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Kremlin Warns that War with Ukraine on Brink of Escalation

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The Kremlin ramped its media to warn that the frozen war in eastern Ukraine was on the brink of dangerous escalation. Moscow and Kyiv blamed one another for a recent surge in violence where 10 Ukrainian soldiers were killed since 2021. Dmitry Peskov, Vladimir Putin’s spokesman, accused Kyiv’s forces of shelling in breach of the ceasefire agreement and entering areas where they were not meant to be. Ukraine accused pro-Russian forces, which are widely believed to be under Russian command, of shelling its troops to provoke retaliation. Mr Peskov said Russia, which officially denies deploying its own troops to the area, was using its influence to restrain pro-Russian forces and called on France and Germany to do the same for Ukraine.

We consider that a disinformation campaign is being conducted against Ukraine that could support renewed Russian offensive conventional operations later in 2021, but Russia is unlikely to launch an all-war offensive operation in the coming month. Russian proxies in eastern Ukraine deployed to full combat readiness on March 16. Despite the potential indicators of a possible operation, the Russian military is not postured to support an imminent large-scale offensive, nevertheless, the possibility of “blitzkrieg” tactical incursion by proxies cannot be excluded. The Kremlin’s disinformation campaign may be intended to pressure Ukraine into engaging in negotiations on unfavourable terms or to set conditions for a Russian escalation in late summer 2021 or both.

In February 2021, President Volodymyr Zelensky took off the air three pro-Russian television channels connected to the pro-Russian Opposition Platform–For Life party, which won 43 seats in the Verkhovna Rada in the 2019 Ukrainian parliamentary election. Kyiv also imposed sanctions on the leader of the pro-Russian opposition, Viktor Medvedchuk, who was accused of “financing terrorists”—paying the Donbas separatists money. Medvedchuk (66) is a Ukrainian oligarch and a personal friend of Putin’s. He fervently wants to see Ukraine stay clear of NATO, the US and the EU, while keeping close ties with “brotherly Russia”. In parallel the Ukrainian intelligence reported Russia’s proxy forces deployed to the highest degree of combat readiness, withdrew personnel from vacations early, and replenished ammunition for front line units on March 16. Russian proxies have also increased their pace of readiness drills since early March. Ukrainian intelligence and independent reporting confirmed that Russia’s proxies are currently improving their defensive positions.

We further analyse that despite Russia conducting an annual Russian Airborne (VDV) exercise in Crimea from March 16-19, 2021, involving 2,000 troops, the exercise was pre-planned and has occurred in mid-March every year since 2017. No reporting of any other Russian forces redeploying or conducting snap exercises near Ukraine in recent weeks were collected. Russia has not deployed additional combat assets into Donbas, such as artillery and armour units, to support a large-scale operation. Ukrainian intelligence characterizes ongoing Russian proxy activity as preparations for “provoking tension” and “provocative action,” not a new offensive. The increased readiness drills and improved defensive positions in the absence of necessary preparations for offensive action indicate that imminent escalation is unlikely.

Additionally, we are making allowances that the Kremlin’s disinformation campaign may be intended to pressure Ukrainian President Zelensky into renewed unfavourable negotiations with the Kremlin or direct engagement with Russian proxies. Kremlin representatives and media outlets have accused Ukrainian President Zelensky of preparing for an offensive due to his unwillingness to continue negotiations with Russia. Ukraine has refrained from direct engagement with Russia’s proxies in Donbas to avoid legitimizing them as independent actors through direct engagement. Russian envoy Gryzlov accused Ukraine of preparing an escalation to break the “impasse” on negotiations and claimed Ukraine’s only alternative to a military escalation is direct talks with Russian proxies. Lukashevich similarly accused Ukraine of preparing an escalation to avoid what the Kremlin frames as Kyiv’s “commitment” to begin direct engagement with Russian proxies in Donbas.

What cannot be excluded is the possibility that the Kremlin’s disinformation campaign may be setting conditions for its own kinetic escalation in later in 2021. The Kremlin routinely accuses Ukraine of refusing to consider Russia-favourable negotiations and of perpetuating the conflict in eastern Ukraine. However, claims emanating directly from the Kremlin overtly accusing Ukraine of preparing for an offensive are unusual. Russian claims of an Ukrainian offensive might indicate that Russian leaders intend to conduct a kinetic escalation, yet new military assets were not reported. The Kremlin likely intends to build its disinformation campaign over several months and may seek to provoke Ukrainian forces into acting against Russia, this framings will be used as a justification for a renewed offensive against Ukraine.

In conclusion, regardless of the Ukrainian officials attempts to counter the onslaught of belligerency in the Moscow media by announcing Ukraine is ready to meet an enemy attack even if it takes the form of a massive invasion, the risk of escalations is estimated to be low, be it from proxies of conventional Russian troops. The snow is just begging to melt on the East European. It is currently “Rasputitsa” or mud season, which is incredibly problematic for offensive manoeuvre warfare. Maybe six to eight weeks remain before belligerent rhetoric and sporadic bombardments in Donbas might truly transform into something much more ominous.

Qatar’s LNG presence in Asia under challenge

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A part of Qatar’s strategy to gear up to an ever-changing energy market, is well illustrated by a long-term LNG contract signed between the Gulf state and Pakistan on February 26, 2021. The 10-year agreement was signed on Friday by the Pakistani Energy Minister Omar Ayub Khan and his Qatari counterpart, Saad Sherida al-Kaabi, and aims to fulfill Pakistan’s energy needs with 3 million tonnes of liquefied natural gas (LNG). It also demonstrates how a traditionally leading power in the LNG market is now making sincere efforts to preserve its superiority, particularly in Asia, amid challenges originated from other LNG suppliers and new unconventional gas resources. Qatar seems to diversify and enhance its LNG network, by establishing long-term partnerships with prominent customers, as it witnesses a rapid emergence of Australia as a major LNG supplier to Asia, while the United States have dramatically increased their LNG exports since the shale gas revolution.

The 2021 deal between Qatar and Pakistan was a historic agreement signed by the two Muslim states, which share a warm and cordial enduring relationship. As a matter of fact, Pakistan will receive its supplies at an almost 31% cheaper price than the existing contract signed by the previous government with Doha in 2015. Mr. Nadeem Babar, Special Assistant to Prime Minister on Petroleum at Petroleum Division stressed that the agreement will begin in January, 2022, with two ships per month loading about 200mmcfd, which will later rise up to four ships of 400mmcfd at a rate of 10.2% of Brent. In comparison, the previous LNG contract was for a 15-year period, beginning with one ship per month of 100mmcfd and going up to 5 ships of 500mmcfd at a rate of 13.37% of Brent. He added that the new LNG agreement includes a provision of price renegotiation after 4 years. This is a significantly beneficial deal for Pakistan, as  the country would pay about $316million less annually when compared to same volume under the existing long term contract, which means that the country will save almost $3 billion in ten years. It will also provide $170 million letter of credit (LCs) under the existing contract compared to $84 million under the new deal, which is also almost half. Therefore, the provisions of the newly signed deal will ensure price stability for Pakistan along with supply security and an additional decrease of the country’s national budget.

Qatar’s economy is driven by exploitation of natural gas and petroleum resources, representing two-thirds of its GDP and almost 80% of export earnings. Qatar, with just one huge gas field, the North Field, holds about 12% of the world’s proven reserves of natural gas, the third largest reserves in the world, following Russia and Iran. However, the state-owned Qatar Petroleum Co. traditionally leads the LNG market, being the largest exporter worldwide, while in terms of natural gas pipeline exports, the kingdom has been ranked as the second major exporter after Russia. According to the data of the Planning and Statistics Authority (PSA), Northeast Asian markets including Japan, South Korea, India, account for 75% of Qatar’s liquefied natural gas (LNG) exports. Unfortunately, a number of formidable challenges have emerged in recent years, and it seems that their impact poses a threat to Qatari interests. The US and Australia are the major rivals in this race for leadership in the LNG market, particularly in the region of Asia, where the most valuable clients of Qatar are located.

Although the United States are not directly threatening Qatar’s dominance, the shale gas revolution, along with the results of advances in production techniques, has made it possible to extract gas at commercially viable rates from previously unyielding rocks. Indeed, U.S. gas production started rising dramatically and since 2011 it has been breaking new records every year. The extraction of shale gas in the U.S. reached over 23 trillion cubic feet in 2020, and is expected to note a further leap by 2040. It becomes apparent that such a growth rate could affect Qatar’s LNG exports in the coming years. Moreover, U.S LNG exports to China decreased during 2019 due to tariffs imposed by Beijing over 2018 and 2019 in retaliation for US tariffs on Chinese goods. However, China decided in February 2020, to accept applications for tariff exemptions on U.S LNG, from March 2, in a move that allowed it to meet purchase targets under the recent US-China trade deal. Therefore, LNG exports to Asia increased by 67% in 2020, accounting for almost half of all U.S. LNG exports. Exports to other major customers in Asia, including Japan, South Korea and India, also noted an increase in 2020 compared to previous years. Global demand for energy is rapidly increasing, particularly in Asia, due to population and economic growth, especially in large emerging countries such as Japan and China. The shale gas ‘revolution’ in the US has the potential to change the global gas picture, by effectively responding to this growing demand for energy. It seems likely that the US’s excess supply of natural gas will increasingly be exported to Europe and Asia in the form of liquefied natural gas (LNG), affecting the composition of domestic markets in those regions and consequently Qatar’s interests.

Qatar’s top position in the LNG market is currently under challenge by another competitor. Australia is getting ever closer to overtake Qatar, as it exported a record 78.0 Mt of LNG in 2020, compared to 77.6 Mt of Qatar.Australia is a country with multiple sources of natural gas, between conventional and unconventional distributed in both North West and East shelves. The main client markets are the big ones in the Pacific basin, including China, Japan and South Korea, turning Australia into a strong competitor in East Asian markets. In contrast to Qatar, Australia holds the benefit of proximity, as it is located at the Asian Pacific basin. On top of that, between 2014 and 2016, Australia signed Free Trade Agreements (FTA) with Japan, China, and South Korea, eliminating tariffs on major exports, including natural gas. This provided greater certainty for Australia, which can offer more affordable prices, by reducing taxes from the total price of LNG to these major customers. In other words, Australia gained a competitive advantage over Qatar and the rest of LNG exporters in the Asian energy market.

This intense competition forced Qatar to come up with and adopt sufficient strategies and measures that would enable the Kingdom to reclaim and re-establish its status as the leading exporter worldwide. Qatar acknowledges that Asian countries will account for an ever-growing share of gas and LNG demand in the coming years. In an increasingly competitive LNG market, Qatar has an interest in solidifying ties with importing states in SouthEast Asia. Australia’s dominating status is set to change within the next decade, following Qatar’s approval of  the world’s largest LNG project in terms of capacity, North Field East Project (NFE). The state-owned Qatar Petroleum announced on February 8, 2020 it had taken the final investment decision to develop the North Field expansion project, which will raise the nation’s LNG production capacity from 77 Mtpa to 110 Mtpa and will put the country on track to return as the world’s largest LNG producer. The project is expected to start production in the fourth quarter of 2025. Qatar also plans a second expansion phase, the North Field South Project (NFS), set to further increase Qatar’s LNG production capacity from 110 Mtpa to 126 Mtpa by 2027, enough to meet the total import needs of both Japan and South Korea.

In addition to that, Qatar employs a segmented approach to LNG marketing, pursuing a steady price for long-term contracts, that will not be affected by any future shifts of demand. For example, Qatar Petroleum has already shown a preparedness to cut prices to secure deals, as it happened with Pakistan. LNG to Pakistan was priced at a 10.2% of Brent crude oil compared with a 13.37% of Brent of the previous 15-year deal signed in 2016. In fact, this is one of the lowest-priced deals ever signed. Last month, Qatar Petroleum entered into another long term sale and purchase agreement (SPA) with Vitol to supply 1.25Mtpa of LNG to Bangladesh, by offering competitive prices. In terms of Qatar’s marketing and pricing strategies, the Kingdom has exceptionally low LNG supply costs, very large scale plants, ships and marketing operations. The plants are already constructed so there is no exposure to rising costs or overruns. As the world’s lowest-cost producer of LNG, Qatar may be more able to endure lower prices than many of the new supply points operating. However, the advancement of US shale, offers the chance to the United States and possibly other suppliers to compete withQatar, undermining its ability to exercise pricing power. The increase in energy demands, paired with the availability of alternative gas producers will likely allow buyers in Asia to negotiate hard over long-term energy contracts, provided by Qatar, seeking shorter, more flexible agreements.

It goes without saying that significant developments and rules’ changes are yet to take place in the LNG industry. The recently signed agreement between Qatar and Pakistan denotes the Kingdom’s sound efforts to secure its network in the region of Asia and to reclaim its grip on the No. 1 position of the LNG market. Qatar, which is highly depending on natural gas exploitation and has successfully being active since 1997, is now confronting with a series of challenges, including more competitors entering the market and the emergence of new LNG-exporting hubs. It is safe to assess that Qatar, acknowledging the presence of emerging risks to its vital interests, will take all the proper steps not only to reverse dynamics that took place lately, but also to prevent greater alternations, that would likely threaten its status quo as the major LNG supplier. The key for Qatar in the long run is to ensure it maintained market share by adapting rapidly to changing market dynamics.

 

 

 

 

 

 

 

What could be in store for US-Taiwan-China relations within the next 4 years

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Trump didn’t have the best relationship with China. He was forceful and not afraid to show a defensive stance to the powerful country. This can be analysed for having both positive and negative implications. On the one hand Trump didn’t give in to China’s power, which arguably  previous presidencies have been more lenient. However, on the other hand the previous president didn’t have the diplomacy to match. Many have questioned if Biden’s administration, in particular the Chinese Government itself, will have a similar straight forward approach.

On Sunday the 7th of March, China’s foreign minister, Wang Yi, warned Biden to not continue the former president Donald Trump’s “dangerous practice” of showing support for Taiwan. Additionally, Wang said “The Chinese government has no room for compromise” and that the Biden administration should stay away from “crossing the line” and “playing with fire”. The controversial island of Taiwan is claimed by China as its own territory, but both the country itself and the US want to give the Taiwanese people their own freedom.

Since the statement from Wang, the US President has replied saying he wants a more civil relationship with Beijing, but has no sign of relaxing the former presidents practices of trade, technology and human rights. In fact, as recently as Tuesday the Biden administration concluded the first arms sales to the island and confirmed exports of key submarine technology. The new administration seems to be continuing the Trumps approach so far.

Wang hasn’t replied or shown the reaction from Beijing over Biden’s recent approach. However, what could happen if neither countries retreat? In the past, China has threatened to invade Taiwan and this could have been another warning in Wang’s recent speech. In fact, China’s excessive military growth despite its stagnant economic growth this year, due to the pandemic, emphasises the ever posing threat to both Taiwan and the US. China has claimed that its massive military is only for defensive purposes and not offensive, yet the International community doesn’t totally believe this. In fact US Adm. Philip Davidson, warned the US two days after Wang’s warnings, that this threat to Taiwan could happen within the next 6 years. Davison also argued that they should see China as “the greatest long-term strategic threat to security in the 21st century”. China’s military definitely doesn’t have the technological advancements as the US military. However, the US has 1.2 million military personnel, whereas China has 2.3 million. The US and its allies shouldn’t and don’t take China’s warnings lightly because quantity has a quality of its own.

However, the US is growing its allies and has invested a further $1.6 billion to the Aegis Ashore missile defence system for safety and security. The US has recently joined the Qaud group. The other three members are Australia, India and Japan. This a group of major democracies that are strengthening their allies in response to China’s growing influence in the region. China currently has disputes with all four of these democratic nations and with them forming an alliance will not sit well with the Chinese Government.

China definitely has the military power to cause a big conflict in Taiwan. However, with more and more enemies joining forces against China and the different political conflicts that can arise from them all, China’s growing security system might be for more defensive reasons than from a first glance. However, we shouldn’t forget that the Chinese threat is very real and they wouldn’t be afraid of committing. China is clearly still a competitor and not an advisory. If China and the US don’t come to some sort of peaceful agreement soon, over the independence of Taiwan, then a conflict between the nations could be even sooner than 6 years.

How Chile was Able to Order Enough Doses to Vaccinate the Entire Population Twice against Covid

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It might seem that from a westernised perspective, the race to obtain COVID-19 vaccines has been won by western nations. Yet, together with the UK, Canada, the USA and the EU, Chile has secured large doses per capita as well. Chile has ordered up to 90 million vaccine doses, which are more than enough to completely immunize the population of 19.2 million people.

Most of the administered vaccines so far were acquired from Sinovac of China. However, Chile’s ambassador in London, David Gallagher, has helped the country to secure vaccinations from AstraZeneca, Pfizer and Johnson & Johnson as well as from the global vaccine-supply programme, Covax.

Since the end of Pinochet’s dictatorship in 2019, Chile has been immersed in a socio-political crisis. The following government of Sebastián Piñera came under strain following the demonstrations and riots that exploded in October in reaction to Chile’s rising levels of economic and political injustice. Yet his more centrist approach to securing vaccinations has the ability to benefit both the country’s economy and its political situation prior to the 2020 elections.

Analysts have praised Chile’s foresight in negotiating vaccine agreements ahead of time, arranging clinical trials in exchange for earlier supplies at a lower cost. Before the start of the pandemic, several vaccine manufacturers were already in good relations with Chilean universities and hospitals.

Chile has provided far more vaccines than it needs to vaccinate the whole population. It aims to vaccinate 5 million citizens by April and 15 million people, or about 80% of the country, by July. However, medical experts in Chile have concerns about the Chinese Sinovac’s jabs efficacy compared to other vaccines. Despite these concerns, they emphasise the effectiveness of Chile’s long-standing vaccination programme, which has had widespread public support since its inception in the 1970s.

Frontline staff and the elderly have been given priority for the vaccination scheme, which was delivered free of charge. The central administration has also helped to streamline the procedure, as opposed to other countries where local or provincial authorities have been left to do so.  Sinovac has been proven easy to distribute, especially to those isolated communities in unusually elongated territory, as it does not require to be stored at extremely low temperatures like some other vaccines.

The roll-out of the vaccine to the public is moving fast, having only begun in early February. The Chilean health sector has considerable expertise with mass immunization programs and a number of vaccination centres have been set up around the country to achieve this goal.

Chiles’ strong ability to secure enough vaccines might encourage neighbouring countries, which have not secured any vaccination schemes deal yet to do so. As a matter of fact, Uruguay will be the last South American country to start the vaccination plan.

Moreover, this might also encourage trade partners and new interested foreign investors to participate in the Chilean economy or engage more with the other Chilean economic sectors.

This vaccination campaign is supposed to help restore the economy after last year’s recession. For others, the main concern is what the effective introduction of the vaccine could mean for social cohesion in a country where tensions have been simmering since the protests that broke out in 2019.

The United States Military Response – What Does this Mean for Biden’s Plans in Iran?

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In the United States, President Joe Biden has released his first military action seen in his presidency so far. In a powerful and co-ordinated attack, Biden had released an air strike all over facilities at a border control point in Syria aiming at Iran backed militia groups, killing at least 22 people in the process. As reported by militia officials only 1 person was killed but a war monitor has reported at least 22. Despite Biden’s strong intentions, his administration aims not to create any further tensions with Iran to secure a nuclear deal, but likewise, he will still not want to be resisting any threats to the US.

The response planned by the United States had resulted from a civilian contractor that had been killed in a rocket attack in Irbil on United States targets on 15th  February 2021. Five other contractors had also been injured including a United States service member. A military base used by the US coalition had also been targeted during the attack.

As a result of this, ten days later, the US alongside consulting coalition partners, had constructed a missile strike in retaliation. Syria had condemned the attack, considering it as a “bad sign” for the administration. Their foreign ministry elaborated by stating that it “strongly condemns the cowardly American aggression”. Despite this, the strike had been carried out at the Syrian border between Boukamal and Qaim with the level of devastation expected from this type of attack.

The Pentagon’s location target of the attack was on Syrian facilities at a border control point used by a number of Iran-backed militia groups such as Kataib Hezbollah and Kataib Sayyid al-Shuhada of which allies with the Damascus government. Strikes had been reported by officials to of hit an area along the border of Boukamal and the Iraqi town of Qaim.

When compared to the previous administrations policies on attacks under the Donald Trump administration, Biden’s administration aimed to not escalate tensions with Iran, and simply punish the militias. This is due to President Biden wanting to instead aim to try and recreate discussions around a nuclear deal that had previously been abandoned. This deal was originally involved around a 2015 nuclear deal to limit its uranium enrichment and allow international inspectors to access areas of their nuclear facilities to check everything was under control. Trump had withdrawn from this deal, instating economic sanctions in an effort to negotiate a new accord. Now, under the Biden administration, he says that he will not lift the sanctions until the terms agreed under the 2015 deal are applied.

Despite Pentagon Press Secretary John Kirby stating that the strike wasn’t designed to raise any aggression or tensions with Iran but instead create a detrimental effect on the militias, it does strike a clear message in the difference in attitudes compared to the Trump administration. President Joe Biden wants to explore and protect the chances of reviving his nuclear deal with Iran, but in doing so he also does not want Iran to get the impression that threats such as Iran-backed militias can continue to cause problems and that he will allow these dangerous groups to continue.