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Media Link: “A View from Afar” on PRC-Taiwan tensions.

datePosted on 14:50, October 14th, 2021 by Pablo

In this week’s podcast Selwyn Manning and I discuss the upsurge in tensions between the PRC and Taiwan and what are the backgrounds to and implications of them. You can check the conversation out here.

In the years that followed the post 9/11 US invasions of Afghanistan and Iraq, I wrote several essays about how, wittingly or wittingly, Osama bin Laden had successfully employed the well-known guerrilla tactic known as the “sucker ploy” on a grand scale. The sucker ploy is a tactic by which guerrillas commit an outrage or stage a provocation of some sort that draws a disproportionate response from the military that they are fighting, thereby shifting popular support from the latter to the former. A classic example is for guerrillas to shoot at passing military vehicles or aircraft with small arms fire from a village, then retreat into the surrounding countryside while the military responds by annihilating the village and its occupants. 

When the US stayed in Afghanistan after the Taliban were ousted from government and al-Qaeda was eliminated from its territory (end of 2002), and then invaded and occupied Iraq under the false pretense that Saddam Hussein was an ally of al-Qaeda and was going to use weapons of mass destruction on the West or allow al-Qaeda to do so, it took the sucker’s bait. It embarked on a global “war on terrorism” that saw the US and others expend much blood and treasure in places like the Sahel and Sub-Saharan Africa, Syria and Libya, Mesopotamia down to Mali, Kenya and many more places in between and beyond, stretching to Europe and Australasia. The US expended trillions of dollars and thousands of lives on these “forever” or “endless” wars, feeding a relentless military-industrial complex while spinning off the militarisation of US policing and some sectors of civil society that is creating the conditions for civil war, hints of which have already been seen over the last couple of years.

Whatever goodwill existed towards the US in the immediate wake of 9/11, it gradually dissipated as a result of US foreign policy recklessness and arrogance over the next twenty years. Yet partisan logics of saving face by “staying the course” or, if that is not enough, patriotically respecting the sunk costs invested rather than simply “cutting and running” locked the US into continuing the folly of pursuing forever wars in far-off places with little strategic value or which posed no existential risk to the country. Those wars have not resulted in any significant change favorable to the geopolitical position of US but have contributed to the polarisation of its internal politics.

Meanwhile US adversaries like the PRC and Russia built and rebuilt their military forces into peer competitors of the US and expanded their spheres of influence. Mostly as a result of US bungling, Russia is now the most important extra-regional power in the Levant and North Africa and is poised, however ironically, to become a major interlocutor between the Taliban and the global community. Chinese economic and diplomatic influence is world-wide in scope and its aggressive military presence is now a constant in East and Southeast Asia as well as along its land borders. Other actors such as North Korea, Iran and Turkey have been emboldened by perceived US weakness while traditional US allies fret about the stability of the international order without its central presence as a stabilizing force.

The Great Satan has seemingly turned into a Paper Tiger.

It gets worse. Across the world authoritarianism has replaced democracy as the dominant political form. Rather than embrace democracy as an antidote to the hatreds that produced 9/11, autocrats of all types have taken advantage of the post 9/11 moment to impose their rule. In another irony, this includes the US, which nurtured the conditions that led to the election of a bigoted sociopathic narcissist to the presidency and the unleashing of long pent-up hatreds within the body politic. “America First” in reality means “America in Retreat” into neo-isolationism and xenophobic defenses of borders, Anglo-Saxon Christians within those borders, economic nationalism and, when it comes to foreign relations, coddling of foreign dictators who shared the former president’s biases and/or his transactional view of how politics should be conducted. The Obama interregnum notwithstanding (and even he seriously compromised on the original idealism of his foreign policy perspective, which won him a Nobel Prize), the US continued to cast a blind eye on the misdeeds of “friendly” dictatorships like the Egyptians, Jordanians, Saudis or Emiratis while barking about those in Iran, Cuba, Syria and Venezuela (and even there, with relatively little bite).

US political/diplomatic leadership is on the wane at home and abroad. The truth is inescapable: since 9/11 the US has been in decline, for the most part due to its own ignorance and excesses.

Needless to say, there were other intervening factors and variables that contributed to the slow-moving, partial success of bin-Laden’s strategy. Sure, he was not around to see it come to fruition. Sure, there has not been a global awakening of Islamicism that threatens the socio-economic and political parameters of most established nation-states. Wahhabism and Salafism are not the dominant sects in the Muslim world. So bin-Laden’s strategy failed in that it did not produce the specific results that he desired. But 9/11 did set into action a chain of events that has left the international community very different that what was before, with the US diminished and divided and no longer the undisputed global “hegemon.” That must be acknowledged.

A key result of this decline is the collapse of the concept of liberal internationalism as a guiding foreign policy principle in the US. This principle, which long enjoyed bipartisan support in US foreign policy circles and which is premised on the notion that the combination of market economies and democratic governance is the best political-economic form (regime), was thought to be imposable by external actors—meaning the US and its democratic capitalist allies—on unstable or failed underdeveloped states where extremism was believed to breed and prosper. From that belief came the pursuit of nation-building and regime change as foreign policy objectives, even if the targets of such ambition had no history with democracy, maintained pre-modern economic, cultural and social structures in which notions of consent and compromise (two hallmarks of all democratic social interaction) were absent, and were ill-disposed to have an occupying force impose anything on them other than temporary physical security and material aid.

The futility of military and civilian “capacity-building” in such contexts is summed up by an essay written by a former US Army Green Beret about his time in Afghanistan titled “Throwing Rocks at a Fire.” The essay recounts the story of a fire in an Afghan commando barracks at an outpost outside the capital. The fire was started by a gas burner used to make morning tea, which was set on the floor of the barracks and surrounded by blankets pulled from beds for the commandos to sit on (the preferred to have their tea on the floor rather than on tables when inside due to the cold weather, much as they did in their home villages). One of them inadvertently knocked the gas burner over, which set fire to a blanket. Rather than smother the fire with dirt or water or toss the burner out a window or door, the commandos–the best of the best Afghan soldiers–threw more loose blankets on the fire, which then rapidly spread to the barracks beds and wooden floor and walls (which unlike village huts, were not made from earthen and clay materials). They then ran out of the building. When the SF trooper arrived, he found the commandos throwing rocks at the fire through the front door of the now fully engaged building. It burnt to the ground.

Rather than chalk it up to the actions of ignorant primitives, my reading is that for the Green Beret the moral of the story was the futility of attempting to impose modernity, to include modern concepts of rationality and logic, on deeply rooted pre-modern cultures and societies that were uninterested in the social aspects of so-called modern democratic living. Learning to fight better with modern weapons was one thing, but re-learning basic forms of social engagement was quite another. Their traditions worked fine for them and imposition of other forms of social organization only complicated things and turned out bad in the end. In hindsight, the Green Beret came to understand their view, but by then he was physically, psychologically, occupationally and temporally far away from that outpost.

As it turns out, for all the lip service paid to promoting democracy, the world is now governed by more authoritarians that democrats, and many of the places in which authoritarianism has flourished are those in which the US intervened the most heavily. As for the promotion of market economics, the major consequence has been greater global income inequality within a context of increased concentration of commodity production, demand and exchange. Contrary to what its adherents and proponents claim, market capitalism does not lead to a “rising tide raising all boats” phenomenon and trickle down (supply side) economics does not lead to a watering of the seeds of a budding middle class emerging out of poverty world-wide. Instead, it has baked in a socio-economic landscape of structural disparity and deprivation juxtaposed against and subordinate to a parallel world of opulence and waste.

In sum, there is very little that is politically or economically “liberal” about the world today.

More can be added to this litany of unhappiness but for the moment the point is this: the era of liberal internationalism has come to an end as both a practical objective and a foreign policy theory. It remains to be seen what will emerge in its stead once the repercussions of the pandemic and US decline fully filter throughout the global community. But therein lies a basis for hope, because in a multipolar world in which no one actor can impose its vision of the “proper” order of things and yet the need for international cooperation is more apparent than ever, perhaps the makings of more equitable and balanced global society can be made organically rather than by imposition even in the face of cultural and social difference.

Selwyn Manning and I focus the discussion of the internal and external power struggles that could ensue once the US military leaves. You can find it here.

Between appeasement and confrontation.

datePosted on 16:00, May 14th, 2021 by Pablo

The worm has turned when it comes to the relationship between the People’s Republic of China (PRC) and the West. Something has happened to sour the relationship beyond repair, and the strains are not limited to US-PRC, Australian-PRC or UK-PRC bilateral relations. Other countries, notably in the EU and Southeast Asia and including traditional rival India, have replaced two decades of offering warmth and goodwill with increasingly frosty and suspicious attitudes towards the PRC. That seems to be due to a combination of PRC militarism and belligerence in places like the South China Sea, Hong Kong, Taiwan and the Line of Control in the Himalayas separating it from India, but also as a result of Chinese sharp power influence operations in liberal democracies, its coercive trade diplomacy, ongoing Chinese cyber espionage, cyber theft and cyber warfare campaigns launched against a swathe of countries (including New Zealand), its dollar and debt diplomacy in Africa and South America where debt for equity swaps are accompanied by the colonisation by Chinese labor of critical infrastructure sites in countries lacking the resources to undertake large scale projects like port modernisation or power generation, and the adoption of “wolf warrior” diplomacy where insults and bullying have become mainstays of PRC diplomatic discourse, particularly but not limited to the issue of human rights and adherence to international norms.

With regards to the latter, in some cases Chinese behaviour is so egregious, such as stationing hundreds of fishing boats outside the marine reserve surrounding the Galapagos Islands or off the southeastern and southwestern coasts of South America and Southern Africa, often using the cover of night to poach in the Exclusive Economic Zones (when not territorial waters) of various countries, that countries otherwise prone to welcome the PRC as an antidote to traditional US or colonial power dominance have started to review their positions with regards to it.

The faith once placed in incorporating the PRC as a good global citizen into the community of advanced nations by admitting it into international organisations such as the World Trade Organisation and giving it leadership roles in others like the World Health Organisation and various UN agencies has not yielded the results that were hoped for. Instead, the errors of so-called modernisation theorists of the 1950s were repeated: rather than encouraging Chinese democracy by exposing it to “Western” values and helping expand its middle class on the back of increased international trade opportunities and the corresponding rise in material opportunities associated with it–something that was thought would lead to a better appreciation by and reproduction of democratic values by those emerging middle classes who would grow to see democracy as the political equivalent of the “free” economic market–under Xi Jinping the PRC has become more authoritarian, more state capitalist, more territorially expansionist, more normatively untrustworthy and more militarily bellicose. Instead of a global good citizen, it is now increasingly seen in the West as a very large bully on the world stage.

This does not absolve the US and various colonial powers of their histories. But it points to the fact that the thirty year period of relative inter-state peace after the end of the Cold War is coming to its conclusion. What lies ahead is unknown but it is likely to be marked by conflict of one sort or another or a combination thereof. The strategic postures of the US, UK, France and Australia all now explicitly identify the PRC as the primary military “peer competitor” (i.e. the enemy) that they must prepare to fight. Even NZ’s defense posture has shifted from unconventional warfare scenarios against irregular non-state actors to involvement in interstate conflicts (although the focus on peacekeeping operations remains). Reflected in defense procurement programs over the next ten years, the shift in war planning is answered by Chinese redoubling of its efforts to expand its fleet and improve the sophistication and size of its land and air-based forces. It also has renewed its bilateral military ties with Russia and courted the alliance of a variety of strategically important authoritarians regimes such as Iran and Turkey. It seems that it is only a matter of time before either by miscalculation, misperception or misadventure it will be involved in an armed engagement with a Western or Western-backed adversary, at which point the escalatory and expansionist potential of such conflict is limited only by the threat of nuclear war.

This puts small states like NZ between a rock and hard place. The diplomatic pressure is being felt in Wellington and Nanaia Mahuta’s speech to the China and New Zealand Business Council reflected the attempts to massage the stresses now apparent in its relationship with the PRC. The question is whether NZ can continue to employ its “softly-softly” approach in the face of the Western turn against the PRC and the latter’s increasingly acerbic responses to criticism of its actions at home and abroad. There can be little doubt that at this juncture if push comes to shove NZ will side with the West as a matter of values and principle. It has signalled as much and, with its commitment to diversifying its trade relations outside of the bilateral ties with the PRC, is setting the pragmatic grounds for doing so even if the short term costs of any deterioration in the relationship with the PRC proves onerous and wide-spread throughout the economy. But so long as the quarrel between Great Powers is limited to podiums and pens, then NZ can hope to finesse the contradictions in its strategic posture.

The answer on how to do so may lay in thinking of NZ’s position in the face of the US/West-PRC rivalry as a strategic balancing act in which the fixed points are appeasement versus confrontation and the slackline between the two is cooperation. The key is to find an equilibrium point along that line given specific issues and changing circumstances. There is plenty of common ground for NZ to serve as a honest broker and fair interlocutor when it comes to PRC-West relations even as it reaffirms its commitment to Western liberal values. Pragmatism and principle will undoubtably factor into the centre of gravity upon which to balance NZ foreign policy in that regard. The goal is to be nimble when demonstrating a desire to cooperate on selected issues given the competing demands by trade and security partners to appease or confront each other. Sometimes the equilibrium point may be closer to the PRC position, sometimes it will tilt in favour of the Western stance. They key to success lies in refraining from entering into broadly binding agreements or commitments and to adopt an issue-by-issue, case by case approach that serves to insulate any particular bilateral decision from the larger geopolitical struggles surrounding it.

That may turn out to not be feasible if the contending Great states do not accept NZ’s “siloed” approach and will not be a permanent foreign policy solution given the apparent inevitability of a Great Power stand-off in the medium term future. But it provides a means of finding the optimal equilibrium point on the diplomatic slackline that is NZs transitional position vis a vis China and the West until the new multipolar world system is firmly established.

Facing facts.

datePosted on 16:09, April 24th, 2021 by Pablo

The critical reaction of some conservative commentators and politicians about Nanaia Mahuta’s “Taniwha and Dragons” speech is focused on the double premise that NZ is “sucking up” to the PRC while it abandons its obligations to its 5 Eyes intelligence partners. Some have suggested that NZ is going to be kicked out of 5 Eyes because of its transgressions, and that the CCP is pulling the strings of the Labour government.

These views are unwarranted and seemingly born of partisan cynicism mixed with Sinophobia, racism and misogyny (because Mahuta is Maori and both Mahuta and PM Ardern are female and therefore singled out for specific types of derision and insult). Beyond the misinterpretations about what was contained in the speech, objections to Mahuta’s invocation of deities and mythological beasts misses the point. Metaphors are intrinsic to Pasifika identity (of which Maori are part) and serve to illustrate basic truths about the human condition, including those involved in international relations. As a wise friend said to me, imagine if a US Secretary of State was an indigenous person (such as Apache, Cherokee, Hopi, Mohican, Navaho, Sioux or Tohono O’odham). It is very possible that s/he would invoke ancestral myths in order to make a point on delicate foreign policy issues.

In any event, this post will clarify a few facts. First, on military and security issues covering the last two decades.

New Zealand has twin bilateral strategic and military agreements with the US, the first signed in 2010 (Wellington Declaration) and the second in 20012 (Washington Declaration). These committed the two countries to partnership in areas of mutual interest, particularly but not exclusively in the South Pacific. New Zealand sent troops to Afghanistan as part of the US-led and UN-mandated occupation after 9/11, a commitment that included NZSAS combat units as well as a Provincial Reconstruction Team (PRT) in Bamiyan Province that mixed humanitarian projects with infantry patrols. More than 3500 NZDF troops were deployed in Afghanistan, at a cost of ten lives and $300 million.

Similarly, NZ sent troops to Iraq after the US invasion, serving in Basra as combat engineers in the early phase of the occupation, then later as infantry trainers for Iraqi security forces at Camp Taji. More than 1000 NZDF personnel were involved in these deployments, to which can be aded the SAS operators who deployed to fight Saddam Hussein’s forces and then ISIS in Iraq and Syria after its emergence. There are a small number of NZDF personnel serving in various liaison roles in the region as well, to which can be added 26 NZDF serving as peacekeepers in on the Sinai Penninsula (there are slightly more than 200 NZDF personnel serving overseas at the moment). In all of these deployments the NZDF worked with and now serves closely with US, UK and Australian military units. The costs of these deployments are estimated to be well over $150 million.

The NZDF exercises regularly with US, Australian and other allied partners, including the US-led RimPac naval exercises and Australian-led bi- and multilateral air/land/sea exercises such as Talisman Saber. It regularly hosts contingents of allied troops for training in NZ and sends NZDF personnel for field as well as command and general staff training in the US, Australia and UK. RNZN frigates are being upgraded in Canada and have contributed to US-led freedom of navigation exercises in the South China Sea (against PRC maritime territory extension projects) and anti-piracy and international sanctions enforcement missions in the Persian Gulf. Among the equipment purchases undertaken during the last two decades, the NZDF has bought Light Armoured Vehicles, the infamous “LAVs” (or Strykers, as they are known in the US), Bushmaster armoured personnel carriers, C-130J “Hercules” transport aircraft, P-8 “Poseidon” anti-submarine warfare and maritime surveillance aircraft, Javelin anti-tank portable missiles and a range of other weapons from 5 Eyes defence contractors. In fact, the majority of the platforms and equipment used by the NZDF are 5 Eyes country in origin, and in return NZ suppliers (controversially) sell MFAT-approved weapons components to Australia, the US, UK , NATO members, regional partners and some unsavoury Western-leaning regimes in the Middle East.

After the estrangement caused by the dissolution of the ANZUS defence alliance as a result of NZ’s non-nuclear decision in the mid-1980s, a rapprochement with the US began in the aftermath of the 9/11 attacks. The 5th Labour government sought to capitalise on the moment and sent troops into Afghanistan and later Iraq using the cover of UN resolutions to deflect political attacks. That led to improved military-to-military relations between the US and NZ, something that has been deepened over the years by successive NZ governments. The intelligence relationship embodied in the Echelon/5 Eyes agreement was slightly curtailed but never ended even when ANZUS died, and gradually was restored as the main security partnership to which NZ was affiliated. Now the NZDF is considered a small but valued military and intelligence partner of the US and other 5 Eyes states, with the main complaints being (mostly from the Australians) that NZ does not spend enough on “defence’ (currently around 1.5 percent of GDP, up from 1.1 percent under the last National government, as opposed to 2.1 percent in Australia, up from 1.9 percent in 2019) or provide enough of its own strategic lift capability. The purchase of the C-130J’s will help on that score, and current plans are to replace the RNZAF 757 multirole aircraft in or around 2028.

The dispute over US warships visiting NZ because of the “neither confirm or deny” US policy regarding nuclear weapons on board in the face on NZ’s non-nuclear stance was put to rest when the Arleigh Burke-class destroyer USS Sampson (DDG-102) participated in the RNZN 75th anniversary celebrations in November 2016 after an agreement between the then National government and US Department of Defense on assurances that it was not carrying or using nukes as weapons or for propulsion. As if to prove the point of bilateral reconciliation, on the way to the celebrations in Auckland DDG-102 diverted to provide humanitarian support to Kaikura earthquake relief efforts after the tremor of November 14th (the week-long anniversary fleet review involving foreign naval vessels began on on November 17th). A Chinese PLAN warship also participated in the anniversary Fleet Review, so the message conveyed by the first official NZ port visit by a US warship in 30 years was made explicitly clear to the PRC.

The fact is this: the relations between NZ and its 5 Eyes partners in the broader field of military security is excellent, stable and ongoing. That will not change anytime soon.

As for intelligence gathering, NZ is a core part of the 5 Eyes signals intelligence collection and analysis network. Over the years it has moved into the field of military signals intelligence gathering as well as technical and electronic intelligence-gathering more broadly defined. More recently, in light of the emergence of non-state terrorism and cyber warfare/espionage threats, the role of 5 Eyes has been upgraded and expanded to counter them. To that end, in the last decade NZ has received multiple visits from high-ranking intelligence officials from its partners that have dovetailed with technological upgrades across the spectrum of technical and electronic signals intelligence gathering. This includes addressing issues that have commercial and diplomatic sensitivities attached to them, such as the NZ decision to not proceed with Huawei involvement in its 5G broadband rollout after high level consultations with its 5 Eyes partners. More recently, NZ has been integrated into latest generation space-based intelligence collection efforts while the focus of the network returns to more traditional inter-state espionage with great power rivals like China and Russia (we shall leave aside for the moment the benefits that the GCSB and NZDF receive from Rocket Lab launches of US military payloads but we can assume that they are significant).

As routine practice, NZSIS and GCSB officers rotate through the headquarters of 5 Eyes sister agencies for training and to serve as liaison agents. Officers from those agencies do the same in NZ, and signals engineers and technicians from 5 Eyes partners are stationed at the collection stations at Waihopa and Tangimoana. GCSB and SIS personnel also serve overseas alongside 5 Eyes employees in conflict zones like Afghanistan and Iraq. While less standardised then the regular rotations between headquarters, these type of deployments are ongoing.

5 Eyes also maintains a concentric ring of intelligence partners that include France, Germany, Japan, Israel, and Singapore. These first-tier partners in turn use their respective capabilities to direct tactical and strategic intelligence towards 5 Eyes, thereby serving as the intelligence version of a “force multiplier” in areas of common interest. One such area is the PRC, which is now a primary focus of Western intelligence agencies in and outside of the Anglophone world. This common threat perception and futures forecasting orientation is shared by the NZ intelligence community and is not going to change anytime soon unless the PRC changes its behaviour in significant ways.

For its part, the PRC has no such complex and sophisticated intelligence networks with which to avail itself. It has intelligence partners in North Korea, Russia, Iran and other small states, but nothing on the order of 5 Eyes. As a result, it is much more reliant on human intelligence collection than its rivals in the 5 Eyes, something that has become a source of concern for the 5 Eyes community and NZ in particular (as the supposed weak link in the network and because of its economic reliance on China, of which more below). While the PRC (and Russia, Israel and Iran, to name some others) are developing their cyber warfare and espionage capabilities, the fact is that the PRC continues to rely most heavily on old-fashioned covert espionage and influence operations as well as relatively low tech signals intercepts for most of its foreign intelligence gathering. If I read intelligence reports correctly, NZ’s counter-espionage and intelligence efforts are focused on this threat.

In a word: NZ is committed to the 5 Eyes and has a largely Western-centric world view when it comes to intelligence matters even when it professes foreign policy independence on a range of issues. That is accepted by its intelligence partners, so transmission (of intelligence) will continue uninterrupted. It is in this light that Mahuta’s comments about NZ’s reluctance to expand 5 Eyes original remit (as an intelligence network) into a diplomatic coalition must be understood. There are other avenues, multilateral and bilateral, public and private, through which diplomatic signaling and posturing can occur.

That brings up the issue of trade. Rather than “sucking up” to China, the foreign minister was doing the reverse–she was calling for increased economic distance from it. That is because New Zealand is now essentially trade dependent on the PRC. Approximately 30 percent of NZ’s trade is with China, with the value and percentage of trade between the two countries more than tripling since the signing of the bilateral Free Trade Agreement in 2008. In some export industries like logging and crayfish fisheries, more than 75 percent of all exports go to the PRC, while in others (dairy) the figure hovers around 40 percent. The top four types of export from NZ to the PRC are dairy, wood and meat products (primary goods), followed by travel services. To that can be added the international education industry (considered part of the export sector), where Chinese students represent 47 percent of total enrollees (and who are a suspected source of human intelligence gathering along with some PRC business visa holders).

In return, the PRC exports industrial machinery, electronics (cellphones and computers), textiles and plastics to NZ. China accounts for one in five dollars spent on NZ exports and the total amount of NZ exports to China more than doubles that of the next largest recipient (Australia) and is more than the total amount in value exported to the next five countries (Australia, US, Japan, UK and Indonesia) combined. Even with the emergence of the Covid pandemic, the trend of increased Chinese share of NZ’s export markets has continued to date and is expected to do so in the foreseeable future.

Although NZ has attempted to diversify its exports to China and elsewhere, it remains dependent on primary good production for the bulk of export revenues. This commodity concentration, especially when some of the demand for export commodities are for all intents and purposes monopolised by the Chinese market, makes the NZ economy particularly vulnerable to a loss of demand, blockages or supply chain bottlenecks involving these products. Although NZ generates surpluses from the balance of trade with the PRC, its reliance on highly elastic primary export commodities that are dependent on foreign income-led demand (say, for proteins and housing for a growing Chinese middle class) makes it a subordinate player in a global commodity chain dominated by value-added production. That exposes it to political-diplomatic as well as economic shocks not always tied to market competition. Given the reliance of the entire economy on primary good exports (which are destined mainly for Asia and within that region, the PRC), the negative flow-on effects of any disruption to the primary good export sector will have seriously damaging consequences for the entire NZ economy.

That is why the Foreign Minister spoke of diversifying NZ’s exports away from any single market. The only difference from previous governments is that the lip service paid to the “eggs in several baskets” trade mantra has now taken on urgency in light of the realities exposed by the pandemic within the larger geopolitical context.

Nothing that the Labour government has done since it assumed office has either increased subservience to China or distanced NZ from its “traditional” partners. In fact, the first Ardern government had an overtly pro-Western (and US) slant when coalition partners Winston Peters and Ron Mark of NZ First were Foreign Affairs and Defence ministers, respectively. Now that Labour governs alone and NZ First are out of parliament, it has reemphasised its Pacific small state multilateralist approach to international affairs, but without altering its specific approach to Great Power (US-PRC) competition.

The situation addressed by Mahuta’s speech is therefore as follows. NZ has not abandoned its security allies just because it refuses to accept the Trumpian premise that the 5 Eyes be used as a diplomatic blunt instrument rather than a discreet intelligence network (especially on the issue of human rights); and it is heavily dependent on China for its economic well-being, so needs to move away from that position of vulnerability by increasingly diversifying its trade partners as well as the nature of exports originating in Aotearoa. The issue is how to maintain present and future foreign policy independence given these factors.

With those facts in mind, the Taniwha and Dragon speech was neither an abandonment of allies or a genuflection to the Chinese. It was a diplomatic re-equilibration phrased in metaphorical and practical terms.

Nanaia Mahuta, NZ’s Minister of Foreign Affairs, gave a speech that was notable for two things. On the one hand she spoke of diversifying NZ’s trade relations away from the domination of one market (read: the PRC). On the other hand she expressed a desire to return the 5 Eyes signals intelligence collection and sharing network to its original charter rather than allow it to be used a diplomatic foil by the other partners in the network (which was brought about by a couple of critical 5 Eyes statements on events in the PRC). To be clear: the 5 Eyes is an intelligence network, not a diplomatic coalition or military-security alliance, so using it for diplomatic signalling and posturing is folly. Not only is NZ the most vulnerable of the 5 Eyes partners to Chinese retaliation, but the move to use 5 Eyes as a diplomatic tool was an initiative that came from a Trump administration that was uninterested in the complexities of the relations US partners maintained with China and very much interested in pressing the partners to bend a knee to Trump’s desire to squeeze China on all fronts.

In other words, it was an absurd and unnecessary initiative that complicated things for the spy agencies involved and undermined the positions of the diplomats who normally would conduct such types of public diplomacy. As it turns out, Winston Peters and Ron Mark of NZ First were the Ministers of Foreign Affairs and Defence at the time of the first US request to use the 5 Eyes to issue joint condemnatory statements about Chinese behaviour in Hong Kong and vis a vis the Uyghers in Xinjiang Province. They wanted to keep in the US good graces and so acceded to the request, something that Mahuta agreed to with regards to a second statement very early on in her tenure as Foreign Minister. But after very blunt warnings from the Chinese about NZ’s meddling in its internal affairs, it is clear that a more calibrated, balanced approach was required. Her speech delivered on that score.

It did so because it counterpoised the need to return to the original 5 Eyes charter with a declaration of intent with regard to diversifying trade away from the PRC. There is irony in the move because it was under the 5th Labour government where NZ’s trade dependence on the PRC was deepened and consolidated via the signing of a bilateral Free Trade Agreement (in 2008). Thus, while former PM Helen Clark may have played a role in getting NZ to push to restore the 5 Eyes charter due to her statement in September 2020 that NZ was losing its independence within it, she also was being rebuked for ignoring the concerns of many that the asymmetric nature of the NZ-PRC FTA would come back to haunt NZ on both the economic and diplomatic fronts.

The speech went on to reaffirms NZ’s foreign policy independence and its commitment to multilateralism, democratic values and a South Pacific orientation. Coming just before a visit by the Australian foreign minister, it served as a framing device for bilateral discussions. More generally, it helped re-frame how NZ proposes to approach the world over the next few years. The key issue will be how it implements, much less achieves, what is essentially a new balance in the conduct of NZ foreign affairs.

In any case, here is the podcast with Selwyn Manning on the subject.

Selwyn Manning and I dedicated this week’s video podcast to the potential emergence of rival blocs within the transitional process involved in the move from a unipolar to a multipolar international system currently underway. However one characterises the phenomenon–autocracies versus democracies, East versus West, colonial versus post-colonial–the global order is increasingly bifurcated and dichotomous. Although a move to multipolarity is seemingly beneficial because it is theoretically more stable over the long term (at least when compared to bi- and unipolar systems), the consequences of the orchestrated shift into adversarial alliance blocs may be detrimental to peace and stability over the short term. You can catch the show here.

In last week’s “A View from Afar” podcast Selwyn Manning and I discuss the failure of NZ’s security services to detect a local white supremacist openly describing on a well known on-line extremist forum how he would use car bombs to “commemorate” the March 15 terrorist attacks in Christchurch, and then we are joined by journalist Ollie Neas to hear more about the role Rocket Lab plays for the US military space program as well as some the regulatory issues surrounding that process by which military payloads are approved by the NZ government. You can find the video here.

In this week’s podcast Selwyn Manning and I discuss the ethics and practicalities involved in the so-called “conflict industry.” It includes a discussion of the who and what of the “kill chain” and the implications of Rocket Lab’s position as a major US military logistical provider. You can find it here.

US capitalists as political saviours.

datePosted on 14:19, March 2nd, 2021 by Pablo

Having watched and read about the Conference of the Paranoid, Angry and just plain Crazy (CPAC), including the Orange Merkin’s return to the political centre stage, I am more convinced then ever that if US conservatism, and indeed the US itself, is to find its way back to some semblance of stability, it is US capitalists who will have to lead the charge. This may seem odd for a left-leaning blog to say, but the logic underlying the rescue lies in some structural imperatives and some non-structural pathologies.

As has been written before in these pages, the State and Society in the US and places like NZ are capitalist because they depend on a profit-driven system of capital accumulation and distribution for the welfare of capitalists and workers alike. Capitalists invest and pay wages out of profits, so both overall economic and specific wage growth depend on the continuation of the profit-investment cycle. Capitalists borrow from other capitalists in order to grow their businesses, which in turn help expand the web of opportunity (measured in employment and/or higher wages) for wage-earners down the productive chain. In other words, the material welfare of everyone depends on the investment decisions of capitalists.

This is the structural imperative: the State and Society are capitalist because of their material dependence on a system of private accumulation and economic decision-making. Even state capitalist systems abide by the immutable laws of the profit-investment cycle, but in the US (and NZ) the vast majority of decisions about accumulation and distribution ultimately rest with capitalists. So long as capitalists invest and workers produce so that profitability is sustained, current welfare and future growth is safeguarded.

In order to maintain this cycle and encourage capitalists to re-invest in the domestic economy, the State uses tax and social policy to sustain economic growth and otherwise frame the investment “climate” in ways conducive to investor confidence. The ways in which it can do so and the effectiveness of what it does is influenced, when not determined, by the political and social climate of the current moment and the outlook for the future. That is because above all, capitalists want two things in tandem: stability and certainty over time. Socio-economic and political stability lends certainty to the investment environment, which encourages regular rates of investment and return on which to make future decisions on investment and wage-setting. The more this becomes a self-perpetuating cycle, the more a capitalist nation-state grows and prospers, thereby reaffirming the utility of the economic model under specific political conditions.

That is the notion that lies at the heart of classic liberalism: the combination of market-driven economies and democratic political institutions is considered to be the most preferable (or least bad) political-economic model because it places (theoretically at least) a premium on private choice and individual freedom. Within parameters broadly set by a State led and managed by a political bureaucracy, capitalists chose where to invest and workers chose where to work given where investment flows. Or at least that is the general idea.

Here is where the superstructural problem starts for the US. Under Trump, the Republican Party has increasingly become untethered from its pro-business bias and devolved into a national-populist cult of personality. The events of January 6 and sociopathic displays at CPAC–displays not isolated to Trump himself–clearly demonstrate that conservatism in the US is no longer based on pro-market ideologies and an understanding of the structural dependence of the State and Society on Capital. Instead, it is now the fevered product of a hodgepodge of conspiracy theories, religious opportunism, racism, bigotry, prejudice and xenophobia, with many of these inimical to maintaining business growth. Trump is the poster-boy of this collective derangement but the GOP is awash in it far beyond him.

That is bad for business. The threat of irrational political leadership and the distinct and ongoing possibility of civil unrest, including irregular collective violence, undermines the stability-certainty cycle because there is a mutual or co-dependence between the political superstructure and the economic base. Political and social instability can and often does lead to economic instability, something that is bad for all concerned.

Under such conditions overall demand drops, many businesses slow production, workers are laid off and investors hedge, sell and take profits rather than make long-term investment plays. Shorter investment horizons add to market uncertainties, which in the US is compounded by the practices of “shorting” stocks (whereby anticipating further value losses the investor borrows stock and sells it at current market value in anticipation of buying it back a future lower price before the loan expiration date) and stock buy-backs (where companies use profits to buy stocks in the company in order to reduce the number of stocks freely available and thereby squeeze the stock price upwards).

Both of these are forms of speculation rather than productive investment and are a hallmark of the US financial markets. They have also attracted the attention of so-called mom and pop “retail” or “day” traders and semi-organised small investor groups whose goals are individual self-enrichment rather than contributing to industry profitability, job creation, technological innovation or overall economic growth. These speculative practices by small and large investors have a negative impact on investment, employment and wage stability, further undermining popular faith in the economic system and the political edifice that serves and protects it.

The combination of anarchic (and self-serving) financial market behaviour and increasingly anti-business fanaticism in Republican/conservative ranks (think of the constant attacks on the techno-oligarchy for de-platforming extremist speech on social media) has attracted the negative attention of credit rating agencies, where debates about lowering the US government credit rating from AAA (outstanding) to something else, previously unthinkable for the global reserve currency issuer, are now common practice. When combined with the possibility of labour conflicts and industrial slowdowns tied to civil unrest, the rise of deranged demagogic politics within the US political Right is a threat to, literally, business as usual.

It is said that, according to the invisible hand of the market, economic actors are self-interested maximisers of opportunity and that the sum result of their self-interested actions clears the market at the collective level. That may or may not be true. What is true is that the “market” involves political as well as purely economic factors and agents, and when political actors interfere with the the profitability of self-interested maximisers of economic opportunity, then measures must be taken to mitigate or overcome those political obstacles.

For US capitalists the problem is not one of class struggle but about class survival. It is not about class war but about self-preservation. The threat to their status comes not from the working classes radicalised by anti-capitalist ideologies but by self-professed capitalist supporters. Not all supporters of capitalism are capitalists themselves or understand the relationship between capital accumulation and distribution at a macro level, and many do not add value and wealth to society but in fact subtract value and wealth from it (be it in their rent-seeking microeconomic behaviours or other forms of myopic malfeasance). Moreover, US capitalist classes are variegated and often in conflict, with ascendent and descendent class fractions competing for political as well as economic dominance (think high tech versus industrial manufacturing elites).

Trump and his supporters represent a large but descendent segment of the capitalist class constellation, but they are not the only or the dominant faction and are a clear threat to the interests of other (ascendent) capitalist class factions (again, think of the techno-oligarchy). Not all corporate elites in the US favour Trump’s behind-the-wall, low skill, low education, industrial-era blue collar form of economic nationalism, and many see it as a simple wave to the past in the face of (and impediment to) an automated and transnationalised productive future. The political fight is consequently as much more or within the capitalist classes as it is between them and the working/subaltern classes and, however couched in the language of cultural conflict and competing value systems, that fight is microcosmically distilled in the struggles over the direction of the Republican Party.

Let me be clear. This does not mean that anti-Trump capitalist elites are good people or interested in the overall welfare of the nation. People like Jeff Bezos and Elon Musk are as much innovative exploiters of the many as they are creators of wealth and opportunity for some. The entire financial industry is populated by selfish people and greedy logics and is in desperate need of major reform (since the post 2008 crash reforms were cosmetic at best). But the necessity of the situation dictates that these type of people be seen as tactical allies in the fight against neo-fascism at a time when progressive forces do not have the strength to help stem the deterioration of the American Right. In other words, desperate times require desperate measures, and the appeal to anti-Trump capitalists is one such thing. Nothing more.

In some countries, the military serves as the saviour of economic elites under stress. In the US that possibility used to be dismissed as laughable but in recent years became a topic of discussion. Although it continues to be seen as a remote option, the ongoing viability of national-populist sentiment in the Republican Party and emergence of an insurrectionist movement within broader political Right circles keep alive the issue of external intervention in the discussion about how to rescue that side of the political system from itself.

This is why US capitalists have to ride to the rescue of the Republican Party. If they do not do so then others may have to, and it will not be revolutionary workers or the peasantry who will be the ones to step up. Inviting military intervention could be catastrophic to the Nation, assuming for a second that the US military would even consider such a move. Social movements will not have the clout to impress Republicans into reform and change away from what they have become. It is therefore up to capitalists to undertake the task.

The Republican rescue involves tough love. In order to save it, the GOP must be broken from the grasp of the national-populists, cultists, MAGA morons and conspiracy theorists. The best way to do so is with the threat or use of a specific type of capital strike. The corporate elite need to threaten the Republican Party with a complete withdrawal of political funding if Trump and his acolytes are not purged. If that threat is not heeded then the funding should be withdrawn, preferably before the next election cycle begins.

The insurance policy to what otherwise would seem to be a risky strategy is the Democratic Party and Biden administration. For all the talk of socialists and radical Leftists, capitalists know that their bread is buttered by the structural dependence of the State and Society on Capital, and Democrats clearly understand this fact. US capitalists may have a more restrained partner in Democrats and may need to concede more on issues of accumulation versus distribution when they are in power, but at least the Democrats are not led by an irresponsible and utterly self-serving myopic cabal that no longer seems to understand the bread/butter relationship.

One gets the feeling that some of this may already be going on. But to be effective the capitalist political strike against the Republican MAGA wing must be public and comprehensive in scope. Winks, nods and quiet backhanders will not suffice. The move has to be out in the open, at least among the economic and political elites.

If that does not happen or does not work to kick the MAGA morons to the curb, then the possibility of a real capital strike must be considered. It can come in the form of a Wall Street sell-off/downturn manipulated by interests most closely associated with the Republican Party or industry slow-downs in regions where Republican support is strongest (say, places where the fossil fuel industry is dominant). Consumer and advertiser boycotts of and slowdowns in supply chain servicing of privately held companies affiliated with Trump are additional forms of capitalist strike.

Needless to say, however sector-specific any economic downturn will be seen over the short-term as a rebuke of the Biden administration, but if quiet assurances are made as to the real intent of the ploy, then both the administration and the productive sectors involved will survive the moment. After all, the goal is to send a message to the Republican political establishment that business will no longer tolerate the national-populist threat to making money, not to kill off profit-making entirely.

In a weird way, this ploy should come naturally to Corporate America. They sell on the future of a Republican Party dominated by Trump and other national-populists and they buy (short term) on Democrats buttering their bread while they bet long term on non-MAGA Republicans restoring the GOP to its status as preferred political interlocutor. There is risk in this strategy but for the private sector, the US as a society, the political system as a whole and the Republican Party as a political institution, the rewards of embracing it will be well worth the challenge.

After all, capitalism is all about risk-taking under conditions of limited information involving structural and super-structural constraints, so the field is open for private opportunity-taking in the national interest.

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