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The North Korean strategic issue

Giancarlo Elia Valori

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Currently North Korea has turned from a regional threat into an unpredictable global strategic player. This implies that, in the future, we will need to reasonably deal with a Korean power which, however, is anything but irrational in its global choices.

Portraying Kim Jong Un’s Korea as a Shangri-La led by an unreliable man is not the truth and does not facilitate the solution of the Korean problem, both in North and South Korea.The fissile material now held by North Korea can be used to build six to thirty nuclear weapons, but what is the North Korean strategy in the use of this atomic arsenal, which is also growing steadily at a yearly pace of 18%, according to the latest data? According to experts, four reasons are used by North Korea to maintain and manage an autonomous nuclear threat which, from a regional area, has a strike range capable of hitting the United States and hence Europe.

The first one is the use of nuclear weapons by North Korea with a view to obtaining international concessions at diplomatic or more directly political levels. What concessions? Certainly the first would be an internationally recognized geopolitical status, perhaps in a stable correlation with South Korea. A status which would enable North Korea to expand its political and economic area in the whole South-East Asia, possibly in connection with the old regional alliances: maybe even the South East Asia Treaty Organization (SEATO), dissolved in 1977, the old ” zoo of paper tigers “, as a British diplomat defined it – a zoo which, however, might be rebuilt around the two Koreas.

Currently a network of credible and multilateral alliances must be recreated so as to shut in and stabilize the North Korean strategic system, thus protecting South Korea and ensuring to North Korea the stability of its regime. Or a good solution could also be the new alliance recently proposed by China for Central Asia, with Pakistan, China, Afghanistan and Tajikistan: a grouping created to counteract the loss of Russian rayonnement in the region, which could be extended to the coasts of North and South Korea so as to incorporate them within a context of reasonable and, above all, credible checks and balances.

Through Xi Jinping, China has warned the Asian regional powers against building new military alliances, proposed over the last few years especially by the United States. Nevertheless China, with its recent Conference on Interaction and Conference Building Measures in Asia (CICA), has a primary interest in neutralizing and strategically surrounding the offers of military alliance that US President Obama has proposed to Japan, the Philippines and Vietnam.

The tensions that China is facing in Eastern Asian seas and in the regional ones of Vietnam and Myanmar are such as to force it to create external (and independent) alliances compared to the old Shanghai Cooperation Organization, which plays a specifically terrestrial role.

North Korea could even adhere to the SCO and hence China would certainly control, along with the Russian Federation, the North Korean missile and nuclear potential; or it could adhere to a new tripartite alliance, with Russia and China, where the North Korean geopolitics should dissolve in a wider and well-controlled context.

With a view to preventing the North Korean escalation from going on, it is important to include North Korea in a strategic framework capable of using its power projection and, in particular, securing the borders and stability of the North Korean regime.

Without these credible assurances, North Korea will have a vested interest in managing its role as international free rider, which maximizes the political effects of its nuclear tests and hence makes an agreement with it more difficult and expensive for the other international players.

It is a way to “raise the price” of its collaboration and to focus worldwide interest on its country.

Not to mention the border with South Korea.

For the North Korean leadership, the Korean Demilitarized Zone around the 38th parallel is a constant threat and the last, hateful, relic of the Cold War.

The armistice of July 27, 1953 froze a strategic factor which, today, has no longer international motivations.

The issue does no longer lie for the United States in covering up their presence in Japan and the Pacific. There is no longer need to stop the Soviet expansion into the Pacific on the edge of China.

Today everything has changed, and we must invent new political mechanisms to put an end to the Cold War phase in the Korean peninsula, which is no longer the Russian strategic “tooth” in the South China Sea, as was the case when the link between the USSR and Maoism became problematic.

Hence either an international committee is established for defining a definitive border between the two Koreas, or North Korea is continued to be granted the role of global strategic free rider – a role that North Korea can no longer play with increasing doses of military power and nuclear threat, otherwise it would no longer be credible.

This is certainly not the panacea for North Korea’s economy.

Hence, thanks to a global and innovative strategic vision, we must break the North Korean military spiral which,   paradoxically, is directly proportional to its domestic economic crisis.

The Neutral Nations Supervisory Commission (NNSC), established on the basis of the 1953 armistice, has now a mere role of communication between the two Koreas, so as to establish reliable relations between them.

Nevertheless, it is not certainly a body which can define a credible geopolitical project – this is not its purpose.

The second of the four aims of the North Korean nuclear build-up is to internationalize the crisis of the Korean peninsula (and of the region) so as to lead to the US or Chinese mediation.

Financial integration between (South) Korea and China – the free trade agreement between the two countries signed last year – is regarded as a threat by North Korea.

Actually North Korea is not entirely wrong: the above stated agreement envisages the creation in Shanghai of a stock market of securities directly traded in the two currencies, namely the won and the renminbi. It also envisages that the South Korean government may issue bonds and securities of its own sovereign debt directly in denominated in the Chinese currency – securities which can be later sold on the large Chinese financial market.

Therefore we can imagine a way to internationalize the North Korean sovereign debt on the Chinese or Russian markets, so as to stabilize the North Korean economy, thus making the Chinese and Russian strategic assurances stop the North Korean nuclear race.

A new Treaty between North Korea, South Korea – which is experiencing a period of financial deleveraging of foreign investors, or a capital flight which is also a form of economic war – the United States, the People’s Republic of China, the Russian Federation and, inevitably, the now useless European Union.

This group of countries should also be joined by Japan and the Indian Federation.

This Committee should establish: a) the internationally recognized border between the two Koreas, thus explicitly putting an end to the alleged hegemony claimed by both countries over the entire Korean peninsula; b) a joint North and South Korean Committee for economic development; c) a military committee supervising the North Korean military nuclear development, with the possibility for Russia – as was the case with Iran – to manage part of the fissile material; d) an international agreement for managing the North Korean nuclear material, which would be reached in the region by Russia and China.

Obviously with the guarantee of the North Korean national sovereignty.

For international analysts, a third reason for creating and expanding the North Korean nuclear arsenal would be the response to possible military attacks threatening the existence of the North Korean Party and State.

This is still a commitment of the Conference we propose, which should explicitly deny any political and military thereat against the North Korean regime, by gradually accepting it into the mainstream of international alliances and organizations.

A normalization which is good for everyone: for the United States, which will save on the deployment of their forces in the Asian region; for China, which will rebuild a preferential relationship with North Korea; for Russia, which could have an interest in developing economic and strategic relations with North Korea .

For Russia, which sets great store by trade with South Korea, the security of the North-Asian system must be ensured by a wide network of multilateral partnerships in various sectors: energy security, nuclear energy, transport safety, food safety and, finally, a multilateral guarantee on information security.

This is the right basis to start.

Finally, the fourth reason analyzed by experts to justify the North Korean significant nuclear build up is to offset, with nuclear weapons, the inevitable structural and conventional weakness of North Korea in relation to the United States and South Korea, two powers which, at various levels, are far superior to North Korea in terms of updating and quantity of their conventional forces.

We could even imagine a series of confidence building measures, managed by the Conference we have proposed, designed to simultaneously reduce the North and South Korean military potential and, hence, reshape the US strategy throughout the Pacific region in relation to North Korea.

This can be done if there is the political will and the effective presence of Russia and China. It is worth trying.

Advisory Board Co-chair Honoris Causa Professor Giancarlo Elia Valori is an eminent Italian economist and businessman. He holds prestigious academic distinctions and national orders. Mr. Valori has lectured on international affairs and economics at the world’s leading universities such as Peking University, the Hebrew University of Jerusalem and the Yeshiva University in New York. He currently chairs “International World Group”, he is also the honorary president of Huawei Italy, economic adviser to the Chinese giant HNA Group. In 1992 he was appointed Officier de la Légion d’Honneur de la République Francaise, with this motivation: “A man who can see across borders to understand the world” and in 2002 he received the title “Honorable” of the Académie des Sciences de l’Institut de France. “

East Asia

The nature of contemporary Sino-Pakistani relations

Syeda Dhanak Hashmi

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China has played a crucial role in maintaining regional peace and security by upholding its concept of an inclusive, cooperative and sustainable security. This has clarified the country’s stance on issues of regional concern, contributing to long-term stability and development in Asia, which includes the promotion of common development, building of partnerships, improvement of existing multilateral frameworks, rule-setting, military exchanges and proper settlement of differences.

To ensure long-term stability and prosperity of the Asia-Pacific, China has put forward a number of proposals that have been highly valued by the international community. To ensure common development is the fundamental guarantee of peace and stability, and the ‘master key’ to solving security problems. The China-proposed Belt and Road Initiative is not only a path of development but also a path of peace, as it will not only bring opportunities to the economic development of regional countries, but also provide ideas and solutions for them to solve security problems. The central theme behind the China-Pakistan Economic Corridor (CPEC) is to open new economic and trade avenues that would lead to the overall social and economic prosperity of the region. The fruit of this economic cooperation is a market far larger in scope than the one that exists because of economic conflict in the region. The envisaged economic route from Gwadar to Kashgar can serve as an alternative and economically shorter sea route instead of the far longer straits of Malacca. This has always been the most compelling reason for multilateral and regional cooperation.

Two of the most reputable theories that support the idea of regional stability, regional integration and strategic cooperation can be stated in terms of ‘economic opportunity cost hypotheses and ‘neo-functionalism’. The first theory assumes that trade and economic interdependence increases stakes amongst economically integrated nations and thereby reduces chances of conflicts erupting. Whereas the proponents of neo-functionalism are of the view that cooperation in one area produces cooperation in other areas. CPEC will pass through Gilgit-Baltistan in the north which will connect Kashgar in China’s western province of Xinjiang. Almost 80% of China’s oil is currently transported through the Strait of Malacca to Shanghai. The calculated distance is almost 16,000km and takes two to three months, with Gwadar becoming operational, the distance would be reduced to less than 5,000km. When fully operational Gwadar will promote not only the economic development of Pakistan but also serve as a gateway to the Central Asian countries.

Keeping in view the regional stability, Pakistan and India are both important neighbours for China which wants to promote trade with its neighbours. Pakistan is a victim of terrorism and that all countries were responsible for contributing towards the eradication of terrorism. But the brutalities of the Indian army in Indian-held Kashmir cannot be ignored here.

Pivot to Asia: Status quo or a challengerpower ?

Hence, regional integration is not possible as long as regional trade is sacrificed for so-called security. Pakistan needs to follow the Chinese model whose trade with India had crossed over $100 billion despite serious political issues between them. Some elements also fear that if there is peace in the region, it will challenge their predominance in the business of the state. Furthermore, the dimension of CPEC that is ignored is its potential to defeat terrorism in the region by raising and improving socio-economic conditions of the people. The Sri Lankan polity, at first divided over the role of China in the region, has come to recognize that the Belt Road Initiative approach fits well with Colombo’s goals of rebuilding a war-torn economy through enhanced connectivity. China also calls for improving regional security architecture to lay a solid foundation for enduring peace and stability in the region, and also calls on countries to properly handle differences and disputes to maintain the peaceful and stable environment in the region.

In the context of Pakistan, CPEC is often termed a game changer for the weak economy of Pakistan. The corridor project carries vital significance as it promises to elevate Islamabad’s economic growth. Unlike US aid, the Chinese aid to Pakistan has offered infrastructure and energy projects that would serve as a means to improve Pakistan’s economy. Despite the cheapness of land, Pakistan is lagging behind in connectivity which increases the trade cost. However, under the umbrella of CPEC the cost would be minimised and export incentives increased. Pakistan expects 4% of global trade. The kind of toll tax, rental fees that Pakistan will gain is roughly $6 billion to $8 billion by 2020.

A strategic and economic balance of power in the region would ensure peaceful resolution of conflicts but also enhance strategic stability leading to a win-win situation. Or by words of professor Anis H. Bajrektarevic: “Asia has to answer itself whether the newest concepts – such as the OBOR/CPEC vs. Indo-Pacific oceanic triangling – are complementary to its development or the heartland-rimland sort of dangerous confrontation. Asia needs a true multilateralism, not a hostage situation of getting caught in a cross-fire.”

The CPEC itself with its focus on Gwadar, has also given impetus to maritime cooperation between China and Pakistan, and beyond. Both states wish to enhance bilateral cooperation in the fields of maritime security, search and rescue, and the blue water economy. Thus, it would not be wrong to say that CPEC has the potential of accruing strategic cooperation. This approach serves as strategic enabler in a rapidly transforming world order. It is therefore the need of time to move from archaic geopolitical vendetta of 19th and 20th centuries to interstate strategic play in the 21st century.

The pursuit of a state’s national interest in the international arena constitutes its foreign policy. A successful foreign policy should employ a balance of economic, diplomatic, and military tools. It is the national interest that shapes the possibilities of state to behave collectively. Through a balanced foreign policy approach, the South Asian region can achieve its mega development projects and establish into a peaceful integrated region. Confidence-building measures between regional players is the first step in this direction to uplift the socioeconomic standards of the people of this region.

An early version of this text has been published by the China Daily

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East Asia

Freedom, Sovereign Debt, Generational Accounting and other Myths

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“How to draw the line between the recent and still unsettled EU/EURO crisis and Asia’s success story? Well, it might be easier than it seems: Neither Europe nor Asia has any alternative. The difference is that Europe well knows there is no alternative – and therefore is multilateral. Asia thinks it has an alternative – and therefore is strikingly bilateral, while stubbornly residing enveloped in economic egoisms. No wonder that Europe is/will be able to manage its decline, while Asia is (still) unable to capitalize its successes. Asia clearly does not accept any more the lead of the post-industrial and post-Christian Europe, but is not ready for the post-West world.” – professor Anis H. Bajrektarevic diagnosed in his well-read ‘No Asian century’ policy paper. Sino-Indian rift is not new. It only takes new forms in Asia, which – in absence of a true multilateralism – is entrenched in confrontational competition and amplifying antagonisms.  The following lines are referencing one such a rift.

At the end of 2017, Brahma Chellaney, a professor with the New Delhi-based Center for Policy Research, wrote an article titled “China’s Creditor Imperialism” in which he accused China of creating a “debt trap” from Argentina, to Namibia and Laos, mentioning its acquisition of, or investment in the construction of several port hubs, including Hambantota in Sri Lanka, Piraeus in Greece, Djibouti, and Mombasa in Kenya in recent years.

These countries are forced to avoid default by painfully choosing to let China control their resources and thus have forfeited their sovereignty, he wrote. The article described China as a “new imperial giant” with a velvet glove hiding iron fists with which it was pressing small countries. The Belt and Road Initiative, he concluded, is essentially an ambitious plan to realize “Chinese imperialism”. The article was later widely quoted by newspapers, websites and think tanks around the world.

When then United States Secretary of State Rex Tillerson visited Africa in March, he also said that although Chinese investment may help improve Africa’s infrastructure, it would lead to increased debt on the continent, without creating many jobs.

It is no accident that this idea of China’s creditor imperialism theory originates from India. New Delhi has openly opposed China’s Belt and Road Initiative, especially the China-Pakistan Economic Corridor as it runs through Pakistan-administered Kashmir, which India regards as an integral part of its territory. India is also worried that the construction of China’s Maritime Silk Road will challenge its dominance in South Asia and the Indian Ocean. Based on such a judgment, the Indian government has worked out its own regional cooperation initiatives, and taken moves, such as the declaration of cooperation with Vietnam in oil exploration in the South China Sea and its investment in the renovation of Chabahar port in Iran, as countermeasures against the Chinese initiative.

Since January, India, the United States, Japan and Australia have actively built a “quasi-alliance system” for a “free and open Indo-Pacific order” as an alternative to the Belt and Road Initiative. In April, a senior Indian official attending the fifth China-India Strategic Economic Dialogue reiterated the Indian government’s refusal to participate in the initiative.

The “creditor imperialism” fallacy is in essence a deliberate attempt by India and Western countries to denigrate the Belt and Road Initiative, which exhibits their envy of the initial fruits the initiative has produced. Such an argument stems from their own experiences of colonialism and imperialism. It is exactly the US-led Western countries that attached their political and strategic interests to the debt relationship with debtor countries and forced them to sign unequal treaties. China’s Belt and Road Initiative is proposed and implemented in the context of national equality, globalization and deepening international interdependence, and based on voluntary participation from relevant countries, which is totally different from the mandatory debt relationship of the West’s colonialism.

It is an important “Chinese experience” to use foreign debts to solve its transportation and energy bottlenecks that restrict its economic and social development at the time of its accelerated industrialization and urbanization. By making use of borrowed foreign debts, China once built thousands of large and medium-sized projects, greatly easing the transportation and energy “bottlenecks” that long restrained its social and economic development. Such an experience is of reference significance for other developing countries in their initial stage of industrialization and urbanization along the Belt and Road routes.

In the early stage of China’s reform and opening-up, US dollar-denominated foreign debt accounted for nearly 50 percent of China’s total foreign debts, and Japanese yen close to 30 percent. Why didn’t Western countries think the US and Japan were pushing their “creditor imperialism” on China?

Some foreign media have repeatedly mentioned that Sri Lanka is trapped in a “debt trap” due to its excessive money borrowing from China. But the fact is that there are multiple reasons for Sri Lanka’s heavy foreign debt and its debt predicament should not be attributed to China. For most of the years since 1985, foreign debt has remained above 70 percent of its GDP due to its continuous fiscal deficits caused by low tax revenues and massive welfare spending. As of 2017, Sri Lanka owed China $2.87 billion, accounting for only 10 percent of its total foreign debt, compared with $3.44 billion it owed to Japan, 12 percent of its total foreign debt. Japan has been Sri Lanka’s largest creditor since 2006, but why does no foreign media disseminate the idea of “Japan’s creditor imperialism”?

In response to the accusation that China is pursuing creditor imperialism made by India and some Western countries, even former Sri Lankan president Mahinda Rajapaksa wrote an article in July using data to refute it.

Most of the time, the overseas large-scale infrastructure construction projects related to the Belt and Road Initiative are the ones operated by the Chinese government and Chinese enterprises under the request of the governments of involved countries along the Belt and Road routes or the ones undertaken by Chinese enterprises through bidding.

It is expected that with the construction of large-scale infrastructure projects and industrial parks under the Chinese initiative, which will cause the host country’s self-development and debt repayment ability to constantly increase, the China’s creditor imperialism nonsense will collapse.

An early version of this text appeared in China Daily

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Arrogance of force and hostages in US-China trade war

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Even before the ink on the comments made by those who (just like the author of these lines) saw the recent meeting between US President Donald Trump and his Chinese counterpart Xi Jinping in Buenos Aires as a sign of a temporary truce in the trade war between the two countries had time to dry, something like a hostage-taking and the opening of a second front happened. The recent arrest in Canada under US pressure of Meng Wanzhou, the chief financial officer of China’s telecommunications giant Huawei, is unfolding into a full-blown international scandal with far-reaching consequences.

Meng Wanzhou faces extradition to the United States where she is suspected of violating US sanctions against Iran, namely by making payments to Tehran via the UK branch of the US bank HSBC. The question is, however, how come someone is trying to indict a Chinese citizen according to the norms of American law, and not even on US territory to boot?

China’s reaction was extremely tough with Deputy Foreign Minister Le Yucheng summoning the Canadian and US ambassadors in Beijing and demanding the immediate release of the detainee, calling her detention “an extremely bad act.” First of all, because this is yet another arrogant attempt at extraterritorial use of American laws.

Other countries, above all Russia, have already experienced this arrogance more than once; suffice it to mention the cases of Viktor Bout and Konstantin Yaroshenko, or of the alleged “Russian hackers,” who, by hook or crook, were taken out to the United States to face US “justice”.

Enough is enough, as they say. Russia’s Foreign Minister Sergei Lavrov, who is usually careful in his choice of words, said that while Russia is not involved in the US-China trade war, it still regards Meng’s arrest as “another manifestation of the line that inspires a rejection among the overwhelming majority of normal countries, normal people, the line of extraterritorial application of their [US] national laws.”

“This is a very arrogant great-power policy that no one accepts, it already causes rejection even among the closest allies of the US,” Lavrov said. “It is necessary to put an end to it,” he added.

One couldn’t agree with this more. But first, I would like to know who really is behind this provocation, even though China’s reaction would have been much anticipated. The arrest of Meng Wanzhou sent US markets into a tailspin and scared investors, who now expect an escalation of the trade war between the United States and China.

The point here, of course, is Washington’s displeasure about Huawei’s activities, with The Wall Street Journal reporting that the US Justice Department has long been conducting a probe into the Chinese company’s alleged violation of US sanctions against Iran.

There is more to this whole story than just sanctions though. The US accuses Huawei (as it earlier did the Chinese ZTE) of the potential threats the company’s attempts to use tracking devices could pose to the security of America’s telecommunications networks. The United States has demanded that its closest allies (primarily Canada, the UK, Australia and New Zealand, with whom it has set up a system for jointly collecting and using Five Eyes intelligence) exclude 5G Huawei products from their state procurement tenders.

I still believe, however, that the true reason for this is not so much security concerns as it is a desire to beat a competitor. Huawei has become a world-renowned leader in the development and application of 5G communications technology, which looks to the future (“Internet of Things”, “Smart Cities”, unmanned vehicles and much more.)

Since technology and equipment are supplied along with standards for their use, there is a behind-the-scenes struggle going on to phase out the 5G standard developed by Huawei from global markets.

As for the need “to put an end to this,” the big question is how. Formally, detainees are extradited to the United States in line with national legislation, but at Washington’s request (which often comes with boorish and humiliating pressure from the US authorities and is usually never mentioned in public).

Add to this the US Congress’ longstanding practice of changing, unilaterally and at its own discretion, already signed international treaties and agreements as they are being ratified – another example of “arrogance of power” as mentioned before.

The question could well be raised at the UN Security Council, but its discussion is most likely to be blocked by the US representative. However, there is also a moral side to the assessment of any political practice the work on international legal norms usually starts with.

If China and Russia, as well as other countries equally fed up with the “arrogance of power” submit a draft resolution “On the inadmissibility of attempts at extraterritorial use of national legislation by UN member states” to the UN General Assembly, it would most likely enjoy the overwhelming support by most of the countries of the UNGA, maybe save for just a dozen or so of the most diehard advocates of Washington’s policy…

First published in our partner International Affairs

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