news reactions, various

[update- added footnote on pipelines in Caspian Sea region, since we are talking about Iran and China and sanctions]

China

• Trade talks broke down, predictably.
• 25% tariffs going into effect. On the US side, this will hit agriculture and LNG exports. The next round will go to aircraft. Surprised this round did not. On the China side, a very wide range of US exports are affected.
• US is going after Huawei seriously now, not just in the US, but trying to prevent it from selling to third parties. This kind of breach of international norms has happened before, the bridge is now fully crossed.
  • Current-round moves block US chip exports (infrastructure) and Google branded Android licenses (handsets).
  • Short term, it will work. Samsung will gain market share.
    • possible retaliation vs Apple
  • Medium term, for handsets, I’d say Huawei will fill the gap within 2 years.
    • Android is built almost entirely on open source, so the barrier to replace it is more a matter of organizing a project with a few thousand developers, rather than making even a single researach breakthrough. This is work that the Chinese tech sector excels at.
    • Between Huawei and the other Chinese makers (Xiaomi, Oppo), that is half of Google’s android market. Google Android goes from industry standard to Samsung’s vendor, though still massively influential.
  • For the top-end chips (high-GHz digital and optoelectronics), Huawei will have to substitute less efficient technologies.
    • This will give european 5G players time to catch up
    • will give third countries a reason to defer 5G deployment
    • no impact on Chinese industry development, was already top priority
    • opens a global market space in the US telecom firms to re-enter
    • It will not put Huawei out of business, because Chinese state will not let them fail and Chinese domestic market can sustain them anyway – and they will still be competitive for providing current-generation telecom to the parts of the world that have ambivalent relations with the US.

Iran

• The NeoCon’s are having their day in the sun, it seems.
• A military adventure would be a self-correcting problem.
• The reason they’re able to do it is because of the oil.
• Watching central-asia pipeline developments. see [footnote 1]
• What would US do if China made a direct massive violation of US sanctions?
  • But China won’t. They haven’t really mastered the high stakes, high-bluff poker style.

US Politics

• Not much happening in the primary race.
  • Other than 2020 DNC delegates working the back channels, figuring out how much the high bid is going to be next year…
• The DCCC, a national organization of state-level Democratic party campaigns, is making a move to prevent primary elections. The most recent method is to punish campaign professionals who should work for any primary candidate who is not an incumbent. I’ve seen the same outcome (to sabotage, rig, or pre-empt the primary process) repeatedly at the local level using various strategems, so it is very much in character for the Democratic party, and we should note the Republicans are exactly the same. Such is the two-party duopoly. Recall that in many, perhaps most congressional and state-legislative districts, it is the primary elections which effectively determine who ends up in the seat.
  • As far as the DCCC goes, this is plainly undemocratic behavior. It is not defensible in any way, and should be widely called out for what it is. If you don’t have primaries, then the party doesn’t represent the people any longer. The Democratic party might as well change its name.
  • The only realistic response is for candidates to run as independents, knowing full well they may become spoilers. This is the ONLY thing that the national and state Democratic (and Republican) parties fear. Public shaming does not affect them in the slightest.
• In the Presidential primary race, Biden getting high poll numbers
  • but… some polls not showing undecideds. I.e. poll with 30% A, 15% B, 5%C, 50% undecided – is often reported as 60%A, 30%B, 10%C.
• Sad/predictable to see bipartisan support returning to Trump on Iran and China.
• Far too early, but 3 key states to watch: FL, PA, AZ.  (no longer MI/WI)
  • If Democrats can win any of these 3 states, I think the next president is a Democrat. If Republicans win FL, PA, AZ they get the white house.
  • Biden and Sanders are both ahead in PA.
  • Trump seems to be ahead in FL, against all opponents.
  • AZ is a tossup for Biden, Trump beating all others. Historically Rep., but Dems took Senate seat in 2018. Sanders would need to work to win it.
• A Biden candidacy and presidency would be an enormous disappointment, would pull the Democratic party further to yield to more Republican policy positions.

Tesla

• The story approaches its conclusion. Not particularly surprised.

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footnote 1:

Not super relevant to Iran. Is relevant to both China and to US LNG exports (energy industry are key Trump administration players!).

Relations in the NG/pipeline part of the “new silk road” are not so simple. The Caspian Sea region is a nexus of rival producers and pipeline owners. The geography and markets make it so that is set up to go mainly East or West. Iran and Russia, at the South and North ends, do not have realistic options to make use of this transit path.

Wikipedia: Turkmenistan pipelines, Azerbaijan Pipelines

Summary of routes:

• West, through Azerbaijan-Georgia-Turkey-EU (TANAP and TAP pipelines)
• East to China, Turkmenistan-Uzbekistan-Kazakhstan-China (Central Asia-China pipeline).
• East to Pakistan/India, Turkmenistan-Afghanistan-Pakisan-India (TAPI pipeline).
• Either Direction: Turkmenistan-Azerbaijan (Trans-Caspian pipeline) or equivalent ship transit
• Iran-Pakistan (Peace Pipeline) was planned, built in Iran, blocked by Pakistan by US request.
• Kazakhstan-China, developed and does not seem to be inhibited, but Kazakhstan’s Caspian shore is not in a position to block any route, so in that sense not part of this discussion.

Other notes:

• East to China already exists, but its expansion was halted for reasons I don’t understand.
• Partially complete construction projects for all the other routes exist.
• Of the not-yet-existing expansions in pipeline capacity, the closest to viability seems to be the Western route, with nothing really blocking it any more.
  • Caspian sea issues were resolved in 2018 [oilprice.com] after a 22 year delay. Among other things, pipeline development in the Caspian was previously blocked by Iran and Russia, who hold the less pipeline-valuable territory at the South and North ends of the Caspian.
• It should be noted that both Turkmenistan and Azerbaijan are repressive police states, with Turkmenistan being especially bad.

Anyway, the actual point of this footnote — everyone wants to sabotage someone else. For Turkmenistan, somewhat old news, but see here , here, here [all links radio free europe].

ADDITIONAL UPDATE – summer 2019 – It seems global natgas prices are on a downtrend, with an excess of seaborne LNG capacity coming online (top 3: US, Qatar, Australia). All of this will eventually find use to replace coal (still a dominant fuel globally), but the infrastructure to do so will take 4-6 years, and until then global natgas prices are quite low. This is hardly helpful for Iran, as there is basically no economic pressure on customers to develop overland natgas export routes.

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