Decoding Global Geopolitics — This Article holds the key!

?Xi Jinping has been appointed as the President of the PRC for the third-consecutive term. Xi's strong leadership, consolidated power, and dubious initiatives may lead to an even more assertive China on the global stage. Let us first examine the Chinese game.

Recent reports reveal that China successfully facilitated a peace agreement between Iran and Saudi Arabia during a four-day-long negotiation meeting held in Beijing. The two nations agreed to refrain from meddling in each other's state affairs, putting an end to the longstanding dispute between them. Additionally, they have decided to reopen embassies to strengthen their diplomatic ties and resume trade deals. This breakthrough could potentially bring more peace and stability to the Middle East region.

For starters, the Saudi-Iran tussle stems from their religious differences - Saudi Arabia is predominantly Sunni while Iran and Iraq are Shia. As the birthplace of Islam, Saudi has sought to assert its leadership in the Middle East, leading to tensions with Shia-dominated Iran. Iran was also accused of funding a Yemeni rebel group that frequently attacked Saudi. However, the recent successful negotiations have resulted in both nations agreeing to respect each other's sovereignty and integrity, hopefully bringing an end to the longstanding conflict.

It's noteworthy that the Iran-Saudi deal has been struck amidst their lowest point in relations with the USA. Saudi's strained ties stem from the murder of journalist Jamal Khashoggi, the reversal of the Petro-Dollar Agreement, and a decrease in oil production against US wishes. Similarly, Iran's relationship with the US has been strained over disputes on regional influence and human rights. Just days before the Iran-Saudi deal, the US Defence Secretary met with Israeli officials to discuss preventing Iran from acquiring nuclear weapons. Meanwhile, the relationship between China and Israel has been strained due to US pressure on Israel to limit cooperation with China. Long story short, China has successfully brought together the US-abandoned Saudi and Iran.

According to Reuters, big oil companies have reported record profits of nearly $200 billion in 2022, which has drawn criticism from the US due to the companies prioritizing stakeholders over addressing global inflation.

What does this all mean? China has aligned itself with top oil-producing nations, oil which is often called black gold, giving China a prominent role in energy diplomacy - managing relations of states to ensure energy security through availability, reliability, and affordability.

China seems to be a dominant force in black gold, but it reigns supreme in the realm of white gold, lithium. This critical rare earth metal is an essential component in batteries. News of lithium reserves recently discovered in Jammu and Kashmir; India has generated considerable buzz. But China's dominance in the global Lithium market is significant, as it holds a 76% share in battery component manufacturing despite having less than 10% of global reserves. The world's largest known Lithium reserves are found in Bolivia, Chile, and Argentina, known as the Lithium Triangle, and Africa has the second-largest reserves. China controls most of the mining and excavation rights in both regions and has recently gained a new partner, Iran, which has discovered the fourth-largest Lithium reserves in the world. This places China as a leader in the production and manufacturing of battery components, a crucial industry for the future. However, this dominance comes at a cost, as the locals who own the rights to these resources have been exploited and remain poor, especially in Africa. Corruption, nepotism, the militarization of natural resources, and China's questionable policies and agreements contribute to this lop-sidedness.

China is aggressively positioning itself as a new leader on the global stage, hoping to supplant the United States. In pursuit of this goal, China's geopolitical landscape is rapidly evolving, with a more assertive stance expected in the years to come.

China’s closest ally, Russia recognizes the dynamics between India & China and seeks to establish peace and stability in the Indo-Pacific region while taking a strong stance against the US-led West. In this vein, Russia will be hosting a trilateral meeting between India, China, and Russia to address ongoing disputes and conflicts between both nations. The outcome of this meeting remains to be seen, but what Russia is doing has the potential to disrupt the world order in a significant way.

Russia is investing a staggering $29 billion to construct a new trade route through the Arctic region, the coldest. Due to rising temperatures and melting glaciers, the Arctic's icebergs are melting at an unprecedented pace, making infrastructure development more accessible. The Arctic Northern Sea Route, which is only 8000 miles long, will save time and money compared to the existing Suez Canal Route (13000 miles) and Cape Town Route (18500 miles). Moreover, the Arctic route will be free of maritime chokepoints like the Strait of Malacca and the Strait of Gibraltar, which could be closed by the US during wartime. This will not only reduce Russia's dependence on conventional trade routes but also attract companies seeking cheaper alternatives.

As the scenario seems increasingly intricate, you may be left wondering about the precise intentions of China and Russia. Before delving into this million-dollar question, let us examine another recent development.

In August, a BRICS summit chaired by Brazil is scheduled to take place, and Saudi Arabia has expressed its interest in joining the group. Brazil has welcomed this proposal due to shared interests and Saudi Arabia's strained relationship with the United States. Furthermore, they plan to introduce a common BRICS currency, backed by gold, which seemed to be a more stable and secure alternative to the US dollar. As nations like India work to create more robust mechanisms for international transactions using their respective currencies, this initiative represents yet another step towards countering the hegemony of the dollar.

China and Russia appear to be consolidating their alliance against the West, by engaging their close and mutual allies in discussions. China has been instrumental in negotiating a peace deal between Saudi Arabia and Iran, despite their historical differences. Similarly, Russia may have a similar vision for India and China through trilateral meetings. By including countries such as Saudi Arabia, Iran, Iraq, and India, the Indo-Pacific nations can form a united front against the US-led West. However, this does not necessarily imply a return to a bipolar world. Let us examine why.

India is not likely to welcome China or Russia's attempts to form an anti-USA alliance in the region for obvious reasons. However, the visit of Australian Prime Minister Anthony Albanese has led to developments worth noting.

India and Australia are now recognized as beacons of democracy in the Indo-Pacific region. During Albanese's visit, both countries focused on the Comprehensive Economic Cooperation Agreement (CECA) and on strengthening defense ties. Numerous defense exercises are planned in the Indian Ocean Region. The upcoming defense exercises are significant as they have the potential to counter China's growing influence in the area. The joint defense exercise offers an opportunity for India and Australia to enhance their military preparedness, promote greater regional cooperation, and strengthen their strategic partnership. As two democratic nations committed to upholding a rules-based order in the region, India and Australia's collaboration can serve as a deterrent against China's aggressive moves.

Australia, to further bolster its defense capabilities, as part of the AUKUS defense agreement, will acquire a nuclear submarine from UK & US. While some Indian experts are unhappy that India is not involved in the deal and question the relevance of the QUAD agreement, others believe that it is good as it allows India to avoid confrontation with China.

Furthermore, the joint defense exercises between India and Australia will likely have a spillover effect, inspiring smaller Southeast Asian nations, such as Malaysia, Laos, and Cambodia, etc. to better protect themselves against external threats, particularly those resulting from China's Debt Trap Policy.

The unfolding of this story and the future of the world order remains to be uncertain as the balance of global power continues to shift. The US-led West strives to maintain its global leadership by preserving its influence in the Indo-Pacific Region through partnerships with nations such as India and Australia, while China and Russia are determined to establish themselves as the new superpowers.

Unfortunately, this wrestle for dominance among major nations may have dire consequences for smaller countries. For instance, Biden visited the Netherlands to ask a company called ASML, the only company in the world that produces a chip without which advanced chips can’t be manufactured, not to deliver these chips to China. China's rising defense budget is putting pressure on fellow nations to increase their defense spending as they perceive China as a potential threat. Egypt and Pakistan are currently on the brink of financial collapse. Pakistan is relinquishing its territory to the Pakistani-Taliban, while Egypt is resorting to selling citizenship to overcome its economic crisis. Additionally, despite having rights over the countries' natural resources, people in African nations such as Zimbabwe, Congo, and Gambia are being exploited by the Chinese military.

While regional powers such as Sweden, Norway, and Spain may occasionally express concerns or opposition towards superpowers such as China, their actions may not carry enough weight to significantly influence the behavior or policies of these powerful nations. Due to their comparatively lower levels of economic and military power, their ability to exert influence on the global stage may be limited. However, it is important to consider that collective actions by multiple countries can have a greater impact. Similarly, countries with the largest reserves of lithium could potentially form an OPEC-like cartel and have greater control over global lithium prices, potentially changing their fortunes.

Currently, China is in a strong position to become the next global superpower, with a dominant market share in many industries that will shape the future. These include rare earth minerals (over 60%), solar panels (around 75%), steel (over 50%), shipbuilding (around 50%), APIs (over 40%), EV batteries (around 70%), and semiconductors (largest consumer - over 50%). On the other hand, India faces challenges in riding an economic and innovation boom, as it has historically focused more on software and technical aspects, rather than hardware and infrastructure like China. This means that the gestation period for any manufacturing industry in India is very high, which can hardly be matched the boom period. Apple facing obstacles in boosting its production in India could be one example.

Narayan Murthy has pointed out the decreasing innovation abilities within India, which hinder the nation from fostering a culture of innovation and building a strong research & development ecosystem to maintain global competitiveness. This, coupled with the emergence of AI, which puts many jobs at risk of displacement, and the upcoming demographic challenges of an aging population lacking proper infrastructure, creates a lopsided economy where benefits may only be concentrated on a particular section of society. As a result, the Indian workforce may shift to sectors such as education, healthcare, food, etc. regardless of the global geopolitical order. If you observe, these sectors have demonstrated resilience during times of crisis, such as war and the COVID-19 pandemic.

This write-up already contains a vast amount of information, and with each passing day, the ever-changing geo-political landscape adds even more data to the mix. Despite this information overload, numerous critical facets require consideration. These include the US-India Agreement regarding India's role in the global semiconductor supply chain, and recent developments within the Shanghai Cooperation Organization (SCO) - currently chaired by India - which has also attracted the interest of Saudi Arabia. Additionally, Russia's latest foreign policy document identifies India and China as their main allies, and there is a growing trend towards de-dollarisation and progress on new currency initiatives. Other critical factors that warrant attention include recent India-Japan developments, such as their joint efforts to build infrastructure in the Indo-Pacific region. Moreover, Japan is seeking to reduce its dependence on Russia and China by building stronger relationships with countries such as South Korea and Germany. So, a thorough analysis of these facets is essential to understand with its the implications and India's stance on these developments. In the next piece, I will try to decode these developments.

Thank you for reading.

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