Friend or Foe? The USA and China.

(A map purporting to substantiate the Chinese claim that they "discovered" America before Columbus)

Sino-American relations are arguably the most important bilateral relationship in the world. While the EU surpasses both of them in terms of economic weight, I believe the shape of the international system over the next century will ultimately be decided by the relationship between China and America. However, since the early 1970’s when Kissinger and Nixon officially restored diplomatic contact with China, their relations have been continuously buffeted by an array of factors. From posturing over the status of Taiwan, to the occasional nationalistic anti-American outbursts, such as those that followed the accidental bombing of the Chinese Embassy in Belgrade by NATO planes in 1999, the formulation of strategy on both sides has been impeded by the perception and misperception of the others intentions.

What does the future of US-Chinese relations look like? To what degree are the scars from the fall of the Middle Empire from a position of almost unshakeable domination to its humiliation at the hands of the western powers during 19th century still present in China? And most importantly, is the US capable of seeing beyond the paradigm of the Chinese threat to that of China as a long term strategic ally?

In order to respond to these questions one has to look at whether either country has what could be termed overarching foreign policy goals, and to the extent, or not, to which these are compatible. In the case of China since the reforms launched by Deng Xioaping its leadership have consistently reaffirmed two concomitant goals: economic modernisation and political stability. To which could be added territorial stability, and in particular a resolution to prevent Taiwanese independence. For America one can identify a desire to maintain and perpetuate their hegemony, which includes broadening the reach of their strategic and economic interests and to a lesser degree than his predecessor but still present under President Obama, the spread of American values.

Taking these two goals as the foundations of Chinese policy assumes that China will continue to adhere to Deng’s motto on the international stage - “hide brightness and nourish obscurity”. However, while the idea of a “peaceful emergence” and of a “world of harmony” were used to reassure both China’s neighbours and the west that China’s growth was not a threat, recently Chinese leaders have showed a greater readiness to employ the term great power. Yet this should not worry the West as although Chinese nationalism is a potent, volatile and worrying force, the Chinese leadership realise that the economic growth which provides the foundation of China’s political and social stability is dependent upon China’s insertion within the same international system which has allowed the quadrupling in size of the Chinese economy during the last two decades. Indeed, Robert Zoellick while assistant secretary of state in 2005 called on China to assume the role of a responsible stakeholder in the international system.

This call as well as the continued development of the Strategic Economic Dialogue (SED) under the tutelage of Henry Paulson are signs that the US recognises that if it wants to maintain its hegemony it needs to integrate China into the international system. In order to do so the US will have to coax China into overcoming its fear of multilateral engagement and continue to reform international institutions to ensure they remain congruent with an evolving reality. Any suggestion that the US should try and actively contain Chinese growth in a re-enactment of Kennan’s policy of containment displays an ignorance of the fact that globalisation has created a strategic and economic interdependence among states that renders this approach counter-productive. Similarly, I believe that this interdependence will prevent the realisation of the Sino-American conflict which John Mearsheimer views as increasingly probable.

While I have no hesitation in condemning the blatant disregard that Beijing routinely shows for human rights I believe that this will not derail US-Chinese cooperation. The fact that during Hilary Clinton’s recent visit to China she did not repeat the condemnation of China’s human rights record that she has vociferously voiced in the past was a further reminder that economic and strategic considerations will take precedence over humanitarian scruples. Indeed before she set off for Asia she declared in an interview with the BBC that "our pressing on those issues (human rights, Taiwan and Tibet) can't interfere with the global economic crisis, the global climate change crisis and the security crises."

The global economic crisis has served to highlight the need for increased cooperation between two and the urgency with which the west must try and increase China’s involvement in and commitment to international institutions such as the IMF and the WTO. Accusations over exchange rates and the temptation to engage in protectionism should be carefully avoided. While the Chinese government will face increasing civil unrest as many face the spectre of unemployment without any social security (some put the number of recent job losses as high as 20 million) , as Minxin Pei explains in a recent edition of Foreign Affairs its highly tuned mechanisms of repression mean it is unlikely to lose power.

Chinese growth looks set to continue. America has faltered, badly. However, with America looking to China to respond to Geithner calls for a bigger gobal stimulus and China heavily reliant on America both as a destination for its exports and as its major source of FDI conflict in the short term looks unlikely. China, at least for now, seems to believe that in its re-emergence “the road to the East runs through the West.”

Political stability under threat?

The idea of contagion is oft quoted by economic correspondents as they chart the diffusion of the liquidity drought throughout the economic world, yet its wider political implications have, in general, received scant column space. The notion that economic health impacts on the political sphere is universally accepted, yet how exactly will the current economic context impact upon the political landscape?

Will the crisis fundamentally weaken the appeal of the free market form of capitalism which has become the mainstay of the world’s democratic countries? Will this crisis, as that of 1929 did, push people towards the political extremes and polarize both opinions and parliaments?

The relationship between capitalism and democracy is oft debated, but as Charles Calomiris states, in recent times democracy has provided a framework conducive to spread and maintenance of individual freedoms upon which both capitalism and western society are founded. Yet the fate of capitalism has rarely seemed so uncertain, and Marx is undoubtedly chuckling in his grave at the exposure of many of its inherent contradictions. However, the FT newspaper has gathered together a group of fifty prominent actors and thinkers to reflect on “The Future of Capitalism”, and while many of them bemoan its current sorry state they propose a re-calibration of capitalism rather than its overthrow. A consensus is building around the fact that the future of capitalism will most probably involve smaller private markets, and bigger governments. The model of capitalism which began with the dawn of Reagonomics and Thatcherism has been thoroughly discredited and as the dominant ideology of the west its decline, along with other factors, surely heralds the end of any lingering attachment to Charles Krauthammer’s “Unipolar moment”. This ideological blow may well contribute to an eastern shift in the balance of power. However, while the lustre of free markets may have faded democracy seems unlikely to go away.

But what about the 1930’s, one may cry? While the triumph of totalitarianism following the stock market crash of 1929 and the ensuing depression set a worrying precedent, it is one unlikely to repeated. However, this does not preclude significant political turmoil, a fact attested to by the protests crushed by riot police in Vladivostok, the violent clashes in Greece and more recently the civil disorder in Guadeloupe. Governments have fallen, Latvia and Iceland being the most pertinent examples and the grand European project is on the ropes. While this crisis should by its very nature benefit the left, the French sociologist Emmanuel Todd believes that it may well signal the rise of right wing populous leaders such as Nicolas Sarkozy and Silvio Berlusconi and an attendant erosion of democracy faced with their authoritarian and demagogic leadership style. Aristotle was a firm believer in the role of the middle class as a stabilising force, but in this recession as they bear the brunt of the pain the recently named “coping class” is increasingly unable and unwilling to maintain the status quo. The true test of political stability and allegiance will come as citizens are confronted with the inevitable evolution in fiscal policy towards higher taxes. This stress test will happen both on a national level where stimulus plans will have to be paid for and on the European level where the flow of transfers towards the struggling eastern countries will have to intensify.

Popular discontent with the current situation, the perceived injustice of the aid to financial institutions, rising unemployment and burgeoning government debt will dictate a profound evolution in the economic policy of most political parties. For the foreseeable future both politicians and voters will be preoccupied with the search for a solution. However, the extent of the political implications of the economic crisis are ultimately dependent on its duration and severity. A relatively smooth return to growth and stability would mitigate any lasting political legacy, but a drawn-out recession would foster social unrest which could lead to the redrawing of the political landscape.

With the future looking uncertain, one certainty remains: we must work to end this recession, and end it quickly.

Israel and Palestine: Should we put off until tomorrow, something which we can't do today?

Is it time to give up on the hope of an immediate and comprehensive problem to the Israeli-Palestinian conflict? Should the quartet temporarily abandon its quest for a long term solution in favour of a short-term stopgap? In other words, is the current context so inhospitable to a lasting settlement that talk of a two-state solution should be sidelined in favour of securing a new ceasefire agreement?

In a recent policy brief for the Carnegie Endowment for International Peace Professor Nathan Brown argues exactly that. He declares that the current context is simply not compatible with the negotiation and enforcement of a permanent two-state solution. Between political division, widespread mistrust, and growing disillusionment with the efforts to provide a solution, the factors that constitute the barrier to such a solution are evident for all to see. One of the foundation stones of this barrier is Israel’s and Hamas’ refusal to recognise the others legitimacy. While this impedes the negotiation required for a long term solution it does not, as previous ceasefires have shown, preclude the negotiation of interim solutions.

However, in a recent presentation to the Brookings Institution, Senator John Kerry declared that behind the seemingly intractable conflict lies an opportunity for significant progress. In his opinion, the kernel of this opportunity is Obama administration and the leadership which it can bring to negotiations. Like Brown, Kerry recognises that with the uncertainty surrounding the new Israeli government’s commitment to a two state solution is worrying, but he also believes that there are “four major causes for hope”. The first of these regards the geopolitical consequences of the rise of Iran- fear of Iran’s increasing power has created a willingness among other states to work with Israel. The second of these is Arab Peace Initiative, which could help to create a home-grown framework for peace. The third is the fact that the boundaries of an acceptable solution are increasingly apparent, and the fourth is the dawning of the Obama administration.

Both men acknowledge the reality that a solution to the Israeli-Palestinian must be a regional one. The direction of the next step taken to counter the Iranian nuclear program, stability in Pakistan, and the outcome of the current conflicts in Iraq and Afghanistan will all impact on the composition of any roadmap to peace between Israel and Palestine. However, even with a positive outcome in each of these areas tend to migrate towards Professor Brown’s stance. The rejuvenating power of the “Obama effect” has been diminished by the severity of the economic crisis, and the orientation of the new Israeli government threatens by its very nature to fundamentally undermine any efforts aimed at a two state solution.

While a suspension of the audacity of hope would not sit well with the Obama faithful it may well fit more smoothly with an increasingly jagged reality. Nathan Brown suggests a “Plan B” which waylays an approach centred on a two state solution in favour of “bare bones short term agreements and looking then to a medium term armistice”. This plan is based around the belief that these limited term agreements would foster an environment more conducive to the elaboration of a long-term solution. What remains key, independent of the approach chosen, is the inclusion of the Arab states in the process and the economic and political rehabilitation of the Palestinian state.

With each option the end goal remains the same, what changes is the timeframe. There is no denying that the only viable solution is one which proposes two states and which conclusively resolves the border question, the right to return, and Jerusalem. Any acknowledgement that the current situation may indeed hinder moves towards this solution must be accompanied by an iron clad commitment to creating conditions which favour its realisation. As Nathan Browne so aptly wrote “acknowledging and working with current realities does not mean accepting them as permanent”.

Put to the sword: What now for Globalisation?

While some choose to vilify globalisation, others worship it. While Naomi Klein identifies globalisation and the brand of “disaster capitalism” it has propagated as the root of the financial crisis, others view it as the only solution to the world’s current problems. In this post, rather than analysing the merits or otherwise of globalisation, I am going to examine whether the current context favours the advance of globalisation or if, as the Princeton economist historian Harold James argues, it sounds its death knell.

Last November capital flows to emerging markets reached their lowest level since 1995, and the market for international bonds collapsed. Gideon Rachman, writing in the FT, declared that this year’s World Economic Forum at Davos was characterised by a thinly veiled trend towards “de-globalisation”. British jobs for British workers. Buy American. Lend French. The reality seems to lend credence to this belief. The economist ran a cover with “the return of economic nationalism” emblazoned across the cover of one of its February issues. The success of this ‘return’ will be dictated by the outcome of the impending battle between nationalist and populist cries for increased protection and the affirmation of the reality that the hermetic sealing of any economy would not only be massively expensive but also ultimately Sisyphean.

This statement about de-globalisation holds if you believe that it is primarily about trade flows and international investment. However, globalisation can also be defined in a broader manner, in the words of the British political scientist David Held it is the “widening, deepening and speeding up of worldwide interconnectedness in all aspects of contemporary social life”. In this sense, the economic crisis will not reduce the ability of people around the world to communicate. The internet is not about to collapse, nor the vast networks of fibre-optic cables which support it. Religion is likely to benefit from the downturn as people seek solace in the spiritual. Criminality and terrorism will continue to develop increasingly global networks, while charities will be called in to pick up the pieces.

Those who equate globalisation to Americanisation will witness what Kushmore Mahbuabni terms as “the irresistible shift of power to the east”. However, globalisation has always been a vehicle for the spread of several cultures, and this shows no sign of abating. Although the internal hierarchy of the cultures it disseminates may now evolve.

Recent events have also highlighted the weaknesses of another interpretation of globalisation. Susan Strange and others who declared the “Retreat of the state” have been faced with a return to prominence of power politics. While traditional geopolitical calculations were never truly supplanted by non-state actors and economic considerations the recent nationalistic posturing of states such as Russia and Venezuela has underlined their importance. Nationalist sentiment might be inflamed by the crisis, but these nation’s means to act on this sentiment are being severely impaired by the continuing depression in the price of oil and natural gas- their major revenue source.

The outlook for globalisation is highly dependent on the manner in which you define the process. If you view it as an economic entity then de-globalisation is a reality. However, if you interpret it as David Held does then globalisation, in its complex entirety, will continue shape the world and the challenges we face.

Whichever interpretation of globalisation you choose one fundamental reality remains, the world is ill equipped to deal with many of the problems which it has raised or exacerbated. The recent uncertainty surrounding the future of the EU and continued question marks over the efficacy and the equity of other, among others, the UN and the IMF confirms this. For Moises Naim , editor of Foreign Policy, “the gap between the need for effective collective action at the global level and the ability of the international community to satisfy that need is the most dangerous deficit facing humanity.”

The need for a move towards global governance is intensifying. Yet no matter what the outlook for globalisation is, our ability and willingness to realise the changes necessary for such governance are, and will remain, severely lacking.