The Gerasimov Doctrine: History Teaches Vigilance

“The history of war convincingly testifies to the constant contradiction between the means of attack and defence. The appearance of new means of attack has always [inevitably] led to the creation of counter-action, and thus in the final analysis has led to the developments of new methods for conducting engagements, battles and operations (and war in general)”.    

Marshal N.V. Ogarkov April 1985

Alphen, Netherlands. 13 August. In April 1985 Marshal Nikolai Ogarkov, recently demoted Chief of the Soviet General Staff, published a book entitled “History Teaches Vigilance”. Central to his argument was the idea that emerging conventional military technologies were changing the balance between conventional and nuclear forces and thus rendering ‘warfighting’ in Europe again possible. In essence Ogarkov was following in the tradition of Soviet military thinkers such as M.N. Tukhachevsky and V.K. Triandafillov back in the 1930s who like their German counterparts such as Hans Guderian, focused on how a force that was on paper inferior in terms of mass could achieve a “decisive result” quickly. Their conclusion was an adaptation of ‘Blitzkrieg’ or ‘Lightning War’ in which technology and manoeuvre was used to exert decisive pressure by a ‘joint’ force at a critical point of weakness in enemy defences.  Fast forward thirty years and what might be called the “Gerasimov Doctrine” (after the current Russian Chief of the General Staff) is clearly rooted in Ogarkov’s thinking.  Indeed, the now frequent snap exercises around and along Europe’s inner borders might well have be seen by Ogarkov as a fourth Russian military revolution.   

Contrast the Gerasimov Doctrine with an excellent paper published this week by the European Leadership Network entitled, “Preparing for the Worst: Are Russian and NATO Military Exercises Making War in Europe more likely?” (Ian Kearns, Lukasz Kulesa & Thomas Frear)  The paper warns that that the “…changed profile of exercises”…is sustaining “a climate of tensions in Europe” and leading to “unpredictability”.  To reduce such tensions ELN calls on both NATO and Russia to better communicate their respective “schedule of exercises”, to better utilize OSCE channels to increase military predictability, politicians on both sides to show restraint in terms of the scenarios used in exercises, and for conceptual work to begin on a new treaty to establish “territorial limitations on deployment of specific categories of weapons”. It is a worthy paper.  However, ELN completely miss the essential point of Russia’s snap exercises which is precisely create tension across a broad front from the Arctic to the Mediterranean so that Moscow can focus on where if it deems necessary it may exert decisive pressure.

In my May 2015 paper for the Canadian Defence and Foreign Affairs Institute, “Countering Strategic Maskirovka” I state, “The Russian use of hybrid or non-linear warfare in Ukraine also suggests the blurring of the traditional NATO distinction between collective defence and collective security. Maskirovka is in fact war that is short of war, a purposeful strategy of deception that combines use of force with disinformation and destabilisation to create ambiguity in the minds of Alliance leaders about how best to respond”.  Indeed, it is a theme I repeat in my new book for Routledge, “NATO: The Enduring Alliance 2015”.

Moscow shows no signs of demurring from such a strategy. In the 1980s when NATO had a relatively straight border to defend with a ‘correlation of forces’ such that the relationship between conventional and nuclear war made the resort to nuclear weapons almost inevitable in the event of war.  However, today NATO must defend a complex set of borders far further to its east than in the 1980s with conventional forces that are at best stretched thin and not just in Europe.  Moreover, it is questionable if the political will exists in key Western European capitals to really defend Eastern European allies in the event of Russian ‘aggression’ that would be far more sophisticated than a frontal assault on the North German Plain by Group of Soviet Forces Germany a la late-1970s.  In that light NATO’s counter-exercises are as much about forward deterrence as forward defence, demonstrating to Moscow that NATO understands the Russian strategy, and has the means to counter it if needs be…even if that is not the case in certain scenarios.

Thankfully, I do not believe either side is seeking a major war in Europe.  However, implicit in Ogarkov’s doctrine was the destabilising political implications of a renewed imbalance in Europe between the offensive and defensive at the decisive moment and point of contact.  An examination of the excellent map of Russian snap exercises ELN provide in another of their papers “Anatomy of a Russian Exercise” (Thomas Frear) reveals Moscow’s strategic political imperative; to straighten Russia’s defensive line via an extension of a buffer zone by if needs pushing the current eastern border of the Alliance back to the west. In spite of Russia’s overt use of force in Eastern and Southern Ukraine the main Russian strategy elsewhere is one of political intimidation via military means.

However, were Moscow at some desperate future point choose instead the military option it would mean ‘limited’ conventional war and the threat of the use of both tactical and strategic nuclear weapons as a way to ‘checkmate’ a NATO conventional response. Such a strategy would be very much in line with Ogarkov’s thinking back in the late 1970 and early 1980s. Indeed, the mistake many analysts make is to see the 2014 Russian Military Strategy as a break from similar strategies adopted by broken Russia back in the 1990s. It would be far more useful to see Gerasimov as the heir to Ogarkov and the latter’s idea of the “Independent Conventional Force”, able to operate under the neutralising umbrella of nuclear weapons and reinforced by the use of strategic disinformation fit for an information age.    

There is another destabilising factor – the rapid decline of the Russian economy. President Putin sees a strong Russian military and the nationalism it engenders and represents as ‘a’ if not ‘the’ central pillar of his regime.  Indeed, Putin has committed vast sums to force modernisation. However, as James Dunnigan points out this week in a piece entitled, “The Red Fleet Returns to the Past”: “The persistent low oil prices and continued economic sanctions have caused the military and political leadership to reassess Russian strategy and procurement policy. GDP is shrinking and the government is having a hard time maintaining the high levels of spending planned to replace Cold War era equipment”. 

Russia’s economic and political situation suggests possibly one of two courses of action; either a shift towards a more conciliatory stance of the sort ELN calls for, or a retreat into a ‘use it or lose it’ mind-set.  Either way for the NATO Allies history does indeed teach vigilance.

Julian Lindley-French

   

Britain and France Must Hang Together…

Alphen, Netherlands. 11 August. It seems apt in this year of all years, the bicentennial of the Battle of Waterloo, to quote Charles Maurice de Talleyrand-Perigord. Talleyrand was one-time French royalist, one-time Napoleon’s foreign minister, one-time French ambassador to London and perhaps the most skilled and cynical diplomat at the 1815 Congress of Vienna. Talleyrand famously said that one is, “….never as far away from the target, as when you do not know where you’re going”.  Were he around today he would probably have said the same about Europe in a world awash with dangerous change. Critically, whatever the mutual irritations and at times contempt London and Paris feel for each other the two old Powers must uphold together Realist strategic principles of power and influence.

It will not be easy. Indeed, all the ingredients exist for one of those tetchy and difficult periods in Franco-British relations which come along as regularly as the Bateaux Mouches on the summer Seine. The Calais migrant crisis has once again opened up various fissures and the hackneyed clichés of mistrust into which the relationship still has a propensity to tumble. Such tensions are exacerbated by the contrasting politics of the two countries.  Britain is led by a Conservative administration committed (or so it claims) to austerity. France is led by a Socialist administration committed to precisely the opposite.  Worse, Francois Hollande and David Cameron simply do not like each other. Consequently, the last Franco-British ‘summit’ was reduced to a rather forced photo op in an Oxfordshire pub – the inebriate discussing indifferently the irrelevant?

Furthermore, on the face of it at least London and Paris take very different views about the future direction of the EU.  President Hollande is pushing Germany hard to introduce Eurobonds and with them the mutualisation of Eurozone debt. Such a step would necessarily drive deeper Eurozone integration and with the further marginalisation of Britain within the EU. With a Brexit vote just around a corner France seems to show no signs of yielding to any of Cameron’s calls for EU reform. Worse, at least some of Hollandes’ closest allies seem to actively welcome the prospect of a British EU exit, even though it is hard to see how such a departure is in France’s best strategic interest. Indeed, even if Britain does depart an unreformed EU somehow the strategic partnership with France will need to be protected from the inevitable political fall-out.

There are some limited grounds for optimism. Behind all the Euro-speak power still courses through the veins of the European body politic in much the same way Talleyrand would have understood and indeed made use of. For all France’s pretentions to want ‘ever closer political union’ the French people have no great desire to see French distinctiveness subsumed by some all-subsuming European super-state.  Moreover, whilst contemporary Germany sees itself (and by and large acts) as a community champion Berlin’s economic power now dwarfs that of France. Consequently, the original idea of the Single Currency as a framework within which to embed and thus constrain a re-united Germany has failed from a French policy perspective.  Even Berlin sees the Franco-British strategic relationship as an essential counterweight to its own power and thus crucial to a legitimate European political balance.

Specifically, the need to underpin ‘European’ influence with hard, credible twenty-first century military power remains the strongest imperative for London and Paris to maintain a close strategic relationship. France dresses up such initiatives as the Common Joint Expeditionary Force (CJEF) as a vital step on the road to what General de Gaulle once called the “third force”. Britain inevitably sees such initiatives as a vital component in a stronger US-friendly European pillar of NATO. Whatever the political packaging the pressing strategic need for Europeans to engage more effectively in major, complex crisis prevention and management is undoubted.  And, such influence will only happen with Britain and France together at the core of much-needed European strategic renovation. That was the goal of the 1998 St Malo Declaration and the 2010 Franco-British Security and Defence Treaty but due to ‘distractions’ has not happened.

Talleyrand once said that the “…art of statesmanship was to foresee the inevitable and to expedite its occurrence”.  If those charged with power in both London and Paris properly understand the scale of change underway and agree where they need to go they will also recognise that for all the differences of style and emphasis Britain and France will and must remain strategic partners. Ironically, this is something Talleyrand himself believed.  

Therefore, it falls to London and Paris to act together to drive forward a distinctly European big picture understanding of the nature and scale of the momentous change that is underway.  Indeed, with illiberal power challenging liberal power in many domains Britain and France must act as the strategic conscience of Europe. Fail and all the current focus with the internal structure of the EU will soon come to seem like misplaced and irrelevant self-obsession.

Britain and France somehow have to hang together for if not they will each hang separately and the rest of Europe with them.  To paraphrase Talleyrand; strategy is far too serious a business to be left to the politicians but it is to the politicians that strategy is ultimately left.

Julian Lindley-French

Hiroshima: The Total Ending of Total War by Other Means

“Sixteen hours ago an American plane dropped one bomb on the city of Hiroshima and destroyed its usefulness to the enemy”.

President Harry S. Truman, 6 August, 1945

Alphen, Netherlands. 6 August. At 0245 hours local time, 6 August, 1945 Colonel Paul Tibbets and his crew of seven took off in their modified B-29 Superfortress bomber from the tiny Pacific island of Tinian some 1500 miles (2400 kms) south of Japan.  Six and a half hours later at 0815 hours local time at an altitude of 31,060 ft (c11,000m) Tibbins ordered the bomb doors opened and the squashed torpedo-like 10 feet (3m), 9700lb (4400kg) ‘Little Boy’ bomb dropped from hooks in the bomb bay.  44.4 seconds later at a height of 1900ft (625m) the world’s first atomic bomb detonated in a blinding white flash unleashing in an atomic instant the equivalent explosive power of 20,000 tons of TNT.  What had been one moment a bustling Japanese city of 350,000 souls was reduced the next to hell on earth. Seventy thousand people died in an instant.  Over the next five years seventy thousand more would succumb to the poisonous radiation Little Boy unleashed.

Ever since that blinding flash of death and destruction burnt Hiroshima to the ground a debate has raged as to the ‘morality’ of a democracy using such power to kill huge numbers of enemy civilians.  To some extent the debate is like many that take place today in which the morals of this age are imposed on the past.  Still, given that nuclear weapons remain such a debate is entirely legitimate.  However, perhaps a more searching question on this day of remembrance is this; what brought the United States and its partner Britain (the British were well ahead of the Americans in the development of the ‘bomb’ until they shared their research in 1942) to use atomic weaponry?

In 1832 Karl von Clausewitz wrote in Vom Kriege, “We see…that war is not merely an act of policy but a true political instrument, a continuation of political intercourse carried on with other means”.  In most English translations of On War Clausewitz’s dictum has been reduced to war being the continuation of policy by other means.

The most pressing concern of the Americans in August 1945 was to reduce the casualties amongst its own citizens that they would doubtless have suffered if the US had invaded the Japanese homeland.  Indeed, during the attack on Okinawa between April and June 1945 the Americans had suffered over 50,000 casualties.  Rather, Washington believed that the dropping of the two atomic bombs would convince Emperor Hirohito to overrule the militarists and sue for peace.  Some believed a mere demonstration of American atomic power would suffice, others not. In the end the attacks on Hiroshima and Nagasaki did of course convince the Japanese to sue for peace.

However, there is a more compelling reason why the United States had little compunction in unleashing such force against the civilian Japanese population. By 1945 the drift to total war in which all rules and norms are abandoned in the pursuit of the enemy’s destruction was complete. In 1939 the Germans had unleashed the power of the Luftwaffe against Polish civilians in Warsaw.  In May 1940 the Luftwaffe attacked Rotterdam which even today bears the scars of that attack.  Between September 1940 and November 1941 the Luftwaffe attacked over 30 British cities killing and wounding well over 100,000 civilians.

In 1942 the head of the Royal Air Force’s Bomber Command Air Marshal Sir Arthur ‘Bomber’ Harris said, “The Nazis entered the war under the childish delusion they were going to bomb everybody else, but nobody was going to bomb them. At Rotterdam, Warsaw, London and half a hundred other places they put that rather naive theory into operation. They sowed the wind, and now they are going to reap the whirlwind”.  The Luftwaffe’s bombers were not designed to attack and destroy cities.  However, the RAF’s Wellington, Stirling and Lancaster bombers were.  By May 1945 the RAF and the United States Army Air Force had attacked 61 German cities, including massive raids on Hamburg, Berlin and Dresden in an effort to destroy the Nazi war effort.  After the war the US Strategic Bombing Survey suggested that the bombing had killed 305,000 civilians and injured a further 786,000.

In the Pacific Theatre between 1942 and 1945 the US attacked 67 Japanese cities killing an estimated 500,000 civilians and rendering over 5 million people homeless.  These include the Tokyo Fire Raids which took place between November 1944 and August 1945 and which may have killed up to 200,000 civilians. 

It is against that backdrop that the 6 August dropping of the Little Boy atomic bomb on Hiroshima, and its ‘brother’ Fat Man on Nagasaki on 9 August, must be seen.  It was total war and by 1945 total war had come to mean precisely that – total destruction of the enemy.  As such Hiroshima was not simply the continuation of policy by other means, but the total ending of total war by other means.  

Critically, both atomic attacks changed the relationship between war and policy forever in a way that Clausewitz himself may actually have glimpsed. In Vom Kriege he wrote, “war is an act of violence which in its application knows no bonds”.  That is why major war once started is rarely controllable and why the best way to ‘fight’ total war is to prevent it and deter it.

This blog is written out of respect for the people of Japan on this painful day of remembrance and in honour of the victims in both Hiroshima and Nagasaki.

Julian Lindley-French

Abandon all Hope Ye Who Enter Here

Alphen, Netherlands. 4 August. Dante’s warning in the Inferno seems apt for a Europe facing mass irregular migration.  Trapped between the ‘let’em all in’ lobby and the ‘Chicken Little society will fall’ lobby most of Europe’s leaders have done what they always do when strategy, policy and politics do not align – little or nothing. There is neither effective national policies in place nor any semblance of effective pan-EU co-ordination. The sad reality is that Europe’s politicians have ducked and weaved around a strategic challenge that has been long in the making.  So, what must be done to balance the responsibility to protect migrants and protect host populations from the destabilising impact and indeed dangers posed by mass irregular migration?  Here is some food for thought.

Understand the scale of the challenge: According to the UN mass irregular immigration into Europe represents some 3% of global movements.  Still, the figures are daunting.  According to the BBC over 200,000 irregular migrants crossed the Mediterranean in 2014 with a similar number expected in 2015. They are a diverse bunch of people and range from those seeking escape from persecution and/or war or to those who seek a better life.  

Face up to the challenge: An effective policy will require action that will appear at times tough. There are no easy solutions to this crisis and political leaders must be honest about that before policy can be created and strategy enacted. The reasons are manifold. Any attempt to exert the necessary policy control over chaos would involve concentration of peoples, followed by processing and in many cases deportation.  For many Europeans there would be echoes with the holocaust and the Nazi persecution of Jews and minorities.  Liberal European governments have also been constrained by Universalist human rights legislation that they created in the aftermath of World War Two in what was a very different age.  

Be honest about the challenge: Mass irregular immigration has the potential to destabilise European societies but Europe needs migrants.  For example, according to the National Institute for Economic and Social Research (NIESR) most irregular migrants seek to reach the UK not to claim mythically-generous welfare benefits but to enter Britain’s notorious black economy.  It is naïve in the extreme to believe that uncontrolled mass irregular migration does not carry with it real dangers for European societies, be it via a boost to criminal networks or via the importation of the very extremism that many of the migrants are fleeing.  Equally, Europe’s ageing populations need migration for societies and economies to continue to function. Therefore, more legitimate avenues for migration need to be created.

Make necessary changes to policy: One reason that mass irregular migration is taking place is that the EU’s Schengen Area has failed.  Free movement across borders within the EU depends on effective control of the EUs external borders. Those controls have effectively collapsed and free movement across inner-European borders is being exploited by criminal gangs almost at will.  Therefore, effective controls need to be re-established both within Europe and at the EU’s external borders.  Critically, there is no point in the likes of Britain and France lecturing Greece and Italy about the need to do more without offering support to better control inflows of irregular migrants.  Fail to do so and the ‘beggar thy neighbour’ policy of encouraging migrants to move to neighbouring countries will continue and sour relations between European states.

Rebuild popular trust in immigration and asylum procedures: Swedish Foreign Minister Wallstrom is right when she says that the entire immigration and asylum system in Europe is in danger of breaking down.  Therefore, something new must be tried. A joint system (and I mean ‘joint’ not another European Commission power grab) of control and assessment at Europe’s borders is needed.  And yes that will mean the establishment of humane camps in places like Italy and Greece in which officials from all EU member-states quickly assess an individual’s right to remain. Such a system will demand strong action. If an individual fails to gain asylum then he or she must be deported from Europe quickly. If an individual seeks to hide their country of origin then experts in language and dialect must be employed to help identify from where that person hails.  And, if countries of origin refuse to accept the return of such irregular migrants European aid must be cut.  Critically, each individual must be treated with respect and each case judged on its merits.  Referring to people as “swarms” is not helpful.

Take a holistic view of the challenge and have the political courage to act: Any solution will take time, Europe to act together, and a proper understanding of the drivers and mechanisms behind mass irregular migration. Critically, the pipelines of irregular migration will need to be rolled back and that will take sustained collective action.  Effective policy will require the establishment of a complex framework that combines effective border controls, policing, immigration and asylum assessment, offensive action against trafficking gangs, and support through aid for those communities most likely to migrate to Europe.

Recognise the price of failure: Like many European citizens I am conflicted over the issue of mass irregular migration. At one and the same time I feel threatened by the scale of such migration, what it could mean for the future well-being and cohesion of my society, and my need to show humanity and compassion.  Equally, I have also completely lost faith in my leaders to confront and meet the many challenges posed by mass irregular migration.  As a seasoned political analyst and historian I know that neither the hard left nor the hard right offer any solutions to this crisis (or anything else for that matter). However, failure by mainstream political leaders to grip this crisis will only accelerate the dangerous drift towards political extremism and populism that Europe’s seemingly endless economic crisis has spawned. That would indeed be a price that is both too high and too dangerous to pay. Get a grip leaders!

Julian Lindley-French

EXERCISE REINFORCEALL: Plugging America’s Atlantic Gap

Alphen, Netherlands. 30 July. Back in the Cold War there used to be an annual military exercise named REFORGER.  Return of US Forces to Germany was meant to reassure NATO allies and deter the formidable Group of Soviet Forces Germany by demonstrating the capacity of the US armed forces to rapidly reinforce its allies from continental North America with a large combat force.  It was a moot point for those of us around at the time that in the event of an invasion the six Soviet tank, shock and air armies stationed just over the then inner-German border could be held at the ‘killing zone’ in and around the Fulda Gap.  Many members of the British Army of the Rhine had their doubts. Thankfully, those days are gone but the need to reassure America’s European allies and to develop allied forces into strong partners of the American armed forces has not. Both requirements pre-suppose a permanently-visible strong American military presence in Europe. Why?

It is necessary to see the European theatre as part of the biggest of America’s big grand strategic pictures.  Like it or not Europe for the moment remains at the juncture of emerging global struggles in which American leadership is vital.  NATO Strategic Direction East sees a Russia that is retreating ever deeper into political cynicism, militarism and a very narrow view of its national interest.  NATO Strategic Direction South sees the collapse of much of the Levant and with it the rise of Islamic State, a terror organisation with the wealth and ambitions of a state that threatens to destabilise not just much of the Middle East and North Africa but Europe as well.  Add to that heady mix of disturbance and destruction state conflicts across the Middle East and North Africa, criminality with strategic implications and the spread of destructive technologies and the need to stabilise the region in which most of America’s democratic allies reside is a paramount American national interest.

In other words, not only does Europe remain a vital strategic space for the security and defence of the United States now is the tipping point between European and by extension American power or weakness, security or insecurity, deterrence or defencelessness, influence or irrelevance.  That is why last month’s decision by the British to maintain defence spending at 2% GDP is so important.  It provides the chance (but only if Whitehall and the British defence chiefs do not blow the opportunity) to create the kind of long-reach, deep joint future force America will need at least it major allies to possess. In other words, Britain must lead an American example.

There is however another reason why the US needs to retain a strong military relationship with its European allies. Read carefully the 2015 US Military Strategy and America’s new strategic military reality becomes apparent – armed forces that have a lot of everything but no enough of anything everywhere. To remain strong the world over the US needs strong, capable regional allies on both its western and eastern strategic flanks.  Whilst there is much in the Obama Administration’s world-view with which I disagree the 2014 European Reassurance Initiative and the commitment of $1bn for training and temporary rotations of US forces through Europe made real strategic sense as a down-payment on such a vision.

Furthermore, for the American military strategy to work the US needs a world-wide web of like-minded and interoperable military partners. Steps are being taken to that end. In May US Defense Secretary Ashton Carter initiated Operation Atlantic Resolve, which mirrors similar efforts in the Asia-Pacific region designed to enhance military interoperability with allies.  In June the US Army reversed the long-trend of downsizing by moving to build-up military equipment levels in Central and Eastern Europe that echoed the pre-positioning strategy of the post-Cold War era.

However, as I suggest in my new book NATO: The Enduring Alliance 2015 (Routledge: London), far more needs to be done and much greater strategic ambition generated on both sides of the Atlantic.  Clunky though it may sound I would reinvent REFORGER in the guise of REINFORCEALL – an annual major US reinforcement of Alliance forces that is seen as part of a US-friendly development programme for NATO Forces.

Such an ‘exercise’ would not simply involve large and expensive bits of metal charging around at various velocities and going bang at various rates.  It would also involve a series of conferences and workshops designed to consider and further military innovation and creativity, with a clear emphasis on value-for-money solutions. Ideas would then be worked up ‘scientifically’, with scenarios developed for exercises which really test structures, responses, capabilities and capacities. A really awkward squad (Red Team) would need to be embedded at the heart of the entire process to prevent the ‘keep the commander happy group think’ towards which all military headquarters gravitate and which I have seen at first hand all too often.

The output/outcome of EXERCISE REINFORCEALL would be enhanced interoperability standards for Alliance forces to better enable allies to operate to affect the world over with those of the United States.

Allied Strong – REINFORCEALL. Just an idea.

Julian Lindley-French

Who Will Win China’s Power Struggle?

Alphen, Netherlands. 28 July. The People’s Bank of China has already pumped some $7.8bn in the Chinese stock market over the past three weeks in an effort to stop the free-fall in Chinese equities.  However, the market fell yesterday by a further 8% and today by 3%. The cause of such market turbulence is an equities and asset bubble driven up by investors betting that the Chinese Government would take whatever action necessary to maintain the value of shares.  This is because the political settlement put in place after the 1989 Tiananmen Square massacre is dependent on a ‘contract’ between the Chinese Communist Party and China’s burgeoning middle classes; the former will enrich the latter in return for the latter accepting Party control. Therefore, what is at stake is far more than a ‘market correction’ of China’s hybrid, partially open stock market.  A power struggle is underway between the Party and its command economy and casino capitalism.  It is also a struggle between economic nationalism, globalisation and ultra-rich money lords that has profound implications for China, Asia-Pacific, and the wider world.

The domestic implications for China are profound. When Hong Kong returned to Chinese rule I suggested that far from Communist Beijing taking over 1 July, 1997 marked the beginning of a struggle for China that would one day see uber-capitalist Hong Kong and Shanghai take over Beijing. That struggle is indeed implicit in the current market turbulence.  This is because when Deng Xiaoping set China on the road to what he called ‘reform’ back in the post Mao late-1970s the Party deliberately left ambiguous the relationship between the command economy and China’s emerging market economy.

By 1989 the steady growth of a middle class fuelled by the new market had begun to challenge the control of the Party.  The inherent tension was expressed by students during the 1989 pro-democracy demonstrations. However, the brutal suppression of those demonstrations was in parallel with the establishment of the ‘contract’ between the Party and the middle classes which enabled the Party to retain political control.  It is that contract that is now under duress as middle class savings and investments are threatened by the stock market crash and with it China’s political stability.

There are also profound implications for China’s neighbours and indeed the wider Asia-Pacific region. The Party has clearly moved to exploit Chinese nationalism in the wake of the 2008 global financial and economic crash as a buttress against renewed domestic dissent. Indeed, China’s extra-territorial claims in the East and South China Seas and the development of an increasingly expeditionary-capable military seem to match the relative decline in China’s economic performance in the wake of the 2008 global financial and economic crash. 

Many years ago when I lived in Hong Kong I saw the power of Chinese nationalism.  For many years the Party kept a lid on such passions by offering ideology as an alternative to nationalism. However, nationalism run deeps in the majority Han Chinese population, as does the sense of grievance many Chinese feel towards the West and its past treatment of China.  Critically, with year-on-year economic growth in double-digits for many years many Chinese had never had life so good. There was no need thus to challenge a national or a world order that was beneficial to China.  That may be about to change.

The implications for the wider world economy should China retrench both politically and economically are profound.  China has used its extensive sovereign wealth funds to make investment in assets the world over.  These asset purchases have been particularly important in Europe where such investments have helped stave off bankruptcy both of major corporations and indeed states. They have also helped to fuel the ability of Western consumers to buy Chinese goods which in turn has helped maintain China’s export-led growth.  Should those ‘investments’ now be turned inwards to maintain Chinese shares at an artificially high price then the implications for a fragile world economy are profound to say the least.

At its extremes the struggle for China could go one of two ways.  The Party could re-impose a command economy and effectively close China’s economy to foreign investment in the name of Communist dogma.  However, such a move would hasten China’s decline and impact negatively on powerful vested interests, not least the People’s Liberation Army which is a major player in the Chinese markets.  Alternatively, the Party could lose political control in which case it is far more likely that extreme nationalism would raise its ugly head. China has no experience of the kind of social-democratic, free market balance that has evolved (and I stress evolved) in North America and Western Europe.

Therefore, the non-Chinese world should have no illusions as to the strategic stakes implicit in the current travails of the Chinese stock markets.  Huge forces are being unleashed and huge forces are under stress which without very careful management could see China’s stability and that of the wider world threatened.  Therefore, not only is it vital China engineers a soft landing to this crisis, it is also vital China develops institutions that ensure more balance in the relationship between the Chinese state and its stock markets.

Julian Lindley-French

Brexitwatch: Obama Must Support Cameron

Alphen, Netherlands, 24 July. “Having the UK in the EU gives us much greater confidence about the strength of the transatlantic union”.  The British media, particularly the slavishly pro-EU BBC, is full of President Obama’s call yesterday for Britain to remain within the EU.  The slant the story has been given suggests Obama is telling Britain to remain within the EU if it wants to retain influence in Europe, the wider world, and more critically Washington.  In fact, in the interview Obama is far more circumspect and far from interfering in British internal affairs he merely expresses the US national interest.  Equally, Obama again highlights three questions central to the Brexit debate.  Can Britain retain its wider influence via its EU membership if Britain has little or no influence in the EU?  Could Britain’s influence survive a Brexit? Is a fair deal for Britain in the coming post-Eurozone crisis EU possible?

Can Britain retain its wider influence via its EU membership if Britain has little or no influence in the EU?  The answer is a clear no.  Not surprisingly the EU warts and all lobby are going ballistic this morning. The central argument of this lobby, which is routinely trotted out at gatherings of the ‘great and good’, is that ‘given’ Britain’s future is in ‘Europe’ the EU must be accepted for what it is warts and all and at whatever cost to the British taxpayer. The failure of the EU warts and all lobby is their supine refusal to accept that the status quo is indefensible.  It is change within the Eurozone that is shifting the relationship towards costs and and away from benefits and that consequently Britain occupies a political position in and on the EU that is fast disappearing. Consequently, there is a very real danger that the 2017 Brexit referendum (or whenever it takes place) will settle nothing with none of the fundamental issues now at stake properly addressed.

Could Britain’s influence survive a Brexit? Yes, although no member of the EU warts and all lobby have ever answered or wanted to answer this question.  With political will Britain the world’s fifth biggest economy and a top five military power, with the world’s most extensive and possibly most experienced diplomatic representation, free to make its own agreements and alliances. could and would prosper as an independent country.  Period.

Is a fair deal for Britain in the coming post-Eurozone crisis EU possible? Possibly, but much would need to change in Britain’s relationship with the EU. Indeed, this is the key ‘fairness’ question and goes to the heart of Cameron’s attempts to renegotiate Britain’s membership of a changing EU.  For all the obfuscation of the Foreign Office’s every which way but loose Balance of Competences review the simple fact is that the EU is not fair to Britain.  Membership costs Britain roughly £20bn per annum whilst Britain suffers a trade deficit with the rest of the EU worth some £52bn, partly due to blocks placed by Germany and others on the Services Directive and by extension the fulfilment of a really single, Single Market. 

Worse, Britain finds itself in a permanent minority with its interests routinely and increasingly trodden into the ground by an unholy alliance of Eurozone members and the European Commission.  Last week the Commission arbitrarily, simply and unilaterally rewrote a binding 2010 agreement preventing the use of British taxpayer’s money to fund the latest Greek bailout.  Late last year Britain was slapped with a huge additional bill by the Commission following a ‘reassessment’ of the size of the British economy to include the proceeds of crime. Naturally, France and Germany received reduced bills from the Commission.

Therefore, if President Obama believes it an imperative American interest for Britain to remain in the EU then he needs to swing the full weight of US diplomacy behind Cameron’s efforts to get a fair deal for Britain in the EU.  First and foremost that means supporting Cameron openly to end the dangerous political fantasy of ‘ever closer union’ and support the idea of the EU as a super-alliance of free and independent nation-states (which I support) rather than super-state.  As the eternal Eurozone crisis demonstrates political adventurism that is not grounded in political and economic reality is fast leading Europe and indeed the wider “transatlantic union” towards ruin. 

Thereafter, the Americans must support Cameron in his pursuit of the objectives laid out in his January 2013 Bloomsberg speech; the creation of a competitive EU via a Single Market that is really ‘single’, a flexible EU that scraps the ‘one size fits all’ philosophy that traps Europeans between a federal ‘Europe’ and a Europe of nation-states; an EU that respects national parliamentary sovereignty and which only acts when collective action is agreed and necessary; an EU that respects democracy and is open and accountable to the people, which today is not the case; and a new political relationship between Eurozone and non-Eurozone members that if not agreed would effectively condemn the latter to taxation without representation.  Remember that Yanks?

Above all, President Obama must also face the contradictions inherent in his own position.  First, that a Britain forced to accept membership at any cost of an EU that is fast moving away from London’s long-held idea of ‘Europe’ as a trading bloc far from reinforcing British clout will simply destroy it.  Second, that the EU will a) evolve into a United States of Europe not unlike the United States of America; and b) that a ‘US of E’ would be pro-American.  As the Greek debt crisis has shown the former is extremely unlikely and the latter by no means assured.

President Obama might also wish to avoid the charge of hypocrisy by insisting in his support for the British people the same principles that underpin American liberty – government by the people, of the people and for the people.  Finally, President Obama may also wish to ask himself one other question this morning; is he happy to impose a political settlement on the British people that he would never dream of imposing on the American people.  If he is then he is no democrat.

Failure by the US to support Britain’s search for fairness WITHIN the EU could well accelerate Britain’s departure from it.

Julian Lindley-French