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Can the BRICS Dominate the Global Economy?

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Brazil, Russia, India, China, and South Africa have thrown down the gauntlet at the feet of the West. Last month these five emerging economies launched a New Development Bank - nicknamed the "BRICS Bank" - that combines features of the World Bank and International Monetary Fund (IMF). Meanwhile, China has proposed an Asian Infrastructure Investment Bank (AIIB) that could compete with the Asian Development Bank (ADB). These initiatives represent the first serious institutional challenge to the global economic order established at Bretton Woods 70 years ago this summer. The psychology behind them is clear, as advanced countries have damaged their own credibility as responsible economic stakeholders in recent years and have failed to fully accommodate the rise of the new powers. Less clear is how much of a substantive improvement these new institutions will make to global governance - or even to the interests of the countries championing them.

At first blush, it is difficult to take the new BRICS Bank seriously. The five founding members were brought together by little more than a clever acronym and a shared desire to send a message to the West. The differences among the five in economic heft, political orientation, and geostrategic interests are cavernous. Moreover, the initial paid-in capital of only $10 billion is a drop in the bucket compared to the development challenges the bank is intended to address.

But the BRICS Bank reflects a real grievance on the part of the emerging world about the state of global economic governance, including the recurring financial crises emanating from the United States and Europe in recent years and the failure of advanced countries to reallocate "shares and chairs" to emerging economies in existing institutions such as the IMF. Moreover, if managed well, the BRICS Bank could make a useful contribution to global development. Yet it could also undermine the global rules-based system that has largely served the economic interests of the BRICS well over the past seven decades.

When representatives of 44 allied nations, mostly from North America and Europe, assembled in New Hampshire in July 1944, they had three principal goals in mind. First and foremost was to construct a rules-based international economic architecture that would help prevent a recurrence of the chaos and devastation of the previous 30 years. Second was to rebuild the war-torn economies of Europe and Asia and lay a foundation for long-term global prosperity. To meet these first two objectives, the delegates at Bretton Woods created the IMF to promote macroeconomic cooperation and discourage beggar-thy-neighbor currency policies, the World Bank to oversee reconstruction and development, and the building blocks of what later became the World Trade Organization to discipline global trade. The North Atlantic powers then met their third objective - preserving their leadership in global affairs - by tilting governance of these institutions in their favor.

Arguably, both the BRICS Bank and China's proposed AIIB have been motivated by three similar objectives - only in reverse order. More than anything, the founding members want to establish themselves as leaders in global affairs; they want to sit in the big chair at the head of the table and hold the gavel. Second, they seek to promote economic opportunity, though with a distinctly mercantilist bent favoring their own commercial interests. Making a positive contribution to the global rules-based order is a tertiary consideration at best.

To be sure, the willingness of the BRICS to invest in infrastructure and sustainable development is welcome. The World Bank estimates infrastructure needs in developing countries of around $1 trillion per annum through 2020. If China and other successful emerging economies can share their development experience and capacity with poorer nations, this would add to global welfare.

But are new institutions - especially ones that raise a number of serious governance and operational questions -really needed to meet these ends? The founding members of the BRICS Bank say they intend to share voting power equally within the existing group and to yield shares to new members as they join. Yet unless the BRICS Bank is going to remain a limited experiment, will South Africa really be able to sustain an equal financial contribution with China? If not, will Beijing continue to be willing to give Pretoria an equal voice in running the institution? And what happens when the combined share of the five founding countries hits the declared floor of 55 percent; will they then stop accepting new members, or will the shares of other existing members be diluted?

Operationally, will the BRICS Bank be able to attract top-tier staff to Shanghai? On what terms will the bank lend? Will there be sound financial, transparency, environmental, and other conditions akin to those applied by multilateral banks such as the World Bank and ADB? Will lending be tied to procurement of goods and services from founding-member companies, or will bidding be open to all?

Similar governance and operational questions surround China's AIIB proposal. Indeed, Beijing should be taking an especially hard look at the costs and benefits of these new institutional arrangements. For all the understandable complaints about the existing order, that order has served China's interests well over the past several decades. It has provided open, growing markets for Chinese exports; access to capital, resources, and technology; and discipline as China has forged ahead with its own domestic economic reforms. Some day in the future when Beijing is sitting in the big chair with the gavel, it may rue the day when it agreed to underwrite expensive new institutions with weak governance and lending structures.

Meanwhile, the BRICS Bank is a wake-up call to the advanced countries of North America, Europe, and East Asia. They should strengthen their own economic management to avoid recurring financial and fiscal crises and do more to share power in the Bretton Woods institutions - notably by persuading the US Congress to enact the IMF quota reforms that the Obama administration championed in 2010. Having made a real concession by embracing the G-20, which includes the BRICS as equal members, as the "premier forum for our international economic cooperation," Western powers should work harder to restore the G-20's effectiveness and credibility. But at the same time, advanced countries should remind the BRICS that the existing rules-based multilateral order has served them all well in substantive terms and is worth preserving and building upon.

Matthew P. Goodman holds the William E. Simon Chair in Political Economy at the Center for Strategic and International Studies in Washington, DC. This article originally appeared on Aug. 6th as part of the CSIS Commentary series and in CSIS: PACNET Newsletter here.

Image: Office of the President, Russian Federation. 

TopicsBRICS

Asia's Next Big Story: China, India and Australia's Economic Dance

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Australia and China have been booming together. Australian resources have fueled Chinese infrastructure investment, and Australia has built out its own infrastructure to deal with Chinese demand. But this story of mutual growth may be ending. Many observers believe China’s current 7.5 percent growth target will need to be moved lower, and empty cities underscore the growing concern that China has overbuilt. Australian exports are predominately commodities, and iron ore, coal, natural gas, and gold are all top 5 shipments abroad. This leaves Australia in an awkward economic position. Geographically, however, Australia may be ideally situated to take advantage of the next infrastructure boom—India.

As of May 2014, China consumed more than 35 percent of Australia’s exports, an extreme concentration. Japan, the second most popular destination for Australian exports, consumed 17 percent, and third place Korea took 6 percent, according to the Australian Bureau of Statistics. Australia does not appear to have the same ties to India. In fact, exports to India have fallen by half since the middle of 2010 due in part to a decline in the value of gold exports.

At the start of the 21st Century, trade between China and Australia was around $6 billion annually. Since then, it has exploded by more than 15 times—to $93 billion in 2013. This $88 billion increase constitutes more than half the $151 billion total gain in exports Australia has made so far this century.

Politically, the relationship between Australia and China is not always amicable. The Australian National Broadband Network is the largest infrastructure project to be undertaken in Australia’s history. Huawei, a Chinese technology company, was barred from bidding on the project with the Australian government, which cited security concerns in its decision.

Regardless, Australia and China have become deeply intertwined economically. For Australia, exports have benefited as China embarked on a building spree. But it may be time for Australia to begin planning its next move, before China shows signs of slowing its infrastructure investments.

Australia, in other words, needs another infrastructure boom. And so does India. India’s Twelfth Five Year Plan suggests that about $1 trillion should be spent on infrastructure over the 2012-2017 timeframe. This would equate to 10 percent of GDP every year being spent on infrastructure. A necessary boost to economic growth in India, where it has stalled for the past couple years. For Australia, having another mega customer would mitigate any weakness in Chinese growth. This transition may not be seamless though.

The funding for the infrastructure may not be easy to come by in India’s poor capital markets. China offered to finance $300 billion of the spending earlier this year. Given the history of border disputes between China and India, this gesture was seen as political posturing more than a potential investment.

India should be tempted by the funding though. Infrastructure for India is a necessity as highlighted by the blackout that left more than 650 million people without power in the summer of 2012. Investment in the electric grid is critical to economic growth, but roads and bridges matter too. These are problems that can only be fixed slowly, and at great cost.  In 2010, McKinsey estimated the cost of India’s poor logistical infrastructure at $45 billion per year. An investment in infrastructure would boost the Indian economy with employment gains from the construction itself, and it would have the long-term benefit of reducing a bottleneck in the Indian economy.

Unfortunately for the new Indian Prime Minister Modi and Australia, correcting the infrastructure deficit is not a straightforward task. The Chinese commitment may bring other global players to the table, but red tape and financing are significant headwinds.

Modi may want to move quickly on the economic plan his party proposed. The Bharatiya Janata Party Election Manifesto calls for building 100 new cities “adhering to concepts like sustainability, walk to work etc.” The plan is ambitious, and many of the ideas make economic sense—incubators for entrepreneurs and improving the lives of women, for example. But accomplishing all of the goals in the near or even medium term will be nearly impossible.

The BJP manifesto may be better suited as a sort of long-term road map of what India needs to be successful. The notion of building 100 new cities may sound excessive, bringing to mind the ghost cities of China. But India will require some new cities to accommodate urbanization that McKinsey estimates will result in India having 11% of the global urban population in 2025. As people migrate from rural to urban areas, wages and spending tend to increase. With a population of more than 1.2 billion people and trailing China in urbanization, India has ample room to begin the shift from the farm to the city. China, even with its ghost cities and previous rapid urbanization, is estimated to have 13 million people move to cities per year between now and 2030—more than the population of New York City every 12 months. India is both more populous and less urbanized China. If the BJP plan is implemented—even marginally, the benefits to Australia could be similar in many respects to the Chinese boom.

There is some movement between Australia and India to deepen ties. The Australia-India Comprehensive Economic Cooperation Agreement is in its fifth round of negotiations, and there appears to be support for the agreement in Australia. A study finds that while the agreement would benefit Australia more than India, it would be beneficial to both. At the moment, the level of Australian exports to India tends to be volatile and heavily tied to commodity prices.

Australia cannot shrug China off either. China and Australia have been in talks around a free trade agreement of their own for almost a decade. But after the 20th round of negotiations, they are aiming to conclude talks by the end of 2014. While China is likely to slow its growth in infrastructure spending in coming years, the level of spending is unlikely to drop over the medium-term.

Are these the first signs of an Asian economic triumvirate? Possibly, but it will take a tremendous amount of cooperation between countries which historically have not been overly friendly. China is scouring the world for investment opportunities, India can oblige, and Australia can supply the material. Australia, though shifting from a reliance on China in some respects, would be more tied to China than ever before in others. For all three countries to reach their full potential, it will be necessary to cooperate.

India’s expected tempered rate of urbanization would be better for Australia than the current Chinese boom. A steady, slow, and long urbanization cycle would allow Australia to continue its recent boom while avoiding internal economic bubbles. There will be volatility—with the concentration of trade to China there can be little else. But Australia has yet to reap the full benefit from one of the great urbanization stories of the 21st century.

Image: Tony Abbott/Flickr. 

TopicsEconomics RegionsAsia-Pacific

Obama's Strategy in Iraq: Operation No Boots on the Ground

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Listening to President Barack Obama speak about Iraq over the past several days, you can’t help but feel sorry for the guy.  This is, after all, a man who catapulted to the top of the list of Democratic presidential candidates in 2008 by largely being the anti-Iraq, anti-war candidate.  The invasion and occupation of Iraq, Obama memorably put it, was “a dumb war,” a war of choice, and perhaps one of the most disastrous foreign policy decisions a U.S. president has made since Vietnam.  This message, and a fresh face running a campaign of hope, was enough for the freshman Illinois senator to not only best the heavyweight Hillary Clinton in the primaries, but also defeat Senator John McCain in the general election.

For an administration that has consistently touted the full withdrawal of U.S. combat troops from Iraq as its greatest foreign policy achievement (the White House could use one right about now), it’s a bitter pill for the president and his national security team to have to re-engage militarily in a country that most Americans would rather forget about.  

Fortunately, Americans don’t have to worry about seeing their sons and daughters, mothers, and fathers back on Iraqi soil defending an increasingly polarizing, ineffective, and abysmal Iraqi government in Baghdad.  In fact, Obama’s use of military force in northern Iraq to date has been anything but large-scale or dramatic; four days after the president gave the order, the Pentagon has executed several rounds of airstrikes on a select group of fixed ISIL targets.  CNN and Fox News may like to hype this up with the continuous, red and white flashing “breaking news” icons, but in the full spectrum of military operations, these operations are in the category of “pinprick.”

Yet “pinprick” is exactly what President Obama and his administration want.  Indeed, this is precisely the plan: do just enough to avert the genocidal slaughter of tens of thousands of trapped Yazidis by a bunch of committed jihadist lunatics, but not enough that would compel the United States to increase its involvement in an unwinnable situation.  If there is any U.S. president who is cognizant of and fully guarding against the “mission creep” syndrome, it’s President Obama.  He has made this point continuously in his public remarks since Thursday night, when he first stepped up to the podium and addressed the American people on the nightmare unfolding in Iraq.  And he repeated it once more: “As Commander-in-Chief, I will not allow the United States to be dragged into fighting another war in Iraq.”

The president’s critics on the Republican side of the isle will continue to bash the administration for playing it safe on Iraq: that is, sending a few manned and unmanned aircraft to drop 500-pound bombs on obvious ISIL targets, and hoping that this will deter or somehow keep the organization in check.  The National Review, a conservative website and magazine, applauded Obama for finally taking concrete military action, against ISI, but in the same sentence described his actions to date as too cautious.  “The organization President Obama quite recently derided as al-Qaeda’s JV team has had a championship year, which demands much more than one fusillade of airstrikes,” the magazine opined.  “The Islamic State has surprised with its effectiveness, and it’s become clear that the Kurdish peshmerga paramilitary forces are underequipped to fight it.”

In an interview with The Daily Beast, Senator McCain labeled the administration’s use of military force in Iraq as “the weakest possible response;” a strange description given the fact that the White House could have decided to stay on the sidelines altogether and let ISIL move closer to the Kurdish capital, Irbil.

Advocates for a more forceful response in Iraq do have a point, however, when they argue that the administration needs to better explain to the American people what its plans are for a more comprehensive counterterrorism strategy against the ISIL problem​.  This extremist army is not confined strictly to the Sinjar mountains, Mosul, Tel Afar, or Tikrit; rather, its control of territory is unprecedented in the contemporary history of international terrorism, and the group’s leadership is intent on expanding into new areas unless someone or something stops them.  Thus, simply striking ISIL positions in a geographically confined area in northwest Iraq is not going to solve the issue, nor will it do anything to slow the group’s consolidation of control in eastern, northeastern and northern Syria, or western and northern Iraq.

What is the president prepared to do once the peshmerga—with the help of U.S. airpower—eventually liberates Sinjar from ISIL?

Image: White House Flickr. 

TopicsISIS RegionsIraq

Russia: The World's Second-Largest Immigration Haven

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“Immigrants aren’t rushing to Moscow in search of opportunity”—President Obama recently stated in an interview with The Economist, while making a larger point about Russia’s receding role in the world. While much of his commentary on the overall state of affairs in Russia was accurate, his comments on a lack of immigrants in Moscow revealed a blind spot in his view of global-migration movements—immigrants have been rushing to Moscow for the last twenty years, and not only to Moscow, but to cities all over Russia.

According to UN Population Division estimates, as of 2013,  the Russian Federation was second only to the United States in the sheer number of immigrants. This is a fact that continues to elude many Americans as, justifiably or not, Russia is commonly thought of as a place to leave rather than a place to which to move. And while it’s true that Russian citizens are emigrating in increasing numbers in recent years (a phenomenon that has been compared to the brain drain of the early 1990s), significantly larger flows of immigrants from the former Soviet Union have been entering Russia for the last twenty years.

So, why are they coming? While Russia’s economy has risen and fallen over the last two decades, an aging population and high mortality rates have kept the demand for labor steady and even growing in some cities. Many of the immigrants coming to Russia are able to earn much higher wages than they could in their home countries. While life for the average labor migrant in Russia is hard, to say the least, the conditions they leave behind are almost always much worse. If there are no jobs in your town in Uzbekistan or Kyrgystan (which are among the major sending countries according to both UN and Russian official statistics), trying your luck in Russia is likely your best option. While experiences differ widely, migrants I interviewed in cities across Russia ranging from Moscow to Irkutsk often noted the appreciably better standard of living than in their home countries.

In addition to labor migrants, Russia has also received many refugees over the last twenty years. In the early 1990s, Armenians and Azerbaijanis fled to Russia after the Nagorno-Karabakh conflict as well as Meskhetian Turks from Uzbekistan after ethnic violence there. Citizens of Tajikistan fled civil war in the 1990s, relocating to Russia as well as to other former Soviet republics. It is difficult to measure the true volume of refugees who entered during much of the nineties, but the number of ethnic conflicts in Central Asia certainly was the source of large flows. More recently, the 2005 Andijan Massacre in Uzbekistan also brought many refugees to Russia. Currently, there are many asylum-seekers in Russia from Afghanistan, Angola, Ethiopia, Somalia, and growing numbers of refugees from eastern Ukraine.  

My emphasis on the presence of labor migrants and refugees in Russia is by no means intended to downplay the multitude of problems that are faced by immigrants and native-born citizens in Russia alike. Those problems are real and the focus of much study and journalism. However, as many of the immigrants to Russia are labor migrants from poverty-stricken, neighboring countries or refugees of ethnic violence and war, the term “opportunity” that President Obama used may not be appropriate. Is it an “opportunity” if you are coming in order to survive? This sentiment should ring true in the United States as the economic gap between our country and those south of our border is analogous to Russia’s economy compared to those of its neighboring countries and former Soviet republics.

A stark example of the effects such a gap can have is the child refugee crisis the United States continues to struggle with week after week. President Obama’s remarks about immigrants (or a lack of immigrants) in Russia coincide with the latest immigration debate that boiled over with the influx of child refugees at the border. It is ironic that in the process of drawing attention to Russia’s dwindling relevancy in the world, President Obama indirectly referenced one of the most complex and troubling issues of his presidency—the inability thus far to pass comprehensive immigration reform.     

President Obama seemed to be trying to demonstrate Russia’s waning relevance to the United States, keeping it “in perspective,” as he said, but, it is clear from the crisis in Ukraine and the ripple effects on all of Europe that Russia is as relevant as ever. Shouldn’t our goal then be to engage Russia and the broader region more productively? One way we could do this would be to recognize migration as an area where our two countries, the United States and Russia—numbers one and two, respectively, in terms of immigrant destinations—could work together and learn from each other. Though the United States has been an immigration destination for much longer than Russia, we are clearly still far from figuring out what works best. Both countries continue to struggle with what to do about masses of undocumented workers, detention centers, public health concerns, fervent anti-immigrant sentiment, as well as many other issues related to immigration.

Though it might not be feasible for the highest levels of government of the United States and Russia to work together on this issue at this time, at least there is collaboration between the two countries at the local level. People-to-people diplomacy continues with multiple U.S.-Russia working groups on various topics, including migration, and the U.S. government has had the vision to fund such crucial programs. I feel fortunate to have been involved in two research groups, one funded by the National Science Foundation and the other by the U.S.-Russia Social Expertise Exchange, which had both Russian and U.S. participants, studying migration issues in both countries. Through such initiatives, it becomes clear just how many similar problems the United States and Russia face. Keeping these lines of communication open helps U.S. and Russian citizens alike gain a real understanding of the on-the-ground situations in their respective countries, no matter what statements our political leaders make.

Mary Elizabeth Malinkin is a program associate of the Kennan Institute at the Wilson Center.

Image: Flickr/DavidDennisPhotos/CC by-sa 2.0

TopicsDomestic Politics RegionsRussia

China's Growing Military Might Has Japan on Edge: Tokyo Responds

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Earlier this week, Japan released its annual defense white paper. It comes amidst a number of initiatives by Prime Minister Shinzo Abe to adjust Japan’s defense policy, including most recently a reinterpretation of the constitution to allow the Japan Self-Defense Force (JSDF) to exercise the right of collective self-defense. In light of Abe’s visit to Australia last month and the agreement to enhance bilateral defense cooperation, it’s worth analyzing this document.

Overall, the white paper reaffirms both the Abe government’s increased concern about China’s strategic trajectory and changes to the JSDF’s force posture already announced in other documents after Abe’s re-election in December 2012. The 2013 defense white paper was already noteworthy for its harsher tone against China. The new version argues “security issues and destabilizing factors in the Asia-Pacific region including the area surrounding Japan are becoming more serious.” It directly criticizes China’s establishment of an East China Sea Air Defense Identification Zone (ADIZ) in November 2013 as a “profoundly dangerous” act designed to “unilaterally change the status quo in the East China Sea.” For the first time it also mentions the problem of “gray-zone” situations which are “neither purely peacetime nor contingencies over territory, sovereignty and maritime economic interests”—another reference to China’s low-level maritime coercion activities in the East and South China Sea.

China’s growing military challenge is the biggest driver for JSDF modernization, followed by North Korea’s missile program. The new National Defense Program Guidelines (NDPG) of December 2013 provided defense-planning guidance for the next five years. They built on the 2010 NDPG, which called for the development of a “Dynamic Defense Force,” that is, a more mobile force better capable of defending the Japanese archipelago against new emerging threats. The 2013 NDPG introduced the concept of a “Dynamic Joint Defense Force,” which paves the way for greater cooperation within a heretofore largely disjointed force. It also announced new capabilities to strengthen Japan’s air-maritime denial capabilities:

·       The Maritime Self-Defense Force (MSDF) Navy is set to acquire 23 new P-1 long-range maritime patrol aircraft to replace the existing P-3C Orions. A further aim is to increase the number of destroyers from 48 to 54. The new destroyers will be smaller, more modular and fitted with minesweeping equipment. At the same time, the number of minesweepers will be reduced by 25%. There will also be ballistic missile defense (BMD) software upgrades for the two Aegis destroyers of the Atago-class as well as acquisition of two more ships, bringing the BMD-capable destroyer force to eight. The submarine fleet is to increase from 16 to 22, as announced in 2010.

·       The Air Self-Defense Force (ASDF) will deploy more F-15 fighters closer to the disputed Senkaku/Diaoyu Islands and will double its Airborne Early Warning Squadrons. It will also expand the number of fighter squadrons, not least through the acquisition of 42 F-35A Joint Strike Fighters.

·       The Ground Self-Defense Force (GSDF) will continue its build-up of an amphibious brigade around the Western Army Infantry Regiment. It will acquire new amphibious assault vehicles as well as 17 V-22 Osprey tilt rotor aircraft. Moreover, the GSDF will further reduce its number of tanks, invest in a new mobile combat vehicle and establish coastal observation and area security units through the Ryukyu Islands. Finally, Japan will also develop nine anti-ship missile companies, which could be forward deployed.

·       The 2014 defense white paper confirms all of those defense equipment plans.

So, what does it all mean? Under Abe, Japan continues to modernize what is fundamentally still a defensive military posture. It’s about making the JSDF more mobile and resilient in the defense of the archipelago whilst remaining predominantly in a supporting role to US forces based in Japan. In this context, analysts have rightly noted (here and here) that the recent move towards exercising the right of collective defense came with major caveats. Essentially, it’s about allowing the JSDF to support its U.S. ally helping to defend Japan against a major military threat.

Moreover, it’s still far from clear whether the JSDF will be able to meet the new white paper’s ambitions. One structural impediment is the defense budget. This year, Japan will spend about US$ 46.9 billion—a growth of 2.2% compared to 2013. Yet, that’s still well below spending in the early 2000s. And a look at the budget breakdown reveals that rising personnel costs, life-extension programs, and upgrading facilities absorb a large part of the budget. If Japan’s economic problems continue more money for defense is hardly likely to be forthcoming.

Even more important is that Abe is fighting an uphill battle in his attempts to initiate lasting change in Japan’s defense policy. As Brad Glosserman points out, the public seems largely skeptical about his vision for a Japan reasserting its power, being content with the current process of “decent stagnation.” In this context, a recent opinion poll revealed that an overwhelming majority of Japanese is still unclear as to why the government decided to reinterpret the constitution in order to exercise the right of collective self-defense. Abe will need to secure another term in office if he hopes to lock-in his changes. Even then, barring a major external shock, Japan’s defense policy will remain fundamentally defensive.

Benjamin Schreer is a senior analyst at ASPI. This article first appeared in ASPI’s The Strategist here

Image: Wikicommons. 

TopicsSecurity RegionsJapan

Palestine's ICC Threat: Pluses and Minuses for Mahmoud Abbas

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The shooting has resumed in Gaza. But where will things go when it ends? Inevitably, in each operation in Gaza since 2008 there is a "Goldstone-ification" on the Palestinian side—a shift from the kinetic to the diplomatic. Legal experts hover, investigations launch, initiatives get underway in courts around the world. Some yield results for the Palestinians. Some don’t. But this time, there may be a game changer. The Palestinians may plead their case against Israel at the International Criminal Court.

The threat of going to the ICC is by now a common one from the Palestinian leadership in the past couple of years. With little leverage on other fronts, the Palestinian leaders have threatened to sue the Israelis for war crimes several times, presumably over settlement construction.  In April, Mahmoud Abbas gave the Israelis an extra jolt when he announced that the Palestinians would sign on to fifteen international conventions, including the Geneva Convention. This came on the heels of his successful recognition of the “State of Palestine” at the UN General Assembly in 2012. Palestinian officials claimed that the fifteen were just the first cluster in a group of international conventions and organizations that numbered closer to sixty-three. Palestinians asserted that, depending on Israel’s actions, they would keep progressing in that list until they reached the sixty-third: the Rome Statute and ICC.

This was the plan before the conflict in Gaza erupted in early July. The ICC was originally intended as a last resort for the Palestinians. But now, with the death toll in Gaza sparking international outrage, the Palestinian leadership may skip all of the other conventions and jump right into the deep end. 

The reasons for this have just as much to do with Palestinian politics as the Palestinian demands for justice. Throughout the Gaza war between Israel and Hamas, the role of West Bank-based Mahmoud Abbas has been severely diminished on the Palestinian street. Hamas’s calls for protests in the West Bank prompted large crowds to take to the streets. But Abbas, a longstanding proponent of nonviolence, refused to endorse a full-blown intifada. With the conflict raging, Abbas clung to his vision of presiding over both the West Bank and the Gaza Strip as the sole representative of the Palestinians. This was despite the fact that Hamas continues to demonstrate its full control over Gaza.

In other words, the Gaza war may have given Hamas a spike in popularity, but he also knows they will not likely emerge stronger after taking a pounding militarily. The Egyptians are also not likely to cede to their demands in the ceasefire talks in Cairo. So, Abbas is taking this opportunity to regain the mantle of the top Palestinian leader. Abbas knows that his international campaign is popular—a June poll showed almost 80 percent of Palestinians support going to the ICC. When the calls for the ICC became louder and louder as the operation dragged on, Abbas sent Hamas leader Khaled Meshaal a copy of the plans for the ICC. Days later, Saeb Erekat, the top negotiator, reiterated his boss’s claims and called on all Palestinian factions to approve the plan to go the ICC.

On August 5, Abbas dispatched the Palestinian foreign minister, Riyad al-Maliki, to The Hague to meet and discuss steps for joining the ICC. This was a bluff. The Palestinians know the process and procedure for joining the ICC is complex—they’ve been studying it for years. The true purpose of the trip came in al-Maliki’s comments after the meeting, where he issued this threat: "Everything that has happened in the last twenty-eight days is clear evidence of war crimes committed by Israel, amounting to crimes against humanity. There is no difficulty for us to show or build the case. Evidence is there ... Israel is in clear violation of international law."

When asked if the Palestinians were worried with a counter-suit from Israel, al-Maliki shrugged it off, saying the Palestinians were willing to accept that because: “nothing compares to the atrocities, the carnage, committed by Israel.”

But this could all backfire on Abbas. In seeking the consent of all Palestinian factions for joining the ICC, including Hamas and Islamic Jihad—terrorist groups that regularly carry out war crimes—Abbas risks exposing himself to the type of counter-suit that could negate his attempts to gain leverage over Israel. An investigation into war crimes reveals the actions of all the actors on the battlefield. Any amount of scrutiny into the events of the past month—the tunnels, the rocket fire from civilian areas, the suicide bombings—is sure to create headaches Palestinians. For Abbas, it could become a race to the bottom on a spectacular stage.

Nevertheless, Palestinians and their supporters continue to demand justice for the last month of hostilities. Now that Abbas has raised the threat of the ICC to a new level, can he back away?

Grant Rumley is a research analyst at the Foundation for Defense of Democracies. 

Image: World Economic Forum. CC BY-NC-SA.

TopicsInternational Law RegionsIsraelPalestinian territories

America and China's Dangerous Dance in Asia

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2010 is a year to remember in U.S.-China relations. Since the second decade of the 21st century, the very strategic foundation of the relationship has undergone incremental erosion – five or so years later the cumulative result is serious.  The vocabulary employed to describe approaches to managing bilateral ties has changed, captured by the decreasing use of an “engagement” vocabulary, a passing transit through the concept of light and heavy “hedging,” on to “deterrence,” and now one hears voices using the vocabulary of coercive diplomacy in both societies.

Some in the China studies field have argued against the proposition that China’s regional policy has become more assertive. I am not among them.  There has been a qualitative change in Chinese regional policy and broader strategic alignment, notwithstanding Beijing’s official protestations to the contrary and the fact that China’s current neuralgias are largely those of the past. Unfortunately, the already-hackneyed characterizations of PRC behavior as “salami slicing” or “nibbling” have an element of truth – Beijing is attempting to peel back the maritime status quo ante in the East and South China seas, one thin layer at a time, without making a move dramatic enough to justify a major response by others at any given moment.  All this is not to say Japan and others have not taken ill-advised actions that have provided openings for, and provoked, Beijing, a most recent example being Tokyo’s renaming islands in the East China Sea.

All this gives rise to several questions:

1. Why (or to what extent) has Beijing changed a successful policy that for more than three decades facilitated a dramatic increase in Chinese comprehensive national power without engendering a proportionate rise in the anxieties of others?

2.To what extent is China responding to the behavior of others and to what extent is it seizing on small provocations to make advances?

3. Why is Beijing jeopardizing the primacy of its internal, economic reform goals by alienating substantial chunks of its periphery and running the risk of an ever-stronger international coalition pushing back?  

4. Why is Beijing allowing itself to be driven into a corner of alignment with Russia, an economic underperformer that violates the PRC’s own 60 year-old-principle of respecting national sovereignty?

5. What are the lessons that we learned from the Cold War about strategy, deterrence, and coercive diplomacy that have applicability in current circumstances in a far different globalized world?

6. Has U.S. policy in any way given added push to negative developments?

7. What are the appropriate (and effective) policy responses available to Washington?  What are clearly disastrous paths that Washington and others should eschew?

I cannot address all these questions, serious research is needed on each, and I am not pushing for specific actions, beyond endorsing the spirit behind Assistant Secretary of State Danny Russel’s July 28, 2014, statement calling for “claimant states to define and voluntarily freeze problematic activities” – the tit for tat cycle occurring in maritime Asia needs to be broken. Instead, I wish to make three points as we try to work our way through this precarious period:

- First, the problem we confront in Asia is not simply assertive Chinese nationalism.  What we face in Asia is conflicting, assertive nationalisms.

- Second, we should not simply frame the issue as, “How should the United States respond to Beijing?”  Rather, the regional and international systems have reacted, and are reacting, and this has already imposed meaningful costs on the PRC.  An important question for Beijing is how long does it wish to bear these, and possibly other, growing costs?

- Finally, as we contemplate how to respond, Washington should not take actions that are to everyone’s detriment, not least the interests of our friends in the region, nor should we fail to consider the lessons of the Cold War in developing responses.

Asia is a region in which levels of trust across national boundaries are low, and memories are long. It is a region full of pluralistic societies and polities, many of which seek to garner domestic support by appealing to nationalistic aspirations – this is as true for Japanese Prime Minister Abe Shinzo as it is for PRC leaders and others in the region.  As a consequence, while it is certainly true that assertive Chinese nationalism is a problem, the larger challenge is the interacting nationalisms driving many polities and societies in Asia to be assertive.  Washington needs to be careful that in opposing the assertive nationalism of China we are not giving free rein to others.

With respect to the second point (China already is paying costs), the PRC’s relations with its periphery have suffered a net decline over the last five years:  Beijing’s “box score” for bilateral relations shows overall losses, with minuses in Myanmar, Vietnam, Indonesia, Philippines, Australia, Malaysia, India, Singapore, and of course Japan, with South Korea being a complex case, but not a plus for Beijing.  China’s relations with ASEAN as a whole would have to be counted as weaker. Anti-Chinese riots in Vietnam and canceled infrastructure projects in Burma are just two indications of how careful Beijing needs to be in its dealings with its neighbors. Relations with Russia could be counted a plus, but I continue to be impressed by the structural weakness of that relationship. Beyond triangular politics, bilateral security, and energy (which Russia needs to sell in any event), what does Moscow have to offer Beijing over the long haul that would offset the serious deterioration with the U.S. and others?  Turning to Hong Kong and Taiwan, many things could be said but, put most simply, it will be tough to give confidence to the populations living in these two areas if Beijing’s relations sour with the West and much of the region to which they are so intimately connected.

If one sets this net loss against a very heavy and challenging domestic agenda in China, where President Xi Jinping is seeking to move forward on the Third Plenum’s broad economic and social agenda, attack powerful networks of corruption, bring added coordination to a very fractious domestic policy system, and move onto yet another area of change in the upcoming Fourth Plenum in October, it is hard to see how the PRC’s external circumstances mesh with the need for internal focus. Foreign economic ties and foreign policy can, for awhile, proceed on somewhat separate trajectories, but eventually security problems will infect economic relationships.

Addressing the third set of issues (appropriate and effective responses), there are no easy answers.  Also, we need to remember that there are big upsides to cooperation with China that never existed with the Soviet Union, and these are not limited to the economic domain.  Nonetheless, two things are clear: first, we ought to remember some central lessons of the Cold War. And second, we should not add to instability and/or hurt our friends more than positively affecting Beijing’s behavior.

Among the central lessons of the Cold War that Glenn Snyder in part catalogued thirty years ago are:

- Increasing commitment to allies has the possible upsides of reassuring friends, enhancing one’s reputation for loyalty, deterring an adversary, and increasing credibility – if one has the material resources and domestic political will to deliver and the threat is sufficiently potent to offset any possible conception of gains.  The possible downsides are being ensnared by friends into commitments not in your interest, provoking an adversary, underestimating the burdens an adversary will bear, solidifying the adversary’s internal coalition against you, propelling a security dilemma of ever-greater proportions, and of course the problems associated with communicating accurately, in a timely fashion, and with credibility, across cultures.

- There is a distinction between deterrence and coercive diplomacy, with the former using threat to prevent an unwanted future action and the latter using threat to persuade an adversary to undo an action already taken. The former is easier than the latter.

- A challenger’s perception of your capability is important.  Capability includes: the willingness of one’s population to sustain a commitment; the material resources available to sustain that commitment (which includes the political ability to tax oneself to achieve that capability); and, the other domestic and global demands drawing on one’s resources – how stretched does one appear to be?

Also, one should not seek to turn existing zones of relative calm and stability into additional problems for Beijing, in the misguided notion that whatever multiplies Beijing’s problems must be in our interests. This we could call the strategy of asymmetric destabilization.  To seek to fish in the troubled waters of the “Occupy Central” movement in Hong Kong, or the “Sunflower Movement” in Taiwan, would provoke the worst possible response from Beijing and is not something that those movements would or should want, making them seem to be agents of outsiders rather than the home-grown movements they are.

To summarize, if Beijing wants to improve relations with Washington, the easiest, quickest, and most mutually beneficial path is to improve relations with its own periphery.  For its part, a portion of the U.S. management approach needs to be constructively shaping the behavior of U.S. allies and friends and recognizing that Asia’s problem is not simply China, but rather the conflicting nationalisms and insecurities of many countries in the region.  Managing U.S. rhetoric, matching resources to objectives, improving our own governance and comprehensive national power, and minimizing the siren song of martial and values discourse in what has become the perpetual U.S. political campaign are not the least of the challenges facing the United States.  In the end, however, Washington needs to find ways to address the nibbling strategy of Beijing without sliding into escalation, doing great damage to the regional (and global) economy, or taking on more than the US people are willing to bear.  An open-ended, deteriorating security and economic environment is a tragedy for the US and the region, and a catastrophe for China. One is hard-pressed to avoid concluding that both China and the US need this deteriorating circumstance like a hole in the head.  That may be the most compelling strategic argument of all to change course.

David M. Lampton is a professor and director of China Studies at SAIS. He is the author of the recently published, Following the Leader: Ruling China, from Deng Xiaoping to Xi Jinping (University of California Press, 2014). This article originally appeared in CSIS:PACNET Newsletter here.

Image: U.S. Navy Flickr. 

TopicsChina RegionsAsia-Pacific

Remembering The Gulf of Tonkin Resolution: 50 Years Later

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The first week of August marks not only the centenary of the guns of August 1914, but also the fiftieth anniversary of the Gulf of Tonkin Resolution, which was as near as the United States ever came to a declaration of war in Vietnam. It’s worth reflecting on why the events of August 1964 still remain the subject of intense controversy.

The root of the matter was the U.S. constitution, which designates the president as commander-in-chief but requires congressional approval for the country to wage war. Conflict between the executive and legislative branches over war powers has been a feature of administrations from Woodrow Wilson to Barack Obama.

On August 4, 1964, President Lyndon Johnson announced that North Vietnamese torpedo boats had made two unprovoked attacks, on August 2nd and 4th, on the USS Maddox patrolling in international waters around the Gulf of Tonkin. The Administration immediately sought a congressional resolution which, in sweeping terms, gave the president the right to commit American forces to the defense of any Southeast Asian nation threatened by communist aggression or subversion. Based on the reports of the two attacks, Congress passed the resolution on  August 7th  by overwhelming majorities, 88–2 in the Senate and 416–0 in the House of Representatives.

The political context was all-important. Johnson, who’d unexpectedly become president following the assassination of President John Kennedy in November 1963, would face election in his own right in November 1964. He wanted a substantial majority that would enable him to introduce a program of civil rights and other domestic reforms. The brewing conflict in Vietnam was still a second-order issue in the United States. Johnson wanted to keep it there, while showing that he would respond with appropriate but limited force to any unprovoked challenge from the communists. He could thus present himself as the candidate most likely to keep American boys out of a land war in Asia, especially after the Republicans rejected the moderate Nelson Rockefeller and chose the hawkish Barry Goldwater as their candidate.

The Tonkin Gulf resolution suited Johnson’s tactics admirably: he won the election in a landslide. But from 1965 onwards, as the war escalated, the death toll mounted and a “credibility gap” emerged over Johnson’s handling of the war, his critics thought it had all been too convenient. Opponents challenged the resolution’s validity. Leading Democrats who emerged as prominent critics of the war, such as Senator William Fulbright, believed they had been grossly misled about the facts of the incident and Johnson’s intentions.

They raised three major charges. First, it was claimed that at least one, perhaps both, of the alleged attacks hadn’t actually taken place. Second, the administration was alleged to have deliberately provoked an attack, in order to gain congressional authority for the subsequent escalation of the commitment, which was already being planned in secret. And third, Johnson had allegedly misled Congress over his intentions and the way in which he would use the resolution.

Even after fifty years, much remains disputed, but the following seem to be the most credible responses to those charges.

First, the attack of August 2nd did take place; the alleged second attack almost certainly did not.

Second, the episode was as much a blunder as conspiracy. Two separate programs were under way in Vietnam, overseen by different agencies in Washington. Operation 34A involved provocative, but ineffectual, missions by CIA-backed South Vietnamese agents into North Vietnam, while the U.S. Navy conducted electronic eavesdropping missions called Operation DeSoto. The North Vietnamese understandably thought the Maddox was involved in a 34A attack. It wasn’t, but the extent of co-ordination between its DeSoto mission and the 34A attack remains unclear. Some hawks in the Johnson Administration had prepared a draft congressional resolution, but the administration’s intention was to introduce it later in the year, possibly after the election. Instead, in a hasty and opportunistic reaction to the alleged attacks, it was brought before Congress while the reports of the alleged attacks were extremely confused and contradictory.

Third, and most important, Johnson clearly gave the impression that his intentions were strictly limited, and that he would consult Congress further before any major escalation of the war. When Johnson’s Defense Secretary Robert McNamara wrote in his 1995 book In Retrospect that he and his colleagues had been “wrong, terribly wrong” on Vietnam, he asserted that Johnson’s error wasn’t deliberate deception in August 1964, but gross misuse of the resolution’s authority in subsequent years. While an important insight, that doesn’t fully excuse Johnson’s behavior in an episode which, half a century later, stands as a reminder of the enormous impact on world affairs of hasty actions, unduly influenced by domestic party politics, bureaucratic confusion and interagency rivalries.

Peter Edwards is an adjunct professor at the Alfred Deakin Research Institute of Deakin University. He is the official historian and general editor of the nine-volume Official History of Australia’s Involvement in Southeast Asian Conflicts 1948–1975.  This article first appeared in ASPI's The Strategist here. 

TopicsVietnam RegionsAsia-Pacific

Why Japan Will Never Be a Permanent Member of the UN Security Council

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Japanese Prime Minister Shinzo Abe’s recent tour of South America, Central America and the Caribbean has been characterized by the international media as an attempt to match—if not outdo—Chinese President Xi Xinping’s own attempts to build economic relations in Latin America.  Yet Abe’s trip was not solely about spheres of economic influence: diplomatic and security issues were never far from the agenda, particularly regarding Japanese membership of the UN Security Council (UNSC).

Next year, Japan hopes to be elected as a non-permanent member of the UNSC.  First elected to the council in 1958 and last a member in 2010, Japan (along with Brazil) has spent more years on the UNSC than any other state, testament to the value that Japanese leaders have for generations placed upon membership of the UN’s chief security forum.  Obtaining the prize of representation has always required some expenditure of diplomatic—and economic—capital.  It is nothing new, then, for Abe to use his meetings with the Caribbean Community (CARICOM) to shore up votes for next October’s elections, which will take place within the UN General Assembly where every country has an equal vote.

Japan’s ambitions go far beyond recurrent non-permanent membership of the council, however.  Instead, Japan has long argued that the permanent membership of the UNSC—currently the Britain, China, France, Russia and the United States—should be expanded to include itself, Brazil, India and Germany, the so-called “Group of Four”.  Last week, Abe and Brazilian President Dilma Rousseff restated their joint case for reform (a March 2011 pamphlet from the Ministry of Foreign Affairs in Tokyo gives further details on the Japanese position).

Although the objective of permanent membership is longstanding, Abe’s diplomatic push ahead of October 2015 inevitably will be seen abroad in the same light as his other foreign policies, several of which have been criticized as hawkish by neighboring governments—not least of all the Chinese, which bitterly opposes the Japanese bid.  Far beyond the unwanted symbolism of a fully rehabilitated and “normal” Japan on the UN Security Council, the very real powers that permanent membership would afford Tokyo are simply anathema to Beijing’s interests.

Unlike Abe’s others attempts to bolster Japan’s international security posture, however, the bid for permanent membership of the UNSC is something that China is able to block with relative ease. As an existing permanent member of the council, China wields a veto over any proposals to alter its composition.  Japan’s permanent membership is therefore not possible without Chinese consent.

As such, Japan’s membership of the P5 is a non-starter, but Japanese ambitions on the world stage will nevertheless redound to the fraught Sino-Japanese relationship.  During previous discussions about reform of the UN in April 2005, “tens of thousands of demonstrators marched on the streets of major Chinese cities, throwing stones and other objects at the Japanese Council’s Office and vandalizing Japanese stores and restaurants.”  A decade on, domestic disgust at perceptions of Japanese hawkishness—stoked by state-controlled media—have hardly abated in China.

For years, Japan has proceeded cautiously and relatively successfully when it comes to pressing its case for reform of the UNSC.  Tokyo has the support of many nations large and small, and has made common cause with both Brazil and India (and Russia, for that matter)—China’s supposed allies in the BRICS bloc.  But Japan’s efforts never will be enough.  There is only one vote that matters when it comes to determining Japan’s future as a prospective permanent member of the Security Council and it is to be found in Beijing, not anywhere in Latin America.  Another round of non-permanent membership is thus the best that any number of Abe’s diplomatic offensives can buy.

Image: Flickr/CC 2.0 License. 

TopicsUnited Nations RegionsJapan

Forget the South China Sea: China's Great Game in the Arctic Draws Near

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Twenty years from now China’s gaze will not focus upon the South China Sea or the Central Asian steppes to fuel economic growth. Instead, Beijing will look to a far more inhospitable place to satiate its appetite for natural resources. The vast, barren northern part of the planet called the Arctic Circle holds about 13% of the world’s undiscovered oil and 30% of its undiscovered natural gas. Greenland, sitting on the rim of the Arctic Circle, boasts of one of the world’s most abundant supplies of rare earths. By September of 2030, when many scientists believe the polar ice cap will have melted, the region may offer a bonanza for natural resources. By that time a new Great Game will have already enveloped the world’s most northernmost region. We can be sure that China will be eager to play.

Although it is the world’s second biggest economy, China depends on imports for many of the raw goods it needs to fuel its relentless pace of economic growth. In the coming decades, it will have to look for natural resources farther and farther away from the mainland if it is to continue on its current pace of development. This explains China’s recent moves into the South China Sea (SCS) and its interest in resource-rich Africa. But China still risks a catastrophic supply shock if war were ever to break out in the SCS since most of its trade passes through the Straits of Malacca. The Northern Sea Route (NSR) that passes through the Arctic Circle thus offers China an unprecedented opportunity to diversify its trade routes and tap into untouched natural resources. Furthermore, trade between China and Europe via the NSR will be faster and cheaper: the NSR shortens the distance between Rotterdam and Shanghai by some 3,000 miles and saves thousands of dollars on fuel. Some scenarios suggest that 5-15% of Chinese trade could pass through Arctic waters by 2020. It is no wonder that China has been making great efforts to improve its relationships with Arctic Circle states.

Yet despite all its advances into the region China is not an Arctic Circle state and it does not sit on the Arctic Council, which currently consists solely of Arctic Circle states. So far this has been to China’s benefit. As a neutral observer of the Arctic Council, China has avoided the kinds of disputes Russia has had with member states—like one that erupted when Russia planted its flag at the North Pole in 2007—that have hurt its influence on the council. China has stuck to its scientific and environmental projects to build credibility.

In fact, China is going to spend $60 million dollars a year on polar research at its new China-Nordic Arctic Research Center in Shanghai. A commitment to conducting rescue missions in the Arctic has also helped improve its image. But for all its efforts in science it is clear why China is in the Arctic: natural resources and trade. Strengthening bilateral relationships with Arctic Council members is, therefore, of paramount importance to Beijing. China prefers these types of relationships because it can bring its economic might to bear on smaller states separately. A new free-trade deal with Iceland and $500 million dollar currency-exchange support program for Icelandic banks are just the beginnings of this strategy. The more economically dependent these smaller states are on China the more likely they are to give Beijing a permanent seat on the Arctic Council, even if it is not an Arctic border state.

Recent world events also point in China’s favor as the Great Game in the Arctic becomes an ever more real phenomenon. It looks as if Russia will become isolated from the West as a result of the Ukraine crisis. This will have major implications for Russia’s position in the Arctic. As the new Sino-Russian gas deal shows, China is Russia’s most natural partner in the East when it comes to energy and large-scale trade. Russian companies, isolated from western partners, will have to turn to Beijing for money and assistance in the Arctic. Indeed, China National Petroleum Corporation already has made a deal with Rosneft, the Russian energy giant, for Arctic oil exploration. Joint deals like this one will be crucial if China is to access the region’s untapped oil reserves because most of the oil along the NSR is within Russia’s Exclusive Economic Zone. These trends will only continue as China’s energy needs grow.

The Great Game in the Arctic Circle is just beginning. For now, it will continue to be shaped by events far away from the polar ice cap. Soon that may change. The West should recognize China’s ambitions; the Far North may not remain cold forever.

TopicsChina RegionsArctic Ocean

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