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Generational Dynamics Web Log for 4-Apr-2015
4-Apr-15 World View -- China to sell eight advanced submarines to Pakistan, encircling India

Web Log - April, 2015

4-Apr-15 World View -- China to sell eight advanced submarines to Pakistan, encircling India

Greece turns to Russia and China, amid reports of imminent default

This morning's key headlines from

China to sell eight advanced submarines to Pakistan, encircling India

Submarine image from Pakistan Defense
Submarine image from Pakistan Defense

The naval arms race between India and Pakistan took a big leap forward this week, as Pakistan signed a deal to acquire eight advanced conventional (non-nuclear) diesel-powered submarines from China. Pakistan's Ministry of Defense said that the eight submarines were being purchased from China to address the force imbalance with India, as India has been expanding its own fleet.

China and Pakistan are "all-weather" friends, and this is a particularly large military sale. Also, as a sign of Pakistan's close relationship with China, this is the first time China has exported its submarines to anyone.

India has been expanding its fleet not just because of Pakistan, but because of China. China has been rapidly expanding its fleet ( "28-Feb-15 World View -- US Navy says that China now has more attack submarines than US"), and India claims that China has been "encircling" India with naval bases.

The Indians particularly point to the Gwadar Port on the Indian Ocean in Pakistan, which China has been developing. The port serves the dual purpose. On the one hand, it's a military naval base. But it's also a way for China to avoid maritime choke points in the Indian and Pacific oceans by moving Persian Gulf oil and gas over land from Gwadar to China.

China claims to have three principles in selling arms to other countries:

However, Western nations have accused China of repeatedly impairing the stability of the region, such as through the sales of advanced cruise missiles to Pakistan that began in the 1990s. Those accusations will certainly be renewed with China's sale of this submarine fleet to Pakistan.

A few days ago, I reported on Pakistan's close relationship with Saudi Arabia. As I've been saying for about ten years, Generational Dynamics predicts that the world is headed for a new "Clash of Civilizations" world war that will pit the West, India, Russia and Iran versus China, Pakistan and the Sunni Muslim countries. Dawn (Pakistan) and Marine Link and Lowy Institute (Australia)

As Russia-Saudi relations deteriorate, Egypt tries a middle road

Relations between Russia and Saudi Arabia have never been particularly friendly, especially since 1938, when Stalin closed the Soviet embassy in Saudi Arabia. Diplomatic relations were not restored until after the collapse of the Soviet Union, but they haven't been close.

In recent years, the Russians have infuriated the Saudis by providing billions of dollars of weapons to the regime of Syria's president Bashar al-Assad.

The Saudis have infuriated the Russians by refusing to cut production as the price of oil collapsed, thereby harming Russia's economy.

Russia has accused the Saudis of supplying weapons to the militias fighting against al-Assad in Syria. The Saudis have accused Russia of invading Crimea in order to kill the Crimean Muslim (Tatar) population.

Egypt is a close ally of Saudi Arabia, and the two countries are partners in the joint Arab military intervention in Yemen, against Iran-backed Houthis.

Egypt depends on Saudi Arabia for financial aid, but would also like a close relationship with Russia. Egypt has had a much longer relationship with Russia, with Russian czars supporting Orthodox Christians in Egypt as far back as the 16th century, and the Soviet Union was a key backer of Egypt in the decades after World War II.

Egypt is in a unique situation: Egypt would like to purchase weapons from Russia, funded by $2 billion of Saudi money. However, Russia has not been quick to sign such a deal, and the Saudi media is reminding Egyptians that 2,500 Egyptian soldiers died defending Crimea from the Russians back in the mid-19th century.

So although Egypt would like to have closer relations with Russia, it appears that they will be overshadowed by Egypt's very close relations with Saudi Arabia. Al-Monitor and Washington Post

Greece turns to Russia and China, amid reports of imminent default

Unconfirmed reports suggest that Greece plans to miss its next scheduled bailout loan repayment to the International Monetary Fund (IMF), and will go into default next week on Wednesday (8-Apr). This would be the best time, since banks are scheduled to be closed for the following four days in celebration of Greek Orthodox Easter, which occurs next Sunday. According to this report, currency bills in Greece's traditional drachma currency have already been printed, and Greece's government would use those four days to convert from the euro currency back to the drachma currency.

Other reports suggest that Greece has been turning to Russia and China for bailout funds that would permit it to retain the euro currency. Russia might consider supplying these funds to Greece, in return for Greece's full-throated opposition to EU sanctions against Russia. China might consider supplying the funds as part of a deal to purchase Greece's port of Piraeus, which China's Cosco shipping group would like to buy.

Alternatively, the Europeans may manage, once again, to find a way to "kick the can down the road," and permit Greece to get through the current week's crisis and continue until the next crisis, which is currently scheduled for July. Investment Watch and Economist

(Comments: For reader comments, questions and discussion, see the 4-Apr-15 World View -- China to sell eight advanced submarines to Pakistan, encircling India thread of the Generational Dynamics forum. Comments may be posted anonymously.) (4-Apr-2015) Permanent Link
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