SUMMARY
As we approach the end of a tumultuous year, November 2024 has proven to be a consequential month with the (surprising for some) election of a more provocative U.S. president; the collapse of the so-called “traffic light” coalition in Berlin and the call for new German elections in February; the impressive performance of China’s president on the international stage; and the convening of a whirl-wind of global and regional meetings, many of which will have consequences for American business over time. The latter include summits by leaders from the Asia and Pacific in Lima, the G20 in Brazil, and the climate summit (COP29) in Azerbaijan – plus a Turkic Summit which took place in Kyrgyzstan. We begin this month’s report with some highlights from the latter. End Summary.
TURKEY HOLDING SWAY IN CENTRAL ASIA
On November 5, the Kyrgyzstani capital of Bishkek was the scene of a summit by the presidents of Turkey and four leading Central Asia countries — Azerbaijan, Kazakhstan, Kyrgyzstan, and Uzbekistan – meeting under the auspices of the Organization of Turkic States (OTS) to discuss prospects for economic integration. Once more of a “talk shop” than anything more substantive, the OTS has become a vehicle for regional co-operation, spurred on by an energetic and ambitious President Tayyip Ergogan of Turkey. The attack on Ukraine has damaged Central Asian countries’ trust in the Kremlin, causing some of the group’s members to view this newly active geopolitical grouping as a way of reducing dependence on Russia – their former “landlord.”
Comment: A senior official in Ankara noted that Turkey’s interests in Central Asia go far beyond historical political, social, and linguistic ties. These economies, he noted are growing rapidly, and Turkey sees ways to capitalize in ways which benefit all parties. U.S. companies should take note: Turkish developers have signed infrastructure and building contracts worth tens of billions of dollars across the Central Asia region. In addition, Turkey’s growing armaments industry is busy in the region, too. Azerbaijan, Uzbekistan, Kyrgyzstan and Turkmenistan (the latter an OTS observer) have already bought Turkey’s battle-tested Bayraktar drones. Our Turkish source confirmed an intelligence report that Kazakhstan is in talks with Ankara to produce them under license. An American Embassy source in Bishkek reported that while Turkey is making rapid headway in the region, Russia still maintains economic and political sway in the region. However, he noted that Central Asian officials now increasingly talk about pursuing a “multi-vector” foreign policy. While China and the U.S. are both also attempting to secure inroads in this strategic region, it is Turkey which, for the moment at least, has the upper hand. U.S. companies with strong Turkish ties are in a position to profit. End Comment.
CHINA’S NEW BACKYARD: LATIN AMERICA
It used to be that South America – indeed the entire Western Hemisphere – was considered America’s back yard. That was for all intents and purposes official U.S. Policy since the Monroe Doctrine was enunciated in 1823 by President James Monroe who was targeting former European colonial powers in his warning. This policy continued well into the 20th and even 21st centuries for a while, but it has waned under recent administrations in Washington.
Indeed, to the contrary, it is China which continues to be ascendant in Latin America, as has been made blatantly clear during November 2024. Starting on November 16, Chinese President Xi Jinping visited the continent to take part in two leadership summits, the first, an Asia Pacific Economic Cooperation forumin Lima, Peru, followed by a Group of 20 summit in Rio de Janeiro, Brazil. According to a well-placed and nominally pro-American political source from Brazil, both visits clearly illustrated what some have called China’s economic marginalization of the U.S. in the region. He warned that, in addition to deepening economic ties, President Xi promotes a governance model that breaks with the U.S.-led postwar order which the Chinese leader insists is an outmoded relic of colonialism, a view shared by the current Brazilian president.
How has this pro-Chinese transformation occurred? Well, our Brazilian source contended that China has replaced the U.S. as the dominant trading partner for most big economies, with the exceptions of Mexico and Colombia. Moreover, Beijing has signed up most of Latin America and the Caribbean to its ambitious “belt and road” infrastructure program which excludes the U.S. China is a voracious buyer of lithium from Argentina, crude oil from Venezuela, and iron ore and soybeans from Brazil.
In addition, our source claimed that China has invested a mind-boggling $286 billion in infrastructure projects in the region, almost rivaling those built or on-going in Africa. These include metro lines in Bogotá and Mexico City and hydroelectric dams in Ecuador, in addition to scattered schools, hospitals, and “friendship” stadiums throughout the region. In an important contrast with its Africa projects, China is using a friendlier lending model which our source credits have apparently provoked less backlash.
Not everything is bad news for us. A Mexican Embassy official in DC told us that Beijing’s largess is not always seen as beneficial. Its trade surplus is resented in some quarters. Moreover, China is crowding into many markets with manufactured exports, such as Huawei Technologies telecommunication hardware, and electric vehicles from BYD, which has taken over an abandoned Ford plant in Brazil, while planning to build a massive assembly plant in Mexico, too. He remarked, anecdotally, that an influx of Chinese steel recently forced the closure of a large Chilean mill. In reaction to this development and similar concerns elsewhere in the region, some countries, he said, are raising tariffs on Chinese goods, while others see threats from big Chinese entrants to traditional sectors, like fishing. Also, China’s image has been tarnished by shoddy construction, such as on a hydroelectric project in Ecuador, and its limited regard for the environment and its treatment of indigenous people, such as those living around copper mines in Peru and with its massive canal project in Nicaragua.
Comment: China is attracted to the region by the same attributes that should make U.S. multinationals eager to compete in the largely democratic region: abundant natural resources including critical minerals; human capital to deploy for manufacturing products like pharmaceuticals; a growing middle class consumer base; and rule of law. As hinted by our Mexican source above, not everything cuts China’s way: Shortly before Xi’s trip, Brazil appeared to reject its overtures to formally join the Belt and Road Initiative, a blow to a program that includes as many as 22 of the 26 Latin America and Caribbean nations eligible for it. This decision has not been confirmed, but if true, it is a significant development. Today, U.S. policymaking towards the region is heavily slanted toward illegal immigration and narcotics interdiction. Both issues are important. But as the foregoing report suggests, it would also be prudent (if we are to keep America great) for Washington to design a Latin American policy which can work more to our country’s benefit by taking advantage of the growing potential of our southern neighbors. End Comment.
GERMAN POLITICAL SCRAMBLE
Since 2021, Germany has been ruled by what is euphemistically called a ‘traffic light’ coalition government between three parties representing considerably divergent political DNA: (1) Chancellor Olaf Scholz’s center-left Social Democrats (SPD), (2) Finance Minister Christian Lindner’s business-friendly Free Democrats (FDP), and (3) Foreign Minister Annalena Baerbock’sleft wing environmental Green Party. Faced with greater challenges than ever before by external competition (largely from China) and by the declining productivity forced upon it by an energy squeeze imposed by Russia, what would in good times be a fragile coalition now faces an existential crisis in the form of a core challenge to what has always been seen as the leading reason for the German economic miracle – its heretofore highly successful “manufacturing-plus” export based economic model. However, last month, the young and ambitious Lindner pulled out of the coalition. A snap election has been called for February 23rd.
Comment: Russian President Putin will be pleased by what he will view as another major distraction from his war in Ukraine. After the U.S., Germany has provided the most assistance to Ukraine (although not in per capita terms; this honor goes to Denmark, Estonia, and Lithuania). Our sources in Berlin express concern that no matter what government takes over in March, it will have a rocky reception from the Trump Administration which is aware of the animus towards it shown by all the traditional German political establishment prior to its stunning victory. What also seems certain, according to these sources, is a possible waning of support for Ukraine, as Germany looks inward. It already hosts over one million Ukrainian refugees at a cost of over $22 billion in integration and resettlement costs. Migration and tougher border controls are key issues in Germany as remains the case in the U.S., France, the UK, the Netherlands and other countries. One source at the German Embassy in Washington reminded us that, in theory, Europe should be able to handle easily the defense of Ukraine with its own resources. Afterall, the EU has thrice Russia’s population and ten times its GDP. But to do so takes time, will power, and leadership. But, for the moment and foreseeable future, all three critical qualities are lacking. End Comment.
AI DECISION UNEXPECTED ‘PLUS’ OF THE APEC SUMMIT
The November 9 to 16 meeting in Peru gathered some of the world’s most powerful political and business leaders for the annual Asia-Pacific Economic Cooperation (APEC) summit which was attended by both U.S. President Biden and China’s President Xi Jinping. The final communique contains 19 bullet points of carefully negotiated verbiage, some of which appear designed to create guard rails against proposed economic policies promoted by President-elect Trump. For example, one point endorsed in what is called The Manchu Pichu Declaration is that “…. we acknowledge the importance of (a). predictable trade and investment environment.”
During the Biden Administration, maintaining stability in global trade with China was a key objective. With China set to host the APEC Summit in 2026, Chinese President Xi Jinping knows that the world economy might look considerably different if incoming U.S. President Trump lives up to his campaign rhetoric to impose tariffs as high as 60 percent on Chinese imports. A State Department participant at these talks would not comment as to whether this was a deliberate effort to complicate the next Administration’s trade initiatives.
A knowledgeable Bloomberg representative who followed closely the business CEO Summit which followed the APEC meeting (and which was attended by more than 1000 senior global business leaders) said he found these sessions far more lively and less scripted than their diplomatic counterpart meetings. He said that J.P. Morgan Chase’s Chairman/CEO Jamie Dimon made his usual, provocative comments, some of which included the following:
- Anticipates an impending mergers and acquisitions’ boom.
- Expects many regulations and red tape, in the U.S. especially, to be curtained.
- Referencing the EU, said that “economic power is military power;” he expressed concern that some of the recent U.S. leadership appears to have forgotten this key point, and,
- Recommended the audience read Trump’s ‘The Art of the Deal’.
In their first meeting in seven months, President Biden met with President Xi Jinping on November 16 and by the accounts we have received, the outcomes were productive. Our NSC source told us that the Chinese indicated a willingness to continue to work with the U.S. on the long list of difficult issues including counter-narcotics, cybercrime, Taiwan, the South China Sea, Russia, and military/military communications.
Biden emphasized the importance of talking to avoid pushing bilateral relations from “competition” into “conflict.” Xi’s message was rather more pointed, noting merely the need to “make the correct choice.” He emphasized the need for major countries to find a way to co-exist.
On other international matters, XI merely restated the party line. He said that China is “neutral” on the question of Ukraine when asked to intervene with Moscow on the issue of the PRK’s involvement in the fighting. He once more warned that China would not tolerate war and chaos on the Korean peninsula, nor would it stand by idly if its national security of vital interest is threatened elsewhere in Asia. As is the usual comment after Summit talks with leading competitors, our NSC source described the bilateral talks as “frank” and “candid.”
Comment: One of the most important outcomes of this meeting was an agreement by the two leaders to work on addressing risks of AI systems. Specifically, President Xi indicated that China is willing to work on improving international cooperation on AI safety, including the need to keep humans in the decision-making loop on whether to use nuclear weapons. One veteran of Chinese policy told us that this point is important, as it marks the first time that China formally and publicly committed to this stance. Trump’s new BFF, Elon Musk, should be delighted by this outcome in view of his oft-stated concern about the potential for “civilization destruction” posed by unsupervised future AI operations. End Comment.
G20 SUMMIT SPUTTERS TO ITS CLOSE
One can generally detect the significance of a multilateral or bilateral summit meeting from the content of the final communiques and/or the “off the record” debriefs provided by individual presidents or prime ministers following their high-level meetings. By these two measures, last month’s G20 Summit in Rio de Janeiro was a bust.
Brazil’s left-of-center president, Luiz da Silva Lula, promoted agenda items focused on climate change and taxing the ultra-rich. The final G20 statement called on negotiators at the UN climate summit at Baku’s COP29 to reach a deal on a new financial goal intended to assist developing countries adapt to severe climate impacts but provided no true impetus or specifics to help the negotiators to complete their task.
Lula had also hoped to push through an agreement to increase taxes on the ultra-rich consisting of global billionaires. While some progressive elements were encouraged by a statement by G20 finance ministers last July that suggested support for such an initiative, Germany and the United States, among other countries, indicated that they are not interested in authorizing a special tax on billionaires.
Argentina which joined in opposition Lula’s tax initiative, was viewed by many participants as a disruptive force at this meeting. Indeed, President Javier Milei was depicted by some as Donald Trump’s surrogate in view of his strong opposition to language proposed on sustainable development, gender equality and billionaire taxation as mentioned above. There almost was no final communique at all due to Milei’s obstructive postering.
On Ukraine, as has been the case at almost every large-scale international meeting where the topic has been raised, language favorable towards Ukraine was voided, largely by the more effective lobbying by China (represented by none other than President Xi Jinping) and Russia (presented by Foreign Minister Lavrov). The EU, US, UK, and Australia had all tried to write into the final communique a strong stance on the horrific conflict, but their efforts foundered when they attempted to call out Russian aggression. The best the communique could come up with were vague references to “human suffering” and the negative impacts of war.
Comment: A member of an “allied” delegation told us privately that German Chancellor Scholtz and Downing Street both noted publicly their deep disappointment at the G20’s tepid response on Ukraine. She also remarked (with some disdain) that no similar statement was made by President Biden. In fact, the President declined to take any questions from the press during his Rio visit and did not debrief privately during his return flight as has often (and usually) been standard post-Summit practice. It is not known whether this was a conscious decision by POTUS himself or by his handlers. Either way, it leaves some observers to contrast Biden with Xi Jinping. Biden authorized the use of longer range ATACMS missiles against targets within Russia while his delegation was pushing for condemnation of Russian aggression. Meanwhile, Xi Jinping pitched business investment opportunities and its on-going belt and bridge initiative. His principal point was to identify China as a force for stabilization and peace versus the United States, which Xi and other Chinese spokespersons routinely identify as a force for instability and chaos. One should worry if this attribute starts to stick. End Comment.
COP29 ENDS IN DISCORDANT AGREEMENT
The climate change summit – COP29 or the twenty-ninth in the series – ended early on Sunday morning, November 24. According to a long-time American participant in these meetings, no one (except the oil producers) perhaps left happy. This is because these meetings end when there is agreement by consensus, and in this instance, the agreement was rammed through by the controversial Azerbaijani chair, even though key countries – such as Nigeria and India – the largest country in the world – had not been heard. The Saudis left happy because they had blocked all but the weakest reference to one of the major conclusions from last year’s summit hosted by the UAE which pledged that the world would transition away from oil, coal, and gas. This year’s meeting was to have examined ways to achieve this laudatory goal, but Saudi Arabia blocked its consideration.
The other key disappointment and the reason why the meeting was delayed for thirty hours concerned the “New Collective Quantified Goal” to replace the $100 billion pledge made by the so-called developed countries in Annex I which is meant to help poorer countries cut their emissions (by building out more clean energy, for example). They wanted the amount of $ 1 trillion to be adopted as the new goal his year, but for the developed parties of Annex I, this amount was a non-starter. Because of wars, huge debt loads, and their own adaptation costs, they offered $200 billion only, finally raising this amount to “at least $300 billion annually by 2035 in the final text. And this was only agreed when the “at least” was added to the text. To say the developing world was disgusted is to put it mildly in the words of our American source.
Comment: It is unlikely that this agreement would have been made had India and Nigeria been allowed to speak. Hence, their understandable outrage at the Azerbaijani Chair’s early morning action closing the meeting with an “agreed text.” Of course, the problem now is whether the U.S. will even continue to participate in these talks. Likely not. President-elect Trump has stated his intention to withdraw on day one as he did in 2017.
Our American source, albeit a committed supporter of the climate change process who is admittedly biased on this topic, said that this action would be short-sighted. He mentioned the position of one of the leaders of “the dark side” in view of the environmentalists, ExxonMobil CEO, Darren Woods. Woods advised Trump to remain in the climate negotiations. He said Trump should bring a “common sense” approach to the annual U.N. Climate Change Conference, as well as “continue to have the U.S. influence policy around the world.” Without a seat at the table, our influence will be negligible. End Summit.
A PICTURE’S WORTH A THOUSAND WORDS
It is said that a picture is worth a thousand words. Hence the usual jockeying among heads of government or state at the group photo op which is a part of many large international conferences. This was the case at both the Asia Pacific Economic Cooperation summit in Lima and the G20 meeting in Rio. At the former, Chinese President Xi Jinping was spotted standing in the place of honor to the right of his host, the President of Peru. President Biden was back in the second row of the gathering, having scooted in just before the shot was taken.
At the final photo op for the G20 Summit on November 18, President Xi was again spotted in the first row next to the host, President Lula. In this instance, there was no Joe Biden in the photo. Instead, the President was spotted on the opposite side of the crowd. His absence was noted, and (according to some reports) someone called for the assembled leaders to wait for him to join them. However, they moved on, perhaps because they had not picked up that the U.S. President was absent. One hopes that was the case. Alternative scenarios are too unkind or embarrassing to consider.
Comment: Further investigation suggests that the President’s staff were to blame for this mishap. Both Canada’s Prime Minister Trudeau and POTUS were apparently waiting in the wrong spot when the leaders convened, and when they finally joined their peers, it was simply too late. For the record, Italy’s Prime Minister Meloni also missed the photo op. End Comment.
