Page 16 - ISQ UK_October 2017

INVESTMENT STRATEGY QUARTERLY

“ The Soviet Union is long gone, but to this day the chess pieces

are still being moved around the board. ”

So, to what proved the pivotal game thirteen. At move 69 Fischer
delivered an extraordinary gamble, an action worthy of three
question marks and three exclamation marks in chess notation. China today sends around 10% of its exports to
How might Spassky respond? For hours the Soviet consulted with the EU, by train along its much-vaunted
his seconds and paced the corridors of the convention centre belt-and-road initiative, the so-called modern
alone. To riposte and fight fire with fire, or defend? Ultimately, he “silk road”.
chose to wait and see. Fischer needed no second invitation. In for
the jugular, the game was over soon after. Spassky’s face visibly China today sends around 10% of its exports to the EU, by train
crumpled, his opponent’s domination assured. The game had along its much-vaunted belt-and-road initiative, the so-called
lasted nine-and-a-half hours! To this writer, a life-long interest in modern “silk road”. Beginning in 2016, China has been investing
geopolitics had begun. heavily in Ukrainian infrastructure with the intention of building
The Soviet Union is long gone, but to this day the chess pieces an alternative route to options passing through Russia and
are still being moved around the board. Contemporary focus is, Belarus. Given the latter’s political isolation by the EU and the
of course, on the Ukraine, a country of prime geopolitical “real closure of its border with Poland, the route crossing the Ukraine
estate” located at the intersection of two very different eco- has become the only way to move goods easily to Western
nomic systems. The European Union derives around 25% of its Europe from China without crossing into Russia.
natural gas imports from Russia, 80% of it via a pipeline run-
ning through the embattled country. Germany is almost wholly
dependent on Russian gas and European industry, including
c.40% of its energy-generating capacity is profoundly reliant. “…an extremely cordial video Summit between
A bilateral dependence exists between Russia and the bloc to President’s Putin and Xi in mid-December
its west. Europe needs the natural gas to drive its economy (a appears to confirm the onset of an idyllic phase
necessity only temporarily alleviated by the arrival of an armada in the relationship between the two countries.”
of container ships from North America), and Russia needs the
revenues from gas sales to run its government and service its
foreign currency debt. Once seen as a potential vulnerability, an extremely cordial
video Summit between Presidents Putin and Xi in mid-De-
Upping the geopolitical ante, Russian troops are said to have cember appears to confirm the onset of an idyllic phase in the
built up on the Ukraine’s Eastern border, close to the eco- relationship between the two countries.
nomically significant Donbass coalfield. Might Russia invade?
The West certainly suspects such a move and has threatened The Chinese state is said to have invested the equivalent of
Moscow with draconian sanctions, especially to its banking around one billion dollars in building compatible railway
system, were it to undertake such high stakes adventurism. infrastructure, as well as a ferry system crossing the Black Sea
Whilst considerable diplomatic efforts are underway to defuse commensurate with the transportation of cargos to the port
the situation there is another player, of equal importance, with city of Odessa, or through the Bosphorus to Europe. Beyond
skin in this game; China. this, Chinese companies have, in turn, invested a further billion
dollars equivalent in plant and other facilities in the Ukraine
closely resembling, in so doing, China’s economic colonisation
of many other countries around the world.

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