Trade Strategy is a Proper Part of National Security

Journal of Political Risk, Vol. 7, No. 6, June 2018 

By William R. Hawkins

Chinese-chartered merchant ship Cosco Shipping Panama crosses the new Cocoli Locks during the inauguration of the Panama Canal expansion in Panama City on June 26, 2016. A giant Chinese-chartered freighter nudged its way into the expanded Panama Canal on Sunday to mark the completion of nearly a decade of work forecast to boost global trade. Photo: JOHAN ORDONEZ/AFP/Getty Images.

On June 4, the Koch brothers (Charles and David) announced the launch of a “multi-year, multimillion-dollar” campaign against the tariffs and trade restrictions imposed by the Trump administration; especially those levied on China. The billionaire brothers are regularly called “conservatives” because they make large campaign donations to Republican candidates. But they are not conservatives; they are libertarians, a very different breed of cat. And their donations to the GOP are meant to sway the party in their ideological direction, not merely support it. The liberal media tries to tarnish conservatism by placing libertarians on “the Right” even though this is not their intellectual origin. This is done to further the left-wing narrative that “conservatives” are self-interested, greedy individuals who are enemies of organized society and the common good. This is true for libertarians, who doubt the very legitimacy of the nation-state or the “higher” norms of society. Too often they define right and wrong on the basis of whether it turns a profit.

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We Need a New Approach to China Even if We don’t Care About Human Rights and Free Trade

Journal of Political Risk, Vol. 6, No. 2, February 2018

By Ho-fung Hung, Ph.D.

Obama era officials Kurt M. Campbell and Ely Ratner recently published “The China Reckoning: How Beijing Defied American Expectations” in Foreign Affairs, arguing US’ assumption underlying its China Policy over the past several decades has been wrong. They admit that China has not changed in the direction most China hands in the US had expected. Rather than becoming more liberal and democratic, it became more authoritarian; rather than more opening to trade, it became more protectionist. They call for a reorientation of Washington’s approach to China. This article has triggered some internal debate and soul searching in the China watchers’ community.

It is understandable that many who expect China to embrace liberal democracy and more economic openness have been disappointed. What is missing in the discussion is that even many realists and corporations who do not care too much about the ideals and principles of economic and political liberalism are frustrated with China too. Over the last few years, another China reckoning is that China is unable, or never intended, to deliver and keep its promises even on many economic and geopolitical issues that are unrelated to the sensitive areas of political reform and change.

Graffiti depicting a portrait of former Chinese leader Mao Zedong with Chinese yuan signs in his eyes, on a wall in Shanghai on March 1, 2017. Source: JOHANNES EISELE/AFP/Getty Images.

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China Grew Up, and Now? Utilitarianism, Democracy and A Moderating Role for the Holy See

Journal of Political Risk, Vol. 6, No. 2, February 2018

By Francesco Sisci

In the past few months, stretching out no longer than a couple of years, an important controversy has mounted in America and the West, in which some argue that we foreigners were fools to believe we could change China. China in the past 40 years, since the U.S. started cooperating with her, taking her under wing, just fooled us and did what it always wanted – remained communist (thus anti-capitalistic) and with a value system different than ours (and thus against our value system). The Holy See, who has proven capable of striking deals in China and also holds a high moral ground in the West, may be able to find a middle way.

Red Guards of the China Foreign Affairs University make a vow with “from Chairman Mao” in hands in front of Tiananmen Rostrum in October, 1966 in Bejing, China. Red Guards were a mass paramilitary social movement of young people in the People’s Republic of China (PRC), who were mobilized by Mao Zedong in 1966 and 1967, during the Cultural Revolution. Source: VCG via Getty Images.

Chinese soldiers march with riot shields outside the Great Hall of the People in Beijing, after the introduction of the Communist Party of China’s Politburo Standing Committee, the nation’s top decision-making body, on October 25, 2017. China unveiled its new ruling council with President Xi Jinping firmly at the helm after stamping his authority on the country by engraving his name on the Communist Party’s constitution. Source: GREG BAKER/AFP/Getty Images.

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China’s $60 Trillion Estimate Of Oil and Gas In The South China Sea: Strategic Implications

U.S. hydrocarbon estimates imply a maximum of $8 trillion worth of oil and gas in the region, explaining part of the strategic divergence of the two superpowers.

Journal of Political Risk, Vol. 6, No. 1, January 2018

By Anders Corr, Ph.D.

China’s estimates of proved, probable and undiscovered oil and gas reserves in the South China Sea imply as much as 10 times the value of hydrocarbons compared with U.S. estimates, a differential that has likely contributed to destabilizing U.S. and Chinese interactions in the region. While China estimates a total of approximately 293 to 344 billion barrels of oil (BBL) and 30 to 72 trillion cubic meters (TCM) of natural gas, the U.S. only estimates 16 to 33 BBL and 7 to 14 TCM. Considering that the inflation-adjusted value of oil vacillated between approximately $50 and $100 per barrel (in 2017 prices) since the mid-1970s, U.S. estimates imply a hydrocarbon value in the South China Sea between $3 and $8 trillion, while Chinese estimates imply a value between $25 and $60 trillion. In addition to other factors, China’s greater dependence on oil imports and higher estimates of hydrocarbons in the South China Sea have driven it to invest more military resources in the region. An overly economistic approach by the Obama administration probably led the U.S. to allow China’s expansion in the South China Sea too easily.

Photo taken on June 13, 2015 shows the Xingwang deep-sea semi-submersible drilling platform at Liwan3-2 gasfield in the South China Sea. China’s largest offshore oil and gas producer CNOOC Ltd. announced on July 3, 2015 that its Xingwang deep-sea semi-submersible drilling platform started drilling at 1,300 meters underwater in Liwan 3-2 gas field in the South China Sea. Credit: Xinhua/Zhao Liang via Getty Images.

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Protectionism Won’t Work: Four Alternatives to Canceling Trade Agreements

Journal of Political Risk, Vol. 5, No. 12, December 2017

By Bhakti Mirchandani

It’s time to create jobs for displaced manufacturing workers and bolster American competitiveness in four ways: (i) invest in growing fields and tradable economies that draw upon a region’s endemic old industrial skills; (ii) fight the opioid epidemic to avoid further declines in labor force participation; (iii) align universities and local manufacturers to ensure that workers are sufficiently skilled to participate in the local tradable economy; and (iv) encourage–and protect–R&D and entrepreneurship in manufacturing.

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China’s Strategic Pivot Towards the South Pacific Island Nation of Tonga

A Hybrid Intelligence Preparation of the Operational Environment (IPOE) Analytical Assessment

Journal of Political Risk, Vol. 5, No. 12, December 2017

By Mark Anthony Taylor

The aim of this research is to critically examine the refocusing of Chinese aid, economic involvement and diplomatic attentions towards the small South Pacific island nation of Tonga.  The research seeks a deeper understanding of China’s behaviour towards Tonga and promotes a reevaluation of how the US and its allies should respond to China’s strategic calculus. China’s actions in Tonga, although appearing benign, represent a cloaked threat to Tonga’s independence, democracy and U.S. regional aspirations.  Furthermore, owing to the comparative strength of the Chinese economic and diplomatic approach, a competitive soft-power response from the US may prove inadequate. In consequence, it may be more advantageous for the US to pursue a heightened hard-power response to ameliorate any potential threat. Through undertaking an analysis of China’s fundamental motivations for the soft-power Tongan pivot and an exploration of the modus operandi employed by China to affect its strategic goals, the project will endeavour to provide a clear answer to the following research question: “Is this Chinese pivot towards Tonga merely an example of cheque-book economic diplomacy, or does it entail a cloaked malignant threat to the security and autonomy of the US and its allies?” Utilising a hybrid adaption of the Intelligence Preparation of the Operational Environment (IPOE) analytic method[1], this project will apply a structured framework in order to probe and reconceptualise the Chinese pivot towards Tonga in an effort to unravel the underlying motivations of China. In line with this approach, the project will firstly scrutinize the situational variables resident in each nation that comprises the terrain of the issue. The significant and unique political, military, economic, social, infrastructure and informational system factors (PMESII) that contribute to the rapid intensification of China/Tongan relations will be explored. From this point, the focus will be turned towards an analysis of the usefulness of the two polar theoretical explanations (liberal and realist) for the current Chinese Course of Action (COA) in Tonga. Lastly, a detailed investigation of the two key Centres of Gravity (COG’s) that underpin and impact upon the China/Tonga relationship will ensue, exploring the cultivation of pro-China sentiment in Tonga and the degree of the US pivot to the South Pacific. The project will draw from a diverse variety of academic publications, expert opinion pieces and news media sources. The analysis reveals that the Chinese strategic pivot into the nation of Tonga superficially appeared to be motivated by benign economic opportunism. However, engagement with Tonga was found to hold a minimal benefit to China in terms of resource supply or economic gain. The major strategic benefits that were found to accrue to China were through the potential securing of Tonga for the establishment of a forward operating military base in the South Pacific. Consequently, China’s pivot may be motivated by concealed Chinese hegemonic designs (the realist perspective) rather than by benign economic opportunism (the liberal perspective). This motivation was found to pose a significant security threat to the US-lead regional order.  Two significant COG’s are bolstering the effectiveness of China’s Tongan pivot. Firstly, China has successfully executed a “hearts and minds” program to facilitate the broad interweaving of pro-China sentiment into the psyche of Tongan society. Secondly, the absence of US attention towards soft-power regional engagement with Tonga has aided China’s pivot. In terms of an effective US response to China’s strategy in Tonga, a revised US soft-power push was assessed as constituting an ineffective strategy due to the resilient China-Tonga relationship that now exists and because of China’s deep aid pockets. Consequently, the evidence points towards the need for a revitalised US hard-power military presence in the region as the most viable option for dampening China’s future militaristic ambitions towards Tonga.

One pa’anga and two pa’anga banknote.
Tonga, Pacific. Credit: Getty Images.

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KORUS: Part of the Heart and Seoul of the US-South Korea Relationship

Journal of Political Risk, Vol. 5, No. 11, November 2017

By Bhakti Mirchandani

South Korea has been an important US ally since 1953.  The alliance is multifaceted, ranging from US military presence in South Korea and coordination on the North Korea nuclear issue to cyber, and from energy to climate change.[1]  South Korea is also the US’s sixth-largest trading partner.[2] Despite the lasting strength of the alliance, the relationship between South Korean President Moon Jae-in and President Trump is fraying under the strain of the North Korean nuclear threat and of renegotiating the bilateral US-Korea free trade agreement (“KORUS “).  President Trump accused President Moon’s government of “appeasement” of North Korea,[3] but ultimately agreed not to attack North Korea without South Korea’s permission.[4]  Trump also threatened to terminate KORUS, which he described as a “horrible deal.”[5]  Beyond the relationship between the two leaders, the position of US Ambassador to South Korea has been vacant since President Trump took office, and South Korean protestors assembled with anti-war signs at an anti-Trump rally outside the US Embassy in Seoul during President Trump’s visit this past Tuesday.[6]

Tae Song Dong, South Korea. The flags of South Korea and the United Nations wave in the breeze. Source: Getty

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Good Hombres (and Mujeres): Let’s Modernize NAFTA

Journal of Political Risk, Vol. 5, No. 9, September 2017

By Bhakti Mirchandani

Mexico is the U.S.’s third largest trading partner[1] and second largest export destination.[2]    Trade representatives from the U.S., Canada, and Mexico said that they made progress in the second round of NAFTA renegotiations (September 1-5 in Mexico City),[3] with a third round scheduled for September 23-27 in Ottawa, Canada.[4]  President Trump’s August 22nd statement at a rally in Phoenix that the US would “probably end up terminating NAFTA at some point”[5] looms over this progress.  Instead, the administration should acknowledge that withdrawing from NAFTA is untenable.

Credit: Bhakti Mirchandani.

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Two Decades of Asian Cooperation and Alliance Building, Followed by Retreat

Journal of Political Risk, Vol. 5, No. 4, April 2017

By David Wolfe

The recent controversy regarding the location of the Carl Vinson Strike Group is analogous to current US Policy in Asia, rather than just another confusing announcement by the Trump Administration. The dysfunctional appearance is emblematic of a newly adopted regional retreat in many ways by the Trump Administration, and ceding territory throughout the region to Chinese aggression and hegemonic dominance.  The time period between the announcements of the US-India Nuclear Agreement back in 2006, right up to the recent withdrawal of the Trans Pacific Partnership (TPP), saw the United States’ Asian Policy focus towards consensus building, greater regional economic integration and an expansion of security partnerships.  However, given the recent withdrawal from TPP, the Trump Administration is reversing course from those alliances established to counter the hegemonic ambitions by the Chinese to one in stark contradiction of that policy overnight.  The United States’ proposed interests, strategic alliances and most importantly, a check to Chinese expansion throughout the region of South, Southeast and Northeast Asia, is now in jeopardy, and no one is more appreciative of this shift than China.  Unfortunately, given the short-term memory in today’s oversaturated news culture, most are either unaware or have forgotten the long-term strategic goals the US has sought to pursue, and how that is now setting up a dangerous scenario for regional allies.

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