29 May 2020   Leave a comment

India and China are once again facing off over disputed territory in the Himalayas. The territory is in the Galwan Valley in the Ladakh Region and the two states have been unable to resolve the issue. Aadil Brar has written a good background on the dispute, which goes back to 1959. The Economist reports on the latest confrontation:

“When Indian and Chinese soldiers brawled at Pangong lake high in the Himalayas earlier this month—a punch-up serious enough to leave many in hospital—General M.M. Naravane, India’s army chief, was unworried. Such “temporary and short-duration face-offs” happened from time to time in remote stretches of the 4,000km (2,500 miles) border between the two countries, he said. Both sides had “disengaged”. But a week later he dashed north to the headquarters of the 14th Corps in nearby Leh, the regional capital, suggesting that something more serious was afoot.

“According to Indian press accounts, Chinese troops have crossed the undefined border with India at several points, some reportedly penetrating 3-4km over punishing terrain. They are said to have destroyed Indian posts and bridges, and dug in with tents and trenches. Incursions have been reported at the confluence of the Galwan and Shyok rivers, the Hot Springs area and Pangong lake, the site of the original scrap (see map).”

I seriously doubt that either country wishes to go to war. They both had larger problems than a border dispute in uninhabitable lands. But both countries have decided to go full-throttle nationalist to address their problems, and they now find themselves in self-knitted straitjackets. As long as their soldiers do not do anything more than throwing racks at each other, then this might be just another flash. But a miscalculation could make this a very dangerous situation.

We need to be reminded about the direction we wish to go. I often view the video below when I feel discouraged about how racism can be so easily re-ignited in the US. It is always with us, but there have been times in my life when I have felt hopeful. Today is not such a day.

Posted May 29, 2020 by vferraro1971 in World Politics

27 May 2020   Leave a comment

US Secretary of State, Mike Pompeo, declared that Hong Kong is no longer autonomous from China. He issued the following statement to the press today:

“Last week, the People’s Republic of China (PRC) National People’s Congress announced its intention to unilaterally and arbitrarily impose national security legislation on Hong Kong. Beijing’s disastrous decision is only the latest in a series of actions that fundamentally undermine Hong Kong’s autonomy and freedoms and China’s own promises to the Hong Kong people under the Sino-British Joint Declaration, a UN-filed international treaty.

“The State Department is required by the Hong Kong Policy Act to assess the autonomy of the territory from China. After careful study of developments over the reporting period, I certified to Congress today that Hong Kong does not continue to warrant treatment under United States laws in the same manner as U.S. laws were applied to Hong Kong before July 1997. No reasonable person can assert today that Hong Kong maintains a high degree of autonomy from China, given facts on the ground.

“Hong Kong and its dynamic, enterprising, and free people have flourished for decades as a bastion of liberty, and this decision gives me no pleasure. But sound policy making requires a recognition of reality. While the United States once hoped that free and prosperous Hong Kong would provide a model for authoritarian China, it is now clear that China is modeling Hong Kong after itself.

“The United States stands with the people of Hong Kong as they struggle against the CCP’s increasing denial of the autonomy that they were promised.”

The revocation of the certification means that the US Congress can now withdraw the special trading and financial commitments US companies enjoy. That special status has well-served both US and Chinese interests, as US companies invested heavily in China believing that investments in Hong Kong, even though the money filtered into mainland China, were protected from the Chinese Communist Party by the protections of the British laws instituted while Hong Kong was a colony.

The Chinese response to the US decision was quite sharp–much sharper than I had expected. Global Times, which often acts as a mouthpiece for Beijing official policy, made this comment:

“Since China is determined to push forward the national security legislation for Hong Kong, it has been prepared for any possible reaction from the US. Sanctions with individual assets and visas as levers are obviously not presentable. Support for this legislation in Hong Kong is gaining momentum.

“Many Chinese people have realized that some US politicians are seizing China by its throat. A long-term rivalry between China and the US is inevitable. In the face of US aggression, China should adopt a calm mentality and be prepared to engage in a long-term battle with the US.

“As China maintains its powerful nuclear deterrence and boosts its military strength, the US will not readily resort to a military showdown with China over China’s core interests. Decoupling is the last trump card the US has.”

The reference to military power was, to me, an escalation that did not seem necessary. But it is an index of how seriously China regards Hong Kong as an internal matter, the British agreement notwithstanding. And the Chinese are correct: ending the special status of Hong Kong is the last card that the US can play on this particular issue unless it, too, begins to talk about military power (a losing card for the US on this matter). Paradoxically, Pompeo’s statement is actually an endorsement of the Chinese position on Hong Kong–that Hong Kong is completely under the control of Beijing.

I actually hate it when analysts on TV start yelling at each other. It makes developing an argument impossible and very rarely is coherent or intelligible. But there was an exchange today on the financial news network, CNBC, between Andrew Sorkin (who actually wrote a very good book on the financial crisis of 2007) and Joe Kernan that suggests how nerves are getting frayed as we try to make sense of the right way to approach the debate about whether deaths from the pandemic are more or less important than deaths from an economic slowdown (a debate that will surely rank as one of the most inane policy debates in American history–the purported “tradeoff” is spurious).

I have posted the exchange, not because I believe that it is itself newsworthy, but rather to provide some measure to assess the relative importance of the stock market to the lives of ordinary American citizens. There was once a time when the stock market bore some connection to the overall health of the economy. Now the stock market is completely decoupled from the economy and is rather a game being played among some very rich people, who are waging bets with each other to see which ones have more influence over the value of stocks. You can access the video here.

Posted May 27, 2020 by vferraro1971 in World Politics

26 May 2020   2 comments

As we try to understand why it seems that the US was so unprepared for the COVID-19 pandemic, one explanation offered by the Trump Administration is that President Obama “left the cupboard bare”. Mr. Trump made this statement in his press briefing on 6 April 2020:

“But they also gave us empty cupboards.  The cupboard was bare.  You’ve heard the expression: ‘The cupboard was bare.’  So we took over a stockpile where the cupboard was bare and where the testing system was broken and old.  And we redid it.

“And, frankly, it would be okay for a small event but not for a big event.  And they had a chance to do it.  Somebody said that a certain person — I won’t tell you, but a certain person said this will happen.  And that’s true.  The problem is that person never did anything about it — previous administrations.  In previous admin- — they never did anything about it.

“You know, we all know all about pandemics and all of the things that we’re seeing now, but nobody thought it was going to happen.  And if we did think it was going to happen, the problem is nobody did anything about it.”

The St. Louis Post-Dispatch ran an editorial yesterday that put the lie to those assertions:

“We’ve taken the time to dissect Centers for Disease Control and Prevention budgets from the year before Obama left office all the way to the present. Trump can lie, but the numbers cannot. Obama left office with an unblemished record of building up the nation’s pandemic preparedness. Trump systematically sought to dismantle it.

“Perhaps because of his experience with the 2015 Ebola outbreak, Obama sought to leave his successor fully prepared to confront future pandemics. He asked in his fiscal 2017 budget request to boost federal isolation and quarantine funding by $15 million, to $46.6 million. Congress approved $31.6 million. In Trump’s three years in office, he has not requested a dime more in funding.

“Obama asked to nearly double his own $40 million outlay for epidemiology and laboratory capacity. Congress balked, but Obama left Trump with that $40 million as a starting point. What did Trump do? In his 2020 budget, he asked Congress to cut that number to: Zero. Zilch. Nothing.

Mr. Trump’s own Center for Disease Control issued a 438 page analysis of its budget requests for 2020. I have reproduced the summary table of the budgets over time. For those who are unfamiliar with the US government’s tabular notations, decreases in budgets are within parentheses ( ). Look at the far-right column which notes the changes from 2019 to 2020. Mr. Trump’s hollowing out of the CDC is actually astonishing. Mr. Trump left the country dangerously unprepared for the pandemic.

Posted May 26, 2020 by vferraro1971 in World Politics

25 May 2020   Leave a comment

Respite from the news.

Posted May 25, 2020 by vferraro1971 in World Politics

24 May 2020   Leave a comment

There were large protests in Hong Kong against the proposed national security law being discussed by the Chinese Communist Party in Beijing. The proposed laws would fatally undermine the limited autonomy the region has under the “one country, two systems” agreement with Britain that was scheduled to last until 2047. Hong Kong activists, writing in an op-ed for the Washington Post, argued that “Beijing has just hammered the final nail in the coffin for Hong Kong’s autonomy. The promise of ‘one country, two systems’ is dead.” If passed, the laws would allow the Chinese Central government to intervene in the region’s affairs if it deemed that activities were secessionist. Although US President Trump has yet to make a public comment on the protests, it seems clear that the US government is moving toward condemning the proposed legislation:

“On Sunday, Trump’s National Security Adviser, Robert O’Brien said the proposed security measures could jeopardize Hong Kong’s future as a financial hub — due in part to its special trade status with the U.S. — and lead to sanctions.

“‘It looks like, with this national security law, they’re going to basically take over Hong Kong,’ O’Brien told NBC’s Meet the Press. ‘And if they do, Secretary [of State Mike] Pompeo will likely be unable to certify that Hong Kong maintains a high degree of autonomy and if that happens there will be sanctions that will be imposed on Hong Kong and China.’

Legislation passed last year requires the state department to annually certify that Hong Kong is ‘upholding the rule of law and protecting rights” and “sufficiently autonomous’ for the city to maintain its special status under U.S. law.

The list of disputes between the US and China that arose just last week were detailed by Eamonn Sheridan:

It is also the case, however, that China, with its heavy-handed policies, may be undermining the economic value of Hong Kong. William Pesek points out the possible grim effects of the protests on the Hong Kong economy:

“At the very least, Hong Kong can kiss goodbye its status as the world’s second-freest economy, a halo bestowed by the Heritage Foundation. The Washington-based think tank has long fetishized Hong Kong’s negligible tax rates, duty-free ports, ease of doing business, unfettered capital flows and transparent rule of law.

“Worse, last year the U.S. passed the Hong Kong Human Rights and Democracy Act, which mandates an annual review of the city’s autonomy; if it finds that China has taken more control, as this move certainly suggests, the U.S. can remove economic and trade privileges Hong Kong enjoys. This would remove its attraction as a gateway to China.

“All of this comes as Hong Kong’s economy reels from last year’s massive protests — which may now return — the U.S.-China trade war and the fallout from the coronavirus outbreak.

“Hong Kong’s gross domestic product fell 5.3% in the first quarter of this year; President Xi Jinping’s new move is only going to ensure more economic trouble.”

I do not think that there are any winners in this situation. If the US Congress forces sanctions on China for its actions in Hong Kong, there will be no way for President Xi to back down. The US, the people of Hong Kong, and China will all pay a heavy price for these short-sighted actions.

Posted May 24, 2020 by vferraro1971 in World Politics

23 May 2020   Leave a comment

There are five Iranian oil tankers approaching Venezuela’s 200 exclusive economic zone (EEZ). There is irony in oil exports to Venezuela, home to one of the largest oil reserves in the world. But the economic chaos in Venezuela due to the mismanagement of the Maduro regime and the economic sanctions imposed on Venezuela by the US has led to gasoline shortages in the country, compounding the misery in the country. The Guardian reports:

“Iran is supplying about 1.53m barrels of gasoline and alkylate to Venezuela, according to both governments, sources and calculations made by TankerTrackers.com based on the vessels’ draft levels.

“The shipments have caused a diplomatic standoff between Iran and Venezuela and the US, as both nations are under US sanctions. Washington is considering measures in response, according to a senior US official who did not elaborate on any options being weighed.

“The US recently beefed up its naval presence in the Caribbean for what it said was an expanded anti-drug operation. A Pentagon spokesman, Jonathan Hoffman, said on Thursday he was not aware of any operations related to the Iranian cargoes.”

The US could probably seize those tankers in the EEZ (or, more likely, just before they enter the EEZ), but it is unclear what interests such actions would serve. Both Russia and China have supported the Maduro regime, and Iran would achieve little more than a symbolic poke in the US eye. Additionally, both Cuba and Turkey have offered Venezuela support. The US currently does not have any good relations with any of those five states, but it also does not have much support for its sanctions against either Venezuela or Iran among its closest allies.

Venezuela has alerted the UN Security Council to the imminent use of force in the Caribbean, as reported by the Pakistani newspaper, The Nation:

“Venezuela’s permanent envoy to the UN Samuel Moncada has warned of a threat which he argued is posed by Washington to Iranian tankers bound for the South American country.

“In a tweet on Friday, Moncada announced that Venezuela had alerted the UN Security Council and its Secretary General Antonio Guterres of ‘the threat of imminent use of military force by the United States against Iranian vessels carrying Venezuelan-directed gasoline’. 

“In another tweet, Moncada insisted that an ‘armed attack on tankers, exercising free trade and navigation between sovereign nations, is a crime of aggression’.

“He added that ‘a naval blockade is aggravated by the fact that it aims to deprive an entire population of its vital means of subsistence’ and that ‘it is a crime of extermination’.”

The US has maintained sanctions on Venezuela for over ten years for a variety of issues: drug-trafficking, violations of international humanitarian law, and terrorism. Venezuela has been paying Iran in gold. Bloomberg reported on 30 April:

“Government officials piled some 9 tons of gold — an amount equal to about $500 million — on Tehran-bound jets this month as payment for Iran’s assistance in reviving Venezuela’s crippled gasoline refineries, the people said. The shipments, which resulted in a sudden drop in Venezuela’s published foreign reserve figures, leave the crisis-ravaged country with just $6.3 billion in hard-currency assets, the lowest amount in three decades.”

The US sanctions on Venezuela are similar to those imposed on Iran–they penalize countries which do business with the state or individuals associated with the state. In both cases, the sanctions are broad-based and level a heavy burden on the ordinary citizens in each country.

At this point I would be surprised if the US tried to interfere with the tankers. The materials will only supply Venezuela for about two months and it seems clear that Venezuela does not have more gold to pay Iran. Thus, the risks do not seem commensurate with the benefit of additional pressure on the Maduro regime. But I have often been surprised by the foreign policy moves of the current administration.

Posted May 23, 2020 by vferraro1971 in World Politics

22 May 2020   Leave a comment

China has proposed a new security law that will have ramifications on the people of Hong Kong. Hong Kong became a British colony at the end of the 2nd Opium War in the mid-19th century, and in the 20th century the colony became an important conduit for foreign capital into the Chinese economy. The inflows were possible because investors trusted British law to protect their interests even though the money ultimately flowed into the more problematic Communist economy. The British lease for the colony expired in 1997, but British laws remained in force under a compromise known as the “one country, two systems” agreement. As the Chinese economy grew into one of the largest in the world, the attractiveness of the compromise has worn thin for the Communist Party and over the last few years it has tried to gain greater control over Hong Kong. In many respects, the Communist Party has viewed the autonomy of Hong Kong as a threat to its control and views that autonomy in the same light as it views the restiveness in Taiwan, Tibet, and Xinjiang–all areas that have movements that favor independence from the control of the central Chinese government.

The US State Department issued the following statement about the proposed security law:

“The United States condemns the People’s Republic of China (PRC) National People’s Congress proposal to unilaterally and arbitrarily impose national security legislation on Hong Kong.  The decision to bypass Hong Kong’s well-established legislative processes and ignore the will of the people of Hong Kong would be a death knell for the high degree of autonomy Beijing promised for Hong Kong under the Sino-British Joint Declaration, a UN-filed agreement.

“Hong Kong has flourished as a bastion of liberty.  The United States strongly urges Beijing to reconsider its disastrous proposal, abide by its international obligations, and respect Hong Kong’s high degree of autonomy, democratic institutions, and civil liberties, which are key to preserving its special status under U.S. law.  Any decision impinging on Hong Kong’s autonomy and freedoms as guaranteed under the Sino-British Joint Declaration and the Basic Law would inevitably impact our assessment of One Country, Two Systems and the status of the territory.

“We stand with the people of Hong Kong.”

Members of the US Congress have proposed legislation that would impose penalties on individuals and banks that “are complicit in China’s illegal crackdown in Hong Kong”. Interestingly, however, US President Trump has yet to comment on the security proposal, despite his campaign to blame China for the spread of COVID-19: “Spokesman speaks stupidly on behalf of China, trying desperately to deflect the pain and carnage that their country spread throughout the world. Its disinformation and propaganda attack on the United States and Europe is a disgrace….” Relations between the US and China have deteriorated at an alarming rate, largely because there is confusion in the US decision-making arena about which issue is most important. Is it trade? Taiwan? Technology transfer and theft? South China Sea? COVID-19? Trump’s personal relationship with President Xi? All I can find in incoherence when I try to determine the overall policy toward China.

For its part, China seems to have a handle on what it wants, although it does not really know how to interact positively with either the US or the world as a whole. The Global Times, a media outlet that often speaks for the Communist Party in China, is very clear about how it regards the issues in Hong Kong:

“The US’ biggest card is canceling Hong Kong’s separate customs territory status. This would be a blow to Hong Kong’s economy, making a dent in the city’s status as an international financial center. But, at the same time, Hong Kong is a rare contributor to tens of billions of US trade surplus each year. A large number of US companies are doing business there, where 85,000 US citizens work and live. Throwing a punch at Hong Kong means hitting the US itself. 

“Hong Kong has been a link between China and the West. Yet, with the deepening of China’s reform and opening-up, this function of Hong Kong has been largely decentralized to China’s coastal areas. If the US cuts its bond with China on Hong Kong, the damage to the Chinese mainland’s economy will be not even close to the blow the US could make 20 years ago.  

“More importantly, when China announced the plan, it meant Beijing had already evaluated how Washington would respond, and has been prepared for possible challenges. The possibility of China retreating under US pressure is zero.”

It is hard for me to imagine the US pushing China hard except in terms of political rhetoric which is largely directed toward the American domestic political situation. But it certainly seems to be the case that the Chinese are bewildered about US Chinese policy.

Posted May 22, 2020 by vferraro1971 in World Politics

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