The Peninsula Foundation

Tag: USA

  • Xi Jinping: Assessing his Foreign Policy

    Xi Jinping: Assessing his Foreign Policy

    All foreign policies must aim at attaining purpose, credibility, and efficiency. Purpose defines the main objectives that the country wishes to achieve through its international relations. Credibility comes from international recognition of its actions in this field. And efficiency allows implementation, at the lowest possible cost, of the desired purpose. These three notions, although interwoven and influencing each other, keep their own specificity.

             How does Xi Jinping’s foreign policy qualify in these three areas?

    Purpose

    Its purpose, in tune with that of the Chinese Communist Party before his arrival to power, is sufficiently clear. By 2049, the centenary of the founding of the People’s Republic, China should have achieved a prominence commensurate to its glorious past. According to former Australian Prime Minister Kevin Rudd, China marches towards the perception of its global destiny with a clear strategy in mind. Such destiny is none other than the resurrection of its historical glory (Rudd, 2017). Projects such as the Chinese Dream of National Rejuvenation, Made in China 2025, and the Belt and Road Initiative, converge in defining concrete goals that lead in that direction. This includes China’s “Great Unification” with Taiwan, the consolidation of a hegemonic position within the South China Sea, making China the epicentre of an Asian-led world economic order, and creating a global infrastructure and transportation network with China at its head. Xi Jinping visualizes the next ten to fifteen years as a window of opportunity to shift China’s correlation of power with the United States. Hence, Beijing seeks the convergence of energies and political determination towards this window of opportunity. The strategic compass of Xi’s foreign policy could not be more precise. Few countries show a clearer sense of its purpose.

    Credibility

             His foreign policy credibility presents a more mixed result. Vis-à-vis the Western World and several of its neighbours, China’s credibility is at a very low point. However, the situation is different in relation to the Global South, where Xi’s foreign policy promotes four interconnected initiatives to expand China’s influence. Besides the Belt and Road, whose objective is creating a China-led global infrastructure and transportation network, there is also the Global Development Initiative, the Global Security Initiative, and the Global Civilization Initiative. The first, the Global Development Initiative, aims to contrast the unequal distribution of benefits that characterize the West-led development projects with the inclusiveness and balanced nature of this China-led multilateral development project [Hass, 2023]. The other two initiatives, global security and global civilization, present rational and balanced options clearly differentiated from America’s overbearing approach to these areas. In the former case, China’s proposal promotes harmonious solutions to differences among countries through dialogue and consultation [Chaziza, 2023]. The Global Civilization Initiative, on its side, fosters cooperation and interchange between different civilizations, whereby the heterogeneity of cultures and the multiplicity of identities is fully respected [Hoon and Chan, 2023].

    The Hambantota Port in Sri Lanka is one of thousands project that China has helped finance in recent years – Image Credit: The Brussels Times (The so-called China’s debt-trap is a narrative trap).

           However, three dark areas emerge in Beijing’s credibility with respect to the Global South. Number one is the frustration prevailing in many of these smaller and underdeveloped nations, resulting from the contradiction between China’s openness as a lender and its severity as a creditor. This has given rise to the suspicion of a hidden agenda on its part and has led to the coining of the phrase “debt trap diplomacy”. Number two derives from the arrogance shown by Beijing towards the rights of several of its weakest neighbours, disregarding international law. This seems to delineate a tributary vision of its relations with them. Although this only affects China’s neighbourhood, it projects a haughtiness that contradicts its formulations about a more harmonious, equitable and inclusive world order. Number three is the apparent contradiction between Beijing’s proclamation regarding the value of the heterogeneity of cultures and the diversity of identities and its treatment of non-Han Chinese minorities at home. A feature susceptible to reproducing itself abroad. All the above generates a distance between words and deeds that casts a shadow of doubt concerning China’s sincerity. Hence, even within the Global South, China’s credibility shows a mixed result.

    Efficiency

    Finally, there is the area of efficiency. It is a very complex one, particularly given China’s over-ambitious purpose. It must be said that until 2008, Beijing succeeded in rising as a significant power without alarming neighbours or the rest of the world. It even attained the geopolitical miracle of doing so without alarming the United States. Indeed, few countries have made such a systematic and conscious effort to project a constructive international image as China has done to this date. This included the notion of “peaceful rise”, which implied a path different from that followed by Germany before World War I and Japan during World War II when they tried to overhaul the international political landscape. China’s path, on the contrary, relied upon reciprocity and the search for mutual benefit with other countries. It was a brilliant soft power marketing strategy that gave China huge goodwill dividends (Cooper Ramo, 2007).

    “Observe carefully; secure our position; cope with affairs calmly; hide our capacities and bide time; be good at maintaining a low profile; and never claim leadership” – Deng Xioping

    Regarding its reunification with Taiwan, it relied on “one country, two systems” and the economic benefits of their interconnection as the obvious means to propitiate their joining together. Regarding its maritime disputes in the South China Sea, after having deferred the resolution of this issue to a more propitious moment, it proposed a Code of Conduct to handle it in the least contentious possible manner. In general, similar approach was evident in Beijing’s handling of various contentious issues.  Beijing’s leadership followed Deng Xiaoping’s advice to his successors: “Observe carefully; secure our position; cope with affairs calmly; hide our capacities and bide time; be good at maintaining a low profile; and never claim leadership” (Kissinger, 2012, p. 441).

    “Like Europe, it has many twenty-first century qualities. Its leaders preach a doctrine of stability and social harmony. Its military talks more about soft than hard power. Its diplomats call for multilateralism rather than unilateralism. And its strategy relies more on trade than war to forge alliances and conquer new parts of the world” – Mark Leonard on China in 2008

    Writing in 2008, before the change towards a more assertive foreign policy materialized, Mark Leonard said about China: “Like Europe, it has many twenty-first century qualities. Its leaders preach a doctrine of stability and social harmony. Its military talks more about soft than hard power. Its diplomats call for multilateralism rather than unilateralism. And its strategy relies more on trade than war to forge alliances and conquer new parts of the world” (Leonard, 2008, p. 109). This phrase encapsulates well how China was perceived worldwide, including by the Western World. Not surprisingly, a 2005 world survey on China by the BBC stated that most countries in five continents held a favourable view of that nation. Even more significant was the fact that even China’s neighbours viewed it favourably (Oxford Analytica, 2005). It was a time when all doors opened to China.

    2008 represented a turning point. The convergence of several events that year changed China’s perception of its foreign policy role, making it more assertive. Among such events the most significant was the global economic crisis of 2008, the worst crisis since 1929, resulting from America’s financial excesses; other important events were the sweeping efficiency with which China avoided contagion; the fact that China’s economic growth was the fundamental factor in preserving the world from a major economic downturn; and the boost to Chinese self-esteem after the highly successful Beijing Olympic games of that year. In sum, the time in which China had to keep hiding its strengths seemed to have ended.

    Although this turning point materialized under Hu Jintao, changes accelerated dramatically after Xi Jinping’s ascend to power. He not only sharpened the edges of the country’s foreign policy but made it more aggressive, even reckless. Xi’s eleven years’ tenure in office has translated into a proliferation of international trouble spots. His overreach and overbearing style misfired, generating a concerted and strong reaction against China. As a result, the costs linked to attaining China’s purpose have skyrocketed. This deserves a more detailed analysis of China’s foreign policy efficiency under Xi.

    Intimidatory policies and actions

             Xi Jinping’s intimidatory policies and actions on international affairs have been extensive, bringing with them immense resistance.

    After dusting off a plan that had remained on paper for years, Xi decided to build seven artificial islands on top of the South China Sea coral reefs. After assuring President Obama they would not be militarized, he proceeded otherwise. Contravening international maritime law, he assigned 12 nautical miles of Territorial Sea and 200 miles of Exclusive Economic Zone to these artificial outposts.

    Under the protection of the People’s Liberation Navy, an oil rig was built in the waters claimed by Vietnam as its EEZ. Disrespecting the International Court of Justice’s ruling about the Philippines’ waters in the South China Sea, China has forcefully enforced its exclusionary presence in them. China’s Coast Guard is now authorized to use lethal force against foreign vessels operating within maritime areas under its jurisdiction claims. This, notwithstanding that China’s claimed jurisdiction, goes far beyond what is recognized by the U.N. Convention on the Law of the Sea or the International Court of Justice while disputed by several other countries.

    The People’s Liberation Army (PLA) began to ignore the median line in the Taiwan Strait, which it had respected for decades. Frequent and increasingly bold incursions within Taiwan’s Air Defence Identification Zone and reiterated calls to the PLA to prepare for war in Taiwan have become the new normal. The Senkaku-Diaoyu islands, disputed with Japan, have been declared one of China’s core interests, thus closing the door to a negotiated solution. This has translated into the systematic incursion of Chinese maritime law enforcement ships and planes into the territorial and contiguous maritime space of these islands, currently occupied by Japan. Beijing unilaterally imposed an Air Defence Identification Zone over two-thirds of the East China Sea, forcing foreign aircraft to identify themselves under threat of “defensive measures” by the PLA Air Force.

             Since 2017, China has reneged on the quite borders with India and engaged in a series of border skirmishes. It has resorted to intrusions into border regions under dispute resulting in a major skirmish in Ladakh with significant casualties, the first since 1987. In 2023, China released an official standard map showing India’s state of Arunachal Pradesh in Northeast India and Askai Chin plateau in the Indian territory of Ladakh in the west, as official parts of its territory, despite India’s objections. At the same time, it renamed 11 places in Arunachal Pradesh with Chinese names. When South Korea decided to deploy the US Army’s THAAD (Terminal High-Altitude Area Defence) ballistic missile defence, as protection against the growing North Korean threat, China put in motion an economic boycott of South Korean products and services. When Australia and New Zealand protested against Chinese interference in their domestic political systems, Beijing openly threatened to impose economic sanctions on governments or private actors criticising China’s behaviour. A few years later, it effectively banned most Australian exports when Canberra proposed an international scientific investigation on the origins of COVID-19. When Canada detained Huawei’s heiress, Meng Wanzhou, answering an American judicial request, Beijing jailed and presented accusations against two Canadian businessmen based in China (releasing them hours after Meng was released).

    Antagonizing Americans and Europeans

             Xi’s rhetoric in relation to the U.S. has been highly aggressive. Reversing the terms of Deng Xiaoping’s advice to his successors to hide China’s strengths while bidding for right time, Xi has alerted America about its intent to challenge and displace it as the foremost power soon. He has repeatedly referred; to the primacy of China in the emerging world order as its most important objective, to the next ten to fifteen years as the inflexion point when a change in the correlation of power between the two countries should be taking place, to the need to overcome the U.S.’ technological leadership, to the necessity for the PLA to ready itself to wage and win wars, and to the next ten years as a time of confrontation and dangerous storms.

    Xi Jinping starts his European tour in Paris on May6, 2024, his first in five years as China-EU trade relation have hit a low. Picture Source: Sky News.

             China’s actions have also antagonized the Europeans. These relate to China’s refusal to use the term “invasion” when referring to Russia’s actions in Ukraine; supporting the arguments provided by Russia concerning the causes of the war; placing the responsibility of the conflict on the US and the NATO; abstaining from voting in the U.N. on the West’s resolutions against Russia; demonstrating its strong strategic relations with Russia that is described as “partnership without limits”; the conduct of military exercises with Russia while war rages on in Ukraine; and providing indirect support for Russia’s war effort through surveillance drones, computer chips, and other critical components for its defence industry. Though all of the above are sovereign decisions of China, Europe, as China’s major trading partner, expects some support to their position and a neutral approach to the conflict from China.

    For the most part, Beijing’s above foreign policy actions were duly accompanied by a bellicose so-called “wolf warrior diplomacy”. It aggressively reacted to perceived criticism of the Chinese government.

    Domestic actions impacting its Image Abroad

    However, with its aggressive display in the international arena, some domestic actions have negatively permeated abroad. Brushing aside Deng Xiaoping’s commitment to respect Hong Kong’s autonomy for a period of fifty years, Xi reclaimed complete jurisdiction over such territory since his arrival to power. Within a process of actions and reactions, accelerated by the progressive strangulation of Hong Kong’s liberties, Beijing finally imposed a National Security Law over the territory. This ended the Hong Kong Basic Law, which guaranteed its autonomy. By burying the principle of “one country, two systems” established by Deng, Beijing was, at the same time, closing out any possibility of Taiwan’s willing accession to the People’s Republic. Henceforward, only force may accomplish that result.

    On the other hand, the brutal Sinicization of Xinjiang Province has shaken the liberal conscience of Western countries, with particular reference to Europe. The Uyghur population re-education camps have been compared to the Soviet’s Gulag. Beijing’s combative reaction to any foreign criticism in this regard, has compounded China’s image crisis in Europe.

    Any remaining trace of the so-called peaceful emergence of China has completely disappeared under Xi Jinping. Under his rudder, China has brought to the limelight a revisionist and tributary vision of the international order. Not surprisingly, interwoven policies and decisions emanating from different geographical points have been converging to contain China. In an unnecessary way, Beijing under Xi has been instrumental in multiplying the barriers to realising its purpose.

    Keeping China at bay

    The number of initiatives to keep China at bay has multiplied. Its list includes the following. The U.S., Japan, Australia and India created a strategic quadrilateral forum known as the Quad, which is none other than a factual alliance aimed at the containment of China. More formally, Australia, the United Kingdom, and the United States gave birth to a strategic military alliance with the same goal. On its side, Japan and Australia signed a security cooperation agreement.

    Leaving aside its restrained post-war defence policy, Japan doubled its defence budget to 2 per cent of its GDP. This will transform Japan to number three position worldwide regarding military expenditure, just behind the U.S. and China. Within the same context, Japan and the U.S. established a joint command of its military forces while agreeing to create a shared littoral force equipped with the most modern anti-ship missiles. Meanwhile, Japan is set to arm itself with state-of-the-art missiles. Overcoming their longstanding mutual mistrust, Japan and South Korea, jointly with the U.S., established a trilateral framework to promote a rules-based Indo-Pacific region. On the same token, Japan, the Philippines, and the U.S. held a first-ever trilateral summit aimed at defence cooperation and economic partnership. They pledged to protect freedom of navigation and overflight in the South China and East China Seas. Several joint naval exercises have taken place in the South China Sea to defend the principle of freedom of navigation, with France participating in the latest one.

    After several fruitless years of attempting to mollify China’s position concerning their maritime dispute in the South China Sea, the Philippines decided to renew its Mutual Defence Treaty with the U.S., which had elapsed in 2016. Meanwhile, most Southeast and East Asian countries on China’s periphery are rapidly increasing their military spending while  still continuing to support the U.S. security umbrella. Although pledging to remain neutral, even Vietnam, a traditional de facto ally of China, decided to upgrade its diplomatic relations with Washington to the highest level.

    America’s several decades policy of “strategic ambiguity” in relation to Taiwan evaporates as a result of China’s increasing threats and harassment to the island. On top of unambiguous support to Taipei by the President and the Congress, the Pentagon has formulated a military doctrine for  Taiwan’s defence in case of invasion. The idea of defending Taiwan if invaded is also taking shape in Japan.

    The European Union adhered to the U.S., the United Kingdom and Canada in sanctioning the Chinese authorities involved in human rights abuses in Xinjiang (the first such European sanction since Tiananmen in 1989). Equally, and for the same reasons, the European Parliament refused to ratify the long-time negotiated investment agreement between China and the European Union. China’s aggressive reaction to such a decision only toughened the European position further. Significantly, European contacts with Taiwan have increased as its democratic nature, and China’s harassment of it are providing a new light on the subject. In that context, the European Parliament officially received Taiwan’s Minister of Foreign Affairs.

    A gigantic containment Bloc

    France and Germany sent warships to navigate the South China Sea in defiance of Beijing’s claimed ownership of 90 per cent of the Sea. NATO’s updated “Strategic Concept” document, which outlines primary threats to the alliance, identified China for the first time as a direct threat to its security: “The People’s Republic of China’s (PRC) stated ambitions and coercive policies challenge our interests, security and values (…) It strives to subvert the rules-based international order, including in the Space, Cyber and Maritime domains (…)The deepening strategic partnership between the People’s Republic of China and the Russian Federation and their mutually reinforcing attempts to undercut the rules-based international order run counter to our values and interests” (NATO, 2022). Not surprisingly, NATO’s last summit included the heads of state and governments of Australia, New Zealand, Japan and South Korea.

    As a result of Xi Jinping’s actions and policies, China is now being subjected to a gigantic geostrategic containment force—a true block integrated by nations and organizations from four continents. For a country like China, which traditionally identified with political subtlety and enjoyed universal goodwill until not so long ago, this change in its strategic environment is not a small development. Xi’s calculations that acting boldly had become possible as China was powerful enough, its economy big enough, its neighbours dependent on it, and the U.S. resolve as uncertain have proved wrong and grossly misfired. At this point, China’s conundrum might leave China with few options short of war. According to former Australian Prime Minister Kevin Rudd, the 2020s have become the “decade of living dangerously”, as, within it, a war between China and the U.S. will most probably erupt (Rudd, 2022, chapter 16).

    In sum

    An evaluation of Xi Jinping’s foreign policy, using the notions of purpose, credibility, and efficiency as bases, would present the following result. Its purpose is crystal clear, which translates into a high mark. Credibility, on its part, shows mixed results: Not entirely unsatisfactory nor satisfactory. In terms of efficiency, though, Xi Jinping has openly failed. The lack of efficiency associated with his outreach adversely affects the attainment of China’s foreign policy purpose, creating countless barriers to its fulfilment. This lack of efficiency affects the country’s credibility as well. The downturn has been dramatic when comparing the current situation of China’s foreign policy to the one that prevailed before 2008 and, more precisely, to Xi Jinping’s ascension to power.

     

     

    References:

    Chaziza, M. (2023) “The Global Security Initiative: China’s New Security Architecture for the Gulf”, The Diplomat, May 5.

    Cooper Ramo, J. (2007). Brand China. London: The Foreign Policy Centre.

    Hass, R. (2023) “China’s Response to American-led ‘Containment and Suppression’”, China Leadership Monitor, Fall, Issue 77.

    Hoon, C.Y. and Chan, Y.K., (2023) “Reflections on China’s Latest Civilisation Agenda”, Fulcrum, 4 September.

    Kissinger, H. (2012). On China. New York: Penguin Books.

    Leonard, M. (2008). What Does China Think? New York: Public Affairs.

    NATO (2022). “NATO 2022 Strategic Concept”, June 29.

    Oxford Analytica (2005). “Survey on China”, September 20th.

    Rudd, K. (2022). The Avoidable War. New York: Public Affairs.

    Rudd, K. (2017). “Xi Jinping offers a long-term view of China’s ambitions”, Financial Times, October 23.

     

    Feature Image: bloomberg.com – Xi Jinping on visit to Belgrade, Serbia on 07 May 2024 (Xi says China will “never forget” the U.S. bombing of its Embassy)

  • West Asian moves and countermoves: Challenges of them spinning out of control

    West Asian moves and countermoves: Challenges of them spinning out of control

    What will the complex calculus of the new Middle East crisis resolve into, and what will be the impact on India?

    ISRAEL has succeeded in diverting world attention from Gaza and Hamas to Iran. This is similar to how Hamas, in October 2023, successfully short-circuited US efforts at normalising relations between the Arab states and Israel under the Abrahams Accord.

    These moves and countermoves are ratcheting up the intensity of conflict in West Asia with serious global implications, including for India. The Indian approach seems to be similar to that in the case of the conflict in Ukraine— to play both sides.

    Countermoves

    Iran’s attack on Israeli soil is unprecedented. It is a response to the Israeli attack on its consulate in Syria on April 1, killing some of its top army commanders. It had warned of a retaliation and that gave Israel and its partners, the US, the UK, etc., time to prepare.

    The US had already moved its forces and prepared its allies in the region to shoot down the projectiles from Iran. Even Jordan apparently participated in this. Israel could take care of the projectiles that managed to reach its territory. So, 99 percent of the projectiles were shot down in the air and there was little damage in Israel.

    The Indian approach seems to be similar to that in the case of the conflict in Ukraine— to play both sides.

    It provided a sense of victory to Israel, the US and their allies. This was US President Joe Biden’s message to Israeli Prime Minister Benjamin Netanyahu and to forestall any immediate Israeli retaliation.

    Did Iran need 15 days to prepare to attack Israel? Could it not have used many more than 300 projectiles to attack to overwhelm Israeli defences? Could the Iranian allies like the Hezbollah in Lebanon and the Houthis in Yemen not have fired a much larger number of projectiles?

    Clearly, Iran was making a show of avenging an attack on them but did not want to hit Israel. It did not want to provoke an attack on its territory from the much superior US and Israeli forces.

    The Iranian foreign minister stated in a press conference after the attack that the US, Turkey and some Arab neighbours were given advance information about the limited attack. The US has denied that it had advance information.

    Not only were 15 days given to Israel to prepare its defence, the timing of the attack was also conveyed in advance. The drones, which would take six–seven hours to reach Israel, and cruise missiles, which would take two–three hours, were bound to be neutralised given the advance preparations.

    Only ballistic missiles, which take only a few minutes to traverse the distance that exists between Israel and Iran, were a serious challenge, but due to the advanced notice and preparation, even they got neutralised.

    The Iranian army briefing after the attack also mentioned that the attack was a limited one and had achieved its objective and no more attacks would occur unless Israel attacked its territory. Thus, the Iranian attack was for show and not effect.

    The US and the G7 that met in the aftermath of the Iranian attack while condemning the Iranian attack suggested that Israel had won and that it should not retaliate against Iran.

    Some even argue that this presents an opportunity to take out Iran’s nuclear establishments and cripple its nuclear bomb capability.

    Indeed, Israel’s attack on the embassy in Syria was meant to draw the US and other allies into unequivocally supporting Israel. That support had been dwindling due to the ongoing genocide in Gaza which was inflaming world opinion. Israel has succeeded in this aim. Today, the attention has shifted from genocide in Gaza to the global implications of a wider war in West Asia.

    Pressures escalating

    The US, while saying it does not want an escalation and that it would not support an Israeli strike, has also said its support to Israel is “ironclad”. Just as Israel has defied US advice to avoid civilian casualties in Gaza and allow more humanitarian aid to enter, it can defy the current US advice to not escalate the conflict.

    Israel could attack, secure in the fact that the US and the allies would defend it if Iran retaliates substantially in response to the Israeli retaliation.

    Will Israel oblige by not attacking Iran? The ultra-right in Israel is pressurising the government to retaliate. They have been a part of the growing problem created by the displacement of Palestinians from the West Bank, coming up of new settlements and aggressive assertions in Jerusalem. All this has led to rising Palestinian resentment.

    Many Israelis and conservative Republicans in the US are arguing for Israeli retaliation. The Israeli war cabinet said the conflict is “not over yet” and we will “extract a price”.

    Even the moderate leader Benny Gantz wants retaliation, though at a time of Israel’s choosing. The ultras argue that Iran has crossed a red line by attacking Israeli soil and it must pay for that.

    Some even argue that this presents an opportunity to take out Iran’s nuclear establishments and cripple its nuclear bomb capability.

    Hamas’s action was a result of perceived subjugation and atrocities by Israel over a long period, which could not have been anticipated by Israel and the US.

    But, there are limits to such actions since there are other players who may be forced to intervene. Also, it could lead to a wider conflict in West Asia. The Sunni nations, though not allies of Iran, may also be forced to act. Already, some of these US allies have prohibited the use of their air space by the US.

    Limits of shadow fights

    Israel has a huge network of intelligence in not only Gaza but all over West Asia. It has been able to kill its opponents’ leaders in Gaza, Lebanon, Iran, Iraq and Syria. Recently, it could kill the sons and grandsons of Hamas leader.

    But, the October 7 attack by Hamas in Israel and Hamas still being able to fight in Gaza six months later lays bare the limits of their intelligence. The extensive network of tunnels in Gaza, the troop strength of Hamas and Israel’s inability to get hostages released for six months also point to the same limitation.

    All this points to the limits of shadow fighting in international relations. Hamas’s attack on October 7 destroyed an equilibrium because it was willing to accept the massive death and destruction in Gaza.

    Israel’s attack on the embassy in Syria knowing that Iranians would retaliate has further shifted the out-of-equilibrium position. These instabilities are feeding into each other since one cannot anticipate what nations may do under uncertainty no matter how well a powerful nation may plan.

    Hamas’s action was a result of perceived subjugation and atrocities by Israel over a long period, which could not have been anticipated by Israel and the US.

    The attack on the embassy in Syria was also unanticipated and a result of Israel’s perception that Iran is behind the Hamas, Hezbollah and Houthis. Iran’s attack on Israel is also a result of its perception of having been attacked on its soil which required an attack on Israeli soil.

    Conclusion: Rising global challenges

    Now that the world is divided into two blocs, the situation has become more worrisome. Iran is a part of the bloc consisting of Russia and China. It has been supplying drones to Russia for its war in Ukraine. Even though this bloc may not want a second front, it cannot but stand with Iran in case of a Western bloc attack on Iran.

    Its stand on the issue will be a crucial determinant of what happens next. The stance of G7 and NATO will be vital since they have been unsuccessfully trying to restrain Israel. Military mobilisation will rise in key nations. The beneficiary will be the military-industrial complex.

    War in West Asia will impact the petroleum products market. If Iran is attacked and it blocks the Hormuz Strait or attacks oil tankers, petro-goods prices will rise. Shipping through the Suez has already been impacted and may face further disruption.

    India imports 85 percent of its petroleum requirements so the outgo of foreign exchange may increase leading to a deterioration in the balance of payments (BOP), weakening of the Indian rupee and higher inflation.

    Thus, the post-pandemic easing of supply bottlenecks may reappear and create inflation globally, disrupting many economies.

    India imports 85 percent of its petroleum requirements so the outgo of foreign exchange may increase leading to a deterioration in the balance of payments (BOP), weakening of the Indian rupee and higher inflation.

    Foreign investments may slow down. A substantial number of Indians working in West Asia may be forced to return and that will reduce repatriation by non-resident Indians.

    Thus, capital flows may be impacted and further aggravate the BOP. India would need to prepare for these challenges in the midst of the fraught election season where the leadership’s attention is not where it should be.

     

    This article was published earlier in The Leaflet.

    Feature Image Credit: Wall Street Journal.

  • The United States as an Empire in Decline: A Talk by Jeremy Kuzmarov

    The United States as an Empire in Decline: A Talk by Jeremy Kuzmarov

    The Peninsula Foundation organised a webinar titled ” World Order Turmoil: The Reality of American Empire” on the 19th of January 2024. The main talk was given by the Chief Guest Jermey Kuzmarow and further comments was provided by the Discussant, Mohan Guruswamy. The event led to excellent discussions with critical comments from both the speakers. The discussions were moderated by Air Marshal M Matheswaran, President-TPF.

    Jeremy Kuzmarov is Managing editor of CovertAction Magazine and author of five books on U.S. foreign policy. His website can be accessed here. Mohan Guruswamy is our Governing Council member and a Distinguished Fellow and a prolific writer on economics, security, and geopolitics.

     

    Given below is the text of jeremy Kuzmarow’s talk, along with questions and answers.

     

    (Source: tunnelwall.blogspot.com)

    In September, I attended a talk sponsored by the Tulsa Committee on Foreign Relations by an inside-the-beltway pundit named Ali Wyne, a former senior fellow at the pro-NATO Atlantic Council and David Rockefeller fellow at the elitist Trilateral Commission.

    Wyne told the audience in so many words that the sun had not yet set on the American empire; that the Biden administration was outmaneuvering the evil Putin in Ukraine; and that the U.S. was still a beacon of hope for the rest of humanity.

    Toward the end, Wyne personalized the talk, discussing how his family had migrated to the U.S. from Pakistan with nothing, and that through hard work he was able to achieve the American dream.

    But Wyne seemed oblivious to the fact that that dream is increasingly unreachable for the majority of people in an increasingly stratified society marred by a decline in civilian manufacturing and public services and skyrocketing education costs.

    Wyne also failed to point out that the American dream historically was achieved at the expense of Third World nations that were looted by U.S. corporations, and by endless wars that killed millions of people.

    Wyne’s delusional worldview is underscored in a new book by Fadi Lama, Why the West Can’t Win: From Bretton Woods to a Multipolar World (Atlanta: Clarity Press, 2023), which shows that the American Century has ended and that a new multipolar world order has been established in which economic dynamism lies primarily in the East.

    Lama is an international adviser for the European Bank for Reconstruction and Development (EBRD) and geopolitical consultant with a Ph.D. in mechanical engineering from the Georgia Institute of Technology (Georgia Tech).

    He points out at the beginning of his book that in 1500, prior to the era of Western colonialism, there was a relatively fair political-economic world order with a close equilibrium between population and wealth generation. But by the end of World War II, the West accounted for only 30% of global population but 60% of global Gross Domestic Product (GDP).

    When many colonized nations gained their independence, the West imposed a neo-colonial framework that enabled their resources to be exploited by Western multinational corporations.

    Some countries on the front lines of the Cold War, such as West Germany, Japan and South Korea, were allowed unhindered development as part of a geopolitical strategy designed to keep them within the Western orbit and curb the advance of Communism. However, being pseudo-independent states, when the political necessity was removed, they were cut back to size.

    The liberation of China in the 1949 Communist-led revolution (an event known in the U.S. as the “loss of China”) was a historical turning point that began to reverse the Western monopolization of wealth and power and set the stage for the re-empowerment of the Global South.

    By 2017, China—known as the “sick man of Asia” in the 19th century following its de facto colonization of Great Britain following the Opium War—was the world’s number one economy with its real goods production amounting to 24% of global real goods production.

    Under CCP leadership, China regained its sovereignty and lifted 770 million people out of poverty, with homelessness now being practically non-existent.

    According to Lama, China’s staggering economic success resulted from a centralized political system in which commercial banking was dominated by the public sector. Central bank financial and monetary policies were further put under the control of the Chinese government, which implemented policies serving the national interest rather than those of the Western financial oligarchy.

    China’s economic success contrasts markedly with the growing economic stagnation in Western countries and the U.S. resulting from the neo-liberal economic model in which the private sector is elevated above the public sector.

    By 2014, the top 0.1% in the U.S. owned as many assets as the bottom 90%, an obscene inequality ratio accompanied by a dramatic rise in poverty, which had been reduced massively in China under more socialist-oriented policies.

    China’s superior state-centric economic model is currently being followed by Russia which has withstood record U.S. sanctions under Vladimir Putin’s leadership through a renewed commitment to economic autarky (self-sufficiency) and investment in local industries and technologies.

    Following the collapse of the Soviet Union, U.S. strategic planners saw a golden opportunity to reduce Russia’s status to that of a fourth-rate power and to enable the plunder of its bountiful natural resources.

    The overzealous policies backfired, however, pushing Russia into alliance with China that signifies the birth of a new multi-polar world order that holds the potential to restore the global economic parity from 1500—before Western colonization took root.

    Lama emphasizes the fact that Russia now provides food aid in Afghanistan and Africa and fertilizer to poor countries, and has forged growing relations with both China and Iran, the latter having gained independence from Western colonial tutelage in 1979 when the Shah was overthrown.

    Lama finds significant economic synergy and growing win-win cooperation in the economic, cultural, scientific and military fields between China, Russia and Iran, which he says are “de facto allies in the struggle for a ‘Fair World.’”

    Russia and China today are leading the way in space exploration, clean energy technologies as well as cutting-edge missile technologies at a time that U.S. weapons systems are proving to be extraordinarily costly and inefficient owing to a Byzantine Pentagon contracting system and under-skilled workforce due to the skyrocketing costs of higher education.

    Today’s shifting power balance can be compared with 1997 when “‘the empire’ had control over three of the top four energy reserves: Venezuela was a U.S. vassal, Russian energy resources were under control of the Money Powers (Western financial oligarchs) via their proxy Russian oligarchs, and Saudi Arabia was a compliant U.S. tributary. Of the top four, only Iranian reserves were out of the Money Powers’ control.”

    By 2022, Lama writes, “the Empire had lost control of the top three reserves, Venezuela, Iran and Russia, while Saudi Arabia is no longer as compliant as it was in 1997.”

    What happened in the interim was a period of heightened military intervention and imperial overreach resulting in a counter-mobilization that signifies the end of the era of Western empires dating back to the 16th century.

    Bretton Woods: From Military to Financial Colonialism

    The imperial framework after World War II was established through the Bretton Woods economic system, which Lama says was designed to “lock countries into a financial structure controlled by the West.”

    Lama writes that this structure “requires central bank governors be independent of their governments, but dependent on rules established by the Bank for International Settlements (BIS), at the top of the pyramid in the Bretton Woods system.

    Established in 1930 to handle reparations payments imposed on Germany at the Versailles Conference after World War I, BIS had helped finance Hitler’s rise to power and was owned by central banks, setting policies for them that directly influenced the global economy.

    Franklin D. Roosevelt had proposed liquidating the BIS due to its cooperation with Nazi Germany, though the resolution that he sponsored to that effect at the July 1944 Bretton Woods Conference at which the post-World War II monetary and political global structure was being set, was revoked after Roosevelt’s death.

    John Maynard Keynes addressing the July 1944 Bretton Woods Conference in New Hampshire. [Source: centerforfinancialstability.org

    According to Lama, when some newly decolonized countries tried to adopt an alternative economic arrangement to Bretton Woods, their leaders (Togo’s Sylvanus Olympio, Egypt’s Nasser; Indonesia’s Sukarno; Democratic Republic of Congo’s Lumumba; Iran’s Mossadegh; Ecuador’s Jaime Roldos; Panama’s Omar Torrijos) were eliminated by wars, coups or assassinations [over a 25-year span].

    Economic hit men would descend on developing countries offering loans for infrastructure projects whose real purpose was to plunge these countries into debt so they would become dependent on foreign creditors and their economies could be restructured along neo-liberal lines and in the service of multi-national corporations.

    A pillar of the Bretton Woods system was that the U.S. dollar was established as the international trade currency, which was convertible into gold at the fixed rate of $35 per ounce of gold.

    With the decline of U.S. competitiveness in the 1960s, the Nixon administration froze the convertibility of the U.S. dollar in gold and, instead, made it convertible to oil, provided that oil was sold only in U.S. dollars.

    This led to a dramatic increase in the price of oil and petrodollar arrangement with Saudi Arabia by which the U.S. provided military protection and weapons to the Saudis in exchange for the promise of them trading their oil in U.S. dollars and using income from oil to buy U.S. Treasury bills. Interest on these sales was then spent by the U.S. Department of the Treasury on infrastructure projects in Saudi Arabia to be executed by U.S. companies.

    The fact that other countries had to hold reserves in U.S. dollars to cover their oil imports allowed the U.S. to incur high trade deficits bred by deindustrialization in the neo-liberal era without causing a depreciation of the U.S. dollar.

    However, this is no longer sustainable in the long term and Russia and China are spearheading a shift in the global economy by which oil and other commodities are no longer being traded in U.S. dollars, ushering in the end of the American Century.

    The Money Power

    Lama’s book includes discussion of the growth of the Western financial oligarchy, or what he calls the Money Power, who are the major shareholders of the leading hedge funds (BlackRock, Vanguard and State Street) and have become the absolute rulers over society.

    According to Lama, the Money Power is well placed to control elections in Western democracies and control mass media in all its forms, print, TV and social media platforms.

    They support free trade agreements designed to usurp what little is left of national sovereignty and a neo-liberal vulture economy in which all aspects of the economy are privatized in order to maximize corporate profits.

    The U.S. decline has been fueled by the Money Power’s recognition that maintaining a strong manufacturing base was no longer necessary when trade deficits could be offset by currency manipulation owing to Nixon’s convertibility of the U.S. dollar to oil and the trade in oil around the world in U.S. dollars.

    The U.S. economy is increasingly dominated by the financial sector which flourishes at the expense of other vital economic sectors, leading to the high wealth concentration and impoverishment of society made worse by austerity measures entailing cutbacks in social and other government services.

    Russophobia, Sinophobia and the End of an Era

    The intense Russophobia cultivated in the U.S. media over the last decade is the result of the Money Power’s lust for Russia’s immense wealth, which it was starting to gain access to in the 1990s before Vladimir Putin reasserted national control over Russia’s economy.

    The anti-Russia propaganda has had the greatest impact on the educated classes, as 77% of Americans with post-graduate degrees considered Russia an enemy in a March 2022 poll, compared to 66% with high school education or less.

    Russophobia has been combined with an ascendant Islamophobia and Sinophobia, whose purpose is to mobilize public support for confronting the troika of powers (Russia, Iran and China), which threaten Western hegemony.

    According to Lama, if a date were to be identified for the end of the U.S. empire, it would be January 8, 2020, when Iran avenged the assassination of General Qasem Soleimani by attacking a U.S. air base in Iraq and displaying Iran’s weapons capability.

    Afterwards, the U.S. Central Command (Centcom) significantly relocated its headquarters from Doha, Qatar, just 125 miles from Iranian shores, to safety in Tampa, Florida.

    While the current U.S. war in Gaza has created a renewed pretext for expanded U.S. military intervention in the Middle East, Lama’s book makes clear that the U.S. could not win a war against Iran for regime change.

    Contrary to Wyne’s analysis, the U.S. has also been outmaneuvered in Ukraine, whose army is in a state of disrepair after a failed counteroffensive. It is further being outmaneuvered by China, which is winning hearts and minds through the Belt and Road Initiative (BRI) that provides low-interest loans to countries for infrastructural development with no strings attached.

    In sum, the Great Game for world domination appears to be up and the Money Power has lost. That is why they are behaving so erratically in manufacturing crisis after crisis as they desperately attempt to sustain a fading world order defined by profound inequality and injustice. For the rest of my talk, I will try and further answer some of the questions that were posed prior to the seminar:

    Question 1) This dealt with consistent U.S. war making as a tool in which the US tried to sustain its hegemony, and growing pushback with the rise of BRICS, Shanghai Cooperation Organization and Rise of China? How will all this shape the future world order?

    Answer: There is the threat of a world war breaking out provoked by the U.S. as the U.S. cannot tolerate geopolitical competition or being relegation to a second rate power, and will respond violently—as it is already doing. Currently, the U.S. is provoking wars simlutaneously with Russia, China and the Middle East, with catastrophic consequences already for the people of Ukraine, Russia and Gaza. The great Australian journalist John Pilger produced a documentary in 2016 warning about the U.S. military buildup in the Asia Pacific and coming war with China, which would be catastrophic for everyone involved.

    It is instructive to look back in history to the 1930s when Japan challenged U.S. and Western empires in the Asia Pacific with the establishment of the Greater Economic Co-Prosperity Sphere. This challenge and effort by Japan to establish an alternative yen bloc in Southeast Asia and to supplant the Western colonial powers led directly to the Pacific War. Records from the time reveal how the U.S. manuevered Japan into firing the first shot (an explicit goal of U.S. policy as outlined by Secretary of State Henry Stimson) by imposing a naval buildup in the South China sea and crippling oil embargo that threatened to cut off Japan’s oil supply and undermine its empire in the Asia-Pacific.

    There is evidence that FDR knew about the impending Pearl Harbor attacks but allowed them to take place because the American public would only support military intervention if America were attacked and the attack was made to look like a sneak attack by a dastardly enemy.

    History could easily repeat itself today; the U.S. military is in fact preparing for war in the Asia Pacific; building a new military base in Micronesia in the middle of the Pacific Ocean, and training soldiers in jungle warfare in Hawaii while studying military battles in the Pacific War, like the Battle of Guadalcanal.

    Gen. Charles A. Flynn, the commander of U.S. Army Pacific, was quoted in The New York Times stating that China had been on “an incremental, insidious and irresponsible path for decades.” Now more than ever, the “total Army,” he said, needs to prioritize relevant Pacific experience.

    U.S. soldiers being trained to fight a 21st Century Pacific War—this time against China. [Source: nytimes.com]

    After provoking a war with China, like with Japan in World War II, the U.S. would surely make it look like China started it and that it was somehow innocent. This has been a feature of US imperial wars going back to the era of the Indian Wars.

    Question 2: The first half of the 20th century was essentially a contest of empires. The two World Wars were fundamentally European wars or a contest of colonial empires. While the European empires were destroyed, the gain was for the U.S. as it emerged as the most powerful actor.

    Answer: Agreed. I would add that the U.S. defeated the Japanese empire in the Pacific theater of World War II, which enabled the U.S. to establish a chain of military bases in the Asia Pacific as a linchpin of U.S. imperialism. U.S. strategic planners had long considered the Asia Pacific key to world domination because of its economic vitality and rich resources and geography and this is why the U.S. cannot accept any rival powers there, including Japan, and now China.

    Question 3: Did the U.S. foresee this and plan its rise to a position as the pre-eminent power ensuring the destruction of the European powers?

    Answer: Yes, absolutely. As one example of dispacing European empires, I was just reading a book about U.S. policy in Congo in the 1960s by David Gibbs, The Political Economy of Third World Intervention. The book showed how U.S. mining tycoons (Maurice Templesman and Harold Hochschild) came to oppose Belgian colonialism so American corporations could replace Belgian ones in controlling and profiting from Congo’s lucrative mineral wealth. Templesman and Hochschild financed CIA front organizations and supported the murder of Patrice Lumumba who wanted to nationalize Congo’s mines after independence. They cultivated very close ties with Joseph Mobutu; Lumumba’s replacement and murderer, who cultivated the image of a Pan-Africanist devoted to African culture, but who sold out Congo and its economy to foreign interests. The CIA funded Mobutu’s security apparatus so he could crush a secessionist movement in the diamond rich Katanga province backed by the Belgians. The goal was for Mobutu to consolidate his control over Congo and for U.S. corporations to take over the mines from Belgians in Katanga. Here is U.S. neocolonialism at work, and muscling out of the Europeans.

    Question 4: The U.S.-led post-1945 world order rests on its control of the three pillars – political, economic, and security ( Allies/Vassals, Economic Control through Bretton Woods systems + USD as the global reserve currency, and the UN Security Council+NATO). Is Western Europe an Ally of the US or is it an unequal relationship?

    Answer: I would say its an ally of the U.S. to a point, as we see from the example of the Belgians in Congo. Many Europeans are starting to question alliance with the U.S. and whether the US has the best interests of European countries in mind. The U.S. involvement in Ukraine and destruction of the Nordstream II pipeline, for example, has been deterimental to European economies, including especially that of Germany that relied on cheap Russian natural gas imports. With the destruction of the pipeline, they were forced to purchase natural gas at a much higher cost from the Middle East and from U.S. natural gas suppliers in Texas and elsewhere who were financing politicians in the U.S. that supported the copious military aid to Ukraine along with the weapons contractors. European countries historically benefited from trade with Russia, so the war in Ukraine has generally hurt their economies and it is not clear for how much longer their populations will put up with this and just go along with the New Cold War.

    Question 5: Decolonisation was superficial as the U.S.-led West retained much of the colonial and imperial controls. Is it right to say that the U.S., in effect, has been an expanding empire since the American-Spanish War? The Cold War was a check on the American expansion.

    Answer: Decolonization was indeed superficial as the U.S. used clandestine and sometimes not so clandestine means toinfluence and control postcolonial leaders across much of the Third World and to sustain neocolonial economic relationships where Third World countries exported raw materials to the West and purchased products that were manufactured there, or had their resources owned and controlled by U.S. corporations.

    I would suggest that the U.S. was an expanding empire from the formation of the country. Historian Richard Van Alstyne wrote an important book in 1960 entitled The Rising American Empire. The book shows how the American founding fathers all conceived of the U.S. as an empire and had ambitions of eclipsing the British and Roman empires at their height. Van Alstyne also addresses how the pacification of the Native Americans and takeover of their resources and land and massacre of those who resisted previewed what the U.S. would do to other peoples around the world.

    As far as the Cold War, my book, The Russians are Coming, Again with John Marciano shows that rather than being a check on U.S. expansion, the Cold War served to validate heightened U.S. intervention across the Third World under the pretext of fighting and combatting communism. In fact the real communist threat, as Noam Chomsky has emphasized, was a threat to U.S. business interests and ability to encourage development of an alternative state-centered model of governance that would prevent corporate pillage and the kind of neoloconial arrangements that prevailed quite widely in this period and beyond.

    Question 6: The end of the Cold War and American unipolar dominance unleashed the push for the American Empire—through GWOT and a series of wars.

    Answer: Absolutely: We have the U.S. empire on steroids with the Global War on Terror. It has given a pretext for the U.S. to invade and bomb many Middle-Eastern countries. And it has been totally ridden with contradictions, as the U.S. has supported leading terrorist states like Saudi Arabia and committed large scale terrorist acts based on standard definitions of terrorism as acts of violence targeting civilians with the purpose of affecting a political goal or political change.

                                                                                                                                                              Source: goodreads.com

    Question 7: NATO Expansion – conflict with Russia and anti-China strategy – a clear case of imperial overstretch and suicidal?

    Answer: Yes I think so. Back in 1996, George Kennan, the father of the containment strategy and original Cold War, warned about NATO expansion, stating: that NATO expansion would amount to a “strategic blunder of epic proportions” and the “most fateful error of American policy in the entire post-Cold War era,” as it would “inflame the nationalistic, anti-Western and militaristic tendencies in Russian opinion, restore the atmosphere of the cold war to East-West relations,” and “impel Russian foreign policy in a direction decidedly not to our liking.”

    Kennan’s prediction proved to be true and look where we are today: in a new Cold War, with the U.S. having torn up the arms control treaties of the 1980s; initiated a proxy war with Russia that could lead to a full-blown war between the two countries and nuclear conflict. If the latter transpires, the NATO expansion surely will have been suicidal. Already it is diverting badly needed resources towards the military and a senseless new arms race, much like in the original cold war, where it produced heavy deficits and Third World type living conditions in the U.S. with astronimical inequality levels, underfunded edcuation and health care system, and abysmally poor public services, including in areas like mental health treatment, and programs to assist the homeless. One consequence is the extremely high crime rates in the U.S. and overcrowded prisons.

    George F. Kennan: if only U.S. leaders in the 1990s and 2000s had listened to him [Source: artsandculture.google.com

    As far as China, the provocations by the Biden administration may be even more insane than with regards to Russia, as a) the U.S. depends on Chinese purchasing of U.S. debt; b) the U.S. economy is quite dependant on China’s; and c) China has superior military technology capabilities that would give it the edge in any war with the U.S.

    Charles Freeman is a retired diplomat who served as Nixon’s translator when he famously visited China in theearly 1970s to reestablish U.S. diplomatic relations during the Cold War. Freeman told me when I interviewed him that China was in no way a military threat to the U.S., but the U.S. sees it as a threat because its economy has been growing and slowly surpassing that of the U.S. The U.S., however, should not view China as a threat of any kind, and should consider its economic growth an opportunity for the U.S. if it tried to harness China’s economic growth to its own. This would mesh well with the win-win strategy advocated for by Chinese Premer Xi Jinping in which China and the U.S. would cooperate to mutual economic benefit.

    Charles Freeman [Source: globaltimes.cn]

    Instead, the U.S. has sought to a) encircle China militarily, b) arm Taiwan to the teeth in violation of the “One China” policy and incite Taiwanese separatist elements, c) try and undermine Chinese interests throughout Southeast Asia, and d) provoke it by launching drone surveillance missions over its borders and in Chinese controlled waters off Taiwan, and e) sailing U.S. naval ships in Chinese waters.

    This is in addition to a) the propaganda directed against China in the U.S., b) the persecution of Chinese scientists; c) support for separatist elements in Xinjiang and Tibet; and d) the waging of an economic war on China and efforts to sabotage China’s economy—a policy that had been pursued by the FDR administration against Japan that directly provoked war with it.

    Question 8: Are current wars in Ukraine and Gaza—a sign of major turbulence in the World Order?

    Answer: Yes absoutely. These wars were both easily avoidable and were a direct result of U.S. foreign policy and its extremism.

    1. In the case of Ukraine, the U.S. was intent on using Ukraine as a battering ram directed against Russia. The U.S. orchestrated the 2014 Maidan coup and empowered and armed far right, Russophobic elements who triggered the war with Russia by a) attacking the ethnic Russian population in Eastern Ukraine; and b) reneging on any commitments in the Minsk peace agreements that would have given greater autonomy to the Luhansk and Donetsk provinces. The U.S. aim was similar to Afghanistan in the 1980s where they wanted to draw the Russians into a military quagmire and trap and discredit Putin and cripple his regime by ratcheting up economic sanctions against him (which it was believed would create disaffection with his rule and trigger a movement for regime change). This strategy was born of desperation because Putin was succeeding in strengthening Russia and blocking the neoconservative designs to control Eurasia and its rich oil and gas reserves, which was only possible with a weakened Russia.
    2. Gaza: The U.S. has long used Israel as an outpost of its power in the Middle East, recently establishing secret military bases in the Negev. The neocons in Washington have long sought regime change in Iran and see Israel as their vehicle to help achieve that. They also wanted regime change in Syria and to ensure Israeli control over the Golan Heights, where oil reserves have been discovered. U.S. weapons have emboldened hardliners in Israel and enabled Israeli aggression in Gaza and now Lebanon with disastrous human costs for the civilian population that people are comparing to a new Holocaust.

    Question 9:  With the rise of China, India, and the BRICS—is this a Power Transition moment?

    Answer: Yes. We are seeing major historical changes in real-time. China’s achievements through the One Belt, One Road initiative were so impressive they led to a copycat effort by the Biden and Boris Johnson admiinistrations that never really got off the ground. The SCO is enabling countries also to get around the World Bank and IMF by offering loans with no strings attached. China’s rise is epitlmized by its trading alliance with Russia and influence throughout Africa, where China is clearly winning the Great Game. While Chinese labor practices may be bad in many places, China is bringing tangible benefits to African countries through the building of impressive infrastructure, whereas all the U.S. offers is drone bases and IMF structural adjustment programs that push economic austerity measures and reinforce social inequality.

    Question 10: Is this a sign of the end of Western dominance of the last 500 years?

    Answer: I believe that yes, we are seeing major historical shifts. It may take some more time as empires often do have lasting power and can linger on even when their legitimacy has been eroded, but change is coming about.

    Question 11: In its entire history, the USA has been at war for all but 15-20 years. Is the USA a war-mongering state?

    Answer: Sadly, yes. It goes back to the founding of the country as a settler colonial state rooted in the military conquest and genocide of the Native Americans. The colonial mentality is so deep that the U.S. names a lot of its weapons systems after native tribes that were vanquished, like the Apache helicopter for example. The Operation to kill Osama bin Laden was called Operation Geronimo after the Apache chief who was vanquished in the 19th century. Noam Chomsky once asked; imagine the nazis had won World War II, and named weapons: “gypsys” and ‘Jews.”

    [Source: telegraph.co.uk]

    This reflects something rotten at the core of imperialism and a deep imperial mentality that is hard to vanquish and is passed on generation after generation. This mentality and the war like culture in the U.S. is seen in a hero worship of soldiers and the military at sporting events, and in the denigration and marginalization of peace activists in popular and intellectual culture.

    That the military culture is a largely top down phenomenon though should be emphasized as since Vietnam, the U.S. government has dared not reintroduce the draft, lest it face a societal revolt remniscent of the 1960s counter-culture movement. So a lot of Americans see through the lies and are not so hawkish—that’s why the government has to distance the public from the wars; lie to them repeatedly about what they are all about; and develop new technologies and AI that could ensure a reliance on machines in fighting wars rather than the American people who often see through the lies and will protest an unjust war—particularly if there are a large number of U.S. ground troops potentially being put in harms way (like in Vietnam).

    Question 12: What is the future of 21st century world order? Barry Posan says the era of Superpower is over. Has the multipolar world emerged? what would be its shape?

    Answer: I think we are indeed seeing the birth of a new multipolar world order in which the center of economic power in the world increasingly lies in the East and in which China is a powerhouse and Southeast Asia is a key motor of economic growth in the Global economy. The U.S. is sliding more towards authoritarianism and potentially even a civil war, and may be further weakened by domestic unrest as it loses its economic supremacy and the U.S. dollar ceases to be a main currency of global trade. U.S. military interventions may focus more on South America and Mexico (which some Republicans want to bomb now to stem the immigration tide) and the U.S. army may have to be deployed more often to contain domestic unrest and right wing estremists/neofascists and to control armies of homeless people who are a product of a failed economic model.

    Related to the last question about U.S. adaptation to the new realities, a great danger is that the U.S. won’t accept reality, and will attempt to violently reimpose its hegemony, triggering a new Pacific War or world war that would result in millions of deaths.

    The recent escalation of conflict in Ukraine and the Middle East as well as U.S. saber rattling towards China and over Taiwan, makes this threat all too real and ominous.

    Feature Image Credit: iai.tv

  • China’s economy is still far out growing the U.S. – contrary to Western media “fake news”

    China’s economy is still far out growing the U.S. – contrary to Western media “fake news”

    GDP data for China, the U.S., and the other G7 countries for the year 2023 has now been published. This makes possible an accurate assessment of China’s, the U.S., and major economies performance—both in terms of China’s domestic goals and international comparisons. There are two key reasons this is important.

    • First for China’s domestic reasons: to achieve a balanced estimate of China’s socialist economic situation and therefore the tasks it faces.
    • Second, because the U.S. has launched a quite extraordinary propaganda campaign, including numerous straightforward factual falsifications, to attempt to conceal the real international economic facts.

    The factual situation is that China’s economy, as it heads into 2024, has far outgrown all other major comparable economies. This reality is in total contradiction to claims in the U.S. media. This in turn, therefore, demonstrates the extraordinary distortions and falsifications in the U.S. media about this situation. It confirms that, with a few honourable exceptions, Western economic journalism is primarily dominated by, in some cases quite extraordinary, “fake news” rather than any objective analysis. Both for understanding the economic situation, and the degree of distortion in the U.S. media, it is therefore necessary to establish the facts of current international developments

    China’s growth targets

    Starting with China’s strategic domestic criteria, it has set clear goals for its economic development over the next period which will complete its transition from a “developing” to a “high-income” economy by World Bank international standards. In precise numbers, in 2020’s discussion around the 14th Five Year plan, it was concluded that for China by 2035: “It is entirely possible to double the total or per capita income”. Such a result would mean China decisively overcoming the alleged “middle income trap” and, as the 20th Party Congress stated, China reaching the level of a “medium-developed country by 2035”.

    In contrast, a recent series of Western reports, widely used in anti-China propaganda, claim that China’s economy will experience sharp slowdown and will fail to reach its targets.

    Self-evidently which of these outcomes is achieved is of fundamental importance for China’s entire national rejuvenation and construction of socialism—as Xi Jinping stated, China’s: “path takes economic development as the central task, and brings along economic, political, cultural, social, ecological and other forms of progress.” But the outcome also affects the entire global economy—for example, a recent article by the chair of Rockefeller International, published in the Financial Times, made the claim that what was occurring was China’s “economy… losing share to its peers”. The Wall Street journal asserted: “China’s economy limps into 2024” whereas in contrast the U.S. was marked by a “resilient domestic economy.” The British Daily Telegraph proclaimed China has a “stagnant economy”. The Washington Postheadlined that: “Falling inflation, rising growth give U.S. the world’s best recovery” with the article claiming: “in the United States… the surprisingly strong economy is outperforming all of its major trading partners.” This is allegedly because: “Through the end of September, it was more than 7 percent larger than before the pandemic. That was more than twice Japan’s gain and far better than Germany’s anaemic 0.3 percent increase.” Numerous similar claims could be quoted from the U.S. media.

    U.S. use of “fake news”

    Reading U.S. media claims on these issues, and comparing them to the facts. it is impossible to avoid the conclusion that what is involved is deliberate “fake news” for propaganda purposes—as will be seen, the only alternative explanation is that it is disgracefully sloppy journalism that should not appear in supposedly “quality” media. For example, it is simply absurdly untrue, genuinely “fake news”, that the U.S. is “outperforming all of its major trading partners”, or that China has a “stagnant economy”. Anyone who bothers to consult the facts, an elementary requirement for a journalist, can easily find out that such claims are entirely false—as will be shown in detail below.

    To first give an example regarding U.S. domestic reports, before dealing with international aspects, a distortion of U.S. economic growth in 2023 was so widely reported in the U.S. media that it is again hard to avoid the conclusion that this was a deliberate misrepresentation to present an exaggerated view of U.S. economic performance. Factually, the U.S. Bureau of Economic Analysis, the U.S. official statistics agency for economic growth, reported that U.S. GDP in 2023 rose by 2.5%—for comparison China’s GDP increased by 5.2%. But a series of U.S. media outlets, starting with the Wall Street Journal, instead proclaimedthat the “U.S. economy grew 3.1% over the last year”.

    This “fake news” on U.S. growth was created by statistical “cherry picking”. In this case comparing only the last quarter of 2023 with the last quarter of 2022, which was an increase of 3.1%, but not by taking GDP growth in the year as a whole “last year”. But U.S. growth in the earlier part of 2023 was far weaker than in the 4th quarter—year on year growth in the 1stquarter was only 1.7% and in the 2nd quarter only 2.4%. Taking into account this weak growth in the first part of the year, and stronger growth in the second, U.S. growth for the year as a whole was only 2.5%—not 3.1%. As it is perfectly easy to look up the actual annual figure, which was precisely published by the U.S. statistical authorities, it is hard to avoid the conclusion that this was a deliberate distortion in the U.S. media to falsely present a higher U.S. growth rate in 2023 than the reality.

    It may be noted that even if U.S. GDP growth had been 3.1% then China’s was much higher at 5.2%. But the real data makes it transparently clear that China’s economy grew more than twice as fast as the U.S. in 2023—showing at a glance that claims that the U.S. is “outperforming all of its major trading partners”, or that China has a “stagnant economy” were entirely “fake news”.

    Many more examples of U.S. media false claims could be given, but the best way to see the overall situation is to systematically present the overall facts of growth in the major economies.

    What China has to do to achieve its 2035 goals

    Turning first to assessing China’s economic performance, compared to its own strategic goals of doubling GDP and per capita GDP between 2020 and 2035, it should be noted that in 2022 China’s population declined by 0.1% and this fall is expected to continue—the UN projects China’s population will decline by an average 0.1% a year between 2020 and 2035. Therefore, in economic growth terms, the goal of doubling GDP growth to 2035 is slightly more challenging than the per capita target and will be concentrated on here—if China’stotal GDP goal is achieved then the per capita GDP one will necessarily be exceeded.

    To make an international comparison of China’s growth projections compared with the U.S., the U.S. Congressional Budget Office (CBO), responsible for the official growth projections for the U.S. economy on which its government’s policies rely, estimates there will be 1.8% annual average U.S. GDP growth between 2023 and 2023—with this falling to 1.6% from 2034 onwards. This figure is slightly below the current U.S. 12-year long term annual average GDP growth of 2.3%—12 being the number of years from 2023 to 2035. To avoid any suggestion of bias against the U.S., and in favour of China, in international comparisons here the higher U.S. number of 2.3% will be used.

    The results of such figures are that if China hits its growth target for 2035, and the U.S. continues to grow at 2.3%, then between 2020 and 2035 China’s economy will grow by 100% and the U.S. by 41%—see Figure 1. Therefore, from 2020 to 2035, China’s economy would grow slightly more than two and a half times as fast as the U.S.

    The strategic consequences of China’s economic growth rate

    The international implications of any such growth outcomes were succinctly summarised by Martin Wolf, chief economics commentator of the Financial Times. If China’s economy continues to grow substantially faster than Western ones, and it achieves the status of a “medium-developed country by 2035”, then, in addition to achieving high domestic living standards, China’s will become by far the world’s largest economy. As Wolf put it: “The implications can be seen in quite a simple way. According to the IMF, China’s gross domestic product per head (measured at purchasing power) was 28 per cent of U.S. levels in 2022. This is almost exactly half of Poland’s relative GDP per head… Now, suppose its [China’s] relative GDP per head doubled, to match Poland’s. Then its GDP would be more than double that of the U.S. and bigger than that of the U.S. and EU together.” By 2035 such a process would not be completed on the growth rates already given, and measuring by Wolf’s chosen measure of purchasing power parities (PPPs) China’s economy by 2035 would be 60% bigger than that of the U.S. But even that would make China by far the world’s largest economy.

    Wolf equally accurately notes that the only way that such an outcome would be prevented from occurring is if China’s economy slows down to the growth rate of a Western economy such as the U.S. Clearly, if China’s economic growth slows to that of a Western economy, then, naturally, China will never catch up with the West—it will necessarily simply stay the same distance behind. Therefore. as Wolf accurately puts it the outcomes are:

    What is the economic future of China? Will it become a high-income economy and so, inevitably, the largest in the world for an extended period, or will it be stuck in the ‘middle income’ trap, with growth comparable to that of the U.S.?

    The progress in achieving China’s strategic economic goals

    Turning to the precise figure required to achieve China’s 2035 target, China’s goal of doubling GDP required average annual growth of at least 4.7% a year between 2020 and 2035. So far China, as Figure 1 shows, is ahead of this goal—annual average growth in 2020-2022 was 5.7%, meaning that from 2023-2035 annual average 4.6% growth is now required.

    China’ 5.2% GDP increase in 2023 therefore once again exceeded the required 4.6% growth rate to achieve its 2035 goal—as shown in Figure 1. From 2020 to 2023 the required total increase in China’s GDP to hit its 2035 target was 14.9%, whereas in fact its growth was 17.5%. This is in line with the 45-year record since 1978’s Reform and Opening Up, during which entire period the medium/long term targets set by China have always been exceeded.

    Therefore. to summarise, there is no sign whatever in 2023, or indeed in the period since 2020, that China will fail to meet its target of doubling GDP between 2020 and 2035—China is ahead of this target. Such a 4.6% growth rate would easily ensure China becomes a high-income economy by World Bank criteria well before 2035—the present criteria for this being per capita income of $13,846.

    It should be noted, as discussed in in detail below, that a clear international conclusion flows from this necessary 4.6% annual average growth rate for China to achieve its strategic goals. It means that China must continue to grow much faster than the Western economies throughout this period to 2035—that is in line with China’s current trend. However, if China were to slow down to the growth rate of a Western economy, then it will fail to achieve its strategic goals to 2035, may not succeed in becoming a high income economy, and will necessarily remain the same distance behind the West as now. The implications of this will be considered below.

    Systematic comparisons not “cherry picking”

    Having considered China’s performance in 2023 terms of achieving its own domestic strategic goals we will now turn to actual results and a comparison of China with other international economies. This immediately shows the factual absurdity, the pure “fake news” of claims such as that the U.S. has “the world’s best recovery“ and “the United States… is outperforming all of its major trading partners.” On the contrary China has continued to far outgrow the U.S. economy not only in 2023 but in the entire last period. China’s outperformance of the other major Western economies, the G7, is even greater that of the U.S.

    Entirely misleading claims regarding such international comparisons, used for propaganda as opposed to serious analysis, are sometimes made because data is taken from extremely short periods of time which are taken out of context—unrepresentative statistical “cherry picking” or, as Lenin put it, a statistical “dirty business”. Such a method is always erroneous, but it is particularly so during periods which were affected by the impact of the Covid pandemic as these caused extremely violent short-term economic fluctuations related to lock downs and similar measures. China’s assertion of superior growth is based on its overall performance, not an absurd claim that it outperforms every other economy, on every single measure, in every single period! Therefore, in making international comparisons, the most suitable period to take is that for since the beginning of the pandemic up to the latest available GDP data. As comparison of China with the U.S. is the most commonly made one, and particularly concentrated on by the U.S. media campaign, this will be considered first.

    China’s and the U.S.’s growth in 2023

    It was already noted that in 2023 China’s GDP grew by 5.2% and the U.S. by 2.5%—China’s economy growing more than twice as fast as the U.S. But it should also be observed that 2023 was an above trend growth year for the U.S.—U.S. annual average growth over a 12-year period is only 2.3% and over a 20-year period it is only 2.1%. Therefore, although in 2023 China’s economy grew more than twice as fast as the U.S., that figure is actually somewhat flattering for the U.S. Figure 2shows that in the overall period since the beginning of the pandemic China’s economy has grown by 20.1% and the U.S. by 8.1%—that is China’s total GDP growth since the beginning of the pandemic was two and half times greater than the U.S. China’s annual average growth rate was 4.7% compared to the US’s 2.0%.

    Economic performance of China and the three major global economic centres

    Turning to wider international comparisons than the U.S. such data immediately shows the extremely negative situation in most “Global North” economies and China’s great outperformance of them. To start by analysing this in the broadest terms, Figure 3 shows the developments in the world’s three largest economic centres—China, the U.S., and the Eurozone. These three together account for 57% of world GDP at current exchange rates and 46% in purchasing power parities (PPPs). No other economic centre comes close to matching their weight in the world economy.

    Regarding the relative performance of these three major economic centres, at the time of writing data has not been published for the Euro Area for the whole year of 2023 —which would be the ideal comparison. However, it has been published for the the Euro area for the four quarters of 2023 individually and trends can be calculated on that basis. These show that In the four years to the 4th quarter of 2023, covering the period since the beginning of the pandemic, China’s economy has grown by 20.1%, the U.S. by 8.2%, and the Eurozone by 3.0%. China’s economy therefore grew by two and a half times as fast as the U.S. while the situation of the Eurozone could accurately be described as extremely negative with annual average GDP growth in the last four years of only 0.7%.

    Such data again makes it immediately obvious that claims in the Western media that China faces economic crisis, and the Western economies are doing well is entirely absurd—pure fantasy propaganda disconnected from reality.

    Relative performance of China and the G7

    Turning to analysing individual countries, then comparing China to all G7 states, i.e. the major advanced economies, shows the situation equally clearly—see Figure 4. Data for China and all G7 economies has now been published for the whole of 2023. The huge outperformance by China of all the major advanced economies is again evident.

    Over the four years since the beginning of the pandemic China’s economy grew by 20.1%, the U.S. by 8.1%, Canada by 5.4%, Italy by 3.1%, the UK by 1.8%, France by 1.7%, Japan by 1.1% and Germany by 0.7%.

    In the same period China’s economy therefore grew two and a half times as fast as the U.S., almost four times as fast as Canada, almost seven times as fast as Italy, 11 times as fast as the UK, 12 times as fast as France, 18 times as fast as Japan and almost 29 times as fast as Germany.

    In terms of annual average GDP growth during this period China’s was 4.7%, the U.S. 2.0%, Canada 1.3%, Italy 0.8%, the UK 0.4%, France 0.4%, Japan 0.3% and Germany 0.2%.

    It may therefore be seen that China’s economy far outperformed the U.S., while the performance of all other major G7 economies may be quite reasonably described as extremely negative—all having annual average economic growth rates of around or even under 1%.

    Comparison of China to developing economies

    A comparison using the IMF’s January 2024 projections can also be made to the major developing economies—the BRICS. Figure 5 shows this, using the factual result for China and the IMF projections for the other countries. Over the period since the start of the pandemic, from 2019-2023, China’s GDP grew by 20.1%, India by 17.5%, Brazil by 7.7%, Russia by 3.7% and South Africa by 0.9%.

    This data confirms that the major Global South economies are growing faster than most of the major Global North economies, which is part of the rise of the Global South and draws attention to the good performance of India. But China grew more than two and half times more than all the BRICS economies except India—China’s growth was 15% greater than India’s. It should be noted that India is at a far lower stage of development than the other BRICS economies—all the others fall in the World Bank classification of upper middle-income economies whereas India falls into the lower middle income group.

    Comparison of China’s growth to Western economies

    Finally, this outperformance by China casts light on what is necessary to achieve its own 2035 strategic targets. China’s 4.6% growth rate necessary to meet these goals means that it must continue to maintain a growth rate far higher than Western economies—Figure 6 shows this in overall terms in addition to individual comparisons given to major economies above. Whereas China must achieve an annual average 4.6% growth rate the median growth rate of high income “Western” economies is only 1.9%, the U.S. is 2.3%, and the median for developing economies is 3.0%.That is, to achieve its 2035 goals China must grow twice as fast as the long term trend of the U.S., almost two and a half times as fast as the median for high income economies, and more than 50% faster than the median for developing economies. As already seen, China is more than achieving this.

    But such facts immediately show why it is an extremely misleading when proposals are made that China should move towards the macro-economic structure of a Western economy. If China adopts the structure of a Western economy then, of course, China will slow down to the same growth rate as Western economies—and therefore fail to achieve its 2035 economic goals. China will be precisely stuck in the negative outcome of the situation accurately diagnosed by Martin Wolf.

    What is the economic future of China? Will it become a high-income economy and so, inevitably, the largest in the world for an extended period, or will it be stuck in the ‘middle income’ trap, with growth comparable to that of the U.S.?

    Conclusion

    In conclusion, it addition to objectively analysing 2023’s economic results, it is also necessary in the light of this factual situation to make a remark regarding Western, in particular U.S. “journalism”.

    None of the data given above is secret, all is available from public readily accessible sources. In many cases it does not even require any calculations and simply published data can be used. But the U.S. media and journalists report information that is systematically misleading and in many cases simply untrue. While it lagged China in creating economic growth the U.S. was certainly the world leader in creating “fake economic news”! What was the reason, what attitude should be taken to it?

    First, to avoid accusations of distortion, it should be stated that there were a small handful of Western journalists who refused to go along with this type of distortion and fake news. For example Chris Giles, the Financial Times economics commentator, in December, sharply attacked “an absurd way to compare economies… among people who should know better.” Giles did not do this because of support for China but because, quite rightly, he warned that spreading false or distorted information led to serious errors by countries doing so: “Coming from the UK, which lost its top economic dog status in the late 19th century but still has some delusions of grandeur, I can understand American denialism… But ultimately, bad comparisons foster bad decisions.” But the overwhelming majority of U.S. and Western journalists continued to spread fake news. Why?

    First, the fact that identical distortions and false information appeared absolutely simultaneously across a very wide range of media makes it clear that undoubtedly U.S. intelligence services were involved in creating it—i.e. part of the misrepresentation and distortions were entirely deliberate and conscious, aimed at disguising the real situation.

    Second, another part was merely sloppy journalism—that is journalists who could not be bothered to check facts.

    Third, supporting both of these factors was “white Western arrogance”—an arrogant assumption, rooted in centuries of European and European descended countries dominating the world, that the West must be right. Therefore, such arrogance made it impossible to acknowledge or report the clear facts that China’s economy is far outperforming the West.

    But whether it was conscious distortion, sloppy journalism, or conscious or unconscious arrogance, in all these cases no respect should be given to the Western “quality” media. It is not trying to find out the truth, which is the job of journalism, it is simply spreading false propaganda.

    It remains a truth that if a theory and the real world don’t coincide there are only two courses that can be taken. The first, that of a sane person, is to abandon the theory. The second, that of a dangerous one, is to abandon the real world—precisely the danger that Chris Giles pointed to. What has been appearing in the Western media about international economic comparisons regarding China is precisely abandonment of the real world in favour of systematic fake news.

     

    This article was published earlier in mronline.org and is republished under Creative Commons Attribution-Non Commercial-No Derivatives 4.0 International License

    Feature Image Credit: China will continue to lead global growth in 2024 – globaltimes.cn

  • Houthi’s attacks in the Red Sea: What does this mean for the world?

    Houthi’s attacks in the Red Sea: What does this mean for the world?

    The Houthis started in the 1990s as an armed group in Yemen, fighting against corruption. They belong to a community called Zaidis, who are a part of the Shia-Muslim minority. Along with Hamas and Hezbollah, the Houthis have declared themselves to be a part of the Iranian-led “axis of resistance” against Israel, the US, and the larger West.1 The Houthis have been attacking commercial ships passing through the lower Red Sea, and this has dramatically increased since mid-November in retaliation to Israel’s bombardment of Gaza. Due to these events, the Red Sea trade route is significantly affected, impacting the flow of global trade and having the potential to cause further damage. With ships attacked and stranded in one of the leading shipping routes of the world, countries seem to find themselves in yet another geopolitical fix. As the war continues between Israel and Gaza, the Red Sea has become a renewed hotspot for geopolitical and military tensions.

    Situated between Africa and West Asia, the Red Sea is a seawater entrance to the Indian Ocean in the south and goes through the Gulf of Aden and the Bab El Mandeb Strait, meeting the Gulf of Suez in the north. Countries like the US, France, Japan, and China have military bases in the region, including in Djibouti and many along the Horn of Africa, with considerable deployment of ships, weapons, and personnel. Establishing such bases conveys how critical it is to have control of the area as a measure of regional power and as a way of asserting their dominance internationally. Big players, including the Cold War rivals, have long struggled to gain presence and influence in West Asia. Having a military and economic presence in Africa with proximity to the Red Sea was necessary, for it provides access to almost 12% of the world’s trade, including nearly 40% of the trade between Europe and Asia.2 

    Until recently, the Houthis had been targeting ships heading towards Israel or ones that Israelis owned. However, recent developments showing attacks on ships bound for Israel with flags of various countries have raised grave concerns for global trade and security in the immediate future. The US, along with countries like the UK, France, and Bahrain, have tried to stop Houthi attacks on ships passing through the Red Sea under what Washington calls the “Operation Prosperity Guardian”. On the first day of the new year, The US military released a statement conveying that they killed at least 10 Houthi rebels and sabotaged three Houthi ships. Although the US was successful in deterring the Houthis from their attempt to attack, it did not do much to stop the group from being involved in disrupting peaceful navigation through the Red Sea.

    Private shipping companies such as Maersk, CMA CGM, Hapag-Lloyd, and MSC have begun to avoid using the Red Sea route due to the imminent threat from Houthis.3  The ongoing supply chain disruption caused by the COVID-19 pandemic and Russia’s invasion of Ukraine could further escalate due to the Red Sea crisis and cause severe concerns for world trade and consumer goods supply. With the suspension of trade via the Suez Canal, traffic through the Red Sea has dropped by 35%.4  The Houthis have raised the shipping cost internationally, imposing additional costs on commerce when trouble at the Panama Canal due to low water levels has already made shipping more complicated and central banks worry about a new inflationary spike. While trade hasn’t wholly stopped, most ships can choose the longer but safer route around Africa through the Cape of Good Hope to reach Europe and Asia from either side. This option imposes significant costs on shipping and, therefore, to consumers and affects local states in the region if the Houthi “blockade” persists. In the worst-case scenario, crude oil prices would rise in 2024 if oil shipments through the canal were stopped entirely, and this could cause a significant disturbance.

    Image Credit: washingtoninstitute.org

    Surprisingly, though, Russian ships have enjoyed free navigation through the Red Sea. Russian ships travel to Asia through the Black Sea, connecting to the Mediterranean Sea, passing through the Suez Canal and the Red Sea, and joining the Indian Ocean. With sanctions from Europe and the US amid the war in Ukraine, Russia cannot afford to lose its markets in Asia, particularly India and China, since these two countries buy almost 90% of Russia’s oil exports.5  The free navigation of Russian ships could possibly be due to its close relationship with Iran or due to the adoption of a similar stance with the Houthis on the war between Israel and Gaza. In the unlikely scenario that Russia does not have access to the Red Sea, it leaves them with the only other option of travelling through the Cape of Good Hope, adding 8,900 kilometres with an additional two weeks of travel. Such delays in oil shipments and a highly possible hike in price may prompt countries like India and China to start looking for other alternatives to their oil requirement, given the pre-existing energy crisis. Most probable alternatives include Saudi Arabia and other Gulf countries that do not need to pass the Red Sea to reach the Indian Ocean and thus Asian markets since they have ports in the Persian Gulf with access to the Arabian Sea.

    The disruption in trade has caused an impact on Indian imports and exports as well. Indian exports traverse the Indian Ocean and reach the Suez Canal through the Arabian Sea to reach European markets. Trade between India and Europe has been rising, at an all-time high in 2022, with goods traded worth $130 Billion.6   As of 2021, India engaged in trade worth $200 Billion through the Suez Canal, making the EU one of India’s main export destinations, with a Free trade agreement in the talks.7  India also procures its oil from Russia using the Suez Canal and the Red Sea. A slowdown or possible pause of oil imports may cause severe concerns amid the ongoing energy crisis. At such a juncture for the Indian economy, if the situation persists, trade will likely take a hit along with India’s domestic economy. If the condition fails to change decisively, the higher fees and the expense of prolonged travel duration will also put inflationary pressure on the global economy and India.

    The Houthis will most likely continue to put pressure on Israel to stop its onslaught in Gaza, and they are likely to keep attacking until they reach their goal. By taking control of the Red Sea and indirectly and directly hurting countries irrespective of their size and power, Houthis pressurize the international community to, in turn, put pressure on Israel. This also means that the group is unlikely to agree on any other way of settlement. Not only does this fall on Israel to stop their attacks but also on the US since the latter has always portrayed itself as a peace negotiator in the Middle East and, therefore, has the responsibility to restore order in the region. The Houthis possess a plethora of Iranian-supplied weaponry, ranging from precision drones to anti-ship cruise and ballistic missiles that can strike a moving vessel hundreds of kilometres away. What makes the Houthis more dangerous is the enormous stockpile that can help them continue their campaign indefinitely.

    The attacks have also prompted an unanticipated return of Somali piracy in international seas. As a result, increased expenses are now a worry for merchant shipping lines and seafarer safety for governments worldwide. The ship Lila Norfolk, under the Liberian flag and carrying six Filipinos and fifteen Indians, was taken over by Somali pirates on January 4th, 2024. The Indian navy had already deployed four warships patrolling the Indian Ocean, including INS Chennai, which was involved in the rescue operation during the recent highjack of ship Lila Norfolk. Even though the Indian Navy’s intervention allowed for the sailors’ rescue, it caused further concerns for India’s security and economy. The spill over of these attacks onto the Indian Ocean may threaten India’s security.

    Countries must monitor developments in the Red Sea and, for India, the Indian Ocean. Although India has not joined any Western-led operations on this matter, the country must push the international community to ensure freedom of navigation and the territorial integrity of countries over their sea is upheld under the UN Convention on the Law of the Seas.

     

    References

    [1] Who are the Houthi rebels and why are they attacking Red Sea ships? (2023, December 23). BBC News. https://www.bbc.com/news/world-middle-east-67614911

    [2] Yerushalmy, J. (2023, December 19). Red Sea crisis explained: what is happening and what does it mean for global trade? The Guardian.

    [3] A new Suez crisis threatens the world economy. (2023, December 16). The Economist. https://www.economist.com/international/2023/12/16/a-new-suez-crisis-threatens-the-world-economy

    [4] Graham, R., Murray, B., & Longley, A. (2023, December 19). Houthi Red Sea Attacks Start Shutting Down Merchant Shipping. Bloomberg.com. https://www.bloomberg.com/news/articles/2023-12-18/houthi-attacks-start-shutting-down-red-sea-merchant-shipping

    [5] Russia: crude oil shipments by destination 2023 | Statista. (2023, September 14). Statista. https://www.statista.com/statistics/1350506/russia-crude-oil-shipments-by-destination/

    [6] I. (n.d.). First India-EU Trade and Technology Council: Significant Milestone in India-EU Relations – Indian Council of World Affairs (Government of India). https://www.icwa.in/show_content.php?lang=1&level=3&ls_id=9416&lid=6112#:~:text=The%20EU%20is%20India’s%202nd,EU%20total%20trade%20in%20goods.

    [7] Ibid.

     

    Feature Image Credit: dailynewsegypt.com

  • G20’s New Delhi Declaration: Serving the Interest of the Global Landlords

    G20’s New Delhi Declaration: Serving the Interest of the Global Landlords

    The Delhi declaration’s achievement is preservation of the interest of the global elite (including the Indian elite). The global landlords enabled it while paying lip service to global good.

    The G20 summit in India ended on a high note with a New Delhi Declaration. This is a matter of immense satisfaction for the prime minister personally and for his entire team which had to struggle to arrive at a consensus among the warring elements of the grouping. It highlights India’s present pole position in the global order. Other nations are trying to draw it into their sphere of influence, or at least trying to prevent it from getting closer to the other side.

    India’s advantage is a result of the continuing Ukraine war and the aggravating Cold War between the G7 and China-Russia combine. It has required deft manoeuvring, more so because of India’s political problems with China which resulted in its president giving the meeting a miss. This caused considerable consternation, given China’s economic and political clout.

    [powerkit_button size=”lg” style=”info” block=”true” url=”https://thewire.in/world/g20s-new-delhi-declaration-serving-the-interest-of-the-global-landlords” target=”_blank” nofollow=”false”]
    Read More
    [/powerkit_button]

  • The US economic war on China

    The US economic war on China

    The anti-China policies come out of a familiar playbook of US policy-making. The aim is to prevent economic and technological competition from a major rival.

    China’s economy is slowing down. Current forecasts put China’s GDP growth in 2023 at less than 5%, below the forecasts made last year and far below the high growth rates that China enjoyed until the late 2010s. The Western press is filled with China’s supposed misdeeds: a financial crisis in the real estate market, a general overhang of debt, and other ills. Yet much of the slowdown is the result of US measures that aim to slow China’s growth. Such US policies violate World Trade Organization rules and are a danger to global prosperity. They should be stopped.
    The anti-China policies come out of a familiar playbook of US policy-making. The aim is to prevent economic and technological competition from a major rival. The first and most obvious application of this playbook was the technology blockade that the US imposed on the Soviet Union during the Cold War. The Soviet Union was America’s declared enemy and US policy aimed to block Soviet access to advanced technologies.

    At the end of the 1980s and early 1990s, the US deliberately sought to slow Japan’s economic growth. This may seem surprising, as Japan was and is a US ally. Yet Japan was becoming “too successful,” as Japanese firms outcompeted US firms in key sectors, including semiconductors, consumer electronics, and automobiles.

    The second application of the playbook is less obvious, and in fact, is generally overlooked even by knowledgeable observers. At the end of the 1980s and early 1990s, the US deliberately sought to slow Japan’s economic growth. This may seem surprising, as Japan was and is a US ally. Yet Japan was becoming “too successful,” as Japanese firms outcompeted US firms in key sectors, including semiconductors, consumer electronics, and automobiles. Japan’s success was widely hailed in bestsellers such as Japan as Number One by my late, great colleague, Harvard Professor Ezra Vogel.
    In the mid-to-late 1980s, US politicians limited US markets to Japan’s exports (via so-called “voluntary” limits agreed with Japan) and pushed Japan to overvalue its currency. The Japanese Yen appreciated from around 240 Yen per dollar in 1985 to 128 Yen per dollar in 1988 and 94 Yen to the dollar in 1995, pricing Japanese goods out of the US market. Japan went into a slump as export growth collapsed. Between 1980 and 1985, Japan’s exports rose annually by 7.9 percent; between 1985 and 1990, export growth fell to 3.5 percent annually; and between 1990 and 1995, to 3.3 percent annually. As growth slowed markedly, many Japanese companies fell into financial distress, leading to a financial bust in the early 1990s.

    In the mid-1990s, I asked one of Japan’s most powerful government officials why Japan didn’t devalue the currency to re-establish growth. His answer was that the US wouldn’t allow it.

    Now the US is taking aim at China. Starting around 2015, US policymakers came to view China as a threat rather than a trade partner. This change of view was due to China’s economic success. China’s economic rise really began to alarm US strategists when China announced in 2015 a “Made in China 2025” policy to promote China’s advancement to the cutting edge of robotics, information technology, renewable energy, and other advanced technologies. Around the same time, China announced its Belt and Road Initiative to help build modern infrastructure throughout Asia, Africa and other regions, largely using Chinese finance, companies, and technologies.

    After winning the 2016 election on an anti-China platform, Trump imposed unilateral tariffs on China that clearly violated WTO rules. To ensure that WTO would not rule against the US measures, the US disabled the WTO appellate court by blocking new appointments.

    The US dusted off the old playbook to slow China’s surging growth. President Barrack Obama first proposed to create a new trading group with Asian countries that would exclude China, but presidential candidate Donald Trump went further, promising outright protectionism against China. After winning the 2016 election on an anti-China platform, Trump imposed unilateral tariffs on China that clearly violated WTO rules. To ensure that WTO would not rule against the US measures, the US disabled the WTO appellate court by blocking new appointments. The Trump Administration also blocked products from leading Chinese technology companies such as ZTE and Huawei and urged US allies to do the same.

    When President Joe Biden came to office, many (including me) expected Biden to reverse or ease Trump’s anti-China policies. The opposite happened. Biden doubled down, not only maintaining Trump’s tariffs on China but also signing new executive orders to limit China’s access to advanced semiconductor technologies and US investments. American firms were advised informally to shift their supply chains from China to other countries, a process labelled “friend-shoring” as opposed to offshoring. In carrying out these measures, the US completely ignored WTO principles and procedures.

    The US strongly denies that it is in an economic war with China, but as the old adage goes, if it looks like a duck, swims like a duck, and quacks like a duck, it’s probably a duck. The US is using a familiar playbook, and the Washington politicians are invoking martial rhetoric, calling China an enemy that must be contained or defeated.

    The results are seen in a reversal of China’s exports to the US. In the month that Trump came into office, January 2017, China accounted for 22 per cent of US merchandise imports. By the time Biden came into office in January 2021, China’s share of US imports had dropped to 19 per cent. As of June 2023, China’s share of US imports had plummeted to 13 per cent. Between June 2022 and June 2023, US imports from China fell by a whopping 29 per cent.

    Of course, the dynamics of China’s economy are complex and hardly driven by China-US trade alone. Perhaps China’s exports to the US will partly rebound. Yet Biden seems unlikely to ease trade barriers with China in the lead-up to the 2024 election.

    Unlike Japan in the 1990s, which was dependent on the US for its security, and so followed US demands, China has more room for maneuver in the face of US protectionism. Most importantly, I believe, China can substantially increase its exports to the rest of Asia, Africa, and Latin America, through policies such as expanding the Belt and Road Initiative. My assessment is that the US attempt to contain China is not only wrongheaded in principle but destined to fail in practice. China will find partners throughout the world economy to support a continued expansion of trade and technological advances.

     

    Feature Image Credit: The limits of US-China Economic Rivalry www.setav.org

  • BRICS++: The West tries playing ‘catch-up’, but it’s too late

    BRICS++: The West tries playing ‘catch-up’, but it’s too late

    Until recently, the West has largely derided the BRICS project. But it finally is awaking to the fact that the BRICS initiative possesses the potential to turn both geo-politics, and the international monetary system, upside-down.

    The seismic Geo-Political event of this era is the explosion of BRICS membership and of even bigger potential BRICS membership. This movement has crossed a key threshold. It has transited from ‘vanilla’ multipolarity to being an anti-colonial expression — a shift that should not be underestimated. It is an ethos drawing energy from deep layers of passionate feeling that was stifled in the immediate post-war years, but which is re-surfacing to invest the multi-polar framework with evident dynamism.

    There are currently eight nations that have formally applied for membership and 17 others that have expressed interest in joining. If Saudi Arabia and Russia are both members, that is two of the three largest energy producers in the one camp.

    If Russia, China, Brazil and India are all members, there will be four of the seven largest countries in the world measured by landmass — possessing 30% of the Earth’s dry surface and related natural resources — as BRICS members.

    Almost 50% of the world’s wheat and rice production, as well as 15% of the world’s gold reserves, are in the BRICS.

    Meanwhile, China, India, Brazil, and Russia are four of the nine highest-population countries on the planet with a combined population of 3.2 billion people or 40% of the Earth’s population.

    “China, India, Brazil, Russia and Saudi Arabia have a combined GDP of $29 trillion or 28% of nominal global GDP. If one uses purchasing power parity to measure GDP, then the BRICS share is over 54%. Russia and China have two of the three largest nuclear arsenals in the world”.

    “By every measure then — population, landmass, energy output, GDP, food output and nuclear weapons — BRICS is not just another multilateral debating society. They are a substantial and credible alternative to Western hegemony”, Jim Rickards asserts.

    With a new trading currency framework likely to be fore-shadowed in August at the BRICS summit, the currency will descend upon a highly receptive audience. It will fall into an increasingly sophisticated network of capital and communications. This network will greatly enhance its chances of success.

    The key mistake is the failure to distinguish between the respective roles of a payment (trading) currency and a reserve currency. Payment currencies are used in trade for goods and services. Nations can trade in whatever payment currency they want; it doesn’t have to be dollars. However, in so doing – in a large way – the demand for the dollar incrementally is drained away. Ultimately this loss of foreign demand for dollars circumscribes the ability of the US to go on spending well above its income.

    What has defined a reserve currency has been a large, well-developed sovereign bond market. No country in the world comes close to the US Treasury bond market in terms of breadth and convertibility.

    And Western finance personnel, therefore, snort in derision at the prospects of the US dollar ever losing its hegemony. But they forget perhaps that there was no US bond market until WW1 when  Woodrow Wilson authorized Liberty Bonds to help finance the war. There were bond rallies and Liberty Bond parades in every major city. It became a patriotic duty to buy Liberty Bonds. The effort worked, and it birthed the US bond market.

    In short, the way to create an instant reserve currency is to create an instant bond market using your own citizens as willing buyers. As Jim Rickards earlier noted, were the BRICS to ‘use a patriotic model’ (by drawing on today’s anti-colonial spirit sweeping the BRICS countries) it would be possible to create international reserve assets denominated in the BRICS+ (trading) currency.

    Also, the recent Bank for International Settlements (BIS)-led experiments in real-time and digital Central Bank foreign exchange transactions promises to transform such a project – and to lessen substantially the need for a large reserve-asset reservoir.

    Until recently, the West has largely derided the BRICS project. But it finally is awaking to the fact that the BRICS initiative possesses the potential to turn both geo-politics and the international monetary system, upside-down.

    This month, the Chair of the Eurasia Group, Cliff Kupchan, wrote in Foreign Policy that “6 Swing States Will Decide the Future of Geopolitics”

    “Middle powers today have more agency than at any time since World War II. These are countries with significant leverage in geopolitics. Much more interesting [however] are the six leading middle powers of the global south: Brazil, India, Indonesia, Saudi Arabia, South Africa, and Turkey. These swing states of the global south are not fully aligned with either superpower and are therefore free to create new power dynamics. These six also serve as a good barometer for broader geopolitical trends”.

     

    “… the question remains whether the BRICS states are going to become a more formal institution under China’s direction … that prospect is a clear challenge to the West…But the threat is unlikely to materialize. These countries may have tacked away from the United States — but that’s different from joining a Chinese-directed, Russian-assisted body actively opposing the United States. As of now, BRICS has not shown the ability to develop and implement a common agenda, so there is very little institutional strength for China to co-opt”

    The blinkers are on. The Western Establishment just doesn’t ‘get it’. Kupchan’s article’s conclusion: “the US has been playing catch-up – and not doing very well at even that”. It needs a well-crafted strategy toward each of the key Swing States (to halt their ‘tacking away’ from the US, towards the Russia-China axis), he warns. Arm-twisting, threats and coercion, presumably, as usual.

    ‘Catching-up’?  The horse already has bolted. The stable is empty.

     

    Feature Image: Indian Express

    This article was published earlier in Al Mayadeen English.

  • An Asia-Pacific NATO: fanning the flames of war

    An Asia-Pacific NATO: fanning the flames of war

     

    Former President Trump sidelined NATO to such an extent that European members were disillusioned with American leadership and NATO was in a state of fragmentation. With Biden’s presidency unleashing its Ukraine strategy and war against Russia, NATO has solidified with blind subservience to American leadership. Building on imagined threats from Russia and China, the US is now seeking to make a NATO alliance format for security across Asia as well. On the eve of the 33rd summit at Vilnius on 11-12 July 2023, Türkiye dropped its objections for Sweden to become the 33rd member of NATO, abandoning its 150-year tradition of proud neutrality and peace in favour of war-mongering. With an eye on Asia, the summit invited four Asian countries – Japan, South Korea, Australia, and New Zealand – as observers at the summit. The summit statement is, as expected, replete with anti-Russian rhetoric but more importantly extensive in its focus on the ‘China threat’ thus paving the way for NATO’s role in Asia. Jeffrey Sachs, in a speech in Australia in early July (reproduced below), has warned forcefully about the peril that NATO poses to global peace and security.                                           – TPF Editorial Team

    “My country, the U.S., is unrecognisable. I’m not sure who runs the country. I do not believe it is the president.”, says Jeffrey Sachs in a speech at a Saving Humanity and Planet Earth (SHAPE) seminar, Melbourne, Australia. “U.S. actions are putting us on a path to war with China in the same way that U.S. actions did in Ukraine.”

    “the idea of opening NATO offices in Asia is mind-boggling in its foolishness. Please tell the Japanese to stop this reckless action.”

    Jeffrey Sachs
    Speech to Shape (Saving Humanity and Planet Earth)
    July 5, 2023

    Good afternoon to everybody. I want to thank you for inviting me and to thank SHAPE for its leadership. I just had the privilege to listen to Alison Broinowski and Chung-in Moon. We have been treated to brilliant and insightful statements. I absolutely agree with all that has been said. The world has gone mad but especially the Anglo-Saxon world, I’m afraid. I don’t know whether there is any sense in our little English-speaking corner of the world. I’m of course speaking of the United States, UK, Canada, Australia and New Zealand.

    There’s something profoundly disheartening about the politics of our countries right now. The deep madness, I’m afraid, is British Imperial thinking that has been taken over by the United States. My country, the U.S., is unrecognisable now compared even to 20 or 30 years ago. I’m not sure, to tell you the truth, who runs the country. I do not believe it is the president of the United States right now. We are run by generals, by our security establishment. The public is privy to nothing. The lies that are told about foreign policy are daily and pervasive by a mainstream media that I can barely listen to or read anymore. The New York Times, Washington Post, Wall Street Journal and the main television outlets are 100 per cent repeating government propaganda by the day, and it’s almost impossible to break through.

    it’s about a madness of the United States to keep U.S. hegemony, a militarised foreign policy dominated by the thinking of generals who are mediocre intellects, personally greedy, and without any sense because their only modus operandi is to make war.

    What is this about? Well, as you’ve heard, it’s about a madness of the United States to keep U.S. hegemony, a militarised foreign policy dominated by the thinking of generals who are mediocre intellects, personally greedy, and without any sense because their only modus operandi is to make war.

    And they are cheer-led by Britain, which is unfortunately, in my adult life, increasingly pathetic in being a cheerleader for the United States for U.S. hegemony and for war. Whatever the U.S. says, Britain will say it ten times more enthusiastically. The U.K. leadership could not love the war in Ukraine more. It is the great Second Crimean War for the British media and for the British political leadership.

    Now, how Australia and New Zealand fall for this idiocy is really a deep question for me and for you. People should know better. But I’m afraid that it is the Five Eyes and the security establishment that told the politicians, to the extent that the politicians are involved in this, ‘well this is how we have to do it’. This is our Security State and I don’t think our politicians necessarily have much role in this. By the way, the public has no role in U.S. foreign policy at all. We have no debate, no discussion, no deliberation, no debates over voting the hundred, now $113 billion, but in fact much more money spent on the Ukraine War.

    So far there’s not been an hour of organised debate even in the Congress on this, much less in the public, but my guess is that your security establishment is really the driver of this in Australia, and they explain to the Prime Minister and others: ‘you know this is the utmost National Security, and this is what America has told us. Let us, your security apparatus, explain what we’re seeing. Of course, you cannot divulge this to the broader public, but this is, at the essence, a struggle for survival in the world’.

    Everything I see myself, and I’m now 43 years in this activity as an economic advisor all over the world, suggests that this message is nonsense. One thing that would be interesting for people to look at, in order to understand these developments, is a very telling article by a former colleague of mine at Harvard, Ambassador Robert Blackwell and Ashley Tellis, written for the Council on Foreign Relations in March 2015. I want to read a couple excerpts from it because it laid out the plan of what’s happening right now pretty directly. This is how things work in the U.S., in which future plans are laid out to the establishment in such reports.

    “Since its founding, the United States has consistently pursued a grand strategy focused on acquiring and maintaining preeminent power over various rivals. First on the North American continent, then in the Western Hemisphere, and finally, globally. Preserving U.S. primacy in the global system ought to remain the central objective of U.S. grand strategy in the 21st century.”    

     – Robert Blackwill and Ashley Tellis in a March 2015 article for Council on Foreign Relations.

    We’re basically told in 2015 what’s going to happen in US-China relations. The deterioration of relations was planned — it’s not ad hoc. So, here’s what Blackwell and Tellis wrote in 2015. First, “Since its founding, the United States has consistently pursued a grand strategy focused on acquiring and maintaining preeminent power over various rivals. First on the North American continent, then in the Western Hemisphere, and finally, globally.” And then they argue that “preserving U.S. primacy in the global system ought to remain the central objective of U.S. grand strategy in the 21st century.”

    So, what’s the U.S. goal? The goal is very straightforward, it is the primacy of the United States globally. Blackwell and Tellis lay out the game plan for China. They tell us what to do.

    Here’s the list, though I’m only excerpting: “Creating new preferential trading arrangements among U.S. friends and allies to increase their mutual gains through instruments that consciously exclude China.” This is the game that Obama already started with TPP, though he couldn’t get it through domestic political opposition. Second, “create, in partnership with U.S. allies, a technology control regime vis-à-vis Beijing,” to block China’s strategic capabilities. Third, build up “power-political capacities of U.S. friends and allies on China’s periphery,” and “improving the capability of U.S. military forces to effectively project power along the Asian rimlands despite any Chinese opposition.”

    This foreshadowing of US policies by way of the Council on Foreign Relations (CFR) is well-known in recent history.

    What I find especially remarkable about this list is that it was made in 2015. It’s the step-by-step plan of action actually being carried out. This foreshadowing of US policies by way of the Council on Foreign Relations (CFR) is well-known in recent history. In 1997 in the CFR’s journal Foreign Affairs, Zbigniew Brzezinski laid out with precision the intended timeline for NATO enlargement and specifically the intention to include Ukraine in that NATO enlargement. Of course, that NATO enlargement plan has led us directly to the Ukraine War, which is indeed a proxy Russia-US war over NATO enlargement.

    Now the friends and geniuses that brought you the Ukraine War are on their way to bringing you a new war in your neighbourhood. As Professor Moon noted, the North Atlantic Treaty Organization is starting to open its offices in East Asia, which is not exactly the North Atlantic.

    So, this is where we are. It’s not absolutely simple to see through for one main reason, at least in the U.S. I’m not sure what it’s like in Australia but I expect that it’s pretty much the same as in the U.S., where we have no honesty or public deliberation about any of this. The policies are owned entirely by the security establishment, the military-industrial complex, the network of “think tanks” which are in fact non-think tanks in Washington, with almost all funded by the military-industrial complex.

    The military-industrial complex and its corporate lobby have taken over the East Coast universities where I teach. I taught at Harvard for more than 20 years, and now I teach at Columbia University. The influence of the intelligence agencies on the campuses is unprecedented, in my experience. All of this has happened without much public notice, almost a silent coup. There is no debate, no public politics, no honesty, no documents revealed. Everything is secret, confidential and a bit mysterious. Since I happen to be an economist who engages with the heads of state and ministers around the world, I hear a lot of things and see a lot of things that help me to pierce through the official “narratives” and pervasive lies.

    You will not find any of this in our public discourse. And just a word, if I may, about the Ukraine War. The war was completely predictable, and resulted from a U.S. plan for hegemony based on NATO enlargement that dates back to the early 1990’s. The U.S. strategy was to bring Ukraine into the U.S. military orbit. Brzezinski, again in 1997 in his book The Global Chess Board, laid out the strategy. Russia without Ukraine is nothing, he argued. Ukraine, he wrote, is the geographical pivot for Eurasia. Interestingly, Brzezinski warned American policymakers to ensure that they don’t push Russia and China into an alliance. In fact, that would be so antithetical to U.S. interests that Brzezinski clearly believed that it would never happen. But it has, because U.S. foreign policy is incompetent as well as profoundly dangerous and misconceived.

    During 1990-91, I happen to have been an advisor to Gorbachev, and during 1991-94, to Boris Yeltsin and Leonid Kuchma, spanning the late days of perestroika and the early days of Russian and Ukrainian independence after the dissolution of the Soviet Union. I watched very closely what was happening. I saw that the United States was absolutely uninterested in any way in helping Russia to stabilise.

    The idea of the U.S. security establishment from the early 1990s was U.S.-led unipolarity or U.S. hegemony. In the early 1990s, the U.S. rejected measures to help stabilise the Soviet economy and then the Russian economy, while it also began planning NATO enlargement, in direct contradiction to what the U.S. and Germany had promised Gorbachev and Yeltsin. So, the issue of NATO enlargement, including to Ukraine, is part of a U.S. game plan that started in the early 1990s, and eventually led to the Ukraine war.

    By the way, the U.S. was deeply involved in the overthrow of Ukraine’s pro-Russian president in 2014. Yes, this was a coup, and to an important extent, a regime change operation of the United States. I happen to have seen a part of it, and I know that U.S. money poured into supporting the Maidan. Such U.S. meddling was disgusting and destabilising, and all part of the game plan to enlarge NATO to Ukraine and Georgia.

    When one looks at the map it’s indeed Brzezinski’s 1997 idea: surround Russia in the Black Sea region. Ukraine, Romania, Bulgaria, Turkey and Georgia would all be members of NATO. That would be the end of Russian power projection in the Eastern Mediterranean and the Middle East. So it went for these “security” geniuses.

    Putin put forward diplomatic responses that were repeatedly rejected by the U.S. and its NATO allies, including the Minsk II Agreement endorsed by the U.N Security Council, but then ignored by Ukraine.

    On December 17, 2021, Putin put on the table a perfectly reasonable document as the basis for negotiation, A Draft U.S.-Russia Security Agreement. At the core was Russia’s call for an end to NATO expansion. Tragically, the U.S. blew it off. I called the White House at the end of December 2021, spoke with one of our top security officials, and pleaded, “Negotiate. Stop the NATO enlargement. You have a chance to avoid war.” Of course, to no avail. The United States’ formal response to Putin was that NATO enlargement was non-negotiable with Russia, a matter in which Russia has absolutely no say.

    This is a mind-boggling way to pursue foreign affairs because it is a direct road to war. I hope everybody understands this war in Ukraine was close to ending as early as March 2022 with a negotiated agreement just one month after Russia invaded on February 24th. The negotiated agreement was stopped by the U.S. because it was based on Ukraine’s neutrality. The U.S. told Ukraine to fight on, end negotiations, and reject neutrality.

    And so we are in a war that continues to escalate towards possible nuclear war, which is what would happen if Russia were to suffer deep defeats on the battlefield. Russia is not losing on the battlefield just now, but if it did, it would likely escalate to nuclear war. Russia is not going to be pushed out of the Donbas and Crimea and meekly go home with apologies. Russia is going to escalate if it needs to escalate. So, we are right now in a spiral that is extremely dangerous.

    Japan plays utterly into this spiral. And Australia does as well. It’s so sad to watch Australia accepting to be used in this reckless way. To pay a fortune for new military bases in a reckless, provocative, and costly way, that will feed the U.S. military-industrial complex while weighing heavily on Australia.

     

    Such U.S. actions are putting us on a path to war with China in the same way that U.S. actions did in Ukraine. Only an Asia-Pacific war would be even more disastrous. The whole idea of the U.S. and its allies fighting China is mind-boggling in its implications, its stupidity and its recklessness. All of this is utterly divorced from Australia’s real security interests. China is not a threat to Australia. It is not a threat to the world.

    I don’t know of a single Chinese overseas invasion in its history, by the way, except when the Mongols briefly ruled China and tried to invade Japan. Other than the Mongol invasion, defeated by a typhoon, China has not launched overseas wars. It’s just not part of China’s statecraft, nor would such wars be in China’s national interest.

    What worries me about the world is a deeply neurotic United States (in)security leadership that aims to be number one, but that can’t be number one in the way that it believes. This is pathetic, yet is applauded each day in London, a place that still dreams of the glory of global empire from a long bygone era.

    RCEP is the correct concept for the region to bring together China, Korea, Japan, the ten ASEAN countries, Australia and New Zealand in a coherent framework, especially around the climate challenge, energy policy, trade policy, and infrastructure and investment policy. A well-functioning RCEP would do a world of good, not only for the 15 countries in RCEP but for the entire world.

    Permit me, in conclusion, to take one minute to say what should be done.

    First, the war in Ukraine could end the day Biden steps up and says NATO will not enlarge to Ukraine. The basis for a negotiated security arrangement has been there for 30 years, but has been rejected so far by the U.S.

    Second, the idea of opening NATO offices in Asia is mind-boggling in its foolishness. Please tell the Japanese to stop this reckless action.

    Third, the U.S. approach to arming Taiwan is profoundly dangerous, provocative and deliberately so.

    Fourth, what is needed most in the Asia-Pacific is regional dialogue amongst Asia-Pacific nations.

    Fifth, the Asia-Pacific should build on RCEP [Regional Comprehensive Economic Partnership Agreement]. RCEP is the correct concept for the region to bring together China, Korea, Japan, the ten ASEAN countries, Australia and New Zealand in a coherent framework, especially around the climate challenge, energy policy, trade policy, and infrastructure and investment policy. A well-functioning RCEP would do a world of good, not only for the 15 countries in RCEP but for the entire world.

    Sorry to have run on so long but it’s so important what SHAPE is doing. You’re completely on the right track and all best wishes to your efforts.

     

    This transcript of Jeffrey Sach’s speech was published earlier in Pearls and Irritations.

    Feature Image Credit: bnn.network

    Cartoon Credit: Global Times

  • The Asymmetric Indo-US Technology Agreement Points to India’s Weak R&D Culture

    The Asymmetric Indo-US Technology Agreement Points to India’s Weak R&D Culture

    Prime Minister Narendra Modi’s state visit to the USA resulted in four significant agreements and the visit is hailed as one of very important gains for India and Indo-US strategic partnership. The focus has been on defence industrial and technology partnership. Media and many strategic experts are seeing the agreements as major breakthroughs for technology transfers to India, reflecting a very superficial analysis and a lack of understanding of what really entails technology transfer. Professor Arun Kumar sees these agreements as a sign of India’s technological weakness and USA’s smart manoeuvring to leverage India for long-term defence and technology client. The visit has yielded major business gains for USA’s military industrial complex and the silicon valley. Post the euphoria of the visit, Arun Kumar says its time for India to carefully evaluate the relevant technology and strategic policy angles.

     

    The Indo-US joint statement issued a few days back says that the two governments will “facilitate greater technology sharing, co-development and co-production opportunities between the US and the Indian industry, government and academic institutions.” This has been hailed as the creation of a new technology bridge that will reshape relations between the two countries

    General Electric (GE) is offering to give 80% of the technology required for the F414 jet engine, which will be co-produced with Hindustan Aeronautics Limited (HAL). In 2012, when the negotiations had started, GE had offered India 58%. India needs this engine for the Light Combat Aircraft Mark 2 (LCA Mk2) jets.

    The Indian Air Force has been using LCA Mk1A but is not particularly happy with it. It asked for improvements in it. Kaveri, the indigenous engine for the LCA under development since 1986, has not been successful. The engine development has failed to reach the first flight.

    So, India has been using the F404 engine in the LCA Mk1, which is 40 years old. The F414 is also a 30-year-old vintage engine. GE is said to be offering 12 key technologies required in modern jet engine manufacturing which India has not been able to master over the last 40 years. The US has moved on to more powerful fighter jet engines with newer technologies, like the Pratt & Whitney F135 and GE XA100.

    India is being allowed into the US-led critical mineral club. It will acquire the highly rated MQ-9B high-altitude long-endurance unmanned aerial vehicles. Micron Technologies will set up a semiconductor assembly and test facility in Gujarat by 2024, where it is hoped that the chips will eventually be manufactured. The investment deal of $2.75 billion is sweetened with the Union government giving 50% and Gujarat contributing 20%. India is also being allowed into the US-led critical mineral club.

    There will be cooperation in space exploration and India will join the US-led Artemis Accords. ISRO and NASA will collaborate and an Indian astronaut will be sent to the International Space Station. INDUS-X will be launched for joint innovation in defence technologies. Global universities will be enabled to set up campuses in each other’s countries, whatever it may imply for atmanirbharta.

    What does it amount to?

    The list is impressive. But, is it not one-sided, with India getting technologies it has not been able to develop by itself.

    Though the latest technology is not being given by the US, what is offered is superior to what India currently has. So, it is not just optics. But the real test will be how much India’s technological capability will get upgraded.

    Discussing the New Economic Policies launched in 1991, the diplomat got riled at my complaining that the US was offering us potato chips and fizz drinks but not high technology, and shouted, “Technology is a house we have built and we will never let you enter it.”

    What is being offered is a far cry from what one senior US diplomat had told me at a dinner in 1992. Discussing the New Economic Policies launched in 1991, the diplomat got riled at my complaining that the US was offering us potato chips and fizz drinks but not high technology, and shouted, “Technology is a house we have built and we will never let you enter it.”

    Everyone present there was stunned, but that was the reality.

    The issue is, does making a product in India mean a transfer of technology to Indians? Will it enable India to develop the next level of technology?

    India has assembled and produced MiG-21 jets since the 1960s and Su-30MKI jets since the 1990s. But most critical parts of the Su-30 come from Russia. India set up the Mishra Dhatu Nigam in 1973 to produce the critical alloys needed and production started in 1982, but self-sufficiency in critical alloys has not been achieved.

    So, production using borrowed technology does not mean absorption and development of the technology. Technology development requires ‘know-how’ and ‘know-why’.

    When an item is produced, we can see how it is produced and then copy that. But we also need to know how it is being done and importantly, why something is being done in a certain way. Advanced technology owners don’t share this knowledge with others.

    Technology is a moving frontier

    There are three levels of technology at any given point in time – high, intermediate, and low.

    The high technology of yesterday becomes the intermediate technology of today and the low technology of tomorrow. So, if India now produces what the advanced countries produced in the 1950s, it produces the low-technology products of today (say, coal and bicycles).

    If India produces what was produced in the advanced countries in the 1980s (say, cars and colour TV), it produces the intermediate technology products of today. It is not to say that some high technology is not used in low and intermediate-technology production.

    The high technologies of today are aerospace, nanotechnology, AI, microchips and so on. India is lagging behind in these technologies, like in producing passenger aircraft, sending people into space, making microchips, quantum computing, and so on.

    The advanced countries do not part with these technologies. The World Trade Organisation, with its provisions for TRIPS and TRIMS (Trade-Related Aspects of Intellectual Property Rights and Trade-Related Investment Measures), consolidated the hold of advanced countries on intermediate and low technologies that can be acquired by paying royalties. But high technology is closely held and not shared.

    Advancements in technology

    So, how can nations that lag behind in technology catch up with advanced nations? The Nobel laureate Kenneth Arrow pointed to ‘learning by doing’ – the idea that in the process of production, one learns.

    So, the use of a product does not automatically lead to the capacity to produce it, unless the technology is absorbed and developed. That requires R&D.

    Schumpeter suggested that technology moves through stages of invention, innovation and adaptation. So, the use of a product does not automatically lead to the capacity to produce it, unless the technology is absorbed and developed. That requires R&D.

    Flying the latest Airbus A321neo does not mean we can produce it. Hundreds of MiG-21 and Su-30 have been produced in India. But we have not been able to produce fighter jet engines, and India’s Kaveri engine is not yet successful. We routinely use laptops and mobile phones, and they are also assembled in India, but it does not mean that we can produce microchips or hard disks.

    Enormous resources are required to do R&D for advanced technologies and to produce them at an industrial scale. It requires a whole environment which is often missing in developing countries and certainly in India.

    Enormous resources are required to do R&D for advanced technologies and to produce them at an industrial scale. It requires a whole environment which is often missing in developing countries and certainly in India.

    Production at an experimental level can take place. In 1973, I produced epitaxial thin films for my graduate work. But producing them at an industrial scale is a different ballgame. Experts have been brought from the US, but that has not helped since high technology is now largely a collective endeavour.

    For more complex technologies, say, aerospace or complex software, there is ‘learning by using’. When an aircraft crashes or malware infects software, it is the producer who learns from the failure, not the user. Again, the R&D environment is important.

    In brief, using a product does not mean we can produce it. Further, producing some items does not mean that we can develop them further. Both require R&D capabilities, which thrive in a culture of research. That is why developing countries suffer from the ‘disadvantage of a late start’.

    A need for a focus on research and development

    R&D culture thrives when innovation is encouraged. Government policies are crucial since they determine whether the free flow of ideas is enabled or not. Also of crucial importance is whether thought leaders or sycophants are appointed to lead institutions, whether criticism is welcomed or suppressed, and whether the government changes its policies often under pressure from vested interests.

    Unstable policies increase the risk of doing research, thereby undermining it and dissuading the industry. The result is the repeated import of technology.

    The software policy of 1987, by opening the sector up to international firms, undermined whatever little research was being carried out then and turned most companies in the field into importers of foreign products, and later into manpower suppliers. Some of these companies became highly profitable, but have they produced any world-class software that is used in daily life?

    Expenditure on R&D is an indication of the priority accorded to it. India spends a lowly 0.75% of its GDP on R&D. Neither the government nor the private sector prioritises it. Businesses find it easier to manipulate policies using cronyism. Those who are close to the rulers do not need to innovate, while others know that they will lose out. So, neither focus on R&D.

    Innovation also depends on the availability of associated technologies – it creates an environment. An example is Silicon Valley, which has been at the forefront of innovation. It has also happened around universities where a lot of research capabilities have developed and synergy between business and academia becomes possible.

    This requires both parties to be attuned to research. In India, around some of the best-known universities like Delhi University, Allahabad University and Jawaharlal Nehru University, coaching institutions have mushroomed and not innovative businesses. None of these institutions are producing any great research, nor do businesses require research if they can import technology.

    A feudal setup

    Technology is an idea. In India, most authority figures don’t like being questioned. For instance, bright students asking questions are seen as troublemakers in most schools. The emphasis is largely on completing coursework for examinations. Learning is by rote, with most students unable to absorb the material taught.

    So, most examinations have standard questions requiring reproduction of what is taught in the class, rather than application of what is learned. My students at JNU pleaded against open-book exams. Our class of physics in 1967 had toppers from various higher secondary boards. We chose physics over IIT. We rebelled against such teaching and initiated reform, but ultimately most of us left physics – a huge loss to the subject.

    Advances in knowledge require critiquing its existing state – that is, by challenging the orthodoxy and status quo. So, the creative independent thinkers who generate socially relevant knowledge also challenge the authorities at their institutions and get characterised as troublemakers. The authorities largely curb autonomy within the institution and that curtails innovativeness.

    In brief, dissent – which is the essence of knowledge generation – is treated as a malaise to be eliminated. These are the manifestations of a feudal and hierarchical society which limits the advancement of ideas. Another crucial aspect of generating ideas is learning to accept failure. The Michelson–Morley experiment was successful in proving that there is no aether only after hundreds of failed experiments.

    Conclusion

    The willingness of the US to provide India with some technology without expecting reciprocity is gratifying. Such magnanimity has not been shown earlier and it is obviously for political (strategic) reasons. The asymmetry underlines our inability to develop technology on our own. The US is not giving India cutting-edge technologies that could make us a Vishwaguru.

    India needs to address its weakness in R&D. As in the past, co-producing a jet engine, flying drones or packaging and testing chips will not get us to the next level of technology, and we will remain dependent on imports later on.

    This can be corrected only through a fundamental change in our R&D culture that would enable technology absorption and development. That would require granting autonomy to academia and getting out of the feudal mindset that presently undermines scientific temper and hobbles our system of education.

     

    This article was published earlier in thewire.in

    Feature Image Credit: thestatesman.com