Journal of Political Risk, Vol. 5, No. 2, February 2017
By James E. Fanell
Below are the critical comments I provided to Dr. Orville Schell, the co-chair of the recent Asia Society and University of California, San Diego report US POLICY TOWARD CHINA: RECOMMENDATIONS FOR A NEW ADMINISTRATION. While there are sections of the work that I agree with, I still fundamentally disagree with the overall foundation of the document’s recommendations which I believe are designed to sustain the past 40 year of a policy that promotes unconstrained “engagement” with the PRC. As such, I’ve gone through the entire document and extracted several statements and paragraphs that I disagree with and a few that I agree with. While I will provide comments for each specific reference issue, I can summarize my dissent of the report in the following major themes:
1. Unconstrained Engagement. Engagement with China is asserted to be the primary goal of US relations with China without providing evidence for that assertion. Or worse, suggesting things are actually going well, contrary to all objective evidence.
2. “The Relationship” is the #1 Priorty. “The relationship” is prioritized as being equal to or more important than U.S national security. There is no clear articulation that U.S. National security should be the #1 national security priority for the US and that our relationship with China should be judged through that lens, not through the lens of sustaining “the relationship” at all costs.
3. Do Not Provoke. America should not “provoke” China, but again, there is no evidence to support why this position will benefit U.S. national security interests.
4. Dissent Not Welcome. While I appreciate inclusion of Ambassador Lord’s dissenting opinion on North Korea, clearly the study did not value, or include, dissenting opinions, especially in the Asia-Pacific Regional Security and Maritime Dispute sections.
Journal of Political Risk, Vol. 5, No. 2, February 2017
By Tom Stern
As President Donald Trump takes command 28 Years after the Tiananmen Square Massacre in Beijing, there are three prominent groups which are considered by the Communist Party of China (CPC) to be dissident and subversive to its ideals, posing a danger to political stability. Each of these could potentially become the backbone necessary for the expansion of freedoms in China.
The 退黨運動 (Tuìdǎng yùndòng), or Tuidang movement for short, is one that seeks the abolition of the CPC. Literally meaning “to withdraw from the Communist Party,” its members are bound by their desire to end the corruption tied to the Party. Caylan Ford, in his dissertation “Tradition and Dissent in China: The Tuidang Movement and its Challenge to the Communist Party” notes a key difference between the movement and those before it in that, rather than drawing from western principles and ideals of democracy and free expression, it seeks to act as a mirror to the nation’s idealized past. In its reflexive approach, the movement employs exigent and distinct Chinese language and ways of thought, such as Confucianism. Ironically, Ford also notes that the movement views the Communist ideology as a largely foreign and detrimental one, “which is portrayed as antithetical to true Chinese values, human nature, and universal laws.” Rather than using a geopolitically-charged force behind its espoused arguments, the Tuidang movement draws from both history and morality in its efforts to compel the Chinese public to recognize their unified, and wholly unnecessary, suffering under the Communist Party.
02 Nov 2011, Mongolia — The processing conveyor under construction is seen at the Oyu Tolgoi mine in Mongolia. Oyu Tolgoi, also known as Turquoise Hill is a combined open pit and underground mega mine project in Khanbogd in the south Gobi Desert. The site was discovered in 2001 and is being developed as a joint venture between Ivanhoe Mines, Rio Tinto and the Government of Mongolia. The mine is scheduled to begin production in July 2012. The Oyu Tolgoi mining project is the largest financial undertaking in Mongolia’s history and is expected upon completion to account for more than 30% of the country’s gross domestic product. Copper production is expected to reach 450,000 tonnes annually and Gold production is estimated to reach 650,000 ounces per year. —(Copyright Kieran Doherty/In Pictures/Corbis / APImages)
Journal of Political Risk, Vol. 2, No. 6, June 2014.
By Jamian Ronca Spadavecchia 
Mongolia stands at a critical juncture between the rewards of natural resource development and the challenges of modernization. On the one hand, it offers abundant opportunities in the natural resources sector and is located near growing and resource-starved industrial nations of East Asia. At the same time, the presence of autocratic neighbors impose international instability on this democratic and market-oriented economy.
This article considers two underanalyzed political risks that are necessary for understanding the future of the Mongolian economy: nationalism and pastoral nomadism. In doing so, it proffers an improved analytical framework for resource investors to better assess and mitigate their Mongolia risk.
Finally, the analysis uses selected case studies to demonstrate how nationalism and pastoral nomadism might impact natural resource investment. For nationalism, a study of the proposed acquisition of SouthGobi Resources (SouthGobi) by the Aluminum Corporation of China Limited (Chalco) is offered. The Chalco study is emblematic of the link between nationalism and two dominant trends in Mongolia: resource nationalism and increasing geopolitical risk in the natural resources sector. The section also looks at how pastoral nomadism poses a risk to Oyu Tolgoi, Mongolia’s premier copper and gold mining project, by examining a dispute between Rio Tinto and indigenous communities of Gobi herders that threatened Oyu Tolgoi’s project financing. Continue reading →
Russia and China are currently conducting naval exercises near Shanghai. In 2013, Russia and China conducted similar exercises near Vladivostok. From right, China’s Yantai Type-054A missile destroyer, Yancheng Type-054A missile destroyer, Wuhan Type-052B guided missile destroyer and Lanzhou Type-052C air defence missile destroyer take part in the fleet review during the “Joint Sea-2013” Sino-Russian joint naval drills at the Peter the Great Gulf near Vladivostok in Russia on Wednesday, July 10, 2013. A Chinese fleet consisting of seven naval vessels participated in the “Joint Sea-2013” Sino-Russian joint naval drills scheduled for July 5 to 12. The eight-day maneuvers focus on joint maritime air defense, joint escorts and marine search and rescue operations. (Photo By Sheng Jiapeng/Color China Photo/AP Images)
Journal of Political Risk, Vol. 2, No. 5, May 2014.
By Anders Corr, Ph.D.
China is using a very blunt and escalatory instrument — threatening general deterioration in military relations — to respond to a limited issue of Chinese individuals stealing trade secrets. On May 20, the United States Justice Department indicted five People’s Liberation Army members for hacking United States commercial data. The remarkable speed with which China responded the following day, and at the highest level, suggests that commercial hacking is an officially-approved state policy on the part of China. The Chinese threat of reduced military cooperation and thereby deteriorating military relations is clumsy in that the Chinese would look better had they simply launched an investigation of the individuals — an investigation that they could later claim shows the indictment as baseless. The broad Chinese threat of deteriorating military relations invites an increase in US military attention to Asia — exactly what the Chinese should be trying to avoid. The clumsiness of the Chinese response to the indictments indicates a rash Chinese leadership prone to irrational military strategies, with consequent market volatility and political instability. The US and its Asian allies should respond with a measured forward deployment of military forces, and redoubled diplomatic energy towards greater alliance cooperation, including between Asian allies and NATO.
For legal and political reasons, the US will not be able to simply withdraw the indictment. It would increase the perception of an increasingly weak US foreign policy. This will lead Chinese diplomats to retaliate in some manner, further decreasing stability between the US and China. Expect mutual diplomatic retaliation to exert downward pressure on the Yuan (compensated by People’s Bank of China buying of Yuan), as well as downward pressure on Chinese stock indexes, including SHCOMP, CSI-300, Bloomberg China-US 55, and HSCEI. Expect Chinese index losses to increase with every additional diplomatic spat that ensues, and to slowly recover during periods of diplomatic quiet. Continue reading →
Gallup opinion polls conducted following North Korea’s third nuclear weapons test found that approximately 64% to 66.5% of South Koreans believe South Korea should develop an independent nuclear weapons capability. They want the capability to defend against North Korea if the United States unexpectedly withdraws its security commitment to South Korea (New York Times).
The United States is fully committed to the defense of South Korea, and North Korea is well aware of this fact. For this reason, South Koreans should not be overly concerned with the latest North Korean antics. The United States stands firmly with its ally South Korea.
Nevertheless, South Koreans are understandably uncomfortable having an unpredictable and highly belligerent nuclear-armed neighbor to the North. South Korean nuclearization would be a major blow to nonproliferation of weapons of mass destruction (WMD). The nonproliferation regime works because member countries show self-restraint by not developing independent nuclear weapons. Rather, they entrust their defense to a close security partnership with the United States, NATO, and other friendly alliances.
If the strength of the alliance is not apparent to the voting population of a non-nuclear country — in this case South Korea — then it is incumbent upon the stronger member of the alliance to take greater measures to display that commitment. These measures should include improved specification of treaty obligations, greater numbers and quality of forces deployed to South Korea, higher levels of South Korean inclusion and diplomatic collaboration in U.S. foreign policy decision-making, and improved diplomatic relations overall through improved trade relations. Deepening all facets of the relationship between South Korea and the United States will enhance the trust required for South Koreans to place the security of their nation in the hands of the United States.
Not taking proactive measures to improve the trust of South Koreans in the United States risks nuclearization of South Korea, which by example, will exponentially increase the risk of further global WMD proliferation. South Korea is a highly respected member of the international community. South Korean nuclearization will erode the taboo against proliferation, making it seem a respectable option for many small and medium-sized nations. We cannot afford the increased risk of nuclear war that this entails.
Saber-rattling by China over the Senkaku Islands, most recently in the form of locking weapons on a Japanese ship and helicopter, have led some analysts to warn of war between the two East Asian countries. These analysts go further to question whether the US treaty commitment to Japan’s territorial integrity would hold in this case (Wall Street Journal).
Such warnings are overblown. Militarized jostling of this sort is normal for low-intensity territorial disputes. All parties — including China — recognize that war would be counterproductive. China regularly activates media coverage with its mildly belligerent actions in order to bolster and maintain its long-term claim to the islands should the case go to an international court in future. Japan is a key US ally and trading partner. There is no question that were war to occur between China and Japan, the United States would defend its ally.
North Korea issued a nuclear threat against the United States and South Korea today, the latest in a long series of such threats emanating from the small rogue nation in East Asia (Wall Street Journal). The UN was already in the process of tightening sanctions, but nothing that will drastically alter the status quo. These threats are geared to galvanize public support within North Korea for the leadership, as well as potentially garner minor material concessions from the West. The most likely scenario is no change, but given the country’s new youthful leadership (Kim Jong Eun), costly missteps are possible. That Kim Jong Eun lacks missile capabilities to deliver nuclear or other weapons of mass destruction (WMD) to his targets does not mean that he could not deliver WMD via simpler methods such as cargo container or by smuggling the material on fast boats from neighboring countries. Port and major cities in the US, South Korea, and Japan have a miniscule but persistent and catastrophic risk from North Korean WMD delivery.
Journal of Political Risk, Vol. 5, No. 2, February 2017
By James E. Fanell
Below are the critical comments I provided to Dr. Orville Schell, the co-chair of the recent Asia Society and University of California, San Diego report