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The Asian Square Dance, Part IX: Mini Scenarios

Michael Akerib

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“I predict that it is in Asia where the fate of the future will be decided.”-Tsar Alexander III

Needless to say, forecasts are extremely difficult to make in international relations, and all the more so when so many factors are in play. The author does not have any special information that he could use to forecast the future. The different miniscenarios are very wide and therefore any of these could reasonably, or unreasonably, be expected to occur.

Mini-Scenario I: Integration or growing together in a Sino-centric world

“… economic integration is the path to riches and peace.” E Prescott

China uses its massive wealth to invest in other countries generating wealth and peaceful sustainable development in a Sino-centric world. This will be done through the One Belt, One Road initiative that groups two projects, the Silk Road Economic Belt and the 21st Century Maritime Silk Road which aims at integration, on a number of levels, a large number of countries from Asia to Europe. These projects replace the International Socialization initiative of President Hu.

Central Asia will be the first beneficiary of the first project and could easily be integrated as a supplier of energy and food.

Europe has largely welcomed China’s financial presence – it now rates as the fifth biggest investor with 2014 FDIs of $18 billion. China has signed an Agriculture Cooperation Plan with the European Union. China is also interested in the Ukraine as a food supplier. Russia would welcome investments in the Pacific where China could produce food and timber to fill its large requirements.

The Silk Road initiative is backed by a $40 billion fund and the creation of the Asian Infrastructure Investment Bank (AIIB) of which even the UK has become a founding member, soon followed by France, Germany and Italy. This could alleviate the negative perceptions the US has of the bank.

These two initiatives are very wide and encompass financial cooperation, increased people-to-people contacts, infrastructure building, investment facilitation, opening of economic corridors and trade facilitation.

China’s actions go as far as Latin America where investments in Ecuador and Venezuela cover the entire energy production process. Africa has also been a priority zone for Chinese investments with a priority for infrastructure. The possibility of transferring labor intensive industries to the black continent has also been suggested.

Nevertheless, the US remains the first destination of China’s overseas investments. Chinese companies are buying majority shareholdings in US companies cheaply as the American economy has been underperforming significantly. This has also led the US to considerably reduce its defense spending.

For the project to be fully successful, however, China abandons its bullying tactics in the South China Sea, its aggressive stance towards Japan, the expansion of its naval power in the Indian Ocean and its rhetoric about reconquering Taiwan. Territorial disputes with India are settled. Historical issues leading to tensions with Japan and the negotiation of an agreement regarding the disputed islands should also come about.

It changes its historical narrative to reduce anti-Japanese feelings and above all to increase the GDP per capita of its population.

It is also more cooperative with its ethnic minorities to avoid confrontation and gradually slides towards a fully democratic system.

It should reduce its military spending that make it appear as an aggressive regional power looking to become a hegemon and invest time and money to project a friendlier image to the surrounding countries.

A satisfactory model is the relations between China and South Korea. This has been achieved through frequent meetings and discussions at various governmental levels.

China and Japan reach an agreement on the Senkaku Islands, followed by wider agreements covering trade and investments, and Japan becomes one of China’s closest allies. A number of events related to the US personnel on the military bases in Japan, leads to a downgrading of the relationship between Japan and the US and the latter is asked to reduce the number of military personnel in the country. Effectively the US presence in the China Sea becomes irrelevant. Taiwan can no longer be effectively protected and a referendum approves the return of Taiwan in the fold of the People’s Republic of China.

Another important step in increasing China’s contribution to a peaceful development is the rise of the remimbi – which today is the fifth most used currency and the second most used in trade finance – as a global currency. It first needs to become convertible and then become a reserve currency and part of the IMF’s SDR basket.

MiniScenario 2: Chaos ahead: The collapse of the Chinese economy

The ageing population and the impact of decades of the one-child policy led to a major impact on labor availability. The country stops being considered as low labor-cost. The government may open the country to immigration from the neighboring countries, creating social tensions.

The anti-corruption drive amplifies and touches a large number of well-established senior members of the party that decide to band together. The president is overthrown. Revolts start in several rural areas where income inequality with city dwellers is large. Farmers and workers are reluctant to see corruption gain the upper hand. Social stability is threatened.

Large tracts of land are polluted and the rural labor force ages, agricultural production declines steeply leading to food shortages. Imports of foodstuffs lead to increased prices and a disruption of the grain market, exacerbated by a US-imposed reduction on exports to China. China decides it will no longer support North Korea and a flood of refugees arrives in the poor eastern provinces.

Water scarcity, already a problem, grows worse due to the present agricultural plans. A disaster is only a climatic-wrought drought away.

Pollution is affecting agricultural production and creating major health problems. Air pollution is major cities already led to episodes of civil unrest.

A bank collapse is a clear possibility as the amount of outstanding bad loans is considerable. This could lead the central bank to sell massive amounts of dollars, putting enormous pressure on the American currency.

The Uigur minority revolts in an attempt to secure independence.

Maoists entice the population to revolt and lead them into a civil war. This grinds globalization to a halt and creates a surge in inflation.

MiniScenario 3: The collapse of North Korea

North Korea’s dictator, Kim Jong-un is assassinated and rival army factions launch a civil war. Chaos ensues and large numbers cross into China. The Chinese army tries to secure the border, but facing total lack of success, invades North Korea. The South Korean army also receives marching orders to secure part of the North Korean territories and in particular the Weapons of Mass Destruction. The two armies clash. US ground forces and air support back the South Korean army.

Certain army units that had remained loyal to the Kim clan, led by Kim Jong-Un’s sister, detonate in front of Pohang, South Korea, a nuclear engine loaded on a ship. There follows a large number of deaths. Simultaneously a similar deflagration is carried out in a Japanese port with catastrophic mortality. The average Japanese is reminded of Hiroshima and Nagasaki. North Korean artillery bombs Seoul, including with chemical weapons. Sleeping North Korean operatives in South Korea proceed with assassinations of key figures.

South Korea, having previously obtained nuclear weapons, reciprocates with the use of these weapons destroying major North Korean infrastructure.

Japans’ Primer Minister orders Japanese troops to land on the western beaches of North Korea.      

The NATO allies of the US are expecting to be requested to provide support but no such request is forthcoming. The US wants to avoid having China drawn into the conflict. However, as the US, South Korean and Japanese troops make deep inroads into North Korea and the troops of that country put a stiff resistance, China calls urgent meetings of the Security Council which is simply emitting toothless resolutions. The Chinese military overtake North Korea and explode a nuclear bomb over Seoul.      

MiniScenario 4: Reviving old enmities

China lands a group of group of marines on the Senkaku islands. Japan may not back down on its own claim on the islands and answers to the Chinese provocation by an important landing of Japanese troops and what starts as small skirmishes rapidly escalate as both sides provide air cover to their troops. With obvious Chinese superiority due to proximity and numbers, Japan asks for military assistance from the US.

China disables a several important US satellites, causing disarray in communications among US troops. Chinese ballistic missiles rain on the US bases in Japan as a preemptive move and North Korea bombs Seoul with classic artillery and missiles.

Russian troops seize the opportunity of occupying several northern islands and Hokkaido.

Essentially, the Japanese economy is destroyed and the country suffers millions of dead civilians.

MiniScenario 5: Gas as mediator

For the US, Russia can be a potential player in the containment for China. Russia, while refusing this role, is reluctant to let China’s influence increase even more or to join China in limiting US’ role in Asia.

While tensions rise between China and Japan over the Senkaku islands, and several incidents take place with planes colliding, Russia’s increased penetration in the Ukraine have led to severe sanctions by the European Union and the US. An ever larger part of Russian gas is exported to China, Japan and Korea. A conflict would seriously impair Russia’s exports. Russia therefore successfully acts as a mediator and President Putin’s prestige is enhanced both domestically and internationally.

MiniScenario 6: China choking … or is it?

Several vessels carrying oil for China are hijacked by pirates in the Malacca Straits. In spite of denials by the US and Indian governments, China claims this is a plot against it. A vessel also destined to China explodes a few hundred miles outside the Hormuz Straits and claims are made by an as-yet-unknown Uighur liberation movement. A US frigate was sailing very close to the vessel at the time of the explosion. An oil tanker bound for China is intercepted by a US vessel, thoroughly searched and then allowed to proceed to its destination.

Central Asian and Russian supplies are able to replace the Middle East shortfall in exchange for further Chinese investments and an even greater economic integration.    

MiniScenario 7: Restless islands

The US closely monitors the synthetic islands built by China in the South China Sea and which are claimed to be Chinese territory. Small incidents degenerate and lead to China attempting to close air and naval space to the US military. The US sinks a Chinese naval unit and China reciprocates. Escalation leads to a major conflict. Escalation includes cyber warfare, space warfare and China is able to keep the US outside the South China Sea. Both powers refrain from using nuclear weapons and China is free to continue its regional domination.

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East Asia

Twists and Turns in US -China Trade War

Gen. Shashi Asthana

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US Secretary of State Mike Pompeo’s stopover at Beijing on 08 October may not have been a pleasant experience, more so in the backdrop of accusation of US Vice President Pence about  China attempting to interfere in U.S. elections. The agenda of North Korean denuclearisation, where US and China were broadly agreeing earlier, seems to have taken a back seat, and improvement of relations doesn’t seem to be realistic in near future. The ongoing trade war continues as both sides dig their heels despite being the biggest trading partners of each other, because it is also linked with global dominance, strategic and military posturing, diplomatic and information offensive.

 China Braving Threat to its Vulnerabilities

China is putting a brave front despite being badly hit at some of its most vulnerable spots in the tit-for-tat trade war with both sides spiralling the slapping of tariffs on a wide range of each others’ trade items. Taiwan, which is another sensitivity of Beijing is witnessing visit of US officials after Taiwan Travel Act was signed by President Trump, with a promise to arm it further with latest weaponry. US continued military posturing in South China Sea, along with the appearance of UK warship ignoring Chinese repeated warning is another concern.   A recent injection of over $110 billion by China into its banks and hardly any financial benefits coming out of BRI partners incapable to repay anything is tightening its financial freedom for global dominance. Some of its BRI partners want to get out of the ‘Debt Trap’ by refusing/reducing Chinese investments is adversely affecting Chinese dream project (BRI), after five years of its announcement like Philippines.

Not a Smooth Sail for US

US on the other hand cannot be celebrating either, with China digging it heals and refusing to give up either in trade war or South China Sea. On North Korean front, the policy of good optics continues with Kim managing to get a lot of goodies from South Korea (presumably at their cost), during the last summit of North and South Korea. Kim in fact has been an outright winner, managing to get another Summit with President Trump, which helps him in convincing his countrymen of his sound leadership, as well as boosting his status internationally. US sanctions on paper continue, but after the chest thumping at Singapore Summit, his friends like China automatically relaxed the sanctions on North Korea, without any worthwhile denuclearisation/reduction in his nuclear/missile arsenal. US realises that knocking out China financially is the key to its global dominance; hence is unlikely to soften up to China. US also faces another challenge of keeping its allies like Japan and South Korea satisfied while negotiating with North Korea and asking ASEAN to make choices of partners, besides continuing with CAATSA hurting some of its strategic partners who could be helpful in balancing China.

It will take some time to see that whoever has greater resilience to withstand the economic stand-off and appetite to take setbacks will have an upper edge, which seems to be US at this point of time. As per IMF assessment, China’s GDP size will be 1.6 per cent lower in 2019 than it otherwise would be, if the US slaps tariffs on all Chinese imports.

How is India affected?

The Indian economy has survived some global slowdowns earlier and should be able to sail through the present one. The bigger problem is the sanction under CAATSA in dealing with Russia for urgently needed military hardware like S-400 and Iran for cheaper crude oil being paid in rupee terms, for which India has adequate refineries. The US option of buying shale oil does not suit India as it does not have adequate refineries and will have to purchase finished product in dollar terms. The port of Chabahar is also crucial for India for connectivity to Afghanistan and CAR. The silver lining is that US being our strategic partner will like to have well equipped Indian Forces to balance China and Indian connectivity to Afghanistan, in case Pakistan does not serve their strategic interest. On both counts I am hopeful that US will find a way out not to hurt its strategic partner.

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The talks held in September 2018 between Kim Jong-Un and Moon Jae-In

Giancarlo Elia Valori

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In less than one year three meetings have been held between the North Korean Leader and the South Korean President, Moon Jae-In.

In the initial meeting the two leaders had decided to put an end to the state of war between their two countries. They had also reaffirmed the goal of denuclearization of the entire peninsula, with the consequent destruction of the nuclear potential of South Korea and of the United States, in particular. They also decided to create an inter-Korean Liason Office between the two sides of the Demilitarized Zone and to bring together the families dispersed between the two Koreas. Finally, the idea was to create new communication infrastructure – railway lines, in particular – a project by which Russia has always set great store.

Indeed, Russia is betting many of its cards on a reunification between the two Koreas, capable of enabling it to keep its excellent relations with South Korea – which are essential for the economy – and to also support North Korea, which is Russia’s unavoidable strategic goal.

Now the two Koreas are dealing on their own, without the US brokerage and intermediation with respect to South Korea, although President Donald J. Trump has recently stated that President Moon Jae-In is his official “delegate” for the denuclearization of the Korean peninsula.

The United States is scarcely interested in the internationalization of the North Korean economy. It only wants denuclearization, while Kim Jong-Un wants denuclearization to develop his country’s economy and maintain its geopolitical and national autonomy.

A serious problem – both in talks and in the final or working documents – is also to define an effective mechanism to check denuclearization.

Indeed, between September 17 and 19, 2018, the signing of the Joint Declaration of Pyongyang has not fully clarified the mechanism of checks on the denuclearization of the Korean peninsula. Kim Jong-Un’s idea is to organise these checks with a series of “experts” appointed by the friendly powers, while the South Korean idea is to accept the maximum possible denuclearization to start the long process of reunification.

The two respective Defence Ministers, however -namely Song Young Moo for South Korea and Rho Kwang Chul for North Korea – have just signed a separate document from the rest of agreements.

In that text confidence-building measures between the parties are put first, with North Korea’s acceptance of dismantling a launch pad and a site for checking jet engines, with the presence of yet unspecified, but friendly international experts. From IAEA? We have some doubts, in this case.

Subsequently North Korea could also dismantle the Nongbyon site, if the United States does the same in South Korea.

It should also be recalled that most North Korean missiles are built to be launched by mobile vehicles, not from fixed bases.

In short, North Korea wants the United States to remove the nuclear umbrella protecting South Korea and Japan while, in the recent talks with North Korea, the United States thinks of a bilateral treaty regarding only the Korean peninsula and, at most, some classes of North Korean missiles.

In the US mind, the planned reduction of North Korean long-range missiles could be even equivalent to a nuclear and conventional decrease of its troops stationed in Guam.

On the basis of a new future agreement, both Koreas (and God only knows how and to what extent the North Korean conventional military potential would be useful for a South Korea unified with North Korea) would also define maritime and land buffer zones, as well as a no-fly zone over the old border, with a view to avoiding clashes or accidental air battles.

This is already partially clear, but much work shall be done to define all the details.

There would also be plans to cover or reduce artillery batteries along the coast.

Obviously, should these talks run aground, the only concrete political result would be the progressive divergence between South Korea and the United States, precisely on the problem of the peninsula’s denuclearization.

Furthermore, over and above the aforementioned sites, North Korea will dismantle the site of Dongchang-ri, in addition to the site of Yongbyon, while Kim Jong-Un is also very interested in the building of fast railway links between South and North Korea.

The two Koreas will get the industrial site of Kaesong back in shape and the old tourist project concerning Mount Kumgang back in track, besides planning new joint economic and tourist areas.

The inter-Korean agreement regards also collaboration for medical and environmental issues, as well as for the protection from epidemics.

In other words, both Koreas think of an economy of compensation between them, which could also develop at a later stage and become a need for the development of both countries.

An economic-political symbiosis that could get the United States out of play and later reinstate Russia, which is increasingly interested in the South Korean economy, as well as finally favour China, which has no intention of leaving the Korean peninsula to the hegemony of North Korea alone.

At the end of the Treaty, there is also the project of a joint participation in the Tokyo 2020 Olympic Games and a joint candidature for the 2032 Olympics.

A few days ago, North Korea also expressed its intention to join the International Monetary Fund and the World Bank – a sign that the internationalization of the North Korean economy is now a certainty.

Hence it is a de facto peace treaty between the two Koreas.

If North Korea continues along this line, it is very likely that South Korea will gain a tactical advantage over the sea while, if the relations between South Korea and the United States remain as they currently are, there should be no significant changes in bilateral relations between the USA and South Korea.

However, what is the current state of relations between the United States and North Korea?

In fact, while the inter-Korean relations are all in the framework of effective confidence-building measures, the clear purpose of the fourth round of talks between the two Korean leaders is to preserve a strong US engagement in the whole negotiation process.

Kim Jong-Un wants to engage the United States for his global economic projection and he certainly does not want to remain tied to a regional economy, albeit open and “reformed” according to China’s rules.

For North Korea, the procedure is simple: at first, bilateral talks with the US support for South Korea; later peace between the two Koreas and finally what is only interesting for the USA, namely denuclearization.

It is not even unlikely that the United States does not accept this timing, but it is also unlikely that it realizes the strategic and economic aspects of this timing.

North Korea wants a fundamental agreement with South Korea because: a) it is an unavoidable asset for the modernization of its economy; b) it is the fundamental strategic factor to have the support of both Russia and China, who want to avoid North Korea’s hegemony over the peninsula, but also want to keep it as a rampart for US forces in South Korea; c) it is only through South Korea that North Korea will eventually be in a position to be connected to the Chinese maritime economic and strategic system and reach up to the Mediterranean.

In fact, if the relations between the United States and North Korea improve further, the site of Yongbyon could be dismantled definitively.

Hence currently Kim Jong-Un wants to thoroughly test the US goodwill, rather than South Korea’s goodwill, in developing a long or very long-term peace policy.

In Kim Jong-Un’s mind, there is in fact a key factor: the US behaviour in the phase in which Muammar Gaddafi accepted its proposal to dismantle his nuclear project.

Kim Jong-Un thinks that not even the story of Saddam Hussein is a guarantee for the US long-term reliability and for the stability of its leaders’ word of honour.

This is the real important factor in the strategy of the North Korean Leader.

Moreover, the US immediate reactions to the last meeting between the two Korean leaders have been fast and positive, both by President Trump and by Secretary of State Mike Pompeo.

And North Korea’s autonomous foreign policy has been seen also recently, with the 70th Anniversary military parade.

North Korea’s military parade and its important national celebration, was attended by Li Zhansu, ranking third in the internal power hierarchy of the Communist Party of China (CPC); by Valentina Matviyenko, President of the Russian Federal Council, the third elected office in the Russian Federation; by a very significant figure, Mohamed Ould Abdel Aziz, President of Mauritania, and finally by Hilal al Hilal, deputy-General Secretary of the Syrian Baath Party.

With peace, North Korea will significantly develop its already multiple economic and political relations with Africa, which will be essential for its new economic development.

At the military parade staged on September 9, there were also authorities from Iran, South Africa and Singapore – which is the never forgotten model of the Chinese “Four Modernizations” -as well as other 60 delegations from “friendly” countries.

At economic level, in August, shortly before the big military parade of the 70th Anniversary, there was the International Fair of Razon, which hosted as many as 114 companies of which 52 North Korean ones.

The North Korean product lines mainly included pharmaceuticals, foodstuffs, textiles, electronics and cosmetics.

However, there were many Chinese large companies selling their products in North Korea despite the UN sanctions.

As from September 17, there was also the Autumn Fair which brought together 320 commercial companies from Russia, New Zealand, Australia and China.

This is in fact the new paradigm of North Korea’s foreign policy.

The dollar has also grown in the exchanges with the North Korean currency, both on the official and on the “parallel” markets.

If all goes well at geopolitical level, the North Korean project will be to further improve its light industry, in addition to the diversification and quantity of products, with a view to trying its own autonomous way on the market world, as was the way of the nuclear system.

It should be recalled that this was also Kim Il-Sung’s project.

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China’s Imprint underneath the Pyongyang Joint Declaration

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On September 18, the leaders of two Koreas met each other in Pyongyang, the capital of the DPRK. The world media focused on the meeting during which the two sides issued the “Pyongyang Joint Declaration”. If we see the Panmunjom Declaration serving as the cornerstone of the dialogue between two Korea, it is necessary to say that this joint declaration took a substantial step to the denuclearization of the Korean peninsula that is vital to the regional peace and beyond.

Literally speaking, the Pyongyang joint declaration highlighted the key issues as follows. First, both sides are determined to achieve the denuclearization of the Korean peninsula. Second, they will work together to improve their relations with a view to the existing state of war, as the defense chiefs from the DPRK and ROK earlier signed a comprehensive agreement aiming to reduce tensions on the peninsula. Third, they will promote the peace talk process of the Korean peninsula. Given that Kim pledged to work toward the “complete denuclearization of the Korean Peninsula”, it would be seen as a political declaration that would mark a starting point for peace negotiations. If all goes well, a peace treaty would be sealed and then comes normalization of DPRK-US relations after it achieves complete denuclearization.

As a close neighbor to the Korean Peninsula, China always supports the DPRK and ROK as well in improving their relations through dialogue and consultation and promoting reconciliation and cooperation. This is the consistent and persistent position of Beijing, which has been playing a responsible role in politically resolving the Korean Peninsula issue and achieving the long-standing peace of the region.

In effect, prior to the leaders of two Korea met each other this week in Pyongyang, they have closely contacted their respective allies or strategic partners. Among them is China, dealing with both sides – Pyongyang and Seoul – in a unique way. It is true that China is the largest trading partner of the ROK while it is equally the only legal ally of the DPRK as well as its largest ideological partner now. If we review the bilateral relations between China and North Korea since last March, Kim Jr. has paid three significant, though unofficial, visits to President Xi of China. For example, during his March 25-28 visit, both sides vowed to continue their traditional solidarity in terms of their shared ideologies and common strategic interests. Xi especially proposed to strengthen the close ties between the two ruling parties. As he said to Kim, “party-to-party and state-to-state relations are the common treasure to both sides. And safeguarding, consolidating and developing China – DPRK relations are unswerving guidelines for China’s foreign policy and security strategy.

During his second meeting with Xi in Dalian summer resort, Kim vowed to terminate all the nuclear tests and to follow denuclearization if the United States took corresponding measures with good wishes. Then following his meeting with Trump in Singapore on June 12, Kim came to Beijing again on 19 to meet his Chinese counterpart. Xi confirmed China’s “3-no change” policy towards the DPRK, that is, political solidarity between the two parties remains unchanged, the friendship between the two peoples remains unchanged, and China’s support of a socialist Korea remains unchanged. Essentially, they serve as the foundation of the strategic consensus between Beijing and Pyongyang. In return, Kim reiterated his permanent shutdown of all nuclear tests and facilities if the US would respond sincerely and responsibly.

Given all the analysis above, it is understandable to conclude that China’s long-standing adherence to the goal of denuclearization of the Peninsula through dialogue and consultation is fully reflected in the Pyongyang Declaration. Meanwhile, China’s stance remains evident since it claims that the Korean issue must be resolved eventually by the Korean people rather than any external power. Therefore, peace not force is the only acceptable way. Also, as China and Russia have repeated that no coercive change of the regime by outside power is tolerated, North Korea can be confident and comfortable to proceed the permanent shutdown of the missile engine test site with international experts observing; and then a complete denuclearization is not too far in the future.

Here is necessary to argue that China has never claimed to play an exclusive role in the Korean Peninsula. Instead of that, China has always encouraged the DPRK to talk to the United States and other relevant parties. Since Kim has agreed to make a trip to Seoul for further talks and to meet the US high-ranking officials in Pyongyang soon, the summit between Kim and Moon marks a leap forward toward peace.

Yet, as the lessons in history show, it is better to approach realistically the Korean issue simply because it has involved too complicated concerns and memories and the overlapped interests. Therefore, we should be ready to accept trial and challenges lying ahead. China has insisted on diplomacy which means that all parties concerned should be brought to the negotiating table under the mandate of the UN Security Council.

Now, Beijing has navigated the course of denuclearization proactively to protect two sides’ common core security stakes when Kim reportedly promised to give up his nuclear program if the United States and South Korea respond to his proposal with good will. Due to this reason, China will do what it can to help ensure “no change of regime by force and denuclearization at the same time in the Korean Peninsula”. This is China’s influence or Beijing’s imprint on the Korean denuclearization issue and the regional peace.

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