Opinion Commentary by Chris Devonshire-Ellis – September 5, 2022

Where the supply chains of all commodities, from energy to downstream production chains and manufacturing capabilities, emerge, is the new science of development.

The situation in Ukraine with regard to Eurasia has not been particularly well covered, mainly because the European Union has focused its efforts on imposing sanctions, blocking ports and border crossings to Russia rather than on taking into account the wider geographical situation.

Yet with Russia apparently having some built-in resistance to EU measures, which were apparently designed to put maximum pressure on Moscow to end its ‘special operation’, the larger and more enduring picture must now be analyzed. As can be seen on the map below, the European Union is located in the extreme west of the Eurasian continent. It is overshadowed by the East.

While the EU has the greatest concentration of wealth, the underlying problem for Brussels is that it must rely on imports to maintain this position. As has been well documented, energy is a key issue for Europe, but much of the supply lies in the east – unless one starts importing gas from North America – a considerably more expensive proposition. The EU is also a major importer of computer, IT and electronic products, in addition to optical equipment, base metals, chemicals and machinery – much of it, except for US-branded products (but made in Asia), also coming mainly from the East.

However, it is not just the problems with Russia that are piling up. European companies are being pressured to also cut trade with China, following criticism over its treatment of Uyghurs in its Muslim-dominated province of Xinjiang. It’s a problem China denies, but one that has already led one EU country – Lithuania – to close its embassy in mainland China and open a trade office with Taiwan instead.
The UK, no longer part of the EU but equally strong in its Chinese rhetoric, said it would label China an “official threat”, which looks set to impose more obstacles to the trade and supply chain. The EU has already torn up its trade deal with China and seems determined to create additional problems. One wonders, given the geographic reality, how wise that really is. The only other viable and well-developed market in the supply chain is the United States, which places a heavy reliance on the United States as the only major entity supporting the EU.

The situation is also working against Europe in the opposite direction. Much of the entire Eurasian region has moved closer to China and Russia, with China having concluded free trade agreements with ASEAN as well as with Japan, South Korea and the United States. ‘Australasia. It is negotiating a deal with the Gulf Cooperation Council and recently signed massive hundred billion dollar deals with Saudi Arabia and Iran, while Russia has done the same and has its own free trade bloc. with the Eurasian Economic Union of Central Asia. India, meanwhile, is part of the BRICS and is closing in on both Russia and India – it took part in the Triumvirate War Games in the Russian region of Vostok last week alongside Chinese troops .

Closer to Europe, Belarus is well within Moscow’s orbit, while Turkey is repositioning itself as a parallel import and transit hub to Russia and the EU. Considering that most countries of the Eurasian landmass are also now involved in the Shanghai Cooperation Organization in some way, it seems that Europe is stuck in a western bloc more than ever.

Asian countries like Japan (member of the G7) or South Korea do not entirely agree with the views of the West either. Both are members of the RCEP free trade agreement which includes China, while Japan has been keen to develop Far East gas pipelines with Russia and has not withdrawn gas provisions like the did his Western colleagues. Meanwhile, South Korea is talking about a free trade agreement with the Eurasian Economic Union.

Not pictured, but to the south is of course Africa, where China and Russia have made huge strides in expanding trade with North Africa and the rest of the African continent, where European colonial history does not does the EU no good. Even Algeria, long a mainstay of French trade, now includes China, not France, as its main import trading partner. Is this perhaps a sign that in the face of this, the EU cannot be competitive?

Latin America is also closing in on China and Russia – several countries, like Argentina, have expressed interest in following Brazil into the BRICS, while countries like Cuba and Ecuador have joined or are considering joining. join Russia’s EAEU.

This means that the EU must either change course and redevelop its trade relations with the East, or be pushed further – almost ejected – towards North America. Given the behavior of Brussels in recent months, it seems that is exactly what is happening. If so, it will ultimately end the notion of a “Greater Eurasian Partnership” from Lisbon to Vladivostok, but create a new one stretching from Istanbul eastward.
This will create new, more exotic supply chains criss-crossing the planet to and from Asia, but at the same time it seems to introduce severe trade limitations for the future of Western Europe. Examining how and where the supply chains of all commodities are developing, from energy to production chains and manufacturing capacities, is the new science of the new developing Eurasia.

Disclaimer

Any views or opinions represented in this blog are personal comments, belong solely to the contributor and do not necessarily represent the views of Asia Briefing Limited or Dezan Shira & Associates.

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