East Asia

Deep State vs Deep South?

There is a recent pattern in American politics, in which Democratic politicians who succeeded in presidential elections were not born in northern states (e.g. Obama, Clinton, Carter, Johnson, Truman, and, if you must, Al Gore), while Republicans who won presidential elections — so, not counting Ford, who inherited Nixon’s presidency post-impeachment — have had very close ties to either Texas (the Bush’s, Eisenhower), California (Reagan, Nixon), or Florida (Bush, Trump).

To some degree, this pattern presumably reflects the old divide between the country’s Northeast and Southeast. The Democrats, who have their base of support in the Northeast, have had trouble in elections when they do not reach out to the South by selecting one of its native sons as their candidate. The Republicans, who have support in the Southeast, have had trouble winning when they do not secure the support of at least one of the country’s three largest states—California, Texas, or Florida.

Looking at the home regions of China’s leading politicans, it is fairly easy to discern a similar north-south divide. A large share of Chinese leaders were born in northern China. These include Beijing-born Xi Jinping (who’s father, Xi Zhongxun, was from Shaanxi) and Shandong-born Wang Qishan (a former mayor of Beijing, now Xi’s anti-corruption chief). At present, out of China’s seven Standing Comittee top leaders, only seventh-ranked Zhang Gaoli was born in southern China. Five of the seven were born in the north and one, Premier Li Keqiang, was born in in central China. Many politicians of the past, such as Zhao Zhiyang or Hua Gaofeng, have also hailed from the north.

Indeed, as far as I can tell, Zhang Gaoli may in fact be the first person in thirty years to be born outside of northern or central China and have made it to the Standing Committee. He is also the only person currently serving in the Party’s 25-member Politburo born outside north or central China.

Central China — which, somewhat confusingly, is sometimes considered to be part of Southern China, though it is located far north of the ‘deep south’ regions like Guangdong or Yunnan — has also produced its fair share of notable figures, such as Hu Jintao, Jiang Zemin, Li Keqiang, Zhou Yongkang, and Wu Bangguo, all of whom were born in Jiangsu or Anhui. There seems, in fact, to be a very recent trend in which, when the General Secretary is from northern China, then the Premier is from central China, and vice versa. So, for example, there is now the pairing of Xi and Li (born in Beijing and Anhui, respectively), and before them the pair Hu and Wen (Jiangsu and Tianjin).

 

Some may interpret this as an implicit power-sharing arrangement between central China and northern China. While at present most leaders come from northern China, this was not the case a generation ago. Jiang Zemin (born in southern Jiangsu), Zhu Rongji (northern Hunan), Li Peng (Shanghai), Hu Yaobang (northern Hunan), Li Xiannian (Hubei), and Yang Shangkun (Chongqing) were not from the north. Of the “Eight Elders” of the 1990s and 1980s, six were born in central or south-central China; the other two in Shanxi. Even Xi Jinping, a northerner, spent his political career in central China or south-central China, in Hebei, Fujian, Zhejiang, and Shanghai.

All this, of course, could be meaningless; birthplace is hardly always a determining factor in any leader’s politics. What is interesting, however, is that such a regional pattern arguably exists in spite of the fact that most of China’s most prominent political figures and revolutionaries in the first half of the twentieth century — including Mao Zedong, Deng Xiaoping, Sun Yat Sen, Chang Kai-Shek, Zhu De, Liu Shaoqi, Hong Xiuquan, Ye Jianying, Zhang Guotao, or even the writer Lu Xun — hailed from southern China or from south-central China. Perhaps this shows that China’s establishment tends to be more northern, whereas China’s anti-establishment tends to be more southern?

The pattern, if it does actually exist, does not appear to be unique to civilian political leaders. Among today’s 11-man Central Military Commission, seven were born within northern China, while two were born in north-central China and two in south-central China. None are from the deep south.

Meanwhile, out of the 205 active members of the Party Central Committee, fewer than 15 were born in the deep south*. (*Here, please correct me if I am wrong. I do not speak Mandarin, and finding this information was difficult. Bo Zhiyue’s work was useful and worth reading, but has a different emphasis. In the end I had to sift through biographies of the Committee members one by one…). No person born in the vast southeast province Guangdong, or the vast south/centre- west province Sichuan, holds one of the 43 positions in either the Communist Party’s Politburo, Secretariat, or Central Military Commission, at or around the highest levels of China’s political hierarchy.

The Sichuan basin has also witnessed a spate of high-profile political take-downs in recent years, notably of Chongqing’ party leader Bo Xilai and, later, of Sichuan province’s former chief Zhou Yongkang. Now Chongqing’s party chief is Sun Zhengcai, who is the youngest member of the current 18th Politburo and formerly served as party chief of Jilin. Guangdong’s party chief, Hu Chunhua, is the second youngest member of the Politburo and formerly served as party chief of Inner Mongolia, after having spent most of his career working in Tibet.

This may be significant, in both cases. Southern China, as well as other areas that might perhaps also be considered to be ‘peripheral’ (including Inner Mongolia, Tibet, and even Jilin), appear often to have been used as something of a stepping-stone to power by young, up-and-coming leaders like Hu and Sun. The idea is—presumably—that they will do whatever it takes to secure the Party’s interests in those regions, given they have such bright future careers to lose if they fail to do so. Past instances may include Hu Jintao serving in Guizhou and Tibet, Zhao Zhiyang in Guangdong, or maybe even Xi in Fujian. In the case of Hu and Sun in Guangdong and the Sichuan basin, they might be there simply because of those regions’ large sizes and significance—but perhaps they are also there to preempt dissent.

…And yet. Much of China’s economic output is generated in areas from around Shanghai south to Guangdong; particularly if you include Taiwan as being part of the country. Guangdong alone accounts for an estimated 10% of mainland China’s GDP and more than 25% of its exports. This creates, perhaps, an unbalanced dynamic: China’s political periphery is also its top commercial engine.

Americans might be tempted to call this state of affairs “taxation without representation”. While I will not stoop to doing so, I would however be very interested in hearing feedback about these patterns from any of the billion or so people who are more knowledgable on Chinese affairs than I am.

So please, comment below.
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East Asia

Oil and the Ouroboros

Today, at $45-50 a barrel, the price of crude oil has risen significantly from the $30 lows it reached around the start of 2016. Still, it remains quite far below the $80-110 range in which it resided during most of the past decade, prior to its crash in mid-2014. Gas and coal prices, meanwhile, have in most areas of the world fallen even more than those of oil has. China, because it is the world’s largest net importer of oil and of fossil fuels in general, has often been viewed as a country that is likely to benefit from these cheaper prices.

This view may be incorrect. Not only do China’s energy imports not equal a large share of its GDP, but the growth of China’s energy imports going forward may be slower than many predict. Moreover, there is an enormous discrepancy in the amount of fossil fuels produced by various regions and provinces within China. As such, the crash in energy prices may excacerbate, or at least influence, some of China’s preexisting geo-political divisions.

Energy Imports

China may be the world’s largest energy importer, but it is has also become its second largest energy producer, and as such only relies on energy imports for an estimated 15% of its total energy consumption, in contrast to 94% in Japan, 83% in South Korea, 33% in India, 40% in Thailand, and 43% in the Philippines. In 2014 imports of oil were equal in value to just around 2.4 % of China’s GDP, according to the Wall Street Journal, compared to 3.6% in Japan, 6.9% in Korea, 5.3% in India, 5.4% in Thailand, 4% in the Philippines, and 3.3% in Indonesia.

South Korea and Japan also imported more than two and four times more liquified natural gas, respectively – the prices of which tend to track oil prices more closely than conventional natural gas prices do – than China did. China’s LNG imports barely even surpassed India’s or Taiwan’s. China’s imports of natural gas in general, meanwhile, were less than half as large as Japan’s and only around 20% percent greater than South Korea’s.

China, furthermore, tends to import energy from the most commercially uncompetitive, politically fragile, or American-hated oil-exporting states, such as Iran, Russia, Iraq, Angola, and other African states like Congo and South Sudan. In contrast, Japan and South Korea get their crude from places that will, perhaps, be better at weathering today’s low prices, namely from Kuwait, Qatar, the UAE, and Saudi Arabia. (Granted, China gets an enormous amount of oil from Saudi Arabia too; however, Saudi oil does not count for nearly as large as share of China’s oil imports as it does for Japanese or South Korean oil imports). Similarly, China gets much of its natural gas from Turkmenistan, Uzbekistan, and Myanmar, whereas Japan imports gas from Australia and Qatar and South Korea imports gas from Qatar and Indonesia. China’s top source for imports of high-grade anthracite coal, and its third largest source for coal in general, is North Korea.

China has, in addition, invested capital all over the world in areas hurt by falling energy and other commodity prices, both in developed countries like Australia and developing economic regions like Africa. With energy prices cheap, it may get low returns on these expenditures.

Energy, History, and Politics

Another mistake the financial media makes is looking at China as if it were a country, rather than what it really is: both a country and a continent. Continents contain deeply-rooted divisions along regional, linguistic, and ethnic lines. China is no exception. China’s main division, roughly speaking, is between  areas south of the Yangtze River, which tend to be mountainous, sub-tropical, and dependent upon importing fossil fuels, and areas north of the Yangtze, which tend to be flat, more temperate, and rich in fossil fuels.

China’s Physical Topography                     China’s Population Density

Northern China, stretching over 1000 km from Beijing southward to Shanghai on the Yangtze, is the country’s political heartland. It is densely populated and home to most of China’s natively Mandarin-speaking, ethnically Han citizens. When compared to southern China, the north has historically been somewhat insulated from foreigners like the Europeans, Americans, and even Japanese. Beijing’s nearest port is roughly 5000 km away from Singapore and the Strait of Malacca; Hong Kong, in contrast, is only around 2500 km from Singapore and Malacca. Beijing is rougly 2600 km from Tokyo by ship, whereas Shanghai is 1900 km from Tokyo and Taipei (in Taiwan) is 2100 km from Tokyo.

Japan’s Ryukyu island chain and the Kuroshio ocean currents historically allowed for direct transport from Japan to Taiwan and the rest of China’s southeastern coast; the Japanese controlled Taiwan for more than three and a half decades before they first ventured into other areas of China in a serious way during the 1930s. Even today, Japan accounts for a larger share of goods exports to Taiwan than do either China or the US.

Southern China has often depended on foreign trade, since much of its population lives in areas that are sandwiched narrowly between Pacific harbours on one side and coastal subtropical mountain ranges on the other. In northern and central China, in contrast, most people live in interior areas rather than directly alongside the Pacific coast.

People in the northern interior often did not engage in as much foreign trade as those on the coast, as, in the past, transportation in the interior was often limited by the fact that northern China’s chief river, the Huang-he, is generally unnavigable and prone to flooding northern China’s flat river plains, destroying or damaging roads and bridges in the process. In southern or central China, by comparison, even people living far inland could engage with the coast by way of the commercially navigable Yangtze and Pearl Rivers, which meet the Pacific where cities like Shanghai, Guangzhou, and Hong Kong are located.

Northern China, however, was most directly exposed to the land-based Mongol and Manchu invaders who ruled over the Chinese for most of the past half-millenium or so, prior to the overthrow of the Manchu-led Qing Emperor in 1912. Today, of course, the north continues to retain China’s political capital, Beijing, and a disproportionally large majority of Chinese leaders were born in northern China — including Beijing-born Xi Jinping and Shandong-born Wang Qishan, a former mayor of Beijing). This is in spite of the fact that most of China’s leading political revolutionaries in the twentieth century, including Mao Zedong, Deng Xiaoping, Sun Yat Sen, Chang Kai-Shek, Zhu De, Ye Jianying, Hong Xiuquan, and the writer Lu Xun, hailed from southern or south-central China.

At present, out of China’s seven Standing Comittee top leaders, only seventh-ranked Zhang Gaoli was born in southern China; whereas five of the seven were born in northern China and one, Premier Li Keqiang, was born in central China. Zhang Gaoli may in fact be the first person born outside of northern or central China in thirty years to have made it to the Standing Committee. He is also the only person currently in the 25-member Politburo born outside of northern or central China. Meanwhile, among the 11-man Central Military Commission, seven were born in northern China, while two were born in north-central China and two in south-central China. By my count, out of the 205 active members of the Party Central Committee, fewer than 15 seem to have been born south of central China.

Indeed, the southern half of China, stretching from islands in Taiwan, Hainan, Hong Kong, Xiamen, and Macau in the east to the plateaus of Yunnan, Sichuan, and Tibet in the west, seems to be politically peripheral. It is home to a majority of China’s 120 million or so non-Han citizens (most of whom are not Tibetan or Uyghur, though those two groups recieve almost all of the West’s attention), as well as home to China’s 200-400 million speakers of languages other than Mandarin, and to China’s tens of millions of speakers of dialects of Mandarin that are relatively dissimilar to the Beijing-based standardized version of Mandarin, and to most of China’s 50-100 million recent adopters of Christianity, and, finally, to most of China’s millions of family members of the enormous worldwide Chinese diaspora.

Southern China is closer to Southeast Asia, a region with an enormous, economically active Chinese population (many of whom speak southern Chinese languages like Cantonese), than is northern China. Southern China’s Fujian province, in particular, is both linguistically and economically close to Taiwan, and southern China’s Guangdong province—the largest province in China—to Hong Kong. A large share of China’s GDP comes from the coastal areas of China from around Shanghai south to Guangdong, particularly if you include Taiwan as part of the country. Guangdong alone accounts for an estimated 10% of mainland China’s GDP and over 25% of its exports. This creates, arguably, an unbalanced dynamic: China’s political periphery is also its main economic engine.

Fossil Fuels

As it happens, northern China produces almost all of China’s fossil fuels. Most Chinese energy is, in fact, produced in and around the province of Shanxi, 300 km or so west of Beijing, where a tremendous share of China’s (and, indeed, the world’s) coal is mined. Shanxi has also seen the biggest political shakeup of any province from Xi Jinping’s anti-corruption campaign thus far. When combined with the northern “Autonomous Regions” of Inner Mongolia and Xinjiang, as well as China’s north-easternmost province Heilongjiang, Shanxi produces a gigantic of China’s fossil fuels in general. Other northern areas, such as Shandong, Liaoning, and Tianjin, are also significant oil producers.

Southern and central China, in contrast, account for most of China’s imports of fossil fuels—especially if you include the economy of Taiwan as being part of southern China. Taiwan, in fact, may be more dependent on oil imports than any other significant economy in the world, according to data from the Wall Street Journal. Falling energy prices may weaken the historical political heartland of China relative to its periphery, in that case. Whether or not this will generate political instability going forward remains to be seen.

Looking Ahead

If (a big if) energy prices remain low for a sustained period, then the question of China’s future dependence on imported energy also becomes relevant, as does the question of the future dependence on imported energy of China’s most important neighbours. In that case, how dependent on energy imports will countries like China, Japan, and India be in a decade or two from now?

While it is impossible to know what the future will be like, it is not difficult to imagine that China will remain less dependent on energy imports than India and/or Japan during the years or decades ahead, as a result of India’s still-emerging economy and Japan’s still-roboticizing economy.

China is not likely to be a major adopter of energy-intensive robots, in per capita terms, because China has a far larger cheap labour force than any country in the world apart from India. Japan, in contrast, will likely help lead the robot revolution, as its labour force is expensive and aging rapidly. This could make Japan even more dependent on importing energy, as machines that are both highly mobile and capable of sophisticated computation require an enormous amount of energy to run — and indeed, one of their main advantages over human labour is that they can and frequently will be tasked to run 24-7, without even taking any time off for holidays or sick days.

China is not certain to increase its energy imports nearly as much as less-developed economies like India, meanwhile, as the Chinese inudstrial sector is facing challenges as a result of its past generation of energy-intensive growth. China faces rising labour costs in many of its cities; a pollution problem; a US that is concerned with Chinese industrial power; and countries throughout the world afraid of China’s world-leading carbon emissions.

In addition, China is located much further away from the Persian Gulf and Caspian Sea oil and gas fields than the Indians and other South Asians are, and so might have difficulty accessing them in a pinch.

China may also, for the first time, have to face industrial competition from resource-rich economies such as Australia, Norway, Canada, Texas, or even the Gulf Arab states,which may be able to use energy-intensive robots of various kinds to build up their manufacturing sectors in spite of their small, expensive domestic labour forces.

All this could make China’s industrial growth rate slip, which in turn might reduce China’s resource imports and thus prevent China from becoming the leading beneficiary of low energy and commodity prices.

Such a shift will be especially likely if the United States or European economies decide to enact tariffs on goods coming from places that generate power by using coal in inefficient ways, a prospect that has become increasingly likely as a result of America’s triple-alliance between environmentalists opposed to coal consumption, shale gas producers competing with coal miners, and energy companies trying to pioneer more expensive but cleaner ways of consuming coal and other fossil fuels. China may then have to focus on growing its service sectors instead of its energy-intensive industrial sectors.

China, Japan, and Siberia 

Japan, lastly, might benefit from Russia’s energy-related woes more than China will. This is not only because the Chinese have to a certain extent often looked to Russia as an ally against the West, but also because the areas of Russia that China is close to are mostly irrelevant to China: they are landlocked, Siberian, and for the most part located far from China’s population centres.

Pacific Russia, in contrast, which is located next to the Sea of Japan on the East Asian side of Russia’s Pacific mountain ranges, has a far more liveable climate than does most of the continental Siberian interior. It is home to several small or medium-sized port cities, such as Vladivostok and Petrapavlovsk-Kamchatsky, which are very, very far away from Moscow. This region accounts for much of the oil and nearly all of the Russian gas exports to Asia—especially energy-rich Sakhalin Island, which is just 40 km away from Japan and was half-owned and inhabited by the Japanese prior to the Second World War.

Russia may, in fact, be somewhat better prepared to fight another border war with China like it did in 1969—which might not be too different than the many other wars Russia has fought within or near its borders both prior to or since then—than it would be to face off against Japan again within the far-eastern, mountainous, archipelagic and peninsular Pacific Russian region, as it did in 1905 and then again during the 1930s and WW2. Of course this does not mean Japan will attack Russia — though it has certainly toyed with the idea of eventually making some bolder moves in the Southern Kuril Islands, which both countries claim as their own. Even the remote, unstated possibility of conflict, however, may help grant Japan leverage in any negotiations with Russia regarding commercial or political issues.

Conclusion

All of this is not to be bearish on China’s future. Energy-intensive industrial growth, after all, woud not necessarily mean an improved quality of life for Chinese citizens. Ideally Chinese standards of living will rise at a considerably faster pace than its energy usage. It does seem, though, that China’s economy may not turn out to be a major beneficiary of the fall in energy prices. The PRC’s neighbours on the other hand, such as Japan and Taiwan, which are less rich in fossil fuels or in labour, may benefit greatly. So too might the poorer countries that depend on energy imports, like India and the Philippines. Just as important, however, yet often overlooked, are China’s domestic geopolitics. Internal Chinese divisions—including along north-south and east-west lines—have been, and might remain, of paramount importance. Energy prices could impact them too.

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East Asia, Europe, Middle East, North America, South Asia

A Look Back At Barack Obama’s Foreign Policy

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Obama was elected at a time when political anxiety in America was relatively high, particularly among Democratic voters who disliked George W. Bush’s seeming lack of sophistication. The feeling was that the US had wasted trillions of dollars in Iraq and Afghanistan, and thus helped to ruin America’s economy and divert attention away from more serious adversaries like Russia and especially China. The economic failure was seen as being confirmed by the financial crisis, which began with the collapse of Lehman Brothers only a month or so before the election. The foreign policy failure was seen as being confirmed by, among other things, Russia’s invasion of Georgia three months before the election, followed one day later by the extravagant opening ceremony of the Beijing Olympics. Even during the presidential lame duck period leading up to Obama’s inauguration, a number of politically or symbolically negative global events occured, including the throwing of a shoe at Bush in Iraq, the 2008-2009 Israel-Hamas War in Gaza, and the Mumbai Attacks in India.

Obama ran against Clinton in 2008 as an upstart candidate in the Democratic primary. He attacked her where she was least popular, which in foreign policy was her support for invading Iraq while in the Senate in 2002. The primary was a close one: Obama won 53 percent of the delegates but actually lost the popular vote as well as the largest state of California. As such, though it is always hard to untangle political strategy from principled belief, it does not seem so far-fetched to imagine that Obama’s campaign policy of Afghanistan being “the good war” and Iraq “the bad war” was, at least in part, devised in order to exploit Clinton’s Iraq weakness without making Obama appear to be too dovish or isolationist. We do know that Obama was not above abandoning his own principles for the sake of victory; he publicly opposed gay marriage until mid-2012, for example, when for intellectual and dispositional reasons it was obvious he was privately in support of it even at the time.

Upon coming into office, Obama formed three main foreign policy positions. One was the “pivot to Asia”, which included both the re-prioritization of Afghanistan over Iraq as well as the rhetorical move to acknowledge the 21st century as ”America’s Pacific Century” (which became the title of a widely heralded article in Foreign Affairs written by Secretary of State Clinton). While both the withdrawal from Iraq and the public assumption of a rising Asia preceded Obama’s arrival in office, he was a natural fit to promote such policies given that he never supported the invasion of Iraq (as 42 percent of the Democratic politicians in Congress had done in 2002), and given that he had personal experience in the Pacific, having grown up in Hawaii and Indonesia and attended college in Los Angeles.

While Obama’s pivot to Asia was mainly rhetorical — it had to be, since the American military never left Asia in the first place and so could not truly pivot back to a region it was already in — he and Clinton did begin healing American relations with a very important Asian country, Myanmar (aka Burma), a diplomatic feat similar to the one Obama would repeat in his second term with both Cuba and Iran.

Another policy was the “Reset with Russia”, which, as with the later reset with Iran, centred around nuclear de-proliferation but was intended as a broader political reconciliation between countries. Obama was attacked heavily by Mitt Romney and Republicans in the 2012 election for having carried out this Reset, to which he and the Democrats successfully responded by ridiculing the Republicans for being “stuck in the Cold War”. This now appears tragically ironic, given how the 2016 election campaigns turned out. But Obama’s Reset with Russia was quite rational.

America needed Russia in order to effectively carry out the surge of US troops into Afghanistan between 2010 and 2014. Russia retains, among other things, a substantial amount of political influence within countries like Tajikistan and Uzbekistan, which neighbour Afghanistan—and an estimated 30-40 percent of Afghanistan’s population is either ethno-linguistically Tajik or Uzbek. The US was also more concerned with containing China than it was with containing Russia at the time, since China’s economy had not yet appeared to slow down and since Russia had not yet formally annexed Crimea or involved itself forcefully in other areas of Ukraine or in Syria.

Moreover, Obama’s Reset with Russia eventually contained a big caveat: the doubling-down of America’s growing military relationships with East European countries like Poland and Romania. Today, with US-Russian tensions having risen tremendously and with the European Union no longer seeming like a potentially potent force, these relationships seem crucial and continue to grow. At the time, they were meant to reassure countries like Poland that they were not being abandoned in the Reset, and at the same time to return the favour that some East European countries had provided when they sent lots of soldiers (relative to the size of their populations and economies, and relative to countries in continental Western Europe) to fight alongside the US in Iraq and Afghanistan.

Among other things, this move included Obama planning missile defence system components in Poland, Romania, and Turkey. The Russians objected loudly to any missile defence program, since they did not want to see the US military presence in Eastern Europe grow. Obama responded that the Russians were being paranoid and that the defence systems were in fact intended only to block future Iranian missile capabilities. This was a ridiculous claim, given that most of the countries involved in the plan surrounded Russia. But the American media mostly ate it up, either because they did not bother to look at a map, or because most Republicans preferred to attack Obama as too weak on Russia rather than too strong on Russia, or because many Democrats did not want to question Obama in general.

While the systems would not be able to block the Russian missile arsenal if it ever came to war, they were an important symbolic gesture and another step in the growing US military alliance with states like Poland. When Obama had earlier, in 2009, backed down on the missile defence issue — announcing, on the 70th anniversary of the Soviet Union’s invasion of Poland in 1939, the cancellation of missile defence in Poland and the Czech Republic, and later being caught on a hot mic in 2012 saying to Dmitry Medvedev that he would have more flexibility in missile defence planning once re-elected — Romney attacked Obama sharply for doing so. But Romney’s campaign was ridiculed for mistakingly using the name Czechoslovakia, taken as a another proof of his being trapped archaically in the Cold War. Romney was especially reproached, even by Republican Congressional leader John Boehner, for declaring Russia to be “America’s number one geopolitical foe”. (That Romney might now become Trump’s Secretary of State boggles the brain). And while Obama may have Reset with Russia early on, he has definitively broken with Putin since.

The third major policy early in Obama’s first term was an attempt at reconciliation with the Muslim world, and particularly with the Arab world, intended to reverse the negative feelings that had grown there — and that Liberals in the West had perceived to have grown there — during the Bush years. Obama was the right man for this job, given his moderate and liberal personality as well as his personal experiences in Indonesia, his middle name Hussein, his grandfather’s conversion to (Shiite) Islam, and his family in Kenya, a partially Muslim country. Obama went to Turkey, Iraq, Saudi Arabia, and Egypt during parts of his first and second overseas trips as president, and gave one of his most famous speeches, A New Beginning, in Cairo, the largest city in the Arab world, at an event co-hosted by Cairo University and Al-Azhar University. Obama’s first-ever presidential television interview was with Al-Arabiya, a Saudi-owned, UAE-based news channel.

This “apology tour”, as Obama-bashers call it, earned him the ire of Republicans for not having stopped in Israel while in the region (though he visited the site of the Buchenwald concentration camp the day after making the Cairo speech). It also helped racist or extreme right-wingers in their attempt to portray Obama as a hidden Muslim, quasi-Muslim or, in the case of those like the shameless, shameful Donald Trump, as possibly foreign-born and therefore not a legitimate president. (This was especially shameful given that the man Obama had beaten to become president, John McCain, was actually not born in an American state, but rather in Panama’s Canal Zone). Incidentally, Shiite Muslims have a centuries-long history of publicly pretending not to be Shiite for fear of being persecuted by the majority Sunnis; this, combined with Obama’s family background, has now led some in the Arab world to accuse Obama of being a secret Shiite with an agenda to allow Shiite Iran to emerge victorious over Saudi Arabia and its Sunni allies.

Of course, Obama’s outreach to the Arab public was put to the test two years later in the Arab Spring, which also centred in Cairo. Predictably for an American president, Obama chose more or less to stand by America’s main allies in the Arab world — the Egyptian military and the royal families of the Arabian Peninsula. Obama only abandoned Hosni Mubarak (a former general) during the middle of the 18-day protest in Tahrir Square, earlier only suggesting that Mubarak not run for re-election following the end of the term he was serving as Egypt’s president at the time.

In the years since, Obama has not pushed back much against Abdel Fattah el-Sisi, who threw out the elected Muslim Brotherhood government of Muhammad Morsi in a military coup and has since declared the Brotherhood to be an illegal terrorist group. (The Sisi government also had support from the political parties which got the second most votes in the post-Mubarak elections, namely the Saudi-backed religious Nour bloc). Similarly, Obama did not limit the Saudis from sending troops to break up Arab Spring protests in neighbouring Bahrain, a Shiite-majority state ruled by a Sunni monarchy. Maintaining the power of Bahrain’s royal family was a key issue for the Saudis, as Bahrain is connected by a causeway to Saudi Arabia’s remote, vast, sparsely populated, Shiite-majority Eastern Province, which is where most Saudi oil and gas is located.

Given that his support for Arabian kings and Egyptian generals was in some ways arguably an abandonment of the “Arab Street”, which Obama had previously supported rhetorically and which the Western media was going gaga over during its coverage of the Arab Spring, Obama’s war in Libya showed that he was still not entirely pro-dictator in the Arab world. This is not to say that Obama waged the war for cynical political reasons, however. The case for the Libya war was fairly straightforward: Gaddafi was an aging tyrant who had ruled for four decades, his impending death or incapacitation due to old age would have risked a war anyway given the enormously divided nature of Libyan geo-politics, and any spillover from a war in Libya was unlikely to be too large given that Libya only has six million inhabitants and is surrounded by the Sahara.

Thus, eventually, we arrive at the events of September 11, 2012, in Benghazi, Libya’s second largest city. Bengazhi is the largest city within a vast radius of itself, especially to the south; it was the city that was initially the centre of the anti-Gaddafi movement—the very city Obama had been aiming to protect from a massacre of Arab Spring protestors when he ordered the US military intervention in Libya. Of course, the Democrats are correct when they say that the Republicans shamelessly used Benghazi in order to try to tar the reputation of Hillary Clinton in order to win the White House in 2016. (If Trump boomerangs on the Republican Party at some point, they might finally get what they deserve for this). Republican cynicism notwithstanding, however, supporters of Obama have arguably misunderstood the Benghazi affair. It is now seen entirely, or almost entirely, as an anti-Clinton or anti-Obama stunt. To understand why this may be an incorrect view, it is important to recall how the war in Libya was interpreted between Gaddafi’s death in 2011 and the Benghazi attack ten and a half months later; a period that overlapped with most of the Obama-Romney presidential race and immediately followed Bin Laden’s death.

The Libya war was, at the time, seen as an enormous success by both the centre-left and the centre-right (and the centre-centre). The centre-right liked the war because the centre-right is hawkish. The centre-left liked the war because it was portrayed as a counter-argument to the Bush-era invasion of Iraq they so despised: Libya did not become a quagmire involving US ground troops, it was fought by a coalition that included European and Middle Eastern countries which had refused to be involved militarily in Iraq, it did not involve misleading claims about weapons of mass destruction (Gaddafi had already given Libya’s WMD program up in 2003, following the US invasion of Iraq), and it was part of a broader anti-tyranny movement, the Arab Spring. With Bin Laden too having just been killed — another feat Bush failed to achieve — Obama seemed to be moving from strength to strength. As Biden put it in the campaign: “Bin Laden is dead and General Motors is alive”. As Clinton put it (regarding Gaddafi): we came, we saw, he died”.

Wars almost always boost a president’s popularity in the short term. Given that the US economy was still reeling from the Great Recession and thus Americans ready to vote for change (which they did eventually, with Trump), and given that the Republicans had controlled Congress since 2010 and so were able to block most of Obama’s non-military initiatives, having Libya be seen as a quagmire-free foreign policy success was a boon for Obama. Though Obama went on to crush Romney in the electoral college, his victory was in fact not a large one: Ohio, Virginia, and especially Florida were extremely close, Obama received just 51 percent of the popular vote nationwide, and the Democratic Party did not succeed in winning back control of the Senate or the House.

Not long after Gaddafi was killed, the media largely stopped paying attention to Libya. The Republicans began to pin more of their hopes on portraying the withdrawal of troops from Iraq as having been destabilizing and a sign of Democratic weakness. However the Benghazi attack, just 25 days before the election, risked showing the American public that Obama’s war in Libya — along with the various other conflicts in the Arab  or Muslim world, including Iraq — was going to be somewhat messier than it had been portrayed as. This was an “October Surprise” that terrified the Democrats, since Obama was ahead in the polls.

Obama and the Democrats, it appears (though it is difficult to be sure), tried to obscure the Libya issue by exploiting the fact that the media was at the time spending most of its attention obsessing over an offensive, low-quality movie posted on Youtube, called the Innocence of Muslims. The claim was that the video had outraged Muslims and thus spontaneously caused protests that in turn caused the Benghazi  attack — a somewhat ludicrous claim, though plausible, and maybe even accurate, given that the attack was relatively sophisticated and, more importantly, that the attack was carried out on the anniversary of 9-11 and came in the wake of months of small attacks and attempted attacks on US and Western targets in Benghazi and in post-Gaddafi Libya in general. The Obama administration was later forced to walk this  claim back — and Susan Rice was forced to give up her bid for Secretary of State because of the claim, at least ostensibly — because the Republicans would not let the issue drop. However that same Republican relentlessness arguably ended up backfiring, since most people saw that the Republicans were mainly concerned with exploiting a tragic event in order to tarnish Obama and Clinton.

(The Republicans also purposefully confused the issue because of the unpopularity of their own hawkish political ideology. The Republican stance on Libya had, in general, not been that entering Libya was a mistake, but rather that it was not forceful enough: they argued that Obama should not have “led from behind” the British, French, and Italians, and that the US should have committed more Special Forces. Yet the Republicans also knew that this stance of theirs was very unpopular among the US public, given that at the time the Iraq War was still extremely fresh in people’s minds and given that the troop surge in Afghanistan was occurring at the time. Thus, the Republicans were on the one hand worried that dwelling on Benghazi would make Americans voters realize that the Republicans were too hawkish, but on the other hand the Republicans were unwilling to pass up the opportunity to use Benghazi (and more generally, Libya) to catch Obama and Clinton in a potential lie over this potential new Middle Eastern quagmire. To square this circle, the Republicans resorted to making only vague, yet intense, accusations over the Benghazi issue. In turn, this left many Republican supporters across the United States to form their own conspiratorial versions of what exactly Obama or Clinton’s sins over Benghazi had been. Not that people needed any extra incentive to start forming conspiracy theories. In fact, maybe my whole opinion on this issue is nothing more than a conspiracy theory…)

Moving on to Syria, and specifically to Obama’s “Red Line”: it is difficult to know whether or not the US should have intervened more forcefully in Syria, and it is also difficult to know how much truth there is to Obama’s claim that he extracted significant concessions from Assad as a result of bluffing during the Red Line affair. What we do know, though, is that in spite of the fact that most Republican supporters and even many Democrats claim that Obama was either weak for not following through on the bluff or stupid for bluffing in the first place, it is in fact not at all clear that bluffing in matters of war is stupid or that failing to follow through on a bluff in the event that it is called — even despite the risk of losing credibility as a result — is a weak thing to do. Thus while Syria remains an immense tragedy and Obama’s role in it is open to debate, the certainty with which many claim that Syria will be remembered as Obama’s top mistake appears to be unfounded.

Finally, let’s talk about Obama’s position regarding Iran, which, in the long term, will possibly be considered his most significant legacy in foreign policy, the equivalent of Jimmy Carter’s reacquaintance with Anwar Sadat’s Egypt or even of Nixon’s reacquaintance with Maoist China. The Obama stance on Iran has often been misunderstood in at least one of the following three ways. One, that it is primarily about Iran’s nuclear weapons program. It is not (though this is of course not to say that nukes are not a very real issue). Two, that Obama and Netanyahu were at odds over America’s stance on Iran. They were not (though this is not to say that relations between Obama and Netanyahu have been hunky-dory or that Israel is not rightfully wary about the improving US-Iranian relationship and Iranian weaponry). Three, that Obama’s policy came from a place of dovishness. In fact, it came just as much from a place of hawkishness: Iran is in some respects a crucial potential US ally.

The conflict between America and Iran began to heat up after the invasion of Afghanistan in 2001 and Iraq in 2003. This was because both invasions had created overlapping spheres of influence between US soldiers and Iranian proxies, and because both invasions had strengthened Iran’s regional influence. Iran had been enemies of both Saddam Hussein and the Taliban. Saddam’s regime had been led by part of Iraq’s Sunni Arab minority, whereas as most of the rest of Iraq are Shiites like the Iranians or else Sunni Kurds (and Kurds are ethno-linguistically closer to Persians than to Arabs). Iran had fought a war against Iraq in the 1980s in which hundreds of thousands of its citizens were killed; the Iranians are now been interfering in Iraq in order to ensure this never happens again. The Taliban in Afghanistan, meanwhile, are predominantly composed of Sunni Pashto-speakers, yet Afghanistan also has a sizeable minority of Shiite Muslims and is more than a quarter Tajik (and Tajik is mutually intelligible with Persian). Iran had threatened to go war with the Taliban in 1998, following the group’s killing of Iranian diplomats. Apart from Pakistan, Iran is the crucial Muslim neighbour of Afghanistan. Iran’s border with Afghanistan is half as long as the enormous US-Mexican border, and even harder to build a wall across.

With Saddam’s Baathists and the Taliban out of power in cities like Baghdad and Kandahar, the Iranians were free to spread their political wings within the region, especially once the US left Iraq. To clip these wings, the US enforced sanctions on Iran and played good-cop bad-cop with the Israelis in threatening to carry out strikes against Iranian military and infrastructural targets. At one point, around 2010-2013, it was commonly expected that Israel and/or America would attack Iran imminently. This good-cop bad-cop role also served both Obama and Netanyahu quite well in their own respective domestic politics. It allowed Obama to avoid appearing to be a warmonger, and allowed Netanyahu to portray himself as firmly standing up to both the White House and the mullahs in Iran in an attempt to ensure security for the Israeli public at any cost.

Indeed, Israeli-Iranian tensions were declining even before Netanyahu’s famous speeches in New York or, later, in Washington. Hamas’s relationship with Iran weakened as a result of Iran’s backing of Assad, which Hamas was not happy with (Hamas’ leadership moved out of Syria in 2012, to Qatar). Iran’s proxy Hezzbolah, meanwhile, became too distracted with helping to prop up Assad in Syria to focus on Israel as it had in its war with Israel in 2006. Moreover, around this same period Israel’s relationship with Turkey deteriorated sharply as a result of the Gaza Flotilla incident in May 2010, and later because Turkey was angered by the coup against Muhammad Morsi of Egypt’s Muslim Brotherhood, the organization from which the Hamas movement was originally sprung. The Iran-Hamas breach over Assad, Hezzbolah’s distraction, and Israel’s growing wariness of Turkey brought a thaw between Iran and Israel. But politics is politics; for now, both countries remain boogeymen in the eyes of one another’s medias.

Many, similarly, believe Obama and Netanyahu to be hated rivals, or, at least, frenemies, when it is not at all clear that their opinions of one another are really so low as they are portrayed. Those who watch NBA basketball (as Obama does) would be familiar with the “hold me back” strategy Obama and Netanyahu arguably used against Iran in the years leading up to the signing of the US-Iranian deal on nuclear and sanctions reductions. The real breach between the US and Israel, if indeed there is to be one in the years ahead, is likelier to occur over issues like Palestine or even Pakistan (where the larger nuclear threat to Israel is located, arguably) than Iran, given Iran has a number of important shared interests with both Israel and the US.

The Obama rapprochment with Iran occured as a result of the fact that Iranian influence was curtailed by the Arab Spring, with the Saudis quelling Shiite protests in the Persian Gulf state of Bahrain and, even more importantly, with large chunks of territory within Syria and Iraq being taken over by militant Sunni groups, including but not limited to ISIS and Al-Nusra. Iran is no longer in a potentially dominant position in the Middle East. As a result, Obama has in recent years has been able to have warming relations with Iran and work, in effect, alongside the Iranians in containing ISIS and in trying to have US troops withdraw from Afghanistan without sacrificing major cities to the Taliban.

While the media now gives a lot of attention to how the US and Iran share an interest in blocking ISIS, the shared US and Iranian interests that exist within Afghanistan are generally overlooked. But the US desperately wants to avoid a situation akin to when the Soviets left Afghanistan in the late 1980s—which brought civil war, the mutilation of the Afghan Prime Minister, a spillover of violence into Pakistan and between Pakistan and India, and eventually Al Qaeda’s attack on the US on 9-11.

The Republicans, who continue to try to make Obama’s deal with Iran appear to be Munich-style appeasement rather than typical presidential diplomacy, do not usually point any of this out. Instead they focus on the Iranian regime’s tyranny and religiosity. Bringing up the extremism of Iran’s government should not be an irrelevant point, of course, but still it comes across as a rather weak excuse to fault the deal, given America’s closer alliance with countries like Saudi Arabia; an alliance the Republicans have played a part in. Their response that Iran, unlike Saudi Arabia, should be resisted mainly because it has the potential to become a regional power, ignores not only the fact that Iran’s position has been set back by the ongoing war in Syria, but also the fact that the US wants Iran to help it contain more plausible regional powers, namely Turkey or Russia.

The US-Russian relationship has, of course, suffered seriously in recent years as a result of the conflicts in Ukraine and Syria, as well as because of the the meddling of Russia in the recent American election (assuming that either Putin or supporters of Putin were indeed behind the hacking of the DNC’s emails, as appears highly plausible). The Iranians are useful to the US in parrying Russian influence in both Central Asia and the Caucasus, in spite of the fact that Iran, Russia, and even the United States have in effect been working on the same side of the Syrian civil war at times. Iran has significant ties to a number of countries that used to be part of the Soviet Union, most notably Azerbaijan, Turkmenistan, and Tajikistan. Given that large Muslim populations in the Caucasus border large Muslim populations living within Russia, and given that Putin himself presided over the Second Chechen War, Iran’s position if of significance here. Reviving the stagnant energy industries in Iran and in Iran’s Shiite-majority ally Iraq also helps reduce the price of oil and, in the long-run, of natural gas, both of which Russia depends highly upon.

Turkey, meanwhile, is a country that has a far larger economy than Iran, an economy that is not at all based on oil exports and is therefore much less exposed to the recent crash in oil prices than Iran’s is. Turkey is also, unlike Iran, a country that is dominated by a single ethno-linguistic group, “the Turks”, who by comparison to Iranians inhabit a fairly compact, non-mountainous region. Partly as a result of this, Turkey is not home to numerous separatist or regionalist movements like Iran is (the PKK, in Turkey’s eastern, mountain regions, being the major exception). An estimated 75 percent of people in Turkey are “Turkish”, whereas an estimated 60 percent of people in Iran are “Persian”. Iran is also a Shiite country, setting it apart from the large Sunni majority in the Middle East and in the Muslim world in general.

In recent years, a number of areas that were once part of the Ottoman Empire have been hit hard by crises; notably Syria, Iraq, Libya, Greece, Ukraine, Cyprus, and Georgia. Turkish politics, led by Erdogan, have also become more Islamic than at any time since the empire fell in WW1. Recently, with Erdogan’s accusation that the Turkish cleric Gulen was behind the failed 2016 coup, and his demand the US extradite Gulen, Turkey’s Islamic politics may be becoming more unified and anti-American. US-Turkish ties have also become strained over America’s close ties to the Kurds in Syria and especially in Iraq. While relations between Turkey and America are still decent in spite of this, in part because the US wants Turkey to help block both Russia and Iran as well as re-establish a semblance of order within Syria and Iraq (where Turkey has troops), the writing is clearly on the wall: Turkey is more likely to be a major regional power than Iran is. Obama’s attempt at a political reengagement with Iran most likely reflected an understanding of this fact, given that Obama is a keen and “realist” policymaker, as most recent US presidents have been.

Ultimately, it is often said presidents are most important in their symbolism rather than in any specific deals they manage to hammer out. If that is correct, Obama appears to score quite well on the short roll of post-Cold War presidents. Obama has been more articulate and likely more sophisticated than George W Bush was, and also more scandal-free and likely more genuine than Bill Clinton was. Obama’s critics too tend to claim that Obama’s most notable decisions in foreign policy were of the symbolic sort, whether it be his refusal to use the term Islamic terrorism, attend funerals in solidarity with the Charlie Hedbo and kosher supermarket victims in France (two weeks before attending King Abdullah’s in Saudi Arabia), or decline the Nobel Peace Prize awarded to him by starstruck Norwegians in the first year of his first term. Even those that do believe the worst of Obama, however — and there really is little reason to do so — should acknowledge he has done less harm to America’s reputation in eight years than Trump now has in the past eight months.

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East Asia, Europe, India, Middle East, North America, South America, South Asia

Political Dynasties and their Discontents

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Political dynasties have always been a big part of human civilization, and today is no exception.

In the United States, the rise of Donald Trump was at least partially a reaction to the dynastic, Clinton-vs-Bush election that only last year most Americans were expecting to get.

It was, after all, Jeb Bush’s candidacy that split the Republican establishment in two, preventing it from coalescing around a politician like Marco Rubio early on and thus leaving an opening for Trump to force his way into. Hillary Clinton’s high disapproval rating, similarly, could even leave the door open for Trump to become president, however unlikely and unappealing that may be.

Canada

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Former Canadian prime minister Jean Chrétien and Liberal Party leader Justin Trudeau wave at supporters at the University of Toronto, February 15, 2015 (William Pitcher)

North of the border, Canada has just elected Justin Trudeau as its Prime Minister, the son of Pierre Trudeau who was prime minister for fifteen years during the late 1960s, 1970s, and first half of the 1980s. One of Trudeau’s two opponents in the election had been NDP leader Thomas Mulcair, whose ancestors include the first and ninth Premiers of the province of Quebec.

Mexico

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Enrique Peña Nieto, presidential candidate for Mexico’s Institutional Revolutionary Party, waves to supporters in the city of Torreón, June 18, 2012 (Flickr)

South of the border, Mexican President Enrique Pena Nieto,who came to power in 2013, “is the nephew of two former governors of the State of México (the state in which Mexico City is located): on his mother’s side, Arturo Montiel, on his father’s, Alfredo del Mazo González“, according to Wikipedia.

East Asia

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Japanese Prime Minister Shinzo Abe (left) and General Secretary of the Communist Party of China Xi Jinping (right)

In China, the current General Secretary Xi Jinping, who is now thought to have amassed more personal power than any Chinese leader since Deng Xiaoping, is the first to come from the “princeling” class. He is the son of a prominent political figure, Xi Zhongxun, from the first generation of the Communist Party leadership. This distinguishes him from the other General Secretaries in the Communist era, including Mao Tse-Tung, whose parents were not prominent politicians and in some cases were actually quite poor.

Other top members of the current Chinese leadership are also “princelings”, most notably Yu Zhengsheng, who is the fourth-ranked politician on the 7-man Politburo Standing Committee (which is generally considered to be China’s top political body), and Wang Qishan, who is ranked sixth on the Politburo Standing Committee and may be one of the most powerful figures in China at the moment as he has been leading Xi Jinping’s anti-corruption campaign . Wang is a princeling by marriage only: his wife is the daughter of Yao Yilin, who was a former Politburo Standing Committee member in the Communist Party.

In Japan, Prime Minister Shinzo Abe is arguably the most powerful politician the country has seen in at least a generation as well. He too comes from a political dynasty. According to Wikipedia, “his grandfather, Kan Abe, and father, Shintaro Abe, were both politicians… Abe’s mother, Yoko Kishi,[3] is the daughter of Nobusuke Kishi, prime minister of Japan from 1957 to 1960. Kishi had been a member of the Tōjō Cabinet during the Second World War”.

Meanwhile the President of South Korea, Park Geun-hye, is the daughter of South Korea’s third president, Park Chung-hee. (Update: Park has since been impeached). (And in North Korea, of course, the Kim family’s rule is now into its third generation). In Singapore, the prime minister since 2004 has been Lee Hsien Loong, the son of Singapore’s modern founding father Lee Kuan Yew who served from 1959 all the way to 1990.

India

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Hillary Clinton, then America’s secretary of state, poses for a picture with Indian Congress Party leaders Sonia and Rahul Gandhi in New Delhi, July 19, 2009 (State Department)

In India, Prime Minister Narendra Modi and his often fanatically right-wing Hindu nationalist BJP party became in 2014 the first party in over three decades to win a majority government in a national election. Modi is not from a political dynasty himself, rather he is the reaction to the modern world’s most prominent political family of all: the Nehru-Gandhi dynasty.

The Guardian wrote in 2007 that “the Nehru-Gandhi brand has no peer in the world — a member of the family has been in charge of India for 40 of the 60 years since independence.” The dynasty (which by the way is not related to the Gandhi) began with Jawaharlal Nehru, India’s first post-British prime minister from 1947-1964. Nehru was himself the son and nephew of significant political figures in pre-independence India. Nehru’s dynasty then continued with his only daughter Indira Gandhi (née Nehru), who was India’s prime minister from 1966-1977 and from 1980-1984, but was assassinated in 1984 by two of her own Sikh bodyguards in the wake of Operation Blue Star.

The dynasty was then followed by Indira’s sons Rajiv Gandhi, who was prime minister from 1984-1989 before being assassinated by the Tamil Tigers in 1991, and Sanjay Gandhi, who was expected to become prime minister but was instead killed in a plane crash. Rajiv’s wife Sonia Gandhi, meanwhile, is the leader of India’s powerful Congress Party and the mother of Rahul Gandhi, who lost to Modi’s BJP in 2014 but still finished with more parliamentary seats and far more votes than any other candidate in the election. Sonia likely would have run for prime minister herself, but cannot because she was born in Italy.

(Sanjay’s wife Maneka Gandhi, on the other hand, has jumped ship from the historically Gandhi-dominated Congress Party and joined the BJP instead; she is currently a cabinet minister in the BJP-led government. Maneka’s son Varun has also gone over to the BJP, serving as the youngest National Secretary in the history of the party and a member of the country’s parliament. However, Maneka and Varun both remain less prominent than the Congress side of the family, which is led by Maneka’s sister-in-law Sonia and Varun’s first cousin Rahul).

Arguably, frustration with the Gandhis directly paved the way for Modi, a man who was not even allowed to enter the United States prior to becoming president because he was allegedly involved in “severe violations of religious freedom” while serving as governor of the important Indian state of Gujarat.

Philippines

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President-elect Rodrigo Duterte of the Philippines speaks with his predecessor, Benigno Aquino III, in Davao City, March 6, 2013 (Malacañang Photo Bureau/Ryan Lim)

You may have also heard about the election of the Philippines ridiculous new president Rodrigo Duterte last week. Rodrigo’s father Vicente was a provincial governor of Davao province and a mayor of Cebu, one of the largest cities in the country. Rodrigo’s cousin was also a mayor of Cebu, in the 1980s.

The Duterte’s are hardly alone in their political dynasticism: according to Public Radio International, “in the Philippines, elections in 2016 will be dominated by dynasties. About two-thirds of the outgoing Congress are heirs of political families. The outgoing president is the son of Corazon Aquino, who led the uprising against the dictator Ferdinand Marcos after Marcos had her husband whacked for being a prominent political opponent. But the Marcos clan is back in the picture, with Ferdinand’s wife, son, daughter and nephew all running for different offices. Also running is the grandson of another president.”

Thailand

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Thai prime minister Yingluck Shinawatra addresses the United Nations Human Rights Council in Geneva, Switzerland, September 9, 2013 (UN/Jean-Marc Ferré)

In Thailand too there has been a political reaction against a political family, that of Thaksin Shinawatra (who was prime minister from 2001 to 2006 before being exiled by a military coup) and his younger sister Yingluck Shinawatra (who was prime minister from 2011 to 2014 before being removed by decree of the Constitutional Court during the Thai political crisis in 2013-2014). According to Wikipedia, the father of Thaksin and Yingluck “was a member of parliament for Chiang Mai. [The Shinawatras are] a descendant of a former monarch of Chiang Mai through her grandmother, Princess Chanthip na Chiangmai (Great-great-granddaughter of King Thammalangka of Chiang Mai).”

Europe

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Prime Ministers Matteo Renzi of Italy and Mariano Rajoy of Spain speak during a European Council meeting in Brussels, June 25, 2015 (La Moncloa)

Europe, at least in contrast to Asia, does not have many political dynasties at the moment. This is, perhaps, in part because European political history was reset to a certain degree following the fall of the Soviet Union. Europe’s leading politicians, including Merkel, Putin, and Erdogan, do not come from political dynasties. Neither does Britain’s Prime Minister David Cameron (though his ancestors were extremely wealthy) or France’s President Francois Hollande. Italian Prime Minister Mattio Renzi’s was a municipal councillor, admittedly, but that does not really count. (Angela Merkel’s grandfather was, similarly, a local politician in Danzig). Spanish PM Mariano Rajoy’s family was fairly prominent, on the other hand.

That said, Europe is far from dynasty-free. According to the Economist, “in Europe family power is one reason why politics seems like a closed shop. Fifty-seven of the 650 members of the recently dissolved British Parliament are related to current or former MPs. François Hollande, France’s president, has four children with Ségolène Royal, who ran for the presidency in 2007. Three generations of Le Pens are squabbling over their insurgent party, the Front National (see article). Belgium’s prime minister is the son of a former foreign minister and European commissioner. The names Papandreou and Karamanlis still count for something in Greece.”

Syria and Egypt 

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Syrian dictator Hafez al-Assad and his family in the 1990s (Wikimedia Commons)

The Arab world remains full of political dynasties and reactions against dynasties, in contrast. In Syria both of these factors can be seen at the same time, as the civil war threatens to unseat Bashar al Assad, son of thirty-year ruler Hafez al Assad. (Bashar’s brother Bassel was initially supposed to take over from his father, but died in a car accident in 1994). In Egypt, meanwhile,the military government of Abdel Fattah el-Sisi is in some ways a response to the presumed attempt by an elderly Hosni Mubarak (diagnosed with stomach cancer in the same year he was deposed) to pass on power to his son Gamal, who had not served in the Egyptian military as Hosni Mubarak and previous rulers Anwar Sadat and Gamal Abdul Nasser had done.

Saudi Arabia 

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Prince Muhammad bin Nayef speaks with King Salman bin Abdulaziz Al Saud of Saudi Arabia in Riyadh while Ambassador Adel al-Jubeir looks on, January 27, 2015 (White House/Pete Souza)

In Saudi Arabia, which is by far the largest Arab economy, a half-shift from one Saudi political dynasty to another may just be getting under way. Thus far in the history of the modern Saudi state (beginning around 1930), the country has been ruled either by founder Abdulaziz ibn Saud or else by one of his 45 or so sons, six of whom have become king, most recently King Salman who took the throne in January of 2015.

Last year, however, Salman removed his half-brother Muqrin (another son of Abdulaziz) from the office of Crown Prince, replacing Muqrin with their nephew Mohammad bin Nayef,  who would become the first king in the next generation of Saudi royals if ever takes over. He might never take over, though: many people now believe that is Salman’s own son Mohammad bin Salman, who is the Deputy Crown Prince and Defence Minister, who is the likeliest to become the next king when Salman (who is 80 years old) steps down or passes away, even though Deputy Crown Prince is formally a lower-ranking position than Crown Prince – and even though Mohammad bin Salman is only 30 years old, which would be an extremely young age for a modern Saudi king.

If Mohammad bin Salman does become king over another prince like Mohammad bin Nayef, Saudi Arabia could in effect be moving from a dynasty of Abdulaziz to a dynasty of Salman. There are now fears that the political situation in the country could become quite messy if the other branches of the huge Saudi royal family try to avoid becoming sidelined from power as a result.

Iran

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Iranian president Hassan Rouhani speaks as parliament speaker Ali Larijani, Chief Justice Sadeq Larijani and the chief of the supreme leader’s office, Mohammad Golpayegani, attend a ceremony in Tehran, October 3, 2015 (Reuters)

Across the Gulf, in Iran, dynasties are not too big a factor within the current religious government. Recently the grandson of Ayatollah Khomeini even was blocked from participating in elections. One big exception to this, however, is the powerful Larijani family, made up of five brothers in key positions in the government. It includes Ali Larijani, who is the Speaker of the parliament and a former member of Iran’s Revolutionary Guards, and Sadeq Larijania, Iran’s Chief Justice.

Israel

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Labor party leader Isaac Herzog (left) and Yesh Atid party leader Yair Lapid (right)

A number of leaders in Israel hail from political families as well. Benjamin “Bibi” Netanyahu, who has now spent more time as prime minister (from 1996-1999 and now again since 2009) than any politician in Israel’s history apart from Israel’s founding  prime minister David Ben Gurion (who Netanyahu will soon overtake), is the son of Benzion Netanyahu. Benzion was a professor of history at Cornell University, an influential Zionist activist and magazine editor, and personal secretary to one of Israel’s most prominent founding fathers, Ze’ev Jabotinsky.

Bibi is also the younger brother of Yonatan Netanyahu, who was the unit commander of and only person to be killed during the famous Operation Entebbe raid in 1976, when 100 or so Israeli commandos rescued 102 hostages of a Palestinian airplane hijacking (compared to 3 hostages killed) from where they were being held in Idi Amin-era Uganda more than 3000 km south of Israel, and returned them safely to their homes in Israel and France.

Israel’s Labour Party leader Isaac “Bougie” Herzog, meanwhile, who won more than twice as many votes as any other Jewish party apart from Netanyahu’s Likud Party in the most recent elections of 2015, is, according to Wikipedia, “the son of General Chaim Herzog, who was the Sixth President of Israel from 1983 to 1993, and the grandson of Rabbi Yitzhak HaLevi Herzog, was the first Chief Rabbi of Ireland from 1922 to 1935 and Ashkenazi Chief Rabbi of Israel from 1936 to 1959″.

The next largest Jewish political party after Labour and Likud is the Yesh Atid Party, led by Yair Lapid. Lapid is a former news anchor who is the son of Yosef “Tommy” Lapid, a former government minister, parliamentary leader of the opposition as recently as 2005, and radio and television personality.

Brazil 

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Brazilian Social Democracy Party leader Aécio Neves answers questions from reporters, May 28, 2015 (Agência Senado/Pedro França)

Leaving the Middle East, Brazils’ Aecio Neves, who in late 2014 very narrowly lost a presidential election to Dilma Rousseff (who may now be on the verge of being impeached herself), is the grandson of Tancredo Neves, who would have been President of Brazil in 1985 if he had not passed away before taking office. Roussef and her influential predecessor Lula da Silva are not from prominent political families, however.

Peru

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Peruvian presidential candidate Keiko Fujimori campaigns for the 2011 election, December 7, 2010 (Flickr/Keiko Fujimori)

In Peru, the country is in the midst of a presidential election, which is a two-round system that began in April and will end on June 5.  Its leading candidate is former First Lady Keiko Fujimori, a daughter of former Peruvian President Alberto Fujimori. Alberto exiled himself to Japan following corruption and human rights violation scandals at the end of his ten yeas in power in 2000, but was later arrested in Chile in 2005 and is now serving a prison sentence back in Peru.

Argentina

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President Cristina Fernández de Kirchner of Argentina speaks in José Amalfitani Stadium, Buenos Aires, April 27, 2012 (Presidency of Argentina)

Argentina, finally, has just recently ended sixteen consecutive years of being presided over by a Kirchner, first by Nestor Kirchner from 2003 to 2007 and then by Cristina Fernandez de Kirchner from 2007 until the end of 2015. The Kirchners were Peronists, a political movement of sorts that has dominated modern Argentine politics, which is named for another power couple, Juan Peron (president from 1946 – 1955) and his second wife Eva Peron, who was a significant political figure in her own right and nearly became Vice President. (Juan’s third wife Isabel Martinez de Peron, meanwhile, was President of Argentina from 1974 to 1976). The incoming Argentine president Mauricio Macri, who is replacing the Kirchners, does not come from a political dynasty, however. His father was just a humble business tycoon.

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East Asia

Examining China’s M&A Boom

An article in last week’s issue of The Economist showed that China’s outbound M&A activity[1] has risen sharply of late, up approximately fivefold since the summer of 2015 and eightfold above its average rate between 2010-2015.[2]

The article mentions that this increase could represent a troubling trend of capital fleeing China in response to China’s experiencing slowing economic growth and a gradually depreciating currency in recent years.

It then largely dismisses this theory, however, saying, “rather than sparking a stampede [of money] to the exits, it is more accurate to say that these changes [in China’s economic performance] have alerted Chinese firms to the fact that they are still woefully under-invested abroad. China’s share of cross-border M&A has averaged roughly 6% over the past five years, despite the fact that it accounts for nearly 15% of global GDP[3]”.

Implicit in these words is the expectation that a country’s share of global M&A should not be too different from its share of global GDP. Yet this overlooks several other factors that may determine a country’s propensity for engaging in M&A. These may include a country’s role in international trade, or a country’s proximity to other large economies or foreign financial hubs, or a country’s cultural and linguistic affinity[4] or political relationship with other large economies and foreign financial hubs.

China ticks each of these boxes in a notable way. It is both physically and linguistically isolated from most of the global economy beyond its own borders: East Asia outside of mainland[5] China accounts for only 12% or so of world GDP[6], while the combined GDP of the world’s majority-Chinese economies outside of mainland China is about nine times smaller than that of mainland China itself[7].

China’s political relations are somewhat fraught. 45% of East Asia’s GDP outside of mainland China occurs in China’s regional rival Japan[8], nearly half of the world’s GDP that occurs in majority-Chinese countries outside of mainland China itself occurs in Beijing’s rival Taiwan, and 25% of global GDP is from its potential rival superpower the US[9]. 

China’s propensity toward international trade is, similarly, not pronounced[10]. China accounts for an estimated 11% of international trade, compared to 15% of global GDP.

Finally, apart from Taiwan, the only notable majority-Chinese economies outside of mainland China are business-financial hubs: Singapore and Hong Kong. Such hubs historically tend towards very high M&A activity, and towards being net originators rather than targets of M&A deals[11]. China’s global share of outbound M&A might therefore be higher were these not financial hubs. If, for example, Hong Kong was considered to be part of mainland China[12], China’s outbound M&A would in most years have been meaningfully higher than it has been[13]. 

The value of China’s outbound M&A as a share of global cross-border M&A should perhaps be lower than China’s share of global GDP, then. Yet so far in 2016 it is on pace to be much higher than China’s share of global GDP. The M&A boom could be capital flight after all. 

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NOTES:

1 — Specifically, the “value of announced outbound mergers and acquisitions including net debt of targets”, according to the article. Notably, however, “announcing deals is not the same as closing them. Between losing out to other bidders and rejection by regulators, China’s investment tally could fall [below what it has announced].” “Nevertheless”, it goes on, “the trend is unmistakable. In recent years China has consistently accounted for less than a tenth of announced cross-border M&A deals; this year its share is nearly a third.”

2According to this article in the Financial Times, Chinese buyers account for an estimated 15% of the value of cross-border M&A that has occured thus far in 2016”. The Chinese offer to buy the Swiss company Syngenta, if accepted, is roughly big enough to eclipse all outbound chinese M&A in any year before 2014.

3- The article goes on to say “…Strategic considerations—acquiring technology and brands that China lacks—are more important [than moving capital out of China] for buyers [of foreign companies], both to bolster their position at home and to speed expansion abroad.”

4 – The following quote is from Clifford Chance and the Economist Intelligence Unit, from 2012: “Despite the growing need for companies to invest in new markets in order to realise their growth ambitions, more than one-half say that they are discouraged from acquiring overseas because of concerns about bridging cultural differences. This rises to 63% for respondents in the US. Many companies admit that they find the softer side of deal-making challenging, with just 44% of companies saying that they are effective at handling cultural integration as part of the transaction process.”

5 — “Mainland China” in this case does not include Hong Kong, Macao, or Taiwan, but does include other Chinese islands like Hainan and Xiamen.

6 – If you also include India, Australia, and New Zealand this figure rises to 18%

7 -By comparison, even the nominal GDP of the United States is only 2.75 times larger than the combined GDP of Britain, Canada, and Australia. France’s GDP is only 3.15 times larger than that of Belgium plus Quebec. Even if you try to count the wealth of the entire Chinese global diaspora rather than just majority-Chinese economies like Taiwan, Hong Kong, and Singapore, it is still very small compared to the size of mainland China’s GDP.  If you assume, for simplicity’s sake, that there are 50 million “overseas Chinese” (the figure given, roughly, by Wikipedia), and that each has an average income of $25,000 (similar to the per capita GDP of Taiwan), then the overall income of the Chinese diaspora is $1.25 trillion — still little more than 10% of mainland China’s GDP.

8 – According to this source, “Chinese FDI in Japan and trade relations between the countries have a long history because of the relative cultural and geographic proximity between the countries (Alvstam et al., 2009). Also, China is one of the two most important trade partners for the Japanese economy. All this should, following the mainstream trade theories (e.g., Helpman, 1984; Helpman & Krugman, 1985; Petri, 1994), give favorable conditions for large inflows of FDI. In relative terms, this picture has to some extent been correct. Before the recent territorial row over the Senkaku, or Diaoyutai, Islands located between Okinawa and Taiwan, the Chinese and Japanese mutual cross-border M&As was steadily increasing with 2010 and 2011 as peak years recording 16 M&A deals, respectively (Recof, 2012). However, this trend seems to have been broken, by recording only 6 M&As in 2012, and 5 M&As in 2013.”

Japan was not even one of China’s top 10 targets of outbound M&A between 2005-2015— the biggest target for outbound Chinese and Hong Kong M&A was Britain (14.6% of the total). By comparison, 43.7% of Japan’s outbound M&A over the past 10 years went to the US. (Source: graphs from http://qz.com/465638/charts-and-maps-how-japans-companies-are-beating-chinas-in-overseas-ma/)

9- This is not to say the China’s relationships with Japan, Taiwan, or the US are nearly as troubled as many people think they are or would like them to be. Still, these relationships mean that China may have a very different outlook in foreign affairs than do many other countries.

10 – Indeed, one might expect China to account for a disproportionately large share of international trade, given its role as the ‘workshop of the world’ and its voracious appetite for imports of energy and minerals. But in fact China only accounts for about 11-12% of global trade as far as I can tell (using statistics from MIT’s Observatory of Economic Complexity), regardless of whether or not Hong Kong is included.

11-   In 2014, the largest M&A deal involving an Asian country, whether cross-border or domestic, was the acquisition of China’s CITIC Ltd. by Hong Kong’s CITIC Pacific Ltd., a deal that was worth about three times more than any other involving an Asian country that year. In 2015, in contrast, one of the biggest deals was, according to this article from Bloomberg, “China Cinda Asset Management’s (pending) $8.8 billion purchase of Hong Kong lender Nanyang Commercial Bank.” Singapore’s outbound M&A has been increasing by a huge amount in recent years too and is much higher than its inbound M&A.

12 —M&A statistics, moreso than many other economic or financial categories, tend to consider Hong Kong as being separate from the rest of the territories of the People’s Republic of China. This may be (at least partially) justified, but it can also confuse matters at times.

13 – In 2011, 2012, and 2013, Hong Kong’s outbound M&A was about 25-40% as large as mainland China’s, even though Hong Kong’s GDP is only around 2% as large as mainland China’s. Singapore’s outbound M&A, meanwhile, was 1.5-22% as large as mainland China’s during 2011, 2012, and 2013, while Singapore’s GDP was also only about 2% as large as mainland China’s.  (Source: Global Financehttps://www.gfmag.com/global-data/economic-data/value-of-cross-border-maa-by-region-country?page=2)

M&A Table

I made this chart in order to find correlations between outbound M&A activity (as given in column I, at the right end of the chart) and the factors in the four leftmost columns of the chart. Column I’s closest linear relationships are with columns E and F — though Japan is an outlier in both cases. Admittedly, though, this chart does not include enough countries or enough years of M&A to say much.

Column B is based on the regions Europe, North America, and East Asia. For example, the USA’s figure in column B is equal to the GDP of Canada plus the GDP of Mexico divided by the GDP of the world. Column C is based on two “super-regions”: the North Atlantic (including Europe and North America) and the Indo-Pacific. The US scores much lower than China in Column B – because North America minus the US has a much smaller GDP than East Asia minus China – but scores much higher than China in Column C, because the US is not far from Europe.

Column D is based on countries in which the majority language(s) is the same: China’s figure in column D, for example, is equal to the combined GDP of Taiwan, Hong Kong, and Singapore – the only other majority-Chinese economies – divided by the GDP of the world.

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East Asia, Images

Labour Strikes in China

The China Labour Bulletin website provides maps displaying incidents of labour strikes that have occurred in recent years. While of course these should be viewed with a hefty grain of salt, they may be worth scrutinizing all the same.

This image below shows the number of strikes in general that have occurred since 2011: as you can see, they have been becoming a lot more common since the beginning of 2014.

since 2011 map

Yet this may be somewhat misleading: nearly half of the strikes indicated in the map above are thought to have had fewer than 100 people participate in them. It may be better to look just at the number of larger strikes that have occured, as the following two maps do:

1000-10,000, 2011.png

more than 10,000 persons since 2011

4 out of the 7 labour strikes involving 10,000+ people since 2011 occured in Guangdong province, according to the China Labour Bulletin

These maps above show that the larger strikes, with 1000-10,000 people and 10,000+ people, respectively, occured most often in 2014, unlike the smaller but more numerous strikes that occured most frequently in 2015 and so far in 2016. Since 2015 there have not been any strikes involving more than 10,000 people, according to the China Labour Bulletin.

chinese_provinces-map

Now let’s have a closer look at the differences between China’s many provinces. Below I have tried to graph the number of strikes that have occurred in each province, first since 2011 and then since 2015:

2011

2015Guangdong, China’s most populous province, finished at the top of both graphs, while Tibet, Qinghai, Hainan, Tianjin, Ningxia, Gansu, and Xinjiang finished at the bottom of both graphs. All of the provinces of China are more or less in the same position in both graphs, in fact. And there are no major regional patterns that can be gleaned clearly from either list.

1000 - 10,000 since 2015.png

Labour strikes since January 1, 2015 involving at least one thousand people. Guangdong had 27, followed by Jiangsu with 9 and Shandong with 8.

What if we adjust the figures to take into account the population size and GDP of each province?  Then we get the following graphs:

2011 pop

2011 gdp

Here Guangdong and Tibet again finished at the top and bottom of both graphs, respectively. Ningxia, however, which had finished fifth from the bottom before adjusting for population and GDP, has now moved up to second from the top. Ningxia is China’s third least populous province (the two Tibetan provinces, Tibet and Qinghai, are the least populous), is one of China’s five “autonomous regions” (the others are Tibet, Xinjiang, Inner Mongolia, and Guangxi), and, along with Xinjiang, has by far the highest concentration of Muslim inhabitants of any province in the country.

In the adjusted-for-population graph, China’s relatively small and wealthy “direct-controlled municipalities”, namely Shanghai, Beijing, Tianjin, and Chongqing, were much higher up than they were on the adjusted-for-GDP graph, with the exception of  Chongqing. (Chongqing is quite a bit less urbanized than the three others are). Shanghai and Beijing were third and fifth, respectively, while Tianjin, which was the least strike-prone of any province when adjusted-for-GDP, was close to the middle of the pack when adjusted-for-population.

Another big change was Hainan, China’s southernmost province and only island province (not counting Hong Kong, Macau, or Taiwan), which was third from the bottom before adjusting for population size or GDP, but fourth from the top when adjusting for GDP and eighth when adjusting for population size. Shanxi and Shaanxi, meanwhile, two neighbouring provinces located in and around the mountains of north-central China, moved from around the middle of the pack to near the top once adjusted for GDP and population.

map_1360

Shanxi in particular is China’s major coal producing region, and the coal industry has come under a lot of pressure in recent years, which may help explain Shanxi’s high position on both of these graphs. (Shaanxi too is a top coal producer. Inner Mongolia, though, China’s second biggest coal producer, is admittedly near the bottom of the GDP-adjusted labour strikes graph). Shanxi has also been arguably the main provincial target by far of Xi Jinping’s intense “anti-corruption” campaign.

Still, these graphs again do not prioritize large strikes over smaller ones. Below, then, are the strikes with between 1000 – 10,000 participants that have occured since 2011. Since there have been very few strikes with more than 10,000 participants, the 1000-10,000 category accounts for an overwhelming share of the large labour strikes that have taken place:

1000 since 2011

1000 since 2011:pop

1000 since 2011:gdp

The graph showing labour strikes with more than 1000 people since 2011, adjusted for GDP size, is I suspect the most important one. The population-adjusted graphs tend to somewhat misleadingly overemphasize the wealthiest provinces, like Shanghai or Tianjin, since they have lots of per capita economic activity and therefore also lots of per capita labour strikes. The graphs that are not adjusted at all skew in favour of populous provinces, meanwhile. The GDP-adjusted graphs, though, are perhaps the most indicative of provinces in which there may be growing social challenges to China’s political or economic establishment.

Notably, this GDP-adjusted graph is also the only one in which clear regional divisions can be seen. Apart from Guizhou, nine of the ten westernmost provinces in China- Tibet, Qinghai, Xinjiang, Yunnan,  Ningxia, Inner Mongolia, Sichuan, Chongqing, and Gansu – are in the bottom thirteen provinces of the list, and six are also in the bottom seven of the list. Seven of the top nine provinces on the list, meanwhile, are seven of China’s eleven eastern coastal states. These also happen to be the seven most southern coastal states on the Chinese mainland.

Beijing and the provinces around Beijing, like Liaoning, Hebei, Henan, Tianjin, Shanxi, Inner Mongolia, and Shandong, are near the bottom or the middle of the list. Shanghai on the other hand, as well as two of the three provinces that surround Shanghai, namely Jiangsu and Anhui, are quite close to the top of the list. Guangdong, which is the most populous province in China, remains far ahead at the top of the list. Three of Guangdong’s four neighbouring provinces, namely Jiangxi, Guangxi, and Fujian, are at the top of the list as well.

chinese_provinces-map

Remarkably, Guangdong’s GDP-adjusted figure for large labour strikes is roughly twice as high as any other province and five times the nationwide average. Guangdong has also been home to four of the seven labour strikes in China involving more than 10,000 people since 2011, according to the China Labour Bulletin. Given Guangdong’s enormous size and revolutionary history, this may be worth noting.

China-provincial-share-of-GDP

The other biggest outlier is the northeastern province of Heilongjiang, which apart from Guangdong had by far the most large strikes adjusted for GDP size. Heilongjiang has been a major oil and coal producing province, which may partially help to explain this. Strikes in the province have been putting its governor Lu Hao, the youngest provincial governor in the country, under a lot of political pressure of late.

Heilongjiang’s position also highlights an interesting trend: China’s most peripheral provinces, like Tibet, Guangdong, Heilongjiang, Xinjiang, Guangxi, Yunnan, Qinghai, Inner Mongolia, Hainan, and Jiangxi, are either at the very top of the list or at the very bottom of the list. Heilongjiang itself has the longest international border in China outside of the three “autonomous regions” of Tibet, Xinjiang, and Inner Mongolia. Heilongjiang’s border with Russia is only slightly shorter than the entire US-Mexican border. Hopefully Donald Trump will move there once he loses the election this year,  and trouble America no more.

The China Labour Bulletin maps also zoom in to show which cities the strikes occured in, and gives basic information about them. For example:

CLB

It also breaks down the strikes by the response they are thought to have received, in five categories: “police”, “arrest(s)”, “government mediation”, “negotiation”, or “other”. According to the site, “Guangdong also led the country in the number of police interventions in labour disputes, accounting for about 19 percent of the total 831 incidents in which police were deployed and 24 percent of the incidents in which arrests were made”.

“Worker protests accounted for 38 percent of all mass protests by Chinese citizens last year, according to statistics published on the well-respected Wickedonna blog.”

To close, here are the numbers of strikes of all sizes since the beginning of 2015, adjusted for provincial population size and provincial GDP size. Guangdong is finally not at the top of either:

2015 pop

2015 gdp

But if you look only at large strikes since 2015, then Guangdong is back on top:

1000 - 10,000 since 2015.png

Labour strikes since January 1, 2015 involving at least one thousand people. Guangdong had 27, followed by Jiangsu with 9, Shandong with 8, and Sichuan with 5. There have been no strikes with 10,000+ people since the beginning of 2015, according to the China Labour Bulletin

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East Asia

Expect the Unexpected: 10 Reasons North Korea Could Soon Change Course

1. Russia’s economy is currently in disarray as a result of falling natural resource prices, slow economic growth in Europe, and its rivalry with the United States. Russia has been an ally of North Korea because it sees North Korea as a counterweight to the Chinese, Japanese, and US-backed South Koreans, the other powers in Northeast Asia. If Russia’s economy does not bounce back, North Korea will need to adapt to the weakening of one of its only friends in the world.

2. Russia has been looking to export commodities to South Korea, as Russia worries that Europe and Japan will reduce their imports of Russian oil and gas as a result of the Ukraine conflict, the American fracking boom, the end of Western sanctions on Iran, and the possibility of Japan turning its nuclear power plants back on. Though Russia is obviously not thrilled about South Korea’s close relationship with the United States, it might nevertheless be happy to see a more united Korea serve as a counterweight to China and Japan in the Pacific.

In addition, the most direct way for Russia and South Korea to trade with one another is via the 800 km of North Korean territory that separates Seoul from Vladivostok. This is particularly true of gas exports, which travel cheapest through overland pipelines rather than by undersea pipelines or LNG ships. It is also true of many other types of goods, however. Politics aside, it would often make more sense to cross North Korea rather than to load and unload ships in order to sail the 600 km of sea between Russia and eastern South Korean ports (which are themselves 150 km or so from Seoul).

map_vostok_eng.jpg

 

3. The youngest generation of the North Korean leadership, embodied by 33-year old Kim Jong Un, was raised during the 1990s, after the Soviet Union had fallen, after China’s economic miracle had begun, and after the Internet and satellite television had become common. Kim Jong Un himself went to school in Switzerland, a stark contrast to his father Kim Jong Il who may have been educated in China during the Maoist era.

Today Kim must be looking at Bashar al-Assad with fear. Like Kim, Assad took over at a fairly young age from a father who had been a larger than life figure. Assad lasted for one decade before the Syrian Civil War got underway; Lil’ Kim is now in the middle of his fifth year in office. Meanwhile, the number of North Koreans living today who were alive during the reign of the first Kim, Il Sung, is quickly falling.

4. Unlike most other poor countries, North Korea’s population is not young. Its population pyramid has two main bulges: one between 40-50 years old, the other between 15-25 years old. A decade from now, then, much of the older bulge will have become too old for manual labour, while the number of young people entering the workforce for the first time will have begun to drop off. At this point, North Korea may be more inclined to move away from a labour-based economy, which in turn will require it to import capital from abroad, perhaps from the South Koreans.

north-korea-population-pyramid-2014.gif

This aging also raises Korea’s family reunification issue: North Korea’s 40-50 year old cohort are in many cases the children of families who were divided by the peninsula’s split in the Korean War. The coming decade will be the last chance for many of these sundered families to get back in touch before their elderly parents pass away — and before this generation becomes old itself.

5. Back when China was run by committee, consensus, compromise, etc.,
it liked being compared to North Korea because it could say, in effect, “we may not have a liberal democratic political system, but at least we’re nothing like the government in North Korea”. Today, though, as China has been moving back in the direction of a more traditional persona-led dicatorship embodied by Xi Jinping, the last thing that the Chinese leadership wants is for Xi to be compared with Kim Jong Un.

Xi has yet to visit North Korea, even though Xi has been perhaps the most well-travelled leader in Chinese history, and the first ever to visit South Korea before North Korea. Kim Jong Un, in turn, has not yet travelled the 800 km from Pyongyang to Beijing. (In fact, Kim Jong Un has never officially left North Korea since taking over as its leader in 2012). This may soon change, however: Kim Jong Un may finally visit Beijing in the next few months.

6.  Japan could be coming back in a big way: Shinzo Abe’s revivalism – including the end of formal military pacifism and the symbolic 2020 Tokyo Olympics may just be the start. The Japanese economy is far less exposed to the Chinese economic slowdown than are those of South Korea and Taiwan. Japan might benefit more from Russia’s troubles than China will, given that China has often allied itself with Russia. Japan is also more dependent on energy imports than China, and so may be more likely to benefit from the fall in energy prices than China will.

Japan may benefit more than any other country from the coming era of robots, given its uniquely aged workforce and technological expertise — and given that robots might make China’s enormous human workforce less of an economic advantage over other countries than it is today. Whether Japan addresses its aging workforce dilemma by importing more energy to power robots or by continuing to outsource more of its industrial activity to countries like Thailand and Taiwan, however, it will have to become more active in the region, and thus potentially more aggressive in the region, in order to ensure its access to foreign markets.

If Japan’s reemergence causes the Chinese to want to create a rift in the US-Japan alliance, Korea is the best place for China to try to do so. The US loves its alliance with Korea, while Japan does not. The Japanese and Koreans have quite a tortured relationship, a legacy of Japan’s historical domination of the peninsula. The US would be thrilled by a more unified Korea, whereas the Japanese might be wary of one even in spite of their current rivalry with the North.

Consider the context for the Korean War (1950-1953): Japanese power had just been decimated in World War Two, so China helped to divide the Korean peninsula because it feared the American-allied unified Korea that had emerged at Beijing’s doorstep following the invasion of the North by America and the South. China did not have to consider using Korea to create a rift between the US and Japan, since Japan was not a player at the time. A somewhat similar situation occurred in 1990, when American power surged again as the Soviet Union fell and as Japan’s economy suddenly began its “lost decades” of slowing growth.

If Japanese power grows, however, China may want a more unified Korea as a buffer against the Japanese and as a prime way of splitting the American-Japanese alliance. Alternatively, if China and Japan can finally mend fences with one another politically, it may cause the United States (and/or Russia) to want a more unified Korea to serve as a counterweight to both China and Japan.

7. More so than during the 1990s,
when Russia and China were weaker than they are now and 9-11 had not yet occurred, the US has a lot to worry about today other than North Korea’s military programs. North Korea’s first nuclear tests were in 2005, possibly in order to win back American attention that had shifted to the Greater Middle East. Now, though, with the US still worried about the Muslim world and also concerned with Russia and China, there may be diminishing returns to this strategy of gaining aid and prestige by nuclear saber-rattling.

The move by North Korea in 2010 to kill 46 South Korean navy soldiers in the Cheonan ship attack, which was by far the most casualties the South’s military has experienced in decades, suggests that the North Korean leadership may be aware of these diminishing returns. More recently, so does the announcement by North Korea this past winter that it has successfully developed a hydrogen bomb.

8. South Korea’s economy is slowing because of China’s economic slowdown and because South Korea has now basically become a “developed” economy (its per capita income is estimated to be $28,000, in nominal terms). While South Korea does not want to pay the financial burden of resuscitating theNorth Korean economy, it could nevertheless see some opportunities for itself in engaging the North in trade.

North Korea, for example, has one of the world’s largest reserves of high-quality anthracite coal, while South Korea is one of the world’s leading importers of coal and of fossil fuels in general. And of course, North Korea has a cheap, Korean labour pool (and potential consumer base), at a time when South Korea’s workforce is no longer cheap or youthful by global standards.

relative trade northeast asia.png

Trade figures, adjusted for overall GDP size

9. Coal prices have plunged of late in China and in most of the rest of the world. This could put a lot of pressure on the North Korean economy, which has become the third largest supplier of coal to China in recent years. China accounts for more than 90 percent of all North Korean international trade. According to Reuters, “last year, North Korean coal deliveries to China surged 26.9 percent, making North Korea China’s biggest supplier behind Australia and Indonesia. Coal deliveries from Australia plunged 25 percent, indicating the increase in [Korean] imports may have been to help support this”.

10. With China and the wider Northeast Asian economy struggling after years of rapid expansion, ending North Korea’s isolation could be a good last-ditch attempt to stimulate regional growth. China, for instance, could try to use its position as the North Korea whisperer in order to gain economic favours from the United States. China also has an incentive to engage North Korea — and to have South Korea engage North Korea — because the last thing the Chinese want to deal with right now is a refugee crisis emerging on their border with North Korea in the unlikely but not impossible event of a state collapse occuring there. A few million Koreans already live in China near the North Korean border.

korea north.png

Finally, North Korea could benefit the regional economy by serving as a land route between China and South Korea. Seoul is just 500-600 km from significant Chinese cities like Shenyang and Dalian by way of the North, and 1150 km from Beijing. In the longer-term, the North Korean trade route could become even more commercially important if fixed links are built across the Yellow Sea between North Korea and China, across the Gulf of Bohai between the Chinese provinces of Liaoning and Shandong, or across the Korea Strait from Japan to the Korean peninsula.

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So, could the era of extreme North Korean isolation from the world be reaching its final days? Certainly, from the US point of view, North Korea is something of a last man standing these days: of the six countries that the Bush government named as the “axis of evil” – Iraq, Iran, Syria, Libya, Cuba, and North Korea – Kim is now the only leader not to have been either toppled (Iraq and Libya), besieged (Syria), or moving towards warmer relations with the US (Cuba and Iran). Given the changes occurring all around it in Asia and the world, North Korea’s position no longer seems like an easily sustainable one. Reunification with the South or not, it still makes sense to guess that North Korea under Kim Jong Un will end up being very different from that of his father.

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