The Peninsula Foundation

Category: Geopolitics & Geo-economics

  • Guyana’s Energy Rise and the US-China Contest

    Guyana’s Energy Rise and the US-China Contest

    Introduction

    In just five years after oil production began, Guyana has become the world’s largest per-capita oil producer and South America’s second-largest supplier of crude. Daily output now stands at ~926,000 barrels, with recoverable reserves exceeding 11 billion barrels in the Stabroek Block alone. Guyana has recorded a GDP growth of 43.6 per cent in 2024, one of the fastest rates globally. The former British colony has very rapidly transitioned from being a peripheral Caribbean economy to a strategically significant energy producer. This has attracted growing attention from both the United States and China, both seeking to secure economic, political and strategic influence in the world’s newest petro state. The manner in which Georgetown navigates and hedges against great-power competition over its resources shall determine whether its oil wealth translates into prosperity or succumbs to the familiar resource curse.

    The Energy Architecture

    Guyana’s transition has been remarkably rapid, with commercial oil production commencing in December 2019, within five years after ExxonMobil’s discovery in 2015. The Stabroek consortium, comprising ExxonMobil (45 per cent), Chevron (30 per cent) and China National Offshore Oil Corporation (CNOOC) (25 per cent), has invested billions in developing Guyana’s offshore resources. CNOOC alone has committed approximately $17.7 billion across six projects, making Guyana the company’s largest overseas investment. ExxonMobil projects production to reach 1.7 million barrels per day by 2030, placing Guyana among the world’s major non-OPEC producers.

     

    Guyana’s energy strategy also goes beyond crude extraction. The Guyanese government is pursuing downstream industrialisation through the $2 billion Gas-to-Energy project, which will transport offshore natural gas to a 300-megawatt power plant at Wales. Supported by a $526 million loan from the US Export-Import Bank, it aims to reduce electricity costs and support the development of a domestic manufacturing base. The participation of companies such as TotalEnergies, QatarEnergy and Petronas indicates efforts to broaden the investor base beyond the Stabroek consortium. At the same time, the continued political consensus around the original Stabroek production-sharing agreement between the Guyanese government and the Stabroek consortium has provided a degree of policy predictability through the 2030s.

    Washington’s Role

    The United States has moved quickly to leverage Guyana’s newfound energy boom into a broader strategic partnership. In March 2026, US Energy Secretary Chris Wright met President Irfaan Ali ahead of the inaugural Shield of the Americas Summit, describing Guyana as “a huge part of this strategy, a very well-governed country with great energy resources”. The summit established the Americas Counter-Cartel Coalition, including Georgetown among a select group of participating Caribbean states. While it has been officially framed as a counter-transnational crime initiative, the initiative reflects broader US efforts to strengthen its security presence in the Caribbean and refocus attention on the Western hemisphere.

    US engagement has also deepened militarily, with the USS Normandy and USS Mahan conducting exercises with the Guyana Defence Force (GDF) in 2025, while US Army Security Force Assistance Brigades have trained GDF units in jungle warfare and engineering since 2022. Washington has also supported the development of coast guard facilities and communications infrastructure, aiming to strengthen Guyana’s security amid continuing tensions over the Essequibo dispute with neighbouring Venezuela. The growing American footprint in Guyana is visible in the consolidation of Washington’s economic and strategic presence across Guyana’s energy, infrastructure and security sectors. Guyana’s strategic value to Washington also lies in its geography, where a sustained American presence in Georgetown helps shape the trajectory of a post-Maduro Venezuela, particularly as the question of whether Caracas drifts back into Beijing’s or Moscow’s orbit remains unresolved through the medium term.

    Beijing’s Parallel Track

    China’s presence in Guyana differs in scope and character. CNOOC is a passive financial partner in the Stabroek block, earning returns from a basin operated primarily by US energy companies. However, CNOOC has leveraged this expertise, earning secure production-sharing contracts for two offshore blocks in Trinidad and Tobago, citing its experience in Guyana.

    For Georgetown, Beijing has emerged as a significant infrastructure and development partner. Guyana signed a Belt and Road Initiative (BRI) memorandum in 2018 and is negotiating a Joint Action Plan. Chinese state entities have financed or constructed major projects, including the expansion of the Cheddi Jagan International Airport, the $260 million Demerara River Bridge, East Coast road upgrades, and the $184 million East Coast rail-highway project. Beyond existing ones, Chinese developmental financing has been associated with prospective projects, including a deep-water harbour and the Amaila Falls hydropower project. Beijing has also provided approximately $36.6 million in debt relief, helping it earn political goodwill without generating the levels of debt distress seen elsewhere in the Caribbean. At the same time, Guyana’s trade asymmetry is visible, with its non-oil exports to China at $17 million in 2022, while imports from China are multiple times higher at $372 million. The Chinese telecom giant Huawei has emerged as a major player in Guyana’s telecommunications sector, drawing scrutiny from Washington on data governance and cybersecurity, amplified by cybersecurity researchers and Guyanese civil society.

    Venezuela’s Shadow

    For Guyana’s rise, the unresolved Essequibo dispute continues to cast a long shadow, with Caracas having escalated its rhetoric under former Venezuelan president Nicolás Maduro. With Maduro’s removal, the risk of military escalation over the Essequibo has diminished, and the transition government in Caracas is likely to prioritise political stabilisation and economic recovery. However, the medium to long-term challenge for Georgetown remains economic, as Venezuela, which is gradually integrating into global energy markets, will compete with Guyana for the same Gulf Coast refining demand. Guyana’s growth opportunity remains intact, provided that the Caribbean remains within the US security umbrella and the Venezuelan energy sector’s recovery remains gradual.

    Guyana’s Balancing

    Amid intensifying great power competition, Guyana has sought to pursue multi-alignment. President Irfaan Ali’s re-election in September 2025 has ensured continuity in economic and foreign policy at a critical moment in the country’s growth story. Alongside the expansion of hydrocarbon production, Georgetown has pursued a dual-track approach to balance its oil-led growth by advancing its Low Carbon Development Strategy 2030 using its extensive forest cover to generate revenue through carbon credit mechanisms, including a $750 million agreement with Hess Corporation. At the same time, Georgetown has maintained close security and economic cooperation with the United States, retaining Chinese participation in the energy and infrastructure sectors, and continuing its adherence to Beijing’s One China policy. These policies reflect Guyana’s attempt to advance its economic and strategic objectives pragmatically, while seemingly preserving strategic autonomy by leveraging external partnerships.

    The Outlook

    By 2030, Guyana’s oil production could reach 1.7 million barrels per day. As the country’s energy sector grows, competition between the United States and China is likely to intensify in areas such as infrastructure and digital connectivity. While souring relations between Guyana and Venezuela increases Georgetown’s security dependence on Washington, a stable regional environment would allow Guyana to pursue a balanced foreign policy and more diversified external partnerships. Ultimately, Guyana is better positioned than other petrostates to convert its hydrocarbon wealth into prosperity, with the Natural Resource Fund Act of 2019 and the Stabroek production-sharing structure indicating a stable economic and institutional architecture that was absent in Venezuela. Georgetown’s deliberate policy of balancing American security cooperation with Chinese infrastructure financing is indicative of a conscious strategy of multi-alignment, rather than succumbing to great power competition that has polarised other petrostates.

     

    Feature Image Credit: panamericanworld.com

    Guyana map Credit: cfr.org

  • The Evolving Situation in Myanmar and it’s Impact on India-Myanmar Relations

    The Evolving Situation in Myanmar and it’s Impact on India-Myanmar Relations

    For Indians researching security issues in the Northeast, three recent developments in Myanmar have once again put the spotlight on the situation there. The first is a May 2026 report by Human Rights Watch (HRW) that pieces together eyewitness accounts of the killing of at least 170 Rohingya men, women, and children, with many others likely injured, in Hoyyar Siri village in Buthidaung township in Northern Rakhine on 02 May 2024[i]. The second is an account of another influx of Chin refugees into Mizoram in May 2026, following the Tatmadaw’s capture of Falam town in Chin state (adjoining Mizoram and Manipur).[ii] The third is the recently concluded visit of Myanmar President (formerly General) U Min Aung Hlaing to India from May 30 to June 03, 2026. According to the initial press release of the Ministry of External Affairs, ‘…he will be accompanied by a high-level delegation comprising several Cabinet Ministers, senior officials and business leaders. This will be the first visit of President U Min Aung Hlaing to India in his current capacity.’ The three events encompass a spectrum of issues that impact India’s relations with Myanmar, broader regional security, and India’s Act East Policy.

     

    Map: Courtesy – Nations online Project

    Myanmar is the bridge connecting Northeast India to Southeast Asia. If geographically included in Southeast Asia, it would be the region’s largest country, with 135 officially recognised ethnicities and a population of over 52 million (2003 census)[iii]. Myanmar is more than four and a half times larger in area than its Western neighbour, Bangladesh, yet has roughly one third of its population. Myanmar is a vital component of India’s Act East policy

    Outline Economic Situation

    Myanmar’s parliamentary elections were held from Dec 25 to Jan 26, with the Junta-supported Union Solidarity and Development Party (USDP) winning an overwhelming majority, further consolidating the military’s hold over the state apparatus. As a result of the USDP being perceived as a proxy for the military regime, the continuing clampdowns on civil liberties at home and the visibly close ties with Russia, most sanctions imposed earlier by the West on the military government remain in place. The nexus between Myanmar’s military and Iran, which is rumoured to be supplying drone parts to the Tatmadaw, has also reinforced the West’s perception of the Junta[iv].

    The pressure of sanctions was intensified by the impact of the war in Ukraine and compounded by energy shocks from the current West Asian crisis.  According to the Lowy Institute, ‘Myanmar has probably been affected more than any other country in Southeast Asia — both in terms of the lack of access to fuel, and also the rising prices… Myanmar is the only country in Southeast Asia whose economy has not recovered to its 2019 pre-COVID levels[v]. With fuel prices having increased more than threefold and deepening scarcity in rural areas, the economy is in a downward spiral, accelerated by power outages, a shortage of essentials such as fertiliser (due to cutbacks by exporters like China), and an overall lack of investment. As per figures of the Asian Development Bank (ADB), ‘…GDP has declined by a cumulative 16 per cent since 2020, with growth falling 2.2 per cent in fiscal year 2025 alone. Inflation has been consistently high, reaching 29 per cent in 2024 and 25 per cent in 2025.[vi] Today, Myanmar has the highest inflation rate in the whole of Southeast Asia[vii].

    Currency:  One of the most significant issues for the economy is the agreement between the Central Bank of Myanmar and the People’s Bank of China to link the Kyat and Renminbi digitally[viii]. This would bypass the international SWIFT banking system and convert Kyats directly to Renminbi, reducing dependence on the dollar. This move effectively ties Myanmar’s economy to China’s, with attendant consequences, especially regarding sovereignty.

    The Security Situation

    The civil war between the Tatmadaw and ethnic armies continues unabated in a see-saw fashion. It is taking a toll on the military, which is in the process of updating its conscription lists. According to a May 2026 report, around 13 million citizens have been found fit for conscription, and about 120,000 individuals have been recruited since the Conscription Law was enacted in February 2024[ix].

    Since its reverses after the launch of ‘Operation 1027’ on 27 October 2023 (an offensive by the Three Brotherhood Alliance (3BTA), composed of three Ethnic Armed Organisations (EAOs) in Shan state bordering China, with tacit Chinese approval for rooting out the scam centres there, the Junta has managed to claw back territory. After 15 months, it is in full control of an important central artery, the Mandalay Myitkyina Road and the connected towns in the Sagaing region[x] (see map on first page). With the capture of Myitkyina, the capital of Kachin state, the Junta is inducting fresh troops and equipment into Kachin. Seeing this, the regional EAO, the Kachin Independent Army (KIA), is reported to have gone on the defensive[xi]. The Junta also continues to hold the important ports of Kyaukphyu (the mouth of the China-Myanmar Economic Corridor) and Sittwe (the gateway of the India-built Kaladan Multimodal Port Project), both in Rakhine, though Sittwe is blockaded on land by the AA and is being supplied by air and sea.

    Elsewhere, too, the Tatmadaw has gone on the offensive. It has launched an offensive on multiple fronts to retake the trading hub of Maw Taung, which borders Thailand in the Thantharyi region (see map below) and has been under the control of the Karen National Liberation Army (KNLA) since November 2025.

     

    Note: Location of Maw Taung is approximate and not to scale. Map: Courtesy – Nations online Project.

    As mentioned earlier, Falam, where Chin state’s only airport is located, was captured by the Tatmadaw in April 2026. With the Tatmadaw aiming to reestablish control over the Myanmar-Mizoram border crossings, the Myanmar border town of Rikhawdar would be the next objective (see map). This could spark another influx of refugees into India’s Zokhawthar. Even today, after the May 2026 influx of Chins into Zokhawthar, residents claim that refugees now outnumber the local residents there[xii].

     

    Visual of Zokhawthar border gate. Map: Courtesy – Nations Online Project.

    Overall, the Tatmadaw has enhanced its capabilities with assistance from its main benefactors, China and Russia, enabling it to conduct offensive operations across the country. In the short- to medium-term, any overthrow of the regime by EAOs aligned with the opposition National Unity Government (NUG) appears unlikely, despite the EAOs still controlling substantial portions of territory in various regions.

    Interestingly, the NUG continues to retain Myanmar’s seat in the UN. It has recently cleared pending UN membership dues of around one million dollars using existing funds and public contributions[xiii], a symbol of the support they still generate.

    Outside Influences

    Myanmar is one state in the Bay of Bengal where Russia, China and the USA have specific, sometimes overlapping and frequently competing interests. Gen (now President) Hlaing has visited Russia seven times to date. Russia is a major supplier of weapons to Myanmar and is rumoured to have shared intelligence with the Tatmadaw, even as it continues cooperation in the energy sphere, including nuclear energy. In February 2026, it signed a five-year military cooperation agreement with Myanmar to protect its territorial integrity and strengthen national sovereignty and security, as per Defence Minister Sergei Shoigu during his visit to Naypyidaw[xiv], further consolidating ties with the Junta. Russia, therefore, has no interest in regime change.

     China continues with its on-off strategy of support to the Tatmadaw and the rebels, stopping aid when its own interests, especially along the China-Myanmar Economic Corridor (CMEC), are threatened. China supported the EAOs in cleaning up the scam centres on the border when the Tatmadaw was unable to do so. Its role in subordinating Myanmar’s economy has already been mentioned. The release of Aung San Suu Kyi from prison to house arrest days after Chinese Foreign Minister Wang Yi’s visit in the last week of April is being interpreted as another sign of Chinese influence over the Junta[xv]. Also, between 2021 and 2023, it has supplied around $ 267 million worth of weapons to the Junta[xvi]. Thus far, it has shown no interest in engineering regime change. China appears to be working towards better border security, securing Myanmar’s rare earth supply chains to Yunnan, and making economic investments in that country. Its other objective is access to the Bay of Bengal. Towards this end, it practices ‘selective intervention through multi-actor engagement, ceasefire management, security outsourcing and border pressure. Though it speaks the language of non-interference, China is actively shaping developments in its neighbour to advance its strategic interests in the Indo-Pacific...’[xvii]

    The USA has drastically reduced assistance by nearly $1.1 billion since 2025[xviii], but lifted some sanctions on Myanmar companies. The Junta is interested in repairing relations with the US and has hired a Washington, D.C., lobbying firm for around $3 million per year to that end[xix]. The US has shown interest in the rare earth deposits in Kachin state, which are currently being mined by China and, in value terms, account for 60% of Chinese imports – though the process for moving the minerals out of Myanmar remains unclear, as do the prospects for future cooperation. However, it is apparent that the US, like China, increasingly views Myanmar (and Bangladesh) through the Indo-Pacific lens and would endeavour to expand its influence in myriad ways, including using aid as a lever to consolidate further in the Bay of Bengal region and limit Chinese influence.

    The Rohingya Factor

    There is increasingly palpable discontent among the Rohingya. Many still attempt to enter Malaysia (which is reported to hold over 200,000 Rohingya) by sea. Inside refugee camps in Bangladesh, cuts in food rations, overall shortages and depredations by militias /criminal gangs, including killings, torture and abductions, have worsened the law-and-order situation[xx]. Hierarchies, some of them criminal, run daily lives here through enforced diktats. Recently, triggered by the death of a youth, the Rohingya Gen Z organised themselves in protest by carrying out a coordinated online campaign in the camp, challenging self-styled community leaders. As observed by a journalist,’…for the first time in years, a segment of the Rohingya community is not just reacting to events, it is attempting to shape them’[xxi]

    Rohingya militancy is getting increasingly better organised. Four known groups operate across the Myanmar-Bangladesh border and in settlements – the Arakan Rohingya Salvation Army (ARSA), Rohingya Solidarity Organisation (RSO), Arakan Rohingya Army (ARA), and Rohingya Islami Mahaz (RIM)[xxii]. The Junta frequently employs ARSA to fight the Arakan Army (AA), which ARSA regards as its main enemy. The AA’s self-propagated doctrine, ‘The Way of Rakhita’[xxiii] with its four pillars- Nationalism, Militarism, Historical Criticism and Pragmatism, has varying interpretations. It could denote inclusiveness and a broader national identity, safeguarding the nation, revisiting past errors, and preparing for the future in a practical way – which might include reconciliation with the Rohingya. Equally, it might indicate a narrow focus on an exclusive Arakan identity, backed by military force and a willingness to deal with anyone supporting such goals, which bodes ill for future prospects for the Rohingya and Myanmar-Bangladesh ties. With relief aid for Rohingyas progressively reducing and unrest in the camps barely contained, Bangladesh’s social fabric is coming under increasing strain. This is fuelled by the spillover of activities of such terrorist groups into Bangladesh, which finds its policy options in Myanmar increasingly restricted as outside powers come to terms with the Junta. The fallout of the Rohingya and Chin refugee crisis remains of prime concern for India, which shares borders with both countries, warranting greater vigilance by Indian border guarding forces and dynamic updation of internal security schemes, co-opting the latest technologies.

    Views of the NUG: The NUG, Myanmar’s shadow government, recently announced a new council in a statement titled ‘Announcement by the Steering Council for the Emergence of a Federal Democratic Union (SCEF) ‘ on its website.  A line on ‘inclusiveness’ states ‘…Furthermore, we are committed to protecting and promoting the diverse identities of all ethnic nationalities residing within member states and units of the Union, and to firmly building a new Federal Democratic Union composed of states that fully guarantee equality among nationalities and the right to self-determination. However, as mentioned earlier, the question of the NUG coming to power remains moot, as does the issue of implementing such a contentious agenda in a nation with a well-documented history of ethnic violence and discrimination.

    India and Myanmar

    Indian President, Draupadi Murmu, with the President of Myanmar, Min Aung Hlaing

    Despite the 2021 coup and the overthrow of Aung San Suu Kyi’s government, India has continued to adhere to its principle of non-interference in the affairs of neighbouring states. Accordingly, it has maintained bilateral relations with the Junta. Following February 2021, as a large number of Myanmarese Chins sought refuge with their kin in Mizoram (and some in Manipur, where ethnic strife between Meiteis and other tribal groups continues), India had to formulate a uniform policy to address this issue, incorporating humanitarian aspects, local sensitivities and security concerns. This has since been done.

    To ensure peace at the local level and prevent disruption to work on its two-decade-old Kaladan Multimodal Port Project (KMMPP), which links Kolkata to Mizoram (via Sittwe onto Paletwa on the Kaladan River and thence onward to Zorinpui in Mizoram by road, bypassing Bangladesh), India resorted to a tactical outreach that included an unofficial meeting between an Indian Member of Parliament and Myanmar rebel groups[xxiv]. This was further expanded by opening a dialogue in Delhi in late 2024 with the concerned EAOs in Chin and Rakhine, as well as representatives of the NUG and the Junta. Ultimately, separate meetings were held with each group; India advocated for a ‘Myanmar-led, and Myanmar-owned’ solution, thereby reiterating its policy of non-interference.

    President Hlaing’s visit to Delhi in June 2026 may have been partly inspired by an appreciation of India’s articulation of the above (non-threatening) policy. Some opine that the primary objective of this visit was to bolster the regime[xxv]‘s legitimacy. That said, the briefing by the Foreign Secretary after President Hlaing’s meeting with Prime Minister Modi indicates that Myanmar has broadly agreed to accommodate India’s major security concerns, notably an ‘assurance that Myanmar’s territory would not be permitted to be used against India’s security interests’[xxvi]. India further emphasised the importance of stability and peace in Myanmar for the security of its Northeast along the 1,643-km-long border. Discussions on cooperation in defence and security, critical minerals and rare earth and connectivity projects were also held. It is hoped that these interactions will lead to visible improvements in border security.

    India’s contribution to various facets of Myanmar’s development (as with its other neighbours in South Asia) is vividly illustrated in the note on bilateral relations posted on the website of the Indian Embassy in Yangon.  While discussion on defence cooperation during the recent visit was limited to aspects of training, capacity building, institution building, and UN peacekeeping, the larger issue of cooperation in the Bay of Bengal and the Indo-Pacific was addressed during the visit of India’s naval Chief, Admiral DK Tripathi, to Yangon in May 2026. This included strengthening existing arrangements for joint exercises, patrolling, hydrographic surveys, training exchanges, and staff talks. With increasing Chinese naval activity in the Bay of Bengal, India-Myanmar naval cooperation is likely to become increasingly important for India, especially given China’s majority shareholding in Kyaukphyu port at the mouth of the China-Myanmar Economic Corridor (CMEC) and the rumoured infrastructure build-up in the Coco Islands[xxvii].

    Conclusion

    Internally in turmoil, Myanmar, as a neighbour, is becoming increasingly important to India. Great power competition, increasing Chinese inroads into that country and its impact on India’s security remain prime concerns. This necessitates realistic, sustained engagement with the ruling regime. Another factor is the future of India’s substantial investments in infrastructure projects in Myanmar, such as the Trans-Asian Highway and the KMMPP. Of these, the KMMPP, which was initiated in 2007-2008, was estimated to cost around Rs 3,200 crore four years ago [xxviii]. Yet even now, the Paletwa port on the Kaladan river remains in the hands of the AA. This also requires India to maintain engagement with rebel groups.

    Overall, India needs to retain leverage with all parties in Myanmar without being perceived as an inimical neighbour. Only then will its border be secured and the vision of Act East, which includes developing the Northeast as a springboard towards Southeast Asia, be actualised.

     

    References:

    [i] ‘Skeletons and Skulls Scattered Everywhere’ Arakan Army Massacre of Rohingya Muslims in Hoyyar Siri, Myanmar 18 May 2026.

    [ii] ‘Over 800 Myanmar refugees enter Mizoram amid Fears of fresh Junta offensive’ The Assam Tribune  17 May 2026.

    [iii] Website of the Embassy of the Republic of the Union of Myanmar, New Delhi.

    [iv] ‘New resistance alliance built to win Myanmar’s civil war’  Dan Swift and Sean Turnell  Asia Times 15 April 2026.

    [v] Podcast ‘Myanmar at a crossroads: Five years after the coup’ by Hunter Marston, Sean Turnell  The Lowy Institute 22 May 2026.

    [vi] Myanmar’s Economy Faces Grim Outlook Under New Government ‘ Ambassador Scot Marciel  Bower Group Asia  23 April 2026.

    [vii] Inflation Forecast 2026 South East Asia (from TheGlobalEconomy.com)

    [viii] ‘Myanmar at a crossroads: Five years after the coup’ Podcast by Hunter Marston and Sean Turnell , Lowy Institute  22 May 2026.

    [ix] ‘New Myanmar Regime Tightens Forcible Conscription Covering 13 Million Citizens’  Myo Pyae The Irrawady 18 May 2026.

    [x] ‘Myanmar Regime Takes Full Control of Mandalay–Myitkina Road to Kachin’ The Irrawady 08 May 2026.

    [xi] ‘KIA Announces Shift to Defensive Strategy as Regime Troops Pour into Kachin State’  The Irrawaddy

    May 19, 2026.

    [xii] ‘‘Over 800 Myanmar refugees enter Mizoram amid Fears of fresh Junta offensive’ The Assam Tribune  17 May 2026.

    [xiii] ‘NUG-funded payments secure Myanmar’s UN voting rights through 2026’ Mizzima News 11 February 2026.

    [xiv] ‘Russia and Myanmar Sign Military Cooperation Agreement’  AFP  03 Feb 2026.

    [xv] ‘Optics Over Outcomes: Myanmar’s Diplomatic Rehabilitation and India’s Tightrope’  Sreeparna Benerjee Observer Research Forum 13 May 2026.

    [xvi] ‘Tatmadaw Moves to Re-Establish Control Over The India-Myanmar Border’ Afiya Ibnath Ayshi  Bangladesh Defence Journal  14 May 2026.

    [xvii] ‘

    [xviii] ‘The Cut of USAID Programs in Burma’ Gemma Nailer  The Borgen Project   17 January 2026.

    [xix] ‘Myanmar’s military rulers hire Trump ally for US$50,000 a month to lobby Washington’ Maria Siow South China Morning Post 07 May 2026.

    [xx] On Myanmar (Substack) 11 May 2026

    [xxi] ‘Rohingya Gen-Z breaks the silence’ Shafiur Rehman  Dhaka Tribune  13 May 2026.

    [xxii] ‘Southeast Asia and the Rohingya Militant Threat ‘  Jasminder Singh The Diplomat  19 February 2026.

    [xxiii] ‘Understanding the Philosophy of the Way of Rakhita’   Rhee Rakha   Global Arakan Network  22 August 2025.

    [xxiv] ‘Mizoram MP meets Myanmar militants in push to speed up work on key connectivity project’. Isaac Zoramsanga,  The Print   01 March 2024.

    [xxv] ‘What the Myanmar President’s visit means for New Delhi’  Takhellambam Jagjit Singh  The Statesman  01 June 2026.

    [xxvi] ‘Won’t allow our territory to be used against India’s interests: Myanmar’ Shubhajit Roy  Indian Express  02 June 2026.

    [xxvii] Operationalising the East: India’s Naval Engagement with Myanmar’s Sreeparna Banerjee  ORF 20 May 2026.

    [xxviii] ‘India-Myanmar Kaladan project’s completion hangs in limbo’ Yeshi Seli  The New Indian Express 05 June 2022.

     

    Feature Image Credit: ddindia.co.in

  • Sustainability and Climate Change: Part of the Environment Complex Challenge

    Sustainability and Climate Change: Part of the Environment Complex Challenge

    Sustainability can be addressed through an independent inquiry into the fundamental issues at hand; at the same time, its interconnection with climate change cannot be ignored. What is more, both sustainability and climate change are part of a wider, existential challenge humanity faces, which I prefer to describe as the Environment Complex Challenge, encompassing biodiversity loss, environmental degradation, and air, water, and soil pollution. While I would prefer to use the fitting term Anthropocene – as the concept offers a comprehensive description of human impact on Earth and is clearly a primary concern in any debate on sustainability and climate change – it is too closely associated with the failed attempt to name a geological epoch in Earth’s history.[1] Though I was never much of a supporter of that undertaking, I always appreciated the comprehensiveness of its focus. Indeed, in the words of Delanty and Mota (2017), the Anthropocene approach highlights the co-existence of natural and social worlds and the deep intertwining of human and other planetary life. After all, sustainability is about the enduring relationship among society, the economy, and the environment, including how society organises its impact on resources and the critical issue of how to organise economic development and growth.

    With regard to sustainability, it is worth recalling its basic definition as stated in the Brundtland Report: meeting the development needs of the present without compromising the ability of future generations to meet their own needs (Our Common Future, 1987). The core argument is that we should be mindful of resource use and not consume more of existing resources than can be replaced, so that future generations will have the same opportunity for development. It is also worth recognising that reducing resource use will help mitigate climate change. While the definition in the Brundtland Report represents a general call for conscious behaviour, several more specific ‘calls to action’ can be identified. One with overriding importance is the increasing global water scarcity, a global challenge but with region-specific impacts. A recent United Nations report (Global Water Bankruptcy, 2026) highlights the seriousness of the water shortage that humanity is facing, assessing that humanity is living beyond water sustainability, as most water-related resources (rivers, lakes, aquifers, wetlands, and glaciers) are beyond full recovery; consequently, water-related risks have become systemic. It added that billions of people face water insecurity, and almost three-quarters of the global population live in countries classified as ‘water insecure’. Another serious topic is food security, and, equally worrying, food waste. A recent UN report states that in 2022, 1.05 billion tonnes, close to one-fifth of the available food, was wasted (UNEP Food Waste Index Report, 2024). With it, a considerable amount of resources is lost in growing and transporting the food in the first place, thereby having a strong negative impact on resource sustainability and on the dynamics of climate change. Land use offers another important focus, not least in connection with biodiversity loss.

    When we consider these aspects, the inherent interlinkage between sustainability (the misuse and overuse of resources) and the dynamics of climate change needs to be acknowledged. Yet sustainability is also closely aligned with the broader human environmental imprint, which, in turn, links it to core aspects of the Anthropocene discourse (setting aside the earlier call to describe a geological epoch). As such, resource extraction and resource (mis)use are critical aspects that link sustainability to the Anthropocene concept. Such a perception is also supported by a critical discussion within the Anthropocene movements: when exactly humanity started to generate a fundamental and recognisable impact on the earth. Ruddiman et al. (2015) focus far back in human history on the beginning of the agricultural era, while Delanty and Mota (2017) identify the 18th-century Industrial Revolution as the beginning of the Anthropocene. While the selection of each date can be well supported by different perceptions and interpretations, one could still argue that, from the perspective of resource use, the Industrial Revolution may be the more impactful and lasting event. After all, it can also be interpreted as the starting point of capitalism and as a never-ending demand for resources, pursued through a continuous economic growth strategy at all costs. Indeed, it is capitalism, with its relentless push for relentless economic growth and resource overuse, which undermines any long-term sustainable prospect for humanity. This unyielding pressure for continued economic growth also underlies the dynamics of climate change and thus fundamentally contributes to what I describe as the Environmental Complex Challenge.

    Returning to the Brundtland definition of sustainability, the primary demand is that humanity, indeed, every individual, must reconsider their use of resources to reduce the individual’s and, in extension, humanity’s environmental impact as much as possible. One may argue this is not only with a view towards future generations, but also with a view to the present. After all, reducing resource overuse will reduce air, water, and soil pollution, contributing to a healthy environment and a healthy life for everyone. It will also be an integral part of mitigating the climate change dynamic and, thus, climate change-related risks. However, one can argue that the list of public-professional references to sustainability exists longer than the list of references to the climate change dynamic, with a line of connected concepts and programs identifiable from the Brundtland Report (1987) to the Rio Declaration and its Agenda 21 (1992) to the Sustainable Development Goals (Agenda 2030). In addition, we could observe influential regional concepts related to sustainability, such as the Factor 4 approach, developed by von Weizsaecker, Lovins, and Lovins (1997), which advocates increasing resource productivity to achieve sustainable development. They emphasise that improving resource efficiency would not only enhance sustainable development by reducing resource overuse but also generate additional wealth. This concept reminds us again of the interlinkage between the environment, the economy, and society. This triangular relationship is a defining one for thinking about sustainability.

    Take, for example, climate change as part of the Environment Complex Challenge, of which sustainability is an inherent aspect. While it represents a global challenge, its impact is always local or regional, thereby affecting the individuals living in those areas. Examples include urban heat waves in Europe and South Asia, and widespread changes in rainfall patterns across Asia, which generate extensive negative impacts on vast rural communities that can last for years. Indeed, extreme weather events are becoming increasingly the norm and increasingly impactful. An estimation of the increasing costs associated with extreme weather events is provided by the World Economic Forum. While during the 1970-1979 decade, associated costs were USD 183.9 billion, they rose to USD 906.4 billion in the 1990-1999 decade, and to USD 1.5 trillion during the 2010-2019 decade (Charlton, 2023). Certainly, responding to extreme weather events by rebuilding and protecting is resource-intensive and therefore a challenge to sustainability in the long run or short run, depending on local circumstances. The threat of sea-level rise, again a global challenge with different local and regional implications, provides another good example. One just has to think about the various Asian megacities, from India to China, that are exposed to sea level rise. Or the threat of sea level rise to food security, when considering the potential devastating impact on the Mekong Delta, the ‘rice bowl’ of Vietnam. While localities and communities around the world are affected by climate change, some face a more severe challenge. We may take the case of Bangladesh, where rising sea levels may submerge wide parts of the country. Where will the people go? They will not stay to drown. As a consequence, tens of millions of climate refugees may move towards West Bengal, in India, and will not be stopped by security measures, when the alternative is drowning. Reducing resource use or increasing the productivity of its use will provide strong support for mitigating climate change by slowing the rate of CO2 increase. Once again, these factors highlight the linkages within the Environmental Complex Challenge and the role of sustainability within it.

     

    At the same time, humanity still faces a fundamental challenge: widespread underdevelopment. One approach to addressing this challenge was the establishment of Agenda 2030, with the aim of ending poverty and hunger in all their forms and dimensions. The sustainable use of resources and protection from environmental degradation are two of the stated goals. Acknowledging the challenges facing the majority of the human population, 17 goals with 169 associated targets were identified (UN Resolution, 2015). What is more, the 2030 Agenda also underscores the interlinkages between development and the climate change challenge. Not only can climate change undermine some of the success already achieved in addressing underdevelopment, but it also increases the challenge of achieving some of the 2030 Agenda goals. Fuso Nerini et al. (2019) assert that 16 of the 17 SDGs and 40 per cent of all targets are impacted by climate change. The climate change challenge to sustainable development is increasing, since we are failing to arrest the climate change dynamic. A recent assessment indicates that we can no longer remain below a 2°C increase, let alone the 1.5°C enhanced climate target agreed in the Paris Agreement. Instead, the predictions made in the last couple of years state that we will be reaching 2.7°C warming by the end of the century (Climate Action Tracker, 2024: 1).

    The Environment Complex Challenge highlights and supports another discussion, one related to reconsidering the object of security. While this topic is linked with the late-1980s to mid-1990s debate on the meaning and interpretation of security, by replacing the state as the object of security with a focus on the individual, the relevance of these challenges is as powerful as it was back then, considering the fundamental challenges humanity is facing; unsustainable use of resources, climate change dynamic, biodiversity loss, widespread pollution issues, and environmental destruction. Lipschutz (1995) states that individual security offers a broader recognition of the insecurity people face by including human welfare issues and underdevelopment. Similarly, Smith (2005) argues that security should focus on the real conditions of insecurity that people and collectives are facing. Such a strong focus on the individual, while the role of neither central nor regional governments should be ignored when addressing the sustainability and climate change challenge, is further justified because sustainable development and addressing climate change require a change of behaviour at the individual level. Otherwise, change will not happen. Indeed, it is our responsibility to bring about change and address the fundamental challenge to our future.

    Bibliography

    Brundtland Report (1987) World Commission on Environment and Development. Oxford University Press. https://www.brundtland.co.za/wp-content/uploads/2022/08/Brundtland-Report-1987-Our-Common-Future.pdf

    Charlton, E. (2023). This is what the climate crisis is costing economies around the world. World Economic Forum. https://www.weforum.org/stories/2023/11/climate-crisis-cost-global-economies/

     Climate Action Tracker (2024) Warming Projections Global Update. Climate Action Tracker.https://climateactiontracker.org/documents/1277/CAT_2024-11-14_GlobalUpdate_COP29.pdf

    Delanty, G., & Mota, A. (2017). Governing the Anthropocene: Agency, Governance, Knowledge. European Journal of Social Theory, 20(1), 9-38.

    GLOBAL WATER BANKRUPTCY Living Beyond Our Hydrological Means in the Post-Crisis Era

    The United Nations University Institute for Water, Environment and Health (UNU-INWEH)

    https://collections.unu.edu/eserv/UNU:10445/Global_Water_Bankruptcy_Report__2026_.pdf

    Nerini, F., F., Sovacool, B., Hughes, N., Cozzi, L., Cosgrave, E., Howells, M., Tavoni, M., Tomei, J., Zerriffi, H., & Milligan, B. (2019). Connecting climate action with other Sustainable Development Goals. Nature Sustainability, 2(8), 674–680.

    Lipschutz, R. D. (1995). On Security. In R. D. Lipschutz (Ed.), On Security (pp. 1-23). Columbia University Press.

    Ruddiman, W. F., Ellis, E. C., Kaplan, J. O., Dorian Q., & Fuller, D. O. (2015). Defining the Epoch We Live In. Science, 348(6230), 348-389.

    Smith, S. (2005). The Contested Concept of Security. In K. Booth (Ed.), Critical Security Studies and World Politics (pp. 27-62). Lynne Rienner Publisher.

    United Nations Environment Programme (2024). Food Waste Index Report 2024. Nairobi.
    UNEP Food Waste Index Report 2024
    https://wedocs.unep.org/bitstreams/5c6e505d-e1d3-4731-b5b8-4ecb9693a056/download

    UN Resolution (2015). Transforming our world: the 2030 Agenda for Sustainable Development. Resolution adopted by the General Assembly on 25 September 2015 70/1. 31, https:// digitallibrary.un.org/record/3923923?v=pdf.

    von Weizsäcker, E. U., Lovins, A. B., & L. H.(1997). Factor Four – Doubling Wealth, Halving Resource. Use Earthscan.

    [1] In early March 2024, the International Union of Geological Sciences confirmed the dismissal of recognition of the Anthropocene as a description of a new geological time.

  • Dynamics Of Trade Surplus

    Dynamics Of Trade Surplus

    While a trade surplus is usually seen as a positive sign of economic health because it indicates a country is exporting more than it imports, a persistent and large trade surplus, especially by major global players like China, has also generated geopolitical and economic tensions worldwide.

    Interestingly, in the decades preceding China’s emergence as a major exporter, from the end of World War II to the early 1970s, the United States ran trade surpluses, primarily due to its industrial strength and its role as a key exporter in the global market —a position China has only recently assumed.

    The issue of trade surplus is now becoming the new nuisance in global affairs. Those who benefit from it support it; others protest. However, the discussion of this topic arises from actions by US President Trump, who is attempting to manipulate trade tariffs to influence global trade in favour of the American economy. While a trade surplus is usually seen as a positive sign of economic health because it indicates a country is exporting more than it imports, a persistent and large trade surplus, especially by major global players like China, has also generated geopolitical and economic tensions worldwide. A recent US Treasury report accused China of disrupting the global economic balance through its substantial trade surplus. This article critically examines the financial mechanisms behind trade surpluses, the strategic narratives of developed nations, and the counter-narratives of developing economies, with a particular focus on China.

    The latest semi-annual US Treasury report (June 2025) did not label China as a currency manipulator but criticised its lack of transparency in managing the renminbi. Instead, it added countries such as Ireland and Switzerland to its “monitoring list” based on trade surplus and intervention metrics. The report highlights China’s opaque exchange rate practices and suggests that intervention through state tools (e.g., sovereign wealth funds) should be more closely monitored.

    Western media and think tanks argue that China’s surplus fuels its industrial oversupply, causing global spillovers and structural trade imbalances. This has harmed local industries in emerging economies by flooding markets with cheap Chinese goods made in factories connected to the Belt and Road Initiative. As a result, many of these countries are now imposing anti-dumping duties to safeguard their domestic industries.

    China’s larger economic footprint means its external balance continues to significantly influence trading partners.

    For China, a trade surplus serves both as a consequence and a policy. The IMF contends that China’s surplus mainly stems from internal macroeconomic factors — such as weak household consumption and excess industrial capacity — rather than intentional export strategies or outright manipulation. Although this surplus rate is lower than at the peak of the “China shock” in the 2000s, China’s larger economic footprint means its external balance continues to significantly influence trading partners. IMF models suggest that weak domestic demand — driven by property downturns and low consumer confidence — has caused a decline in consumption in China and has pushed the real renminbi lower, which in turn enhances exports. This has further amplified the trade surplus.

    However, Western policymakers and scholars argue that Beijing’s industrial model, underpinned by subsidies and exchange rate policies, amplifies this surplus into a global oversupply and trade friction. Brookings researchers describe this as a “mercantilist trade policy,” characterised by low domestic consumption, state-driven subsidies, and a focus on exports. The resulting surplus—now larger relative to global GDP than during the 2008 peak—puts pressure on trading partners despite US tariffs that have failed to reduce the bilateral trade deficit.

    Statistical Distortions: “Missing Imports”

    The most revealing statistic is that from 2018 to 2024, official US data revealed a $66 billion reduction in imports from China, while Chinese records indicated a $91 billion increase in exports to the US, a discrepancy of $157 billion. Much of this is due to the US de minimis rule, which permits parcels valued at under USD 800 to enter the country duty-free and bypass detailed customs reporting. E-commerce giants like Temu and Shein exploit this loophole, and 1.36 billion de minimis parcels entered the US market in 2024 alone, most of which originated from China. This underreporting skews trade data, underestimating China’s market reach and downplaying the structural impact of the surplus.

    Global Spillovers and E-commerce Consequences

    These surplus-driven shipments have severely impacted U.S. domestic retailers. However, bricks-and-mortar firms face import duties, labour regulations, intellectual property standards, and environmental rules. They cannot compete with low-value imports, which are not subject to duties or other regulations. Recent changes in U.S. policy have directly addressed the de minimis loophole, and an exemption for low-value Chinese imports was removed as of 2 May 2025, causing parcel duties to rise to 145%. This has caused small U.S. retailers to halt shipments, and platforms like Temu have been using local warehouses to circumvent fees, only to have the policy to be temporarily rolled back on May 14, highlighting the unstable political climate surrounding e-commerce regulation.

    Impact on Emerging Economies

    Developing countries are increasingly feeling the impact of China’s surplus-led export model. According to the World Bank, two-thirds of developing economies are expected to see their GDP growth slow from 4.2 per cent to 3.8 per cent by 2025, due to ongoing trade frictions, particularly between the US and China. Inexpensive Chinese goods, whether cheaper solar panels, electronics, or textiles, also pose a threat to emerging markets, and many are fighting back with anti-dumping duties and trade defence measures. At the same time, countries like Brazil, Indonesia, South Africa, and India have imposed tariffs, launched dumping investigations, and reconsidered their trade dependencies. Even countries that are traditionally aligned with China are concerned about the surging Chinese exports. An additional concern is that FDI in developing countries has declined to its lowest level since 2005, reaching just $435 billion in 2023. There is a risk that investment will fall further, raising concerns about investment, infrastructure, and poverty reduction.

    The Times article explains that Donald Trump’s tariffs did not reduce Chinese imports. Even with highly aggressive tariffs, the share of U.S. imports from China decreased by only 7 to 8 percentage points from 2018 to 2024, although industry estimates suggest that the actual fall in Chinese-origin goods entering U.S. supply chains is smaller (perhaps around 3 to 4 percentage points), due to relabelling and third-party routing.

    This raises stark questions about the effectiveness of the counter-tariff cycle. The overall outcome of this tariff war is simply a confusing and panicked state of affairs. The Times article explains that Donald Trump’s tariffs did not reduce Chinese imports. Even with highly aggressive tariffs, the share of U.S. imports from China decreased by only 7 to 8 percentage points from 2018 to 2024, although industry estimates suggest that the actual fall in Chinese-origin goods entering U.S. supply chains is smaller (perhaps around 3 to 4 percentage points), due to relabelling and third-party routing.

     Theoretical perspectives

    Dependency Theory and the Prebisch–Singer Hypothesis argue that developing countries experience declining terms of trade because they focus on primary goods, whereas industrialised nations retain advantages in high-value manufacturing. However, China has challenged this idea by dominating global markets in both primary and advanced products. As a result, we might reasonably conclude that even rising industrial powers, when driven by surplus, tend to uphold the global structures of dependency. Models like Unequal and Ecologically Unequal Exchange demonstrate how trade surpluses frequently involve a systematic undervaluation of labour and environmental costs in poorer countries, redirecting wealth to the Global North.

    These theories emphasise how global trade undervalues labour, worsens resource extraction, and causes environmental degradation, thereby transferring wealth from peripheral to core countries. Research suggests that Chinese-led global supply chains contribute to environmental damage and resource depletion in exporting countries, externalising ecological costs, which worsens the structural disadvantages for those nations. China’s GVC-enabled export surge often externalises ecological costs to commodity-exporting nations.

    Macroeconomic accounting theory states that a capital account deficit indicates a trade surplus, which means that for China, this results in capital inflows. Consequently, China needs to impose tight controls on its currency to maintain financial stability. With a current account surplus of approximately 3% of GDP, global capital flows, combined with managed exchange rates and the accumulation of foreign reserves—mainly US Treasuries—demonstrate structural policies designed to keep the renminbi weak and direct money into Western securities.

    The current trade environment is shaped by negotiation frameworks, such as the US–China truce, and tools, such as WTO rules and anti-dumping procedures. However, the US is now expanding its pressure on Europe, targeting its large goods surplus and digital tax regimes in an effort to rebalance trade.

    Global Debate

    IMF chief economist Pierre Olivier Gourinchas emphasised that “external balances are determined by macroeconomic fundamentals, not the link to trade and industrial policy, which is more tenuous”. The IMF analysis from the spring meetings similarly implies that internal imbalances (such as differences in savings and investment) influence external current account outcomes, and that China’s surplus reflects its high savings rate, low consumption, and industrial overcapacity. Therefore, while US officials describe China’s trade surplus as a sign of mercantilist excess, IMF analysis reminds us that external imbalances are a reflection of underlying macroeconomic divisions: in China’s case, a high savings rate, low consumption, and industrial overcapacity.

    Inderjit Gill, Chief Economist and Senior Vice President for Development Economics at the World Bank, said: “In the rest of the world, the developing world is now a development-free zone.”

    Surplus narratives are tools of structural power: while developed nations try to portray surplus as distortion, dumping, and manipulation to justify tariffs, subsidies, and monitoring, developing countries aim to reframe them as ecological exchange and dependency to highlight systemic inequalities

    Growth in developing economies, which has ratcheted down from 6 per cent in the 2000s to 5 per cent in the 2010s, and then to less than 4 per cent in the 2020s, mirrors the decline in global trade growth, from 5 per cent in the 2000s to around 4.5 per cent in the 2010s, and below 3 per cent in the 2020s. This illustrates the bilateral nature of the trade surplus. First, fundamentally, surplus narratives are tools of structural power: while developed nations try to portray surplus as distortion, dumping, and manipulation to justify tariffs, subsidies, and monitoring, developing countries aim to reframe them as ecological exchange and dependency to highlight systemic inequalities.

    China promotes an alternative narrative about its surplus, arguing that it stems from genuine investment, state-led development, and economies of scale, rather than protectionism or currency manipulation. Belt and Road infrastructure is presented as development, not geopolitical trap – although critics raise concerns of “debt-trap diplomacy”.

    Interestingly, in the decades preceding China’s emergence as a major exporter, from the end of World War II to the early 1970s, the United States ran trade surpluses, primarily due to its industrial strength and its role as a key exporter in the global market —a position China has only recently assumed.

    A paper by Robert Stehrer titled “What Is behind the US Trade Deficit?” published in ‘The Vienna Institute for International Economic Studies’ (WIW), traces the historical US trade deficit back to the 19th century and places it in a global context. A reading of it would show a broader narrative at play.

    Policy Roadmap

    Stricter transparency rules are essential to close statistical loopholes and create a level playing field by mandating the disclosure of foreign exchange interventions and de minimis trade flows (such as e-commerce transactions below US$800). These flows can artificially keep a country’s exports cheap and imports expensive, thereby inflating its trade surplus. Countries with persistent surpluses (exceeding 3% of GDP) should participate in a dialogue-based “Global Adjustment Protocol” that includes concessional finance for structural reforms, aiming to strike a balance between conditionality and developmental needs.

    One crucial step in this direction would be to include a green surplus index as part of a Green Current Account Score, which measures environmental degradation and natural resource depletion, thereby aligning surplus behaviour with sustainability goals.

    The urgent need is for reform of international organisations, liberating the IMF and WTO from Western dominance, transforming them into genuinely global entities or replacing them with organisations like the BRICS bank (NDB) and AIIB. Additionally, they should be empowered with greater authority to monitor global imbalances and suggest corrective measures, such as managing capital flows instead of imposing unilateral tariffs. This would help streamline WTO procedures, reducing delays, and defend policy space—such as supporting trade defence measures (anti-dumping duties, safeguards) by emerging economies.

    Conclusion:

    This article argues, through an economic analysis of current trade affairs, how hegemonic powers manipulate the political landscape. Trade surpluses are not merely economic aggregates—they are narrative tools in international power politics, with developed countries portraying surpluses as dumping or currency manipulation to justify tariffs and regulatory barriers. Conversely, surplus nations (both developed and emerging) describe their surpluses as the result of sound investments, economies of scale, and effective state guidance.

    From the macroeconomic surplus in the economy to the underreported e-commerce inflows, the reality of modern trade imbalances is far more complex than what mercantilist rhetoric suggests. An analysis of China’s experience demonstrates this point. The next phase of global trade reforms should emphasise transparency, robust multilateral regulations, and ecological responsibility. Beyond mercantilist rhetoric, there is a need for systemic frameworks that accurately reflect economic realities and sustainable goals—only then can tensions caused by surpluses be managed in a balanced and lasting manner.

     

     References:

     

    Feature Image Credit: Aljazeera.com

    Graphs Credits: Reddit; Financial Times; Statista

  • Why Nations succeed or fail: a Nobel cause

    Why Nations succeed or fail: a Nobel cause

    Daron Acemoglu, Simon Johnson and James A Robinson have been awarded the Nobel (really the Riksbank prize) in economics “for studies of how institutions are formed and affect prosperity.” Daron Acemoglu is a professor at the Massachusetts Institute of Technology. Simon Johnson is a professor at the same university. And James Robinson is a professor at the University of Chicago.

    Here is what the Nobel judges say was the reason for winning:

    Today, the richest 20 percent of countries are around 30 times wealthier than the poorest 20 percent of countries. The income gaps across countries have been highly persistent over the past 75 years.39 The available data also show that between-country disparities in income have grown over the past 200 years. Why are the income differences across countries so large and so persistent?

    This year’s Laureates have pioneered a new approach to providing credible, quantitative answers to this crucial question for humanity. By empirically examining the impact and persistence of colonial strategies on subsequent economic development, they have identified historical roots for the extractive institutional environments that characterize many low-income countries. Their emphasis on using natural experiments and historical data has initiated a new research tradition that continues to help uncover the historical drivers of prosperity, or lack thereof.

    Their research centers on the idea that political institutions fundamentally shape the wealth of nations. But what shapes these institutions? By integrating existing political science theories on democratic reform into a game-theoretic framework, Acemoglu and Robinson developed a dynamic model in which the ruling elite make strategic decisions about political institutions—particularly whether to extend the electoral franchise—in response to periodic threats. This framework is now standard for analyzing political institutional reform and has significantly impacted the research literature. And evidence is mounting in support of one of the model’s core implications: more inclusive governments promote economic development.

    Over the years (or is it decades?) I have posted on the work of various Nobel winners in economics.

    What I have found is that, whatever the quality of the winner’s work, he or she (occasionally) usually got the prize for their worst piece of research, namely work that confirmed the mainstream view of the economic world, while not actually taking us further into understanding its contradictions.

    This conclusion I think applies to the latest winners. The work for which they received the $1m prize is for research that purports to show that those countries that achieve prosperity and end poverty are those that adopt ‘democracy’ (and by that is meant Western-style liberal democracy where people can speak out (mostly), can vote for officials every so often and expect the law to protect their lives and property (hopefully). Societies that are controlled by elites without any democratic accountability are ‘extractive’ of resources, do not respect property and value and so over time do not prosper. In a series of papers applying some empirical analysis (ie correlating democracy (as defined) with levels of prosperity), the Nobel winners claim to show this.

    Indeed, the Nobel winners argue that colonisation of the Global South in the 18th and 19thcenturies could be ‘inclusive’ and so turn the likes of North America into prosperous nations (forgetting the indigenous population) or ‘extractive’ and so keep countries in dire poverty (Africa). It all depends. Such is the theory.

    This sort of economics is what is called institutional, namely that it is not so much the blind forces of the market and capital accumulation that drives growth (and inequalities), but the decisions and structures set up by humans. Supporting this model, the winners assert that revolutions precede economic changes and not that economic changes (or the lack thereof before a new economic environment) precede revolutions.

    Two points follow from this. First, if growth and prosperity go hand in hand with ‘democracy’ and the likes of the Soviet Union, China, and Vietnam are considered to have elites that are ‘extractive’ or undemocratic, how do our Nobellists explain their undoubted economic performance? Apparently, it is explained by the fact they started out poor and had a lot of ‘catching up’ to do, but soon their extractive character will catch up with them and China’s hyper-growth will run out of steam. Perhaps now?

    Second, is it correct to say that revolutions or political reforms are necessary to set things on the path to prosperity? Well, there may be some truth in that: would Russia in the early 20thcentury be where it is today without the 1917 revolution or China be where it is in 2024 without the revolution of 1949? But our Nobellists do not present us with those examples: theirs are getting the vote in Britain in the 19th century or independence for the American colonies in the 1770s.

    But surely, the state of the economy, the way it functions, the investment and productivity of the workforce also have an effect? The emergence of capitalism and the industrial revolution in Britain preceded the move to universal suffrage. The English Civil War of the 1640s laid the political basis for the hegemony of the capitalist class in Britain, but it was the expansion of trade (including in slaves) and colonisation in the following century that took the economy forward.

    The irony of this award is that the best work of Acemoglu and Johnson has come much more recently than in the past works that the Nobel judges have focused on. Only last year, the authors published Power and Progress , where they pose the contradiction in modern economies between technology driving up the productivity of labour but also with the likelihood of increased inequality and poverty. Of course, their policy solutions do not touch on the question of a change in property relations, except to call for a greater balance between capital and labour.

    What you can say in favour of this year’s winners is that at least their research is about trying to understand the world and its development, instead of some arcane theorem of equilibrium in markets that many past winners have been honoured for. It’s just that their theory of ‘catching up’ is vague (or ‘contingent’ as they put it) and unconvincing.

    I think we have a much better and more convincing explanation of the processes of catching up (or not) from the recent book by Brazilian Marxist economists Adalmir Antonio Marquetti, Alessandro Miebach and Henrique Morrone who have produced an important and insightful book on global capitalist development, with an innovative new way of measuring the progress for the majority of humanity in the so-called Global South in ‘catching up’ on living standards with the ‘Global North’. This book deals with all the things that the Nobel winners ignore: productivity, capital accumulation, unequal exchange, exploitation—as well as the key institutional factor of who controls the surplus.

     

  • Recalibrating India’s Act East Policy: New Realities in Myanmar and Bangladesh

    Recalibrating India’s Act East Policy: New Realities in Myanmar and Bangladesh

    On 23 September 2024, Reuters published a news item quoting unnamed sources that said that India had ‘ invited political and military opponents of Myanmar’s ruling junta to attend a seminar in New Delhi. Even as the lack of corroboration of such a report puts it in the realm of conjecture, it is worthwhile mulling over the motivations or otherwise for such a seminal event to be even contemplated, especially in the light of implications for India’s Act East Policy.

     

    TPF Occasional Paper: 10/2024

    Recalibrating India’s Act East Policy: New Realities in Myanmar and Bangladesh

    Maj Gen Alok Deb (Retd)

    On 23 September 2024, Reuters published a news item quoting unnamed sources that said that India had ‘ invited political and military opponents of Myanmar’s ruling junta to attend a seminar in New Delhi’[i]. The item went on to specify that the shadow National Unity Government (NUG) and ethnic minority rebels from the states of Chin, Rakhine and Kachin bordering India had been invited to a seminar in mid-November, to be hosted by the Delhi-based Indian Council of World Affairs (ICWA), a foreign policy think tank funded by the Government of India. The piece was also carried by some major Indian newspapers with its origin attributed to Reuters. At the time of writing, there has been no acknowledgement or rebuttal of this report by any government agency. Neither has the ICWA posted this on its website as a forthcoming event. Even as the lack of corroboration of such a report puts it in the realm of conjecture, it is worthwhile mulling over the motivations or otherwise for such a seminal event to be even contemplated, especially in the light of implications for India’s Act East Policy.

    A Summary of India’s Act East Policy

    India’s ‘Act East’ policy of 2014 is an initiative that takes off from its earlier ‘Look East’ policy. ‘Act East’ envisages initiatives at multiple levels with the nations of ASEAN and the wider Indo-Pacific region. These initiatives are to be taken forward through a process of continuous engagement at bilateral, regional and multilateral levels, thereby providing enhanced connectivity in its broadest sense, including political, economic, cultural and people-to-people relations.[ii]

    To successfully implement the ‘Act East’ policy, the Indian government is working to make the North East its strategic gateway to ASEAN. Accordingly, it has increased the allocation for the region’s development by more than four times over the last 10 years.[iii]  The North East is also poised to benefit from initiatives from countries like Japan which earlier this year had proposed developing an industrial hub in Bangladesh with supply chains to the North East, Nepal and Bhutan.[iv]

    As the North East becomes India’s gateway to ASEAN,  the centrality of Myanmar to our Act East becomes apparent. It is the key link in the road connectivity between India’s North East and other ASEAN nations whereby the free flow of inland goods, services and other initiatives to and from these nations to India can be ensured. The success or otherwise of Act East is thus directly affected by the security environment in Myanmar. Instability here will negatively impact our North Eastern states sharing borders with that country. The internal situation in Myanmar therefore becomes an area of prime concern for India, warranting close attention.

    For similar reasons, another neighbour, Bangladesh, is equally important for the success of India’s Act East Policy. India’s North East has benefitted from good ties with Bangladesh, both security-wise and economically. Militancy in the North East has reduced over the last decade and a half. With Bangladesh agreeing to provide access to its ports in the Bay of Bengal for the movement of Indian goods, the North Eastern states have a shorter route to the sea. Additionally, states bordering Bangladesh such as Assam and Meghalaya have developed trade links with that country for mutual benefit. The  BBIN (Bangladesh Bhutan India Nepal) Motor Vehicle Agreement for the Regulation of Passenger, Personal and Cargo Vehicular Traffic was signed in 2015 to ‘ promote safe, economically efficient and environmentally sound road transport in the sub-region and … further help each country in creating an institutional mechanism for regional integration’  is another mechanism for implementing our Act East and Neighbourhood First policies[v]. The role of Bangladesh here is pivotal.

    State of the Civil War in Myanmar

    Fighting in Myanmar is now in its fourth year. The military junta continues to suffer reverses on the battlefield. Large portions of Rakhine State and certain portions of Chin State are now under the control of the Arakan Army (AA). International Crisis Group has recently averred that ‘..in just a few months, the Arakan Army has created the largest area in Myanmar under the control of a non-state armed group – in terms of both size and population – and is now on the verge of securing almost all of Rakhine’[vi].

    In Shan state to the North, the Three Brotherhood Alliance (TBA) of three Ethnic Armed Organisations (EAOs) had by December 2023, captured over 20,000 square kilometres of territory, including key border crossings and trade routes between China and Myanmar in Operation 1027[vii].  On 07 March 2024, the Kachin Independence Army (KIA) launched Operation 0307 and successfully captured certain military posts across  Kachin State close to the Chinese border. This forced the Tatmadaw (Myanmar military) to redeploy, further thinning out forces[viii]. Fighting also continues in other states and regions across the country, notably Sagaing and Kayah.

    Associated Press deduces that ‘.. the announcement of the measure on state television amounts to a major, though tacit, admission that the army is struggling to contain the nationwide armed resistance against its rule..’.The Junta has since conscripted Rohingya youth and deployed them against the Rakhines. 

    Notwithstanding these losses, there is no let-up in the Tatmadaw’s efforts to combat the rebels. The Junta has resorted to conscription to stem rising attrition, activating an old law in this regard. Associated Press deduces that ‘.. the announcement of the measure on state television amounts to a major, though tacit, admission that the army is struggling to contain the nationwide armed resistance against its rule..’ [ix] To further contextualise, the same article stated the rebel National Unity Government’s (NUG) claim that more than 14,000 troops have defected from the military since the 2021 seizure of power. The Junta has since conscripted Rohingya youth and deployed them against the Rakhines. The Chins fear that they too will be acted upon similarly.[x]

    To overcome the asymmetry of force especially in artillery and airpower, the rebels have acquired large numbers of drones. These are being used to bomb military positions, contributing significantly towards the successes of the CNA’s operations[xi].  To summarise, Myanmar’s civil war continues to see-saw with no signs of ebbing. The Junta continues to make periodic peace overtures to the NUG with conditionalities that the latter is unwilling to accept[xii]. With the multiplicity of actors and issues involved, there are no clear indications of how and when the conflict will be resolved.

    Impact of the  Myanmar Conflict on India’s North-East

    The impact of Myanmar’s internal situation on India’s border states has progressively worsened. Initially, after the Junta takeover, it was Mizoram which bore the brunt. The state government citing common ethnicity and humanitarian concerns accepted the influx of Chins from Myanmar as a moral responsibility and initiated rehabilitation measures. These refugees along with earlier refugees from Bangladesh recently joined Kukis from Manipur, number around 44000 and continue to remain in refugee camps.[xiii] The Central government has had to reconcile its policy of preventing infiltration across borders with the societal realities of Mizoram. A positive outcome of this approach is that there has been no violence in Mizoram.

    In Manipur, by September 2024, the 18-month-long ethnic conflict had resulted in over 225 deaths and some 60,000 people displaced.[xiv] The administration has been derided by both sides, more so with recent warnings about impending threats to law and order[xv] followed by retractions[xvi]. People of either community have been uprooted from their homes and moved to safe areas separated by buffer zones guarded by security forces.  So great is the mutual suspicion that on the clamour of the Meiteis to replace the Assam Rifles, two battalions of this central force have been withdrawn and replaced by the Central Reserve Police Force (CRPF), against the wishes of the Kukis[xvii].

    Voices for an independent ‘Kukiland’ for the Kuki Zo peoples are being raised,[xviii] which are variously interpreted as a demand for greater autonomy within Manipur or for a separate union territory. The current happenings also dredge up the old ghost of ‘Zale’n-gam’ or Kuki nation, comprising the Chin Kuki Zomi peoples (including Mizos) residing across India, Bangladesh and Myanmar. Zale’n- gam has few takers and appears restricted to a YouTube channel[xix]. Today both sides fight each other with a variety of weapons including improvised rockets and drones. Hostage-taking is the latest tactic that has been adopted.[xx]

    Tension between the Nagas of Manipur and other communities is discernible with some reports of violence against the former.[xxi] As of now Nagas have kept out of the Kuki-Meitei dispute; also, other than the insurgent National Socialist Council of Nagaland ( Isak Muviah) faction (NSCN-IM) that is observing a ceasefire with the Centre, no other party has demanded integration of all Naga inhabited areas in India ( Arunachal Pradesh, Assam, Manipur) and Myanmar – the idea of  Greater Nagalim.

    At the state level, the responses of Mizoram and Manipur to the Myanmar crisis vary. This can be best seen in their reactions to the Centre’s recent notification to fence the entire 1643 Km Myanmar border and its earlier decision to end the Free Movement Regime that permits movement on both sides of the border for up to a distance of 16 km.[xxii]  While the Mizoram government and tribes living in both states oppose the decisions, the Manipur government clamours for its implementation. Currently, only around 30 Km of the border has been fenced.

    Since the Tatmadaw now has limited control over its border areas, it has become imperative for India to commence a structured dialogue with other warring parties in Myanmar’s border regions. This, with a view to restoring the situation in Manipur (and on the border) through mutually acceptable solutions at least for the short to medium term, is necessary. Only then can a modicum of security on the border be guaranteed. This involves navigating a maze of ethnic, religious, historical and societal issues with great sensitivity. The importance of such a dialogue cannot be overemphasised, more so because of recent developments in Bangladesh.

    The Impact of Bangladesh’s ‘Second Liberation’

    The events of 5 August 2024  that witnessed the overthrow of Sheikh Hasina’s government have proved to be yet another watershed in India-Bangladesh relations. India has invested more in the India-Bangladesh relationship than with any other neighbour in South Asia. A glance at the website of our Ministry of External Affairs[xxiii], where details of various agreements and summaries from the last Prime Ministerial meeting in Delhi in June 2024 are provided, will suffice to show just how strong and all-encompassing this relationship has become.

    Persons or organisations associated with the previous regime have either fled the country or been placed under arrest and assets confiscated. A few have been killed by mobs. Bank accounts of others have been frozen. Jamaat e Islami which collaborated with the Pakistan Army in 1971 has been resurrected. Extremists with proven murder charges against them have been freed from prison, as have political prisoners.

    At the time of writing, it is two months since the interim government headed by Chief Advisor Mohammed Yunus assumed charge.  The country continues to make efforts to reestablish the rule of law. All wings of the armed forces have been given magisterial powers[xxiv]. The functioning of the judiciary, higher civil services, local administration, police, security agencies, banking, economy, and higher education, is under review. Persons or organisations associated with the previous regime have either fled the country or been placed under arrest and assets confiscated. A few have been killed by mobs. Bank accounts of others have been frozen.[xxv] The Jamaat e Islami which collaborated with the Pakistan Army in 1971 has been resurrected. Extremists with proven murder charges against them have been freed from prison, as have political prisoners. Commissions have been set up to suggest reforms in the constitution, electoral system, police, judiciary, public administration and in tackling corruption.  Elections do not seem to be on the horizon yet. The advisers ( as the ministers are currently known) are new faces, not well known in India.

    While this paper does not attempt to be a study of India-Bangladesh relations, the polarised politics in that country coupled with a perception that the misdeeds of Sheikh Hasina’s government were conducted with impunity because of Indian backing, is sure to impact India’s portrayal here.

    With the removal of Sheikh Hasina, the India-Bangladesh relationship is undergoing a major reset. Statements of certain public figures and sentiments of a section of the population in that country suggest that a different perspective on the evolution of Bangladesh as a nation from 1971 onwards is emerging. While this paper does not attempt to be a study of India-Bangladesh relations, the polarised politics in that country coupled with a perception that the misdeeds of Sheikh Hasina’s government were conducted with impunity because of Indian backing, is sure to impact India’s portrayal here. This will make it an arduous task for both countries to go back to the trusted, cooperative and mutually beneficial relationship that existed. As mentioned, the list of achievements for both countries is far too numerous –  settlement of land and oceanic borders,  road, rail and riverine connectivity (including use of ports), economy and business ( both government and private), education including educational scholarships, technology, disaster management, border management, maritime security, military to military cooperation, improved people to people contacts, culture and health. As per records, of the 16 lakh visas issued by India for Bangladesh nationals in 2023, 4.5 lakhs were for medical treatment alone[xxvi]. Economies are so embedded that everyday necessities like onions are exported regularly to Bangladesh ( approximately 6 to 7 lakh tonnes annually).

    Even as the new regime provides assurances on the security of minorities and acknowledges India as an important neighbour, the enthusiasm with which it has interacted with official interlocutors from a host of nations worldwide especially China, Pakistan and the US is noteworthy and indicates where its newfound priorities might lie.

    A parallel reality, however, is that negative perceptions about India have historically found space in sections of Bangladesh’s polity. These have received a huge fillip after the change of regime with even settled agreements prone to misunderstanding. A recent example pertains to a tripartite agreement dating back to the Hasina period whereby electricity is to be imported from Nepal via India to Bangladesh. The agreement was signed in Kathmandu in the first week of  October 2024. Newspaper reports from Bangladesh indicate that there is palpable resentment over the condition that Indian transmission systems inside Indian territory be utilised for this purpose since it increases costs per unit of electricity in Bangladesh.[xxvii] Another issue currently bedevilling relations is the state of minorities in Bangladesh who have faced attacks on their homes, businesses and religious places with some loss of life, since the protests in July. India’s concerns in this regard have been conveyed at the highest level. Even as the new regime provides assurances on the security of minorities and acknowledges India as an important neighbour, the enthusiasm with which it has interacted with official interlocutors from a host of nations worldwide especially China, Pakistan and the US is noteworthy and indicates where its newfound priorities might lie.

    Larger Implications for India

    Bangladesh and Myanmar are pivotal for India’s Act East policy from the security, economic and connectivity angles. The issues pertaining to Myanmar and Manipur have been brought out earlier. A common concern affecting both nations and  India is the Rohingya crisis. Despite international pressure and requests from Bangladesh for China to intercede with Myanmar on its behalf, there has been no positive response from Myanmar. Bangladesh, which currently hosts close to one million refugees,[xxviii] has publicly expressed its inability to accommodate any more Rohingyas and asked for a speedy ‘third country settlement’ [xxix]. A detailed report of the International Crisis Group (ICG) in October 2023[xxx]provides details of activities of militant organisations like the Rohingya Solidarity Organisation (RSO) and Arakan Rohingya Salvation Army (ARSA) which are involved in drug running from Myanmar along with Bangladeshi syndicates for sale of the product in that country. Their participation in violent crime and other illegal activity has become a pressing concern within Bangladesh. Rohingyas have infiltrated into India as well, and have been identified as far North as Jammu. The security implications of such migration for both Bangladesh and India are apparent. The insensitivity of the Myanmar Junta on this account is heightening security risks for India and Bangladesh and merits diplomatic intervention.

    With the situation in Bangladesh evolving by the day, it is prudent for India to take a strategic pause as it weighs its options for pursuing its Act East policy. While giving the new regime in Bangladesh its due, India has to consider the impact of resurgent forces aided by inimical powers that aim to derail the India-Bangladesh relationship beyond repair. Even as both countries attempt to reestablish strong ties, the old adage preached by educated Bangladeshis in the context of support to Sheikh Hasina’s regime that ‘India should not put all its eggs in one basket’ resonates. While Myanmar geographically cannot provide the singular advantages that Bangladesh can, it is time for India to press for securing Myanmar’s cooperation to complete pending projects in that country, such as the Kaladan Multi-Modal Port Project (KMMPP) via Sittwe and Paletwa, that provides an alternate route to our North East, as well as the Trans Asian Highway (TAH) that provides connectivity with the rest of ASEAN, amongst others.

    To summarise, two possible reasons for inviting rebel Myanmar groups to Delhi could be: first, the relative viability of either Bangladesh or Myanmar to help implement the Act East policy in light of the emerging situation in Bangladesh and the state of the civil war in Myanmar. The second, ensuring security on the India-Myanmar border, to prevent aggravating the situation in India’s border states.

     

    Notes:

    [i] ‘Exclusive: India extends unprecedented invite to Myanmar’s anti-junta forces, sources say’ Wa Lone and Devjyot Ghoshal Reuters September 23, 2024

    [ii] ‘Govt aims to make Northeast gateway of ‘Act East Policy’: President Murmu’ Press Trust of India 27 June 2024.

    [iii] Ibid.

    [iv] ‘Japan to tie landlocked Northeast India with Bangladesh’  Saleem Samad  The Daily Messenger 05 March 2024.

    [v] Press Information Bureau Government of India Ministry of Shipping note dated  10 June 2015

    ‘Bangladesh, Bhutan, India and Nepal (BBIN) Motor Vehicle Agreement for the Regulation of Passenger, Personal and Cargo Vehicular Traffic amongst BBIN’

    [vi]   ‘Breaking Away: The Battle for Myanmar’s Rakhine State Asia Report N°339 | 27 August 2024’ International Crisis Group (Executive Summary).

    [vii]   ‘As Myanmar’s Junta Loses Control in the North, China’s Influence Grows’  Jason Tower, United States Institute for Peace, August 1, 2024.

    [viii] Ibid.

    [ix]   ‘Facing setbacks against resistance forces, Myanmar’s military government activates conscription law ‘ Associated Press, February 12, 2024.

    [x] ‘India’s ‘Forgotten Partition’ and the Myanmar Refugee Crisis’  Swapnarka Arnan The Diplomat  11 May 2024.

    [xi] ‘We killed many … drones are our air force’: Myanmar’s rebels take on the junta from above. Aakash Hassan and Hannah Ellis-Petersen  The Observer 20 January 2024.

    [xii] ‘Armed Groups Snub Myanmar Junta ‘Peace’ Offer’  The Irrawaddy 28 September 2024

    [xiii] ‘Centre provides 1,379 MT rice to Mizoram for Manipur, Myanmar, B’desh refugees’ Morung Express 25 September 2024.

    [xiv] ‘Ethnic violence in India’s Manipur escalates, six killed’  Tora Agarwala Reuters  September 7, 2024

    [xv] ‘900 Kuki militants infiltrated Manipur from Myanmar, says Security Advisor’ India Today NE September 20 2024.

    [xvi] ‘Input on infiltration by 900 Kuki militants could not be substantiated on the ground, says Manipur security advisor’ Vijaita Singh The Hindu 26 September 2024.

    [xvii] ‘Kukis call removal of Assam Rifles from 2 Manipur areas ‘biased, appeasement’, Meiteis call it ‘victory’  Ananya Bhardwaj  The Print 04 August 2024.

    [xviii]‘ Manipur: Kuki-Zo organizations hold rallies, demand separate ‘Kukiland’ for peace  by Northeast News

    August 31, 2024.

    [xix] YouTube channel titled ‘Zalengam Media’.

    [xx] ‘Kuki militants seek release of ‘secessionist’ in Manipur’ Prawesh Lama and Thomas Ngangom Hindustan Times Sep 30, 2024.

    [xxi] ‘Keep us out of your war, Manipur Naga body warns two warring communities’  The Hindu Bureau 06 February 2024

    [xxii] ‘Government sanctions ₹31,000 crore to fence Myanmar border’   The Hindu

    Published – September 18, 2024

    [xxiii] Ministry of External Affairs, Government of India website mea.gov.in.

    [xxiv] ‘Navy, the air force also granted magistracy powers’  The Daily Star September 30 2024

    [xxv] ‘Bank accounts of Joy Putul Bobby frozen’ Dhaka Tribune 30 Sep 2024.

    [xxvi] ‘Indian High Commission in Dhaka, facing protests & threats, returns 20,000 visa applicants’ passports ‘ Ananya Bhardwaj  The Print   29 September 2024.

    [xxvii] ‘Bangladesh delegation in Nepal to sign the contract to import 40 MW electricity’ Dhaka Tribune 30 September 2024.

    [xxviii] Operational Data Portal of the United Nations High Commissioner for Refugees, for Bangladesh.

    [xxix] ‘Bangladesh calls for faster resettlement process for Rohingya’ Ruma Paul  Reuters  September 8, 2024

    [xxx] ‘Rohingya Refugees in Bangladesh: Limiting the Damage of a Protracted Crisis’ International Crisis Group Autumn Update 04 October 20223.

     

    Feature Image Credit: What does Sheikh Hasina’s resignation mean for India-Bangladesh relations? – aljazeera.com 

    Map Credit: National Online Project

    Bangladesh Parliament Image: The Shattered Identity of a Nation: From Liberation to Chaos – borderlens.com

    Sheikh Mujibur Rahman’s Statue: Bangabandhu to Toppled Statue: Mujibur Rahman’s contested legacy post Bangladesh upheaval – Economic Times

     

  • China has achieved escape velocity: it is now unstoppable

    China has achieved escape velocity: it is now unstoppable

    The 21st century is shaping up to be the Asian, Eurasian, and Chinese century.

    While the Hegemon spent at least $7 trillion – and counting – on unwinnable Forever Wars, China is spending $1 trillion in an array of Belt and Road Initiative (BRI) projects across the Global South: the emphasis is digital/transportation connectivity corridors. Geoeconomic imperatives intertwined with rising geopolitical influence.

    The four-day, twice-a-decade plenum of the Communist Party of China that took place last week in Beijing, designing an economic road map all the way to 2029, was a stunning affair in more ways than one.

    Let’s start with continuity – and stability. There’s no question after the plenum that Xi Dada, or The Big Panda, will stay on the helm until 2029 – the end of the current five-year economic drive.

    And if Xi is healthy enough, he will stay until 2035: the fateful and uber-game-changing target year for China to exhibit a GDP per capita of $30,000, with massive worldwide reverberations.

    Here, we see the confluence between the progression of “socialism with Chinese characteristics” and the defining contours, if not of a Pax Sinica, at least of the non-Hegemon-centric, multi-nodal world (italics mine).

    The proverbial U.S. Think Tankland/Sinophobia axis has been hysterical on China not being able to sustain a 5% a year growth rate for the next few years – the target once again stressed at the plenum.

    The Chinese themselves have not bothered about the growth rate for a long time, since in 2018 they switched to a strategy of so-called qualitative development, that is, not at the expense of traditional industries, but on the basis of high technologies and the creation of new areas, such as the production of new energy sources and artificial intelligence.

    A Russian analysis by the Center for Geopolitical Forecasts makes a crucial point: “The Chinese themselves have not bothered about the growth rate for a long time, since in 2018 they switched to a strategy of so-called qualitative development, that is, not at the expense of traditional industries, but on the basis of high technologies and the creation of new areas, such as the production of new energy sources and artificial intelligence.”

    That’s the rationale behind Made in China 2025 – which is being implemented at breakneck speed: high-tech development leading the way towards a “high-level socialist market economy”, to be consolidated by 2025 and fully constructed by 2035.

    The next step will be to attain the status of “modernized socialist power” by 2049, at the 100th anniversary of the People’s Republic of China (PRC).

    The plenum proved once more that “socialism with Chinese characteristics” – or, for the recalcitrant, Chinese-modified capitalism – is “people-centric”. The supreme values are national interest and the people’s interests – attested by the fact that large private corporations remain under the strategic control of the CPC.

    It’s idle to try to find in the final communique at the end of the plenum any restrictions on private capital on the path to “universal prosperity”. The key point is that the role of capital should always be subordinated to the concept of “socialism with Chinese characteristics”.

    Watch the reform ship steadily sailing

    Everything is explained here in nearly didactic terms, chronicling the birth of the “Decision of the CPC Central Committee on further comprehensive deepening of reforms to promote Chinese modernization”.

    What is now already referred to colloquially all across China as “The Decision” spreads across 15 parts and 60 articles, divided into three main sections, proposing more than 300 important reforms.

    “The Decision”, in full, has not yet been published; only the road map of how Beijing planners got there. Of course, this is no mere policy paper; it’s a quintessentially CPC-style dissertation in which the details of economic and political measures are obscured by clouds of images and metaphors.

    Take a look, for instance, at this passage:

    “To ensure that the reform ship sails forward steadily, the ‘Decision’ proposes that further comprehensive deepening of reform must implement the “six principles”: adhere to the party’s overall leadership, adhere to the people-centred approach, adhere to the principle of maintaining the integrity and promoting innovation, adhere to system building as the main line, adhere to the comprehensive rule of law, and adhere to a systematic approach.”

    Most of the “Decision” – 6 parts in a total of 13 – is about economic reform. Will China pull it off? Of course, it will.

    Just look at the precedents. In 1979, the Little Helmsman Deng Xiaoping started to transform a nation of farmers and peasants into a well-oiled machine of efficient industrial workers. Along the way, GDP per capita was multiplied by no less than 30 times.

    Now, the ramifications of Made in China 2025 are turning a nation of factory workers into a nation of engineers. Of 10,5 million university graduates a year, a third are engineers.

    The emphasis on AI has led, among other examples, to the automobile industry being able to produce a $9,000 EV in complete automation and make a profit. China is already a global leader in EVs (BYD building plants in Brazil, Thailand, Turkey, Hungary), solar power, drones, telecom infrastructure (Huawei, ZTE), steel, shipbuilding – and soon, also semiconductors (thank you, Trump sanctions).

    While the Hegemon spent at least $7 trillion – and counting – on unwinnable Forever Wars, China is spending $1 trillion in an array of Belt and Road Initiative (BRI) projects across the Global South: the emphasis is digital/transportation connectivity corridors. Geoeconomic imperatives intertwined with rising geopolitical influence.

    Hegemon hysteria aside, the fact is the Chinese economy will grow by a whopping $1.7 trillion only in 2024. That is more than in all but the last three years – because of the Covid effect.

    And Beijing borrowed exactly zero yuan for this growth. The U.S. economy, by comparison, may grow by $300 billion in 2024, but Washington had to borrow $3.3 trillion for that to happen.

    Researcher Geoff Roberts has compiled a very useful list of what China is doing right.

    And when it comes to the nitty gritty, the numbers are staggering. Here are just a few, apart from GDP growth:

    • Foreign goods trade is up 6.1% to $2.9 trillion year-on-year.
    • The trade surplus is at $85 billion, up 12% compared to 2023.
    • ASEAN trade is up by 10.5% to $80 billion; China is the number one trade partner of individual ASEAN members.
    • China had a record crop of 150 million tons of cereal grains.
    • The courier sector handled 80 billion parcels, up 23% year-on-year.
    • SMIC is the world’s number two pure-play foundry after Taiwan’s TSMC.
    • China Telecom paid $265 million for 23% of QuantumCTek, the patenter of Micius, the world’s first quantum communications satellite.
    • Commercial aerospace launched 39% of China’s 26 rockets.
    • Invention patents rose 43% to 524,000. China is the first country with 4 million domestic invention patents in force.
    • Baidu’s 1,000 robotaxis in Wuhan will break even in Q4 and will be profitable next year.
    • China has 47% of the world’s top AI talent. It added no less than 2000 AI courses to school and college curricula since 2019.
    • On world-class institutions doubling as research leaders, 7 out of 10 are Chinese, including the top one: the Chinese Academy of Sciences, ahead of Harvard.

    Exceptionalist China “experts” believe their own fantasy that the U.S. allied with occupied Japan, Germany and South Korea would be able to match and surpass China’s pull with the Global Majority, because they have more resources and more capital.

    Nonsense. Even more nonsense is to believe that the Hegemon’s NATO “partners” – as in vassals – will follow the leader in creating cutting-edge technology.

    The high-speed train that matters has already left the station. The 21st century is shaping up to be the ‘Asian, Eurasian, and Chinese’ century.

     

    Feature Image Credit: The Diplomat

    The article is republished from the Strategic Culture Foundation.

  • “And Now to some serious Governance”

    “And Now to some serious Governance”

    A time comes for each leader and government to rise above pettiness, discarding ill will and hatred towards all. For the BJP, now uniquely in its third term, this is the time to show the nation that it is a party with a difference. For the opposition equally, this is the time to cooperate with the government on critical issues impacting the country.  

     

    Since my retirement from active service, I have avoided politics and political writings like the plague, but the avoidable happenings of the past few months have caused me, like am sanguine would have to millions of our countrymen, pain and a sense of despair.

    India has conducted over 18   general elections to its Parliament since 1952 with a lot of fury and vibrancy, but the Lok Sabha 2024 general elections were indeed an example of abysmally low-level politics transcending our better senses.

            How the world’s largest democracy indulged in its Lok Sabha 2024 elections was hardly complimenting to it considering the unquestionable fact that among the emerging nations in the world, call it from the Global South, the conduct of our elections showed some among those participating in poor light. Between competing political parties, enlightened debates and mutual civility were sadly lacking.   India has conducted over 18   general elections to its Parliament since 1952 with a lot of fury and vibrancy, but the Lok Sabha 2024 general elections were indeed an example of abysmally low-level politics transcending our better senses. India, which carries a fair amount of moral authority and is considered an example of a true and vibrant democracy, cannot let its hallowed image be sullied attributable to the selfish electoral games of some of its political leaders. The party in power at the Centre, the principal Opposition party and all those regional parties at the helm in the states have to display adequate maturity and a modicum of propriety and civility towards each other and not politicize each and every aspect of governance or national issues impacting India. The opposition, as it shows the mirror to the government on critical issues of governance, must not criticise each and every act of the government as a matter of routine.

             With the outcome of the general elections now done and dusted and the previous BJP government back in power, albeit with a clear reduction in its seats tally from 303 down to 240, it must get down to the exacting business of good governance from the Centre. That the same government, with its experience of the last ten continuous years in power, fielding more or less the same faces in the Cabinet in critical ministries and importantly serviced by the same bureaucrats should have, relatively speaking, not such an arduous task in governance. However, the thrust for fair, equitable, and sensitive handling of all critical matters across the nation has to come from the top political leadership. All our states must never feel discrimination by the Centre, especially in financial allocations urgently required for developmental works and disaster management. Additionally, the new government must take stern measures to keep rising inflation and unnecessary governmental expenditure under check before the economy takes a severe nose-dive.

             The Modi government, with the continuous experience of the last ten years, will have more than a good idea of the systemic improvements required and about areas needing additional financial resources and effort. It is unnecessary to worry too much about criticisms from the opposition but to carry on regardless in developmental works, without fear or favour, and with impartiality towards all the states in the true spirit of federalism. A time comes for each leader and government to rise above pettiness, discarding ill will and hatred towards all. For the BJP, now uniquely in its third term, this is the time to show the nation that it is a party with a difference. For the opposition equally, this is the time to cooperate with the government on critical issues impacting the country.

             New Delhi’s hands will be full of the nation’s diverse and formidable challenges, requiring attention and effectiveness. On the foreign policy front, India will have to walk the tightrope of maintaining strategic autonomy and sustaining its good relations with both the US and Russia. However, as it determinedly confronts an overly assertive China, India needs to use its economic clout and sophisticated diplomacy to get its South Asian neighbourhood closer to it and each other, avoiding the debt trap diplomacy and financial machinations of China.

    The number of terror-related incidents in J&K has gone up substantially in the last three months, and Pakistan will have to be kinetically chastened.

          India must, at the appropriate level, convey to China that their confrontationist attitude towards us will be harmful to the Chinese, too and may propel India to rethink its existing Tibet policy. Nevertheless, India must maintain the utmost vigil along the 3485 km Line of Actual Control/ IB, which it shares with  China. Meanwhile, Pakistan once again needs to be cautioned against stepping up terror activities in J&K  or elsewhere in the Indian hinterland. India is in full knowledge of Pakistan’s many fault lines. Still, it has refrained from exploiting these, and Pakistan must also cooperate in ensuring a peaceful and prosperous South Asian neighbourhood independent of China’s wily stratagems. The number of terror-related incidents in J&K has gone up substantially in the last three months, and Pakistan will have to be kinetically chastened.

    Meanwhile, India’s preparations to successfully improve its security capabilities to confront a two-front war must go ahead with realism and an unfailing determination. Measures to augment capital expenditure for major defence acquisitions must be identified. Transformative defence reforms like the introduction of integrated theatre commands will need the attention of the Centre. In addition, India must take all steps to restore peace in our restive NE states.

             The Modi government has come in for some criticism abroad on its human rights record and dealings with its Muslim population. This unjust criticism must be dealt with judiciously and with maturity. India’s overall inclusiveness and celebration of its diversity are unique examples for the entire world, especially the nations of the Global South. We must never deviate or be even seen to shift from this noble orientation.

    Reduction of the yawning gap between the countless ultra-rich and those millions in abject poverty is essential as we boast of becoming the 5th largest economy in the world. The many human indices where we are faltering also need to be addressed.

             As economic strength is the pillar that propels and sustains progress, the Modi government must take measures to improve our economic health. Reduction of the yawning gap between the countless ultra-rich and those millions in abject poverty is essential as we boast of becoming the 5th largest economy in the world. The many human indices where we are faltering also need to be addressed.

             By all yardsticks, India is deservingly on the cusp of acquiring a seat on the global high table. Let us not squander away this golden opportunity by internal squabbling but instead work together in addressing crucial issues that affect our nation; we must seize this opportunity.

    Feature Image Credit:  vskbharat.com    

    Cartoon Credit: Times of India

  • The catastrophe of modern capitalism: Inequality as an aim in Neo-Liberal-Ideology

    The catastrophe of modern capitalism: Inequality as an aim in Neo-Liberal-Ideology

    Neoliberalism is the dominant form of capitalism that began in the 1980s as a way to promote global trade and grow all economies. That was a false promise, whereas in essence it supported individuals amassing massive wealth in the name of market forces, at the expense of common man by ensuring states minimise their role and eliminate welfare economics. It ensured least-developed and developing economies remained resource providers to developed economies, exemplifying extraction and exploitation. Neoliberalism is a top down economic policy that does not benefit those who are impoverished. The inequality we see on a global scale is mind-numbing. In 2006, the world’s richest 497 people were worth 3.5 trillion US dollars representing 7% of the world’s GDP. That same year, the world’s lowest income countries that housed 2.4 billion people were worth just 1.4 trillion US dollars, which only represents 3.3% of the world’s GDP. The situation today is far worse as Andreas Herberg-Rothe explains in his critical analysis below. The world is in urgent need of freeing itself from the clutches of neoliberal capitalism. 

     

    ..neoliberalism contains a general tendency towards an extensive economisation of society. Thus, inequality transcends the economy and becomes the dominant trend in society, as in racism, radical extremism, and hate ideologies in general: Us against the rest, whoever the rest may be.

     

    Following on from the initial question about Hannah Arendt’s thesis that equality must be confined to the political sphere, we must ask how democracy and human rights can be preserved in the face of social inequality on an extraordinary scale. By the end of this century, 1% of the world’s population will own as much as the “rest” of the other 99%. And already today, only 6 people own more property than 3.6 billion. Let us take a closer look at some of the ideas of the currently dominant neo-liberalism, which sheds some light on the acceptance of these current obscene inequalities. For this ideology, social inequality is a means to greater wealth. However, since it sets no limits on social inequality, it can be used to legitimize even obscene inequalities. We argue that neoliberalism as an ideology is the result of the spread of a specific approach to economic thought that has its roots in the first half of the twentieth century, when Walter Lippmann’s seminal book “An Inquiry into the Principles of the Good Society” (1937), followed by Friedrich August von Hayek’s “The Road to Serfdom” (1944), gave rise to neoliberalism. During the Cold War period, neoliberals gained more and more ground in establishing a global system. With the support of Milton Friedman and his “Chicago Boys,” the first attempt to establish a pure neoliberal economic system took place in Chile under the military dictatorship of General Pinochet in the 1970s. In the last decade of the Cold War, neoliberal architects such as Margaret Thatcher and Ronald Reagan began to impose the new economic model. Since the end of the Cold War, the final development was that neoliberalism became THE hegemonic economic system, as capitalism was de jure allowed to spread unhindered worldwide, and neoliberalism continued on its way to becoming the dominant belief system.

    The critical message in this sense is the following: This process is not limited to an economic dimension – neoliberalism contains a general tendency towards an extensive economisation of society. Thus, inequality transcends the economy and becomes the dominant trend in society, as in racism, radical extremism, and hate ideologies in general: Us against the rest, whoever the rest may be.

    When we talk about global inequality in the era of neoliberalism, we are referring to two other major developments: To this day, inequality between the global North and South persists. While the total amount of poverty has decreased, as seen in the World Bank’s report (2016), there is still a considerable gap between those countries that benefit from the global economy and those that serve as cheap production or commodity areas. The second development takes place in countries that are more exposed to the neoliberal project. In this sense, societies are turning into fragmented communities where the “losers of neoliberalism” are threatened by long-term unemployment, a life of poverty, social and economic degeneration.

    After three decades of intense global neo-liberalism, the result has been a significant increase in social inequalities, polarization and fragmentation of societies (if not the entire world society), not to mention a global financial crisis in 2008 caused by escalating casino capitalism and the policies of a powerful global financial elite.

    We are witnessing a global and drastic discontent of peoples, fears and anger, feelings of marginalization, helplessness, insecurity and injustice. After three decades of intense global neo-liberalism, the result has been a significant increase in social inequalities, polarization and fragmentation of societies (if not the entire world society), not to mention a global financial crisis in 2008 caused by escalating casino capitalism and the policies of a powerful global financial elite. We witness a global and drastic dissatisfaction of the peoples, fears, and anger, the feelings of marginalization, helplessness, insecurity, and injustice. After three decades of intense worldwide Neo-Liberalism, the result significantly intensified social inequalities, polarization, and fragmentation of societies (if not the entire world society), not to mention a global financial crisis in 2008 caused by escalating casino capitalism and the policy of a powerful global finance elite.

    The central critique is that neoliberalism includes social inequality as part of its basic theory. Such capitalism emphasizes the strongest/fittest (parts of society) and uses inequality as a means to achieve more wealth.

    Remarkably and frighteningly, the situation outlined does not provoke the oppressed, marginalised, and disadvantaged populations to turn against their oppressors and their exploitation. These people tend to sympathize with ideological alternatives, either with more triumphant (right-wing) populist movements and parties or are attracted by radical/fundamentalist religious groups such as the Islamic State. The result is an increase in polarization and violence, and even more protracted wars and religious-ideological disputes. Europe is not exempt from the trend toward obscene social inequality. We also find a polarization between rich and poor, between those who have good starting conditions and those who have little chance of prosperity, between those who are included and those who feel excluded. The fact that Europe has so far largely avoided populist parties gaining administrative power (although we have already witnessed this process in France, Hungary and Poland) may be due to the remnants of the welfare state. In this respect, at least a minimum of financial security remains and limits the neoliberal trend. In the United States, on the other hand, a flawless populist could reach the highest office. The people, stuck in their misery, fear and insecurity, voted for a supposed alternative to the neoliberal establishment, but above all against other social outcasts whom they blamed for their misery. This brings us to the central critique of neoliberalism, a system that has caused fundamental social oddities, the impact of which as an ideology has been highlighted above. The central critique is that neo-liberalism includes social inequality as part of its basic theory. Such capitalism emphasizes the strongest/fittest (parts of society) and uses inequality as a means to achieve more wealth.

    In an interview with the German magazine Wirtschaftswoche, Hayek spoke bluntly about the neoliberal value system: He emphasizes that social inequality, in his view, is not at all unfortunate, but rather pleasant. He describes inequality as something simply necessary (Hayek, 1981). In addition, he defines the foundations of neo-liberalism as the “dethronement of politics” (1981). First, he points out the importance of protecting freedom at all costs (against state control and the political pressure that comes with it). The neoliberals see even a serious increase in inequality as a fundamental prerequisite for more economic growth and the progress of their project. One of the most renowned critics of neoliberalism in Germany, Christoph Butterwegge (2007), sees in this logic a perfidious reversal of the original intentions of Smith’s (reproduced in 2013) inquiry into the wealth of nations in the current precarious global situation. The real capitalism of our time – neoliberalism – sees inequality as a necessity for the functioning of the system. It emphasizes this statement: The more inequality, the better the system works. The hardworking, successful, and productive parts of society (or rather the economy) deserve their wealth, status, and visible advantage over the rest (the part of society that is seen as less strong or less ambitious). The deliberate production of inequality sets in motion a fatal cycle that leads to the current tense global situation and contributes to several intra-societal conflicts.

    The market alone is the regulating mechanism of development and decision-making processes within a society dominated by neo-liberalism, and as such is not politics at all. This brings us closer to the relationship between neoliberalism and democracy. The understanding of democracy in neoliberal theory is, so to speak, different. Principles such as equality or self-determination, which are prominent in the classical understanding of democracy, are rejected. Neo-liberalism strives for a capitalist system without any limits set by the welfare state and even the state as such, in order to shape, enforce and legitimize a society dominated only by the market economy. Meanwhile there are precarious tendencies recognizable, where others than the politically legitimized decision-makers dictate the actual political and social direction (e.g. the extraordinarily strong automobile lobby with VW, BMW and Mercedes in Germany or big global players in the financial sector like the investment company BlackRock). Neoliberalism only seemingly embraces democracy. The elementary democratic goals (protection of fundamental and civil rights and respect for human rights) can no longer be fully realized. Democracy cannot defend itself against neo-liberalism if political decision-makers do not resolutely oppose the neo-liberal zeal for expansion into all areas of society. The dramatic increase in inequality coincides with the failure of the state as an authority of social compensation and adjustment, as neoliberalism eliminates the state as an institution that mediates conflicts in society. To put it in a nutshell: Whereas in classical economic liberalism the state’s role is to protect and guarantee the functioning of the market economy, in neoliberalism the state must submit to the market system.

    Our discussion of neoliberalism here is not about this conceptualization and its history, which would require a separate article. Nevertheless, we want to emphasize that in neo-liberalism, social inequality is a means to achieve more wealth for the few. Therefore, we argue that there must be a flexible but specific limit to social inequality in order to achieve this goal, while excessive inequality is counterproductive.

    As noted above, moderate levels of inequality are not necessarily wrong per se. In a modern understanding, it also contributes to a just society in which merit, better qualifications, greater responsibility, etc. are rewarded. The principle of allowing differences, as used in the theory of the social market economy, is a remarkably positive one when such differentiation leads to the well-being of the majority of people in need. However, neo-liberalism adopts a differentiation that intensifies inequality to a very critical dimension. The current level of social inequality attacks our system of values, endangers essential democracy, and destroys the social fabric of societies. Even if we consider a “healthy” level of inequality to be a valuable instrument for a functioning market society, what has become the neoliberal reality has nothing to do with such an ideal. Neoliberalism implies an antisocial state of a system in which inequality is embedded in society as its driving mechanism. Consequently, we witness a division between rich and poor in times of feudalism. A certain degree of social equalization through the welfare state and a minimum of social security is no longer guaranteed. The typical prerequisites today are flexibility, performance, competitiveness, etc. – In general, we see the total domination of individualism within neo-liberalism, leading to the disintegration of society. In one part of the world, mainly in the Global South, we observe the decline of entire population groups. In contrast, in other parts of the world we see fragmented societies in hybrid globalization and increasing tendencies towards radical (religious) ideologies, violence and war.

    It must be acknowledged that neoliberalism was one of the causes of the rise of the newly industrialized nations, but the overemphasis on individual property also contributes to obscene inequality and thus to the decline of civilized norms.

    The Polish-British sociologist Zygmunt Bauman summed up this problem by comparing it to the slogan of the French Revolution: “Liberté, Egalité, Fraternité”. According to the proponents of the time, each element could only be realized if all three remained firmly together and became like a body with different organs. The logic was as follows: “Liberté could produce Fraternité only in company with Egalité; cut off this medium/mediating postulate from the triad – and Liberté will most likely lead to inequality, and in fact to division and mutual enmity and strife, instead of unity and solidarity. Only the triad in its entirety is capable of ensuring a peaceful and prosperous society, well integrated and imbued with the spirit of cooperation. Equality is therefore necessary as a mediating element of this triad in Bauman’s approach. What he embraces is nothing less than a floating balance between freedom and equality. It must be acknowledged that neoliberalism was one of the causes of the rise of the newly industrialized nations, but the overemphasis on individual property also contributes to obscene inequality and thus to the decline of civilized norms. When real socialism passed into history in 1989 (and rightly so), the obscene global level of social inequality could be the beginning of the end (Bee Gees) of neo-liberalism, centered on the primacy of individual property, which is destroying the social fabric of societies as well as the prospects for democratic development. Individual property is a human right, but it must be balanced with the needs of communities, otherwise it would destroy them in the end.

     

    Feature Image Credit: cultursmag.com

    Cartoon Image Credit: ‘Your greed is hurting the economy’ economicsocialogy.org

  • Globalisation’s Sunset

    Globalisation’s Sunset

    Are we witnessing the end of globalisation and the rise of economic nationalism? Who is responsible for this state of affairs? For many, the villain is clearly the US and its allies in the West. The reason is the rise of China as the world’s manufacturing and technology superpower. China is beating the West at its own game, and the US is shaken by the visible signs of the end of its hegemony and the dominance of the West.  Globalisation is being throttled by the West in a futile attempt to end China’s rise. The result will be catastrophic for the Global South in its aspirations for accelerated development. Former Venezuelan ambassador and Princeton scholar Alfredo Toro Hardy analyses what he sees as the sunset of globalisation.

    – Team TPF

     

    Economic globalisation was the offspring of the neoliberal ideology that prevailed after the collapse of the Soviet Union. The globalisation process took off in the mid-nineties, as was identified by the firm support given to it by leaders such as Bill Clinton and Tony Blair, particularly the former, who commanded the world’s largest economy.

                Its most emblematic expressions would be the Washington Consensus, the creation of the World Trade Organization in 1995, and China’s entry into these organisations in 2001. The first resulted from the convergence of positions between the U.S. Treasury Department and International Financial Organizations based in Washington. It would translate into a ten-point recipe called to set in motion the economic liberalisation of distressed and closed economies, chiefly the previous communist ones. The second involved the global homogenisation of rules in matters as diverse as manufacturing, agriculture, services, labour standards or intellectual property, as well as the abandonment by its members of industrial policies and protectionism. The third represented the insertion into the global labour market of more than a billion human beings whose working costs were but a fraction of those in developed countries. This would be accepted and even promoted by the United States under the assumption that a China open to the world’s economy would eventually open itself to the values of liberal democracy as well.

                The importance of neoliberal ideology, as a determining factor of this process, would be key. As a matter of fact, for a long time the leading force in the world economy, America’s economy, was characterised by its industrial policies, protectionism, and vertical integration of its corporations. The federal government’s industrial policies became a catalyst for economic development, either through direct investments and engagement or through incentives for the private sector to follow a particular course of action. The countless products and services incorporated into the American technological repository resulting from NASA’s R&D efforts exemplify these policies. They still represent the broad shoulders on which the country’s private technological sector stands. Protectionism expressed itself through tariffs and non-tariff barriers to protect domestic production from foreign competition. Vertical integration, on its part, involved direct control by U.S. corporations in their production and distribution channels. Hence, outsourcing did not figure in their strategies. It is worth adding that even President Reagan, despite his deregulatory crusade, supported his country’s industrial policies and imposed protective barriers against Japanese competition (Foroohar, 2022).

    Globalization in question

                For decades, globalisation has represented an unchallenged paradigm. Under its course, China reached the anteroom of world economic supremacy, numerous cheap labour economies, particularly in Asia, emerged strongly, and large corporations relying on the revolutions in information technology, communications and transports outsourced and dispersed their production and services (again mainly in Asia). Actually, it was in the emerging Asian countries where, in nine of every 10 cases, the great beneficiaries of globalisation were concentrated. Moreover, it was estimated that between 2020 and 2030, the global middle class would jump from 3,300 million to 4,900 million people, with 80% of that jump taking place in Asia (Milanovic, 2018, p. 19; OCDE, 2010). However, for some time now, globalisation has been under serious questioning. Among the reasons behind this, the following should be outlined: the emergence of powerful populist movements in the Western World; climate change distortions upon trade and the impact on climate itself, resulting from maritime trade over long distances; and economic and political nationalism in China.

                Populism is, to a large extent, directly related to the immense social upheavals caused by the massive outsourcing of jobs to the cheapest labour economies. In 2000, Clinton predicted that globalisation would allow the export of products without exporting jobs. Exactly the opposite happened, though, seriously affecting the social fabric of the United States and its European counterparts. This significantly eroded their democratic systems. Climate change, with hurricanes, floods, and other incidents, has increased the risk of global supply chains, resulting in annual revenue losses of up to 35% for companies. (McKinsey and Company, 2020).

    Conversely, the massive mobilisation of supertankers worldwide generates up to 14% of the total greenhouse gas emissions affecting the planet. (Prestowitz, 2022). Indeed, “the ultimate buyer [of final products] remained an ocean or a continent away” (O’Neil, 2022, p. 113). In addition, contrary to what American promoters of China’s emergence had suggested, the country’s economic prosperity has led to an increasingly nationalistic and authoritarian model. Far from getting closer to U.S. values, China has emphasised its economic nationalism and geopolitical aggressiveness within the context of a growing rivalry with the United States.

    The triggering elements

                However, even if disappointment with globalisation continued to grow, the triggering elements that would end up clearly tilting the balance against it were still missing. COVID and Russia’s invasion of Ukraine took care of it. Twenty trillion U.S. dollars in goods rely on global supply chains. Especially so as the disaggregation of production translates into millions of components, parts and final manufacturers moving in every direction. (McKinsey and Company, 2020). This vertiginous dissemination of productive processes led to unexpected, sudden, and massive disruptions during the pandemic. As a result, global economic interdependence choked. The endless Zero COVID policy implemented in China, the geographic nerve centre for global trade, exponentially aggravated this situation. The result was none other than inflation that brought to mind the seventies and has not yet been controlled.

                This was joined shortly afterwards by the impact of the invasion of Ukraine by Russia. One that not only disrupted vital energy and food supply chains but fundamentally brought geopolitics back to the global scenario through the main door. As if the emerging Cold War between China and the U.S. had not already been enough to undermine faith in globalisation, events in Ukraine made security the central component of the international order. It was a sort of fall of the Berlin Wall in reverse. One that brought down the relevance of economics and propelled that of politics. Olaf Scholz’s “global zeitenwende” clarified that a new strategic culture and national strategy would become his country’s new priority (Scholtz, 2023). Under such circumstances, placing economic security in distant and potentially hostile hands was no longer a rational option.

    Back to the past

                Not surprisingly, the United States began reverting to policies that preceded globalisation. That is, to industrial policies, to protectionism, and the vertical integration of its corporations. Indeed, before losing the House of Representatives to Republicans in November 2022, Biden’s Democrats passed several laws that embody industrial policies. A perfect example is the so-called energy revolution, with 490 billion dollars being involved in incentives to guide private investment towards generating clean energy sources. It also allowed the federal government to intervene in medicine prices through direct negotiations with the pharmaceutical industry. In the same direction went the laws that stimulated competitiveness and innovation, the superconductors industry, and infrastructural development. In parallel, the “Buy American” policy, subsidies to the domestic industry, and the maintenance of the tariffs imposed by Trump represented an evident protectionist impulse. Meanwhile, American corporations, in tune with these policies and in reaction to the risks of dismembering their production and services on a global scale, are opting for vertical integration and direct control of their activities. This implies, by its very nature, a production centred on the local or the regional.

    Getting back home

                All of the above factors contribute to industries’ onshoring and supply chains. In 2021, of the 709 large U.S. manufacturing corporations consulted, 83% responded that they would very likely or probably return their production operations to the United States. (Ma, 2021). Numerous leading American and foreign corporations are opting to produce in the U.S. to benefit from the new incentives put in motion by the Biden administration. This list includes, among many others, Intel, GM, US Steel, Taiwan Semiconductor Manufacturing (TSMC), Toyota, Samsung and Micron Technology. The amount of their investments, in tens of billions of dollars in many cases, speaks for itself. The motivation behind this impressive move was well reflected in the words of the larger-than-life founder of TSMC, Morris Chang: “Globalization and free trade are almost dead and unlikely to return”. (Cheng, 2022; Doherty and Yardeni, 2022). However, together with this on-shoring move, there are also parallel movements of near-shoring or friendly shoring nature, where manufacturing and supply chains are being circumscribed to neighbours or traditional allies that do not represent a security risk. With the world’s largest economy becoming protectionist, it will be difficult for globalisation to retain its influence, especially as Europe rapidly evolves in the same direction.

    Globalization last hope

                Until recently, an area of globalisation seemed to be relatively protected from these kinds of upheavals: the digital ecosystem. According to a 2016 report, the rapid flows of international trade and finance that characterised the 20th century appear to have flattened (…), yet globalisation has not reversed. Indeed, digital flows are growing very quickly.” (McKinsey Global Institute 2016). However, a few months ago, Brookings published a highly pessimistic report regarding the future of this sector. According to it: “Historically, the arrival of the global web created an opportunity for the interconnection of the world under a global digital ecosystem. However, mistrust between nations has led to the emergence of digital barriers, which imply their focus on controlling their digital sovereignty (…). These developments threaten current forms of interconnectivity, causing high-tech markets to fragment and retract, to varying degrees, upon national states”. (Brookings, 2022). Thus, the last sector of globalisation, which still showed significant dynamism, is also reversing under the impact of geopolitics. Globalisation, no doubt about it, seems to be experiencing sunset.

     

     

    References

    Brookings (2022). “The geopolitics of AI and the rise of digital sovereignty”, December 8.

    Cheng, Ting Fang (2022). “TSMC founder Morris Chang says globalization is ‘almost dead’, Nikkei, December 7.

    Doherty, J. and Yardeni, E. (2022). “Onshoring: Back to the USA”, Predicting the Markets, February 5.

    Foroohar, Rana (2022). Homecoming. New York: Crown.

    Ma, Cathy (2021). “83% of North American Manufacturers are Likely to Reshore Their Supply Chains”, Thomas, June 30.

    McKinsey & Company (2020). “Could climate change become the weak link in your supply chain”, August 6.

    McKinsey Global Institute (2016). “Digital Globalization: The New Era of Global Flows”, March.

    Milanovic, Branko (2018). Global Inequality. Cambridge, Mass.: The Belknap Press of Harvard University Press.

    OCDE (2010). “The Emerging Middle Class in Developing Countries”, Working Paper Number 285.

    O’Neil, Shannon K. (2022). The Globalization Myth. New Haven: Yale University Press.

    Prestowitz, Clyde (2022). “Is the U.S. Moving Out from Free Trade? Industrial Policy Comes Full Circle”, Clyde’s Newsletter, December 12.

    Scholz, Olaf (2023). “The Global Zeitenwende”. Foreign Affairs, January/February.

     

    Feature Image Credit: worldcrunch.com (Globalization as Ideology is Dead and Buried).

    Image Credit: Gulliver’s Travails (Paresh Nath, The Khaleej Times, UAE) www.uncommonthoughts.com