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Westphalia with Chinese Characteristics

The Buzz

What will be the future implications of China’s rise in power?  The towering political scientist Stephen Krasner has produced a lucid synopsis for the Hoover Institution.  One of the biggest take-away points is that the organization of global governance stands to undergo a significant overhaul if Beijing’s capabilities continue to expand vis-à-vis the United States.

In terms of the international economic order, Krasner notes that

“[t]he existing trade and investment regimes more or less assume that corporations are independent of the state; this assumption is comfortable for the United States. It is not so comfortable for China: a more powerful China might press for principles, norms, and rules that were more accepting of state direction of the economy.”

It warrants pointing out that China’s preferences for statism in economic affairs are not simply because of its communist leadership.  Rather, developing economies in general tend to rely upon government intervention for growth.  This was true of the so-called Asian Tigers in the 1970s and is certainly true of China and the other BRICS nations today, all of which blend an appreciation for markets with a dyed in the wool commitment to a form of dirigisme.

The difference between the newly industrialized countries (NICs) of the 1970s and the BRICS of today, of course, is that the latter entertain hopes of refashioning the international economic architecture to better suit their particular interests.  Hong Kong, Singapore, South Korea and Taiwan never aspired to global leadership.  Whether the BRICS will succeed in their bid any time soon is far from certain; as yet, the BRICS lack the cohesion, the will and the means actually to lead a new global order.  Nevertheless, their dissatisfaction and rise in power do combine to produce a long-term potential threat to the western-made status quo.

China’s rise might also portend implications for how states engage with each other politically and diplomatically.  “China’s internal divisions make it one of the strongest proponents of the sanctity of sovereigntist principles that totally reject external interference in the internal affairs of other states,” Krasner points out. “The United States as a proponent of human rights, and as target for transnational terrorist, has a much weaker commitment to non-intervention.”

There is some irony to this mismatch in attitudes.  Sovereignty, territorial integrity and non-intervention are the cornerstones of the Westphalian system, a model of international relations that emphasizes the centrality of state actors to global politics and which is supposed the epitomize the western approach to international organization.  Yet Krasner is correct that the U.S. and Europe have been at the forefront of enervating Westphalia over the past several decades while China has emerged as a champion of Westphalian principles.

Just as the Westphalian ideal has been at times convenient for western powers and inconvenient (and ignored) at other times—a system of “organized hypocrisy” in Krasner’s own words—so too are Westphalian norms a valuable (and pliable) resource for China’s leadership.  As Stephen Hopgood argues in his book The Endtimes of Human Rights, the logic of Westphalia affords Beijing a rationale for maintaining authoritarian rule at home and opposing the imposition of western influence abroad (including, recently, in Syria).

Westphalia can also be applied by China to legitimize its actions, at least rhetorically, regarding its various territorial and sovereignty disputes: from Xinjiang and Tibet to Taiwan and the islands of the East and South China Seas.  All of this means that Westphalia can probably be expected to remain firmly in place as a core tenet of international order under Chinese leadership, even if the application of Westphalian norms will look cynical and opportunistic to observers in the west.

If China does reassert sovereignty as an inviolable cornerstone of international organization then it will be a hammer blow to western interventionists on both the right and left.  This is partly what Krasner means when he concludes that “the world would be a very different place than it is now if an autocratic China became the indispensable nation.”

Not everybody in the west would be sad to see a reduction in of overseas interventions, of course, but if it takes Chinese preponderance to curtail the west’s adventurism then this might leave a bitter taste—especially if it comes accompanied by other changes to international order.  An uncertain future impends.

TopicsSecurity RegionsChina

Asia's Next China Worry: Xi Jinping's Growing Power

The Buzz

Since Mao Zedong died in 1976, power in China has slowly decentralized. Deng Xiaoping’s reforms promoted the lifting of the hand of the state from the economy while ultimate authority within the Chinese Communist Party has become more dispersed. Part of this process is generational: no Chinese leader has enjoyed the authority of either Mao or Deng and in its place collective rule has become the norm.

The ascendance of Xi Jinping to the top position in China has challenged those trajectories. During his short period in office, Xi has brought back executive authority, serving as secretary general of the Chinese Communist Party, president of the PRC, chairman of the Central Military Commission, and as an ex officio member of the Standing Committee of the Politboro. If that resume wasn’t impressive enough, he has also claimed the chairs of two groups established at the Third Plenum of the CCP, held last fall: the National Security Commission and the Central Leading Group for Comprehensively Deepening Reforms. Those gavels go along with the two older Leading Small Groups he also chairs, one on Foreign Affairs and the other on Taiwan Affairs. He is chairing yet another new group to oversee military reform. Observers see Xi’s hand in economic affairs as well, usurping in many ways the role traditionally held by the prime minister. Xinhua reported that he chaired a leading group of financial and economic affairs, and described him as its director, a position usually held by the premier.

This consolidation of power is impressive but Xi’s authority is also being boosted by his anti-corruption campaign. Record numbers of party members – tens of thousands – are being disciplined and prosecuted for misconduct. Senior officials, referred to as “tigers” in the media, are being hunted as well, including senior PLA figures previously thought untouchable. The country waits with baited breath to see if Xi will take down a former Politboro Standing Committee member, a position long considered immune from investigation.

The drive to purge the party of its corruption cancer at its core – and the fear that the initiative is as much aimed at political opponents as corrupt party members – has prompted many bureaucrats and officials to lower their heads and withdraw from decision making in an attempt to ensure that they don’t attract attention. There is a marked increase in suicides among officials. In this environment, such an activist leader can be even more assertive and Xi seems to relish the opportunity.

The desire to centralize authority is also evident in the government’s pursuit of advocates of transparency. Rather than seeing them as erstwhile allies in the anti-corruption effort, the government has gone after them as doggedly as it has corrupt officials. Plainly, Xi wants to retain control of the anti-corruption campaign, in particular who it targets.

This is consistent with the effort to assert tighter control over the media, both in broadcast and print, and the internet. Analysts speak of unprecedented censorship and oversight in the last year.  It may not be a coincidence that Xi also chairs a new small group that oversees internet security.

Some argue that Xi’s “new authoritarianism” is a prerequisite to economic reform: he has to shore up his left flank from attacks by the old guard.  Others worry about an old-fashioned power grab, in which Xi isolates, marginalizes, and ultimately crushes any challenge to his authority.

Whatever his ultimate aim, Xi’s support for reform has very clear limits. Cleaning up the party is intended to rehabilitate and legitimate the CCP, not loosen its grip on China’s politics. 

How should outsiders feel about what is happening in China?

Elements of Xi’s program might improve governance in China.  In principle, the anti-corruption campaign could lighten the burden imposed on the Chinese people resulting from unjust treatment by avaricious officials.  It reflects a degree of increased, if indirect, accountability of the ruling party to the public.  And if Xi uses his accumulated power to break through the resistance of special interest groups and successfully transform China's economy (which former Premier Wen Jiabao called “unstable, unbalanced, uncoordinated, and unsustainable”) to a stable and sustainable maturity with more reliance on domestic consumption rather than exports, then  he would bless both his people and the global economy.

However, Xi does not seem interested in promoting the liberal values that Americans and many friends in the region believe are conducive to justice, prosperity, and peace.  His accumulation of power represents a step back toward the dictatorial paramount leadership of the Mao era – ironically, an inclination that got Bo Xilai in trouble. Still, there is little danger of a return to a cult of personality in China and events as calamitous as the Cultural Revolution are extremely unlikely. China has changed too much. The appropriate analog for Xi is more Putin than Mao.

A selective purge of corrupt officials, combined with continued crackdowns on dissent, may not be enough to satisfy the demands of an increasingly empowered and savvy civil society, however.  The CCP’s domestic insecurity is likely to continue during Xi’s tenure, which means continued risk of Chinese overreaction to a perceived challenge to China's dignity by foreigners.

A relatively high concentration of power in a paramount leader might increase consistency and predictability in Chinese foreign policy-making, simplifying  the task of reaching agreement on how to achieve and maintain a stable peace as China becomes the region’s second great power.  There is only one guy we need talk to, Xi Jinping.  But any advantage is lost if he insists China’s vital interests require encroaching on other states’ vital interests.  And the likelihood of an intemperate foreign policy is greater if a smaller number of people are in charge, with a one-man dictatorship being the worst case (well exemplified by Pyongyang). 

If Xi’s foreign policy is an extension of his domestic political agenda, outsiders may be unqualified to judge whether it is successful.  Based on China's external interests, however, Xi seems to have walked China into the trap that Deng Xiaoping warned about: alarming neighbors into security cooperation against China before the difficult task of Chinese economic development is completed.

Brad Glosserman is executive director of Pacific Forum CSIS. Denny Roy is senior fellow at the East West Center in Honolulu. This article originally appeared in CSIS:PACNET newsletter here

Image: Flickr. 

TopicsDomestic Politics RegionsChina

Iranian Press, Citing Algerian Parody Site, Claims Lionel Messi Donated €1m to Israel

The Buzz

A major Iranian media outlet is reporting this morning that Argentine soccer superstar Lionel Messi has given one million euros to Israel. In a story dated July 23, the Iranian Students’ News Agency (ISNA) proclaims, “One Million Euros of Aid from Messi to the Zionist Regime,” and says that the donation comes “as the regime occupying Qods [Jerusalem]” commits “war crimes” in Gaza.

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The story cites “Israeli newspapers,” and says that European newspapers are also carrying the claim. However, the claim actually appears to originate at Le Compétiteur, an Algerian parody site. On July 17, Le Compétiteur ran a story headlined “Lionel Messi Offers One Million Euros to Israel,” declaring that the little Argentine had given an amount equivalent to his World Cup bonus to “the State of Israel,” and notes (like the Iranian story) that this comes amidst attacks on Gaza. The story also says that the claim was ignored “in the Zionist press.”

This story then appears to have been misconstrued by a number of outlets—such as El Fagr in Egypt on July 20 and Réflexion in Algeria on July 21—as a serious report. It has also been spreading on Twitter, complete with doctored photographs of Messi holding a “Stand With Israel” t-shirt. ISNA, or someone else in this game of telephone, appears to have mistranslated Le Compétiteur’s claim that the “Zionist press” was ignoring the story to read that the “Zionist press” had originally reported it. The “Zionist press” then became “Israeli newspapers.” ISNA even took the the time to update Le Compétiteur’s casualty count for the Gaza conflict—250—to 600.

This is not the first time the Iranian press has made this mistake. In 2012, the hardline Fars News parroted a report in the American satire site The Onion that Iran’s then president Mahmoud Ahmadinejad was more popular among rural white Americans than Barack Obama. And it’s not the first time it’s happened to Messi, either. In the World Cup, Messi had scored a heartbreaking stoppage-time winner that helped knock Iran out of the contest and denied the Iranian squad a historic draw with the powerful Argentine side. After the game, an account linked to the Islamic State of Iraq and al Sham congratulated Messi and “invite[d] him to join the jihadist call.” The Sunni jihadists of ISIS are indeed no fans of Iran—but the account was apparently fake. Messi will have to stick to soccer.

Image: Danilo Borges/copa2014.gov.br Licença Creative Commons Atribuição 3.0 Brasil.

TopicsMedia RegionsIran

Why Gross Domestic Product (or GDP) is Grossly Inaccurate

The Buzz

Gross Domestic Product (GDP) is meant to be the singular summarizing statistic of economic growth and prosperity for a nation. It is in fact an inaccurate, untimely, and vague indication of economic activity. “The economy grew at…” should never quote GDP, because GDP does not capture the entirety of economic output.

As pointed out in a Wall Street Journal article last year, economic data is highly unreliable when it is initially released. By the time the data has been revised to the point of usefulness, it is no longer useful. The first quarter of this year is a prime example: the advance print was +0.1%, second estimate was -1.0%, and the final (for now) estimate was -2.9%. Revisions take months and sometimes years, and basing decisions on a first estimate could prove disastrous.

The Economist recently showed that portions of the economy, such as illegal activity, are not counted in GDP. Some countries in Europe are expanding what is counted in GDP to include drugs and other illegal activities, which will boost their economies by anywhere from 0 to 5%. The oft cited debt-to-GDP ratio will narrow instantaneously without any change in the financial condition of the government. Of course, adding lines to GDP statistics increases the level of GDP, but it does not alter the underlying economy. More stuff gets counted, but nothing has changed in the everyday life of the economy.

What the Europeans are attempting to measure is the informal—or underground—economy. The informal economy is the economic activity not typically measured due to under or unreported income, tax dodging, legality, or otherwise. And it is not trivial. Eurostat estimates US GDP would increase by 3% if the European changes were instituted in the US.

What is the underground economy as a whole hiding? One paper estimates 18-19 percent of income is unreported to the IRS. At the end of 2013, personal income in the U.S. was $14.1 trillion. This means that somewhere in the neighborhood of $2.5 trillion is earned off the books. Apply a tax rate of 15% to that figure, and, suddenly, $375 billion appears in tax coffers. With the US deficit expected to be $583 billion, it becomes apparent why there is a need to understand the informal economy.

Possibly even more surprising than its size is the fact that the underground economy is not all drug dealers and hedonistic economic participants. California estimates only 15% of the underground is made up of illegal activity. Most of the informal economy is construction and other forms of easily concealed labor; i.e., workers doing legal things “under the table”.

The US has a lot of cash outstanding, and this encourages an underground economy. It is difficult to have a vibrant underground economy without cash or another untraceable means of exchange. As electronic forms of payment became increasingly popular, it was thought the US would be able to more easily convert informal labor to formal labor. Crypto-currencies, such as Bitcoin, may be a method of building a 21st century informal economy.

And this raises the question of whether the electronic economy can force labor to move to the formal economy. It appears not. The new “micro job” culture is being spurred by innovations in retail and nearly ubiquitous access to the internet. Some of these effects may be showing through the part-time employment figures that have been persistently high during this recovery. Understanding how to convert informal labor market participants into formal ones is critical, simply because of the massive amount of tax revenue that is at stake.

GDP does a decent job of measuring the size of the formal economy—it just takes some time and a few tries to get there. As such, it is very useful for understanding, in hindsight, what broad components of the economy drive growth or contraction. But, like most economic statistics, GDP means little without the proper context and analysis. It struggles to articulate the finer points of the economic story.

Since GDP is left exclusively to the formal sector, economists, policy makers, and business leaders are not getting the entirety of the economic picture—regardless of the eventual accuracy of the GDP report. Without having some understanding of the informal economy, decision makers are dealing with only a partial picture of GDP, employment, productivity, and wage growth. Measurement of the informal sector may have started with GDP in Europe, but it should continue to other economic measures (in some cases it already has).

Granted, if the US were to estimate the informal economy GDP, employment, and other statistics would likely suffer from larger revisions and decreased accuracy. But we would have a more thorough measure of the output, a more accurate picture of employment, and more insight into how an economy functions. At the moment, the US is only measuring part of the economy, and not even doing that very well.

Image: Flickr. 

TopicsEconomics RegionsUnited States

What Will Determine a Ceasefire in Gaza

Paul Pillar

Anyone who reads about the carnage in the Gaza Strip and has at least an ounce of humanity is hoping that a ceasefire will come soon. Jodi Rudoren's coverage in the New York Times suggests that current calculations of the Israeli government of Benjamin Netanyahu involve weighing the crippling of the physical ability of Hamas to attack Israel against international condemnation of Israel that is likely to mount as long as the Israeli operation continues. Those considerations are no doubt part of the Israeli government's thinking, but only a part and a rather tactical part at that. In anticipating when Netanyahu and his cabinet will call a halt to the operation, a more strategic view is required—or at least what Netanyahu would consider strategic.

So far Israel has sustained less condemnation than one might think, given that its explanation for the hugely disproportionate civilian casualties its operation has inflicted—that they are a result of Hamas's unprincipled hiding of its military assets among the civilians—patently lacks credibility. The infliction of death and destruction on the civilian population of the Gaza Strip is, as with so many other Israeli military offensives and as with the blockade and economic strangulation of Gaza itself, intended to reduce popular support for whatever group or government Israel happens to be opposing.

The paucity of appropriate condemnation is due first and foremost, as always, to the political pusillanimity of American politicians of both parties who are more concerned about not jeopardizing their reelection chances by crossing a powerful lobby than about advancing the long-term interests of the Israel they claim to support, let alone the United States they are supposed to serve. Little counterweight to this perpetual tendency is coming from European leaders, who are disinclined to sanction Israel at a moment when they are preoccupied with the latest turn in the Ukraine crisis and have economic reasons to be disinclined to do much about sanctioning Russia.

There will be a ceasefire after this round of fighting, as there has been after previous Israeli operations in the Gaza Strip. Maybe a ceasefire is a week or so away, which would make Operation Protective Edge about as long as Operation Cast Lead in 2008-2009, in which some 1400 Palestinians died. Netanyahu does not want to keep mauling Gaza indefinitely, not only because of direct human costs to Israel (which so far consist—quite unlike the far greater Palestinian casualties—almost entirely of soldiers engaged in offensive operations) but also because he does not want to destroy Hamas. Netanyahu needs Hamas. Netanyahu may be blind to how his policies endanger Israel's long-term interests, but he is staunchly committed to the medium-term objective of retaining the West Bank. Having Hamas around as a hated, continually invoked reason never to get serious about negotiating a comprehensive settlement with the Palestinians serves that objective.

As the sequence of events preceding the current round of violence makes clear, Netanyahu saw as the biggest threat to that strategy the reconciliation agreement between Hamas and Fatah, the dominant party in the Palestinian Authority. If the agreement held, excuses for not being serious about negotiating a comprehensive peace agreement and establishing a Palestinian state to replace the occupation would become too flimsy to maintain. So Netanyahu did everything he could to destroy the reconciliation, including the mass round-ups of Hamas members and other applications of force that led almost inevitably to the onslaught that followed. Netanyahu was aided and abetted in that strategy by the U.S.-led West, which accordingly shares responsibility for the bloodshed that has ensued. Now Netanyahu's government can continue to make all the familiar claims about how Israel doesn't have a negotiating partner, how half of the Palestinians are ruled by a terrorist group supposedly dedicated to the destruction of Israel, how rockets coming from Gaza show how Israel can never risk ending occupation of the West Bank, etc. etc.

He also can say that Hamas is resisting a ceasefire. Hamas deserves strong criticism for fighting on even when it knows this means the possibility of casualties among innocent Israeli civilians as well as the certainty that significantly more Palestinian civilians will die from Israeli bombs and gunfire. Sometimes it appears that the group forgets there are more important things than its objective of having political power over all Palestinians. But the response by Hamas certainly is not surprising. The Israeli government has succeeded in structuring the situation such that Hamas figures it has nothing to lose by continuing to fight, because it has nothing to gain from not fighting. It tried the peaceful route, by observing a ceasefire in the year and half since the previous ceasefire despite Israeli violations, and by surrendering much of its political power through the reconciliation pact, in which it agreed to support a Palestinian government with no Hamas members and with a commitment to negotiating a peace agreement with Israel. Netanyahu made sure Hamas got no payoff whatsoever for following the peaceful route, and instead paid a price for it.

All that Hamas can now see as in its immediate interests is to try to bolster its popular support and credibility by, as a first choice, holding out for some relief to Gazans from their status as inmates in what amounts to an open-air detention camp. Haunting that pursuit, however, will be the knowledge that after the deal Hamas struck with Israel in November 2012, the ceasefire that was called for did take hold, but the easing of the Israeli blockade of Gaza that also was supposed to occur largely did not—another example of an Israeli disincentive to Hamas to negotiate peacefully. Beyond that is an interest in getting Israel to observe the prisoner exchange deal that it violated by re-arresting hundreds of former prisoners. And if all that fails, there at least is whatever catharsis comes from futile whacks at Israel with a few more rockets or some fighters sneaking through tunnels. The more death and destruction that Israel inflicts on the Gaza Strip, the stronger will be the popular desire for catharsis and revenge.

Unless the underlying issues are addressed, the next ceasefire will not stop this tragic cycle. The stage will be set for another round, when Israel will mow the lawn again. Absent regime change in Israel, the cycle will continue until and unless political leaders in the U.S.-led West summon political courage they have not displayed and acknowledge that the objectives the current Israeli government is pursuing are not in their own country's interests, or even in Israel's.

Image: IDF Flickr. 

TopicsIsrael Palestinian Territories RegionsMiddle East

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