The global shift to green energy will transform nearly every element of the global economy, therefore also having a major impact on the geopolitical landscape. Democracy’s world leaders who are facing a seemingly never-ending pandemic, the spread of authoritarianism, and increasing opposition to multilateralism and free trade, will also have to juggle this energy transition which promises prosperity but will be difficult to achieve. This week, we dive into global energy politics, the developed and developing worlds’ gripes about globalization, the West’s increased involvement in Africa, and the road ahead for Germany’s newly elected chancellor.

Green Upheaval: The New Geopolitics of Green Energy

Jason Bordoff and Meghan L. O’Sullivan, Foreign Affairs

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The dynamics of global energy politics will not be annulled by the advent of green energy, only changed by it. As the most important commodity in the world, energy dictates the flows of nearly every element of the global economy; as such, even the smallest implications of the energy transition are massive in scope. The transition is unlikely to be a smooth one. The so-called “petrostates” – a group including Russia and Saudi Arabia – will likely benefit from reduced demand due to price competition driving out higher-cost competitors, increasing their market share even as the overall size of the market shrinks. Even under the most aggressive reforms needed to meet the Paris Agreement 2050 net-zero targets, the world is likely to still be using 25-50% of the oil and gas as it does today. On the other hand, the countries most likely to benefit from the energy transition itself are those which excel at innovation and have access to cheap capital. As the rules for international trade of green energy assets are established, the governments with the most mature and flexible frameworks will enjoy an advantage. Countries with rich natural resources in cobalt, copper, lithium, nickel, and rare earth metals will see demand skyrocket, giving them leverage. The technologies needed for the next generation of energy will give power to key manufacturers. Producers of hydrogen and ammonia are expected to see their market share rise to a third of all global energy transactions. In addition to this reshuffling of geopolitical power, the energy transition is likely to be a de-globalizing force. A world powered by green energy will be much more reliant on electricity, which is more difficult to transport than oil or gas. Security interests will also push countries to be less dependent on energy imports – Europe’s heavy reliance on Russian gas created problems during the global energy crunch earlier this year. The forerunners of the green transition are also likely to pressure the slower movers, potentially fragmenting trade relationships. While the energy transition is a necessary move to combat the potential devastation of climate change and will lead to a wave of new energy technologies, the shift will be anything but smooth. The world’s governments will have their work cut out to navigate the new geopolitical landscape forged by green energy.

The Hidden Threat to Globalization

Niccolo W. Bonifai, Irfan Nooruddin, and Nita Rudra, Foreign Affairs

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The support for globalization and free trade is waning in both rich and poor countries. The rising opposition to free trade has fueled populist movements in several countries, including the United Kingdom and the US. In these wealthy countries, the narrative has been that globalization has helped poorer countries at the expense of workers in rich countries whose jobs have been “stolen.” While it is true that the economic opportunities generated in the developing world by globalization have created pockets of job losses in wealthy nations, the argument is ironic because workers in rich economies have greatly benefited from globalized markets. Moreover, workers in developing countries also feel like they have been taken advantage of. Much of the working class in these developing nations has missed out as those in high-skilled industries have benefited disproportionately from globalization. On the other hand, free trade policies and international investment have helped many poorer countries establish middle classes and build robust domestic economies. The failure of globalization has been its unequal distribution of wealth and its current disregard for lower-skilled workers. The question is, how do we capitalize on the benefits of globalization to make it more inclusive and equitable? There could be “disastrous consequences” for the global economic order if protectionist policies continue gaining ground; the supply chain nightmares of today would seem small, the prices of products and commodities would sharply increase, and job growth would slow. The authors of this article argue a decoupling of the world’s economies could result in decreased productivity, stymied innovation, and lower economic growth for everyone. To prevent this from happening, leaders in developing nations must do more to protect and support workers while developed countries should provide greater access to their markets, among other considerations. Above all, greater collaboration among policymakers for global economic reform is necessary: “Ultimately, the future of globalization may come down to whether leaders can recognize the stark consequences of failing in this fight and, hence, the necessity of action.”

The West’s involvement in Africa: A revived strategy of containment?

Africa’s ties to China and the West are starting to look more alike

The Economist

Containment Can Work Against China, Too

Hal Brands, The Wall Street Journal

At the recent Forum on China-Africa Co-operation (FOCAC) in Senegal, Chinese leader Xi Jinping said Sino-African relations were characterized by “sincere friendship and equality, win-win for mutual benefit and common development, fairness and justice, and progress with the times and openness and inclusiveness.” However, relations between African nations and China are far from equal and African leaders are becoming increasingly worried that China is losing interest in the continent. Over the last several years China has provided financing and/or operates 35 African ports and thousands of miles of roads and railways through its Belt & Road Initiative, giving it a firm grip on billions of dollars’ worth in assets. China has successfully won over many African countries with its policy of non-interference in domestic affairs, but, in return, it expects countries receiving its aid to support it in international organizations, consider Taiwan a part of China, and to stand against criticism about China’s human rights abuses. In 2016, Chinese lending to Africa hit a peak of $28 billion, but it has since dropped to $7 billion, according to 2019 figures. At this year’s FOCAC, China pledged only $40 billion, as compared to $60 billion in 2015 and 2018. Interestingly, the West has begun to step up its involvement in Africa. The European Union has announced a $340bn global infrastructure program called the Global Gateway, while the US has spearheaded the Build Back Better World initiative, both of which rival China’s Belt & Road Initiative. Moreover, the “no political strings attached” language has been coming from the mouths of Western leaders, including US Secretary of State Antony Blinken.

This shift by the US and Europe towards expanding and enhancing relationships in Africa looks very similar to the strategy the US used to forge crucial alliances with democracies around the world during the Cold War era – “pursuing unilateral advantage through multilateral means.” These alliances were a critical part of America’s containment strategy back then, and they could be the key to stopping China from reversing the balance of power and ushering in an era where authoritarianism reigns. Facilitating deeper cooperation on technology, trade, and defense with democracies across the globe could build up the collective resilience and pressure needed to bring down China, just as the Soviet Union was brought down. As Hal Brands puts it, “The best check on autocratic aggression remains the strength and unity of the democracies.”

A Political Experiment Takes Shape Under Sholz in Germany

Tony Barber, Financial Times

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If Olaf Sholz is confirmed as the German Chancellor next week, his coalition government of Social Democrats (SPD), Greens, and Free Democrats (FDP) will be among the faster governments formed. This is no small accomplishment for Germany’s first three-party coalition government since the 1950’s. Considering the three parties’ disparate views on the pandemic, fiscal policy, and foreign policy, Sholz will have his work cut out for him to unify these groups. On the coronavirus front, infection rates peaked in late November at an all-time high, pushing many to advocate for vaccine mandates. This has met with some resistance from some east German states, and with the federal government eager to avoid mixed messaging between state and federal restrictions (as was the case late in Merkel’s administration), it may be difficult for the new government to form a health policy all three parties will agree on. On the fiscal side, the FDP has been pushing for increased restraint, wishing to avoid making the pandemic-era recovery fund a permanent installation. Given the government’s goal of increasing public investment, a careful balancing act between debt limits and spending must be negotiated to achieve policy aims. Finally, the Greens and the FDP campaigned on a tougher stance towards China and Russia than the SPD took under Merkel, and Germany has failed to meet NATO’s defense spending goal of 2% of GDP. As Germany moves towards finalizing its government for the coming years, its next Chancellor must carefully navigate the conflicting aims of its three ruling parties to move Germany into the post-pandemic era.