地缘贸易博客This blog considers how ideas and events framed by geography and trade shape our world, while sharing observations and analysis on discovery, transport, industry and much more.

Thursday 1 December 2011

New APEC Trans-Pacific Partnership - Spanning the Pacific Ocean from Coast to Coast

APEC meeting to discuss the Trans-Pacific Partnership Agreement

The Asia-Pacific Economic Cooperation (APEC) Economy Leaders gathered in Hawaii for the final APEC Leader's Summit on 12-13 November 2011 of the US Presidency. The aim of the 21 member APEC forum is to lower trade barriers and increase economic cooperation in the Asia-Pacific region. At the Summit, APEC leaders pledged to work together to achieve the broad outlines of a plan that could work as the model of a new Trans-Pacific free trade zone, spanning the Pacific Ocean from coast to coast, known as the Trans-Pacific Partnership (TPP). 

The proposed free trade zone could serve as a model not only for the region but in light of the failure of the latest Doha Round negotiations, it could also serve as a model for other global trade pacts. The current Trans-Pacific Partnership members include Chile, Brunei, New Zealand and Singapore, with America, Australia, Japan, Malaysia, Perú, and Vietnam already in negotiations to join. Canada, México and Colombia are also considering joining.

The US President, Barack Obama, has said publicly that he hopes the Trans-Pacific Partnership will be the cornerstone of an APEC-wide free-trade area. In a similar statement, the Chinese President, Hu Jintao, too said that China supported the proposal for an APEC-wide free trade area from coast to coast in the Asia-Pacific Region.

Many of the smaller Trans-Pacific Partnership countries welcome Japan’s participation for the access it would give them to a second giant market, alongside America’s. The treaty’s ambitions are for free movement of almost everything with the exception of labour. Japan hopes to influence global technological standards in industries like electric cars and clean energy by joining with the US. 

US and China - both part of the Asia-Pacific Region

By agreeing to open negotiations to join the Trans-Pacific Partnership, the US President is clearly seeking to re-establish the US as a Pacific nation. The Trans-Pacific Partnership is a symbol of the shift in the world’s centre of economic gravity from the Atlantic to the Pacific Ocean. If the ten-country deal is concluded, it will cover a market 40pc bigger than the European Union.

The US and Asia-Pacific countries need to maintain productive relationships with China, especially over the coming years 2012-2013, while China prepares for an internal leadership change within the Communist Party and at the same times goes through a period of introspection about its future role in the world. It is important that the US re-engagement is not seen as a path to confrontation with China. Rather, how China emerges from this process and the policies it chooses to implement in the Asia-Pacific region and globally will determine much about what the world will look like in the medium and long term.

Wednesday 2 November 2011

China keeps the space dream alive - 神舟八号Shenzhou-8 Spacecraft launched on 1.11.11

China has launched the unmanned 神舟八号Shenzhou-8 spacecraft, marking the start of another key mission in the nation's quest to assemble a permanent space station within a decade.

Shenzhou-8 blasted off on board a Long March-2F carrier rocket early on 1 November 2011 from the Jiuquan Satellite Launch Centre in north-western China's Gansu Province.

It was scheduled to dock with the 天宫一号 Tiangong-1 Space capsule within two days of the launch and stay linked for 12 days. 神舟八号Shenzhou-8 is then scheduled to perform a second rendez-vous and docking manoeuvre before it detaches to allow the re-entry module to return to Earth on November 17.

Astronauts are scheduled to visit 天宫一号 Tiangong-1 twice next year on the 神舟九号Shenzhou-9 and 神舟十号Shenzhou-10 spacecraft, which are designed to link with 天宫一号 Tiangong-1 to form a mini-space station.

The 神舟八号Shenzhou-8 is carrying an experimental facility developed by German and Chinese scientists. According to the German space agency DLR, plants, bacteria and human cancer cells will be exposed to zero gravity and space radiation for nearly three weeks as scientists seek to explore questions such as how gravity affects biological processes and how the immune system could be strengthened.

In one experiment, Chinese and German researchers are jointly studying a miniature ecosystem with algae and fish. They hope to develop a biological life-support system to produce oxygen and food and to treat water for longer space missions. In another, scientists will investigate the crystallisation of medically relevant proteins in space. They are interested in the development of new substances to target the MRSA "superbug" and the parasites that cause malaria.

In 2003, China became the third nation to launch an astronaut into space after Russia and the US.

Saturday 22 October 2011

Spaceport America Ready for Launch

A fly-over by Virgin Galactic’s SpaceShipTwo (SS2) suborbital vehicle and WhiteKnightTwo mothership marked the 17 October dedication of the hangar at Spaceport America, the world’s first purpose-designed launch facility for space tourism and sub-orbital science flights.

The site has officially been providing limited commercial vertical launch services since 2006 but is now gearing up for SS2 sub-orbital flights within two years. This week's event marked the formal completion of Phase One of the two-part construction program, with Phase Two now getting under way. The latest wave of work includes completion of the main hangar and construction of a visitors experience center.
The facility for commercial space travel in the Rio Grande valley of New Mexico, Spaceport America, is the first of its kind in the world. Virgin Galactic has signed up to be the anchor tenant for 20 years and has dedicated hundreds of millions of US dollars to developing the technology. Here are some pictures of the dedication event:

SpaceShipTwo reflected in the east facing glass wall of the Spaceport terminal
 and terminal complex designed by Sir Norman Foster.

Two views of the Spaceport from the west, the structure blends
 ‘Dune’-like  into the desert scrub.

SpaceShipTwo between the Moon and the Spaceport.

Veteran Apollo astronaut Buzz Aldrin hands Sir Richard Branson a plaque with the
Spaceport’s new ceremonial address – No.1 Half Moon Street, Las Cruces.
The name commemorates links to Virgin’s offices in London’s Mayfair district.

Aerial gymnasts perform at the dedication ceremony.

Virgin Galactic President/CEO George Whitesides said powered test flights to sub-orbit are still on track for next year, with rocket motor maker Sierra Nevada gearing up for a further full-duration ground test in November. The company acknowledges progress has been slower than planned, but adds that the focus remains on safety. The Geo-Trade Blog will continue to report and update on future developments at the Spaceport.

Thursday 22 September 2011

中国China - 缅甸Myanmar, a new route to the sea?

Map of China and Myanmar - Bay of Bengal and Straits of Malacca

China's geography is such that sea routes between Asia and Europe are currently limited to starting in the China Sea. Commercial trade ships then navigate South from China's ports to travel through the Malacca Straits bordered by the Malay peninsula with Singapore at the tip, to gain access to the Indian Ocean and on to Europe. The above map illustrates that China's land mass extends well into Eurasia bordering India and several of the Central Asian Republics like Kazakhastan and Kyrgyzstan. Yet China is hemmed in along its southern border by a plethora of countries including Pakistan, India and Myanmar.

In purely Geo-Trade terms, Myanmar represents the shortest distance to the sea from the Chinese border with the added advantage that it is also located fairly close to to the east of China where most of China's industrial hubs are located.

Myanmar, a little known country in the 21st Century

Myanmar is not a small country, it covers an area bigger than France and it has a population of around 60m people. It's most recent history is characterized firstly by a military dictatorship under General Ne Win who seized power in 1962 and erected a virtual wall around the country, sealing it off from almost all outside influence for several decades. In 1988, he was suceeded by a Junta after nationwide protests. The Junta has since maintained the country almost as isolated as the General despite some attempts to open the country up.

Access to the Bay of Bengal for China

China's dream of having access to the Indian Ocean, it seems is about to come true. China and Myanmar have been working together on building a new port, oil and gas pipelines, and roads which are already under construction in Myanmar, giving China, for the first time direct access to the Bay of Bengal, and a new route for an estimated 20pc of its oil imports.

Dams are also springing up on Myanmar's rivers to generate hydropower to provide power to the 云南Yunnan province, in the South of China too.

China has at last found a solution to the trade bottleneck through the Malacca straits and at the same time has resolved a key Geo-Trade challenge, by opening up access to the Indian Ocean on its Southern flank, through a newly formed strategic alliance with Myanmar, uniting both their futures, inextricably together.

Thursday 4 August 2011

Indonesia – a new emerging regional player?

New Hotel Complex recently opened in Jakarta

Indonesia has a population of around 240m making it the fouth most populous country in the world after China, India and the US, with a bigger population than Brazil. Indonesia has been one of the best performing economies of the G20 over the last few years. Last year alone it had growth of 6pc. It is the giant of South-East Asia.

As a democratic Muslim-majority, but not Islamic state, Indonesia is a key bridge for anyone to the Muslim world. Indonesia has managed to silence the separatist campaigners from recruiting new followers through a successful counter- ideological campaign during recent years. What is truly remarkable is that the antiterrorist efforts are taking place in the absence of the draconian laws that once underpinned the Soeharto regime.

Leading role in ASEAN

Indonesia is the biggest and most influential member of the ten-member Association of South-East Asian Nations (ASEAN). For the last year it has held the presidency of ASEAN and has sucessfully chaired and won consensus over various tricky security questions such as claims to the South China Sea and guidelines for conduct on the implementation of the 2002 declaration on the South China Sea.

Indonesia's new middle class

According to research cited by The Economist and carried out by Nomura, a Japanese Bank, Indonesia is creating a new middle class. In 2004 it numbered around 1.6m, in 2011, it now has around 50m people. For the purposes of its research, Nomura defined “middleclass” as a someone with a disposable income of over $3,000 per year. If growth continues at the current rates, the Indonesian middleclass could soon reach almost 150m by 2014 putting it on par with countries like India. This would be a stunning achievement compared with a decade earlier.

With new found wealth, affluent Indonesians are able to invest in new consumer goods. In Jakarta the object of choice at present is a scooter. Last year 8m alone were sold. Piaggio, an exclusive Italian brand has just re-entered the market selling a much more upmarket bike in Jakarta to cater to the more sophisticated tastes of the new middle-class.

Will Indonesia be taken seriously?

If population is destiny then Indonesia is well on its way to becoming a successful regional emerging player and perhaps even a BRIC. What Indonesia appears to be really seeking is recognition of its rise by other international players.

Although Indonesia is also hoping to maintain strategic relations with both the US and China. An Op-Ed in the Jakarta Post ahead of President Obama's visit towards the end of 2010 put it this way: 

"...Indonesia has always prized itself on the autonomy with which it has conducted its international dealings, it will be balanced in reaching out to America while retaining its prized relationship with Beijing."

Thursday 28 July 2011

Heat Energy– is solar power the missing link in renewable energy?

Solar Power Tower in Spain

Heat dominates industrial energy consumption. In the UK alone 76 pc of industrial energy consumption is heat. Few things can be manufactured without heat. The importance of heat in total energy consumption sharply contrasts efforts to green the energy infrastructure. European and US policy is largely aimed at renewable electricity production using wind turbines and solar panels. But while it may be fine to convert electricity into heat for domestic use, such as electric heaters or electric cookers, it is also very inefficient to do so.

It is often assumed that our energy problems are solved when renewables reach 'grid parity' - the point at which they can generate electricity for the same price as fossil fuels. But to truly compete with fossil fuels, renewable energy must also reach thermal (heat) parity. The missing element in European and US sustainable energy policy is a renewable source of thermal energy.

Solar Heat Energy

Most solar technologies were developed in the late 19th century early 20th century. For example, solar power towers were invented in 1878. Solar concentrator technology is based on a combination of solar power towers and parabolic dish systems (as pictured above). Solar furnaces can produce temperatures of up to 3,500°C enough to manufacture hydrogen and all metals. The production of steel takes place at 1,800°C and aluminum at 2,000°C. These temperatures can be achieved in just a few seconds as demonstrated in the video below of a solar furnace melting steel:

The problem is that this technology is mostly used for the wrong purpose. In the 21st century, solar energy collected from solar thermal plants is still being converted into steam (via a steam boiler), which is then converted into electricity (via a steam turbine that drives an electric generator). The process is as inefficient as converting electricity into heat: two-thirds of energy gets lost when converted from steam to electricity.

If solar thermal plants were used to generate heat instead of converting the heat collected into electricity, the technology could deliver much cheaper energy than it currently does. The crucial difference between solar thermal energy and other renewables producing electricity is that solar thermal energy actually starts with heat energy. Hence, in contrast with other renewables, the cost of heat energy is far lower than the cost of electricity, and so it may be able to compete with burning fossil fuels at the thermal level. The Geo-Trade Blog believes that policy makers in the US, Europe and Emerging Economies should explore further how solar heat energy could be applied directly to industry, without the intermediate step of generating electricity.

Wednesday 20 July 2011

Doha Round of World Trade – who needs it most?

Shanghai Port in China

For the past 400 or so years Europe and by extension through the discovery of the Americas – the US, has enjoyed a comparative economic advantage over the rest of the world. European intellectuals advocated the ideas of enlightenment and progress and European and US businesses have harnessed technology to impose their will on the rest of the world.

How did Europe become so important economically

How is it possible that in the year 1000 the Middle East's share of the world's GDP was larger than Europe's – 10pc compared with 9pc? But by 1700 the Middle East's share had fallen to just 2pc and Europe's had risen to 22pc.

A new book by Timur Kuran, a Turkish-American Economist, entitled “how Islamic law held back the Middle East” tackles this question. The central thesis is that the Middle East fell behind Europe because it failed to produce commercial institutions – most notably joint-stock companies – that were capable of mobilising large quantities of productive resources and enduring over time.

Europeans inherited the idea of the corporation from Roman law. Using it as a base, they also experimented with more complicated partnerships. In the 19th century limited liability became widely available as well as other innovations such as double-entry book-keeping and stock markets. European and US economic dominance is rooted not just in the exploitation of scientific technology but in its ability to develop institutions that combined labour and capital in imaginative ways.

No more “third world”

Since 2008 so called “developing countries” have become the engines of the world. They have contributed almost all of what economic growth there has been from 2008-2011. In the 1980s they accounted for 34pc of global income at purchasing-power parities. In 2010 they accounted for 43pc provoking the President of the World Bank to proclaim in 2010 that: 2009 saw the end of what was known as the third world”.

The term “third world” used to mean poor and dependent. Hence almost by definition, third world countries were economic failures. But with the emergence of the East Asian tigers, developing countries entered a new era, shedding their dependency and entering the 21st century in a resurgent position at a time when the so called “developed countries” were in decline.

The Doha Trade Round – serious risk of failure

The Doha talks were launched in the Qatari capital almost a decade ago, in the aftermath of the 9/11 atrocities. This was supposed to be the “development round”, with the US and the EU showing “more understanding” towards the rest of the world, dropping its trade barriers and abandoning “neo-colonial attitudes” so as to spread the wealth and hopefully temper the hatred.

However the initial Doha meeting was also the moment that China joined the WTO, re-engaging with the global trading system after a long absence. By the time of the Cancun WTO summit in 2003, China and the other big emerging economies had entered the global economic scene in a very big way. As such, they felt strong enough to reject the Doha deal on offer and insist on more access to G7 markets in return for opening up their own. At the 2005 summit in Hong Kong, the WTO talks foundered again – the emerging giants now even bolder and EU and US trade diplomats and politicians failing to grasp the speed at which the centre of economic gravity was shifting eastwards.

Six years later, emerging markets' goals have changed too. Many emerging economies are now more bothered about keeping food prices in check than about keeping rich-world subsidies down. The EU and the US espouse free trade yet, both maintain a vast web of barriers and subsidies that not only dump agricultural goods on world markets but also seriously undermine global commerce.

In April 2011, Pascal Lamy, Director-General of the WTO provided a blunt assessment of the state of affairs. He suggested a deal this year is in “serious doubt” due to “a clear political gap” which “is not bridgeable”.

What then for the future of free trade rules and for the US and the EU

The World Trade System has played a pivotal role in securing more than 60 years of relative peace and prosperity. But the WTO system of multilateral rules is near the verge of collapse. The Doha talks are at serious risk of being the first failure of a multilateral trade negotiation since the 1930s which led to protectionism and trade barriers being erected that stunted economic growth for a decade blighting countless lives and doing much to cause the ensuing global conflict.

The Geo-Trade Blog believes strongly that the the US and the EU needs the boost to investment, growth and jobs that Doha would deliver far more than the fast-growing emerging markets. The prosperity of the next generation of US and EU citizens depends on them being able to sell their goods to the mass markets of tomorrow – the very countries we are refusing to do a deal with. The US and the EU need to look upon the rising numbers of Chinese, Indians and Brazilians who can afford to buy US and European products and see this as an opportunity that will provide jobs and economic growth in the the US and the EU enabling their companies to prosper. The opposite is protectionism fuelled by fear that leads to a stagnated global economy blighting the lives of everyone. The US and EU need to lead the charge in freeing-up world trade in their own self-interest.

Thursday 30 June 2011

México – a new regional power in the Américas

México in the 21st Century

The stereotypical image of México, particularly the steady flow of security-related stories in the international media, is not flattering. However the numbers tell a different story.

México is roughly the size of Western Europe. It is the world's 14th largest economy, producing 2.2pc of global GDP and the world's 10th largest producer of oil. Goldman Sachs and The Economist predict that México has the potential to become the 7th largest economy within the next 40 years. It has a young and urbanised population. Around 50pc of the population are under 25 and around 77pc live in urban areas.

México is a trading nation with more Free Trade Agreements than any other country (13 agreements with 44 countries including the US and the EU). Around 80pc of Mexican exports have a US destination. Nearly 1million people and $1bn in trade travel between the US and México border everyday – making it the world's busiest border.

It shares similar values to Europe and the US: political openness, free trade and a willingness to debate and act on key 21st century challenges. México is a member of the G20 and was previously a co-ordinator of the G5 major emerging economies.

Position in the world in 21st century

However México does not yet project a clear strategy for its long-term development. It remains uncertain about its role and position in the world – now and in the future. It has yet to work out whether it is serious about challenging Brazilian regional leadership, and about becoming a global power too.

It appears that within México there are still conflicting views on how much it should aspire to play a wider regional role. It has a strong history of non-interventionism in the region. But México could do so much more in light of its economic weight. It could position itself as a convening power and deal-maker in the Americas. It could also be much more demanding of other neighbouring countries in the region if it wanted to.

Relations with the US have never been better

The importance that the US attaches to its bilateral relationship with México was illustrated in President Calderón's first State Visit to Washington in May 2010. President Calderón was granted generous access to President Obama, a one-on-one meeting, a press conference and he was granted only the second State Dinner to be celebrated under the Obama Administration at the White House. As a result both President Calderón and President Obama have built a genuinely strong and productive relationship.

During the State Visit, President Calderón became the first Mexican President to lay a wreath at Arlington National Cemetery's Tomb of the Unknown Soldier. Previously Mexican presidents had declined this request, not wanting to dwell on US military incursions into México, but President Calderón's visit to Arlington represented the 21st relationship between México and the US, in which Calderón used the opportunity to recognise the role of Mexican Americans in the US military.

The State Visit showed that México-US relations were on a good footing with the US characterising the relationship as: “The United States is proud to be México's friend, partner and neighbour...we will succeed or fail as one...”

Mexican innovations for the north

The US economy has been undergoing a massive economic structural shift over recent decades with those at the bottom feeling the pinch of stagnating wages and even more so after the 2007 financial crisis. Mexican companies, seeing an opportunity, a growing demographic of increasingly poorer people in the US, have begun to export their own emerging economy innovations. For example, MedicallHome, a Mexican company that provides medical advice over the phone for $5 a month, as well as access to its network of 6,000 doctors has expanded north of the border with great sucess. Similarly, a subsidary of Carlos Slim's América Móvil, has also been selling pre-paid mobile phones popular in México. More than 3 million phones have already been sold in the US.

So what role should México play

México appears to be punching below its weight in the region in the 21st century. Even though it has only half the population of Brazil, geographically it is the US' closest neighbour and in many ways its most like-minded “ally” in the Americas, where more countries are increasingly becoming hostile to free trade and political openness. If México is serious about becoming a major emerging regional player, it needs to begin to act like one in the eyes of the other players on the world stage.

To do this, México needs to gain momentum across bilateral and multilateral issues to win it influence with the other big players like the EU and China. If this were to happen, México would be in a position to become a strong regional player with the ability to shape the outcomes on some of the big questions of the 21st century. The key challenge is, will México and its leaders step up to the fray?

Thursday 23 June 2011

Water for the North of China – 南水北调

Map of the three routes for the South-to-North Water Transfer Project to
alleviate the lack of water in the north of China

Water scarcity in Chinese history is a big issue. China has suffered from water scarcity in the north since ancient times. Summer monsoon winds originating in the Indian Ocean sweep into China. When the summer monsoon is stronger, the moisture-laden winds push the rains farther northwest into China. But when the monsoon is weak, the rains fall farther south and east, depriving northern and western parts of China of summer rains.
Recent research on the strength of monsoon rains over the last two millenia has thrown up some interesting results. The research was based on the layers of stone in a 118-mm-long stalagmite dating from 190 AD found in a cave in Gansu Province in China. It has allowed researchers to match, the amounts of uranium and thorium throughout the stalagmite, to tell the date each layer was formed with the “oxygen signature” in the stalagmite that shows the amounts of rainfalla measure of summer monsoon strengthto those dates. The researchers discovered that periods of weak summer monsoons coincided with the final years of the Tang (618-906AD), Yuan (1279-1368AD) and Ming (1368-1644AD) dynasties, which are known to have been times of popular unrest and social upheaval. In contrast, strong summer monsoons prevailed during one of China's "golden ages," the Northern Song Dynasty (960-1279AD).
Without the strong rains, food becomes scarce causing social problems and unrest. Hence it is no coincidence that China's most successful dynasties all fell in times of water scarcity. In the 20th century Mao was greatly aware of the need to keep the north watered, in 1952, he called for a scheme that would divert water from the southern Chinese rivers to the north to ease the growing water shortages in the cities of Beijing and Tianjin and the northern provinces of Hebei, Henan and Shandong.
The South-to-North Water Transfer Project
In the 21st century, the mammoth task of transferring water to the north has begun. The South-to-North Water Transfer Project is an incredible feat of engineering on a very grand scale, the aim of the project is to transfer at least 44.8bn cubic metres of water each year from the the Yangtze River in the south, to counter the thirst of the north China plain and its 440 million people. It is the largest project of its kind ever undertaken in the world. The rapid growth of megacities — around 22 million people in Beijing and 12 million in Tianjin alone — has put considerable strain on the ground water aquifiers in the north. In recent years, urban and industrial development has often been supplied with water at the expense of agriculture leading to severe water shortages in rural areas.

Map of the the three routes of South-to-North Water Diversion Project

The project will link China's four main rivers – the Yangtze, Yellow River, Huaihe and Haihe – and requires the construction of three transfer routes, stretching south-to-north across the eastern, central and western parts of the country. In August 2002, the project was approved  and work began on the eastern route of the project in late 2002, and on the central route in 2003. The Central route is due to be completed shortly. Work on the western route is more complicated and is not due to be completed until 2050.
But not everyone is in favour
The project has been criticised for its lack of concern for the environmental impact and the human impact on people being relocated to make way for the canal on the central route. Questions about the cleanliness of some of the water being transferred have also been raised. In the US, the New York Times said the project was like "...channeling water from the Mississippi River to meet the drinking needs of Boston, New York and Washington." 

The below video report provides some further opinions on the the South-to-North Water Transfer Project:

Nevertheless, it is clear, that if China is to continue its growth and development in the 21st century, it must resolve the problem of water scarcity in the north. With 22pc of the world's population, China has only 8pc of the world's fresh water which adds to the challenge. Its per capita availability of fresh water is barely a quarter of the world average. Furthermore, the north accounts for around 37pc of the country's total population, but has only 12pc of the country's total water resources. Yet, in the south, about 1,000bn cubic meters of water from the Yangtze River empties into the sea each year. There is no easy solution to this geographical conundrum and the scale of the problem is huge.

The Geo-Trade Blog believes the South-to-North Water Transfer Project provides a practical solution to a tricky geographical problem that goes back thousands of years. The water transfer project appears to be a logical trade-off as long as the north continues to play fair and does not take advantage of the arrangement to develop further at the south's expense by taking a greater share of the water from the Yangtze River. Although if water remains at present levels, there appears to be enough water for all.

Thursday 16 June 2011

Turkey, the 'European BRIC'– a new regional power in 21st century

An aerial view of Istanbul - the Bosphorus

At the beginning of the 21st century Turkey is once again rising to become an economic and political power, both in its region and in the world. The rise of Turkey is one of the last decade’s most important stories. Last year it grew faster than any other big economy except China and India. As the world’s 17th-biggest economy, Turkey has become a leading member of the G20 club. It has NATO’s largest army after the US.

The reach of Turkish companies is also spreading. They operate not just across the region but around the globe. Many construction projects in the Middle East involve Turkish firms and workers. Turkish Airlines, has turned into a global force as Istanbul, now Europe’s biggest city by far (at around 15m), has become an aviation hub.

A new canal linking the Black Sea and the Sea of Marmara

Map showing where the proposed new Canal Istanbul
will be built by 2023

In the run up to the latest Turkish elections, the ruling AK party which won a new mandate on 12 June 2011, pleged to build another bridge across the Bosphorus and more spectacularly a new canal linking the Black Sea and the Sea of Marmara that would be a match for the Panama Canal. This project was first proposed by Sultan Suleiman the Magnificent in the 16th century.

The new canal will be called 'Canal Istanbul', it will link the Black Sea to the Sea of Marmara, which leads to the Aegean Sea. The new waterway will be located on the European side of the Bosphorus. Its main purpose is to reduce the heavily congested tanker traffic through the Bosphorus Strait and to minimise the risk of accidents. The proposed Canal will have a length of around 48km with a depth of 25m, a width of 150m on the surface and 120m at the canal bed. This will allow the largest vessels to pass.

The project is intended to be completed in time for the 100th anniversary of the Turkish Republic in 2023.

A new regional player

Turkey's location between Europe and the Middle East lends it huge geo-trade significance, not least as an energy and pipeline corridor. Over the last decade, it has developed closer relations with Georgia and with Iran, Iraq, Syria and other Middle Eastern countries, to the consternation of its traditional allies, the US and Israel.

Azerbaijan provides Turkey with access to the energy-rich Caspian Sea states of Kazakhstan, Turkmenistan and Uzbekistan. Turkey is also a strong supporter of the 1,768km Baku-Tbilisi-Ceyhan pipeline that runs from Baku to its Mediterrenean port of Ceyhan.

The EU accounts for 75pc of foreign investment in Turkey and roughly half its exports and inward tourism. Turkey is Europe’s third-biggest producer of televisions. Likewise, Europe's energy security depends on the transit of oil and gas from Central Asia and the Middle East through Turkey.

Europe and Istanbul relations

Europe in its history has had an uneasy relationship with Istanbul during the Ottoman Empire, in fact, some might say that Europe has been almost defined, through the centuries, by a tension between Christian and Islamic boundaries and by Muslim encroachment in Europe from the East and the South. To some extent, in some European countries, this view still pervades policy makers today when considering Turkey's accession to the EU.

Today the EU needs to ensure that it does not turn inwards and become fixated on internal questions. There is a real danger that Islamic identity is defined as 'the other' and while this debate ensues, Europe misses the bigger picture of what is happening in the world in the 21st century. The EU – with 330m people alone in the Euro-zone area has a key role to play in the 21st century. But it needs to remain outward-looking to understand the changes taking place in emerging economies and in the greater world in Asia-Pacific to become an active global player.

In the 21st century, Turkey is the closest thing Europe has to a BRIC. The EU must find ways to enhance its relations with this important new emerging regional power. Perhaps through a Special Economic Zone to provide access to the EU internal market, the EU's greatest success to date. Then maybe with the option for Turkey to join the Euro too if it meets the fiscal criteria. Turkey could also be invited to join the Schengen agreement to enable free movement of persons through the Schengen Member States. Europe needs badly to embrace Turkey, it needs the fresh perspective and energy of the Turk people and to harness the economic firepower of an important emerging economy on its dooorstep.

Thursday 9 June 2011

The InterOceanic Highway between Brazil and Perú connecting the Atlantic and Pacific Oceans

InterOceanic Highway between Perú and Brazil that connects the Atlantic
and Pacific Oceans

The InterOceanic Highway (Carretera Interoceánica is the official Spanish name and Estrada do Pacífico is the Brasilian name) will have a total distance by road of 5440kms from the Atlantic to the Pacific.

The road is one of the biggest construction projects ever undertaken in América Latina. The highest point is 4850m or 42m higher than Mont Blanc, Europe's highest mountain. Twenty two bridges are being built including a spectacular new bridge of 722m across the Madre de Dios River at Puerto Maldonado in Perú.

 The InterOceanic Highway got off the ground due to the support from three Presidents Lula da Silva (Brazil), Alan García (Perú) and Evo Morales (Bolivia). All were key supporters of the project through which they sought the further integration and development of the three countries: Brazil – the giant of América Latina with its huge area of the Amazon, Perú with its Pacific coast and also with more than half its land area in the Amazon and the land-locked Bolivia with massive energy resources in need of infrastructure to transport them to the sea ports.

Over 4650km are complete and fully asphalt covered. Work is progressing on the final section 736kms from the Amazon basin and over the Andes mountains. The cost has been budgeted at 1.3 billion dollars.

The InterOceanic Highway will open up the Pacific Ocean to Brazil and Bolivia. It will connect América Latina's biggest mega-city São Paulo with Perú's three ports on the Pacific Coast; San Juan, Mataraní and Ilo. América Latina has benefited from the boom in the world price for mineral resources. Perú is the world’s largest silver producer, second largest producer in copper and zinc and sixth in gold.

Peru has advanced considerably over the last five years. Since 2006 growth has accelerated, averaging 7% despite the world recession. The share of Peruvians living in poverty has fallen from 49% in 2004 to 35% in 2009. Social indicators have improved immensely - between 2005 and 2010 Perú climbed 24 places in the United Nations Human Development Report.

Much of the Pacific coast, where farmers export asparagus, grapes and other products enjoys almost full employment in 2011. Though many parts of the Andean highlands remain poor, the arrival of the InterOceanic Highway has cut journey times meaning that many farmers there too have joined the export boom. Much of this succes is due to the vision of outgoing Peruvian President Alan García and his predecessor Alejandro Toledo. Both pursued policies of price stability, fiscal rigour, foreign investment, open trade and investment in major civil works infrastructure.

Perhaps Alan García's vision for Perú and América Latina is best summed up in his own words:

"We will be a first-world country soon, but we need to keep the goal in sight, and the goal is work, effort, execution of public works. We don’t live on words, we don’t live on promises, we live on concrete works.”

Unfortunately Alan García was not able to choose a sucessor in the same way that Brazil’s Luiz Inácio Lula da Silva and Colombia’s Álvaro Uribe had managed to do in 2010. His party, did not even have a candiate in the first round of presidential elections held in April 2011. None of the three centrist moderate candidates made it to the second round of voting on 5 June 2011. Instead the Peruvian electorate was presented with Ollanta Humala, an ex-army officer with affiliatons with Hugo Chavéz and Keiko Fujimori, the daughter of the former president now serving a 25 year prison term for human rights abuses. Ollanta Humala, prevailed by a narrow 3% margen with a manifesto programme that looks unlikely to deliver the growth rates needed to continue to lift peruvians out of poverty and at best reads like a recipe of missed opportunities for the next five years.

Friday 3 June 2011

Cities in the 21st century — a city-dominated world

Picture of Beijing in the 21st century

The 18th and 19th centuries were the last centuries of empire in the world. The idea of the nation-state took hold in the 19th century. The Wesphalian idea of nation-state sovereignty that basically says that a nation's affairs are its own, and no other state has the right to act within its borders has been the basic diplomatic template since the 17th century. The limits to the nation-state were shown by European rivalries at the beginning of the 20th century while growth in cities began to flourish from the mid-20th century across the world. As a consequence the 21st century looks set to become the 'century of the cities'.
By the year 2030, three out of five people will live in cities. The UN forecasts that today's urban population of 3.2 billion will rise to nearly 5 billion by then. The top 25 cities in the world account for more than half of the world's wealth. And the five largest cities in China and India account for 50pc of those countries' wealth.
This increase will be most dramatic on the least-urbanised continents, Asia, América Latina and Africa. Surveys and projections indicate that most urban growth in coming years will be in emerging economies as the map below indicates.

Map of Growth in Cities since 1950s, 2000s and projected to 2015

A new concept has recently arisen in the growth of cities known as the 'mega-region'. A mega-region occurs when growth in cities in a particular region is accelerated. Research shows that the world's largest 40 mega-regions cover only a tiny fraction of the habitable surface of the planet and are home to fewer than 18pc of the world's population but account for 66pc of all economic activity and about 85pc of technological and scientific innovation. The mega-regions, rather than countries, are becoming the key driver behind economic development and wealth creation.

The largest of these is the Shenhzen-Guangzhou region in China, home to about 120 million people. China is planning to create the world's biggest 'mega-region' by merging nine cities to create a metropolis twice the size of Wales with a population of 42 million.
Map of new Chinese mega-region
The new mega-region will cover a large part of China's manufacturing heartland, stretching from Guangzhou to Shenzhen and including Foshan, Dongguan, Zhongshan, Zhuhai, Jiangmen, Huizhou and Zhaoqing. Together, they account for nearly a tenth of the Chinese economy.
By 2015, around 150 major infrastructure projects will mesh the transport, energy, water and telecommunications networks of the nine cities together, at a cost of some 2 trillion yuan (£190 billion). An express rail line will also connect the hub with nearby Hong Kong.

A new concept 'Aerotropolis'

In a new book titled “Aerotropolis: The Way We’ll Live Next” by Kasarda and Lindsay, the authors develop a vision of the 'aerotropolis' as a symbol of a city-dominated world. The aerotropolis is “glocal,” a place that draws on local competitive advantages (like cheap labor) as it plugs into the  21st century global on-demand-production supply chains. Therefore it makes sense to affix cities to airports on the model of the aerotropoli for air transport companies such as Fedex and UPS. Hence an airport, having begun life as an outlying curiosity, on the edge of the city, becomes the heart of the mega-region or mega-city, its raison d’être.

The book illustrates this new concept through a series of compelling numbers. While world GDP rose 154pc between 1975 and 2005, world trade grew 355pc. Meanwhile, the value of air cargo climbed an astonishing 1,395pc. More than a third of all the goods traded in the world, some $3 trillion worth - but barely one percent of its weight! - travels via air freight.
If the book is right and Aerotropoli do take off, then, this has the potential to further push international trade relations between mega cities and mega-regions into the foreframe and leave the country relationship as a minor detail. For example, when New Songdo, an aerotropolis near Seoul, does business with São Paulo, the South Korean-Brazilian relationship is of little interest. Likewise the new Chinese Shenhzen-Guangzhou mega-region is likely to pay little attention to what the UK thinks, but will be very interested in London.

Thursday 26 May 2011

Mongolia – a new concept for "buffer states" in the 21st Century

Map of Mongolia, geographically located between China and Russia, 
the 21st century regional powers in the former "buffer states" of Central Asia

Qing (Manchu) Dynasty

The 清朝Qing (Manchu) Dynasty (1644-1911) was China's last dynasty. The Manchus were Mongol-like horsemen turned merchants from Manchuria. They were of mixed Mongolian, Korean, Chinese and Jurchen stock. The Manchus sucessfully expanded the Chinese Qing empire far into Central and Southeast Asia and managed to bring Tibet and Mongolia under Chinese control through a system of buffer states. The Manchu success was attributed to their ability to marry Mongol military technique with Chinese administrative government.

Buffer states and Chinese territorial control up until 19th century

For around 18 centuries, China's geographical position was protected in all directions by a system of buffer states. The aim was to carefully administer and rule a “China territorial core” (which roughly hadn't changed territorially since China's first unification under the Qin emperor in 221 BC) and then surround this with a group of buffer states or territories, ruled through different forms of agreements. This system granted security, trade and served to expand Chinese imperial virtue to the outside world.

In the 17th century the 清朝Qing dynasty conquered China, taking over the Ming Dynasty. At the same time Russian encroachment started into the once deserted and loosely controlled Siberia. The Russians started thinking of Siberia in terms of the European state, that is they wanted clear, limited frontier positions, not loosely ruled, buffer zones. This led to a series of treaties and wars marking the borders between Qing China and Russia for over two centuries, by which Russia took large parts of Siberia's frozen desert.

In the 19th and 20th centuries, the buffer states were increasingly encroached upon from all sides. While the Russians were coming from the north, the British were coming from the sea and from the south. The first opium war came in 1839-42, which led China to accept different rules of trade and administration of foreign merchants working in China, and in 1939-42 the first British-Afghan war saw British forces reaching the south west frontier of one territory which was loosely under China control - Tibet. In the same period the French conquered Indochina, a buffer state of the Qing dynasty, and the Japanese rejected Chinese patronage and conquered Korea, also a part of the
Qing empire. The Qing dynasty eventually collapsed in 1911. But encroachment by foreign powers on all the sides of the Chinese border changed China's perception of its own territory and of the use of buffer states.

Mongolia today in 21st century

Today the concept of buffer states for security and trade with Central Asia and other surrounding countries is no longer relevant. Instead Mongolia and other former buffer states in Central Asia are now the subject of intense commercial interest due to their immense mineral resouces and proximity to China. Mongolia has some of the largest coal mineral resources in the world as well as immense reserves of copper, gold and uranium.

China's national energy strategy is currently focused on securing increasingly scarce resources while diversifying away from the western world. Hence China is investing heavily in mineral resources from Mongolia. Since 2003, it has invested around $500m in FDI in Mongolia. This is because much of Mongolia's coal is the high-quality “coking” variety vital to steel production and it is located only 145km from the Chinese border. Interestingly, China now produces 50pc of the world's steel. Hence Mongolian coal is set to become a cornerstone of Chinese energy policy that will fuel Chinese economic growth in the 21st century. 

Mongolia and other Central Asian States have long been intertwined with Chinese history and its system of "buffer state" territorial control. But today, China's investment in this former buffer zone, where a third of Mongolians are still nomadic or semi-nomadic in the 21st century, is beginning to open it up to the outside world. A further development is the beginning of a new wave of commercial relations between China and Russia that the US is unable to compete with.

So far, it appears, in the 21st century, that neither China nor Russia sees Central Asia as its exclusive domain. In Mongolia, both Russia and China are treading carefully. Russia's influence in Central Asia combined with Chinese investment cash, together, is working to transform what were fragile buffer states into a transit corridor based on trade in energy and minerals. The Geo-Trade Blog believes that it is highly possible that this could give rise to trade in a whole range of goods and services in a flourishing new trading corridor through the former Central Asian buffer states which the European bloc countries could also tap into due to their geographical proximity. It is here where economic power is being exerted and the shape of the world in the 21st century is beginning to emerge.