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The war in Ukraine will determine how China sees the world

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Each day brings new horrors to Ukraine, where Russian artillery fire echoes like thunder across cities and towns. The metropolis of Kharkiv lies in ruins, victim of two weeks of bombardment. Mariupol, on the coast, has been destroyed.

It is too soon to know if a winner will emerge from the fighting. But, on the other side of the planet, the world’s emerging superpower is weighing its options. Some argue that China will build on a pre-war friendship with Russia that knows “no limits”, to create an axis of autocracy. Others counter that America can shame China into breaking with Russia, isolating Vladimir Putin, its president. Our reporting suggests that neither scenario is likely. The deepening of ties with Russia will be guided by cautious self-interest, as China exploits the war in Ukraine to hasten what it sees as America’s inevitable decline. The focus at all times is its own dream of establishing an alternative to the Western, liberal world order.

Both China’s president, Xi Jinping, and Mr Putin want to carve up the world into spheres of influence dominated by a few big countries. China would run East Asia, Russia would have a veto over European security and America would be forced back home. This alternative order would not feature universal values or human rights, which Mr Xi and Mr Putin see as a trick to justify Western subversion of their regimes. They appear to reckon that such ideas will soon be relics of a liberal system that is racist and unstable, replaced by hierarchies in which each country knows its place within the overall balance of power.

Hence Mr Xi would like Russia’s invasion to show up the West’s impotence. If the sanctions on Russia’s financial system and high-tech industry fail, China will have less to fear from such weapons. If Mr Putin lost power because of his miscalculation in Ukraine, it could shock China. It would certainly embarrass Mr Xi, who would be seen to have miscalculated too, by allying with him—a setback when he is seeking a third term as Communist Party leader, violating recent norms.

For all that, however, Chinese support has its limits. The Russian market is small. Chinese banks and companies do not want to risk losing much more valuable business elsewhere by flouting sanctions. A weak Russia suits China because it would have little choice but to be pliant. Mr Putin would be more likely to give Mr Xi access to northerly Russian ports, to accommodate China’s growing interests in, say, Central Asia, and to supply it with cheap oil and gas and sensitive military technology, including perhaps the designs for advanced nuclear weapons.

Furthermore, Mr Xi seems to believe that Mr Putin does not need to win a crushing victory for China to come out ahead: survival will do. Chinese officials confidently tell foreign diplomats that Western unity over Russia will splinter as the war drags on, and as costs to Western voters mount. China is already trying to prise apart Europe and America, claiming that the United States is propping up its power while getting Europeans to foot the bill for high energy prices, larger armies and the burden of hosting over 3m Ukrainian refugees.

China’s approach to the Russo-Ukraine war is born out of Mr Xi’s conviction that the great contest in the 21st century will be between China and America—one he likes to suggest that China is destined to win. For China, what happens in Ukraine’s shelled cities is a skirmish in this contest. It follows that the success of the West in dealing with Mr Putin will help determine China’s view of the world—and how it later has to deal with Mr Xi.

The first task is for nato to defy Chinese predictions by sticking together. As the weeks turn into months that may become hard. Imagine that the fighting in Ukraine settles into a grim pattern of urban warfare, in which neither side is clearly winning. Peace talks could lead to ceasefires that break down. Suppose that winter draws near and energy prices remain high. Ukraine’s example early in the war inspired support across Europe that stiffened governments’ sinews. The time may come when political leaders will have to find the resolve within themselves.

Willpower can be linked to reform. Having defended democracy, Western countries need to reinforce it. Germany has decided to deal with Russia by confronting it, not trading with it. The European Union will need to corral its Russia sympathisers, including Italy and Hungary. The British-led Joint Expeditionary Force, a group of ten northern European countries, is evolving into a first responder to Russian aggression. In Asia, America can work with its allies to improve defences and plan for contingencies, many of which will involve China. The joined-up action that shocked Russia should not come as a surprise to China if it invaded Taiwan.

And the West needs to exploit the big difference between China and Russia. Three decades ago their two economies were the same size; now China’s is ten times larger than Russia’s. For all Mr Xi’s frustration, China has thrived under today’s order, whereas Russia has only undermined it. Obviously, Mr Xi wants to revise the rules to serve his own interests better, but he is not like Mr Putin, who has no other way of exerting Russian influence than disruptive threats and the force of arms. Russia under Mr Putin is a pariah. Given its economic ties to America and Europe, China has a stake in stability.

Shanghai on the Dnieper

Rather than also push China “outside the family of nations, there to nurture its fantasies, cherish its hates and threaten its neighbours”—as Richard Nixon wrote years before his famous trip to Beijing five decades ago—America and its allies should show that they see the rising superpower differently. The aim should be to persuade Mr Xi that the West and China can thrive by agreeing where possible and agreeing to differ where not. That requires working out where engagement helps and where it threatens national security.

Might China yet start down this path by helping bring the war in Ukraine to a swift end? Alas, barring the Russian use of chemical or nuclear weapons, that looks unlikely—for China sees Russia as a partner in dismantling the liberal world order. Diplomatic pleading will influence Chinese calculations less than Western resolve to make Mr Putin pay for his crimes. ■

This article appeared in the Leaders section of the print edition under the headline “The alternative world order”

THE ECONOMIST

Proposal to declare NSBM, KDU, SLIIT, Northshore & Horizon as ‘Universities’

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In another move to solve the prevailing forex crisis in Sri Lanka, renowned businessman Dhammika Perera has tendered a proposal to the government to declare the National School of Business Management (NSBM), the Kothalawala Defence University (KDU), the Sri Lanka Institute of Information Technology (SLIIT), the Northshore University and the Horizon University as ‘universities.’

The number of students who have applied to study at foreign universities amid the crisis situation in the country has increased to about 30,000 and the number of Sri Lankan students who are already spending their first and second years in foreign universities are about 50,000.

Estimatedly, Sri Lanka spends about US$ 2 – 2.5 billion a year on these 80,000 some students. Another huge portion of dollars is being paid to foreign countries to pursue courses at foreign universities and the aforementioned private institutions of higher education in Sri Lanka.

Given attention to the above circumstance, Mr. Perera has proposed that the name ‘university’ be officially bestowed upon these institutions in order to retain this huge portion of dollars in Sri Lanka, whilst giving Sri Lankan students the opportunity to pursue foreign university courses in the country as well as bringing in foreign students and earning a dollar-based income through it.

It is hoped that these five private institutions of higher education may receive the approval of the University Grants Commission (UGC) as well as the opportunity to initiate new private universities with that approval, making the ultimate goal of converting Sri Lanka into a hub of higher education a reality.

MIAP

Milk powder price soared. New price declared

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Milk importers have decided to increase the price of imported milk.

Accordingly, the price of a 400 g packet of milk powder will surge by Rs. 250 and the new price will be Rs. 790.

This has been concluded during a special discussion held by the Milk Powder Importers Association today (19).

The price of milk powder had increased on two previous occasions.

MIAP

Sri Lanka cancels schools exams over paper shortage

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Sri Lanka cancelled exams for millions of school students as the country ran out of printing paper with Colombo short on dollars to finance imports, officials said Saturday.

Education authorities said the term tests, scheduled a week from Monday, were postponed indefinitely due to an acute paper shortage as Sri Lanka contends with its worst financial crisis since independence in 1948.

“School principals cannot hold the tests as printers are unable to secure foreign exchange to import necessary paper and ink,” the department of Education of the Western Province said.

Official sources said the move could effectively hold up tests for around two thirds of the country’s 4.5 million students.

Term tests are part of a continuous assessment process to decide if students are promoted to the next grade at the end of the year.

A debilitating economic crisis brought on by a shortage of foreign exchange reserves to finance essential imports, has seen the country run low on food, fuel and pharmaceuticals.

The cash-strapped South Asian nation of 22 million announced this week that it will seek an IMF bailout to resolve its worsening foreign debt crisis and shore up external reserves.

The International Monetary Fund on Friday confirmed it was considering President Gotabaya Rajapaksa’s surprise Wednesday request to discuss a bailout.

Around $6.9 billion of Colombo’s debt needs to be serviced this year but its foreign currency reserves stood at about $2.3 billion at the end of February.

Long queues have formed across the country for groceries and oil with the government instituting rolling electricity blackouts and rationing of milk powder, sugar, lentils and rice.

Sri Lanka earlier this year asked China, one of its main creditors, to help put off debt payments but there has been no official response yet from Beijing.

Hindustani Times

Another Minister tests positive for Covid

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Fisheries Minister Douglas Devananda has reportedly tested positive for Covid-19

MIAP

Health sectors warn of possibility of new Covid variants being developed

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There is still a possibility of new variants of the Covid-19 virus being developed, warned the Health Ministry.

Director of the Health Promotion Bureau Dr. Ranjith Batuwanthudawa pointed out that the contagion has not been eradicated fully from the country and that there is a possibility of new variants being developed.

Only 53 per cent of the target group had received the booster dose of the vaccine against the virus, he added.

MIAP

Keells opens state-of-the-art centralised distribution centre

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Keells Supermarkets recently opened its Rs. 4.6 billion, state-of-the-art centralised distribution centre (DC) in the industrial zone in Kerawalapitiya. 

The facility is equipped with the latest cutting-edge technology and systems on par with global retail giants.

This will serve as Keells Supermarkets’ first owned and operated DC and is a testament to their commitment to product and service excellence.

The 260,000 square feet facility occupying nine acres will make it the third largest warehouse facility in the country and the largest technologically advanced distribution facility in the modern retail sector in the country. 

The initiative was initially set in motion five years ago after undertaking a comprehensive study on global best practices and the growing needs of the expanding supermarket chain.

The initiative was materialised consolidating Keells Supermarket’s three warehousing facilities into one centralised warehouse with operations in the dry, fresh and chilled categories. 

This in turn now provides all our suppliers the ability to just deliver to one location cutting down on logistical time and costs and benefits particularly the smaller suppliers. 

The facility is equipped to handle over 100,000 kg of fresh produce daily, and the temperature-controlled space will ensure the cold chain is not compromised. 

This is vital to ensure the freshness is retained from the farm gate to store providing customers freshest of produce as well as an assurance of better product availability overall.

The roof space spanning 200,000 square feet would be set up with solar panels that will have an installed capacity of approximately 800 KW. 

With this, the total solar power installed capacity of the chain would increase to approximately 12 MWs, making Keells Supermarket chain one of the leading brands in Sri Lanka generating renewable energy.

John Keells Group Chairman Krishan Balendra said: “The state-of-the-art Distribution Centre is a significant step towards achieving our core purpose at Keells, of ‘improving the quality of life for the nation.’ As a responsible corporate citizen that prioritises national interest, we believe that this is also a move towards advancing the nation’s food security ambitions led by a private sector entity.

Further, this cutting-edge facility which has embedded the highest global standards of technology will support our outlet expansions, catering to a wider consumer base across the country and providing growth opportunities for the stakeholders in our value chain. 

Employing over 500 team members, this facility will allow our supermarket business to provide good quality products at the right time resulting in the best offering for consumers at the stores”.

The state-of -the-art distribution centre will enable Keells to create efficiencies across its entire supply chain from farmers, manufacturers and distributors, small and large, and no doubt raise the industry standards while serving as a model for modern trade retailers.

 In particular, given the current environment where global and local supply chains are faced with disruptions affecting product prices, investments such as this, will prove to reinforce and support the economy and support Sri Lankan consumers.

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US Under Secretary for Political Affairs to visit Sri Lanka soon 

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The US Under Secretary for Political Affairs Victoria Nuland will travel March 19-23 to Bangladesh, India, and Sri Lanka with an inter agency delegation to underscore U.S. commitment to, and cooperation with, Indo-Pacific partners , US State Department,announced  

Accordingly, Under Secretary Nuland will hold Partnership Dialogues in Bangladesh and Sri Lanka and Foreign Office Consultations in New Delhi. 

On each stop, Under Secretary Nuland and the delegation will meet with civil society and business leaders to strengthen economic partnerships and deepen ties in the pursuit of peace, prosperity, and security in the Indo-Pacific region.

Other senior members of the delegation include Assistant Secretary for South and Central Asian Affairs Donald Lu and Deputy Under Secretary of Defense for Policy Amanda Dory.

ADB steps into assist Sri Lanka amidst forex crisis

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The Asian Development Bank (ADB) is ready to assist Sri Lanka in “relevant policy areas” to enhance foreign currency earnings, in particular tourism and trade and investment, according to ADB President Masatsugu Asakawa.

He also said some of the macroeconomic issues the government is facing particularly fiscal and balance of payment deficits are challenging and need to be addressed in due course.

“ADB sees 2022 as a year where the government would be able to lay the foundations of more robust growth, backed by efforts towards greater diversification of Sri Lanka’s production structure and exports and an investment climate conducive for both SMEs as well as large enterprises with close linkages to the global economy,” he said.

ADB has supported SL Covid-19 response efforts in 2021 with US $460 million in new assistance to procure 12 million doses of COVID-19 vaccines, strengthen health care services in some underserved provinces, and improve rural road connectivity to boost access to jobs, incomes, and social services.

Complementing this sovereign assistance, ADB’s private sector window committed an equity investment of up to $80 million in John Keells Holdings PLC to boost the country’s food value chain and promote economic growth and job creation.

Sri Lanka is also very active in ADB’s Trade and Supply Chain Finance Program, which fills market gaps by providing guarantees and loans through partner banks in support of trade.

In 2021, along with financing 6 per cent of Sri Lanka’s import, this programme supported the import of $160 million worth of COVID-19 vaccines.

Our 2021 disbursements totaled $684 million. These funds supported ongoing projects in hydro, solar, and wind power generation; rural connectivity; building small and medium-sized enterprises (SMEs); education; irrigation; and primary health care, including for the COVID-19 response.

ADB’s priorities for this year include further support for rural connectivity, building vocational skills, and projects in water supply, renewable energy, and SMEs. Before the pandemic, ADB’s annual lending commitment was around $800 million.

More broadly, ADB will continue to support the country’s evolving development needs. It is now developing a new country partnership strategy for Sri Lanka, which will guide our programme from 2023 to 2027. We intend to focus on three priority areas.

First is sound macroeconomic management and private sector development as the basis of rapid and inclusive economic transformation.

Second is to promote balanced, green, and resilient rural–urban development. And third, is to enhance human capital. Across our work, ADB will continue to address broader issues such as climate change, gender equality, digitization, governance, capacity development, and regional cooperation and integration.

During the past two years just over $650 million was mobilised or repurposed from ongoing projects to support the government’s health, education, economic, and SME response.

ADB support started immediately after the onset of pandemic, with the provision of $4 million to procure medical supplies and materials to increase screening and testing capacity across the country.

He noted that ADB is very grateful for Sri Lanka’s offer to host the 55th Annual Meeting of the ADB Board of Governors this year.

In view of the ongoing challenges posed by COVID-19, the government and ADB have decided to hold this year’s annual meeting in two stages.

The first stage will comprise a virtual, reduced-scale meeting of the Board of Governors on May 5 to conduct several matters of official business required by the institution.

The second stage in September will include a series of seminars and knowledge sharing events under the theme “Positioning Climate Resilient Green Recovery for the Post-COVID-19 World.” These sessions will focus on ways to safely reopen and stimulate economies after COVID-19, while ensuring that future growth is both green and sustainable.

The programme will discuss tourism, digital transformation, blue economy and finance, gender equality and greening of the economy, including the region’s response to climate change, among others.

The landing cost along is Rs. 4462.25. Gas prices should be increased immediately – Litro Surakeeme National Unity

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Litro Surakeeme National Unity says that in order to save Litro Gas, immediate action must be taken to increase the price of a gas cylinder, otherwise, the company will have to be closed in the next three months.

“The international LPG price in February was $ 880 per metric ton. We have incurred a loss of Rs. 200 million from this ship alone when we unloaded the ship’s gas quantity which is currently being prepared for unloading based on the February price and delivered it to the customer at the current price. The amount of money we bore as a state-owned company for the people last year alone was 1100 crore. On this financial basis, this company will have to close down in the next three months. We are not talking about price increases. This must be managed ”

Q. We never borrowed cylinders. Now you are asking for a price increase to manage the issue, aren’t you?

“If the only way to manage this is to increase prices, we must do it.”

Q. How much more are you proposing to increase this time?

“We have to cost Rs. 4462.25 as the landing cost ”

Litro Surakeeme National Unity stated this addressing a media briefing held in Colombo yesterday (18).