Weekly Overview Cables - Ukraine war, and evaluating Biden-Xi meeting in San Francisco - accomplishments, challenges, and unaddressed issues.
Ukraine war updates.
1) Russia Renews Avdiivka counteroffensive.
The Russian army launched a third attempt to take Avdiivka - a town of relatively little strategic value (aside from being a minor logistical advantage - definitely not worth the current methods/casualties) but of potential political value as a Kremlin talking point to wrap up the year with a military success.
In total, Russian forces have lost a confirmed 197 damaged and destroyed vehicles and several thousands troops in offensive operations near Avdiivka since October 9.
As of Friday, Russia lost around 1,000 troops and 30 tanks in a single day - with no significant breakthrough to show for this extreme attrition.
2) Dutch elections bring power to the far right - danger of intra-EU populist coalitions becomes more real.
The Party for Freedom led by Geert Wilders attained a surprise win in the Dutch elections.
Coalition talks (Wilders did not secure a majority to rule outright) were always going to be difficult for Wilders - and there are early signs of this already.
But his victory is nonetheless significant.
There could theoretically be a direct impact on Ukraine - if the new Dutch government (led or co-led by Party for Freedom) refuses to continue the previous pro-Ukraine line advanced by the outgoing PM Mark Rutte.
Holland is sending F-16s to Romania - to train Ukrainian pilots.
It is also set to deliver F-16s to Ukraine in 2024.
The precise number is yet to be confirmed, but these plans may in fact come under threat with Wilders now in power/co-leading the Dutch government.
More broadly, and together with Slovakia and Hungary, the new Dutch government could form a populist coalition (luckily, with the return of Donald Tusk, Poland will no longer be part of this) - this would then endanger aid packages meant for Ukraine.
Already, we can see how Hungary was successful in blackmailing EU via its veto on the aid package to Ukraine - Brussels was forced to approve €900m ($985m) in advance payments to Hungary under its hitherto frozen share of recovery funds (due to number of constitutional/rule of law violations committed by the populist Hungarian government).
But with looming major decisions for the EU, the size of the bribe demanded by the Hungarian PM is set to increase - Viktor Orbán, is now threatening to block Ukraine’s candidacy for membership of the EU (EU leaders will gather on December 14th and 15th to discuss Ukraine’s EU membership).
Unfortunately, similar tactics within the union may become ever more frequent going forward - music to Putin’s ears.
3) Air defense coalition.
Twenty nations have now agreed to form a coalition to further bolster Ukraine's ground-based air defense capability.
This new capability coalition on “Ground Based Air Defense” is led by France and Germany - focusing on the deliveries of more equipment to Ukraine.
In the meantime, Russia’s response was to target core civilian infrastructure in the largest ever one-off drone attack campaign agains the capital Kyiv.
But 74/75 drones were shot down - this is an unprecedented level of interception.
Even so, some power lines were still damaged and one successful hit (and falling debris) was enough to leave 17k people without power.
Of course the bigger impact is still felt on the frontlines - every thwarted attack on Kyiv means less air defense capacity allocated towards protection of the frontline troops.
Biden and Xi meet in San Francisco: both sides have something to boast about.
The long awaited Biden - Xi meeting resulted in a number of accomplishments, while still leaving a lot on the table.
In many ways, the APEC summit and meeting between the leaders of the two global superpowers went as well as one could realistically hope for.
Anyone expecting more, did not have realistic appreciation for the fundamental differences in the core national security needs of both the US and China.
Political benefits accruing to each side.
For President Biden, this was a broadly successful political event.
Xi Jinping traveled all the way to US turf - where he publicly and openly dismissed the notion that China was going to challenge America:
“China has no intention to challenge the United States or to unseat it. Instead, we will be glad to see a confident, open, ever-growing and prosperous United States..”
Now granted, this is not really true, it is still a major prestige boost for Biden ahead of the 2024 elections - especially after months of tough policy from Washington (with unprecedented restrictions on tech transfers/semiconductor supplies that are aimed to stall the broader Chinese industry - not just (contrary to White House press releases) its military might).
Xi’s remarks could therefore be interpreted as a de facto public validation of Biden admin’s policy on China: not only is this administration successfully arming America’s allies, building coalitions like AUKUS (as well as facilitating rapprochement between South Korea and Japan, and securing agreements for new military bases in Philippines etc), and inflicting major technological restrictions (indirect economic sanctions), but it is then also securing a public display of appeasement by the target of these measures.
Speaking of the next year’s elections - this leads us to the second reason why it was so important to have this in-person meeting now: as an election year, 2024 will throw a lot of political obstacles in the way of any rhetorical softening towards China (at the time when GOP candidates would be bashing China on steroids and accusing Biden of being weak) - the niceties we all witnessed last week, was going to be tough to pull off.
This means there would have been little chance of genuine substantive rapprochement.
All political leaders require dignified treatment - and this is especially the case with a leader of a totalitarian state.
And Biden would simply be unable to offer this needed dignified treatment.
Now, there are those that have argued that the niceties were spoiled by Biden’s supposed gaffe in calling Xi a ‘‘dictator’’.
This happened in a press conference, and in response to a question from a reporter - where President Biden confirmed that he considered Xi as a “dictator”, qualifying this by explaining that this was because the latter was a leader of a ‘‘communist country’’.
(side note: he should have replaced “communist” (which China isn’t) with “totalitarian”(which it is).)
Well..Biden’s remarks are (broadly) both factually correct, and politically the best that Biden could have done.
Some have accused him of a major gaffe, but it is hard to see how saying anything else or evading the question would have been perceived as anything but being “weak”.
And when ‘‘weak’’ and ‘‘undiplomatic’’ are your only options, as a general rule, you err on the side of the latter.
And here too - Biden picked the lesser of two unfavorable outcomes.
He was in a tricky situation and did almost as best as he could.
This is not to say that there weren’t far more ideal diplomatic options.
He could, for example, respond with the following: ‘‘well… look, I don’t think there is anyone with illusions about fundamental differences in the political structures of our respective states”.
This would amount to responding in the affirmative without saying ‘‘yes he is a dictator’’.
But then again, perhaps this is too diplomatic, perhaps Biden was right to err on the side of being direct.
(side note: China did produce a customary objection, but this is unlikely to lead to US-China relations souring even further. After all, Xi knows that Biden is correct..He may not like what he is hearing, but he cannot complain too much either.)
Overall however, this was a great political event for Biden.
And as a side benefit, San Francisco was cleaned up from its usual ailments.
Now, even though the fake Potemkin villages of pristine facades are no solutions to deep-seated urban problems, perhaps this will reintroduce (and normalize) the radical idea that it would be nice if the government got its act together and really put in an effort to solve the issues of homelessness, drug abuse and crime.
If it is possible to create a mirage of order for a week, let us now try to solve the underlying causes and make it possible to enjoy San Francisco for the full 52 weeks of the year.
But we digress.
Going back to the political benefits of the summit, and from China’s perspective too, this was a major success.
At the time when its already struggling economy is beset with a dangerous problem of a foreign capital flight (a significant majority of 75% of the foreign money that had previously flowed into China’s stock market in the first seven months of this year has already left the country) concocting a sense of normality, and implying some political stability in relationship with the US, is precisely what Xi needs right now.
The warm personal welcome offered to Xi by the organizers of the event (and Governor Newsom in particular) didn’t go unnoticed in Chinese social media networks either.
After months of western coalition building and attempts to surround China, Xi was offered an appearance of friendship -an important personal prestige boost to the Chinese leader.
But all of these are political gains - and are thus by definition shorter-term in their impact.
Let us now focus on the the substantive agreements & accomplishments of this summit.
Real & apparent accomplishments of the summit.
1) Military channels reopen.
High-level military-to-military communication will now resume.
These were on ice since August of 2022 - after (then House Speaker) Nancy Pelosi’s trip to Taiwan triggered China into an unprecedented campaign of intimidation and extreme military drills around the island.
For months, the US was rightly interested in resumption of these comms channels.
It is far better to isolate Beijing and surround it with overlapping military alliances while still talking with their military leadership - this serves as an essential safeguard to Washington’s measures.
But not only - it is a practice that can now be withdrawn once again if there is a need for China to escalate.
And: a) given recent history and b) future trajectory of events, China will at some point need to escalate in some way.
It is therefore good to have these military-to-military comms resumed not only due to their practical utility in averting a miscalculation and a potential gradual slide into a full-blown conflict, but because they can furthermore act as a pressure release valve - instead of ramming into allied ships or doing something of equal danger, China can now suspend/pause these comms when it will need to register its future dissatisfaction with developing status quo.
2) Beijing’s commitment to crack down on Fentanyl precursors.
This is an announcement of an agreement that has a potential to either 1) become very consequential very soon, or 2) amount to very little in practice and end up being a Chinese ruse to secure further concessions from the US.
Indeed in return to these commitments, Beijing has already secured a sanctions exception for its Ministry of Public Security’s Institute of Forensic Science.
And frankly, this seems to be a failure of US diplomacy: why should China be offered anything in return for exercising its duty as a responsible state - if not a strict legal duty (for the existence of which, there could be many persuasive arguments as well) then at least a political duty of a major superpower to crack down the shipments of precursors that lead to the overdose of tens of thousands of Americans every year.
Leaving aside strict obligations, this is also extremely bad PR for China - there is a danger of appearing as an extremely hostile state on the global arena.
State sponsored infliction of such enormous harm can and should be expected of states like Iran, Russia or North Korea.
And proper exercise of the US leverage would have been a warning of China falling into that league of global menaces - that the US has enough media/informational resources to make sure of this is very clear.
The possibility of this highly unfavorable outcome should have been enough of a disincentive to move Beijing’s hands.
Instead, Washington decided to reward China for the exercise of cruel leverage over the lives of many American civilians.
This is a bad precedent to set.
But perhaps all could be forgiven if the promised measures would really pay off such diplomatic generosity from the US.
If Beijing was truly going to put an end to this wave (or do everything that was in its hands to move in that direction) then maybe just maybe America’s generosity on sanctions could be justified.
But will China really pull all the levers available to it?
As of this moment, it is hard to tell - thus far, China has committed to: 1) curbing precursor supplies (by directing its chemical companies to curtail shipments to Latin America) and 2) Sharing information about suspected trafficking with an international database.
Naturally, and even if fully implemented in earnest, this only (potentially) solves the issue (as it relates to China - the full comprehensive solution will be harder to attain - shadowy companies in other countries will spring to fill in the supply gap) going forward - and we have no idea about the amount of precursors already in the hands of Mexican cartels.
Indeed, and even if all future supplies of precursor materials are curbed, we don’t know how many years’ worth of material the relevant gangs have in possession: the yield on tiny amount of precursors is enormous (precisely why the profit margins are extremely high - drawing in a lot of willing retail suppliers), and a few tonnes could last for years.
But these are grander issues, and when it comes to China, the more immediate question is one of implementation - will they deliver on their new commitments?
That depends on how we view Beijing’s role in all this.
A more cynical view would be that China is deliberately spreading precursors here to inflict a demographic injury on the US (especially as its own near-term demographic prospects are anything but encouraging)
In addition, and as evidenced by the US diplomatic concessions mentioned above, this is a very attractive lever to wield over America.
But even if there is absence of deliberate malice, at the very least, there is a case of significant recklessness.
Beijing is happy not to do much.
And proving this (hopefully, only hitherto) total disregard to American lives is very easy: if a similar scourge of fentanyl epidemic was spreading through China, it is inconceivable that the totalitarian Chinese government would let this issue go unaddressed for too long.
In fact, here is an assertion: if these precursors were causing similar demographic threats to the Chinese, none of these precursor producing companies would be around for more than a few weeks - all of them would be shut down immediately (with many owners probably executed too).
But going back, and regardless of what you believe about China’s motives , careful observation and enforcement of these commitments will be key.
Washington must create a liaison unit and task force to work with China on this - this will allow us to either expedite the progress or catch the faux promises made to President Biden very soon.
3) AI.
“The leaders affirmed the need to address the risks of advanced AI systems and improve AI safety through U.S.-China government talks.” says the White House readout.
But there are no concrete actions beyond this.
And it is unlikely that we will in fact see anything of such a concrete nature anytime soon.
Both countries are rapidly building their respective AI capabilities.
Unfortunately, and given that many more advanced countries beyond China and the US are also developing similar AI tools (and many of them are US allies), this is an area that will require a multilateral agreement - the scope of this issue is not limited to the US-China relations.
In addition, many of the countries that have their own AI ambitions are rogue states like North Korea.
And it is important not to dismiss their technical prowess either: after all, their cyberattacks/cyberops are extremely sophisticated, and even if they don’t produce cutting-edge research/anything even close to something like artificial general intelligence, it is also not inconceivable that they could develop sophisticated autonomous AI-driven platforms.
This is all to say that when so many countries are racing towards similar capabilities, mere agreement between China and the US on the safe use of AI is insufficient.
In fact, there is a clear prisoner’s dilemma here - precisely because there are so many other rogue players racing towards these capabilities, it is inconceivable to see how major superpowers can agree to limit their own actions without securing a total unanimity on restrictions (which is not possible anytime soon).
Having said that, the sentiments expressed are of course welcome - but it is too soon to be even hopeful on progress in this sphere: the non-weaponization/safe use of AI is a complex multilateral problem that will by definition require unanimity of compliance for any agreement to be even remotely credible.
And the complexity of this problem means that the Biden-Xi meeting was simply an insufficient arena where anything further could have been realistically attained.
What remained off the table:
1) No relief on US tech sanctions.
There was not even a hint that the Biden administration would ease up the iron chokehold over China’s advanced tech industry - with limitations ranging from export restrictions on microchips (both advanced and less advanced) to supply/transfer bans on chip-making equipment and US persons working at/collaborating with China on areas of tech deemed sensitive to the US national security.
There is also (as of August of this year) an investment restriction into Chinese industries (once again, deemed as a threat to national security).
The US was furthermore successful in rallying the support (and compliance) of partner states like The Netherlands and Japan - their respective chip-making companies: ASML (the only company in the world producing extreme ultraviolet lithography (EUV) photolithography machines used in advanced semiconductor production) and Tokyo Electron are now also restricted from supplying crucial tech to China.
That there was no progress (for Beijing) in this area should come as no surprise.
In fact, just a month ago, the Biden administration had added further semiconductor export restrictions on China - the timing is also crucial - a signal to Beijing that this is a no-go area that should not be discussed.
With the latest restrictions imposed only so recently, there was a strong message to Beijing that a political space to negotiate even minor concessions simply did not exist - a forewarning to Beijing to refrain from any possible attempts - sparing Xi from an embarrassment of getting a direct in-person rejection.
2) Expanded Chinese subsidies and mistreatment of US companies.
China has dramatically expanded subsidies to its state-owned enterprises (SOEs), but the US is also engaging in a massive subsidy spree via the CHIPS act and the IRA incentives - so much so that some of our European allies have threatened World Trade Organization (WTO) action.
So this is an area where the tit-for-tat will simply continue.
And with all of the restrictions on China, Washington simply doesn’t have a strong case to make for any possible Beijing-sponsored subsidies’ relief any time soon.
And this is why it was predictable that no substantive progress would be made this soon during the Biden - Xi meeting.
What can and should happen going forward, is a clear warning that the US will not tolerate targeted mistreatment against its companies - the raids/employee arrests experienced by American companies Mintz Group and Bain & Company in April and March of this year.
Washington has a large capacity for targeted retaliation against large Chinese multinationals (remember Huawei) - and Beijing must be forewarned that further similar behavior will result in a significant counterpunch.
Of course, America will always be restricted by the rule of law - it will not be able to retaliate in the same manner as China.
But this need not be a significant restriction either - there are surely plenty of prime targets available in the Chinese industry - it is very likely that there are plenty of legitimate targets of actual crimes to pick from.
3) Taiwan clarity.
Neither side wants a military escalation anytime soon - the evidence of this is lack of any military preparation/build-up in Taiwan’s proximity.
China is not ready for an invasion (and we will see month of advance notice if/when Beijing opts in favor of using force for ‘‘unification’’) and the US does not have sufficient Naval assets in the region to fend off a full-scale Chinese attack (and neither Taiwan nor allies like Japan and Australia are ready ready as well).
As such, the military status quo (of no immediate escalation anytime soon) suits both parties well.
But politically, Xi is clearly unhappy - he sees the US deviating from the one China policy in both thought and action.
It was therefore probable that Xi was seeking assurances that:
1) The Pelosi affair of sending a US house speaker/someone of equal stature to Taiwan does not happen going forward;
2) Washington avoids actively commenting on/taking sides in the upcoming presidential elections in Taiwan;
3) That the Biden admin promises to not support any pro-independence sentiment/shut down any intent by Taiwanese politicians to go in the direction of a unilateral declaration of independence;
4) Washington reins in/cancels further militarization of Taiwan - and stops further transfer of missiles like Tomahawks or fighter jets.
Naturally, number 4 will never happen (and rightly so).
Nonetheless, it is indeed likely that Xi received private assurances on Taiwanese independence.
In addition, it is likely that the Biden admin promised some sort of an ‘‘attempt’’ to discourage Pelosi-style ‘‘independent’’ political initiatives (while making it clear that the Congressional leaders are formally free to do as they please).
(side note: some analysts have suggested that Pelosi’s trip was planned by White House. But this is unlikely to be true. It is not clear what would the Biden admin gain by triggering China at the time of an ongoing war in Ukraine and when its own assets were deficient/not present in adequate numbers in the Taiwanese strait. Getting caught unprepared could not have possibly been a result sought by a deliberate strategy of a provocation. The truth is probably more simple: Pelosi wanted to solidify her legacy on Taiwan prior to her departure from Congressional leadership, and the Biden admin was forced to pick up the pieces.)
With that said, and although it is unclear what private assurances (if any) he received from Biden, this is what he got in a formal public statement:
“On Taiwan, President Biden emphasized that our one China policy has not changed and has been consistent across decades and administrations. He reiterated that the United States opposes any unilateral changes to the status quo from either side, that we expect cross-strait differences to be resolved by peaceful means, and that the world has an interest in peace and stability in the Taiwan Strait. He called for restraint in the PRC’s use of military activity in and around the Taiwan Strait.”
Translation: we will not support pro-independence/unilateral declaration of independence by Taiwan so relax with the military measures..
This is not bad at all for Xi - it is unlikely that he could have got anything stronger than ‘‘no unilateral changes” (which also necessarily implies a no to an independence).
Overall then, and given fundamental differences (that are only likely to exacerbate in the medium to long term) this summit was the best we could have hoped for.
At least in the near term, the world is probably much safer (and conflict between the two premier superpowers less likely) after this summit than it was before.