Today has been a hectic news day, so lots of awesome data to dig through compared to yesterday's comparably slow news cycle. Enjoy today's content!
Unifying the Royal and American Navies: The New Anglosphere under American Leadership
Today American and English naval officials are preparing to sign a major agreement that will see a considerable boost in technological integration and interoperability. Furthermore, this agreement would open the door for officers and enlisted personal on both sides to serve on each other's ships. Halfway around the world, the United Kingdom and Australian governments signed a memorandum of understanding that lays the groundwork for the joint development of their navies' next generation of destroyers.
There are a couple of things we can draw from these news stories. First, the inevitable combining of her majesties Royal Navy and the US Navy is finally underway. We had seen signs of this when the United Kingdom decided to construct two supercarriers of the Queen Elizabeth class without the requisite support fleet to keep her running over long distances and provide adequate protection.
The reasoning for this was simple as they were never meant to operate under the Royal Navy's authority alone. The Queen Elizabeth class was designed to not only operate both naval variants of the F-35 joint strike fighter but to augment American Carrier capabilities in the Atlantic. Allowing both Navies personal to work aboard each other's vessels further illustrates the trend of the United Kingdoms' eventual subservience to American interests and objectives in exchange for eventual economic access and protection.
The Memorandum of Understanding between the English and Aussie governments reflects a more silent issue of coming budget cuts as a Hard Brexit becomes the most likely outcome of EU-UK trade negotiations. A Hard Brexit would send the UK economy very likely into a double-dip recession resulting in budget cuts to the military and other services that can be cut in the short run. If the UK and convince the Aussies to cost-share in developing the next generation of Naval vessels, it will alleviate some budgetary pressures on the Royal Navy and potentially provide jobs and expertise for both nations shipbuilding industries.
America's Silent Return to Taiwan: Rare Bipartisan Support in Congress
This week saw the introduction of a pair of bills to the US Congress floor concerning Taiwan's status. One of these bills would seek to end Taiwan's isolation from international institutions like the World Health Organization, and the other seeking to expand Taiwan's access to US capital markets. This recent flurry of activity concerning Taiwan has fuel speculation that these bills' language may include defense commitments or intelligence sharing, but this largely remains to be seen.
While the most recent activity concerning Taiwan has come from the Trump administration directly through state visits by prominent American officials and approval of record arms sales and technology transfers, this is the first open case of support from the legislative branch on a bipartisan basis on the issue of Taiwan. While these bills will likely sit in Committee till, after the election, they will likely be pushed onto the floor no later than the end of Q1 of 2021.
There is a growing bipartisan basis for twisting the screws on the Chinese governments, especially concerning the growing impact of Coronavirus on the global economy and Chinese officials' inaction to warn the world and contain the virus within its own borders. Expect this consensus to solidify more if China continues to publish rosy economic data when the rest of the world slides into a sluggish recovery or double-dip recessions.
The US Increases Pressure on Nord Stream 2: More Sanctions
To no one's collective surprise, the United States this morning added additional sanctions against companies, individual ships, and officials who support the Nord Stream 2 natural gas pipeline's continued construction. This pipeline would see Gazprom supplied natural gas flow through the Baltic Sea to its largest consumer market in Germany. The project remains stuck at 90% completion, and most European companies pull out of assisting its completion due to fears of sanctions by eager US officials. Russian officials have denounced this as an attack on the Russian economy.
Nord Stream 2 has been continuously mired in controversy from its approval by Chancellor Gerhard Schroeder, who joined Gazprom's board when stepping away from politics and the recommitment to the project despite this controversy by Chancellor Angela Merkel. While the Nord Stream 2 project is improbable to be finished, German commitment is very likely to remain strong till the very end.
There are a couple of reasons for this in my mind. First, with the largest infrastructure supported by Governments, there is a perception of sunk cost and already committed political capital, which won't shake loose until a much larger controversy, making it impossible to support. Second, the Germans wish to continue having a largely independent foreign policy without continued US intervention.
However, these efforts are continuously frustrated by direct US intervention in German supported projects like Nord Stream 2 and indirectly by its neighbors like Poland agreeing to massive Natural Gas purchase agreements with the United States, constructing a massive LNG terminal to facilitate such imports, and relocating massive scores of US military personal from Germany to Poland.
India finally forsakes Iran in Natural Gas Deal: India's Pivot to the United States and the Commonwealth
Today Iranian officials announced that several Indian companies have pulled out of developing the Farzad-B gas field, which has an estimated reserve of 21.7 trillion cubic feet of natural gas. Iran has stated that several domestic companies will be contracted out to complete the gas field development. These companies were not named, so very likely, the field will remain undeveloped without Russian or Chinese financing.
Over the past decade, India has been the most willing trade partner for Iran as Iranian officials being desperate to get ahold of US Dollars or Euros, heavily discounted their crude exports and offered to self insure their tanker fleets lifting the liability of the import partner. The Indians in the past used Gold to bypass US sanctions on dollar transactions with the Iranian government, which was only halted recently in 2019 as India finally came into compliance with the new sanctions levied by the Trump Administration.
This has been inevitable as India seeks to carve a place for itself in the coming world disorder, where the US remains committed to a smaller pool of allies but committed to engagements largely in its own hemisphere. The recent invitation of the Indians to the Australians to join joint naval exercises with the US and Japan being one of these instances and the further legitimizing of "The Quad," which until recently has been a largely unofficial alliance structure between the Indians, Aussies, Japan, and the United States.
Brazil receives temping US Financing Deal for Non-Chinese 5G Rollout
The United States continues its crusade against Chinese tech champion Hauwei by offering the Brazilian government a large financing package in exchange for them seeking out other 5G competitors of non-Chinese origin. While this offer's size remains undisclosed, a representative US Export-Import Bank officials made note that there $27 billion available for large commercial deals as part of the bank's "China and Transformational Exports Program" for those nations willing to negotiate with the bank. The US International Development Finance Corporation has also made similar overtures but has yet to hint at its financial commitment level.
For my commentary concerning the Monroe doctrine's resumption, see yesterday's "Geopolitics Today" issue. However, we are likely to see similar overtures to Argentina, Chile, Ecuador, and Columbia as they look to plug holes in their budgets with willing US dollar support in exchange for removing some Chinese technological influence.