The Peninsula Foundation

Category: International & Transnational Affairs

  • RCEP, Indo-Pacific Economic Framework and Vietnam

    RCEP, Indo-Pacific Economic Framework and Vietnam

    The World Bank projection for the RCEP is indeed very impressive and the Member States will see GDP increase by 1.5 per cent. Furthermore, by some estimates, the RCEP could add almost US$ 200 billion to the global economy by 2030.

    ASEAN Member States, Australia, China, Japan, South Korea, and New Zealand have heralded the Regional Comprehensive Economic Partnership (RCEP) on 01 January 2022. This 15 Member consortium is the largest economic grouping and constitutes nearly 30 per cent of the global population which relates to a market of 2.3 billion people with an output value of about US$26.2 trillion with over a quarter in world exports. The World Bank projectionfor the RCEP is indeed very impressive and the Member States will see GDP increase by 1.5 per cent. Furthermore, by some estimates, the RCEP could add almost US$ 200 billion to the global economy by 2030.

    Infographics Credit: Vietnam Investment Review

    As far as Vietnam is concerned, the leaders in Hanoi must be happy to see the RCEP take concrete shape given that it was signed in November 2020 during the ASEAN Summit under Vietnam’s chairship. Vietnam, according to Fitch Solutions, is expected to benefit enormously from the RCEP particularly the IT, footwear, agriculture, automobiles, and telecommunications sectors being the major export categories. The RCEP will also provide Vietnam access to huge consumer markets which could be double the size of those included in the CPTPP. Vietnam can potentially move to become a high-tech manufacturer, and the RCEP can facilitate “local firms increase exports and attract high-quality goods for its consumers. Likewise, agriculture and fisheries product exports will benefit”.

    Vietnam, according to Fitch Solutions, is expected to benefit enormously from the RCEP particularly the IT, footwear, agriculture, automobiles, and telecommunications sectors being the major export categories

    Vietnam’s economic outlook for 2022 is positive with numerous growth opportunities. The National Assembly has identified (2021-2025 period) focus areas in sectors such as “digital economy, hi-tech industries, developing the urban economy, strengthening regional connectivity, strengthening the role of key economic zones, and restructuring to achieve a green and sustainable economy among others”. These sectors can be expected to grow given that the country has strong economic indicators notwithstanding the downturn in economic growth due to COVID-19. This is premisedon “investor-friendly policies, relative economic and political stability, cost efficiency, and consumer demand prospects, supply chains restructuring in Asia” which will attract both old and new investors.

    However, Vietnam should also be prepared for the ongoing and impending geo-economic and geopolitical triggers emerging from contestation between the US and China. During the East Asia Summit in October 2021, President Biden announced that the US was considering a major trade and economic initiative in the form of an “Indo-Pacific economic framework”. Soon thereafter Commerce Secretary Gina Raimondo visited Japan, Malaysia, Singapore, and South Korea to “begin discussions on potential negotiations that could start in early 2022”. Besides some Members of Congress, the new framework is also inspired by Australia and Japan, who had called for a “more active U.S. trade policy, including U.S. leadership in regional trade initiatives”. Above all, the initiative should be seen as a move by the Biden Administration to put to rest any doubts in the minds of regional leaders that the US “lacks an economic and trade strategy sufficient to counter China’s increasing economic influence” in the aftermath of President Trump decision to withdraw from the proposed 12-nation Trans-Pacific Partnership (TPP) in 2017.

    The new US economic framework, it is hoped, will also lessen fears in the minds of regional countries arising from the geopolitical-geostrategic issues between the US and China. The US’ “free and open Indo-Pacific” strategy which pivots on ‘rule of law’ is essentially diplomatic and military and is symbolized by the Quadrilateral Security Dialogue among the US, Japan, India, and Australia (the Quad) and the Australia-United Kingdom-United States (AUKUS) security partnership.

    The Quad has made significant progress and the first-ever in-person Leaders’ Summit was held in September 2021. It was agreed to advance practical cooperation on 21st-century challenges such as “ ending the COVID-19 pandemic, including by increasing production and access to safe and effective vaccines; promoting high-standards infrastructure; combatting the climate crisis; partnering on emerging technologies, space, and cyber security; and cultivating next-generation talent”. The leaders also called for building quality infrastructure in the Indo-Pacific region which was targeted against China’s Belt and Road Initiative (BRI).  As far as the AUKUS is concerned, the rationale is quite clear and is driven by the growing Chinese assertiveness amid fears of extreme coercion against regional countries particularly Taiwan and the claimants of the South China Sea.

    The RCEP and the “Indo-Pacific economic framework” are significant developments but can potentially pose a dilemma for Vietnam

    The RCEP and the “Indo-Pacific economic framework” are significant developments but can potentially pose a dilemma for Vietnam. There are numerous economic benefits to be accrued from the RCEP, but at the same time there are both economic and strategic rewards from the “Indo-Pacific economic framework”.  The US Indo-Pacific strategy has not found much favour in Hanoi; instead, Vietnam has chosen to support and pursue the ASEAN Outlook for Indo Pacific (AOIP) which envisages ASEAN Centrality and the East Asia Summit (EAS), as the underlying principle for promoting cooperation in the Indo-Pacific region.

     

    Feature Image Credit: worldakkam.com

  • The Cold War that Wasn’t

    The Cold War that Wasn’t

    US President Joe Biden has repeatedly cast his country’s rivalry with China as a battle between democracy and autocracy, an ideological clash reminiscent of the Cold War. This narrative is inaccurate – the United States and China are locked in a competition for strategic dominance – and all but precludes resolution. Whereas demands related to tangible assets and security concerns can be accommodated, ideological struggles typically end one way: with the unconditional defeat of one of the parties

    The US should not be attempting to “defeat” China, as it did the Soviet Union, because, first and foremost, China is not on a quest to spread “socialism with Chinese characteristics” around the world. When Chinese President Xi Jinping declared in 2017 that “war without the smoke of gunpowder in the ideological domain is ubiquitous, and the struggle without armament in the political sphere has never stopped,” he was mainly demanding that outsiders respect China’s institutions and cultural traditions.

    The US is an exhausted power, and it is now being challenged by a rising one. To ensure that this well-known geopolitical dynamic does not end in war, the US must abandon jingoistic rhetoric and replace megaphone diplomacy with wise and creative statesmanship.

    This partly reflects Chinese nationalism, fed by historical narratives, especially the memory of the “century of humiliation” (1839-1949), during which China faced interventions and subjugation by Western powers and Japan. But it is also pragmatic: The Communist Party of China recognizes that some domestic trends could destabilize the country and eventually even undermine the CPC’s rule.

    For example, China’s economic rise has produced an educated, well-connected, and fast-growing middle class. If these increasingly powerful consumers rejected restrictions on private-sector activity or limits to free expression, the CPC would have trouble on its hands. Given this, the CPC views US advocacy of political freedom and human rights in China as an effort to subvert its rule.

    Even America’s drive to export liberal democracy to Asia and Africa has been less an ideological problem for China than a strategic one. Functioning democracies are likely to be harder bargaining partners for China and might even be brought into US-led anti-Chinese alliances.

    On this front, China’s fears have probably been assuaged by recent developments. With the from Afghanistan and the Taliban’s quick reconquest of the country, America’s democratic “crusade” – to borrow the language of former US President George W. Bush – seems to have reached an ignominious conclusion.

    But even if the US is not bringing new countries into the democratic fold, its existing alliance system is formidable, and Biden is committed to strengthening it further. For example, he has worked to resuscitate NATO; created , a new defense and technology alliance with the United Kingdom and Australia; and deepened security cooperation among key democracies in the Indo-Pacific (Australia, India, Japan, and the US, known as the “Quad”).

    This focus on alliances is probably the biggest difference between Biden’s China policy and that of his predecessor, Donald Trump, who spearheaded the shift toward confrontation. (Prior to Trump, recent US presidents largely attempted to maintain good working relations with China, not least because they clung to the assumption that the country’s economic rise would gradually bring about political change.)

    For China, this difference is worrying. Though the US cannot contain China alone, it can apply strong diplomatic pressure if it has other powers on its side, and China is in no position to create an alliance system that can match that of the US. Far from stabilizing the situation, however, this imbalance could fuel China’s insecurity, making constructive engagement all the more difficult

    America’s position is hardly unassailable, either. Biden’s touted exposed the limits of ideology as a mobilizing tool for a global anti-China coalition. It does not help that America’s own democracy is plagued by polarization, paralysis, and discontent. Add to that the world’s highest numberof COVID-19 deaths, and the “shining city on a hill” has lost its luster, to say the least.

    While the US is no ancient Rome – not least because it retains extraordinary advantages in crucial areas, from defense and diplomacy to technology and finance – it is suffering from what the historian Edward Gibbon described as “the natural and inevitable effect of immoderate greatness.” It has failed to adapt its democratic institutions to meet the needs of its population and its responsibilities as a world power.

    Ultimately, the US is an exhausted power, and it is now being challenged by a rising one. This dynamic is as longstanding as it is dangerous. As the ancient historian Thucydides explained, the rise of Athens, and the fear that this instilled in Sparta, made the catastrophic Peloponnesian War inevitable. Harvard’s Graham Allison notes that there have been 16 similar cases in the last 500 years. War broke out in 12 of them.

    To avoid what Allison calls the Thucydides Trap, the US must abandon jingoistic rhetoric and Manichean thinking, replacing megaphone diplomacy with wise and creative statesmanship. The choice is not between capitulating to China and crushing it. The US must recognize China’s legitimate concerns and aspirations, and it must be prepared to negotiate accordingly. (Sooner or later, it will have to do the same with regard to the West’s current showdown vis-à-vis Russia over Ukraine and NATO’s expansion.)

    The US must accept that the days of American hegemony are over. In today’s multipolar world, different political cultures and systems will have to learn to coexist. The ideological defeat of the Soviet Union did not exactly usher in a liberal democracy. Perhaps more important, even if China somehow suddenly became a liberal democracy, its historical grievances and territorial aspirations would remain, as is the case with Russia today. In this sense, ideological competition is beside the point.

    This article was originally published by Project Syndicate.

    Feature Image Credit: The Hill

  • Infrastructure development is high priority for Vietnam-Lao PDR relations

    Infrastructure development is high priority for Vietnam-Lao PDR relations

    The year 2022 is singularly important for Vietnam-Lao PDR relations. It marks the 60th anniversary of the bilateral diplomatic relations, and 45 years of the Vietnam-Laos Treaty of Amity and Cooperation. Both sides have accorded high priority to the current year, and Prime Minister Pham Minh Chinh extended the invitation to Lao Prime Minister Phankham Viphavanh to visit to commemorate the above events.  Accordingly, Prime Minister Viphavanh is in Vietnam and is leading a high-level delegation.

    Prime Minister Pham Minh Chinh, according to reports, will also co-chair the 44th meeting of the Vietnam-Laos Inter-Governmental Committee and launch the Vietnam-Laos Solidarity and Friendship Year 2022. This would help to “get a better understanding of each other’s socio-economic situation, development orientations and external policies” particularly during the ongoing COVID-19 pandemic.

    The visit is also intended to boost Vietnam-Laos cooperation strategy for the 2021-2030 period and the five-year cooperation plan for the 2021-2025 period that are now into the second year and involve bilateral engagements in multiple domains such as politics, diplomacy, security-defence, economy, science-technology, culture, and education-training.

    COVID-19 would be high on the agenda of both leaders given that the pandemic is impacting their countries. They are in the midst of the fourth wave with 8,236 and 354,075 active cases (as of 05 Jan 2022) respectively.

    In December 2021, the Lao government announced opening up of the country for trade and tourism in three phases: First phase – January 1, 2022; Second phase – April 1, 2022; and the Third phase July 1, 2022. In the first phase, 17 countries, including Vietnam and many neighbouring ASEAN countries, besides some European countries, China, the US, Australia and Canada would be welcomed. The Lao economy is impacted by COVID-19 and was projected to grow at 3 per cent, a figure lower than 4 per cent as approved by the Laotian National Assembly. This attributed to the pandemic and prolonged lockdowns that disrupted economic activities and companies, retail and wholesale shops had to shut down.

    Leaders in Vientiane recognize the importance of regional development particularly in the Cambodia-Laos-Vietnam Development Triangle Area (CLV-DTA)

    Vietnam and Lao PDR are also engaged in major connectivity projects. Lao is a landlocked country and ports in Vietnam provide the country access to the sea to engage in international seaborne commerce.

    Last year, during President Nguyen Xuan Phuc visit to Laos, 14 agreements spanning a wide range of issues were signed. The leaders agreed to fast-track joint projects including Vung Ang No.1, 2, 3 port projects, the Hanoi-Vientiane Expressway, Vientiane-Vung Ang Railway, Lao-Vietnam Friendship Park in Vientiane, Nongkhang Airport and hospitals in Lao Houaphan and Xiangkhouang Provinces.

    One of their flagship joint projects is the 1,450 kilometres long East-West Economic Corridor (EWEC). It is a road-building project and is supported by the Asia Development Bank (ADB). Its western leg includes Thailand, and in the east, it terminates at the Vietnamese port of Da Nang which is a major gateway to the Pacific.

    Similarly, the 555 kilometres railway link (452 kilometres in Laos and 103 kilometres in Ha Tinh central province in Vietnam) between Vientiane and the Vietnamese deep-water port of Vung Ang is important. It gives Laos yet another access to the sea. Importantly, it is being jointly developed and Laos would hold a 60% stake in the project, and Vietnam with 40%.

    China is also engaged in connectivity projects in Laos. In December 2021, after six years of construction, the Laos-China Railway project was finally operationalized. It is a complex project and includes 61 kilometres of bridges and 198 kilometres of tunnels and reduce travel time between Vientiane to the Chinese border from 15 hours by road to four hours. It will be operated by the Laos-China Railway Co., a joint venture between China Railway group and two other Chinese government-owned companies with a 70% stake and a Laotian state company with 30%.

    Vietnam offers Laos an alternative to Chinese infrastructure investments and it ranks third among investors in Lao with total investments of US$ 5.16 billion in 209 projects. There are fears that the Chinese funded projects do not generate economic benefits for Laos, instead these only benefit China.

    There are geopolitical dynamics at play in the CLV-DTA that are targeted against China, and Cambodia and Laos acknowledge Vietnam’s leadership

    Vietnam cannot match up with the Chinese investments in Laos, but leaders in Vientiane recognize the importance of regional development particularly in the Cambodia-Laos-Vietnam Development Triangle Area (CLV-DTA). Vietnam for example has invested nearly US$ 4 billion in Cambodia and as noted above over US$ 5 billion in Laos. It is fair to assume that there are geopolitical dynamics at play in the CLV-DTA that are targeted against China, and Cambodia and Laos acknowledge Vietnam’s leadership.

    Images Credit: Vietnam times

  • China’s New Land Border Law

    China’s New Land Border Law

    On October 23, 2021, the Standing Committee of the National People’s Congress, the highest legislative body of the People’s Republic of China passed the Land Boundary Law along adding to its new Maritime Law as well as China Coast Guard Law passed earlier in 2021, which shows China’s intention in pursuing an aggressive policy on its territorial claims. The land boundary law came into effect on January 1, 2022. The law is likely motivated partially by the possible implications over developments in Afghanistan that could potentially have a destabilising effect in Xinjiang, growing violence in Myanmar-China border but more by the India-China geopolitical tussle.  The timing of the law is clearly related to the escalating border tensions with India and in the South China Sea. India and China have been engaged in border stand-off since May 2020.[i] Closer scrutiny of this law, consisting of 62 articles in seven chapters, indicates that China is stepping up its aggressive tone when it comes to border disputes, demonstrated by its rhetoric that China will “resolutely defend territorial sovereignty and land border security.”[ii] It states that the main aim of the law is to “standardise and strengthen the security and stability of land borders” and “safeguard national sovereignty, security and territorial integrity.”[iii] In other words, Beijing will take all measures to safeguard its interests within its specified borders by any means be it military or economic. The law effectively uses a civil-military fusion strategy emphasising improvement of public services and infrastructure along the borders as also incorporating the local population in territorial defence. The law prohibits any party from engaging in any border activities which would “endanger national security or affect China’s friendly relations with neighbouring countries”.[iv]

    Zhang Yesui, a spokesperson for the National People’s Congress stated that the law became necessary to safeguard China’s interests at the border and to regulate national borders, border defence management, and international cooperation in border affairs.[v] This law has serious implications for all 14 countries sharing borders with China. By incorporating the sovereignty claim over disputed territories China has effectively legitimised the use of force along its 22,4577 kilometres of borders as of January 01, 2022. Even though China has guaranteed that these laws aren’t meant to dislodge any international laws and treaties, it is evident that China is adopting aggressive policies to attain its goals.

    The new law has serious implications for India. Firstly, since the 1962 war, the Line of Actual Control (LAC) is the de facto border between India and China, and both countries have different interpretations of the LAC over at least 13 different locations.[vi] Article 4 of the law states China’s sovereignty and territorial integrity as sacred and inviolable and applies this dictum to the disputed territories.[vii] Thus this law makes the earlier agreement of Peace and Tranquillity along the disputed Sino-India border almost irrelevant.  Secondly, the law forbids any form of construction of facilities “near” China’s border. This is elucidated in Article 10 deals with border defence construction including its river waters management under the term flood control. These issues are deliberately kept vague, and they could interfere with any form of construction on the border. This could again become contentious as both the countries are engaged in an “infrastructure arms race” on their sides of the border. Thirdly, the new law has made a special mention of the role of civilians concerning the development of villages and towns in the borderlands. The law reflects China’s intention to increase civilian settlements bordering India, Nepal, and Bhutan.[viii] This move goes in tandem with China’s agenda of “developing the border regions, enriching the local people” introduced in 1999 and is seen as a strategy to legitimise its territorial claims.[ix]

    The law has a problematic stance with international law, as Beijing is circumventing these by enacting domestic laws to give it legal backing for its unlawful actions. It shows that international law is ineffective against powerful states. The new law goes against the ethos of the Vienna Convention on Law of Treaties of 1969 (VCLT), which is an instrument that regulates the treaties between states. It establishes internationally recognised norms of behaviour by states in crisis or conflict situations. It is important to note that under the general principles of international law, unilateral declarations do tend to have a legal character of their own as explained under the Law of Treaties. It is imperative that such unilateral declarations must not affect the rights of other states and must go through two different stages to be considered legally acceptable. Firstly, there should be a unilateral statement by an actor and secondly, the said statement must either be accepted by the party/parties concerned or must go unchallenged. In this case, several parties have issues with China’s new land border law.[x]

     As Beijing’s ‘Land border law’ came into effect on January 1st, the PLA released a propaganda video showing the Chinese flag and soldiers in the Galwan valley, with a banner reading ‘never yield an inch of land’. Earlier China released a statement renaming 15 places in India’s border state of Arunachal Pradesh. Chinese maps have consistently shown the entire state of Arunachal Pradesh, Barahoti plains in Uttarakhand, and areas up to the 1959 claim line in Ladakh as its territory.[xi] China will use the new law to claim these areas as its sovereign territory thus deeming it non-negotiable. It is playing realpolitik to increase pressure on India by escalating the friction points.[xii] The current situation at the India-China border has the potential to spiral out of control, as both sides are deploying heavy armaments and forces on the border, and in essence, the new law makes the border dispute a ticking time-bomb with far-reaching consequences for the world.

    Reference

    [i] Philip, Snehesh Alex. “Chinese Troops Challenge India at Multiple Locations in Eastern Ladakh, Standoff Continues.” ThePrint, 24 May 2020, https://theprint.in/defence/chinese-troops-challenge-india-at-multiple-locations-in-eastern-ladakh-standoff-continues/428304/.

    [ii] Wei, Changhao. “NPCSC Adopts New Laws on Family Education and Land Borders, Amends Audit Law & Authorizes New Regulatory and Military Reforms.” NPC Observer, 18 Nov. 2021,https://npcobserver.com/2021/10/26/npcsc-adopts-new-laws-on-family-education-and-land-borders-amends-audit-law-authorizes-new-regulatory-and-military-reforms/.

    [iii]  Panag , Lt Gen H S. “China’s Land Border Law Is More Sinister than It Lets on. India Needs a Course Correction.” ThePrint, 11 Nov. 2021, https://theprint.in/opinion/chinas-land-border-law-is-more-sinister-than-it-lets-on-india-needs-a-course-correction/764463/.

    [iv] 13th National People’s Congress. “Land Border Law of the People’s Republic of China.” The National People’s Congress of the People’s Republic of China, 23 Oct. 2021, http://www.npc.gov.cn/npc/c30834/202110/5a3d27747cc542f8bcde9030a83218e2.shtml.

    [v] Huang, Kristin. “What ‘New Challenges’ Does China’s New Border Defence Law Aim to Tackle?” South China Morning Post, 31 Oct. 2021, https://www.scmp.com/news/china/diplomacy/article/3154139/what-new-challenges-does-chinas-new-border-defence-law-aim.

    [vi] Fravel, Taylor M. “Analysis | Why Are China and India Skirmishing at Their Border? Here’s 4 Things to Know.” The Washington Post, WP Company, 2 June 2020, https://www.washingtonpost.com/politics/2020/06/02/why-are-china-india-skirmishing-their-border-heres-4-things-know/.

    [vii] Kalita, Jayanta. “China’s New Border Law Could Further Complicate Boundary Disputes”, The Irrawaddy, November 22, 2021.  https://www.irrawaddy.com/opinion/guest-column/chinas-new-border-law-could-further-complicate-boundary-disputes.html

    [viii] Pasricha, Anjana. “Chinese Border Villages in Disputed Territory Put India on Alert.” VOA, 2 Apr. 2021, https://www.voanews.com/a/east-asia-pacific_voa-news-china_chinese-border-villages-disputed-territory-put-india-alert/6204062.html.

    [ix] Jianqiang, Yang. “Deputy Director of the National Ethnic Affairs Commission, Answered Questions from the Chinese Government Website on the ‘Eleventh Five-Year Plan’ for the Action to Promote Frontiers and Enrich the People.” Central Government Portal, 18 June 2007, http://www.gov.cn/zwhd/2007-06/18/content_652065.htm.

    [x] Pandey, Utkarsh. “The India-China Border Question: An Analysis of International Law and State Practices.” ORF, 23 Dec. 2020, https://www.orfonline.org/research/the-india-china-border-question/.

    [xi] “China’s new border laws implemented under Galwan video: All you need to know about the legislation and why is it a concern for India.” Firstpost, January 03, 2022.  https://www.firstpost.com/india/chinas-new-border-laws-implemented-amid-galwan-video-all-you-need-to-know-about-the-legislation-and-why-is-it-a-concern-for-india-10253481.html

    [xii] Siddiqui, Huma. “China continues its belligerence, renamed 15 places in Arunachal: India should expect more such actions, say experts”, Financial Express, December 31, 2021. https://www.financialexpress.com/defence/china-continues-its-belligerence-renamed-15-places-in-arunachal-india-should-expect-more-such-actions-say-experts/2395218/

     

    Feature Image Credi: Global Times

    Map Credit: jagranjosh.com

  • UAE’s industrialization drive and the potential for Sovereign Wealth Funds to unlock value

    UAE’s industrialization drive and the potential for Sovereign Wealth Funds to unlock value

    The United Arab Emirates has renewed its commitment to the fourth industrial revolution recently with an ambitious target of increasing the industrial sector’s contribution from AED133 billion to AED300 billion (US$ 81.7 billion) by 2031. The main objectives of this ten-year strategy are to leapfrog towards knowledge-intensive industries, apply technology-intensive solutions to retrofit current industries, and push manufacturing in industries like aerospace, pharmaceuticals, medical equipment, etc. However, these objectives are not novel. While the early development plans of the emirates’ primarily focused on diversifying the economy from hydrocarbon revenues, the ultimate objective was to expand towards knowledge-intensive industries. In line with this, economic development plans as early as 1991 record the rulers’ interests in building a manufacturing-oriented economy, but the success is yet to materialize. Even in the case of the most diversified emirate – Dubai, the main drivers of the economy as of 2020 were entrepot activities like trade (26.5%), transportation and storage (12.5%), and financial services (9.7%), while manufacturing contributed to 8.8%. These statistics can be further appreciated by recollecting that from the early 1990s, development plans for Dubai were made under the assumption that the annual real growth rate in its manufacturing sector would meet 7%.[1]  As of 2020, the growth rate in manufacturing is only 0.3%. While manufacturing-oriented industrialization was to play a key role in the economy, there have been considerable challenges in realizing it. This article first briefly recalls the historical development efforts of the emirate, then discusses reasons which could have hindered the country’s trajectory towards knowledge-intensive manufacturing, and highlights a potential development instrument the country can utilize to realize its objectives in the present day.

    Federal Structure and overcoming the Inequalities

    Being a federation every emirate was offered autonomy which retained the control of resources of the respective emirates’ within respective ruling families. This resulted in vast inequalities amidst emirates with Abu Dhabi and Dubai becoming relatively well off compared to others. The remaining emirates were dependent on the budget provisions from oil-rich Abu Dhabi to maintain the social contract over their respective emirates. This internal dynamic resulted in different approaches being taken for economic development in the country. To briefly summarize some of them – Dubai invested in infrastructure to improve its entrepot facilities and industrialize in sectors associated with hydrocarbon resources, Abu Dhabi began focusing on renewable energy and clean technology from the early 2000s,  Ras al-Khaimah benefitted from its low-cost production environment (up to 25-50% lower than in other emirates) to become the country’s manufacturing base, and Fujairah developed a storage and bunkering expertise due to its geographical location beyond the chokepoint of the Strait of Hormuz.[2] The developmental push from the emirates created a boom mainly in industries associated with hydro-carbon, real-estate, logistics, and finance. Although official data on sector-wise contribution to GDP remain unpublished, World Bank data confirms that as of 2019 about 16% of the UAE’s GDP is accredited to hydrocarbon sources. It also confirms that as of 2019, manufacturing value-added as a percentage of GDP stood at 8.7%.

    In the context of UAE, the viability of proceeding with labour-intensive industries as a starting point was low as the country has a small Emirati population. Second, while most late developing countries have resorted to wage suppression to make production costs competitive, the UAE is restricted from doing so owing to the social contract it shares with its citizens

    Despite the autonomy every emirate has enjoyed, the overarching approach the country has used for economic development is to invite foreign firms to the country by providing business-friendly infrastructure and environment.[3]For the emirate of Dubai, which was most successful in diversification, Singapore’s development model was an inspiration for implementing policies promoting business-friendly infrastructure and environment.[4] Among potential factors that explain the challenge in the uptake of knowledge-intensive manufacturing in the UAE, this article focuses on two – First, the inherent characteristic of firm relocation, and second, the existence of a twin labour market in the country with high wage levels. Helleiner argued that it is easier to scale to knowledge-intensive industries when labour-intensive production processes exist locally, this way, production activities can upgrade vertically. The logic was that direct relocation of knowledge-intensive functions of industries would imply high costs to the firm. His thesis was based on the development of the Asian tigers whose development process benefitted from the vertical up-gradation of industrial activity. In the context of UAE, the viability of proceeding with labour-intensive industries as a starting point was low as the country has a small Emirati population. Second, while most late developing countries have resorted to wage suppression to make production costs competitive, the UAE is restricted from doing so owing to the social contract it shares with its citizens. UAE nationals are instead offered much better employment packages in the public sector which deters their participation in the private sector.[5] As a result, the private sector across all skill levels is significantly dependent on expatriate labour. In addition to this, foreign talents are paid twice as much as their home countries across all skill levels. Tong and Al Awad demonstrate that this is true not only for low-skilled and semi-skilled jobs but also for high-skilled jobs by comparing the average wages of high-skilled expatriates from the US and the UK. They compare their wage levels at home and in Dubai, control for purchasing power parities, and find that the salaries are twice as that in their home countries. Competition for knowledge-intensive industries has predominantly arisen from the global North and as income levels in the UAE are twice as much as that in developed countries, there is an inherent risk on the price competitiveness of products on a global scale.

    Development model, SWF, and Top-down Approach

    A difference in the UAE’s late development model relative to others in the category is that while the latter was challenged in capital accumulation, it was easily accrued for the UAE. The difficulty for the UAE lies in using accumulated capital to break the dependency. Thus, the way forward for the UAE lies in a radical rethinking of its development model. Where vertical integration by first relocating labour-intensive industries demonstrates a bottom-up approach to development, the UAE is better positioned to approach development in a top-down model of vertical integration having accumulated capital. Although public sector investment and involvement in the economy is high, there exists scope to increase the synergies between industry-leading companies and local producers through the public sector. In this case, a policy instrument with the potential to push economic development is the state’s Sovereign Wealth Funds (SWFs).

    The channelling of SWFs as a development policy instrument provides an opportunity for greater collaboration between international industry leaders and local businesses. Investing in the economic diversification of the country has been an important objective for the state’s SWFs. Some noticeable instances where the SWFs have built linkages between international companies and local businesses have been in the aerospace sector.[6] For instance, Mubadala entered into strategic partnerships with Airbus and Boeing in 2008 and 2009 respectively and launched Strata Manufacturing as a wholly-owned subsidiary of Mubadala in 2009. Soon after Strata Manufacturing was launched, the company concluded agreements with both Airbus and Boeing to manufacture aircraft parts at its aerostructures manufacturing facility in Al-Ain. This further continued when Strata Manufacturing received a ten-year contract from Boeing for the manufacture of Boeing 777’s empennage ribs and vertical fin rib for Boeing’s 787 Dreamliner. This development model is novel because it demonstrates how embedded autonomy, a key feature in the East Asian development model, can be replicated while collaborating with established international companies for economic development at home. Sovereign Wealth Funds as an institutional investor demonstrate how the state can be at the forefront of national development efforts from a transnational level.

    This top-down model of economic development through SWFs is a novel use of the investment vehicle as a policy instrument. It allows the state to direct development from a transnational level, which is an important operational condition for developmental states in an era of globalization

    An important lesson from late developers in East Asia and Southeast Asia is that state-directed capitalism is important for economic development. This top-down model of economic development through SWFs is a novel use of the investment vehicle as a policy instrument. It allows the state to direct development from a transnational level, which is an important operational condition for developmental states in an era of globalization. Although the UAE has demonstrated the use of this instrument in some cases, there is great potential to further drive economic development towards the fourth industrial revolution through SWFs. There will likely be more linkages built between local businesses and international companies through SWFs as the UAE moves forward to a knowledge-intensive economy. As the article highlighted above, there will be challenges moving forward in ensuring price competitiveness at a global level when operating in a labour market with price distortions. To this end, the challenge remains in finding innovative financing mechanisms by state investors in the short run and for policymakers to introduce suitable policies for correcting the price distortions in the long run. This ongoing effort in the UAE requires a closer examination from researchers, development practitioners, and policymakers as it is a unique development model and has the potential to deliver promising developmental lessons.

     

    Notes

    [1] Euromoney; London”, Periodical, (1997), World Economic Analysis, United Arab Emirates Document no.:198889294, ProQuest One Business.

    [2] Ulrichsen, Kristian Coates, The United Arab Emirates: Power, Politics And Policy-Making, p.87-129, Routledge, 2017.

    [3] Davidson, Christopher. The United Arab Emirates: A Study In Survival. 1st ed. Lynne Rienner Publishers, 2005.

    [4] Sampler, Jeffrey, and Saeb Eigner. Sand To Silicon. Dubai, UAE: Motivate Publ., 2008.

     

    [5] Davidson, Christopher. The United Arab Emirates: A Study In Survival. 1st ed. Lynne Rienner Publishers, 2005.

     

    [6] Ulrichsen, Kristian Coates, The United Arab Emirates: Power, Politics And Policy-Making, p.103-108, Routledge, 2017.

     

    Feature Image Credit: Asharq AL-awsat

  • Vietnam and Russia Commit to Engagements across Domains

    Vietnam and Russia Commit to Engagements across Domains

    Vietnamese President Nguyen Xuan Phuc has completed a “very successful and meaningful” visit to Russia with both sides making commitments to reinforce the comprehensive strategic partnership that spans multifaceted engagements across domains. Vietnam figures prominently in the Russian foreign policy and their bonhomie is best demonstrated by the fact that President Vladimir Putin has visited the country five times, a number more than any other country.

    Russian President Vladimir Putin and President of Vietnam Nguyen Xuan Phuc made a statement in the wake of their talks in Moscow – “The relations of comprehensive strategic partnership between the Russian Federation and the Socialist Republic of Vietnam are based upon years-long traditions of friendship and mutually beneficial cooperation, laid down by the previous generations. They have been tested by time, they are not affected by conjuncture oscillations, and serve as an example of mutually respectful cooperation that corresponds to the basic interests of the two countries”

    President Nguyen Xuan Phuc’s visit to Russia merits attention from at least five perspectives. First at the politico-diplomatic levels: both sides have a common understanding of international issues; they endorse a multipolar world order; guided by the principles of resolving major conflicts in the world through diplomacy based on respect for international law. Moscow also acknowledges the increasing role of the ASEAN and Vietnam as important Member State. Russia has also agreed to “explore promising areas of cooperation” within the framework of the ASEAN Outlook for Indo-Pacific.

    Second, the Vietnam-Russia bilateral trade has made significant strides. Their bilateral trade reached US$4.05 billion in the first ten months of 2020 and Russia ranked 24 among 129 countries and territories investing in Vietnam. Russia plans to increase its offshore energy business in the country and the joint statement notes that “creation of favourable conditions for the expansion of activities of Russian and Vietnamese oil and gas companies in the territories of the two states and the implementation of joint projects in third countries in accordance with international law, including the 1982 UN Convention on the Law of the Sea, and the national legislation of Russia and Vietnam”;  however, it is important to mention that there are frequent standoffs. For instance, there was a major standoff in the Vanguard Bank involving 50 Vietnamese and 40 Chinese vessels over the operations of the drilling rig Hakuryu 5 operated by Russia’s Rosneft in Vietnam’s oil and gas Block 06-01.

    Third, their bilateral defence and security cooperation is well established and in September this year, Russian Foreign Minister Sergey Lavrov and his Vietnamese counterpart Bui Thanh Son announced plans to ramp up military-technical cooperation including setting up a centre for nuclear science and technologies in Vietnam. Vietnamese military has acquired Russian origin naval and air platforms (Kilo Class submarines and SU-30MKK fighter jets) and the bilateral trade in arms increased from US$ 293 million (1993-99) to US$ 6514 million (1999-2018) and constituted nearly 84 per cent of all its military purchases.

    Fourth is about the COVID-19 pandemic that continues to rage in the world and its new variant Omicron bringing new fears. Vietnam has been impacted severely by the pandemic and has recently begun to open up. The US and China have provided it with vaccines. During President of Vietnam Nguyen Xuan Phuc visit to Russia, the  Russian Direct Investment Fund has signed an agreement for the “expansion of cooperation with partners in Vietnam aimed at the production of the Russian Sputnik V vaccine” involving the Russian pharmaceutical company Binnopharm Group and Vietnam’s T&T GROUP. RDIF, leading to creating a full-cycle production of Sputnik V in Vietnam.

    Fifth is the US-led Indo Pacific initiatives that clearly target China.  It merits mention that the joint statement issued at the end of the Summit notes that Russia and Vietnam “do not enter alliances and do not sign agreements with third countries to carry out actions that harm each other’s independence, sovereignty, territorial integrity and basic interests,” and that “the development of Russian-Vietnamese relations is not aimed against any third side.”

    Vietnam has no plans to align with the US’ Indo Pacific strategy or any US initiatives that target China even though it has disputes with China in the South China Sea. Russia has stayed clear of the South China Sea disputes and has not supported China. It is conscious that it enjoys cordial relations with the majority of the ASEAN Member States.

    Meanwhile, the Russian Navy recently conducted joint exercises with the ASEAN navies including the Vietnamese Navy. The Russian ambassador to the ASEAN has stated that the exercises were about “peace, stability and prosperity in the region,” and the Indonesian first fleet commander said the exercise “enhance the interoperability and understanding between the Russian and ASEAN militaries”. Interestingly, these exercises are also being viewed as signalling ASEAN’s principle of non-alignment, particularly in current times of high regional tensions given that the ASEAN navies held similar exercises with the PLA Navy. The ASEAN Member States routinely conduct bilateral military-naval exercises with the navies of the US, Japan, Australia, India, France and the UK.

    Vietnam has adopted a pragmatic foreign policy and successive leadership have successfully managed tensions in the South China Sea. Likewise, Russia has major stakes in augmenting regional stability which provides for crucial convergences between Hanoi and Moscow.

     

    Feature Image Credit: tass.com

  • Cambodia Assumes Chairmanship of the ASEAN

    Cambodia Assumes Chairmanship of the ASEAN

    While there is euphoria in Phnom Penh over the new responsibility, Prime Minister Hun Sen inherits at least five challenges from the previous ASEAN Chairmanship under Brunei.

    The gavel representing the ASEAN has arrived in Phnom Penh and it is a proud moment for the country to hold the position of Chairmanship of the Association of Southeast Asian Nations (ASEAN) for the third time after joining the grouping in 1999. In his customary remarks, Prime Minister Hun Sen announced that his country is “committed to leading ASEAN by championing the 2022 theme of “ASEAN Act” – Addressing Challenges Together – to increase harmony, peace and prosperity across the whole region”. He also assured to “uphold the core spirit of ASEAN’s basic principles of “One Vision, One Identity and One Community,”

    While there is euphoria in Phnom Penh over the new responsibility, Prime Minister Hun Sen inherits at least five challenges from the previous ASEAN Chairmanship under Brunei. First is the South China Sea.  Prime Minister HunSen did not hesitate to refer to it as “an unwelcome guest which now turns up on ASEAN’s doorstep annually and without fail”. He even labelled it a “very hot rock” amid fears that his country could be  “tossed” requiring sophisticated diplomacy wherein it is necessary to “catching it to avoid getting burned”

    In this context, it is useful to recall the 26 October 2021 Chairman’s Statement of the 24th ASEAN-China Summit which emphasised the “importance of non-militarisation and self-restraint in the conduct of all activities by claimants and all other states, including those mentioned in the DOC that could further complicate the situation and escalate tensions in the South China Sea”. China continues to engage in exploration activities in the region much to the discomfort of the Philippines. Malaysia, Vietnam and Indonesia. Also, the Chinese coast guard vessels have engaged in coercion and their operations potentially undermine the ongoing negotiations on the Code of Conduct in the South China Sea (COC).

    The second is about ASEAN’s post-pandemic economic recovery. So far ASEAN Member States’ economic indicators are quite promising and marked by positive growth rates. Cambodia has an opportunity to prepare the region and the human resources for the impending disruption that will be marked by Industry 4.0 technologies. It requires regional digitalisation and impetus to fintech through innovation pivoting on resilience across sectors. This issue is also highlighted in the Chairman’s Statement of the 38th and 39th ASEAN Summits. The ASEAN Leaders’ Statement on Advancing Digital Transformation in ASEAN has also called for strengthening “regional digital integration and transformation to enhance the region’s competitiveness, and turn the current pandemic crisis into an opportunity through digital transformation.”

    The third issue is about Myanmar. It may be recalled that Myanmar did not participate in the 38th and 39thASEAN Summits after the ASEAN decided to bar Myanmar’s military chief Min Aung Hlaing to join the meeting. This decision, by all accounts, was a “rare bold step by a regional grouping known for its non-interference and engagement”. Prime Minister Hun Sen is concerned about the possibility of a humanitarian crisis in the country and was quite candid to note that the “situation in Myanmar could escalate – and maybe even turn into a full-scale civil war – and so Cambodia must be well-prepared and ready to deal with any potential crisis there.”

    The fourth priority for Cambodia as the Chairmanship of the ASEAN would be to take forward the objectives and principles of the ASEAN Outlook for Indo Pacific (AIOP) initiative. ASEAN’s engagement in the wider Asia-Pacific and Indian Ocean regions would be in four key areas i.e.  Maritime cooperation, connectivity, UN SDGs 2030, economic and other possible areas of cooperation. However, the grouping believes that the existing ASEAN-led mechanisms should drive the AIOP for which Cambodia would have to marshal all diplomatic skills at its disposal to convince the major players in the Indo-Pacific of the importance of the AOIP as also about ASEAN’s centrality.

    Although AUKUS did not feature in Prime Minister Hun Sen’s remarks or the Chairman’s statement on the 38th and 39th ASEAN Summits, it looms large in the minds of the Member States

    Fifth, Cambodia would have to develop a sophisticated response to the AUKUS which has added a new dimension to the existing security challenges emerging from the QUAD which is allegedly targeted against China. Although AUKUS did not feature in Prime Minister Hun Sen’s remarks or the Chairman’s statement on the 38th and 39th ASEAN Summits, it looms large in the minds of the Member States. Indonesian and Malaysian are concerned fearing that the development can result in an arms race and encourage the buildup of power projection capabilities; however, the Philippines has welcomed the AUKUS.  The current situation is akin to the division among the ASEAN Member States over the presence of the Western military in the region. AUKUS has provoked China too and it can potentially intensify US-China military contestation in the western Pacific that further adds to insecurities among the Southeast Asian countries.

    Finally, Cambodia’s Chairmanship of the ASEAN attracts numerous challenges but it remains to be seen how Phnom Penh steers the ASEAN in the coming months particularly when the US too has come down heavily with sanctions on Cambodia after it permitted a Chinese company to build military-naval infrastructure at the Ream Naval Base arguing that it threatens regional security.

    Image Credit: cambodianess.com

  • Environmental Impacts of the Belt And Road Initiative

    Environmental Impacts of the Belt And Road Initiative

    China’s Belt and Road Initiative (BRI), initially known as One Belt One Road (OBOR), was first announced in 2013 by President Xi Jinping. It aims to interconnect Asia, Europe, and Africa through two interlinked projects: the Belt as the land route, and the Road as the maritime route. The BRI aims to contribute significantly to overall economic or monetary development, as well as in the power generation area, it can further develop energy access and unwavering reliability in regions with quickly developing energy demand. Nonetheless, the BRI’s financial advantages and development of power frameworks might come at the cost of significant  environmental degradation. The sheer size of the BRI has ignited increasing global concerns about the potential environmental damage. These concerns include ecologically sensitive areas, concern about the large amounts of raw materials needed, and locking in of various environmentally detrimental forms of infrastructure, for example, non-renewable energy (fossil fuel) related framework.

    The BRI projects are instrumental in meeting the global CO2 emission targets; if all the BRI member states fail to reach the CO2 emission targets, that would result in a 2.7° C increase in the average global temperature.

    There are numerous BRI projects which would pass through ecologically sensitive areas, thus compromising on such fragile regions. Some have even described BRI as the “riskiest environmental project in history”. The BRI has far-reaching influence, and it is estimated that the BRI investments are impacting over 60 per cent of the global population. The BRI projects are instrumental in meeting the global CO2 emission targets; if all the BRI member states fail to reach the CO2 emission targets, that would result in a 2.7° C increase in the average global temperature.

    Securing and protecting the environment while encouraging financial advancement under the BRI will be extremely difficult and challenging, as the initiative crosses a different scope of fragile and delicate environments. Biophysical conditions range from woods and steppes in Russia; to ice, snow, and permafrost across the Tibetan Plateau; and tropical rainforests in Malaysia. Observers are worried about the natural threat that the BRI presents. Infrastructure advancement, trade, and investment ventures under the BRI could bring negative ecological impacts that might offset its economic gains. The possible effects of the BRI are complex and manifold. Foundation projects affect biological systems and wildlife, yet in addition aberrant impacts like logging, poaching, and settlement, adding to deforestation and other land related changes. The BRI could result in biodiversity loss because of fragmentation and debasement of various habitats, and cause increment in greenhouse gas emission due to the development and upkeep of transportation infrastructures and further Chinese interest in coal-terminated power plants. It could likewise speed up extraction of natural resources, like water, sand, and ferrous metal minerals and ores in nations along the BRI.

    One such danger from BRI is the Russia–China Amur Bridge transport corridor, which takes apart two nature reserves with old growth forests. BRI framework will influence practically all of Eurasia’s biggest stream frameworks. Also, numerous BRI courses, for example the Karakoram Highway, go through geo-dynamically active regions. The Karakoram Highway linking the Xinjiang province in China to Gwadar Port in Pakistan, goes through Himalayan areas known for “extremely high geodynamic action” like seismic tremors, avalanches, frigid disintegration and erratic storms, but alternative pathways are even worse. In the Aral Sea, Central Asia, combined effects from the socio-ecological communications between misadministration, over-water system and serious contamination causing water shortage are amplified by truly dysfunctional transboundary management which can possibly result in armed conflicts. Heavily polluting Chinese concrete plants migrating to Tajikistan has been referred to as one illustration of this. Also, a logging ban in China’s Heilongjiang area caused spill-over impacts for forests overseas. Additionally, trade changes methods of production and utilization, changing income and along these lines contamination levels. As indicated by the Kuznets curve, pollution increments at first as income develops, yet over a defining moment, contamination falls as higher earnings bring innovative upgrades and expanding interest for ecological conveniences. Financial development might build the modern contamination base, known as scale effects. Negative scale effects and positive effects for the climate are hard to separate observationally, and quantitative examinations differ on whether the scale or procedure impact is bigger. Various toxins likewise respond diversely to exchange related changes. For instance, a Chinese report joining scale and method effects proposed that trade expanded SO2, and dust fall, however, decreased substance oxygen interest, arsenic and cadmium.

    Arranging and resolving natural issues related with the BRI is colossally complex and multi-scaled. Understanding the attributes of the effects of BRI on the environment is the initial step for conceiving strategy and plans for addressing its effects on guaranteed sustainable development. The main mechanism to achieve the sustainability objectives of the BRI is cooperation, “characterized by governance guidance, business commitment, and social participation”. In any case, environmental governance accompanies different difficulties, first, BRI specific and related approaches are not unyielding, but rather dependent on intentional and corporate self-administrative instruments. China’s vision of a “green BRI” is probably not going to be acknowledged without any stricter approaches that set out concrete and substantial set of activities. Second challenge, for the environmental governance of the BRI is to address tele couplings.

    The Chinese government is taking a functioning, yet delicate way to deal with the environmental governance of the BRI. China utilizes the BRI as a stage to introduce itself as the rule-maker/rule-taker in global ecological administration as it further mobilizes existing environmental governance organisations and assembles new ones. Be that as it may, the environmental stability of the BRI doesn’t just rely on the environmental governance endeavours of Chinese actors, however, strikingly on the implementation, checking, and authorization of environmental laws and guidelines in BRI host nations. Finally, and most importantly the most significant errand for future research is to exactly explore whether environmental standards or norms be subject to California or Shanghai effects.

     

    References

     

    Callahan, William A. China dreams: 20 visions of China’s future Oxford University Press, 2013, p. 1

    Adolph, C., Quince, V., & Prakash, A. (2017). The Shanghai effect: Do exports to China affect labor practices in Africa? World Development, 89, 1–18. https://doi.org/10.1016/j.worlddev.2016.05.0091

    Andrews-Speed, P., & Zhang, S. (2018). China as a low-carbon energy leader: Successes and limitations. Journal of Asian Energy Studies, 2(1), 1–9. https://doi.org/10.24112/jaes.02010123

    Abbott, K. W. (2017). Orchestration: Strategic ordering in polycentric climate governance. In A. Jordan, D. Huitema, H. Van Asselt, & J. Forster (Eds.), Governing climate change (pp. 188–209). Cambridge: Cambridge University Press. https://doi.org/10.1017/9781108284646.01221

    Cefic 2011 Cefic (2011) Guidelines for Measuring and Managing CO2 Emission from Freight Transport Operations, http://www.cefic.org/Documents/RESOURCES/Guidelines/Transport-and-Logistics/Best%20Practice%20Guidelines%20-%20General%20Guidelines/Cefic-ECTA%20Guidelines%20for%20measuring%20and%20managing%20CO2%20emissions%20from%20transport%20operations%20Final%2030.03.2011.pdf?epslanguage=eni

    Randrianarisoa, Laingo M., Anming Zhang, Hangjun Yang, Andrew Yuen, and Waiman Cheung. “How ‘belt’and ‘road’are related economically: modelling and policy implications.” Maritime Policy & Management 48, no. 3 (2021): 432-460.

    Cockburn , Henry. “China’s $8 Trillion ‘Silk Road’ Construction Programme ‘Riskiest Environmental Project in History’.” The Independent. Independent Digital News and Media, May 20, 2018. https://www.independent.co.uk/climate-change/news/china-belt-and-road-initiative-silk-route-cost-environment-damage-a8354256.html.

    “Decarbonizing the Belt and Road Initiative: A Green Finance Roadmap.” Vivid Economics. Accessed October 1, 2021. https://www.vivideconomics.com/casestudy/decarbonizing-the-belt-and-road-initiative-a-green-finance-roadmap/.

    Ascensão, F.; Fahrig, L.; Clevenger, A.P.; Corlett, R.T.; Jaeger, J.A.G.; Laurance, W.F.; Pereira, H.M. Environmental challenges for the Belt and Road Initiative. Nat. Sustain. 2018, 1, 206–209.

    Teo, Hoong C., Alex M. Lechner, Grant W. Walton, Faith K.S. Chan, Ali Cheshmehzangi, May Tan-Mullins, Hing K. Chan, Troy Sternberg, and Ahimsa Campos-Arceiz. 2019. “Environmental Impacts of Infrastructure Development under the Belt and Road Initiative” Environments 6, no. 6: 72. https://doi.org/10.3390/environments6060072

     

    Feature Image Credit: USC US-China Institute

    Map Credit: Brookings Institution

     

  • Are we on the path to World War III? The rise of Asia and lessons from World War I

    Are we on the path to World War III? The rise of Asia and lessons from World War I

    Robert McNamara, the US Secretary of State during the Cuban Missile Crisis, famously noted that it was sheer luck, not rationality, that prevented the escalation of this crisis into a world war.

    The rise of East Asia and South-East Asia is inevitable – unless there would be World War III in this region. Whereas World War I was fought by the powers located at the shore of the North-Atlantic, World War II by those of the North-Atlantic and North-Pacific, World War III would be fought by those powers solely at the North-Pacific and the Indian Ocean. Are there lessons to be learned from the devastating conduct and outcome of World War I for our times? Is there only one lesson to be learned – that you can learn nothing from history? Or are we doomed to repeat history if we don’t learn anything from it? History will not repeat itself precisely, but wars repeatedly occur throughout history, even great wars. We are living in an age in which a war between the great powers is viewed as unlikely because it seems to be in no one’s interest, as the outcome of such a war would be so devastating that each party would do the utmost to avoid it. Rationality seems to dominate the assumptions and way of thinking in our times. But no war would have been waged if the losing side, or even both sides, would have known the outcome in advance.

     

    But what if conflicts in Asia would not be fought to pursue national interests so much as recognition? What would this mean: to be accepted as equal again after the humiliation in the course of European colonization and subsequent American hegemony? Indeed, acknowledgement of past suffering seems to be a trauma in the conscience of many Asian nations. Are those desires only irrational or a different kind of rationality, which we have to take into account?

     

    There are striking similarities between the Pre-World War I era and the current developments in Asia: World War I signifies the danger, not the inevitability, of a new world war in the decades to come. World War I is a symbolic representation of the risk that war amongst the great powers could erupt although nobody would benefit from it. It is a writing on the wall, that rationality is not a guarantee for avoiding self-destruction. All reckonings regarding the repetition of World War I in Asia are based on the assumption that it would be in no one’s interest to fight a large-scale war, even with WMD, which could lead to the destruction of great parts of Asia. But what if conflicts in Asia would not be fought to pursue national interests so much as recognition? What would this mean: to be accepted as equal again after the humiliation in the course of European colonization and subsequent American hegemony? Indeed, acknowledgement of past suffering seems to be a trauma in the conscience of many Asian nations. Are those desires only irrational or a different kind of rationality, which we have to take into account? At present, we have apparently a conflict between democracies in the Pacific and the Indian Ocean on one side and authoritarian China on the other. But during my few visits I got the impression that the trauma of colonization and the non-recognition of the Asian civilizations is more counting in the cultural memory of the Asian nations. And especially India should be wary to be instrumentalised by the US in their conflict with China.

     

    During her last visit to Beijing in September 2012, then US secretary of state Hillary Clinton held a press conference in which she stated that the world would soon see, but for the first time in history, that a rising power and an established power would not engage in a war. Of course, her statement was related to China and the US. Additionally, she even compared the competition between China and the US with that of the Peloponnesian War between Sparta and Athens – authoritarian Sparta against democratic Athens. Athens, the strongest city-state in Greece before the war, was reduced to a state of near-complete subjection, while Sparta became established as the leading power. Thucydides, the chronicler of the Peloponnesian War and one of the ancient world’s most important historians, saw the initial cause of this war in the growth of Athenian power: “What made war inevitable was the growth of Athenian power and the fear which this caused in Sparta.”

    Unlike Plato, though, Thucydides argues that it was not the striving for power in itself but rather fear of loss of power and, in the long term, fear of being oppressed, robbed of one’s freedom, and enslaved that caused the escalation leading to war. In Thucydides’ account, fear was the cause of war on both sides. Sparta was afraid of the growth of Athenian power, and Athens was afraid of what might happen if it gave in to an escalating series of demands and threats, the result of which could not be foreseen.

    The Europeans who went to war assumed they would be home by Christmas 1914. We know now, of course, that World War I not only happened but that it also resulted in the self-destruction of the European powers in two world wars. World War I is foremost a lesson that a limited conflict could escalate into a nightmare of millions of deaths and unspeakable suffering, for which no rational explanation could be found.

     

    No one wanted World War I to happen. Or, at least, no one wanted the kind of war that actually took place. The general assumption was that the conflict would be very limited. The Europeans who went to war assumed they would be home by Christmas 1914. We know now, of course, that World War I not only happened but that it also resulted in the self-destruction of the European powers in two world wars. World War I is foremost a lesson that a limited conflict could escalate into a nightmare of millions of deaths and unspeakable suffering, for which no rational explanation could be found. Military aims and strategies gained priority above meaningful political purposes. Although the generals of the German empire believed that they were relying on Clausewitz’s theory, in fact, they perverted him. Tactics replaced strategy, strategy substituted politics, politics gained momentum above policy, and policy was militarized. It was as if everybody was saying: being at war would mean a stop to thinking.

     

     

    This does not mean a simple equation of rising China with the then rising German Empire. Although the actors then and today seem to be quite different, the dynamics generated by the conflict between emerging, rising and declining powers are strikingly comparable.

     

    Perhaps the deepest and hidden reason for this escalation was that no war party could admit neither defeat nor failure. Striking evidence for this assumption is that the proclaimed war aims of the German Empire got momentum the more they got unrealistic and irrational. The pride, honour and identity of the German Reich prohibited the acknowledgement of defeat and failure. This was the same with Russia, France, England and the Habsburg Empire – and the Turk Empire too. Perhaps especially these Empires knew that their rule wouldn’t survive if they would have had to acknowledge military defeat or failure. Military defeat or failure would have humiliated their identity and their “face”: their social recognition within their society and community. A military defeat would signal their “symbolic death” – and so, the empires fought a war for life and death. This does not mean a simple equation of rising China with the then rising German Empire. Although the actors then and today seem to be quite different, the dynamics generated by the conflict between emerging, rising and declining powers are strikingly comparable.

    Robert McNamara, the US Secretary of State during the Cuban Missile Crisis, famously noted that it was sheer luck, not rationality, that prevented the escalation of this crisis into a world war. In 1983 the world did even need twice more than a great fortune to avoid a nuclear disaster. In current times all great powers are using military means to pursue their political and economic interests. But we just should not allow ourselves to bet in a casino-like style that military conflicts and strategies could not lead to the escalation of limited conflicts into great power wars. The path to World War III would not be similar to that leading to World War II, but comparable to the pre-World War I era.

    This article is an amended version of the Introduction in his book “Lessons from World War I for the Rise of Asia” by Stuttgart:Ibidem Publishers.

    Feature Image Credit: www.express.co.uk 

    Article Images: www.fr21news.com , www.bloomberg.com , L’EXPRESS

  • Indian Foreign Secretary visits Colombo: Attempt to reset India-Sri Lanka ties

    Indian Foreign Secretary visits Colombo: Attempt to reset India-Sri Lanka ties

    India and Sri Lanka are immediate neighbours that share cultural, historical and religious ties spanning over thousands of years. Indian tourists to Sri Lanka are a major source of tourism revenue for the island nation. Despite all these ties, the bilateral relations continue to be impacted by considerable mistrust. Recent increase in tensions between the two South Asian neighbours is a result of the island nation allowing China to enhance its strategic footprints in Sri Lanka and increase its influence in the region. Despite certain inconsistencies in the Indo-Sri Lankan bilateral relationship, it will still be in the best interests of both countries to enhance their relationship amid the uncertain shifts in the geopolitical landscape.

    Indian Foreign Secretary’s visit to Colombo

    India’s foreign secretary Harsh Vardhan Shringla concluded a four-day state visit to the Island nation on October 5. His sojourn commenced at a time when Colombo expressed her eagerness to ink a few defence pacts with New Delhi.

    The visit was eventful as well as broad-based. The Foreign Secretary  held a meeting with the Sri Lankan President Gotabaya Rajapaksa on tourism, power generation, and cooperation in economic recovery. To reset the strained relations with Colombo, Shringla’s schedule was kept tight and focused on closed-door discussions. He called on Sri Lankan Prime Minister Mahinda Rajapaksa, Finance Minister Basil Rajapaksa, Foreign Minister G.L. Peiris and Foreign Secretary Admiral Jayanath Colombage (Rerd). From the capital, Shringla hopped from one town to another. He visited and held meetings in Kandy, Trincomalee and Jaffna to enhance bilateral ties.

     

    While in Trincomalee, he explored the possibilities for materializing the India-Sri Lanka energy partnership. In separate meetings with  Tamil National Alliance (TNA), Tamil Progressive Alliance (TPA), and Ceylon Workers’ Congress (CWC), Shringla voiced India’s firm support to the implementation of the 13th Amendment, a constitutional amendment that would empower the Tamil minorities but continues to be held in abeyance by the Sri Lankan government. During his visit, Shringla launched a few Indian initiatives like Model Housing Village’ in the northern district of Vavuniya, a school building at Vadamarachchi in Jaffna, and the Saraswathy Central College building in Pussellawa in Kandy. India had earlier constructed over 46,000 houses for the war-affected families in north.

    New Delhi has supplied to Colombo 100 tons of liquid medical oxygen, 26 tons of medicines and ambulances as part of its support to the Island’s efforts to overcome the pandemic. The state has also received about half a million Covid vaccines from India. Sri Lanka’s Suwa Seriya programme was supported by India. Sri Lanka and India together have implemented a USD 400 million currency swap agreement and one more is expected to happen.

    Colombo Crisis

     India’s External Affairs minister S. Jaishankar and Sri Lankan Foreign minister GL Peiris had a tête-à-tête on the side lines of UNGA in September. Weeks after Dr S. Jaishankar’s visit to Sri Lanka in the first week of January this year, Indian fishermen were killed by the Sri Lankan Navy, which resulted in renewed tensions between the two countries.  Moreover, the cancellation of the tripartite Memorandum of Understanding (MoU) between Sri Lanka, India, and Japan for the development of the strategically located East Container Terminal (ECT) at the Colombo Port in February, added more salt to the already strained relations between the two neighbours.

    What became an even more controversial issue was when Sri Lanka cleared a Chinese energy project in three islands off the Jaffna peninsula that is barely 50 km from Tamil Nadu coast. Recently, Sri Lankan parliament passed the Colombo Port City Economic Commission Act to oversee a huge Chinese luxury oceanside development project. This gives China a significant foothold in the country and will allow it to enhance its strategic presence throughout the region. Accordingly, India emphasised that it expected Sri Lanka to be “mindful” of ties with New Delhi, particularly in the security realm.

    Interestingly, the series of events that have taken place this year came after the statement given by Sri Lankan Foreign Secretary Jayanath Colombage last year regarding Sri Lanka’s adoption of an “India first approach”, which reflects Colombo’s supposed willingness to protect New Delhi’s strategic interests in the region. However, despite these guarantees, the geopolitical shifts occurring in South Asia make it arduous for Sri Lanka to maintain consistently positive relations with its neighbour.

    Ties that continue to stand

     China has become a critical factor in the Indo-Sri Lankan bilateral equation. The East Asian giant’s deep pockets have become a more attractive economic option for Sri Lanka vis-à-vis India. While India took five months to approve a loan moratorium requested by Sri Lanka last year, China approved an additional USD 500 million loan expeditiously. Moreover, the issue involving the Tamil cause continues to sustain the long-standing trust deficit between the two South Asian neighbours.

    However, this is not to say that Sri Lanka will disregard India for its partnership with China. Colombo is aware of the risks involved in engaging deeply with China. Sri Lanka is no stranger to Beijing’s debt trap that compromises its sovereignty. Despite Rajapaksa’s cordial ties with China, Sri Lanka will have to inevitably reconsider its priorities if this continues to persist.

    While China may have the upper hand in mega-infrastructure projects, India’s role in cementing its people-to-people ties with Sri Lanka and taking the lead in the education, health, and tourism sectors, continue to give it considerable edge in the overall inter-state dynamics. Apart from being its major trading partner, India has also demonstrated its proactive partnership by being the first responder in humanitarian assistance.  Most importantly, India has no interest in compromising Sri Lanka’s territorial integrity and sovereignty. Additionally, India continues to reiterate that it gives priority to Sri Lanka under key regional frameworks such as its Neighbourhood First Policy and Security and Growth for All in the Region (SAGAR).

    Sri Lanka is also aware of this and has tried to make up for its decisions that have compromised India’s interests. Despite cancelling the ECT tri-partite MoU, Sri Lanka has taken the prerogative to permit Indian companies to develop its West Container Terminal (WCT). Moreover, the scheduled address by Pakistani Prime Imran Khan, to the Sri Lankan Parliament during his visit to Sri Lanka in February, was also cancelled. Recently, much attention has been placed on Sri Lanka’s “roadmap” to restore ties with India and address several important issues such as the fishermen’s issues, building connectivity, trade and investment, and promoting religious links.

    A way forward

     At a time when India’s Indo-Pacific concerns are on the rise, New Delhi is perturbed by Beijing’s diplomatic successes in Sri Lanka and throughout South Asia. China’s quick responses and its its large funding are attractions that has swayed the Island nation towards a pro-China policy. Given the endemic corruption and the Chinese-engineered Sinhala chauvinism with anti-India stance has forced Indian companies to become very cautious about investing in Sri Lanka. But India is ahead of China when it comes to tourism, and health care. Sri Lankan students are now eligible to compete in India’s National Eligibility cum Entrance Test (NEET) and Joint Entrance Examination for the IITs. Last year India’s allocation of $50million for counter-terrorism and $15 million for promoting the Buddhist links drew tremendous positive attention of Lankan policymakers. The first pilgrims’ flight from Sri Lanka to Kushinagar in Uttar Pradesh is expected to take off soon. From the days of Julius Jeyawardane Sri Lanka has evolve a very crafty and nuanced diplomatic strategy, a truly Chanakyan approach. India will need to be equally crafty to checkmate the Chinese inroads into Sri Lanka. [TPF].

     

    Feature Image Credit: Lankaxpress