Archive for May 31st, 2012

By Walter Lohman

The “rise of the rest” presents the United States with its two principal manifestations in China and India.  There are no two relationships more important to American success in securing its interest in the emerging global environment and shaping a new order.

The official U.S. relationship with the People’s Republic of China (PRC) is fundamentally a poor one, and will long remain so.  The U.S. and China have conflicting national interests and governing ideologies.  The challenge is to manage the conflicts in ways that minimize the impact on each country and others in the international system.

Take two examples the Chinese have described as “core interests.”

On Taiwan, the U.S. and PRC are diametrically opposed.  The PRC believes Taiwan a part of its territory; the U.S. position is that the status of its sovereignty is unsettled.  The PRC reserves the prerogative to use force to settle the question; the U.S. is ambiguously committed to Taiwan’s defense.  The PRC holds up the 1982 U.S.-China Communiqué as requiring the U.S. to gradually reduce arms sales to Taiwan; the U.S. holds that the Taiwan Relations Act (TRA) mandates it supply Taiwan arms necessary for it to “maintain a sufficient self-defense capability.”

Add to this the restraints imposed by Reagan’s Six Assurances, particularly the policy of not pressuring or mediating between the parties across the Straits, not consulting with the PRC on arms sales to Taiwan, and not altering the terms of the TRA, and neither side has any room for compromise.  The best officials can do is state their positions and agree to disagree.  There is no way to reconcile the positions.   The only thing that will change this state of affairs is a 180-degree change in Taiwan’s disposition toward its sovereignty, and that means much more than the thaw that has occurred in cross-Straits relations since 2008.

There is a similar direct conflict concerning the South China Sea.  The Chinese have two alternative bases for the rights they claim in these waters, one historical and one legal.  Under either of them, they lay claim to rights over all of the land and most of the sea.  Land claims there are not America’s concern, but claims, direct or derivative, over the sea are in direct conflict with historic American interest in the freedom of the seas.

Protecting U.S. interests vis-à-vis the PRC means maintaining a highly capable forward deployed military, tending American alliances and keeping allies capable, and asserting its rights and prerogatives physically as well as diplomatically.  It means maintaining a consistent, persistent set of policies.  It means keeping lines of communications active, but being completely comfortable with achieving nothing in terms of bilateral relations.  Flexibility is a one way street for the Chinese.  Staying firm and managing any fallout is the best approach.

The rise of India represents the opposite challenge. The basics of the U.S.-India relationship are good.  The U.S. and India have mostly coincident, and few diametrically opposed, interests, and very similar governing ideologies.  The challenge here is managing the relationship in a way that maximizes its opportunities.

Two examples illustrate the convergence of U.S.-India interests.

First, China.  American concerns about Chinese military modernization and intentions in the Western Pacific roughly mirror Indian concerns about Chinese capabilities and intentions in its own neighborhood. The PRC’s active challenge to India’s northern borders and its sponsorship of Pakistan tie together India’s two greatest security threats.  Indeed, many in New Delhi believe they see Chinese encirclement in Chinese outreach to their neighbors.

The PRC achieving its territorial ambitions east of its territorial seas and along the Indian border simultaneously is unlikely.  By the same token, leaving it unchallenged on one could result in increased pressure on the other.  The U.S. and India have an obvious mutual interest in restraining Chinese ambition in both areas in order to prevent realization of it in either.

Both countries’ relationships with China are complex.  Both have economic interests, investment and trade, and interests in the international economic system at stake.  The Indians have an imperative similar to America’s to manage conflicting interests in a way that minimizes their impact on bilateral relations, economics and the international system.

Second, terrorism.  Long before the attacks of 9/11, India was a tragic victim of terrorism, suffering literally thousands of incidents a year.  Since 9/11, the U.S. has become much more sensitive to India’s predicament and a set of common interests it had not previously recognized.

This is most stark in their converging views on Pakistan.  Whereas once the American policy establishment reflexively viewed India as one side of an India-Pakistan problem, that dynamic has receded in priority as a result of India’s forbearance and Pakistan’s slide into near state failure.  India today is largely seen by the U.S. as a partner in counter-terrorism solutions; Pakistan is seen as essentially an undeclared state sponsor of terrorism, ambivalent about the very proposition of counterterrorism and its choice of security allies.

Common interests on counterterrorism are also apparent in the U.S. and Indian perspectives on Afghanistan.  Both have an interest in a stable and peaceful Afghanistan, free from the grip of the Taliban.  The U.S. is, of course, leader of the international coalition to help ensure this, although its sense of urgency is diffused across thousands of miles.  India is one of Afghanistan’s largest aid donors, and its interest is much closer to home.

Whereas in U.S.-China relations, ideology acts as an accelerant on conflicting interests, in the U.S.-India relationship, ideology is a salve for underperformance.  Despite differences in approaches to developments in the Middle East, market disappointments in India, or deliberate political shots at Indian immigration to the U.S., common values offer the U.S.-India relationship an underlying confidence that sustains it through the criticism.  Flexibility and patience are assets in U.S.-India relations as there is an inherent sense of inevitability about the relationship.

The way the United States manages these vastly different relationships will not only enable it to secure its direct interests — it will shape the impact from “the rise of the rest.”  In short, a world in which common U.S.-India aspirations are met and Chinese ambition restrained will be a better place.  Achieving this requires two very different approaches.

Walter Lohman is Director of Asian Studies at the Heritage Foundation.

By Indrani Bagchi

As American power meets new claimants for a place at the top table, we are no longer looking at a single narrative that was almost a mantra for how nations conducted themselves. In the rise of the rest we are witnessing new ideas of the the exercise of power and different notions of how the world is structured.

More than any other power, it is in the rise of China and India that we find the tussle of two compellingly different narratives. Of particular interest is how the two developing giants exercise power as regional hegemons.

China is following a path to power wholly its own. China is much less likely to interfere in the internal affairs of sovereign states. This could mean that states can have their own models of economy or government without risking a diminution of Chinese patronage. In return, though, Beijing will demand that smaller, less powerful states explicitly recognize China’s primacy.

Leaving aside India, China has resolved its land border disputes with almost all its neighbors. That has not stopped it from aggressively pursuing expansionist territorial ambitions either in the South China Sea, or with pliant nations on its borders, like Myanmar and  Laos. Buoyed by impressive economic and military growth, China has picked fights with the Philippines, Japan and Vietnam over sovereignty issues.

As India has grown, its primary foreign policy has centered around what it calls a “peaceful periphery.”  From the Maldives to Nepal, Bangladesh and Sri Lanka, India has encouraged liberal democracy, however imperfect that might be.

Two factors have and will continue to temper India’s support for such an international order. First, India’s security concerns will trump many other issues. In Myanmar, India engaged the military government in favor of holding out for justice for Aung San Suu Kyi because it can only work with the Myanmar military to counter many northeast insurgencies, many of whose leaders live in the neighboring country.

Second, India has not shied away from involving itself in the domestic politics of a neighboring country if its stability is crucial for India. In the Maldives, India supported the new government after a controversial transfer of power in February – because the Maldives is the bridgehead for New Delhi’s Indian Ocean strategy. India has quietly but forcefully opposed Nepal’s Maoists from fashioning a left-wing authoritarian state on its doorstep, all the while encouraging Nepal’s political parties to choose democratic forms of governance.

A third factor, often unarticulated is China. China’s activities along India’s periphery, often encouraged by India’s neighbors as insurance against Indian hegemony, have alarmed New Delhi to the extent that in many cases, India is willing to compromise on the fundamental principles of liberal democracy that it itself lives by.  On the other hand, China’s own boorish behavior in its neighborhood has propelled some towards a sympathetic India.

As “others” like India and China rise, some trends are clearly visible. We might be returning to the old balance-of-power paradigm here, which makes it particularly interesting. India will weigh in with the principles of a Western international order, except that it wants to be in the tent. China is already in the tent, but clearly an outsider. Beijing will take decisions based less on what kind of world it wants to see and more on open self-interest, bordering on mercantilism.

With some exceptions, China has been fairly successful until now. India, meanwhile, is in the midst of serious policy crisis — making it rather like a deer caught in the headlights, leading many to ask whether some Chinese characteristics might not be more attractive.

In the end, the India story of a pluralistic, liberal democracy, is much more attractive. But the Chinese model appears more efficient.

Indrani Bagchi is Diplomatic Editor of the Times of India.

By John Lee

The economic rise of countries outside the post-WWII Western alliance provides a potential challenge to the pre-existing liberal order — for the simple reason that these emerging powers had little role in the creation of the liberal order. American leverage and influence must be understood within the context of the global liberal order. Any successful challenge or dilution of this order will weaken America’s global role and leadership. Although we cannot predict the future, we can point to important and difficult-to-alter domestic and structural factors that will significantly influence how these emerging powers view the future global liberal order, and their place within it.

As the two most populous nations, there is understandable attention to the re-emergence of China and India. It is widely assumed that authoritarian China will have far more difficulty integrating into the liberal order than democratic India.

This assumption is correct, but nevertheless poorly analyzed or understood. It is well known that the international liberal order is characterized by rules-based competition, dispute resolution processes and open economic and trading systems. Less well understood are the implications of such an order.

No liberal system can function effectively without the significant separation of political, economic, legal and administrative agency and agents. Governments genuinely committed to a liberal system of rules and competition use the tools of state to uphold the agreed rules of the game, most notably when it comes to protecting the agreed rights of their citizens against their own officials. In economic activity, they voluntarily give up much of their capacity to intervene in legitimate competition between firms, engineer economic outcomes, and determine the winners and losers in the hurly-burly of global economic competition. Conflating economic, political and foreign policy goals should be the exception rather than the norm.

This is the problem with the seductive belief that authoritarian China will be increasingly ‘integrated’ into the liberal order and emerge as a defender of such an order. China is moving in the opposite direction of what ‘responsible stakeholders’ in a liberal order ought to be doing.

The country’s failings in protecting the fundamental rights of its own citizens and in subjecting the Communist Party (CCP) to the ‘rule of law’ are well known. When it comes to economics, its state-dominated political economy is deliberately designed to ensure that the CCP retains an interventionist and decisive role in engineering economic outcomes through support for and protection of its state-owned-enterprises – domestically and increasingly internationally.

It is clear that the separation of economic, legal, judicial and administrative agency from politics would necessarily entail the dilution of the CCP’s relevance, standing and therefore power. The structure of the Chinese political-economy – and the CCP’s mindset – is instructive. And if this mindset will be as difficult to alter as I suspect it might, the prospects of authoritarian China emerging as a constructive player in a global liberal order are slim.

India is also emerging from a socialist past, albeit a softer and democratic one. However, the separation of political, judicial and economic power is already established in India, albeit imperfectly enforced. Moreover, the driving forces behind India’s economic emergence are the private rather than state sector. This means that New Delhi has no option but to increasingly relinquish its control over the economy and society for India too continue its rise.

Indeed, the domestic habit of separating economic and foreign policy from regime objectives is already well-grounded in India and is likely to continue. Although India will continue to have significant disagreements with America over important foreign policy issues, the nature of India’s rise is far more conducive to it emerging as a constructive contributor (if not defender) of the global liberal order.

The analysis of domestic structures, which give rise to government habits and behavior, can be applied to other emerging giants such as Brazil and Indonesia. Both are young democracies. But the natures of their political economies are less established than in China or India.

The entrenching of agreed limits on the government’s role over the economy, bureaucracy and courts in these countries will bode well for their willingness and ability to rise as effective contributors to any future liberal order – and make it more difficult for countries such as China to resist, challenge or alter key aspects of the existing liberal order. But their emergence as authoritarian economic powers will mean the weakening of the global liberal order, and reduce America’s capacity to exercise leadership and influence in a future time.

Dr. John Lee is the Michael Hintze Fellow and Associate Professor at the Centre for International Security Studies, Sydney University, and a scholar at the Hudson Institute.

Rising Powers and a New Emerging Order

By Richard S. Williamson

The international system remains relatively unchanged since Western allies, led by the United States, created the post-World War II international architecture to contain communism and create conditions for prosperity and peace – especially their prosperity and peace.  Now we face a different reality: Western powers are experiencing economic crisis, China and India are on pace to rank among the top three economies by 2050, and rising economies will potentially rival the G-8 in the decades to come.  In spite of these recalibrations to the world’s economic equilibrium, most rising powers continue to participate in multilateral organizations as outsiders or, at best, marginal actors.  If multilateral institutions no longer correspond to the reality of international affairs, how will this impact their influence in the decades to come?

The United States has benefited from the array of international multilateral institutions.  They can provide a broad acceptance, or legitimacy, for actions.  They provide a means for buy-in and burden-sharing.  The dialogue, deliberations, and debate, while often cumbersome and time-consuming, can result in better informed and improved decisions.  And it is my experience serving in ambassadorships to United Nations bodies in New York, Vienna, and Geneva that usually the United States can prevail on matters important to it if we put in the time, diplomacy, and encouragement required.  When a vital national interest is at stake, as was at play in Kosovo and Iraq, the United States can and will circumvent the encumbrances of the UN.

Furthermore, multilateral institutions have a reach that enables them to play a critical role in norm-setting, whether in international civil aviation or counter-terrorism.

Combined, these elements provide a measure of predictability which benefits the less mighty and the mighty.  The practices, processes, and procedures of multilateral institutions provide comfort to the less strong that the mighty will take into account past practices, norms, and others’ perspectives.  The great elephant will not trample the grass willy nilly.  Yes, the United States and others reserve the right to act unilaterally when they must in their vital national self-interest, but that will be the exception.  Normal events will be handled within the guardrails established and accepted.  The less mighty feel less need to form alliances to oppose or constrain the mighty.  Both sides of that equation benefit.

But as the power within these institutions increasingly fails to reflect power in the real world, they will lose legitimacy.  Respect and adherence to these institutions and their restraints will weaken and circumvention practices will increase.

So far China and other rising economies are not engaging in a direct assault or an open rejection of the established architecture.  But they are keeping their options open.

In spite of posturing by rising powers, many experts have speculated that as rising powers like China gain more influence, they will not overturn the current system’s rules and principles, but instead seek to gain more authority within the existing order.

Another potential course of action for a rising power is to engage with the existing international system while seeking over time to revise the architecture.

In response to calls for China to become a responsible stakeholder, Bates Gill and Michael Schiffer have pointed out that Beijing may reasonably conclude that the international community is populated by irresponsible stakeholders – and that there is little advantage in acquiescing to existing structures unless they are adapted to fit China’s policy preferences.

Rising powers may seek to design new arrangements that take account of their growing interests, just as Washington helped create the United Nations after it walked away from the League of Nations after World War I.  Over time incremental actions could make the current architecture obsolete – a more dramatic outcome than a mere bending of norms.

There are indications that incremental institutional changes already are underway; note the creation of new energy institutions by states dissatisfied by existing regimes.

The United States is not in decline.  But our traditional allies in Europe face an ongoing economic and political crisis, less appetite to meet their obligations in NATO, and less capacity to meet other responsibilities.  Meanwhile, with the rapid rise of China and other dynamic economies such as India, Brazil, and Turkey, the relative preeminence of the United States is changing.  New ways and means will develop to account for these newer influential voices and their interests.

That’s the reality.  How we think through these developments, and our willingness to lead in shaping the changing world, will determine our own capacity to project our power, protect our interests, and advance our values.

Ambassador Richard S. Williamson served in various senior positions in the Reagan White House and the State Department and he has served in four ambassadorships.  He currently is a Senior Fellow at the Chicago Council on Global Affairs.

Crunch Time for China?

From the draft Global Trends 2030 report:

Most of the emerging economies weathered the 2008 financial crisis well. In the coming decade, we will probably witness not only relative economic gains by China, India, and Brazil, but also the increasing importance of emerging regional players such as Colombia, Indonesia, Nigeria, South Africa, South Korea, and Turkey. However, developing countries will face their own challenges, especially in continuing the momentum behind their rapid growth.

The health of the global economy will be increasingly linked to how well the developing world does—more so than the traditional West. The developing world already provides more than 50 percent of global growth and 40 percent of global investment. Its contribution to global investment growth is more than 70 percent. China’s contribution is now one and a half times the US contribution. In the World Bank’s baseline modeling of future economic multipolarity, China—despite a slowing of its economic growth—will contribute about one-third of global growth by 2025, far more than any other economy. The world economy no longer depends on US consumers but on investment growth in emerging countries.

Nevertheless, China will face stiff hurdles to achieving that goal in the 2030 timeframe. The country’s population will start aging rapidly….  China has averaged 10-percent real growth during the past three decades; by 2020 the economy will probably be expanding by only 5 percent, according to several private sector forecasts….  China faces the prospect of being trapped in middle-income status—of its per capita income not continuing to increase to the level of the world’s advanced economies. Many Latin American countries faced a similar situation in the 1980s and were unable to avoid the trap because of income inequality and their inability to restructure their economies….

An economically difficult transition could mean an equally difficult political one in the case of China.  Slower per capita growth will increase the difficulty  of meeting rising expectations, potentially sparking discontent. A political crisis would make it harder for China to meet its economic goals. A prolonged political and economic crisis could cause China to turn inward, blaming external forces for its problems at home.

Although the leadership and much of the middle class are now wedded to globalization because of China’s startling success over the past 30 years, suspicion of the outside world lingers and, similar to historical cases elsewhere, could reemerge as a powerful political force if Chinese economic development stalls….