The promise of high-speed trains, smooth expressways, and mega hydropower is too good to turn down for a country like Laos. For the tiny landlocked Southeast Asian nation, with a population of about 7.5 million, it is an opportunity to shed the label of “one of the least developed countries in the world.”
Laos shares a 313-mile long border in the north with China. The geographic placement of the country ensured that it would not be ignored by Beijing and would inevitably feature in its grand geopolitical plans. The mineral-rich, underdeveloped country is the right fit for President Xi Jinping’s much-exalted Belt and Road Initiatives.
The cost of three Chinese-built expressways is expected to be around $17.8 billion. While that figure is not huge when applied to infrastructure projects, it is almost equal to the country’s GDP to Laos.
In the hope of securing better roads and the country’s first rail line for its people, Vientiane has stepped into a pothole-ridden future. China is already the country’s largest foreign investor. Chinese firms are into hydropower, agriculture, mining, and construction in the country’s furthering Beijing’s hold over its economy and fiscal health.
Like other BRI projects worldwide, China’s dealings with Laos are murky, often unethical, and “hidden.” According to the AidData report, the railway between the Chinese city of Kunming and Laos capital, Vientiane, is being built on a public-private partnership (PPP) model. For the project, the Government of Laos secured a $480 million loan from China’s Eximbank, meaning the funds should eventually find their way back to Chinese shores.
With a weak economy, further burdened by Covid restrictions, Laos is in a precarious position. The country shows signs of having fallen into the dreaded debt trap propagated by China. AidData report states, “ Laos is in a class of its own, with exceptionally high levels of sovereign debt exposure (29.4% of GDP) and hidden debt exposure (35.4% of GDP) to China. Laos’ overall level of debt exposure to China is equivalent to 64.8% of GDP.”
A couple of months ago, Fitch Ratings described Laos’ external debt repayment profile as “challenging.” Vientiane will likely have to take more loans, probably from China, to repay its current debts.
The noose has already begun to tighten. It has been reported that Laos is repaying loans to China through debt to equity swaps because it is unable to make payments in currency. The country handed over majority control of the debt-ridden state utility Électricité du Laos to China Southern Power Grid Co to cover debts owed. In effect, now the country’s national power grid is controlled by a state-owned Chinese company.
China’s interests in the country are both political and economic. Aiding the country to develop its infrastructure would pave the way to its vast mineral reserves. Tin, gypsum, gold, granite, and limestone are mined here. Rich deposits of iron and lead are found in Laos. The country also possesses substantial reserves of copper and precious stones. It is believed that many other mineral deposits remain as yet undiscovered and underexploited.
Improving its transport infrastructure will ensure China’s land connectivity to the Indochina Peninsula, specifically Thailand and Cambodia. It opens up a corridor to ports located in the Gulf of Thailand, away from the South China Sea. Cultivating Laos, a member of the Association of Southeast Asian Nations, or ASEAN, would ensure that Beijing has an ally when its neighbors band together.
Countries like Laos urgently need the BRI alternative, proposed by the G7 nations, Build Back Better World, to take off. Otherwise, in their quest for development, many might lose their sovereignty.
The United States, China, and Japan squared off over maritime security at a regional summit on Wednesday.
The virtual gathering of the East Asia Summit took place as tensions between the United States and China have been intensifying recently over several issues in the Asia-Pacific region, such as the South and East China Seas and the Taiwan Strait.
Biden's participation in the meeting underscored that the United States has been keen to regain its influence in the region, while China has been trying to bolster relations with the Association of Southeast Asian Nations.
Noting the "enduring" U.S. commitment to the Indo-Pacific, Biden expressed concern over "threats" to the international rules-based order and vowed to stand with allies and partners to support democracy, human rights, the rule of law, and freedom of the seas, the White House said.
Australia and the Association of Southeast Asian Nations (ASEAN) agreed at a summit on Wednesday to establish a "comprehensive strategic partnership.
China has also sought an agreement on the same strategic level with ASEAN. Premier Li Keqiang met ASEAN leaders on Tuesday. The bloc's leaders will meet China's President Xi Jinping in November at a special summit held virtually, two diplomatic sources told.
Australia already has bilateral strategic partnerships with Indonesia, Malaysia, Thailand, Singapore, the Philippines, and Vietnam.
As chair of ASEAN, Brunei said the agreement "marked a new chapter in relations" and would be "meaningful, substantive and mutually beneficial."
Iran and world powers party to the 2015 nuclear deal will return to Vienna within weeks after months of delay.
Ali Bagheri Kani, who became the new chief nuclear negotiator in mid-September, announced the news following a meeting on Wednesday with European officials in Brussels, saying the exact date will be announced next week.
The three European powers party to the JCPOA offered to meet as a group after talks with EU's Enrique Mora in Tehran earlier this month were successful, but Iran refused.
On Wednesday, the Iranian foreign minister called the joint meeting "disagreeable," especially as the E3 usually releases a shared statement after, which he said contains only their unilateral viewpoints.
Russia, Europe's single largest supplier, has been accused by some analysts and European officials of exacerbating the energy crisis on the continent.
Vladimir Putin has told state-controlled energy giant Gazprom to start pumping natural gas into European gas storage facilities once Russia finishes filling its stocks, which could happen by November 8.
During a televised meeting on October 27, Putin told Gazprom CEO Aleksei Miller to finish filling underground gas storage facilities in Russia by November 8 and "start gradually increasing the volume of gas" in the company's storage facilities in Austria and Germany.
This timeline would make it possible for Gazprom to "fulfill your contractual obligations to supply European partners with gas in the autumn-winter period," according to the Russian leader.
Tesla Becomes First $1 Trillion Car Firm
An order for 100,000 electric vehicles from Tesla pushed the carmaker's market capitalization to over $1 trillion – more than the next nine most valuable listed carmakers combined.
Hertz will have the largest electric vehicle (EV) rental fleet in North America after purchasing 100,000 Tesla Model 3s in a deal worth $4.2 billion. The vehicle rental firm will also install "thousands" of EV chargers throughout its location network. The move means 20 percent of the company's rental fleet will be battery-powered by the end of 2022.
Tesla shares surged more than 12% and added almost $118 billion to the company's market capitalization following the announcement by Hertz. The milestone is an enormous achievement for Tesla that places it in an elite group of companies, including Google parent Alphabet and Amazon. However, it still trails Apple's and Microsoft's $2-trillion-plus market caps.
According to the Bloomberg Billionaires Index, Tesla's stock surge made chief Executive Officer Elon Musk the richest man on Earth, boosting his net worth by $36.2 billion to $288.6 billion.
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