Need To Know: June 24
Pratas: bigger than they appear
Taiwan Sends In The Marines
Taiwanese marines have been deployed to the Pratas Islands in the South China Sea as the Chinese military plans to conduct drills in the area in August.
The People's Liberation Army plans to hold a large-scale beach landing exercise nearby reportedly to simulate a takeover of the Pratas. The islands matter to Beijing as they sit at a strategic crossroads Chinese warships have to pass when going to the Pacific from Hainan province.
As a show of goodwill, in 2000 Taiwan’s military recalled all soldiers stationed on all the islands it holds in the South China Sea, and replaced them with Coast Guard personnel, who are not considered part of the military.
The military deployment is temporary. But with China lashing out at the world, that is likely under review.
Like India-China troop deployments in the Himalayas, this is the kind of exercise that 18 months ago would have been a little noticed; but is now worth noting as China becomes more volatile.
China-EU Summit
Speaking of Xi Jinping, he tried some rare charm in a virtual summit with EU leaders this week.
It didn’t work.
Seated in front of a screen at Communist Party headquarters in Zhongnanhai, Xi told his EU counterparts, “China wants peace instead of hegemony.” He also tried to downplay Beijing’s trade differences with the EU, saying China was “a partner, not an opponent,” and would continue to open up its economy.
But European Council President Charles Michel responded by saying, “We have to recognize that we do not share the same values, political systems, or approach to multilateralism.”
European Commission President Ursula von der Leyen then pointed out the EU’s dissatisfaction with Beijing’s lack of effort to cut down industrial subsidies, and the EU’s impatience over the slow progress towards an investment treaty to ease access to the Chinese market for European investors. The two sides started negotiations in 2014, but it’s unlikely a deal will be reached by the end of year, as planned.
Von der Leyen also said that China would face "very negative" consequences if it pressed ahead with imposing its new security law on Hong Kong.
Like China’s ties with almost everyone, relations with the EU have been sliding. During the Covid-19 pandemic Beijing attempted to pressure the EU’s diplomatic service into watering down a report which documented Chinese state-backed disinformation campaigns.
The EU has divisions. Its foreign minister Josip Borrell was happy to do Beijing’s bidding on the Covid report. Most member states — Germany, in particular — are desperate to be able to export more to China. Europe is a long way from China, so Chinese sabre-rattling at its neighbors affects Europe little. And EU members will demand what their interests require.
But it is interesting that the generally pusillanimous EU is taking a publicly harder line on China, perhaps reflecting its public anger over Covid, and China’s generally aggressive and blundering diplomatic style.
Does Surging Price of Power in Laos Spell Trouble?
Preamble to this next item …. events have dictated that we focus far more on China and foreign policy than we intended when we launched. Over time we definitely want to look at domestic policy, and its implications more closely.
As such, Laos has appointed a new managing director of its state-owned electric company, replacing the former director amid rising anger in the country over high rates for electricity. Power prices have become a sensitive issue in Laos, a country building billion-dollar hydropower dams on its major rivers to sell electricity to richer neighboring countries.
With local bills inexplicably soaring, many have been calling on the government to lower prices as the country enters its warmest months.
“Every household has seen higher power bills,” a Vientiane resident told Radio Free Asia. “I used to pay 800,000 kip [U.S. $89] a month, but now I pay almost double, and I don’t know why.”
“I don’t know how they calculate the rates. Everybody is complaining. My household uses no more power than before. I would like to see lower rates because I’m not working right now,” he said.
In a much hyped announcement last year, the government said it would lower the price of electricity. But that hasn’t happened. From the outside, it’s not clear whether the program involved subsidies the government now can’t afford.
Laos is a one-party communist state that has been cracking down harshly on dissent. While it has apparently avoided a Covid-19 outbreak (testing is very limited), tens of thousands of Laotians who work in Thailand have returned home because there are no jobs for them. The country’s vital tourism sector is shuttered. And work on some controversial Chinese Belt and Road Initiative projects has slowed.
In fact, the high-speed rail link China is building through Laos in very contentious. As with all BRI projects, most of the workers are Chinese. There are allegations top officials in the Laotian Communist Party were richly rewarded by China for approving the project. The country’s combined debt exposure for the railway is more than US $1.5 billion — a big amount for a country with a nominal GDP of around US $20 billion. With the economy struggling, servicing that debt could quickly become an explosive issue as did China’s deals in neighboring Myanmar, which lead to the fall of the military regime.
Add it all up, and Laos could be a country on the brink.