Summit "Central Asia - Germany". US pushes EU to invest in GXNUMX countries
On September 29, the Germany-Central Asia summit begins in Berlin. The C5+1 format, which has already become familiar over the past year, moved from the fields of the UN General Assembly, where the Central Asian “Group of Five” met with George Biden, to Germany ten days later.
Meeting before the summit of the President of Kazakhstan K.-Zh. Tokayev and German President F.-W. Steinmeier was noted by all observers for the Kazakh leader’s firm intention to strictly comply with the sanctions regime.
From an emotional point of view, the speech is not the most positive for Russia, if you do not take into account the real flow of goods and the fact that this is not the first agreement on sanctions from the Kazakh leader. The first time it caused a strong reaction among the domestic public was at SPIEF 2022.
In addition to the external declared, raw materials and energy focus of the negotiations at the summit, as well as passages regarding sanctions, let’s try to look at this event from a slightly different perspective. Namely, in light of the results of negotiations at the UN General Assembly with the United States and the last Central Asia-EU summit, held in June.
Oddly enough, it turns out that a significant part of the material will be devoted not so much to Central Asia, but to relations between the US and the EU against the backdrop of the region.
If the June summit was, in fact, dedicated to finding opportunities for the EU to respond to truly grandiose proposals to the region from China within the framework of the summit in Xi'an, that is, it had, if not results, then a work agenda, then the summit with the United States turned out to be frankly disappointing. They expected some kind of strong answer from him, but in the end everything was limited to general words. Washington came to this event surprisingly poorly prepared.
The summit with Germany was intended to level out this vagueness and from F.-V. Steinmeier and O. Scholz, the leaders of Central Asia are already waiting for more definite steps in terms of investment. This year, Germany is, perhaps, the leader in terms of activity in the region, and one can understand the Germans - they need to look for sites that partially compensate for the falling assets in Russia, they need to look for alternatives for raw materials.
But alternatives are alternatives, and such activity in Central Asia in Europe is no longer just an investment, but a big policy that the United States usually does not let go of.
Here we see that the States are not only retouching the gaps in the preparation of the event at the UN General Assembly, but are also giving the EU (and not for the first time) a free hand. And even pushing Europe to take active action. We do not see this in other regions; even the EU’s activity on the Ukrainian issue is coordinated and in many ways directly moderated by the United States.
Here we are faced with one of the very stable and popular narratives that the United States stands almost for the economic strangulation and collapse of Europe. They say that production from the EU is “fleeing” to the USA. What makes these theses more convincing is that they come directly from Europe itself.
But if you start to understand, the situation appears more complex and deeper, since the problem of the EU (with all the industrial and financial power of this essentially confederal state entity) is that both China and the United States, in different ways, seek to manage its economic growth themselves.
From some point of view, this is a paradoxical situation, but it is determined by the clash between the industrial elites of the EU, who are in favor of a Chinese link, and the political elites, who are in favor of a link with the United States. In the Chinese model, the EU is assumed to be an investor and supplier to China and a buyer of Chinese goods; in the American model, accordingly, China is replaced by the United States. But in both the first and second cases we are talking about the single EU market, including the financial market.
The EU cannot directly ban trade with China and US investments, but they have quite succeeded in doing something else - creating an outflow of investment capital. COVID-19 has slowed down both China and the European Union. The energy and inflation shock of the second half of 2022, together with the consequences of COVID-19 and US programs to “contain inflation”, created a good basis for pumping free financial resources of the Eurozone to American sites.
Production has not gone away, but investment in China has gotten worse, and China also has difficulties with growth rates. One thing clings to another, no one grows, but the added value has begun to move. In general, it is customary for us to criticize the team of J. Biden, and to praise D. Trump - this situation is part of the very Trumpist program through which he wanted to change the trade balance between the US and the EU.
In the EU, industrial elites periodically raise a wave of information about the transfer of production, trying to force their political wing, which lies almost entirely under the United States, to unblock investments, but the EU still keeps a very high rate for it (+3,75%), justifying it with “inflation.” " However, in addition to the failure of the investment cycle, consumer activity in the EU is also artificially decreasing.
It is clear that the topic of inflation in the EU is being pushed from above. The shock of the autumn of 2022, when the EU saw the “depths of its depths” in the form of industrial inflation of 37% and consumer inflation of 16%, when the EU’s foreign trade balance began to sag before our eyes, in theory could not be offset by an increase in the key rate. It showed that its rise was more an external political decision than due to the inflationary struggle.
Of course, industrialists raised their voices against European officials, threatening to “transfer production overseas,” but over the course of several months, the EU energy market (not without our help, by the way) gradually returned to normal, but the key stake in the fight for inflation remained.
Although, it would seem, why fight it if it is possible, relying on rising consumer prices, to increase production volumes, and even in the context of a struggle with Moscow? However, the EU limits consumption, essentially blocking trade with China, because the focus here is primarily on consumption, and only then on production.
The EU market remains, even cemented, politically and economically, but consumption parameters are kept in check, since free resources actually flow overseas, because the investment attractiveness of China has decreased.
This is not the first year that the United States has been “pumping out liquidity.” The problem is that they need to specifically support the corporate sector today. It would be nice for Arab funds to invest in the EU economy, but in such conditions it is simply not profitable. Not everyone can stimulate capital outflow using the Russia-US method; there are more subtle designs.
But the problem with the United States itself is that even having somehow improved its corporate sector, getting it to work within the United States is a completely non-trivial task under current conditions.
If the Trumpists are knocking their heels, demanding to invest these funds in domestic production, then the current administration, within the framework of the liberal agenda, having received the required figures for the stock markets and the banking sector, redirects them to investment outside, uses them to reduce the cost of imports, as well as for tax revenues. This is banker logic, which, apparently, is ineradicable in the current administration of the United States.
On the other hand, the United States is still having great difficulty, but is avoiding problems with attracting and redirecting money in terms of government. borrowings.
In this position, not only should the United States not think about the collapse of the EU, it should protect and strengthen European unity like the apple of its eye, erect concrete fences and roadblocks around it. In fact, they are cementing, linking the Turkish economy to the Eurozone, and in such a way that even the seemingly main beneficiary of this process, R. Erdogan, did not really like it.
It is clear where this narrative comes from - from the suffering industrial European elites, with whom Moscow has traditionally been in sync. Who would like it when your industrial growth and added value are so controlled. The most interesting thing here is that the US does not replace consumption in the EU with its own goods, which, apparently, infuriates the European industrial elite no less than the “investment dues”.
A certain difficulty lies in the fact that the accumulation of G-7 resources in terms of creating alternatives to the Silk Road - the PGII program is poorly supported by Arabian money, and the receipt of specific benefits is extended over time. Indeed, today from 45% to 55% of Southeast Asia’s foreign trade is tied in various ways to China. China acts as an assembly shop, packer, logistics and commercial representative of the region to the EU.
Nobody in Southeast Asia likes this, but it is very difficult to remake this model - it was formed jointly on European technologies and American investments, and other countries acted as producers of necessary, important, but still largely “spare parts” for the final product. Geopolitical interests have changed, but the model cannot be changed so easily, and not everyone in the United States itself is ready to revise it.
And in such a situation, giving the EU the opportunity (hypothetical or real) to enter the markets of Central Asia, where China will now be forced to launch not only production, but also provide part of the financial resources for consumption, is a rather interesting solution for the United States, even if not as systemic as the PGII or I2U2+ projects.
In addition to the fact that the Eurozone can gain expanded access to purely raw materials, including such significant ones as uranium (however, the United States itself is counting on this product), they are trying to identify an alternative to the Russian production site, where Europeans have worked for a long time, and Now we are forced to fold. And the fact that in this case the EU will either cooperate or compete with China - well, these are modern realities.
For the United States, the position here is generally quite convenient, since they only need to open the political (de facto investment) valve and demand that the leaders of Central Asia and the European Union formally comply with the sanctions regime.
We just observed the next round of such a public “oath of sanctioned allegiance” at the meeting of F.-V. Steinmeier and K.-J. Tokaeva. But this was not the first time and will not be the last time.
It is possible that the United States will turn a blind eye to the “holes” in sanctions under the EAEU in such combinations as the EU vs China - Central Asia, in the hope of gaining the loyalty of both the EU and Central Asia in the medium term, and not right here and now.
The peculiarity of the process here is not the pre-planned, but rather the situational nature of the policy. This option was clearly found “by touch”, since it was obvious that the US-Central Asia summit did not bring results. Instead of C5, the US preferred to work individually. The region expected the summit to have an effect no less than the Xi'an Declaration, but in the end it turned out something not very clear and not very concrete.
The US position on individual agreements with Uzbekistan, outside the framework of the Group of Five, did not work. But it was also interesting how quickly, literally in a week, the United States got its bearings and redirected the Central Asian five into the framework of the summit with Germany, bringing Kazakhstan a little ahead in media, partly correcting the shortcoming.
It’s hardly worth blaming the countries of Central Asia for some kind of anti-Russian vector here, since over twenty years, if they invested in them, it was in the raw materials sector, but here in a calendar year there are offers from the south, and from the north, and from the east, and from west. It’s just that the most developed program so far is Chinese.
For China, with all its desire to cooperate with the EU, such a position is still more of a challenge and competition, fragmentation of influence on the continent, where, on the contrary, it is necessary to strengthen this influence as much as possible today. Analysts generally reasonably note that such activity is a priori aimed at eroding the EAEU, although, for example, for China, the weakening of the EAEU at the moment is already a weakening of its own logistics.
In general, it was not in vain that Beijing took a strategic pause to prepare for the October “One Belt, One Road” forum, which is billed as one of the largest events of the year. The combinations here are complex, and the players depend on each other. But this is precisely why China may well try, together with part of the European industrial elite, to beat Washington’s situational option, since, unlike the latter, Beijing prepared much more carefully for the development of Central Asia.
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