The end of Eurocentrism

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Eurocentrism can be defined as a cultural phenomenon that views non-Western societies from a European or Western perspective. In European and North American historical writing on the rest of the world, it was long the dominant outlook, not coming under attack from within the West until the 1960s.

That was the time when Eurocentrism met its first great challenge in the work of Marshall Hodgson, author of the three-volume work The Venture of Islam. Hodgson showed that the history of literate societies should be centered on Asia and its outliers rather than on Europe. And before the modern era, Islamic civilization was the light that radiated to the periphery where Europe existed.

The latest book by Jan Krikke, author of Creating a Planetary Culture: European Science, Chinese Art, and Indian Transcendence, is a brief but very effective work that continues to expose the limits of Eurocentric history.

This makes his book timely: The West is struggling to come to terms with ceding its prominent role in the world to Asia for the first time in 500 years.  

Krikke, a longtime Asia correspondent and frequent contributor to Asia Times, gives Chinese and Indian civilizations equal pride of place in the emergence of our modern world.  

At first sight, the main thesis of his book appears to be reductionist:  Europe excelled in science, China tended toward art or esthetics, and India’s forte was religion or spirituality. Their mutual influence, which started in earnest in the 19th century, is shaping our planetary culture.

Krikke gives due credit to George Rowley, the American art historian who first noted the dominant qualities of the world’s three “source cultures.” Rowley famously noted: “The Chinese way of looking at life was not primarily through religion, or philosophy, or science, but through art.”

Krikke describes conventional accounts of Europe’s Modernist Revolution between the 1860s and the 1920s as one of the most notable examples of Eurocentrism. He shows that the Japanese woodblock print (ukiyo-e), based on the Chinese prototype, was instrumental in moving European artists away from the optical style that had dominated European art for centuries. 

The Japanese print on the wall behind Vincent Van Gogh played a key role in moving European art away from its optical tradition. 

Frank Lloyd Wright, the “father” of modern architecture, was one of the few modernists to recognize the East Asian roots of the Modernist Revolution. Wright himself was strongly influenced by Japanese art and architecture. Giving a lecture on the influence of the Japanese print on his work in the 1920s, Wright told his audience:

“The [Japanese] print is more autobiographical than you may imagine. If the Japanese print were to be deducted from my education, I don’t know what direction the whole might have taken.

“The gospel of elimination of the insignificant preached by the print came home to me in architecture as it had come home to the French painters who developed Cubism and Futurism. Intrinsically the print lies at the bottom of all this so-called modernism. Strangely unnoticed, uncredited. I have often wondered why.”

Kyoto’s Katsura Palace and Frank Lloyd Wright’s protomodern architecture, a template for a machine esthetic.

Krikke pioneered the study of the origin of axonometry, the English name for a projection system developed in the 10th century by Chinese architects. Axonometry is to Chinese art what linear perspective is to European art. 

In the 1920s, during the climax of the Modernist Revolution, European artists and architects embraced the Chinese projection system. Today, axonometry is a key feature of computer-aided design (CAD) systems. Virtually any structure of consequence built in the world today, whether skyscrapers or space shuttles, starts on the drawing board as an axonometric projection.

China’s projection system axonometry, developed in the 10th century, played an elusive but crucial role in modernized Western esthetics in art and architecture. 

Krikke also sheds light on one of the most enigmatic stories in the history of science. In the late 17th century, the German mathematician Gottfried Leibniz invented the binary code, but after encountering a diagram of the 64 hexagrams from the I Ching (Book of Changes), Leibniz wrote a paper crediting the Chinese with first having used a binary code. 

The Chinese binary system uses a different code, broken and unbroken lines rather than 0 and 1, but Leibniz argued that the principle was the same. 

In the 1960s, Joseph Needham, author of the monumental study Science and Civilisation in China, shed new light on Leibniz’ claim by making the connection with the modern science of Cybernetics. Needham wrote: 

“It [the binary code] has been found to be, as [Norbert] Wiener points out in his important book on cybernetics, the most suitable system for the great computing machines of the present day.

“It has been found convenient to build them on a binary basis, using only ‘on’ or ‘off’ positions, whether of switches in electrical circuits or of thermionic valves, and the type of algorithm followed is therefore the Boolean algebra of classes, which gives only the choice of ‘yes’ or ‘no,’ of being either inside a class or outside. 

“It is therefore no coincidence that Leibniz, besides developing the binary arithmetic, was also the founder of modern mathematical logic and a pioneer in the construction of calculating machines. As we may see later, Chinese influence was responsible, at least in part, for his conception of an algebraic or mathematical logic, just as the system of order in the Book of Changes foreshadowed the binary arithmetic.”

The ASCI code using Gottfried Leibniz’ binary system and the Eight Trigrams. A code can be given any attribute we like.

Krikke takes the story one step further by pointing out that cybernetics and the I Ching both rely on binary/Boolean logic. The trigrams and hexagrams are conceptually the same as Boolean classes.  The Boolean operators in the I Ching are favorable and unfavorable. He quotes transpersonal psychologist Marysol Sterling Gonzalez, who referred to the I Ching as a “psychological computer.”

The third theme in Krikke’s book centers on the macrohistory of Larry Taub, author of The Spiritual Imperative. Taub’s macrohistory is based on an ancient Hindu prophecy centered on Varna, which holds that humanity goes through a cycle of four stages, each of which advances human consciousness. 

Taub mentions the abolition of slavery as an example. That inhumane practice was endemic throughout the world for millennia, but in the 19th century, abolishing slavery suddenly became a “spiritual imperative.”

The spiritual imperatives of our time identified by Taub are ecological protection, economic equality, voluntary simplicity, and the development of human-centric technology.

Larry Taub mapped the Hindu Vanra cycle to actual human history.

The first indication of a “new age” emerging came in the 1960s, when raising consciousness went mainstream. Millions of people around the world discovered the value of yoga, meditation techniques, and a natural holistic lifestyle, and they made it part of their daily routine. 

Like Taub, Krikke can be accused of having a utopian view of humanity. He argues that technology will lead to the end of human need in the second half of the 21st century and consciousness-raising will lead to a reduction in human wants. Artificial intelligence and related technologies will eliminate most jobs that do not require human warmth, and people will be required to work just a few hours a week. 

Krikke does not directly address some of the pressing issues of our time: whether the world will find the political will to change to current system of extreme inequality and exploitation, whether societies will be able to find a mechanism to distribute the fruits of the so-called Fourth Industrial Revolution equitably, or whether humanity can prevent an ecological catastrophe. 

But his book weaves a fascinating tale demonstrating the falsity of the Eurocentric division of history into ancient, medieval, and modern with the West in the lead and the others bringing up the rear. China and then Japan were what the West calls “modern” in many respects and, in architecture and the arts, it was their influence that helped to make the West modern.

Krikke shows that Europe, China and India have influenced one another in highly significant ways and that, as Marshall Hodgson once asserted, history must be written from the perspective of the world, not from that of a particular civilization.

Eurocentric history is detrimental to developing a planetary mindset. It has become increasingly clear that a viable future must be created through the cooperation of equals. Otherwise, the world is in big trouble. 

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Pandemic inequalities and the G20

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With the Covid-19 pandemic bringing the entire world to an abrupt halt in 2020, multilateral groups such as the Group of Twenty (G20), the United Nations and the European Union played an essential role in coordinating efforts and ensuring that recovery initiatives were spread out across the globe, benefiting those nations that could not rise out of this turmoil without international support.

Arguably, vaccination against the virus causing the Covid-19 respiratory ailment was one of the most effective means to mitigate the effects of the pandemic in both developed and developing nations. With global networks and partnerships allowing a single dose of Covid-19 vaccine to be priced between US$2 and $40, governments needed to make inoculation available for all citizens.

The following data indicate how successful vaccine penetration was in G20 member nations.

Total Covid-19 Doses Administered per 100 People (October 14, 2022) | Source: Our World in Data

However, the Global South evidently fell behind developed nations.

A death rate of 4.66% in Mexico was alarming, with Indonesia being at a concerning 2.46%. Poor mortality rates are a significant indicator of a nation’s sub-optimal health infrastructure.

This means that the developing countries of the G20 lagged behind their developed counterparts in terms of the quality of medical services available to their people, and the results are evident in the Covid-19 data made public.

Despite the vaccines’ apparent success in reducing the disease’s severity among vulnerable populations, numerous countries experienced the adverse effects of widely discredited measures like school closures and lockdowns.

These measures created a significant divide between the Global North and South, with certain nations benefiting from better health infrastructure and advanced educational facilities, allowing them to reopen earlier than others.

For instance, in 2020, children in advanced economies lost an average of 15 school days due to the pandemic, while the number increased to 45 days for emerging-market economies and a staggering 72 days for children in the poorest nations.

The Global South

India faced an uphill task due to its inherently large population, relatively small medical workforce and budgetary constraints. Mexico found it challenging to address an influx of immigrants in its southern regions, paired with geographical disparities.

Indonesia, despite being the first Southeast Asian country to commence a vaccine rollout, fell victim to its own low vaccine stocks and bureaucratic hurdles.

Japan found great success in its vaccination numbers due to a robust campaign, and additional efforts spurred on by the nation hosting the Tokyo Olympics. South Korea used tech solutions for evidence-based health targets and ramped up production through an inherent advanced medical sector.

Other developed G20 nations, similarly, had the privilege of abstaining from such problems for the most part. The United States, despite a strong domestic anti-vaccine movement, had crossed 180 vaccinations per 100 persons at one point, primarily due to governmental wealth enabling contracts with pharmaceutical giants, and vaccines to be administered for free.

The European Union also worked together to fund vaccine research and development and produced enough vaccines by July 2021 to vaccinate 70% of its adult population.

The G20 had, in this regard, attempted to bring about vaccine equity in multiple instances. It created the Access-to-Covid-19 Tools (ACT) Accelerator to bring about an equitable distribution of tests and, subsequently, vaccines around the globe. This was assisted by disseminating information and resources, often favouring nations with little or none to spare.

India’s G20 presidency

During its tenure as the president of the G20, the Indian government was deeply committed to driving tech-enabled development in the health sector and establishing digital public infrastructure.

One crucial proposal India and South Africa put forth in 2020 before the G20 was an intellectual property rights waiver. The primary goal was to enhance access to knowledge, making the battle against Covid-19 economically feasible for developing nations.

Despite not gaining significant traction at the time, this proposal resurfaced during India’s presidency due to its potential to address the pressing challenges faced by the health sectors in the global South.

Moreover, the collapse of COVAX, a global vaccine network intended to distribute vaccines equitably, clearly indicated the structural bottlenecks and vaccine politics that needed urgent resolution.

The existing mechanism failed to provide vaccines effectively based on the specific needs of individual countries, underscoring the importance of a comprehensive and united approach to global health crises.

As India’s G20 presidency approaches its conclusion, specific critical issues remain that demand immediate attention. The global value chains suffered disruption due to the pandemic, and the Russia-Ukraine dispute further highlighted the system’s vulnerability to external shocks.

India must recognize the opportunity to lead the coordination of the G20 in addressing these gaps and creating more robust health systems to mitigate future risks.

This article was co-authored with Rohan Ross of National Law School of India University in Bangalore, Karnataka, during his internship at the Observer Research Foundation.

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Tokyo needs to focus on its role as a middle power

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In 2018, we convened the Asia’s Future Research Group because of concern about the intensification of US-China geopolitical rivalry and the increasing risk of military clash in the Asia-Pacific region. The lack of balance in Japanese public discourse about how Japan should address this evolving strategic environment in Asia deeply troubled us.

We saw that not only Asia’s future but also Japan’s future was at a strategic crossroads. We therefore invited scholars and experts on Japanese foreign policy and international relations to join a multiyear project in order to develop a realistic and moderate Japanese strategy for Asia.

In December 2022, the Japanese government adopted a new “National Security Strategy” for the first time in a decade. Although it does not ignore the need for diplomatic dialogue and cooperation, what stands out is the strong emphasis on power politics (including military capabilities) and geopolitics as well as economic security.

The new strategy stresses the centrality of Japan’s self-defense capabilities and the US-Japan alliance. However, there exists a significant disparity between the paradigm presented in the new strategy document and Japan’s own capabilities.

Prime Minister Fumio Kishida reviews Self-Defense Forces troops on the anniversary of their establishment, November 27, 2021. Photo: Prime Minister’s Office of Japan)

Consequently, the US-Japan alliance is deemed essential to fill this gap; and in that sense, there is an element of logical consistency in the new strategy. Accordingly, strengthening the US-Japan alliance ends up being the strategy’s a priori premise and its absolutely indispensable prescription.

Our serious concern that the new paradigm will leave Asia entangled and divided in the future.

Japan’s long-held emphasis on a multifaceted and multilayered approach to Asia policy continues to be a constructive way to address the new regional and international challenges that have emerged. The transnational challenges that have become particularly prominent in recent years have acutely demonstrated the need for an unprecedented level of international cooperation. Nevertheless, recent foreign policy discourse around the world has tended to focus more on great power competition than on interstate cooperation.

In this context, Japan should maintain and promote security cooperation with the United States – but at the same time, it should also exercise leadership to help mitigate the competition between the US and China in Asia through constructive diplomacy, thereby reducing the danger of great power war in the region. Without this, there can be no solution to transnational problems and no progress toward a world free of nuclear weapons.

Such efforts and practices are consistent with the concept of “middle power diplomacy,” which aims toward a more autonomous foreign policy – one that is close to, but not solely
dependent on, the United States.

Approach toward Asia and the promotion of middle power diplomacy

One of the most important goals of Japan’s policy toward Asia is to promote further prosperity in the region through international trade, investment, and technological advances while making economic activities more environmentally sustainable and ensuring that the benefits of economic development are distributed more equitably.

To achieve this future vision, cooperation with countries that share values and similar political and economic institutions is crucial. Relations with the United States remain an important pillar of Japan’s foreign policy. However, using the rationale of strengthening the US-Japan alliance, Japan should not neglect countries that are not allies or partners of the United States.

To mitigate great power competition and prevent it from escalating into great power wars, Japan should deepen cooperative relationships with middle powers in the Asian region, such as South Korea, Australia, New Zealand, India and the Association of Southeast Asian Nations (ASEAN) and become a driving force of middle power cooperation.

While defending fundamental human rights and democratic principles, Japan should recognize the diversity of political systems in Asia and be sensitive to the different historical trajectories and sociocultural traditions in each country. Japan should resist moves to divide Asia into a struggle between democracies and autocracies and avoid an overly ideological approach to foreign policy.

Japan should also be cautious about defining the Asian region solely in terms of the “Indo-Pacific,” a concept that has recently been used frequently in international political
discourse.

Japanese Prime Minister Fumio Kishida meets with US President Joe Biden and Indian Prime Minister Narendra Modi. Photo: Wikipedia

While the concept of the Indo-Pacific has the advantage of emphasizing the importance of freedom of navigation and the security of long sea lanes vital to international trade, it has the drawback of viewing the Asian region primarily in maritime terms. The Indo-Pacific concept diminishes the importance of continental Asia and suggests an intention to counter or contain China.

Rather than concentrating on a single geographical concept, Japan’s diplomacy should reflect a multifaceted view that also incorporates the perspectives of “AsiaPacific,” “East Asia” and “Eurasia.”

Japan should reinvigorate its middle power diplomacy to build a more stable, peaceful and prosperous future for Asia. South Korea, which shares basic strategic interests and political values, is Japan’s most important partner in middle power diplomacy.

President Yoon Suk Yeol of South Korea listens to Prime Minister Fumio Kishida of Japan speak during their bilateral summit on March 16 in Tokyo. Photo: Yonhap

Japan can also build on the meetings involving Japan, Australia, India, and the United States – the Quad meetings – and take the lead in promoting a “middle power coalition” of Japan, Australia, and India. Inviting other Asian middle powers, such as South Korea and the ASEAN nations, to the mix would lead to the formation of a region-wide middle power alignment.

Japan should energetically engage China on the basis of partnerships with middle power countries in Asia and Europe to achieve stability in bilateral relations between Japan and China and cooperation on urgent transnational issues.

Regional economics

The Asian region has achieved remarkable economic development since World War II. At the same time, economic liberalization and rapid globalization that have driven this development have brought to the surface problems such as widening economic disparities and environmental degradation.

To mitigate such side effects and socio-political costs, Japan must place greater emphasis on sustainable development goals, which focus more on social and environmental protection.

In addition, the negative impact of the Covid-19 global pandemic and the disruption of international supply chains due to the Russia-Ukraine war, as well as China’s “weaponization of trade” and economic coercion have become prominent as new challenges of economic security.

Devising an effective response to these challenges is now an urgent priority for Japan and many Asian countries. Therefore, Japan’s regional economic diplomacy requires policies from three separate perspectives: economic liberalization, sustainable development and economic security.

Japan has played an important role in the Asian region in areas such as financial governance, trade promotion and development assistance cooperation, including infrastructure development. Building on this past success, Japan should continue to play a leadership role in rule making and cooperation in each of these areas as a leading economic power in Asia and a global middle power.

For example, Japan can make a meaningful contribution to implementing and expanding the Comprehensive and Progressive Agreement on Trans-Pacific Partnership (CPTPP), which is widely regarded as a high-standard free trade agreement in terms of trade liberalization and order building.

It can also help to devise an effective international debt restructuring program for Sri Lanka, which defaulted last year.

Anti-government protest in Sri Lanka on April 13, 2022, in front of the Presidential Secretariat. Photo: Wikimedia Commons

In the area of infrastructure development, Japan should continue to promote and realize its proposal to standardize the international principles of “quality infrastructure investment.” Encouraging China to follow these principles would help steer China’s investment
and support for infrastructure development toward sustainable economic development in the developing countries in Asia.

In addition, while various frameworks for regional economic cooperation exist in Asia, Japan’s basic position should be “open regionalism” and the prevention of a fragmented Asia.

From this perspective, Japan should promote cooperation under the US-led Indo-Pacific Economic Framework (IPEF), as a founding member. But Japan should also consider joining the Digital Economy Partnership Agreement (DEPA), which was launched by small and medium-sized Asia-Pacific countries (Singapore, Chile, and New Zealand) and is expected to expand its membership in the future, as well as the China-led Asian Infrastructure Investment Bank (AIIB).

Regional security

In order to maintain peace in Asia and to uphold Japan’s security, a certain level of deterrence is essential, but this raises the potential of a security dilemma. For deterrence to be effective, it is necessary not only to properly develop defense capabilities but also to provide some assurance to potential adversaries that their core interests will not be threatened.

Also, in pursuing defense cooperation between Japan and the United States, Japan should not hesitate to actively and openly express its views on security issues to the United States. A healthy alliance is not one in which Japan simply submits to US policies and intentions, but rather one in which Japan confidently engages in strategic dialogue with the United States on a more equal footing.

Regarding various Asian security issues, Japan should skillfully balance deterrence and diplomacy and pursue policies that contribute to reducing tensions and preventing crises.

With regard to North Korea, Japan should seek a realistic, gradual, reciprocal and step-by-step approach toward the ultimate goal of denuclearization of North Korea by making concrete progress on the resolution of the abduction issue.

With regard to the Taiwan issue, it is necessary to avoid a military crisis by maintaining conditions under which the status quo is preserved until the day comes when China and Taiwan can find a peaceful solution to the unification issue. To this end, it is important that both Japan and the United States convey to China in a credible manner that they clearly oppose any unilateral use of military force by China and at the same time have no intention of supporting Taiwan’s permanent separation or independence from China.

Meanwhile, the Senkaku Islands issue is one of the major factors undermining stability and cooperation in Sino-Japanese relations, and Japan should be creative in discussing with China various ideas for reducing tensions over those islands. Japan should politically revive and try to implement the Japan-China joint press release of June 2008 and the understanding on joint development in order to make the East China Sea a “sea of peace, cooperation, and friendship.”

The first pillar of Prime Minister Kishida’s “Hiroshima Action Plan” is the continued non-use of nuclear weapons. To strengthen this pillar, the Japanese government should publicly urge the nuclear weapon states to adopt a doctrine of “no first use” of nuclear weapons. By doing so, it will help institutionalize a global norm against the use of nuclear weapons.

By participating as an observer in the UN Treaty on the Prohibition of Nuclear Weapons, Japan can demonstrate international leadership toward nuclear disarmament as a long-term goal. Japan’s participation as an observer would not undermine US nuclear deterrence but rather serve as a bridge between the nuclear weapon states and non-nuclear weapon states.

Transnational challenges

Japan has heretofore made considerable contributions through international organizations and bilateral aid to address transnational issues such as global warming, pandemics of infectious diseases, and refugees from conflict in unstable regions. Based on this track record, Japan should continue to demonstrate its leadership in this area as a responsible major Asian country and a leading global middle power.

In addition, as an economically developed liberal democracy, Japan has an international responsibility to defend and promote universal human rights. In this regard, the concept of “human security,” which Japan has long advocated, is effective in dealing with these transnational challenges in Asia, where many countries tend to emphasize national sovereignty and a variety of political systems exist.

Therefore, Japan needs to promote more inclusive and effective regional and international cooperation, while keeping this concept as a basic principle and acting as a bridge across the geopolitical and ideological divides that have become more pronounced in recent years.

Specifically, Japan should work with other Asian countries to ensure that public health cooperation, such as Covid-19 vaccine provision, is not unnecessarily drawn into the intensifying Sino-American strategic competition.

Solar farm in Japan. Photo: Made in China

On climate change, given that both Japan and China are major carbon emitters in Asia, Japan should directly cooperate with China in the development and promotion of environmental technologies. This would not only enhance their ability to meet their own emission reduction targets, but also contribute to helping other Asian countries reduce their greenhouse gas emissions.

In the area of human rights and humanitarianism, Japan should first and foremost improve its own human rights and human security situation and lead by example. While refraining from bringing up human rights and democracy as ideological tools in the geopolitical competition with China, Japan should adopt practical humanitarian approaches that are in line with local realities.

For example, through existing frameworks such as the ASEAN Intergovernmental Commission on Human Rights, Japan can share best practices with other countries on improving government transparency and reforming legal and judicial systems and foster and support civil society actors involved in providing humanitarian assistance to victims of human rights abuses.

Major recommendations

Based on the above ideas, here are our specific recommendations for Japanese policy toward Asia:

  • In order to develop middle power diplomacy, lead the promotion of a “middle power coalition” of Japan, Australia, and India, which could drive the agenda-setting of the Quad (Japan, Australia, India, and the United States), and further strengthen functional cooperation with the Republic of Korea, ASEAN, and other middle power countries.
  • In response to the South Korean government’s decision regarding the “conscripted labor issue,” make continuous efforts to improve relations with South Korea.
  • Regarding debt restructuring measures for Sri Lanka, encourage China to participate continuously in the newly established “Creditor Committee for Sri Lanka” and cooperate by disclosing necessary information.
  • Encourage the return of the United States to the Comprehensive and Progressive Agreement on Trans-Pacific Partnership (CPTPP) and make diplomatic efforts toward the goal of simultaneous accession of China and Taiwan, which have formally applied for membership.
  • Explore the appropriate timing with a view to joining the Asian Infrastructure Investment Bank (AIIB).
  • With regard to rulemaking in the digital sector, consider applying for membership in the Digital Economy Partnership Agreement (DEPA), while promoting cooperation in the Indo-Pacific Economic Framework (IPEF).
  • Strengthen and deepen the doctrine of strictly defensive defense in the direction of enhancing deterrence by denial rather than focusing on counterstrike capabilities, which are less effective and have greater side effects.
  • Encourage North Korea to conduct another investigation into the abduction victims and establish a liaison office in North Korea to carry out such an investigation, with the aim of resuming negotiations for the normalization of diplomatic relations with North Korea.
  • Since a gradual, realistic, incremental, and reciprocal approach is needed to achieve the ultimate goal of denuclearization of North Korea, seek as a first step a freeze of North Korea’s nuclear weapons and missile development programs.
  • Based on paragraph 3 of the 1972 Japan-China Joint Statement, while opposing unilateral changes in the status quo from either side of the Taiwan Strait, clearly state that Japan does not support Taiwan’s independence.
  • Acknowledge the reality of the existence of an issue between Japan and China regarding the Senkaku Islands and discuss with China ways to ease and resolve tensions over the islands.
  • Urge the nuclear-weapon states to adopt a doctrine of “No First Use” of nuclear weapons and participate as an observer in the UN Treaty on the Prohibition of Nuclear Weapons.
  • Encourage inclusive transnational cooperation in the public health sector and work to reduce the negative impact of geopolitical tensions, ideological differences, and sovereignty conflicts on such cooperation.
  • Cooperate with China to promote environmental technologies and develop low-carbon infrastructure in third-country markets to address the climate change crisis in Asia.
  • Regarding human rights and human security, focus on improving the human rights situation at home while promoting a non-ideological, humanitarian approach that is practical in line with local realities in order to broaden support and cooperation among Asian countries

This article is excerpted with permission from the report “Asia’s Future at a Crossroads: A Japanese Strategy for Peace and Sustainable Prosperity,” published this week by the “Asia’s Future” Research Group. The group’s convenors are Yoshihide Soeya, professor emeritus of political science and international relations at at the College of Law of Keio University, and Mike Mochizuki, who holds the Japan-U.S. relations Chair in Memory of Gaston Sigur at the Elliott School of International Affairs of George Washington University and is also a non-resident fellow at the Quincy Institute for Responsible Statecraft.

Other authors and editors are Kuniko Ashizawa, who teaches international relations at the School of International Service, AmericanUniversity, and at the Elliott School of International Affairs, George Washington University; Miwa Hirono, a professor at the College of Global Liberal Arts at Ritsumeikan University; Saori Katada, a professor of international relations and the director of the Center for International
Studies at the University of Southern California; Kei Koga, an associate professor at the Public Policy and Global Affairs Program, School of Social Sciences, Nanyang Technological University, and concurrently a nonresident fellow at the US National Bureau of Asia Research and a member of the Research Committee at Japan’s Research Institute for Peace and Security; Jong Won Lee, a professor at the Graduate School of Asia-Pacific Studies, Waseda University; Kiyoshi Sugawa, a senior research fellow at the East Asian Community Institute; Takashi Terada, a professor of international relations at Doshisha University; Ambassador Kazuhiko Togo, a visiting professor at the Global Center for Asian and Regional Research, University of Shizuoka; and Hirotaka Watanabe, a professor at the Department of Political Science, Teikyo University.

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As Fed wraps up tightening, Chinese yuan breathes easier

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No government is probably happier that the US Federal Reserve is completing the most aggressive tightening cycle in decades than Xi Jinping’s.

Amid intensifying headwinds zooming China’s way, the idea of less monetary austerity in Washington – and fewer shocks in global capital markets – couldn’t arrive sooner. And odds are that Wednesday’s Fed interest-rate increase, the 11th in 17 months, is the last in the current campaign.

Yet there’s another reason the Fed taking a breather is comforting news for Xi: It relieves pressure on the yuan exchange rate.

As investors ratcheted down their expectations for China hitting 5% growth in recent weeks, the central bank found itself in a tug of war with currency speculators. Local media detailed how China’s major state-owned banks were dumping dollars for yuan in onshore and offshore markets to halt the renminbi’s slide.

This week, the plot thickened as top Community Party leaders meeting in Beijing pledged to keep a floor under the yuan exchange rate as part of vows to invigorate the capital market and buttress confidence.

“It’s interesting that the Politburo mentioned FX stability in the statement, for the first time in recent years,” analysts at HSBC observe in a note to clients. “This means that smoothing yuan depreciation pressure may become more of a policy priority from now on. This is in line with the People’s Bank of China’s further tightening of FX policy recently.”

On the dollar’s recent strength, strategists at RBC Capital Markets note that “the current rise has not been accompanied by as sharp a spike in volatility.” Thanks to nimble policymaking, they add, the yuan’s recent softness hasn’t turned “into an acute crisis situation.”

Beijing limiting the yuan’s downside is good news for four reasons.

One, it reduces default risks in the property market.

It’s not a given that Fed chairman Jerome Powell is done raising rates. As economist Seema Shah at Principal Asset Management puts it: “Data dependence remains the buzzword and, given the confusing signals of waning inflation but a tight labor market, keeping all options on the table seems to be a sensible approach” for the Fed.

Powell, after all, is keeping his options open after Wednesday’s move to raise the Fed’s benchmark rate to roughly 5.3% from 5.1%, the highest level since 2001. As Powell said on Wednesday, “it’s certainly possible that we will raise rates again at the September meeting. And I would also say it’s possible that we would choose to hold steady at that meeting.”

Longtime Fed watcher Diane Swonk at KPMG speaks for many economists when she says Powell’s directive was “about as clear as mud.”

What is clear, though, is that the steady decline in US inflation over the past year – to 3% from 9% – means the Powell Fed will soon take a back seat on US economic policymaking.

As the Fed throttles back on austerity, monetary-policy currents among top economies will remain uniquely divergent for the rest of 2023. It means that the conditions that propelled the dollar to the highest in decades are being reversed just as China is struggling to support the yuan.

As downward pressure on the yuan recedes, so will concerns that “China Evergrande” will be trending on global search engines. The weaker the yuan gets, the greater the risk property-development giants might default on dollar-denominated debt.

Quieter conditions in Chinese credit markets will make it easier for Xi’s reform team to end boom/bust cycles in the real-estate sector.

Two, it reduces the risk of an Asia-wide race to the bottom on exchange rates.

In recent months, many Asian policymakers worried the yen’s 7% drop this year would prod Beijing to follow suit. Nothing, after all, might ensure China reaches this year’s 5% GDP growth target faster than a sharp drop on the yuan.

That would set the stage for a region-wise response. Given still-lingering trauma from the late 1990s, fears that Tokyo’s beggar-thy-neighbor strategy might provoke responses from China to South Korea to Southeast Asia has been a major fear of US Treasury officials.

Back in the ’90s, the Fed’s aggressive rate increases boosted the dollar to levels that forced officials in Bangkok, Jakarta and Seoul to abandon currency pegs. Those competitive devaluations set in motion the 1997-98 Asian financial crisis.

In the decades since, governments strengthened banking systems, increased transparency, created bigger and more vibrant private sectors and amassed sizable foreign-exchange reserves to shield economies from global shocks.

The Covid-19 crisis, though, demonstrated that Asia is still too reliant on exports for growth. Even so, Asian governments over the past year have been more inclined to prop up exchange rates to limit the risks of imported inflation.

As Xi and Premier Li Qiang resist the urge to engineer a weaker yuan, the global financial system has breathed something of a sigh of relief.

Three, a stable yuan could help reduce trade tensions. Surely, it has dawned on US Treasury Secretary Janet Yellen that Beijing is displaying restraint in currency levels as Tokyo does the opposite. That might have been the reason Yellen’s team left China off Washington’s latest “currency manipulator” lists.

Even if Prime Minister Fumio Kishida’s Japan is pushing the weak-yen envelope, Beijing needs to tread carefully. As President Joe Biden runs for re-election, Republican challengers – many itching to investigate China over Covid-19 and suspicious of Asia in general – are sure to accuse Beijing of unfair currency manipulation.

Sanctioning China is, after all, perhaps the only thing on which Biden’s Democrats and Republicans agree. Xi’s team surely realized that while Donald Trump’s trade war and unhinged rhetoric were a drag, Biden’s more targeted and consistent curbs on China Inc since January 2021 have landed some notable blows.

All the more reason to avoid new tensions just as Premier Li’s team pivots toward creating greater economic space for China’s private sector to thrive. Part of the problem is China’s own success in de-emphasizing the public sector over the last 20-plus years.

Sure, Xi’s regulatory clampdown on Big Tech since late 2020 stymied progress on increasing the role of – and innovation in – the private sector. But Beijing is being reminded the hard way that the public sector’s share of urban employment – roughly 20% – no longer packs the punch it once did. It means that, this time, Xi and Li need a more vibrant private sector to boost income and confidence on the way to faster GDP growth.

Here, the policy shifts on display in Beijing this month, coupled with a less draconian Fed, are a plus for private-sector development in Asia’s biggest economy.

“This latest rhetoric from the top man of China’s State Council is likely to boost positive animal spirits in the short term at least,” says analyst Kelvin Wong at Oanda.

“From a medium-term perspective, the external environment also needs to be taken into consideration when global interest rates are likely to stay at a higher level for at least till the second half of 2024 given the latest hawkish monetary policy guidance from major developed countries’ central banks,” including the Fed.

Four, it suggests the shift to more productive growth is real. The latest signals coming out of Beijing are that Team Xi is more focused on long-term economic confidence than short-term-stimulus sugar highs.

The strategy “talks about boosting consumption but only indirectly, via supporting household incomes,” says Julian Evans-Pritchard, head of China economics at Capital Economics. “Those hoping for a new approach to stimulus involving greater transfers to households are likely to be disappointed.”

Economists at Barclays add that “while it signaled more support for the economy, the Politburo meeting generally fell short of offering large-scale stimulus. We view this as a signal that the government would stabilize growth around its target but refrain from an outsized policy response, given the top leaders’ intended shift in focus to quality.”

With a weak-yen obsession these last 25 years, Japan has amply proved that a weaker exchange rate may boost GDP, but does nothing to increase innovation, productivity or overall competitiveness.

If you are the CEO of a large or midsize company, why bother doing heavy lifting on restructuring, recalibrating, reimagining or reanimating innovative spirits when a weak exchange rate is bailing you out?

At the same time, internationalizing the yuan has arguably been Xi’s biggest reform victory these last 10 years.

In 2016, Xi’s government set the stage for yuan’s fast-increasing use in trade and finance when then-PBOC governor Zhou Xiaochuan secured a place for the yuan in the International Monetary Fund’s Special Drawing Rights program. It marked the yuan’s inclusion in the IMF’s club of reserve currencies, joining the dollar, euro, yen and pound.

Xi’s team has steadily increased and broadened the channels for foreign investors to access mainland China’s stock and bond markets. Chinese shares were added to the MSCI index, while government bonds were included in the FTSE Russell benchmark. That, and moves to increase financial transparency, increased global demand for the yuan.

Odds are good, says analyst Ming Ming at Citic Securities, that Xi’s government will continue to improve China’s capital-markets infrastructure to attract more long-term investment and boost direct financing.

Part of the process of building trust in the yuan is letting markets decide its value. The lack of full convertibility remains a big speed bump, of course. But so would the perception that Xi’s team and the PBOC are actively manipulating the yuan lower – provoking the Biden White House or the wider Group of Seven.

Beijing is focused on maintaining progress to date in internationalizing the yuan, and for good reason. That will get a bit earlier as the Fed ends a tightening cycle that Xi’s Communist Party will not miss.

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Tanks and ship-borne cars: Fire can wipe out both

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In the Yom Kippur war in 1973, the last big armor battles before Ukraine, Israeli tanks encountered two enemies.

ПТРК "Малютка"
Two Sagger launchers and command and control system. Photo: Creaitve Commons

One was the new weapon Egypt used to destroy tanks, a wire-guided ground launched missile called the AT-3 Sagger (previously the 9M14 Malyuta). It was the first man-portable guided anti-tank missile. It was set up on the battlefield so the shooter was separated by some yards from the launcher, giving the shooter a better chance of survival against counter-fire.  

The Sagger was teamed up with the RPG-7. a rocket propelled grenade with a shaped-charge warhead.  The RPG-7 was carried by an individual foot soldier who had to get close to the target he was trying to destroy, making the RPG-7 operator vulnerable once he was discovered. 

These two weapons did a lot of damage to Israeli tanks. At that time the Israeli tank force was made up of US M-60 and M48 tanks, British Centurions, and T-55 Russian tanks that had been captured in 1967 and refurbished and modernized by Israel’s tank shop located south of Tel Aviv. Israel lost over 1,000 tanks, either destroyed or damaged.

The other enemy was the one tank with the worst reputation in the 1973 War: the US M-60 Patton tank. Many M-60’s mysteriously caught fire and burned, often incinerating tank crews in the process. At first it was thought the fires were caused by enemy fire and shrapnel, but when tanks started going up in flames where there was no immediate enemy activity, the Israelis began looking for the cause.

Israeli M-60 “Magach” tank, now a museum piece. Photo: Creative Commons.

Israeli technicians discovered that as the tank operated in a hot, dry, desert environment, like that in the Sinai, significant amounts of sand accumulated inside the tank. At the same time, a lot of oil and other lubricants leaked onto the tank’s floorboards and accumulated in gaps in the tank chassis. 

When the leaked oil mixed with the sand and got wedged in between the tank hull and the fuel tank, the sand-oil mixture and metals formed a sort of battery. In the heat and when sparks inside the tank were leaping around as the tank moved along the combat line, the “battery” could set off leaked oil and fuel that reached the fuel tank, causing a major fire.

Just after the war the Israelis found a solution: coating the fuel tank with insulating foam so that the battery-like fires could not happen. That brilliant solution was passed on to the Pentagon. The US Army was not interested, mostly because the US expected to fight a war in Europe where there wasn’t any sand and where the weather tended to be much cooler and with more moisture than in the Middle East. On the other hand even back then there was no guarantee that the US would fight only in Europe, and it sold its tanks to many foreign customers.

Late this month a Dutch container ship, the Fremantle Highway, caught fire off the coast of the Netherlands, in full view of the shore. The 18,500 ton ship was carrying 3,000 cars from Germany to Egypt. At least 25 of the cars on board were electric.  At least one of the electric cars caught fire and started a blaze that, at the time I was preparing this article, was consuming the ship.

Firefighters so far had not been able to contain the fire which was spreading, as the ship was crippled and starting to list. Whether the ship can be saved isn’t clear.  Many crew members were wounded in the blaze, and one crew member died.  Some jumped into the sea: some 23 crew members were evacuated by helicopter.  

This was not the first ship stricken by fire while carrying automobiles. In 2022, the Felicity Ace caught fire off the Azores Islands. It was bringing thousands of supercars, including Porsches, to the United States. It sank while being towed. A fire onboard was attributed to faulty lithium batteries in some of the cars. Reportedly the ship had 1,117 Porsche cars on the ship.  Audi claimed a loss of 1,944 vehicles. In addition there were 189 Bentley’s, 85 Lamborghini’s and 561 Volkswagen’s.

The Felicity Ace's sunken treasure: Porsche, Bentley, Lamborghini...
Felicity Ace. Photo: Creative Commons

Transporting electric vehicles by sea is hazardous.  As the manufacturing of electric cars gains momentum it is increasingly likely we will see more and more electric cars from South Korea, Japan and China coming by sea to the United States, and car batteries coming from Japan, Korea, China and India also shipped by sea. As has already been noted about discount electric scooters, lithium batteries especially on the cheaper models can spontaneously explode and create intense fires that are difficult to suppress.

It is likely insurers will soon either start raising their rates for electric vehicle and battery cargoes, or will refuse to insure electric vehicles and batteries in transit. So far, at least, no one has devised reliable safeguards to protect against faulty lithium batteries.

Israel figured out a workaround for its M-60 tanks. Maybe the super-advocates of electric vehicles will figure out how to prevent tragedies at sea.

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Allocation of powers in times of war: Israel’s case

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The compounding impact of three events sheds light on Israel’s present upheaval concerning the allocation of power between its legislative and judicial branches. 

One was the decision of David Ben-Gurion, Israel’s first prime minister, in 1948 exempting Ultra-Orthodox Jews from military service, which was supposedly to be of short duration but in fact is still in effect.  

The second was the Supreme Court venturing into the constitutional void in matters of national security, particularly after the passing of a quasi-constitution (called Basic Laws) in 1992, inventing a fluid “reasonableness” doctrine. This doctrine drew on the legal philosophy of Aharon Barak, president of the Supreme Court between 1996 and 2005, that abstracted from realities of war and altered the meaning of a “Jewish state.”  

Ben-Gurion believed that the exemption of Ultra-Orthodox, whose numbers stood then at 400, from serving in the army was justifiable, since the Holocaust had wiped out all the European Jewish centers of learning. Today though, there are 1.3 million Ultra-Orthodox (Israel’s population stands at 9.34 million), 60% under the age of 20, and 70,000 studying in this group’s institutions (called “yeshiva,” which means “sitting”).  

It is a poor population, both men and women working few hours, living off grants and subsidies. The men are eternal students. The women take care of children: The group’s fertility rate is 6.6, though they work outside the home too. With such numbers, what started as a marginal issue becomes a serious political one as members of this group vote.   

In 1970, a petitioner complained to the Supreme Court that by continuing to grant exemptions from military service to yeshiva students, the defense minister was abusing his power. The court dismissed the case, declaring that it was political and not for the court to decide. 

‘Equality before laws’

In 1981, lawyer Yehuda Ressler went to court with the same complaint. The Supreme Court ruled as in 1970. In 1986, Ressler tried again and, with Justice Aharon Barak on the panel – who turned out to be the force behind the Supreme Court’s intense activism since 1992 – the court determined the matter to be “justiciable,” the legal term defining whether the courts could debate the issue to start with.  

What are the implications of such a decision on the ground, a decision drawing on Barak’s view that the principle of “equality before laws” is above a collective right to security even in Israel?

If all young men must serve three years in the army, two issues related to the situation on the ground come up. How to execute such a decision when the number of Ultra-Orthodox students stands in the tens of thousands? Who would drag them from their studies and families to the army camps? 

Such a decision was enforceable when the numbers were small. Today’s large numbers make it impossible, illustrating how the combination of entitlements and demography can become a political minefield.

The solution is political, not legal. The first role of the state is to protect against violence. Having young secular Israelis, women and men, serve years in the army while increasing numbers of heavily subsidized Ultra-Orthodox memorize and debate ancient texts is a recipe for diminished security and morale. 

It’s a political problem. By gradually diminishing entitlements, the size of the Ultra-Orthodox community would shrink.   

If the principle of “equality before laws” dominated all other concerns, it would run into another fact on the ground. Israel’s Arab population is 1.6 million, and is exempt from military service too (though 1% of its youth volunteer to serve). 

By letting the Arab population continue to be exempt from obligation to serve, the court would acknowledge that certain issues are not justiciable and the notion of “equality before laws” is not the overruling principle when there are constant foreign and domestic threats of violence.

How did the Supreme Court reach the conclusion that matters of war and foreign policy are justiciable?

In his “Constitutional Revolution: Israel’s Basic Laws,” Barak states that “The principal organ of state that must pour content into the Basic Laws’ majestic generalities is … primarily the Supreme Court,” and concludes that “the rule of law, equality and human rights are the security of the state.”

Not quite. President Abraham Lincoln suspended habeas corpus during the American Civil War though it was unconstitutional; the US interned hundreds of thousands of Japanese-American citizens during World War II; and under McCarthyism during the Cold War, the US violated many cherished rights. 

Although the US reversed those policies, Barak argues that wartimes in the US were rare, giving time to return to cherished democratic principles. Israel, however, having been continuously at war for its 75 years of existence, does not have this luxury. 

Deviating from “democratic principles,” Barak speculates, would become established principles that even eventual peacetime governments would not reverse. Therefore, rights should be independent from realities on the ground, wars in particular. 

This is how the debate in Israel turned into one about democracy vs tyranny – nothing to do with left, right and superficial “isms.”

Drawing on this same argument, and noting that the fundamental values of Judaism are “love of humanity, sanctity of life, social justice, doing what is good and just,” Barak erases all distinction between a “democratic” and a “Jewish state” – though the latter is the defining feature of the new state in Israel’s Declaration of Independence in 1948. 

Barak reduces the meaning of the “Jewish state” to one distinguishing feature: “Jews have the right to immigrate there, and that their national experience is that of the state.”  

Are young secular Israelis then assumed to sacrifice their lives for Jews in the Diaspora having the right to migrate to Israel when in the mood or when forced by circumstances?  

The Supreme Court’s “reasonableness” doctrine, making it justiciable to overrule everything, including political and security matters and appointments, and altering the meaning of words in the name of ahistorical principles fitting peacetime, is key to Israel’s present domestic upheaval about the allocation of powers.

But maybe more: Ben-Gurion wanted Israel to become a nation like all others. Seventy-five  years of warfare prevented this goal, though it shaped secular generations who have increasingly less in common with Jewish communities before World War II, with the Jewish Diaspora now, and with large segments of Israel’s observant – though not Ultra-Orthodox – population.

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China suspected of building aircraft carrier base in Cambodia

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China may have built its second overseas military facility, this one in Cambodia, centered on a pier that can host one of its aircraft carriers, enabling power projection and helping to resolve its “Malacca Dilemma.”  

This month, Nikkei reported that China had made significant progress on building a naval base in Cambodia and was close to completing a pier that could berth an aircraft carrier. That report said that satellite images taken by BlackSky, a US commercial imagery company monitoring the construction at Cambodia’s Ream Naval Base, shows a nearly complete pier that closely resembles China’s pier at its only acknowledged overseas base in Djibouti.

In April, Asia Times reported China’s construction of an air defense center and expanded radar system near Ream Naval Base. Cambodian Prime Minister Hun Sen allocated 157 hectares for the project in September 2022, and an additional 30 hectares were earmarked for a naval radar system. 

A Cambodian Defense Ministry official said there would be no Chinese funding, support, or presence in those facilities amid persistent allegations that Ream Naval Base is being secretly developed as China’s surveillance hub for the South China Sea and its first foreign military base in the Indo-Pacific region.

Previously, Asia Times reported in January 2022 on China’s dredging projects at Ream Naval Base to enable the docking of larger vessels, with Cambodian officials confirming that China had funded the project and other infrastructure construction at the facility. China’s dredging project represents a significant upgrade as, at the time, the base’s shallow waters only allowed it to host smaller patrol vessels and not substantial warships. 

Nikkei’s new report says the first signs of the Ream pier construction were reported in July 2022, with China making rapid progress. The source says that the piers at Ream and Djibouti both have a 335-meter section could be used to berth an aircraft carrier.

Nikkei notes that in a confrontation, the US could bomb Chinese military facilities in the South China Sea, but attacking Ream would mean bombing Cambodia. Despite that, the source cites a Chinese Embassy official in the US that Cambodia’s constitution bans foreign military bases on its territory and that construction at Ream strengthens Cambodia’s capacity. 

Myanmar activity

China may have been behind similar projects in Myanmar, enabling it to secure a foothold in the Andaman Sea to bypass its long-running strategic conundrum wherein its over-dependence on the Malacca Strait makes it vulnerable to a naval blockade by the US and its allies.

In April, Asia Times reported on renewed construction activities on Myanmar’s Great Coco Island, with satellite imagery showing a freshly lengthened 2,300-meter runway and signs of increased activity in recent months, such as the construction of hangars and a radio station. 

Since 2014, there have been reports of Chinese signal intelligence (SIGINT) facilities in the Andaman Sea, including at Manaung, Hainggyi, Zadetkyi, and the Coco Islands, while Chinese technicians have worked on radar stations and naval bases near Yangon, Moulmein and Mergui.

From Ream, China could counter US naval presence in the Malacca Strait chokepoint, secure its emerging interests in the Gulf of Thailand, and establish a southern flank in the South China Sea.

Conversely, Cambodia depends on China as an economic lifeline and a possible security insurance against its larger and militarily stronger neighbors, Thailand and Vietnam.

Also, China’s SIGINT facility on Myanmar’s Great Coco Island may serve as a forward defensive position for Kyaukpyu Port, the maritime terminus of the China-Myanmar Economic Corridor (CMEC), which ends south of China’s Yunnan province.

It may also give China an advantage against the Indian Navy, as Myanmar can conduct surveillance flights from Great Coco Island to monitor Indian operations from the Andaman and Nicobar Islands. 

China could then bargain with Myanmar to share intelligence from those flights in exchange for economic and political support, which the latter badly needs, embroiled in an ongoing civil war and dealing with Western sanctions. 

However, China’s moves to establish a foothold near the Malacca Strait, South China Sea, and Indian Ocean are far from a done deal, as unreliable relationships, unstable host countries, and limited near-term naval power in the Indian Ocean have prevented China from establishing a dependable network of naval bases to secure its sea lanes of communication in the event of a military conflict. 

Changes in Cambodian policy

Further, Cambodia may not be China’s “yes man,” contrary to its previous behavior and expectations.

In a March article in Fulcrum, Melinda Martinus and Chhay Lim report that Hun Sen’s January 2022 visit to Myanmar was viewed as Cambodia acting on the behest of China, with the July 2022 execution of pro-democracy activists by Myanmar’s junta marking a turning point for Cambodia, leading it to re-engage with ASEAN counterparts and disinvite the junta from ASEAN meetings during its chairmanship. 

Martinus and Lim also note that Cambodia has condemned Russia’s February 2022 Invasion of Ukraine and provided humanitarian assistance to the latter. They note that Cambodia’s moves were a surprise, as it was expected to follow China’s position of refusing to condemn Russia for its actions and considering its cordial relations with the latter.

Martinus and Lim also say that during its chairmanship of the Association of Southeast Asian Nations, Cambodia made notable efforts to steer itself away from China’s direct influence, especially when doing so is perceived to be relatively cost-free. 

The writers say Cambodia is diversifying its relationships to lessen its dependence on China. They report that Western approval of its condemnation of Russia’s invasion of Ukraine was seen as a preparatory move for the incoming Hun Manet cabinet, which may reset ties with the West.

In addition, they noted that Cambodia signed a free-trade agreement with South Korea last year, which could lessen economic over-dependence on China. 

In the case of Myanmar, Sudha Ramachandran wrote last month in an article for the Jamestown Foundation that China’s decision to back the Myanmar junta is fraught with risk, as resistance groups target Chinese nationals and projects.

Ramachandran cites that of the 7,800 recorded nationwide clashes since the February 2021 coup, 300 occurred in areas where major Chinese projects are located, with 100 happening in 19 townships where China’s oil and natural-gas pipelines run.

He also says that Myanmar’s military may not be the formidable fighting force it is believed to be, as it is much smaller than previously thought. He notes that Beijing’s pumping the junta with weapons can only serve to deepen anti-China animosity by resistance groups, putting Chinese projects and nationals in Myanmar at greater risk.

Ramachandran also states that while Myanmar’s civil war is at a stalemate and the junta has a tenuous grip on power, the military’s hold on the territory is expected to decline. 

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Why is Hezbollah poking Israel?

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Nearly 20 years after its war with Israel, Hezbollah, with its persistent harassment of the Jewish state across Lebanon’s southern border, seems to be itching for a rematch. Why the militia is dragging a failing country to war is anyone’s guess. 

In recent weeks, Hezbollah chief Hassan Nasrallah has renewed discussion of the 2006 war’s unfinished business. That conflict ended with the status of 13 border points unsettled, along with the fate of Shebaa Farms, a small strip of disputed land near the Golan Heights.

In the latter’s case, ownership should have been negotiated a month after the war, per UN Security Council Resolution 1701. But that never happened.

Nasrallah has justified his newfound urgency by saying that a year ago, Israel began constructing a fortified border wall to replace the flimsy barbed wire.

He added that Hezbollah isn’t seeking the demarcation of the land border between Israel and Lebanon, a process he rejected last October when the two sides set their maritime borders. Rather, he wants Israel to withdraw from every territory that Lebanon claims, without negotiations.

Why is Nasrallah trying to shake up the border now?

One theory is that he’s trying to renegotiate the rules of engagement with Israel, currently set at near-zero tolerance toward any cross-border attacks. Another suggests that Nasrallah wants to deflect Lebanese attention away from domestic misery in a country where the economy has been in free fall for years.

To spite Israel, Hezbollah erected tents on Shebaa Farms. Israel then lobbied world capitals to persuade the militia to remove them. If Hezbollah refuses, it’s not clear how far the Israeli government is willing to go to force the issue.

If border clashes escalate, Nasrallah said he’s confident of yet another victory – like the one he imagined in 2006 and the one that Hamas claimed in 2021.

Backing by Iran

Nasrallah insists that not only is his militia better armed and stronger than before, it would also be supported by pro-Iran militias like Hamas, Palestinian Islamic Jihad, and Iraqi Popular Mobilization Units that would “unify the fronts” and wage war on Israel simultaneously. But even then, it isn’t clear how Nasrallah can overpower Israel and force it to concede on any issue.

In the event of full-scale war, Hezbollah and Hamas would likely fire an unprecedented number of rockets in a bid to overwhelm Israel’s Iron Dome, hoping that some rockets sneak through.

Iran has supplied Hezbollah with explosive drones and precision-guided missiles (PGMs). As Iron Dome gets jammed, Hezbollah would then use its bigger rockets to strike strategic Israeli assets – such as Ben Gurion Airport, oil installations, chemical plants, and densely populated areas.

The Israeli Air Force (IAF) would be busy preempting or retaliating against the militias’ launchpads. 

It’s possible that both Hezbollah and Hamas have dug tunnels that can transport their fighters behind Israeli lines. Such tunnels aren’t as dangerous as they sound because they are bottlenecks that force fighters to trickle into Israel, and only with light arms.

Tunnels wouldn’t enable the massing of Hezbollah or Hamas fighters or the shuttling of heavy arms needed to battle effectively with Israel Defense Forces (IDF). Still, militants behind Israeli lines could take hostages or briefly control a town, either of which would be an enormous publicity victory.

If Hezbollah or Hamas decided to walk into Israeli territory, Israel’s undisputed control of airspace would decimate the invading fighters. That was the main reason Israel reversed its fortunes against Egypt and Syria in 1973. When Egyptian ground troops exited their surface-to-air missile umbrella, the IAF took them out, clearing the way for a counterattack.

Nasrallah’s continuous bragging of how the days of humiliation are gone gives the impression that Iran and its militias have attained unprecedented power. But Israeli firepower dwarfs that of Iran and its militias combined. Israel enjoys a qualitative military edge over Iran that is bigger today than it was between Israel, on one hand, and Egypt and Syria, on the other, in 1967 and 1973.

Consider that in the 1967 war, when Arab armies suffered their worst defeat, they still managed to kill close to 800 Israeli troops, down 32 fighter jets, and destroy 400 tanks. Today, Iran and its militias don’t have the capacity to inflict a fraction of such losses on Israel.

This means that while Hezbollah and Hamas can disrupt Israeli life and give the Jewish state a bloody nose, they cannot cause enough Israeli alarm to call for general mobilization. As long as that’s the case, wars that Iranian militias launch on the Jewish state will remain border skirmishes, with militias inflicting minor damage on Israel and Israel responding with devastating force.

In 2006, Israel razed large swaths of Lebanon and its infrastructure. Had it not been for Arab states’ largesse that funded reconstruction, parts of Lebanon would still be under rubble.

This time, if Nasrallah drags Lebanon into another war with Israel, wealthy Arab countries will be loath to bail it out. Lebanon will just die, and maybe Gaza, too.

This article was provided by Syndication Bureau, which holds copyright.

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Time for Albanese to meet with Xi Jinping

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Australian Prime Minister Anthony Albanese’s government has overseen a turnaround in Canberra’s relations with Beijing that hints at a larger scope for other countries to balance business and security in their dealings with China.

Albanese’s strategy is also enabling Australia to benefit from the diplomatic opportunities presented by China’s economic difficulties.

When Albanese took office in May 2022, Australia-China relations were in bad shape. After former prime minister Scott Morrison’s call in 2020 for an inquiry into the spread of Covid-19 from China, Beijing imposed trade sanctions on A$25 billion (US$17 billion) worth of Australian exports.

The Chinese Embassy shared an abrasive list of 14 grievances against Australia, while the former Australian defense minister Peter Dutton (now leader of the Opposition) made historical comparisons between China today and Nazi Germany and counseled to “prepare for war.”

Canberra’s poor reputation in the Pacific arguably helped Beijing to seal a security pact with Solomon Islands.

There were no ministerial meetings for more than two years and there had been no formal leader-level talks since November 2016.

What a difference a year can make. Albanese met Chinese President Xi Jinping on the sidelines of the Group of Twenty summit in November 2022 and communication between Australian and Chinese ministers is increasingly routine. Beijing has eased its bans on most Australian exports, though restrictions persist on barley, seafood and wine.

Foreign Minister Penny Wong has reinvigorated Australian diplomacy not only in the Pacific but also in Asia and the wider Indo-Pacific region. Australia’s steady pattern of dialogue with China now aligns with that of its main ally, the United States.

Most notable about the improvement in bilateral ties is that Albanese has not weakened Australia’s position on any of China’s stated grievances. Canberra is enhancing its support for the US-led security architecture, through avenues like the AUKUS partnership with the United States and the United Kingdom and the Quadrilateral Security Dialogue with the US, Japan and India.

Albanese has condemned Beijing’s alleged human-rights violations, endorsed the “de-risking” of economic engagement with China, and refused to extradite Australia-based democracy activists to Hong Kong.

To be sure, he has made tactical concessions, particularly by not unilaterally sanctioning Chinese officials implicated in abuses in Xinjiang, mainly because such moves are unlikely to change Beijing’s conduct.

A part of this shift in fortunes is Beijing’s situation. China’s economy is troubled. Growth has barely recovered after the lifting of its zero-Covid policy and is constrained by Beijing’s limited headway in resolving structural problems such as high debt, low productivity, declining demographics, international trade pushback, and an over-reliance on the property sector.

In this context, economic coercion – which has usually been expensive and ineffectual for Beijing – is less attractive, especially after Russia’s invasion of Ukraine elevated the importance of Australia’s commodity supplies.

But the Albanese government deserves substantial credit for taking advantage of this opportunity through sensible diplomacy, including level-headed statements, constructive interactions and strength-building through collective action with like-minded partners.

Australia-China relations would not have stabilized if Albanese had maintained the combative attitude of the previous government.

PM should go to Beijing

A next step for Albanese should be to visit China. This trip would preserve productive momentum in bilateral ties without diluting Australia’s dedication to a “rules-based international order.”

It would raise the chances of Beijing lifting residual trade controls. It would show regional countries that Canberra recognizes their and its own need to co-exist with China. It would reinforce the message of US cabinet members who have recently traveled to China, that strategic competition should not veer into conflict or preclude cooperation on global challenges.

It would also boost the probability that Australian detainees in China such as Cheng Lei and Yang Hengjun can return home.

Calls for Albanese to condition his travel on the prior removal of all trade impediments or the prior release of detainees are understandable, but doing so would unfortunately make these outcomes less likely. China has its own domestic politics and Albanese’s visit would be a diplomatic gesture that makes it easier for Xi to justify the ongoing climbdown from China’s failed coercive diplomacy.

Albanese should use Beijing’s moderating economic policies to press Australian goals.

Wong’s comment that a visit requires “continued progress” on trade disputes, Trade Minister Don Farrell’s warning that Canberra could resume a World Trade Organization case against Chinese tariffs on Australian barley, and Treasurer Jim Chalmers’ reinforcement of these messages to his counterpart are fitting ways to set expectations of normalized relations with Beijing.

Albanese has not restored the golden era of Australia-China relations – that is neither possible nor the right ambition; he has simply brought some calm.

This is probably as good as it gets for Australia-China relations in the readily foreseeable future, meaning regular meetings, firm yet non-belligerent political discourse, open economic exchanges in the vast majority of non-sensitive areas, and Canberra working with partners to advance its own priorities and encouraging China similarly to embrace multilateralism.

A stretch goal could be closer collaboration on transnational concerns like climate change and debt relief, if it is free of preconditions.

However, the Albanese detente is vulnerable to a US-China crisis or a resurgence in Beijing’s assertive diplomacy. Greater volatility is likely and Australia will choose to back itself and the United States in that event, yet measured rhetoric and coordinated responses would still reduce bilateral fallout.

The message for other countries is that strained Chinese economic circumstances present additional space to pursue independent foreign policies while continuing to do business with China. But capitalizing on this demands a strategy that is strong in its commitment to self-determination but also to dialogue, diplomacy and multilateralism.

This article was first published by East Asia Forum, which is based out of the Crawford School of Public Policy within the College of Asia and the Pacific at the Australian National University.

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Chipping away at US dollar dominance

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There is undeniable excitement about challenges to the American dollar’s position as the global reserve currency.

While economists have warned for years that the dollar’s dominance shouldn’t be a foregone conclusion, few have paid close attention to the warnings, especially in the halls of American power.

After Russia invaded Ukraine and US sanctions failed to deliver a decisive blow against the Russian economy, new questions emerged about how the global economy grew beyond America’s grip. 

These discussions have reached a fever pitch in debates about the creation of a BRICS currency. The BRICS – a grouping of the economies of Brazil, Russia, India, China and South Africa – represents an alternative to Western-controlled international organizations such as the World Bank and International Monetary Fund.

Together, these economies represent a vast swath of the global economy, and their influence extends to areas beyond the American purview in the Global South. Creating a shared currency in these economies would upend international trade and represent a clear challenge to the dollar as the world’s reserve currency.

But this article isn’t about a BRICS currency, because we are far from its creation. Instead, we must recognize that discussion about a BRICS currency overshadows more significant developments quietly chipping away at the dollar’s current dominance.

This month, India and the United Arab Emirates agreed to use their local currencies for cross-border transactions. On the surface, this might not seem particularly important. Countries trade in their local currencies all the time. However, this small development is laying the foundations for dramatic changes in the near future.

Trade between India and the UAE is booming. From April 2022 to March 2023, bilateral trade was US$84.5 billion. Oil drives this, as India is one of the world’s largest oil importers and consumers.

The UAE is also the second-largest source of remittances for India. Remittance payments – money sent back home by Indians working outside the country – are vital to the Indian economy. In the 2021-22 fiscal year, India received close to $90 billion in remittance payments, the highest on record for the country. 

Disempowering the petrodollar

Remittance payments and oil sales have been conducted in US dollars for decades, but with the new focus on trading in local currencies, there is a clear shift away from the dollar. One official told Reuters that India is preparing its first rupee payment for Emirati oil to the Abu Dhabi National Oil Co in the coming months. 

Part of the power of the US dollar as a global reserve currency is how it is used for transactions between countries like the UAE and India. This is especially clear in the oil trade, given that oil is almost universally traded in dollars.

If the US wants to punish the geopolitical decisions of other countries like Russia, it can exercise its control over the dollar in the oil trade. This is one reason China has been actively investing in Saudi Arabia. 

As part of its years-long push to break the oil trade’s reliance on dollars and shift it to the yuan, China has been on a charm offensive in Saudi Arabia. China has even floated the idea of a free-trade agreement between the two nations, attempted to buy a minority stake in Saudi Aramco, and welcomed the kingdom’s multibillion-dollar investments in China.

The closeness of the relationship has worried the US, but President Joe Biden’s administration has proved unable or unwilling to stop China and Saudi Arabia from moving closer together.

Saudi Arabia has also been leveraging its position as a primary supplier of crude oil to India for its geopolitical ambitions of carving out a genuinely independent foreign policy.

These developments might seem small taken by themselves, but viewed together, it’s clear that a profound shift is taking place in the global economy. Without the creation of a BRICS currency, major economies of the Global South are forging partnerships that will allow them to move their economies off the US dollar.

In another part of the world, Brazil and Argentina are discussing the creation of a common currency. While these plans might seem pie in the sky right now, a foundation is being laid that will seriously challenge the dollar’s dominance.

The US needs a new strategy to contend with these challenges coming down the pike, and so far, it’s hard to detect one in Washington. 

It’s essential to see the forest beyond the trees. The dollar isn’t going to be killed off by one contender currency like a BRICS currency. It will lose its power and dominance thanks to small steps taken by countries that prefer to determine their affairs without the influence of a global reserve country.

As the world’s second-largest economy, China is helping other countries like Saudi Arabia  push their visions for global power. It’s all happening in real time. You just have to look at the details. 

This article was provided by Syndication Bureau, which holds copyright.

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