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    Peter Thiel’s Bitcoin Paranoia

    Silicon Valley billionaire Peter Thiel finds himself in a confusing moral quandary as he struggles to weigh the merits of his nerdish belief in cryptocurrency against his patriotic paranoia focused on China’s economic rivalry with the United States. Participating in “a virtual event held for members of the Richard Nixon Foundation,” Thiel, while reaffirming his position as a “pro-Bitcoin maximalist,” felt compelled to call his faith into doubt due to his concern that China may use bitcoin to challenge US financial supremacy.

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    According to Yahoo’s Tim O’Donnell, Thiel “thinks Beijing may view Bitcoin as a tool that could chip away at the dollar’s might.” He directly quotes Thiel who wonders whether “Bitcoin should also be thought [of] in part as a Chinese financial weapon against the U.S.”

    Today’s Daily Devil’s Dictionary definition:

    Financial weapon:

    The role any significant amount of money in any one person’s, company’s or nation’s hand is expected to play to assert power and obtain undue advantages in today’s competitive capitalism

    Contextual Note

    Thiel may be stating the obvious. Money is power and concentrations of money amount to concentrated power. The point of power is to influence, intimidate or conquer, depending on how concentrated the power may be. It is ironically appropriate that the event at which Thiel spoke was organized by the Nixon Foundation. Richard Nixon was known for putting the quest for power above any other consideration. He was also known for opening the relationship with China, which many Republicans today believe led to a pattern of behavior that allowed China to eventually emerge as a threat far more menacing than the Soviet Union during the Cold War. Nixon was also the president who destroyed the Bretton Woods system that set the financial rules ensuring stable international relations in the wake of World War II.

    Thiel’s thoughts are both transparently imperialistic. They follow Donald Trump’s “America First” logic, while at the same time revealing Thiel’s uncertainty about how to frame it in the context of Bitcoin. His version of “America First” has less to do with the Trumpian idea that America should worry first about its own internal matters and later deal with the world than with the idea of the neocon conviction that the US must impose itself as the unique hegemon in the global economy. In Thiel’s mind, this sits uncomfortably alongside his made-in-Silicon Valley belief that cryptocurrencies represent the trend toward something that might be called “financial democracy.”

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    According to O’Donnell, Thiel “explained that China isn’t fond of the fact that the U.S. dollar is the world’s major reserve currency because it gives the U.S. global economic ‘leverage,’ and he thinks Beijing may view Bitcoin as a tool that could chip away at the dollar’s might.” O’Donnell is guilty of somewhat hypocritical understatement when he claims that it is all about China not being “fond of” the dollar’s status as the world’s major reserve currency. Who besides the US would be “fond of” such a thing? Those are O’Donnell’s words, not Thiel’s. As for the idea that Bitcoin might chip away at the dollar’s might, Thiel avoids making that specific point and prefers a more vaguely paranoid reading of events as he suggests a kind of plot in which China may be using Bitcoin to undermine US hegemony.

    Thiel’s phrasing places him clearly in the realm of what might be called diplomatic paranoia. He begins with a statement of speculative uncertainty as he expresses his concern with China’s turning Bitcoin into a financial weapon. Here are his exact words: “I do wonder whether at this point Bitcoin should also be thought in part of as a Chinese financial weapon against the US where it threatens fiat money but it especially threatens the US dollar and China wants to do things to weaken it.”

    “I do wonder whether at this point Bitcoin should also be thought … of” expresses a deviously framed insinuation of evil intentions by a Fu Manchu version of the Chinese government. This is a popular trope among Republicans and even Democrats today, who vie with each other to designate China as an enemy rather than a rival. But Thiel’s admission that it’s really about “wondering” tells us that we are closer to Alice’s Wonderland than to the CIA book of facts.

    Thiel then adds the temporal detail of “at this point,” which introduces a surreal notion of time that has more to do with a fictional dramatic structure than the reality of contemporary history. It is tantamount to saying: This is where the plot thickens. And his suggestion of how it “should be thought of,” besides being manipulative, indicates that we are invited into accepting the plot of a paranoid fantasy made up of thought rather than reality.

    He then explains what he means by “a Chinese financial weapon against the US.” Though he claims to be a believer in the unfettered freedom of cryptocurrency, he accuses it of violating what might be called “the rule of law” insofar as “it threatens fiat money,” which is the privilege of every nation on earth. But that worry has little merit compared to the fact it “especially threatens the US dollar,” which — it goes without saying — China wants to weaken.

    Thiel knows where the money is. It lies in the primacy of the US dollar. That is why the US has 800 military bases across the globe.

    Historical Note

    Since the dismantling in 1971 of the Bretton Woods system by US President Richard Nixon — in whose name the Richard Nixon Foundation was created — the dollar has functioned as the ultimate and most devastating financial weapon in history wielded by a single government. The Bretton Woods agreement, signed in 1944 by 44 countries, allowed the dollar to play a controlled role as the world’s reserve currency thanks to its convertibility with gold. When the growing instability of the dollar, due in part to the Vietnam War, threatened the order established by Bretton Woods, Nixon unilaterally broke the link with gold. Instantaneously, the US was free to weaponize the dollar for any purpose it judged to be in its interest.

    Nixon produced one of the greatest faits accomplis in history. As with many successful unnoticed revolutions, Nixon’s administration presented the uncoupling of the dollar and gold as a temporary measure, the response to a momentary crisis. It took two years for the world to notice that Bretton Woods had definitely collapsed. The era of floating currencies began. Money could finally be seen for what it is: a shared imaginary repository of value that could eventually become the focus of what Yuval Noah Harari has called the religion of capitalism in his book, “Money.”

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    For many people, Bitcoin has become a kind of alternative religion, or rather a vociferous radical sect on the fringes of the global religion of neoliberal capitalism. Bitcoin as a concept highlights the lesson brought home by the collapse of Bretton Woods: that the value of money people exchange, despite Milton Friedman’s objections, is literally based on nothing and therefore meaningless. That also means — though the faithful are not ready to admit it — that its value is infinitely manipulable. It appears to derive from economic reality but is anchored in little more than what a small group of people with excess cash may think of it on a given day. Elon Musk ostentatiously manipulated its value when he announced that Tesla had purchased $1.5 billion worth of bitcoin. 

    For anyone with billions to throw around, it’s an easy game to play. The manipulation by Musk, Peter Thiel’s former associate as co-founder of PayPal, doesn’t worry Thiel. Wondering about whether China might, in some imaginary scenario, use Bitcoin for nefarious purposes does trouble him.

    Thiel represents our civilization’s new ruling elite. It consists of individuals who sit between two hyperreal worlds, one dominated by the mystique that surrounds means of payment (cash) and the control of financial flows, complemented by another that seeks political control and the hegemony required to enforce the now imaginary “civilized” rules governing financial flow. Since the demise of Bretton Woods, those rules have lost all meaning. That means the rules themselves can be weaponized. It’s a monopoly that Thiel, his fellow members of the Nixon Foundation and most people in Washington insist on reserving for the US.

    *[In the age of Oscar Wilde and Mark Twain, another American wit, the journalist Ambrose Bierce, produced a series of satirical definitions of commonly used terms, throwing light on their hidden meanings in real discourse. Bierce eventually collected and published them as a book, The Devil’s Dictionary, in 1911. We have shamelessly appropriated his title in the interest of continuing his wholesome pedagogical effort to enlighten generations of readers of the news. Read more of The Daily Devil’s Dictionary on Fair Observer.]

    The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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    US in ‘close consultations’ with allies on possible action over Beijing Olympics

    The US state department said on Tuesday the Biden administration is consulting with allies about a joint approach to China and its human rights record, including how to handle the upcoming Beijing Winter Olympics.The department initially suggested that an Olympic boycott to protest China’s human rights abuses was among the possibilities, but a senior official said later that a boycott has not yet been discussed.The official said the US position on the 2022 Games had not changed but that the administration is in frequent contact with allies and partners about their common concerns about China. Department spokesman Ned Price said earlier the consultations were being held in order to present a united front.“Part of our review of those Olympics and our thinking will involve close consultations with partners and allies around the world,” Price told reporters.Human rights groups are protesting China’s hosting of the Games, which are set to start in February 2022. They have urged a diplomatic or straight-up boycott of the event to call attention to alleged Chinese abuses against Uyghurs, Tibetans and residents of Hong Kong.Price declined to say when a decision on the Olympics would be made but noted there is still almost a year until the Games are set to begin.“These Games remain some time away. I wouldn’t want to put a timeframe on it, but these discussions are underway,” he said. “It is something that we certainly wish to discuss and it is certainly something that we understand that a coordinated approach will be not only in our interest, but also in the interest of our allies and partners. So this is one of the issues that is on the agenda, both now and going forward.”The Beijing Winter Olympics open on 4 February 2022, and China has denied all charges of human rights abuses. It says “political motives” underlie the boycott effort.Rights groups have met with the International Olympic Committee and have been told the Olympic body must stay politically “neutral.” They have been told by the IOC that China has given “assurances’’ about human rights conditions.Both the IOC and the US Olympic and Paralympic Committee have said in the past they oppose boycotts.In March, IOC president Thomas Bach said history shows that boycotts never achieve anything. “It also has no logic,” he said. “Why would you punish the athletes from your own country if you have a dispute with a government from another country? This just makes no real sense.”The USOPC has questioned the effectiveness of boycotts. “We oppose Games boycotts because they have been shown to negatively impact athletes while not effectively addressing global issues,” it said. “We believe the more effective course of action is for the governments of the world and China to engage directly on human rights and geopolitical issues.” More

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    Escaping Thucydides’ Trap: Keeping the Peace Between Rising and Reigning Powers

    A conflict between the United States and China seems increasingly likely. A trade war that began several years ago has had economic repercussions for both sides. In the South China Sea, Chinese aggression against Taiwan is checked by the US military. In cybersphere, the war has already begun, as American and Chinese hackers attempt to exploit weaknesses in each other’s online defenses for military, political and economic information.

    With this ever-increasing antagonism between China and the US playing out on the world stage, little imagination is required to appreciate the catastrophic result of a conflict between the world’s two largest economies with nuclear triads.

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    Several years ago, Dr. Graham Allison of Harvard University unveiled a historical pattern where increasing tensions between rising and reigning states led to diplomatic friction and war. Allison dubbed this pattern Thucydides’ Trap, in honor of the Athenian strategos who identified “the growth of the Athenian power, which [put] the Lacedaemonians into fear” as a cause of the Peloponnesian War between 431 and 404 BC. Allison identified 16 cases throughout history in which the rise of a rival state provoked a response from an existing hegemonic power. In 12 of those cases, titanic wars followed, while peace prevailed in only four.

    So, what lessons do the four cases with a peaceful ending offer when considering the nascent Sino-American rivalry? Close examination reveals that military, economic and political considerations contributed to a diplomatic decision for peace. In every case, both sides were vulnerable to substantial military losses in terms of personnel and equipment. The winner of the contest would find economic gains that paled in comparison to what they could have achieved in peacetime, and the loser could expect nothing short of economic devastation. Likewise, winning these conflicts could leave the victor weakened politically and almost certainly lead to the deposition of the loser. Victory in each case would have been Pyrrhic in human, economic and political terms. Defeat would have been near annihilation.

    Thus, the four cases in which adversaries escaped the trap provide potential avenues for China and the US to do the same.  

    Spain vs. Portugal

    In the late 15th century, the Iberian Peninsula held two of Europe’s economic and military powerhouses: Spain and Portugal. In Portugal, the reign of Henry the Navigator ushered in a period of exploration and colonization in Africa. Through a combination of squeezing out rivals and occupying key positions in the Eastern Atlantic, Portugal was able to utilize important sea lanes to facilitate trade with western Africa. However, the War of Castilian Succession between 1475 and 1479 ended with a unified Castille and Aragon, greatly shifting the balance of power by creating a unified Spain.

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    After the Reconquista ended with the capture of Granada in 1492, Portugal’s trading empire was exposed to a newly united Spain. Flush with captured Muslim treasure and in possession of an experienced military, Ferdinand and Isabella needed only to look west to find targets for future expansion. Later that year, the discovery of the Americas and the potential for economic dominance over two continents made war even more likely. Yet Spain and Portugal were able to negotiate the Treaty of Tordesillas in 1494. In doing so, they averted a potentially brutal military conflict.

    Subsequently, Spain and Portugal concentrated their militaries and economic might into their colonial empires. Spanish colonies in Latin America and the Pacific created a colonial empire that only crested in the 18th century. Portugal’s possessions in Brazil, Africa, India and the Far East allowed it to access spice markets, and it generated a Portuguese-Indian sea trade monopoly. Though both empires eventually faded, their shared peace allowed each of them to experience massive economic growth — albeit at the cost of the indigenous peoples they attacked and enslaved in doing so.

    The example illustrates an emphasis on foreign trade and domestic investment instead of escalation to war. As a result of their peaceful settlement of tensions and the ensuing economic boom, Spain and Portugal became more politically stable. The new Spanish monarchy consolidated its power after 1492, making its previously multifaith state into a Catholic stronghold and ensuring that the ties between Aragon and Castille were permanent. Meanwhile, spurred on by strong trade from their colonies, Portugal was able to endeavor its Renaissance.

    The United States vs. the United Kingdom

    The precipitous rise of American industrialism and the modernization of the US Navy challenged British domination of the seas at the turn of the 20th century. As American factory output, as well as iron and steel production, surged, the US built a formidable modern battle fleet of the latest capital ship designs. Consequently, the British government realized that the cost of a conflict was something it could ill afford. By the early 20th century, the first lord of the Admiralty admitted that the United States could create a larger navy than the British Empire.

    A territorial dispute over Venezuela in 1895 threatened to ignite a third Anglo-American war, creating economic panic. By 1901, the British Admiralty realized that the US Navy would soon possess the potential to outstrip the British Grand Fleet. Thanks to the Spanish-American War of 1898 and the leadership of President Theodore Roosevelt, American naval tonnage had tripled from 1900 to 1910. Britain’s ability to maintain a stronger navy than its allies was threatened by this massive growth.

    Meanwhile, Britain was also engaged in a naval race with Germany, its primary antagonist during the era. The rapid construction of the German high seas fleet with the latest armor and guns threatened the British coastline and maritime trade routes in the event of a war. Faced with two bids for naval supremacy, the UK concentrated on the German threat and ignored American naval competition. By exempting the US from the two-power standard (to have as many battleships as its next two great competitors, plus 10%), and by leaving the Roosevelt Corollary to the Monroe Doctrine unchallenged, Britain was able to deescalate the potential conflict between the two countries.

    As a result of this diplomatic and military resolution, Britain’s prudence soon netted extensive economic and national security gains. As the Great War commenced, Britain’s war economy relied increasingly on raw materials, munitions production and food supplies from the United States. This ongoing trade, coupled with Imperial Germany’s unrestricted submarine warfare and the revelation of the Zimmerman Telegram, helped propel the US into declaring war on Germany in April 1917 and thus into becoming an ally to its onetime rival. By averting a war, Britain was able to win another, one with truly disastrous consequences for European liberty had it lost.

    Although its enemies were dismembered or subjected to humiliating terms that sowed the seeds of political violence and the Second World War, the UK enjoyed a period of political continuity, which helped its victory against Nazi Germany in 1945 and led to a more gradual dissolution of the British Empire by the 1960s.

    The Soviet Union vs. the United States

    Following a joint victory in World War II, tensions rose rapidly between the United States and the Soviet Union. A 40-year rivalry and a nuclear arms race threatened the world with a mutually annihilating conflict. But despite multiple flashpoints, such as the Berlin Blockade of 1948-49 and the Cuban Missile Crisis in 1962, the Cold War never fully went hot. 

    Though the phrase “mutually assured destruction” is typically used to refer to destruction by nuclear weapons, a conflict even before both sides wielded large arsenals could have been catastrophic. The Soviet Union was savaged by the Second World War with an estimated 24 to 27 million deaths and could not afford another conflict in the immediate aftermath. Though the United States held a stronger economic position, it realized that an invasion of the Soviet Union was likely to end the same way it did for the Germans in the summer of 1941. Thus, for both sides, victory would have come at too great a cost.

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    Reeling from the cost of total war from 1941 to 1945, the Soviet Union quickly repaired its economy and produced notable growth consistently. Its annual gross national product (GNP) rose by 5.7% from 1950 to 1960 and 5.2% from 1960 to 1970. At the same time, the US experienced unprecedented development. This was due in part to geographic isolation from Europe during World War II, which prevented extensive damage to American industries. The inception of new industries such as television, the rise of suburbia and government investment in infrastructure helped the US economy expand continuously for decades after 1945. The resources for each nation’s respective economic success would not have been available if they had chosen to start a third world war.

    Extensive proxy wars led by the US and the Soviet Union offered glimpses of the destruction and economic hardship that would have ensued if NATO combated the Warsaw Pact. From 1955 to 1975, the United States fought a desperate containment war against insurgents in Vietnam that ended with a communist victory and the destabilization of several other countries in Southeast Asia. In Afghanistan, the Soviets spent 10 years trying to suppress the mujahadeen before their ignominious withdrawal in 1989.

    Both conflicts resulted in the US and Soviet Union suffering tens of thousands of casualties among military service members, while causing even higher death tolls among the people of Vietnam and Afghanistan. Those wars also cost the US and the Soviet Union large sums of money that could not be regenerated, prompting economic hardship. The price of these proxy wars, terrible as they were in their own right, offered a window to the horror that would have ensued if the two superpowers had gone to war.

    Eventually, the nonviolent end of the Cold War brought with it far greater political stability than a military tête-à-tête between the Americans and Soviets would have done. The new government of the Russian Federation was able to take power quickly and without international incident.

    Germany vs. the United Kingdom and France

    Following the reunification of Germany in 1990, the fear of a third world war was foremost on the mind of the British and French governments, who prepared to make an independent military alliance should Germany rearm. Understanding this fear, and with the horrors of the world wars within living memory, Germany opted against rebuilding its military to the same degree as earlier in the 20th century. The costs of the two world wars further dissuaded Germany from posturing in a way that would invite another total conflict. In this way, the Germans ensured peace for the foreseeable future in Europe. 

    As a result of decreased military tensions between the UK, France and Germany, Europe focused its energy on opening its borders and harmonizing its economic exploits. The continued expansion of the European Union and the introduction of the euro currency cemented these aims. All three partners benefited economically from this period of stability. In 2019, Germany had the largest national economy in Europe, followed closely by the UK and France, respectively. There is freedom of travel and ease of custom that furthers cultural interaction and social development, and Europeans are arguably happier, healthier and freer than they were at any previous point in history.

    Subverting the Modern Trap

    None of the four cases cited above is an exact clone of current relations between the United States and China. In both the Iberian and the American-British examples, there was a shared cultural background and a similar language between the two sides that doubtlessly contributed toward peace. During the Second World War, the US and the Soviet Union formed a military alliance that defeated Nazi Germany and Imperial Japan. By contrast, the US assisted nationalist forces during the Chinese Civil War of 1945-49 and combated Chinese communist soldiers during the Korean War of 1950-53. In the late 1980s, memories of both world wars provided Britain, France and Germany with enough incentive to resolve their issues peacefully.

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    This does not mean there are no similarities each side can use as a guide to peace. Economic incentives played a role in the reduction of tensions between Spain and Portugal. Similarly, ending the trade war between the US and China and resuming normal economic ties would help fill each nation’s coffers. The United States and Great Britain were able to ally before combating a single enemy. If climate change were viewed as a shared problem, the US and China could ally to combat it together.

    Finally, the US and China do not share a land border, which was also true of the US and the Soviet Union during the Cold War; this reduces the opportunity for an overzealous or nervous service member to inadvertently start a conflict. Both countries, in addition, are important members of the United Nations, which mirrors how Britain, France and Germany were important members of the European Union and NATO.

    Graham Allison’s analysis of relations between rising and reigning powers paints a grim future, one in which two powerful nations armed with nuclear weapons fight one another. To avoid such a future, the American and Chinese governments must strive to understand the lessons of the past. They must learn about the instances in which Thucydides’ Trap did not spring. Diplomacy between the two powers must always be pragmatic, and each side should understand that they will never get everything they want at the negotiating table. Finally, each side must scale down their military presence, particularly in the South China Sea, before a misstep or negligent discharge can potentially ignite a global war.

    By recognizing the devastating harm that would occur in the event of a war, and the potential for economic growth and political stability if peace is sustained, two of the world’s largest powers can concentrate on shared goals and projects for mutual benefit. This will not be easy. But, as Benjamin Franklin once observed, “There has never been a good war or a bad peace.”

    The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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    It’s Time to Act, Not React, on North Korea

    Although things have been quiet in recent months and there has been no active dialogue between North Korea and the United States, developments in recent days suggest that Pyongyang is back on the agenda of the international community.

    First, it became known that the US has been reaching out to North Korea through several channels, starting in mid-February, but it has not heard back. North Korea then published two statements within as many days by two high-ranking officials. On March 16, Kim Yo-Jong — the sister of North Korean leader Kim Jong-Un — criticized the joint US-South Korea military exercise, warning that if Seoul dares “more provocative acts,” North Korea may abrogate the Inter-Korean Comprehensive Military Agreement of 2018. She also cautioned the US that if it “wants to sleep in peace for [the] coming four years, it had better refrain from causing a stink at its first step.” Two days later, First Vice Foreign Minister Choe Son-Hui was quoted saying that North Korea sees no reason to return to nuclear talks with Washington, calling its outreach a “cheap trick.”

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    These statements coincided with a warning issued by the head of the US military’s Northern Command that North Korea might begin flight testing an improved design of its intercontinental ballistic missiles “in the near future.” On March 23, Pyongyang tested two cruise missiles before qualitatively upping the ante with a short-range ballistic missile test on March 25, constituting a breach of UN Security Council resolutions.

    Although these developments may suggest that a further escalation on the Korean Peninsula is inevitable, North Korea has thus far been following its traditional playbook by signaling a message that leaves all options on the table, ensures maximum room for maneuver and, at least from Pyongyang’s view, places the ball in Washington’s court. North Korea is raising the stakes ahead of the conclusions of the policy review process in the US, while simultaneously conveying the message that the door is open for reengagement at some point. “In order for a dialogue to be made,” Choe said, “an atmosphere for both parties to exchange words on an equal basis must be created.”

    Biden’s North Korea Policy Review

    Further developments in US-North Korea relations will, to a significant extent, depend on the outcomes of the policy review process. Although this process is not yet complete, it is apparent that the policies of the Biden administration will differ significantly from those of the previous administration under Donald Trump.

    First, we should not expect Trump’s personalized diplomacy to continue under President Joe Biden. Rather, the US is trying to restore a consultative process by involving the regional actors in Northeast Asia more directly in the North Korea question — and possibly trying to (once again) multilateralize the nuclear issue in the longer run.

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    During the visits of Secretary of State Antony Blinken and Secretary of Defense Lloyd Austin to Japan and South Korea earlier this month, Blinken stated that the Biden administration was consulting closely with the governments of South Korea, Japan and other allied nations. He also acknowledged that Beijing “has a critical role to play” in any diplomatic effort with Pyongyang. Whether more consultation leads to actual consensus remains to be seen.

    Second, the US will most likely propose a processual solution to the nuclear issue. In an op-ed for The New York Times in 2018, Blinken himself argued that the best deal the US could reach with North Korea “more than likely will look like what Barack Obama achieved with Iran.” He wrote that an interim agreement “would buy time to negotiate a more comprehensive deal, including a minutely sequenced road map that will require sustained diplomacy.”

    Third, the new administration seems to place a greater focus on the human rights issue in its policies on North Korea. During his visit to Seoul, Blinken made clear that the US would not only address security concerns, but also the North Korean government’s “widespread, systematic abuses” of its people.

    Three Lessons From the Past

    Act, not react: As past experiences with North Korea have shown, it is now critical for the United States to act quickly and clearly communicate its new North Korea strategy to both its allies and Pyongyang. If official communication channels are blocked, the facilitation activities of individual European Union member states and/or Track 1.5 intermediaries could be helpful. Until then, it is crucial not to get sucked into rhetorical tugs-of-war with North Korea.

    If the international community fails to act quickly on North Korea, Pyongyang will likely once again resort to a crisis-inducing policy, thus forcing the international community to react to its expected provocations, rather than preventing further escalation in the first place.

    Separate the issues: The North Korean nuclear issue is complex. Solving the military and security components of this issue will inevitably require addressing a range of related political, diplomatic, economic and even historical issues. As the case of the Six-Party Talks has shown, however, one individual negotiation process can quickly become overwhelmed by the multitude of challenges and issues associated with the nuclear issue. As such, it is essential to establish adequate formats with the right participants to address the respective issues and challenges.

    There is a role for Europe: Although there is no doubt that the EU is only a peripheral player in Korean Peninsula security issues, the current debate on a new Indo-Pacific strategy provides an important opportunity for Brussels to critically reflect on its own approach to North Korea, as it has failed to achieve its stated goals — i.e., denuclearizing the peninsula, strengthening the nonproliferation regime and improving the human rights situation in the Democratic People’s Republic of Korea.

    Although the denuclearization of the Korean Peninsula will not be front and center of this new strategy, the EU needs to show greater political will to contribute toward solving the pending security issues in the region if it wants to strengthen its profile as a security actor in the region.

    *[This article was originally published by the German Institute for International and Security Affairs (SWP), which advises the German government and Bundestag on all questions related to foreign and security policy.]

    The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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    The Guardian view on China, Xinjiang and sanctions: the gloves are off | Editorial

    China’s response to criticisms of horrifying human rights violations in Xinjiang is clear and calculated. Its aims are threefold. First, the sanctions imposed upon individuals and institutions in the EU and UK are direct retaliation for those imposed upon China over its treatment of Uighurs. That does not mean they are like-for-like: the EU and UK measures targeted officials responsible for human rights abuses, while these target non-state actors – elected politicians, thinktanks, lawyers and academics – simply for criticising those abuses.Second, they seek more broadly to deter any criticism over Xinjiang, where Beijing denies any rights violations. Third, they appear to be intended to send a message to the EU, UK and others not to fall in line with the harsher US approach towards China generally. Beijing sees human rights concerns as a pretext for defending western hegemony, pointing to historic and current abuses committed by its critics. But mostly it believes it no longer needs to tolerate challenges.Alongside the sanctions, not coincidentally, has come a social media storm and consumer boycott targeting the Swedish clothing chain H&M and other fashion firms over concerns they voiced about reports of forced labour in cotton production in Xinjiang. Nationalism is a real and potent force in China (though not universal), but this outburst does not appear spontaneous: it began when the Communist Youth League picked up on an eight-month-old statement, and is being egged on by state media.China has used its economic might to punish critics before – Norway’s salmon exports slumped after dissident Liu Xiaobo won the Nobel peace prize – and often with the desired results. But this time, it is acting far more overtly, and it is fighting on multiple fronts. Some clothing companies are already falling into line. Overall, the results are more complex. The sanctions have drastically lowered the odds of the European parliament approving the investment deal which China and the EU agreed in December, to US annoyance. Beijing may think the agreement less useful to China than it is to the EU (though many in Europe disagree). But the measures have done more to push Europe towards alignment with the US than anything Joe Biden could have offered, at a time when China is also alienating other players, notably Australia. Foreigners – who in many cases have offered more nuanced voices to counter outright China hawks – are already becoming wary of travelling there, following the detention and trial of two Canadians, essentially taken hostage following their country’s arrest (on a US extradition request) of a top Huawei executive. The sanctioning of scholars and thinktanks is likely to make them more so. Businesses, though still counting on the vast Chinese market, are very belatedly realising the risks attached to it. Those include not only the difficulty of reconciling their positions for consumers inside and outside China, but the challenges they face as the US seeks to pass legislation cracking down on goods made with forced labour, and the potential to be caught up in political skirmishes by virtue of nationality. For those beginning to have second thoughts, rethinking investments or disentangling supply chains will be the work of years or decades. But while we will continue to live in a globalised economy, there is likely to be more decoupling than people foresaw.The pandemic has solidified a growing Chinese confidence that the west is in decline, but has also shown how closely our fates are tied. There can be no solutions on the climate emergency without Beijing, and cooperation on other issues will be both possible and necessary – but extraordinarily difficult.Beijing’s delayed response to the UK sanctions suggests it did not anticipate them, perhaps unsurprising when the integrated review suggested we should somehow court trade and investment while also taking a tougher line. But the prime minister and foreign secretary have, rightly, made their support for sanctioned individuals and their concerns about gross human rights violations in Xinjiang clear. Academics and politicians, universities and other institutions, should follow their lead in backing targeted colleagues and bodies. China has made its position plain. So should democratic societies. More

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    How Stable Is Antony Blinken’s Idea of Stability?

    We recently observed in this column that US President Joe Biden’s embrace of an anti-Russia, Cold War mentality may have been guided by the desire to comfort media outlets such as MSNBC and The New York Times, which over the past five years have staked their reputations on that same commitment. For the Democrats, Russia serves as the incarnation of political evil. Calling Russian President Vladimir Putin a killer devoid of a soul fit the script of hyperreal melodrama to which Democrats seem addicted. Without a named person to play the role of incarnate evil, Democrats feel the American public may stop believing in the nation’s predestined goodness.

    Biden’s America Is the New “Middle Kingdom”

    READ MORE

    Like most powerful leaders, Chinese President Xi Jinping leads a government that has had people killed and routinely does things contrary to the taste of American politicians. But the image of Xi, a calm, rational bureaucrat, does not resemble the kind of theatrical villain the American public loves to hate. He lacks the character traits, the posture, the gestures, the gait and the sheer stage presence that defined leaders like Adolf Hitler, Joseph Stalin, Fidel Castro, Ayatollah Ruhollah Khomeini, Saddam Hussein, Osama bin Laden and even Hugo Chavez. Perhaps this lack of a recognizable villainous foil to the heroic US president explains why Biden’s bureaucratic secretary of state, Antony Blinken — rather than Biden himself — has assumed the task of defining the terms of the new Cold War with China that is brewing.

    Here is how Blinken makes his case for a warlike posture: “China is the only country with the economic, diplomatic, military, and technological power to seriously challenge the stable and open international system — all the rules, values, and relationships that make the world work the way we want it to, because it ultimately serves the interests and reflects the values of the American people.”

    Today’s Daily Devil’s Dictionary definition:

    Open international system:

    In the 21st century, a rulebook of geopolitical relationships, whose doors can be closed and locked only by the United States of America

    Contextual Note

    Blinken succinctly describes what is meant by American exceptionalism. He distinguishes it from former President Donald Trump’s policy of “America First,” which focused on domestic issues, such as closing off the southern border to immigration and allowing real Americans to concentrate on the essential business of “winning” as they compete against their rivals and neighbors. Blinken feels that Trump’s idea that every nation should pursue its particular interest without regard for the others was a recipe for instability. In contrast, America’s imposition of leadership on dependent allies will ensure stability.

    Embed from Getty Images

    Blinken and Biden apparently believe in international solidarity — provided, of course, that it is structured around themes the US chooses. “Another enduring principle,” Blinken intones, “is that we need countries to cooperate, now more than ever. Not a single global challenge that affects your lives can be met by any one nation acting alone.” But a closer look at his idea of cooperation reveals an idea closer to former President George W. Bush’s “coalition of the willing” than open concertation. He also makes it clear that even though Russia, Iran and North Korea stand out as a vague equivalent of Bush’s “axis of evil,” China is the real threat against which an effective coalition must be assembled.

    The Biden administration simply refuses to acknowledge that China’s rise, which has effectively lifted more than 800 million people out of poverty, should be considered as having any redeeming factors that might lead the US to promote a policy of cooperation with China rather than confrontation. It may be the administration’s belief in the theory of the “Thucydides trap,” which, if taken seriously, fatalistically supposes that a waning power and a rising power must not seek to cooperate, but must be resigned to confronting each other, forcing the weaker to submit.

    In his speech, Blinken made this intriguing comment about cooperation: “That requires working with allies and partners, not denigrating them, because our combined weight is much harder for China to ignore.” He is undoubtedly thinking about Trump’s propensity to lambaste US allies in Europe and elsewhere. This may also explain why the Biden administration has avoided reproaching Saudi Arabia with its crimes and blatantly undemocratic behavior.

    Blinken asserts that “as the President has promised, diplomacy — not military action — will always come first.” But, contrary to most expectations, there has been no diplomacy with Iran, and the attempt at diplomacy with China last week in Alaska turned to the kind of confrontation that precedes military action. At the same time, Admiral Philip Davidson has indicated that he believes war with China will be inevitable because of the US commitment to defending Taiwan’s independence. The Financial Times notes that “Biden has taken a tough rhetorical posture towards China over its military activity around Taiwan and in the South and East China Seas.” The tone in Washington seems closer to preparation for war than an intensification of diplomacy.

    The Chinese have expanded their geopolitical activity with a focus on infrastructure rather than military presence. The US sees this as an assault on its global hegemony. Underlying this feeling is the reality that since the beginning of the century, the US has seen a decline in its influence across the globe. The rise of China means that any new president of the United States must feel that getting tough with China will be electorally advantageous. But posturing with an eye to seducing the electorate can sometimes lead to actions that severely undermine the very stability Blinken believes must be ensured through American leadership.

    Historical Note

    Antony Blinken’s logic can be seen as the application of John Mearsheimer’s notion of US hegemony as the central feature of a “realist” foreign policy. That realism reflects a binary vision of the world, as a choice between hegemony and anarchy. Hegemony is the lesser of the two evils and is therefore deemed good. No great power should renounce its quest for hegemony. For the US, ever since the Monroe Doctrine established in 1823, regional hegemony has become the reigning orthodoxy.

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    As a realist, Mearsheimer opposes the “neo-liberal” idea that US hegemony should be guided by the belief in a moral mission. Because hegemony is good, its abuses will always be tolerable as conditions for maintaining the good. Mearsheimer even had a soft spot for Trump’s “America First” approach. Secretary Blinken and President Joe Biden have chosen to deviate from Mearsheimer by promoting a version of hegemony that relies on a return to the moralism of the neo-liberal agenda. They paint the US as a force for promoting democracy and human rights across the globe. Biden called it leading by the force of example rather than the example of force.

    Blinken offers some examples. “It requires standing up for our values when human rights are abused in Xinjiang or when democracy is trampled in Hong Kong, because if we don’t, China will act with even greater impunity.” Does “standing up for” mean envisioning war? The absurdity of his statement becomes clearer when one imagines the way the Chinese might reformulate it to criticize the US: It requires standing up for our values when human rights are abused among the black population in America’s inner cities or when democracy is denied and trampled in Puerto Rico, because if we don’t, the US will act with even greater impunity. Only a global hegemon “stands up” in that manner.

    The realists correctly point out that the attitude that consists of feeling justified to use force on the grounds that another nation is not living up to one’s own rigorous moral or political standards is at best a distraction and at worst an invitation to chaos. Realists, like Mearsheimer or Henry Kissinger, respect power alone rather than any abstract notion of virtue. They see moral considerations as irrelevant, though they tend to think that, according to some mysterious metaphysical principle, the values of the US are more valid or trustworthy than those of other nations.

    Power will always assert itself. Superior power will usually win every spontaneous contest. That is the reality of politics. But is that a recipe for stability? The real question that every honest human being must consider is this: Should politics and political thinking alone rule human society? Is there a place for morality and not just as a feature of political rhetoric?

    *[In the age of Oscar Wilde and Mark Twain, another American wit, the journalist Ambrose Bierce, produced a series of satirical definitions of commonly used terms, throwing light on their hidden meanings in real discourse. Bierce eventually collected and published them as a book, The Devil’s Dictionary, in 1911. We have shamelessly appropriated his title in the interest of continuing his wholesome pedagogical effort to enlighten generations of readers of the news. Read more of The Daily Devil’s Dictionary on Fair Observer.]

    The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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    China and the Perils of Bipartisanship

    Not a single congressional Republican voted for the recent $1.9 trillion stimulus package. Not even the so-called moderate Republicans, the handful who backed the second impeachment of former US President Donald Trump, deigned to support an economic package that helps Americans hardest hit by the COVID-19 pandemic. The entire Republican caucus didn’t just snub the Democrats. They ignored the Republican mayors, as well as 41% of Republican voters, who approved of the legislation.

    Naturally, the unified Republican caucus complained that President Joe Biden was not displaying his promised bipartisanship. It didn’t seem to occur to them that bipartisanship is a two-way street. How soon they’ve forgotten that nearly every Democrat in both houses voted for the Trump administration’s initial bailout package in March 2020.

    A Deeper Look into Hong Kong’s Evolution

    READ MORE

    Nevertheless, the Biden administration remains eager to find common ground with Republican legislators. The president has high hopes that he can attract Republican support for an infrastructure bill this summer, given that rebuilding American bridges, highways and the like was a priority for the previous administration.

    But here’s a truly troubling scenario. Casting around for another unifying topic, the Biden team has seized upon China. Democrats and Republicans alike are concerned about what China is doing these days. There is bipartisan disgust over what’s happening in Hong Kong and Xinjiang. Hawks in both parties have long warned about Beijing’s actions in the South China Sea. Despite wildly different economic ideologies, Democrats and Republicans have joined hands in their opposition to Chinese trade and currency policies, cavalier approach to intellectual property rights and efforts to dominate markets in the Global South.

    On the face of it, however, the bill that Senate Majority Leader Chuck Schumer is starting to pull together is just another infrastructure initiative. It is meant “to shore up U.S. supply chains, expand American production of semiconductors, create 5G networks nationwide and pour billions into investments into U.S. manufacturing companies and hubs, among other proposals,” according to The Washington Post.

    Embed from Getty Images

    But it’s not just infrastructure. The measure is specifically designed to bolster the full-spectrum US fight against China. “Hating China is a big bipartisan thing, and Schumer has the opportunity to take ownership of being against China,” points out Douglas Holtz-Eakin, president of the right-wing American Action Forum.

    According to the most benign reading of this bipartisanship, the Biden administration will be manufacturing an anti-Chinese version of the Sputnik moment when, in 1957, the Soviet launch of the first artificial satellite prompted a frenzy of US government spending on science and technology to catch up to the Russians. “The danger China poses could fundamentally reorder U.S. attitudes toward government’s role in domestic economic growth, research and development in ways that leave the United States stronger,” writes liberal columnist E.J. Dionne.

    A robust industrial policy is indeed preferable to, say, the tariffs that the Trump administration levied against Chinese products. If fear of China overcomes the conservative distaste for government interventions in the economy, should progressives really be looking this particular gift horse in the mouth?

    Full Court Press

    The Quad is the latest multilateral mechanism through which the United States is putting pressure on China. The four countries — the United States, India, Japan and Australia — all have their separate beefs with Beijing. But last week was the first time that the heads of these four states met as part of the Quadrilateral Security Dialogue, which was set up in 2007.

    The statement the four leaders recently published in The Washington Post makes no mention of China. It’s all about cooperating on climate, the pandemic and strengthening democracy. But that’s just being diplomatic. As Alex Ward writes in Vox, China has “gotten into a deadly fight over a disputed border with India, started a trade war with Australia, hacked the US government, and for years used its might to push Japan around on economic and military matters.” Trump tried to rally the four countries behind his own anti-China agenda. But his efforts were compromised by a suspicion in many quarters that he’d just as soon negotiate a deal with China behind the Quad’s back as coordinate a united front.

    The current president, by contrast, has moved steadily away from a preference to engage China. “Biden had to be reprogrammed on China” during the presidential campaign, one of his advisers said. This reprogramming explains Biden’s harsher tone during the election, such as calling Chinese leader Xi Jinping “a thug.”

    As president, Biden has been careful to sound notes of both amicability and threat. Cooperation to deal with the climate crisis is certainly a possibility. But promoting deals with China is not going to win the new president support in Congress or, for that matter, with the American public. China’s unfavorability rating rose to 79% in a recent Gallup poll, its worst showing in more than four decades. A shift has taken place in just the last couple of years. According to a Pew Research Center poll, 67% of Americans now have “cold” feelings toward China, compared to only 46% in 2018.

    The appointment of Kurt Campbell as the Indo-Pacific coordinator at the National Security Council (NSC) indicates the direction of the administration’s new take on Asia. Campbell was a key architect of the “Pacific pivot” under Secretary of State Hillary Clinton in the Obama administration. He’s not going to play quite the anti-China role that Matt Pottinger did on Trump’s NSC, but he’s a firm believer in strengthening bilateral alliances and multilateral coordination to contain China.

    In a January 2021 piece in Foreign Affairs, Campbell channeled Henry Kissinger in asserting the need for the US to restore a “balance of power” in the region. What that really means is that the US, with the help of its friends, must push back against China to reassert its own Pacific authority, both militarily and economically. Practically, Campbell explains, this means that:

    “Although Washington should maintain its forward presence, it also needs to work with other states to disperse U.S. forces across Southeast Asia and the Indian Ocean. This would reduce American reliance on a small number of vulnerable facilities in East Asia. Finally, the United States should encourage new military and intelligence partnerships between regional states, while still deepening those relationships in which the United States plays a major role—placing a ‘tire’ on the familiar regional alliance system with a U.S. hub and allied spokes.”

    Over the years, China has steadily eroded US power not only in Asia but internationally. It used the anti-globalism of the Trump years to expand its influence in international institutions such as the United Nations and its associated bodies like the World Health Organization. Where It has encountered difficulties in expanding its influence, such as with international financial institutions, it has simply created its own. Shortly after Biden’s election, China joined the Regional Comprehensive Economic Partnership, which includes the countries of Southeast Asia, plus Australia, New Zealand, South Korea and Japan). This move, plus Beijing’s recent investment agreement with the European Union and President Xi’s announcement that China would also consider joining a modified Trans-Pacific Partnership, suggests an economic counteroffensive to the US ramping up of multilateral security arrangements.

    These moves have not gone unnoticed. On the eve of their first visit to Asia this week, Secretary of State Antony Blinken and Pentagon chief Lloyd Austin III wrote in The Washington Post, “If we don’t act decisively and lead, Beijing will.”

    The Biden administration’s decision to focus on beefing up US economic competitiveness, particularly in the tech sector, is in some ways an admission of defeat. China has outmaneuvered the United States in the global economy. The only way Washington can compete at the moment is by throwing its weight around militarily and trying to play catch-up on the home front.

    Is China a Useful Threat?

    It’s hard to argue with the importance of investing in critical US industries. Republicans and laissez-faire economists generally oppose such a policy of picking winners and losers in the marketplace, except when it comes to the military-industrial complex. Only a large external threat can move such ideologues to accept the obvious: governments can and should shape markets.

    But here are some problems with hitching this industrial policy to the “China threat.” The global economy needs an overhaul to address the climate crisis, rampant economic inequality, automation and other developments. This is no time for the US to turn its economic relationship with China into a Cold War competition. Sure, let the two countries compete over who makes the best laptop computer, but cooperation is essential for developing new rules for the global economy. A robust industrial policy doesn’t preclude cooperation, unless it feeds into a rancor and a parochialism that makes cooperation near to impossible.

    The COVID-19 pandemic has exposed the fragility of global supply chains, with the collapse of international trade and countries initially competing for scarce medical equipment. This is not a new problem, however. Shelley Rigger writes in her 2013 book on Taiwan about a moment “in 1999 when a power transmission tower on a remote mountain in central Taiwan toppled, blacking out the island’s high-tech industry for a day. The interruption nearly doubled the world price of memory chips and the supply of TFT-LCD flat screens took six months to return to normal.” Natural (and unnatural) disasters can wreak havoc on the supply of essential components.

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    Ensuring an indigenous supply of computer chips may well protect the US in the short term, but it does little to address the underlying problem of supply chains. A return to a time when every country produced all of its essentials or went without is not really an option, considering the importance of global trade routes going back to the Silk Road and even before. Reshoring and relocalization are both essential in this age of climate crisis. But a reordering of the global economy that accommodates such changes should be a matter for coordination, not Cold War competition.

    In addition, an industrial policy that prioritizes gaining a competitive edge over China could overshadow the other major focus of the Biden administration, namely reducing the national and global carbon footprints. High-tech products often rely on key outputs of the extraction industry, like cobalt and lithium. An industrial policy built on minimizing carbon emissions and the use of rare minerals, rather than besting China, would pick very different economic winners and losers.

    When it comes to foreign policy, bipartisanship is not necessarily a virtue. The two major US parties came together around waging the Vietnam War, confronting the Soviet Union during the Cold War and fighting “terrorism” in the wake of September 11. The first failed, the second was outrageously expensive and nearly ended in nuclear apocalypse, and the third led the country into the infamous “forever wars.”

    Selectively challenging China over its human rights record, its overreach in the South China Sea or the conduct of its businesses around the world (like this fish meal operation in Gambia) is appropriate. Going all out in a military, economic and cultural competition with the Asian superpower — and forging a wafer-thin bipartisan consensus to do so — is the height of folly.

    *[This article was originally published by FPIF.]

    The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More