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Exposed: China's False South China Sea Narrative

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Chinese authorities, as well as sympathetic writers, have in recent months sought to deflect criticism of China’s island-building campaign in the Spratlys by insisting that Beijing is merely copying what other claimants have done for years. According to this narrative, every claimant is as guilty as Beijing of altering the status of features in the South China Sea in contravention of international law and escalating tensions. But this narrative is false. Unfortunately, in one recent case, poorly chosen messaging from Washington has only strengthened it.

China’s argument against the Philippines is the easiest to dismiss. No evidence has been offered to show that Manila has engaged in large-scale dredging or reclamation work, other than the expansion of a narrow strip of sand off Thitu Island years ago to allow for the construction of a runway. The Philippines has engaged in some reclamation to prevent erosion at features, just as all claimants have (and just as occurs at coastal and island beaches around the world). Most importantly, Manila has never attempted to create a rock or island from a low-tide elevation, as China has at three of the seven features it occupies. That is by far the most legally troubling, and most provocative of China’s actions.

Malaysia also engaged in reclamation work at Swallow Reef, on which it built an airstrip, luxury scuba diving resort, and small naval base in the 1980s. The natural rock or island was expanded from approximately 25 acres to 85 acres. That is admittedly substantial, but a drop in the bucket compared to the thousands of acres built by China in the last two years. And, as with Thitu Island, it is important to recognize that Malaysia construction did not seek to alter either the geographic or legal status of Swallow Reef.

Among the claimants, Vietnam presents the most tempting target for the disinformation campaign. It occupies the most features, much of that occupation is not well-documented, and the government in Hanoi has traditionally been more reticent than Manila to disclose details of its activities in the Spratlys. Worse, it clearly has engaged in reclamation work on some of its features, most obviously Sand Cay and West (London) Reef, though again, at a tiny fraction of the scale pursued by China. According to unverified Chinese sources, it has also done reclamation at Central (London) ReefGrierson ReefNamyit IslandPearson ReefSin Cowe Island, and Southwest Cay.

In many of these cases, Vietnam clearly engaged in reclamation after the signing of the 2002 Declaration of Conduct for Parties in the South China Sea, thereby undercutting some (but not all) of its moral authority in saying China’s island building violates the spirit of the agreement. This is not helpful, and is precisely why Secretary of Defense Ashton Carter has called on all parties to refrain from further reclamation and construction, and did so during his meeting in Hanoi with Defense Minister Phung Quang Thanh. But again, key differences must be pointed out—Hanoi’s reclamation work has been a drop in the bucket compared to Beijing’s, and to date, there has been no documentation of Vietnam reclaiming a low-tide elevation or submerged feature to turn it into a rock or island. In other words, like the Philippines and Malaysia, Vietnam has engaged in reclamation or expansion, but not outright island building as China has.

Of late, the U.S. government has contributed to this muddying of the waters. While testifying before the Senate Foreign Relations Committee on May 13, Assistant Secretary of Defense David Shear noted that “Vietnam has 48 outposts; the Philippines, 8; China, 8; Malaysia, 5, and Taiwan, 1.” The fact that Vietnam had “48 outposts” was news to those who closely follow the South China Sea, both in the United States and in the region. In fact, it was more than twice what most experts cite as the number of features occupied by Vietnam. Many assumed Shear had misspoken, but then Secretary Carter repeated the figure in his speech at the Shangri-La Dialogue.

It didn’t take long for casual South China Sea watchers, and those more sympathetic to China’s position, to jump on the 48 figure as evidence that Vietnam has been the real aggressor. In The DiplomatGreg Austin asserted that Vietnam has doubled the number of features it had occupied since 1996. What this and similar arguments overlooked is that Shear and Carter did not say that Vietnam occupies 48 features, they said that it has 48 “outposts.” For some reason, Washington decided to individually count every visible structure Vietnam has built on low-tide elevations and other features—something it never did for Chinese-occupied features before the island building campaign.

This means the U.S. government is counting Great Discovery Reef, for example, three times because Vietnam has built three different “pillbox” structures at different locations around the reef. Combined, those structures cover approximately 3.5 acres, with the two farthest from each other separated by about 5 nautical miles, and the two closest by less than 1 nautical mile. By comparison, China’s work at Fiery Cross Reef stretches about 2 nautical miles from end to end and covers 800 acres, with numerous facilities. Not only is this method of accounting for occupation in the Spratlys extremely misleading, but by not explaining its methods, Washington has helped fuel China’s false narrative.

If the long game for the Southeast Asian claimants, the United States, and like-minded nations is to rally international opprobrium against China in the hopes that Beijing will recognize the costs of its extralegal claims, then messaging that plays into China’s narrative of victimization is a sure way to lose.

This piece first appeared on the Asia Maritime Transparency Initiative (AMTI) website here

TopicsSecurity RegionsAsia

Why South Korea Is Silent on China's Moves in the South China Sea

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Last month on The Diplomat, Van Jackson made an important argument about South Korea's increasingly notable silence on freedom of navigation in the South China Sea.

 

Jackson, like many analysts, recognizes growing Chinese misbehavior there, most obviously the destabilizing island-reclamation strategy and expansive sovereignty claims it fuels. Jackson would like to see greater South Korean engagement (actually, any at all). He rightfully notes that the more unified the Asian front regarding rules in the Western Pacific, the more likely China is to moderate its actions. 

Where is the ROK on the South China Sea?

South Korea is a U.S. ally. As a trading state heavily dependent on open, safe sea-lanes, it has a strong interest in freedom of navigation rules. As a proximate neighbor of China, it has a similarly strong interest in China's socialization into a rules-bound regional community. Countries around China's periphery, from Japan to India, worry that if China is not rebuffed in the East and South China Seas, a sense of hegemonic dominance in the region may grow in Beijing. These minor conflicts are widely seen as the leading edge of the larger question of China's regional intentions as it grows ever stronger.

These concerns about China's integration or rejection of regional rules are, of course, well known. But Jackson helpfully fingers the growing unease in the U.S. over South Korea's hedging on China. Besides silence on the South China Sea question—on which almost every other regional state has weighed in against China—the South Koreans also quickly signed up for the Chinese-led Asian Infrastructure Investment Bank, and they have dragged their feet for years on missile defense deployment.

The corresponding American anxiety is predictable. In Washington, it seems obvious that South Korea should sign up with the U.S. camp regarding China. The Republic of Korea (ROK) is a U.S. ally, which spends far less on defense than it otherwise would because of the US defense commitment. Why should the U.S. provide world-class defense to the ROK without something in return?

Separating China from North Korea is vastly more valuable

The ROK's silence on China in the region, and the trust or at least credibility which that brings in Beijing, has a huge benefit not mentioned in Jackson's essay and elsewhere in this debate: gradually convincing China that it can safely give up it's North Korean 'buffer.' The current Chinese-North Korean relationship is the coldest it has ever been in the post-Cold War period due to vigorous diplomacy by the Park Geun-Hye Administration and its necessary (if unfortunate) reticence on Chinese regional behavior. This Sino-North Korean drift is a fantastic turn of events, which should not be jeopardized with minor South Korean gestures regarding the South China Sea.

North Korea is not even close to being economically self-sufficient (ironic, given its autarkic ideology). Specifically, North Korea has great trouble feeding its population on its own; the last time it had to, it suffered a famine that killed roughly 10% of its population. Nor can it power its machinery, vehicles, power-grids and so on without fuel imports. Nor can its decadent elites enjoy the fruits of tyranny—mansions, cars, top-shelf liquor, yachts and the rest—without a pipeline to the world and access to banks and credit. Permanent subsidization is required.

During the Cold War, the USSR and China were maneuvered into competing for a North Korean 'tilt' by sponsoring its inefficient economy. After the Cold War, the U.S., South Korea and Japan also occasionally subsidized the DRPK as part of various deals (which would invariably collapse). North Korea also routinely asks the UN and any other country that will listen for aid of almost any sort.

But this decades-old 'aid hunt' is slowly exhausting itself. Last year's definitive UN report on North Korea's ghastly human rights record makes it harder for UN agencies to assist Pyongyang without crushing criticism in the democratic world. The regionally relevant democracies—Japan, the U.S. and South Korea—have also been suckered once too often by the North to help again without serious concessions. The South Korean Sunshine Policy has been defeated twice at the polls, and the current U.S. attitude of 'strategic patience' means in practice no aid without verifiable denuclearization, which will not happen. The USSR is gone, and Russia today is too weak, economically stagnant and underpowered in Asia to play the supporting role it once did. Other rogues like Iran or Venezuela may sympathies with the North's aggressive anti-Americanism but can hardly muster the aid flows needed.

That leaves China.

China is the last lifeline. It provides the fuel that keeps the lights on and the cars on the road. It looks the other way on sanctions-busting luxury imports. Robust cross-border networks help meet basic needs for food, clothing and consumer goods for the general population. China provides a location for North Korean financial activities, which are often illicit. Beijing gives diplomatic cover in international organizations, including blocking a referral of Pyongyang to the International Criminal Court. In the language of game theory, China is the final hunter in the 'stag hunt' game needed to pin down the North.

To cut this lifeline would almost certainly produce a regime crisis. The population would once again be thrown into the penury of the famine years, while at the top, the cash, lifestyle and goodies for elites would dry up. Given that the Kim family has essentially bought off the army brass for decades to prevent a coup, the prospect of Pyongyang elites turning on each other over a diminishing budgetary and resource pie is arguably the greatest threat to Kimist rule. The Kim family almost certainly senses this vulnerability.

Prioritizing North Korean collapse

The end of Chinese support is a necessary (if not sufficient) cause for North Korea's eventual collapse. South Korean President Park's robust efforts to woo Beijing have helped push China and North Korea apart in the last few years. This is a huge achievement—arguably the most important in her otherwise scandal-laden presidency. For South Korea to weigh in on the South China Sea would jeopardies this tenuous breakthrough. Beijing must believe South Korea is at least neutral regarding Chinese power before it will give up Pyongyang. Given that U.S. forces are stationed in South Korea, Park must be flattering Xi Jingping quite a lot, and she has probably bit her tongue on other issues, like the South China Sea. But ultimately who cares? Cutting Pyongyang off from its last sponsor would be a sea-change and is well worth these costs.

Ideally, South Korea, as a fellow regional democracy and U.S. ally with strong freedom of navigation interests, would support the regional pushback on China in the South China Sea. But the realities of Chinese growth force tough choices. As I have argued before, rigid democratic maximalism regarding China will openly provoke it; Asia does not need ideological neocons. The democracies need to find ways to work with the realities of Chinese power without betraying core values. Abandoning Taiwan, for example, is a bridge too far in such accommodation. But in the South China Sea (and AIIB), a bit of South Korean silence or free-riding is a tolerable swap for a much greater gain.

The U.S. has many other allies and friends on the South China Sea issue. Laying the groundwork for the cessation of Chinese support for Pyongyang is of far greater strategic significance to the U.S., and just about everyone else, than the mild extra weight South Korea could bring on the South China Sea.

This piece first appeared in the Lowy Interpreter here

Image: Creative Commons 2.0. 

TopicsSecurity RegionsAsia

China's New Killer in the Sky: Japan's Submarines Beware

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China has developed and deployed a new, advanced fixed-wing, anti-submarine patrol aircraft in waters near Japan and South Korea, local media outlets are reporting.

The reports said that several four-engine Gaoxin-6 anti-submarine aircraft were delivered to the People’s Liberation Army Navy late last year, four years after the first prototype of the aircraft was unveiled. Chinese media and foreign outlets have long compared the Gaoxin-6 to Lockheed’s P-3C Orion, which Washington and its allies have long used to patrol waters near China.

However, some experts dispute the assertion. For instance, Li Jie, a Beijing-based naval expert often quoted by Chinese media, told the Hong Kong-based South China Morning Post that “there is still a certain gap between China's Gaoxin-6 and the American P-3C, especially in terms of its flight and reconnaissance ranges.”

A report in the state-run China Daily said the Gaoxin-6 design is based on China’s Y-8 medium-range transport plane, but that “the aircraft can easily be distinguished from other Y-8 variants by its large sea-search radar, mounted below the cockpit, and the magnetic anomaly detector boom that looks like a metal tail.”

It went on to say that the plane is operated by a crew of ten, and “is capable of flying 6,000 kilometers or staying in the air for more than eight hours.”

This is the first large aircraft China has developed specifically for anti-submarine warfare, making Beijing the sixth country after United States, Russia, Japan, the UK and France to have developed such a sophisticated ASW plane, according to the report in the China Daily. Anti-submarine warfare has long been viewed as a major weakness of China’s Navy, which has helped spark something of an arms race in Asia.

“Prior to the Gaoxin-6, the PLA navy only had a handful of the antiquated SH-5 maritime patrol amphibious aircraft and some ship-borne helicopters when it needed to deploy air platforms in anti-submarine operations," Wang Ya'nan, deputy editor-in-chief of Aerospace Knowledge magazine, was quoted as saying by China Daily.

Wang added: “That situation had hugely confined the PLA navy's long-range combat capability because foreign navies' submarines are probably the most dangerous threat to its fleets."

Li, the Beijing-based naval expert, told SCMP that the navy had opted to deploy the first Gaoxin-6 aircraft to the North Fleet in order to contend with South Korea and Japan’s submarines. "The Gaoxin-6 specialises in reconnaissance and searching for submarines. "Both Japan and South Korea have the world's most advanced submarines in the waters of the Yellow Sea and the East China Sea. That's why the navy decided to deploy Gaoxin aircraft to the North Sea Fleet first."

South Korea has amassed a formidable undersea fleet in recent years, including German-made submarines as well as numerous indigenous designs. This fleet is expected to grow at a robust rate in the years ahead.

Japan, on the other hand, has long had a capable of submarine fleet, and—amid growing tensions with China—announced plans to expand the size of that fleet. It has also been modernizing it with the introduction of Soryu-class submarines in 2009.

As Kyle Mizokami has explained on The National Interest:

Japan’s Soryu-class submarines are some of the most advanced non-nuclear attack submarines in the world. Displacing 4,100 tons submerged, the subs can make 13 knots on the surface and up to 20 knots submerged. Four Stirling air independent propulsion systems allow the Soryu class to remain underwater far longer than most diesel electric submarines.

Mizokami has also noted that submarines would play a central role in Japan executing an anti-access/area-denial (A2/AD) strategy against China in the event of a conflict over the two countries.

“Japan’s fleet of 16 submarines, in the process of being increased to 22, will be the most effective active defense. The JMSDF submarine fleet, composed of the newer Soryu and older Oyashio-class diesel electric submarines, is one of the most professional and technologically advanced in the world. The idea would be to direct Japan’s strength in submarine warfare against Chinese weaknesses in anti-submarine warfare (ASW),” Mizokami wrote back in February.

All of which makes strengthening anti-submarine warfare capabilities a necessity for the Chinese military.

Zachary Keck is managing editor of The National Interest. You can find on Twitter: @ZacharyKeck.

TopicsSecurity RegionsAsia

America's Trillion-Dollar F-35: Lethal Super Weapon or Super Bust?

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Last week there was a real flurry in the press and the blogosphere about the performance of the F-35 Joint Strike Fighter. Or, more accurately, about the lack of maneuver performance in a trial against an F-16—a design that dates back to the 1970s. War is Boring has been running hard on the issue, with writer David Axe—a frequent critic of the F-35—leading the charge. The story was picked up by the mainstream press, including an ‘exclusive’ in The Australian today.

The story is based on a leaked test pilot’s report (PDF) of an air-to-air exercise in January this year. (Note: the report is marked Export Controlled Information FOUO. For ASPI Strategist readers inside government, this is one to access at home.) The crux of the story is that the F-35 was beaten because it couldn’t outturn the F-16, and suffered from “energy disadvantage for every engagement.” To those who have been strident F-35 critics for years, such as Aviation Week’s Bill Sweetman, this was the news they’d been expecting.

When I first saw the story, I was a bit surprised—but only a bit. Based on figures I’ve seen, my expectation would’ve been that the F-35 and F-16 would be roughly comparable in close-in dogfighting performance, with one or the other having a marginal advantage depending on exactly how the fight was set up, and the configuration of the aircraft—particularly how much stuff was slung under the F-16. And that’s consistent with other, far less reported on, comparative assessments between the two.

That might seem strange at first. Why, after all, would the latest and most sophisticated combat aircraft around not be able to completely outclass a competitor that pre-dated it by decades? (To be precise, the Block 40 F-16 in the trial is a late 80s design.) The answer, in part, is that it isn’t the fight the F-35 was designed for. An F-35 pilot who finds him- or herself in a tight turning contest within visual range has got something terribly wrong. In fact, in today’s world of helmet mounted off-boresight targeting, any pilot who finds themselves in such a fight is probably going to be walking home. And as for air-to-air gunfighting, as practiced in the January trial, oh please—the 1960s called and wants its top guns back.

Instead, the F-35 is designed to be lethal at well beyond visual range through a combination of stealth, sensors, superior information processing and electronic warfare capability. There are reasons to wonder how effective the F-35’s bag of tricks will be into the future, especially as counterstealth systems evolve, and I’d like to see it carry more and longer-ranged weapons, But the trial back in January tells us precisely nothing about the effectiveness of the F-35 in the regime it was designed for.

And if that was all that could be criticized about the recent fuss, it wouldn’t be so bad. But it seems that there was a strong element of confirmation bias at work as well. If you already thought the F-35 was a dog (not entirely a bad thing to be in a dogfight, but I digress), then this report confirmed it. But a careful reading suggests that the flight controls of the F-35 involved were software limited to a point where it was effectively handicapped out of the fight. That’s why the recommendations made at the end of the report read like this:

- Increasing pitch rate would provide the pilot more options

- Consider increasing alpha onset

- Consider increasing pilot yaw rate control authority

And that’s why an Aviation Week piece a couple of months ago (subscribers) about the same trial—which was picked up by Lockheed Martin’s PR team as a positive story—noted that the aircraft “can be cleared for greater agility as a growth option.” Simply put, we don’t yet know what the relative maneuverability of the F-35 to the F-16 is, only what that particular software load allowed. (And even when we do know, the significance will be limited for the reasons mentioned earlier.) I notice that there are now some ‘second generation articles’ that have picked up on the same observation. (You can get an F-16 pilot’s perspective here.)

In an interesting incidental commentary, most of those contrarian articles say something along the lines of ‘there are plenty of reasons to be critical of the F-35 program, but this isn’t one of them.’ And that captures the problem about much of the public reporting on the F-35. The program has been running almost a decade and a half, with significant schedule slippages, engineering problems, software issues and cost overruns in its early years. The net effect has been to cost the Australian taxpayer many billions of dollars to establish an interim air combat capability. But much of the discussion has been about the wrong thing—yesterday’s concept of air warfare.

This piece first appeared in ASPI’s The Strategist here

Image: Flickr/U.S. Air Force. 

TopicsSecurity RegionsAsia

Russia's New Nuclear Submarines to Target U.S. Aircraft Carriers

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Russia is designing “carrier killer” nuclear submarines, local media is reporting.

According to reports in The Moscow Times and Pravda, among others, Anatoly Shlemov, the head of the state-owned United Shipbuilding Corporation's state defense order department, recently said that Russia will build two-classes of fifth-generation submarines as part of Vladimir Putin’s military modernization plan.

The first of these submarines will be designed to intercept strategic submarines whereas the other class will be built to target large surface vessels, principally aircraft carriers. “Though the designs have not yet been named, one will be classified as an ‘underwater interceptor’ and the other an ‘aircraft carrier killer,’” The Moscow Times paraphrased Shlemov as saying.

Shlemov elaborated in the report: “The main purpose of the [underwater interceptor] is to protect groups of [ballistic] missile carrying submarines, and to battle with enemy submarines…. The second ship will be a cruise missile carrier [used] for defeating coastal and surface targets.” With regards to the second class of ships, the report noted that Shlemov specifically stated one variant with be a “carrier killer.”

The two new classes of submarines will have the same design, with the principal difference between them being their armaments and purposes. According to The Moscow Times report, the two new submarines will be used to replace the Soviet-era Oscar II-, Sierra-, and Victor-class multipurpose nuclear-powered submarines.

As The National Interest reported last month, work on the fifth-generation submarines is already underway. Vladimir Dorofeyev, CEO of Russia’s Malakhit Marine Engineering Design Bureau, told TASS in June that "the work on the fifth generation of submarines is already underway. The project will be implemented after the Yasen nuclear submarine construction project is completed.”

Admiral Viktor Chirkov, the commander-in-chief of the Russian Navy, subsequently confirmed this, telling a conference: “In order to avoid pauses and standstill, we have started design work on developing submarines of the next, i.e. fifth generation.”

The fifth-generation submarines are part of a revival of Russia’s submarine building industry. After laying dormant for much of the post-Cold War era, Moscow recently unveiled two new classes of fourth-generation submarines.

The Borei-class nuclear-powered ballistic missile submarine (SSBN), which first entered into service in 2013, will serve as the undersea leg of Russia’s strategic deterrent.

The first Yasen-class nuclear attack submarine was also commissioned in 2013, and has impressed many U.S. naval officers. Much like the carrier killer variant of Russia’s forthcoming fifth-generation submarine, the Yasen-class is designed to engage surface vessels. Dave Majumdar has reported that the Yasen-class sub is equipped with:

24 missile tubes which can carry the supersonic NPO Mashinostroyeniya P-800 Oniks anti-ship missile which can hit targets roughly 200 nautical miles away. Severodvinsk can also carry Novator RK-55 Granat nuclear-capable 1,600 nautical mile-range subsonic land attack cruise missiles. Additionally, the Yasen-class boats can also launch the 3M14 Kalibr and 3M54 Biryuza land attack and anti-ship missiles, which have a roughly 300-mile range, though its torpedo tubes.

Some have doubted the potency of Russia’s budding undersea fleet. For instance, Norman Friedman, a longtime naval analyst, told Defense News that he is “skeptical” of Russia’s planned submarine boom. “There's a history in that country of laying down things that don't get finished for a long time. No question they'll lay down the subs, but actually building them after that is a more interesting question."

Other analysts disagree, however, Bryan Clark, a former U.S. submariner who is now with the Center for Strategic and Budgetary Assessments, told the same publication: “The Russians have put their money where their mouth is with regard to submarine construction and development. They see that as a way to generate an asymmetric advantage over U.S. forces. If they can develop a really high-end submarine force like they did in the Cold War, it would create a problem for U.S. naval planners and strategists thinking through how to deal with a potential Russian threat—one that could emerge without a lot of warning."

Zachary Keck is managing editor of The National Interest. You can find him on Twitter: @ZacharyKeck.

Image: Admiralty Shipyards

TopicsSecurity RegionsEurasia

OXI: The Greek Debt Disaster Unfolds

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The Greek people have delivered a resounding ‘no’ in the referendum, but the tragedy is still unfolding. It will take some time for the implications to evolve, but it’s hard to see how the vote helps achieve a resolution. The Greek people want to stay in the euro but don’t want austerity. The European negotiators and the IMF have neither the inclination nor the wiggle-room to agree. With the Greek banks closed, time is pressing. Leaving the euro would be hugely disruptive. Staying in the euro means a continuation of the failed policy of austerity. Thus Greece is in for a hard time. But how important is this for the rest of us?

Disruption in Greece doesn't help Europe's lackluster recovery, but it's not big enough to do substantial harm—Greece is less than 2% of Europe's GDP. Moreover, most of the damage has already been done, notably in 2010 when the unfolding Greek crisis diverted budget policies in the advanced economies from expansion to austerity, thus derailing the post-2008 recovery.

The peripheral countries (Spain, Italy, Ireland and Portugal) that seemed so vulnerable to contagion when the crisis began in 2010 may have their financial markets tested, and the drama queens of financial markets will do their best to turn this into another opportunity for profit-making market volatility. But there is not enough substance here to keep such disruption going for long. The European Central Bank has the ability and means to handle any financial fall-out.

Some see this as the beginning of the end for the euro experiment. With Greece staring at departure, will others follow and the euro disintegrate into national currencies? This outcome would be some kind of wish fulfillment for the euro-skeptics who dominate the UK press. But for all its challenges (past and future), the core countries of the euro have built up massive synergies and benefited enormously, both economically and politically. The degree of integration now accomplished will not be abandoned lightly. Greece was always an outlier, a misfit in economic structure and maturity. The parting would be painful, but will not unravel the euro.

Greek public debt is not insubstantial (the part owed to Europeans is conservatively estimated at 3.3% of the Eurosystem's GDP), but almost all is now owed to governments or international agencies, which can wear the losses without dramatic impact on their economies. The IMF has already asserted (rather boldly) that “the IMF's shareholders will not suffer losses.” 

What are the economic lessons? Countries can run budget deficits, overly generous pension schemes, and large external deficits for decades if foreigners provide the funding, but there is no free lunch. Unsustainable policies eventually stop and the longer countries have been off-track, the longer it will take to fix. Living standards can't rise if productivity remains low. Incompetent and sometimes corrupt governance might get by when the economic climate is benign, but can't cope when problems arise.

These are the old lessons. What are the new ones?

There is a melancholy message about the political-economy of decision-making: even when there is a better path for crisis resolution available, politics can sometimes push events down a worse path, which none of the participants wanted. When the current Greek Government was elected early this year, there was an opportunity for a fresh start based on mutually held objectives. There was unanimity among the negotiators that staying in the euro was desirable. There was a common recognition that Greece could not repay its government debt (even after the 2012 restructure), although the creditors were politically constrained from acknowledging this in public. Similarly, there was implicit understanding by all that the austerity package imposed in 2012 needed to be softened.

Skillful negotiators would have found a formula to put the debt to one side, thus opening up the opportunity to shift from the budget austerity required to repay the debt towards a more growth-oriented policy package, emphasizing the medium-term nature of the reforms needed.

This would have created an outcome all parties could accept: the debt would not be written off but would be extended, with modest payments in the near-term. This would not only suit Greece, but would have allowed a continuation of the fiction in the creditors' balance sheets that the debt was worth its face value. Greece would have shifted from an austerity strategy to one that addressed structural problems, but at a pace that allowed growth. Greece's feet needed to be held to the fire, but reform takes time when structural problems are so entrenched.

Alas, the negotiators did not have these skills. Just who let down the side will be hotly debated, but it looks like all parties were to blame, with the possible exception of the European Central Bank.

We will learn more about the mistakes of the European Commission and Greece as each participant attempts to shift the blame over coming months. But one thing is clear already: the International Monetary Fund played its cards badly and has lost both prestige and credibility. The Fund should not have become involved in the first place. This was a matter for the Eurosystem to sort out, just as federated states such as the U.S. or Australia would resolve state debt without calling in the Fund.

Dominique Strauss-Kahn, the Fund Managing Director at the time the crisis began, wanted to restore the waning influence of the Fund and perhaps burnish his own political ambitions in Europe. Instead, the outcome has been to demonstrate the Fund's weaknesses:

-Its Euro-centric governance structure over-rode its own rules and precedents to achieve a support program, which at the time suited Europe.

-It was unable to orchestrate a timely bail-in of excessive private-sector debt in 2010 (thus allowing the private-sector creditors to get off too lightly), or arrange a subsequent realistic restructuring of sovereign debt.

-Its forecast of Greek GDP in the face of budget austerity was, as usual with these support programs, hopelessly optimistic.

-It forgot the lessons of the disastrous Indonesian 1997-98 support program. The Fund's detailed involvement in the politically sensitive Greek pension reform seems to be on a par with its insistence on Indonesian petrol-price increases during the fraught political circumstances of 1998. The prerequisite for competitiveness reforms is reminiscent of the Fund's requirement to dismantle the Indonesian clove monopoly two decades earlier.

So much for the economics. Much less has been said about the strategic politics of what is unfolding. Greece's small size keeps the global economic consequences manageable but the same can't be said within the strategic context, where small problems can have large ramifications: 'For want of a nail, the battle was lost'.

This piece first appeared in the Lowy Interpreter here

Image: Flickr. 

TopicsEconomics RegionsEurope

A Frightening Thought: Nuclear Weapons are Back (And So Is Deterrence)

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With nuclear modernization programs under way across a range of countries, Russia asserting its right to deploy nuclear weapons in the Crimea, NATO reviewing the role of nuclear weapons in the alliance, and a recent report in the U.S. arguing for a more versatile arsenal of tactical nuclear weapons, it’s clear the world’s revisiting an old problem: how to build effective nuclear deterrence arrangements.

Since the end of the Cold War, thinking about deterrence issues has been mainly confined to the academic and think-tank world. But policymakers are now having to re-engage with those issues. And the problem has a new twist: we no longer enjoy the luxury of a bipolar world. Indeed, as Therese Delpech observed in her RAND monograph Nuclear deterrence in the 21st century, nowadays “the actors are more diverse, more opaque, and sometimes more reckless.”

Done properly, deterrence is a contest in threats and nerve, or—to use Thomas Schelling’s phraseology—“the manipulation of risk.” (The chapter so titled in Schelling’s Arms and influence is a great starting point for anyone wanting to think through the broader deterrence problem.) That helps explain why some thought the concept ‘ugly’. It’s hard to make a policy threatening massive damage to societies and civilians sound noble and aspirational. Still, the bad news is that the alternatives are worse. And if deterrence is going to remain the dominant approach in nuclear weapon strategy, we need to fit the strategy to the contemporary geopolitical environment.

Historical experience of the deterrence problem is greatest in relation to two competing superpowers, separated by intercontinental distances, endowed with the resources to manage challenges, and both knowing well the costs of major war. We’ve had relatively little experience of nuclear deterrence in contests between giants and midgets (US v North Korea), between established and fast-rising powers (US v China), and amongst players in a multipolar system. Even our understanding of the role nuclear deterrence plays in relations between regional rivals (think South Asia) remains under-developed. It’s entirely possible that the old superpower deterrence model might not fit those new challenges well. Indeed, maybe the old model doesn’t even fit the US–Russian strategic relationship well these days: Russia’s no longer governed by a sclerotic CPSU.

Some years back INSS’ Elaine Bunn (now a senior official in the Obama administration) wrote a paper unpacking the notion of ‘tailored’ deterrence introduced in the 2006 Quadrennial Defense Review. True, deterrence has always been characterized by particular strategic wrinkles, but Bunn’s paper was an attempt to bring those wrinkles to the fore in relation to the possibility of a nuclear-armed North Korea, Iran, or transnational terrorist group. Her exploration of three different forms of tailoring—tailoring to specific actors and specific situations; tailoring capabilities; and tailoring communications—helps to illustrate the growing complexity of the deterrence challenge.

It now seems likely that we’re headed back into a set of complicated deterrence debates. A strategy that might make sense in one strategic setting—for example, a degree of restraint by a giant engaged in a conflict with a midget—might well risk flagging unintended messages in another. In the giant–midget case, almost any crossing of the nuclear threshold by the giant risks imposing a set of desperate choices on the midget’s leadership, and desperate choices tend not to be good ones.

Deterrence in the context of an established power versus a fast-rising power has a different wrinkle. One effect of a deterrence-dominated world is to reward passivity over initiative. As Schelling notes, in the world of the arthritic, passivity tends to be the default choice. But fast-rising powers aren’t arthritic. Turning one aside from a revisionist agenda will probably be more challenging than deterring another established player.

Multipolarity brings its own wrinkles, including a more mixed set of adversarial relationships, asymmetrical contests, inadvertent signalling, and third-party exploitation of bilateral rivalries. Capability issues become more vexed: actors require the capabilities to deter and defend against another, but also the residual capabilities to remain a player in other contests. The pressure must surely be towards larger rather than smaller arsenals. And reputational issues become more dominant: just as Margaret Thatcher fought the Falklands War in part to show the Soviet Union that the West wouldn’t buckle in the face of force, so too players in a multipolar nuclear world will want to show resolve in one contest because of its implications for others.

Finally, and perhaps most controversially, deterrence turns upon a credible threat to cross the nuclear threshold if push comes to shove. During the 1960s the U.S. advocated a doctrine of flexible response, arguing for a model of deterrence that would fail in small packets rather than in one catastrophic breakdown. Notwithstanding the giant–midget problem outlined above, there’s usually good sense behind such a doctrine: it makes deterrent threats more credible, avoids global annihilation in any initial crossing of the nuclear threshold, maintains a degree of ‘intra-war deterrence’ from the options still on the table, and optimizes prospects for negotiated war termination. But historically the doctrine invited questions about the relative balance between usability and credibility in US nuclear policy—questions buried rather than resolved by the end of the Cold War.

Tailoring, messaging, usability, credibility, and thresholds: I suspect policymakers will soon be thinking about all those questions again, across a range of deterrence relationships.

This piece first appeared in ASPI’s The Strategist here

TopicsSecurity RegionsAsia

Sorry, France: Russia to Build Powerful Mistral-Style Assault Ships

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Russia will build its own amphibious assault ship in the wake of France refusing to sell Moscow two Mistral-class helicopter carriers.

In 2011, France and Russia signed a $1.5 billion deal for Paris to build two Mistral-class amphibious assault ships for Russia. The ships have already been built and the first one was scheduled to be delivered last November, but France pulled out of the agreement at the last minute over Russia’s role in the Ukraine crisis.

Ever since Paris began to reconsider the agreement, there have been periodic reports that Russia might build its own helicopter carriers to replace the Mistral vessels.

Indeed, as far back as October 2014, Rear Adm. Victor Bursuk, the deputy Commander-in-Chief of Russia’s Navy, declared: “We are not dependent on France in any way, it is just one of the contracts of military-technical cooperation and nothing more. The [Russian] shipbuilding program planned building warships of this class, and it will certainly be implemented.”

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Discussion of domestically-produced amphibious assault ships has picked up in Russia in recent weeks as France has moved to formally terminate the contract.

For example, back in May, as French representatives were arriving in Russia to discuss the terms of the cancellation, Oleg Bochkaryov, the deputy chairman of the Russian Military-Industrial Commission, told local journalists: “We have these types of ships planned.” Around the same time, there were a number of reports that suggested that Russia had received some of the Mistral-class design blueprints from France, and would possibly produce a replica of the French-built ships. Bochkaryov denied these reports, however, saying the Russian amphibious assault ships “will be built in line with a different class as we have a different ideology of paratroopers landing. There is no set task of copying Mistrals.”

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Other Russian officials later denied that Moscow had received any of the Mistral technologies from Paris. For example, last month Denis Manturov. Russia’s Industry and Trade Minister, told reporters, “What technology we have received? - none as of today [sic].” He did allow, however, that Russia “already had the hull modular design technology, we just had no orders, and we supplied the stern section and the fore-body."

At an arms show in St. Petersburg this week, Vladimir Pepelyayev, the chief of naval shipbuilding division at the Krylov State Research Center, elaborated on how the Russian vessels would differ from the French ones Moscow had originally intended to purchase. According to Pepelyayev, the Russian design “suits the tactics of using our forces, our mentality and our approaches to amphibious operations." He added: "Mistral and other such foreign ships… are tailored to match the ‘Atlantic mentality’. The task of our ships is to provide assistance to frontline troops in defending our borders, in other words, landing assault groups in the rear of advancing enemy forces. Naturally, they are designed differently.”

Pepelyayev went on to say that his company had passed the design information to the Russian Navy and is currently waiting for its approval. “The concept has been proposed to the Navy for scrutiny. We shall now wait for the Navy to speak its mind.”

He also estimated that the ships would cost 30 billion rubles (roughly $550 million) to build, and possibly less. About 80 percent of this cost would go to weaponry, while the other 20 percent would go towards the hull.

Regarding the timeline for the ship’s construction, Pepelyayev explained: “The conceptual design will take about twelve months to accomplish and the technical project and design documentation, another year or two. Building the ship will require another three years." Other experts have given a similar timeline, saying the ship could be built by 2020.

(Recommended: The Russian Air Force's 5 Most Deadly Weapons of War)

As The National Interest has repeatedly emphasized, Russia is undertaking a massive military modernization program, which it plans to continue despite its mounting economic woes. Like many of the weapon systems being contemplated, its unclear what level of priority the amphibious assault ship will be given, a factor that will be especially crucial if economic factors force Moscow to scale back the modernization effort.

In fact, there is some reason to believe that the amphibious assault will not be a high-level priority. Namely, Russian security officials have said France’s failure to deliver the Mistral-class ships will “definitely not” impact Russia’s national defense, and that the cancellation “cannot be even considered a loss." These comments, however, may have more to do with a long-standing belief in some Russian defense circles that Moscow should have built the ships domestically from day one.

Zachary Keck is managing editor of The National Interest. You can find him on Twitter: @ZacharyKeck.

Image: Wikimedia/Simon Ghesquiere/Marine Nationale

TopicsSecurity RegionsEurasia

Asia's Lethal Naval Arms Race

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Claims that a destabilizing ‘arms race’ is underway in the Asia–Pacific have become commonplace and are supported by reports that regional defense spending has surpassed Europe for the third consecutive year. As my ASPI report released today shows, the corollary of this situation is intensifying naval competition in the region. The implications for Australia and the Australian Defense Force (ADF) are significant.

Decisions on arms acquisitions in the Asia–Pacific continue to be driven by a multitude of strategic rationales and domestic factors. The significant changes underway since 2008 raise questions regarding the primary motivation behind regional naval acquisitions, including their supporting air capabilities.

Maritime disputes between China and its neighbors have increased tensions and affected countries’ military modernization programs. These tensions have driven the requirement for greater surveillance capabilities and signals intelligence systems as well as more surface combatants with longer endurance and platforms able to launch anti-ship missiles, submarines, and long-range aircraft.

These disputes occur in the context of heightened uncertainty about the future distribution of regional power, particularly between the U.S. and China. Consequently, regional naval arms decisions are increasingly driven by ‘action–reaction’ dynamics—reciprocal dynamics in which developments in offensive and defensive capabilities become an interactive process in which the arms requirements of one party depend upon the known, assumed or anticipated capabilities of the forces of other parties; Those dynamics are manifested in counter-reaction (where one party responds to another’s capabilities) and mirror-reaction (where a party imitates another’s capabilities). In other words, these dynamics display some of the important characteristics of an arms race and show that the Asia–Pacific maritime zone is indeed becoming more contested, and potentially more volatile.

Obviously, there are regional differences between Northeast Asia and Southeast Asia. Naval ‘action–reaction’ dynamics are most clearly visible in Northeast Asia. It should be noted that a common argument (see for instance here) against the emergence of naval arms races or serious competition in Asia is that defense                        spending as a percentage of GDP remains rather modest in most countries. That’s also true for northeast Asian countries. However, this measure doesn’t take into account the real value amount, nor does it consider the sophistication or type of the defense equipment acquired by individual countries. Doing so paints a different picture, one that shows that China, Japan, South Korea and Taiwan are increasingly reacting to each other’s capabilities and modernization efforts. US capabilities are a key factor in this equation as well.

The picture in Southeast Asia is more complex. The South China Sea has dominated strategic rationales for increasing capabilities, particularly submarines. Since 2012 the number of naval platforms in many countries decreased while military expenditure continued to climb, indicating substantial efforts to modernize and invest in fewer but more capable systems. Despite these efforts, Southeast Asian countries (with the exception of Singapore) haven’t yet worked out how to develop, operate and sustain sophisticated capabilities. Should the ADF deploy to Southeast Asia in the future, it could face more sophisticated capabilities.

While the ADF won’t lose its ‘capability edge’ in Southeast Asia in the medium term, in the short term investments in certain platforms increase the chance of a ‘lucky punch’. For instance, Indonesia is testing supersonic missiles from its frigates and putting Chinese anti-ship cruise missiles on fast attack craft. With rising economic growth, Southeast Asian countries will better address problems such as maintenance and logistics and increase their combat capability through improved situational awareness and better command and control systems.

The dynamics of regional naval modernization indicate that the future security environment in the Western Pacific will only become more contested. Northeast Asia is already caught up in action–reaction dynamics. Maritime Southeast Asia might follow suit over time. Importantly, while not imminent, the ADF’s key tenet of being a technologically superior force in Southeast Asia will gradually be eroded, at least in certain capability areas.

The upcoming Defense White Paper will need to address how the ADF will modernize its own air and maritime capabilities in a neighborhood that’s becoming more complex. It also means that we need to invest even more in building sustainable regional defense partnerships and further strengthening our U.S. alliance.

This piece first appeared in ASPI's The Strategist here

TopicsSecurity RegionsAsia

Greece: The First Developed Country in History to Default to the IMF

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Its failure to make a €1.73 billion euro payment to the International Monetary Fund by June 30 makes Greece the first developed country in history to default to the IMF.  It could also mark the beginning of the end for the European Union as the world has known it.

Brinkmanship by Greece’s hard-left Syriza government—rejecting its creditors’ demands to cut public sector wages, pensions, and other domestic spending while honoring its international debt obligations—continued down to the wire, and beyond. 

This default triggers a 30-day grace period, after which there could be serious consequences for Greece beginning in August, or sooner.  Greece’s other multilateral, government-backed international creditors—the European Central Bank (ECB) and European Commission—may now be forced to declare Greece in default in accordance with the terms of the current €130 billion euro bailout package that they and the IMF (the “Troika”) gave to Greece in 2012.  

That bailout was needed because the first one, a €110 billion euro package awarded by the Troika in 2010, failed to revive economic growth and put Greece back onto the path of fiscal stability.  The fact is that Greece has now essentially defaulted three times in the last five years, although the Troika institutions have tried to paper over the previous two defaults (which were euphemized as “haircuts” for investors), because they agreed to them. 

This third default, however, will be less orderly than the previous two.  Failure to make a €3.5 billion payment to the ECB on July 20 could be the final nail in the coffin and force Greece to leave the eurozone.

Heritage Foundation analysts criticized the IMF decision to proceed with the first bailout in 2010, which violated the IMF’s “exceptional access framework” lending caps. They also noted the certain predictability the first bailout would fail to solve the Greek debt problem in spite of the IMF’s bending the rules.  

The whole point of those IMF rules was to stop additional lending and force the Greek government to make the fundamental reforms and government spending cuts that must happen for a true economic recovery to begin.  But those reforms were barely being put into effect before the Syriza government—elected just last January—began rolling them back.

This week the Syriza government imposed capital controls and forced a week-long shutdown of the banking system, to head off a run by Greeks to grab what few euros are left in the vaults.   Meanwhile, Greece’s inexperienced and reckless Prime Minister Alexis Tsipras announced a referendum vote on Sunday, July 5, when Greek citizens can vote to accept the “austerity” measures being imposed by Brussels and Frankfurt—five days after the Troika deadline. 

There is an almost universal consensus among economists and policy analysts that Greece’s entry into the eurozone was a tragic mistake, especially for the citizens of Greece. At first the euro and the low interest rates it enabled provided a financial windfall.  

Unfortunately, the Greeks did not handle that unique opportunity prudently, but instead acted profligately.  Strong public sector unions demanded bloated government payrolls and generous early-retirement benefits. For their part, Greece’s protected and self-interested private business elites enjoyed the Eurozone benefits in tourism and shipping—then made tax evasion into an art form. The heavily indebted middle class saw this example and followed suit.

Greece is ranked 130th of 178 countries in the 2015 Wall Street Journal/Heritage Foundation Index of Economic Freedom, bettering only Ukraine and Belarus among its European counterparts. The rule of law is weak and corruption is pervasive. Despite some past efforts to create a more business-friendly regulatory environment, the labor market remains rigid and slow to adjust to market realities.

Getting out of the eurozone that it should never have been permitted to enter will be extremely painful for Greece. But at the end of the day, independence from the eurozone could be a blessing—albeit one accompanied by lower living standards for a while.  

A “Grexit” from the eurozone will also spur further soul-searching by Greece’s similarly indebted and economically less efficient EU neighbors in the southern tier.  And that will spell more trouble for the EU grand project, and the bureaucrats in Brussels.

James M. Roberts is a research fellow for economic freedom and growth at The Heritage Foundation. 

Image: Flickr. 

 

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