According to the survey by the British Chambers of Commerce (BCC), 55 percent of exporters reported higher shipping costs and delays, as did 53 percent of manufacturers and business-to-consumer services firms.
Among all types of businesses, 37 percent of companies were affected by the attacks, according to a survey of 1,000 firms between January 15 and February 9.
Some businesses surveyed said container hire costs had jumped as much as fourfold, while delivery times had blown out by up to four weeks.
“There has been spare capacity in the shipping-freight industry to respond to the difficulties, which has bought us some time,” William Bain, BCC head of trade policy, said on Sunday.
“But our research suggests that the longer the current situation persists, the more likely it is that the cost pressures will start to build.”
The Iran-backed Houthis have carried out dozens of missile and drone attacks on commercial ships in the Red Sea, one of the world’s busiest shipping routes, since the start of the war in Gaza.
The rebel group claims to be targeting vessels with links to Israel in an effort to show solidarity with Palestinians under Israeli bombardment in Gaza.
The Houthi attacks have caused major disruption to global trade, with trade volume going through the Suez Canal, which connects the Red Sea to the Mediterranean Sea, falling an estimated 42 percent, according to the United Nations Conference on Trade and Development.
Earlier this month, Tetley Tea, the UK’s second-most popular tea brand, said it was facing “much tighter” supplies due to disruptions in the Red Sea.
The United States and the UK have launched dozens of strikes against targets linked to the Houthis in response to the attacks.
On Saturday, the US and UK militaries said they had bombed 18 Houthi sites in Yemen, including underground weapons and missile storage facilities, air defence systems, radars and a helicopter.
Before Elon Musk announced that he would pour billions into building his largest Tesla plant in the industrial outpost of Monterrey, Mexico, United States trade winds were already shifting south.
In late 2022, Mexico’s Economy Minister Raquel Buenrostro Sánchez said that 400 companies had expressed interest in relocating from Asia to Mexico. New industrial parks were popping up, many driven by Asian money, and the investments were raining down. By June 2023, some $13bn in investments had been secured, according to Mexico’s secretary of finance and public credit, most for auto or auto parts manufacturers.
New numbers from the US Census last week indicate that Mexico is the US’s top trading partner. In 2023, the US traded $798bn with Mexico as the goods it bought from its southern neighbour surged past China and Canada. The boom around nearshoring – a catchy term that describes the movement of companies closer to their preferred market, in this case, the US – has helped drive Mexico into this position.
“This is not cyclical, this is new,” said Andrew Hupert, a trade expert who has lived in China, and now lives in Mexico.
“What I’m seeing is a diversification of manufacturing. The calls started coming from companies saying, ‘I don’t want all my eggs in one basket’,” said Joshua Rubin, the vice president of business development with the Javid Group, a Nogales, Arizona-based company which helps companies start operations in Mexico.
According to the Federal Reserve Bank of Dallas, Mexico first edged out Canada at the start of 2023, with bilateral trade between the neighbours totalling $263bn in the first four months, as China’s numbers continued their descent. By the end of the year, the US had bought $475bn worth of Mexican goods, compared with $421bn from Canada and $427bn from China, which saw its number drop by 20 percent from 2022.
The nearshoring boom is not exclusive to Mexico. A report in 2022 by the Inter-American Development Bank (IDB) suggested that all of Latin America and the Caribbean was poised to reap the benefits, with as much as $78bn in exports in the near future. Countries such as Argentina, Brazil and Colombia stood to make sizeable gains. But they were all dwarfed by Mexico, which accounted for nearly half of the IDB’s forecast nearshoring growth. It has caught the attention of the Canadian auto parts lobby, which has started to express concern that Chinese investments in Mexico will end up undercutting Canadian jobs.
How Mexico got into this position is as much a result of its own initiatives and growth as it is geopolitical forces outside of its control. And experts suggest it is just beginning.
“It’s a world of opportunities now,” said Marco Villarreal, who helped Hisun Motors, a Chinese-based manufacturer of ATVs and UTVs, open up manufacturing facilities in Saltillo, a city on the outskirts of Monterrey.
Villarreal, who had long careers at General Motors and Caterpillar, recalled a tour of industrial parks in the Monterrey-Saltillo region in late 2020, and the head of Hisun’s US operations expressing surprise at the extent of the manufacturing muscle before him.
“Marco, what’s happening in Mexico is what happened in China 30 or 40 years ago when we started a manufacturing expansion,” Villarreal recalled the owner telling him.
“There is a growing interest from Asia to set up a footprint in Mexico,” agreed Alfredo Nolasco, a business development specialist who founded the Mexican consultancy Spyral.
What explains the boom?
Mexico has long carved out a space as a manufacturing hub for the US, through tariff and duty-free programmes that have enabled companies to set up so-called “maquiladoras” – as the factories were dubbed in the 1990s – to assemble products exclusively for export. The North American Free Trade Agreement, and its revamped cousin known as the United States Mexico Canada Agreement, was another boon for the southern partner.
Mexico has programmes to build products like cars exclusive for exports [File: Jorge Duenes/Reuters]
But a confluence of new factors has converged to create the surge we are seeing today. The one most often highlighted by experts on both sides of the Mexico-US border is the trade war between China and the United States. It began under the administration of former US President Donald Trump and has really taken off under President Joe Biden, said Hupert.
Hupert has been warning of the dwindling gains in China for years, arguing that compliance costs were going to outweigh savings.
“To comply with Chinese regulations and US regulations at the same time is more or less impossible,” said Hupert. “The United States in many industries is asking for information that the Chinese could at any time deem to be state secrets.”
Then there was the COVID-19 pandemic, which exposed a logistical risk which had never really been considered by a globalised economy. Companies were forced to swallow tough supply chain pills as the cost to get containers of goods to North America from China skyrocketed. It killed businesses that were unable to get their products to their markets or moved Mexico into an indispensable position, as was the case for medical supplies going into the US during lockdowns.
All this said, it is not that companies are abandoning China or neighbouring countries altogether, said Hupert, but setting up branches or expanding their Mexico footprint.
“The pandemic left us a very important lesson that took us from the globalisation of production to the regionalisation of production,” said Claudia Esteves, the director general of the Mexican Association of Private Industrial Parks. “It’s practically killing globalisation.”
The war in Ukraine has been an additional factor that caused European interests to reconsider their manufacturing outposts in places like Poland, she added.
“Our good luck is due to our geographic position,” she said. “It’s because we share a 2,000-mile [3,218km] border with the biggest market in the world.”
As a result, the demand for industrial parks has also exploded. Some 50 new industrial parks were under construction in Mexico in 2023 – almost half by Chinese investors, and another 20 percent that are Korean, said Esteves. In 2019, there were 2 million square meters (21.5 million sq ft) of occupied industrial park space. By mid-2023, that jumped to 4.3 million square meters (46 million sq ft). “That’s historic,” she said.
Growth that has been ramping up for decades
While this nearshoring boom is largely around manufacturing, the growth of trade is broader than that.
Mexico’s agricultural sector has seen an ‘astronomical’ boom in past few years [File: Carlos Jasso/Reuters]
Jamie Chamberlain, the chairman of the Greater Nogales Santa Cruz County Port Authority, sees it as part of a trajectory dating back decades. He recalls going to rural farms in Mexico as a child with his parents, who started importing fruits and vegetables in 1971.
In the agricultural sector, the growth has been “astronomical” – when he started in the business in 1987, the import of produce was a business that spanned November to May. “Now, we’re pretty much a year-round industry that imports from every single state in the country of Mexico,” he said. “The berry sector is the largest growth sector and all for export to the United States.”
It is not just demand that has greased this economic wheel. There is forward-thinking involved. In Nogales, for example, the Port Authority started planning to expand its port of entry to manage the increasing flow of trucks when there were 900 to 1,000 crossing into the US every day. Now it is about twice that, in each direction.
“The preparation in infrastructure is so important,” he said.
Cartels and currency
Hupert identifies two potential clouds in this upward trajectory – the instability caused by drug cartels and the currency. “The peso is just too damn strong,” he said. “That and inflation wipes out Mexico’s cost advantage.”
It is not just a cost advantage but a labour supply advantage, said Villarreal. The US does not have the skilled labour many US companies are clamouring for and which Mexico has spent decades developing. It now has more than 50 years of automobile manufacturing under its belt, which means it has a workforce that can take on technical assemblage and is more than qualified for less demanding roles, such as furniture, he noted.
And where gaps do exist, the market forces are already working to fill them. Nolasco, the business development specialist, recalled one client who came to him looking for suppliers for nuts, bolts and washers.
“Even though Mexico is a powerhouse, we realised that for those kinds of simple issues, there weren’t enough,” he said. As demand grows, that labour supply issue may be solved.
“That’s a large opportunity there to develop joint ventures with Mexico and other partners around the world.”
Amid allegations of Indian interference in national elections, there’s a call to boycott Indian goods in Bangladesh.
Last week, a supplier for the Indian consumer goods giant Marico faced a chilly reception in Dhaka’s Panthapath area. Grocery shops, usually eager to stock their shelves with its hair oil, cooking oil, body lotion and other products, refused to take new deliveries.
“Sales of Parachute oil, a Marico bestseller, have plummeted to almost zero in recent weeks,” local shopkeeper Aman Ullah said. “Indian products just aren’t moving. We’re stuck with unsold stock and won’t be restocking.”
Another shop owner who requested anonymity revealed a deeper reason: “I don’t want to sell Indian products any more.” He cited YouTube videos advocating a boycott of Indian goods, which he wholeheartedly supported.
Simmering anti-India sentiment in Bangladesh has boiled over in the past decade, culminating in public displays such as celebrations in Dhaka last year after India’s loss in the Cricket World Cup final.
But after last month’s elections in Bangladesh, in which Prime Minister Sheikh Hasina secured a fourth term while the opposition boycotted the polls, a massive “India Out” campaign was launched, alleging Indian interference in Bangladesh politics.
The Bangladeshi diaspora and opposition groups have fuelled this anti-India movement and advocated boycotts of Indian products. This movement mirrors similar campaigns in the Maldives, where Mohamed Muizzu capitalized on anti-India sentiment to win the presidential election.
In Dhaka, the campaign was launched against the backdrop of India’s traditionally strong ties with Hasina’s government and its strained relationship with the opposition, leading many to believe India favoured the status quo.
Exiled Bangladeshi physician Pinaki Bhattacharya, who fled alleged government harassment in 2018, has emerged as the key figure in this burgeoning social media movement accusing India of interfering in Bangladesh’s recent elections to keep Hasina in power.
Through his more than two million followers across social media platforms, Bhattacharya launched the #BoycottIndia campaign in mid-January, urging them to join “this monumental endeavour”. His call, emphasizing love of homeland and determination to break free from perceived shackles, resonated with thousands.
The anti-India movement has surged online, fuelled by user-generated content. Photos of crossed-out Indian products like Amul butter and Dabur honey are circulating alongside barcode identification tips to boycott these goods. A single post highlighting the 890 prefix used in barcodes for Indian products garnered more than 1,000 shares, showcasing the movement’s online reach.
Why did the campaign gain traction?
The Indian High Commission in Dhaka declined Al Jazeera’s request for a comment on this anti-India campaign.
At a Mumbai forum on January 30 with Indian External Affairs Minister S Jaishankar, attendees raised concerns about India’s foreign policy amid perceived shifts in regional dynamics, particularly the growing pull of major rival China on neighbouring countries like Bangladesh and the Maldives.
Jaishankar downplayed concerns about foreign policy shortcomings but conceded the competitive reality. He pointed out that China’s geographical proximity naturally grants it influence over neighbouring countries like the Maldives, Sri Lanka and Bangladesh.
Screengrab from Facebook of online movements advocating boycott of Indian products
State Minister of Information and Broadcasting and lawmaker from the ruling Awami League Mohammad A Arafat, too, dismissed the concerns saying Bangladesh had received global attention because of the unprecedented fact of a fourth term for the ruling government.
“If I have to talk about other country’s interest in our local politics, then the first name I would mention is the United States which even declared a Visa restriction policy based on Bangladesh election. On the other hand, India, from the very onset officially stated that Bangladesh’s election is its internal matter and it has no say in it,” Arafat said.
Obaidul Quader, general secretary of Awami League told Al Jazeera that the “India out” campaign is run by opposition parties who instead of taking part in the election blaming “India for their misfortune.”
“They [the opposition parties] have this trump card of bashing India if anything goes against them,” said Quader, “I don’t think common people of Bangladesh support this campaign. They know that Awami League will never work against the interest of people.”
The burgeoning anti-India campaign, meanwhile, is finding traction within Bangladesh’s domestic political landscape, raising concerns about potentially destabilising Bangladesh’s economy and impacting regional relations.
Gono Odhikar Parishad, a rising political force aligned with the Bangladesh Nationalist Party (BNP)-led opposition, is promoting the boycott movement. Party leader Nurul Haque Nur declared at a recent rally in Dhaka that “We all have to start an ‘India Out’ campaign’” while alleging Indian interference in the recent elections.
Rumeen Farhana, international affairs secretary of the BNP, told Al Jazeera that the people of Bangladesh never liked India’s interference in Bangladesh politics. “It’s now crystal clear that India did everything possible to keep the regime in power since 2014,” she alleged.
Resentment against India reached a boiling point in Bangladesh after Hasina’s Awami League secured a resounding victory in the January 7 elections, capturing 223 seats out of 300 in parliament. Critics alleged the process lacked legitimacy due to the opposition’s boycott and the presence of numerous Awami League-backed independent candidates, raising questions about the fairness of the vote.
Indian Prime Minister Narendra Modi offered swift congratulations to both Hasina and “the people of Bangladesh for the successful conduct of elections”, endorsing the outcome. In contrast, Western governments expressed reservations, highlighting the boycott and the lack of a strong opposition presence.
Facebook Screengrab of calls for a boycott of Indian products in favour of Bangladeshi products
Farhana said anti-India public sentiment in Bangladesh goes beyond politics. “The border killing, unresolved water sharing of 53 rivers including Teesta, trade deficit all play roles to that,” she said.
Around 1,276 Bangladeshis have been killed and 1,183 injured by India’s border forces since 2010, according to human rights organisation Odhikar. Then there are the decades-old unresolved water-sharing agreements for 53 transboundary rivers in addition to Bangladesh’s massive trade deficit with India, all of which have raised concerns about Bangladesh’s sovereignty and economic independence.
Ali Riaz, distinguished professor of politics and government at Illinois State University, told Al Jazeera that India’s unqualified support of the Awami League and Hasina during the 2024 elections has raised questions among many citizens about “whether it has compromised the country’s sovereignty”.
However, Sreeradha Datta, a professor at the Jindal School of International Affairs in Sonepat, India, refuted the claims of India’s “unqualified support” and said the Awami League was “creative in going past the polls even if India [had] not agree[d] to recognise the election”.
“China and so many others congratulated PM Hasina right after the election, so would that make any difference if India didn’t support it?” she asked.
The economic fallout
Analysts, meanwhile, pointed out that boycotting Indian goods could have major repercussions for the economic relationship between the two countries.
India is a major exporter to Bangladesh with annual trade historically exceeding $12bn. Additionally, Bangladesh relies heavily on India for essential commodities, and the two governments are currently in talks on an annual quota of imports of Indian farm products.
Calling the anti-India campaign a “political stunt”, Munshi Faiz Ahmed, former chairman of the Bangladesh Institute of International and Strategic Studies, a state-funded think tank, told Al Jazeera that the economic fallout of boycotting Indian products will be more severe for Bangladesh.
“I don’t think any rational Bangladeshi would opt for taking part in this campaign. India is our neighbouring country, and we are heavily dependent on them for our everyday essentials like rice and onions. We are dependent because we get those products at the cheapest prices because of geographical proximity,” Ahmed said, adding that sourcing those products from somewhere else would cost much more.
Jyoti Rahman, an Australia-based economist told Al Jazeera that the “India Out” movement may be politically important to the extent that “it sends a strong message to the Indian policymakers” about growing discontent in Bangladesh but the “economic effects are less clear cut”.
Rahman pointed out that despite being India’s fourth largest export destination, Bangladesh still comprises about 3.5 percent of the Indian export market. “Even if all exports to Bangladesh stopped, it probably wouldn’t significantly affect the Indian economy as these products would find a market elsewhere,” Rahman said.
On the other hand, he said, a fifth of Bangladeshi imports are from India, including essentials such as cotton for the garment manufacturing sector, cereals and produce such as onions. “[Looking at] other sources of imports for these products could stoke inflation further,” Rahman said.
However, he highlighted the potential political effectiveness of boycotting non-essential items like tourism, cultural imports like Bollywood movies and consumer products, which he said could benefit domestic industries.
The overwhelming dependence of Bangladesh on India also means that “Indian businesses are vulnerable if such a movement gains traction and support”, Riaz said.
Even if the economic impacts are limited or not immediate, the boycotts will contribute to the public discourse on the role of India in Bangladeshi politics and highlight the unequal relationship, he said. “This is no less important.”
Sri Lanka seeks to foster growth after its economy contracted 3.8 percent last year, according to World Bank estimates.
Thailand and Sri Lanka have signed a Free Trade Agreement (FTA), a move Sri Lanka hopes will help it emerge from its worst financial crisis in decades.
“This move aims to enhance market opportunities, with negotiations covering various aspects such as Trade in Goods, Investment, Customs Procedure, and Intellectual Property Rights,” read a statement published on Saturday by the Sri Lankan president’s media department.
The island nation has been renewing a focus on trade deals to foster economic growth and help its battered economy, which is estimated by the World Bank to have contracted 3.8 percent last year after a severe foreign exchange crunch plunged it into a wider financial crisis.
A delegation headed by Thai Prime Minister Srettha Thavisin arrived in Colombo on Saturday to sign the FTA along with other agreements. Srettha will also attend Sri Lanka’s 76th Independence Day celebrations on Sunday.
— President’s Media Division of Sri Lanka – PMD (@PMDNewsGov) February 3, 2024
“This will provide tremendous business opportunities for both sides. We encourage our private sectors to explore the potentials of two-way trade and investment,” Srettha told a joint media briefing following the signing of the deal.
The two countries also signed a new air services agreement.
Bilateral trade between Sri Lanka and Thailand was worth about $460m in 2021, Sri Lankan central bank data showed.
Sri Lanka exports mainly tea and precious stones to Thailand and imports electronic equipment, food, rubber, plastics and pharmaceuticals.
New Delhi, India – Demand for India’s Basmati, the long-grain aromatic rice, from traditional buyers in the Middle East, the US and Europe has dropped as it has become costly. The reason is the escalating tensions in the Red Sea, the shortest and most efficient trade route for ships moving from Asia to Europe.
Attacks by Iranian-backed Houthis from Yemen on commercial vessels passing through the Red Sea have forced shippers to avoid one of the world’s most crucial trade routes. The alternative longer route around the Cape of Good Hope on the southern tip of Africa has added more than 3,500 nautical miles (6,500km) to the journey and close to a half-month of sailing time to each trip, significantly increasing shipping costs.
Exporting Basmati from India has become a challenge for shippers as freight costs have shot up as high as five times with an increase in insurance premiums, shortage of containers and longer transit time, said, Vijay Kumar Setia, director of Chaman Lal Setia Exports Ltd and former president of the All India Rice Exporters’ of India.
Part of the inventory is lying at various ports or processing units, while some stock is now being sold in the domestic market, resulting in a fall in prices by about 8 percent in the local market.
India, the world’s biggest rice exporter, ships over 4.5 million tonnes of basmati rice out of the country annually. About 35 percent of about 7.5 million tonnes of production is shipped to Europe, North America, North Africa and the Middle East through the Red Sea.
“Buyers are hesitant to take at higher prices,” said Setia. “Some exports are going on, but business isn’t that smooth. We are losing profits because of higher logistic costs.”
Like Basmati, chaos in the Red Sea is disrupting shipments of produce from tea to spices and grapes to buffalo meats from India, resulting in losses to exporters. Similarly, imports of fertilisers, sunflower oil, machinery components and electronic goods to India are getting delayed, raising the risk of higher costs to consumers. This has raised concern that the unrest will lead to supply-chain snarls and contraction of trade, and halt a slowdown in food inflation.
India is heavily reliant on the Red Sea route through the Suez Canal for its trade with Europe, North America, North Africa and the Middle East. These regions accounted for about 50 percent of India’s exports of 18 trillion rupees ($217bn) and about 30 percent of imports of 17 trillion rupees ($205bn) in the year ended March 2023, according to CRISIL Ratings.
Shipments are currently getting delayed by 21-28 days. The crisis could cost the country more than $30bn in exports for the fiscal year ending March, hitting $451bn of exports a year ago by around 6.8 percent, said Sachin Chaturvedi, director-general of the Research and Information System for Developing Countries, a New Delhi-based think tank.
Official estimates of the impact on trade in India will be known when the government releases export and import data around mid-February for January.
Houthi rebels have been carrying out missile and drone attacks on cargo ships in the Red Sea since November, actions they say are in response to Israel’s war on Gaza. Retaliatory strikes to aid the safe movement of ships by a US-led coalition haven’t stopped the Houthi assaults.
Shipping costs rise
To avoid risk, the shipping industry has temporarily suspended Suez Canal transit. The average number of tankers and cargo ships transiting through the Suez Canal had fallen about 46 percent over two months till January 28, while the voyages around Cape of Good Hope have risen 32 percent, according to the International Monetary Fund PortWatch data.
Meanwhile, shipping prices have increased. According to Drewry’s World Container Index, the average price of transporting a 40-feet (12-metre) container on a cargo ship rose 161 percent to $3,964 on January 25 from $1,521 on December 14.
The chaos has brought concern for India. Around half a dozen ships heading toward India or with Indian crews on board have been attacked – allegedly by Houthis or hijacked by armed pirates. In response, India has increased its maritime presence in the Arabian Sea by deploying about a dozen warships.
But the fear is so high that about 25 percent of the outbound shipments transiting through the Red Sea have been held back and roughly 95 percent of cargo ships from India have been rerouted through Cape of Good Hope, said Ajay Sahai, director-general of the Federation of Indian Export Organisations, set up by India’s Ministry of Commerce and Industry.
Imports more expensive, exports hurt
Russia has emerged as one of the largest suppliers of crude oil to India [File: AP Photo]
However, there is no disruption in oil flows even as the Red Sea is one of the key routes for oil shipments for India which imports 80 percent of its crude oil needs.
Russia emerged as one of the biggest crude suppliers to India in 2023, accounting for more than one-third of its imports. Unlike other sectors, there is no diversion of Russian vessels carrying crude oil bound for India through the Red Sea, as per S&P Global.
But the supply of sunflower oil has become tight for India, the world’s biggest importer of the vegetable oil. As most of the vessels from Russia and Ukraine are being rerouted through Cape of Good Hope, freight costs have increased by 35 percent and transit time increased by 15 days, said Sandeep Bajoria, CEO of Sunvin Group, a vegetable oil brokerage. Part of the higher costs has been passed to consumers, he said.
Similarly, shipments of fertilisers have been delayed and logistics costs have risen, minister of chemicals and fertilisers, Mansukh Mandaviya, told reporters, adding India will have no shortage of fertilisers critical for the country’s food security as there are adequate reserves.
But the crisis is hurting buffalo meat export. India is one of the major buffalo meat suppliers to the international market. About 60 percent of the country’s shipments go through the Red Sea to countries including North Africa and Russia.
Freight costs have risen three times and shipments are getting delayed for about two to three weeks, said Fauzan Alavi, spokesperson of the All India Meat and Livestock Exporters Association.
Tea exports are also bearing huge losses as logistic costs have gone up by at least 60 percent and transit time doubled, said P K Bhattacharjee, secretary-general of the Tea Association of India.
“Now we are expecting the Red Sea crisis will prolong for a pretty long time,” said Sahai of the Federation of Indian Export Organisations. “If this happens, the supply chain will continue to be disrupted and containing inflation will be delayed.”
The government has set up an interministerial panel to monitor the crisis.
Chinese Foreign Minister Wang Yi and US National Security Adviser Jake Sullivan met to discuss competition and cooperation between the two countries.
Chinese Foreign Minister Wang Yi and United States National Security Adviser Jake Sullivan have held talks aimed at keeping in contact, both sides said, with Wang stressing that “Taiwan independence” posed the biggest risk to Sino-US ties.
Wang and Sullivan met in Bangkok, Thailand, on Saturday, just more than two months after US President Joe Biden and Chinese President Xi Jinping met on the sidelines of the Asia-Pacific Economic Cooperation summit in San Francisco.
The two “had candid, substantive and fruitful strategic communication on implementing the consensus reach at the San Francisco meeting … and on properly handling important and sensitive issues in China-US relations,” China’s foreign ministry said in a statement.
The White House said that the meeting between the officials was “part of the effort to maintain open lines of communication” between the two countries.
It added that “Sullivan stressed that although the United States and China are in competition, both countries need to prevent it from veering into conflict or confrontation”.
Beijing and Washington have previously clashed on issues related to technology, trade, human rights, and Taiwan, which China claims as its territory.
Taiwan
The recent Taiwanese election saw the Democratic Progressive Party (DDP) secure a third term. The DPP is resistant to China’s claim over Taiwan.
This week, two US lawmakers met Taiwan’s new leader, Lai Ching-te, to reaffirm Washington’s support for the self-governing island.
This was the second group to arrive in Taiwan since the election after Biden sent an unofficial delegation to congratulate Lai two days after the vote.
But, according to China’s foreign ministry, Wang stressed in the meeting with Sullivan that Taiwan was “China’s internal affair, and the regional election in Taiwan cannot change the basic reality that Taiwan is part of China”.
“The biggest risk to peace and stability across the Taiwan Strait is the so-called ‘Taiwan independence’ movement. The biggest challenge to China-US relations is also the ‘Taiwan independence’ movement,” it added.
Before the meeting, Taiwan’s defence ministry said China sent 33 aircraft, including SU-30 fighters and six navy vessels, around Taiwan between 6am Friday to 6am Saturday (22:00 Thursday – 22:00 Friday GMT). Among those sent, 13 warplanes crossed the Taiwan Strait, an unofficial boundary between Taiwan and China.
The White House said Sullivan “underscored the importance of maintaining peace and stability across the Taiwan Strait” without elaborating.
High-level diplomacy
Apart from cross-strait issues, the officials also touched on other issues, including Russia’s war against Ukraine, Iran and the Middle East, North Korea, the South China Sea, and Myanmar, the White House said.
Both sides agreed that the two presidents would keep regular contact, provide strategic guidance on bilateral relations and promote exchanges between the US and China in different areas and levels, the Chinese ministry said.
The two sides will set up a call between President Xi and President Biden, the White House said in a statement, as part of “high-level diplomacy” efforts.
They also agreed to launch a joint working group on anti-drug cooperation and set up an intergovernmental dialogue on artificial intelligence.
Sullivan and Wang “recognised recent progress in resuming military-to-military communication and noted the importance of maintaining these channels”, the White House added.
An estimated 10 civilians have been killed in air strikes targeting the neighbouring towns of Arman and Malh in the southeast Syrian province of Sweida, according to local media.
Jordanian forces are believed to be behind Thursday’s attacks, though its government has yet to confirm any involvement.
Sweida 24, a news platform based in its namesake city, said warplanes carried out simultaneous strikes on residential neighbourhoods after midnight local time (21:00 GMT).
The attack in Malh caused material damage to some houses. The second strike in Arman, however, collapsed two houses and killed at least 10 civilians, including four women and two girls, both under the age of five.
Jordan is thought to have carried out previous raids in Syria, mostly near the countries’ shared border, in an effort to disrupt weapons smuggling and drug-trafficking operations.
The news outlet Suwayda shared this image on social media of the wreckage following a suspected Jordanian air raid on January 18 [Suwayda 24 via Reuters]
But inhabitants of the towns struck on Thursday questioned the choice of targets.
“What happened was a massacre against children and women,” Murad al-Abdullah, a resident of Arman, told Al Jazeera. “The air strikes that targeted the villages are far from being identified as fighting drug traffickers.”
Al-Abdullah said the bombing was not limited to houses of people suspected to be involved in drug trafficking. He noted other homes were damaged as well, terrorising villagers while they were asleep and causing needless civilian deaths.
“It is unreasonable for two girls who are no more than five years old to be involved in drug trafficking,” al-Abdullah said.
Tribes and residents of the villages near the Jordanian border issued separate statements this week disavowing any involvement in drug smuggling.
The statements also pledged to lend a hand to Jordan to eliminate criminal networks trafficking narcotics and other drugs across the border. In turn, they asked Jordan to suspend its bombings of civilian sites.
The spiritual leader of the Druze religious group in Syria, Sheikh Hikmat al-Hajri, appealed to Jordan to prevent further civilian bloodshed.
“The attacks should be heavily focused towards the smugglers and their supporters exclusively,” al-Hajri said in a public statement.
Al-Abdullah, the Arman resident, also called on Jordan to collaborate with Syrian locals to stop the trafficking operations.
“We are a society that does not accept the manufacture or trade of drugs, and the Jordanian government should have communicated with our elders to cooperate in combating drug traffickers, instead of bombing residential neighbourhoods,” al-Abdullah said.
Suspected attacks aimed at drug-trafficking operations
Thursday’s attack is believed to be the third time this year that Jordanian planes have carried out air raids on Syrian territory.
A previous attack occurred on January 9, resulting in the deaths of three people in the countryside of Sweida, according to the Syrian Observatory for Human Rights, a London-based rights monitor.
The Observatory said that five smugglers were also killed in a border attack on January 7. Fighting that day took place sporadically over 10 hours.
By the end of the raid, Jordanian forces had arrested 15 suspects. They also claimed to have recovered 627,000 pills of Captagon, an illicitly manufactured amphetamine, and 3.4kg of cannabis.
“What Jordan is doing can certainly delay drug-smuggling operations but unfortunately, cannot stop them completely. The border with Syria is 375km (233 miles) long, and smuggling operations are carried out by professional groups, not some random individuals carrying out bags of drugs to cross the border,” said Essam al-Zoubi, a lawyer and human rights activist.
Drug enforcement officials in the United States and other Western countries have said that war-torn Syria has become a major hub in the Middle East for the drug trade.
The country, for instance, has become the primary manufacturer for Captagon, a multibillion-dollar business. Experts have said smugglers are using Jordan as a route through which Syrian drugs can reach the oil-rich Gulf states.
A Syrian soldier arranges packets of Captagon pills in Damascus, Syria, on November 30, 2021 [File: SANA via AP Photo]
Al-Zoubi and other human rights advocates have warned the Syrian government itself is involved in the drug trade, in an effort to shore up its war-drained finances.
Reports indicated that the Fourth Armoured Division of the Syrian Army has played a role in overseeing the country’s drug operations, alongside the Iran-backed armed group Hezbollah, an ally of the Syrian government.
“The officials responsible for drug smuggling in Syria are Hezbollah of Lebanon, the Fourth Division, and the security apparatuses of the Syrian regime that control southern Syria,” al-Zoubi said.
Jordan and its allies have also taken other approaches to stopping the drug trade.
In March last year, for instance, the US Department of the Treasury imposed sanctions on six people, including two relatives of Syrian President Bashar al-Assad, for their role in producing and trafficking Captagon. Some of those sanctioned had ties to Hezbollah as well.
But al-Zoubi warns that even targeted attacks on Syrian drug dealers will not be enough to stop the trade.
“It does not matter to the drug officials from Hezbollah or the Fourth Division if traders are killed, as the trades themselves will continue regardless of the people,” al-Zoubi said, pointing to an example in May 2023.
Jordanian soldiers patrol the Jordan-Syria border in 2022, as the country seeks to crack down on drug smuggling [File: Raad Adayleh/AP Photo]
Jordanian planes, at the time, had carried out air raids in the Sweida countryside, targeting the house of one of the most famous drug traffickers in Syria, Marai al-Ramthan. He was ultimately killed in the attack.
But, al-Zoubi said, his death “did not limit drug trafficking but, in fact, increased it”. Other smugglers used his demise as an opportunity to expand their trade in his absence.
Omar Idlibi, director of the Doha office at the Harmoon Center for Contemporary Studies, said that geopolitical turmoil in the region has also allowed trafficking to flourish.
“Drug-smuggling operations to Jordan did not exist before 2018, that is, before the Syrian regime and its Iranian allies regained control of southern Syria from the opposition factions,” he told Al Jazeera.
Idlibi explained that the launch of Russia’s full-scale invasion of Ukraine in 2022 has had a direct effect on the expanding drug operations.
As it focused on Ukraine, Russia withdrew some of its troops in Syria, allowing Iranian militias and Hezbollah forces to spread. Those groups then turned some of the Syrian army’s headquarters into logistical centres for the manufacture, transport and smuggling of drugs to Jordan.
Russia’s need for military equipment from Iran also prompted it to turn a blind eye to the drug-smuggling activity in Syria, Idlibi explained.
“Everyone knows that the Syrian regime and Iran are behind the terrorist activity on the Syrian-Jordanian border, and unless it is terminated from the source, it will continue at different rates,” Idlibi said.
Taipei, Taiwan – In early 2021, Chien and his fellow pineapple farmers in southern Taiwan received bad news: China had added their crop to a list of banned imports, claiming concerns about pests and other safety issues.
At the time, Taiwanese pineapple farmers were sending nearly all their fruit to China in an industry worth $284m a year, even after factoring in the COVID-19 pandemic. Within a month, the price of their pineapples had dropped from 60 US cents per 600gm to mere pennies, according to Chien.
“As soon as the news broke, the whole thing collapsed within a month,” he said, asking not to use his full name for fear of economic repercussions because he sells pineapples to Hong Kong.
Worse still, the recently harvested crop could not be sold locally or exported to neighbours like Japan and Hong Kong because of issues over product quality, he added.
“Taiwan had not really promoted export products because they relied on China in the past. Farmers were very nervous about the political situation, and the price of pineapples was very low because they could not sell them,” he told Al Jazeera.
Beijing has also targeted other produce from Taiwan as part of its attempt to sway public opinion on the island [File: Ritchie B Tongo/EPA]
Beijing, which claims Taiwan as its own territory, announced more bans over the subsequent months, targeting other tropical fruits such as sweet custard-like sugar apples and crunchy pear-shaped wax apples.
For observers in Taiwan, the import bans had little to do with food safety or concerns about pesticides. It appeared to be another case of Beijing expressing its anger at the governing Democratic Progressive Party (DPP), which it regards as “separatist” and hell-bent on independence.
‘Clear correlation’
Since the DPP took power in 2016 under President Tsai Ing-wen, Beijing has resorted to various means of coercion to undermine her government, including military exercises in the Taiwan Strait, picking off Taiwan’s last few diplomatic allies, stirring up misinformation campaigns online, and isolating the self-ruled island from international organisations.
Beijing has also turned to economic coercion, banning individual tourists from visiting Taiwan in 2019, fining Taiwanese companies operating in China such as Far Eastern Group in 2021, and placing import bans on Taiwanese products from fruits to fish.
Hitting out at Taiwanese farmers like Chien has limited economic impact on Taiwan’s economy, but the message is clear to Taiwan watchers.
Most farmers live in southern Taiwan, a stronghold of the DPP. In August 2022, China banned more than 2,000 Taiwanese imports, including biscuits and pastries, in protest against a historic visit to Taiwan by then-US Speaker of the House of Representatives Nancy Pelosi.
These efforts have continued in the lead-up to Taiwan’s presidential and legislative elections on January 13. As campaign season kicked off last April, Beijing announced a major investigation into Taiwanese trade practices, ruling last month that Taiwan had unfairly imposed “trade barriers” on more than 2,000 Chinese products.
“This timeline aligns perfectly with Taiwan’s presidential election. There seems to be a clear correlation indicating China’s intention to leverage trade issues as bargaining chips to influence Taiwan’s voters’ distrust in the DPP’s governance and decrease their credibility in handling cross-Strait trade conflicts,” wrote Chun-wei Ma, an assistant professor for international affairs at Tamkan University, in a recent report on the issue.
The aim is to encourage voters to move away from presidential candidates like the DPP’s William Lai and towards a more “China-friendly” party, Ma said.
The Kuomintang is seen as more China-friendly than the DPP, which has been in power since 2016 [I-Hwa Cheng/AFP]
Taiwan’s government has also accused Beijing of election interference through economic coercion, such as when it ended tariff cuts on a dozen Taiwanese petrochemical imports in late December – just as voters were starting to make their final decisions.
Similar allegations were made when Beijing targeted Apple supplier Foxconn with a surprise tax investigation in November in what was widely seen as a rebuke of founder Terry Gou’s decision to run for president.
The move was also criticised as “political” by Taiwan’s National Security Council, as Beijing did not want Gou to divide the opposition in the upcoming election, raising the chance of a DPP victory, according to department head Wellington Koo.
The more conservative Kuomintang (KMT), in contrast, has a long working relationship with Beijing. The independent Taiwan People’s Party has also called for more cooperation and renewed talks on a controversial service trade agreement with China.
Still, despite Beijing’s flurry of activity, Taiwan experts such as Bonnie Glaser, managing director of the Indo-Pacific Program at the German Marshall Fund, argue its economic coercion remains restrained and largely symbolic compared with the damage it could potentially inflict.
With cross-strait trade valued at $205bn in 2022 according to Taiwanese data, China is Taiwan’s largest trading partner – a position that holds no small influence. Beijing has shown that it is not afraid to punish other close trade partners – in 2021 it cut off coal and other imports from Australia, for instance, after Canberra called for an independent investigation into the origins of COVID-19.
“Unlike the cases of Australia, South Korea and other countries which were meant to punish and to deter others from challenging Chinese interests, economic pressure on Taiwan has been small-scale and part of a broader strategy of preventing Taiwan independence and promoting reunification,” Glaser told Al Jazeera by email.
Analysts note that Beijing has yet to target Taiwan’s all-important semiconductor industry, the world’s biggest, or the landmark 2010 Cross-Strait Economic Cooperation Framework Agreement, which cut tariffs on major imports and exports.
Beijing has not targeted Taiwan’s semiconductor industry, which is vital to its own economy [File: Florence Lo/Reuters]
Glaser feels Beijing’s economic coercion is likely to have the most impact on undecided voters.
“The use of economic coercion to influence Taiwan’s elections is only one of the tools that Beijing is using,” she said. “It is unlikely to have any impact on voters who are the base for the [KMT] and [DPP] or those who have already decided who they will vote for. But it may have some impact on undecided voters.”
New generation of voters
While China relies on old methods to sway voters, Taiwan’s voter base is changing.
Voters born towards the end of martial law and later see themselves as Taiwanese and not Chinese are tired of their overbearing neighbour to the north and its punishment for asserting their identity.
They have also grown up in a much more stable environment than some of their parents and grandparents. They may have missed the economic boom of the 1970s and 80s, but they also grew up with an overall higher standard of living with benefits like health insurance and widespread higher education.
Austin Wang, who studies Taiwanese public opinion at the University of Nevada, Las Vegas, said China’s coercive activities have begun to backfire at a transitional moment for Taiwan.
“Economic benefit from China indeed influenced the public opinion in Taiwan in the past,” he said.
“The elder generation who experienced poverty cared about the economy more than identity. However, since the younger generation in Taiwan entered the era of post-materialism, economic benefits can hardly change their identity or attitude toward independence.”
As Taiwan’s political landscape changes, its economic presence in China is also falling. Thanks in part to the pandemic, the population of Taiwanese people working in China fell from a high of 261,000 in 2011 to a low of 163,000 in 2021, according to government data.
Some businesses operating there also questioning the future.
A 2022 survey of 500 Taiwanese companies by the US Center for Strategic and International Studies (CSIS) revealed that while 60.8 percent of respondents had business operations in China, 76.83 percent felt Taiwan needed to reduce its “economic dependence on China”.
A quarter of respondents said they had already moved some of their business out of China, and a third were considering moving some operations.
Taiwan’s vice president is running for the top job in Saturday’s election. Beijing claims he is a ‘separatist’. On Tuesday, he said he wanted to maintain the status quo [Alastair Pike/AFP]
On the ground in Taiwan, even farmers are having similar thoughts.
Beijing reversed its ban on Taiwanese pineapples in 2023, but it was also a lesson in why they needed to reduce their dependence on China.
During the three years they were locked out of the Chinese market, farmers worked together, and with the government, to grow better quality pineapples that could be exported to more demanding markets in Hong Kong and Japan, farmer Chien explained.
As business and prices rise, Chien said older farmers may return to business as usual, but the younger generation will not forget what happened.
“We don’t want to be used as bargaining chips. Because even if it’s fine today, even if the [Chinese market] was replaced, and a different president was chosen, the situation would still not change,” he said. “If China is unhappy, we could still be cancelled or banned, so that’s a very unhealthy trade relationship.”
Al Jazeera’s Kimberly Halkett challenges White House National Security Spokesperson, John Kirby about US responsibility over the escalation of tensions in the Red Sea.
Travis Dardar, a fisherman and member of the Isle de Jean Charles Tribal Community off the coast of Louisiana, has twice been displaced by fossil fuels.
Rising sea levels forced him and his tribal nation to move in 2016 from the island where they had settled in the 1830s to escape the Trail of Tears, the forced displacement of Indigenous tribes by the US government. “If anybody’s seen climate change, I’m that guy. I watched that place disappear right before my eyes,” he told Al Jazeera.
He resettled in Cameron Parish, a Louisiana coastal community where he could make a living working in one of America’s largest fishing industries, but he was displaced again in August by the construction of Venture Global’s Calcasieu Pass 2, a liquified natural gas (LNG) terminal that is being built to ship fossil fuels overseas. He took a buyout in August and moved away from the site and is now commuting two hours to Cameron for oyster season.
He said LNG terminals are threatening his livelihood in the fishing industry.
After a decade-long fracking surge, the United States has become the world’s largest LNG exporter. The Gulf of Mexico sits at the front lines of America’s LNG export boom with massive terminals expanding along the Texas and Louisiana coasts. Called “clean energy” by the fossil fuel industry, LNG is in fact mostly methane, one of the most potent greenhouse gases.
President Joe Biden’s administration now faces a huge climate decision: whether to approve Venture Global’s Calcasieu Pass 2 (CP2), one of more than 20 proposed LNG export terminals. CP2 can’t export to certain countries unless the Department of Energy rules it is in the public interest. The LNG would mostly be exported to Europe, which is moving away from Russian gas due to the war in Ukraine.
The Federal Energy Regulatory Commission (FERC) will make a decision on CP2 as soon as this month. After FERC’s decision, the Department of Energy will determine whether an export licence for CP2 is in the public interest.
Venture Global did not respond to a request for comment. In the past, the company has argued the project will bring more than 1,000 permanent jobs to Cameron Parish and LNG can replace coal in some countries to bring down emissions.
But a new paper by a leading methane scientist found that, when the entire lifecycle of exported LNG is considered, it can be 24 percent worse than the lifecycle of coal.
‘A shrimp-pocalypse’
BP’s Deepwater Horizon oil rig disaster took four years to clean up [US Coast Guard handout via EPA]
In November, Dardar travelled to Washington, DC, along with other Louisiana activists to protest CP2 in front of the Department of Energy and Venture Global buildings. He helped deliver a petition to the department with 200,000 signatures against the project.
Louisiana is the largest seafood producer in the lower 48 US states. The industry has retail, import and export sales totalling more than $2bn and employs more than 26,000 people in the state.
But Dardar said LNG companies have bought up and torn down the fishing docks, and the Coast Guard tells fishermen to get out of the way of the LNG tankers or they will be arrested. He said last year, a huge wave from a tanker ripped pieces off his boat.
The oyster, shrimp and fish populations are vulnerable to climate change and oil spills. The region suffers frequent oil spills, including BP’s Deepwater Horizon oil rig disaster in 2010, which spilled 200 million gallons (760 million litres) of oil into the Gulf of Mexico and took four years to clean up. Most recently in November, 1 million gallons (3.8 million litres) of oil leaked off Louisiana’s coast.
If LNG construction continues, Dardar fears the fishing industry will collapse. “You’re talking about a shrimp-pocalypse,” he said.
The US, the world’s largest historical emitter of greenhouse gases, is on pace to set a record for extraction of fossil fuels. That includes breaking records for gas production. In the process, not only is the US not on track to meet its emissions reduction targets, the emissions from exported LNG are not included in the domestic math and remain uncounted.
Environmental groups, members of Congress and Louisiana residents are calling on the Biden administration to deny the CP2 permit.
A group of lawmakers sent a letter in November asking Energy Secretary Jennifer Granholm to reject the project, saying the lifecycle emissions of all existing proposed LNG terminals would be equivalent to 681 coal plants. CP2 alone would amount to 20 times the emissions of the Willow Project, a controversial oil drilling project in Alaska that the Biden administration approved in March.
Senator Jeff Merkley, one of the letter signers, told Al Jazeera: “The United States has been promoting a massive myth, which is that fossil gas is better than coal for the climate. That is a huge disservice to the world because it is scientifically wrong, and also it undermines our legitimacy in the climate conversation. It’s convenient because we’re shutting down coal mines and instead we’re increasing fracking and gas.”
“We’ve built seven export facilities, and the next one, CP2, becomes a point where we can focus our attention on this — what is essentially a big myth, or a big lie perpetrated by the US government that undermines our efforts to have humanity address this key problem,” Merkley said.
He said if the US isn’t doing its part on climate, it allows other countries to continue to extract fossil fuels too. “Because if America isn’t going to change its habits when it’s the biggest historical producer of carbon dioxide, [others can say] why should we change ours?”
Health impacts
Residents living near the LNG plants are experiencing health effects alongside those of climate change [Charlie Neibergall/AP Photo]
The fishing industry is not the only community impacted by the LNG boom. Residents living near the LNG plants are experiencing health impacts alongside climate change.
Roishetta Ozane, founder and director of the Vessel Project of Louisiana and a mother of six children, was one of the activists who delivered the petition to the Department of Energy in Washington.
She said the LNG terminals are polluting the air and sea level rises from climate change are submerging wetlands and replacing groundwater with saltwater.
“There is nothing safe about LNG — it’s greenwashed and should be called LMG [liquefied methane gas] because of the methane pollution it emits,” she wrote in a text to Al Jazeera. “There’s only one person who can put a stop to this injustice: President Biden.”
Cameron resident John Allaire, who worked for decades in the oil and gas industry before he retired, stood on his porch and looked down the coast, where only a mile (1.6km) away, he can see a huge flare from Venture Global’s Calcasieu Pass, an existing LNG plant. The company’s proposed CP2 terminal would be built nearby. A horn sounded as a tanker next to the plant prepared to leave the dock.
When Allaire first moved to his property in the 1990s, there was no industrial pollution, and he could see the stars at night. Now the flares light up the sky “like Las Vegas”. He and his wife often smell fumes from the plant. “When we get the wind out of that direction, it literally gets hard to breathe out here,” he said.
He has experienced powerful hurricanes, including one in 2005 with a storm surge so high that it swept his house out to sea. The hurricanes leave debris in their wake that dries out and becomes fuel for wildfires. This year, Louisiana saw an extreme drought, and a wildfire threatened Allaire’s home before it was extinguished.
“It’s silly, what we’re doing — this huge experiment to see how much carbon we can put into the atmosphere,” he said.
He described a rush now to get oil and gas out of the ground and sell it as fast as possible. “It’s capitalism at its finest — just monetize it as quick as you can and to heck with the consequences.”
Back on his boat, Dardar said he hopes the Department of Energy rejects the permit for CP2.
“Don’t nobody come to Louisiana to see LNG plants. They come for the seafood. They come for the Cajun music. They come for the gumbo,” he said.
“If they give them their permits, we’re gonna continue fighting, that’s for sure. I’m gonna fight until they put me in the ground if that’s what it takes.”
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