Exclusive Economic Zones (EEZ) are often a subject of strong disputes between countries. In the case of Japan, being able to keep its rich and resourceful marine territories has become a priority. Especially since its neighbor has become consistently offensive in that area, Japan needs to make major military investments in order to keep its hands on its sovereignty.
An EEZ is an exclusive economic zone, which is a sea zone prescribed by the United Nations over which state has special rights regarding the exploration and use of that zone. And in some areas, what is at stake can also represent great economic development for some countries. Marine resources, including energy production from water and wind, fishing rights and oil exploration, are the main reasons why EEZs are so often disputed.
Japan has disputes over its EEZ boundaries with all of its Asian neighbors, including Russia, the Republic of Korea, the People Republic of China (PRC) and the Republic of China Taiwan (ROC).
The East China Sea is one of the regions where these disputes are the most critical, especially between Japan and the PRC that concerns the different application of the 1982 UNCLOS, which both nations ratified. The dispute is based on “the natural prolongation of the continental shelf of China in the East China Sea,” which China claims that it extends to the Okinawa Trough (200 nautical miles further than where the territorial sea of China is measured).
In 1995, the PRC discovered a natural gas field in the Sea that lies in an area where the two nation EEZ claims overlap, increasing tensions between the two countries. These tensions grew even worse after rounds of disputes over island ownership in the same Sea triggered both official and civilian protests between China and Japan. It has therefore become an issue that both militaries have to be ready to deal with and Japan has been preparing for such scenarios.
In 2011, Japan selected the Lockeed Martin F-35A lighting II Joint Strike Fighter (known as JSF) for its next generation of fighter jets. In June of this year, the U.S. State Department notified Congress of a potential $1.7 billion foreign military sales case for Japan to buy four Northrop Grumman E-2D Advanced Hawkeye for the Japanese Air Self Defense Force. The aircraft is specialized in information surveillance and reconnaissance, which is one of Japan’s main needs in its disputes with China.
Japan also invested in a major Helicopter destroyer, a carrier with impressive size and abilities. The JS Izumo is capable of the simultaneous landing or takeoff of five helicopters at the same time, due to its large size, which is almost unprecedented. Experts say that it could even potentially be used in the future to launch fighter jets or other fixed wing aircraft, since it’s the largest warship in Japan’s fleet since World War II.
Recent changes within the Japanese defense would facilitate military partnership between the U.S. and Japan. Japan is also looking for help and partnership from the old continent, as officials know they can’t only rely on the U.S. for both military materials and partnerships.
In the margins of the G7, Prime Minister Shinzo Abe met with French President François Hollande to express his concerns about escalating tensions in the South China Sea. Japan could be actively looking to extend its military partnerships, as the French are well known in offering promising military equipment especially in the navy/marine sector.
The historical French Constructions Industrielles de La Mediterrannée (CNIM) has recently proven its abilities to be ahead of its time for Naval designs with the L-Cat, a high-speed sea connector for amphibious operations, still missing in Japan’s fleet but that could prove to be useful when fast pace assault or evacuation is required in an island with shallow waters, which Japan has plenty of.
There is no doubt that Japan is accomplishing something huge by increasing its forces at sea. Not only is it essential for Japan’s sovereignty and territorial integrity, but it is also a promise to the Japanese that their government is protecting their borders strongly and won’t fail under pressures from their large neighbor. Historically, Japan has often proven that it could stand strong and that’s exactly what it is doing today. We shall soon witness new major investments to enhance Japan’s already powerful self-defense forces.
By increasing its self-defense force, Japan pushes back on China and inspires the nation to change its offensive behavior in the Sea of Japan and in the East China Sea. Japan is becoming increasingly a major military force at sea and is on its way to offering more military partnerships with the world’s leading nations. Not only tying into the U.S. Navy’s networked battle force, but also opening the path to more partnerships that could go far beyond its territorial limits.
Planned Japanese Self Defense Force Aircraft Buys, Destroyer Upgrades Could Tie into U.S Navy’s Networked Battle Force, USNI News, Sam LaGrone, June 10th 2015
Japan, France wary of Beijing’s reclamation binge in South China Sea, Japan Times, June 7th 2015
How to Trade Shares for Beginners
Although expectations had been modest for 2019, the stock markets around the world had been active in 2019 and the positive returns seen so far have exceeded even the most optimistic expectations. Supported by easy monetary policies around the world, as well as by positive economic expectations for 2020, stocks continue to move, which makes a significant number of people deciding to start investing. Since stock trading is much harder than most of them think, let’s see some of the most important things beginners must consider in order to accelerate their learning curve.
Stick with the most liquid shares
Finding “the next big thing” is one of the illusions that seduces most of the beginners. They spend a significant amount of time looking for those companies that will have huge returns over the next months of years. Not even the most-skilled stock traders are able to do that, so why do you think you will?
Instead of looking for those shares, stick with the companies that already have a leading position in the industry. Google, Facebook, Microsoft, Apple, and Boeing are just some of the names that are popular at the time of writing, and looking at their performance in the long run, so far, they’ve managed to impress.
Study educational materials
Beginners fail to understand that share trading is a skill-based endeavor and study is one of the most important parts of the process. Study as many educational materials as you can and gain as much knowledge as possible because you’ll definitely need it. This guide and other similar ones will introduce you to share trading and help you understand the basic concepts. Remember this axiom: “Around 90% of the traders lose 90% of their capital in their first 90 days of trading”. Education is one of the main factors why beginners stumble into the same mistakes over and over again. You don’t want to be in the same position as most of the people who don’t learn and spend time to sharpen their skills.
Build a portfolio
Closely linked to our first tip, building a portfolio of uncorrelated assets is one of the most important things to consider, if you want to limit the damages of your mistakes. No matter how good you are, in trading, you won’t make money all the time. Diversification will help you minimize the effects of some losing trades. Don’t concentrate all the risk in a single stock and instead pick at least three or four names that might perform positively in the near-term.
Saudi Arabia halves oil production: How long will it last, and will it affect oil prices?
Saudi Arabia announces it will halt 50% of its oil production. This Vestle news article will explore the possible financial impact.
Since recent drone airstrikes crippled Saudi Arabia’s Aramco oil processing facility in mid-September, the country – the world’s No. 1 exporter of oil* – has been forced to close half the plant while reconstruction takes place. While no casualties resulted from the attack, the real harm is finally coming to light, as the impact on Saudi Arabia’s oil industry is becoming clearer. This Vestle news article explores this important topic.
Aramco estimates that the closure will affect almost 5.7 million barrels of crude oil per day, which amounts to roughly 5% of the world’s daily oil production. To help you put that into perspective, consider that Saudi Arabia produced 9.85 million barrels a day in August 2019. And it’s not just oil production that will suffer. Saudi Energy Minister Abdulaziz bin Salman also indicated that the closure has forced a temporary halt in gas production, limiting the supply of ethane and natural gas by 50% as well.
One particular detail that those with an eye on the financial markets might find interesting is that the attacks took place at a time when Saudi Arabia continues to progress toward taking Saudi Aramco public – a first for the kingdom’s global-reach energy sector. How much money are we talking? As the world’s most profitable oil company, it’s estimated to be valued at around $1.5 trillion.**
Will this affect oil prices?
The short answer, according to some people, is probably yes. With Saudi oil output expected to dip below 50%, the outages present “an extreme risk situation for oil,” according to Paul Sankey, managing director for Mizuho Securities. However, measures have already been put into place. Depending on how long it takes for Saudi Arabia to recover the damaged facility, OPEC (the Organization of Petroleum Exporting Countries) is aiming to suspend production cuts to help temper the impact of the ongoing crisis. On the trading side, the International Energy Agency is expected to release strategic oil stocks, and US President Donald Trump has already authorized the release of oil from the US petroleum reserve.***
In the weeks just after the drone strikes, the price of WTI Oil on the Vestle platform showed a 13% increase, followed by a 12% decrease over the following two weeks. Also during that time, Bloomberg reported that the spread between WTI and Brent widened to 37%, which could be an indication that the oil spike might affect global prices more than other oil giants, such as the United States. Furthermore, a representative from Goldman Sachs estimates that the global benchmark for Brent Oil could rise above $75 a barrel if the plant shutdown lasts for more than six weeks.****
Will it get any worse?
Some people fear the Aramco incident represents the potential for a broader regional conflict that could escalate to the point that it affects Gulf oil production as a whole. CFRA Research oil analyst Steward Glickman said, “Oil prices are now likely to bake in a much higher geopolitical risk premium than had been absent in much of 2019.” With the recent bombing in June of oil tankers in the Gulf of Hormuz not so distant, it’s no wonder some analysts like Glickman like are raising their eyebrows. ***
Considering all the different factors that play into this situation—the global, financial and geopolitical—there’s no telling what kind of turns it will take. The only thing to do is keep an eye on the news for the political side of it, and financial sites like Vestle to see what kind of ripples such an event is making in the financial markets.
Oil prices and the financial markets
Volatility such as that recently experienced by both WTI Oil and Brent Oil can present both opportunities and risks for informed traders, such as those who invest in Contracts for Difference or CFDs, which essentially means trading on the price movement of a particular instrument without owning the underlying asset. At Vestle, you’ll find hundreds of tradable CFD instruments, from commodities like oil and natural gas to popular stocks, indices, ETFs and crypto. And thanks to a selection of trading signals, market indicators and our economic calendar, access to important financial info for global situations like this is right at your fingertips.
Vestle (formerly known as ‘iFOREX’) is the trading name of iCFD Limited, licensed and regulated by the Cyprus Securities and Exchange Commission (CySEC) under license # 143/11. The materials contained on this document have been created in cooperation with Vestle and should not in any way be construed, either explicitly or implicitly, directly or indirectly, as investment advice, recommendation or suggestion of an investment strategy with respect to a financial instrument, in any manner whatsoever. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 83.7% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Any indication of past performance or simulated past performance included in this document is not a reliable indicator of future results. Full disclaimer: https://www.vestle.com/legal/analysis-disclaimer.html
Fears of a 2019 European Economic Slowdown Loom
Although the spotlight is on the trade war between the United States and China, one aspect that is currently ignored by the media is represented by signs of weakness in the European continent.
Germany slows down
After posting a -0.3% GDP contraction in the third quarter of 2018, the economic indicators released from Germany in 2019 cannot support a positive economic picture. The manufacturing sectors continue to show signs of weakening, with the Markit PMI Composite now at 51.6, down from 52.3.
Industrial Production had been contraction by 1.9% in November, and both imports and exports had been down by 1.6% and 0.4%, respectively. DAX trading had also suggested there is growing concerns among investors and the main German stock index peaked out in July 2018, being now down by 15%.
Germany relies mostly on exports, being the third exporter in the world, only surpassed by the United States and China. That is why the weakness we see in Germany is actually a symptom of what’s happening in other European countries as well.
Italy and France not too encouraging
The new populist government in Italy, formed by La Lega and The Five Star Movement faced a serious challenge to get the EU’s approval for the 2019 budget, as the already high debt-to-GDP ratio (currently at 131.8%) raises concerns on whether the country will be able to meet its debt obligations in the future.
There are also serious concerns about the banking sector, which despite mergers and acquisitions, and huge capital available from the ECB, were unable to solve their problems which emerged after the 2008 financial crisis. The future of Italy is very uncertain, and analysts predict that the new government will not be able to meet their economic promises, given that we are at the end of a business cycle.
Speaking of France, the problems are social at the present time. President Macron was unable to stop the “Yellow Vests” protests, despite promises to increase the minimum wage and the overall standard of living for the very poor. France’s debt-to-GDP ratio currently stands at 97%, but given the latest promises, there are concerns whether the country will manage to keep the budget deficit below 3% in 2019, as the European treaties demand.
Although there’s a single currency in Europe, in terms of fiscal policy things were very fragmented, which is why the economic recovery had been very slow and the reason why investors predict Europe will face the greatest challenges to solve its economic, political, and social problems.
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