberty and prosperity would be guaranteed. Markets couldn’t do it alone. New rules were needed.

That’s just where we are now. One may argue, as I would, that a pendulum shift is overdue. Global capitalism has, over the past 20 years in particular, simply run a bit too far ahead of the domestic concerns in some individual nation states. Countries with wildly different political, economic and even moral frameworks have not all played by the same global rules. Under those circumstances, fair and free markets begin to break down.

The process of crafting a new Bretton Woods has only just begun. But starting with the values that liberal democracies want to uphold is a good place.