Archive for ‘trade’ Category
It is said that the who and when of diplomatic missions tells much about the disposition of the government sending them. If that is true, then consider this.
The most important annual Trans-Pacific diplomatic (APEC) meetings are being held in Bali this week. John Key and Tim Groser are there, once again pushing their trade-first (only?) agenda in the main sessions and back rooms.
Meanwhile, Foreign Minister Murray McCully is on a mission to Antarctica.
Since Antarctica has no diplomatic agencies on its soil, it seems odd that the foreign minister is headed that way in the absence of a treaty signing or other diplomatic event. His press release states that the visit, his first, is because he is the minister responsible for New Zealand’s Antarctic Affairs and that along with his visit to Scott Base he will head to the US base at McMurdo Sound. But there is nothing diplomatic on his agenda.
Mr. McCully is not a minister for anything scientific, so he is not discharging science portfolio responsibilities by visiting one of the research stations on the continent. Perhaps, as Minister of Sports and Recreation, he is looking into possibilities along those lines, especially since he was flown down on an Air Force plane along with 117 others plus the 11 person Air Force crew.
But if he is not engaged in anything other than a tour of the realm, why is he not with other Trans-Pacific foreign ministers in Bali? Is this the contemporary equivalent of the colonial practice of assigning diplomats in disgrace to a posting in Brazzaville? Is Antarctica New Zealand’s diplomatic version of the Mosquito Coast?
MFAT and National will say that he was superfluous to requirements in Bali (not exactly in that language) because the PM and Trade Minister are there. That tells us two things.
On the international relations front it confirms that New Zealand’s foreign policy is dominated by a trade fixation (fetishism?) that has come to dominate all other aspects of New Zealand’s diplomatic endeavor. In spite of Mr. Key’s posturing at the UN with regard to UN reform, weapons non-proliferation and multilateral intervention in search for votes for a Security Council temporary seat next year, the hard fact is that New Zealand’s diplomatic ranks have been purged, one way or another, of arms control and non-proliferation specialists, climate change and human rights experts and many other senior diplomats whose primary expertise lies outside the realm of trade. They have been replaced by younger, less costly and more narrowly focused trade zealots (many riding on Groser’s coat tails) whose knowledge and experience in other diplomatic fields is comparatively thin.
This has been accompanied by out-sourcing lead responsibility for intelligence sharing and security assistance negotiations to the GCSB, SIS and NZDF, which is one of the reasons, in concert with the trade fixation, that New Zealand’s foreign relations have taken a distinctly schizophrenic look under National (trade with the East, defend with the West, even if the PRC and US are on a collision course for supremacy in the Western Pacific).
One might respond that spy agencies and armed forces should cut their own deals with foreign counterparts, since it is their business after all. But that is precisely why diplomatic intercession is required–securing the national interest is a long-term game played on many fronts that is not reducible to bureaucratic self-interest, making friends amongst foreign counterparts, or currying immediate favor. It is a fluid balancing game rather than a static one-off opportunity, which is why allowing spooks and uniforms to dictate the terms of engagement on matters of intelligence and security is less than ideal. That is particularly so when the ministers in charge of security and intelligence as well as military affairs are less than conversant with the nature of the operations they are responsible for and where there is no independent oversight of their decisions regarding the conduct of those operations.
Likewise, trade zealots need to have their single-minded obsession with neo-Ricardian prescriptions tempered by those who understand that the world is not solely dominated by trade balances and import/export quotas, tariffs, licensing and the other minutiae of cross-border economic interaction. Important as these are, they need to be considered in relation to other areas of diplomatic endeavor so that coherence, congruence and continuity in foreign affairs can be achieved and maintained. The latter is important for no other reason than it helps establish and maintain a nation’s reputation as a global actor.
New Zealand’s reputation as a global actor has transformed under National from that of an independent and autonomous honest broker into that of a wheeling, dealing “free” trading operator that hedges its bets by cozying up to the world military superpower. It remains to be seen how tenable this position will be over the long-term.
On the internal front McCully’s Antarctic junket offers proof that he is an outcast within his own party, a pariah best unseen and unheard. He has no significant allies in the Collins or Joyce factions of the National caucus and no real friends elsewhere. He has no discernible influence on foreign policy, serving more as a spokesperson and chief of ceremony. The weeks before his trip to the frozen continent he was flitting about the US and Caribbean, visiting the America’s Cup before heading to the UN for some meeting and greeting, then onto bilaterals with Caribbean counterparts. Prior to that he was at the Pacific Island Forum in the Marshall Islands, preceded by trips to Hong Kong, China and Mongolia, Melanesia and the Cook Islands and Africa and the Seychelles. He presented many gifts to a variety of dignitaries from far-off lands and wore colorful shirts as much as he did suits. He did little hard negotiating.
That is a lot of time spent abroad during times when parliament is sitting, particularly when the bulk of the trips were for more symbolic than significant purposes. Come to think of it, when was the last time he answered a question in the debating chamber? I may have missed it but he does seem conspicuous by his absence.
In effect, McCully has been given a comfy sinecure to ensure that he stays away from his own caucus and steers clear of involvement in the “real” business of foreign affairs, that being trade. This neuters him in terms of the internal politics within National as well as with regard to foreign policy making (which is now the province of Groser and his minions). This is a variation on the theme used by Labour with respect to Winston Peters, when he became a Foreign Minister not in cabinet who spent a similar amount of time as McCully does exploring the far–and nicer–reaches of the globe. Except Antarctica.
And we have paid for all of it.
Media coverage of trade negotiations in the Asia-Pacific have largely overlooked the strategic perspectives underpinning different countries’ approaches to the subject. In this analytic brief I outline some of the issues involved, to include potential problems when different strategic outlooks are juxtaposed.
Posted on 10:13, August 30th, 2012 by Pablo
“Tokens of sovereignty” are state-issued commodities such as stamps, passports and internet domain suffixes. They differ from symbols of sovereignty such as flags in that only nation-states can legally own, sell and trade them. I examine the issues surrounding one such token, known as a “flag of convenience” (FOC), here.
Posted on 17:04, August 1st, 2012 by Pablo
A recent canvass of members of the diplomatic community resident in Wellington had as a common theme the apparent incoherence of contemporary New Zealand foreign policy. That prompted me to attempt to deconstruct the major features of New Zealand foreign policy during the last three decades and to offer some explanations as to why they no longer hold in the measure that they once did. You can find the explanation here.
Given that foreign policy has rarely been addressed in this year’s election campaign, and then only briefly in the form of PR releases and sound bites rather than genuine debate, I used this month’s Word from Afar column at Scoop to point out why that is not such a good thing.
Market responses to the US debt crisis and financial downgrade have been like king tides as of late, and inevitably speculation centers on the possibility of a “double dip” global recession (this speculation is more than rhetorical. Gold and other precious metal prices have spiked overt the last three weeks as investors flee the stock, bond, commodity and currency markets). There is much talk, some fearful and some hopeful, of a global meltdown of epic proportions. The argument goes that downgrading the US credit rating devalues US Treasury bonds and the dollar, which slows US private investment at home and abroad, decreases domestic consumption, increases unemployment and generally prolongs the recession begun in 2008. This ripples negatively across the globe given the interconnectivity of commodity chains and the central role of the US in them. Be it on the Left or the Right, the belief in state bankruptcy is taken as an article of faith.
The reality is different. What is happening is a fiscal crisis of the Western State rooted in a cyclic crisis of capitalism. Arguments about the blown-out US public debt obscure the fact that it is the result of the same conditions that produced the 2008 recession and which are at root the cause of the next one. For the last thirty years the ‘bubble” of private debt was replicated by the US Government, in the last decade under the strain of simultaneously fighting two prolonged low intensity conflicts. In Europe public debt was in part procured in order to compensate for private debt (via the provision of subsidized entitlements). Capital was lent on looser and looser terms as interest payment calculations came to rival returns on productive investment as the dominant macroeconomic logic. The market in financial derivatives boomed, then busted, bringing with it a crisis in small scale property ownership at the same time that major manufacturers were being bailed out by the US government.
There is a difference, however, between the private sector and the State when it comes to fiscal crises. The analogy between States and firms is overdrawn. Firms go bankrupt; States do not. States may default on loans and suffer the indignities of downgrading by financial institutions, but they do not go out of business. The reason is simple. States with a presence in the global economy may fail but they do not cease to exist.
Modern states are political entities with other measures of power beyond economic resources, are rooted in historical and cultural ties within more or less fixed borders, have distinct political systems and political regimes that govern them, and are therefore sheltered from the hard realities that beset wayward market agents in a globalised system of production, service and exchange. More importantly with regard to the social and political relations of production, the modern nation-state supercedes the market at any specific moment even while being generally subject to its rhythms and dictates. It is, after all, a capitalist type of state that is not reducible to the productive apparatus.
Imagine even if the US defaulted on its current obligations. Its credit rating would fall further in parallel with the value of its currency, but how long will that last? Even if the US fails its financial obligations, it would be the markets that push for a debt restructuring favourable to it. As the core of the global economy, the US is simply too big to fail because its financial collapse would reverberate widely and deeply through the world. In fact, with the exception of undeveloped failed states and microstates with minimal economic resources to promote, virtually all modern states can survive a fiscal crisis and default.
Take Argentina, which in 2000 defaulted on its foreign loans, uncoupled its currency from the US dollar and then renegotiated the terms of its obligations. Since most of the outstanding balance was interest rather than principal, foreign creditors were eventually forced to settle on terms favourable to the Argentines (about 60 cents on the dollar lent). The weakened Argentine peso stimulated commodity exports and attracted foreign investment in resources and primary goods. In spite of endemic corruption, political interference and a multitude of market inefficiencies, over the last five years Argentina has averaged growth rates in excess of six percent and attracted the highest levels of foreign investment ever even while maintaining a large public deficit.
Greece, the poster child of all that is supposedly wrong with governments and societies that do not couple entitlements with production, is another such case. What would happen if Greece defaulted on its recently rescheduled loans? Will it cease to be? what it could do is drop out of the Eurozone, replace the Euro with the much less expensive drachma, and print money to fund its domestic obligations. Somee foreign investors may flee, but local capitalists will continue to engage the domestic market, people will continue to consume, albeit at lower rates with regards to imported goods, tourists will still flock to see the historical sites and visit the islands, and the country will continue to exist. In fact, should it be successful at restructuring its economy on more internally-focused terms out from under the straitjacket of Eurozone obligations (say, by making its tax collection system more rational and efficient), it could serve as a model for the other “PIGS” nations—Portugal, Ireland and Spain—as well as Italy.
It was Northern European, mostly German capital, directly and channeled through the European Central Bank, which sought to recycle in the European periphery the super-profits accrued during the last two decades of derivative market expansion. These are the creditors who took the risk in the PIGS and who now demand debt repayment schedules rooted in austerity measures and privatization programs. They are also the beneficiaries of a strong Euro, unlike the weaker Southern European economies now under siege. Should debtor countries in Europe decide to reconfigure their economies around a devalued national currency a la Argentina, the European Union will be finished as a currency regulator. Here the sub-regional ripple or contagion effect makes each of the PIGS too big to fail, something that is magnified in the case of the US. Loss of credit rating and a high debt to GDP ratio, in others words, does not translate into State bankruptcy.
The larger point is that states can default but they cannot be bankrupted because they are not solely economic agents but instead sovereign political actors with interests that transcend a financial bottom line. They can be upgraded and downgraded as financial risks, but even if investment falls and inflation rises, they will not disappear. Think of Brazil and Argentina in the late 1980s when inflation ran at over 1000 percent per year. Did they disappear? Did all foreign investment dry up? Did local markets crash?
Truth be told, capitalism, led by finance capital, was on overheated overdrive for the two decades before 2008, only slowing down briefly after events such as 9/11, even when objective conditions advised against the maintenance of the macroeconomic policies private agents used to calculate the speed of their returns. Western States emulated private agent logics, whereas Asian banks and sovereign wealth funds were less keen to adopt derivatives-led financial approaches backed by increasingly unsecured loans (although some of that did creep into Asian markets as regional economies attracted Western investment).
Here is where global networks come in. Rather than wage war on States with economies in default, other States that are debt free or less indebted work to cover their investments, and those of their private agents, in the debtor States. This means that even if private agents in the debtor States fail as a result of their market excesses or miscalculation, and State treasuries do n not have enough reserves to cover their debts, States remain open for business, perhaps even on more favourable terms depending on the nature of sovereign debt restructuring agreements (public debt for equity swaps are one measure that can improve State efficiencies as a result of restructuring). Inefficient producers are expelled from the market; inefficient States muddle along.
The entire Western capitalist combine was due for a retrenchment given the downward slope it has been on since spending, both public and private, exceeded productive output in material goods and services. So long as money could be made off of lending money and risks were passed on to increasingly lower-level actors, early 21st century capitalism saw States tax and spend without coherent productive purpose (which mirrored the approach of the financial markets). This was a good political calculation but not a sound economic grounding for future productive growth within current capitalist parameters. Thus the turn towards private sector retrenchment in 2008, with public sector retrenchment now following.
We hear about the demise of various States because they can no longer afford to repay what they have borrowed in order to maintain whatever it is that is considered precious to national identity and political stability–public goods and entitlements in Europe, a war machine in the US. Retrenching Western States may not be able to provide these services in the measure they used to, but thy remain (however diminished) as linchpins of an international system that has its origins in the Treaty of Westphalia rather than Bretton Woods or the Washington Consensus. States are the ties that bind that global system of exchange, and Western States continue to have a central role in it even as the system moves towards increased multipolarity.
Markets and politicians alike need to be cognizant of this fact, because as Keynes pointed out, it is political conditions, not economic conditions, that are the best guarantors of long-term investment. Rather than the economic particularities of a given investment climate at a specific moment in time, political stability offers better conditions for secure future private return. A stable national polity is the best guarantee of profit even if the public books are not balanced. That is the political cost for the social peace that is the basis for economic stability.
Ironically, it was the short-term focus of the macroeconomic logics that propelled the “bubble” that led first to the financial crisis of 2008 and now to the current conditions of political impasse and social instability in many liberal democracies. That is where the convergence of the fiscal crisis of the Western State and the cyclic crisis of capitalism can lead to liberal democratic State failure: when it produces a crisis of legitimacy of the political elite, often confused with regime crisis, that once rooted in and superimposed on the economic downturn and social unrest constitutes an organic crisis of the State. The UK evidences these type of pre-conditions.
Rather than demand zero-sum tax cuts and a diminished State role in guaranteeing the social relations of production, the priority of the market during a State fiscal crisis should be to to express confidence in the State because delegitimisation of the latter is an absolute guarantee of disasterous market consequences for the private actors involved with them in the event that they are overthrown or fragment. That is where market ideologues have failed in their basic obligation: to help foster the political and socio-economic conditions in which stable rates of private return are generated. Instead, they are exacerbating the crisis with their jitters, demands and panic trading. This will not lead to an organic crisis in most liberal democratic states (which will muddle along), but it could produce legitimacy crises in newly democratic states or those with significant social cleavages. Even then the prospect of State, as opposed to regime or private sector failure, is unlikely.
All of which is to say that when it comes to the fiscal crises of modern Western States, this too shall pass.
The manhandling of Green Party leader Russell Norman by Chinese security guards as they escorted a high-level delegation into Parliament raises some thorny questions for the government. Norman was protesting in favour of a free Tibet when his flag was taken from him and he was shoved to the ground. Technically speaking, he was exercising his democratic right to free speech and protest on parliament grounds, so the minute the guards laid hands on him they were guilty of assault. Of course, it remains to be seen if Norman did anything to provoke the guards reaction, such as by rushing at the visiting officials or uttering threats (neither of which appears at this juncture to have happened). Some commentators believe that he deserved what he got because he was being provocative merely by protesting , or because the whole episode was a PR stunt anyway. Even so, if the assault on him was provoked by his holding the flag or shouting “free Tibet” rather than him posing an immediate physical threat to the delegation, then the guards were in fact violating his rights as well as NZ criminal law and parliamentary protocol. So what is the government to do?
China is now the second largest trading partner of NZ, which has secured the first bilateral free trade agreement between China and a Western country. The National government has worked hard to deepen ties with the PRC, to the point that it is working on the details of a military exchange program with the Asian giant and has not opposed the sale of strategic assets to Chinese consortia. In the past the 5th Labour government has coordinated with visiting Chinese delegations to prevent protesters from getting close to the visitors. There is, in other words, a history of NZ officials working to appease Chinese sensitivities about protest and dissent within a larger context of improving relations between the two countries.
But there has never been a direct confrontation between members of a Chinese entourage and NZ citizens, much less a shoving match between Chinese nationals and an MP inside of parliament itself (as far as I know previous protests by Ron Donald never escalated this far). So a precedent is about to be set. If the NZ Police charge the security guards with assault, or if the government declares them personae non grata and expels them, then NZ runs the risk of having these strengthening ties disrupted by a Chinese diplomatic backlash. Even of short lived or partial, any retaliatory curtailment of trade and investment could end up costing NZ millions of dollars in lost revenue (and the jobs that go with it). But if the Police or government do nothing, then they send the signal that NZ’s commitment to civil rights is secondary to its commitment to trade. Some might see that as kowtowing to an authoritarian one party state in the pursuit of profit. So far the Police have said that they will investigate Norman’s complaint about the incident, but that does not mean it will result in charges being laid.
One line of argument could be that NZ has to look at the broader and longer-term picture and not jeopardise a relationship that is crucial to NZ’s future prosperity over a trivial incident. A counter-argument is that NZ has more to lose if it abandons its democratic principles in favour of the ethereal promise of cash down the road. One rationale privileges principle over practicality; the other privileges the reverse.
So, what is to be done? What should be Labour and ACT’s responses be (as the majority opposition party and supposed champion of individual rights, respectively)? Should pragmatism triumph over principle, or should principle outweigh economic and diplomatic considerations? Is there a compromise solution in which face is saved all around? Will the Police go through the motions of an investigation but do nothing, and if so, what will National do by way of official follow up?
Less one think that this conundrum could only occur because of the nature of the Chinese, consider this scenario:
A protester attempts to approach US Vice President Biden and/or Secretary of State Clinton at the Beehive entrance in order to deliver a petition demanding closure of Camp X Ray at Guantanamo, or better yet, a summons to the International Court of Justice for complicity in US “war crimes” in Iraq and Afghanistan. What do you think the Secret Service response would be, and if the Secret Service agents surrounding the US dignitaries were to react in a physical manner, would the NZ Police or government press charges against them?
Such are the quandaries of being an elf amongst giants.
I have seen and read the reports of John Key’s much anticipated “secret” trip to Afghanistan. I must say that it is one of the more amateurish, cringe worthy attempts at symbolic politics I have seen in a long time–not quite as bad as George W. Bush’s “Mission Accomplished” carrier charade, but of the same ilk. Let me explain why.
First, the good part. I think it was entirely sensible for the National spin-meisters and military brass to tie the Afghan detour to the Gallipoli celebration trip. The unfortunate RNZAF chopper accident on ANZAC day forced a change of plans so that the PM could attend the funerals of the ill-fated crew, but that only added to his message of military support and remembrance. As for the greedy economic opportunists who have criticised him for abandoning the arse kissing trade mission to the Arab Gulf Coast, they need to realise that given the circumstances in which the tragedy occurred, Mr. Key had no political option but to return for the funerals. How would it have looked if he choose to continue to brown nose the Arabs while some of the nation’s service people were laid to rest? The likes of one Mr. Langely may put personal self-interest before recognition of service, but most Kiwis understand that not only was it politically necessary for Mr. Key to return, it was the right thing to do.
But that is about as good as it gets. Contrary to the fawning editorial opinion of the NZ Herald, Key’s tiki tour of Afghanistan showed how out of his league he is on international security affairs.
He started out by mentioning that he was flown by helicopter from his arrival point (presumably Bagram Air Force Base, the site of a notorious US “black” detention centre) to the SAS location. In doing so he managed to convey the message that the most heavily defended areas of Kabul are still too dangerous for Western VIPs to drive through, and that the SAS is not located in Kabul as he claims but is actually based elsewhere. He then pointed out that he used heavily armed motorcades to travel in Bayiman and elsewhere because he and his entourage were “juicy fish” for insurgent targeters.
Well, not quite. In a country that is awash in visits by heavy-hitters from a number of countries, Mr. Key is more like an anchovy. Moreover, heavily weighted Western motorcades involving a half dozen armoured SUVs and armed escort vehicles are not immune to roadside bombs (and I bet he traveled in the third or fourth vehicle). In fact, given that they have to travel on main arteries and disrupt local traffic and pedestrian flows as they do so, convoys such as Mr. Key’s actually make for better targets for opportunistic guerrillas deeply embedded in a resentful local population (especially where well-prepared guerillas can deploy efffective IEDs on five minutes notice). If leaving a light footprint is what hearts and minds are partially about, then his mode of land transport was a tactical failure.
Mr. Key prattled on about how he wanted to experience the conditions in which the NZDF operate in that theater. But he choose to spend his evenings at the British embassy. That is a double insult: first to the UN and ISAF patrons of the NZDF mission, which have their own housing compounds or use heavily guarded hotels for visiting VIPs; and secondly to the NZDF itself. Mr. Key could have stayed in officer quarters in any number of bases including at the PRT in Bayiman or the SAS operations centre (which is likely to be on the Afghan military base where its anti-terrorism Crisis Response Unit is headquartered). But instead he choose to take the poncy route and accept accommodation from the colonial master. How quaint of him, and how much it tells us about his sincerity in wanting to understand the conditions that NZ troops face.
Mr. Key managed to offend the Bayiman locals by trying to shake hands with a girl, a cultural taboo in that region. So much for MFAT and NZDF giving him a head’s up about local customs, to say nothing of his lack on intuition about the context in which he was operating. For him, ignorance on that occasion turned out not to be bliss. For the NZDF PRT team, this could have been ther moment where 6+ years of good civil-military relations became unstuck. The question begs: would Helen Clark have been so, uh, uninformed? >>Note to Red Alert and The Standard–while I appreciate your views you must not use this post to score political points because to my mind you are little better when it comes to partisan issues such as this>>
In defending their role, Mr. Key said that the SAS had not fired their weapons. This is laughable to the point of tears. The very nature of their “training” mission, as well as the fact that they have participated in at least two well publicised firefights (even if we accept the argument that they did so in “support” roles, which is ludicrous), requires that the SAS employ their weapons, even if merely as covering or suppressing fire for their Afghan comrades.
And yet, the supplicant NZ press uncritically lapped up his patent lie while he hid under the doctrine of plausible deniability (that is, because Mr. Key may have believed the lie to be true because his advisers or the NZDF command told him to take their word at face value and he had no reason to doubt them because he simply does not know better). Here, Mr. Key’s ignorance truly is a measure of political insulation, if not bliss.
Mr. Key told this same press that he was “considering” extending the deployments of the Bayiman PRT and SAS past their respective termination dates in September 2010 and March 2011 respectively. This was a forgone conclusion given that the NZDF wanted to do so and given the government’s obsession with tying a bilateral US-NZ free trade agreement to its military commitment in Afghanistan as well as the recent military-to-military reapprochment between the two countries. Heck, the foreign press was told before the trip that the extension had already been authorised but Mr. Key played cagey with the NZ press. Could that be because he wants to appear to be considerate of opposition voices in parliament when in fact he is not?
Mr. Key did his usual name-dropping act. He met with Karzai and General McCrystal. He met with local leaders. Although he waxed lyrical about what they had to say, he made no mention of what he had to say to them. Did he tell Karzai that his corruption and the drug-running antics of his cronies would not be tolerated? Did he press Karzai on not back-sliding on human rights, especially for wimin and ethnic minorities? Did he query McCrystal on continued civilian casualties at the hands of ISAF forces, and did he make clear to the General what the NZDF understanding of the rules of engagement are? Nothing of the sort has been mentioned, so for all the NZ public knows he could have been exchanging cricket scores and family photographs with the Big Boys.
And then there was the piece d’resistance: John Key fitted out in a journalist flak jacket and helmet, his blood type outlined like a bulls-eye on his chest, grinning like a kid in a GI Joe costume. Then there were the photos of him acting friendly with the pilots on the RNZAF C-130 and acting pensive on the US Blackhawk ‘copter that did the bulk of his tour transfers. Dang. I have no doubt that he needed the body armour when he was not sipping tea with the Poms, but did his minders really think that a photo op in that outfit would come across as warrior-like and decisive? If so, they are clueless because he just looked goofy, somewhat akin to the infamous photo of Democratic candidate Michael Dukakis sitting in a tank turret wearing a helmet in the 1988 US presidential campaign. In both cases the image spells out L-O-O-O-O-O-S-E-R. As for the aircraft photos: staged and contrived from the get-go. He looked like he was on one of those Air NZ tourist charters to the Antartic summer solstice. Another photo op FAIL.
Mind you, the NZDF brass as well as the troops on the ground would have appreciated the gesture, albeit for different reasons. So there was symbolic worth in the venture. It was in its execution where the enterprise failed.
Because they are clueless National PR flacks will congratulate themselves on a job well done in getting their message about the PM out to the masses, and the supplicant invited press will play the role of willful lapdogs by writing positive stories based on National PR releases (in part, because they share the government’s contempt for the intelligence of the general population, and in part because they would like to be invited along on other future junkets of this sort). But the cruel truth is that the exercise showed yet again how far out his depth the PM is when confronting the intricacies of even the most rudimentary aspects of foreign affairs. For those with a better sense of judgement, the exercise was embarrassing, not encouraging. Or as Pauly Fuemana would have said, “how bizzare.”
***THIS POST HAS BEEN UPDATED ON APRIL 17 TO ACCOUNT FOR NEW INFORMATION RECEIVED***
Niwa has announced that a contract to upgrade the research vessel RV Tangaroa has been let to a Singaporean company rather than a NZ-based consortium. The EPMU and Labour Party have criticised the move, citing the fact that local jobs were at stake and a chance to up-skill NZ workers was lost. And of course, the flow-on effects of employing NZ workers is obvious, because they will spend their wages a bit on beer but more on nappies, mortgages, rent and DIY projects. All that is true and reason enough to oppose the Niwa deal, but there is much more to the story. That is because the bottom line boils down to what I shall call a dirty money savings. Here is how it works.
The Niwa chief knob, John Morgan, refused to state what the bids were, but other sources have noted that at $9 million the NZ contractor bid was more than double the $4 million Singaporean bid. Sounds like he got his maths right. Mr. Morgan then went on to say that the Singaporean contractor had a lot of experience and 3000 staff dedicated to the task as well as many resources to do the upgrade, which he claimed was a complex operation that involved cutting holes in the hull of the ship in order to install a dynamic positioning system (DPS) that holds the ship steady and precise over an undersea target in variable conditions (how he thinks that 3000 people will work on that one job is another question, as is the complexity of cutting holes in a boat, but I am just quoting from the NZPA article on the decision).
He defended the decision as a cost-savings bonus for the NZ taxpayer, and the Minister for Research, Science and Technology the vainglorious “Dr” Wayne Mapp (Ph.D.s in Law are not usually addressed as Dr.) pontificated that although he was not involved in the decision he supported it because the NZ consortium was not dependent on that contract (presumably that resource-rich Singaporean outfit was) and, quote, “after all we have an FTA with Singapore.” File that one under “another Mapp moronity.”
Here is why the deal is dirty. Unskilled and semi-skilled Singaporean shipyard workers (e.g. stevedores, drivers, loaders, builders and roustabouts) are paid between SG$10-15 dollars per day. Non-engineer skilled workers (divers, torchmen, pipefitters) may earn double or triple that. They are mostly foreign workers on temporary visas (mainly from Bangladesh, mainland China and India) who cannot bring their families with them and who are housed in containers and squalid dormitories with occupancies of 20-50 men per room and one toilet amongst them (women are not allowed on the docks). They are not allowed to independently organise or collectively bargain. They work 12 hour days and suffer extremely high rates of industrial accidents–over 50 workers died in 2009 from injuries received on the job, and dozens if not hundreds more were crippled by accidents. In the vast majority of cases, seriously injured foreign workers who are unable to return to work are left dependent for months on private charity until their claims for compensation are resolved or are deported once they leave hospital (and often repatriated in any event).
Mr. Morgan is reported as saying that the Singaporean bid, at $30/hour (it is not clear if he is speaking of US, NZ or Singaporean dollars), was half the NZ $60/hour labour costs. But whatever the currency, $30/hour would only apply to supervisory and managerial staff who would not be doing the physical labour involved in installing the DPS system (which would be done by the foreign workers mentioned above). That means that his claims of labour costs savings on which the decision partially rested is either a willful misprepresentation of the true Singaporean figures or, worse yet, a sign that Niwa did not undertake due dilligence in ascertaining the veracity of the $30/hour figure. In other words, if the latter is true then Niwa got fleeced by the Singaporean contractor, who then pocketed the difference between its real labour costs and the $30/hour figure. If the former is true, the Mr. Morgan needs to be held to account for his miserepresentation.
There is a bigger picture to consider. Singapore is an authoritarian state in which political party competition and elections are rigged, freedom of speech is restricted and foreign workers are not covered by the same labour laws as Singaporean citizens. Instruments for foreign worker redress, compensation and mediation are virtually non-existent. The Singaporean lifestyle, so admired by John Key and other acolytes of the Singaporean regime, is based on the gross exploitation of these foreign workers who, after all, build the buildings Singaporeans live and work in, provide the food, transport and maid services they are accustomed to, construct their highways and polish their cars, and staff the hundreds of foreign MNCs the use the country as an operational hub. Foreign workers comprise a quarter of Singapore’s nearly 5 million population, so the economic debt owed to them is great.
That is why the decision is about dirty money savings. Forget the job-related issues in NZ. Niwa’s decision is based on its knowingly countenancing the human rights abuse of a vulnerable group of people in a foreign country. It violates ILO standards, it violates NZ labour law, and it violates nominal notions of decency in doing so. Mrs. Morgan and Mapp may argue that Niwa is saving the NZ taxpayer money, and that it is not responsible for the behavior of foreign contractors, but in doing business with the Singaporean firm it could well wind up with blood on its hands. Put succinctly: the money Niwa saves on the deal comes directly from the sweat and blood of these foreign workers.
None of this would matter if NZ was an authoritarian state unconcerned about human rights and fair labour standards. The problem is, NZ spends a lot of time in international fora banging on about exactly such things. However, this appears to be more a case of “do as I say, not as I do” because NZ in recent years has seen fit to cozy up to regimes like those of Singapore, China and a host of Middle Eastern autocracies, in which the very concepts of universal rights and fair labour standards are not only disputed, but rejected out of hand on “cultural difference” grounds. Well, that may be the case because as Lew so nicely put it a while back, “NZ foreign policy is trade,” but NZ does not have to contribute to the perpetuation of exploitation in foreign cultural contexts, especially if its reputation depends on its rhetorical championing of human rights. That is a matter of choice, and the choice in this instance is clear.
There is such a thing a trading fairly and doing business in an ethical way in which the bottom line is not just about money, but about human decency as well. A restrained rate of profit or reduced savings on cost are often a better guarantee of long term investment than short term profit maximisation or miserliness, and an interest in foreign worker conditions can contribute to the betterment of international business practices. But the choice here has been to save costs rather than stand on principle and improve by example. For a country that prides itself on its international status based upon fairness principles, decisions like this one give the lie to the cheap talk in international confabs.
All of which is to say–shame on both of you, Misters Mapp and Morgan. But then again, we would not expect otherwise.