Category Archives: trade

On NZ foreign policy “independence.”

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For many years New Zealand elites have claimed to have an “independent” foreign policy, so much so that it has become a truism of NZ politics that transcends the partisan divide in parliament and is a shibboleth of the NZ foreign policy establishment that is parroted by media and pundits alike. But is it a correct characterization? More broadly, is any country able to maintain a truly independent foreign policy?

If “independence” in foreign policy is defined as the unfettered freedom and ability to pursue courses of action in the international arena without regard to cost or consequence, then the answer is no. Foreign policy independence is an aspirational goal (for some) rather than a practicable achievement (for very few).

Instead, what NZ has is a flexible foreign policy based on what can be called constrained or bounded autonomy. Just like the notion of bounded rationality in game theory (where rationality is not opened-ended but framed by the interactive context in which decisions are made), NZ’s foreign policy autonomy occurs within identifiable parameters or frameworks governing specific international subjects and relationships that are not fungible or identical in all instances. Some are broad and some are limited in scope. Some are more restrictive and some are looser in application. Some are more issue-specific or detailed than others depending on the frameworks governing them. Within those parameters NZ has a significant range of foreign policy-making choice and hence room to maneuver on the world stage.

One reason that NZ does not have an independent foreign policy is that NZ is inserted in a latticework of formal and informal international networks and relationships that to varying degrees constrain its behavior. Things like membership in TPPA, 5 Eyes, WTO, IMF, WHO, NPT, COP, World Bank, INTERPOL and other multinational agencies as well as regional organizations like the Pacific Island Forum, Five Powers Agreement, NATO partnership and various international conservation and legal regimes, as well as bilateral agreements such as the NZ-PRC FTA, Washington and Wellington Agreements and Australia-NZ close defense relations, clearly demonstrate that NZ has formal and informal commitments that bring with them (even if self-binding) responsibilities as well as opportunities and privileges. What they do not bring and in fact mitigate against is foreign policy independence.

This latticework of relationships is the foundation for NZ’s commitment to a rules and norms-based international order because as a small country operating in a world dominated by great and medium powers, it is the commitment and enforcement of international codes of conduct that balances the relationships between big and small States. That gives NZ a measure of institutional certainty in its foreign relations, something that consequently grants it a degree of autonomy when it comes to foreign policy decision-making.

This is what allows NZ, in the broader sense of the term, to be flexible in its foreign policy. Within its broadly autonomous and flexible position within an international system governed by an overlapping network of rules, regulations and laws, comes the “nested” (as in “nested “ games as per rational choice theory, where the broadest macro-game encompasses a series of “nested” meso- and micro-games) ability to move between approaches to specific issues in a variety of areas in the diplomatic, economic and security spheres. 

A second reason that NZ does not have an independent foreign policy is due to what international relations theorists call the “Second Image” effect: the influence of domestic actors, processes and mores on foreign policy-making. NZ’s foreign policy is heavily dominated by trade concerns, which follow mercantilist, Ricardian notions of comparative and now competitive advantage. The logic of trade permeates NZ economic thinking and has a disproportionate influence on NZ foreign policy making, at times leading to contradictions between its trade relations and its support for liberal democratic values such human rights and democracy. As trade came to dominate NZ foreign policy it had a decided impact at home, with the percentage of GDP derived from import-export trade averaging above 50 percent for over three decades (with a third of the total since 2009 involving PRC-NZ trade).

Meanwhile, the domestic ripple effect of trade-related services expanded rapidly into related industries (e.g., accounting, legal and retail services related to agricultural export production), adding to its centrality for national economic well-being. As things stand, if NZ was to be cut off from its major trading partners (the PRC and Australia in particular), the economic shock wave would wash over every part of the country with devastating consequences.

What this means in practice is that export sector interests have a disproportionate influence on NZ’s foreign policy-making. The country’s material dependence on trade in turn locks in pro-trade mindsets amongst economic and political elites that either subordinate or inhibit consideration of alternative priorities. That reduces the freedom of action available to foreign policy-makers, which reduces their independence when it comes to formulating and implementing foreign policy in general. Almost everything passes through the filter of trade, and questions about trade are dominated by a narrative propagated by actors with a vested interest in maintaining the trade-dependent status quo. 

Althugh less influential than the export-import sector, other domestic actors also place limits on foreign policy independence. Disapora communities, the intelligence and military services, tourism interests, religious groups, civil society organizations—all of these work to influence NZ’s foreign policy perspective and approaches. Balancing these often competing interests is an art form of its own, but the key take-away is that the influence of domestic actors makes it impossible for NZ to have a truly “independent” foreign policy for that reason alone, much less when added to the international conditions and frameworks that NZ is subject to.

Given those restrictions, the key to sustaining foreign policy flexibility lies in being principled when possible, pragmatic when necessary and agile in application. Foreign policy should be consistent and not be contradictory in its implementation and requires being foresighted and proactive as much as possible rather than short-sighted and reactive when it comes to institutional perspective. Crisis management will always be part of the mix, but if potential crises can be foreseen and contingency scenarios gamed out, then when the moment of crisis arrives the foreign policy-making apparatus will better prepared to respond agilely and flexibly.

In short, NZ has and should maintain a flexible foreign policy grounded in support for multilateral norms and institutions that allows for autonomous formulation and agile implementation of discrete positions and approaches to its international relations and foreign affairs. Whether it can do so given the dominance of trade logics in the foreign policy establishment remains to be see.

The big picture.

The issue of foreign policy independence matters because the world is well into the transition from unipolarity (with the US as the hegemon) to multipolarity (which is as of yet undefined but will include the PRC, India and the US in what will eventually be a five to seven power constellation if the likes of Japan, Germany and other States emerge to prominence). Multipolar systems are generally believed to be more stable than unipolar systems because great powers balance each other on specific issues and obtain majority consensus on others, which avoids the diplomatic, economic and military bullying (and response) often associated with unipolar “hegemonic” powers. However, the transition from one international system to another is marked by competition between rising and declining great powers, with the latter prone to starting wars in a final ttempt to save their positions in the international stats quo.

In the period of long transition and systemic realignment uncertainty is the new normal and conflict becomes the default systems regulator because norm erosion and rules violations increase as the old status quo is challenged and the new status quo has yet to be consolidated. This leads to a lack of norm enforcement capacity on the part of international organizations rooted in the old status quo, which in turn invites transgressions based on perceived impunity by those who would seek to upend it. This has been seen in places like the South China Sea, Syria, and most recently Ukraine. 

The transitional moment is also marked by conflicts over the re-defining of new rules of systemic order. These conflicts may or may not lead to war, but the overall trend is the replacement of the old system (unipolar in the last instance) with something new. Illustrative of this is the Russian invasion of Ukraine, where a former superpower well into terminal decline has resorted to war on a smaller neighbor as a last attempt to hold on to Great Power status. No matter what the outcome of the conflict itself, Russia will be much diminished by its misadventure and therefore will not be a member of the emerging multipolar configuration.

The new multipolar order will include traditional “hard” and “soft” power usage but will also include “smart” and “sharp” power projection (“smart” being hybrids of hard and soft power and “sharp” being a directed focus by State actors on achieving specific objectives in foreign States via directed domestic influence and hybrid warfare campaigns in those States).

They core feature of the emerging multipolar system is balancing. Great Powers will seek to balance each other on specific matters, leading to temporary alliances and tactical shifts depending on the issues involved. They will then seek the support of smaller States, creating alliance constellations around individual or multilateral positions.That is why systemic multipolarity is best served when odd numbers of Great Powers are present in the configuration, as this allows for tie-breaking on specific subjects, to include rules and norms re-establishment or consolidation.

More importantly, in multipolar systems balancing becomes both a focus and a feature of State behaviour (i.e. States seek to balance each other on specific issues but also desire to achieve an overall balanced system of interests in the multipolar world). In a sense, multipolar balancing is the diplomatic equivalent of the invisible hand of the market: all actors may wish to pursue their own interests and influence the system in their favour, but it is the aggregate of their actions that leads to systemic equilibrium and international market clearing.

In a nutshell: although international norms violations are common and conflict becomes the default systems regulator during periods of international transition and systemic realignment, the multipolar constellation that emerges in its wake is chracterised by balancing as both a focus and a feature. That demands flexibility and agility on the part of great powers but also gives diplomatic space and opportunity to smaller powers with such traits.

In this context a flexible and agile foreign policy approach allows a small State such as NZ considerable room for maneuver, may magnify its voice regarding specific areas of concern (such as climate change, environmental security, migration and the general subject of human rights, including indigenous and gender rights) and therefore give it increased influence disproportionate to its size and geopolitical significance (in other words, allow it to genuinely “punch above its weight”).

Issues for New Zealand.

On the emerging international system.

If a flexible and agile foreign policy is pursued, NZ has the ability to expand its diplomatic influence and range of meaningful choice in the emerging system. For self-interested reasons, NZ must push for the early consolidation of a new multipolar order dominated by liberal democracies, recognizing that there will be authoritarian actors in the arrangement but understanding that a rules-based international order requires the dominance of liberal democratic values (however hypocritically applied at times and always balanced by pragmatism) rather than authoritarian conceptualisations of the proper world order. In practice this means extending the concept of “liberalism” to include non-Western notions of cooperation, consensus-building, transparency and proportional equality of participation and outcomes (this is seen in the current NZ government’s inclusion of “Maori Values” in its policy-making orientation). The need for univerally binding international rules and norms is due to the fact that they help remove or diminish power asymetries and imbalances that favor Great Powers and therefore level the playing field when it comes to matters of economic, cultural, diplomatic and security import. For this reason and because it is a small State, NZ has both a practical reason to support a rules-based international order as well as a principled one.

NZ and the PRC-US rivalry.

The key to navigating US-PRC tensions is to understand that NZ must avoid the “Melian” Dilemma:” i.e., being caught in the middle of a Great Power conflict (the phrase comes from the plight of the island-state Melos during the Peloponnesian Wars, where Melos attempted to remain neutral. Sparta agreed to that but Athens did not and invaded Melos, killed its men, enslaved women and children and salted its earth. The moral of the story is that sometimes trying to remain neutral in a bigger conflict is a losing proposition). 

NZ will not have a choice as to who to side with should “push come to shove” between the US and PRC (and their allies) in a Great Power conflict. That choice will ultimately be made for NZ by the contending Powers themselves. In fact, in a significant sense the choice has already been made: NZ has publicly stated that it will stand committed to liberal international values, US-led Western security commitments and in opposition to authoritarianism at home and abroad. While made autonomously, the choice has not been made independently. It has been forced by PRC behaviour (including influence, intimidation and espionage campaigns in NZ as well as broader misbehavior such as its record of intellectual property theft, cyber-hacking and the island-building projects in the South China Sea) rather than NZ’s desire to make a point. Forced to preemptively choose, it is a choice that is principled, pragmatic if not necessarily agile in application.

How much to spend on defense?

Focus on overall Defense spending (however measured, most often as percentage of GDP) is misguided. What matters is not how much is spent but how money is spent. Canada, for example, spends less (1.3 percent) of GDP than NZ does (1.6 percent) even though it a NATO member with a full range of combat capabilities on air, land and sea. The 2 percent of GDP figure often mentioned by security commentators is no more than a US demand of NATO members that is most often honoured in the breach. Although it is true that Australians complain that NZ rides on their coattails when it comes to defense capabilities, NZ does not have to follow Australia’s decision to become the US sheriff in the Southern Hemisphere and spend over 2.5 percent/GDP on defense. Nor does it have the strategic mineral resource export tax revenues to do so. Moreover, even if it overlaps in places, NZ’s threat environment is not identical to that of Autsralia. Defense priorities cannot be the same by virtue of that fact, which in turn is reflected in how the NZDF is organized, equipped and funded.

NZ needs to do is re-think the distribution of its defense appropriations. It is a maritime nation with a land-centric defense force and limited air and sea power projection capabilities. It spends the bulk of its money on supporting this Army-dominant configuration even though the Long-Term Issue Brief recently issued by the government shows that the NZ public are more concerned about non-traditional “hybrid” threats such as disinformation, foreign influence operations (both State and non-state, ideologically-driven or not), climate change and natural disasters as well as organized crime, espionage and terrorism. More pointedly, the NZDF has a serious recruitment and retention problem at all staffing levels, so no material upgrades to the force can compensate for the lack of people to operate equipment and weapons.

This is not to say that spending on security should completely shift towards non-traditional, non-kinetic concerns, but does give pause to re-consider Defense spending priorities in light of the threat environment in which NZ is located and the political realities of being a liberal democratic State where public attention is focused more on internal rather than external security even if the latter remains a priority concern of security and political elites (for example, with regard to sea lanes of communication in the SW Pacific and beyond). That leads into the following:

Trade.

Trade is an integral component of a nation’s foreign policy, particularly so for a country that is unable to autonomously meet the needs and wants of a early 21st consumer-capitalist society. The usual issue in play when it comes to foreign trade is whether, when or where trade relations with other countries should directly involve the State, and what character should such involvement adopt. Should it be limited to the imposition of tariffs and taxes on private sector export/imports? Should it be direct in the form of investment regulations, export/import controls, and even State involvement in negotiations with other States and private commercial interests? Should the overall trade orientation be towards comparative or competitive value? Most of these questions have been resolved well in NZ, where the government takes a proactive role in promoting private sector NZ export business but has a limited role beyond that other than in regulatory enforcement and taxation.

One change that might help erode NZ foreign policy subordination to trade-focused priorities is to either separate the Trade portfolio from the Foreign Affairs Ministry or to create a Secretariat of Trade within Foreign Affairs. In the first instance “traditional” diplomacy can be conducted in parallel to trade relations, with consultative working groups reconciling their approaches at policy intersection points or critical junctures. In the second instance Trade would be subordinated to the overarching logic of NZ foreign affairs and act as a distinct foreign policy component much like regional and subject-specific branches do now. The intent is to reduce foreign policy dependence on trade logics and thereby better balance trade with other diplomatic priorities.

The larger issue that is less often considered is that of “issue linkage.” Issue linkage refers to tying different threads of foreign policy together, most often those of trade and security. During the Cold War trade and security were closely related by choice: security partners on both sides of the East-West ideological divided traded preferentially with each other, thereby solidifying the bonds of trust and respect between them while benefitting materially and physically from the two dimensional relationship. NZ was one of the first Western countries to break with that tradition, and with its bilateral FTA with the PRC it completely divorced, at least on paper, its trade from its security. That may or may not have been a wise idea.

In wake of events over the last decade, NZ needs to reconsider its position on issue linkage. 

Issue linkage does not have to be bilateral and does not have to involve just trade and security. Here again flexibility and agility come into play across multiple economic, diplomatic and military-security dimensions. For example, NZ prides itself on defending human rights and democracy world-wide. However, in practice it has readily embraced trade relations with a number of dictatorial regimes including the PRC, Saudi Arabia, the UAE, Qatar, Iran, and Singapore (which whatever its veneer of electoral civility remains a one party-dominant authoritarian State). It also provides developmental aid and financial assistance to nobility-ruled countries like Samoa and Tonga. The question is how to reconcile these relationships with the professed championing of democracy and human rights

It is not an easy question to answer and is where the “pragmatic when necessary” perspective clashes with the “principled when possible” approach. It might be the case that human rights and democracy can (some might say should) not be linked to trade. But that would mean ignoring abuses of worker’s rights and other violations like child labour exploitation in trading partners. It is therefore a complicated dilemma that might best be resolved via NZ support for and use of multinational organizations (like the ILO and WTO ) to push for adherence to international standards in any trade pact that it signs.

A potentially more fruitful linkage might be between climate change mitigation measures and sustainable production and trading practices. Each trade negotiation could include provisions about carbon reductions and other prophylactic measures throughout the production cycle, where sharing NZ’s acknowledged expertise in agricultural emissions control and other environmental conserving technologies can become part of NZ’s negotiating package.

Alternatively, in the emerging post-pandemic system of trade a move to replace “off-shoring” of commodity production with “near-shoring” and even “friend-shoring” has acquired momentum. Near-shoring refers to locating production centers closer to home markets, while friend-shoring refers to trading with and investing in countries that share the same values when it comes to upholding trade and after-entry standards, if not human rights and democracy. Combining the post-pandemic need to de-concentrate commodity production and create a broader network of regional production hubs that can overcome the supply chain problems and negative ripple effects associated with the pandemic shutdown of production in the PRC, NZ could engage in what are known as mini-lateral and micro-lateral initiatives involving a small number of like-minded regional partners with reciprocal trading interests.

Australia and the Pacific.

Rather than get into specifics, here a broad appraisal is offered.

Australia is NZ’s most important international partner and in many aspects very similar to it. However, beyond the common British colonial legacy and shared Anglophone war experiences they are very different countries when it comes to culture, economy and military-diplomatic outlook. Likewise, NZ shares many traits with other Pacific island nations, including the seafaring traditions of its indigenus peoples, but is demonstrably distinct in its contemporary manifestation. More broadly, Austalia acts as the big brother on the regional block, NZ acts a middle sister and the smaller island States act as younger siblings with their own preferences, attitudes and dispositions.

To be clear: the family-like characterisation is a recognition of the hierarchical yet interdependent nature of the relationships between these States, nothing more. For NZ, these relationships represent the most proximate and therefore most immediate foreign policy concerns. In particular, the English speaking polynesian world is tied particularly closely to NZ via dispora communities, which in many cases involves NZ-based islanders sending remmitances and goods to family and friends back home. Island nations like Samoa and Tonga are also major recipients of NZ developmental aid and along with the Cook Islands are significant tourist destinations for New Zealanders.

Because of their extensive trade relationship and long-standing diplomatic and military ties, NZ understands that maintaining warm relations with Australia is vital to its national interests. 

Where it can differentiate itself is in its domestic politics, offering a more inclusive and gentler form of liberal democratic competition that avoids the harder edged style displayed by its neighbor. It can include a different approach to immigration, refugee policy, indigenous rights, and the role of lobbyists and foreign influence in domestic politics, especially when it comes to political finance issues. Without being maudlin, NZ can be a “kinder, gentler” version of liberal democracy when compared to Australia, something that allows it to continue to work closely with its Antipodean partner on a range of mutal interests.

The key to maintaining the relationship with Austalia is to quibble on the margins of bilateral policy while avoiding touching “the essential” of the relationship.For example, disputes about the expulsion of Kiwi-born “501” criminal deportees from Australia to NZ can be managed without turning into a diplomatic rift. Conversely, combating foreign influence campaigns on local politics can be closely coordinated without extensive diplomatic negotiation in order to improve the use of preventative measures on both sides of the Tasman Sea.

The key to maintaining good relations with Pacific Island states is to avoid indulging in post-colonial condescension when it comes to their domestic and international affairs. If NZ truly believes in self-determination and non-interference in domestic affairs, then it must hoor that belief in practice as well as rhetorically. Yet, there has been a tendency by NZ and Australia to “talk down” at their Pacific neighbors, presuming to know what is best for them. There are genuine concerns about corruption in the Pacific community and the increased PRC presence in it, which is believed to use checkbook and debt diplomacy as well as bribery to influence Pacific Island state leaders in a pro-Chinese direction. But the traditionally paternalistic approach by the Antipodean neighbors to their smaller brethern is a source of resentment and has backfired when it comes to contanining PRC expansion in the Southwestern Pacific. The reaction to the recently announced Solomon Islands-PRC bilateral security agreement is evidence of that heavy-handedness and has been met with hostility in the Solomons as well as other island States at a time when the regional geopolitical balance is in flux.

To be sure, NZ offers much developmental aid and humanitarian assistance to its island neighbors and is largely viewed with friendly eyes in the region. The best of way of assuring that goodwill is maintained is to speak to island States as equals rather than subordinates and to emphasize the notion of a Pacific community with shared traditions, cultures and values. It is for the Pacific Island states to determine what their individual and collective future holds, and NZ must respect that fact even while trying to promote principles of democracy, human rights and transparency in government region-wide.

Summary.

It is mistaken and counter-productive to label New Zealand’s foreign policy as “independent.” A cursory examination of domestic and international factors clearly demonstrates why it is not. Instead, NZ purses a flexible foreign policy grounded in constrained or limited autonomy when it comes to foreign policy-making and which is operationalized based on agility when it comes to reconciling relationships with other (particularly Great) powers and manuevering between specific subjects. It is soft and smart power reliant, multilateral in orientation and predominantly trade-focussed in scope. It champions ideals tied to Western liberal values such as human rights, democracy, transparency and adherence to a rules based international order that are tempered by an (often cynical) pragmatic assessment of how the national interest, or least those of the foreign policy elites, are served.

Balancing idealism and pragmatism in non-contradictory or hypocritical ways lies at the core of NZ’s foreign policy dilemmas, and on that score the record is very much mixed.

This essay began as notes for a panel discussion hosted by https://www.theinkling.org.nz at the Auckland War Museum, November 3, 2022. My thanks to Alex Penk for inviting me to participate.

The incremental shift.

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In the build up to the Xmas holidays I was interviewed by two mainstream media outlets about the recently released (December 2021) Defence Assessment Report and last week’s 5 Eyes Communique that included New Zealand as a signatory. The common theme in the two documents was the threat, at least as seen through the eyes of NZ’s security community, that the PRC increasingly poses to international and regional peace and stability. But as always happens, what I tried to explain in hour-long conversations with reporters and producers inevitably was whittled down into truncated pronouncements that skirted over some nuances in my thought about the subject. In the interest of clarification, here is a fuller account of what is now being described as a “shift” in NZ’s stance on the PRC.

Indeed, there has been a shift in NZ diplomatic and security approaches when it comes to the PRC, at least when compared to that which operated when he Labour-led coalition took office in 2017. But rather than sudden, the shift has been signalled incrementally, only hardening (if that is the right term) in the last eighteen months. In July 2020, the the wake of the ill-fated Hong Kong uprising, NZ suspended its extradition treaty with Hong Kong, citing the PRC passage of the Security Law for Hong Kong and its negative impact on judicial independence and the “one country, two systems” principle agreed to in the 1997 Joint UK-PRC Declaration on returning Hong Kong to Chinese control. At the same time NZ changed its sensitive export control regime so that military and “dual use” exports to HK are now treated the same as if they were destined for the mainland. 

In November 2020 NZ co-signed a declaration with its 5 Eyes partners condemning further limits on political voice and rights in HK with the postponment of Legislative elections, arrests of opposition leaders and further extension of provisions of the mainland Security Law to HK. The partners also joined in condemnation of the treatment of Uyghurs in Yinjiang province. In April 2021 Foreign Minister Nanaia Mahuta gave her “Dragon and Taniwha” speech where she tried to use Maori allegories to describe the bilateral relationship and called for NZ to diversify its trade away from overly concentrated partnerships, using the pandemic supply chain problems as an illustration as to why.

She also said that NZ was uncomfortable with using the 5 Eyes intelligence partnership as a public diplomacy tool. I agree completely with that view, as there are plenty of other diplomatic forums and channels through which to express displeasure or criticism. The speech did not go over well in part because NZ business elites reacted viscerally to a large tattooed Maori woman spinning indigenous yarns to a mainly Chinese and Chinese-friendly audience (and other foreign interlocutors further afield). From a “traditional” (meaning: white male colonial) perspective the speech was a bit odd because it was long on fable and imagery and short on “hard” facts, but if one dug deeper there were plenty of realpolitik nuggets within the fairy dust, with the proper context to the speech being that that Labour has an agenda to introduce Maori governance principles, custom and culture into non-traditional policy areas such as foreign policy. So for me it was the balancing act bookended by the trade diversification and 5 Eyes lines that stood out in that korero.

Less than a month later Prime Minister Ardern spoke to a meeting of the China Business Summit in Auckland and noted that “It will not have escaped the attention of anyone here that as China’s role in the world grows and changes, the differences between our systems – and the interests and values that shape those systems – are becoming harder to reconcile.” That hardly sounds like appeasement or submission to the PRC’s will. Even so, Mahuta and Ardern were loudly condemned by rightwingers in NZ, Australia, the UK and US, with some going so far as to say that New Zealand had become “New Xiland” and that it would be kicked out the 5 Eyes for being soft on the Chinese. As I said at the time, there was more than a whiff of misogyny in those critiques.

In May 2021 the Labour-led government joined opposition parties in unanimously condemning the PRC for its abuse of Uyghur human rights. The motion can be found here.

In July 2021 NZ Minister of Intelligence and Security Andrew Little publicly blamed China-based, state-backed cyber-aggressors for a large scale hacking attack on Microsoft software vulnerabilities in NZ targets. He pointed to intolerable behaviour of such actors and the fact that their operations were confirmed by multiple Western intelligence agencies. He returned to the theme in a November 2021 speech given at Victoria University, where he reiterated his concerns about foreign interference and hacking activities without mentioning the PRC by name as part of a broad review of his remit. Rhetorical diplomatic niceties aside, it was quite clear who he was referring to when he spoke of state-backed cyber criminals (Russia is the other main culprit, but certainly not the only one). You can find the speech here. 

In early December 2021 the Ministry of Defense released its Defense Assessment Report for the first time in six years. In it China is repeatedly mentioned as the major threat to regional and global stability (along with climate change). Again, the issue of incompatible values was noted as part of a surprisingly blunt characterisation of NZ’s threat environment. I should point out that security officials are usually more hawkish than their diplomatic counterparts, and it was the Secretary of Defense, not the Minister who made the strongest statements about China (the Secretary is the senior civil servant in the MoD; the Minister, Peeni Henare, spoke of promoting Maori governance principles based on consensus and respect into the NZDF (“people, infrastructure, Pacifika”), something that may be harder to do than say because of the strictly hierarchical nature of military organisation. At the presser where the Secretary and Minister spoke about the Report, the uniformed brass spoke of “capability building” based on a wish list in the Report. Let’s just say that the wish list is focused on platforms that counter external, mostly maritime, physical threats coming from extra regional actors and factors rather than on matters of internal governance.

Defence-Assessment-2021Download

Then came the joint 5 Eyes statement last week, once again reaffirming opposition to the erosion of Hong Kong’s autonomy and its gradual absorption into the Chinese State. Throughout this period NZ has raised the issue of the Uyghurs with the PRC in bilateral and multilateral forums, albeit in a quietly diplomatic way.

I am not sure what exactly led to NZ’s shift on the PRC but, rather than a sudden move, there has been a cooling, if not hardening trend during the last eighteen months when it comes to the bilateral relationship. The decision to move away from the PRC’s “embrace” is clear, but I have a feeling that something unpleasant may have occurred in the relationship (spying? influence operations? diplomatic or personal blackmail?) that forced NZ to tighten its ties to Western trade and security networks. The recently announced UK-NZ bilateral FTA is one step in that direction. AUKUS is another (because if its spill-over effect on NZ defense strategy and operations).

What that all means is that the PRC will likely retaliate sometime soon and NZ will have to buckle up for some material hardship during the transition to a more balanced and diversified trade portfolio. In other words, it seems likely that the PRC will respond by shifting its approach and engage diplomatic and economic sanctions of varying degrees of severity on NZ, if nothing else to demonstrate the costs of defying it and as a warning to those similarly inclined. That may not be overly burdensome on the diplomatic and security fronts given NZ’s partnerships in those fields, but for NZ actors deeply vested/invested in China (and that means those involved in producing about 30 percent of NZ’s GDP), there is a phrase that best describes their positions: “at risk.” They should plan accordingly.

Along with the New Year, there is the real possibility that, whether it arrives incrementally or suddenly, foreign policy darkness lies on the horizon.

Media Link: “A View from Afar” on supply chain bottlenecks, commodity (over) concentration and the need for post-pandemic structural reform.

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Selwyn Manning and I have created YouTube channels under our respective business names in order to promote the “A View from Afar” podcast series. The latest episode examines recent problems of global supply, production and exchange, using a micro-to-macro lens to discuss the interplay between economics, policy and politics in creating and hopefully ameliorating the failures of the pre-pandemic system of trade. You can find it here.

Principled, pragmatic or expedient.

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For several decades under Labour and National-led governments New Zealand has claimed to have an independent (and sometimes autonomous) foreign policy. This foreign policy independence is said to be gained by having a “principled but pragmatic” approach to international relations: principled when possible, pragmatic when necessary. More recently NZ foreign policy has shifted from traditional diplomacy in which trade was a component part to a trade focused orientation to which all other aspects of diplomatic endeavour are subordinated. Seen as a marriage of belief in Ricardian notions of comparative (and now competitive) advantage with a pragmatic understanding that NZ is dependent on trade for its survival and prosperity, the “trade for trade’s sake” approach continues to reign supreme to this day.

It turns out that foreign policy pragmatism or principle may no longer obtain in certain instances, especially when trade is involved. Take the issue of NZ military-related exports. It has been revealed that NZ firms and (possibly) public agencies export everything from airplane parts to small arms, explosive ordinance, training simulators, muzzle flash suppressors, missile guidance systems and artillery range finders to 41 countries and territories. (The term “possibly” is used here because all of the NZ exporting entities are redacted in the export list made public by MFAT. While some private exporters can be broadly identified by the nature of the items sold, other special license categories make ambiguous the provenance of the equipment in question).

Most of these exports go to NATO members and other liberal democracies, while other recipients are regional partners like Singapore, Malaysia , Australia, Tonga and Indonesia. The bulk of what is exported is what might be considered to be on the soft rather than sharp end of the so-called “kill chain:” items that do not impart lethal force directly but which contribute to the accuracy and lethality of weapons systems that do.

None of this would be controversial if it were not for the fact that some of the recipient countries have checkered human rights records (like Indonesia) while others have outright dismal histories of authoritarianism and military criminality. That includes Saudi Arabia, the United Arab Emirates, Turkey, and the PRC. Saudi Arabia and the UAE lead a coalition of Sunni Arab states that have been credibly accused of committing war crimes and genocide against Houthi populations in Yemen. Saudi Arabia does not recognise the Universal Declaration of Human Rights (the UAE was not party to the UDHR vote) and along with the UAE does not recognise a number of human rights conventions involving women’s rights, labour rights, political and social rights. Malaysia, Singapore and Indonesia also are not party to the UDHR and while not as dismal as the Sunni oligarchies, have subpar records when it comes to adhering to international human rights norms and agreements. NZ exports military training material to the PRC, whose human rights history is known for all the wrong reasons. There are other dubious recipients but the issue is clear. In spite of claiming to be a champion and defender of human rights as a matter of principle, NZ exports military equipment to egregious violators of human rights both at home and abroad.

Some will argue that NATO members and other democracies like Australia also violate the laws of war and human rights in their own territories. There is merit to those arguments. But the difference between Australia, Canada, the UK and US and, say, Saudi Arabia and the UAE when it comes to military conduct in conflict theatres is that war crimes committed by the forces deployed by liberal democracies are exceptions to the rule and are punished (even if initially covered up) rather than systematically encouraged and later denied. Domestically, while systemic racism clearly exists throughout the liberal democratic world, it is no longer genocidal in nature even if in previous eras there was a significant element of that.

Conversely, places like the PRC systemically abuse human rights at home, deny individual and collective rights as a matter of course and treat ethnic and religious minorities as if they were foreign enemies. Turkey has grown increasingly authoritarian under President Erdogan, with its treatment of its Kurdish minority a particularly black mark on its record. The UAE and Saudi Arabia are known for their mistreatment of foreign workers, Shiia Muslims in particular but not exclusively. Jordan and Bahrain, other recipients of NZ strategic license exports, are Western allies but not known for their adherence to human rights conventions.

Even Israel, a supposed liberal democracy and a Western ally that is another recipient of NZ military-related exports, systematically violates the rights of Palestinians inside and outside of its recognised territorial limits, including targeting of civilian populations during times of conflict (in Gaza) and forcibly annexing Palestinian territory (in the West Bank) as part of an expansionist doctrine that seeks to eventually expel Palestinians from what they and Israelis consider to be their homelands. Within Israel, in spite of recent electoral gains by so-called “Arab” (Joint List) parties, Palestinians are more often seen and treated as a subversive fifth column rather than full citizens (Arabs make up around 20 percent of the Israeli population).

Most liberal democracies simply do not act this way. The West may be guilty of many things, particularly during the colonial era and Cold War, but even if flawed most liberal democracies at a minimum pay lip service to the rule of law based on civil liberties and human rights at home and abroad. A fair number of the recipients of NZ strategic exports in recent years make no such pretence.

None of this would matter if NZ had a realist approach to foreign policy that was completely pragmatic in orientation based on national self-interest. Matters of principle would not factor into foreign policy-making and trade relations. But that is not the case. Instead, NZ is a very vocal defender of small state and minority rights in the international community as an extension of its championing of international human rights, international norms and the rule of law. That makes trading with authoritarians somewhat hypocritical and exporting military equipment to murderous regimes downright reprehensible. Especially when done for a buck–that is, for the profit gain of NZ private firms.

To be clear, almost any hunting-related equipment can be converted for dual use military purposes. But there is much more to the NZ export list (released by MFAT to a couple of investigative reporters under OIA requests) than converted hunting equipment. It also is interesting that most of the redactions in the sanitised export list are justified on commercial sensitivity rather than national security grounds. If items were merely dual use conversions from hunting equipment, one would think that there are little commercial sensitivities involved given the global scope of the hunting industry. Nor are end users always identified on the list, which makes MFAT assurances that it knows what is ultimately being done with the exports somewhat disingenuous. Either it knows and does not want to say or it does not know even though it allowed the export license request for those items to be approved.

Consider this example. MFAT approved the sale of a general utility aircraft from a Hamilton-based aerospace company (now bankrupt) to a PRC-based aviation firm in spite of numerous concerns about the end use of that aircraft. A year or so after the sale went through the plane was photographed at an airshow wearing North Korean military livery, sparking an investigation into how international sanctions on North Korea were circumvented in the process (the sanctions violation was considered a first order offence given the military use of the aircraft). In the legal process that followed, which resulted in the conviction and fining of the Hamilton firm for violating the international sanctions regime and NZ strategic export requirements, MFAT admitted that it had no clue as to who the end user might be beyond the PRC firm that, incidentally, owned a half interest in the Hamilton company and controlled its board of directors. In other words, it took the exporter’s word as an article of faith and as a result contributed to an egregious violation of UN sanctions that NZ voted to support. Diplomatically speaking, that tarnished NZ’s reputation because neither principle or pragmatism, much less due diligence, was applied to the sale.

Even training equipment has to be considered in proper context. Artillery range finders used for training purposes (which MFAT claims was the case with Saudi Arabia) are being used to train artillery for war, not fun and games. Saudi artillery is regularly used in the Yemen civil war, so it a stretch to say that exporting equipment that trains troops to be more accurate with their artillery fire is not related to the Yemeni conflict. Likewise, even if small in terms of numbers and monetary value, exporting sidearms and squad weapons to human rights violators ignores the fact that they could be used against domestic populations and foreign civilians as well as foreign adversaries.

Again, none of this would be of concern if NZ did not proclaim itself to have an independent foreign policy based on principle as well as pragmatism. If it was a country powered by a military-industrial complex such as the US, it would all be in a day’s business to export military equipment to assorted nefarious regimes. But not so NZ, which has staked its international reputation on being an agent of honest virtue–a good global citizen, as it often says.

The truth is different. If NZ was truly independent it could resist the pressure to act as a cut-out or front for its allies’ military-related services (say, by not allowing the national airline to serve as a sub-contractor for the reconditioning of Saudi Navy gas turbines usually serviced by US Navy contractors). It could pick and choose about when to be principled and when to be pragmatic when it comes to military-related exports (say, by exporting to NATO or liberal democratic partners only). After all, although clearly lacking any basis in principle, it is really pragmatic for NZ to sell the Saudis and Emiratis military equipment when they are involved in industrial-strength war crimes in pursuit of a genocidal campaign in a neighbouring country? Will the diplomatic benefits of courting such states outweigh the costs of making its rank hypocrisy visible to the rest of the international community?

In a past life I was involved in the decision-making chain involved in US military sales and training, etc. to Latin American countries. The primary criteria for vetting military equipment and training requests was twofold: the nature of the equipment or training requested and the character of the political regime (government) making the request. If the equipment or training was too sensitive or excessively lethal and/or the regime doing the requesting was of dubious disposition, then the request was denied. If the decision was anything other than an outright “no” on the primary grounds, then other criteria was applied: state of trade and diplomatic relations with the requesting state, the geopolitical balance in the (sub) region in which that state was located, the possibility of a domino proliferation impact, the presence of other foreign weapons suppliers as substitutes for US exports, etc. Once all of this was factored in with input from the various elements of the inter-agency consultation process (involving the State Department, CIA, NSC, Treasury, Commerce and other federal agencies with a potential stake in the matter), sometimes after sounding out other countries in the region about their reactions, a recommendation was sent to the White House for approval/denial. If the White House approved the sale/mission, then the recommendation was sent to Congress for approval, something involving several committee votes and then a general vote in both Houses. The process was slow and circuitous but in the end it was comprehensive and transparent.

Although it is possible that there are similarly robust weapons exportation strategic license vetting protocols in place in NZ, that does not seem to be the case. MFAT appears to make the call, perhaps after consultation with DPMC and/or Cabinet. Parliament is not involved in the decision-making process. No public notification is made. In other words, the entire NZ strategic export licensing regime is opaque at best. You can read the official criteria here.

MFAT says that the vetting process is rigorous and that it knows exactly where NZ sourced military equipment winds up. Yet it has only denied one out of 254 special export license requests in the last three years (to the Saudis for mortar stands and fire control (observation tower) equipment, supposedly in response to the Khashoggi murder). If foreign policy principle were involved, one might expect that the approval rate would be somewhat lower for authoritarian-ruled countries. But if pragmatism and trade are the criteria in play, does it make sense to supply murderous regimes with any kill chain components? Or is the fact that the entire decision-making process for granting special export licenses is so opaque that MFAT and the suppliers thought that they would never be found out if it were not for the good work of a couple of intrepid reporters?

More than principle and pragmatism as guideposts for foreign policy, it seems that trade-promoting expediency is the new normal in NZ foreign affairs, something that continues under the Ardern government. But with expediency comes a loss of independence and autonomy as well, because among other reasons, states with their own agendas can use NZ’s trade zealotry as third party cover for transactions they themselves may be reluctant to admit publicly (even the US has suspended weapons sales to Saudi Arabia because of its behaviour in Yemen). Or authoritarians can hold non-military trade relations with NZ hostage to the provision of military equipment. Either way, that makes NZ a foreign policy tool of others rather than an honest broker in international relations and global good citizen.

Just like the fact that NZ’s “clean and green” image is more myth than reality, the foreign policy reality is that at least when it comes to trading in the paraphernalia of death, NZ is unprincipled, hardly pragmatic and dominated by logics of trade expediency rather than a commitment to the upholding international human rights. While it would be too much to expect a National-led government to put principle before trade expediency, that this continues to occur under a Labour-led government (in which the Prime Minister claims that she was unaware of the strategic export recipient list until asked about it by the media) is all the more outrageous given its constant repetition of the “independent, principled but pragmatic” foreign policy mantra.

If NZ is to regain a semblance of integrity in diplomatic circles, its foreign policy decision-making matrix must change away from trade obsessed expediency and towards the principled but pragmatic orientation that grants it the independence that it claims to have. Conversely, if it wants to put trade before everything else, then it might as well fess up and open up the country’s foreign policy to the highest bidder.

Media Link: “A View from Afar” podcast on the private military-security industry and NZ’s role in it.

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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.

Thinking of a post-pandemic future.

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I was recently invited to participate in an international teleconference on post-pandemic futures. It has a NZ-centric focus but involved distinguished participants from overseas, including former high level government and private sector officials. Discussions were held under Chatham House rules so I cannot get into particulars, but I am writing here as a reflection on what I heard.

Above all, I took away two troubling thoughts. The first is that the discussion was entirely elite-focused, with much talk about trade regimes, supply chain dynamics, attracting foreign direct investment, scientific diplomacy, political leadership characteristics and competition, plus other things of that sort. The second take-away was the nearsightedness of many of the discussants, particularly those representing the private sector. In a nutshell, they just want to get back to business as usual.

I made some remarks that attempted to amplify the context in which we are operating. I will elaborate on them here.

The CV-19 pandemic is an inflection point in a longer trend involving the intertwined crises of national and international governance and models of accumulation. It has exposed the dark contradictions in both. These must be addressed if the world is to emerge a better place. But there is a broader backdrop to this trend that needs to be understood before we get into unpacking its component parts.

The international system is in the midst of a long transition. It has moved from a tight bipolar configuration during the Cold War to a unipolar construct in the 1990s and an emerging multipolar system after 2001. The emerging system is characterised by the interplay between ascendent and descendent great powers, the emergence of non-state actors as key international actors (both irregular and corporate), an erosion of international norms and rules, and the resultant presence of conflict as a systems regulator. The underlying ideological consensus that dominated international relations from the end of World War two until the last decade, that being the notion of a liberal order where the combination of democratic government and market-driven economies was seen as the preferred political-economic construct, has eroded to the point of marginality.

In its wake has re-emerged the concept of realpolitik or power politics, whereby nation-states and other international actors pursue their interests above all things and do so with the resources at their disposal relative to the countervailing powers of others. This does not always mean that might makes right because not all resources are coercive. Some are persuasive, which helps distinguish between so-called “hard” power (coercive, be it economic, military or diplomatic), “soft” power (persuasive), “smart” power (a mixture of both) and “sharp” power (coating coercive intent in a persuasive argument or approach).

Over the last two decades several great powers have emerged or re-emerged, while the lone 1990s superpower, the US, has declined. This is seen in the fact that while superpowers intervene in the international order for systemic reasons, great powers do so for national reasons. One only needs to view the US inability to prevail in regional wars and then turn towards economic nationalism, populist politics and away from support for alliances and international organizations to see its descent. Meanwhile, pretenders to the throne and others have emerged: China, Russia, India, Japan, Germany in the forefront, but other regional contenders also in the mix (Indonesia, Brazil, South Korea, France and the UK, perhaps Iran and Turkey as part of lesser constellations).

The issue is not so much who these specific emerging powers are but the fact that they are moving the international system towards multipolarity. Given its relative decline, there is little that the US can do about this even if it attempts to reverse the trend (assuming that it recognises what is happening). And yet, the contours of the future system will not conform to the specific interests or designs of the emergent powers within it. Much like Adam Smith’s invisible hand of economics, it is the aggregate of power dynamics during the transitional moment that will give precise shape to the global future. A new balance of power will emerge, but it remains unclear as to its exact configuration or stability.

That is the broader backdrop to the global crises of governance and models of accumulation. As macro and micro-cosmic reflections of this larger reality, national, regional and international governmental organisations have been sidelined and/or undermined by a combination of forces. Some are internal, such as the ossification of agencies due to corruption and self-interest. Others are external, such as rapid and sudden migration trends resulting in ideological and racial backlash in recipient countries. Whatever the combination of factors, the crisis of governance is seen throughout liberal democracies as well as many authoritarian regimes (even Singapore!) and international organisations like the EU, WHO, WTO, SEATO, OAU, OAS and UN. Many of these agencies are seen as toothless at best and bastions of patronage, nepotism and corruption at worst. Above all they are mostly seen as (and many are) ineffectual and inefficient in discharging their mandates.

The decline in quality of political governance is paralleled and matched by the increasingly obvious contradictions of the global model of accumulation. Commodity supply chain concentration, hyper-specialisation, just-in-time production, “race-to-the-bottom” wage competition, and other features of the globalisation of production, consumption, supply and exchange have produced increased inequalities and fractures in the world social division of labour. Hyper-concentration of wealth in the so-called “one percenters” has happened on the backs of the global poor, who now extend well into what used to be the middle classes of advanced liberal democracies. Again, the US provides an example with its charity food lines and millions of unemployed (rising to 20 percent of the work force and over 30 million unemployment claims lodged in just three months) as a result of the pandemic. The US situation is particular dire because most private health insurance is tied to employment, so the loss of jobs is measured in both declines in income as well as health coverage.

This is what the pandemic has done. It has exposed in dark relief the ugly side of the global market. It has also glaringly revealed government incompetence and indifference on a global scale. These two pathologies have now combined, and the results are being felt by common people, not elites. This could well be the moment when the Liberal Order dies, killed by a disease whose spread was, in a bitter ironic twist, facilitated by its success.

That is why getting back to “normal” and business as usual by returning to the status quo ante will not work, and where short-term solutions will not suffice. That only staves off the inevitable, which is that the dual crises will continue to compound and deepen as they head towards a circuit-breaking outcome. Phrased differently, it appears that what students of social revolutions call the tension-release model is now well in play: there is a slow build up of accumulated tensions punctuated by episodic outbreaks of disorder or discontent, culminating in a cathartic moment in which the old system is destroyed and a new one–however unclear in its precise contours–begins.

If the root causes are not addressed, the next explosion of mass discontent will be precipitated by any number of calamities, man-made or natural: resource conflicts caused by draught, flooding, famine or competition over access to increasingly precious natural resources like fresh water; mass migrations tied to the above; great power war; civil war; sectarian and irredentist violence; pollution- or climate-caused environmental catastrophes; wide spread urban destruction caused by earthquakes, eruptions, hurricanes, thrones, cyclones or tornados; energy provision failures; and more pandemics. This list is not exhaustive.

It is not as if there has been no warning that things cannot hold. From the 2000 “Battle of Seattle” to the Occupy Wall Street demonstrations later that decade, to the Arab Spring of the early teens to the protests in places like Chile, France and Lebanon last year, there has been a slowly rising tide of resistance to politics and economics as given. The protests are not just about one or the other but are in fact about both: systems of governance and systems of profit and their influence on each other.

The malaise is wide-spread. The US and UK are polarised, India is riven by sectarian tensions, Arab oligarchies remain closed but under increased popular pressure, despotic politics have taken hold in Brazil, Hungary, Eastern Europe, Central Asia, the Philippines and Turkey under electoral guise, sub-national actors challenge sovereignty in a host of Sub-Saharan states and even the seemingly monolithic regimes in China and Russia are riven by internal tensions and political intrigue. The world stands at the brink of a valley of transition where the costs of change are real but the outcome is uncertain.

Returning to normal, at least if it is defined as the way things were before the pandemic hit, is a guarantee that the socioeconomic and political contradictions now laid bare will fester, accumulate and eventually explode. That is an outcome few would want. This is why the post-pandemic moment must be seen as a window of opportunity for comprehensive change rather than a resumption of what once was.

In order to avoid an explosive break with the past, the key to post-pandemic recovery lies in addressing the dual crises of governance and accumulation as the most important priorities even if short term economic and political remedies are offered (say, by removing Trump from office, turning to regional supply chains and re-committing international agencies to a rules-based international order). I cannot offer any specifics, but it seems to me that a move towards sustainable development based on restrained rates of profit and renewable resource extraction is a beginning. Given the resurgence of wildlife in urban and suburban areas and air and water cleansing during the lockdown, climate change mitigation efforts need to be wrapped into larger projects of environmental restoration in which a return to natural balance is given urgent attention.

These involve political reforms in which those who advocate for a return to the previous economic status quo are blocked from doing so. After all, there are many interests vested in the current global market framework and they will do everything in their power to resist and thwart meaningful change that undermines their positions and diminishes their bottom lines. The key is to find a consensus about reforming, if not an alternative to, the system as given, including the reconfiguration of incentive structures in order to promote broad adherence to the shift in the global model of accumulation.

The future will be multipolar. The question is whether it will be stable or unable, sustainable or exploitative, multilateral or parochial, driven by self-interest or concern for the collective good. The overall process of transition to multipolarity is immutable, but the specific features of the future system will be defined for better or worse by human agency. It remains to be seen if the opportunity to recast the world in a better image will be seized.

Given what I heard at the online meeting, I am not sanguine about the prospects of this happening. It is easier to go back to what is known than venture into the unknown. The forces pushing for a return to the status quo are many and powerful. But the pandemic has pulled away the layers of mystification and false consciousness that heretofore obscured the intense exploitation, class cleavages and unrepresentative politics that lie at the root of the modern global edifice/artifice.

It is time for economic and political architectural re-design on a world scale.

Interest, values, trade and security.

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The media frenzy about the NZ-PRC relationship got me to thinking, but as I got to thinking I found myself meandering off of my original train of thought. You see, at first I was pondering the one-sided, hectoring nature of the media coverage, where pro-China shills like the business writers at the Herald and assorted corporate types and National Party flunkies like Tod McClay were allowed to run their mouths about how the relationship with China was headed down the tubes. There was the Kiwi coward resident 34 years in China* who implicitly disparaged Anne Marie Brady by saying that “(i)t’s unhelpful for politicians and a few anti-Chinese professors to feed uncorroborated McCarthyite conspiracies about Chinese spy networks in their countries and targeting anyone who doesn’t share their view.” There was Audrey Young’s reference to “ivory tower” eggheads in her regurgitation of business lobby bullet points. All of this was offered without a single rebuttal.

  • *I am not going to mention this useful fool’s name but it would have been nice if a “journalist” has asked him, given his long residency in China and successful business ventures there, whether he was a dual citizen and/or member of or has ever had any formal contact with the Chinese Communist Party, whether he has ever had to “facilitate” transactions or provide pay-offs to party or local officials and whether he is on any Chinese government payroll as a spokesperson, business “ambassador,” representative, go-between or in any other capacity. I say this because it is unusual for Chinese authorities to allow non-diplomat Westerners to comment on official reactions to PRC-related events in foreign countries even if they are citizens of the country in question.

There were even pro-China academics featured in the media and assorted pundits opining that the Labour-led government needed to pull an about-face and correct things ASAP. There were the usual skeptics about the GCSB rational for advising against using Huawei in the 5G roll-out. One of them, a well known rightwing blogger and pollster, used a 2012 junket to Huawei headquarters paid for by the company to proclaim that all the security concerns were a stich up up of an honest company so that Western telecom firms could gain a competitive advantage. There were the usual shouts of racism from the Chinese language media and wanna-be “influencers.” There was even something that looked suspiciously like a planted fake news article in an English language mainland media outlet that was extensively and uncritically quoted in the Herald that said that Chinese tourists in Aoetaroa complained about being “stabbed in the back” by the Kiwis. I shall leave aside the curious fact that the article only appeared in English and used rather odd quotes to describe the reaction of tourists to a minor diplomatic row involving their home and host countries–a row that had zero effect on them.

It was all so sickly obsequious to the Chinese that my initial thought centred on whether most of NZ’s business and political elites (and their lackeys in the media and academia) were so obsessed by self-enrichment, greed and short term opportunism that they completely lost sight of their moral compasses. After all, China is a one-party authoritarian state that uses mass internment camps to control a restive ethno-religious minority, mass surveillance as a form of social control, violates human rights in systematic fashion, transgresses international norms and laws as a matter of course (such as in the island-building projects in the South China Sea) and uses bribery, corruption, fraud and intellectual property theft as an integral part of its business development models. This would seem inimical to the values of the paragons of virtue extolling the “special relationship” between the PRC and NZ but nooooooo. The Chinese are good for the NZ economy and that is all that matters. It would seem that the trade-oriented business elites and their political puppets are China’s Vichy representatives in Aotearoa.

That sent my thoughts in a more academic direction. I recalled that Marx wrote that the combination of private ownership of the means of production and universal suffrage could not hold because if everyone got an equal vote and only a few were property owners (capitalists), then capitalism would be voted out of existence. He was wrong about that due to the reform-mongering function of the capitalist State, but that got me to thinking that he also wrote that capitalists were incapable of being patriots because profits were made globally and hence their interests were not confined to their countries of origin. People may recall that in the Manifesto he wrote “workers of the world unite!” as a response to capitalism as it entered the Gold Age of imperialism, a topic that Lenin subsequently developed a greater length.

It occurred to me that in the arguments about China we see a NZ variant of this. NZ capitalists and their toadies do not give a darn about democratic values, transparency, norms, a rules based order or the security concerns of Western states. They are in it for the buck and if that means kowtowing to a dictatorship then so be it. Given that NZ business and political elites have kowtowed to the likes of the Saudis, this should not be surprising. In their view if there is money to be made then the less impediments to doing so the better.

The smarter types will show the structural impact of Chinese trade with NZ by citing the usual $27 billion in 2018 bilateral trade figure and 8,700 jobs connected to it. But this trade is mostly in milk powder, tourism and English language and tertiary education (as NZ exports) and consumer non-durables (electronics, light machinery and plastics, mostly) as imports, so it is not as if NZ is going to turn into a high tech artificial intelligence and robotic hub thanks to the Chinese. The bottom line, then, is the bottom line: NZ capitalists by and large will cling to the window of opportunity presented by the opening of the Chinese market even if it confirms our trade dependency on primary goods and agro-exports and even if it means sacrificing NZ’s commitment to principle when it comes to exercising an independent foreign policy.

That was going to be the end of my thought process on the matter. I was going to balance the criticism of China by noting that the US and traditional Western partners have less than stellar records in their foreign relations and spy histories and that the US under Trump is an insane clown posse when it comes to international affairs even if the intelligence and security professionals who staff the 5 Eyes network would not be swayed by the craziness swirling around them and would make assessments about security matters on objective grounds. But then I got to thinking about something I read repeatedly on right-wing political sites: values.

One of the major objections to the Chinese and NZ’s relationship with the PRC appears to be the issue of values, or the fact that we do not share values. People point out the long cultural ties that bind NZ to the UK and Anglophone Commonwealth as well as the US. They point to joint sacrifices in war and peace, common sports, notions of good and bad, proper behaviour, etc. These folk do not want these shared values to be usurped and replaced by Asian values, or at least the Confucian-derived cultural mores that contact with China brings to NZ. The list of fears and concerns is long but the bottom line is that many on the conservative side of the political ledger have real fears of the Chinese “other” that go beyond the “Yellow Peril” of the Cold War.

That prompted a turn in my thought. You see, although I have a fairly idealistic streak and understand the utility of constructivism in international relations practice, I am a realist at heart. And realists are not sappy snowflakes looking for a global group grope. Instead, they focus on two things as the currency of international relations and foreign policy: power and interest. As the saying goes, in an anarchic world or Hobessian state of nature where values are not universally shared and norms are contingent on voluntary acceptance by independent State actors as forms of self-imposed restraint, then what matters is the exercise of power in pursuit of national interest.

That leads me to the following pseudo-syllogism:

States have interests, not friends.

Foreign partnerships are based on interest, not friendship.

Trade and security relationships are therefore interest-based.

They may overlap, complement but should never countervail.

A State’s degree of interest in any matter is self-defined.

Values help define but do not determine interest.

Interest may be influenced by values and values may involve shared cultural mores, norms and history that make for notions of “friendship,” but interest is not reducible to them.

Interest prevails over values when interest and values are at odds.

It is the relationship between values and interest that concerns me now. If I accept that values are only part of the definition of interest, then I must accept that shared values do not necessarily place some forms of interest above others. Nor does the absence of shared values do likewise in the negative. And if that is the case, then the matter of trade versus security must be weighed based on the degree of value-free interest in each and the impact each has on the ability of NZ to wield what limited power it has on the global stage.

The issue is problematic because NZ has long claimed to have a “principled” foreign policy that is based on the values of independence, multilateralism, transparency, non-proliferation, human rights adherence and assorted other good things. I do not believe that NZ actually adheres to these when push comes to shove or even as a foreign policy bottom line, but if virtue signaling in international relations is characterised as lauding the role of “principle” in foreign policy, then NZ is the semaphore of that movement.

To be sure, NZ is a trading nation and is committed in principle to it. Securing a favourable balance of trade that helps GDP growth and distribution is a matter of economic security and must be included in any national security estimates, to include threat assessments. There are as a result practical and principled reasons why the issue of assessing relative interest is so important and why it may favour the trade whores.

Put another way, what are the interests at stake in NZ’s security relationships and what is their worth to the national well-being when juxtaposed against the country’s trade relationships (since security and trade have been uncoupled in the NZ foreign policy perspective)? If the benefits of trade are real and immediate while the benefits of security partnership are more ethereal or hypothetical than real (especially given the actual and opportunity costs involved), interest would dictate that trade should be favoured over security. But what if the benefits of security relations are more like those of insurance policies, in which you only fully realise them when you need them? How do you calculate the pluses/minuses of the trade-security dichotomy over the medium to long-term?

I do not have the answer to this. I have written plenty about the NZ-PRC-US strategic triangle and the unfortunate balancing act NZ has to engage in because of the misguided attempt to trade preferentially with China, on the one hand, and seek security guarantees through partnership with the US, on the other. Either could have worked in isolation or when the two great powers were not in competition, as it seemed when the two-track foreign policy approach was developed and refined in the late 1990s and early 2000s. But those days are long gone. There are ascendent and descendent great powers contesting for dominance in the Western Pacific, and we are just another pawn in their increasingly acerbic game.

So the question now is how do we measure “interest” in our trade and security relationships and which, on balance, should we favour given the centrifugal pull of each on our policy-makers? Do we give up our Western-centric security ties to fully embrace a China-led Asian/non-Western foreign policy orientation? Or do we give up the material benefits of our Asian-focused trade, learn to live within our means and reaffirm our security ties to our “traditional” partners? Is there a middle road or happy medium that can be pursued without suffering the consequences of alienating our partners on either side?

That seems to be the preferred option for the moment. But that assumes that NZ has a choice in the matter and that its behaviour will influence the corresponding behaviours of its larger, contending interlocutors because their respective interests are maintained by our dichotomous foreign policy approach. That is a very tenuous assumption to make because it is also quite possible that in the end it will be a larger partner who, exercising its power over us in its own national interest within a strategic context dominated by great power rivalries, that makes the choice for us.

Plus ca change, or, does Labour have a foreign policy?

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Among the things mentioned during the 2017 election campaign, foreign policy was not one of them. This is not surprising, as domestic policy issues tend to dominate election year politics in times of peace in virtually all democracies. The syndrome is compounded in New Zealand, where matters of diplomacy, international security and trade are notable for their absence in both parliamentary debates as well as public concern, only surfacing during moments of controversy surrounding specific issues such as foreign troop deployments, NZ involvement in Anglophone spy networks or negotiating trade deals that appear lopsided in favour of other states and economic interests.

Even if foreign policy is not a central election issue, it nevertheless is an important area of governance that should in principle reflect a Party’s philosophy with regard to its thrust and substance. Given that the Labour-led coalition that formed a government in 2017 represents a departure from nine years of center-right rule, it is worth pondering what approach it has, if any, to reshaping foreign policy in the wake of its election.

It should be noted that NZ foreign policy has been relatively consistent over the last 20 years regardless of which party coalition was in government. Dating to the break up of the ANZUS defense alliance on the heels of its non-nuclear declaration in 1985,  NZ has championed an “independent and autonomous” foreign policy line that, if not completely integrating it into the non-aligned movement that rose during the Cold War, granted it some latitude in how it approached its diplomatic relations and international commitments. Foremost amongst these was support for multilateral approaches to international conflict resolution, concern with ethics, rules and norms governing international behaviour, advocacy of small state interests and a self-assigned reputation as an “honest broker” in international affairs. Issues of trade, diplomacy and security were uncoupled once the Cold War ended, something that allowed NZ to navigate the diplomatic seas without the constraints imposed by binding alliance ties to larger partners.

From the mid-90s there has been a trade-centric core to NZ foreign policy, to the point that promoting “free” trade and negotiating trade deals, be they bi- or multilateral in nature, is seen to have overshadowed traditional diplomatic and security concerns such as nuclear non-proliferation, environmental protection and human rights promotion. This “trade-for-trade’s sake” approach was initiated by the Shipley government but deepened under both the 5th Labour government as well as the National-led governments headed by John Key. After 9/11 it was paralleled by a reinforcement of security ties with traditional allies such as Australia, the US and the UK, in spite of the fact that the move towards expanding trade relationships in Asia and the Middle East ran against New Zealand’s traditional advocacy of a principled foreign policy that defended human rights as well as the thrust of the geopolitics perspectives of security allies (which view NZ trade partners such as China and Iran as adversaries rather than partners).

Although both Labour and National continued to voice the “independent and autonomous” foreign policy line during the 2000s, what actually took place was the development of two separate tracks where NZ pushed trade relations without regard to security commitments and human rights, on the one hand, and on the other hand deepened its involvement in US-led security networks without regard to broader diplomatic concerns. This was formalised with the signing of the bi-lateral Wellington and Washington Declarations in 2010 and 2012. For NZ diplomats, the parallel track approach was a matter of keeping eggs in different baskets even if it violated the long-standing principle of security partners trading preferentially with each other. That is not a problem so long as NZ trading partners are not seen as hostile to or competitors of the US and its main allies. Yet NZ chose to expand its trade ties with China with the signing of a bilateral Free Trade Agreement (FTA) in 2008, something that has not only increased its trade dependency on China in the years that followed (China is now NZ’s second largest export market and third largest import market), but also put it in the unenviable position of trying to remain balanced in the face of increased US-China competition in the Western Pacific Rim. Similarly, NZ-Iranian trade ties, and the nascent talks about NZ-Russian bilateral trade, both run the risk of negatively counterpoising NZ’s economic and security interests in each case.

Following Labour’s lead, the National government doubled its efforts to reinforce its ties to the US-led security network while pushing for trade agreements regardless of domestic opposition to both. It committed troops to the battle against Daesh in Iraq and Syria and continued to maintain presence in Afghanistan after its formal commitment to the ISAF mission ended in 2013. It revamped and upgraded its commitment to the 5 Eyes signals intelligence collection partnership that includes the US, UK  Australia and Canada. It loudly advocated for the TransPacific Partnership Agreement (TPPA) even though the 12 country pact was largely seen as favouring US economic interests and serving as the economic component of a US containment strategy towards China in the Western Pacific.

Now it is the Labour-led coalition headed by Jacinda Ardern that holds the reins. What can we expect from it when it comes to foreign policy? Continuity when it comes to the “two-track” approach? A deepening of one track and softening of the other? An attempt to bring a third track–what might be called a humanitarian line that re-emphasises human rights, environmental protection and non-proliferation, among other rules-based policy areas–into the mix?

From what is seen in its foreign policy manifesto, Labour appears to want to have things a bit of both ways: overall continuity and commitment to an “independent” foreign policy but one in which ethical concerns are layered into trade policy and in which international security engagement is framed by UN mandates and multilateral resolutions (as well as a turn away from military combat roles and a re-emphasis on peace-keeping operations). A commitment to renewed diplomatic endeavour, particularly in international fora and within the South Pacific region, is also pledged, but the overall thrust of its foreign policy objectives remain generalised and rhetorical rather than dialed in on specifics.

A few months into its tenure, the new government has done nothing significant with regards to foreign policy. Jacinda Arden made some noises about resettling the the Manus detainees in NZ during her first official trip abroad, only to be rebuked  by Australian PM Malcolm Turnbull and her own Opposition. She also made  ill-advised comments about who Donald Trump may or may not thought she was, leading to skepticism as to the veracity of her story. NZ First leader Winston Peters was named foreign minister more as a matter of style (and reward) rather than in recognition of his substance when it comes to foreign affairs. Likewise, Ron Mark got the nod to be Defense Minister in what appears to be a sop thrown to an old soldier who enjoys military ceremonies but cannot get his medals rack sorted correctly. Andrew Little was apparently made Minister responsible for Intelligence and Security because he is a lawyer and a reputed tough guy who as Opposition Leader once sat on the Parliamentary Select Committee on Intelligence and Security, rather than because he has any particular experience in that field, especially with regard to its international aspects. The Greens, in the past so vociferous in their defense of human rights, pacifism, non-interventionism and anti-imperialism, have gone silent.

As for the Labour Party foreign policy experts, whoever and how many there may be (if any), the question is how do they see the world. Do they use (neo) realist, idealist, constructivist or some hybrid framework with which to frame their perspective and that of their government? Do they use international systems theory to address issue linkage in foreign policy and to join the dots amongst broader economic, social, military and political trends in world affairs as well the nature of the global community itself?  Are they aware of the Melian Dilemma (in which small states are often forced to choose alliance between competing Great Powers)? iven the predominance of trade in NZ foreign policy, how do they balance notions of comparative and competitive advantage when envisioning NZ’s preferred negotiating stance? If not those mentioned, what conceptual and theoretical apparatuses do they employ? On a practical level, how do their views match up with those of the foreign affairs bureaucracy and career diplomatic corps, and what is their relationship with the latter?

Issues such as the ongoing NZDF deployments in Iraq (and likely Syria, if the NZSAS are involved) have not (yet) been reviewed in spite of early campaign promises to do so. Nor, for that matter, has Labour taken a detailed critical eye to the stalled TPPA negotiations now that the US has abandoned them, or re-examined its diplomatic approaches towards the Syrian, Ukrainian and Yemeni civil wars, South China Sea conflicts, the North Korean nuclear weapons program, post-Brexit economic relations, maritime conservation regimes and a host of other important and oft-contentious topics.

Judging from the manifesto it is hard to discern a coherent intellectual underpinning to how Labour policy makers approach international relations. It is also difficult to know how the new government’s foreign policy elite relate to the careerists charged with maintaining NZ’s international relations. So far, there is no identifiably Labour approach to foreign affairs and policy carry-over from previous governments is the norm.

That may not hold for long. The election of Donald Trump to the US presidency has changed the global environment in which NZ foreign policy is formulated and practiced because if anything, he has rejected some of the foundational principles of the NZ approach (support for the UN and multilateralism) with his “America First” philosophy and has increased global tensions with his belligerent posturing vis a vis adversaries and his bullying of allies. That combination of provocation, brinkmanship and alienation of allies brings with it high risks but also a diplomatic conundrum for NZ. Given that NZ maintains good relations with some of US adversaries as well as allies, yet is intimately tied to the US in uniquely significant ways, its ability to maintain the dichotomous  approach to an independent foreign policy may now be in jeopardy.

After all, the US now demands open expressions of “loyalty” from its allies, for example, in the form of demands that security partners spend a minimum of two percent of GDP on defense (NZ spends 1.1 percent), and that trade partners give acknowledged preference to US economic interests when signing “deals” with it. In that light, and with Trump increasingly looking like he wants open conflict with one or more perceived rivals (and is on a clear collision course with China with regards to strategic preeminence in the Western Pacific), the “two-track” NZ foreign policy may now be more akin to trying to straddle a barbed wire fence while balancing on ice blocks rather than a matter of saving diplomatic eggs.

In light of this, it is time for the Labour government to stand up and be heard about where they propose to steer NZ in the international arena during what are clearly very fluid and uncertain times.

From failure, opportunity comes.

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When President Trump signed the executive order withdrawing the US signature from the Trans Pacific Partnership Agreement (TTPA), he signed the death warrant of that multinational trade deal in its present form. The US was the core member of the TPPA and held the dominant negotiating position within it, so the decade-in-the-making, laboriously undertaken and vexing complex compact that was agreed to by the other eleven signatories is now all but null and void.

There are options, however, for the TPPA that may allow it to survive and thrive in light of Trump’s unilateral abrogation.

First, the other eleven member states can put the agreement into hibernation, wait for the 2020 US presidential election and hope that a more trade-oriented president succeeds Trump.

Second, they can hope that the Republican congressional leadership will force Trump to reverse his decision sometime between now and 2020. That would only occur if Trump is weakened by some failure and the GOP sensed that it could re-assert its traditional pro-trade stance at his expense. The Democrats would welcome the move for opportunistic partisan reasons even if some of its leading figures such as Bernie Sanders also oppose the TPPA and applauded Trump’s decision to pull plug on it.

Third, the members could look to themselves and re-draw an agreement that is less US-centric. Many of the provisions insisted on by the US could be reconsidered and even dropped in exchange for increased preferences for the interests of previously junior TPPA partners.

Fourth, the remaining TPPA partners could look to fill the void left by the US with another large market economy. The one that springs immediately to mind is China. That is where things get interesting, and where opportunity may lie.

China is already party to the ASEAN-China Free Trade Agreement (ACFTA) that established a regional free trade area that is the largest in terms of population and third largest in term of trade volume and nominal GDP. Some of the ACFTA signatories are also parties to the TPPA (Brunei, Malaysia, Singapore, Vietnam). This agreement is considered to be a “true” free trade agreement in the Ricardian sense because it reduces tariffs across 7,881 product categories to zero percent, with the result being that tariffs on ASEAN goods sold to China fell to 0.1 percent and those of China sold in ASEAN to 0.1 percent in the year the agreement went into force (2010)

The non-US TPPA members could opt to negotiate an agreement with ACTFA as one course of action. That may be difficult given that the TPPA is not a “genuine” FTA as much as it is an investor guarantee agreement (IGA) in which market regulations are altered to attract foreign investors and these are protected from legal liability in the event of disputes with the host state. What is not included in the TPPA are across-the-board reductions to zero tariff, and in fact many domestic industries remain protected or subsidised throughout the TPPA membership as part of the horse trading undertaken during negotiations over its central tenets. But it may be possible to reconcile the two trade deals in an effort to create a new super trade bloc on neo-Ricardian grounds.

Another option might be to invite China to the table. It has the second largest market in the world and is continues to grow at a sustained and rapid pace in spite of the vicissitudes of the world economy over the last two decades. It is making the transition from export platform to a mixed domestic mass consumption/value-added export model, and it has previously expressed interest in joining the TPPA. The US blocked consideration of China’s membership because it saw the TPPA as the economic equivalent of the military “pivot to Asia” announced by the Obama administration, that is, as a hedge against Chinese economic, diplomatic and military influence in the Western Pacific Rim in what amounts to a new Containment Policy in the Asia-Pacific.

With the US gone, China has an opening and the remaining TPPA members have an opportunity. The TPPA will have to be renegotiated, but it is likely that the non-negotiable provisions insisted by the US will not be supported by the Chinese and can be dropped in the effort to entice their interest. In turn, China might have to accept something less than blanket reductions in uniform tariffs and agree to a tariff reduction regime that is more segmented and scaled in orientation and gradual and incremental in application (i.e. more product or industry specific and phased in over a longer period of time). That is clearly within the realm of possibility, as is Chinese agreement to other TPPA provisions stripped of their US-centric orientation.

China has already signalled its intentions in this regard. President Xi used this year’s Davos Forum to preach the virtues of free trade and global commerce, arguing against protectionism as an impediment to international understanding and exchange. China has proposed the creation of a Regional Comprehensive Economic Partnership (RCEP) along the lines mentioned above with regard to an ACTFA-TPPA merger but with the provision that the US be excluded. There are many details to be ironed out but the groundwork has been laid for that to happen.

What makes the turn to a China-included trade bloc a potentially win-win proposition for remaining TPPA signatories is that the key provisions demanded by the US–changes in market regulations and preferential market entry clauses for US business interests (including changes in patent and copyright protection) and imposition of limited liability clauses in the event US businesses are sued by local governments–were those that were most resisted by domestic audiences in several TPPA member countries. Removing them not only allows the agreement to be free of those constraints but also diffuses a source of domestic opposition in countries where such things matter.

One thing TPPA states should think carefully about, especially small states like New Zealand, is the invitation to negotiate bi-lateral trade deals with the US instead of the TPPA (something just announced by the Trump administration). The historical record shows that large asymmetries in market size favour the larger over the smaller partner in bilateral trade agreements. This is due to economies of scale, market dominance, and economic and geopolitical influence derived from market size advantages. The recent track record of bilateral deals between the US and smaller states reinforces this fact. Australia, South Korea, Chile, Colombia and the Central American nations plus Dominican Republic grouped in the CAFTA scheme all have bilateral FTAs with the US. In all instances the majority benefits accrued to US-based companies and industries and the benefits accrued in the partner states were limited to specific export markets (mostly in primary goods), with little flow-on, trickle down or developmental effects in the broader national economies.

So rather than “jump on a plane” to sign a bilateral deal with the US, as one wag put it, smaller states such as New Zealand need to think hard whether the bilateral alternative with the US is more long-term beneficial than a multilateral agreement, especially when it has shown that under a certain type of administration the US is willing to renege on its commitments even if they are multilateral rather than bilateral in nature. With the Trump administration also set to review and replace the tripartite North American Free Trade Agreement with Canada and Mexico (NAFTA), it is clear that honoring commitments and maintaining continuity in trade policy is not, even if just for the short term, on the US agenda.

When one widens the lens on what the Trump administration is doing in terms of its threats to withdraw from various bi-and multinational defense agreements unless the partner states “pay more” for US protection, it becomes clear that the US is not, at least for now, a reliable international partner.

The reason is that the new US attitude to trade is part of a larger phenomenon. The neo-isolationist protectionism embedded in the “America First” approach adopted by the Trump administration has ended, however temporarily, over 50 years of bipartisan consensus in the US political elite on the merits of international engagement. Be it in trade, foreign aid or collective defense, the US policy elite, both public and private, have embraced globalisation as a means of projecting US power, influence and values world-wide. That era has come to end for the time being, and so long as Trump is successful in pursing his “America First” strategy it will continue to be so.

That may or may not make America Great Again but it could well have a negative impact on those who seek mutual benefit by engaging with it. They will be asked to do more, pay more and offer more concessions in order to be granted US favour.

In the absence of an alternative, that is an unenviable position to be in. But if alternatives are available, then the current moment in US politics provides a window of opportunity to countries that have found themselves marginalised by Trump’s policy directives. The re-orientation of TPPA is one such opportunity because, if for no other reason, a US return to the TPPA fold in the post-Trump era will see it with much less leverage than it had up until now. Add to that the possibility of increased benefits via a renegotiated deal with the remaining and possibly new partners, and the downside of the US withdrawal seems acceptable.

From a smaller nation perspective, that is a good thing.

Media Link: Political Risk and Sustainable Enterprise.

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I was invited by the nice folk at sustainnews.co.nz to contribute a short essay related to sustainable economics from my perspective as a geopolitical and strategic analysis consultant. The essay wound up  making the connection between political risk and sustainable enterprise, and more importantly, the relationship between sustainable enterprise and democracy. You are welcome to view it here.