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111. Taiwan’s Opportunities in Emerging Industry Supply Chains

Author:
Evan A. Feigenbaum and Michael R. Nelson
Publication Date:
11-2021
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
To some, the acute supply chain crisis that has followed in the wake of the coronavirus pandemic is a sign of poor planning, lack of resilience and surge capacity, and industry rigidity. Inflation is also having a major impact and will inevitably lead to some supply chain reconfiguration. But structural shifts matter too, including rising costs in mainland China—the world’s manufacturing’s powerhouse—and the overconcentration of freight in just ten companies that control 85 percent of global container capacity. Globalization has bequeathed a system that seemed efficient until it was tested by the multidimensional crises of the last two years. In industry after industry, C-suites are planning for a world of disruption. At a minimum, companies aim to build resilience and redundancy into their supply chains. But there is another factor—political risk—that is complicating planning, especially in technology-intensive industries. Specifically, the emergence of multidimensional strategic competition between Beijing and Washington has interrupted the flow of goods, capital, people, technology, and data. And these geopolitical disruptions look set to become a long-term structural trend. This is a sea change that will invariably bleed into many industries and rejigger supply chains. But amid the disruption, some economies will have fresh opportunities to attract investment, build out new industries, and diversify their growth drivers. Taiwan is one such economy that may stand to benefit from the supply chain rethink. This paper explores some ways that it could do so. But to seize opportunities in this dynamic environment, Taiwan needs policy changes and technology investments to better position its ecosystem of government, business, academia, research institutions, and labor to attract new supply chain opportunities, especially for the Fourth Industrial Revolution and the emerging economy of the twenty-first century. Two prior Carnegie Endowment studies of Taiwan’s economic competitiveness included specific recommendations that could comprise the foundation of an ecosystem that serves the public interest by bolstering Taiwan’s profile and role in more and more global supply chains. Most notably, these were Carnegie’s recommendations to position Taiwan’s economy as a trusted hub, trusted vendor, trusted tester, and trusted conduit for technology-intensive R&D and production. Taiwan’s public interest would benefit if such opportunities became a counterpoint to mainland China’s scale advantages. But Taiwan faces intense competition from other economies in Asia and Europe that also seek to capitalize on supply chain shifts, reaping the harvest from their investments while carving out specialized niches amid rising suspicion of mainland China-origin technology products and services. This study aims to help to refine competitive choices for Taiwan while highlighting unique comparative advantages that would make it an especially attractive place for new global investments. The paper digs deeply into two opportunities for Taiwan. The first involves dynamic changes in one of the high-tech industries that Taipei has made into a strategic priority—the life sciences, including biotechnology and precision medicine. Despite twenty years of concerted effort and some signal successes, especially with drug development and diagnostics, Taiwan has not captured a role or market share analogous to its multidecade build-out in semiconductors. For Taiwan, trust will be the crucial variable and competitive advantage. Taiwan could, for example, leverage its advantages with high-quality medical data to become a locus for clinical trials, while also leveraging other advantages for global supply chains in the drug discovery, advanced diagnostics, and personalized medicine markets. But to do so, it will need to make policy and regulatory changes and make some new strategic investments. The second chapter turns to whether Taiwan’s economy could be positioned as a leader in testing, validating, and deploying software, which would give Taiwan-based firms a larger role in the information technology services business where mainland China, India, and others have a larger profile. Elements of Taiwan’s ecosystem could potentially be positioned to use software engineering to ensure that business software and services produced by local companies and their international partners are more tested and more trusted than competing products on the market.
Topic:
Science and Technology, Geopolitics, Investment, Industry, and Supply Chains
Political Geography:
Taiwan and Asia

112. The EU’s Defense Ambitions: Understanding the Emergence of a European Defense Technological and Industrial Complex

Author:
Raluca Csernatoni
Publication Date:
12-2021
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Is the European Union (EU) about to rise as a defense technological actor on the world stage? According to conventional wisdom, attempts at greater European integration in security and defense were not likely to amount to much, given that such policy fields have long been considered the reserved domain of the EU member states or the North Atlantic Treaty Organization (NATO). This working paper goes beyond this traditional state-centered approach by looking at past and recent institutional efforts to consolidate European security and cooperation on defense industry and technology. Such efforts have continued despite the disruptions caused by the coronavirus pandemic, owing to the bloc’s willingness to become a stronger security and defense actor on the global stage. The timing of this shift was facilitated by a set of circumstances that triggered a new European defense momentum. Contributing factors include the geopolitical pressures of Brexit, an unreliable transatlantic partner in the United States, concerns within European defense industries regarding dwindling national defense budgets and fierce global technological competition in high technology areas, and the European Commission’s growing supranational role in security and defense. This impetus was also facilitated by the privileged relationship between various EU institutions, European defense industrial actors, transnational interest and lobby groups, and organized expert bodies. In this respect, the defense industry and high-level expert and interest groups have occupied a central position in shaping EU policy processes, funding priorities, and security and defense research programs. Such a rapprochement between EU institutional structures and the European defense industry has allowed for the emergence of a so-called European defense technological and industrial complex (EDTIC). This European defense industrial ecosystem encompasses a wider variety of transnational actors beyond the political, military, and industrial groups typically present in national military-industrial complexes. It presents a dense, multilevel network of EU institutions and agencies; security and industrial stakeholders; national public authorities; and interest and expert groups, all of which both compete and cooperate to shape and set policy agendas. However, this rapprochement is also characterized by the absence of strong democratic control mechanisms and little political and public accountability concerning the surge in and direction of the European defense technological and industrial integration process. These transformations have the potential to make the union a more capable and strategically autonomous global defense technological actor. At the same time, they challenge existing EU democratic governance structures and processes. The EU’s security and defense policies remain tough areas for parliamentary scrutiny and democratic oversight. The EU’s policymaking institutional machinery has been finely tuned to mediate power, keep things as technical and bureaucratic as possible, and to create package deals for certain defense industrial interests and member states’ political agendas. Yet, for real European integration in the field of security and defense, more political and democratic trust is needed across the continent.
Topic:
Security, Defense Policy, European Union, and Cooperation
Political Geography:
Europe

113. How Argentina Pushed Chinese Investors to Help Revitalize Its Energy Grid

Author:
Juliana González Jáuregui
Publication Date:
12-2021
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
China’s modernization strategy integrates both domestic and foreign policy, especially through two complementary prongs—the so-called Going Global strategy and the Belt and Road Initiative (BRI). This push to internationalize China’s development strategy has ushered in a new era in Beijing’s relationships with countries and regions around the world. In Latin America, these policies have triggered a dynamic pattern of interactions between China and the region’s political economy. Being rich in fuels, energy, foodstuffs, and basic products, countries in Latin America have emerged as significant suppliers for China, but they also have become important destinations for Chinese-made industrial products, and, subsequently, Chinese investment and lending. For Latin American countries, China’s rise as an influential investor, lender, trader, and builder has created an array of new challenges and opportunities. While Beijing has harnessed its engagement in Latin America to support its own development, countries in the region have sought to direct some of China’s economic and financial resources to promote their own strategic sectors. Argentina illustrates this dynamic well, particularly in the energy sector. Argentinian government officials and business leaders have attracted Chinese investment and finance into renewables and other types of energy to promote Buenos Aires’s goals of taking a hybrid path to an energy transition. For its part, China has seized this opportunity to advance its own development goals and to participate in Argentina’s energy transition strategy. Though Argentina has not yet formally joined the BRI, Argentinian officials have reported publicly that Buenos Aires has already decided to endorse the initiative and is waiting for the right moment to do so.1 Argentina has been weighing the pros and cons of signing on to the BRI. On the one hand, signing on could enhance the presence of Chinese actors in the Argentinian renewables sector, as China seeks to intertwine its engagement in Latin America with the deployment of the Green BRI, the dimensions of the initiative that are framed in terms of environmental sustainability. More broadly, joining the BRI could attract new Chinese investment and finance in alternative energy and electricity transmission infrastructure, further contributing to Argentina’s goals for an energy transition. On the other hand, Argentina faces the challenge of designing and implementing a long-term national energy plan that complements its role in the BRI. This means devising an energy plan that, among broader objectives, seeks to help Argentina harness Chinese know-how on renewables and develop innovation and technological capacities of its own. In the meantime, Argentina’s lack of committed engagement with the BRI to date has not impeded the expansion of Chinese overseas investment and financing for renewables and other types of energy projects in the country. In a clear sign of political agency, the diplomatic outreach of key Argentinian national and provincial government officials, as well as corporate players’ push for local associations, has been central in the quest to increase Chinese engagement in Argentina’s solar and wind power sectors and in other alternative energy projects. These interactions have allowed Argentinian policymakers to help shape an adaptive partnership to strengthen the alignment between Chinese investments and Argentinian development objectives. Admittedly, this engagement has at times encountered resistance due to environmental and social risks in certain localities. Even so, these concerns are part of the learning process and set a tone for future cooperation on energy projects. Renewables and alternative energy will continue to be a magnet for global investment as countries around the world strive to address climate change. Thus, local tensions are pushing both Argentinian and Chinese actors to learn from the problematic impacts of some projects and do more to address local communities’ concerns jointly. Successful responses to such concerns would further enhance the basis of Argentina and China’s energy-focused adaptative partnership.
Topic:
Infrastructure, Economy, Business, Investment, and Energy
Political Geography:
China, Asia, Argentina, and South America

114. Reimagining Nuclear Arms Control: A Comprehensive Approach

Author:
James M. Acton, Thomas Macdonald, and Pranay Vaddi
Publication Date:
12-2021
Content Type:
Special Report
Institution:
Carnegie Endowment for International Peace
Abstract:
The governments of China, Russia, and the United States all express support for arms control. They disagree profoundly, however, about its purposes and preconditions. To try to find common ground, this report presents nine detailed practical measures that—implemented individually or as part of a package—would help address each state’s specific security concerns and the shared dangers of arms racing and inadvertent escalation.
Topic:
Security, Arms Control and Proliferation, Nuclear Weapons, and Treaties and Agreements
Political Geography:
Russia, China, Asia, and United States of America

115. Algeria’s Borderlands: A Country Unto Themselves

Author:
Dalia Ghanem
Publication Date:
05-2020
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Smuggling goods across the border between Algeria and Tunisia has created a parallel economy for marginalized border populations. Law enforcement and smugglers alike must navigate these gray zones in state authority. In Algeria, state formation remains an evolving process, as evidenced by the situation in the country’s northeastern border regions. With Algerian officials in these areas permitting smuggling of petrol and certain other commodities over the border with Tunisia and smugglers weeding out security threats even as they go about their illicit trade, the two ostensibly adversarial parties complement each other. This unusual relationship furthers the intrusion of the state into citizens’ livelihoods even as it manipulates state authority.
Topic:
Law Enforcement, Economy, Borders, Trade, and Smuggling
Political Geography:
Algeria, North Africa, and Tunisia

116. Europe Needs a Regional Strategy on Iran

Author:
Cornelius Adebahr
Publication Date:
05-2020
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
The rift between Europe and the United States over Iran is deepening. To regain leverage, the Europeans should engage all eight Gulf states in talks about regional security and nonproliferation. The rift between Europe and the United States over Iran is deepening. Two years of U.S. maximum pressure on Tehran have not yielded the results Washington had hoped for, while the Europeans have failed to put up enough resistance for their transatlantic partner to change course. Worse, the U.S. policy threatens to destabilize the broader Persian Gulf, with direct consequences for Europe. To get ahead of the curve and regain leverage, the European Union (EU), its member states, and the United Kingdom have to look beyond their relations with the Islamic Republic and address wider regional security challenges. The United States’ incipient retreat as a security guarantor and Russia’s increased interest in the region make it necessary for Europe to engage beyond its borders. Despite being barely alive, the 2015 international nuclear deal with Iran offers a good starting point. The Europeans should regionalize some of the agreement’s basic provisions to include the nuclear newcomers on the Arab side of the Gulf. Doing so would advance a nonproliferation agenda that is aimed not at a single country but at the region’s broader interests. Similarly, the Europeans should engage Iran, Iraq, and the six Arab nations of the Gulf Cooperation Council in talks about regional security. Rather than suggesting an all-encompassing security framework, for which the time is not yet ripe, they should pursue a step-by-step approach aimed at codifying internationally recognized principles at the regional level.
Topic:
Security, Nuclear Weapons, Treaties and Agreements, and Nonproliferation
Political Geography:
Europe, Iran, Middle East, and United States of America

117. Overcoming Taiwan’s Energy Trilemma

Author:
Evan A. Feigenbaum and Jen-Yi Hou
Publication Date:
04-2020
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Taiwan needs to look not just to the energy it needs right now but also to the energy it will need ten to twenty years from now if it is to power its future. This paper focuses on two elements of the paradigmatic transformation that are especially relevant to Taiwan’s future: (1) the rise of new energy and storage technologies, and (2) the dynamics of liquefied natural gas pricing. In particular, it looks at several ways in which new investment partnerships between Taiwan and U.S. players could bolster Taiwan’s ambitious effort to build out renewable energy as a source of industrial and residential power.
Topic:
Energy Policy, Markets, Science and Technology, Investment, and Fossil Fuels
Political Geography:
Middle East, Taiwan, and United States of America

118. Bridging the Elite-Grassroots Divide Among Anticorruption Activists

Author:
Abigail Bellows
Publication Date:
01-2020
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
The professionalization of the anticorruption field has produced a cadre of capital-based NGOs with the technical expertise to be formidable government watchdogs. But at what cost? Corruption-fueled political change is occurring at a historic rate—but is not necessarily producing the desired systemic reforms. There are many reasons for this, but one is the dramatic dissipation of public momentum after a transition. In countries like Armenia, the surge in civic participation that generated 2018’s Velvet Revolution largely evaporated after the new government assumed power. That sort of civic demobilization makes it difficult for government reformers, facing stubbornly entrenched interests, to enact a transformative agenda. The dynamics in Armenia reflect a trend across the anticorruption landscape, which is also echoed in other sectors. As the field has become more professionalized, anticorruption nongovernment organizations (NGOs) have developed the legal and technical expertise to serve as excellent counterparts/watchdogs for government. Yet this strength can also be a hurdle when it comes to building credibility with the everyday people they seek to represent. The result is a disconnect between elite and grassroots actors, which is problematic at multiple levels.
Topic:
Corruption, Political Activism, NGOs, and Political Movements
Political Geography:
Caucasus and Armenia

119. Multipolarity in Practice: Understanding Russia’s Engagement With Regional Institutions

Author:
Paul Stronski and Richard Sokolsky
Publication Date:
01-2020
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Over the past two decades, and especially since Russia’s invasion of Ukraine in 2014, the Kremlin has intensified its engagement with international institutions. This paper evaluates the drivers of this involvement, Russian views of three of these organizations, and Moscow’s success in achieving its objectives.
Topic:
International Relations, Regional Cooperation, Multilateralism, and Institutions
Political Geography:
Russia and Global Focus

120. Russia at the United Nations: Law, Sovereignty, and Legitimacy

Author:
Philip Remler
Publication Date:
01-2020
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
The central task for Russian foreign policy in the era of President Vladimir Putin has been to regain the undisputed recognition that Russia is a world power like the Soviet Union before it, a status to which Russia feels entitled.1 The United Nations (UN) is Russia’s most important venue for putting its global aspirations and achievements on display. Russia’s status as a permanent member of the UN Security Council boosts its claim to be part of a global oligarchy and grants it the power to veto or undermine initiatives that it deems contrary to its interests. The concepts underlying Russia’s use of the UN to promote its aspirations form the subject of this paper. Russia, like the Soviet Union before it, devotes great resources to its missions at the UN, especially New York and Geneva. It traditionally cultivates extensive expertise among its mission members, appointing them to UN postings several times over their careers and leaving them in place for long periods. Russian diplomats are noted for their abilities in drafting highly technical UN documents in English—none more so than Sergey Lavrov, currently Russia’s foreign minister and formerly its permanent representative to the UN from 1994 to 2004.
Topic:
Foreign Policy, Sovereignty, Power Politics, Law, Geopolitics, and Legitimacy
Political Geography:
Russia and United Nations