China’s Weaponization of Trade

Featured

2017-03-08T021955Z_935056016_RC1D2CDC5F60_RTRMADP_3_CHINA-ECONOMY-TRADE-960x576-1488954774

The largest container ship in world, CSCL Globe, docks during its maiden voyage, at the port of Felixstowe in southeast England, January 7, 2015. Photo: Reuters.

A column internationally syndicated by Project Syndicate.

China denies mixing business with politics, yet it has long used trade to punish countries that refuse to toe its line. China’s recent heavy-handed economic sanctioning of South Korea, in response to that country’s decision to deploy the Terminal High Altitude Area Defense (THAAD) anti-missile system, was just the latest example of the Chinese authorities’ use of trade as a political weapon.

China’s government has encouraged and then exploited states’ economic reliance on it to compel their support for its foreign-policy objectives. Its economic punishments range from restricting imports or informally boycotting goods from a targeted country to halting strategic exports (such as rare-earth minerals) and encouraging domestic protests against specific foreign businesses. Other tools include suspending tourist travel and blocking fishing access. All are used carefully to avoid disruption that could harm China’s own business interests.

Mongolia became a classic case of such geo-economic coercion, after it hosted the Dalai Lama last November. With China accounting for 90% of Mongolian exports, the Chinese authorities set out to teach Mongolia a lesson. After imposing punitive fees on its commodity exports, Chinese Foreign Minister Wang Yi voiced “hope that Mongolia has taken this lesson to heart” and that it would “scrupulously abide by its promise” not to invite the Tibetan spiritual leader again.

A more famous case was China’s trade reprisals against Norway, after the 2010 Nobel Peace Prize was awarded to the jailed Chinese dissident Liu Xiaobo. As a result, Norwegian salmon exports to China collapsed.

In 2010, China exploited its monopoly on the global production of vital rare-earth minerals to inflict commercial pain on Japan and the West through an unannounced export embargo. In 2012, after China’s sovereignty dispute with Japan over the Senkaku Islands (which the Japanese first controlled in 1895) flared anew, China once again used trade as a strategic weapon, costing Japan billions of dollars.

Likewise, in April 2012, following an incident near the disputed Scarborough Shoal in the South China Sea, China bullied the Philippines not only by dispatching surveillance vessels, but also by issuing an advisory against travel there and imposing sudden curbs on banana imports (which bankrupted many Philippine growers). With international attention focused on its trade actions, China then quietly seized the shoal.

China’s recent trade reprisals against South Korea for deploying the THAAD system should be viewed against this background. China’s reprisals were not launched against the US, which deployed the system to defend against North Korea’s emerging missile threat and has the heft to hit back hard. Nor was this the first time: in 2000, when South Korea increased tariffs on garlic to protect its farmers from a flood of imports, China responded by banning imports of South Korean cellphones and polyethylene. The sweeping retaliation against unrelated products was intended not only to promote domestic industries, but also to ensure that South Korea lost far more than China did.

China will not use the trade cudgel when it has more to lose, as illustrated by the current Sino-Indian troop standoff at the border where Tibet, Bhutan, and the Indian state of Sikkim meet. Chinese leaders value the lopsided trade relationship with India – exports are more than five times higher than imports – as a strategic weapon to undercut its rival’s manufacturing base while reaping handsome profits. So, instead of halting border trade, which could invite Indian economic reprisals, China has cut offIndian pilgrims’ historical access to sacred sites in Tibet.

Where it has trade leverage, China is not shy about exercising it. A 2010 study found that countries whose leaders met the Dalai Lama suffered a rapid decline of 8.1-16.9% in exports to China, with the result that now almost all countries, with the conspicuous exception of India and the US, shun official contact with the Tibetan leader.

The harsh reality is that China is turning into a trade tyrant that rides roughshod over international rules. Its violations include maintaining nontariff barriers to keep out foreign competition; subsidizing exports; tilting the domestic market in favor of Chinese companies; pirating intellectual property; using antitrust laws to extort concessions; and underwriting acquisitions of foreign firms to bring home their technologies.

China regards even bilateral pacts as no more than tools to enable it to achieve its objectives. From China’s perspective, no treaty has binding force once it has served its immediate purpose, as officials recently demonstrated by trashing the 1984 Sino-British Joint Declaration that paved the way for Hong Kong’s handover in 1997.

Ironically, China has developed its trade muscle with help from the US, which played a key role in China’s economic rise by shunning sanctions and integrating it into global institutions. President Donald Trump’s election was supposed to end China’s free ride on trade. Yet, far from taking any action against a country that he has long assailed as a trade cheater, Trump is helping make China great again, including by withdrawing the US from the Trans-Pacific Partnership and shrinking US influence in the Asia-Pacific region.

The TPP, which Japanese Prime Minister Shinzo Abe is seeking to revive, but without US participation, can help rein in China’s unremitting mercantilist behavior by creating a market-friendly, rule-based economic community. But if the TPP is to be truly effective in offsetting the trade sword wielded by a powerful, highly centralized authoritarian regime, it needs to be expanded to include India and South Korea.

China’s weaponization of trade has gone unchallenged so far. Only a concerted international strategy, with a revived TPP an essential component, stands a chance of compelling China’s leaders to play by the rules.

Brahma Chellaney, Professor of Strategic Studies at the New Delhi-based Center for Policy Research and Fellow at the Robert Bosch Academy in Berlin, is the author of nine books, including Asian JuggernautWater: Asia’s New Battleground, and Water, Peace, and War: Confronting the Global Water Crisis.

Advertisements

China Reveals How it Wages Psychological Warfare

Featured

The Sino-Indian troop standoff has underscored the centrality of propaganda in China’s foreign policy.

5a52d1ce-7040-11e7-9a9a-a7d2083b6658_1280x720_170533

A Chinese government handout photo of a live-fire military exercise in Tibet. The photo was released amid rising border tensions with India. It later came to light that the military exercise was conducted before the crisis began.

By , The Japan Times

Since a Sino-Indian troop standoff began at the border where Tibet, Bhutan and the Indian state of Sikkim meet, China’s warmongering has become so raucous and coarse that, to the casual observer, a Himalayan military conflict may seem imminent. In reality, Beijing is waging — in Chinese strategic tradition — full-throttle psychological warfare to compel India to back down without a shot being fired.

The current crisis, more significantly, has underscored the centrality of propaganda in China’s foreign policy — from the aggressor playing the victim to unremitting efforts to camouflage its intrusion into tiny Bhutan that precipitated the standoff. China’s vitriolic war rhetoric and unrealistic preconditions for holding talks stand out in stark contrast to India’s measured response and emphasis on diplomacy and dialogue to peacefully resolve the standoff. The U.S. has implicitly supported India’s stance by similarly calling for a dialogue to peacefully end the crisis.

The crisis, in fact, has highlighted how China blends psychological warfare (“psywar”), media warfare and the manipulation of legal arguments (“lawfare”) to undermine the opponent’s information-control capabilities and to buttress its strategic game plan. Disinformation and deceit are among the tools China is employing in its psywar to tame India without military combat, in Sun Tzu style.

Its psychological operations (psy-ops) have included mounting almost daily threats to teach India a lesson, unless it gives in. Indeed, the authoritarian regime in Beijing has shown itself adept at exploiting the political divisions in the world’s largest democracy, including reaching out to Indian Prime Minister Narendra Modi’s opponents and attacking his “Hindu nationalism” in order to help sow dissensions in India on its current China approach.

Given China’s rise as a praetorian state, its foreign ministry is probably the weakest government branch; yet that ministry has taken the lead to intimidate India in unbecoming and undiplomatic language. Beijing is also using its state media to threaten an “all out confrontation” along the entire, more than 4,000-kilometer-long Sino-Indian border and to warn India that it would suffer a humiliating rout greater than it did in the 1962 war. One Chinese state mouthpiece even called the Indian foreign minister a liar.

In the current crisis, the Chinese state and its media have worked in tandem to feed disinformation as part of the psy-ops. After all, media organizations, backed by an annual $10 billion budget from the state, have become integral to China’s global propaganda offensive. Chinese propaganda is getting smarter and more targeted, with some in the Indian media lapping up the disinformation, yet Beijing’s mendacity is becoming conspicuous.

Consider two examples. In mid-July, the Chinese state broadcaster CCTV telecast a video of live-fire military exercises in Tibet by a mountain brigade deployed against India. It later came to light that this was a routine annual drill conducted in early June before the crisis began. Shortly after the CCTV report, the Chinese military’s official newspaper, PLA Daily, said tens of thousands of tons of military hardware had been moved to Tibet in response to the troop standoff. This report too turned out to be part of China’s psywar, with Indian intelligence still finding no evidence of a Chinese military buildup in Tibet.

In this light, what can China hope to achieve through its psy-ops? India has a lot at stake: If it were to wilt under the Chinese pressure, it would impair its national security and potentially open the path to its long-term strategic subordination to China. In addition, China would be able to mount a stronger military threat against India’s hold on its far northeast.

India is a raucous democracy with poor public relations and media outreach. Yet China’s psywar has failed to obscure even the key facts, let alone achieve any political objective.

The crisis, which offers important insights to other countries on China’s psychological-warfare practices, was triggered in mid-June after days of growing local military tensions when People’s Liberation Army troops sought to unilaterally change the territorial status quo by beginning work on a strategic highway through Bhutan’s Doklam Plateau, which is located very close to the Tibet-Bhutan-Sikkim trijunction. (China contends that Doklam is its own territory in the way it claims the Japanese-controlled Senkaku Islands or the sprawling northeastern Indian state of Arunachal Pradesh.) The Chinese encroachment prompted the Indian army to swiftly intervene and halt the road construction, triggering the standoff.

The PLA has for years been quietly chipping away at strategic areas in Bhutan’s north and west. It has also waged an aggression by stealth to assert its claim over the Doklam Plateau, including by increasingly sending Tibetan herdsmen and armed patrols there and by turning some natural paths into small paved roads. Bhutan has long complained of Chinese encroachments. For example, it told its Parliament in 2009 that it had “protested many times to the Chinese regarding the road-construction activities.”

Bhutan, with just 8,000 men in its military, police and militia, has no means to resist Chinese encroachments. Its security partner, India, was previously loath to go beyond training and advising Bhutanese forces. But with China’s latest land grab also threatening Indian security, New Delhi decided that Bhutan’s fight was India’s fight. In a strategic miscalculation that has fueled its current fury, China anticipated Bhutan’s diplomatic protest over its latest road construction but not India’s rapid military intervention.

New Delhi cannot allow Beijing to gain control of Doklam because it will result in China fortifying its military positions around the border trijunction and bringing India’s territorial link with its northeastern states within Chinese artillery range. This link — the Siliguri Corridor — is just 27 kilometers wide at its narrowest point and is aptly known as the “Chicken Neck.” If China built the highway through Doklam, it would be able to transport heavy tanks to the trijunction and, in the event of a war, seek to implement its military plan to cut off mainland India from northeast India.

The risk that a frustrated China could escalate its current psy-ops to a military conflict cannot be discounted. Indeed, Beijing is signaling that it will brook no Indian “interference” in Bhutan’s external relations or national security, although Indo-Bhutanese relations are governed by a friendship treaty and defense arrangements. It wants India to leave Bhutan to its fate.

More fundamentally, China’s intrusion into Bhutan and its war rhetoric against India raise important larger issues. One issue is China’s disregard of international law, including the bilateral accords it has signed with Bhutan and India pledging not to alter the status quo unilaterally. As the South and East China seas also illustrate, Beijing signs agreements and treaties but does not comply with them.

Another issue is China’s abiding faith in propaganda, extending from fake history claims to other countries’ territories to disinformation operations intended to deceive and outmaneuver opponents. The reliance on propaganda blurs the line between fact and fiction to such an extent that, gradually, the Chinese state begins to believe its own propaganda and act upon it. This factor, along with its associated risks, is apparent in the Doklam standoff.

Brahma Chellaney is a geostrategist and the author of nine books, including “Water, Peace, and War” (Rowman & Littlefield).

© The Japan Times, 2017.

Truth Beyond the Brotherhood

Featured

With the passage of time, the transactional elements in the U.S.-Indian partnership have become more conspicuous than the geostrategic dimensions, compounding India’s security dilemmas.

 Brahma Chellaney, Open magazine

donald-trump-with-pm-modi_650x400_51498518396

U.S. President Donald Trump made it known during his presidential election campaign that he likes India and Indians. Yet, in office, Trump has taken a series of steps in the immigration and trade realms that have adversely impacted India. Prime Minister Narendra Modi had a good first-ever meeting with Trump, although it yielded few deliverables. The two will have another opportunity to meet soon when Germany hosts the annual G-20 summit in Hamburg. Yet it is still not clear how salient India will be in the Trump foreign policy. This is largely because Trump’s larger geopolitical policy framework is still evolving.

The U.S.-India strategic partnership is essentially founded on two pillars — a U.S. commitment to assist, in America’s own interest, India’s rise; and a shared interest in building an inclusive, stable, rules-based Asian order to help manage China’s muscular rise. The hope in India has been that the U.S. would assist its rise in the way it aided China’s economic ascent since the 1970s. President Jimmy Carter, for example, sent a memo to various U.S government departments instructing them to help in China’s rise. Even China’s firing of missiles into the Taiwan Strait in 1996 did not change that policy. If anything, the U.S. has gradually loosened its close links with Taiwan, with no U.S. Cabinet member visiting that island since those missile manoeuvres.

U.S. policy, effectively, helped turn China into an export juggernaut, which today sells $4 worth of goods to the U.S. for each $1 of imports.  In the process, just as the U.S. inadvertently saddled the world with the jihadist scourge by training Afghan mujahedeen — the anti-Soviet guerrillas out of which Al Qaeda evolved — it unintentionally created a rules-violating monster by aiding China’s economic rise. Abusing free-trade rules, China has systematically subsidized its exports while impeding imports to shield domestic jobs and industry. In effect, China has grown strong and rich by quietly waging a trade war. Trump said he told Chinese President Xi Jinping during their Mar-a-Lago summit in April that “we’ve rebuilt China with the money you’ve taken out of the United States.”

India wants the U.S. to buttress the two central pillars of their strategic partnership. Washington’s China “opening” of 1970-1971, engineered by US National Security Adviser Henry Kissinger, was designed in the wake of the 1969 Sino-Soviet military clashes to exploit the rift in the Communist world by aligning China with America’s anti-Soviet strategy. The result was that China, in the second half of the Cold War, became Washington’s partner against the Soviet Union. By comparison, there is no tectonic geopolitical development or calculation motivating the U.S. to assist India’s rise. Rather, the main driver is a transactional calculation — that an economically booming India, just like China’s economic ascent, will be good for American businesses.

Make no mistake: U.S. foreign policy is inherently transactional, with commerce the central plank. Indeed, Trump’s recent visit to the world’s chief ideological sponsor of jihadism, Saudi Arabia, was a reminder that money speaks louder than the international imperative to counter a rapidly metastasizing global jihadist threat. The visit yielded business and investment deals for the U.S. valued at up to almost $400 billion, including a contract to sell $109.7 billion worth of arms to a country that Trump previously accused of being complicit in 9/11.

Trump’s immediate two predecessors, Barack Obama and George W. Bush, did not hide their transactional approach toward a warming relationship with India. For example, the landmark nuclear deal, unveiled in 2005, was pivoted on India boosting its defence transactions with the United States. Consequently, India has emerged as a top U.S. arms client in a matter of years, even as the 12-year-old nuclear deal remains a dud deal on the energy front, with not a single contract signed as yet.

Trump’s weakness, for which he has been widely lampooned, is that he is publicly mercantile and transactional in his foreign-policy approach. His being so commerce-oriented upfront, rather than quietly, as was the case under his predecessors, does not, of course, signify a shift in U.S. policy focus. For example, in the past, the American demand for Indian steps to correct India’s large trade surplus with the U.S. was made in private by a president or publicly by one of his Cabinet members. But Trump articulated that demand forthrightly in his opening remarks at the joint news conference with Modi. “It is important that barriers be removed to the export of U.S. goods into your markets, and that we reduce our trade deficit with your country,” he stated.

The mutual admiration on display during the visit — with Trump lavishing praise on Modi and calling him a “true friend,” and Modi returning the favour to laud Trump’s “vast and successful” business experience — could not obscure the U.S.-India divergence on regional security issues. The Modi visit speeded up Washington’s decision to fill the vacant position of U.S. ambassador to India by naming Kenneth Juster, a senior White House official. Hopefully, the visit will also accelerate the separate inter-agency reviews currently being conducted in Washington on America’s Pakistan and Afghanistan policies.

Take Afghanistan: For nearly 16 years, the U.S. has been stuck in Afghanistan in the longest and most expensive war in its history. It has tried several policies to wind down the war, including a massive military “surge” under Obama to compel the Taliban to sue for peace. Nothing has worked, in large part because the U.S. has continued to fight the war on just one side of the Afghanistan-Pakistan divide and refused to go after the Pakistan-based sanctuaries of the Taliban and its affiliate, the Haqqani network. As Gen. John Nicholson, the U.S. military commander in Afghanistan, acknowledged earlier this year, “It is very difficult to succeed on the battlefield when your enemy enjoys external support and safe haven.” Worse still, the Taliban is conspicuously missing from the U.S. list of Foreign Terrorist Organizations, while the procreator and sponsor of that medieval militia — Pakistan — has been one of the largest recipients of American aid since 2001, when the U.S. invasion of Afghanistan helped remove the Taliban from power.

India is concerned that the U.S. still seeks to preserve the option of reaching a Faustian bargain with the Taliban. No counterterrorism campaign has ever succeeded when militants have enjoyed cross-border havens. The Taliban are unlikely to be routed or seek peace as long as they can operate from sanctuaries in Pakistan, where their top leaders are ensconced. Their string of battlefield victories indeed gives them little incentive to enter into serious peace negotiations. U.S. Defence Secretary Jim Mattis in June signalled a potentially tougher approach to safe havens in Pakistan, saying the U.S. will hit the enemy where it is “fighting from,” which is “not just Afghanistan”. However, only time will be tell whether this was a rhetorical statement or more.

U.S. has long had a blind spot for Pakistan. Today, the key question for Trump on that front is whether to continue the carrots-only approach toward Pakistan of Obama and Bush or finally begin to wield the big stick against a country that defiantly remains wedded to terrorism. To be sure, the tough message to Pakistan in the joint U.S.-India joint statement on the occasion of Modi’s visit was music to Indian ears: “The leaders called on Pakistan to ensure that its territory is not used to launch terrorist attacks on other countries. They further called on Pakistan to expeditiously bring to justice the perpetrators of the 26/11 Mumbai, Pathankot, and other cross-border terrorist attacks perpetrated by Pakistan-based groups”. This was the clearest message to Pakistan that any Indo-U.S. joint statement has incorporated.

Indeed, the Trump-Modi statement also stated: “The leaders stressed that terrorism is a global scourge that must be fought and terrorist safe havens rooted out in every part of the world. They resolved that India and the United States will fight together against this grave challenge to humanity. They committed to strengthen cooperation against terrorist threats from groups including Al Qaida, ISIS, Jaish-e-Mohammad, Lashkar-e-Taiba, D-Company, and their affiliates. India appreciated the United States designation of the Hizbul Mujahideen leader as a Specially Designated Global Terrorist as evidence of the commitment of the United States to end terror in all its forms”.

The Pakistan-based Hizbul Mujahideen leader Syed Salahuddin, who held a joint public rally last December with Lashkar-e-Taiba chief Hafiz Saeed, is the first militant from India’s Jammu and Kashmir to be designated by the U.S. as a global terrorist. The action against Salahuddin, although belated and designed largely to play to the Indian gallery, adds to the number of Pakistan-based individuals designated as terrorists by the U.S. or the United Nations. It thus helps reinforce Pakistan’s image as a leading terrorist hub.

However, it is true that the U.S. has long been reluctant to take concrete action against Pakistan-based individuals that it has labelled “terrorists”, if their terrorism is directed only at India. Take Hafiz Saeed, the mastermind of the cataclysmic 2008 Mumbai terrorist strikes: The U.S. has yet to act five years after putting a $10 million bounty on Saeed’s head. Saeed, who founded the Inter-Services Intelligence agency’s largest front organization, Lashkar-e-Taiba, remains the Pakistani military’s darling, with his public life mocking both America’s bounty on his head and the UN’s inclusion of him on a terrorist list. Washington has refrained from even criticizing Pakistani authorities for aiding and abetting Saeed’s public rallies. The rallies seek to project him as some sort of messiah of the Pakistani people. Saeed’s public role adds insult to injury for India, reinforcing the imperative that it must on its own fight Pakistan’s jihad-inspired war, which shows no sign of abating. Indeed, with Pakistan’s ceasefire violations triggering a fierce Indian response, Pakistani generals since the beginning of 2016 are using their terrorist proxies to target security camps in J&K.

Through both policy inaction and generous aid, the U.S. has effectively turned Pakistan into its terrorist protégé, like Saudi Arabia. Pakistan is a valued asset for China to keep India boxed in, but why does Washington still shield that country? U.S. policy indeed plays into China’s hands by propping up Pakistan and unwittingly helping to cement the Sino-Pakistan nexus. Will Trump fix a broken Pakistan policy that permits the Pakistani military to keep nurturing transnational terrorists? It will be overly optimistic to believe that the U.S. under him will change course fundamentally and apply sustained pressure to encourage a reformed Pakistan at peace with itself.

Compounding matters for India is Trump’s lack of an Asia policy or a larger geostrategic vision that gives primacy to major Asian democracies like Japan and India so as to prevent the emergence of a Sino-centric Asia. Trump came to office vowing to end what he saw as China’s free ride on trade and security issues that has allowed Beijing to flex its muscles more strongly than ever. But in contrast to his tough talk during his presidential campaign, when he famously said he would not “allow China to rape our country,” Trump has sought a cooperative relationship with China grounded in reciprocity. Accordingly, Trump, far from seeking to challenge Beijing’s hegemonic ambitions, has stayed on the same China-friendly path as Obama.

In fact, underscoring how the U.S. still seeks to balance its bilateral relationships with important powers in Asia, Trump invited Xi to Mar-a-Lago — his private estate in Palm Beach, Florida, that he calls the “Southern White House” — because he wanted to offer the leader of the world’s largest autocracy the same hospitality that he extended to the prime minister of China’s archrival, Japan, which is Asia’s oldest democracy. In February, Trump brought Prime Minister Shinzo Abe to Mar-a-Lago on Air Force One for a weekend of working lunches and golf. And in April, he hosted Xi at Mar-a-Lago.

Those Indians getting carried away by Trump’s praise for Modi should know the kind of admiration the U.S. president publicly displayed for Xi. “We have a great chemistry together,” he said about Xi. “We like each other. I like him a lot.” Trump also added that “lots of very potentially bad problems will be going away,” owing to his relationship with the “terrific” Xi.

The mercurial Trump’s honeymoon with Xi (and China), however, appears to be coming to an end. In a stunning admission of failure, Trump tweeted that counting on Xi to address the North Korea challenge hasn’t worked. It was naïve of Trump to rely on Beijing because North Korea has been seeking to escape China’s clutches and pursue direct engagement with Washington. It is possible that Trump may now pursue a tougher line toward Beijing, especially on trade issues. But that may not necessarily be India’s gain, unless he develops a larger geostrategic plan for Asia, including fixing Obama’s unhinged “pivot” policy and treating India as an indispensable partner. At present, Trump scarcely shares India’s concern about Chinese expansionism in its neighborhood and beyond and appears reluctant to aggressively confront Pakistan on its support for terrorist groups.

The growing cosiness in India’s ties with Washington masks New Delhi’s increasing concerns about its deteriorating regional-security environment. China has stepped up strategic pressure on India from different fronts, including deepening its nexus with Pakistan. Even as a pro-U.S. tilt has become pronounced in Indian foreign policy over the past one decade, with India emerging as a leading U.S. arms client, the relationship with Washington offers no answers to New Delhi’s security dilemmas. Trump, besieged by allegations of collusion between his campaign associates and Russia, has little space to fundamentally revamp U.S. foreign policy, including on Pakistan and China. The more things change, the more they tend to stay the same in U.S. foreign policy. India has no choice but to address the security dilemmas — and the regional threats — on its own.

© Open, 2017.

Vladimir Putin’s geopolitical chessboard

Featured

p9-chellaney-a-20170606-870x580

, The Japan Times

U.S.-led sanctions against Moscow are helping to create a more assertive Russia determined to countervail American power. The bipartisan support in the U.S. Senate Foreign Relations Committee for additional sanctions, even as a special counsel investigates alleged collusion between U.S. President Donald Trump’s election campaign and Moscow, suggests that the U.S.-Russia relationship is likely to remain at a ragged low.

Despite the Russian economy suffering under the combined weight of sanctions and a fall in oil prices, Moscow is spreading its geopolitical influence to new regions and pursuing a major rearmament program involving both its nuclear and conventional forces. Today, Russia is the only power willing to directly challenge U.S. interests in the Middle East, Europe, the Caspian Sea basin, Central Asia and now Afghanistan, where America is stuck in the longest war in its history.

Put simply, the U.S.-led Western sanctions since 2014 are acting as a spur to Russia’s geopolitical resurgence.

In keeping with the maxim that countries have no permanent friends or enemies, only permanent interests, Russia has rejiggered its geopolitical strategy to respond to the biting sanctions against it. Russian President Vladimir Putin has significantly expanded the geopolitical chessboard on which Moscow can play against the United States and NATO.

Historically, strongman governments facing domestic challenges have whipped up nationalism by rallying popular support against foreign adversaries. Who better to blame for Russia’s economic travails than the sanctions-imposing U.S. and its allies? Putin’s jaw-droppingly high approval ratings contrast starkly with the deepening unpopularity at home of his U.S. counterpart.

Putin has shown himself to be a very skilled player of geopolitical chess. Despite Russia’s gross domestic product shrinking to below that of Italy, Putin has managed to build significant Russian clout in several regions. The blunders of Western powers in Iraq, Libya and Yemen, of course, have aided Russian designs in the Middle East.

Putin has made Russia the central player in the bloody Syrian conflict, fueled by outside powers. Until Russia launched its own air war in Syria in September 2015, the U.S.-British-French alliance had the upper hand there, aiding supposedly “moderate” jihadist rebels against Syrian President Bashar Assad’s government and staging separate bombing campaigns against the Islamic State terrorist organization. Russia’s direct intervention, without bogging down its military in the Syrian quagmire, has helped turn around Assad’s fortunes and reshaped Moscow’s relationships with Turkey, Israel and Iran.

As part of his multidimensional chess game, Putin is also building Russian leverage in other countries that are the key focus of U.S. attention — from North Korea to Libya. But it is Russia’s warming relationship with the medieval Taliban militia — the U.S. military’s main battlefield foe in Afghanistan — that has stood out.

Russia’s new coziness with the Taliban, of course, does not mean that the enemy of its enemy is necessarily a permanent friend. Putin is opportunistically seeking to use the Taliban as a tool to weigh down the U.S. military in Afghanistan.

Because of the Taliban’s command-and-control base and guerrilla sanctuaries in Pakistan, Moscow has also sought to befriend that country. This imperative has been reinforced by the continued U.S. unwillingness to bomb the Taliban’s command and control in Pakistan.

The revival of the “Great Game” in Afghanistan is just one manifestation of the U.S.-Russian relationship turning more poisonous. Another sign is Moscow’s stepped-up courting of China. The U.S.-led sanctions have compelled Russia to pivot to China. Putin attended the recent “One Belt, One Road” summit in Beijing despite his concern that China is using that project to displace Russia as the dominant influence in Central Asia.

To be clear, Russia’s growing ties with India’s regional adversaries, China and Pakistan, have introduced strains in the traditionally close relations between Moscow and New Delhi. The paradox is that as India has moved strategically closer to the U.S., American policy has propelled Russia to forge closer ties with Beijing and to build new relationships with the Taliban and Pakistan.

The Russia-U.S. equation has a significant bearing on Asian and international security. Trump came into office taking potshots at the Chinese leadership but wanting to be friends with Russia. However, the opposite has happened: America’s relationship with Russia, according to U.S. Secretary of State Rex Tillerson, has hit its lowest point in years while Trump has developed a strong personal relationship with China’s top autocrat, Xi Jinping, who welcomes his mercantile, transactional approach to foreign policy.

This pirouette has happened because, in reality, Trump is battling those who, in the 21st century, are unwilling to forgo a Cold War mentality. Washington may be more divided and polarized than ever but, on one issue, there remains strong bipartisanship — Russia phobia. This has come handy to those seeking to inflict death by a thousand cuts on the Trump presidency, including by calculatedly leaking classified information and keeping the spotlight on the alleged Russia scandal in which there is still no shred of evidence of collusion between the Trump campaign and Moscow.

Against this backdrop, America’s sanctions against Russia are unlikely to go, despite clear evidence that they are fostering increasing Moscow-Beijing closeness by making Russia more dependent on China. The sanctions effectively undercut a central U.S. policy objective since the 1972 “opening” to Beijing by President Richard Nixon — to drive a wedge between China and Russia.

For Putin, the sanctions represent war by other means and a justification for him to make his next moves on the grand chessboard. With U.S. Senate Foreign Relations Committee Chairman Bob Corker determined to slap Moscow with additional sanctions, U.S.-Russian tensions and rivalries will continue to serve as a strategic boon for China even as they roil regional and international security.

Longtime Japan Times contributor Brahma Chellaney is a geostrategist and author.

© The Japan Times, 2017.

India’s nuclear industry deserves a place in the sun

Featured

New nuclear power has become increasingly uneconomical in the West but electricity from Indian-made reactors is still competitive.

Brahma Chellaney, Nikkei Asian Review, July 3-9, 2017.

22_06_2017_016_023_010The Indian government recently approved the construction of 10 commercial nuclear power reactors of indigenous design, initiating the largest nuclear building program in the world since the 2011 Fukushima disaster in Japan. The global nuclear power industry is still reeling from that calamity: Just three of Japan’s 42 reactors are currently operating, while France — the poster child for nuclear power — plans to cut its reliance on atomic energy significantly.

New nuclear power has become increasingly uneconomical in the West, in part because of rapidly spiraling plant-construction costs, prompting the U.S. and France to push reactor exports aggressively, including to “nuclear newcomers” such as the cash-laden oil and gas sheikhdoms of the Arabian peninsula. Still, the bulk of the new reactors under construction or planned worldwide are located in just four countries — China, Russia, South Korea and India.

The Indian decision to turn to a “fully homegrown initiative” reflects the continuing problems in implementing a 2005 agreement on nuclear power with the U.S. Nine years after the U.S. Congress ratified the landmark deal, commercialization is still not within sight.

India, duped by its own hype over the nuclear deal, had announced plans to import reactors costing tens of billions of dollars from two U.S.-based vendors, Westinghouse Electric and GE Hitachi Nuclear Energy, and France’s state-owned Areva. The Indian plans helped motivate Toshiba to acquire Westinghouse — a takeover that ultimately proved a huge blunder, plunging Toshiba into a grave financial crisis. Westinghouse filed for bankruptcy protection in March.

One missing link in commercializing the U.S.-India deal has been Japan, which signed a separate civil nuclear agreement with New Delhi only in 2016 after other supplier-nations had already concluded such accords. The Japanese parliament’s approval in early June of the agreement with India clears the legal path for Japanese exports. The accord is to take effect in early July.

Japan is a top nuclear equipment supplier, not merely because Toshiba largely owns Westinghouse. Hitachi has a global nuclear power alliance with GE, while Mitsubishi Heavy has one with Areva. Just one Japan-based company, Japan Steel Works, controls 80% of the international market for heavy nuclear forgings.

The Japanese parliamentary approval, although an important development, has come at a time when Westinghouse, GE Hitachi and Areva — which dominate the international reactor export business — are in a dire financial state, with their futures at stake. These are the companies that were to principally benefit from the U.S.-India nuclear deal, although none had secured a supply contract thus far.

Fading promise

Having invested considerable political capital in the vaunted nuclear deal with the U.S., India today confronts an embarrassing situation: The nuclear power promise is fading globally before New Delhi has signed a single reactor contract as part of that deal. To save face, India, with one of the world’s oldest nuclear energy programs, has embarked on a major expansion of domestically designed power reactors.

The monumental nature of the decision to construct 10 reactors with 700 megawatts of capacity each is underscored by the fact that the total size of these units surpasses the current installed nuclear generating capacity in the country. India has 22 nuclear reactors in operation which produce 6,219MWe of electricity. The 10 new reactors will be in addition to seven others already under construction which will have a combined capacity of 5,300MWe.

The 10-reactor decision fits well with India’s commitment under the Paris climate accord to reduce reliance on fossil fuels. India is committed to cutting the carbon intensity of its economy by about a third by 2030, including by generating 40% of its electricity from non-fossil fuels. The single-minded focus on carbon, however, threatens to exacerbate India’s water crisis, given the water-guzzling nature of the energy sector, especially nuclear power.

Moreover, U.S. President Donald Trump’s decision to exit the Paris accord has cast unflattering light on the onerous climate-related obligations India has taken on before it has provided electricity to all its citizens. According to a review of global trends by the Netherlands Environmental Assessment Agency the U.S. produces eight times more carbon dioxide emissions than India, on a per capita basis. Under current plans, India will link the last remaining 4,141 villages without power to its electricity grid in 2018, but 24-hour electricity will not be available nationwide to all communities until 2022.

India’s decision to ramp up its nuclear power capacity may contribute little to meeting the 2022 goal, given that the time frame for domestic nuclear plant construction averages seven years. But it will yield major economic dividends, including boosting domestic industry and creating thousands of jobs. By providing $11 billion worth of likely manufacturing orders to Indian industry, the 10-reactor decision will help to transform the domestic nuclear industry, according to Prime Minister Narendra Modi.

By contrast, had India relied primarily on imports of Western reactors to accelerate new capacity additions, the financial costs would have been substantially higher, without tangible benefits accruing to domestic industry. India is already a top weapons importer. Reliance on Western reactors would have made it the world’s largest importer of nuclear power plants — a double whammy for Indian taxpayers, especially given that the country is the only major Asian economy that is import-dependent rather than export driven.

In this light, the travails of the nuclear deal with the U.S. may be a blessing in disguise for India. But for the serious financial woes of Westinghouse, GE Hitachi and Areva — each of which was to build a cluster of reactors at a separate Indian park — Indian taxpayers would have been potentially saddled with plants like Areva’s reactor project in Finland, which is currently almost a decade behind schedule and billions of euros over budget.

Rightful place

To be sure, a dispute with Western suppliers over nuclear accident liability also put a break on India’s reactor-import plans. After India’s 2010 legislation put off foreign reactor vendors by giving plant operators the right of recourse against equipment suppliers in the event of a nuclear accident resulting from substandard equipment or material, New Delhi established a nuclear insurance pool in 2016 to extend protection to suppliers. By then, however, the global nuclear power scene had fundamentally changed due to the impact of the Fukushima disaster.

mapNuclear power may be on a downward trajectory globally, yet it has earned a rightful place in India’s energy mix. The country’s domestic nuclear power industry, without technological assistance from overseas, has done a good job in beating the mean global plant-construction time frame and in producing electricity at a price that is the envy of Western reactor vendors. As a result, power from domestic reactor models is competitive with cheap coal-fired electricity. By contrast, in the U.S., where five reactor closures have been announced since 2013, utilities are seeking greater state subsidies to keep other nuclear plants operating.

India was compelled to establish nuclear autarky, including an independent fuel cycle, because it was excluded from international civil nuclear trade on the grounds that it developed nuclear-weapons capability in 1974 after the Nuclear Non-Proliferation Treaty had already taken effect in 1970. (The five countries that tested bombs before the NPT was concluded were accorded the status of nuclear-weapons states under the NPT.) The Indo-U.S. nuclear deal sought to remedy this situation somewhat by opening civil nuclear commerce to India while recognizing the reality of its nuclear-weapons capability.

For many in India’s governing elite, the nuclear deal with the U.S. — despite the conditions quietly put into the American ratifying legislation — became the acme of their aspirations for the country. They believed the deal would turn the U.S. into India’s enduring benefactor and catapult the country into the big-power league. Years later, for example, New Delhi is still not in the U.S.-led Nuclear Suppliers Group, with China unyielding in its opposition to India’s entry.

A cost-benefit analysis against this background is helping to lower India’s expectations from the nuclear deal. By expanding construction of its own reactor models, India is laying the base for its emergence as a reactor exporter. Compared with the larger reactors of Westinghouse, GE Hitachi and Areva, India’s midsize reactors are better suited for the developing countries, considering their grid limitations.

India may still buy some Western reactors, but the latest decision clearly signals that its focus will be on building its own reactors. It has taken 12 years for Indian hype over the nuclear deal to give way to sober realism. The inward turn reaffirms India’s embrace of a zero-carbon power source and underscores its faith in the likely advent of commercially attractive reactors based not on uranium — a resource it lacks — but on thorium, which it has in plenty.

Brahma Chellaney is a geostrategist and the author of nine books, including the award-winning “Water, Peace, and War.”

© Nikkei Asian Review, 2017.

 

20170615_India-Nuclear-Plant_article_main_image

The Kudankulam nuclear power plant seen from a beach in the southern Indian state of Tamil Nadu © Reuters

Modi’s Russia Challenge

Featured

Russian President Putin shakes hands with India's Prime Minister Modi during a photo opportunity ahead of their meeting at Hyderabad House in New Delhi

Brahma Chellaney, The Hindustan Times, June 2, 2017

Indian Prime Minister Narendra Modi’s Russia visit raises a fundamental question: Is Moscow still India’s ‘tried and trusted’ friend? Russia’s growing relations with India’s adversaries, China and Pakistan, have spurred unease in New Delhi. However, many in India have failed to grasp the factors driving Moscow’s overtures to Pakistan or its sale of offensive weapon systems to China.

Such moves have little to do with India. Russia may be in decline economically but, geopolitically, it is a resurgent power, spreading its geopolitical influence to new regions and pursuing rearmament at home. Russia is the only power willing to directly challenge US interests in the Middle East, Europe, Caspian Sea basin, Central Asia and now Afghanistan, where America is stuck in the longest war in its history.

In keeping with the maxim that countries have no permanent friends or enemies, only permanent interests, Russia has rejigged its geopolitical strategy to respond to the biting US-led sanctions against it since 2014. Russian President Vladimir Putin has significantly expanded the geopolitical chessboard on which Moscow can play against the US and NATO.

Putin has made Russia the central player in the bloody Syrian conflict, fuelled by outside powers. Until Russia launched its own air war in Syria in September 2015, the US-British-French alliance had the upper hand there, aiding supposedly ‘moderate’ jihadist rebels against Bashar al-Assad’s regime and staging separate bombing campaigns against ISIS. Russia’s direct intervention, without bogging down its military in the Syrian quagmire, has helped turn around Assad’s fortunes and reshaped Moscow’s relationships with Turkey, Israel and Iran.

As part of his multidimensional chess game, Putin is also building Russian leverage in other countries that are the key focus of US attention — from North Korea to Libya. But it is Russia’s warming relationship with the medieval Taliban — the US military’s main battlefield foe in Afghanistan — that seriously conflicts with India’s interest.

Russia’s new coziness with the Taliban, of course, does not mean that the enemy of its enemy is necessarily a permanent friend. Moscow is opportunistically seeking to use the Taliban as a tool to weigh down the US military in Afghanistan. Because of the Taliban’s command-and-control base and guerrilla sanctuaries in Pakistan, Moscow has also sought to befriend Islamabad. This imperative has been reinforced by the US refusal to bomb the Taliban’s command and control in Pakistan.

The paradox is that as India has moved strategically closer to the US, American policy has worked against India’s regional interests, propelling Russia to forge closer ties with Beijing and to build new relationships with the Taliban and Pakistan. The US still continues to fecklessly accommodate China and battle the Taliban on just one side of the Afghanistan-Pakistan divide. Russia is equally nonchalant if its geopolitical chess play squeezes Indian interests.

The revival of the “Great Game” in Afghanistan is just one manifestation of the US-Russian relationship turning more poisonous. Another sign is Moscow’s stepped-up courting of China. For example, with Russia staying quiet, last year’s BRICS Goa Declaration, at China’s insistence, omitted any reference to cross-border terrorism or to any Pakistan-based group yet mentioned ISIS and al-Nusra. Putin attended the recent “One Belt, One Road” summit in Beijing despite his concern that China is using that project to displace Russia as the dominant influence in Central Asia.

With Russia becoming the largest crude oil exporter to China, Moscow-Beijing ties are booming economically, yet underlying political suspicions and wariness remain. In the India-Russia case, it is the reverse: Relations are warm politically but the two-way trade is in sharp decline, slumping to less than $8 billion in 2015. US-led sanctions against Russia, by promoting Moscow-Beijing closeness, are undercutting a central US policy objective since the 1972 opening to Beijing — to drive a wedge between China and Russia.

For Putin, the sanctions represent war by other means and a justification for Russia to countervail US power. With the US Congress threatening to impose additional sanctions even as a special counsel investigates alleged collusion between President Donald Trump’s election campaign and Moscow, US-Russian tensions and rivalries will continue to buffet India’s regional interests, but serve as a strategic boon for China.

Against this background, Modi faces an exigent challenge to revitalize a flagging partnership with Russia while safeguarding India’s regional security and its $3 billion development aid to Afghanistan since 2002. This challenge is compounded by the fact that a robust relationship with Moscow is vital to a balanced Indian foreign policy, to leveraging India’s ties with other powers, and to managing an increasingly muscular China. A drifting relationship with Russia would crimp India’s options, to its serious detriment.

Brahma Chellaney is a geostrategist and author.

© The Hindustan Times, 2017. 

China’s Imperial Overreach

Featured

A column internationally syndicated by Project Syndicate

images

HONG KONG – Chinese President Xi Jinping’s tenure has been marked by high ambition. His vision – the “Chinese dream” – is to make China the world’s leading power by 2049, the centenary of communist rule. But Xi may be biting off more than he can chew.

A critical element of Xi’s strategy to realize the Chinese dream is the “one belt, one road” (OBOR) initiative, whereby China will invest in infrastructure projects abroad, with the goal of bringing countries from Central Asia to Europe firmly into China’s orbit. When Xi calls it “the project of the century,” he may not be exaggerating.

In terms of scale or scope, OBOR has no parallel in modern history. It is more than 12 times the size of the Marshall Plan, America’s post-World War II initiative to aid the reconstruction of Western Europe’s devastated economies. Even if China cannot implement its entire plan, OBOR will have a significant and lasting impact.

Of course, OBOR is not the only challenge Xi has mounted against an aging Western-dominated international order. He has also spearheaded the creation of the Asian Infrastructure Investment Bank, and turned to China’s advantage the two institutions associated with the BRICS grouping of emerging economies (the Shanghai-based New Development Bank and the $100 billion Contingent Reserve Arrangement). At the same time, he has asserted Chinese territorial claims in the South China Sea more aggressively, while seeking to project Chinese power in the western Pacific.

But OBOR takes China’s ambitions a large step further. With it, Xi is attempting to remake globalization on China’s terms, by creating new markets for Chinese firms, which face a growth slowdown and overcapacity at home.

With the recently concluded OBOR summit in Beijing having drawn 29 of the more than 100 invited heads of state or government, Xi is now in a strong position to pursue his vision. But before he does, he will seek to emerge from the National Congress of the Chinese Communist Party later this year as the country’s most powerful leader since Mao Zedong.

Since taking power in 2012, Xi has increasingly centralized power, while tightening censorship and using anti-corruption probes to take down political enemies. Last October, the CCP bestowed on him the title of “core” leader.

Yet Xi has set his sights much higher: he aspires to become modern China’s most transformative leader. Just as Mao helped to create a reunified and independent China, and Deng Xiaoping launched China’s “reform and opening up,” Xi wants to make China the central player in the global economy and the international order.

So, repeating a mantra of connectivity, China dangles low-interest loans in front of countries in urgent need of infrastructure, thereby pulling those countries into its economic and security sphere. China stunned the world by buying the Greek port of Piraeus for $420 million. From there to the Seychelles, Djibouti, and Pakistan, port projects that China insisted were purely commercial have acquired military dimensions.

But Xi’s ambition may be blinding him to the dangers of his approach. Given China’s insistence on government-to-government deals on projects and loans, the risks to lenders and borrowers have continued to grow. Concessionary financing may help China’s state-owned companies bag huge overseas contracts; but, by spawning new asset-quality risks, it also exacerbates the challenges faced by the Chinese banking system.

The risk of non-performing loans at state-owned banks is already clouding China’s future economic prospects. Since reaching a peak of $4 trillion in 2014, the country’s foreign-exchange reserves have fallen by about a quarter. The ratings agency Fitch has warned that many OBOR projects – most of which are being pursued in vulnerable countries with speculative-grade credit ratings – face high execution risks, and could prove unprofitable.

Xi’s approach is not helping China’s international reputation, either. OBOR projects lack transparency and entail no commitment to social or environmental sustainability. They are increasingly viewed as advancing China’s interests – including access to key commodities or strategic maritime and overland passages – at the expense of others.

In a sense, OBOR seems to represent the dawn of a new colonial era – the twenty-first-century equivalent of the East India Company, which paved the way for British imperialism in the East. But, if China is building an empire, it seems already to have succumbed to what the historian Paul Kennedy famously called “imperial overstretch.”

And, indeed, countries are already pushing back. Sri Lanka, despite having slipped into debt servitude to China, recently turned away a Chinese submarine attempting to dock at the Chinese-owned Colombo container terminal. And popular opposition to a 15,000-acre industrial zone in the country has held up China’s move to purchase an 80% stake in the loss-making Hambantota port that it built nearby.

Shi Yinhong, an academic who serves as a counselor to China’s government, the State Council, has warned of the growing risk of Chinese strategic overreach. And he is already being proved right. Xi has gotten so caught up in his aggressive foreign policy that he has undermined his own diplomatic aspirations, failing to recognize that brute force is no substitute for leadership. In the process, he has stretched China’s resources at a time when the economy is already struggling and a shrinking working-age population presages long-term stagnation.

According to a Chinese proverb, “To feed the ambition in your heart is like carrying a tiger under your arm.” The further Xi carries OBOR, the more likely it is to bite him.

p7-chellaney-a-20170527-870x580