Boeing-Embraer Deal: Consequences for the Global Aircraft Industry

Journal of Political Risk, Vol. 6, No. 2, February 2018

Three military aircrafts are photographed in the air from above. One is in the foreground with the remaining two flanking the it in the background. The ocean is visible in the backdrop.

The KC-390. Source: Brazilian Government.

Evodio Kaltenecker
Researcher

Boeing, the world’s largest aerospace company, initiated negotiations in December 2017 with Embraer, the world´s third-largest aircraft maker.  The Chicago-based US aerospace giant is pursuing a business agreement with the Brazilian jet maker in a global competition with Boeing´s European rival, Airbus.  The US and Brazilian companies have discussed the idea of a joint venture in which Boeing could take a stake of up to 90 percent in the Brazilian aircraft maker’s commercial business. That business unit will likely exclude sensitive military business to reduce Brazil´s concerns about sovereign defense capability. [1]

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China’s $60 Trillion Estimate Of Oil and Gas In The South China Sea: Strategic Implications

U.S. hydrocarbon estimates imply a maximum of $8 trillion worth of oil and gas in the region, explaining part of the strategic divergence of the two superpowers.

Journal of Political Risk, Vol. 6, No. 1, January 2018

A yellow oil rig is photographed in the middle of the ocean.

Oil rig. China’s largest offshore oil and gas producer CNOOC Ltd. announced on July 3, 2015 that its Xingwang deep-sea semi-submersible drilling platform started drilling at 1,300 meters underwater in Liwan 3-2 gas field in the South China Sea. Source: Pxhere.

Anders Corr, Ph.D.
Publisher of the Journal of Political Risk

China’s estimates of proved, probable and undiscovered oil and gas reserves in the South China Sea imply as much as 10 times the value of hydrocarbons compared with U.S. estimates, a differential that has likely contributed to destabilizing U.S. and Chinese interactions in the region. While China estimates a total of approximately 293 to 344 billion barrels of oil (BBL) and 30 to 72 trillion cubic meters (TCM) of natural gas, the U.S. only estimates 16 to 33 BBL and 7 to 14 TCM. Considering that the inflation-adjusted value of oil vacillated between approximately $50 and $100 per barrel (in 2017 prices) since the mid-1970s, U.S. estimates imply a hydrocarbon value in the South China Sea between $3 and $8 trillion, while Chinese estimates imply a value between $25 and $60 trillion. In addition to other factors, China’s greater dependence on oil imports and higher estimates of hydrocarbons in the South China Sea have driven it to invest more military resources in the region. An overly economistic approach by the Obama administration probably led the U.S. to allow China’s expansion in the South China Sea too easily.

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China Swaggers, But Time Not On Its Side

Journal of Political Risk, Vol. 6, No. 1, January 2018

A group of People's Liberation Army (PLA) soldiers are photographed jogging in full inform on a plaza. Trees are visible in the background.

Group of People’s Liberation Army (PLA) soldiers in China. Gene Zhang via Flickr.

Arthur Waldron

University of Pennsylvania

I have some thoughts about the “year of doom” 2018 that appeared on the web yesterday. They are as follows:

(1) China has undertaken her dangerous policies for internal reasons. That is how China is. She has no pressing or other need for Scarborough Shoal in the Philippines EEZ, for example.

(2) We know (1) is true because Xi Jin Ping goes on an on about loyalty, reshuffles the army, creates the most boring flag raising ceremony in history, and was reported to get in a fight with a general about whether the army should be made national instead of party. Who after all is going to take a bullet for Xi? We need to get to the root of this domestic phenomenon, but how is an almost impossible question.

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Protectionism Won’t Work: Four Alternatives to Canceling Trade Agreements

Journal of Political Risk, Vol. 5, No. 12, December 2017

A blue and red cargo ship is photographed at the Yangshan deepwater port.

Yangshan deepwater port. Source: Flickr.

Bhakti Mirchandani

Senior Vice President at An Alternative Investment Management Firm

It’s time to create jobs for displaced manufacturing workers and bolster American competitiveness in four ways: (i) invest in growing fields and tradable economies that draw upon a region’s endemic old industrial skills; (ii) fight the opioid epidemic to avoid further declines in labor force participation; (iii) align universities and local manufacturers to ensure that workers are sufficiently skilled to participate in the local tradable economy; and (iv) encourage–and protect–R&D and entrepreneurship in manufacturing.

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China’s Strategic Pivot Towards the South Pacific Island Nation of Tonga

A Hybrid Intelligence Preparation of the Operational Environment (IPOE) Analytical Assessment

Journal of Political Risk, Vol. 5, No. 12, December 2017

A 20 yuan note is photographed against the backdrop of the Li River in Yangshuo. Mountains are also visible.

A 20 yuan note against the backdrop of the Li River in Yangshuo. Source: Brian Steering via Flickr.

Mark Anthony Taylor
Macquarie University

The aim of this research is to critically examine the refocusing of Chinese aid, economic involvement and diplomatic attentions towards the small South Pacific island nation of Tonga.  The research seeks a deeper understanding of China’s behaviour towards Tonga and promotes a reevaluation of how the US and its allies should respond to China’s strategic calculus. China’s actions in Tonga, although appearing benign, represent a cloaked threat to Tonga’s independence, democracy and U.S. regional aspirations.  Furthermore, owing to the comparative strength of the Chinese economic and diplomatic approach, a competitive soft-power response from the US may prove inadequate. In consequence, it may be more advantageous for the US to pursue a heightened hard-power response to ameliorate any potential threat. Through undertaking an analysis of China’s fundamental motivations for the soft-power Tongan pivot and an exploration of the modus operandi employed by China to affect its strategic goals, the project will endeavour to provide a clear answer to the following research question: “Is this Chinese pivot towards Tonga merely an example of cheque-book economic diplomacy, or does it entail a cloaked malignant threat to the security and autonomy of the US and its allies?” Utilising a hybrid adaption of the Intelligence Preparation of the Operational Environment (IPOE) analytic method[1], this project will apply a structured framework in order to probe and reconceptualise the Chinese pivot towards Tonga in an effort to unravel the underlying motivations of China. In line with this approach, the project will firstly scrutinize the situational variables resident in each nation that comprises the terrain of the issue. The significant and unique political, military, economic, social, infrastructure and informational system factors (PMESII) that contribute to the rapid intensification of China/Tongan relations will be explored. From this point, the focus will be turned towards an analysis of the usefulness of the two polar theoretical explanations (liberal and realist) for the current Chinese Course of Action (COA) in Tonga. Lastly, a detailed investigation of the two key Centres of Gravity (COG’s) that underpin and impact upon the China/Tonga relationship will ensue, exploring the cultivation of pro-China sentiment in Tonga and the degree of the US pivot to the South Pacific. The project will draw from a diverse variety of academic publications, expert opinion pieces and news media sources. The analysis reveals that the Chinese strategic pivot into the nation of Tonga superficially appeared to be motivated by benign economic opportunism. However, engagement with Tonga was found to hold a minimal benefit to China in terms of resource supply or economic gain. The major strategic benefits that were found to accrue to China were through the potential securing of Tonga for the establishment of a forward operating military base in the South Pacific. Consequently, China’s pivot may be motivated by concealed Chinese hegemonic designs (the realist perspective) rather than by benign economic opportunism (the liberal perspective). This motivation was found to pose a significant security threat to the US-lead regional order.  Two significant COG’s are bolstering the effectiveness of China’s Tongan pivot. Firstly, China has successfully executed a “hearts and minds” program to facilitate the broad interweaving of pro-China sentiment into the psyche of Tongan society. Secondly, the absence of US attention towards soft-power regional engagement with Tonga has aided China’s pivot. In terms of an effective US response to China’s strategy in Tonga, a revised US soft-power push was assessed as constituting an ineffective strategy due to the resilient China-Tonga relationship that now exists and because of China’s deep aid pockets. Consequently, the evidence points towards the need for a revitalised US hard-power military presence in the region as the most viable option for dampening China’s future militaristic ambitions towards Tonga.

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