Despite sanctions, Russian fuel is still selling — here’s who’s buying

“Petroleum shipments are still relatively stable for Russia, as nations like China and India have picked up some slack from EU countries weaning themselves off oil, and Russia still has LNG, coal, and nuclear energy to help the economy float, too.

In order to make petroleum products more appealing to customers like India and Indonesia, Russia has offered fairly steep discounts — an average of $30 per barrel — against Brent crude oil, which has also been a benefit for Sri Lanka, Pakistan, Bangladesh, and Cuba, all emerging economies struggling with inflation, as Business Insider reported. Although according to S&P the discounts on Russian crude oil are decreasing, some analysts believe they’ll persist, making Russian crude oil imports highly palatable for poorer countries.”

“Countries like China, India, and Turkey are proving eager partners for the Russian fuel industry, with Turkey doubling Russian oil imports this year and vying to become a hub for Russian LNG transfers into Europe after damage to the Nord Stream pipelines.”

“Even with the Nord Stream 1 pipeline out of commission — and setting aside the transfers to China, now Russia’s biggest natural gas buyer — European countries are importing record amounts of Russian LNG at market prices, according to Bloomberg. France has purchased about 6 percent more Russian LNG between January and September of this year than it did all of last year; Spain has already broken its record for Russian LNG imports this year, and Belgium is on track to do the same.

The stakes for natural gas imports are somewhat different than they are for Russian petroleum, in a number of different ways; for one, the EU hasn’t imposed sanctions against it as it has against petroleum products, though the bloc does intend to eliminate its reliance on Russian fossil fuels by 2027. Second, Russia has already used Europe‘s reliance on its natural gas as a weapon; Russia cut access to many European countries which refused to pay for LNG in rubles, and cut total output to Europe by 60 percent in June and by 80 percent in July, Reuters reported last month.”

“Russia continues to invest heavily in its nuclear technology, and nuclear facilities in many nations are dependent on Russian technology and cooperation to function, even if they’re not directly importing Russian nuclear fuel, according to a report by Robert Ichord for the Atlantic Council.”

“Russia has several illicit strategies to evade western sanctions on its energy products and financial system. Because these transactions are, by their nature, often difficult to track, it’s hard to know how effective and how widespread they are — not to mention how much the Russian economy is benefiting from them.”

The Chinese government’s unlikeliest standoff is with … fandom

“In 2016..China formally banned K-pop…The ban, ironically, turned many former K-pop stars back into Chinese celebrities whose K-pop influence is still being felt.”

“The K-pop ban both is and isn’t about Korea. It began as a response to a US-Korea missile deal, but really embodied disapproval of three things the Chinese government perceived as tied to K-pop culture: the encroaching influence of US individualism, over-zealous fanbases, and effeminate men.

That last one is a major part of the K-pop ban, which forbids men from wearing earrings and excessive makeup on live TV.”

“Dan Chen researches authoritarian politics at the University of Richmond. She told Vox that the CCP’s fixation on masculinity is a recent byproduct of Xi’s growing nationalism — because “nationalism is a very masculine ideology.” Framing foreign influences like K-pop as anti-masculine plays right into Xi’s narrative of an idealized China that’s strong physically as well as economically and politically. Toward this end, the government has worked to eradicate effeminacy in schoolchildren and promoted images of strong, muscular soldiers as the masculine ideal.”

China is committing genocide. The world has no plan to stop it.

“the United Nations has published a report. A report that says China’s policies “may constitute international crimes, in particular crimes against humanity.” A report that adds nothing new to what we already knew about the crisis, that neglects to call the crisis what it is — genocide — and that some experts say was watered down under tremendous pressure from Beijing.”

Biden’s latest global infrastructure plan is all about competing with China. That’s a problem.

“Global power is often seen as a zero-sum game, and policymakers in Washington fear that China’s growing influence is coming at the expense of the US. Yet they haven’t offered an alternative to the BRI, instead largely chastising China for its intentions behind it and discouraging countries from joining it.

But that changed at the Group of Seven (G7) Summit last month, when President Joe Biden announced the Partnership for Global Infrastructure and Investment (PGII). With the PGII, G7 governments and private funders aim to invest $600 billion in low- and middle-income countries over the next five years, with $200 billion specifically earmarked from the US.

The motivation isn’t hard to discern: Counter China’s BRI. “Imitation is the sincerest form of flattery,” said Jorge Heine, a professor at Boston University and Chile’s former ambassador to China. “It has finally dawned on Western countries that there is actually a need for infrastructure in countries in Africa, Asia, and Latin America.””

“In his remarks announcing the PGII, Biden stated: “I’m proud to announce the United States will mobilize $200 billion in public and private capital over the next five years.” Despite that promise, however, the real money the US government has committed is far from $200 billion — adding up to about $170 million.

That discrepancy comes in part from how the US plans to finance this agenda. Kenny told me the US and the European Union have been keen to mostly rely on the concept of financial leverage. For example, a government may offer to finance $1 of an infrastructure project with the idea that this will then spur and be matched by $10 of investment from the private sector. “There’s this idea that you get from the millions and billions to these hundreds of billions by leveraging the private sector,” Kenny said. But, he added, “the fact is the record of that has been grim.” Rather than a one-to-10 public-private financing ratio, “we’re seeing a low one-to-one.”

The US is relying on leveraging to fund the PGII for two reasons. One, Congress is unlikely to authorize any more money for this kind of initiative, especially given its failure to pass increased funding for domestic programs (the rebranding of the initiative from “Build Back Better World” was no coincidence). So leveraging private companies “makes small amounts of US government money look bigger,” Kenny said, while enabling the administration to take credit for the whole promised sum.”

“The other reason, according to Kenny, is a deeply embedded ideological belief, stemming back to the Washington Consensus of the late 20th century, that the private sector beats government when it comes to delivering on goods like infrastructure. Reliance on the private sector also has the added benefit of preferring US companies and workers for various development projects, but Kenny added that US policymakers genuinely appear to believe this method makes these projects more affordable to low- and middle-income countries.

This line of reasoning is shaky, though, as public-private partnerships like the ones the PGII proposes are often very complex.”

“China and the BRI have had a different model, which has proven more successful. Kenny told me that China has been more willing to finance infrastructure that will be owned and operated by Global South governments. Fundamentally, this allows projects to be built faster and more cost-effectively as governments are already responsible for most infrastructure (approximately 83 percent of infrastructure investment worldwide is government-financed, per a 2017 study), and they don’t need to bargain and haggle with private companies.”

“One key way for the US and G7 to support the Global South would be to better use existing multilateral institutions like the World Bank and regional development banks like the African Development Bank, especially because, as Kenny told me, the World Bank actually can do the concept of leverage pretty well. While the US is proposing the approach of a “bespoke retailer” that pursues public-private deals one project at a time (each maybe a $100 million investment), the World Bank is like a big “wholesaler” that leverages money from the whole market (in the range of hundreds of billions) to support a range of public sector projects.

“Governments put in a little bit of capital to the World Bank, which then goes out and borrows massive amounts on private markets, issuing bonds at a 10:1 ratio,” Kenny said, meaning that they can get a lot of money for construction and development projects for the Global South. The World Bank also used to be much more engaged in financing hard infrastructure like roads and railways, only for priorities in terms of what is funded to change in recent decades. A massive recapitalization of the World Bank, Kenny said, could be an important place to start.

Dean Baker, senior economist and co-founder of the Center for Economic and Policy Research, also suggested the issuance of “special drawing rights” (SDRs) from the IMF to shore up the central banks of countries in the Global South. SDRs effectively act as “coupons” from the IMF — the closest thing to the world’s central bank — and they function like cash transfers to countries in times of crisis.

SDRs were most recently issued to support countries around the world facing a financial crunch during the Covid-19 pandemic, and were used by low- and middle-income countries to pay for vaccines and other health care needs. However, as the authors of a Brookings Institution analysis of SDRs during the pandemic found, high-income and upper-middle-income countries currently receive the majority of SDRs, so distribution would need to become more equitable.

The US would also be wise to focus on its strong suits. As Kenny wrote in a recent article, the best way the US could help build the human capital of the world by way of providing scholarships and visas for access to its world-leading institutions of higher education, as well as increasing the number of work visas issued. And many of these migrants would end up sending capital back to their home countries in the form of remittances. A 2019 IMF study found that remittance flows total up to greater amounts of cash to low- and middle-income countries (China excluded) than overseas development aid.”

“A final option for the US is to ditch the global competition frame and collaborate with China to invest in the Global South. Baker argued that the “competition basically makes zero sense” due to the global scale of issues like the climate crisis, pandemics, and global development more generally.”

“Fundamentally, the Global South hasn’t necessarily bought into the geopolitical ideological competition of “democracy vs. autocracy” between the US and China. The Global South, as seen in its position toward the Russian war on Ukraine, is increasingly pursuing a strategy of what Heine termed “active nonalignment,” meaning rather than siding with either of the big powers in this supposed “new Cold War,” they’re more narrowly focused on their own economic growth and development.”

America’s Fishing Industry Is Getting Caught Up in the Trade War

“Tariffs on seafood have hit Alaska in particular, Alaska’s fishing industry generates over $5 billion dollars in economic activity and creates nearly 70,000 jobs in the state, making it a vital lifeline for the state. Over 40 percent of U.S.-caught Alaskan salmon and one-third of all seafood from Alaska is exported to China each year. Much of it is processed in China and then re-imported to the United States for sale in grocery stores.

As the National Fisheries Institute points out, this split processing stream has contributed to rising seafood costs for U.S. consumers, as China’s retaliatory tariffs hit seafood when imported for processing and the original U.S. tariffs hit products upon their return to American shores.”

“For consumers, meanwhile, these costs are discouraging consumption of fish, according to a February study published by data analytics firms IRI and 210 Analytics. That month alone, sales of frozen seafood products decreased by 9.4 percent, while fresh seafood sales decreased by 12 percent.”