They say rectify is wise. What is not often pointed out is that it can be expensive. And that is what Italy fears now, because its Prime Minister, Giorgia Meloni, has already informed China that she is abandoning the Belt and Road Initiative. Better known as 'the new Silk Road', it is the megalomaniacal plan that the Chinese president, Xi Jinping, designed shortly after reaching the top of power to assert the newly acquired role of superpower and structure the world in an alternative way. to that of the traditional colonizing powers.
Developing countries, especially in Asia and Africa, were quick to join the project. They hope that China will materialize its promise to build the infrastructure that will allow them to escape poverty and take a bite out of the globalization that has turned the Asian giant into the second world power. Developed countries, however, from the beginning considered the Chinese plan as an affront. After all, China is the West's main 'systemic rival'.
Italy, however, broke the G7 consensus by becoming the only member that joined the Belt and Road (IFR), convinced that it could be beneficial. Almost four years have passed since that signing, and Meloni is convinced that the agreement has had nothing positive. Therefore, without trying to raise much dust, Rome has told Beijing that it is leaving, that they should not count on it for a plan that many see as an attempt to convert Chinese economic power into political influence.
Therefore, today we analyze the complicated situation of Europe vis-à-vis China and Xi's plan.
These are the three topics we will address today:
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Italy will no longer travel the new Silk Road.
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Support Ukraine, until it reaches our pocket.
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There is no money in Argentina.
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The new world order
Italy will no longer travel the new Silk Road
You can't sip and blow at the same time. And that is what Europe is constantly trying to achieve in its relationship with China. The business world sees the country as an appetizing market for products as diverse as German cars, French luxury handbags, or Pata Negra Iberian ham. The growth of the Chinese middle class, added to an elite that consumes without restraint, is a candy that Western multinationals have licked up everything that the Communist Party has allowed them.
Western governments, for their part, believed that Chinese investments could be a lifeline to end more quickly the economic crisis that began in 2008. For this reason, many countries granted 'golden' visas to those who put money of dubious origin in brick and mortar. in companies, and facilitated the acquisition of infrastructure and participation in all types of sectors. That was the juncture at which Italy said yes to the Belt and Road plan.
But the same Western companies that drool over the Chinese market are also aware that that country has not stood by and is fighting back with electric cars, low-cost textiles and bulk honey. The balance thus tips more towards the side of 'threat' than that of 'opportunity'. Last year, Italy increased its exports to China from 13 billion euros to 16,400 million. It seems like a good result, but it pales in contrast to imports from China, which went from 31.7 billion euros to 57.5 billion. Perhaps that is why Meloni has preferred to turn his back on Xi. But discreetly, without making any type of public announcement. If it has become known, and the prime minister has finally had to show her face, it has been due to leaks from different sources.
As expected, the news has not gone down well with Chinese leaders, who have accused Italy of “slandering” the initiative. It is already known that they have very thin skin, and Meloni has tried to reduce the tension by emphasizing that “we must have a good commercial and economic relationship with China.” But it has made it clear that rivalry is increasing, and that cooperation is giving way to a growing confrontation that can be seen in aspects such as the investigation that the European Union has opened on Chinese electric cars, with a view to imposing tariffs on them.
That Europe must defend itself is a fact. Because China plays with marked cards and a hurtful double standard. But that Europe must try to defend itself with more tools than tariffs is also clear. Its car manufacturers, for example, have rested on their laurels and have fallen behind in the electric revolution, technology companies have lost the advantage they had, and the industry has less and less weight and relevance. Especially worrying for the future is that, while young Chinese focus on leading the world and conquering the main educational institutions, Europeans are plummeting in the PISA report.
China is not only advancing in Europe, but it is also advancing in the rest of the world, while the West is unable to see and stop its clear decline, thinking that the world still revolves around it. Only this ignorance explains why many Europeans are surprised to know that ports such as those of Valencia or Bilbao are managed by Chinese companies, which have also launched the first fourth-generation nuclear power plants, are developing 6G in telecommunications, and are leading areas such as artificial intelligence or quantum computing.
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Russian invasion
Support Ukraine, of course, but until it hits our pockets
When Vladimir Putin decided to invade Ukraine and advance towards kyiv, Poland opened its borders and the homes of its citizens to Ukrainians fleeing the war. More than two million found refuge in the neighboring country. Others left for Hungary or Moldova, which also welcomed them with open arms.
Now, however, the transporters block the borders so that Ukrainian truckers cannot circulate through their territory, because they accuse them of unfair competition. And something similar happens with the cereal from the invaded country, which neighboring farmers see as a threat to theirs. Never mind that it is a lifeline for Ukraine to keep its economy afloat.
On the other side of the Atlantic, in the United States, some conservative politicians are also tired of financing Ukrainian defense and are beginning to make demands in domestic politics, with the strengthening of their southern border, to unlock a generous aid package that, if not approves, it can leave Ukraine at the mercy of Putin. Because, as the Ukrainian military and politicians themselves recognize, if it were not for Western help Russia would have achieved its objectives on the ground a long time ago.
Perhaps for all this, when the American tiff is resolved, attention will be placed on the European Union, whose help seems to be maintained, at least for the moment. But it is increasingly evident that the bill is increasing proportionally to a boredom that also already affects the Ukrainian population itself, and alternative financing mechanisms must be sought to circumvent the obstacles that Hungary poses. It is a war of military, economic and psychological attrition, in which only whoever assumes the most deaths in the trenches may win. And there, Russia has much more cannon fodder.
The only alternative solution is to redouble military assistance to Ukraine, risking provoking a direct confrontation between Russia and the West. More and more analysts believe that it is a matter of time before this clash occurs, and for China to be forced to take sides in a situation that can potentially lead to a Third World War. For this reason, there are those who maintain that it is better now than later, because the communist regime will become increasingly powerful.
Personally, I am not at all sure that Beijing is going to jeopardize the well-being it has achieved for the Chinese population by supporting Putin. Its leaders are very pragmatic and avoid conflict. However, the Taiwan issue could erupt at any moment and, with the production of the world's most advanced chips at stake, the United States could be forced to act. Not because of the democratic values that they like to boast about so much, but because of the economic interests that really move them. As he did with Kuwait.
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Milei's Argentina
“There's no money”
We must thank Javier Milei for speaking clearly. And from his investiture speech we must stay with a phrase that will mark the most immediate future of Argentina: “There is no money.” For this reason, the new president predicts cuts that could be especially harsh and, unlike what is happening in our country, he has begun by making good on his promise to reduce the Executive. He has left it in nine ministries, less than half of those named by Pedro Sánchez. He has also decided to end institutional advertising and take an ax to different subsidies, such as transportation.
Regardless of whether it is logical to think that Milei has some screws loose, if his example spread, many other governments would have to utter his phrase. “There's no money”. Because the West is getting used to living off debt, beyond its means, creating a fictitious well-being that will explode at some point. Someday we will have to recognize that there is no money to pay pensions, that it makes no sense that retirees earn more than the average salary in the country, that the public sector is oversized and extremely inefficient, that we are not even that innovative not as competitive as we think, and that our youth are not prepared for the future.
It remains to be seen if Milei is capable of doing half of the things he has promised during the campaign and, above all, of putting the economic disaster that has characterized Argentina for a long time on track. But, for now, she is grateful that she is making things clear to the population.
Is all for today. I hope I have explained well some of what is happening out there. If you are signed up, you will receive this newsletter every Wednesday in your email. And, if you like it, it will be very helpful if you share it and recommend it to your friends.
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