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Europe as a Model for De-escalation on the Korean Peninsula

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Speaking as former Secretary General of the Council of Europe on de-escalation on the Korean Peninsula, on peace and security in Eastern Asia is a real challenge. For millenniums Europe itself was far away from forming unity and providing peace. On the contrary, the smallest of all continents has been the scene of many wars, some of them called the “100 years war” or the “30 years war”.

 The latter involved most of the European countries and was one of the most destructive armed conflicts in history.
Between 1618 and 1648 more than half of the European population died because of direct or indirect consequences of the fighting. In the 20th century this history of bloody conflicts culminated once again in conflicts which became global, 100 years ago Europeans started World War I and 75 years ago World War II.  Many historians dealt this year of centenary of WWI with its causes.

I dare to say that there are always the same threats to peace and security: lack of communication, stereotypes and prejudices and ignorance.
Current conflicts, in the Middle East, in Africa, but also in Eastern Europe may persuade us to repeat the saying that history gives lessons all the time, but nobody is learning them.

However there are examples where the lessons of history were not only listened to but were transformed into dialogue, mutual understanding, and at the end to friendship. One example is the process of European unification including the end of the Cold War and the fall of the Berlin Wall. But there are other, in my view exiting examples too.

E.g. South Africa, which was also divided, not in a territorial sense but inside the nation. In all these positive examples you will see three key words and principles: dialogue, reconciliation and truth.

While after World War I it were only a few people who were ready to learn the lessons,  during the World War II people started to prepare the new after-war-Europe based on a common cultural and spiritual heritage. It was in the middle of World War II, in 1943, when the famous British statesman Sir Winston Churchill surprised the listeners of his weekly radio address.
He suggested that after the war all nations of Europe including the current enemies should form a “Council of Europe” to unite the continent in peace and through cooperation.

In the aftermath of the horrors of the Second World War, the main concern of the founding fathers of the European unification was to create a system that would ensure lasting peaceful co-operation between all European nations based on common values. Unfortunately the post-war period in Europe was also marked by the political and material division of Europe with the emergence of the iron curtain.
The division, which has had a deep and traumatic impact on Europe, was characterized by an ideological confrontation between two political systems. Europe was breathing, to quote Pope John Paul II, only with one lung.
But beside this deep ideological and military rift Europe could avoid direct military confrontation, I would like to say, also because of the remembrance of the horrors of the WWII.

And in this context I have to pay tribute and bend my knees in front of the victims of the nuclear tragedies of Hiroshima and Nagasaki. Their unimaginable suffering saved the world from further tragic nuclear experiences. And the legacy of the dead or livelong suffering and handicapped people from Hiroshima and Nagasaki must be nuclear disarmament, in particular in Eastern Asia!
But before turning to East Asia and the Korean Peninsula, let me return to the European example.

An important step to overcome the rift in the common home of Europe was the conference on security and cooperation in Europe with the Helsinki accord of 1975 signed by 35 countries including the U.S. and the Soviet Union, that promotes human rights as well as cooperation in economic, social, and cultural progress. The Helsinki accord proved that Europe had still much more in common than what could divide the continent.

The OSCE – Organization for Security and Cooperation in Europe – emerged from the Helsinki Conference.
It plays an important role up to today and is covering Europe, Central Asia and North America except Mexico. Currently the OSCE is monitoring the Ukrainian crisis.  The OSCE is not unknown in East Asia as three countries of the region – Japan, Mongolia and South Korea are already partners for cooperation of the OSCE.

14 years later, 1989/1990 dramatic political but peaceful changes swept through Europe as consequence of several factors.
Michael Gorbachev’s perestroika was one of them, the collapse of centrally planned economy in the communist countries was another one. But in my view the most important factor was the people. The peoples of the countries separated from the other part of Europe by the Iron Curtain wanted to choose their governments themselves like in the Western part of Europe.

In my view it was not the end of history as proclaimed by Francis Fukuyama, no, it was the return to the better part of European history.
Central, Eastern and South-eastern Europe could join the path of peace and reconciliation which was chosen by the Western European democracies in the late 40ies and early 50ies of the last century when the Council of Europe and the European Communities were created. The Council of Europe goes back to the already mentioned courageous idea of Winston Churchill and the European Union, former the European Communities, goes back to the idea of French foreign minister Robert Schuman.
The enemies of yesterday should administrate the main resources of armament, coal and steel, together in order to make wars between them impossible.

However, there was also still mistrust among nations in the after-war-decade. And the ideas were not totally new. The Austrian aristocrat with a Japanese mother, Richard Coudenhove-Calerghi, created after the WWI the Paneuropa-movement and proposed United States of Europe.
 A programme of European Christian-Democratic Parties in the 30ies spoke about a common market, a term which is familiar to the European Union.

What was essential for the success of these ideas in the aftermath of WWII was that they were accompanied by a large movement of reconciliation or you may call it also spirit of reconciliation. Reconciliation of former enemies has been seen throughout Europe, for example between France and Germany, Austria and Italy, Germany and Poland, Russia and Germany.

This reconciliation is at the same time a prerequisite of European unification as well as a result of it. I do not dare to answer the famous question who was first the chicken or the egg. Reconciliation is taking place also in South Eastern Europe. The enemies of yesterday are sitting together in a Regional Council and are co-operating in a free trade area. I do not want to hide that there are still problems, like the functioning and complicated structures of the common state institutions in Bosnia-Herzegovina and a fair and just solution for all inhabitants of Kosovo.
There are still problems in the Caucasus and the already mentioned Ukrainian and Crimean crisis. But in the spirit of the new Europe dialogue and mutual understanding should help to solve these problems too.

What was decisive that reconciliation could take place, became reality in every day’s live of the nations concerned? These were of course several and different aspects. It needed politicians who were convinced that they couldn’t do more for the security and a live in peace for their nations than to reconcile with the neighbours and enemies of the past.

E.g. it was important for German-Polish and perhaps even more for German-Jewish reconciliation when German Chancellor Willy Brandt fell on Dec.7, 1970 on his knees in front of the monument of the heroes of the Warsaw Ghetto. And it fostered without any doubt the French-German reconciliation when President Charles de Gaulle and Bundeskanzler Konrad Adenauer met on the battle fields of WWI and when the two old men embraced each other after signing the Treaty of Elysee between their countries.

But the sustainable reconciliation happened at grass root level, when more than 8 million young Germans and French participated in the youth exchange or when Italians and Austrians worked together in the mountains of Northern Italy, 2000 to 4000 meters above sea level, to turn the trenches and shelters of WWI into mountain trails.

One may ask whether this concept can be exported or better to say, imported? The African Union, for example, followed already the model of the Council of Europe but with the goal to reach the level of integration of the European Union.
This will of course be not very easy due to different political systems in the member countries and they still face serious conflicts to overcome, may I just refer to Congo and Sudan. But the vision is already there.

The Americans have their Organisation of American states and NAFTA, the free trade zone of USA, Canada and Mexico, South America has Mercosur. In East Asia and the Pacific you will find several attempts to enhanced cooperation, from the   Regional Comprehensive Economic Partnership, the Asia-Pacific Economic Cooperation, the Shanghai Cooperation Organisation (without Japan), the South Asian Association for Regional Cooperation (with Japan as observer), to ASEAN, the Association of Southeast Asian Nations and Asian+3, with again Japan, China and South Korea on board.

To some extent these cooperation organisations or entities are still a mirror of political and ideological rifts and differences, some are already crossing ideological dividing lines, some still need some deepening of trustful cooperation.
As East and South East Asia has a history of conflicts like Europe and is still facing ideological rifts, reconciliation of former enemies and rivals should play a similar role like in Europe in order to achieve peace, stability and security for all.

When Willy Brandt fell on his knees in Warsaw in 1970 Europe was still divided, the Federal Republic of Germany belonged to the democratic West and NATO, and Poland belonged to the Communist Bloc and the Warsaw Pact.
This did not hinder Willy Brandt to apologize for the crimes and atrocities carried out by Nazi-Germany.  He demonstrated that reconciliation is possible across political and ideological boundaries.
To achieve, what is the aim of today’s conference, de-escalation in Eastern Asia and in particular on the Korean Peninsula, you need the same spirit and readiness for dialogue and reconciliation.  
On all sides you need the cognition that across existing boundaries and rifts there is much more people have in common than what could divide them. So, where to should such a cognition or recognition lead?

First of all, continue and develop what is already there, e.g. the Regional Comprehensive Economic Partnership which is in the state of promising negotiations between the member countries of ASEAN, the three additional members of ASEAN Plus Three, i.e. China, Japan and South Korea, and Australia, India and New Zealand. These 16 countries should not form an exclusive club.

They should express from the very beginning the openness for others, in particular for North Korea. It will demonstrate that economic cooperation is bringing many more advantages than military confrontation.
The same applies to already existing areas of economic cooperation between North and South Korea, e.g. the Kaesong North-South Korean industrial complex.

But there are other modalities too such as traditional arm’s-length trade and investment and processing on commission (POC) trade.
Despite all difficulties and backlashes one shouldn’t underestimate the contribution of economic cooperation to de-escalation. It was also one of the European experiences during the time of the so-called Cold War when Western and Eastern Germany developed economic ties.
Another option at East Asian multilateral level would be to follow the European example of the Helsinki process. As already mentioned it was an important contribution to security and cooperation in Europe when in 1975 35 countries from both sides of the Iron Curtain including the U.S. and the Soviet Union met for a conference.

The aim was promoting human rights as well as cooperation in economic, social, and cultural fields. Like the OSCE a Conference and in consequence an Organization for Security and Cooperation in East Asia (OSCEA) of all countries of the region including of course Russia but also the “trans-pacific” USA could be a platform for de-escalation and prevention of conflicts.  The OSCE participating states Russia and USA as well as the East Asian partners for cooperation of the OSCE could certainly help with their know-how. The organization itself will for sure assist too.
Looking to the map, OSCE and a new OSCEA would cover the northern and central part of Asia, Europe and North America, forming a kind of belt of security and cooperation.

I could also imagine that either some East Asian states bilaterally or international organisations of East Asia could organize even multilaterally youth exchange following the very successful French-German example. I am afraid that such a proposal is coming too early for North and South Korea, but I would see another opportunity that is a pressing issue for many Koreans at the same time.  
Millions of families were separated following the division of the Korean peninsula in 1945 and the 1950-53 Korean War. There have been family reunification events in the past on a relatively small scale. But many more separated families who had no contacts at all for more than 60 years are desperately waiting to see their relatives. Reassuming family reunification talks and programs would certainly be a way to better mutual understanding.

Let me come to my last proposal in a very sensitive area.
You remember that I mentioned the Schuman-Plan that stood at the cradle of the European Union, avoiding future wars by common administration of the resources of conventional warfare, coal and steel. Today’s challenge is not the resources of traditional warfare but the threat of nuclear war.  

I repeat that the legacy of the dead or livelong suffering and handicapped people from Hiroshima and Nagasaki m be non-proliferation of nuclear arms and disarmament, in particular in East Asia.

On the other hand, still some countries including North and South Korea want to use atomic energy peacefully. But it’s well known, it is not a very big step from nuclear power plant to the production of atomic bombs. The best way to overcome the mutual mistrust would be to form a nuclear community on the Korean Peninsula, administrating peaceful atomic energy together and holding the peninsula free from nuclear bombs.
Coming to the end of my intervention I would like to summarize.

It is worth to follow the European example how to create an area of peace and stability. Courageous leaders have to admit wrongdoings and crimes of the past and should see reconciliation with former enemies as the best way to provide peace and security for the own nation. Overcoming the threats of non-communication, stereotypes and prejudices as well as ignorance and based on a spirit of truth, dialogue and reconciliation inclusive cooperation on a regional level regarding economy as well as security should be intensified.

On the Korean Peninsula existing economic cooperation should be intensified with a very special solution for the nuclear power.
At grass root level the spirit of reconciliation shall be implemented through a wide program of youth exchange and on the Korean Peninsula more separated families should have the opportunity to meet. May be all this sounds like a dream.
But let me by concluding modify a word of Vaclav Havel, who said, if we don’t dream of a better Europe, we will never get a better Europe.
If you don’t dream of East Asia in peace and prosperity, of a Korean Peninsula without confrontation, you will never get it.  

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East Asia

Shaping the new world order: The battle for human rights

Dr. James M. Dorsey

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China is leading the charge in a bid to undermine accepted concepts of human rights accountability and justice.

The Chinese effort backed by autocrats elsewhere has turned human rights into an underrated, yet crucial battleground in the shaping of a new world order.

China is manoeuvring against the backdrop of an unprecedented crackdown on Turkic Muslims in its north-western province of Xinjiang, the accelerated rollout of restrictions elsewhere in the country, and the export of key elements of its model of a 21st century Orwellian surveillance state.

The Chinese effort, highlighted in Human Rights Watch’s World Report 2019, is multipronged.

It involves proposals to alter the principles on which United Nations Human Rights Council operates in ways that would enable repressive, autocratic regimes.

To achieve its goal, China is employing its financial muscle and infrastructure and energy-driven Belt and Road initiative to economically entice countries that are financially strapped, desperate for investment and/or on the defensive because of human rights abuses.

China is also seeking a dominant role in various countries’ digital infrastructure and media that would allow it to influence the flow of information and enable its allies to better control dissent.

China is waging its campaign at a crucial juncture of history. It benefits from the rise of ethno- and religious nationalism, populism, intolerance and widespread anti-migration sentiment across the world’s democracies.

The campaign is enabled by the emergence of presidents like Donald J. Trump in the United States, the Philippines’ Rodrigo Duterte, Turkey’s Recep Tayyip Erdogan, Hungary’s Victor Orban and Brazil’s Jair Bolsonaro who have either deemphasized human rights or gone as far as justifying abuses in addition to seeking to limit, if not undermine, independent media that hold them accountable.

The timing of the Chinese effort is significant because it comes at a moment that predictions of the death of popular protest, symbolized by the defeat of the initially successful 2011 popular Arab revolts, are being called into question.

Mass anti-government demonstrations in Sudan demand the resignation of President Omar al-Bashir. Anti-Chinese groups march in Kyrgyzstan while protests in Zimbabwe decry repression, poor public services, high unemployment, widespread corruption and delays in civil servants receiving their salaries. The past year has also seen widespread anti-government agitation in countries like Morocco and Jordan.

The protests and what Human Rights Watch executive director Kenneth Roth describes in his foreword to the group’s just published, 674-page World Report 2019 as “a resistance that keeps winning battles” suggests that China’s campaign may have won battles but has yet to win the war.

“Victory isn’t assured but the successes of the past year suggest that the abuses of authoritarian rule are prompting a powerful human rights counterattack,” Mr. Roth wrote.

Nonetheless, Human Rights Watch’s China director Sophie Richardson warned that “people outside China don’t yet seem to realize that their human rights are…increasingly under threat as Beijing becomes more powerful… In recent years, Beijing has…sought to extend its influence into, and impose its standards and policies on, key international human rights institutions—weakening some of the only means of accountability and justice available to people around the world,”

Ms. Richardson noted that China had last year successfully pushed a non-binding resolution in the UN Human Rights Council (HRC) that advocated promotion of human rights on the basis of the People’s Republic’s principle of win-win, a principle that cynics assert means China wins twice.

In a sign of the times, the resolution garnered significant support. The United States, in a twist of irony, was the only Council member to vote against it with countries like Germany and Australia abstaining.

China is not the only country that would like a globally accepted approach to be altered to the detriment of human rights. Muslim nations, with Saudi Arabia in the lead, have, for example, long sought to have blasphemy criminalized.

The resolution “gutted the ideas of accountability for actual human rights violations, suggesting ‘dialogue’ instead. It failed to specify any course of action when rights violators refuse to cooperate with UN experts, retaliate against rights defenders or actively reject human rights principles. And it even failed to acknowledge any role for the HRC itself to address serious human rights violations when ‘dialogue’ and ‘cooperation’ don’t produce results,” Ms. Richardson said.

“If these ideas become not just prevailing norms but also actual operating principles for the HRC, victims of state-sponsored abuses worldwide—including in Myanmar, South Sudan, Syria, and Yemen—will face almost impossible odds in holding abusive governments accountable,” Ms. Richardson cautioned.

In a separate interview, Ms. Richardson described the resolution as “the start of a process to wither away the UN human rights eco system.”

She said human rights groups were concerned “about what China will try to do next, whether it will more aggressively try to change the council’s mandate or nibble away at language in treaties or roll back the role of civil society. China wants inter-governmental cooperation instead of accountability, government officials discussing among themselves with no discussion of accountability for abuses and no participation of independent groups.”

China’s efforts are both an attempt to rewrite international norms and counter sharp Western criticism of its moves against Christians and Muslim and its crackdown in Xinjiang.

Up to one million Turkic Muslims have reportedly been incarcerated in re-education camps that China projects as vocational training facilities. To maintain its crackdown, China depends on a fragile silence in the Muslim world that is fraying at the edges.

In addition to attempting to change the operating principles of the UN Human Rights Commission, lobbying UN and foreign government officials to tone down criticism and invited foreign diplomats and journalists on choreographed visits to Xinjiang, China has at times successfully employed its economic and financial clout to buy either support or silence.

Pakistan, the host of the Belt and Road’s US$45 billion crown jewel, has curbed its initial criticism of the crackdown in Xinjiang.

Similarly, China is pressuring Myanmar to revive the suspended US$3.6 billion Myitsone dam project, which if built as previously designed would flood 600 square kilometres of forestland in northern Kachin state and export 90 % of the power produced to China.

China has reportedly offered in return for the dam to support Myanmar that has been condemned by the United Nations, Western countries and some Muslim nations for its repressive campaign against the Rohingya, some 700,000 of which fled to Bangladesh last year.

In a bid to pacify, criticism of its Xinjiang policy in Central Asia where anti-Chinese sentiment has been rising, China agreed this month to allow some 2,000 ethnic Kazakhs to renounce their Chinese citizenship and leave the country.

The decision follows testimony in a Kazakh court of a former employee of a re-education camp detailing three facilities in which up to 7,500 Kazaks and Chinese nationals of Kazakh descent allegedly were being held. The testimony prompted sharp criticism in parliament and on social media.

China and the West’s diametrically opposed concepts of human rights are part of a larger contest for dominance over the future of technology and global influence.

Freedom House, a Washington-based freedom watchdog, reported last year that China was exporting to at least 18 countries sophisticated surveillance systems capable of identifying threats to public order and has made it easier to repress free speech in 36 others.

“They are passing on their norms for how technology should govern society,” said Adrian Shahbaz, the author of the report.

Added Nadège Rolland, a senior fellow at the National Bureau of Asian Research, a Washington think tank, speaking to Bloomberg: “There’s a 1984 component to it that’s kind of scary.”

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Project of the century: How the Belt and Road initiative will impact the Eurasian region

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In 2013, China announced the creation of the Silk Road Economic Belt and the Maritime Silk Road of the 21st century – this initiative of “The Belt and Road” was designed to turn Asia and Europe into a single economic region. It focuses on the industries that are important for the internal growth in China and, at the same time, involves over 70 countries with a total population of 4.4 billion. Today, the initiative has already changed the economy of Eurasian countries significantly. Over the last seven years, the region got approximately $98 billion in investments in order to implement 168 projects.

What’s in it for China?

In recent years, China’s economic growth has slowed from double-digits to 6.4% in 2017. The wide-reaching economic model formerly in use (based on cheap labour, gross investment, and exports) has faced a number of serious challenges.

The country has to overcome industrial overproduction – steel making in China is a great example of this challenge. According to official data, China’s production capacity amounts to 1.1 billion tons per year, while internal demand is approximately 700 million tons, and China’s export partners cannot consume the remaining 400 million tons. The country needs to be provided with an access to new markets and to launch new resource-intensive projects.

In addition, Chinese authorities have been facing the problem of a sharp increase in labour cost. We live in a world where the average labour cost in China ($758) is higher than in Russia ($615). And it causes many multinational corporations to move their manufacturing facilities to other South-East Asian countries, such as Vietnam. China is losing its historical competitive edge – cheap labour, and analysts are increasingly talking about the risk of “stalling” in the trap of average income.

Furthermore, China needs to reduce its debt burden. The country is one of the world leaders in joint debt rating. In 2016, the total debt load in China amounted to $27 trillion, which equals 254% of the country’s GDP. Simultaneously, the amount of “bad” debt in the banking system is growing.

Social inequality and poor ecology exacerbate the situation further. For example, 1% of the wealthiest Chinese control roughly 33% of total national wealth, while 25% of the poorest Chinese possess just a mere 1%. Beijing sees as little as 124 clean days every year, while total environmental destruction amounts to 3.5-5% of China’s total GDP. In addition to a number of internal reforms adopted to create an economic model focused on domestic consumption, the Chairman of the People’s Republic of China, Xi Jinping, proposed the “Belt and Road” initiative. Among other things, it is designed to stimulate domestic economic growth through external forces – ensuring access to Chinese products in new sales markets, natural resources, integration into complex production chains, exchange of advanced technologies, and the establishment of new high-tech manufacturing facilities in China. To do this, Chinese authorities are attempting to create a large-scale platform that will enable the expansion of trade and investment relationships, as well as technological cooperation between China and Central Asia, Europe, and Africa. This is believed to be a way for China to gain an access to the tools needed to overcome the economic development challenges described above.

China helped create powerful financial institutions in order to finance projects within the framework of the Belt and Road initiative, such as the Asian Infrastructure Investment Bank with $100 billion in capital, and the Silk Road Foundation ($40 billion in capital). The New Development Bank (or BRICS Bank) is also seen as an important element of the Belt and Road projects’ financial infrastructure, which will also involve the participation of the largest Chinese state-owned banks and development institutions. The total budget for projects under the Belt and Road initiative is estimated at an astronomical $1.3 trillion. The bulk of these investments is expected to be sent to the countries of the Eurasian Economic Union, including Russia, Kazakhstan, Armenia, Belarus and Kyrgyzstan, which are key to the implementation of The Belt and Road initiative.

How will this Chinese initiative affect other countries?

The Belt and Road initiative will stimulate major infrastructure changes not only in China, but also in other countries through which the New Silk Road passes. There are expectations for the construction of new roads and railways, power plants, ports and fuel pipelines. The Chinese investments are expected to accelerate the growth of the economies of the countries participating in the Belt and Road initiative.This is precisely what is meant by mutually beneficial cooperation, or the “win-win” model, which Chinese officials often reference. Many believe in the efficacy of such a model. A total of 69 countries and international organizations have entered into agreements with China to cooperatively implement the framework of The Belt and Road initiative. In practice, cooperation is developing in several key areas.

Trade

In the long run, the Chinese government is striving to create a single integrated economic space, with the ultimate goal of establishing a free trade zone. Already, by the end of 2017, China’s trade turnover with the countries that signed cooperation agreements within the framework of the Belt and Road initiative exceeded $800 billion. To further integrate the economies of Asia and Europe, the creation of six economic corridors has been proposed. The main routes of the Silk Road Economic Belt will connect China with Mongolia and Russia, Indo-China, Pakistan, the Republic of Bangladesh, India and Myanmar, as well as Central and Western Asian countries. Today, goods from China are most commonly delivered by sea, taking approximately 45 days. The construction of modern highways and high-speed railways will shorten this delivery period to 10-15 days.

The most important project in this respect is the largest Central Asian land port – Khorgos. This facility is strategically located in Kazakhstan in the Free Economic Zone called “Khorgos – Eastern Gate”, which also includes logistics and industrial zones. China has invested over $3 million in this project, which saw the first trains come to port in 2015. It is expected that the majority of cargo trains traveling between China and Europe will pass through it in the future.

The formation of a modern transport and logistics infrastructure in the countries of Central Asia, the Caucasus and, even, Europe is a key component for the development of these national economies. Such projects enable China to unload their excess production capacity and deliver domestic goods to foreign markets. Not only large state-owned companies, but small and medium-sized businesses stand to gain as they provide services for complex projects implemented under the framework of the Belt and Road initiative. For example, since 2011 Chinese and European cargo trains have traveled through 28 cities in 11 European countries. Currently, there are more than 4,000 trips per year, and this number is expected to increase to 5,000 by 2020.

Energy

The Belt and Road initiative also takes into account the need to create new energy capacities – construction of interstate power lines, pipelines and gas pipeline systems, and the development of new energy-deposit fields.

One of the most promising projects in this area is Yamal LNG, the Russian liquified natural gas plant that was commissioned at the end of last year. The project’s budget is estimated at $27 billion with approximately $20 billion provided by Chinese banks, led by the Silk Road Foundation as the primary investor.

Additionally, the Power of Siberia gas pipeline is expected to be complete by the end of 2019 – it will enable Russia to supply China with 38 billion cubic meters of gas per year for 30 years. The pipeline, traversing the Republic of Sakha (Yakutia), Irkutsk and Amur regions, will become the largest gas transportation system in Eastern Russia, thanks to over $70 billion in investment by Russia and China.

Tourism

According to online companies Ctrip and Alibaba, Chinese citizens took 129 million tourism trips abroad last year, spending a total of $118.4 billion. Implementation of the “One Belt, One Road” strategy will contribute to the influx of Chinese tourists to countries in the Eurasian Economic Union. Indicators of that influx are already growing. For example, last year a record number of Chinese tourists visited Russia – 1.5 million. However, it is important to note that the bulk of revenue generated as a result of  serving Chinese tourists goes to Chinese businesses, not Russian ones, as Chinese travelers tend to buy tour packages and order guide services from home, paying either in cash or through national Chinese payment systems.

Education

The Silk Road Economic Belt also fosters business cooperation between China and other Eurasian countries in the field of education. Today, 25% of all international students in Russia come from China. This indicates an especially high rate of international education collaboration with China as Russia’s share is a mere 2% of all Chinese students studying abroad (most still prefer European and American universities). China and the EEU countries are trying to solve the problem of a personnel shortage in the fields of economics, law and business, increasingly developing joint educational programs. For example, the Moscow School of Management SKOLKOVO runs specialized “Understanding Russia” programmes for Chinese entrepreneurs on how to effectively conduct business in Russia. Over 300 business leaders from China have been trained in this programme. In addition, in November, 2018 the Moscow School of Management SKOLKOVO and the business school of the Hong Kong University of Science and Technology will launch “EMBA for Eurasia”, a cooperative programme designed for business leaders in Eurasia.

Innovations

The most widely-accepted theories of economic growth see technological development as the main driver of modern economic growth. Within the Belt and Road initiative, a special role is played by the sharing of technologies and technological innovations. As of today, 75 industrial parks are under construction as a part of the initiative.

In 2015, a Chinese holding bought 65% of YotaPhone, the Russian smartphone manufacturer. China also actively collaborates with other Eurasian countries on innovative projects in the fields of biotechnology, photonics, biomedicine, LED, food and consumer goods. In essence, it means that “One Belt, One Road” propels the industries of the Eurasian region to a new technological level. For example, several organizations from Belarus, Kazakhstan and Russia are developing an innovative project to cool heavy-duty machinery – the so-called “double phase-shift cooling system” is being developed on a super-computer technology platform.

Work is being done in other areas as well, as seven belts are planned to be put in place, including financial and agricultural ones. In total, roughly one thousand different projects are expected to be implemented across different countries in the long term.

What are the barriers for implementing the strategy?

The Belt and Road is an initiative, not a project, meaning it has no defined goals or deadlines. China first mentioned its intention to establish the Silk Road Economic Belt and the Maritime Silk Road of the 21st century back in 2013, yet today, five years later, there is still no official information about the total number of projects or participating countries that should be involved, rendering the strategy somewhat amorphous. Unless the Belt and Road initiative is “institutionalized,” business can not use standard project and investment approaches, which makes it difficult to implement the overarching plan.

Furthermore, China is reducing investment in the Eurasian region. In 2013, the country allocated as much as $18 billion toward the project, but cut this amount down to $10 billion in 2016. If China had not invested in Iran’s nuclear program that year, this amount would have dropped to $5 billion. Such an approach makes predicting future investments challenging. The internal economic and political dynamics of China contribute to the challenge of forecasting the trajectory of the initiative – public and private investment banking institutions have begun to scrutinize these investment projects, as too much money was spent inefficiently or lost, drawing the attention of Chinese regulatory bodies.

Another important roadblock is the fact that some of the announced projects have not been a success. For example, the construction of a high-speed railway between Moscow and Kazan, which was originally designated as one of the priority projects for the Belt and Road, stalled. The construction of this Russian segment was supposed to be the first stage in building a railway between Moscow and Beijing, which was to be followed by an even more ambitious “Eurasia” railway project, connecting Beijing, Moscow and Berlin. Unfortunately, under current financial conditions, these projects are not economically viable, which halted their development at the feasibility study stage. This is a clear example of collaboration in which strategic ambitions outpace, or fail to take into account, the economic and investment feasibility of the Belt and Road projects.

Nevertheless, the initiative has emerged at the right time. At a time when protectionism is gaining momentum in international trade, China is driving an expansion of free market values, simplified customs and visa procedures, and the creation of transportation and logistics infrastructure that will ensure the quick and easy delivery of goods to new markets. This approach enables multilateral development at the domestic level and eliminates barriers to business that already seem archaic in the global world of the 21st century.

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Decoding Pentagon Report on China January 2019

Gen. Shashi Asthana

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Amidst sequential escalation of US- China ‘Heated cold war’, Pentagon has released a new report on 16 January 2019, airing US concerns about China’s growing military capability highlighting a contingency  about a possible attack against Taiwan. This is sequel to the coercive/threatening speech of Chinese President Xi Jinping in the beginning of 2019 and earlier in 19th CPC. This Pentagon report however needs to be read in context of US-China heated cold war, including information war. The interpretation of the report indicates expeditionary design of Chinese military strategy with global ambition, exploiting its increased ‘Comprehensive National Power’ (CNP) with improved technology, economics, military hardware and other elements of CNP. Chinese rapid advancement  in hypersonic weaponry, cyber warfare, sea and air power have allowed it to look beyond its “Active Defence Strategy” and slow moving “Incremental Encroachment Strategy” to expeditionary ambition beyond second island chain. It highlights its design of increasing number of bases, which can be turned into military bases at short notice. The Chinese interest of keeping a buffer zone in the form of North Korea to avoid having direct land border with US ally is also indicated in the report. The continuous increase in its defence budget has helped PLA to modernize and pose serious challenge to regional neighbours like India

The US Position

As per the information in open domain, the Report does not cover US position in response to Chinese growing military capability in context of Taiwan, apparently being classified, as Taiwan is strategically important to them. In a joint Communication with PRC in 1972, US had adopted the line of No declaration of independence by Taiwan, No UN seat and no representation in an international organisation, which requires only one membership for a country, in respect of Taiwan. US, however, remains opposed to any unilateral changes in status quo by either side. US will therefore like to have a democratic, independently governed Taiwan as an ally, where they have adequate strategic and economic leverage, instead of it forming part of Communist PRC. Neither Taiwan nor China, nor US have crossed redlines of each other so far. The US security assurance in terms of Taiwan Relations Act, indirectly promising to make available “such defense equipment and services, as may be necessary to enable Taiwan to maintain a sufficient self-defense capability.” has been one of the deterrence to PRC in acting against Taiwan.  Last year US Defence Budget was more than next seven countries put together including China; I do not see China posing a military challenge or competition to US in global arena, however in near vicinity of its eastern seaboard, it may pose some challenge in South China Sea and Taiwan Strait. The recently signed Taiwan Travel Act, sale of military hardware to Taiwan indicates that US is in no mood to give a walkover regarding Taiwan.

Chinese Position in context of Taiwan

PRC claims Taiwan as its integral part and is looking for its peaceful reunification continues to be a dream. PRC passed the Anti-Secession Law in 2005, authorising war if island formally declares statehood: hence any effort towards its independence/aiding its independence will invite Chinese action to protect its sovereign territory. The threatening speeches of Xi have brought US and Taiwan much closer and much sooner than what Xi Jinping would have expected. Taiwan seems to have got bolder today and is talking of self defence indicating that Chinese coercion has not worked so far. Will China Use Force Against Taiwan

President Xi Jinping has ordered the Southern Theatre Command responsible for monitoring the South China Sea and Taiwan to get ready for war, but in my opinion China will not use force against Taiwan due to many reasons. Firstly Adventurism by China in Taiwan at the time of Trade War with US does not make any economic sense as bulks of Taiwan’s investments are already in China with Taiwan having a trade surplus of approximately US $ 30 billion with China . China gains nothing, but has a lot to lose if it attacks Taiwan. Secondly, its adventurism will amount to crossing red line of US, which treats Taiwan no less than an ally. It had earlier indicated that any unilateral change of ‘status Quo’ in Taiwan as a red line and most desired option of common Taiwanese. China has enough missile arsenals to destroy Taiwan, but such destruction of Han Chinese, who have relations and investments in mainland will not go well with domestic population of mainland, besides destroying its own economic powerhouse .The threatening speech by China for Taiwan and countries helping them is to deter Taiwan getting stronger to pursue the path of independence.

What does this Report means for India

With construction of CPEC connectivity, and China’s need to increase domestic support by generating spirit of  nationalism amidst slowing down of economy, the urge to do something different cannot be ruled out. This could be an encroachment into un-demarcated borders. The clouds of ‘Two Front War’ continue to hang over India. To avoid a ‘Two Front War’ for India, the best way is to convince the potential adversaries that India is capable of fighting it. This convincing cannot be by announcements or statements by leaders, but by developing capability to do so. The defence capabilities take long time to build up, more-so if India does not have strong manufacturing base. ‘Make in India’ and self reliance is essential, but time consuming; hence must continue simultaneously with procurements. The defence budget allocation will have to substantially increase in 2019 and beyond to narrow down asymmetry in CNP with China, in the interest of national security.

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