Geopolitical Rundown - 19th February 2021

Europe

Is Europe Ready For a Post Merkel Age? 

After 16 years as the most powerful person in Europe, Angela Merkel will step down as German chancellor in September. Angela has led the country through several major crises since assuming the chancellorship in 2005 and the leadership of the Christian Democratic Union in 2000, including the 2008 financial crash, the refugee crisis, and the ongoing COVID-19 pandemic. 

The question remains, is Europe ready for a post-Merkel age? Her 16years in office have made her become European Union’s tallest leader. No doubt her exit will create a vacuum in Europe’s politics. If Germany does not get its internal politics right, Europe’s role on the world stage may be at stake. 

 It is also important to watch if Merkel’s policies, trade relations, and plans will be upheld. For example, Germany has indicated an interest in working with The U.S. on trade, China, and climate change. It had also expressed interest in ensuring Europe and the United States strengthen transatlantic ties with a trade deal to abolish tariffs. Will the new Chancellor tow this line or introduce new policies? 

When Germany goes to the polls in September, Germany's leadership over Europe will be tested. Macron has been seeking to fill the leadership vacuum Merkel will leave behind, and if Merkel’s successor will uphold Germany's influence it must confront these opponents and stamp its authority. 

Another question that comes to mind is if the new successor will continue the diplomatic relations with Russia, even as Merkel did, although, in the last years of power, the relationship was not the same. 

EU Foreign Affairs Chief threatens Russia with new sanctions. 

EU foreign affairs chief Josep Borrell has promised new sanctions against Russia and sharpened criticism of Moscow in the ongoing fallout from his "humiliating" trip. 

Joseph Borrell told the MEPs (Members of the European Parliament) that Russia had gone "full circle" since the fall of the Soviet Union in its return to "merciless" authoritarianism, and there was "deep disappointment and growing mistrust" with Moscow, which was "disconnected" from Europe because “the Russian elites consider our liberal democratic system a threat".

Borrell also claimed that he wanted to test if the Russian authorities were interested in revising the differences in our relations but the answer was clear: They aren't. 

In the European Parliament on Tuesday, 9th February, Borrell told members of the parliament that he will put forward “concrete proposals using the right of initiative that the [EU] high representative [for foreign affairs] has.” 

He will, most likely, propose asset-freezes and visa-bans on Russian individuals involved in jailing opposition figure Alexei Navalny, under Europe's new 'Magnitsky Act'.

Foreign ministers would discuss his draft blacklist when they next met, on 22 February, and it will be left for the member states to decide the [EU's] next steps. But yes, this could include sanctions.

North America

Blackout in Northern Mexico as winter storm hits Texas

Over 2.5 million households in seven northern Mexican states were left without power as the winter storm that hit Texas over the weekend lowered the amount of natural gas available for export.

Mexico’s Federal Electricity Commission said Monday that a winter storm in Texas reduced natural gas exports from the U.S. by around 25 percent, causing blackouts in parts of northern Mexico. The shortage affected Sinaloa, Sonora, Durango, Chihuahua, Coahuila, and Nuevo Leon states and disrupted production at electricity generation stations. 

Again, supply chain professionals must begin to think ‘outside the box.’ Acts of god-like weather changes are expected, but we must begin to think of alternatives. The weather-induced breakdown of the Texas energy grid did not affect Texas alone but Mexico as well. As the weather starts to improve, it is still expected that the effect of the crisis will linger because of how the oil market works. 

Right now, the oil supply chain is experiencing major disruption as oil isn’t getting pumped out of the ground, refineries are shut, and there’s no export out of the Gulf Coast. 

Since the Gulf Coat is responsible for roughly half of the country's oil refining capacity, there is no doubt that the effect of this cold will ripple down the supply chain in the U.S. 

During a virtual press conference on February 15, the state utility CFE said that Mexico was unable to import around one of the four billion cubic feet of natural gas that the country sources from the US daily, and roughly 60% of the electricity produced in the country is generated with natural gas, most of which is imported from the US through a system of pipelines.

This blackout makes it evident that Mexico has a dependency on US natural gas which endangers the reliability of the system in moments of emergency. 

Mexico must also begin to think of ways to reduce its absolute reliance on energy from the U.S. if it wants to reduce the chances of this happening again. Many factors that determine the health of its economy are out of its control. 

Asia 

China’s strategic advantage 

According to Eurostat, China has surpassed America as the European Union’s top trading partner. EU trade with China reached $711 billion in 2020 compared to $673 billion with the United States. As the struggle for world power between China and America continues, China is hoping to bank on this strategic advantage. How will the United States improve its trade relations with the EU to become its top trading partner again? 

Will the Biden administration introduce more policies to this effect? 

Africa

South Sudan's Political Woes

It is now evident that South Sudan risks sliding back into a civil war. 

South Sudan suffered a brutal civil war from 2013 to 2018, exposing a country whose foundations were weaker and divisions deeper than its well-wishers envisioned. The war has quietened, thanks to a peace deal signed in 2018 by the two belligerents. But the path to stability is unclear. Not only could the pact collapse, but it does little to calm an insurgency in the nation’s south or local violence elsewhere. 

In February 2020, South Sudan’s two main belligerents began forming a unity government under a peace deal inked a year and a half earlier. But the pact is fragile, smaller conflicts are still ablaze and the threat of returning to full-blown civil war remains. 

What’s then the solution to South Sudan's political woes? A reshaping of South Sudan’s political architecture toward more consensual forms of governance could do the trick. If this does not happen, its economy will be greatly affected. In 2019, the was country was the U.S' 173rd trading partner, but a civil war will only push that number down further.