The Two Chinas

Today, a new, but very different, “two Chinas” question is emerging. It centers on whether China is best understood as a strong country, with a promising future despite some short-term difficulties, or as a country facing serious structural problems and uncertain long-term prospects. In short, two very different Chinas can now be glimpsed. But which one will prevail?–haass-2015-08#Wljsj1yf0dr49qyZ.99

Uptil a few years ago, the world was living the China Dream. It’s economy was growing above 10% rate – an unbelievable pace – since more than three decades. People all around the seemed attracted to the Chinese model of development. Eve with the world’s largest population, it had managed to transform a substantial part of its rural population into the middle class. Particularly astounding was the fact that with its authoritarian economy, it had been able to mitigate itself from the worst effects of the 2008 Global Recession, which had severely hit USA and most of Europe – severely discrediting the liberal-capitalism theory.

But switch over to 2014-15, things are nowhere the rosy pitch they once were. The Chinese Economy is now at a pace of 7% – way more than India, from where I am penning down this- but it is a far cry from those days. There are also rife speculations that this government figure is also not particularly honest – a typical Chinese authoritarian trait- and that the actual growth rate is only 5%. The seriousness of the situation was reflected in the alarm with which the government froze stock markets in the midst of a dramatic price correction.

Furthermore the August move of China to deregulate renminbi was the most alarmist move made by China is what I feel the last two decades.

And this is coming at a time when the BRICS is launching their New Development Bank as a rival to The World Bank, and China is making plans for inter-trade collusion with Russia with the renminbi as the flagship currency in it. These two headlong collisions with the USA and its allies – armed with a resurgent dollar – has to be done at a time when the renminbi is strong at dawn, not at its twilight.

A big part of this is due to the intense anti-corruption campaign unleashed by President Xi Jinping. More of a power-grabbing campaign rather than a reformist campaign, due to the wave of prosecutions that it has unleashed, officials in China are now more vary than ever while taking decisions – for fear of repercussions which they might have to face in future years.

China’s aging population, an unintended consequence of its draconian one-child policy, poses another threat to long-term prosperity. With the dependency ratio – the proportion of children and pensioners relative to working-age men and women – set to rise rapidly in the coming years, economic growth will remain subdued, while health-care and pension costs will increasingly strain government budgets.

The increasingly apparent conclusion from this whole scenario is that China wants to have the economic growth that capitalism produces, but without the downturns that come with it.  It is vital for the Chinese economy to recover, otherwise the whole world will have to face a backlash from it. Some analysts recommend china to liquidate its immense assets overseas ( China is the biggest foreign owner of real estate in USA ) to pump in cold hard money in its economy, but that is a short-term solution at best.

So whether China is facing short term problems or long term serious structural problems; only time will tell. But one thing is certain, the next three decades will not mirror the past three ones.


Chinese Laundry in America’s Backyard

One of the world’s most powerful journalistic mouthpiece – The  Economist – came up this week with a startling relevation that there might be a competitor to the famous Panama Canal coming up in the near foreseeable future. This has literally opened up the floodgates; in this context, a barrage of opinions and columns which I can reasonably predict to come up in the coming days by the global diaspora.

A place that looks as if it is still sleeping, the Brito river in Nicaragua might become the stage of a world conflict in the next decade. The main brouhaha is about a new canal being envisioned in Nicaragua, by the Chinese government-military and some big Chinese companies, which could very well pose as a competitor t the Panama Canal, providing an alternate route between the busiest sea routes in the world, joining the two biggest oceans in the world- the Pacific and the Atlantic.

Chinese billionaire, Wang Jing’s company is willing to gamble 40 billion USD on a fiendishly astute project, which would make a canal that exceeds the existing Panama canal in all aspects – allowing 500 metre long supertankers to pass through, a problem that both the Suez and the Panama face in the wake of ever-increasing size of ships.

The construction alone would be a spectacle. Some 50,000 labourers (perhaps a quarter of them Chinese) might work on site, and 2,000 diggers, dredgers and other giant machines would excavate about 5 billion cubic metres (177 billion cubic feet) of dirt, using 5 billion litres of fuel in the process. They will lay what they dig up 1.5km either side of the canal, which HKND promises to turn into new arable land about three times the size of Manhattan, partly for the 30,000 people uprooted from their homes.

Construction will no doubt damage the environment. A 107km-long, 280-metre-wide trench will be dredged through pristine Lake Nicaragua, rainforests will be uprooted, big-cat migration routes traversed and indigenous families ousted from sacred lands. Mr Wild pledges that, when finished, the reforested land along the canal route will be better cared for than it is now. But can any pharaonic enterprise, let alone a Chinese one, be trusted not to cut corners? Environmentalists will try to block it every step of the way.

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The proposed canal route

But all these considerations and grandiose plans apart, this mega project raises many dangerous questions. Nicaragua, a relatively obscure country, has willingly let go of its sovereignty and has given a concession of 100 years to the Chinese company. What future does this hold for Nicaragua? Will this project shoot-up its economy – Yes, definitely it will. But can we eliminate the thought that this is  just another of a series of Chinese incursions in foreign territory, something on the lines of South China Sea? And most importantly, will this turn out to be a 21st Century Cuban Missile Crisis, where the meek country of Nicaragua maybe used by the Chinese military as a base to target the American soil – after all they built an air strip on those disputed islands which have the capability to land any air force plane for that matter ? Who can stop if the Chinese Navy decides to send its warship on a hopscotch from one ocean to another?

These are some serious questions that need not only some very deep thought, but also some constructive action. After all USA, with its own version of “Truth, Justice & Liberty” which it continues to uphold in all corners of the world, to not do something about what’s going on in its own backyard is something surprising.

So far, America has been phlegmatic about the enterprise. Perhaps, like Jorge Quijano, administrator of the Panama Canal, it believes that financially the project is a bottomless pit and has no future. Mr Quijano reckons that for the Nicaraguan canal to earn a competitive return on investment, it would have to charge double the tolls levied in Panama, which would put off most customers.

Nicaragua’s Sandinista rulers shrug off the worry. “If China is behind the project, it will not be a big problem for Wang Jing to get the financing,” Mr Coronel says. After all, what wouldn’t China pay to see one of its naval fleets one day emerging from the Central American jungle right under America’s nose?

The Dead Bloggers of Bangladesh

Last week blogger Niladri Chattopadhyay, known as Niloy Neel, became the fourth this year to be hacked to death for writings that some felt were abusive towards Islam. Chattopadhyay was among 84 people listed by hardline groups for the alleged anti-Islamic sentiment in their writings.

The government has come under increasing pressure to investigate the killings and stop further murders, with many accusing it of failure to provide security to the country. Human Rights Watch in a statement on Wednesday called on Bangladesh to protect free speech after the Bangladeshi police chief asked bloggers not to “cross the line” with their writings. “It’s shocking that Bangladesh authorities not only failed to protect the bloggers despite complaints to the police about threats against them, but instead are proposing self-censorship,” the group’s Asia director, Brad Adams, said.

“The government should recall that its duty is to uphold the constitution and protect people’s lives, as well as their religious freedom,” Adams added. The murders have shocked most Bangladeshis and have been criticized not only by civil society groups but also the right-wing Jamaat-e-Islami party. On Sunday, the Inspector General of Police, AKM Shahidul Hoque, said: “There will always be free thinkers. I have enough respect for them. But we need to remember that hurting religious sentiments is a crime according to our law. I will request them, please make sure that we don’t cross the line. Anything that may hurt anyone’s religious sentiments or beliefs should not be written,” he said.

The murders have purportedly been claimed in statements by a mysterious militant group called Ansarullah Bangla Team, which claims affiliation with al-Qaeda, but their claims have not been verified.

On the face of it, it is an attempt to kill free speech. But the problem runs deeper. The Muslim-majority nation is going through a volatile phase. Ever since the Awami League government opened the controversial war trial to indict those who committed serious crimes during the liberation war, the country has been on edge. The main opposition, the Bangladesh Nationalist Party, has joined hands with the Jamaat-e-Islami to unleash violent protests against the government, particularly against the war trial in which several Jamaat leaders have been indicted. The government has not heeded to the protests, but the street violence continues. The killing of the bloggers comes against this background.

The bloggers were supporters of the war crimes trial, and instrumental in shaping public opinion in cyber space against communalism, which obviously brought the Islamists’ wrath upon them. They were also soft targets compared to those involved in the trial, who get government security.

Humans are full of contradictions. On one hand where we pledge to uphold the ideals of free speech, yet on the other hand we barbarically condemn  the flag bearers of dissent in our society to death. These deaths are not just deaths of bloggers, or of journalists, these are the instances where slowly our liberties are curtailed from us piece by piece. The global community should raise its voices against these crimes against humanity occurring in broad daylight and put pressure on the government of Bangladesh to stop these attacks. Failure to do so would only send a message of toleration to the assailants.

To NATO, With Love from Russia

RUSSIA’S aggression in Ukraine has given NATO both a new sense of purpose and a new kind of threat: “hybrid” warfare. With its increasing expansionist attitude that has potential ramifications for the whole of Europe – and that’s putting it modestly, NATO is increasingly at crossroads with this despotic dictator – as described by the famous Russian band : “Pussy Riot”.

The overarching assumption is that Russia’s president, Vladimir Putin, flushed by the success of annexing Crimea and prising away Ukraine’s Donbas region, moves on to something even more ambitious. His goal: to undermine NATO and the European Union, by concentrating his well-honed techniques of hybrid warfare on two Baltic states that share a land border with Russia—Latvia and Estonia.


Hybrid warfare brings together military and non-military instruments to discombobulate the target state.

Unlike Ukraine, the Baltic states are members of both the EU and NATO and are covered by the military alliance’s commitment to collective security under Article 5 of the 1949 Washington treaty that deems an attack on one as an attack on all. But this was conceived in an era when there was no doubt whether a country was under military attack or not. The big question is whether it is fit for purpose in dealing with 21st-century Russian tactics, which use ambiguity and deniability to make it hard to gauge whether an attack is really under way. Only once in NATO’s 66-year history has Article 5 been invoked—after the attacks of September 11th 2001—and at the time it was controversial whether this was a proper use of the alliance’s biggest stick.


This is how Mr Putin might test it. Working to its established game plan, Russia starts by stirring up the resentments of “Russians” in Estonia and Latvia (by some reckoning, about a quarter of the population in both countries), bombarding them with propaganda about the discrimination they are supposedly subjected to. Using agents provocateurs to foment pro-Russian demonstrations in the capitals, Riga and Tallinn, Russia does all it can to undermine the authorities in both countries. Ethnic Russians from Estonia and Latvia who were encouraged to fight with their “brothers” in eastern Ukraine stand ready to carry on the fight back home.

As the situation deteriorates, using his tried and tested method with Crimea; Mr Putin orders snap exercises of elite troops on the Russian side of the border, giving him the option of military intervention with little notice. Drills of this kind were a critical element in the destabilisation of Ukraine. Cyber-attacks are stepped up, adding to confusion, and NATO faces a huge increase in incursions into allied airspace in the region by Russian aircraft. Next, “self-defence forces” start forming in areas with many ethnic Russians, organised by soldiers wearing the same green uniforms shorn of insignia as the “little green men” who suddenly turned up in Crimea.

Estonia and Latvia ask NATO to declare that an Article 5-invoking event is under way and thus to commit all the alliance’s members to come to their defence. There is a lack of consensus that a full-scale response is justified at this stage, and with Mr Putin warning that any escalation by NATO could force Russia to consider using nuclear weapons to defend itself, the alliance’s “parliament”, the North Atlantic Council, cannot reach the required consensus of all 28 countries. The insistence of Germany that all political means of defusing the crisis must be brought to bear before going down a path that could lead to a major war in Europe finds many supporters. Thus, the bedrock assumption on which NATO’s credibility and thus the security of Europe rests has been tested and found wanting.


How likely is such a scenario? Perhaps Mr Putin regards the risk of taking on NATO as too great. Even his Ukraine escapade has stretched Russia’s military resources.

But the allies cannot afford to rely on that. They have drawn up plans to hold the NATO Response Force, which has at its disposal 40,000 well-equipped troops, at a much higher state of readiness. A “spearhead” force of about 5,000 troops will be deployable at the first sign of trouble, possibly within hours, on the order of the alliance’s supreme commander, General Philip Breedlove, without the usual requirement for consensual political approval. NATO’s new secretary-general, Jens Stoltenberg, says it is also helping its front-line states improve their intelligence-gathering and situational awareness. Knowing what an aggressor is planning and understanding early on what is happening on the ground are vital.

Heinrich Brauss, NATO’s assistant secretary-general for defence policy, stresses the need for speedy decision-making: “One week”, he says, “could be too long in the event of a hybrid attack. We are now significantly accelerating our procedures.” He refuses to define what might trigger Article 5. “Some ambiguity is necessary,” he says. But an adversary “must know that NATO is capable and willing to act”.

Whatever happens, the geopolitics of Europe, which has dominated the world scope for the better part of the last two centuries, continues to hog the limelight away from another contender,the ISIS.