Sunday 19 May 2024
Saturday 18 May 2024
EXCELLENT GAZA SUMMARY FROM THE NEW YORKER
Is Netanyahu Choosing a War of Attrition Over Biden’s Wider Plan?
As Israelis mark their independence, the Biden Administration pushes for a regional alliance.
Eleven days ago, the C.I.A. director, William Burns, arrived in Cairo to join the negotiations over Gaza, which have also been brokered by Qatar and Egypt. Since then, ordinary Israelis began checking their phones every couple of hours to find out the fate of the “iskah,” Israel’s never-quite-consummated ceasefire deal with Hamas. Last Tuesday, we found out, instead, that the Israel Defense Forces had conducted air strikes in part of Rafah, and gained control of the Palestinian side of the land crossing into Sinai, near the Egyptian border. As the country marks an unusually vexed Independence Day, it is not yet clear how the Rafah incursion will affect the negotiations. It is clear that, as the Biden Administration (and many Israeli security experts) conceive it, a deal would not just secure the return of hostages but gesture toward a turning point in the war and in the region—which the Netanyahu government continues to resist.
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Netanyahu claims that beneath Rafah, in a network of tunnels and bunkers, four Hamas battalions remain intact, presumably joined by fighters fleeing the north and holding an unknown number of surviving hostages. (Unnamed Israeli officials suspect that many Hamas fighters, along with the leader Yahya Sinwar, have actually moved back to tunnels further north.) Above ground in Rafah, a million Gazan refugees languish in tents, with few facilities and little food. Most are from Gaza City and Khan Younis, where, during the winter, the I.D.F. scattered most other Hamas battalions and, in the process, killed tens of thousands of civilians, and destroyed or damaged half the homes and more than three-quarters of the schools. More than three hundred thousand people are reportedly on the move again, desperately seeking safe zones. When Israeli officials speak of applying military “pressure” to secure the hostages’ release, the implication is that Hamas must believe that an attack on them is imminent; paradoxically, though, Hamas must know that Israel knows that an actual attack would doom the hostages—and, in the eyes of the world, the nation. In any case, it would certainly mean that thousands more Gazan civilians would be killed or subject to famine, which is why the White House firmly opposes an attack. Early last week, President Biden announced that he had held up a shipment of bombs that, he said, “have been used historically to deal with Rafah, to deal with the cities.”
As for the framework for the deal, which the United States supported, it would reportedly involve multiple phases. First, a temporary ceasefire of several weeks would halt the fighting and release “hundreds” of Palestinians in exchange for thirty-three hostages: women, older men, the sick, and the wounded. In addition, Israel would permit Gazan civilians to return to the northern cities, and enable an increase of an unspecified amount of humanitarian aid. It has also been reported that a second phase would aim for an “arrangement to restore sustainable calm.” Then, presumably, the remaining hostages—including those who have died—and Israeli soldiers held by Hamas would be released, in return for more Palestinian inmates in Israeli prisons.
Last Monday, in what appeared a breakthrough, Al Jazeera reported that Hamas had “accepted” the deal. (Israel has called the news agency, which is sponsored by Qatar, a mouthpiece for Hamas, and last week ordered its broadcasting equipment to be confiscated and access to its Web site blocked.) Across Israel, demonstrations led by families of the hostages, calling for the government to bring them home, gained momentum. However, it was soon evident that Hamas had written new language into the draft, such that the first release of hostages might include dead hostages. Hamas also rejected any Israeli veto over which Palestinian prisoners will be freed (which meant that some notorious Hamas leaders could be returned to the West Bank, according to an analysis by the Israeli journalist David Horovitz) and set conditions for Israeli overflight of Gaza.
These were serious changes but also distractions. Irreconcilable approaches to the duration of the second phase would anyway preëmpt an agreement over the first. Hamas claimed that, during the second phase, the ceasefire would, in effect, become permanent, and suggested that it had secured an American guarantee that the war would end after the first phase was complete. (This was consistent with the Biden Administration’s stated aim that “an initial six-week ceasefire would be built into something more enduring.” The Administration did not respond to a request for comment.) Accordingly, Hamas has set conditions that would give it back control of Gaza and gain it more influence in the West Bank, Horovitz wrote. Israel’s Prime Minister, Benjamin Netanyahu, meanwhile, speaks of “absolute victory,” and says that the I.D.F. will go after Hamas in Rafah, deal or no deal. His close allies—Likud populist nationalists, settler messianists, and the ultra-Orthodox—have made clear their intention to fend off any compromise of their claim to the whole “Land of Israel,” which means the West Bank, though not, historically, Gaza. Netanyahu insists that, if he takes the deal, Hamas would “rebuild their military infrastructure” and live to kill another day. His implicit counteroffer is just a turnabout: give me the hostages and I won’t kill you today, but I will as soon as I have them. For now, the stalemate persists.
Or does it? For months, Secretary of State Antony Blinken has been publicly urging Israel—most recently in Riyadh, on April 29th—to consider how its military actions in Gaza might be tempered by the prospect of joining a U.S.-led regional alliance against Iran; how Hamas might be preëmpted by a larger diplomatic plan, including the normalization of relations with Saudi Arabia, rather than by a war of attrition, which would only promise Gazans more carnage and Israel international isolation. In Riyadh, Blinken asked what is to be done, after a ceasefire is in place, about security, governance and administration, and humanitarian and reconstruction needs in Gaza. Right now, Hamas fighters simply reappear where the I.D.F. retreat, prompting Israeli counter-insurgency raids, such as the one in March on the Al-Shifa hospital, in Gaza City, where Israel said Hamas had regrouped. “It’s clear,” Blinken said, “that in the absence of a real political horizon for the Palestinians, it’s going to be much harder, if not impossible, to really have a coherent plan.”
What Blinken was implying is that you have to try to solve the whole puzzle in order to have a shot at solving this part. The Saudis and the Gulf states have the resources to rebuild Gaza, but the Saudis cannot move on close coöperation, let alone normalization, with Israel without an end to the war and an agreement on a clear path to a Palestinian state. Nor can the Saudis, Emiratis, Jordanians, or Egyptians move on any public military alliance. (“They don’t trust Bibi,” the veteran Haaretz security correspondent Amos Harel told me.) Even a preliminary calm would require a Palestinian administration blessed by the Palestine Liberation Organization; the pollster and analyst Khalil Shikaki, who is based in Ramallah, told me that the P.L.O. remains “the only big-tent Palestinian entity that still has broad legitimacy.” And there can be no such blessing without a clear promise of a Palestinian state. (The Saudis, Tom Friedman reported in the Times, would expect a freeze on Israeli settlement construction in the West Bank and a “three-to five-year ‘pathway’ ” to establish a Palestinian state.)
After the early hours of April 14th, moreover, when Iran attacked Israel with three hundred and thirty drones, cruise missiles, and ballistic missiles, the alliance was no longer hypothetical. According to the Intercept, the U.S.—supported by the U.K., French, and Jordanian air forces—shot down more of Iran’s missiles than Israel did. (Other reporting also indicated the use of Emirati and Saudi intelligence.) The few that got through did minimal damage. Nevertheless, Israelis awoke the next morning to a country that seemed, however subtly, changed; even career hawks who, eliding the question of Palestine, once spoke solemnly about Israel going it alone against Iran were now speaking solemnly about the need for an alliance and an openness to a renewed peace process.
Video From The New Yorker
SOMETHING HAS TO GIVE
How long can good times keep rolling for markets?
William Cohan is a former investment banker and author of ‘Power Failure: The Rise and Fall of an American Icon’ William Cohan · 18 May 2024
Now that US interest rates seem to have stabilised, there are supposedly way too many deals being cooked up for bankers to take a summer break.
As the Financial Times has reported, the joke around WallStreet these days is that August in the Hamptons enclave on Long Island has been cancelled.
“There’s money everywhere,” the cofounder of one alternative asset manager was quoted as saying at this month’s Milken Institute conference.
The Hamptons quip is probably an exaggeration. But it’s certainly fair to say that some green shoots are sprouting in the capital markets, at least in the bellwether investment banking products.
For instance, first-quarter M&A deal values in the US and in Europe harked back to the dealmaking enthusiasm of the pandemic years, according to Linklaters.
In the US, the value of public M&A deals topped $224.3bn, the highest value of deals since the second quarter of 2022, when the deal values were $260bn. In Europe, deal values reached $47bn in the first quarter — also the highest since the second quarter of 2022 — driven by an increase in dealmaking in the UK.
According to S&P Global, global bond issuance in the first quarter of 2024 increased 15 per cent, to $2.4tn, from $2tn in the first quarter of 2023. And last week, there was a rush of new issuance in both the investment grade and highyield bond markets.
One not so bright spot — initial public offerings. IPO-issuance in the first quarter 2024 continued to decline, according to S&P Global, to the lowest level since the second quarter of 2022.
But April was the busiest month for IPOs since November 2021, according to Renaissance Capital, which also tracks IPO issuance.
So good times it seems. But all of this raises aquestion. We are seeing a turn downwards in the interest rate cycle but without the usual painful economic correction that canac company such pivots. Are we overdue a reckoning?
The stock market might be one place to look for signs that things are getting out of hand after the more than doubling of the benchmark S&P 500 from pandemic lows in 2020.
David Einhorn, the reclusive hedge fund manager at Greenlight Capital who correctly predicted the implosion of Lehman Brothers in 2008, is pretty clear that things are not all right. Greenlight declared in its first-quarter letter to his investors: “The stock market is fundamentally broken!”
Einhorn’s beef with the equity markets seems to be that investors either don’t “care about valuation” or cannot “figure out valuation”.
He believes that old-fashioned value investing, where investors find stocks that are fundamentally undervalued and hold them until other investors figure out what they have been missing, is all but dead.
He thinks index funds are ruling the markets and making the mistake of overinvesting in overvalued stocks and underinvesting in undervalued stocks.
“As several trillion dollars have been redeployed in this fashion in recent years, it has fundamentally broken the market,” according to the Greenlight letter. The firm claims not to be complaining. Rather, it said, it was “excited” to invest at this moment because “once these undervalued stocks underperform long enough, some of them become ridiculously cheap”.
Einhorn might not have had a great 2024 so far. His hedge fund returned 4.9 percent in the first quarter of 2024 compared with a rise of 10.6 per cent for the S&P 500. But that came after an impressive 2022 and 2023, during which Greenlight made returns of almost 33 per cent and 22 per cent, respectively.
It’s hard to know which camp is right — the Wall Street banking optimists, who get paid to be upbeat, or Einhorn, who has made a fortune on occasion by being pessimistic.
But there are substantive issues overhanging markets — the many ongoing global conflicts, the continued uncertainty around the US Federal Reserve’s direction of rates and the outcome of the US presidential election, which could very well return Donald Trump to the White House.
It seems to me we should at least be alive to the risks of a reckoning.
Tiff Macklem, the governor of the Bank of Canada, has argued likewise, warning on May9 that “some indicators of financial stress have risen” and that the valuation of “some financial assets appear to have become stretched”.
He added: “This increases the risk of a sharp correction that could generate system-wide stress. What’s most important is that, to properly manage risks, financial system participants need to remain proactive. And financial authorities need to remain vigilant.”
Jean Pisani-Ferry : « Le danger est celui d’une divergence croissante entre les Etats-Unis et l’Europe sur la question chinoise »
Le 14 mai, le président américain, Joe Biden, a annoncé un quadruplement des droits de douane sur les véhicules électriques importés de Chine, qui vont ainsi passer de 25 % à 100 %, en même temps qu’une augmentation substantielle des tarifs sur les batteries, les panneaux solaires et une série d’autres produits chinois.
Attendue, bien que contraire aux règles de l’Organisation mondiale du commerce, cette décision s’analyse au premier chef comme une gesticulation symbolique, destinée [en vue de la présidentielle de novembre] à couper l’herbe sous le pied de Donald Trump en le privant d’un argument de campagne dans les circonscriptions ouvrières des Etats-clés. Les Etats-Unis n’importent en effet quasiment pas de véhicules électriques chinois. Plus largement, l’ensemble des produits touchés par la mesure annoncée par Joe Biden ne comptent que pour 18 milliards de dollars (16,60 milliards d’euros), soit moins de 5 % des importations en provenance de Chine.
Il n’en reste pas moins que la décision signale une inflexion de la politique américaine. Si Joe Biden n’avait pas remis en cause les droits de douane institués par Donald Trump, il avait jusqu’ici pris soin de ne pas les relever.
Lire aussi |
Depuis l’Inflation Reduction Act (IRA) de 2022, la politique industrielle verte reposait sur des subventions, certes assorties de clauses de contenu local, mais accessibles aux entreprises du monde entier. Cette politique donne d’ailleurs des résultats : entre le début de 2022 (avant l’IRA) et le début de 2023 (après), l’investissement dans les technologies vertes a augmenté de 36 %. Le renforcement de la protection commerciale pour toute une série de produits verts indique certainement la volonté de construire aux Etats-Unis une nouvelle industrie décarbonée largement découplée de la Chine.
L’inflexion est que, jusqu’ici, le rôle dévolu à la politique commerciale dans la stratégie de l’administration Biden n’était pas d’abord de sauvegarder l’emploi ou de promouvoir un développement industriel, mais de préserver la sécurité économique. Le conseiller à la sécurité nationale, Jake Sullivan, avait d’ailleurs pris bien soin de préciser que le but de l’administration était de protéger les technologies fondamentales, pas d’opposer un mur aux exportations chinoises. Vu de Pékin, le changement de pied sera certainement lu comme un signe de plus de la volonté américaine de se découpler de la Chine.
« Dérisquer » la relation
Cette question est de première importance pour l’Union européenne (UE). Contrairement aux Etats-Unis, celle-ci importe déjà des véhicules électriques chinois, qui comptent aujourd’hui pour un quart des immatriculations. Redoutant un afflux massif de ces véhicules, l’UE a lancé une enquête antisubventions, dont les résultats seront connus cet été et qui va sans doute conduire à la mise en place de droits de douane compensateurs.
Cependant, ceux-ci seront certainement d’un niveau bien plus faible que 100 % et, à l’instar des constructeurs japonais dans les années 1990, les constructeurs chinois étudient déjà où et comment investir pour préserver leur accès au marché européen. Ils y sont explicitement encouragés par certains gouvernements, y compris en France, où Bruno Le Maire, le ministre de l’économie, a réaffirmé cette invitation à investir à l’occasion de la visite en France du président Xi Jinping.
Lire le décryptage |
Un récent rapport Bruegel-CEPR tente de le préciser en s’attachant à mettre en évidence les vulnérabilités induites par une concentration excessive des importations, qui expose à un risque de perturbation des chaînes d’approvisionnement, mais aussi des exportations, qui expose à un risque de coercition. Le résultat est que le nombre de produits concernés par le premier risque reste très faible, et que la réponse au second est surtout de l’ordre de la dissuasion.
Divergence croissante
La stratégie européenne est donc nettement différente de celle qui s’affirme aux Etats-Unis, et qui sera considérablement renforcée en cas de victoire de Donald Trump en novembre.
Ce n’est pas affaire de naïveté, de minimisation des risques ou d’impréparation : depuis 2020, lorsqu’elle croyait encore au doux commerce et avait conclu avec Pékin un accord de coopération économique et d’investissement finalement resté lettre morte, l’UE a beaucoup évolué sur la question chinoise. Elle s’est dotée de toute une panoplie d’instruments pour se protéger des risques de ruptures d’approvisionnement et riposter aux éventuelles tentatives d’intimidation. Mais même si l’on prend au sérieux la possibilité d’un comportement agressif de la Chine, les conséquences pratiques à en tirer restent d’ampleur limitée. Ce n’est que dans l’hypothèse, extrême, d’une rupture totale des relations économiques bilatérales (à la suite, par exemple, d’un conflit sur la question taïwanaise) que nous serions réellement désarmés.
Lire aussi la chronique :
Ce qui est finalement inquiétant dans la décision de Joe Biden, ce n’est pas qu’elle puisse induire un détournement des exportations chinoises vers le marché européen. Le secteur automobile chinois est effectivement en surcapacité, mais les droits de douane sur les véhicules électriques n’aggraveront en rien le problème. Le danger auquel nous faisons face est celui d’une divergence croissante entre des Etats-Unis engagés, de fait, dans une stratégie de découplage d’avec la Chine, et une Europe, qui, prenant certes le risque chinois au sérieux, vise à le contenir plutôt qu’à le supprimer.
Peut-on partager la même perspective géostratégique tout en ayant sur le plan économique des orientations de plus en plus distantes ? C’est sur cette question qu’il faut réfléchir ; c’est à elle que les dirigeants européens devraient se consacrer.
Malaysia’s appetite for oil and gas puts it on collision course with China
By Rebecca Tan
May 11, 2024 at 18:00 Taiwan Time
BINTULU, Malaysia — In the open sea off the coast of Malaysian Borneo, industrial rigs extract massive amounts of oil and gas that fuel the economy of Malaysia.
Slightly beyond that, in waters Malaysia also considers its own, Chinese coast guard vessels and maritime militia boats maintain a near-constant presence, say Malaysian officials. For 10 years, their country has done little to contest them.
But Malaysia is running out of oil and gas close to shore. Increasingly, it has to venture farther out to sea, raising the likelihood of direct confrontation with Chinese forces in the South China Sea.
As tensions rise throughout the South China Sea, one of the world’s busiest and most contested bodies of water, energy demands are drawing Malaysia deeper into the fray and testing the country’s long-standing reluctance to antagonize China, according to interviews with more than two dozen government officials, diplomats, oil and gas executives and analysts in Malaysia.
Some of Asia’s biggest oil and gas reserves lie under the seabed of these disputed waters, according to the U.S. Energy Information Administration. Since 2021, Malaysia’s state-owned energy company, Petronas, has awarded several dozen new permits for companies like Shell and TotalEnergies to explore new deposits here, many in so-called “deepwater” clusters more than 100 nautical miles from shore but still within the boundaries of what Malaysia considers its exclusive economic zone (EEZ).
These developments are teeing up more confrontations with China, warn energy and security analysts. Already, federal and provincial officials in Malaysia have been beefing up military deployments around the industrial port town of Bintulu in the state of Sarawak, where much of the country’s oil and gas industry is based, and Malaysia has been increasing military cooperation with the United States, particularly on maritime security. For the first time later this year, a bilateral army exercise known as Keris Strike that Malaysia conducts annually with the United States will be held on Borneo, said a U.S. State Department official.
At least since 2020, China has been harassing Malaysian drilling rigs and survey vessels, leading to standoffs that have lasted months, according to satellite imagery and data that track ship movements. For years, Malaysia’s response has been muted — a calculation shaped by reliance on Chinese investment and the relative weakness of the Malaysian military, said Malaysian security analysts and defense officials. Unlike the Philippines or Vietnam, Malaysia rarely publicizes Chinese intrusions into its EEZ, which extends 200 nautical miles off the coast, and withholds how often these incidents occur from journalists and academics.
In an exclusive interview, the director general of Malaysia’s National Security Council dismissed concerns of Chinese harassment even as he acknowledged that Chinese vessels had been patrolling Malaysian waters nearly nonstop.
“Obviously, we prefer for Chinese assets not to be in our waters,” said Nushirwan bin Zainal Abidin, who was ambassador to China from 2019 to 2023. But there’s no need, he added, for the dispute to “color” Malaysia’s broader relationship with its largest trading partner. “We can let sleeping dogs lie,” Nushirwan said.
Despite objections from countries in Southeast Asia, China has laid claim to almost the entire South China Sea, building artificial islands and deploying vessels to enforce what it calls the “10-dash line,” delimiting on maps the boundaries of what China says are its waters, which come within 25 nautical miles of the Malaysian coast.
While much attention in recent months has been paid to China’s intensifying encounters in contested waters with Filipino fishermen and coast guard, tensions stirring farther south, where the world’s biggest oil and gas companies have deeper interests, have gained far less notice. Asked about Malaysia’s claims of Chinese incursions, China’s Ministry of Foreign Affairs said in a statement that Chinese vessels have been conducting “normal navigation and patrol activities” in areas under its jurisdiction.
Malaysia has for decades sought to “decouple” the South China Sea dispute from trade and investment with China, said a high-ranking Malaysian official, who spoke on the condition of anonymity because he had not been authorized to address the issue.
But the country’s need for offshore oil and gas is starting to upset this delicate balancing act, the official said. He noted that Chinese coast guard vessels have repeatedly disrupted operations at the Kasawari gas field, which contains an estimated 3 trillion cubic feet of gas and where Malaysia has recently built its biggest offshore platform. “For what’s happening at Kasawari, I don’t have a solution,” the official said. “Right now, no one does.”
Venturing into deeper waters
In the 1970s, before Shell discovered large deposits of oil and gas off the coast, Bintulu was a small fishing village with a single stretch of road connecting a mosque to a market. Today, it’s a throbbing hub of industry, anchored by a 682-acre processing facility that produces 30 million tons of liquefied natural gas per year. In 2023, Malaysia was the world’s fifth-largest exporter of LNG, according to the U.S. Energy Information Administration.
Malaysia has relied on these resources to drive growth for decades, deriving 20 percent of its gross domestic product from oil and gas. But several years ago, industry analysts warned that the country’s era of “easy exploration” was ending. Oil and gas found in shallow waters, meaning at depths less than 1,000 feet, were running out. Companies knew there were more deposits remaining, said San Naing, a senior oil and gas analyst at BMI, a market research firm. “They just had to go farther out.”
Nearly 60 percent of Malaysia’s gas reserves are located off the state of Sarawak, says the country’s energy regulator. Starting in 2020, Petronas ramped up exploration. Two years later, having reported a string of new discoveries, the company awarded 12 new licensing contracts to energy conglomerates looking to operate in Malaysia, the most since 2009.
Petronas executives say this enthusiasm is a sign of “investor confidence.” But in private, investors have been fretting over the risks of operating in the South China Sea, said a veteran oil and gas analyst who researches Malaysia and who spoke on the condition of anonymity to protect business interests. “What happens when the Chinese boats turn up? That’s always front of mind,” said the analyst.
In 2018, after harassment by Chinese vessels, Vietnam called off a major oil project midway through construction, leaving the companies involved with an estimated $200 million in losses. That incident was a “shock to the industry” and drove companies to reconsider investments in the South China Sea, said the analyst. Malaysia’s new discoveries are encouraging companies to return. But the risks now are arguably higher than ever.
A handful of Chinese vessels patrol the waters at Luconia Shoals, about 60 nautical miles off the Malaysian coast, near major gas fields like Kasawari. But a much bigger fleet of hundreds of Chinese coast guard ships and maritime militia are based farther north, near the Spratly Islands, where Petronas has designated new clusters for oil and gas exploration. The closer Malaysia’s energy projects come to the Spratlys, the greater the likelihood of confronting the Chinese, said Harrison Prétat, deputy director at the Asia Maritime Transparency Initiative at D.C.-based Center for Strategic and International Studies.
In recent months, Chinese officials have said pointedly that the exploration of resources in the South China Sea “should not undermine China’s territorial sovereignty and maritime rights and interests.”
Petronas rejected requests for interviews and did not respond to inquiries about the South China Sea. But last year, after Beijing released a new map of the waterway that expanded Chinese claims, Petronas’ chief executive, Tengku Muhammad Taufik Aziz, made an unusually strong statement of objection. Extracting offshore oil and gas is within Malaysia’s sovereign rights, he said. “Petronas,” he added, “will very vigorously defend Malaysia’s rights.”
The U.S. government has rejected China’s expansive claims in the South China Sea but has not formally endorsed Malaysia’s claims.
A ‘fundamental rethinking’
Three years ago, a fleet of 16 Chinese military planes conducting an exercise over the South China Sea entered Malaysian airspace, said Malaysian officials. The incursion elicited rare rebuke from the Malaysian air force, which called it a threat to national security, and prompted the Malaysian minister of foreign affairs to summon the Chinese ambassador. Writing for a think tank, a trio of Malaysian scholars said the incident had “sparked fundamental rethinking within the Malaysian establishment about the country’s China policy.”
Chinese officials, however, denied that its planes had ever entered foreign airspace. A Chinese state-run think tank, the National Institute for South China Sea Studies, said military aircraft were free to fly over the airspace of the South China Sea since its boundaries were “unclear.”
By the end of 2021, Malaysia had announced that a new air base would be built near Bintulu. Soon after, an army regiment from a neighboring city was moved in and last year, defense officials said they had worked out a plan to establish a new naval base. Speaking in Parliament, Defense Minister Seri Mohamad Hasan said Malaysia’s oil and gas would be protected “at any cost.”
Since 2021, Malaysia has also been increasing defense spending and strengthening military cooperation with the United States. Malaysia has received drones, communication equipment and surveillance programs, including long-range radar systems, installed on Borneo, to “monitor the sovereignty of airspace over the coastlines,” officials say. Later this year, Malaysia is set to get a decommissioned U.S. Coast Guard cutter and hold the annual Keris Strike military exercises with the U.S. on Borneo, according to the State Department official, who spoke on the condition of anonymity to share private negotiations.
Little of this has been highlighted by Malaysia. It is eager to avoid becoming “entangled” in the geopolitical contest between the United States and China, said the high-ranking Malaysian official.
He said he presumes that China “sees” everything happening in the South China Sea. “The question is will they see what we’re doing and allow it.”
Christian Shepherd in Taipei, Taiwan and Desmond Davidson in Kuching, Malaysia contributed to this report. Maps by Laris Karklis.
Nato’s failure to save Ukraine raises an existential question: what on earth is it for?
The military alliance is turning 75. But there’s little to celebrate in Kyiv, as Putin’s forces continue their bloody advance
Nato’s grand 75th birthday celebration in Washington in July will ring hollow in Kyiv. The alliance has miserably failed its biggest post-cold war test – the battle for Ukraine. Sadly, there’s no denying it: Vladimir Putin is on a roll.
Advancing Russian forces in Kharkiv profit from the west’s culpably slow drip-feed of weaponry to Kyiv and its leaders’ chronic fear of escalation. Ukraine receives just enough support to survive, never to prevail. Now even bare survival is in doubt.
Ukraine is Europe’s fight. It’s freedom’s global fight, Joe Biden says – a fight for democracy. “Our support cannot and will not falter. Britain is with you for as long as it takes,” Rishi Sunak vows. Yet, on the ground, Ukraine is mostly left to fight alone.
Nato should have intervened robustly to deter Russia’s aggression right from the start, as repeatedly urged here. No-fly zones could have prevented thousands of civilian casualties and limited damage to Ukraine’s cities.
Restrictions on Kyiv’s use of western-made missiles to attack military bases and oil refineries inside Russia were, and are, self-defeating. Nato navies should have imposed defensive cordons around grain-exporting Black Sea ports. Putin should be told where to shove his contemptible attempts at nuclear blackmail.
All this might still be done, if there’s a will. General Richard Shirreff, a former top Nato commander, urges a “fundamental shift” to a more activist strategy. He’s right. But there’s little sign that politicians are listening. Biden and Germany’s Olaf Scholz allow excessive, myopic caution to obscure military and moral imperatives. France’s Emmanuel Macron, abandoning appeasement, now claims only Russia’s defeat will save Europe. A bit late, Manu.
In Britain, Sunak prates disingenuously about unparalleled security dangers. He may scare UK voters – but he does not scare Putin or his “no-limits” enabler, China’s Xi Jinping, as last week’s defiant Beijing love-in showed. That’s because, for all their talk, like Nato as a whole, neither Sunak nor hawkish foreign secretary David Cameron, the Cotswolds kestrel, are prepared to step in directly to help Ukraine win. Thus, they render defeat more probable.
Nato should fast-track Ukraine’s full membership in July. But it won’t. The US has already decided against – and the rest tamely tag along. Kyiv is vaguely told it must wait until “conditions are right”. The actual, discreditable reason is Biden’s outdated, cold war-era fear of Russian retaliation. Does he truly believe Putin would attack Nato’s 32-country array, a vastly superior force? More likely, cowardly Putin would back off.
Anders Fogh Rasmussen, former Nato secretary-general, has the right idea. He wants Ukraine’s accession talks to begin right away – and Scholz to stop blocking supplies of long-range Taurus missiles.
“If you argue that you cannot extend an invitation to Ukraine as long as a war is going on, then you give Putin an incentive to continue the war, to prevent Ukraine joining Nato,” he said. The EU should stop dithering, too, and super-charge Kyiv’s membership application at next month’s summit. The frontline situation grows critical, partly because Russia has exploited the delay, caused by Donald Trump’s allies, in delivering a $60bn (£47bn) US weapons package. Secretary of state Antony Blinken admitted as much in Kyiv last week. Ukraine is also short of soldiers. Macron’s recent musings about sending ground troops were angrily dismissed out of hand in Washington and Berlin. Yet this option demands serious consideration. The US is now reportedly considering deploying troops as trainers.
“European leaders cannot afford to let American political dysfunction dictate European security,” analysts Alex Crowther, Jahara Matisek and Phillips O’Brien argue. “They must seriously contemplate deploying troops to Ukraine to provide logistical support and training, to protect Ukraine’s borders and critical infrastructure, or even to defend Ukrainian cities. They must make it clear… Europe is willing to protect Ukraine’s territorial sovereignty.”
It’s increasingly up to Europe, which has most to lose. Aside from the dire consequences of Ukraine’s permanent partition or total subjugation, success for Putin’s neo-imperial project prospectively imperils a clutch of former Soviet republics – Georgia is one vulnerable example – the EU and European security.
If such scenarios materialised, Nato would be sucked in regardless. Or would it? Trump is a wild card. If he beats Biden in November, former advisers are convinced he will pull the rug from under Ukraine and cosy up to Putin. They also believe he will move to quit Nato, initially by sabotaging or blocking operations. July’s birthday party may be Nato’s last. At which point, Europe really would be on its own.
“If Trump is re-elected and follows through on his anti-Nato instincts, the first casualty would be Ukraine,” wrote Alexander Vershbow, former US ambassador to Russia and Nato. “The disastrous consequences would only start there.”
Why is it so hard for western politicians to grasp the broader, existential nature of the Russian threat? Recurring spying rows, sabotage, assassinations, arson and cyber-hacks show Moscow “is waging war on European countries”, Russia expert Edward Lucas warned. “How is it that Russia, a country with an Italy-sized economy, is able to attack the entire west with impunity? The answer is that Russia does not take us seriously.”
Imagine how future historians may view all this. The world’s most powerful military alliance failed to defend a neighbouring European democracy and independent sovereign state from illegal, unprovoked, precedent-setting invasion, ruinous destruction and war crimes committed by a less powerful, authoritarian aggressor. Extraordinary.
Ill-led Nato cannot be relied upon to head off far-reaching disaster in Ukraine. So the question arises: what is Nato for? It’s not only Trump who’s asking. If they don’t raise their game, quickly, alliance leaders should cancel the champagne – and hang their heads in shame.
• Simon Tisdall is the Observer’s Foreign Affairs Commentator
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