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China’s Economic Diplomacy Amid Multipolar Disorder

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More often than not, China is billed as the driver of post-pandemic global growth and recovery. This claim is not entirely groundless. In addition to combating the pandemic quite successfully, China demonstrated 18.3% GDP growth by the end of the first quarter of 2021, as compared to the first quarter of 2020. Given the current circumstances, there are now concerns that China will have no serious alternatives when it comes to international economic cooperation. For many countries, this situation is fraught with increased dependence on China.

Yet, strong economic indicators do not replace the need for regenerating China’s economy after the shocks it has suffered. This is especially so, as the cases of India and some other nations demonstrate that spontaneous outbreaks of the epidemic are still within the realm of possibility and could result in a shortage of vaccines around the world. At the same time, Beijing is facing growing competition with the U.S. as well as unprecedented external pressure exerted by the West.

All these factors taken together raise more and more questions about the trajectory along which the post-COVID world will develop and about China’s global leadership.

Ping-pong diplomacy: a new interpretation

April marked the 50th anniversary of ping-pong diplomacy. Official representatives of China and the U.S. discussed its pivotal role in establishing and fostering bilateral contacts. The parties have come a long way since then—they do not shy away from calling each other ‘principal threats’, with this wording extending to official documents, while the intensity of mutual sanctions exchanges and accusations is, indeed, quite often reminiscent of a ping-pong game.

So far, this looks like a rigged friendly game: no one is really trying to deliver a blow the other could not parry. Nonetheless, as the game progresses, it becomes increasingly appealing, and the political rhetoric of both parties is taking on new colors. The March meeting in Anchorage where the parties exchanged mutual accusations holds a special place in this game.

The parties escaped the confinements of rhetorical displays long ago, as political realities and concomitant practices are changing, too. Last year, China outstripped Russia to come second on the list of states with the highest number of U.S. sanctions imposed against them, while the U.S. is still the principal initiator of such sanctions.

Even more impressive is that military spending is growing amid the global recession. According to SIPRI, it totaled $2 trillion in 2020. Adjusted for the fact that some states (Chile, South Korea) did re-allocate their military spending to other areas, the trend, even if not ubiquitous, will apparently persist. For instance, this dynamic will be relevant for the Asia Pacific. In 2021, China’s military spending grew by 6.8% over last year, reaching $209 bn. South Korea’s military budget increased by 5.4% as compared to last year, reaching $48 bn. Even Japan joined the trend by setting a record in the last few years and allocating about $52 bn to military spending in 2021.

With that in mind, mutual tensions have spread throughout the international relations system. On 6 May, China suspended its strategic economic dialogue with Australia. Earlier, on 22 April, Australia cancelled two deals (between China and the state of Victoria) concluded as part of the Belt and Road Initiative. Plans called for cancelling four such deals as being, according to Australia’s Foreign Minister Marise Payne, “inconsistent with Australia’s foreign policy.” New Zealand tends to draw similar conclusions.

Differences in the European area are no less stark, while China sometimes employs an asymmetrically harsh strategy: in late March, in response to four XUAR officials being declared persona non grata, China imposed sanctions on ten Europeans and four organizations. At times, awkwardness emerges even in China’s bilateral relations with those who readily cooperate with China. For instance, there are reports of Chinese hacker attacks on Russia’s Rubin Central Design Bureau of Marine Engineering, which designs submarines for Russia’s Navy.

These facts make the reports from the Boao Forum for Asia held on April 18–21 all the more surprising. The 20th anniversary economic forum became the biggest in-person conference since the pandemic broke out. Official reports suggest that over 4,000 people from more than 60 states and over 160 organizations from 18 states and regions registered for in-person attendance.

The Forum’s sidelines offer an excellent perspective on a world where Asia is reviving after the pandemic. In global terms, the GDP by PPP share of Asian states amounts to 47.3%, having grown by 0.9 per cent as compared to 2019. In 2020, Asian states demonstrated a 1.3 per cent rise, which is 3 per cent higher than the global average. FDI demonstrated a far more significant difference: while it totaled $476 bn in Asia, with a mere 4% drop, the global average saw a drop of 42%. The Forum emphasized Asia’s role in regional integration (in particular, the RCEP), while the Belt and Road Initiative received its traditional share of attention.

Other sources also report favorable trends. According to VEB reports, ASEAN nations are still China’s main trading partners. In the first quarter of 2021, trade with ASEAN totaled $191.4 bn (a growth of about 35.3%), with Vietnam accounting for the bulk of that amount. The IMF expects Asia to showcase the highest economy recovery rate (adjusted for last year’s low base and the overall level of economic development).

Elevated rhetoric is typical of such formats and is certainly not something unprecedented. Yet, the fact that the biggest in-person forum since the pandemic broke out was held in Asia is noteworthy. This once again underscores that Asian states coped best with the coronavirus pandemic, both in terms of countering COVID-19 and relieving its socioeconomic consequences. Nonetheless, such positive rhetoric—coupled with other aggressive phenomena of the international environment—shows that not only has the common misfortune fail to rally the post-COVID world under a single banner but has, on the contrary, served to fragment it further: the world is now highly polarized and extremely heterogeneous.

Features of China’s post-COVID economic diplomacy

Given China’s much more successful recovery after the pandemic, new avenues lie before it. For instance, China became the EU’s biggest economic partner last year, overtaking the U.S. The number of freight trains travelling between the EU and China topped 12,400 last year, which is 50% more than in 2019 and seven times more than in 2016.

China achieved marked results in its cooperation with Latin American and African nations. In 2005–2020, China’s investment and construction contracts in Latin America totaled some $183 bn. Over the same period, China invested about $303 bn in Sub-Saharan Africa, with another $197 bn in the MENA nations.

At the same, we should remember that China’s successes and bright prospects come packaged with a number of long-standing, yet unresolved issues as well as new challenges. For instance, as of June 2020, the debt owed to China by several African states was reported to be over 25% of their total foreign debt (Angola, the Republic of the Congo, Djibouti, Cameroon, Ethiopia and Zambia are on such a list). At the same time, China has improved the capabilities of its military base in Djibouti, now capable of receiving aircraft carriers. Such results are directly connected with China’s increased economic presence on the continent.

The same features are largely typical of Asian nations. Huge debates surround the policies pursued by Rodrigo Duterte, who is frequently criticized for his concessions to China (often in exchange for promised investment). Recently, the president of the Philippines was harshly criticized for giving China control over fishing areas in the South China Sea. His policy towards China is contrasted with that of Indonesia’s leader Joko Widodo and his more prudent balancing between the U.S. and China without “kowtowing.”[1] Indonesia was thus able to come to more favorable cooperation terms (for instance, the country received vaccines from China).

Chinese workforce and technologies remain a separate issue when it comes to implementing joint projects. Environmental standards and co-related issues often come up. For instance, protests against China’s growing presence in Central Asian states are not infrequent: over the last two years, there were at least 40 such protests.

Besides, port-related scandals frequently erupt in connection with China, evoking discussion particularly with respect to Pakistan and Myanmar. Certainly, the hottest topic here is Hambantota port that Sri Lanka leases to China. There are regular talks of Sri Lanka being in the “debt trap,” while the country’s officials deny this, claiming that the country will “never be an unsinkable aircraft carrier posing a threat to anyone else.” Additionally, the “debt trap” is often interpreted as part of a more systemic crisis: in Sri Lanka’s case, its causes include the “twin deficits”—trade deficit and budget deficit.

China’s approach to India is a special case in point. Back in the summer, when the border conflict broke out, China responded in a rather restrained manner to the sanctions imposed on it. During the current coronavirus wave rampant in India, Beijing has officially voiced support for New Delhi and offered its vaccines supplies. Nonetheless, the recent incident of a Chinese diplomat comparing China’s outer space successes and India’s funeral pyres has prompted a violent reaction. Although this post has been deleted, the incident produced a powerful impression. This is far from the first instance of China being accused of using the pandemic to bolster its global leadership.

The ambivalence of China’s stance is also visible in international institutions. On the one hand, China has greatly benefited from the liberal global order; on the other hand, China regularly stresses the privileges spawned by this order for the West and the injustices when it comes to the Global South.

In spite of this, China remains part of various international regimes, both as the donor and the recipient of benefits. Information surfaced in March of BRICS’s New Development Bank giving China a loan of $1 bn for economic recovery. The RCEP is expected to assist China in implementing the “Made in China 2025” strategy and ensure access for Chinese companies to building supply chains. Additionally, at every multilateral venue, China stresses the need for joint action in combating the COVID-19 pandemic, thereby boosting its international image (in particular, Xi Jinping spoke about this at the G20 Summit in November 2020).

Economic and financial institutions with Chinese participation continue to expand. The review of the AIIB’s five years of operation presented in July last year suggests that the number of founding members has nearly doubled from 2016 to 2020, from 57 to 103; 87 projects were supported in this period and $19.6 bn invested.

From the standpoint of political discourse, we notice a major difference in China’s conduct at international venues and in its bilateral dialogues. Nonetheless, this has had little influence on Beijing’s policies in international bodies, which remain fairly pragmatic. Currently, China is the UN’s second-biggest sponsor following the U.S. and ittakes advantage of UN institutions to promote the Belt and Road Initiative. As of last April, 15 Chinese nationals headed various UN bodies.

At the same time, we have to acknowledge that Chinese initiatives have been put to a major test during the pandemic. In last June, Wang Xiaolong, head of the International Economic Department at China’s Foreign Affairs Ministry, said that the pandemic had seriously affected 20 per cent of the Belt and Road Initiative projects and had a negative impact on another 30 to 40 per cent. Even though the Belt and Road Initiative is still actively promoted, the pandemic will most likely make its own adjustments to China’s investment projects. In particular, forecasts suggest falling investment in extractable resources and some infrastructure projects; greater attention may be focused on projects with a short payback period.

Wolves at our door?

Given the growing external pressure, claims of Chinese expansion and threat persist with varying intensity around the world. Beijing seeks to neutralize them, largely by replacing one idea with another. Yet the practice of combating concepts with other concepts (for instance, replacing “peaceful rise” with “peaceful development,” the “Chinese dream,” the “community of common destiny,” etc.) has apparently not produced the desired result so far.

This is the background that particularly focuses on the new style of the Chinese diplomatic language, which is getting progressively ruder. China’s foreign policy is often termed “wolf warrior diplomacy,” and its practices are expected to become increasingly aggressive. Media have noted that Chinese diplomats went to the trouble of “digging through a dictionary of French swear words” before calling the head of a French foundation a “petty canaille.”

In the heat of playing ping-pong, it is easy to forget it is just a game. It seems like a real battle as it plays out, and the victory appears crucial. When one concentrates on playing, it is hard to reflect and ponder awkward questions. Do we lose important long-term benefits in such a game? Is it really impossible not to play or to choose a different game even if a partner challenges you?

Not to excuse such conduct, but just by way of an observation, it would be fair to say that such a “stylistic simplification” has, in fact, become part and parcel not only of China’s diplomatic language: the same trend can be found in Russian and American official statements (more about this can be found here).

Additionally, it often turns out that inappropriate statements are individual initiatives rather than malicious intents sanctioned by the Communist regime. Excuses for using harsh rhetoric can be found in China’s domestic political demand prompted by China’s growing nationalism and the Chinese Communist Party’s efforts to legitimize its authority.

Today, China is still trying out its new global status: it continues to promote the value of international cooperation at various international venues, introduce regional trade agreements, set up new global value chains amid the new circumstances. The devices used to work with countries as part of the Belt and Road initiative and other Chinese formats for cooperation are pragmatically the same, just as before. Moreover, China is not original even in manifestations of its most extreme policy actions: a similar response to sanctions and boycotts was seen in various periods of its modern (and not only modern) history.

Yet, quantity is often known to transform into quality, and this applies to China in particular. We should not underestimate the current transformations. In 2017, for instance, analysts noted that China’s flagship concept of a “community of common destiny” was for the first time officially included in a UN resolution. During the pandemic, the Belt and Road Initiative took on a new dimension as it was augmented with the notion of a “Health Silk Road.” Besides, it is no secret that a cumulative effect often results in common political practices being institutionalized—China’s Ministry of Commerce officially included sanctions into its scope of activities in September, 2020.

The “warrior wolf” diplomacy often looks like overreaction (the events and China’s response are incomparable in significance), and it hurts economic interests more often than not. Summing up, we can say that China’s strategy as a grand concept has long taken shape and is consistently implemented, although quite emotionally. China thinks in categories that entail mandatory accounting for national (domestic) interests. Most likely, China will continue this policy adjusted for the consequences of the pandemic and for episodes of irrational behavior by international actors. Experience shows that one can and should negotiate with China, no matter how harsh the talks might seem. What ultimately matters in ping-pong is not just reaction time and unpredictability, but also nerves of steel.

 [1]“Kowtowing” is the traditional Chinese ritual of genuflecting before the emperor. Figuratively, it is sometimes used to refer to “vassal” relations between China and its economic partners, similar to the “tribute system” of ancient China.

From our partner RIAC

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Biden-Putting meeting: Live from Geneva

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19:00 The places of the flags on the Mont Blanc bridge on which President Biden and President Putin will pass to reach the meeting venue on Wednesday usually hold the flags of the different Swiss cantons. Not today. The American and Russian flags have been placed to welcome the two leaders. 

18:00 A day before the Geneva summit: Hotel Intercontinental where the American delegation and probably President Biden himself is staying, how the city looks like a day before the meeting, what are the security measures like, why isn’t the UN involved and are the usual protests expected?

Iveta Cherneva with live video political commentary from Geneva one day ahead of the Biden-Putin Summit

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Will the promotion of cricket in GCC add to its Soft Power?

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In recent years, Gulf Cooperation Council (GCC) countries, have been trying to bolster their ‘Soft Power’ in a number of ways; by promoting tourism, tweaking their immigration policies to attract more professionals and foreign students and focusing on promoting art and culture. The United Arab Emirates (UAE) has taken the lead in this direction (in May 2017, UAE government set up a UAE Soft Power Council which came up with a comprehensive strategy for the promotion of the country’s Soft Power). Under Crown Prince Mohammad Bin Salman (MBS), Saudi Arabia has also been seeking to change its international image, and it’s Vision 2030 seeks to look beyond focusing on economic growth. In the Global Soft Power Index 2021, Saudi Arabia was ranked at number 24 and number 2 in the Gulf region after the UAE (the country which in the past had a reputation for being socially conservative, has hosted women’s sports events and also hosted the G20 virtually last year)

Will the promotion of cricket in GCC add to its Soft Power?

   One other important step in the direction of promoting Soft Power in the GCC, is the attempt to popularize cricket in the Gulf. While the Sharjah cricket ground (UAE)  hosted many ODI (One Day International )tournaments, and was witness to a number of thrillers between India and Pakistan, match fixing allegations led to a ban on India playing cricket at non-regular venues for a duration of 3 years (for a period of 7 years from 2003, Sharjah did not get to host any ODI). The Pakistan cricket team has been playing its international home series at Sharjah, Abu Dhabu and Dubai for over a decade (since 2009) and the sixth season of the Pakistan Super League is also being played in UAE. Sharjah has also hosted 9 test matches (the first of which was played in 2002).

 Sharjah hosted part of the Indian Premier League (IPL) tournament in 2014, and last year too the tournament was shifted to UAE due to covid19 (apart from Sharjah, matches were played at Dubai and Abu Dhabi). This year again, the UAE and possibly Oman are likely to host the remaining matches of the IPL which had to be cancelled due to the second wave of Covid19. The ICC Men’s T20 World Cup to be held later this year (October-November 2021), which was actually to be hosted by India,  could also be hosted not just in the UAE, but Oman as well (there are two grounds, one of them has floodlights). International Cricket Council (ICC) is looking for an additional venue to UAE, because a lot of cricket is being played there, and this may impact the pitches. The ICC while commenting on the possibility of the T20 World cup being hosted in the Middle East said:

, “The ICC Board has requested management [to] focus its planning efforts for the ICC Men’s  T20 World Cup 2021 on the event being staged in the UAE with the possibility of including another venue in the Middle East’

GCC countries are keen not just to host cricketing tournaments, but also to increase interest in the game. While Oman has a team managed by an Indian businessman, Saudi Arabia has set up the SACF (Saudi Arabian Cricket Federation) in 2020 and it has started the National Cricket Championship which will have more than 7,000 players and 36 teams at the school level. Peshawar Zalmi, a Pakistani franchise T20 cricket team, representing the city of Peshawar the capital of Khyber Pakhtunkhwa, which plays in the Pakistan’s domestic T20 cricket league – the Peshawar cricket league —  extended an invitation to the SACF, to play a friendly match against it. It’s owner Javed Afridi had extended the invitation to the Saudi Arabian team in April 2021.  Only recently, Chairman of SACF Prince Saud bin Mishal  met with India’s Ambassador to Saudi Arabia, Dr Ausaf Saeed, to discuss ways for promoting the game in Saudi Arabia. He also visited the ICC headquarters at Dubai and apart from meeting officials of ICC also took a tour of Sharjah cricket ground.

GCC countries have a number of advantages over other potential neutral venues. First, the required infrastructure is already in place in some countries, and there is no paucity of financial resources which is very important. Second, there is a growing interest in the game in the region, and one of the important factors for this is the sizeable South Asian expat population. Third, a number of former cricketers from South Asia are not only coaching cricket teams, but also being roped in to create more enthusiasm with regard to the game. Fourth, UAE along with other GCC countries, could also emerge as an important venue for the resumption of India-Pakistan cricketing ties.

Conclusion

In conclusion, if GCC countries other than UAE — like Saudi Arabia and Oman  — can emerge as important cricketing venues, their ‘Soft Power’ appeal is likely to further get strengthened especially vis-à-vis South Asia. South Asian expats, who have contributed immensely to the economic growth of the region, and former South Asian cricketers will have an important role to play in popularizing the game in the Gulf. Cricket which is already an important component of the GCC — South Asia relationship, could help in further strengthening people to people linkages.

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Analyzing the role of OIC

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oic

Composed of fifty-seven countries and spread over four continents, the Organization of Islamic Conference (OIC) is the second-largest intergovernmental body following the United Nations (UN). And it is no secret that the council was established in the wake of an attack on the Al-Aqsa Mosque in Jerusalem. Safeguarding and defending the national sovereignty, independence, and territorial integrity of its member states is the significant provision of the OIC’s charter. OIC charter also undertakes to strengthen the bond of unity and solidarity among member states. Uplifting Islamic values, practicing cooperation in every sphere among its members, contributing to international peace, protecting the Islamic sites, and assisting suppressed Muslim community are other significant features of its charter. 

Recently, the world witnessed the 11-days long conflict between Hamas and Israel. In a recent episode of the clash between two parties, Israel carried out airstrikes on Gaza, claiming many innocent Palestinian lives. The overall death toll in the territory rose to 200, including 59 children and 35 women, with 1305 injured, says Hamas-run health ministry. This event was met with resentment from people across the world, and they condemned Israeli violence. After 11 days of violence, the Israeli government and Hamas agreed to a ceasefire. The event of Israeli violence on Palestinians has called the role of OIC into question. The council, formed in the aftermath of the onslaught on Al-Aqsa mosque, seemed to adopt a lip service approach to the conflict. However, the call for stringent measures against Israeli aggression by the bloc was not part of its action. 

Likewise, the Kashmir issue, which has witnessed atrocities of Indians on innocent Kashmiris, looks up to the OIC for its resolution. Last year, during the 47th session of the Council of Foreign Ministers (CFM) in Niamey, Niger, the CFM reaffirmed its strong support for the Kashmir cause. The OIC categorically rejected illegal and unilateral actions taken by India on August 5 to change the internationally recognized disputed status of the Indian Illegally Occupied Jam­mu and Kashmir and demanded India rescind its illegal steps. However, the global community seems to pay deaf ears to the OIC’s resolution. The Kashmir issue and the Palestine issue are the core issues of the world that are witnessing the worst humanitarian crisis. And the charter of the bloc that aims to guard the Muslim ummah’s interest rings hollow. About a year ago, the event that made rounds on electronic and social media was the occurring of the KL summit, which reflected another inaction of the OIC. The move of influential Muslim countries (Iran, Turkey, and Indonesia), to sail on the idea to establish another forum to counter the OIC, manifested the rift in the bloc.  

Many OIC countries are underdeveloped and poorly governed and are home to instability, violence, and terrorism. The consequences of the violence and terrorism in the OIC countries have been devastating. According to Forbes, 7 out of 10 countries, which suffer most from terrorism are OIC members. The Syrian conflict is another matter of concern in the Mideast, looking up to OIC for a way out. An immense number of people have lost their lives in the Civil war in Syria.

Several factors contribute to the inefficiency of the bloc. The first and foremost reason is the Saudi-Iran stalemate. Influential regional powers (Iran and the Kingdom of Saudi Arabia) in the Mideast share strained links following the Islamic Revolution in Iran. Both sides dissent each other on many fronts. Saudi Arabia accuses Tehran of interfering in its internal affairs, using terrorism as a tool to intimidate neighbors, fuelling sectarianism, and equipping proxies to de-stabilize and overthrow the legitimate government. Locked in a proxy war in the Mideast, the KSA and Iran vie for regional dominance. Moreover, Iran’s nuclear program is met with strong resentment in the KSA since it shifts the Balance of Power towards Iran. Such developments play a vibrant role in their stalemate, and the bloc’s effectiveness is hostage to the Saudi-Iran standoff.

Political and social exclusion in many OIC states is the norm of the day, contributing to upheaval and conflict. In OIC countries, the level of political participation and political and social integration is weak. This fact has rendered OIC countries vulnerable to unrest. Arab Spring in 2011 stands as the best example. Furthermore, conflicts, since the mid-1990s, have occurred in weak states that have encountered unrest frequently. 

Saudi Arabia has tightened its grip on the OIC. The reason being, the OIC secretariat and its subsidiary bodies are in the KSA. More importantly, the KSA’s prolific funding to the bloc enhances its influence on the bloc. One example includes, in the past, the KSA barred an Iranian delegation from the OIC meeting in Jeddah. Saudi authorities have not issued visas for the Iranian participants, ministry spokesman, says Abbas Mousavi. “The government of Saudi Arabia has prevented the participation of the Iranian delegation in the meeting to examine the deal of the century plan at the headquarters of the Organization of Islamic Cooperation,” Mousavi said, the Fars news agency reported. Given the Iranian growing influence and its access to nuclear capabilities, the KSA resorted to using financial leverage to reap support from Arab countries against Iran. For instance, in past, Somalia and several other Arab states such as Sudan and Bahrain received a commitment of financial aid from Saudi Arabia on the same day they cut ties with Iran. Furthermore, the summits of OIC, GCC, and Arab League are perceived as an effort by Saudi Arabia to amass support against Tehran. 

Division in the Muslim world and their clash of interests is yet another rationale behind its inefficacy. These days, many Muslim countries are bent on pursuing their interests rather than paying commitment to their principles, that is, working collectively for the upkeep of the Muslim community. Last year, the governments of Israel and the United Arab Emirates (UAE) announced that they had agreed to the full normalization of relations. Following this, the Kingdom of Bahrain became another Muslim country to normalize its links with Israel. Such moves by the Islamic countries weaken the OIC agenda against Israel. 

OIC’s efficacy would be a distant dream unless the Saudi-Iran deadlock finds its way. For this purpose, Pakistan can play a vital role in mediating between these two powers. Pakistan has always been an active player in the OIC and played its role in raising its voice against Islamophobia, Palestine Issue, and the Kashmir issue. Shunning their interests and finding the common goals of the Muslim ummah, should be the utmost priority for the members of the bloc. Every OIC member ought to play its part in the upkeep of the bloc. Furthermore, a split in the bloc should come to an end since it leads to the polarization of member states towards regional powers. Many OIC countries are rich in hydrocarbons (a priceless wealth, which is the driver for the growth of a country); if all OIC members join hands and enhance their partnership in this sphere they can fight against energy security. And OIC is the crux for magnifying cooperation among its member states to meet their energy needs.

In this era of globalization, multilateralism plays a pivotal part. No one can deny the significance of intergovernmental organizations since they serve countries in numerous ways. In the same vein, OIC can serve Muslim ummah in multiple ways; if it follows a course of adequate functioning.

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