A new species in international relations was born on Thursday – the Aukus. It is a security partnership between Australia, the UK and the US, which is directed at China, while incensing France. The trilateral pact will involve the US and the UK providing Australia with the technology and capability to deploy nuclear-powered submarines.
But beyond the diplomatic and military ramifications, three less-remarked energy, trade and economic implications are key.
First, bringing in the UK has shifted the geographic focus. The term “Indo-Pacific” as distinct from Asia-Pacific has become increasingly popular. Partly, this reflects the American desire to bring in India as a counterweight to China. The UK’s foreign policy and defence review this year also indicated a tilt towards the Indo-Pacific and the “Quad” groups the US and Australia with India and Japan. Despite New Delhi’s serious disputes with Beijing, it has, however, long prided itself on non-alignment.
As the US tries, so far more rhetorically than actually, to draw down its Middle East military presence, it seeks like-minded partners to pick up the burden. This role is not to protect world energy supplies altruistically, but to deny them to any peer or local rival: the Soviet Union in the 1970s and the 1980s, Saddam Hussein and Iran in the 1990s. Now Washington holds this Sword of Damocles over Beijing.
Second is the more explicit threat to Chinese energy security. During the Second World War, the US oil embargo on imperial Japan led it to strike Pearl Harbour to clear the way to the petroleum resources of the Dutch East Indies (what is today known as Indonesia). But the Japanese had not reckoned with American submarines, which sank their tankers and merchant fleet and starved the home islands of food and fuel.
A casual glance at the map reveals the significance of the Indo-Pacific to the modern energy world: oil and liquefied natural gas shipments from the Arabian Gulf through the Strait of Hormuz, Bab Al Mandeb and the Suez Canal, the Straits of Malacca and the South China Sea. The “first island chain” of US-aligned Japan, Taiwan and the Philippines lies astride critical trade routes. The whole South-East Asian archipelago is a major LNG supplier and LNG will also cross the Indian Ocean from East Africa later this decade.
Australia, a rare country that runs a trade surplus with the Middle Kingdom, is a key energy partner for Beijing. The world’s largest LNG exporter, it supplied almost half of China’s requirements last year, far ahead of any other country. Australia and Indonesia were the leading sellers of coal to China. In “new energy minerals”, it ranks top in the world for output of lithium and second (to China itself) in rare earths.
Yet foreign policy differences have strained relations. Beijing has slapped overt and hidden restrictions on imports of agricultural goods and coal. Australian iron ore, which is particularly crucial, was one major commodity that China did not dare touch with restrictions.
During the Trump administration, Chinese tariffs also essentially prevented LNG imports from the US, until a trade deal was reached in late 2019.
China has been acutely aware of its energy vulnerability for at least two decades. It is intolerable for an aspiring superpower to have its maritime lifelines threatened by US-led alliances. It has tried many ways to limit this: increasing domestic shale gas output; constructing overland oil and gas pipelines from Russia, Central Asia and Myanmar as part of the Belt and Road Initiative (BRI); acquiring overseas hydrocarbon assets; and developing alternatives in electric vehicles, renewables and nuclear power.
But despite its close relationship with Vladimir Putin, reliance on Russia as a key energy supplier is not a comfortable long-term position either. Nor is the Kremlin keen on the BRI’s extending influence over its Eurasian backyard.
China’s “string of pearls” of ports that could eventually become naval sites includes Hambantota in Sri Lanka and Gwadar in Pakistan, near the Strait of Hormuz. In 2017, it opened its first overseas military base in Djibouti, which already hosts American and French forces.
Iran’s much-hyped deal with China in March could give eventual access to the new port at Jask on the Gulf of Oman. However, Beijing has so far not sought to replicate or challenge the extensive US military footprint in the Middle East.
Third is the White House’s snub to the EU. The election of Joe Biden was welcomed in Brussels as a change from the confrontational and destructive Trans-Atlantic policies of the George W Bush and Donald Trump administrations. Mr Biden reluctantly accepted the fait accompli of completing Russia’s Nord Stream II gas pipeline to Germany, stoutly defended by Berlin over the doubts of many, particularly in Ukraine and Poland.
But now, Aukus’s promise of nuclear-propelled submarines scuttles France’s $66 billion deal to build up to 12 conventional vessels for Canberra. The string of US blunders in Iraq, Syria and Libya, its violation of the Iran nuclear deal and most recently the chaotic retreat from Afghanistan, have damaged European trade and security, and reinforced concerns over Washington’s reliability.
Paris has in response reiterated the need for European “strategic autonomy”. This includes standing united against Chinese and Russian bullying, but not allowing Washington to draw Europe into unnecessary hostility with China, nor being hostage to increasingly erratic and nationalist American domestic politics.
Europe’s energy interests are less directly concerned with Asia-Pacific. But the recent surge in gas prices and the recovery in oil are a warning of how dependent the continent remains on both Russia and the GCC.
The EU’s climate and energy security ambitions are badly out of sync. And it has yet to wield hard power effectively in harness with its undoubted soft and regulatory influence.
Though an awkward and unlovely bird, Aukus shows the direction of evolution in world affairs. Nuclear submarines make headlines. But it is the responses in Beijing, Moscow and Brussels to energy and trade constriction that will make a sea-change across the Indo-Pacific.
Robin Mills is chief executive of Qamar Energy and author of The Myth of the Oil Crisis
Day 3, Dubai Test: At a glance
Moment of the day Lahiru Gamage, the Sri Lanka pace bowler, has had to play a lot of cricket to earn a shot at the top level. The 29-year-old debutant first played a first-class game 11 years ago. His first Test wicket was one to savour, bowling Pakistan opener Shan Masood through the gate. It set the rot in motion for Pakistan’s batting.
Stat of the day – 73 Haris Sohail took 73 balls to hit a boundary. Which is a peculiar quirk, given the aggressive intent he showed from the off. Pakistan’s batsmen were implored to attack Rangana Herath after their implosion against his left-arm spin in Abu Dhabi. Haris did his best to oblige, smacking the second ball he faced for a huge straight six.
The verdict One year ago, when Pakistan played their first day-night Test at this ground, they held a 222-run lead over West Indies on first innings. The away side still pushed their hosts relatively close on the final night. With the opposite almost exactly the case this time around, Pakistan still have to hope they can salvage a win from somewhere.
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Terror attacks in Paris, November 13, 2015
- At 9.16pm, three suicide attackers killed one person outside the Atade de France during a foootball match between France and Germany
- At 9.25pm, three attackers opened fire on restaurants and cafes over 20 minutes, killing 39 people
- Shortly after 9.40pm, three other attackers launched a three-hour raid on the Bataclan, in which 1,500 people had gathered to watch a rock concert. In total, 90 people were killed
- Salah Abdeslam, the only survivor of the terrorists, did not directly participate in the attacks, thought to be due to a technical glitch in his suicide vest
- He fled to Belgium and was involved in attacks on Brussels in March 2016. He is serving a life sentence in France
RESULTS
1.30pm Handicap (PA) Dh 50,000 (Dirt) 1,400m
Winner AF Almomayaz, Hugo Lebouc (jockey), Ali Rashid Al Raihe (trainer)
2pm Handicap (TB) Dh 84,000 (D) 1,400m
Winner Karaginsky, Tadhg O’Shea, Satish Seemar.
2.30pm Maiden (TB) Dh 60,000 (D) 1,200m
Winner Sadeedd, Ryan Curatolo, Nicholas Bachalard.
3pm Conditions (TB) Dh 100,000 (D) 1,950m
Winner Blue Sovereign, Clement Lecoeuvre, Erwan Charpy.
3.30pm Handicap (TB) Dh 76,000 (D) 1,800m
Winner Tailor’s Row, Royston Ffrench, Salem bin Ghadayer.
4pm Maiden (TB) Dh 60,000 (D) 1,600m
Winner Bladesmith, Tadhg O’Shea, Satish Seemar.
4.30pm Handicap (TB) Dh 68,000 (D) 1,000m
Winner Shanaghai City, Fabrice Veron, Rashed Bouresly.
What can victims do?
Always use only regulated platforms
Stop all transactions and communication on suspicion
Save all evidence (screenshots, chat logs, transaction IDs)
Report to local authorities
Warn others to prevent further harm
Courtesy: Crystal Intelligence
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Fresh faces in UAE side
Khalifa Mubarak (24) An accomplished centre-back, the Al Nasr defender’s progress has been hampered in the past by injury. With not many options in central defence, he would bolster what can be a problem area.
Ali Salmeen (22) Has been superb at the heart of Al Wasl’s midfield these past two seasons, with the Dubai club flourishing under manager Rodolfo Arrubarrena. Would add workrate and composure to the centre of the park.
Mohammed Jamal (23) Enjoyed a stellar 2016/17 Arabian Gulf League campaign, proving integral to Al Jazira as the capital club sealed the championship for only a second time. A tenacious and disciplined central midfielder.
Khalfan Mubarak (22) One of the most exciting players in the UAE, the Al Jazira playmaker has been likened in style to Omar Abdulrahman. Has minimal international experience already, but there should be much more to come.
Jassim Yaqoub (20) Another incredibly exciting prospect, the Al Nasr winger is becoming a regular contributor at club level. Pacey, direct and with an eye for goal, he would provide the team’s attack an extra dimension.
MATCH INFO
FA Cup final
Chelsea 1
Hazard (22' pen)
Manchester United 0
Man of the match: Eden Hazard (Chelsea)
Gulf Under 19s final
Dubai College A 50-12 Dubai College B
A State of Passion
Directors: Carol Mansour and Muna Khalidi
Stars: Dr Ghassan Abu-Sittah
Rating: 4/5
Company Fact Box
Company name/date started: Abwaab Technologies / September 2019
Founders: Hamdi Tabbaa, co-founder and CEO. Hussein Alsarabi, co-founder and CTO
Based: Amman, Jordan
Sector: Education Technology
Size (employees/revenue): Total team size: 65. Full-time employees: 25. Revenue undisclosed
Stage: early-stage startup
Investors: Adam Tech Ventures, Endure Capital, Equitrust, the World Bank-backed Innovative Startups SMEs Fund, a London investment fund, a number of former and current executives from Uber and Netflix, among others.
More from Neighbourhood Watch:
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
Sole survivors
- Cecelia Crocker was on board Northwest Airlines Flight 255 in 1987 when it crashed in Detroit, killing 154 people, including her parents and brother. The plane had hit a light pole on take off
- George Lamson Jr, from Minnesota, was on a Galaxy Airlines flight that crashed in Reno in 1985, killing 68 people. His entire seat was launched out of the plane
- Bahia Bakari, then 12, survived when a Yemenia Airways flight crashed near the Comoros in 2009, killing 152. She was found clinging to wreckage after floating in the ocean for 13 hours.
- Jim Polehinke was the co-pilot and sole survivor of a 2006 Comair flight that crashed in Lexington, Kentucky, killing 49.
How to apply for a drone permit
- Individuals must register on UAE Drone app or website using their UAE Pass
- Add all their personal details, including name, nationality, passport number, Emiratis ID, email and phone number
- Upload the training certificate from a centre accredited by the GCAA
- Submit their request
What are the regulations?
- Fly it within visual line of sight
- Never over populated areas
- Ensure maximum flying height of 400 feet (122 metres) above ground level is not crossed
- Users must avoid flying over restricted areas listed on the UAE Drone app
- Only fly the drone during the day, and never at night
- Should have a live feed of the drone flight
- Drones must weigh 5 kg or less
Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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MATCH INFO
Uefa Champions League semi-final, first leg
Barcelona v Liverpool, Wednesday, 11pm (UAE).
Second leg
Liverpool v Barcelona, Tuesday, May 7, 11pm
Games on BeIN Sports
Jeff Buckley: From Hallelujah To The Last Goodbye
By Dave Lory with Jim Irvin
SPECS
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UAE currency: the story behind the money in your pockets
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