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Will Italy leave the European Union

Following a decrease of 0.1% in the third quarter of 2018, Italy’s economy contracted of 0.2% in the final quarter of the same year. As such, Italy is now officially in technical recession; just when it seemed to be recovering from the effects of the debt crisis. This has sparked an intense political debate and has cast doubts over its economic prospects. But what does this actually mean for Italy and the EU?

Technical recession: the domestic debate

The news that Italy has entered into technical recession have immediately triggered a mutual-blaming quarrel between political forces. The governing coalition formed by the Five Star Movement and the League attributed the fault to the former ruler, the Democratic Party; who, on its part, accuses the economic policies of the current executive.

In reality, the situation is way more complex, and the responsibility cannot be ascribed to a single reason. As in all economic issues, there are multiple factors in place whose interplay determines the growth on a given period; therefore, it is difficult to clearly find out who or what is responsible. Economic performance is a long-term issue. Amazon’s CEO Jeff Bezos once said that “if we have a good quarter it’s because of the work we did three, four, and five years ago. It’s not because we did a good job this quarter”. His sentence does also apply to states. So, part of the responsibility can be imputed to the previous governments who, in spite of having managed to reassure the markets and bring Italy back on the path to a limited growth, failed to reduce the country’s huge debt. But it is equally true that the current executive, in power since June 2018, has raised the concerns of investors with the economic policies it has implemented or proposed.

First, it attempted to adopt an expansionary fiscal policy to boost growth by increasing public expenditures. However, this alarmed the EU Commission: even though Italy’s budgetary plan did not break the Union’s rules, it was still considered too risky as it would have caused a fiscal deficit and increased the already enormous public debt. This resulted in a standoff that was ultimately solved when the Italian government partially backed down and reduced the planned spending. Yet, the episode caused stress on the financial markets and harmed trust among investors. Another controversial topic in the economic policy of the incumbent government is the introduction of a basic income for unemployed people: it would increase public spending, but its future benefits are dubious.

Technical recession: the external factors

Apart from the policies of this government or the previous ones, there are many other external factors that the executive cannot control and that probably have had a more important impact on Italy’s economic performance. The country’s GDP contractions comes amid a global slowdown. The growth of the EU as a whole has been limited to 0.3% in the final quarter of 2018. There are some issues on trade as well. China, the world’s second-largest economy and a non-negligible export destination for Italy, is also growing at a slower pace than before. Problems exist also with another and more important trading partner: the United States. President Trump’s protectionist policies have surely had a negative impact on the EU and on Italy. At the end of May 2018 the US imposed 25% tariffs on steel and 10% ones on aluminium. In 2016, Italian metal exports to the US were worth almost 2 billion dollars. This is not an impressive figure, but more important industries could soon be hit and this eventuality could have had an impact. Trump is threatening to put tariffs on cars, that always in 2016 represented 9.5% of total Italian exports to America for a total value of more than four billion dollars. Again, this is not an extraordinary amount, but the spill-over effects on related industries should also be considered. The EU is trying to reach a deal on trade with the Trump administration, also by menacing to impose counter-tariffs wort 23 billion dollars on US products, but in case it fails Italy will surely be negatively affected. The looming possibility of a no-deal Brexit in recent months might also have had a role. The UK is a more important destination for Italian export than China and the US, and the prospect of a no-deal scenario may have had an impact, even though it is still too early to evaluate this. But the most important point probably concerns energy supplies. Italy is dependent on petroleum imports, and the price of oil surged in 2018 to reach the climax at the beginning of October, thus covering much of the period in which the Italian economy has contracted. The price went down since then, and the effects will probably be felt in the coming months.

These are only some of the numerous factors that may have determined Italy’s recession in the second half of 2018. What is important to understand is that the issue is very complex and easy explanations are not effective indicators of the reasons behind the GDP contraction. But what about the future prospects for Italy? Will it leave the Eurozone?

A prelude to leaving the Euro?

Since the debt crisis of 2011 and the subsequent austerity policies, Euroscepticism has become common in Italy’s political discourse. EU institutions were criticized and perceived as technocrats at the service of financial interests, and some even advocated for Italy to abandon the EU or at least the Euro. The most recent recession, albeit marginal by now, might reopen the debate, especially if it were to continue. After all, the two ruling parties were among the most vocal anti-Euro political forces, even though they took more moderate positions later on.

This is a political choice that Italy will have to make, but it will have of course major economic implications. According to the optimum currency area theory, it is economically beneficial to have a single currency in case the region is strongly integrated by intense trade exchanges and a great mobility of production factors. So, a country evaluating whether to enter or leave a common currency area should assess its degree of economic integration with other participants. As a matter of fact, the higher the level of integration, the greater are the benefit and the lowest are the costs of renouncing to monetary sovereignty to have a single currency. For what concerns the benefits, the main advantage of a common currency is to eliminate transaction costs due to exchange and interest rates and their variation. If the economies are closely intertwined with an elevated trade volume and a strong mobility of workers and productive factors, having different currencies brings very high costs that partly eliminate the gains of trade; and adopting a single currency removes these costs. But having a common currency also brings its own costs, because it makes it impossible for states to use monetary policy to counter asymmetric economic shocks, namely recessions that hit only that country but not others. If it has its own currency whose value can freely float, its automatic depreciation will boost export and counter the economic slowdown. But if it has renounced to its monetary sovereignty by adopting a common currency like the Euro, this mechanism is impossible. However, a high degree of economic integration minimizes this inconvenience, as it also allows to reduce the recession’s effects. If the country’s economy is closely intertwined with that of its fellow partners, the diminution of the price of its products will encourage others to buy them, thus increasing its exports. Similarly, if there is a high mobility of workers, then jobless people will be able to emigrate to other countries thus re-equilibrating the domestic labour market. In short, if the economies are strongly integrated, the benefits of having a single currency are high and the costs are low; so, it is wise to adopt the common currency. Now, is it the case of Italy?

For what concerns trade, in 2016 Italy’s exports to Eurozone alone was worth 192 billion dollars, over a total amounting to 450 billion. In the same year, its imports from other Eurozone countries amounted to 207 billion on a total of 397. This shows the importance of its exchanges with the other countries using the Euro. Moreover, its economy is also integrated with the Eurozone via mutual investments, expats, joint-ventures, services and others. If it abandoned the Euro, then it would lose all the advantages of having the same currency as its main economic partners. In addition, if it came back to the lira it would have to face the short-term shock. The currency would rapidly depreciate, and while it is true that this would boost export, it would also bring back consistent transaction costs. Moreover, inflation would erode the people’s purchasing power and there would be deep consequences on its debt with soaring spread and strong difficulties to obtain new loans. The situation would surely stabilize with time, but all in all, this does not seem to be an economically-convenient move for Italy.

Conclusion

The fact that Italy has entered in technical recession is surely no good news for it and the EU. Blaming each other at the political level will not solve the issue, also because there are many factors at play and responsibility cannot be fully attributed to anyone. Much will depend on future economic developments; but the contraction is limited by now and, in spite of the Eurosceptic positions of the current government, there is nothing that indicates that Italy will leave the Eurozone anytime soon.

The geopolitics of the Indian Ocean

The Indian Ocean is an immense maritime space of great geopolitical and geoeconomic importance. It is a crossroad for sea trade that connects the advanced economies of the East and the West. At the same time, there are also many factors that threaten its stability. These are often closely related with the international dynamics of the Asia-Pacific, to the point that the two areas can be considered as single reality.

West: Challenges and Opportunities for Africa

On its western part, the Indian Ocean touches the shores of the vast African continent. This creates a peculiar mix of opportunities and challenges for coastal states like South Africa, Mozambique, Madagascar, Tanzania and Kenya. Thanks to their position, they can easily reach important economic areas such as India, the Middle East, Europe and the Asia-Pacific. Engaging in maritime trade with these regions could provide a major economic boost to these African states and improve the living conditions of their citizens. In addition, emerging powers like China and India are heavily spending in Africa to access its much-needed natural resources and exploit the opportunities for high investment returns. Yet, in the case of China, this also raises concerns. While African states welcome Chinese investments as they come with no legal precondition on the respect of civil and human rights, some worry that its economic penetration might result in political leverage and in a form of economic neo-colonialism.

There are also two states whose situation is particular. The first is Ethiopia, the powerhouse of the Horn of Africa. As other states along the continent’s eastern coast, it can greatly benefit from international sea trade, but unfortunately it is a landlocked country. This largely explains the recent deal it reached with Eritrea to settle their longstanding conflict: turning Eritrea into a friend would enable Ethiopia to access the sea and engage in maritime trade along one of the busiest routes in the world. As a matter of fact, the Red Sea is an obliged passage for ships sailing between Europe and Asia. Ethiopia has even expressed its intention to build a navy, which is a clear sign of its seafaring ambitions.

The second peculiar case is Somalia. In theory, it is also poised to take advantage from its position on the Indian Ocean, but in practice it is a failed state ruled by armed groups where the central government has not enough power to pursue such kind of maritime policy.

This raises the issue of the threats to sea trade along the Western shores of the Indian Ocean. Somalia is part of the problem, as it has become a hub for piracy. The difficult economic conditions have pushed many Somalis to start attacking cargos navigating along the country’s coasts. This became a serious problem that prompted the international community to organize a military operation to patrol the Somali waters and combat piracy. These efforts succeeded in securing the area and in reducing the number of attacks, but as long as the socio-economic conditions of coastal population do not improve, the risk of piracy will remain.

Then, there are two important chokepoints that connect the Indian Ocean with the Mediterranean via the Red Sea, which can be considered as a peripheral area of the Indian Ocean putting it in communication with Europe: first, the Bab-el-Mandeb Strait; second, the Suez Canal. Both passages are essential for sea trade, and any interruption would have a major impact on the global economy.

North: India & Hormuz

Located to the North, India is certainly the main regional player. A large and fast-growing economy, it is one of today’s most important rising powers and its influence is growing worldwide. New Delhi considers the Indian Ocean as “its own” maritime space, a vector for power projection and economic growth but also an area to be preserve from the intromissions of hostile powers for the sake of national security. India can enormously benefit from its position protracting towards the ocean midway along the vital East-West sea lanes, and in fact it already taking advantage from it. At the same time, by building a powerful navy it can extend its power abroad and protect its interests. As a matter of fact, New Delhi is concerned over the presence of foreign actors in the Indian Ocean, most notably Beijing. The PRC is indeed investing heavily in the region on the basis of its Maritime Silk Road plan, aimed at creating a string of ports to sustain trade with Europe. This is of central importance for China’s economy, which relies on sea trade for exporting goods and importing hydrocarbons; but some consider that the real objective of the project is to extend its influence in the region by economic means. In a context of broader Sino-Indian rivalry, New Delhi worries about Beijing’s presence in countries like the Maldives or Sri Lanka, considering it as a potential threat to its security. Similarly, India also sees unfavorably the China-Pakistan Economic Corridor that will connect the PRC with the ocean via the port of Gwadar.

Again, there is also a strategic chokepoint to consider: the Hormuz Strait, which connects the Persian Gulf with the Indian Ocean. This passage is vital for tankers carrying Middle Eastern oil to Europe and Asia and any interruption would have catastrophic economic consequences. Unfortunately, this is not a remote event: in case of a serious standoff between the US and Iran, the Strait would soon become a major flashpoint, since Teheran’s deterrence strategy is largely based on blocking the Strait; which it can do with relative ease due to geographic reasons.

East: the Indo-Pacific

To the East, the Indonesian archipelago and Australia separate the Indian Ocean from the Pacific. Similarly to Somalia, the waters around Indonesia had become infested with pirates in the recent past; and the phenomenon has been reduced only thanks to multilateral military and development efforts. Yet, if the living conditions of coastal populations deteriorated again, the problem may arise once more.

That said, Indonesia and Australia benefit from their position between the two oceans. It allows them to project their power in both directions, to reach the large European and East Asian markets and finally to access Africa with its resources and its potential for investments. Indonesia is particularly relevant in this regard: it is another emerging economy with a great potential, and its virtually controls all the major straits connecting the two oceans: Sunda, Lombok and most importantly Malacca. Indonesia’s growth is largely due to its position on these sea lanes, and Singapore has based its incredible wealth on it. Again, these passages are essential for maritime trade between Europe and Asia as well as for the latter’s energy security; and would become hotspots in case of war, notably between the US and China. If the US Navy closed them, it could seriously harm the tenure of the PRC’s economy. At the same time, they are also essential for American allies like Japan, South Korea and Taiwan; meaning that the US will use its naval power to ensure no hostile power blocks the Straits.

The eastern part of the Indian Ocean plays a fundamental role for maritime security; and the importance of the juncture between the two Oceans is leading many scholars, analysts and policy-makers to consider them as a single maritime region: the Indo-Pacific. The Indian Ocean is extremely important for states in East Asia because it represents the necessary passage to reach Europe; and the security dynamics of the Indian Ocean and of the Asia-Pacific are closely related. China’s New Silk Road initiative, the forays of its Navy in the waters of the Indian Ocean, the Sino-Indian competition, the free flow of oil from the Gulf and piracy in Indonesia are all strategic issues that tie the two oceanic regions. This explains why the concept of Indo-Pacific is also taking importance in American strategic discourse: the economic and security dynamics of the two areas are so intertwined that they must be considered as a single space. Other powers are applying the same logic, and this is having practical consequences: the Quadrilateral Security Dialogue uniting the US, Japan, India and Australia indicates their willingness to strengthen their political and military cooperation to face shared security challenges like the rise of China; and it represents the emergence of the Indo-Pacific as a political and strategic reality.

Conclusion: an Indo-Pacific future?

Many scholars believe that “the future is Asian”, which is even the title of a recent book by Parag Khanna. But Asia’s rise largely depends on trade with Europe and on oil imports from the Middle East across the Indian Ocean. As such, Asian states have major strategic concerns in this area. China, Japan and South Korea need to keep the sea lanes open. India is an emerging power whose influence is growing across the world via the sea. Indonesia is the pivot connecting the Pacific and the Indian Oceans. The United States, the world’s primary security provider, is facing many challenges in both Oceans and is committed to preserving the freedom of navigation. Moreover, the interests of the various stakeholders in the area are sometimes colliding, such as in the case of China and India. As such, with Asia’s importance growing every year in both economic and political terms, the Indo-Pacific is also gaining primary strategic relevance.

That’s all for today guys, thanks for watching another KJ Vid. What are your views on Italy’s recession. Will Italy recover or implode and potentially leave the EU. We would love to hear your views in the comments below especially if you are from Italy.

Please also consider supporting us on Patreon so we can produce more of these geopolitical reports and help to keep us independent from political influence.

That’s all for today, see you next time.

Stabalizing Iraq and Syria

After years of war, it appears that Iraq and Syria are gradually stabilizing. The government forces supported by the US and Russia respectively are restoring their control over the two countries, and the self-proclaimed Islamic State has lost virtually all of its territory. Yet, this may just be an ephemeral peace. The social and economic foundations of the two states remain shaky at best, and many issues are still unsettled; notably the role of Sunni Arabs and the future of the Kurds. Without a comprehensive action to solve such questions, peace in Iraq and Syria will not be achieved on a solid basis.

I’m your host Kasim, welcome to another KJ Vid. In this video we will discuss the future of Iraq and Syria. Just before we begin, we would like to invite you to our Patreon account where you can get the full reports and other perks for our content. Supporting us on Patreon helps to keep our channel independent and create more videos.

Iraq and Syria in chaos

Iraq has been ravaged by conflict with practically no interruption since the US invasion in 2003. The fall of Saddam Hussein’s regime destabilized the country and resulted in a long insurgency against the occupying American forces. Progress in state-building was slow and limited in scope. The US ultimately withdrew its troops from the country in 2011 by a decision of then-President Barack Obama; but Iraq was still too weak to ensure the authority of the central government over all of the territory. In the same year, the Arab Spring broke out all over the Middle East. In Syria, it rapidly degenerated into a violent civil war opposing the loyalists to President Bashar al-Assad and the rebels; a broad term indicating various armed groups of different affiliation, ranging from those who favoured Western-like democracy and jihadist groups.

Things got more complicated in 2014 with the rise of a Sunni extremist group that would later become known as Islamic State. Exploiting the chaos that reigned in Syria due to the civil war and the power vacuum caused by the withdrawal of American troops from Iraq, it took control of large swathes of lands in the northern parts of the two countries. In particular, it seized important facilities such as oil fields and dams in Iraq and it even threatened Baghdad. This prompted the US to organize a multinational coalition to support the Iraqi government in its fight against the terrorist group by deploying special forces and by conducting air strikes. Soon, they also started operating in Syria, where the conflict was about to turn into a major international matter involving various foreign powers that supported the government or the rebels to pursue their own interest.

Russia intervened actively since 2015 to sustain Bashar al-Assad, its main ally in the area. Western powers assisted the rebels and bombed facilities to punish the loyalists for allegedly using chemical weapons against civilians. Turkey, who opposed the al-Assad government, became directly involved in 2016 with the main objective of preventing the formation of some kind of Kurdish territorial entity. As a matter of fact, the Kurds had rapidly proved to be an effective combat force in fighting the IS, and received support from the American-led coalition. This allowed them to take control over a large strip of territory at the border with Turkey, who feared the area would become independent or at least a rear base for Kurdish fighters operating against its territory. As such, it conducted several military operations to secure the lands along its borders and expel Kurdish forces. Iran also took part to the war by sending weapons and troops in support of al-Assad on the basis of the common Shia faith and of converging geopolitical interest. To counter its growing influence, Israel also carried out airstrikes in Syria against Iranian outposts.

Now, it seems that the two intertwined conflicts are about to end. In Syria the government is slowly restoring its authority and the Islamic State has lost almost all of the territory it controlled there and in Iraq. Yet, many issues remain unresolved, notably the role of Sunni Arabs and the Kurdish question.

Sunni Arabs: excluded from power

Sunni Arabs belong to the largest of the two main branches of Islam, the other being the Shias. But even though they are a majority in the Ummah as a whole, their situation in Iraq and Syria is particular.

For what concerns the former, Sunnis are indeed a minority. Most Iraqis are Shias, which also means that they are politically closer Iran, the main centre of Shiism. Yet, Sunnism had its glorious days in the country. During the Middle Ages, Baghdad was the heart of the mighty Abbasid Caliphate, from which today’s Islamic State took many symbols. More recently, Sunni Arabs formed the ruling elite in Iraq during the years of Saddam’s rule. His Ba’athist regime was dominated by Sunnis, which meant that in Iraq a minority was ruling over the majority. But the situation was reversed after Saddam was overthrown following the US invasion in 2003. Since Sunnis had formed the backbone of Saddam’s dictatorship, they were removed from their posts and largely excluded from power to the benefit of the Shias. At that point, the Sunni Arab community became the main pool of recruitment for the anti-American insurgency and then for the Islamic State. The situation has improved since then, but properly integrating Sunnis in Iraqi political life remains a central matter to stabilize the country.

The situation of Sunnis in Syria is the opposite and resembles that of Iraq under Saddam, albeit inverted. Sunni Arabs form the majority of Syria’s population, but the governing elite belongs to the Alawite movement, which is a sect of Shia Islam. This generated much resentment among Sunnis, who felt politically emarginated. As a result, many of them joined the ranks of the rebels when the uprising started in 2011. Now, the government seems close to prevailing, but it will have to establish a more inclusive form of governance to ensure peace in the long term.

The Kurds: a stateless people

In the case of the Kurds, the problem is slightly different. Here, it is not about a religious divide, but rather an ethnic and linguistic one. The Kurds are mostly Sunni and speak their own separate language, and as a single people they count around 40 million individuals. They live in a region located at the crossroad of Syria, Turkey, Iran and Iraq. Yet, their demands for an independent state have systematically been frustrated, and today they remain a stateless nation with little prospects of getting their own independent country.

Yet, they play an important political role. The lands where they live include the oil-rich areas of northern Iraq. The Kurdistan’s Workers Party, or PKK, has been waging a decade-long insurgency against Turkey to obtain independency or at least autonomy for Kurdistan; but Ankara has always firmly opposed their demands without hesitating to use violence and there is no indication that things will change anytime soon. In Iraq, several tens of thousand Kurds were killed by Saddam’s regime during the ‘80s in what is known as Anfal genocide. Later on, Iraqi and Syrian Kurds became America’s most effective on-the-ground allies in the fight against the Islamic State. But this angered Turkey out of fear that Kurdish-controlled territory could turn into an independent state or a base for operations on Turkish soil. As such, Ankara dispatched its military several times to secure Kurdish areas along its borders. However, this has led to a clash with the US, in a moment when bilateral relations are already strained. Washington has been supporting the Kurds and needs to reward them somehow; but any concession implying autonomy would upset Ankara, who is also an important ally. At the same time, Turkey cannot defy the US because the political and possibly economic retaliation might be too harmful. This has resulted into a stalemate that remains unresolved.

As in the case of Sunni Arabs, solving the Kurdish question will be of central importance for ensuring a long-lasting peace in Iraq and Syria, but finding a common agreement is even more difficult in this case: it is not a mainly domestic matter, but a transnational one involving various stakeholders, which makes finding a solution an even more complex endeavour.

Conclusion: ensuring inclusivity

As we have seen, conflict resolution in Iraq and Syria demands to integrate both Sunni Arabs and Kurds in the social and political life of the two countries. This is essential for granting peace in the long term: if Sunnis are not adequately represented, the Islamic State or a similar organization may soon rise again; while the Kurds may take arms and start a large-scale insurgency that would be difficult to tackle. Unfortunately, actually doing so is not easy. Both groups have powerful enemies and are internally fragmented, and other players can exploit these divisions for their own interests. As a matter of fact, major powers like the US, Russia, Iran and Turkey all have their own interests in the area; which is another complicating factor. In addition, given the large number of tribes, parties, armed factions, ethnic groups that live in Iraq and Syria, finding an agreement that satisfies everyone is extremely difficult. But to prevent the emergence of new jihadist groups or a new violent phase of the Turkish-Kurdish conflict and to ensure the stabilization of Iraq and Syria, a solution must be found in this sense.

That’s all for today guys, thanks for watching another KJ Vid. What are your views on CPEC, is it a good thing or bad thing for Pakistan? Is it likely to succeed or fail? We would love to hear your views in the comments below.

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The rise of Indonesia

Indonesia is the world’s largest Muslim country by population and is one of South-East Asia’s most dynamic economies.

Located at the juncture between the Pacific and Indian Oceans, it has the potential to become a leading regional power.

However, its location is also a source of considerable challenges that Indonesia will have to manage attentively in the coming years.

Indonesia’s Geography

The very name Indonesia is revealing: it comes from Greek and means “Indian Islands”. As a matter of fact, Indonesia is an archipelago located at the eastern edge of the Indian Ocean, and this is a key factor that has shaped its geopolitical thinking.

In terms of dimension and configuration, Indonesia is a vast but fragmented state. It counts over 18,000 islands; the most important of which are Sumatra, Java, the southern section of Borneo, Sulawesi and the western part of New Guinea.

These islands, covered by a thick rainforest rich in wildlife, have a volcanic origin. This means that Indonesia is vulnerable to seismic events and tsunamis; something that has a negative impact on its human security environment.

The country extends over almost 8 million square kilometres if we take into account its maritime space including the Exclusive Economic Zone, or EEZ. Combined with its archipelagic nature, this makes it difficult for the central state to exert its power over all the territory; also, because fragmentation is reflected in demographic terms: the population exceeds 260 million citizens divided in more than 300 ethnic groups; and this has important implications on the country’s geopolitics.

Moving on, Indonesia’s position has a deep impact on its foreign affairs. Located at the crossroad between the Indian and Pacific Oceans, Indonesia plays a pivotal role for international maritime trade.

Sumatra is the southern boundary of the Malacca Strait, one of the world’s busiest waterways and a strategic chokepoint. But Indonesia also controls other important straits; notably Sunda, Lombok and Makassar. These are all essential for trade between Europe and Asia, but also for the latter’s energy security.

Most of the oil it consumes transits through these narrow passages; which explains their geostrategic relevance. Indonesia hugely benefits from its role as a gateway between the two oceans, but this also brings considerable strategic problems because foreign powers have always been trying to control the archipelago.

This continues today: China, the US, Japan and India all have major interests at stake in the Indonesian Straits, and are trying to expand their influence on the country. Finally, the archipelago also hosts important natural resources like oil, gas, minerals, timber and fish. These commodities are a source of wealth for Indonesia, but also another driver for the presence of external powers.

Indonesia’s Geopolitical Thinking

Indonesia’s nature as an archipelago and its “crossroad location”, a concept known as posisi silang, have shaped its geopolitical thinking since it gained independence from the Netherlands in 1949. Indonesia had to assert its authority over its surrounding seas to ensure its prosperity and security. A first step in this sense was the 1957 Djuanda Declaration, by which Indonesia claimed its sovereignty over all the maritime areas around the archipelago; especially those located between its main islands like the Java and Flores seas.

This stance was later recognized internationally by the UN Convention on the Law of the Sea in 1982. The Djuanda Declaration was the first step towards a more comprehensive doctrine called “Maritime Archipelagic Outlook”, or Wawasan Nusantara Bahari. First formulated in 1966, this Doctrine still stands today. It considers that Indonesia’s location leaves it vulnerable to foreign meddling and that its fragmented geography endangers the unity of the state; but it is also the basis for justifying Indonesia’s leading regional role.

In geostrategic terms, the doctrine considers Java and its sea as Indonesia’s core, which must be protected from external threats. Applying a mandala logic, it identifies three concentric layers that are the base of Indonesia’s foreign and defence policy.

The innermost circle is Indonesia itself, the middle one extends to South-East Asia and Australia, while the external zone includes the rest of the world. The sea is equally important from a geoeconomic point of view.

Indonesia is a trade crossroad, it has an important fishing industry and its waters host important hydrocarbon deposits, estimated to hold 3.7 billion barrels of oil and 2,900 billion cubic feet of gas. As such, securing the sea has a primary importance for the country’s economy.

Finally, in geopolitical terms, it considers the sea as the space connecting the various islands that form its geographically and culturally fragmented territory. This configuration makes separatism easier, and therefore is seen as a threat to the unity of the state; even though it is also argued that the separation of the different national groups reduces the risk of inter-ethnic conflict. Moreover, the sea is the mean by which foreign powers have reached the archipelago in the past.

Consequently, Indonesia believes that controlling the sea is a precondition to preserve the unity and the independence of the state. In this sense, it seeks to achieve resilience both at home and in neighbouring states, assuming that Indonesia is safe only if the archipelago and the surrounding countries are stable.

Yet, Indonesia must face several challenges. Apart from numerous secessionist movements, some of which have been successful, it must also cope with illegal fishing, smuggling, unauthorized immigration and piracy. The latter was once a major problem, but it has been greatly reduced thanks to multilateral efforts and by improving the living conditions of coastal areas.

Terrorism is also a matter of concern, and several attacks have already taken place.

In economic terms, even though Indonesia’s national strategy emphasizes the cohesion of the state and aims to limit foreign meddling, most of its hydrocarbons and of its resources in general are exploited by foreign corporations. In addition, there is a great disparity between urban areas like Jakarta and the rest of the country, especially outside Java.

Indonesia’s power

Indonesia can be considered a middle power, but it is definitely a rising one. Its GDP is the largest in South-East Asia, and in 2017 it amounted to 3.25 trillion measured in US dollars of the same year in terms of Purchasing Power Parity. This ranked the country as the world’s 7th largest economy, and it is projected to become the 4th by 2050. Indonesia’s steady 5% growth rate is helped by low inflation, a budget deficit under control and a public debt representing just 29% of the GDP. Moreover, saving is quite high at around 32% and investments are flowing in, thus paving the way to a continued growth. The trade balance is positive, driven by the export of commodities like oil, gas, coal, metals and palm oil; but also many other low added-value products such as clothing and electric components. Always in terms of PPP, its per capita GDP reached 12,700 dollars in 2017: a still low figure, but a remarkable progress from past levels. Unemployment is only 5.5%; yet, agriculture still retains 32% of the workforce and around 10% of Indonesians live below the poverty line, with 21% remaining at risk. The country also has real problems in terms of corruption and inequality, and must face notable environmental challenges: rising sea levels, deforestation, and extreme weather are already causing notable losses to its economy and are menacing its human security.

Indonesia’s armed forces are also evolving. It spends about 0.8% of its GDP on defence; and in spite of the emphasis given to the sea, the Army has a greater importance than the Navy. Land forces, notably marines and special forces units trained for asymmetric warfare, are indeed important for such a fragmented country; but the Navy remains underdeveloped. It mainly relies on corvettes, and having only 8 frigates and less than 5 diesel-electric submarines seems insufficient, even though it has a good park of minesweepers and there are talks to buy more subs. Similarly, the Air Force only counts around 40 fighters and some attack aircraft. These two branches have quite advanced equipment and are better than those of most ASEAN countries, but Indonesia will need to expand them to affirm itself as a regional power and to cope with challenges like China’s rise.

Conclusion: Indonesia’s foreign policy today

The maritime dimension, control over the straits, internal stability, autonomy from foreign influences and an active regional role have been the cornerstones of Indonesia’s foreign policy for decades. In 1955, Indonesia held a conference in Bandung that marked the birth of the non-aligned movement of states that did not want to side with neither the US nor the USSR.

Today, it still keeps this stance. Regionally, it supports integration through the Association of South-East Asian Nations, or ASEAN; and it aspires to become its leader. In its relations with external powers, notably the US and China, it attempts maximizing its autonomy by keeping ties with all of them. Indonesia maintains good political and trade relations with both, but it is worth mentioning that it hosts a significant Chinese diaspora which represents around 1% of the population and runs many successful business activities. At the same time, it also cooperates with other powers. Japan and India are important economic partners and security cooperation is growing, especially with the latter. Indonesia also trades with European countries; which are also important arms suppliers.

It is expected that Indonesia’s foreign policy will continue along this line in the next future: trying to maintain its partnership with multiple countries so to maximize its benefit and freedom of action. But in the evolving international scenery of the Indo-Pacific, where the US maintain a strong presence all while China and India are rising, it will be hard for Indonesia not to take sides.

Geopolitics of Brazil

Brazil is South America’s emerging power. It is the largest and most populous country in the continent; and it benefits from a favourable geographic position, important natural resources and a growing economy. As such, it is taking a more active international role both in the region and beyond. Yet, it must also face notable challenges; notably corruption, criminality, inequality and others; all of which may undermine its rise as a great power.

Geography and Brazil’s rise

Like any other country, Brazil’s geopolitics can be examined as a combination of three factors: dimension, configuration and position.

Brazil covers a total area of about 8,515,000 square kilometres, making of it the 5th country in the world in terms of size. This puts Brazil in a favourable position to dominate the continent, as it can access any region with relative ease. Similarly, its 7,500 kilometres-long coastline on the Atlantic Ocean enables Brazil to easily project its power abroad and to engage in lucrative maritime trade.

In terms of configuration, Brazil’s territory can roughly be divided in two parts. The north-west is centred on the Amazon river basin and its vast rainforest, the largest in the world and a real treasure in terms of biodiversity. The south-east is made up of ridges and mountain ranges crossed by the Parana river. As a matter of facts, watercourses are an important feature in Brazil’s geography: the country has a complex hydrographic system that brings significant benefits to electric power generation and agriculture, which is also favoured by Brazil’s warm climate. Most of Brazil’s 208 million citizens, the majority of which are young people, live in the cities along the coast. This has resulted into vast metropolis where economic prosperity meets overcrowded slums.

But position is Brazil’s most important characteristic. It borders ten nations, meaning all the countries in South America except Ecuador and Chile. None of its neighbours represents a real threat, and not only because relations are generally good: Brazil is simply more powerful than any of them. Even Argentina, the second most influent country in the continent, cannot seriously challenge Brazil’s supremacy due to a worse geopolitical and economic situation. Other states are not a real matter of concern; yet, they are important for Brazil’s own geopolitical ambitions. Brazil wants to extend its influence westwards to connect the Atlantic and the Pacific Oceans so to unlock its innermost territories, become the centre of coast-to-coast trade and increase its regional influence. To reach this objective, Brazil needs to keep the URAPABOL area in its sphere of influence. This zone takes its name after the three states composing it: Uruguay, Paraguay and Bolivia. They are seen as South America’s geopolitical pivot, meaning that the power who controls them can extend its influence over all the continent and obtain a dominant position. Moreover, the URAPABOL states were also seen as useful buffer zone against foreign threats and Argentina in particular; even though today the likelihood of a war is really remote. For these reasons, Brazil is attentive to maintain a solid political, economic and demographic presence in these three countries. But Brazil’s is also located along the Atlantic’s coasts, meaning that it can easily reach the large American and European markets to the North; as well as Africa with its natural resources and many fast-growing economies. So, Brazil also wants to become a naval power to boost its economy and develop its Navy to project its power abroad.

Brazil’s economic & military outlook

Apart from geography, Brazil also has natural resources, a considerable economic potential and important military means.

Brazil is certainly South America’s leading economy, but its outlook is made of mixed figures. This year, its GDP is projected to reach 1.9 thousand billion dollars, which goes to 3.5 thousand in terms of Purchasing Power Parity. The expected growth rate is of 2.4% in current prices. Brazil was at the 9th place on the list of the world’s largest economies in 2018, and it is expected to reach the 5th position by 2050. Its per capita GDP will stand around 16.7 thousand dollars in 2019, a relatively low figure to be combined with an unequal distribution of wealth. After years of high inflation, the price growth seems to have stabilized at around 3.5%. The debt of the central government is on the rise, amounting to almost 79% of the GDP in 2017, Along with a slight budget deficit of around 1%, this trend can become problematic in the long term. Unemployment affects 10.7% of the population today, and 4% of Brazilians lived below the poverty line in 2016. The trade balance has been in constant surplus for years, sustained by agriculture and manufacturing exports. As a matter of fact, Brazil is a true agronomic giant and its industry is also developing in many sectors. In addition, it also hosts significant hydrocarbon and mineral reserves, and is a leading producer of biogas. However, this has negative environmental consequences: huge swathes of the Amazon rainforest have been cut to grow the crops required for producing biogas; and also for other reasons like timber production. Brazil has nuclear reactors for energy generation and infrastructures are being improved, but much work remains to be done.

This overview shows that Brazil is indeed an emerging country, but like other economies in analogous conditions it has still considerable challenges to deal with. Corruption, poverty and inequality continue affecting its economy. This has important repercussions on the country’s political life, since similar matters are a cause of social unrest and high crime rates. In fact, Jair Bolsonaro has been elected President largely out of promises of tackling corruption, reforming the economy and crushing criminality.

Brazil is the main power in South America also in military terms. It spends regularly more than 1.32% of its GDP on defence, and it possesses large and well-equipped armed forces who remain politically influential. The Army includes, among others, specialized units for jungle warfare and a vast park of vehicles. It also maintains the Strategic Rapid Action Force, ready to be deployed anywhere in the country at a short notice. In recent years, due to better relations with Argentina and in accordance to its strategy to extend its power westwards, it has relocated many units in the Amazon area. The Air Force operates fighters, cargos and airborne warning & control planes. But the Navy is the most notable component of the Brazilian military, as it is a powerful mean of power projection. Today, it includes diesel-electric submarines, landing ships and a helicopter carrier plus naval aviation and marines; and it also plans to deploy a nuclear-powered attack submarine by 2025. Finally, Brazil also possesses a considerable defence industry and carries on its own space program.

Brazil’s foreign relations

Brazil’s foreign policy is largely based on multilateralism. It maintains pretty good relations with its neighbours, and it is a member of the main regional bodies like the Organization of American States, the Union of South American Nations and the Southern Common Market; where it plays an important role in promoting integration. It provides economic aid to developing countries, notably African ones; but this is also motivated by economic interests, like accessing resources and opening new markets for Brazilian firms. It also takes part to UN missions and promotes the enlargement of the UN Security Council. Moreover, it is a member of the informal BRICS group along with Russia, India, China and South Africa; and it keeps cooperating with all of them all while maintaining good ties with the US and with European countries.

Now that Bolsonaro is President, US-Brazil relations will receive a boost: Bolsonaro is openly pro-American and share many similar views with Trump: they oppose immigration, they are close to Christian and conservative groups, they promise to crush criminality and fight terrorism, they are favourable to death penalty, they support the rights of gun owners, their economic policy focuses on privatization and deregulation at home while protecting their industry from foreign competition by introducing tariffs, they criticize authoritarian regimes and are very friendly towards Israel and other pro-US states like Japan or South Korea, and they are hostile to foreign (and especially Chinese) economic penetration in their countries. Since Brazil is the main power in South America and the only one capable of countering US supremacy to some degree, Bolsonaro’s election is a gift for America: it virtually ensures that Brazil will remain friendly and that it will oppose rival powers like China and Russia. Both of them are indeed expanding their presence in South America to access resources and to subtract the area from American influence, but now their efforts risk being thwarted. Nevertheless, China remains a central economic partner for Brazil, and along with Russia it will continue to extend its presence in South America. Brazil, on its part, will maintain its multilateral approach to diversify its partnerships, maximize its benefits and increase its global influence.

Conclusion

Brazil is South America’s main power and its influence in international affairs will certainly increase in the future. Yet, its economic growth is not as spectacular as China’s or India’s; and it has to face many challenges like poverty and inequality, environmental degradation, corruption and social unrest. All such factors will limit its geopolitical role. But Brazil, is that contrarily to other emerging countries, it is not involved in rivalries with other states and it is not challenging the existing international order. Instead, it focuses on multilateralism and mutually-beneficial cooperation. This is probably the most remarkable aspect of Brazil’s rise: at least by now, it looks that it will be peaceful and not destabilizing.

Is Macron a friend of the Rich?

Recently France has been swayed by large scale protests carried out by tens of thousands of its citizens in response to a series of economic reforms since the new government came to power in 2017. A growing mistrust amid the tax cuts on corporations and high earners while raising taxes for the working class has prompted the people to put pressure on the government to make big changes.

Emmanuel Macron founded the centrist movement named “En Marche!” in April 2016 and much to the surprise of many, won the elections the following year. The French saw promise in Macron’s manifesto, which promised significant economic reforms backed up by his relevant experiences both in the public and private sectors. The fragile economy and mistrust for the previous regime left the people with no options but to take a risk instead of voting far-right candidate Marine Le Pen. However as the recent “Yellow Vests” movement spread out in France the truths behind the reforms have only started to get publicity.

Historical information

Francois Hollande, who preceded Macron as President, failed to live up to expectations having faced major opposition from his proposed economic and employment reforms. He faced criticism for many issues including failing to address difficulties in integrating immigrants into the French society and even pandering to the right with his comments on stripping French citizens with dual nationalities off their citizenship following the high profile terrorist attacks that shook the country, including the Charlie Hebdo shooting in 2015 and the Nice truck attack in 2016. Hollande decided not to re-run for the election due to a combination of social, political and economic frailties and the huge mistrust shared among the French citizens.[1] Macron on the other hand was appointed Deputy Secretary General to Hollande in 2012, while also serving as Minister of Economy, Industry and Digital Affairs between 2014 and 2016, where he formulated several business reforms to aid the economy.[2]

Macron was born in Amiens, France and is an alumnus of the elite École Nationale d’Administration. He showed great aptitude in the areas of literature, politics and theatre at an early age and had been able to forge powerful connections during his time as an inspector at the French Finance Ministry during Nicolas Sarkozy’s tenure as President. However he switched civil service to work in investment banking at Rothchilde and Co where he swiftly rose up the ranks to become managing director before being appointed as Francois Hollande’s staff. [3] His most significant contribution in investment banking was his crucial role in advising Nestlé on its USD 12 billion acquisition of a unit of Pfizer in 2012 which earned the nickname- “the Mozart of finance”.[4]

Despite public protests as, the business reform package he introduced in 2015 as Finance Minister was forced through parliament by then Prime Minister Manuel Valls who invoked the special article 49.3 procedure which also received criticism from within the ruling Socialist party.[5] However he soon resigned (in 2016), and founded En Marche! And announced his candidacy for the 2017 presidential election. His manifesto attracted a lot of attention, and was even able to gain support from both the left and the right, especially through his proposals that aimed at lowering housing and corporate taxes, reforming pensions and welfare, and allocating substantial resources.

He became France’s youngest ever president by defeating Le Pen in 2017. He had received 66.1 percent of the 47 million votes cast. He had never held an elected post but it did not seem very difficult for him to achieve his objective.

Plans for the economy/budget:

The biggest test, and also Macron’s main objective has been to overhaul France’s economy. He inherited a very poorly performing economy from his predecessor with the biggest challenges being[6]:

  • 10% unemployment, and nearly one in four among under-25s
  • Bloated public spending (56% of GDP compared with 44% in Germany and 39% in the UK)
  • Low economic growth

 His twin aims are to boost investment and set up a “new growth model” that is both good for social mobility and the environment. Macron has been advocating a Nordic-style economic model that mixes spending cuts of 60 billion euros with a 50 billion euro stimulus package over the same period. The “spend and save” system that Macron plans is meant to mix targeted public spending with fiscal discipline as a Nordic model. Besides lowering corporate tax rate from 33 to 25 percent he also has plans to slash 120,000 jobs from France’s bloated civil service while lowering companies and households; tax bill by 20 billion euros.[7] These are part of the major economic reforms that Macron has planned while making France stick to the EU government deficit limit of 3 percent of GDP.[8]

Security and Defence

In light of the recent terrorist attacks that have rattled France and resulted in the loss of hundreds of lives, Macron has proposed increase in defence and policing by recruiting 10,000 new police officers and expand prison capacities. He also advocates the idea of an EU army, and has been promoting joint military projects and setting up a permanent European headquarters.

Some of his notable plans for governance includes reducing number of lawmakers by a third in both the Senate and National Assembly, banning the hiring of family-members as assistants of lawmakers, and banning consulting activity for people holding elected office.[9]

Foreign relations and others

France’s commitment to 2015 Paris climate agreement has been among the key global issues that Macron has promised to back-up and promote since his early days in the office.

When it comes to foreign relations he has voiced support for multilateral institutions such as the UN security council, however also supporting the promotion of the French language and Francophone institutions as “an essential vector of our influence and a weapon against the spread of radicalism”. He stands strong against the Syrian regime led by Bashar al Assad and wants him to answer for his crimes before an international tribunal while being a strong critic of Russian policy, backing EU sanctions following the Ukraine crisis.

Europe

Macron is pro-EU and has campaigned for greater cooperation and integration within the EU on fiscal, environmental and social regulation. In his European agenda he has expressed his plans towards a common fiscal policy, a joint finance minister, implementation of the banking union and a bolstered bilateral relations with Germany.[10]

Macron’s tenure as president

Macron came to power at a problematic time- he faced a massive restructuring of regional powers following the Brexit referendum, as well as US President Donald Trump’s reshuffling of American interests. These major changes made the situation a little more difficult from the very start, and especially after the shocking withdrawal of the US from the Paris climate accord, a decision made my Trump himself, who does not believe in climate change. This prompted Macron to offer France as a second homeland to climate researchers.

One of the first things he did was making a state visit immediately after his election to meet Angela Merkel in his quest for improved Franco-German relations and since forged a strong relationship with Merkel and agreed on a “common roadmap” for Europe. However Merkel has a more cautious approach than Macron when it comes to major issues concerning the EU.[11]

He has always been vocal about increased European cooperation on many issues, and has been pushing for a “European Army” to improve security in the EU-with Merkel quick to endorse Macron’s plan, and . Macron also voiced strong interests to pursue security dialogue with Russia seeking to improve EU-Russia relations especially in terms of security.

In France

Macron had been quick in pressing for reforms soon as he took charge- with one of his first significant contributions being against mass corruption and nepotism in French politics- introducing a ban on elected representative from hiring family members.[12]

Yellow vests movement

In the May 2018, a political movement arose that challenged Macron’s economic reforms. It has been named “Mouvement des gilets jaunes” or the “Yellow Vests Movement” where demonstrations started on 17 November 2018, months after it was created. The main protagonists of the now ongoing movement are the ordinary working and middle class French citizens who strongly feel that Macron is not the leader for the ordinary working class. What triggered the movement was the proposal to keep increasing a direct tax on fuel, as well as the carbon tax. Although Macron stated that these were part of his plans to reduce fossil fuel reliance but it has been widely criticised as an act of “taxing the poor to tackle climate change”.[13]

In his first budget Macron’s business friendly government had proposed trimming corporate rates and a “wealth tax” on the rich, explaining that boosting investment will aid the economy, however also increasing certain taxes such as one on low-income pensioners. While giving tax breaks to big corporations, plans of charging lower taxes on high-paid workers in certain industries have garnered mistrust from ordinary citizens and political rivals alike, with the left-wing calling him “Hero to the rich”.[14] He also moved to loosen hiring and firing regulations on companies to improve France’s paralysed labour market.

Protests have been going on for over a month and hundreds of thousands of French citizens have taken part in what seems to be an anti-Macron rebellion, with the premier making a U-turn by suspending the proposed tax hike amid the protests that have turned violent. French authorities have deployed nearly a hundred thousand security forces during several days of protests detaining thousands and using anti-riot weapons such as tear gas against protestors.[15]

In a very recent bid to end the standoff, Macron announced a package of measures for low-income workers estimated by economists to cost up to 15 billion euros. Besides suspending the fuel-tax hike plans for six months, he also announced raising the minimum wage by a 100 euros per month from 2019 while scrapping the recent increase in social security taxes on pensioners earning less than 2000 euros.[16]

The protests are still ongoing with protestors expecting their 42 directives to be accepted. However recently it has garnered criticism for a lack of leader and organisation, and violence by protestors and use of force by police has already resulted in over 500 injuries. Despite Macron announcing several major changes bowing down to protestors, there are many demands to yet to be met and it is not clear when or how the Yellow Vests Movement will end.

Conclusion

Macron, poised to become “Europe’s next leader” as Merkel nears her exit from politics, saw a major slump in his popularity since the protests. Falling out of favour may mean nationalists such as Marine Le Pen gaining support, and with the rise of the populism in Europe in the past few years, it may not come as a surprise if France leans towards the far-right. A major shift in powers may make the situation in the region volatile and with France being a major power in the EU, and with the UK poised to officially leave the EU in a few months, it would cause a major restructuring in regional powers and interests. Most concerning of all, with countries such as Italy, Hungary and Poland having already given in to populism, a major power joining their ranks will shake up the EU and prove to be a major challenge in the future of the EU. The current situation and its developments in France will have a significant impact on the economic and political stability in the rest of Europe.

[1] https://theconversation.com/where-did-it-all-go-wrong-francois-hollande-flops-out-of-presidential-race-69806

[2] https://www.biography.com/people/emmanuel-macron-050817

[3] https://www.nouvelobs.com/rue89/20160830.RUE5451/au-fait-il-faisait-quoi-chez-rothschild-emmanuel-macron.html

[4] https://www.ft.com/content/9bd62502-12cf-11e7-b0c1-37e417ee6c76

[5] Revault d’Allonnes, David (17 February 2015). “Loi Macron : comment le 49-3 a été dégainé comme un dernier recours”

[6] https://www.bbc.com/news/world-europe-39845905

[7] https://www.bbc.com/news/world-europe-39845905

[8] https://www.ft.com/content/37223e92-3319-11e7-bce4-9023f8c0fd2e

[9] https://www.reuters.com/article/us-france-protests/french-yellow-vests-protest-in-their-thousands-for-fifth-saturday-idUSKBN1OE0BF

[10] https://www.ft.com/content/37223e92-3319-11e7-bce4-9023f8c0fd2e

[11] “Emmanuel Macron and Angela Merkel pledge to draw up ‘common road map’ for Europe”. The Telegraph. 15 May 2017

[12] “France bans hiring of spouses by politicians in wake of Fillon scandal”. Reuters. 27 July 2017.

[13] https://www.politico.eu/article/macrons-mistake-taxing-the-poor-to-tackle-climate-change/

[14] https://www.thelocal.fr/20170927/hero-to-the-rich-macron-cuts-taxes-for-wealthy-in-first-french-budget-france

[15] https://www.reuters.com/article/us-france-protests-tax/france-drops-fuel-tax-hike-as-yellow-vest-anger-persists-idUSKBN1O40PQ

[16] https://www.france24.com/en/20181210-macron-france-tax-cuts-raise-wages-speech-yellow-vest-unrest

Modern Nations – Rise of Muslims Episode 7

Based entirely on the book by Ali Mahmood titled “Muslims” –

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In this episode, Author Ali Mahmood, looks at the emergence of Muslim nation states following the collapse of the Ottoman empire. He looks at the birth of modern Egypt, Pakistan, Afghanistan and Iran.

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The Ottoman Dynasty – Rise of Muslims Episode 6

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The Ottoman dynasty governed the Muslims and built one of the largest empires the world has ever seen

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Israel’s Enigmatic relationship with India

India and Israel have been allies for much of recent history although the relations between these two countries have been low-profile and only started getting global attention in recent years. Besides having strong economic ties the two countries also share key strategic and military cooperation.

Surprisingly India-Israel relations were largely informal until 1991. Despite having some ties since the 1960s mainly owing to defence and intelligence cooperation, India did not formalise diplomatic relations due to having a pro-Arab and pro-Palestinian stance. However this gradually changed when they formally established diplomatic relations with Israel in 1992.[1]

History

India recognised Israel as early as 1950, but did not establish diplomatic ties until 1992. During the Suez crisis in 1956 the then Israeli foreign minister Moshe Sharett visited India as the Israeli army pushed into Egypt after Egyptian President Gamam Abdel Nasser nationalised the canal; while India played the role of mediator alongside the UK, the US and Yugoslavia.

During the Sino-Indian war in 1962, Indian PM Jawaharlal Nehru sought arms from Israel, writing to Israeli PM Ben Gurion, and he responded, forming the foundations for defense cooperation between the two countries. This paved way for increased bilateral cooperation over the years as India sought more arms in their war with Pakistan in 1965 as well as in 1971.[2]

Throughout much of the 1970 and 1980s, India kept its distance from Israel publicly due to its support for the Palestinian cause. India was a founding member of the Non Aligned Movement (NAM) that was supportive of anti-colonial struggles around the world which explains their support for the Palestine Liberation Organisation (PLO).[3] India was astonishingly one of the first non-Arab states to recognise Palestinian independence. There were several geopolitical issues that shaped India’s standpoint during the 1970s and 80s. The seemingly antagonist position between India and Israel also involved India’s diplomatic strategy of trying to counter Pakistan’s influence in the Arab world as well as of safeguarding its oil supplies from the Gulf.

There were other major motives behind India’s anti-Israel stance. India has a large Muslim population and their antagonism towards Israel played a major role in delaying diplomatic relations, as politicians feared that they may lose Muslim votes in key regions if they were to formalise ties.[4] Also,  was the fact that thousands of Indian citizens worked in the Gulf, helping keep its foreign exchange reserves afloat.

Security cooperation

Even before establishing formal ties, India and Israel managed to collaborate in specific areas, with India’s main intelligence agency RAW (research and analysis wing) and Israel’s Mossad having signed a secret cooperation agreement in the areas of security, intelligence and military equipment.[5] The two top intelligence agencies established relationships since the 1960s. This was remarkable because throughout the 1970s and 80s their bilateral relations were sour. The situation started to shift in 1989 as three major developments sowed the seeds of change: first, the beginning of the era of coalition politics in India; second, the beginning of Pakistan-sponsored insurgency in Kashmir; and finally, break-up of the Soviet Union and end of the Cold War coupled with the fall-out from the reversal of Iraq’s invasion of Kuwait.[6] Since the early 1990s, the growing insurgent activities in Kashmir sponsored by Pakistan heightened regional security environment of India and the then opposition party BJP kept pressurising the government to normalise relations with Israel. After the end of the Cold War, India, like many other countries had to make major changes to their foreign policy to accommodate the changing international milieu. It went towards economic liberalisation, opening its doors to other nations and subsequently formalised diplomatic relations with Israel. It was however kept low-profile due to India’s interests in the Middle East.

India gave a number of reasons to justify the 1992 opening of formal relations, which are as follows[7]:

  1. Israel’s criticality to what happens in West Asia and the Gulf, that is a part of India’s extended neighbourhood impacting its strategic space, energy supplies and the 6 million Indians living in the region.
  2. Sophisticated defence equipment , technology and systems from Israel; potential cooperation in security and defence including counter terrorism.
  3. Absence of any quid pro quo from the Arab states
  4. Agricultural prowess including related technologies of Israel.

More recently the economic rivalry between India and China plays a role in this context. The growing relations between China and Pakistan have raised insecurities, especially the fact that Pakistan are the largest recipient of Chinese arms. These issues gave India more reasons to build-up their own arms and as Israel are among the top arms manufacturers in the world with one of the best research and development facilities as well as a supposedly good counter-terrorism unit, there are more reasons to increase cooperation in the field of security and defence.

First Israeli PM visit to India[8]

Ariel Sharon was the first Israeli PM to visit India in 2003 and the bilateral relations between the two nations started gaining publicity. State visits from officials started to take place since the establishment of diplomatic relations. This laid the framework for further cooperation in various areas; Agreements on Cooperation in the field of Health Sciences and Medicine and on Cooperation in combating illicit trafficking and abuse of narcotic drugs and psychotic substances were signed in 2003. In the same year, more significant agreements were signed in the field of protection of the environment, and another on the exemption of Visa requirements of holders of diplomatic, official and service passports.

2005 saw a MoU on India-Israeli Research and Development Fund Initiative while in 2006 a major pact was signed in the field of agriculture cooperation.

 Bilateral trade

Bilateral trade progressed rapidly since 1992. From a base of USD 200 million in 1992 comprising primarily of diamonds, merchandise trade has diversified and the overall figure stood at an astonishing USD 5.19 billion in 2011. In 2016 the figure slumped to USD 4.16 billion in 2016 (excluding defence) with the balance of trade in Israel’s favour. Trade in diamonds constitutes over 53 percent of bilateral trade. After China and Hong Kong, India is Israel’s thirds largest trading partner in Asia. Currently the sectors forming the diversified bilateral trade include pharmaceuticals, agriculture, IT and telecom, and homeland security. India’s major exports to Israel include precious stones and metals, chemical products, textiles and textile articles, while major exports from Israel include precious stones and metals, chemicals and mineral products, base metals and machinery and transport equipment.

Cooperation between the two nations increased dramatically ever since the election of India’s new Hindu nationalist BJP government led by Narendra Modi in 2014. This was followed by a first ever visit by an Israeli defence minister in 2015. The current prime ministers Benjamin Netanyahu of Israel and Modi of India met for the first time at a UN General Assembly in 2014 where they discussed economic, technological, and agricultural collaboration for the future, while Netanyahu expressed his concerns about a nuclear Iran and the spread of radical Islam throughout Middle East.[9] In 2017, Modi made a stand alone visit to Israel- the first ever by an Indian PM.

Just weeks before modi’s historic visit, Netanyahu’s cabined agreed on measures aimed at increasing Israel’s non-diamond exports to India by 25 percent while establishing a new 40 million USD joint innovation, research and development fund. In July this year Israel Aerospace Industries (IAI) signed an agreement with India’s KSU in July 2018, to operate Israeli Taxibot semi-robotic vehicles at India’s New Delhi and Mumbai airports. Taxibot is connected to planes which taxi the airplanes from the airport’s jet bridge without the use of the airplane’s main engines.[10]

Israel in recent years have taken a strategic decision aimed at strengthening economic relations with China, Japan and India. Major Indian software companies including TCS, Infosys, Tech Mahindra and Wipro have began to penetrate the Israeli market. During PM Modi’s visit in July 2017, the first meeting of the newly established India-Israel CEOs Forum took place.[11]

Defence cooperation: military equipment and technology

Defence cooperation forms one of the strongest aspects of the bilateral relations

India is the largest buyer of Israeli military equipment, while Israel is India’s largest customer after Russia.[12]

Israel produces some of the most sophisticated, cutting edge weapons systems in the world and India have been major buyers for a while now. India buys weapons systems for their armed forces, including navy and air force.

Since the 1990s, India purchased UAVs, drones, airborne early warning and control (AEW&C) radar systems, anti-tank missiles and many more weapons systems in deals worth billions of dollars. In 2007, the two nations signed a 2.5 billion DSD deal to develop an anti-aircraft weapons systems in India, and in 2009[13], Israel sold Barak 8 air defence systems to India for a staggering 1.1 billion USD. In 2011 Indian army bought more than 1000 units of Israeli X-95 assault rifle to use in counterinsurgency operation. In 2011 there were reports of a deal in which India were to purchase a large number of Israeli Spike anti-tank missiles, launchers, and related equipment worth nearly a billion dollars, from Israel’s Rafael Advanced Defense Systems;[14]. Although the old contract with Rafael was cancelled, India has recently been on the verge of signing a 500 million USD deal with Israel to buy 4500 Spike missiles in a government-to-government purchase which could be finalised any moment.[15]

Israel also provides India with military technologies, and strategies for count-terrorism, including offering assistance following the 2008 Mumbai attacks.[16]

 Shifting Israel-Palestine stance

In 2015, India abstained from voting against Israel at the UN human rights commission signalling a shift in its Israel-Palestine policy. However in 2017 it voted for an Arab-sponsored resolution that rejected the US recognition of Jerusalem as capital of Israel.

 Conclusion

Despite a recent setback taking place due to India having voted against the US recognition of Jerusalem as the capital of Israel, the bilateral relations between the two nations have been growing stronger since the arrival of Modi making way for a new era of collaboration. In early 2018, Saudi Arabia opened its airspace for the first time ever to a commercial flight to Israel with the inauguration of an Air India route between New Delhi and Jerusalem.[17]

It seems today that the history of advocacy for the Palestinian cause is gradually diminishing as India is growing in alliance with Israel in more areas of cooperation and assistance. While India racks up more arms deals and equips its military with more sophisticated weapons systems and technology, it will be interesting to see further developments especially in the field of defence and security cooperation and find out what their main objectives are.

 [1] http://www.atimes.com/india-israel-relations-obscurity-certainty/

[2] https://www.livemint.com/Politics/k4CBHr4bIzoZ0O6OBOXw1M/India-Israel-ties-A-timeline.html ; https://www.tau.ac.il/humanities/abraham/india-israel.pdf

[3] http://www.rubincenter.org/meria/2004/12/pant.pdf

[4] Aafreedi, Navras (2012). “The Impact of Domestic Politics on India’s Attitudes towards Israel and Jews”. In Singh, Priya; Susmita, Bhattacharya. Perspectives on West Asia: The Evolving Geopolitical Discourses. Shipra Publications. pp. 171–183. ISBN 9788175416376.

[5] Pant, Harsh V. 2004a. ‘India–Israel Partnership: Convergence and Constraints’, Middle East Review of International Affairs (MERIA), vol. 8, no. 4

[6] https://www.tau.ac.il/humanities/abraham/india-israel.pdf

[7] https://www.tau.ac.il/humanities/abraham/india-israel.pdf

[8] https://www.tau.ac.il/humanities/abraham/india-israel.pdf

[9] https://www.jewishvirtuallibrary.org/history-and-overview-of-india-israel-relations

[10] https://www.jewishvirtuallibrary.org/history-and-overview-of-india-israel-relations

[11] https://www.mea.gov.in/Portal/ForeignRelation/Unclassified_Bilateral_briefb.pdf

[12] https://www.reuters.com/article/us-airshow-india-israel/israeli-defense-minister-lands-at-india-airshow-to-boost-arms-sales-idUSKBN0LM0WL20150218

[13] “IAI signs $2.5 billion deal with India – Israel Business, Ynetnews”. Ynetnews.com.

[14] https://en.globes.co.il/en/article-1000633160 ; https://www.thehindubusinessline.com/news/world/india-to-buy-israelis-spike-missile-for-1-b/article9749112.ece

[15] https://www.hindustantimes.com/india-news/india-set-to-seal-500mn-deal-with-israel-to-buy-4-500-spike-missiles/story-wdT2IufrQ4ldybZFX76X5K.html

[16] Horovitz, David; Matthew Wagner (27 November 2008). “10 hostages reportedly freed from Mumbai Chabad House”. The Jerusalem Post.

[17] https://www.independent.co.uk/news/world/middle-east/saudi-arabia-israel-airspace-riyadh-tel-aviv-flight-air-india-iran-flight-times-airlines-a8269891.html

What are China’s Interests in Afghanistan?

The inexorable economic rise of China is producing political and strategic repercussions in all directions. One of the more interesting cases is China’s growing interest in Afghanistan, a country wracked by multiple conflicts and intermittently occupied by foreign powers for nearly forty years.

China and Afghanistan are immediate neighbours as they share a short 76 km border. The border point is distant from urban centres on both sides as it interfaces with the extremity of the Wakhan corridor on the Afghan side, and the outer edge of the Chalachigu Valley on the Chinese side.

The immediacy of Afghanistan’s geographic proximity to China makes the country hard to ignore. But in view of Afghanistan’s profile as an essentially failed state which has been in political and military turmoil for four decades, China can hardly afford to take its eyes of the place.

Add to that the fact that global powers, notably two superpowers in the form of the former Soviet Union and the United States, have maximally intervened in Afghan affairs (notably by occupying the country), then we can legitimately wonder as to why China hasn’t also forcefully intervened in Afghan affairs. Not yet anyway.

Welcome to KJ Vids. In this video we will examine the reasons behind China’s growing involvement in Afghanistan.

What is the full extent of Chinese involvement in Afghanistan?

China is reportedly building its first military base in Afghanistan. It is important to note that the Chinese government denies these claims and only admits to building a training camp in the Wakhan corridor to train Afghan forces. According to Chinese military sources, Beijing is helping Afghanistan set up a mountain brigade in the remote north-eastern corner of the country.

But even if we take these Chinese denials at face value, the fact that China admits to training Afghan forces is in and of itself of great political and strategic import. It speaks to growing Chinese influence in Kabul and signals that China wants to get involved in the military affairs of its volatile western neighbour.

Despite its massive economic clout, and projections that it will displace America as the world’s biggest economy as early as 2032, China hasn’t invested in a big political presence overseas. It may surprise many viewers that China has only one avowed military base overseas and that’s situated in Djibouti.

The newly opened base in Djibouti is designed to serve multiple military and economic functions but above all it is going to provide China with vital experience in how to exercise and manage power projection well beyond its borders. It is perhaps China’s first step toward projecting hard power at a global level, akin to how Western powers flex their muscles on the world stage.

The training camp in the Wakhan corridor (with or without Chinese troops) is clearly not about power projection on the world stage. For a start it borders china and is in close proximity to the restive Chinese region of Xinjiang. China faces serious unrest in this region as a result of continually repressing the region’s indigenous Muslim community known as the Uyghurs. In that context, the base in the remote north-eastern corner of Afghanistan is focussed on counter-terrorism operations and to that end it is potentially more concerned with Chinese security than Afghanistan’s. More on this later.

But beyond latest reports of Sino-Afghan military cooperation, just how involved is Beijing in Afghanistan? Well, for a start China maintains a relatively large embassy in Kabul, a reflection of the scope of its operations across the country. China has an abiding economic interest in Afghanistan, primarily not because the country is attractive economically, but because Afghanistan is central to two of China’s core regional economic ambitions.

These are the Belt and Road Initiative and the China-Pakistan Economic Corridor. China needs a measure of stability and security in Afghanistan in order to safeguard its massive regional investments, stretching from Pakistan to Central Asia. To that end, China began to step up its activities in Afghanistan from 2014 onwards.

At the economic level, Beijing is involved in the Afghan economy in multiple ways. First, China gives Afghanistan direct financial aid. Statistics vary but according to conservative estimates Beijing has given Kabul at least $410 million in direct aid since 2014.

Second, China has emerged as Afghanistan’s biggest foreign investor, focussing mostly on minerals and other natural resource extraction. China was also the first country to begin extracting oil from the Amu Darya basin in northern Afghanistan.

But not all Chinese investment projects have progressed according to plan, in part because of lack of security but equally because of the nature of Chinese overseas economic and commercial enterprise. Concerns about contractual issues and the general aggressive and single-minded approach of Chinese firms – often to the detriment of local workers’ rights – have ground some projects to a halt. The best example is the Mes Aynak concession (concerned with copper ore extraction) which was awarded to Chinese firms more than ten years ago but which has so far failed to even get off the ground.

At the political level, China stepped up its involvement in Afghanistan in late 2014 by trying to set up a “forum” to revive peace talks between the Afghan government and the Taliban. This was followed by other initiatives, notably in partnership with Pakistan. But China’s attempt at peace-making has been largely unsuccessful, reflecting two inescapable facts. Foremost, China lacks experience in foreign conflict resolution. Second, as an ally of Pakistan, China is not seen as an honest broker by the Afghan government.

But to fully understand the drivers of China’s involvement in Afghanistan and Beijing’s desired outcomes we must take account of geopolitics and specifically China’s competition with major global and regional powers in this arena. Let’s start with India.

Undermining India in Afghanistan

Despite its substantial investments in Afghanistan – and notwithstanding its role as a major donor to the Afghan government – it is important to note that China is not in the first tier of active states in the Afghan arena. That distinction goes to three countries, namely the United States, Pakistan and Iran.

China belongs to a second-tier group of countries that are vying for influence in Afghanistan. The other member states of this tier are India and Russia. Similar to China, the Indians have also stepped up their activities in Afghanistan, although not in the sharp manner as Beijing post-2014. By contrast, New Delhi has incrementally increased its activities in Afghanistan since the overthrow of the Taliban in late 2001.

India has to tread carefully in Afghanistan so as not to draw Pakistan’s wrath. The latter remains the single most influential player in Afghanistan and in view of broader Indo-Pakistan hostilities, any significant movement by New Delhi inside Afghanistan is likely to draw a fierce reaction from Islamabad.

The Indian embassy in Kabul was bombed twice, in 2008 and 2009 respectively, causing dozens of fatalities. The 2008 attack – which killed 58 people including an Indian brigadier general – was attributed to Pakistan’s notorious Inter-Services Intelligence agency by US intelligence officials.

Unlike Pakistan, China is not interested in taking “kinetic” action against Indian interests in Afghanistan. In fact, the two powers are known to cooprate on joint projects in Afghanistan, notably developing the new Afghan diplomatic corps.

Limited cooperation notwithstanding, China is clearly interested at containing Indian influence in Afghanistan as any increase of influence there positively impacts India’s standing in the broader Central Asia region. India is fast making inroads in Central Asia – and although it cannot displace the two biggest actors in that arena, namely China and Turkey – nevertheless Beijing is fearful of the potential political impact of New Delhi’s outreach to Central Asian states.

Keeping America in check

As we have seen in relation to India, the strategic impact of China’s involvement in Afghanistan primarily serves to augment the role and standing of a Chinese ally, notably Pakistan.

The same pattern can be observed in relation to China’s view of and approach towards the US presence in Afghanistan. In hard power terms – specifically in terms of the deployment of military forces and centrality to the counter-insurgency campaign against the Taliban and its allies – the US is the dominant foreign power in Afghanistan.

But a more nuanced appraisal of power and influence projection in Afghanistan cannot fail but to identify Pakistan and Iran as the true dominant foreign powers not least because they are Afghanistan’s immediate neighbours and will continue to compete for dominance long after the US has departed the arena.

In view of its broader rivalry with the US, notably in the South China Sea, the People’s Republic does not the want the US to succeed in any conflict arena, let alone not one with massive geopolitical importance, as demonstrated by the longstanding and multi-faceted Afghan conflict.

To that end, China’s strategic posture in Afghanistan complements the role and standing of another one of its allies, notably the Islamic Republic of Iran. But whilst Iran takes active measures against US and broader Western interests in Afghanistan – by for instance allegedly directly supporting the Taliban in military operations – China is content to limit its containment strategy to the political and diplomatic levels.

The domestic dimension

Finally, in assessing China’s role and influence in Afghanistan, it is important to take full stock of the domestic considerations informing Chinese strategy. As stated earlier, China has a counter-terrorism stake in the conflict as it fears infiltration by Uyghur and other militants from Afghanistan into China’s restive Xinjiang region.

Furthermore, the Islamic State group is active in Afghanistan and by definition this jihadist group is deeply opposed to the Chinese presence that country. More broadly, the Islamic State (or Daesh as its detractors call it) is incensed by China’s massive repression of Uyghurs and other Chinese Muslims, specifically in Xinjiang but also across China as a whole. China fears that the Islamic State group may try to conduct operations inside China and the Wakhan corridor would be the preferred infiltration point. This explains China’s military interest in the corridor.

But beyond jihadist groups, all the authentic Islamic currents in Afghanistan are appalled by China’s treatment of the Uyghurs. The Chinese have reportedly imprisoned up to one million Uyghur Muslims in so-called “counter-extremism centres” which amount to concentration camps.

If China wants to be successful in Afghanistan, and ultimately to play a stabilising role by reconciling the Afghan government with its opponents, then it must also properly address concerns about its treatment of Chinese Muslim minorities.             

 

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