27 February 2010

Iran, India Israel, Pakistan and The Bomb




I do not support proliferation of nuclear weapons, for Iran or other countries. However, in the case of Iran, I believe the threat of Iran ever employing nuclear weapons is overblown.  One should look beyond the Iranian government’s intemperate rhetoric.  The government knows full well that a nuclear attack on any country would bring swift and catastrophic retaliation that would result in destruction of the Iranian government and much of the country’s infrastructure. Blustering rhetoric the Iranians are guilty of, but they are not fools

The hyperbole, threats and scare mongering by the US and Israel are surely more about protecting Israel’s nuclear exclusivity in the Middle East. However there is a far more serious issue about nuclear weaponry at stake.

Instead of worrying about Iran, one should be debating what to do should Pakistan go critical and fall into the hands of radical fundamentalists. Such a regime would be far more likely to launch a nuclear attack on either India or Israel than Iran would on Israel or the US. Should such a regime change take place in Pakistan, what would the response be? Bomb the nuclear facilities in Pakistan, initiate yet another war? Encourage India to invade Pakistan and trigger a wider regional conflict of frightening proportions?

This same question about nuclear proliferation could put be put with regard to any other country not considered an ally of the US.  North Korea is far more unstable and less predictable than Iran, yet one hears little in the way of threats by the US or Europe to bomb or invade North Korea.

21 February 2010

US Foreign Policy, an Antonym for Realpolitik

Realpolitik, a definition: Realpolitik (German: real “realistic”, “practical” or “actual”; and Politik “politics”) refers to politics or diplomacy based primarily on practical considerations, rather than ideological notions or moralistic premises;

There is no listed Antonym for Realpolitik, but one can be found in the practice of Foreign Policy of the United States. The US has practiced an unrealistic, impractical policy since the end of World War II and it is a policy that unusually attracts bi-partisan support. Both the Democrats and Republicans are guilty of pursuing a policy clearly inimical to the US national interest.

The US foreign policy is the antithesis of practical no-nonsense national interest, diplomacy. All one needs to do to understand this is the recent row with China, the world’s second largest economy, the world’s number one exporter and most importantly, the US’s major creditor holding over $700 billion in US treasury notes. Without China’s purchase of US debt, the US would be on the brink of financial collapse. In addition, China’s economy is driving the global economic recovery. Yet, rather than applauding China, the US has done all possible to provoke and alienate China by imposing tariffs on Chinese imports at the behest of US labour unions; catering to a the Tibetan Dali Lama as a head of state when he is only a religious leader; supplying arms to Taiwan, regarded by China as a breakaway province. In addition to China’s importance as an economic power it also wields a Security Council veto. It can put a stop to any coordinated attempt to impose sanctions on Iran and could withdraw from the six party talks aimed at containing North Korea signalling the death knell of those negotiations. For the US in particular there is a huge risk in antagonising China. Presently, China buys US debt in order to prop up the US financial structure and thereby its major export market. However, should China’s domestic economy and those of its Asian neighbours mature, China would no longer be dependent on exports to the US market and no longer find it necessary to purchase US debt. At that point the danger to the US economy becomes acute.

Then, there is Georgia that foolishly began a war with Russia and invaded an inconsequential breakaway province, South Ossetia, which had opted to join Russia. The US inserted itself into the conflict supporting Georgia, which was clearly at fault, thereby angering Russia and went so far as to express support for Georgia’s application to join NATO, the North Atlantic Treaty Organisation. Georgia, situated in the Caucasus region on the Black Sea, far removed from the North Atlantic. Little wonder Russia looked upon this bit of foolery as an attempt to gain a military foothold into the Russian sphere. Somehow the US, which regarded the Soviet presence in Cuba as a threat to its national security in 1962 and invasion of its sphere could not understand why Russia should object to the US having a military presence in the Caucasus. Russia, no longer the formidable foe that was its predecessor state, the USSR, is still an important nuclear armed global power, and a member of the five nation UN Security council, like China, with veto power. Without Russia’s support in the six power talks on North Korea negotiations would grind to a halt. Again, without the support of Russia, there can be no effective UN Security resolution regarding Iran.

Without a doubt the most grievous and damaging mistakes made in the name of US non-Realpolitik has been the unstinting support of Israel. That support has led to the alienation of the entire Muslim world and has been at the crux of the rise of radical fundamentalism and attendant terrorism. The US, to mollify and gain the support of the US based pro Israeli lobby, has sacrificed relations with the entire Middle East, and large parts of South East Asia all in order to accommodate a nation state of no strategic value. The only value Israel now has is as an ally is to counteract terrorism, the cause of which was the creation of the state of Israel, and the US support of subsequent Israeli policies. One cannot turn back the clock and remove the state of Israel, but if the US were to be a truly honest and impartial broker in its dealings with the Palestinian problem, perhaps something could be salvaged from what is a geopolitical disaster.  I fear, however, matters have now deteriorated to the point that not even a two state solution is possible, or even desirable. The bloodshed, acrimony and deep-seated hatred is so imbued in the Palestinians that the people will never fully accept such a compromise. In the long term, as one Israeli friend said, demographics will prevail, a separate Jewish state will not survive but will revert to a pre-war single state embracing both the Muslin and Jewish peoples. In the meanwhile, both the Israelis and the Palestinians will continue to suffer.

As so often much of the US foreign policy has been formulated to accommodate US domestic ethnic and religious pressure and lobby groups rather than for the national interest. And when one looks at the current conflicts and potential ones on the boil, most of them can be laid at the doorstep of a deeply flawed US foreign policy.







The EU, a failed State?

The latest economic crisis to arise is that of Greece, a profligate country that has squandered its resources and is now reduced to holding a begging bowl for a financial bail out. Were it just Greece that suffers, one could shrug it off and leave it to the Greeks to sort out. The problem is that Greece is a member state of the EU, and of the EMU, the European Monetary Union, comprised of 16 countries that employ the Euro currency. Thus, the economy of each member state redounds not only upon the other states, but globally. The supposed deficit maximum for all member states is 3% but Greece's deficit has ballooned to 13%! “Greece’s budget gap, which its previous government originally forecast would be 3.7 percent in 2009, was largely the result of “an insufficient response” by Greek authorities as well as expenditure overruns, the commission said. Economic statistics provided by Greece “were completely wrong,”

That, alas, is not the only delinquent country. Greece is only one of the infamous PIIGS countries - Portugal, Ireland, Italy, Greece and Spain - all of which have exceeded the theoretical 3% deficit limit. Other countries, even major economies as France and the UK are on the cusp of surpassing the same limit. The UK, once a leading economy in Europe and the world, although not a member of the EMU Eurozone, now has a Debt to GDP ratio of 456%! Worse, there is now talk of the imminent collapse of Sterling.   The 3% deficit limit has become a joke. There is no fiscal discipline, just empty threats to punish the delinquent nations, and because of the fear of a domino effect, no punishment, instead, bail outs. 

What happened to the dream of creating a major economic union to rival the world's leading economy, the United States?

The answer is 'o'er leaping ambitions'.

The EU began with a core of six countries in 1957, comprised at that time of the major powers in Europe: Belgium, France, Italy Luxembourg, the Netherlands, West Germany - and expanded shortly thereafter to include the UK, Denmark and Ireland. All well and good, but then the rot set in. The EU, in an unseemly rush to incorporate other countries and expand its influence and economic clout, began willy nilly to admit country markets with economies and political cultures incompatible with the core structure. In the 1980s came Greece, Spain and Portugal, and, after the fall of the wall, a veritable flood of new admissions from underdeveloped nations from East Europe. The current membership now numbers 27 countries with another eight awaiting admission: Croatia, Macedonia, Turkey, Albania, Bosnia and Herzegovina, Montenegro, Serbia, and Iceland.  Iceland? Yes, Iceland, which has just suffered the collapse of three banks and a financial meltdown

As more countries with even more disparate cultures and economies are added, the greater the risk of collapse of the EU and the Euro. 

Post Script
As much as China is pilloried for currency manipulation, and authoritarianism by the vaunted free market countries of Europe and the United States it has the healthiest economy in the world. In terms of both Public and External Debt China ranks well below the US and major European economies

Public Debt http://en.wikipedia.org/wiki/List_of_countries_by_public_debt

External Debt http://en.wikipedia.org/wiki/List_of_countries_by_external_debt

Debt to GDP Ratio
Even more impressive is China's Debt to GDP Ratio, 5% against USA 84%, Germany 155%, France 210%. 



31 January 2010

China at the 2010 Davos WEF

Today’s (31 January 2010) NZZ am Sonntag  (Neue Züricher Zeitung), my favourite Sunday newspaper, in the Background Section carried a full page feature article on the Chinese presence at the WEF in Davos titled “ China demonstriert am WEF seine neue Machtposition” (At the WEF China showcases its new power). Alas, the article is ,of course, in German and I am too lazy to translate it in its entirety, so I shall treat you only to some excerpts:

“In the past at WEF it has always been the United States on centre stage with the CNN interviewing and dancing in attendance on a hefty high level US delegation. This week the staging changed dramatically.

This past week the highest profile American was Barney Franks, a Democratic congressman holding forth on discussion panels. The low profile of the US  at the WEFF was signalled by the change in administration and the tone of Obama’s State of the Union Address. In contradistinction to the US presence one saw a high calibre Chinese contingent headed by the Vice Presidential Minister, Li Keqiang, tipped to be the successor to Hu Jintao. Also, interestingly, more Chinese was heard spoken in Davos than any time in the past.

The US is turning inward absorbed by its own difficulties, polarised by domestic politics and severely hit by the economic downturn. Into this gap enter China, and how!  The Middle Kingdom has replaced Germany as the number one exporter in the world and supplanted Japan as the second largest economy.

China now produces more automobiles than the USA and is home to four of the five largest banks on the planet. China, not the moribund EU, has the resources to provide a Greece verging on bankruptcy with funds to prevent it going under.

Ironically, the global financial crisis was the springboard which launched China into prominence. In Copenhagen, China flexed its muscle confronting and denying the USA leadership on the issue of climate change. Negative as that might be seen, on the positive side of the ledger, a recovery from the global recession would be very difficult without the Chinese locomotive.

No one is more conscious of this than the Chinese themselves as evidenced at one of the discussion panels in Davos. Some Western participants called once again for the exchange rate of the Renminbi to be adjusted and declared that China must finally “play by the rules”. To that, responded the head of one the largest Chinese banks, “those are your rules, not our rules. Why should we play by these rules?” Lecturing by the West is no longer welcomed by the Chinese.

The time is long past that one must blindly follow the US capitalistic recipe said one Chinese economist. The central question for China is “what is best for China?”

With respect to relations with the USA, one representative of this new China said to a representative of the USA, “We are not friends, we are business partners”

This sea change and shift in global power couple with continuing economic problems in the USA could give rise to resentment amongst Americans and engender increasing protectionism leading to a trade war.”

Finis

My Italics and Comments
At end of the day, should it come to a trade war, both parties would be sorely wounded. But China holds more economic weaponry in the form of disposable capital, and has a more disciplined population behind it than the USA. The Chinese, having endured sorrow and misfortune over the last two hundred years have steeled and toughened themselves, and the domestic economy of China will soon decouple China from its present dependence on exports, and the USA. This, while the US has grown soft, spoiled,  politically inept, debt ridden and intellectually dissolute.


For China, a double standard


This morning’s Washington Post (31 January 2010) raised flags of concern over a change in China’s tone described as “triumphalist“ and “tough” in its response to US arms sales to Taiwan.

It would be almost amusing if not for the potentially serious nature of this conflict.

The US State Department justifies the sales saying "Such sales contribute to maintaining security and stability across the Taiwan Strait,".

Oh, come now let us be frank. The arms are to support continuing America influence in the Pacific theatre and ensure Taiwan could eventually used as a base of operations in event of open conflict with China.

The US cannot seem to accept that the Pacific Ocean is no longer an off-shore American lake over which it has dominion. With the rise of China to its former glory after two centuries of exploitation by the West, China is resuming its role as one of the great nations of the world and the dominant force in the region.

Taiwan will, in the not distant future, revert to its former status as a province of China, otherwise it will find itself isolated economically, militarily and politically. Economically, because China is its major trading partner, militarily because Taiwan cannot stand up to China’s might and with America’s financial woes and multiple wars cannot expect to be propped up by the US. Politically, Taiwan is also being marginalised by the change in political climate in Japan where the new government led by Hatoyama is moving Japan out from under the wing of the US and toward closer relations with China. Again, as with Taiwan, China has replaced the US as Japan’s biggest trading partner. In fact, China’s dramatic recovery from the recent global economic downturn has served to rescue Japan from recession.

From the assumption of power by the communists in China in 1949 until recently, Taiwan could rely for support on both Japan and the US, but no longer. As Japan logically moves out of the US orbit, so will Taiwan be forced back into China’s fold, whether the US likes it or not.

The reaction and hand wringing concern expressed by Europe, as well as the US, is symptomatic of their inability and unwillingness to relinquish the colonial hold they  held over China for two hundred years. The centre of gravity of global power is moving inexorably to the East and the sooner the European/Transatlantic alliance accepts and accommodates themselves to this the better for them and the world.


25 January 2010

For China the Economic Nuclear Option, option



Much has been written about mutual self assured destruction should China use its ultimate economic weapon as reprisal for US potectionist legislation and interference in internal affairs.

Indeed, by cashing in T-Notes and/or diversifying its enormous US currency holdings away from the US dollar China risks killing the golden goose, its prime export market. Fortunately, however, China’s domestic economy is improving and growing fast and much of its current growth now stems from burgeoning domestic consumption. It is slowly reducing its depndence on exports in general and exports to the US in particular.

However, it will not be wholly independant in the short term and until it is, China will be hostage to a US Democratic congress which is, in turn, hostage to US labour unions.  So, what to do?

Although a full scale counterattack at this stage would harm ist own interests, China could nevertheless fire a warning shot across the bow of the US. China could bring home to the US the eventual risk it faces in provoking the Dragon by simply suspending for one or two months purchase of Treasury notes and, at the same time, devote a large sum of its massive dollar holdings to increasing its Gold reserves, already the world’d largest holdings (1000 tonnes). The US needs a constant infusion, a fix, of several billion  dollars from sale of T-notes each month to keep its financial head above water, and the withdrawal of Chinese support would serve as a loud wake-up call to the present myopic US administration.

18 January 2010

Democracy as a global concept - an observation from the past, a warning for the future

I first posted this blog on 26 March 2005, and because it remains a salient topic I am republishing it.

With reference to my previous posts expressing doubt about the validity and global application of democracy, a friend recently sent me the following:

“At about the time the original 13 United States adopted their new
constitution, in the year 1787, Alexander Tyler (a Scottish history
professor at The University of Edinburgh) had this to say about "The
Fall of The Athenian Republic" some 2,000 years prior.

"A democracy is always temporary in nature; it simply cannot exist as a
permanent form of government. A democracy will continue to exist up
until the time that voters discover that they can vote themselves
generous gifts from the public treasury.

From that moment on, the majority always votes for the candidates who
promise the most benefits from the public treasury, with the result that
every democracy will finally collapse due to loose fiscal policy, (which
is) always followed by a dictatorship."

"The average age of the worlds greatest civilizations from the beginning
of history, has been about 200 years. During those 200 years, these
nations always progressed through the following sequence:

From bondage to spiritual faith;
From spiritual faith to great courage;
From courage to liberty;
From liberty to abundance;
From abundance to complacency;
From complacency to apathy;
From apathy to dependence;
From dependence back into bondage."

End of quote

In that sequence of events I would place the United States somewhere between dependence (depending on foreign financial institutions to buy over $2 billion a day in US T-Notes to finance America’s burgeoning debt and consumer appetite) and bondage (when countries decide not to buy the wonky T-Notes and US dollar, or decide to foreclose, leaving the US up for sale).

17 January 2010

A Swiss View of the USA

A Swiss View of Obama
This one centres on an article in today's Neue Züricher Zeitung, the premier Sunday German language newspaper in Switzerland to which I subscribe and read with my Sunday morning breakfast at a local Café. The article today deals with Obama's first year in office with an assessment of his performance in various sectors where he promised "Change". I should point out that the newspaper, the NZZ, like most European media was harshly critical of Bush and welcomed Obama with open arms. Now, a year later, the ardour has cooled considerably and criticism of Obama throughout Europe has mounted.

Herewith the NZZ analysis of Obama's polices and what he has achieved with respect to the following issues:

The Economy and Employment in the US: Obama claims two million jobs were saved with the stimulus package, a number widely disputed, while unemployment in the US continues to rise.

Financial System: Despite bailouts and multi billion dollar handouts, banks have not relaxed credit and despite threats of reprisal by the Obama administration, the banks continue to award huge bonuses to executives

Healthcare: A health care package has been agreed but the cost of the programme remains unclear, and could further exacerbate the indebtedness of the US.

The Wars in Iraq and Afghanistan: Troops are being withdrawn from Iraq as promised but now, as many expected, unrest is once more on the increase. At the same time troop levels in Iraq are drawn down, the number of boots on the ground is being increased in Afghanistan, so there is no net gain and the war in Afghanistan is becoming increasingly unpopular in the US and seen by many as already lost.

The Middle East Peace Process: Failure. Obama has been unable to rein in the pro-Israeli Lobby in the US, and Netanyahu in Israel, nor stop construction of new settlements.

The Battle against Terrorism: The global terrorist networks continue to flourish and expand and the conundrum of closing Guantanamo is unresolved, the result of the latter being that initial goodwill toward Obama in the Arab world has all but evaporated.

Disarmament: Negotiations with Russia are dragging on with no resolution,

Climate: Obama's performance at Copenhagen was received with disappointment throughout Europe. They looked to him for leadership and got none.

As you see, the only issue on which the NZZ sees significant progress is Healthcare - everything else is is awarded a failing grade.

In addition, the front page headlines today on the NZZ read: "New Pressure on the Swiss Economy by the US". This stems from the threat of the US Treasury to impose a tax of $1 Billion per year on Swiss banks operating in the United States. The Swiss citizenry are justifiably angry.

This, mind you, is coming from a country and newspaper that has been traditionally very pro-American, but which now perceives the US as more of threat to the country than an ally. Whatever goodwill Obama brought with his election has now been dissipated by his policies.

Finis

Reprint China/Democracy Blog



Today's blog, a reprint of one from March 2006, is a long one and, although dated, it still reflects my controversial views about Democracy and in particular how it applies to China. 


Harking back to previous observations on Asia, and China in particular, I should preface my remarks with two of my favourite homemade adages:



1. Democracy is not a panacea for all of a society’s ills
2. American Democracy is like some wines - it does not travel well, and is best consumed in the country of origin.



In order for a democracy to be fully functioning, there are a few basic requirements – a relatively well educated population, cultural cohesion, security, good nationwide communications, and some experience in self government (my requirements).

With respect to China and the first posit, I am not convinced that Democracy is the answer at this stage of China’s development. China is an enormous landmass with a population in excess of 1.3 billion, many of whom are ill educated, low per capita income and with limited health care (like the USA). Cultural cohesion is also not fully developed, only having been begun under communists and central rule since 1949 in recent history; communications are improving rapidly but are not yet ideal. In other words, there are more pressing priorities than free elections, multi party systems and the right to stand on the street corner mouthing obscenities and promoting religion.



In 1960, I read a book, “The Soul of China”, by Amaury de Riencourt. It may be out of print now, but I remember it well because of its revolutionary thesis (for me), namely that Communism fitted Chinese culture and history “like a glove”. The author argued that the Confucian tenets of obedience to central and senior authority were incorporated into Chinese communism. There was more, but that was the essence of his position. Since then, I have read at least three histories of China. In those books they present the view that Communism in China is merely the successor to the world's oldest and most successful autocracy. China, they argue, "is trying to achieve economic modernisation without the representative political democracy that Americans view as their special gift to the world's salvation." They also caution Americans who are prone to bash China's autocratic government to avoid attempting imposition of the flawed American model on China's unique culture.



A longtime Chinese friend, who with his family fled China and the communist take over in 1947, returned to China in recent years and surprised me with the comment, “the best thing to happen to China was the communist assumption of power in 1949”.



As it turns out I, a dedicated capitalist, had already reached the same conclusion, but I was surprised that a dedicated Chinese capitalist such as my friend would have the same point of view. Communism freed China from the grip of the colonial powers – Great Britain, France, Untied States, and Japan and although it took WWII and the invasion of China by Japan to initiate the process. Communism, with the exception of the years and madness of the Cultural Revolution, maintained and strengthened China’s cultural traditions. Communism united China and its disparate parts for the first time in its 4500 year long history and began to implement a policy of cultural cohesion making Mandarin Chinese an official language of communication; it has harnessed the brilliant and innate Chinese intellect and is on the road to making China a superpower in every respect.



China today has regained the pride it lost under the rule of the colonial powers in the Treaty Port “agreements” forced upon them in the 20th and 19th centuries. It has the fastest growing economy in the world; it has education and the free market economy as its major priorities. Security, in a land as large as China, with a large segment of the population still not educated in the ways of democracy can only be possible with a strong central control. Some day China will evolve in the direction of democracy but China recognizes it should not make the mistake of Russia and rush will nilly into the arms of democratic capitalism in which it has no experience or background. I personally do not believe it will ever have a Western style democracy.

As for suppression of religious freedom, organised religion is more of a liability than a blessing. First, religion has never played a major role in Chinese history or culture. If you examine Chinese history you will see that religious influence, with the exception of Taoism (Daoism), in China always came from outside China and has been pluralistic – Islam, Christianity and Buddhism, all foreign influences. Even Taoism never developed into a religious organisation or institution having been practiced as an individual philosophy. None of the religious doctrines have gained universal appeal to the Chinese. The closest to acceptance could be Confucianism’s moral and ethical tenets which people sometimes confuse with religion. Religions such as Christianity ran counter to and conflicted with the imperial claim to divinity and omniscience and the importance of filial obedience and respect. So, when the Christians tried to preach their doctrine of obeisance to an other-worldly authority, they got very short shrift from the powers that be. As much value as there may be in religious philosophy as ethics, I see no value to organized religion. It is a divisive, not a uniting force in society – just look at the history of Western Civilization and the wars that have been (and still are being) fought for religious motives. If China is wise, it will keep religion institutions under firm control.



I frequently hear the term "afraid" when the subject of China is raised, but China need not be feared as an aggressor. China, unlike its former communist cousin the USSR, China has never aspired to world domination or territorial acquisition. Colonialism has never formed part of Chinese history even in its golden Ming period (1368-1644) when its huge maritime fleets navigated all the way to today's Somalia (with compasses unknown at that time in Europe) in 1403 before Columbus lucked and stumbled his way across the Atlantic pond. Its interests then as now were in creating political and commercial alliances not in imposing its culture on others. Any involvement in wars has been to protect its borders. During the Korean War it became enmeshed in that conflict because of the threat of a superpower, the United States, occupying territory contiguous to China. Taiwan is regarded as a legitimate part of Chinese territory and as such, in China's view, has to return to the fold, and will do so in the not distant future.



Taiwan, held up as an icon of democracy, was ruled by a dictator and thief, Chiang Kai Shek, from 1950 until the 1980s and during the 1950s Chiang instituted a wave of political repression called “The White Terror”. So democracy, aside from being a recent phenomenon, has not necessarily been responsible for Taiwan’s success. Hong Kong was also under an imposed government, the British, from 1842 until 1997, the Brits having allowed democratic elections only when HK was about to be turned over to China – perfidious Albion indeed. Hong Kong flourished because it was in a controlled, secure environment, not riven by internal dissent or threatened by external forces. That political and social situation and the inherent Chinese entrepreneurial spirit were responsible for Hong Kong’s progress which was in place long before elections in 1997.



Those points deal just with China and the Chinese. Then, look at the effect and impact of democracy on former colonial territories in Africa. Are they really better off? I for one do not think so – those countries are totally corrupt, engaged in vicious tribal warfare and subjected to horrific atrocities that seldom took place under firm colonial rule. Look at Russia – now with endemic crime, and rampant corruption that I never saw in the years I worked in that country. Russia, under the inept, drunken and corrupt Yeltsin caved into to US pressure and its ideologues to move the country, before it was in any way ready, into democracy and capitalism. Had they followed instead Gorbachev’s formula for gradual change from communism to democratic socialism to democracy the evolution to democracy would have taken longer but it would have had more positive results. Putin is now trying to hold the line and reverse the rot, but it may be too late. Result – the Russians, with the exception of the Oligarchs and local mafia, are increasingly disenchanted with both democracy and capitalism and long for the good old days of Communism and security.



Many of these countries were catapulted from either stone-age cultures or feudal governments into a full blown democracy without any historical reference points. Using the analogy of wine again, for democracy to flower, it requires time and a process of maturation. Democracy is not a system that can be imposed externally (as we are trying to do in Iraq) on an alien culture, any more than one can transplant flora and expect it to flourish in alien soil conditions.



This is particularly true of American Democracy which has its dubious appeal to Americans but does not necessarily suit other cultures. In Francis Fukuyama’s classical book on liberal democracy “The End of History and The Last Man” Fukuyama argues cogently but not (for me) convincingly, that liberal democracy (liberal in the philosophical sense, not political) is the epitome of political evolution. I disagree. There are too many shortcomings, too many inequities in the system to satisfy me and justify such an assertion. Furthermore, I believe there is an inherent defect in democracy raised by both Aristotle and Alexis de Tocqueville (“Democracy in America” – 1830). Aristotle argued that democracy unrestrained can only lead to mobocracy. De Tocqueville, over 2000 years later, after observing democracy in the making in America in the 1830s, posited that “democracy contains within it the seeds of its own destruction”, a theme echoed from Burke to Tocqueville to Ortega de Gasset to Mencken, related to excessive freedom and misguided egalitarianism.

Finis

28 January 2006

"Be careful what you wish for...", a prime example.

Several of my previous posts have warned of the risks associated with "be careful what you wish for....", as related to the perils of democracy and free and open elections.

The recent election results in Palestine have served to confirm this admonition and to underscore the defective US foreign policy and incompetence of Condolezza Rice. Rice, thinking she had achieved a major breakthrough because of the sop given to the Palestinians in opening access to Gaza, completely misread the political climate in the Palestinian territories. So, the US got its wish of free and open elections and then was handed the worst imaginable result; just as happened in Iraq, Egypt, Pakistani western provinces, and Lebanon where Islamic movements have either prevailed or have registered significant victories.

Certainly Fatah corruption was a factor in driving 60% of Palestinians to vote for Hamas, but an equally influential issue was the inability of Fatah to stand up to Israel. Thanks to the US's partiality to Israel, the latter has offered nothing but minimal concessions to the Palestinians; they have refused to abide by UN resolution calling for unconditional withdrawal from the occupied territories and refuse to negotiate the partition of Jerusalem. Little wonder the Palestinians had so little faith in Fatah.

The US now, unsurprisingly, are following their usual flawed policy by waving '‘the big stick' threatening to withdraw financial aid unless Hamas bows to their wishes. The EU might not be so ready to do the same and this pressure could encourage the Arab donors, in particular Iran, to provide more support to Hamas. This would give Iran another opportunity to thumb their nose at the US and reinforce its ambition to be seen as the new force in the Middle East.

Not being satisfied to try to coerce the Palestinians to kowtow, the US is also putting the arm on India to support the US move to take Iran to the Security Council. If not, warns the US, the agreement for support of India's nuclear program could be taken off the table. That is a risky ploy indeed. India is no pushover, and only recently has it seemingly overcome its visceral and long time antipathy to the United States. Such 'hard ball' tactics could set back all the recent progress in relations with a country rapidly developing into a major power.

It is difficult to understand how a country such as the United States, possessing so much material wealth, could be so bereft of intellectual capital.

baoluo

19 January 2006

Postscript to the Iran Question

I refer to my previous post of 16 January, 'Here we go again'

The interim Prime Minister of Israel recently stated that it would be unacceptable for Iran, the country being an avowed enemy of Israel, to hold nuclear weapons. Presumably this is a thinly veiled threat of military action against Iran should it proceed in that direction.

The question this statement provokes is whether this policy and position applies to any country considered an enemy of Israel. If so, then I must ask what would Israel’s position would be if a country already in possession of nuclear weapons such as Pakistan were to replace the present secular government with one radicalised and overtly opposed to Israel.

Would Israel and the United States then threaten Pakistan with military action? Would Israel, with the support of the United States, nuke Pakistan’s nuclear facilities? I can envisage several consequences of such an action, none of them pleasant.

baoluo

16 January 2006

Here we go again!

"This is the most grave (sic) situation that we have faced since the end of the Cold War, absent the whole war on terror," Sen. John McCain told CBS' "Face the Nation." "It is a serious problem -- probably right now the most serious in the world," (Senator) Lott said. Does that sound familiar? Was it only four years ago that Iraq was the gravest threat facing humanity? And, of course there is or was North Korea, touted as an inhuman regime which could precipitate a nuclear holocaust, a topic now off the shelf of the talking shop.

Then with regard to Chinese and Russian Support: "They need stuff from us. They need trade. They need all kinds of assistance. We ought to play hardball with them," he said. "And if President Bush were to do that, either publicly or privately, I think he'd get broad bipartisan backing." That brilliant reasoning emanating from Senator Schumer of New York. So now China and Russia could replace France and Germany as ungrateful curs. Will vodka, egg foo yong and sweet-sour shrimp soon be taken off the Senate dining room menu?


This intemperate rhetoric is coming from both sides of the aisle, Democrat as well as Republican.

Although the European Big Three: France, Germany and the UK, have come to together to support taking the issue to the Security council, it is still far from certain that two veto toting members, Russia and China, will go along with them. China in particular would be loathe to alienate an important energy source to fuel its growth. Russia too has traditionally close ties to Iran and some lucrative contracts pending for supply of nuclear equipment. One question is what sanctions could be imposed considering that the Europeans and Americans do not want to punish the people there as they did in Iraq with sanctions on essential items. Iran’s biggest export must surely be oil, but who in their right mind wants to deprive the world of oil when it is already in short supply. Sanctions on exports would drive up the price to new highs. Mc Cain thinks the consequences in this regard are acceptable, but I wonder how many other people would be happy with a 50% or more increase in petrol prices. By his reasoning and that of Bayh, any consideration of the Iranian people would be taken off the table.

The US, of course, is, as always, ready to give enthusiastic support to any opposition to Iran, and lurking in the background stirring up the pot, is Israel. The US and Israel would dearly love to undertake military action, their preferred option to any difference of opinion, but that could hold tremendous risks. Another air strike by Israel on Iran (as in the 80s) would be seen, quite correctly, as approved and supported by the US and further inflame Arab sensibilities, confirming the viewpoint that the US is out to destroy Islam.

The US is not in a position to undertake a large scale ground campaign when it does not have enough troops to fight the insurgency in next door Iraq, and any attack on Iran could have serious implications in Iraq amongst the Shia. The latter would not take kindly to the US attacking Shia brothers in Iran. That sort of ill advised action could alienate the largest single ethnic and religious group in Iraq. The Shia have been relatively well-behaved until now, but if they were provoked, they could create worse chaos than already is present in Iraq. They could well do what I have always thought they should and could do, namely declare an autonomous Shiite State. The upshot of that would be to elevate Iran to a major regional power and one with enormous oil reserves in both Iran and the Iraqi Shia territory. The other scenario is that such actions against Iran could tip the Shia in Iraq into an all out war against the US and its coalition allies.

As for the threat of a nuclear wielding Iran, it is difficult to justify singling them out when Israel has possessed nuclear weapons for twenty years and refuses to sign the non-proliferation treaty, but nary a word about this from the West. In any case, I do not fear an attack on either Israel or the West by a nuclear armed Iran. To undertake such a fool hardy action would bring utter and complete destruction of Iran by the US and Iran is well aware of those consequnces.

As for Pakistan, which I have always contended poses a greater threat than any other Muslim state, the US is now playing with fire in that country, an alleged ally in Bush’s war against terrorism. Indeed, it is undoubtedly true that the western provinces in that country are harbouring at the very least remnants of Taliban and probably Al-Qaeda cells. In addition, Al-Zawahiri may well be holed up there, but so what? What if an air strike killed Al-Zawahiri? Would that take the wind out of the sails of the insurgency in Iraq? Would it destroy the ability and wish of Al-Qaeda to strike at western targets? I hardly think so. The insurgency and terrorism have evolved beyond movements centralized and tightly controlled by Osama and any of his lieutenants. The diverse national and local terrorist groups are becoming autonomous, most having their own agenda and resources which will in no way be affected by the removal of a single person such as al-Zawahiri.

The US legislators are virtually unanimous in justifying the deaths of the civilians in Pakistan in order to kill al-Zawahiri, but as with Iraq the Americans are unable to look beyond their immediate objective. Not only are they supporting the action and results, they seem to be proposing the US not recognise Pakistan territorial sovereignty and that the western border area be considered an open warfare zone with or without Pakistan approval. What now? Are the people who took us to war in Iraq now proposing we invade both Iran and Pakistan?


Musharraf is already walking the proverbial tightrope with a regime shot through with radical fundamentalists; his army and intelligence services have been compromised and infiltrated by al-Qaeda sympathisers. I argued two years ago that his days were numbered and every incident of the nature of the recent bombing going awry can only hasten his departure. Once that happens, Pakistan could move from being a reluctant collaborator and ally to an outright enemy state, one with nuclear weapons and delivery systems already in place. The risk of a radicalised Pakistan is that it could draw India into a regional nuclear conflict that would then escalate into a wider conflagration.

In the years leading up to Vietnam there was much talk of the ‘domino effect’, namely that any given communist regime would by its propinquity to its neighbours bring them down as well. Now, the invasion of Iraq seems to be leading the US into a succession of unsustainable wars. They will prove unsustainable because, short of bombing the entire territory into rubble and killing the population in the process, there is no way the US can prevail in those wars. Iran is no Iraq. It is an ethnically and religiously homogenous nation and not suffering under a regime any where near as repressive as that of Sadaam. It has a more effective fighting force and a population that on the whole will resist invaders.

If, as Professor Stiglitz of Columbia University estimates, the cost of the Iraqi war could be in the realm of $1.2 trillion, the mind boggles at the cost of financing yet another war in Iran. Then, add the cost to the American economy of increased cost of petrol and you have a recipe for economic disaster, a result Osama could never on his own have achieved.

baoluo

26 November 2005

An Explanatory Note About this Blog

Many readers of this blog will ask, quite rightly, why my seeming preoccupation with China in the posts. In fact, at the outset, this post should have been placed as a Foreword to the Blog.

The answer is simple: the media, the US and most other governments are narrowly focused on Iraq and the Middle East and to a great extent ignore the developments in Asia, in particular those involving China.

Most news about China centres on the trade deficit, outsourcing and loss of US jobs to China. These are also salient issues, but there are bigger stakes, political ones, that are having global impact, events that are in play, but being overlooked by a public uneducated and poorly informed by media about the region.

As has often been the case, the world, and chiefly the United States, is generally reactive to events. That is to say, it only takes note of happenings in a region of the world when a crisis is already full blown. The reaction is usually one of shock or surprise and more often than not inappropriate, frequently disastrous and hasty decisions are made by a government merely because it was unprepared to deal with the matter and needed to be seen as in control by a nervous and even more ignorant public.

Thus, although this blog will deal with geopolitical questions throughout the world, I make no apologies for the focus on Asia, and the individual topic of China. The latter looms larger in influence on the world with each passing day and it behoves the public, governments and media to prepare for the consequences by understanding the history and staying abreast of events in that area.

baoluo

How to Find All Previous Posts

Please Note:

On the left sidebar are listed only the most recent ten posts. In order to view all previous posts, one must scroll down the full text posts on this, the right side of the home page. At this writing there are 38 posts available.

Thank you

Condolezza Rice, Dominatrix

When Condolezza Rice was appointed Secretary of State she stated she would be a travelling Secretary of State, more so than Powell who had to stay in Washington and spend his time shoring up Bush’s image and wonky policies by appearing with him at every press conference.

Once Bush secured his reelection, there was no longer need for pretense, no longer for believable Powell to give loyal support to Bush’s lack of credibility. He could come out of the closet and unleash his secret foreign policy weapon – Condolezza Rice, Dominatrix!

Condolezza was set to both play nice and crack the whip with visits in Palestine, Canada, Russia, China, France and Germany.

So, here in this post, will begin a series which will be devoted to Rice’s peregrinations and policies; we will follow and evaluate the results of her approach and objectives.

Aside from her trendy fashion splash wearing her S&M working leather outfit, she has not made an auspicious start.

So far Russia, Iran, N. Korea and Canada have told her not to bother. Iran has said they will not tolerate interference in their affairs and will continue with nuclear development. Russia echoed Iran’s sentiments and signed an agreement to assist Iran in its nuclear plan. Putin and Bush had a “candid” conversation which means that Putin told him to stay out of internal Russian affairs while Bush tried unsuccessfully to reply without a speech prompter by his side, or on his back. Rice, despite being a specialist in Russian affairs, apparently has not been able to bring her expertise to bear on this issue.

Canada’s liberal PM could not muster enough votes to support Bush’s Nintendo Missile Defence system, so Rice cracked the whip and cancelled her trip to Canada. Dear oh dear, how will Canada be able to survive without a visit by Condolezza Rice?

Latin America? My dire warnings of impending disaster are, alas, proving all too correct. What has Rice done to counter the trend toward ant-Americanism in South America? What has she done to counter the influence of Chavez, of a growing move to the Left in Bolivia, Argentina and Uruguay? This is not to mention the keystone of Brasil led by Lula who has cozied up to Chavez. All China has to do is wait for the Latin fruit to ripen and drop in their lap.

At this writing she is in the Middle East, as the saying goes, beating a dead horse, trying to resuscitate the corpse of US foreign policy in that region. The Palestinians quite understandably do not take her or the Bush State Department seriously seeing them as a stalking horse for Israel. We have not had an impartial approach to the Israeli/Palestinian problem since the days of Jim Baker and Brent Scowcroft and the present policy is without question the most biased ever in favour of Israel. With the Evangelicals increasing influence in foreign policy and education that is not likely to change in the foreseeable future. Her recent much ballyhooed role in bringing the Palestinians and Israelis to an agreement on access to and from the Gaza strip is little more than a band-aid applied to a gaping wound. She, like Dubya, is a dedicated Evangelical and brings with her all that ideological baggage common to evangelicals – moralistic preaching and arrogant belief in the superiority of Western style democracy and Christianity.

Not even mild-mannered Brent Scowcroft, former National Security Advisor and long time Bush Senior friend in his interview with Jeffrey Goldberg (see the New Yorker 31 October) could resist criticism of Rice. If you have not or cannot obtain a copy, herewith his take on Rice, “
He correctly point out Rice’s forte is narrow and in the Russian domain, not Asia, not the Middle East. Because of the American preoccupation with Iraq little attention is given to more important areas. Secretary of State Condoleezza Rice failed to attend an important Asean meeting. Moreover, the Americans have sought to use successive Asia Pacific Economic Co-operation (Apec) summits to push their agenda of security and counter-terrorism - issues which are less central to Asian countries.

Her academic credentials like so many of Bush/Cheney/Rumsfeld appointees are impeccable academically but lacking “in the trenches” experience. Wolfowitz was another example of the ivory tower pundits and one who led us into the present quagmire in Iraq. Rice with her doctoral badge is in some respects more dangerous because she brings with her the baggage of evangelical religious beliefs and unquestioning loyalty to Bush who has no foreign policy credentials, in practice or on paper – the blind leading the blind.

Finis

17 July 2005

Latin America - a crisis in the making Part III

Further to my series on China's growing influence in Latin America at the expense of the United States and as a result of America's neglect, please read more on the link below.

"So far, official Washington has ignored or denied the significance of China's Latin America strategy. Indeed, "President Hu Jintao spent more time in Latin America last year than President George W Bush," Miami Herald columnist Andres Oppenheimer has observed. "China's vice president, Zeng Qinghong, spent more time in the region last month than his US counterpart, Vice President Dick Cheney, over the past four years."

China's tango with Latin America

Much as the US once used the open-door ploy against Europe to get at Chinese resources and labor, China is now playing the same card against the US in Latin America as it aggressively pushes to find new markets and vital energy sources.


27 May 2005

More on Chinese Textile Exports and the Yuan

Two recent (26 May) lengthy articles in The Economist dealt with the impact of import restictions on textiles from China and the net effect of a possible revaluation of the Yuan.

I have excerpted three paragraphs from those articles which are relevant to my post of 24 May on these subjects:

"The quotas and tariffs will not save the American textile industry or restore the 1m jobs it has lost since the 1980s. “China isn't their problem,” says Laura Jones of the US Association of Importers of Textiles and Apparel. “It's the whole rest of the world.”

"At most, the restrictions will slow Chinese export growth to the West. But any slack is likely to be taken up by other poor countries (my Italics). The “safeguard” measures—a product of the tortuous negotiations on China's admission to the World Trade Organisation—cannot be used against other countries. One of the protectionist arguments used last year for prolonging quotas was that their abolition would wipe out export-based industries in poor countries that allegedly relied on quota protection from Chinese competition. "

"The true losers from any return of quotas will be American and European consumers and the retailers that cater to them. It will mean higher prices now, and hinder lower future prices by slowing the emergence of Chinese “supply-chain cities”, as UBS, an investment bank, calls them, that will handle the entire process of making a piece of clothing from sheep to shelf. "

"a small Chinese revaluation would have virtually no impact on America's vast external deficit. China's share of America's imports is around 10%, so even a 10% appreciation would reduce the dollar's trade-weighted value by only 1%. Were China's move followed by the rest of Asia, the dollar's value would fall by something closer to 4%. But even that would do little to close America's $600 billion-plus current-account gap."

24 May 2005

China, Foreign Trade and the Yuan: Be careful what you wish for... Part IV

Recent moves by the Bush administration to punish China for America’s lack of fiscal discipline has once again underscored the US’s inability to look ahead to consequences of its foreign policy. Iraq, of course, is the most outstanding failure, and now we are faced with another colossal blunder, this time with the China policy.

The US contends that a) increased textile imports from China and b) the Yuan peg to the dollar are endangering the US and global economy. Solution: restrict textile imports from China and float the Yuan. Really?

America’s indebtedness resulting from spending more money than it generates in revenues has placed $1.98 trillion of the $4trillion in US Treasury notes in the hands of foreign investors. Japan, the largest holder accounts for $680 billion and China $224 billion. In addition, China buys dollars to ensure its currency, the Yuan, stays at about 8.3 to the dollar, where it has been fixed for nine years.

The U.S. current account deficit widened every quarter last year, to reach an unprecedented 5.6 percent of the economy at the end of the year, while the U.S. federal budget deficit grew to a record $412 billion.

The US needs the inflows, the purchases of Treasury notes to finance its current account deficit. Without ongoing purchases of US Treasury notes the US would literally go broke. There is not enough money in the treasury to pay America’s bills and interest payments on those outstanding notes, or, if you like, America’s IOUs.

If China were to cash in their bonds and demand payment in gold rather than fiat US currency, what would happen to the Dollar? Gold prices? the Yuan? At current prices there is not enough gold in existence to pay off all of China’s holdings of US Bonds. Because of a shortage of freely traded and available gold inventory, prices would likely need to increase by perhaps 8 times or more to make enough gold available to pay China. Buy gold now!

If China wants to cash in their US Bonds, the most likely scenario is that the US will merely print more Dollars as needed and voilà, skyrocketing Inflation.

Although such action by China is not presently in the cards, if China were pushed to the wall, its ace would be the treasury notes. Cashing them in would have a greater negative impact on the United States than a nuclear strike.

Restricting Chinese Imports
If the US stops buying Chinese products, then US prices for products manufactured in China will go up – again big time inflation. As for textiles specifically, limiting only Chinese exports to the US will not stop the inflow of cheap textiles. No action has been taken to reduce the import of textile products from Egypt, Latin American and African exporters of products at prices lower than those of the US textile industry, so how will simply reducing Chinese exports alleviate pressure on the US industry?

Wal-Mart in 2004 estimated purchases from China to reach $18 billion. Think of the impact of a significant increase on prices of the world’s largest retailer. One estimate has it that 80% of microwave ovens in the world are produced in China; China became the biggest producer of mobile phones, colour TVs and monitors in the world last year. The statistics showed that the nation's output for these products has respectively accounted for 35 per cent, 40 per cent and 55 per cent of the world's total.

The Yuan
If China chooses, or is pressured , to float the Yuan, the US dollar could fall as the Yuan rises. Once that happens, prices of Chinese imports could increase more, as will prices for those products in the US – higher US inflation.

If the Dollar falls enough, other countries that currently hold Dollars as central bank reserves, could decide to bail out of the Dollar so it does not drag their own currencies down. Even countries that simply peg their own currencies to the Dollar may decide to allow their currencies to float. The most likely US financial defense would be to raise interest rates significantly.

One considered opinion on the net effect of appreciation of the Yuan by an economist is, “China gains its comparative advantage by low material and labour cost, highly efficient machinery as well as good quality control system. Hence, the appreciation of the Yuan would not exert too much impact on China’s comparative advantage and the US demand for Chinese exports. Besides, China’s share in the US total trade is only about 10%, and even if the Yuan appreciates by 20%, the real effect reflected on the US current account in dollar term will only be about 2%, which is too small to influence the US current account imbalance and relieve its unemployment pressure.”

Conclusion
It would appear then that China holds three trump cards: (1) Remove Yuan peg to the Dollar (US inflation), (2) Cash in their US Bonds (US interest rate rise, US inflation or much, much worse), (3) Threaten to stop or reduce all exports to US (US mega inflation).

America’s Shock and Awe approach will work no better economically with Chiina than it has in Iraq militarily. The consequences of this ill thought out knee jerk reaction to China will have even more serious repercussions than the debacle in Iraq.

16 May 2005

Latin America - a crisis in the making Part II

With reference to my previous post "Latin America - a crisis in the making", I submit the following recent article from The Economist, an article which reflects both my previous comments and which highlights and underscores my criticsm of US Foreign Policy in this region.

Trouble in the "backyard"
Apr 28th 2005 SÃO PAULO From The Economist print edition

Just stop calling it that
Rice and Lula: wary allies

AFTER four years in which South Americans complained of neglect by the United States, George Bush is paying attention. He sent his defence secretary, Donald Rumsfeld, to the region in March. Condoleezza Rice, the new secretary of state, set off on a four-nation tour this week. Mr Bush himself is expected in Argentina and Brazil in November. Why the sudden interest? Because things are going badly.

The United States' long-standing project for the region, free trade among the hemisphere's 34 democracies, is stuck. Mr Bush's newer idea of spreading democracy everywhere could suffer reversals in South America. Last week Ecuador's Congress ousted its pro-American president. Democracy in Bolivia and Peru is fragile.

As America's influence in South America has waned, China's has waxed. The noisiest problem for Mr Bush is Venezuela, led by an implacably anti-American populist, Hugo Chávez. He is thought to be fomenting unrest in other Andean countries, and this week scrapped a longstanding military co-operation accord between Venezuela and the United States. The Bush administration has so far failed to persuade fellow members of the Organisation of American States to back its candidate to be the group's secretary-general.

Michael Shifter, an analyst with Inter-American Dialogue, a think tank in Washington, DC, says that the United States needs to abandon its traditional attitude that Latin America is merely its “backyard”. Ms Rice, who has recently carried emollient messages to several continents, seems to understand this. Her tour takes in two reliable allies, Colombia and El Salvador. But much of the business that matters is with pricklier countries. She was to attend a pro-democracy jamboree in Chile. She started her tour in Brazil, the region's main power, which the United States hopes will be a bulwark against instability.

Brazil is wary of pan-American free trade, bitter about American farm subsidies and suspicious of American military aid to Colombia. It is too big and ambitious in its own right to accept American leadership. For their part, the Americans deem Brazil's president, Luiz Inácio Lula da Silva, a tad too friendly to Mr Chávez.

In Brasília, however, Ms Rice played down differences. A joint statement spoke the local language of “liberty, democracy and social justice”, though the secretary mentioned drugs, terrorism and trade in a later speech. The statement called on Ecuador to respect “democratic order”, though neither country may do much to ensure this. Brazil leads the United Nations' peacekeepers in Haiti and probably restrains Mr Chávez. If other Andean governments fall into anti-American hands, its moderating influence will be sorely needed.

The best hope for stability in South America is to make it richer. The United States alone cannot make that happen, but could do more to help.

The Prescience of George Kennan

The Prescience of George Kennan

George F. Kennan (1904-2005), a distinguished US diplomat and historian, was one of the primary architects of US strategy during the Truman Administration. Kennan was one of the most thoughtful and eloquent writers not just on history, international politics, and US-Russian relations, but on American society, questions of personal and political philosophy, and contemporary problems such as nuclear weapons, the environment, population growth, and urbanization

The following quote from PPS/23, written in February 1948 when he was head of the US State Department's Policy Planning Staff, is often given as evidence of the iniquity of US foreign policy.

"We have about 50% of the world's wealth, but only 6.3% of its population.... In this situation, we cannot fail to be the object of envy and resentment. Our real task in the coming period is to devise a pattern of relationships which will permit us to maintain this position of disparity.... To do so, we will have to dispense with all sentimentality and day-dreaming; and our attention will have to be concentrated everywhere on our immediate national objectives.... We should cease to talk about vague and ... unreal objectives such as human rights, the raising of the living standards, and democratization. The day is not far off when we are going to have to deal in straight power concepts. The less we are then hampered by idealistic slogans, the better."

Fifty seven years later that sensible advice is still valid and ignored.

baoluo