Building BRICS?

Alphen, Netherlands.  27 March. They represent 25.9% of the world’s land mass, 43% of the population and 17% of global trade.  The UN Development Programme states that by “2020, the combined economic output of three leading developing countries alone – Brazil, China and India – will surpass the aggregate production of Canada, France, Germany, Italy and the United States”.  Today the five BRICS countries (Brazil, Russia, India, China and South Africa) at their fifth annual summit in Durban will announce a new BRICS Bank, under the catchy 1960s throwback title of “Partnership for Development, Integration and Industrialisation”.  The aim of the Fabulous Five is clear; to counterbalance what they see as a) the western-dominated International Monetary Fund and World Bank; and b) plug a gap in development financing caused by the West’s financial and economic woes.  Is the BRICS laying the foundation of a new world order?

 

On the strategic face of it the Durban summit would seem a natural extension of Chinese President Xi Jingping’s Kissingeresque Moscow démarche of last week.  Clearly, the vacuum created in strategic leadership by the West’s rapid decline, accentuated and accelerated by the EU/Germany’s incompetent handling of the Cyprus default, will see new actors emerge.  However, for all the clear ambitions of China (and to a markedly lesser extent Russia) the five countries are still divided on many issues.

The most obvious is the strategic provenance of the BRICS.  Whilst China and Russia clearly think in terms of classical Kennanesque Cold War Realism, and thus see the strategic game with the West as ultimately zero sum, Brazil and India come from that rather woolly tradition of non-alignment.  The Non-Aligned Movement emerged in the 1960s as an attempt by India in particular not to be dragged into somebody else’s potentially destructive grand strategy.  For a country that had lost well over a million people fighting Britain’s grand and not-so-grand wars this made sense.

Today, India is emerging in its own right and is as a much regional-strategic competitor of China as partner, particularly given China’s role in nuclearizing New Delhi’s arch-adversary, Islamabad.  To that end, as an example of constructive multilateralism a BRICS that promotes stability and co-operation rather than competition is a good thing. 

Brazil fits into pretty much the same category as India.  At several conferences of late I have attended the Brazilians present clearly identified their strategic interests with those of the West.  Moreover, in my Oxford Handbook of War a leading Franco-Brazilian academic summed up Brazil’s foreign policy as essentially Latin American in focus and by and large aligned with that of the US, so long as Washington worked with Brazil.  The BRICS can thus be seen very much in the light of a Brazil keen to remind America of its burgeoning regional-strategic influence.  

As for South Africa the ANC-led government still sees its roots as having been established in a form of colonial war and as such is instinctively drawn to any form of non-alignment with a vague anti-Western tinge.  And, of course, Pretoria is desperately in need of Chinese capital.

Furthermore, for all the grandiose talk last week of a new strategic partnership between Russia and China, Moscow has no desire to be Athens to China’s Rome, particularly if tensions between the US and China reach a point where Moscow’s commercial and energy relationship with Europe is affected.  That may change over time but Moscow will continue to hedge its strategic bets.

However, if there are divisions between the BRICS based on geography, alignment and allegiance there are also huge gaps.  Indeed, it is the issue of capital that will most probably highlight such gaps.  The choice of ‘partnership’ as the key word for the summit is critical.  If the BRICS become seen too overtly as part of a new Chinasphere it will rapidly fall apart.  However, partnership means equality and the word at the summit is that each member will put some $10bn (€7.8bn) into the BRICS Bank.  This figure represents only 0.1% of Chinese GDP and yet some 2% of South African.

Therefore, for the moment the BRICS will remain far more a non-aligned movement than a counter-balancing mechanism.  However, it is the long-term context that makes the BRICS interesting.  One report suggests that whilst Asia alone accounts today for some 24% of world trade, it will be 42% by 2030 and 48% by 2050.  Whereas thanks to the EU, Europe’s mutual impoverishment pact, whilst Western Europe represented 48% of world trade in 1990, it is 34% today and likely to fall to 19% in 2030 and 15% by 2050. 

If the report is right the BRICS could one day find itself at the very core of a new world order.  This summit is clearly building BRICS for the future.

Julian Lindley-French

Xi's Kissinger Move

Alphen, Netherlands. 25 March.  At the start of his historic visit to Russia last week newly-installed Chinese President Xi Jingping said that the “two countries spoke a common language”.  If America sees itself as the indispensable global pivot China clearly has the ambition to become the other global pivot in a new bipolar order.  Xi’s visit to Moscow last week, just over forty years on from Henry Kissinger’s famous 1971 visit to Beijing, makes it is clear that China is embarked on a grand strategy to balance America on the world stage.  This will be a tumultuous twenty-first century.
 

Kissinger’s 1971 visit to China was set against the backdrop of a Nixon administration desperate to extract itself from a failing Vietnam War.  Henry Kissinger, the grand architect of Cold War Realpolitik, wanted to force the Soviet Union to look both east and west.  Moscow was already at the time embroiled in a full-scale border war with China, its supposedly Communist partner.  In a sense by forcing the Soviet Union to face the prospect of a ‘zweifrontenskrieg’ (two-front war) Kissinger applied lessons from his native Germany’s history to US grand strategy

Cue Xi.  The aim of Chinese grand strategy is certainly not to trigger a war with the Americans.  However, Chinese strategic logic is still embedded in Sun Tzu; force an opponent to confront so many options over such time and distance that to all intents and purposes they render themselves weak by uncertainty.  And, Xi clearly understands Kissinger’s dictum that “no country can act wisely in every part of the globe at every moment of time”.

Xi’s timing is impeccable.  There are of course perfectly legitimate reasons for close Chinese-Russian relations.  They are partners in the Shanghai Co-operation Organisation.  China is the world’s biggest energy consumer whilst Russia is the biggest energy provider.  Trade between the two countries is booming and is now worth some $88bn or €68bn per annum. 

However, Xi’s visit and indeed his vision is grand strategic and must be seen as such. China intends to lead the strategic counter-balance to the American not-so-well led West and to that end will forge relationships that exploit American uncertainty and Europe’s precipitous decline. 

Kissinger famously said that “If you don’t know where you are going, every road will get you nowhere”.  As Xi was speaking to Russian President Putin I was attending a conference in The Hague organised by the excellent Atlantic Commission on the transatlantic partnership.  Set against Xi’s visit to Moscow the extent to which Europe’s political class has completely lost the strategic plot was all too evident.  As Xi talked about a new anti-democracy global balance of power pact with Putin all my fellow Europeans could worry about was Cyprus and trying to blame America and Britain for causing the Eurozone crisis. Not only is that laughably wrong it completely and dangerously misses Xi’s point. 

And there is a link.  The Russian media has been running stories all week about the EU’s attempts to resolve the Cyprus crisis as being anti-Russian.  Given that the deal struck over the weekend will possibly see a levy of up to 20% on depositor’s accounts worth €100,000 and more the deal will indeed have a real impact on Russian depositors.  Now, much of that money is of very dubious provenance and it is clear that Germany in particular wants to stop Cyprus being used as an offshore bank haven within the Euro.  However, the timing could not have been worse and will simply help push Russia towards a new anti-Western strategic partnership with China. 

That dynamic will be made all the more certain by the strategic denial that now afflicts the Euro-world.  For example, the Chinese are clearly building a blue-water navy and Xi’s comments demonstrate clear intent to use the Chinese fleet as a platform for strategic influence.  Do not worry, I was told by a senior NATO official, because the Chinese do not know how to use such a fleet.  Sorry NATO but should you not be thinking about these developments?

Clearly, the West must not fall into the trap of concluding that legitimate Chinese ambitions are a precursor to conflict and somehow a new narrative is needed in the US-Chinese strategic relationship (the only strategic relationship that now matters).  Equally, neither Americans nor Europeans can ignore Chinese intent as stated by Xi in Moscow or its burgeoning capability.  In others words the transatlantic allies need a China strategy. 

Sadly that was not the worst of it in The Hague.  A senior European said that in December the European Union will devote a WHOLE session of the European Council meeting to defence.  Whoopee!

Kissinger said that “power is the great aphrodisiac”.  Perhaps he should now add that weakness is the great sedative.

Xi’s Kissinger move – it will not be his last.

Julian Lindley-French

Oxford Blues

Alphen, Netherlands. 20 March.  Sometimes my alma mater Oxford University needs to be dragged kicking and screaming into the eighteenth century (Enlightenment).  The sacking of a librarian and graduate student, the wonderfully-named Calypso Nash, is just another example of a college leadership completely out of touch with the young people it serves.  The 'crime' was that some students performed something called the Harlem Shake in the library of St Hilda's College (always a bit uppity and conservative).  One can almost hear the tut-tutting amongst the fossilised academics in the Senior Common Room who probably think the Harlem Shake is a cocktail and are still wondering how one can dance such a thing. 

 

What is particularly galling is that back in the seventies when I was an undergraduate at University College, Oxford (the oldest and the best) some of the things we got up to in the college library makes a thirty second performance of the latest u-tube craze seem like a papal inauguration.  We even played cricket! 

 

So, Hilda's wake up, smell the coffee and remember that you are an institution dedicated to the education of young people and that within reason a little bit of creative exuberance should be celebrated not crushed.  Above all re-instate Ms Nash because her sacking is unjust and makes you look like an ass.  Clearly, someone called Calypso can hardly be sacked for permitting the occasional library dance!  As some of your young people might say (so I have heard) - der!

 

Julian Lindley-French

Who Will Pay for Cyprus?

Alphen, Netherlands.  19 March.  In “1984” George Orwell wrote, “Doublethink means the power of holding two contradictory beliefs in one’s mind, simultaneously, and accepting both of them”.  I was reminded of doublethink (to that add double-speak) watching Europe’s politicians and Eurocrats dance on the head of a political pin to distance themselves from the so-called ‘one-off’ Deposit Tax Levy Confiscation of ordinary Cypriot’s  money.  So, who will pay for Cyprus and will the money be put to good use?

 

The logic is brutal.  With Cyprus representing only 0.2% of the Eurozone economy, the Cypriot banking sector some 330% of Cypriot GDP and with 30% of deposits in Cypriot banks Russian (and much of it of very dubious provenance) Cyprus can only fund its side of the proposed €10 billion ($13 bn) bailout via bank depositors. 

Why this particular deal and why now?  For once the EU is being unfairly blamed for a crisis not of its making (aside from the fact that the Euro is a political project that does not work).  German Chancellor Angela Merkel, supported by her Finnish and Dutch counterparts, wants to demonstrate prior to the September German elections that she is being prudent with German taxpayer’s money.  And, under no circumstances must the bond markets be spooked so that the borrowing costs soar of the bigger Eurozone debtors such as Greece, Italy, Ireland, Portugal and Spain – at least not until after September. 

As of today all involved are either retreating fast from imposing the now infamous ‘haircut’ on the small depositor or blaming the Cypriots themselves for this disaster.  The suggestion is that depositors with over €20,000 ($26k) will now have 6.9% of their savings in Cypriot banks taken from them whilst those over €100,000 ($130k) will have 10% confiscated.  This means dodgy Russians and retired Brits neither of whom are hugely popular with those who run the Eurozone will be hit.

Would the money be put to good use?  Well, this reflects yet another fundamental untruth this crisis has spawned.  Yes, it is true that the northern, western European taxpayer has already paid a lot either funding or under-writing ‘loans’ that will never be repaid.  At the same time Berlin has done all it can to ring-fence its taxpayers and find other people to pay for a crisis that by and large had its origins in the ill-conceived leadership of Berlin, Brussels and Paris when the Euro was set up.  The half-measures under discussion simply prolong the agony and increase the costs which have effectively turned the EU into a mutual impoverishment pact.

Therefore, ‘haircuts’ will fail because they do not address the fundamental problem of the Eurozone; the need for tight and common fiscal discipline and structural reform of southern Eurozone economies.  In other words, the Euro will only ever be stable if there is real fiscal and banking union or if the Eurozone contracts into a customs zone of reasonably similar economies organised around Germany.  However, the former would demand the effective end of national sovereignty and democratic accountability, whilst the latter would see southern European economies cast out into the global economy and forced to compete.  That would make current austerity measures look like benign charity.

There is a more immediate consequence; the future cost of crisis-management will now inevitably grow.  This morning the spokesman of EU Council President Herman van Rompuy tried to play down the Cyprus crisis by suggesting it was a special case.  Special or not a clear message has been sent that future bailouts could well involve EU-inspired raids on the small savings of small people.  This will almost certainly mean that when the next crisis inevitably erupts in Spain, Italy or elsewhere people will rush to withdraw their savings from banks and thus triggering a massive banking run. It is banking runs that kill currencies.  In other words this proposal will make contagion more not less likely. 

So, making small depositors pay for the crisis makes little or no sense other than to stave off the immediate disaster.  Indeed, without federation or fracture the crisis cannot be resolved only temporarily contained.  Critically, the Cypriot fiasco reinforces the toxicity that is the political incompetence that created the Eurozone crisis and which is sustaining it.

Orwell also wrote in “1984”, “The choice for mankind lies between freedom and happiness and for the great bulk of mankind happiness is better”.  Sadly, as Cyprus reveals the Eurozone is generating neither freedom nor happiness, just fear.

Come September and the German elections these realities will have to be faced and the EU’s current phoney war will come to an end with a bang…if not before. 

Who will pay for Cyprus? All of us sooner or later.

Julian Lindley-French

A Tragic Moment in History

Alphen, Netherlands. 19 March.  Tony Blair suggested yesterday that the West would come to regret not intervening in Syria.  He is of course right.  Tony Blair had to make a terrifying call ten years ago which clearly weighs heavily upon him.   Equally, he must accept it is precisely his ill-conceived and under-planned invasion of Iraq ten years ago tomorrow that makes impossible any attempt to rescue the Syrian people.  Indeed, the tenth anniversary of the Iraq invasion and the linkages that could be inferred between that act and any Western intervention in Syria today that will doom the Syrian people to their terrifying fate.  Something more for Mr Blair to ponder.

Julian Lindley-French    

Power, Prejudice and Paranoia

Alphen, Netherlands. 15 March. “The ides of March have come” says Shakespeare’s Julius Caesar. Standing in the Vatican’s St Peter’s Square Tuesday, watching on a big, incongruous screen the Princes of the Roman Universal Church file into Mass I was struck by the power of this moment when a new Pope is chosen to lead the world’s 1.3 billion Catholics.  I am not a Catholic and I happened to be walking past St Peter’s but one could feel the electricity of change in the air.  The sense of occasion was made all the more powerful by the tented media city that had sprung up all around St Peter’s.  It was as though Charlemagne’s army had returned to enforce the Emperor’s fiat.  Something else was apparent; the interaction of the ancient with the utterly modern, of faith, belief and identity and how across much of the world that friction is casting an ancient world in a new light but only so often to highlight old thinking.  There is a almost a presumption of future conflict which sure enough will guarantee it.
 

It is in the domain of power politics that the interaction of old and new with power, prejudice and paranoia is now more intense than at any time since the end of the Cold War.  Nowhere is this more apparent than in the world’s most important power relationship, that between the US and China.  Naturally, as a Briton and a European my instincts are for and with democratic America.  That said, there is nothing in my soul that is particularly anti-Chinese, although like many westerners I am having to force myself to recognise the consequence of Europe's wilful decline and learn to think anew about this new power world.

Equally, I am no European apologist for China.  There are many aspects of China’s one-party rule that I find disturbing and there are quite a few aspects of China’s increasingly aggressive foreign and security policy that worry me.  Whilst there is no reason to believe conflict is imminent, as China has clearly invested in a system the West invented, danger (the ides of March) lurks. 

The metaphor of future conflict is the developing cyber cold war.  A close friend of mine has just come back from Beijing where he attended a high-level conference on all things cyber.  What struck him was the extent to which American concerns about China’s strategic hacking are mirrored in Chinese concerns that the Americans are embedding software in programmes that will enable Washington to pirate Chinese secrets. 

That the Chinese are carrying out strategic hacking there can be no doubt.  This is all part of the presumption of future conflict generated by then strategic hyper-competition that is emerging between China and the US.   And, for the sake of fairness, I will avoid being dewy-eyed about my American allies.  I am old enough to recall those long lost days back in the 1980s when the US routinely exaggerated Soviet military capability to justify a huge defence budget and control over allies.  The American tendency towards power, prejudice and paranoia is certainly no less pronounced than the Chinese.  Sadly, it is just such power, prejudice and paranoia (not Europe’s wilful weakness) that is today setting the rules of this new/old strategic game.    

Therefore, in his humble way Pope Francis seemed to be saying something new to all of us – Catholic and non-Catholic alike; we still have free-will and the power of choice.  We can decide not to presume future conflict.  We can if we want to change the terms of the engagement with each other and in so doing better understand the perspective of the other.  Even a hard-bitten Realist like me can recognise the dangerous logic of so embracing the past that we instinctively repeat it.

That was what I was trying to do in St Peter’s Square – challenge myself to see the world through the perspective of a faith I was brought up to distrust.  Ironically, so much of my healthy English realism about Brussels and the EU has its roots deep in the Protestant Reformation of the sixteenth century when England stood alone against the Catholic princes of Europe.

Have I undergone some Damascene conversion?  No.  Do I think the world will become less adversarial?  Probably not.  However, I think it wrong to assume that conflict and friction are the natural state and that somehow the period of relative (and I stress relative) strategic calm of the recent past will automatically be replaced by confrontation and friction and ulitmately conflict and war between America and China.  The idea that a new East-West showdown is sooner or later inevitable to establish the world's new strategic pecking order is sadly implicit in far too much that is written these days.

The risk is certainly there.  For as Shakespeare wrote, “The ides of March have come. Ay Caesar, but not gone”.

Julian Lindley-French

Syria: Between Sarajevo and Baghdad

Alphen, Netherlands, 11 March.  Thucydides, the great-great grandfather of unforgiving International Relations once said, “The strong do what they have to do and the weak accept what they have to accept”.  British Foreign Secretary Hague’s announcement last week in Parliament that Britain will send armoured vehicles and bullet-proof vests to support the Syrian National Coalition came just at the moment when the UN declared one hundred thousand Syrians refugees.  The level of human suffering in that benighted country is now biblical in its proportions.  In a twist of fate the decision comes almost ten years to the day British troops joined US and other coalition forces in the March 2003 Iraq invasion which rent the international community asunder.  Just how far has humanitarian interventionism come in those ten years?

 

Humanitarian interventionism goes back to the end of the Cold War.  It was a brief moment in history which reached its zenith in 2001 when two contrasting 'evangelical champions’ came together to form an unlikely alliance between an American conservative and a British social democrat – George W. Bush and Tony Blair.  Bush was at war fighting Al Qaeda; Blair believed deeply in Just War.

The Americans wanted to eradicate 'AQ’ which to many on the Washington right would be only achieved by 'modernising' the Middle East after America’s image.  A mission that was in no small way linked to the security of Israel.  Blair was haunted by the tragedies of the 1990s in the Balkans and Rwanda in which millions perished for want of action. 

At America’s brief unipolar moment the judicious use of force made everything seem possible.  In 1995 the US had finally led NATO to end the Bosnian Serb assault on the Bosnian capital Sarajevo and in 1999 Blair successfully persuaded US President Bill Clinton to force the Serb military out of Kosovo.  Finally, in 2000 Blair ordered Britain’s armed forces to intervene in Sierra Leone to prevent a genocidal massacre in its capital Freetown.  The blueprint for humanitarian interventionism was established.

Come 911 American power, Bush’s war and Blair’s creed came together as neo-conservatism met humanitarianism.  First came Afghanistan in November 2001 when the two creeds deployed side-by-side.  The Americans led the robust counter-terrorism whilst Europeans sought hearts and minds.  Then came Iraq.  The 2003 invasion not only split Europe down the middle and diverted effort from Afghanistan but forced Tony Blair and Britain to make a terrible choice between war-fighting America  and peacekeeping Europe. 

In fact there were deep differences between Bush and Blair.  An exchange I had at the time with Richard Perle in the International Herald Tribune reflected the tension.  Perle suggested that Iraq was just the beginning of US efforts to transform the Middle East with Iran the one-day objective.  The UK would be willing to support the US over the issue of Iraqi weapons of mass destruction, I countered, but London would never support some wider American ‘crusade’.

With bucket-loads of hindsight what became Blair’s tragedy is now Syria’s.  To bridge the immense political gulf between Bush and Blair London had to find some ‘legal’ justification to make the Iraq invasion ‘just’, – hence the Europe-splitting controversy over UN-mandate.  For Blair only a Saddam that posed a very real and present danger could possibly bridge the ideological divide between Bush, Blair and sceptical European public opinion.

In effect Blair placed the entire future legitimacy of Western interventions on the existence of Iraqi WMD.  The subsequent failure to find any WMD in effect destroyed not only Blair but the very cause of humanitarian interventionism that he had championed and which still has much to commend it.  Worse, the Iraq disaster critically undermined belief that Afghanistan could be stabilised amongst many of America’s closest allies and impressed upon the West’s adversaries a sudden vulnerability.  That vulnerability has now been compounded by economic disaster and a widespread and exaggerated belief that the West is in terminal decline.

 

Yes, small-scale interventions have been tried since in Libya and now Mali, but none of them have anything like the Responsibility to Protect ambition that grew out of the the Balkan and Rwandan tragedies.  They are more strike, hope and withdraw operations and as likely to lead to one set of monsters replacing another than offer any real hope to ravaged peoples.

Ten years on from Iraq the British decision must be seen it that light.  A genuine but half-hearted attempt to offer a little support to a brutalised people that is far too little, far, far too late.  Tragically,  in its half-heartedness such 'intervention' becomes non-intervention.  It also effectively marks the grave of Blair’s humanitarian interventionism. 

So, the strong will do what they always do and the weak will suffer what they always suffer whilst the declining will wring their collective hands and feign strength, as they have always done.

How far has interventionism come?  It has come as far as Syria but is now trapped on the rocky, grave-pitted road between Sarajevo and Baghdad.

Julian Lindley-French