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China’s future political and economic moves

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On May 22, 2020 China will organize its largest institutional political assembly, the National People’s Congress. Institutionally, it should have been held on March 5, but it had been postponed to May 22.

 There are two obvious meanings underlying this political choice, which results directly from President Xi Jinping.

 The first and most evident is the return to full normalcy, after the now officialised end of the outbreak in Wuhan, Hubei and of the other minor ones. Secondly, it is the sign of a rediscovered political, organizational and economic operation, pending a confrontation between China and the United States that is expected to become ever less easy to resolve on both sides, but also strongly decisive for the new world geo-economic equilibria.

There will be about 5,000 delegates from all areas of the country representing the 56 constitutionally recognized minorities who,over a period of about ten days, will institutionally define the annual budget, the country’s annual and multi-year economic goals, as well as some important bills. It is a Congress that establishes China’s “global strategy”, albeit in a concrete and simple way.

Certainly there is still the block on the entry of Chinese coming from other countries, but workers have returned to factories and almost all schools and universities have been reopened, as well as shops, although there are signs of possible new spreading of Covid 19, which so far the Chinese government has not neglected at all.

The attention will be obviously focused on the Central Government’s Report, which in this case will certainly be needed to have the necessary consensus and support from all regions in the country, so as to avoid both the danger of factionalism, which is central to the CPC’s theory and practice, and above all to provide economic and organisational consistency and unity to all the work that peripheral areas shall carry out on their own.

 This is a typical mechanism of the Third International’s tradition.

I was once confidentially told by Deng Xiaoping, who also came from one of the recognised minorities, that they did not want Communism as it was achieved elsewhere, but just Socialism, albeit with Chinese characteristics.

 Without bearing this in mind, even today little is understood of the Chinese political system and of its medium and long term goals.

At economic level, in fact, in the first quarter of 2020 China’s GDP fell by 6.8% compared to the same period of last year.

 The sharpest economic downturn since 1976, when Mao Zedong died and the GDP decreased only in that period, and later started to always grow again by 1.6%.

A final important sign to Western analysts was sent by President Xi Jinping on May 18 last, at the Assembly of the World Health Organization.

Obviously the first signal follows the vast diplomacy of support and economic and health collaboration, which characterized China immediately after the outbreak of the Wuhan epidemic-pandemic.

 In other words, President Xi Jinping wants to eradicate the idea that the Covid-19 virus is only “made in China” – an idea that characterizes the great “fake news” that has alarmed the United States and so far collected 116 adhesions to the request – recently made by the EU – of an independent study on the virus origins and on the new ways of spreading among human beings it has shown.

The first information and economic goal pursued is to avoid – first and foremost – the worldwide defamation of China, of its economy and of its reliability, and also avoid having to pay large sums of money for repairing the damage caused by Covid-19, should some countries, just like the United States, want to resort to this legal-administrative and insurance instrument to achieve their real goal, i.e. preventing China from playing – for a sufficiently long time – its current role as global competitor at economic, political and military levels.

 Hence, as President Xi Jinping clearly stated at the WHO Assembly, China does not feel to be and is not responsible for any life lost in the world due to the Covid-19 pandemic.

President Xi Jinping also added that China reacted as quickly as possible – as opposed to the slowness of action in other Western countries – thus clearly perceiving the threat posed by the pandemic. The President also said that it was China that first spread the sequencing of the entire virus genome, through the usual procedures, i.e. the official transmission of data to the WHO.

Therefore, President Xi’s speech at the WHO is intended to reaffirm China’s centrality. This will certainly be reaffirmed also at the forthcoming National People’s Congress, but with another secondary objective, i.e. to underline the isolation of the USA and its “factionalism”, just when China is regaining – after the pandemic – the primary role it has played in recent years as the leading country of the new globalization, while Donald Trump’s “America First” policy is isolating the United States from the EU and from China itself and is reproposing an old “Cold War” tension with the Russian Federation, as well as finally rebuilding fences and spreading polemics in the Middle East and Latin America. Self-isolation or probably an old-style and “out of time” perception of the US global role, which is still inevitable but must be rethought without solemn and currently useless memories of the past.

This is the other communication, economic and political goal of China’s current and future actions, in this phase when the Covid-19 still appears to be retreating.

 Deng Xiaoping told me so very clearly.

He told me they wanted Socialism, not Communism. In Deng’s mind, in fact, Communism is Western stuff. Indeed, the Chinese Communists had rightly interpreted Marx, who did not want the transition to Socialism and the structural end of capitalism in the peripheries of the world but, if anything, in its evolved centre, namely Germany and Great Britain. According to the CPC’s documents, Togliatti and Gramsci – before him – had “made mistakes”.

 And certainly not out of servility towards the USSR that, at the time, was an unavoidable point of reference for the Italian Communist party (PCI).

Hence we should never think that the CPC stopped studying Karl Marx’s texts, albeit with creative intelligence.

Quite the reverse. Nowadays Marxism is often mentioned in China, as the theory for shifting – within capitalism – from the production of goods and services to mass financialisation that the Chinese government currently uses, above all, to propose – with extreme caution –  its entry into the world market.

 And Deng, who was always a dear personal friend, is now one of the two true historical references for President Xi Jinping, together with Mao Zedong.

Hence unification of China, together with the still necessary Great Modernization, in addition to those established by Deng Xiaoping at the beginning of post-Maoism, which was never real Communism, because it never set as its goal the transformation of the remaining global capitalist world, but its penetration, with Chinese and, above all, national objectives and styles.

Moreover, just to eliminate again this brand of “Made in China” virus and of adverse actions and hacking against the websites of Western research centres – which is an accusation made by the EU – President Xi Jinping has clearly stated that- when discovered and tested – the therapies should become “global public goods”.

Another strong signal sent by China to the West is clear: do not think you can make the usual big deal with the future anti-Covid19 vaccine because when we have it anyway – and we will probably have it before you – we will distribute it as free patent and we will not ask for additional costs or fees.

It is easy to imagine what could be the propaganda and geopolitical result for China in this case, which would find itself distributing modern and above all free anti-viral vaccines to all the regions, in Latin America, in Asia and in Europe itself, which have been radically and further impoverished by the pandemic.

What could Westerners say in this case? Could they say their vaccine is cheap, but better?

 It is easy to imagine the effects of this counterfactual propaganda.

 It is also easy to imagine the potential geopolitical impact of such an operation.

 At the next upcoming National People’s Congress another political and economic weapon of Chinese propaganda is and will be the reaffirmation of China’s political, scientific and financial contribution to the World Health Organization, just as the United States has declared that its contributions to the WHO have been frozen.

Where there is a “void”, the Chinese fill it. Westerners have left on their own, but they have lost both a possible ally and a major source of information. Bad choice. Opponents must be penetrated and not be cursed with a ritual that is very closely related to that of Protestant sects or American new religions such as Scientology. The eighteenth-century-style sectarianism is not a good way for spreading a political message – just think of the neo-evangelical sects that made Bolsonaro’s electoral fortune in Brazil.

Hence, for the Chinese, simultaneous implementation of Sun Tzu’s rules and the Thirty-Six Stratagems.

Finally, however, President Xi Jinping has not rejected the idea of a “large world analysis” on Covid-19, but regarding the global responses to the pandemic, not only the vague theories on its territorial origin.

These are the guidelines that, in all likelihood, we will see in action at the forthcoming National People’s Conference.

 But there are two other essential political signs from China that we must consider: one is the core of the future Chinese expansion, which is still Africa – another great void of Westerners that China is filling strategically and economically – and the other is the new Chinese attention- and of President Xi, in particular – paid to the Great South of the world. A legacy of Mao’s Thought.

In the policy line, already established for the national People’s Congress to be held on March 5 last, there are some rather new aspects: firstly, the new deadline for the eradication of absolute poverty throughout the country, which has been postponed for the meeting to be held next Wednesday, while the deadline for China to become a leading nation in technological innovation is still 2035. The same holds true for 2050, the deadline for the project to turn China into a world leader.

In other words, to make Deng Xiaoping’s Fourth Modernisation, the military one, the axis of China’s real technological, civil and organizational transformation.

Throughout China, the Covid-19 pandemic has in fact stepped up processes that had already been defined in the past by the central Government: firstly, the acceleration of digitalization, which has obviously been favoured by the “lockdown” that China has adopted – as happened in almost all European countries and the United States, where the closure of companies and distribution has forced consumers to inevitably resort to e-commerce.

Obviously, also in China, as elsewhere in the world, greater attention has been paid to what is still called – who knows for how long – “national interest”.

 However, this has not happened in the EU countries on the verge of bankruptcy, such as Italy itself, where any aid provided by the other EU Member States is only for their own gain, since they are obviously just waiting to swallow up what remains of Italian SMEs, and the huge colossal private savings of Italians, to rescue their banks.

In Italy an incompetent ruling class is waiting for ambiguous aid such as the ESM or the future, equally ambiguous, slow, vague and unclear “Recovery Fund”, as it was charity, generous donations and gracious concessions from old friends.

Another structural factor of the Chinese economy triggered by the pandemic has been a greater level of technological and financial competition among the countries affected, and also among Chinese companies themselves in their domestic market, which has obviously grown in importance and has largely replaced reduced exports and also imports, actually blocked by the combination of the pandemic and the trade war between China and the United States.

Socialism that makes once again “substitution economy”, as was the case in the 1950s.

Another economic factor that the pandemic has reactivated or accelerated, in China as elsewhere, is the major role of the private sector and the no-profit sector.

This will certainly be at the core of the next National People’s Congress, which sees local, ethnic and political autonomies strongly represented. Nevertheless, it mainly represents – ina politically significant way – also some technical-scientific elites, fully integrated in the CPC, which, however, have a strong influence both on the Party and on the “inner circle” of President Xi Jinping.

President Xi wants to avoid China losing it dominant role in the world as a result of the now hopefully ended pandemic. Indeed, he wants to redesign it at a time when, due to past and present mistakes, the productive, social and healthcare system of the United States and part of the EU shows strong failures, which immediately spill over and affect what were once called the “productive forces”.

As President Trump said, the United States has harshly asked for a gradual “decoupling” – albeit fast and certain – of the American companies from China. Due to the very characteristics of the current Chinese economy, however, President Xi Jinping knows all too well that – whatever happens to the Chinese economy today and in the immediate future – the Global Value Chains (GVCs), on which China cannot but fully rely, are all semi-destroyed.

A few months ago, Chinese companies were among the largest companies in the world to applyfor “force majeure” certificates to terminate existing supply contracts in the world.

 Certainly, the real attack by Trump’s America on the Chinese economy will be launched through the new Global Value Chains, which, almost certainly, will now encircle China, but will no longer penetrate it.

China will play its cards which – as we will see soon – will also be played at the forthcoming National People’s Congress, with a network of probable internal Chinese marginal areas that will very fiercely compete with the new probable external pro-USA network of new CGVs which -we imagine – will pass through India to Vietnam, and through Taiwan, to India and obviously Japan. This is the reason for Taiwan’s recent “revival” as an unlikely geo-economic opponent of China, upon US clear indication.

 Another issue that will be surely well explored by the next National People’s Congress – with President Xi Jinping who will be able to strongly innovate the Chinese economy, even with a higher rate of liberalization – is that of strengthening the State, so as to make it ever more effective as a “power multiplier” and as developer of a national policy line, “with Chinese characteristics” – exactly as Deng Xiaoping repeated to me – which combines military, finance, productive economy, diplomacy and intelligence Services, with a view to winning the real war of China today, i.e. the war against the USA which, however, no one will ever fight on the ground and with the old means of “classic” military power.

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. “

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East Asia

Importance of peace in Afghanistan is vital for China

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image source: chinamission.be

There are multiple passages from Afghanistan to China, like Wakhan Corridor that is 92 km long, stretching to Xinjiang in China. It was formed in 1893 as a result of an agreement between the British Empire and Afghanistan. Another is Chalachigu valley that shares the border with Tajikistan to the north, Pakistan to the south, and Afghanistan to the west. It is referred to as the Chinese part of the Wakhan Corridor. However, the Chinese side of the valley is closed to the public and only local shepherds are allowed. Then there is Wakhjir Pass on the eastern side of the Wakhan corridor but is not accessible to the general public. The terrain is rough on the Afghan side. There are no roads along the Wakhjir Pass, most of the terrain is a dirt track. Like other passages, it can only be accessed via either animals or SUVs, and also due to extreme weather it is open for only seven months throughout the year. North Wakhjir Pass, also called Tegermansu Pass, is mountainous on the border of China and Afghanistan. It stretches from Tegermansu valley on the east and Chalachigu Valley in Xinjiang. All of these passages are extremely uncertain and rough which makes them too risky to be used for trade purposes. For example, the Chalagigu valley and Wakhjir Pass are an engineering nightmare to develop, let alone make them viable.

Similarly, the Pamir mountain range is also unstable and prone to landslides. Both of these routes also experience extreme weather conditions. Alternatives: Since most of the passages are risky for travel, alternatively, trade activities can be routed via Pakistan. For example, there is an access road at the North Wakhjir that connects to Karakoram Highway.

By expanding the road network from Taxkorgan in Xinjiang to Gilgit, using the Karakoram Highway is a probable option. Land routes in Pakistan are already being developed for better connectivity between Islamabad and Beijing as part of CPEC. These routes stretch from Gwadar up to the North.

The Motorway M-1, which runs from Islamabad to Peshawar can be used to link Afghanistan via Landi Kotal. Although the Karakoram highway also suffers from extreme weather and landslides, it is easier for engineers to handle as compared to those in Afghanistan.

China is the first door neighbor of Afghanistan having a common border. If anything happens in Afghanistan will have a direct impact on China. China has a declared policy of peaceful developments and has abandoned all disputes and adversaries for the time being and focused only on economic developments. For economic developments, social stability and security is a pre-requisite. So China emphasizes peace and stability in Afghanistan. It is China’s requirement that its border with Afghanistan should be secured, and restrict movements of any unwanted individuals or groups. China is compelled by any government in Afghanistan to ensure the safety of its borders in the region.

Taliban has ensured china that, its territory will not use against China and will never support any insurgency in China. Based on this confidence, China is cooperating with the Taliban in all possible manners. On the other hand, China is a responsible nation and obliged to extend humanitarian assistance to starving Afghans. While, the US is coercing and exerting pressures on the Taliban Government to collapse, by freezing their assets, and cutting all economic assistance, and lobbying with its Western allies, for exerting economic pressures on the Taliban, irrespective of human catastrophe in Afghanistan. China is generously assisting in saving human lives in Afghanistan. Whereas, the US is preferring politics over human lives in Afghanistan.

The US has destroyed Afghanistan during the last two decades, infrastructure was damaged completely, Agriculture was destroyed, Industry was destroyed, and the economy was a total disaster. While, China is assisting Afghanistan to rebuild its infrastructure, revive agriculture, industrialization is on its way. Chinese mega initiative, Belt and Road (BRI) is hope for Afghanistan.

A peaceful Afghanistan is a guarantee for peace and stability in China, especially in the bordering areas. The importance of Afghan peace is well conceived by China and practically, China is supporting peace and stability in Afghanistan. In fact, all the neighboring countries, and regional countries, are agreed upon by consensus that peace and stability in Afghanistan is a must and prerequisite for whole regions’ development and prosperity.

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Shared Territorial Concern, Opposition to US Intervention Prompt Russia’s Support to China on Taiwan Question

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image credit: kremlin.ru

The situation around the island of Taiwan is raising concerns not only in Chinese mainland, Taiwan island or in the US, but also in the whole world. Nobody would like to see a large-scale military clash between China and the US in the East Pacific. Potential repercussions of such a clash, even if it does not escalate to the nuclear level, might be catastrophic for the global economy and strategic stability, not to mention huge losses in blood and treasure for both sides in this conflict.

Earlier this week, Russian Foreign Minister Sergey Lavrov stated that Moscow continued to firmly support Beijing’s position on Taiwan as an integral part of China. Moreover, he also underlined that Moscow would support Beijing in its legitimate efforts to reunite the breakaway province with the rest of the country. A number of foreign media outlets paid particular attention not to what Lavrov actually said, but omitted his other remarks: the Russian official did not add that Moscow expects reunification to be peaceful and gradual in a way that is similar to China’s repossession of Hong Kong. Many observers of the new Taiwan Straits crisis unfolding concluded that Lavrov’s statement was a clear signal to all parties of the crisis: Russia would likely back even Beijing’s military takeover of the island.

Of course, diplomacy is an art of ambiguity. Lavrov clearly did not call for a military solution to the Taiwan problem. Still, his remarks were more blunt and more supportive of Beijing than the standard Russia’s rhetoric on the issue. Why? One possible explanation is that the Russian official simply wanted to sound nice to China as Russia’s major strategic partner. As they say, “a friend in need is a friend indeed.” Another explanation is that Lavrov recalled the Russian experience with Chechnya some time ago, when Moscow had to fight two bloody wars to suppress secessionism in the North Caucasus. Territorial integrity means a lot for the Russian leadership. This is something that is worth spilling blood for.

However, one can also imagine that in Russia they simply do not believe that if things go really bad for Taiwan island, the US would dare to come to its rescue and that in the end of the day Taipei would have to yield to Beijing without a single shot fired. Therefore, the risks of a large-scale military conflict in the East Pacific are perceived as relatively low, no matter what apocalyptic scenarios various military experts might come up with.

Indeed, over last 10 or 15 years the US has developed a pretty nasty habit of inciting its friends and partners to take risky and even reckless decisions and of letting these friends and partners down, when the latter had to foot the bill for these decisions. In 2008, the Bush administration explicitly or implicitly encouraged Georgian leader Mikheil Saakashvili to launch a military operation against South Ossetia including killing some Russian peacekeepers stationed there. But when Russia interfered to stop and to roll back the Georgian offensive, unfortunate Saakashvili was de-facto abandoned by Washington.

During the Ukrainian conflicts of 2013-14, the Obama administration enthusiastically supported the overthrow of the legitimate president in Kiev. However, it later preferred to delegate the management of the crisis to Berlin and to Paris, abstaining from taking part in the Normandy process and from signing the Minsk Agreements. In 2019, President Donald Trump promised his full support to Juan Guaidó, Head of the National Assembly in Venezuela, in his crusade against President Nicolas when the government of Maduro demonstrated its spectacular resilience. Juan Guaido very soon almost completely disappeared from Washington’s political radar screens.

Earlier this year the Biden administration stated its firm commitment to shouldering President Ashraf Ghani in Afghanistan in his resistance to Taliban advancements. But when push came to shove, the US easily abandoned its local allies, evacuated its military personal in a rush and left President Ghani to seek political asylum in the United Arab Emirates.

Again and again, Washington gives reasons to conclude that its partners, clients and even allies can no longer consider it as a credible security provider. Would the US make an exception for the Taiwan island? Of course, one can argue that the Taiwan island is more important for the US than Afghanistan, Venezuela, Ukraine and Georgia taken together. But the price for supporting the Taiwan island could also be much higher for the US than the price it would have paid in many other crisis situations. The chances of the US losing to China over Taiwan island, even if Washington mobilizes all of its available military power against Beijing, are also very high. Still, we do not see such a mobilization taking place now. It appears that the Biden administration is not ready for a real showdown with Beijing over the Taiwan question.

If the US does not put its whole weight behind the Taiwan island, the latter will have to seek some kind of accommodation with the mainland on terms abandoning its pipe-dreams of self-determination and independence. This is clear to politicians not only in East Asia, but all over the place, including Moscow. Therefore, Sergey Lavrov has reasons to firmly align himself with the Chinese position. The assumption in the Kremlin is that Uncle Sam will not dare to challenge militarily the Middle Kingdom. Not this time.

From our partner RIAC

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Russia-Japan Relations: Were Abe’s Efforts In Vain?

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Expanding the modest elements of trust in the Japan-Russia relationship, talking through reciprocal concerns before they lead to conflict, avoiding bilateral incidents, and engaging in mutually beneficial economic cooperation is the way forward.

One year after the end of Shinzo Abe’s long period of leadership, Japan has a new prime minister once again. The greatest foreign policy challenge the new Japanese government led by Fumio Kishida is facing is the intensifying confrontation between its large neighbor China and its main ally America. In addition to moves to energize the Quad group to which Japan belongs alongside Australia, India, and the United States, U.S. President Joe Biden’s administration has concluded a deal with Canberra and London to provide Australia with nuclear-powered submarines which in future could patrol the Western Pacific close to Chinese shores. The geopolitical fault lines in the Indo-Pacific region are fast turning into frontlines.

In this context, does anything remain of the eight-year-long effort by former prime minister Abe to improve relations with Russia on the basis of greater economic engagement tailored to Moscow’s needs? Russia’s relations with China continue to develop, including in the military domain; Russia’s constitutional amendments passed last year prohibit the handover of Russian territory, which doesn’t bode well for the long-running territorial dispute with Japan over the South Kuril Islands; and Russian officials and state-run media have been remembering and condemning the Japanese military’s conduct during World War II, something they chose to play down in the past. True, Moscow has invited Tokyo to participate in economic projects on the South Kuril Islands, but on Russian terms and without an exclusive status.

To many, the answer to the above question is clear, and it is negative. Yet that attitude amounts to de facto resignation, a questionable approach. Despite the oft-cited but erroneous Cold War analogy, the present Sino-American confrontation has created two poles in the global system, but not—at least, not yet—two blocs. Again, despite the popular and equally incorrect interpretation, Moscow is not Beijing’s follower or vassal. As a power that is particularly sensitive about its own sovereignty, Russia seeks to maintain an equilibrium—which is not the same as equidistance—between its prime partner and its main adversary. Tokyo would do well to understand that and take it into account as it structures its foreign relations.

The territorial dispute with Russia is considered to be very important for the Japanese people, but it is more symbolic than substantive. In practical terms, the biggest achievement of the Abe era in Japan-Russia relations was the founding of a format for high-level security and foreign policy consultations between the two countries. With security issues topping the agenda in the Indo-Pacific, maintaining the channel for private direct exchanges with a neighboring great power that the “2+2” formula offers is of high value. Such a format is a trademark of Abe’s foreign policy which, while being loyal to Japan’s American ally, prided itself on pursuing Japanese national interests rather than solely relying on others to take them into account.

Kishida, who for five years served as Abe’s foreign minister, will now have a chance to put his own stamp on the country’s foreign policy. Yet it makes sense for him to build on the accomplishments of his predecessor, such as using the unique consultation mechanism mentioned above to address geopolitical and security issues in the Indo-Pacific region, from North Korea to Afghanistan. Even under Abe, Japan’s economic engagement with Russia was by no means charity. The Russian leadership’s recent initiatives to shift more resources to eastern Siberia offer new opportunities to Japanese companies, just like Russia’s early plans for energy transition in response to climate change, and the ongoing development projects in the Arctic. In September 2021, the annual Eastern Economic Forum in Vladivostok did not feature top-level Japanese participation, but that should be an exception, not the rule.

Japan will remain a trusted ally of the United States for the foreseeable future. It is also safe to predict that at least in the medium term, and possibly longer, the Russo-Chinese partnership will continue to grow. That is no reason for Moscow and Tokyo to regard each other as adversaries, however. Moreover, since an armed conflict between America and China would spell a global calamity and have a high chance of turning nuclear, other major powers, including Russia and Japan, have a vital interest in preventing such a collision. Expanding the still very modest elements of trust in the Japan-Russia relationship, talking through reciprocal concerns before they lead to conflict, avoiding bilateral incidents, and engaging in mutually beneficial economic cooperation is the way forward. The absence of a peace treaty between the two countries more than seventy-five years after the end of the war is abnormal, yet that same unfinished business should serve as a stimulus to persevere. Giving up is an option, but not a good one.

From our partner RIAC

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