Banananomics: The Truth About Xi's Trip To Europe

French President Emmanuel Macron is calling for an update on the country’s economic ties with China, just as Chinese leader Xi Jinping is expected to visit France for a State visit.

Inputs that matter: In a wide-ranging interview with La Tribune Dimanche, the French president says Europe wants more reciprocity in its economic ties with China to ensure its financial security better.

• Xi landed in France Sunday afternoon, the first stop of a five-day European tour.

• Xi will also visit one of his closest European allies, Hungary’s prime minister, Viktor Orbán.

• The Chinese leader’s visit follows weeks of escalating tensions. European officials have cracked down on suspected espionage, and the European Union threatens to unleash new tariffs on Beijing’s contentious trade practices.

The opportunity: “We like fair competition. We don’t like when China floods the market with massively subsidized e-cars,” European Commission President Ursula von der Leyen said last month. 

• “We recognize what we see as the Chinese playbook,” Margrethe Vestager, the European commissioner for competition, told Bloomberg Television last month.

• “The Chinese leadership is pretty clear about what they want,” says Abigaël Vasselier, the director of foreign relations at Merics, a German thinktank focused on China.

• The visit comes as China pushes to avoid a trade war with the EU, while attitudes towards Beijing in the bloc are hardening after multiple spying scandals and China’s ongoing support for Russia in the war in Ukraine.

Zoom in: Xi and Macron’s rapport was uplifted last year when the Chinese president took his French counterpart on a rare personal trip to Guangzhou, a city in southern China. 

• Next week, Macron will return the favor with a visit to Hautes-Pyrénées, a mountainous region of France.

Between the lines: China’s hostility to NATO is part of the reason why Beijing has maintained its support for Moscow since the invasion of Ukraine

• Hungary is Huawei’s most extensive base outside China, and the country will soon host carmaker BYD’s first European factory.

Follow the money: ​​Though Macron is said to have backed a critical EU investigation into Chinese EVs late last year, he’s also on a charm offensive as he tries to entice investment from the world’s No. 2 economy.

• “Let’s be clear, I’m not proposing to distance ourselves from China,” Macron said in the interview.

• “Whether it’s about climate or safety, we need the Chinese.”

• Meanwhile, Russia’s foreign ministry mentioned remarks by the British foreign secretary, David Cameron, and the French president, Emmanuel Macron, and the delivery of US ATACMS long-range missiles to Ukraine.

• “They are deliberately leading the situation towards a further escalation of the Ukrainian crisis towards an open military clash between NATO countries and Russia,” the foreign ministry said.

The Abraham Accords was one of the few Trump initiatives the Biden administration was happy to pick up and build on.

Inputs that matter: A defense treaty would solidify the seven-decade security alliance between Saudi Arabia and the U.S. and tie them ever closer to each other as U.S. adversaries like Iran, Russia, and China seek to expand their influence in the Middle East.

• There is already extensive security and intelligence cooperation between Israel and Saudi Arabia to contain their mutual adversary, the Shiite government of Iran.

• State Department spokesperson Matthew Miller said that the U.S. is currently negotiating one mega-deal involving three components on Thursday.

• As part of the agreement, the U.S. would give Saudi Arabia security guarantees modeled on its defense pacts with non-NATO countries like Japan and South Korea.

The opportunity: The deal also reportedly includes U.S. assistance to help Saudi Arabia build a civilian nuclear program, something that the country has long sought for its economy but which critics fear could be converted quickly into a weapons program.

• "The sun, the moon, and the stars have to align pretty close together in record time to make this happen," Aaron David Miller, a veteran Mideast peace negotiator now with the Carnegie Endowment for International Peace, told Vox.

• Unfortunately, said Miller, "In my experience, Arab-Israeli negotiations work at two speeds: slow and slower."

Zoom in: The Guardian reported this week that the Saudis are also proposing a "plan B" agreement under which the US-Saudi components of the deal would be completed even without any Israeli involvement.

• For normalization to be realized between Saudi Arabia and Israel, there has to be a pathway for a Palestinian state and "calm in Gaza," U.S. Secretary of State Antony Blinken told a panel at an economic conference in Riyadh this week.

Between the lines: And though Biden had vowed on the campaign trail to hold the crown prince responsible for the killing of Saudi journalist Jamal Khashoggi, the prince has denied involvement in the Washington Post columnist's death, but U.S. intelligence agencies have concluded that he ordered it.

• Half a decade ago, Jamal Khashoggi, a Saudi journalist and Washington Post contributor who had been living in the United States, entered his nation's consulate in Istanbul and was never seen again.

Follow the money: Meanwhile, Iran utilizes tactics like ship-to-ship operations, intermediaries, and rebranding to evade sanctions and sell oil to China. 

• U.S. sanctions have cut off Iran from most of its traditional customers, forcing Tehran to find new buyers and sell its oil at discounted prices.

• "Iran is continuously developing and expanding not just the network of middlemen and trading companies involved in the sale of its oil, but also its fleet of tankers that it predominantly uses to move its crude," said Nader Itayim, the Middle East editor at the U.K.-based Argus Media.

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