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All the President’s Surplus White Men
The problem of America today is the problem of white men. Who lies at the intersection of guns, right-wing fanaticism, pandemic and climate change denialism? Who ensures that racism continues to course through the lifeblood of the country? Who stands in the way of gender equality? Who supports foreign wars and the military-industrial complex? Who is getting hit hard by the erosion of the manufacturing base in the heartland? White men.
White men are twice as likely as non-white men and white women to own guns. Although white women espouse racist right-wing views as much or even more than white men, it is the latter who overwhelmingly show up to vote, to gather with guns on the street, and to intimidate non-whites in person and on social media.
Conservative white men have been at the forefront of climate denialism, according to a fascinating sociological study from 2011, and it’s not just Donald Trump who hates wearing masks during a pandemic but men more generally. A significant gender gap exists on the use of force, with women considerably less likely to support military intervention.
Take the example of Brad Pascale, Trump’s former campaign manager. He was detained in Florida this week after allegedly hurting his wife, waving guns and talking about suicide. After his demotion to a digital consultant position on the campaign in July, he no doubt was worried about losing work altogether after the November election. There it is in a nutshell: white male violence, right-wing politics and anxiety over economic security. And residual white privilege. If Pascale were African American, an encounter with the police like that might not have ended peacefully.
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Of course, I’m not talking about all white men. Plenty of white women have jumped on the alt-right bandwagon. And American conservatives can always point to a few people like Clarence Thomas, Ben Carson and Diamond and Silk to allege that their ideology is colorblind.
But white men who are all revved up and with no place to go pose the greatest challenge to American democracy. They are the core of Donald Trump’s support. They are showing up on the streets in militia formations and with Proud Boy banners. The “manosphere” of online anti-feminism is the gateway for many right-wing activists who worry about being “replaced” by minorities and immigrants. And white men have been struggling with a long period of enormous economic dislocation that has turned them into a surplus labor force.
Go West
If Donald Trump loses in November, these white men will remain a problem. After all, unlike liberals who threaten to decamp to New Zealand if Biden loses, disgruntled Trump bros are not going to just up and leave the United States. Yet that’s precisely how countries have long dealt with the problem of surplus white men.
In the bad old days, countries handled surplus men by sending them off to populate far-off lands. The political and religious misfits of the incipient British Empire sailed off to settle the land that hugged the eastern seaboard of North America. Later, the British exported its unruliest men to the prison colony of Botany Bay in Australia. The imperial nations of France, Spain, the Netherlands and Portugal similarly redirected male energy into meeting, enslaving and killing the locals of distant places. Those white men who didn’t have imperial realms to colonize — Germans, Italians, Scandinavians, Irish — ended up founding America’s early immigrant communities.
Men with little prospect of improvement have always been a potential source of trouble. They turn to drink, to crime, to revolution — and sometimes all three — if left to their own devices. The law of primogeniture, whereby the oldest son inherited all and left the other male heirs penniless, only compounded the problem by producing a seemingly endless supply of dispossessed men.
For its first 100 years of existence, the United States had a convenient safety valve for such male restlessness: the Western frontier. In the Midwest, the Southwest and the Far West, the industrious built family farms, the greedy sought gold, and the opportunistic robbed banks. Along the way, they did what white men often did in those days: kicked the locals off the land and killed them when they refused to leave.
When the frontier closed at the end of the 19th century, white men enlisted to expand a new American empire in the Spanish-American War and through expeditionary interventions in Latin America. World War I and the flu epidemic of 1918 “solved” the problem of the surplus with a ruthless cull of more than 100,000 men. Later, World War II removed four times that many from the equation. Since that time, America has continued to go to war. But the US government also made an effort to deal with its white male population by creating well-paying jobs in an expanding manufacturing sector and offering returning soldiers a leg up through programs like the GI bill
This golden age of American economic growth, however, was primarily a golden age for the white American male. White women, if they broke with tradition to enter the workforce, earned considerably less than their male counterparts. And black Americans, especially prior to the successes of the civil rights movement in the mid-1960s, were relegated to second-class citizenship. In 1960, a mere 2% of women and black men worked in high-wage jobs like engineering and law. Virtually all doctors in the United States were white men. Racism and sexism permeated the immediate postwar government programs.
Angry White Men
In the 1960s, as a result of powerful social movements, women and minorities began to rise professionally. They continued to make gains in the ensuing decades, but the US economy as a whole hit a brick wall in the early 1970s. Real wages peaked in 1973. Imports began to appear more frequently on supermarket shelves and in car showrooms. Unions began to shed members in the 1970s and 1980s. And by the 1990s, the manufacturing jobs began to shift overseas — first with a massive expansion of the maquiladora program in Mexico after the passage of NAFTA and then to low-wage locations in Asia. Between 2000 and 2014, the United States lost 5 million manufacturing jobs.
These economic transformations left behind many male blue-collar workers. They could still get jobs, but those jobs didn’t pay as well as the manufacturing positions of the golden age. In response, this proletariat didn’t organize against the ruling capital class. Increasingly, these workers listened to sexist, racist and xenophobic slogans that blamed women, minorities and immigrants for taking away their jobs. The financial crisis of 2008-09 swelled the ranks of the new right with many angry white men from the middle class as well.
This is not a purely American problem. Angry white men have been a fixture in European right-wing politics, in Australia, in Israel. Machismo has long played a role in Latin American politics and, despite the rise of feminism across the continent, continues to influence electoral outcomes from Colombia to Brazil. Even China, where men can get jobs but not necessarily wives, has to deal with a problem of surplus men, given the population’s preference for male babies. India, too, faces an excess of 37 million men.
But the United States must address a particularly toxic version of this problem because of the country’s endemic racism, polarized politics and Rust Belt economics. Angry white men contributed to the Reagan revolution of the 1980s, the Gingrich backlash of the 1990s and the rise of the Tea Party in 2009. But it wasn’t until 2016 that they found a leader just like them. Enter Trump, stage right.
The Problem of Surplus
Donald Trump would seem an unlikely spokesperson for white workers left behind by the deindustrialization of the United States. With his business empire, Trump has invested overseas in more than 30 countries, outsourced the production of his own brand-named items to foreign companies and hired undocumented workers for his US facilities. As his recently leaked tax returns reveal, he has also been spectacularly unsuccessful with his ventures even as he has cheated the government out of what he owes in income tax.
Trump knows that playing to Wall Street is not a winning political strategy. Rather, as I point out in a piece on TomDispatch this week, the president has put himself at the front of a white male mob, channeling the violent vigilantism that has erupted periodically throughout American history. In this way, Trump lucked out by appealing to just enough white voters in economically distressed states to eke out an Electoral College victory in 2016. One month before the 2020 election, the polls suggest that Trump may not be so lucky this time.
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The white mob still supports him for all his efforts at closing borders, suppressing minority votes and celebrating the racist history of the United States. And he still supports the white mob, this week refusing to denounce white supremacy in the first presidential debate. But the president hasn’t delivered on the economy, and the pandemic has claimed too many victims to be easily swept under the rug.
Whoever wins in November, the problem of surplus white men won’t go away. The Democrats, entranced by “third ways” and “post-industrial” economics, have ignored white male workers at their electoral peril. Joe Biden has courted this vote by appealing to his working-class roots in Scranton. But he’ll have to pay more than lip service if he gains the White House.
The past option of sending surplus white men off to other lands is no longer on the table. In taking the problem of surplus white men seriously, it’s not necessary to jettison identity politics or pander to sexism and racism. Rather, the answer is to create well-paying jobs for all through Green New Deal policies. The bulk of these jobs — retrofitting buildings, creating new energy infrastructure, building a fleet of new electric cars — need to be open to those without a college education. As automation advances, new educational opportunities have to be made available as well or else technology will just add to the problem of surplus labor.
Racism and sexism won’t magically disappear with a Green New Deal. Nor are jobs alone the answer. They need to be jobs that promise a future and a sense of belonging to something greater. The Trump campaign has provided its followers with this sense of belonging. So, for that matter, have the Proud Boys. Together they have turned surplus white males into an urgent political problem for this country.
A personnel change in the White House will not solve this problem. But putting into place a dramatic new economic program that relies on working-class Americans to save this country? That puts white men shoulder to shoulder with workers from all backgrounds on behalf of a common purpose? And that links up with Green New Deals in other countries? That might do the trick of turning a surplus into an asset.
*[This article was originally published by Foreign Policy in Focus.]
The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More
Trump at the UN: A Failure to Lead
True to himself, US President Donald Trump completely failed to address any of the issues confronting the global community in his keynote speech to the 74th General Assembly of the United Nations. Instead, he used the platform to criticize China, to excoriate Iran, to boast of how big and dangerous the US military has become, and to urge every nation to close its borders to even the most hungry or persecuted migrants. He did, however, think it appropriate to support the right of all Americans to own as many guns as they want.
In the same speech, Trump made headlines with his words urging the world to hold China accountable for having “unleashed this plague on to the world,” in reference to the COVID-19 pandemic, and for deliberately encouraging the coronavirus to spread. The White House cut these words from the transcript posted on its website. Perhaps even the administration’s press office did not have the stomach to publish such libel.
This speech to the UN was a moment when the leader of the free world — as a US president might once have been seen — could actually attempt to lead. The speech was an opportunity to inspire and to set out a roadmap to a better future. Trump chose to do the reverse. The world is facing a triple crisis of an international pandemic, economic collapse and climate emergency. Trump could only reach out for people to blame: the Chinese, Iranians or Venezuelans. He failed to mention that the United States has the biggest coronavirus death toll of any country in the world, with over 200,000 dead and counting.
Nor did Trump comment on the millions out of work or that America’s west is burning at the same time that its southeast is inundated by hurricane after hurricane. These are not just America’s problems: Trump did not address the dire straits of billions of non-Americans impacted by these dangers. Why would he? This is the true measure of “America First.”
The American leadership vacuum is a grave danger to not just Americans but to us all. Trump’s failure to act early to stem coronavirus infections — a deliberate decision he made to fatuously “avoid panic” — will likely cost the lives of tens of thousands more Americans on top of the current staggering death toll. The US withdrawal from the World Health Organization in the middle of the pandemic signaled that Trump wanted no part of the international leadership out of the health crisis. The resultant deaths will be beyond imagination.
Trump has employed the same approach to international economics. His regime’s policy has been to withdraw from trade agreements, set up sanctions barriers against competitors and allies, and complain that everyone else’s industrial policies are more successful than his. Trump has also embarked on a determined effort to weaken the international institutions — the International Monetary Fund, the World Bank, the World Trade Organization and so on — that have enabled the world economy to prosper for the past 75 years. The world is going to need a great deal of leadership to emerge out of the current economic wasteland, on a scale of what was done to repair the damage of the Second World War. We can rely on Donald Trump to be absent from that role, too.
As for the climate emergency, Trump has chosen to deny it. More than that, he has proceeded to undo everything previous US governments and the international community had done to try to save the planet from disaster. All of these crises are going to produce millions of refugees across the world. Trump couldn’t care less.
The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More
Can the India-China Confrontation Play Out in East Africa?
China and India have never been friendly neighbors. The laws of geopolitics set the two Asian giants against one another. In recent years, Chinese President Xi Jinping’s confrontation with the US and Indian Prime Minister Narendra Modi’s ambitions for a powerful and global India have inflamed nationalism on both sides of the Himalayan border. Bilateral tensions peaked in June, when a border clash in the Himalayan Galwan Valley resulted in the death of 20 Indian soldiers and an unspecified number of Chinese troops.
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Now, the competition between China and India is moving to Africa, and to East Africa in particular. Since 2000, the continent has witnessed China’s deep and ubiquitous penetration through trade, investments, infrastructures, energy, budget support and security cooperation. In 2008, New Delhi showed a newfound interest in Africa.
Despite China’s head start, India is trying to catch up to counter Beijing’s predominance over the continent. East Africa is the region where the two Asian powerhouses share vital interests and where their competition will likely play out more seriously.
India’s Africa Policy
India–Africa relations are rooted in history. The Indian Ocean constituted a channel of trade and population exchange for centuries. Consequently, East Africa has always enjoyed close ties with India, and around 3 million people of Indian descent live between the Horn and South Africa. After independence from British rule in 1947, India was politically active in Africa as a champion of decolonization and South-South cooperation. The period that followed saw India–Africa relations phase out until New Delhi brought the continent back into the picture from the mid-2000s.
In economic terms, trade augmented eightfold between 2001 and 2017, making India Africa’s third-largest trading partner with a total exchange worth $62.6 billion. While Chinese trade with the continent largely outnumbers it, India has kept up the pace and investments grew alongside trade, jumping to $54 billion in 2016.
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As a fast-growing manufacturing power, India places strategic relevance to raw materials for the stability of its supply chain and energy sector. Indeed, New Delhi’s exchange with Africa, like Beijing’s, is driven by natural resources — with oil and gas accounting for approximately two-thirds of the total — followed by gold and other ores.
Political ties have also strengthened over the years. In 2008, the first India–Africa Forum Summit was launched in New Delhi and took place again in 2011 and 2015, with 41 African heads of state attending; the next conference was scheduled in September 2020. These summits allowed African leaders, on the one hand, to set out their cooperation priorities and India, on the other, to respond accordingly. As a result, India–Africa cooperation pivoted around capacity building, technology transfer and infrastructural investments. Lastly, India has sought support on UN reform, which would be unrealistic without the votes of African countries in the General Assembly.
Security issues have been on the agenda as well. New Delhi is particularly active in the realm of anti-piracy. After the kidnapping of several Indian citizens by Somali pirates, the Indian navy stepped up its efforts after 2008 and escorted over 1,000 vessels across the Gulf of Aden, sometimes in cooperation with the European Union’s Mission Atalanta.
Another domain that saw India at the forefront is UN peacekeeping missions. The Indian subcontinent has always been one of the leading suppliers of peacekeepers to UN missions, with 80% of them deployed in Africa. On top of that, Indian defense academies have provided training to the Nigerian, Ethiopian and Tanzanian military.
Modi and the Challenge to China
Modi has given further impetus to India–Africa relations. In July 2018, he outlined the 10 guiding principles of India’s engagement with Africa during a visit to Rwanda and Uganda. On that occasion, the prime minister leveraged India’s role in South-South cooperation to advance his credentials as leader of the developing world. Besides rhetoric, Modi moved from words to action by signing a defense agreement with President Paul Kagame of Rwanda and by extending two credit lines worth nearly $200 million to the Ugandan government. He also announced the opening of 18 new diplomatic missions in Africa by 2021, bringing the total to 47.
The prime minister has placed a keen eye on East Africa, which is set to become the epicenter of the India–China confrontation. The Red Sea and the Gulf of Aden are essential maritime routes for India’s export-oriented economy. China is heavily investing along these two waterways through the “Belt and Road Initiative” (BRI), especially in the port of Djibouti and the Suez Canal.
Djibouti is indeed becoming yet another element of the Chinese maritime network in the Indian Ocean, along with Pakistan, the Maldives, Sri Lanka, Bangladesh and Myanmar. This network, the so-called “String of Pearls,” geographically surrounds India and is perceived as a strategic nightmare in New Delhi. Therefore, the Chinese expansion in the western Indian Ocean urges India to intervene.
To counter the BRI in the Indian Ocean, New Delhi launched a similar initiative for East Africa: the Asia-Africa Growth Corridor (AAGC). Conceived in 2016 and still at an early stage, this Indo-Japanese project will attract investments on development, quality infrastructure, institutional connectivity, capacity building and people-to-people cooperation to the region. Due to its anti-Chinese nature, the AAGC primarily targets contested countries like Djibouti and Ethiopia.
In 2017, Indian President Ram Nath Kovind clustered both countries for his first official visit. At the time, Ethiopia was already the largest beneficiary of India’s scholarship scheme and lines of credit for Africa with $1.1 billion, besides being the scene of the 2011 India-Africa Forum Summit. Djibouti was a relatively new target for New Delhi. In the year of the visit, China opened its first overseas military base in Djibouti. Consequently, Kovind not only signed some cooperation agreements, but he also reportedly expressed India’s interest in a military base on Djiboutian soil, a project still under discussion.
The geopolitical confrontation between India and China looms on the horizon. Africa — particularly the east — is set to become an arena of such a global, momentous challenge. India has economic, energetic and security reasons to deepen its relations with the continent. Furthermore, China’s ubiquitous presence in Africa and the Indian Ocean is a direct menace to Modi’s global ambitions. Although China is still out of reach, New Delhi’s engagement has been steadily expanding in all fields, and its approach based on soft power looks promising. The concepts of building Africa’s capacities and unleashing its potential, along with the employment of African workers instead of foreign labor like China, have resonated across the continent.
On the one hand, East Africa is under India’s radar more than any other region of the continent for its strategic position. On the other, East African governments have a long track record of balancing off the influence of external actors. East Africa is also the region where India can rely on a robust diaspora community. Hence, India presents itself as a useful ally to balance China’s growing influence in the region.
Finally, yet importantly, the US and the European powers might prefer New Delhi’s penetration into the continent at the detriment of China’s, which is perceived as a growing geopolitical threat to the West. East Africa, in sum, might soon become the new battleground of the economic and security confrontation between the two Asian giants.
*[Fair Observer is a media partner of Gulf State Analytics.]
The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More
What Can the Gulf States Learn from the Belarus Crisis?
It might come as a surprise that the Gulf states have more than a passing interest in events in Belarus. Beyond growing economic ties, the political drama provides valuable lessons for the region’s monarchies and their efforts to maintain standards of living for their citizens without compromising power and influence. The Belarus crisis also offers useful pointers for Gulf states in their dealings with Russia.
Over the past three decades, Belarusian domestic politics has been defined by its predictability. Despite the emergence of opposition candidates around election time, President Alexander Lukashenko’s grip on power was such that there was only one outcome. Yet, as with so much of 2020, life as Belarusians know it has been turned on its head.
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While the veracity of past elections has been called into question, a mixture of political complacency and COVID-19-related turmoil has breathed new life into Belarus’ opposition movement. Beyond disputing Lukashenko’s winning margin in July’s poll, hundreds of thousands of ordinary Belarusians have taken to the streets calling for change. Mostly born after the collapse of the Soviet Union, this generation does not regard the stability offered by Lukashenko as an asset. As they see it, state control of Belarus’ economy and society is incompatible with their aspirations.
Lukashenko’s response to what has effectively become a matter of life and death for his regime has fluctuated between incoherency and heavy-handedness. The president’s disappearance from the public gaze at the start of the unrest, coupled with the disproportionate use of force against demonstrators, suggests that he did not seriously consider the possibility of mass protests. Continued police brutality and opposition candidate Svetlana Tikhanovskaya’s flight into exile make it difficult to use “external forces” as justification for the crackdown.
“Family” Comes First
Much like Belarus, the Gulf states have relatively young populations, particularly Saudi Arabia, where over two-thirds of citizens are under the age of 35. Many have benefited from access to higher education systems that have grown exponentially since the early 2000s, both in terms of state and private universities. With this in mind, the region’s political elites can use the lack of meaningful opportunities for so many Belarusians to underscore the importance of their development plans and national visions.
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Designed to meet the specific needs of Gulf countries, these strategies nevertheless have several objectives in common. In an effort to counter faltering prices and technological obsolescence, the region is attempting to diversify its dependence on oil and gas revenues by facilitating high-knowledge-content jobs in different industrial sectors. Doing so also requires the greater incorporation of indigenous populations into national workforces at the expense of expatriate workers. In this respect, Kuwait’s plans to drastically reduce its migrant population offers a glimpse into the future shape of the Gulf’s workplaces. While never explicitly mentioned in strategic documents, the Gulf states anticipate that encouraging their own populations’ development will offset opportunities for the type of political dissent that’s currently gripping Belarus and which rocked Bahrain almost a decade ago.
The Gulf’s rulers have no appetite for an Arab Spring 2.0, a scenario that some warn is a distinct possibility thanks to COVID-19. Accordingly, local development opportunities will continue to be encouraged during these chastened times. When it comes to wider political participation, Kuwait will remain something of an outlier for the foreseeable future.
The Gulf states’ responses to COVID-19 also merit consideration. Once dismissed by Lukashenko as an ailment that can be treated with saunas and vodka, Belarus was among the last in Europe to enact lockdown measures. While it remains to be seen what impact ongoing protests will have on infection rates, a spike in cases could be used by Gulf states to justify their no-nonsense approaches to tackling the virus. Qatar, for example, was one of the first to completely lock down all but the most essential public services. The country’s return to normal rests on the public’s strict compliance with a four-phase reopening plan.
Don’t Annoy Next Door
International reaction to the political crisis in Belarus has so far been muted, with presidents Vladimir Putin of Russia and China’s Xi Jinping leading the congratulations for Lukashenko’s re-election. For its part, the European Union’s response has been cautiously led by the likes of Lithuania and Poland. Their approach reflects two important points. First, the protests are highly internalized and not about pivoting Belarus further East or West. Second, direct support for the opposition risks a Ukraine-type scenario whereby Moscow directly intervenes to safeguard its interests.
Point two is of particular relevance to the Gulf states, whose economic ties with one of Russia’s closest allies continue to grow. Cooperation between Belarus and the United Arab Emirates is a case in point. According to government statistics, the volume of trade between both countries amounted to $121 million in 2019, up from $89.6 million the previous year. Minsk has also made overtures to Oman regarding joint manufacturing opportunities and the re-export of products to neighboring markets.
Saudi Arabia undoubtedly has the most to lose from antagonizing Russia in its own backyard. Last April, the kingdom sold 80,000 tons of crude oil to Belarus. This purchase, first of its kind, not only reflects Minsk’s determination to lessen its reliance on Russian supplies, but also happened against the backdrop of faltering demand and an oil price war between Moscow and Riyadh. Since then, both sides have brokered a fragile peace designed in part to ensure that OPEC+ members respect industry-saving production cuts.
Accordingly, the “softly, softly” approach currently being employed by the EU’s eastern flank provides a blueprint for how the Gulf states should continue to manage their responses to the Belarus crisis. Not only does it offer the best chance of maintaining economic relations irrespective of the final outcome, but it also keeps regional oil supplies in still uncharted waters at a time of great uncertainty in global markets. Antagonizing Russia with even the most tacit support for Belarus is, put simply, too risky a proposition.
Belarus’ unfolding crisis is ultimately about replacing an unmovable political leader and system that have dominated the country for decades. In a region defined by its own version of long-term political stability, a similar scenario among Gulf states is unpalatable. Fortunately, the region still has resources at its disposal to prevent this from happening and protect much-needed economic victories in new markets. While always important, the Gulf’s indigenous populations are increasingly being reconfigured as the most essential features of the region’s future prosperity and stability.
*[Fair Observer is a media partner of Gulf State Analytics.]
The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More
- in US Politics
On Labor Day, remember this: Trump's America works only for the rich | Robert Reich
Opinion
Donald Trump
On Labor Day, remember this: Trump’s America works only for the rich
Robert Reich
We are eight weeks from a momentous election. If Joe Biden wins, he must work to redistribute income – and power More
The Unintended Economic Impacts of China’s Belt and Road Initiative
China’s footprint in global foreign direct investment (FDI) has increased notably since the launch of the Belt and Road Initiative (BRI) in 2013. That served to bring Chinese overseas FDI closer to a level that one would expect, based on the country’s weight in the global economy. China accounted for about 12% of global cross-border mergers and acquisitions and 9% of announced greenfield FDI projects between 2013 and 2018. Chinese overseas FDI rose from $10 billion in 2005 (0.5% of Chinese GDP) to nearly $180 billion in 2017 (1.5% of GDP). Likewise, annual construction contracts awarded to Chinese companies increased from $10 billion in 2005 to more than $100 billion in 2017.
Interestingly, however, the American Enterprise Institute’s China Global Investment tracker recorded $420 billion worth of investment and construction in BRI countries versus $655 billion in other countries between 2013 and 2018. So China actually invested more in countries outside the BRI during the period, given that Chinese investment in developed countries tends to have larger market values, particularly for mergers and acquisitions.
Additional Pain
Based on other measures, however, Chinese investment in BRI nations was much larger as a percentage of its total investment for the period. For example, greenfield investment represented almost half of all investment in BRI countries, but only 13% in other markets. Chinese firms were awarded $268 billion worth of construction contracts in BRI countries versus $166 billion elsewhere. Greenfield investment and construction in BRI countries amounted to $340 billion versus $230 billion in non-BRI countries.
The subsidies that Beijing contributes to its state-owned enterprises implies that many of the BRI projects actually cost it far more than the face value of the construction and investment, meaning that loan defaults — a common occurrence — add that much more additional pain to Beijing’s coffers.
The BRI: Keeping the Plates Spinning on China’s Economy
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Asia attracted the majority of BRI-related investment and construction contracts between 2013 and 2018, receiving just over half of such activity, with Southeast Asia taking 46% of that amount. Africa received 23%, followed by the Middle East at 13%. Overall, approximately 38% of total investments and construction contracts were targeted at the energy sector in host nations, with 27% ending up in transport and 10% in real estate.
The largest BRI project as of 2018 was the China-Pakistan Economic Corridor, which links Kashgar in China’s Xinjiang province with the port of Gwadar in Pakistan. Investments and construction contracts worth nearly $40 billion had been devoted to the project, with total spending likely to reach in excess of $60 billion by the time it is finished, equivalent to about 20% of Pakistan’s nominal GDP. The country endured a large increase in imports of materials and capital as a result, which aggravated its trade imbalance. By 2018, its current account deficit had expanded to more than 6% of GDP from less than 2% in 2016.
Expensive Membership
While Pakistan’s economic challenges were not and are not entirely attributable to the BRI, the strains added to it by the BRI became highly problematic. That turned out to be a common byproduct of the initiative among the countries receiving the largest amounts of investment. Large debts in countries with limited financial resources and means of generating revenue often undermine governments’ ability to successfully manage their economies. Rather than benefiting from the infrastructure investments made by China, they sometimes end up perpetually treading water.
Rising debt service often increases a country’s borrowing costs, can raise doubt about its solvency, contribute to a depreciating currency and increase the local currency value of the external debt burden. Consequently, the macroeconomic fallout of being a recipient member of the BRI “club” can be severe, particularly for the smallest and poorest countries.
A 2018 study from the Center for Global Development has noted, for example, that in the case of Djibouti, home to China’s only overseas military base, public external debt had increased from 50% to 85% of GDP in just two years — the highest of any low-income country. Much of that debt consists of government-guaranteed public enterprise debt owed to China’s Export-Import Bank (EXIM).
In Laos, the $6-billion cost of the China-Laos railway represents almost half the country’s GDP. Debt to China, Tajikistan’s single largest creditor, accounted for almost 80% of the total increase in Tajikistan’s external debt between 2007 and 2016 period. And in Kyrgyzstan, China EXIM is the largest single creditor, with loans of $1.5 billion, or about 40% of the country’s total external debt.
It certainly does not appear that Beijing put sufficient effort into contemplating the likely economic impact of the BRI prior to commencing it, either upon host nations or upon itself, for all concerned have borne the consequences of excessive and imprudent lending. Could it be that that Communist Party of China did not care, and that all that mattered was rolling the Initiative out as quickly as possible once it decided to do so?
It is truly surprising that Beijing did not do a better job of envisioning the multiplicity of potential outcomes. That is undoubtedly the overriding reason why the Chinese government decided to pivot in 2018 and adopt a seemingly more rational, moderate and achievable approach to unleashing the remainder of the BRI upon the world. It now realizes that its reputation and legacy are at stake, never mind the hardship it has placed on scores of developing countries around the world in the process.
*[Daniel Wagner is the author of “The Chinese Vortex: The Belt and Road Initiative and its Impact on the World.”
The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More
- in US Politics
US unemployment fell to 8.4% last month as Covid-19 slows recovery
US unemployment and employment statistics
Employers added 1.4m new jobs, a number that was markedly lower than in recent months – 1.8m in July, 4.8m in June and 2.5m in May More
