The Triple Crisis Shaking the World

By JOSCHKA FISCHER

This article taken from www.project-syndicate.org

More than just a public-health disaster, the COVID-19 pandemic is a history-defining event with far-reaching implications for the global distribution of wealth and power. With economies in free-fall and geopolitical tensions rising, there can be no return to normal: the past is passed, and only the future counts now.

BERLIN – The COVID-19 pandemic is entering its second phase as countries gradually reopen their economies and loosen or even revoke strict social-distancing measures. Yet, barring the arrival of an effective, universally available therapy or vaccine, the transition back to “normal” will be more aspirational than real. Worse, it risks triggering a second wave of infections at the local and regional level, and possibly on a much larger scale.

True, political decision-makers, health-care providers, scientists, and the general public have learned a great deal from the experience of the first wave. Though a second wave of infections seems highly probable, it will play out differently than the first wave. Rather than a full-scale lockdown that brings economic and social life to a standstill, the response will rely mainly on strict but targeted rules for social distancing, face masks, telecommuting, video conferencing, and so forth. But, depending on the next wave’s intensity, local or regional lockdowns may still be deemed necessary in the most extreme cases.

Much like the first wave of the pandemic, the next phase will involve a trio of simultaneous crises. To the risk of new infections getting out of control and spreading globally once again must be added the ongoing economic and social fallout and an escalating geopolitical bust-up. The global economy is already in a deep recession that will not be quickly or easily overcome. And this, along with the pandemic, will factor into the intensifying Sino-American rivalry, particularly in the months leading up to the United States’ presidential election in November.

As if this combination of health, socioeconomic, and geopolitical upheavals were not destabilizing enough, one also cannot ignore the Trump factor. If US President Donald Trump were to win a second four-year term, the current global chaos would escalate dramatically, whereas a victory for his Democratic opponent, Joe Biden, would at least bring greater stability.

The stakes in the US presidential election could scarcely be higher. Given the world’s mounting crises, it is no exaggeration to say that humanity is approaching an historic crossroads. The full extent of the economic recession probably will not become apparent until this fall and winter, when it will most likely come as another shock, because the world is no longer accustomed to such dramatic contractions. Both psychologically and in real terms, we are accustomed to continuous growth.

Will richer countries in the West and Asia be able to deal with a deep, widespread, prolonged recession or even depression? Even if trillions of dollars in stimulus spending proves sufficient to offset a full collapse, the question will be what comes next.

In the worst scenario (which is not impossible), Trump is re-elected, the second wave of the pandemic is global, economies continue to crash, and the new cold war in East Asia turns hot. But even if one does not assume the worst, the triple crisis will usher in a new era, requiring that national political and economic systems and multilateral institutions be rebuilt. Even in the best-case scenario, there can be no return to the status quo ante. The past has passed; only the future counts now.

We should harbor no illusions about what might and should come next. The crises triggered by the pandemic are so deep and far-reaching that they inevitably will lead to a radical redistribution of power and wealth at the global level. The societies that have prepared for this outcome by mustering the necessary energy, know-how, and investments will be among the winners; those that fail to see what is coming will find themselves among the losers.

After all, long before the pandemic, the world was already undergoing a transition to the digital age, with far-reaching implications for the value of traditional technologies, legacy industries, and the distribution of global power and wealth. Moreover, an even greater global crisis is already fully visible on the horizon. The consequences of runaway climate change will be far graver than anything we have ever seen, and there will be no chance of a vaccine to solve that problem.

The COVID-19 pandemic thus marks a real turning point. For centuries, we have relied on a system of political economy comprising sovereign egoistical nation-states, industries (both under capitalism and socialism) that run on fossil fuels, and the consumption of finite natural resources. This system is quickly reaching its limits, making fundamental change unavoidable.
The task now is to learn as much as we can from the first wave of the triple crisis. For Europe, which seemed to have fallen far behind economically and geopolitically, this moment represents an unexpected opportunity to address its obvious shortcomings. Europe has the political values (democracy, rule of law, and social equality), technical know-how, and investment power to act decisively in the interest of its own principles and goals, as well as those of humanity more generally. The only question is what Europeans are waiting for.

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SAUDI ARABIA AND RUSSIA REACH MAJOR DEAL TO CUT OIL PRODUCTION

Oil prices were at record lows for the past couple of months as the the production increased by Saudi Arabia and Russia. But on 9th of April those two states agreed on a major deal to cut oil production.

Find below the news from axios.com regarding the sucject.

 

OPEC+, led by mega-producers Saudi Arabia and Russia, reached a tentative agreement Thursday to impose large cuts in oil production as the coronavirus pandemic fuels an unprecedented collapse in demand, per Bloomberg and Reuters.

Why it matters: The revival of OPEC+ collaboration patches up the early March rupture between the countries, which had pushed already depressed prices down much further by threatening to unleash even more new supplies into the saturated market.

The outlets, citing anonymous sources in the group, say the emerging OPEC+ agreement calls for cutting 10 million barrels per day in May and June.
That would amount to roughly 10% of global demand levels before the outbreak, which analysts now see cutting around 25 to 30 million barrels per day — or more — from global consumption in the near-term.
How it’s playing: Oil prices rose earlier today in apparent expectation of the agreement, but later fell back.

Prices surged late last week when talk of a very steep cut first surfaced. Today’s limited move suggests traders have already priced the reductions in — and recognize they pale in comparison to demand losses.
The global benchmark Brent crude was trading at around $32-per-barrel as of 2:30 p.m. ET — around $10 higher than they were in the middle of last week but below where they started the day.
How it works: Per the Wall Street Journal, Saudi Arabia is pledging to curb 4 million barrels per day from April production levels, while Russia will scale back by 2 million barrels daily.

“The tentative OPEC+ plan would see 10 million barrels a day of cuts through June, dropping to 8 million a day from July and then 6 million a day in the first quarter of next year,” Bloomberg reports, citing an anonymous delegate to the meeting.
What they’re saying: “The market’s muted price reaction is a sobering indicator of the headwinds that remain, namely demand destruction,” RBC Capital Markets analyst Michael Tran told Reuters.

“If true, the preliminary production cut of 10 million bpd among OPEC+ members is a good first step, but it would still not be enough given the 20 million bpd+ supply overhang expected for 2Q20,” the consultancy Rystad Energy said in a note when word of the agreement began emerging.
What’s next: Energy ministers from G20 nations are slated to meet remotely Friday, and Russia and Saudi Arabia are hoping for millions of barrels per day in combined cuts from countries outside the OPEC+ group, including the U.S., the world’s largest producer.

The Trump administration has declined to offer firm commitments, but has repeatedly touted upcoming market-driven cuts in U.S. production as low prices prompt oil-and-gas companies to scale back.

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HONG KONG IS GIVING $1200 TO ALL CITIZENS

To accelerate the slowing economy and to get rid of the effects of the protest Hong Kong administration decided to give $1200 to its 7 million citizens. Here is the infromation from the cnn.com;

Hong Kong (CNN Business)

Hong Kong is handing most of its residents a pile of cash to spend as it tries to save its slumping economy from the aftermath of protests and the coronavirus outbreak.

The Asian financial hub said Wednesday that the measure — the cornerstone of a 120 billion Hong Kong dollar ($15.4 billion) stimulus package — will involve giving 10,000 Hong Kong dollars (about $1,280) to all permanent residents in the city who are at least 18. About seven million people will benefit from that program.
Financial Secretary Paul Chan also warned that the city will record its first budget deficit in 15 years due to the recession that began in the third quarter of 2019.
The situation is expected to worsen. Chan said the deficit for the next fiscal year through March 2021 is expected to hit a record high of around 4.8% of the city’s GDP.
“Hong Kong’s economy is facing enormous challenges this year,” Chan said. “The outlook is far from promising in the near term.”
The financial secretary said during a budget presentation that Hong Kong’s economy has been “dragged by a host of headwinds” that percolated last year, including fallout from months of mass protests, the ongoing US-China trade war and the slowing global economy.
Those issues pushed Hong Kong into recession, with the economy shrinking 1.2% overall last year, marking its first annual decline since the global financial crisis.
Now, it is also confronting the spread of the novel coronavirus, which “has dealt a severe blow to economic activities and sentiment in Hong Kong,” Chan told the city’s Legislative Council.
Hong Kong's Financial Secretary Paul Chan in a speech to lawmakers on Wednesday.
Hong Kong’s Financial Secretary Paul Chan in a speech to lawmakers on Wednesday.
Some of the money for the relief package will come from a special fund that has been established “in view of the deteriorating economic and employment conditions as a result of the novel coronavirus epidemic,” Chan said.
In addition to the government handout, the government will also slash income tax for some residents, he said, adding that this would impact almost 2 million taxpayers. Authorities also plan to give low-income residents of public housing a month of free rent, as well as provide a one-off allowance to 200,000 underprivileged households.
Next’s year’s projected budget deficit is “higher than what many people expected,” according to Terence Chong, an associate professor of economics at the Chinese University of Hong Kong.
But he added that Hong Kong can likely take the hit given it maintains a healthy financial cushion — it has about $145 billion in fiscal reserves.
“This [deficit] actually is not that big a deal,” Chong told CNN Business. “We do have ways to get back the money, so I’m not that worried about that.”
The Hong Kong government has been trying to boost its economy for months. It has already rolled out several rounds of stimulus collectively worth more than 30 billion Hong Kong dollars ($3.9 billion).
Despite the ongoing challenges, Chan said he believes the economy will be able to bounce back in the long term.
“Although the impact of the epidemic on our economy in the near term could possibly be greater than that of the SARS outbreak in 2003 … Hong Kong’s economic fundamentals remain solid,” he said. “The economy of Hong Kong should be able to recover once the epidemic is over.”
— CNN’s Eric Cheung contributed to this report.

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IMPACT OF CORONA VIRUS ON WORLD ECONOMY

No doubt that there were lot worse epidemics in the history of our old world but thanks to the developing information technologies the impact of the corona virus may be the biggest on global scale. Anyone who has internet access can read all the news about it and may get really anxious as the health authorities and politicians make some declarations almost everyday about it. There will be great economic impact on the world economy as China is one of the biggest economies in the world and again one of the biggest exporters of the world. With a population of around 1.4 billion China’s consumption of goods is signifcant alone and together with the psychology of foreign buyers the production of goods shall decrease and it will affect the world economy.

China is a very popular touristic destination in recent years and there is no doubt that the number of tourists who are willing to visit China this year shall drop tremendously. Most probably importers of Chinese goods shall stop their purchases until China becomes virus safe and this will affect the prices in China and the world.

Here are some views from the respectable sources of the world press regarding the situation;

 

How will the coronavirus affect the world economy?

by DW.com
Less consumption, idle factories, broken global supply chains. It’s not just the Chinese economy that is suffering from the spread of the coronavirus — but the moment of truth is yet to come.
The coronavirus epidemic is spreading further in China and Chinese experts believe that it could peak in 10 to 14 days. Around 45 million people in the Chinese province of Wuhan are cut off from the outside world. In order to curb the spread of the virus, Beijing has extended the Chinese New Year holiday, and pushed back the opening of the stock markets. When it finally opened on Monday, stock prices crashed. They, however, stabilized again on Tuesday.

As a precaution, Beijing had given the financial system an unusually high injection of 1.2 trillion yuan (€156 billion, $171 billion) to keep the domestic money market and banking system functioning. In addition, import duties on goods that are important in the fight against the disease were eased.

But it’s not only the stock markets that have been hit. Chinese consumption has also plummeted as a result of the outbreak. Large New Year’s events were canceled; tourist attractions and cinemas were closed. The doors remain closed at around 2,000 Starbucks, hundreds of McDonald’s restaurants, 130 Uniqlo shops and at all 30 Ikea stores.

The travel industry has also been badly affected. Several countries issued travel warnings about China; some airlines even suspended flights to China. Lufthansa and its subsidiaries Swiss and Austrian Airlines canceled their connections to and from Beijing until February 29. The Chinese authorities urged its own population to postpone travel abroad and prohibited domestic travel groups.

Most factories and offices will remain closed this week. Several carmakers, including Volkswagen, BMW, Volvo, Toyota and Tesla, extended their annual New Year production breaks. Additionally, China’s largest oil refinery cut production by around 600,000 barrels a day due to shrinking fuel demand.

Learning from SARS

When SARS hit China 17 years ago, domestic trade suffered significantly and stock markets fell. However, the global economy is now much more interconnected and the Chinese economy is much more important. At the time China’s share of the world economy was only around 5%, today it is more than 16%.

Now the world’s second-largest economy is an important export market for German products, an important production location for German industrial companies and the starting point for many global supply chains.

The ifo Institute’s economic expert Timo Wollmershäuser believes that “the economic consequences will be greater than the SARS epidemic.” That crisis, which lasted 6 months, cost China about 1% growth in gross domestic product (GDP), a number so small that it was hardly reflected in the German figures. “Since then, the country’s economic importance has grown, the infection rate is greater and the Chinese government has reacted harder,” said Wollmershäuser.

Too early for a true analysis

Many experts believe that it is too early to talk about the extent of economic consequences. Jens Hildebrandt, the director of the German Chamber of Commerce in Beijing, told DW that the country is at a practical standstill anyhow because of the Chinese New Year and spring festivities. “All factories close for three to four weeks,” he added. Thus, even under normal circumstances, the entire economy — except for the important tourism industry — would be offline.
CORONAVIRUS: TIMELINE OF THE DEADLY VIRUS IN CHINA AND WORLDWIDE

On December 31, 2019, China notifies the World Health Organization of a string of respiratory infections in the city of Wuhan, home to some 11 million people. The root virus is unknown and disease experts around the world begin working to identify it. The strain is traced to a seafood market in the city, which is quickly shut down. Some 40 people are initially reported to be infected.
How the coronavirus outbreak is impacting employment and ongoing production will only become apparent from next or the week after next, according to Hildebrandt, since the Chinese government has extended the holidays until February 2 and in some cities until February 9.

The reason is that a large part of the factory workers come from the region around Wuhan, which is almost completely quarantined, says Hildebrandt. Only in the coming week will it become clear how many workers will return to the main production locations in the Shanghai and Beijing areas and in southern China, and to what extent production and thus the international supply chains will be affected by the virus.

Hitting the supply chain

“We see no signs as of now that supply chains will be completely disrupted, even if there are delays,” said Gerhard Wolf, head of foreign trade at the Association for Wholesale, Foreign Trade and Services (BGA). His credo: No need to panic.

So far, there is no trace of panic among German companies, says Hildebrandt from the German Chamber of Commerce in Beijing. “At the moment they are acting rather calmly, though plans are being drawn up for how to deal with the situation.”

The German Institute for Economic Research (DIW) is also taking a careful approach. “It is still far too early to be able to carry out a serious analysis of the economic effects of the coronavirus,” said DIW President Marcel Fratzscher. “If the spread of the coronavirus in China and worldwide can be successfully contained, then the economic costs should be limited and be limited to a short-term loss of production in China.”

Stopping the supply chain

However, should the production stops in China last longer, the international supply chains would be at risk, warns Klaus-Jürgen Gern from the Kiel Institute for the World Economy.

“China is significant as a supplier to the rest of the world,” said Gern. A long standstill could interrupt supply chains in the chemical, automotive, textile and electronics industries, warn Allianz economists. International companies would no longer get the parts they need and would have to find other suppliers or shut down production.

One that has already been hit is the South Korean manufacturer Hyundai Motor. The company announced on Tuesday it would suspend all production in South Korea later this week. The reason for the suspension is that the cable harnesses required for production, which Hyundai usually gets from China, are just not coming.

 

What Will the Coronavirus Do to the US & Chinese Economy?
by Wolf Richter • Feb 6, 2020 •
Is this the black-swan event people have been predicting for years?

The numbers are getting bigger every day. As of the end of Saturday in China, there have been over 14,000 confirmed cases of the novel coronavirus, which originated in Wuhan, a city with 11 million people, in Hubei province. 304 people have died in China, according to official numbers.

And there are reports coming out that confirm suspicions that official numbers in China may have to be taken with a grain of salt. According to a report by the New York Times today, Chinese authorities silenced doctors and others who were seeing the first symptoms starting in early December. Authorities obfuscated even the basics: for example, they told the public that they closed the food market, where the virus had first infected humans, for renovations.

This crackdown on doctors and others kept people in the dark, prevented them from taking protective measures, delayed an effective public health response, and allowed the virus to spread.

What the Chinese government is still not telling the public, or what it is telling the public that is wrong, just adds to the list of known unknowns that the economy and markets have to deal with.
And now there are fears what unknown unknowns may still be lurking out there that might surprise everyone.

Maybe all this will blow over in a few weeks, and China’s economy goes back to normal, with just another flu-like disease on its hands, running in parallel with the flu.

Or maybe it will drag out and get worse and more complicated and more insidious, as baffled authorities lumber from what with hindsight may look like one wrong decision after another, and then the repercussions are going to spread.

One thing we already know: 14 provinces and cities that account for nearly 70% of China’s GDP have now shut businesses and factories until at least February 9.

In the US, 8 cases of coronavirus have been confirmed. In Japan 17. None of these patients have died. But in the Philippines, a Chinese man, traveling from Wuhan, has died of the coronavirus, the first death outside China.

On Friday, the US Department of Health and Human Services declared a public health emergency and said that foreign citizens who’ve traveled anywhere in China within the past 14 days will be denied entry to the US. And it said that US citizens who had traveled in Hubei province will be quarantined for up to 14 days.

We don’t know yet what the coronavirus will end up doing, though we know what the flu virus has already done so far this year in the US alone.

The CDC estimates that this flu season in the US alone, that medical conditions caused by the flu have killed at least 10,000 people. The top end of the CDC’s weekly estimate now sits at 25,000 deaths, with somewhere around 20 million Americans infected with the flu, and we’re only about half-way through the flu season.

Globally, the flu has killed between 290,000 and 650,000 people each flu season in recent times.

But there are differences between the flu and the novel coronavirus.

This coronavirus is new, and there is no vaccine, while the flu is a known issue that kills tens of thousands of people in the US every year, and hundreds of thousands of people globally every year, though there is a vaccine which is only moderately effective, and tens of millions of people in the US alone get sick every year, and miss work and stop shopping and cancel trips.

But because it happens every year, it’s part of the seasonal economic ups and downs, and it’s baked into the cake of life, so to speak, and it’s baked into the economy and into financial markets.

But this coronavirus is new, and it’s in addition to the ravages of the flu. The flu will kill tens of thousands of people in China this flu season. The coronavirus is in addition to that. And preliminary data indicates that the coronavirus death rate is quite a bit higher than the death rate of the flu, though it’s not nearly as high as the death rate of SARS was.

And there is something else that is different – the reaction to the virus by authorities and large and small economic players, spreading across China, from draconian quarantines and lockdowns of entire huge cities and travel restrictions, to closed universities, cafe chains, stores, and manufacturing plants.

Entire transportation systems have gotten shut down. People stopped going places – and this was the Chinese New Year when nearly all of China goes somewhere. And just plain daily life has been disrupted in the affected areas, as the fear of infection is keeping many people at home. And economic activity has dropped.

Economic activity doesn’t need to drop a lot in an economy as vast as China’s before it has an impact globally.

On Monday, February 3, the financial markets in China will reopen, after having been closed since the end of trading on January 23rd for the New Year break. Over the last five trading days before the break, the Shanghai Composite index dropped over 3%.

Markets were supposed to have reopened on Friday, January 31, but authorities extended the national holiday to get a better handle on the markets before they re-open.

Chinese government entities, state-owned financial firms, and regulators, along with big financial market participants will try to keep the bottom from falling out of the markets, as they have done in the past.

Authorities have urged market participants to not panic and to remain calm. China’s securities regulator urged investors to look at the coronavirus “rationally and objectively.” And it urged investors to “adhere to the concept of long-term investment and value investment.”

And the People’s Bank of China said it would drown the market in liquidity over the next few days to prop up the markets.

Nevertheless, I expect some fireworks in Chinese markets on Monday, as markets are trying to price in the known unknowns, and as they’re trying to figure out what the unknown unknowns might be.

Authorities may also counter this with some monetary and fiscal stimulus in order to prevent further slowing of the Chinese economy. The defaults in corporate debt are already spooking said authorities; and at smaller and regional banks, loans have soured to such an extent that bailouts are now happening in a routine manner. The coronavirus comes on top of it.

One thing that is becoming increasingly clear: the reaction to the coronavirus will be a blow to the Chinese economy, at least for the period that these measures are in place, and some of it will percolate around the world.

Transportation and tourism outside China are already being impacted. A number of airlines have canceled flights in and out of China. Foreign citizens who’re coming from China, in particular Chinese citizens, are no longer allowed into a number of countries.

In many places, tourists from China have become the largest group. Suddenly, they’re not showing up. They’ve made reservations, but they’re not coming. This impacts the tourist industries in cities like Paris, San Francisco, and Tokyo.

China has become the largest market in the world for passenger vehicles. Peak sales occurred in 2017, with nearly 25 million cars and light trucks delivered. But in 2018 and 2019, sales fell by a combined 13% from 2017. This year already started out on a bleak note, and then the coronavirus hit.

It is hitting in two ways:

One, auto sales: people have cut back on going out and doing stuff, and buying things, and in some of the most affected areas, auto sales have come to a near-standstill.

And two: production. Auto manufacturing is one of China’s official key industries. All major global automakers have plants in China. Most of the vehicles sold in China are made in China.

Some of the biggest automakers in China, including Volkswagen and GM, have announced that they closed at least some of their plants through February 9. Tesla’s Gigafactory in Shanghai also suspended production before it ever got going properly. And companies across the board have warned that they anticipate disruptions.

The components industry in China is huge. And it faces similar shutdowns that will then translate into supply chain disruptions for automakers.

Research firm IHS Markit said that if the coronavirus spreads rapidly across China, it could entail a further wave of plant closings that might drag into mid-March, and this could slash auto production by as much as 32%.

In terms of global automakers, if the disruption to their global supply chains and the plunge in sales in China lasts much beyond February 9, they’re going to show up in their first-quarter earnings calls, or before. And this includes GM, which is a huge player in China.

The reduction in every-day activity in China and the shutdown of part of the transportation system, including the cancellation of countless flights, is going to impact global demand for crude oil. And this already hit the beaten-up US shale oil industry.

The crude-oil benchmark grade, WTI, was trading at over $60 a barrel at the beginning of the year. It has since then slumped by 15% to below $52 a barrel, the lowest level since early August. This comes at the worst possible time for US shale oil producers, which are already reeling from overproduction, losses, and bankruptcies.

There are other industries that will be impacted by the reaction of authorities and economic players to the coronavirus.

But for once, the big trade deficit that the US has with China ensures that even if demand takes a nose-dive in China, it’s going to hit the US economy to a much smaller extent.

Supply-chain disruptions may become a headache for manufacturers in the US, particularly in industries with sophisticated machined products, such as the auto industry, that cannot be re-routed quickly.

And a general slowdown in the global economy is going to impact the US. Tourism and the entire travel industry, and airlines are going to take a hit, at least temporarily.

But here is the thing: health scares have a tendency to blow over fairly quickly, in terms of their economic impact. In the past, they disrupted things for a few months, and then everyone got used to it and adjusted to it, and companies found partial solutions and workarounds, and life sort of went back to normal.

The flu is a big killer, but has been baked into the economic pie. Companies and people live with it. Other diseases came and went. SARS has essentially disappeared.

Human nature is resilient and resourceful, and economies will get through this.

So I expect a significant impact in China in the first quarter, and I expect a small impact in the US economy. It’s going to put more pain on the US shale oil industry, but it was already in trouble before this started.

And if disruptions drag out, I expect troublesome supply chain issues that will eventually get worked out. Broadly speaking, inventories are high in the US. And there is a buffer for many products.

But the biggest factor is just how concentrated the US economy is on services and on consumer spending – not manufacturing.

So beyond some limited sectors, I don’t expect a huge impact in the overall US economy. I don’t think this is the black-swan event that people have been predicting for years. I expect that the reaction to the coronavirus will eventually settle down. This may happen over the next few weeks, or it may take longer, but it will settle down.

The outbreak of a health threat – whether it’s Ebola, SARS, or the coronavirus – always causes an uproar in the US media, and rightly so because people should know about it. But the economic impact of these health threats in the US – and that’s the key here, in the US – has been only minor in recent times.

The big thing that can kill the US economy is a disease in the financial system, as we have seen. The US economy runs on credit, and when credit gets the flu, as we have seen during the Financial Crisis, when banks and other financial firms threaten to collapse, that’s when all bets for the US economy are off.

What Will the Coronavirus Do to the US & Chinese Economy?

 

Coronavirus: The economic cost is rising in China and beyond
By Andrew Walker
BBC World Service economics correspondent
The furniture store Ikea closed all its 33 shops in China in response to the outbreak
The human cost of the coronavirus outbreak is climbing across China and beyond. The economic cost is also mounting, mainly, but not only, in China.

That damage is, for the most part, not due to the virus itself so much as efforts to prevent it spreading.

There are strict restrictions on moving out of Wuhan, where the outbreak began, a city with a population of 11 million.

The lockdown, also now extended to other parts of Hubei province, prevents business-related travel as well as the movement of goods and workers.

Fear of the virus also means many people will choose to avoid activities they think might expose them to the risk of infection.

So restaurants, cinemas, transport providers, hotels and shops are all quickly feeling the impact.

And the timing of the health crisis, during the lunar New Year break, means those industries have been particularly exposed to commercial losses.

The New Year holiday was extended for a few days by the national Chinese authorities and there have been longer extensions imposed by some provincial authorities, delaying the return to work for some businesses even longer.

Any delay resuming production and selling goods is likely to lead to cash-flow problems, especially for smaller operations.

Many companies will have to continue paying bills, including employees’ pay.

And for manufacturers selling goods abroad, there may be some issues with buyers becoming more reluctant to buy from China.

Herbert Wun, who owns Wing Sang Electrical, which makes products such as hair-straighteners and blow-dryers in Guangdong province, told BBC News, many companies would not have much slack to take this kind of impact, coming, as it did, on top of the US-China trade war.

And the epidemic “will add to the pressure on customers trying to shift their supply chain away from China”.

The impact is not confined to China.

International retailers have closed operations in China – the furniture seller Ikea and the coffee shop chain Starbucks, for example.

Several overseas airlines have stopped flights to China and international hotel chains have been offering refunds.

And beyond that, there is growing concern about integrated international supply chains.

China has a much bigger role in these networks than it did at the time of the last major health problem that emerged from the country – the severe acute respiratory syndrome (Sars) virus 17 years ago.

Hyundai, of South Korea, has suspended its car production because of problems with the supply of parts from its operation in China – an early warning sign of possible extensive disruption ahead.

China is an important supplier for the global motor industry and the electronics sector.

Many mobile phones and computers are made in China or at least have components manufactured there.

Financial markets have also felt the effect of the health crisis.

Stock markets around the world are lower than they were two weeks ago. China’s market fell 8% on the first day of trading after the holiday.

There has been a particularly marked impact on the prices of industrial commodities, as China is such an important buyer.

Crude oil hit its lowest level in more than a year.

It has dropped by about 15% in the past two weeks, reflecting declining demand from China – underlined by reports the country’s leading refiner, Sinopec, is cutting back.

A group of oil exporting nations is considering production cuts in an effort to reverse the price fall.

Copper is also cheaper – by about 13% over the past two weeks.

It is an important material for the construction industry, which is also sure to be affected in China.

Many of the suppliers of these commodities are emerging and developing economies.

It is early days to attempt to quantify the likely economic effects.

Much will depend on how well the Chinese authorities are able to contain the virus.

But some forecasters have made rather tentative efforts to put some numbers on the impact.

One example is the consultancy Oxford Economics which predicts the Chinese economy will grow less than 4% in the first quarter of 2020 from a year earlier.

For the full year, the forecast is average growth of 5.6%.

For both figures, the previous, pre-virus forecast was 6%.

It also expects the global economy to grow slightly less – by 0.2 percentage points – than it would have done otherwise.

But Oxford Economic says this is all based on an assumption the “worst case scenario” will be avoided. So there is a risk of the economic damage turning out to be more severe.

https://www.bbc.com/news/business-51386575

 

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FOREIGN POLICY INTERN LETTERS

 

Trade War and The New World Order: Is it time to say farewell to Neo-liberalism ?

Ali Hacıaliefendioğlu

 

In 2018, the United States declared a new tariff policy against goods which were being traded the US between China, and the new era of emphasized his trade approaches have begun. When President Donald Trump elected in 2016, he addressed promise to protect American people, workers and domestic manufacturers from unfair trade practices.[1] The main arguement in this approach is the stealing of the US intellectual property by China.[2] Under the direction of these allegations, the US administration made a decision to improve new tariffs against China, and we call this emerging event as ‘Trade War’.

In this article, I will tray to explain ‘What is Trade War ?’, ‘What are expected as consequences’ and ‘Is it End of the Neo-Liberalism ?’ in the light of Karl Polanyi’s double movement theory.

The membership process of China was not an easy case for the US and World Trade Organization (WTO). When the calendars showed 2000, the US , at that time Bill Clinton who was in office, accepted the request for membership of China to WTO.  Given the facts, it was clear that China at that time was not clearly ready to become a member of WTO because of human right issues and state structure. Donald Trump refers to this situation all the time, and says that ‘that war was lost many years ago by the foolish, or incompetent people who represented the US’. With this argument, Trump tried to show the unsuccessfulness of the presidents who served before him; Barack Obama, George W. Bush and Bill Clinton.[3]  Trump, with his discourses, implies that the former presidents’ administration was incompetent and that the 18 year process brought great economic damage to the US, and in this way, he tries to prove the legitimacy of his own policies.

In this section, it is necessary to understand the accusations of the USA against China and the validity of its claims.

The USA’s views on China

One of the main accusations of the USA is that China has stolen intellectual property of the companies which invested from the USA.[4] These stolen intellectual properties also include secret military technologies, and sort of advanced technologies which can be use of by ordinary people.[5] In fact, Mark Warner who is the US senator and the Vice Chair of the Senate Intelligence Committee, described Huawei a threat to national security.[6] According to some accusations, Huawei is one of the companies which stole intellectual property of the USA and disobeyed the sanction decision against Iran. In 2017, the USA published a formal investigation about these topics and showed that, with cyber attacks and stealing of intellectual properties which belonging to the USA costs 225bn-600bn dollars to the USA in a year.[7]

After this stage, we have to focus on Foreign Direct Investment (FDI) regime of China. The Chinese government requires a joint venture principle for foreign companies to invest. In this way, the Chinese FDI rules are forced on the investing companies to create an entity with Chinese partners.[8] According to some experts, this leads to an unfair relationship in the context of the WTO rules. Because, it is claimed that the USA companies had to share their technologies by forcing them to enter the Chinese markets. It is said that this situation should be punished with sanctions under the roof of the WTO.[9]

However, despite all these allegations made by the USA, Clinton’s former Secretary of Treasury and economist Larry Summers stated: ‘China’s technological progress is coming from terrific entrepreneurs who are getting the benefit of huge government investment in basic science. It’s coming from an educational system that’s privileging excellence, concentrating on science and technology. That’s where their leadership in some technologies is coming from, not from taking a stake in some US company.’[10] It is understood from this statement that, in addition to the accusatory attitudes towards China, it is said that China does not need to steal any technologies from the USA, and has an education system, and infrastructure to produce these technologies.

China’s views on the USA

After mentioning the USA grievances the issue is to be discussed from the China perspective. China is very uncomfortable with Trump’s policies and describe him as a ‘bully’.[11] Also, China describe the USA policies against neo-liberal system and  far from dialogue. So, it can be understood easily, China puts Trump’s policies in a revisionist approach, and China struggle with its self-confidence. It can be prove with some analysis; according to UN figures, the USA depends on China to buy only some 8% of all US exports, against it, China has to sell almost 25% of its goods to the US. [12] According to some other approaches, China’s economy is in a downturn and this situation is putting  pressure on President Xi’s policies. Under this political pressure, Mr. Xi is trying to deal with Mr. Trump.[13]

Despite all of this, China prefers to use a moderate language in international relations. As remembered, Mr. Xi stated that China would maintain a dialogue path towards the US protectionist policies and act according to the free market requirements in bilateral relation with other countries. This is also supported with quotes of Wang Qishan, Chinese vice-president who said a week after the summit of Buenos Aires. Mr. Qishan stated that Beijing is ready to talk with Washington to resolve the trade dispute.[14]

The approaches of the two countries can be briefly described in this way. As is known Trump’s administration placed  30% tariff on imported solar panels. (China is the most productive country in this sector.) On the same day, Trump’s administration also put 20% percent tariff on washing machines which were to be imported. China exported 425 million dollars worth of washers to the US.[15] However, the taxes imposed on 1 March 2018 are considered as the beginning of the Trade War. As it is known, the Trump administration has set tariffs 10% on alluminium and 25% on the steel.[16] These two important assets also used in both military technologies and civil technologies that is mentioned above. Also China put new tariffs on 34bn dollars valuable goods import from the USA.

It is not enough to see these news by chance or to evaluate the current political situation from narrow angles. Is this a sign that we have come to an end in the neoliberalism period, or is it that states only want to protect themselves ? Before continuing to search an answer to these questions, I think it would be necessary to state about Karl Polanyi’s Double Movement Theory in this section of my article.

Double Movement Theory

Polanyi describes liberalism as a mechanism that does not correspond to nature. Polanyi says that liberalism is misleading the ideals of economy. Liberalism, which has created a reality where the utopian expectations are achieved more or less at the same time, according to Polanyi the two different results of liberalism emerged as a dream of an imaginary freedom denying the reality of society or accepting this reality and denying idea of freedom. The first result is the liberal opinion and the second is the result of the fascist view.[17] It is not necessary to go into detail in this article why Polanyi did not see liberalism as natural development, but it is helpful in understanding of the source of the Double Movement Theory, so I have to mentioned it in brief. The commodification of labor, land, and money s defined as the beginning of the free market and the collapse of liberalism.

As money is a key element of production in the market economy, its inclusion in the market mechanism will have institutional implication while labor and land will be integrated into the market economy and the essence of society will be dominated by market rules. Because labor and land are nothing more than the natural environment of the people who make up the societies.[18] The most important of these three concepts which Polanyi defines as ‘imaginary commodities’ is labor. Reducing the fate of the market mechanism making people and their natural environment a concept to be bought and sold will result in the collapse of society.[19]

Polanyi’s main arguments came from the 19th century world order. Polanyi found that the liberal market is subject to a bi-directional movement, based on its conclusions. This theory called as ‘Double Movement Theory’ can be said to be a movement against the perception of freedom created in the context of liberal policies and it creates an action that causes breakage in history. On the one hand, the markets spread all over the world, and the commodities they contain have high levels and integrate with the institutions where measures and policies are produced. The international exchange of commodities and the unification of markets brought with it richness and freedom, while also highlighting the importance of prevention policies and control mechanisms. The existence of free market and the increasing security concerns in the same direction will lead to crises when it reaches breakpoint. Therefore, according to Polanyi, ‘unnatural liberalism’ causes a paradoxical structure and crises. While the source of this paradox was defined by double movement, it focused on the fact that markets could not exist freely.[20]

Polanyi actualized social sources of 1st and 2nd World War with the double movement theory. In fact, the free market economy has brought the gold standard and free trade to the point of obstruction over the years, and caused the economic crises with the outbreak of 1929 Great Depression, and in the direction of protectionist demands and policies the losers of 1st World War caused fascism to rise in Italy and Germany. The global expansion of the market encouraged society to protect itself, not only the rise of fascism but also to transform the USSR into Stalinism.[21]

In liberalism society or social relations are adapted within the economic system, but on the other hand it had to be embedded in society. This situation leads to the emergence of the uncontrollable liberalism as an action that is detrimental to the social structure. In this context, Polanyi proposed the view of embedded liberalism. ( Embedded liberalism was first used by the US political scientist John Ruggie as a concept. Ruggies concept stands on the basis of Polanyi’s embedded and dis-embedded economic theories.)[22] After the 2nd World War it has existed in the Bretton Woods System which envisions a controlled economic integration. The main objective of the integration process developed in line with international institutions is to try to realize the states and societies with the determined tariffs and money standards without causing any damage. Embedded liberalism emerged as a reaction to the free market economy which was experienced in the 19th century and resulted in disasters[23]. Shocked by the Oil Crisis in 1973, the Bretton Woods system ended in 1981 and was replaced by dis-embedded neoliberal policies.[24]

A look at the Current Situation

Undoubtedly, it is no coincidence that the USA sees China as the biggest enemy of its economy. Most of the locomotive sectors in the United States started to open their factories in this country for cheap production advantages with the China becoming a member of the WTO. This was a major problem for the middle and low income classes although technological superiority was still existing in the US. Considering the discourses and policies developed under the administration of Trump, it is quite possible to see parallels with Karl Polanyi’s theory. As known, Trump’s campaign motto was ‘Make America Great Again’ and ‘America first’ perception formed a discourse that frequently came to the fore during the election. As I mentioned above when Trump was elected as president, he said that he would protect American workers’ right and increase job opportunities as one of his first action under presidency.

It would not be difficult to say that it is not surprising that Trump was elected president with these discourses. The middle class’s income problems became more evident with the 2008 Economic Crisis, and deepened over time. The middle class which thought liberal policies of the US no longer had any triumph was consolidated under Trump’s rhetoric and decided on the US’s new political orientation. Considering Polanyi’s approach the situation is also striking. Although the uncontrollable Neo-liberalism has enriched the US middle class for a while, but it has also caused the fall of middle class. This situation led to the development of more conservative approaches by the middle and low income classes which make up the majority of the population. Focusing on this political and social conjuncture, it is easy to understand that Trump’s discourses are not coincidental.

The US’s changing domestic political manifestations are what the Trump administration imposes on the world. The US realized that it could not exist as a hegemonic power in the existing system in the world. The founding power of the system has now become an actor trying to change the system around its own interests. In this context, it can be easily analyzed that the US to has taken an isolating attitude in its own region, and then trying to impose on a global scale. The attitude towards Mexico and the revision of NAFTA ( It will be named as United States-Mexico-Canada Agreement UMSCA)[25] could be an example of regional isolation policies. However anti-immigration and xenophobia are increasing in the US, and this social situation is supported by the irrational promises such as ‘the Wall’ project. The point is that the pioneer country of Neo-liberalism develops isolated policies and more conservative and fascist tendencies are observed in the society.

To examine the commercial tension between China and the US in this context would be more useful in terms of recognizing the socio-political infrastructure of the situation. The attitude of the Trump administration toward China was, as I mentioned above, that China stole the US’s intellectual properties. Although the claims on this issue are left open to debate, the US is undoubtedly trying to establish an economic pressure on China over its production advantages. It is confusing to see the unilateral policies pursued by the US cause concerns in the context of bilateral international law while the membership of China the WTO is in a controversial position during the period due to the human rights situation in China.

However although the differences between the US and China’s economic powers are still wide apart, the need for each other is at very high level. While the US has the highest amount of debt in the world, it has invested its power to finance this debt with China. Also China requires good economic relations with the US to protect its investment and realize its economical growth. At the current point the weight of the US economic power has been shown to China and the new economic agreement which is still being talked about is signaled that the interest of the US will be protected.

Unilateral policies developed by the US under Trump administration lead to new problems in the international system, and to deepen the existing problems. The isolated policy of the US also changes its perspective towards the EU. Trump administration wants equalization of capital sharing in NATO and this situation has forced Germany and France in their role in global politics. EU which is open to Russian and Chinese influence in the context of the Trump’s isolation policies, is focusing in developing alternative options for NATO. The Treaty of Aachen signed between Germany and France in the recent months has led to the introduction of the definition of the ‘European Army’, even though it envisions socio-political integrations.[26]

This general framework I have drawn out shows that the policies which give importance to regionalism throughout the world have started to gain effectiveness. However, the current situation of the US has reached a level that would harm the multilateral international world system. Therefore, the US which was the founder of the world system after the World War II, became an actor that reveals a revisionist approach against this system. One thing to be foreseen after this stage is the US will pursue a unilateral international policy under Trump’s administration, and use the political and economic instruments as a ‘power device’ against other rival states.

In conclusion, can we say that the US will destroy the neo-liberal order ? Such a future does not seem very likely. It is possible to explain this situation under two titles. First of all, Trump’s internal policies do not give any sign of this. Second, the US’s production-consumption relations are not ready for a new alternative approach. Although Trump’s criticism of Mexico and China seems to be against liberalization in international markets, in essence, it does not have such an approach in these policies. Trump’s administration has reduced the taxes it receives from companies to open factories in the US. In this way, it aims to create new jobs to American workers by returning companies from abroad. Trump aimed to strengthen the basis of his populist discourse which was advocated in his early years of office, but new regulations do not weaken Neo-liberalism, but rather reinforce it. The recent tax policies show that the Washington administration has lowered tax obligations on the rich and loosened control mechanism.[27] These regulations shows that, although Trump discursively constituted a revisionist and populist pattern in his speeches, but on the other hand, his actions in domestic politics show that the ‘wild face’ of the free market model is supported. Besides, the US is the country with the most debt today. In order to finance this debt, it needs the free market model more than ever. Also, Trumps’s administration has not prepared a new ideological basis or understanding for new economic approach to be established related with the alleged isolated policies. Thus, the US orientation in foreign policy is more conservative with the assumption that it will lose its power in the existing system, but these policies are nothing more than a realist economic approach. While I write these lines, meetings are organized between the US and China to finish Trade War, but it is not possible to predict that the desired result will be reached. On the other hand, it is not difficult to predict that, this process will end in the way of US’s interests.  Finally, the populist approaches of Trump administration are aimed at breaking China’s commercial power, but it will not be able to initiate a sustainable recovery process for the United States. However, these approaches have the potential to make societies more protective and xenophobic.

 

References

  • Presidential Executive Order Regarding the Omnibus Report on Significant Trade Deficits, White House, 3/31/2016
  • “These Are the 128 U.S. Products China Is Enacting Tariffs On”. Fortune.
  • Smith, David (April 4, 2018). “Trump plays down US-China trade war concerns: ‘When you’re $500bn down you can’t lose'”. The Guardian.
  • “Strategic Tariffs Against China Are Critical Part of Trade Reform to Create More Jobs and Better Pay”, AFL-CIO press release, March 22, 2018
  • “Huawei faces bill for tens of millions for ‘theft of 4G technology'”. The Telegraph. 2018-10-23.
  • Basically kidnapping’: China’s state media lashes out at Canada over arrest of Huawei executive”. Global News. 7 December 2018.
  • Pham, Sherisse (March 23, 2018). “How much has the US lost from China’s intellectual property theft?”. CNNMoney.
  • Command and control: China’s Communist Party extends reach into foreign companies”, Washington Post, January 28, 2018
  • Why is the U.S. accusing China of stealing intellectual property?”, Marketwatch, April 6, 2018
  • “Larry Summers praises China’s state investment in tech, saying it doesn’t need to steal from US”. CNBC
  • Milton Ezrati Trade War From the Chinese Side. Forbes Oct. 3, 2018
  • Keith Bradsher, Alan Rappeport and Glenn Thrush A Weakened China Tries a Different Approach With the US: Treading Lightly. New York Times,  12,2018
  • Stefania Palma US criticisms China’s empire and aggression in Asia. Financial Times, Nov. 15,2018
  • “President Trump Approves Relief for U.S. Washing Machine and Solar Cell Manufacturers”. Office of the United States Trade Representative. January 2018.
  • Swanson, Ana (2018-03-01). “Trump to Impose Sweeping Steel and Aluminum Tariffs”. The New York Times. ISSN 0362-4331.
  • The Great Transformation Polanyi Karl p.342 İletişim Yayınları çeviren Ayşe Buğra
  • Ruggie, John Gerard 1982. International Regimes, Transactions, and Change: Embedded Liberalism in the Postwar Economic Order
  • Johnathan Kirshner 1999, Keynes Capital Mobility and the Crisis of Embedded Liberalism. Review of International Political Economy 6:3 Autumn 313-337
  • John Ruggie 1997. Globalization and the Embedded Liberalism Compromise: The End of an Era ? Max Planck Institute for the Study of Societies.
  • S. and Canada Reach Deal to Salvage Nafta”. The New York Times. September 30, 2018.
  • Niall McCarthy After Historic Franco-German Treaty, How High Is Support for an EU Army? Forbes jan.23 2019
  • Emily Stewart Trump has a 100bn dollars tax cut for the rich he wants to enact without Congress, Vox. Jul 31 2018.

[1] Presidential Executive Order Regarding the Omnibus Report on Significant Trade Deficits, White House, 3/31/2016

[2] “These Are the 128 U.S. Products China Is Enacting Tariffs On”. Fortune.

[3] Smith, David (April 4, 2018). “Trump plays down US-China trade war concerns: ‘When you’re $500bn down you can’t lose'”. The Guardian.

[4] “Strategic Tariffs Against China Are Critical Part of Trade Reform to Create More Jobs and Better Pay”, AFL-CIO press release, March 22, 2018

[5] “Huawei faces bill for tens of millions for ‘theft of 4G technology'”. The Telegraph. 2018-10-23.

[6] Basically kidnapping’: China’s state media lashes out at Canada over arrest of Huawei executive”. Global News. 7 December 2018.

[7] Pham, Sherisse (March 23, 2018). “How much has the US lost from China’s intellectual property theft?”. CNNMoney.

[8] Command and control: China’s Communist Party extends reach into foreign companies”, Washington Post, January 28, 2018

[9] Why is the U.S. accusing China of stealing intellectual property?”, Marketwatch, April 6, 2018

[10] “Larry Summers praises China’s state investment in tech, saying it doesn’t need to steal from US”. CNBC

[11] Milton Ezrati Trade War From the Chinese Side. Forbes Oct. 3, 2018

[12] Ibid.

[13] Keith Bradsher, Alan Rappeport and Glenn Thrush A Weakened China Tries a Different Approach With the US: Treading Lightly. New York Times,  Dec. 12,2018

[14] Stefania Palma US criticisms China’s empire and aggression in Asia. Financial Times, Nov. 15,2018

[15] “President Trump Approves Relief for U.S. Washing Machine and Solar Cell Manufacturers”. Office of the United States Trade Representative. January 2018.

[16] Swanson, Ana (2018-03-01). “Trump to Impose Sweeping Steel and Aluminum Tariffs”. The New York Times. ISSN 0362-4331.

[17] The Great Transformation Polanyi Karl p.342 İletişim Yayınları çeviren Ayşe Buğra

[18] Ibid p.118

[19] Ibid. p.120

[20] Ibid p.123

[21] Ibid. p.23

[22] Ruggie, John Gerard 1982. International Regimes, Transactions, and Change: Embedded Liberalism in the Postwar Economic Order

[23] Johnathan Kirshner 1999, Keynes Capital Mobility and the Crisis of Embedded Liberalism. Review of International Political Economy 6:3 Autumn 313-337

[24] John Ruggie 1997. Globalization and the Embedded Liberalism Compromise: The End of an Era ? Max Planck Institute for the Study of Societies.

[25] U.S. and Canada Reach Deal to Salvage Nafta”. The New York Times. September 30, 2018.

[26] Niall McCarthy After Historic Franco-German Treaty, How High Is Support for an EU Army? Forbes jan.23 2019

[27] Emily Stewart Trump has a 100bn dollars tax cut for the rich he wants to enact without Congress, Vox. Jul 31 2018.

Visits: 299

SEPTEMBER 11, THE BEGINNING OF A NEW CONJUNCTURE – REŞAT ARIM

SEPTEMBER 11, THE BEGINNING OF A NEW  CONJUNCTURE (*)

                    REŞAT ARIM

 

The general trend seems to be away from the vestiges of the Cold War and towards more interna­tional cooperation. If, at the end, the conjuncture consolidates this trend, it can make the World a safer place to live in.

 

Introduction

The terror attacks of September 11 on the United States has marked the beginning of a new conjuncture. A unique con­stellation of forces is emerging. At the present time one can hardly predict what the world will look like when the process will completely settle and the conjuncture take shape.

A terrible force has struck the Twin Towers and the Pen­tagon. We have seen the most terrible kind of terrorism. This is what has been called asymmetric use of violence. Every country has experienced its impact. The whole civilised world has con­demned it and is determined to fight it. Already political, mili­tary and legal measures are underway.

The conjuncture will eventually mature at a point in time when the basic components of the puzzle will be put in place. At this early stage we can determine that the process has been set in motion. All the same, there are already certain indications as to the direction in which things will be moving.

One such indication is the way September 11 shock was immediately perceived. Some said the horrific attacks might help usher in the “post post-Cold War era”. Some others talked of a second chance to bury the Cold War.1 The reference point was mostly the Cold War. This shows that the period in which we lived contained the remnants of that episode. There is awareness that despite all efforts we could not completely free ourselves from living under the spell of the Cold War climate.

Another indication is the attitude of the main players in the face of such a catastrophe. They were very quick to come forth. NATO countries immediately rallied to the cause. Russia and China were also in the forefront. On the way to a more sta­ble world, September 11 made the road bifurcate. The relation­ship between US, Russia and China, would determine to a great extend how we shall proceed from that point on. They are the three permanent members of the United Nations Security Council and most directly involved in Central Asia where the fight against terrorism has opened. We shall see how they will act to put in place the missing components of the puzzle; the final shape of the conjuncture will emerge accordingly. To be able to make a guess on the end result, it would be useful to look into the relationship between these three powers.

Relations between US, Russia and China

September 11 being the turning point in an analysis of the relations between these three countries, it would be useful to

 

1 A Second Chance to Bury the Cold War, International Herald Tribune, 5 Oct 2001.

 

divide each subject into two chapters: before September 11, after September 11.

US-Russia Relations Before

For our present purposes it would not be necessary to go as far back as the end of the Cold War. It may suffice to start with the Bush Administration. However, it would be useful to relate briefly how the Americans perceived the period since the Cold War. There are those who say that since the Cold War the American policy struggled to find the right approach toward Russia.2 There are others who are of the opinion that the conse­quences of the change brought about by the end of the Cold War still reverberate.3 Yes, the US is the single most powerful and influential country, but relations with Russia pose prob­lems. A report submitted to the US Congress admitted that in 1992 and 1993 Yeltsin gave the West more than would have seemed possible under Gorbacev. The cutting of aid to the Communist regime in Afghanistan and ordering combat troops out of Cuba are mentioned as examples.4 That period was also described as the honeymoon period. But, slowly starting in 1993 the Russian Federation would take important decisions in for­eign policy and the first indication was the declaration of the policy of “near abroad”. Again in 1995 there came a decree on the Russian policy toward CIS countries. The objective was fur­ther economic integration under Russian leadership. Russia would

 

2Senator Joseph Biden, US Foreign Policy Agenda, Department of State, March 2001

3 Robert J. Liber, ibid.

4 CRS Issue Brief for Congress, Congressional Research Service, Sept 25, 2001

 

also try to have a CIS defence alliance. Then we see the “new military doctrine”. This doctrine foresaw the use of nu­clear force when needed. Such an assertive policy would cer­tainly put an end to the good relations between the US and Russia. Russia also started to balance the worldwide influence of the US by working to create a multi-polarworld.Among other things, Russia endeavoured to build a “strategic partner­ship” with China. When Kozyrev was replaced by Primakov in 1996 it became clear that the divergence of views between the two countries would deepen.

When Putin came to power it was already apparent that this trend would continue and be strengthened. The “Putin Doctrine” adopted in the year 2000, is contained in documents relating to foreign policy, defence, security and information. It will be useful for our analysis to have a closer look at the document called “The Foreign Policy Concept”. Russia is de­scribed there as the strongest Eurasian Power. It is asserted that the US strategy of unilateral action may destabilise the world.5 New threats to Russia’s national interests come from attempts to establish a unipolar world, dominated economically and militarily by the US. It is concluded that Russia will endeavour to establish a multilateral system for international relations. Russia would make a global effort to support the United Na­tions and its Security Council against US attempts to control the World.

So, when President Bush took over suggestions were mostly about the way his Administration could use to discour­age the Russian behaviour. In December 2000 Condoleeza Rice would say that US

5 Ariel Cohen, Putin’s Foreign Policy and US-Russian Relations, The Heritage Foundation Backgrounder, Jan 18, 2001

 

policy should concentrate on the important security agenda with Russia.6 However after one year in office, the Administration started to give more positive signals. Colin Powell in his remarks on March 2001 said that the US wanted to be good friends with Russia.7

             Oil and gas

Oil and gas resources of the countries of Caspian and Central Asia are important for US, Russia and China. They have already become a bone of contention between US and Russia. China is slowly entering the game. It would therefore be ap­propriate to look into this question here in the section dealing with US-Russian relations.

Azerbaijan, Kazakhstan, Turkmenistan and Uzbekistan are rich in oil and gas. How rich? Estimates of oil reserves vary between 25 to 85 billion barrels. Natural gas reserves are quoted 6 to 11 trillion cubic feet. Production figures may give us an idea as to their capacity.

Azerbaijan oil fields are Chiraq, Guneshli and Azeri. Baku-Tbilisi-Ceyhan pipeline project envisages the transporta­tion of oil with a capacity of 50 million tons per annum. Ka­zakhstan is developing the Tengiz and Korolev oil fields in partnership with the Chevron Company of the US. The produc­tion of the Tengiz field is already being taken to the Russian port of Novorossisk trough a pipeline formed by international companies. The pipeline is 1.500 km long and will carry initially 28 million tons of oil per year and later 67 millions tons. Turk­menistan produced 0.5 trillion cubic feet of gas in 1998.

 

6 Condolezza Rice, Chicago Tribune, Dec 31 2000, ibid.

7Colin Powell, Remarks to the National Newspaper Association, March,23,2001, ibid.

 

For the time-being transportation of oil from the Cas­pian region is mainly to the West, therefore the rivalry has been mostly between the US and Russia regarding the export routes. Soviet Union was one of the largest oil exporters. Russia would like to carry the new oil output of the region through her facili­ties. The US, on the other hand, seeks to diversify the number of outlets. US Assistant Secretary of Energy said that moving Cas­pian energy supplies into the global market was important from the point of view of US national security. He also declared that Russia was an important partner in this field and that they encouraged it to participate in the development of multiple transport routes.8 Russia on her part in a formal policy declara­tion in 1996 said energy was major factor in safeguarding Rus­sia’s security.9 We see that both countries consider energy mat­ters so important as to constitute a question of security.

 

This rivalry between the US and Russia that people called the new “Great Game”10 was studied by the officials and scholars of the two countries in October 2000 at a conference by the Caspian Studies Program of the Harvard University. American officials said US wanted to promote the independ­ence and the economic development of the countries in the re­gion and they do not intend to alienate Russia.

 

8 David L. Goldwyn, US Assistant Secretary of Energy, Testimony, April 12, 2000

9 Stephen Blank, Every Shark East of Suez: Great Power Interests, Policies and Tactics in the Transcaspian Energy Wars, Central Asian Survey, 1999

10 Bruce R. Kuniholm, Geopolitics of the Caspian Basin, The Middle East Journal, Washington, Autumn 2000

 

However, it was clear that Russia perceived US efforts in the region as imping­ing on Russian security.11 Other American scholars are of the opinion that Russia thinks that US is purposefully weakening Russia’s strategic position and even wants to constrain it.12

Although we are dealing here with US-Russian relations, it would be useful to point to the implications of China’s inter­est in Central Asian oil and gas. This may create competition first between Russia and China and eventually between China and US. As a matter of fact, China has acquired several fields in Kazakhstan and wants to build the longest pipeline in the world, from Western Kazakhstan to the Xinjiang province in China. China also has another ambitious project to build a gas pipeline from Eastern Turkmenistan to the Pacific Coast of China. An oil pipeline is also being considered from Kazakh­stan along the same route.13

US-Russia Relations After

We may now turn our attention to what has transpired since the September 11 attacks.   It has been reported that the same day of the

 

11   Emily Van Buskirk, Power Politics in the Caspian, Harvard Newsletter, March 13, 2001

12 Fiona Hill, Policy Brief, Brookings Institution, May 2001

13 Ariel Cohen, Testimony in the House of Representatives, US Interests in Central Asia, March 17,1999

 

terrorist attack President Putin telephoned President Bush to express his condolences. From that moment on things between the two countries developed in a positive way. A week after the attacks, Mr. Armitage went to Russia to ask Russia’s help on tracking down Osama bin Laden. Again it was reported that he also enquired whether Russia was pre­pared to transform their still antagonistic relations.14 He would inform the Russian side that US intended to send its forces to Uzbekistan and Tajikistan. US wanted a green light from Mos­cow before doing that. Russia’s cooperation in this field was essential.15

The reasons behind the cooperative attitude of Mr. Putin have been the subject of intense debate. According to Russian sources, the Russian government is demonstrating its willing­ness to be a military and political ally. A Russian newspaper editorial commented, “In a strange way, the Kremlin is trying to get from the West what the West has always dreamed of ex­tracting from Russia. Moscow is talking about joining the World Trade Organization and about strengthening ties with NATO”.16 An American think-tank official described it as a strategic decision of President Putin. He knew that Washington needed Moscow as a military and political ally, and he would not find a better opportunity for rapprochement with the West. Putin also tried to make the agreement of Uzbekistan and Taji­kistan to make their skies and bases available to US as a conces­sion from Russia itself.17 Observers from neutral quarters were quick to say that the price for his support to the Afghanistan campaign was the acceptance by the US of his war against the Chechens. It was an alliance for realpolitik.18

14 A Second Chance to Bury the Cold War, International Herald Tribune, 5 Oct 2001

15 Russia, Why Is It Needed? Time Magazine, Oct 8, 2001

16 A New Rapprochement Between the US and Russia, The St. Petersburg Times, Oct 27 2001

17 Putin’s Bold Move, Time Magazine, Oct 29, 2001

18 Le Monde, 19 Oct, 2001

 

Following these first contacts the two governments were starting to reshape a new form of relationship. The US-Russia Working Group on Afghanistan gave the first signals of such a change when they met in November 2001 in Moscow. They is­sued a statement which talked about the “extraordinary depth and breadth of cooperation and consultation” between the two countries.19

US-Russian Summit

The major development that has taken place in the rela­tions of the two countries after September 11 is the Summit meeting between President Bush and President Putin in the United States on November of 2001. There, many decisions and actions taken by the two countries separately following the tragic attacks culminated in a basic agreement. The Joint Statement issued at the end of the talks is titled “New Relation­ship between the US and Russia”.20 In this document they both state they have overcome the legacy of the Cold War and that they don’t see each other as an enemy or threat. They would work together to promote security in the world. This, of course, is a fundamental commitment. Even if they have previously taken steps in this direction, this time they undertake to form a partnership for the leadership of the world.

This constitutes a real change towards a new interna­tional conjuncture.

The two leaders in the same document say they are de­termined to meet the threats to peace. And they enumerate them: terrorism, proliferation of weapons of mass destruction, militant nationalism, ethnic and religious intolerance, and regional instability. This is a

19 US-Russia Working Group on Afghanistan; Joint Press Statement, Washington, D.C., Nov 2001

20 The White House; Joint Statement by President George Bush and President Vladimir Putin on a New Relationship between the US and Russia, Nov 14, 2001

 

broad spectrum. When such diverse issues are enumerated one by one, the question arises whether the two powers will be able to agree on the methods to deal with them. Again, to deal with these challenges they talk of cre­ating a new strategic framework. Will that be a new mecha­nism? That remains to be seen.

A most interesting part of their agreement is the new emphasis they put on the relationship between NATO and Rus­sia. They go as far as envisaging joint decisions, not only in the fight against terrorism but also on matters relating to regional instability and other contemporary threats. Following on that understanding the British Prime Minister has written to the NATO leaders and President Putin and proposed such a new security framework under which Russia would take part in de­cisions on key security issues. Already in 1997 NATO-Russia Permanent Joint Council was set up to discuss such matters. However, it was not intended as a decision-making body. This time, ac­cording to senior British officials, the proposal of the British Prime Minister is designed to create a problem-sharing partner­ship “to ensure that Russia never feels out in the cold when se­curity emergencies occur in the future”.21 Later, NATO Secre­tary General had further talks in Moscow on the same question.

The paragraph of the Joint Summit Statement on missiles has been overtaken by events, and it seems it is not a subject to disturb rapprochement between Washington and Moscow.

China

Although relations between the United States and Russia looks likely to be for the time being the cornerstone of the inter­national arena in the years to come, one should not underestimate  the   part

  • The Times, Nov 17,2001

 

to be played by the People’s Republic of China. Firstly, because China is a major power in Asia and the World. Second, China historically influenced very much the relations between US and Russia.

US-China Relations Before

Relations between China and the US go back to 1850’s. In this century the two countries have alternately been allies and foes. They fought the Korean War. Later Cold War circum­stances led the US to alter its strategy. There was a need to con­tain the Soviet Union. For that reason President Nixon in 1972 visited China and signed the famous Shanghai Communique. China and US renounced the use of force in settling disputes with each other. On the critical issue of Taiwan, according to the negotiator of the text, Henry Kissinger, the paragraph was so worded that it was not a victory by one side over the other.22 In this way the Grand Triangle of US-Soviet Union-China was formed. A candid description of the triangle was made in a re­cent publication of the Shanghai Institute of International Rela­tions. It says that the important part of the triangle was US-Soviet relations. Sino-US and Sino-Soviet Relations were subor­dinate to US-Soviet Relations.23 It was within this framework that diplomatic relations were established in 1978 and. the US recognised the Government of the People’s Republic of China as the sole legal Government of China. The US acknowledged that there is but one China and Taiwan is part of China. Until 1989, relations continued in this vein and went even further. President Reagan in a letter to Deng Xiaoping in 1982 proposed to have a strategic relationship in the face of the Soviet threat.

22 Henry Kissinger, The White House Years, 1979

23 The Post Cold War World, The Shanghai Institute for International Studies, Shanghai, China, 2000

 

Following the end of the Cold War this relationship could not go on as before. Several factors came to pass before the strategic considerations. Taiwan issue, trade problems, questions of human right, all had their part in influencing rela­tions. Still the two parties were trying to find a way to solve their differences. In 1996 President Clinton declared that he would sustain constructive engagement towards China. High-level visits ensued. President Jiang Zemin visited the US in 1997. He spoke of developing bilateral cooperation. Next year President Clinton went to China and spoke about strategic part­nership. Later the two countries signed an agreement to open the Chinese economy to foreign competitors. In this way, after 13 years of negotiations US were terminating its opposition to China’s membership in the World Trade Organization.

US-China Relations After

The Chinese leaders expressed support for the US in the struggle against terrorism. The US acknowledged it as a good gesture. The US Secretary of State said that China’s cooperation in this field had bolstered the relationship between the two countries after a rocky period during the first months of the Bush Administration.24 Later the Presidents of US and China met at the APEC meeting in Shanghai. President Jiang Zemin at the joint news conference said they are opposed to terrorism in all forms and hoped any military action would be aimed accu­rately and would be guided by the United Nations.25 President Bush declared that China had agreed to cooperate with intelli­gence matters and interdict the financing of terrorist groups.26

As to what China wants in return, observers were quick to point that the aim of the Chinese was to obtain the understanding of

 

24 International Herald Tribune, Oct 18, 2001

25IHT, Oct 20, 2001

26 ibid.

 

US on Xinkiang, Tibet and human rights ques­tions.27 The position taken by China was described as an alli­ance for Realpolitik.28

An American scholar was cautious in his interpretation. He referred to the struggle against terrorism as a short-term opportunity for China, but said it would create long-term un­certainties. As of now, by insisting that America’s actions must receive the support of the UN Security Council, that US’s mili­tary action be limited, China wants to control the unilateral im­pulses in US foreign policy. However, in the long run US strug­gle against terrorism may threaten Chinese interests; already the alarmists in Beijing were talking about US possibly using the struggle against terrorism to tighten the chain of contain­ment around China.29

China-Russia Relations Before

Chinese-Russian relations affect any development in Asia. This has been the case in the past centuries. It will proba­bly be true in the future. After the People’s Republic was founded in 1949 China needed a strong ally and concluded a Treaty of Alliance with Russia. The Soviets relinquished their zone of influence in Manchuria and extended assistance to China. Later on Soviet demands caused China’s resentment. China also claimed territories lost to that country in the 19th century. This led to the border clashes between the two coun­tries in 1969. It was following that episode that China turned towards the United Sates which was looking for an ally on the Asian continent.

Chinese-Soviet relations took a long time to recover from these border clashes. It was only in 1985 with Gorbacev that relations could

27 Time Magazine, Oct 8, 2001

28 Le Monde, 19 Oct 2001

29 Harry Harding, IHT, Oct 18, 2001

 

be normalised. His Vladivostok speech helped smoothen the atmosphere and Gorbacev visited China in 1989. However, according to the Chinese, Russia was leaning to­wards the US and the West in the early 1990’s and kept China at a distance30 Later President Yeltsin paid a visit to Beijing in 1992 and the basis for a comprehensive cooperation was laid. During those years China was experiencing a very rapid economic de­velopment and this has greatly impressed the Russians. Trade volume was expanding. Border questions were being negoti­ated. The two countries were trying to find common ground on several fields. Still there were many questions to be settled. Some Russian officials and scholars were asserting that China was claiming Russian territory.31 Despite problems, slowly a political rapprochement was taking place. At the end in 1997 they entered into a strategic partnership. During the visit of the Chinese President to Moscow a declaration was signed. They announced a New Multipolar World. In 1999 the two Presidents forged a strategic and cooperative partnership.32

The last and important episode of this rapprochement has taken place in the period just before September 11. Last July the two countries signed a Treaty for Good Neighbourliness, Friendship and Cooperation. The treaty settled many issues. The demarcation of the long-disputed border of 4.000 km was decided. Cooperation against militant Islam in Central Asia was foreseen. Arms sales were another important item. But, of inter­est for the purposes of our analysis was their determination to offset the perceived US hegemonism.33

Prior to this episode the Chinese were presenting their rapprochement with Russia as something not being antagonistic to

30 The Post Cold War World, The Shanghai Institute for International Studies, Shanghai, China, 200

31 ibid.

32  ibid

33 Ariel Cohen, The Russia-China Friendship and Cooperation TreatyA Strategic Shift in Eurasia, The Heritage Foundation Backgrounder, July 18, 2001

 

the United States. They were describing it as sharing stra­tegic interests in maintaining stability along their periphery re­gions and especially in Central Asia. They were asserting that both were afraid of the fundamentalism developing there and its spread to the adjacent areas in China and Russia.34 The com­parison between this stated objective and the text of the new treaty would not be missed by the Americans. The American scholar who was following this development would say that the treaty signalled a big shift in geopolitics and the Eurasian balance of power. He would counsel the Bush Administration to closely monitor the implications of this treaty and take the appropriate steps, i.e. to increase regional security and try to induce Russia to scale down its military cooperation with China.35

The Shanghai Five

At this juncture it would be appropriate to say some­thing about an initiative directed towards Central Asia. The initiative was taken originally by China, was later joined by Russia and recently has grown into a full-scale organization. China started a series of border demarcation and demilitarisa­tion talks with four of the Central Asian countries. It evolved into an economic, military, and diplomatic process. The coun­tries involved held their first presidential summit meeting in Shanghai in 1996. In 2000 they pledged to jointly crack down on liberation movements, terrorism and religious extremism in their borders. According to the assessment of a Director of the Brookings Institution, through this process China and Russia try to assert themselves more effectively in a world they see as dominated by the United States.36 In the summer of 2001 China, Russia, Kazakh-

34 ibid.

35 ibid.

36 Bates Gill of the Brookings Institution, Shanghai Five: An Attempt to Counter US Influence in Asia? Newsweek Korea, May 2001

 

stan, Kyrgyzstan, Tajikistan and Uzbekistan have created the Shanghai Cooperation Organization. This new development was perceived by another American scholar, as a sign of the willingness of China and Russia to be the decision-makers in Central Asia and to exclude Turkey, Iran and the United States. The scholar in his study published just after the formation of the Organization prophetically asks how effective the two countries will be against the Taliban, the Islamic Front of Uzbekistan and the organization of Osama bin Laden.37

China-Russia Relations After

For the time being both countries are satisfied with the war that is being waged against terrorism in Afghanistan. But later developments in Central Asia will probably favour one country over the other and that may alienate one of them. As we have seen, after many years Russia and China have finally established a certain balance between the two countries; they can start a really serious cooperation. Now the question is whether this cooperation can be put aside for a while, trying to benefit from the fruits of the American action in the area. Or is this cooperation really so important as to forsake the benefits that may accrue from the military action and its consequences?

Conclusion

The analysis in this paper was limited in scope; still it could give useful indications. We have looked into the relation­ship between the United States, Russia and China both before and after September 11. The impact of the tragic event on this relationship gives enough evidence that a new conjuncture is in the making. The developments on the US-Russian front are very impressive.   There are promising

 

37 Ariel Cohen, The Russia-China Friendship and Cooperation Treaty: A Strategic Shift in Eurasia, The Heritage Foundation Backgrounder, July 18, 2001

 

signs on the US-China side. The colour of the relations between Russia and China will be determined by developments in Central Asia. Throughout the analysis we have of course kept in mind the positive re­sponses coming from Europe and other regions of the World. But, the fight against terrorism is only beginning; so the con­juncture to settle will have to wait  the evolution on many fronts.

For the moment there are good indications things may move in the right direction. The general trend seems to be away from the vestiges of the Cold War and towards more interna­tional cooperation. If, at the end, the conjuncture consolidates this trend, it can make the World a safer place to live in.

 

(*) Published in the fpi Quarterly “Foreign Policy”, Vol. 26, Nos. 3-4

Visits: 327

DEVELOPMENTS WITHIN THE ATLANTIC COMMUNITY AND TURKEY – Muharrem Nuri Birgi

Security

 

DEVELOPMENTS WITHIN THE ATLANTIC COMMUNITY AND TURKEY (*)

The “Atlantic Community” is an expression of  the unity of destiny and the identity of interest between the United States, Canada and Europe brought forth by the Second World War. The frictions, which have been intensified from time to time, between some European powers and the United States may lead to conclusions contrary to this reality.

Muharrem Nuri Birgi

(*) Published in the fpi Quarterly “Foreign Policy” Vol.3, No. 4

 

One of the most important realities brought forth by the Second World War and its aftermath is that unity of destiny and the identity of interest between the United States, Canada and Europe constitute a lasting geo­political fact and precept. The term “Atlantic Community”  is, therefore, an expression of this reality.

A near-sighted look at the frictions, which have been intensified from time to time during recent years, between some European powers and the United States may lead to conclusions contrary to this reality. However, ninety per cent of these frictions result from endeavours made not to des­troy the Atlantic Community but to adapt it to various developing condi­tions. Yet, if errors accumulate, long-term aims shall have been sacrificed in favour of short-term appearances, and if the dangers are ignored, this process of adaptation may be replaced by explosions and divisions. Des­pite the strength of the logic ordained by geo-political realities, history contains many examples of deviations from the path of reality simply be­cause of lack of wisdom.

The concept of the Atlantic Community has in the North Atlantic Trea­ty Organization found its most comprehensive and effective legal and political expression and military organization.

Within its overall political balance, Turkey has secured the support and cooperation required both for its development and security by basing its place in the Atlantic Community on legal foundations, through its membership in the Council of Europe and associate membership in the Common Market on one hand and through its entry into NATO on the other. Yet, a number of developments are taking place both within Europe and in the relations between Europe and the United States. In the face of these developments what is the present position of Turkey and the state of the foundations on which it has based its policy?

The principal points of  these developments may be sketched as follows :

 

1 – The arrival, following the Second World War, at a point of maxi­mum solidarity and togetherness in the Atlantic Community within the fra­mework of NATO, from the military standpoint, and through the Marshall Plan, as well as a number of bilateral treaties, from the economic view­point.

2 -Then came a gradual attempt to show the cooperation with theUnited States and its military protection as an American domination over Europe, with the increasing frictions between the two shores of the At­lantic and the transformation of these frictions into a viscious circle through increasing economic and technological rivalries.

3The continuation of two divergent currents among the advanced European powers, one aiming at the realization of the United Europe and the other creating obstacles for this unity – due to economic rivalries and attempts at establishing political superiority – runnning parallel to, and in­teracting with the frictions and rivalries which I mentioned above.

For the Western powers, which had come out of the Second World War in a state of utter exhaustion, two vital necessities existed in all their gravity : to achieve an early economic recovery, and to reach the capa­bility of resisting an invasion by Soviet Russia, the danger of which had be­come imminent. While all these needs were secured by the United States through NATO, the Marshall Plan and several bilateral treaties, the pri­celess value of this tremendous protection and assistance of the United States could not but have psychologically crushing, and even in certain respects irritating, aspects. However, so long as a fear for life, and eco­nomic exhaustion dominated the picture, this aspect of the matter was hardly felt.

The unprecedented economic and technological development of Wes­tern Europe and the success of Soviet Russia in transforming the Cold War, which carried with it the danger of a real hot war at any moment, into a form of detente, pushed the fear for life into the background (in many circles it altogether disappeared), and economic and technological rivalry began between the United States and the advanced European pow­ers, which not only no longer needed American assistance, but had reached its level in many fields.

At the same time, a situation began to develop, of direct interest to Turkey. The attitude of highly advanced powers in Western Europe to­wards their developing European allies began to change. Time has shown that the principal factor leading the highly developed powers in Western Europe to firmly embrace their less developed allies within NATO, as far as possible under conditions of equality, was the fear for life created by the probability of an armed invasion by Soviet Russia. In actual fact, this danger of Soviet invasion has not at the present day been eliminated. But as I pointed out above, Soviet propaganda has, with an excellent knowledge of the weaknesses of the West, succeeded in wrapping the Cold War, which presented the danger of turning into hot war, with the cloak of detente. Today, no one can claim that any one of the NATO countries is facing the danger of becoming a victim of an armed Soviet invasion in a matter of days or months-and possibly years. Yet, the frightening scale of increase in Soviet arms, their establishment of naval superiority in all seas and their failure to end activities for creating division among the allies and particularly for separating Europe from America and for destroying every one of them from within, their failure to refuse to go beyond a certain point in both discussions for mutual arms reductions and for the estab­lishment of security and their anxiousness to maintain at such points mi­litary and political superiority to the other side-in other words to weaken the other party – should be considered as evidences to dissuade everyone from claiming that the danger of Soviet invasion is over. Particularly those countries geographically in critical locations are compelled not to over­look the possibility that this danger may, all of a sudden, turn again into an armed invasion.

However, at this moment, particularly in highly developed western countries, the existing detente is considered by the majority as an irre­vocable step towards peace. A large portion of those who are not so opti­mistic wish to believe that through untiring political pressure and leader­ship in setting a good example, and by establishing a political and psych­ological atmosphere of security, the arms may indeed be reduced some day; in other words, putting the cart before the horse, they wish to believe that instead of establishing security through a genuine disarmament, it would be easier to get the parties to drop their arms by creating an at­mosphere of security through a number of promises regarding the observ­ance of human rights, non-agression and friendship. In this miscalcula­tion of the existing dangers and over-optimism, much influence is due to the younger generations which have not gone through the chilling exper­iences of the Second World War and its immediate aftermath, and who listen to the story of those days as if they are listening to a dull lecture of a pedantic professor.

All these have contributed, in the developed western countries, to pushing matters of defense into the background, and bringing economic and technological problems to the foreground. The situation being as it is, the highly developed western powers have started to play the part of a sort  of  first-class  United  Europe among themselves,  throwing   aside or drawing in their wake those who happen to be less fortunate in economic development.

The countries which have made great progress in commerce, industry, economy and technology certainly have problems to discuss and resolve among themselves. In fact, within the Common Market there are countries like «the Nine» on one side, and other associate members like Turkey which are candidates for full membership – countries which through their own volition have agreed to become full members after a certain period of time. However, the Nine have expanded the nature of their communion. There is today an institutionalized Nine. Their ministers or prime ministers meet officially not only to discuss economic matters but also to resolve political and military problems and to determine a joint basis for discus­sions with the United States on political and military matters.

To express it nakedly, those members of the North Atlantic Treaty Organization (including Turkey) which are outside the Nine are now faced with the fait acompli that a number of questions are either presented to the NATO Council in an already well-defined manner as predetermined by the Nine, or these could be put into execution even without consulting NATO. We hear that the Nine inform their NATO allies which are not among the Nine of matters they have discussed if and when they consider it appropriate. There is no need to stress that this can never be accepted as satisfactory.

If in the course of relations between Europe and the United States – which I will deal with a little later – there is a necessity for a number of prior consultations and preparations among the Europeans – not to es­tablish a front against the United States but to enhance the existing cooperation – there is a Eurogroup within NATO formed for this purpose. This should provide a medium, and not a treaty within the treaty, for those European Allies who might wish to come together regularly to discuss the sharing of defense expenditures, manufacture of arms, etc., and naturally Americans and Canadians should be regularly kept informed. Why then have not the Nine considered this procedure adequate and why have they turned themselves into a separate institution? Here it becomes necessary to make an analysis of the French attitude.

France, even before de Gaulle, had considered itself as the leader of Europe. This claim has lead France to conflicts from time to time with Britain and Germany. Ever since de Gaulle’s advent to power, the French political scene has been dominated by the conviction that the prerequisite for establishing French supremacy in Europe was getting American hands off Europe. Even after de Gaulle’s death, in other words today, this con­tinues to be so. This policy, which exceeds the potential of France, has made its most evident effect felt within NATO. The well-known de Gaulle statements, could be summed up as follows : “The North Atlantic Treaty and its organization, NATO, are separate things. I am staying in the Treaty, but I am withdrawing from NATO, that is, from the military organization and integration of the Treaty.” France has advanced a unilateral theory which is extremely hard to defend logically and legally. Without with­drawing its hands completely from the NATO military organization, i.e. by mainting contact through a number of observers and through other for­mulas, France has established a “national strike force” including nuclear arms but having a limited practical value. In defense of its action France argued openly or by implication that the United States could not be trusted; therefore one had to rely on national forces and that Europe should have a nuclear force independent of the United States. In reality, however, the membership of France within the military organization of NATO was not at all an obstacle to France’s developing a nuclear strike force of its own. In fact, Great Britain has a nuclear force which is at least as big as that of France, but Great Britain has not left the NATO inte­gration. Moreover, while de Gaulle stated that Europe should have its own force he did not conceal that France would not agree to share its own nuclear force with other European countries.

My purpose is not to criticize the French policy but merely to state the reason why the «Nine» behave as if they have thrown NATO aside. Since, in order to reach a common position in a community, it is customary to reach an agreement on the basis of the maximum acceptable to the dissenting partner, the dominant view among the «Nine» has generally been that of France, which does not participate in the Eurogroup within NATO and which claims that since, where the United States is present its views weigh heavily, European issues should be discussed only in those parleys where the United States is not present. Recently a French paper, referring to the tightening of the rope by the French Foreign Minister al­most to the breaking point on every occasion, stated that this might lead France’s allies to get used to acting eventually without France. Considering the position of France within the West European community, this guess may not be one hundred per cent true, but in certain matters, one may think, it is not absolutely wrong either.

Looking at the present state of the «Nine», quarrelling on almost every economic issue, anxieties of superiority and egotism making themselves apparent in political matters, one might think that such a community should not be highly effective and could in any case hardly replace the NATO Council. This would be a shortsighted conclusion and should not  be an excuse for Turkey  to remain outside  the door of the  «Nine»  as far as political and military matters are concerned. Since Turkey is not yet a full member of the Common Market, it may not be possible for it to demand full participation in all meetings of the Nine. However, a sui generis practical solution can be found for its participation in discussions on such vital issues as defence, security, East-West relations, and the future of European unity. We are living in an age of empiricism and pragmatism; in politics a way out can always be found to every problem when there is a will. This problem, which is a simple one, should be no exception in this general atmosphere of pragmatism. Casting aside the doubts on the efficacy of the «Nine», there is a problem of principle : if we are a part of Europe and if we are a member of the Atlantic Community, all that this necessitates should be carried out. The problem is beyond being an issue of pride or prestige. It is a matter of serving the needs of our foreign policy and of our basic interests.

In saying this I fully realize that alongside what the «Nine» should do for us, we sould not forget that there are many things we also have to do. To become part of the community formed by the developed members of the Atlantic Community, which is the brain and main source of the present civilization where technology, industry, commerce and culture play an ex­tremely important role, requires an early approach to their level of devel­opment. Otherwise, there are bound to be differences between us, and the effects of these differences will be felt at the most unexpected moments. It is hard to say that the present development and progress of Turkey rep­resents the maximum of its potential. We have to mobilize, in a scientific and systematic manner, all our energy and means because the time is over for consoling ourselves by boasting of some results obtained here and there.

In this connection I wish to add my belief that considerations such as “does Turkey belong to the West or to the East? Turkey should choose one” refer not to the conditions of today but to those of the past centuries, because, with the elimination of sense of distance, comrnunication be­coming a matter of moments, and civilizations interacting with each other, the division of the world into parts such as Europe, Asia, etc. has almost become meaningless in many respects. Today even the most fanatical states accept modern technology and the way of living composed by it. The only way for us is the one followed by almost all the countries of the world: i.e. to attain a level of industry, trade and culture which allows everyone in the country to benefit from prosperity. We believe that the most abundant possibilities and methods for attaining this are to be found in the Atlantic Community, of which we are a part thanks to the opportun­ity created by our geo – political position. We have to make up for the time lost without delay.

I would like to pass over now to the relations between Europe and the United States.

There is still not a unified European position, attitude or voice. As I pointed out above there is a French position which is unique and which can even be described as anti-European unity in some respects. Even within Benelux (Belgium, Holland, and Luxemburg) sometimes different voices are heard. Although Germany and Great Britain have common points, they also differ in details.

Despite all these differences, in European countries – even including France in certain respects – and in the United States, there is a conviction that both sides depend on each other. !n the beginning of my article I stat­ed that the Atlantic Community was a constant geo-political reality re­vealed by the Second World War. This reality creates the hope that cer­tain frictions that now exist between the developed European powers and the United States have after all a ceiling; in other words, the rope may be tightened but it will not break. The fact that even France does not object to the stationing of American Military Forces in Europe and feels it ne­cessary to state its attachment to the North Atlantic Treaty might be considered as a sign of hope in that respect.

Immediately after the Second World War, a sort of balance was es­tablished between the worn-out Europe and the United States, a super­power which played the role of a protective parent – a relationship between the protector and the protected. Now what is involved between the enriched group of European powers claiming a personality and the United States is a balance of partnership. The difference between the two situations can be reduced if realism prevails over mutual sensitivity. Then a trouble – free transition from one to the other would become possible. Furthermore, its status of super power gives United States a position of su­periority vis-a-vis European powers, which are unable to unite and coor­dinate their energies, and the assessment of the measure of this superi­ority brings forth a number of highly delicate issues.

A review of the current points of friction would reveal that most of these are between the developed countries and the United States. In other words, these are not problems of direct concern to Turkey, but, without any doubt, in the long run these will a!so concern Turkey, or at least their effects will be felt by us.

It is remarkable that even the proposal made last year by Mr. Kissen-ger for a new Atlantic Declaration and for sharing the burden of NATO de­fenses, which interests Turkey highly, smells of the current frictions between the United States and developed countries, in fact, the idea of a new Atlantic Declaration aims at eliminating the poisonous effects of the current frictions by sharing the NATO defense burden with developed countries and treating NATO defense matters as a whole together with economic and monetary issues.

My purpose in pointing out some peculiarities of the situation is only to emphasize that due to our position, which is not in direct conflict with the United States, there would be very rare occasions on which we would find ourselves in a situation compelling us to take sides in the disputes between the two coasts of the Atlantic. By saying this I do not mean that we should stand aside. On the contrary, in many cases, particularly as regards the Kissinger proposal I mentioned above, we have always to be very active. There may even be a possibility for us to act as a mediator.

The frictions between some developed European powers or groups of powers should not lead us to a search of conscience by attempting to answer such questions as “whether we should prefer the United States to Europe or Europe to the United States”. The policy that suits Turkey’s in­terests best is the Atlantic policy, as a Europe without the United States or a United States without Europe will always represent for us a lame and crippled policy. Such a policy has two fields of application : one is NATO and the other our bilateral relations.

The policy which we have been following for many years now cannot be described otherwise. However, implementation of this policy has not been adequately fruitful due to a number of rather psychological comp­lexes on our part.

I wish to conclude my article by enumerating these complexes :

  • — We turn our backs to issues which are not or do not seem to be convenient to us; whereas we should be interested or should take part in a number of situations or issues which are inconvenient to us; their feared harmful effects can only be eliminated or alleviated in this manner, not by leaving the field free for others.
  • — From time to time we restrict or blunt our initiatives by asking such outdated and senseless questions as “East? or West?” as I men­tioned above.
  • — Both within NATO and within the field of our overall policy we are interested in a problem only if and when it has an aspect that would affect us in an immediate future, in many instances, with the resulting passivity we have practically made ourselves forgotten.
  • — In a number of cases we have turned our attention to an issue only after it has matured and become hard to change, and thus we have become constant complainers.

5 — Generally our policy remains at the «defensive» level; i.e., we have generally found it convenient to prevent ripening developments or state our objections and work on the initiatives of others without making counter proposals of our own for the solution of the problems at hand.

It is possible for us to keep in step with the tempo of Western dip­lomacy, which is in continuous development, through a number of confer­ences, proposals, counter proposals, and official as well as unofficial contacts and communications, because we have enough men to succeed in this type of work if used properly.

Visits: 339

Neighbors should be seen as natural partners(*) The world order over the centuries has been characterized by the use of force and domination. The deadlock of your neighbor being your natural enemy, and your neighbor’s next neighbor being your natural ally because he is also the enemy of your neighbor, because of his geographical position in the neighborhood, should be broken Arne Olav Brundtland (**) 5 April 2002, Turkish Daily News

Neighbors should be seen as natural partners(*)
The world order over the centuries has been characterized by the use of force and domination. The deadlock of your neighbor being your natural enemy, and your neighbor’s next neighbor being your natural ally because he is also the enemy of your neighbor, because of his geographical position in the neighborhood, should be broken
Arne Olav Brundtland (**)

5 April 2002, Turkish Daily News

We are living through highly dramatic times. Sept. 11 has been looked upon as the most profound watershed in history. Many relationship have to be reexamined. In numerous ways there is a new deal in international relations.

But we also have to wonder about what is constant. It was the secretary of defense for U.S. Presidents Kennedy and Johnson, and subsequently the leader of the World Bank, Robert S. MacNamara who among others, but with the very special background of defense and economic development, have asked the fundamental question: What is history? He chose to give his answer in the form of another, which the vanquished recuperated for a new war?

The point is naturally that the world order over the centuries has been characterized by the use of force and domination. That your neighbor is your natural enemy and that your neighbor’s next neighbor is your natural ally because he as well is the enemy of your neighbour, because of his geographical position in the neighborhood. This sort of deadlock should be broken. Neighbors should be seen as natural partners.

But the use of arms does, not seldom, pay off. The use of violence can be cost effective. Although it is always hard to calculate what a war can bring. Many a statesman taking up arms has been frustrated by the consequences and often ended up in a much poorer situation, if in life at all.

All wars stop. At some point they actually do. But there will always be a vanquished leader who dreams of revenge.

Traditional motives of self-defense are strong — even in the intra-national setting — and have not lost their values or philosophical respectability.

Self-defense is an honorable proposition in most societies. When the nation is under threat from the outside one stands up to be counted, even with pomp and fanfare.

This holds also in the situation when the state, which should be the guarantor of safety and possess the monopoly of the means of physical coercion implodes or in other ways do not do their job, the instinct of self defense is there and it finds ways to fulfill itself when in need.

A number of motivations for the rightful use of coercion have been there for centuries.

We have experienced different kinds of crusades.

To some, wars of national liberation are both honorable and acceptable.

Now we have humanitarian intervention. The concept was borne for implementation in the vicinity of the country in which we are now.

We should not forget the different versions of holy war in the world today — here Islam is in focus. Is that a respectable proposition?

War, however, is much more problematic in the nuclear age, since the means for devastation are far outstripping what could be hoped for as a gain. So tell us even the realists, and Henry Kissinger is among them. We must find other means of influence and competition, at least on the plane of global strategy dominated by states with nuclear weapons. And this line of thought did take hold among top policy makers encapsulated in the acknowledgement: A nuclear war can never be won and must never be fought. And since conventional wars between nuclear armed antagonists will always run the risk of escalation to a nuclear level, even a conventional war is too risky. This is the legacy of The Ronald Reagan-Mikhail Gorbachev understanding that helped end the Cold War between East and West. This problem does not go away from the American-Russian relationship, nor from confrontational settings in other regional contexts.

It leaves us with:

– The need for stable balances of weapons of mass destruction at the lowest possible level — a complicated triple relationship India-China-Pakistan is a new and very challenging one.

– The need to sort out the problem of proliferation of weapons of mass destruction.

– The need to sort out the problem of possible first use of such weapons.

– You can not easily have it both ways, namely threatening or even using nuclear weapons, and at the same time be successful in stopping the proliferation of nuclear weapons or the nuclearization of the arsenals of the countries which can afford them. The “Osirak” type of action by taking out weapons programs on the ground by means of air power, is a risky one, can only buy you some time while you might not be able to muster the support you need for doing it again.

The poor men’s weapon of mass destruction are said to be biological and chemical weapons. But it might as well be seen as the nuclear option in view of the revolution in conventional military affairs, in particular in the United States. Accuracy in the means of delivery is the case in point.

Today we still have a number of international flashpoints. India-Pakistan, Korea, Taiwan to mention but a few. These are problems that will not easily go away, and they should not be forgotten. We can add Nagorno Karabah. Well can add a number of others, while not forgetting the Israel-Palestinian or in particular the other states subsumed in the concept of the “Axis of Evil.”

Military balances might be freezing political conflicts. A deterrent however presupposes an ultimate willingness to use arms. A sophisticated inventory of weapons makes for different strategies of escalation.

But military balances also provide for arms races, much to the detriment of civilian development. In more optimistic circumstances, military balances could be a groundwork for arms control.

Is the possession of territory so all-important? Did not the European Great Powers really prosper just after they had given up the notion of keeping their overseas colonies or whatever they called it, by military means? Empires used to be established through conquest. They could only be sustained through the free acceptance of the people. The forces of fragmentation during the last century testify to that. The forces on integration however are based on free and democratic support.

We must realize that we all have actual or potential problems of peace. The power struggle in Western Europe created two world wars during the last century. Struggle between France and Germany created wars through centuries. I remember Helmut Kohl officially visiting Oslo recalling that his family had supplied the German Army with soldiers in three wars within living memory 1870, 1914, 1939. This should be enough. This should be stopped. Among ways to stop it was to join NATO. But more important he saw membership in the European Union as basically a grand peace initiative. Cooperation in the EU runs far deeper that cooperation in NATO. Political and economic integration is both broader and deeper than military cooperation even in an institution like NATO.

But still we have problems. Northern Ireland, Basque separatists,

Entering the European Union means entering a scheme for peace. Entering NATO has many of the same connotations. Being in NATO has been a framework for peace and stability and moderation of conflicts. These processes which have stabilized the relationships in Western Europe is now in for the test of adding to the same in a much broader framework, both in Eastern Europe and in the Eastern Mediterranean region.

For hundreds of years the peoples in Northern Europe were happy and gruesome warriors. The Vikings plagued the continentals and the main prayer in the churches was: please Oh Lord save us from the fury of the Normans.

After the Viking age, the Nordics continued to fight among themselves and the power play around the Baltic Sea was dominant for centuries. But eventually things changed to become more peaceful.

Why is there peace between Sweden and Norway?

Why do we not quarrel about territory that previously belonged to the other side? “Normally” secession should lead to war, but not here, perhaps because the center (Sweden) would not be militarily strong enough the dominate the periphery (Norway) by use of military force and would bleed to weakness and lose out in the long run. It took some time in Stockholm in 1905 to sort out the alternatives and to decide for peace. In addition; None of the Great Powers were interested in any war between Sweden and Norway.

Why is there peace between Sweden and Finland — Why did they come to terms over the Aland Islands?

Why was the bitter enmity between Finland and the Soviet Union after World War II turned into coexistence?

Why did the Finns drop any sort of irredentist longings for lost formerly Finnish territories to the East? As seen from the outside some territories are hardly worth fighting for. This should be checked against the background of different international conflicts. But the concept “not worth fighting for” must take into account a certain balance. If only one of the sides in a conflict hold this concept, it might be free for the other to settle the dispute — unilaterally.

But a universal application of the right for any group to establish a separate state would lead to global chaos. Although those f.i. in the former Soviet Union did not think in terms of global stability but rather in terms of hatred of the center and a longing for independence. A new world order must be based on the inviolability of borders, but not necessarily the unchangeability. Peaceful changes are not to be ruled out.

On the other hand, the free form of integration makes the borders somewhat less important. Political solutions can be found on different levels. Local entities might even be represented directly at the center and thus in fact surpassing their own capitals — occasionally.

Conflicts have turned into internal strife. During the forty-odd conflicts of the 1990s, almost all of them were not between states. But the categories are overlapping and the distinction is blurred. It often starts with complains about discrimination and reports of a lack of respect for human rights. It coincides with the lack of a fair and forceful police and judiciary. Parties have no one, or feel that they have no one to go to with their grievances, or to ask for help in the dispute settlements, and consequently they react in different fashions in self-defense, weapons in hand. The smaller units like the clan, the family and the like become the nucleus.

Outside intervention can be useful in terms of observers, peacekeepers mediators etc. But very so often the stronger party to the conflicts is less inclined to accept outside help.

We have a new world post Sept. 11 — the just cause of bringing terrorists to justice and even stopping states that harbor terrorists, give them support or even comfort. Not withstanding the problem of the lack of a universal definition of the term “terrorist.”

Again MacNamara in one of the first comments made on the BBC stressed on the twin challenge of bringing the perpetrators to justice and taking better care of the challenges of poverty that breeds terrorism.

Let us take the first first. The question of fighting terrorism is not the question of whether to do it, but how to do it cost effectively and with results. You do not talk most terrorists out of their determination. You have physically to stop them. You need military force, you need a good and reliable police force, and an uncorrupt legal system.

Sept. 11 has given a strong boost to the state as an institution. Military power should not be privatized. This is no field for the worlds many NGOs. But the state holding the monopoly of physical power must be legitimate. The rule of law is all-important. But please be aware: there should not be the rule of any sort of law. The democratic press and good governance should be implemented. Democracy however presupposes independent, literate and tolerant citizens. And be aware of those who would like to use the techniques of the democratic process to eventually abolish democratic rule. Democratic leadership is one of service and not any sort of license to pursue private economic or other interests. The democratic state exists for its people and not the other way around. Democratic leadership presupposes transparency and accountability. Democracy is a never ending challenge and is not established forever. It has to be nurtured. It has to produce the political results that demonstrate its superiority.

To build military capabilities is the easy part. What about 84 billion extra on the American Defense budget?

Then comes the question of American superiority in all aspects of military affairs. The world’s only superpower. Projecting power, unilaterally if they must, multilaterally they can.

The rest of the world can only perform junior roles. But some have assets better than others, be it Special Forces or even territory. If the strategic value of Turkish territory mostly has been connected to the straits, new situations with regard to the Gulf War and the operations in Afghanistan have given Turkey a basis for rendering extremely valuable contributions.

Contrary to what has been said by realists, and I can quote even Joseph Stalin, that geography is a constant, the significance of geography changes by development of means for military action and the variations of the political problem on the agenda, to mention but a few of the many relevant factors.

Then comes the need of fighting terrorists by the means of a good and effective police force.

Response to Libya: U.S. used air power and struck targets in Libya. The Europeans mostly looked on the American operations, and gave over flights rights, but relied on their police forces to combat the terrorists not in their homeland, but on European soil if they chose to turn up there.

Current transatlantic discussion: Unilateralism. The U.S. is the only nation that can take on terrorists in faraway countries by means of a superior military, most others might bemoan the American trigger happiness. And so the question is whether the United States and the EU perceive the same terrorists, or whether they mostly see the ones for which they have the means to deal with. In other words: Is the perception of the threat a function of the capability to deal with the threat. There are lots of examples throughout history of governments describing the threat according to their own means with which to deal with it.

There is some confusion about the root causes of terrorism. As so well stated by columnist Thomas L. Friedman of the IHT: Many of the terrorists are not coming from poverty. Many are coming from well-to-do families; they have education and a prosperous future. But still they are willing to under certain circumstances to do what the hijackers of Sept. 11 were willing to do.

We need to do something to weaken the root causes of terrorism. The role of poverty comes along in a different dimension.

Some have better intelligence, but it is also important that some have a better psychological analysis and are in a better position to help the all-important dialogue to avoid the clash of civilizations.

Why did the Bader-Meinhof gang in Western Germany have so much success? It was at least partly because there was a broad group of people who were sympathetic to their cause. In German: Die sympatisanten.

I suggest that this category is very important as well.

Take a look at the speech made by Kofi Annan when he accepted the Nobel Peace Prize focussing on the comprehensive needs of the little girl in Afghanistan, but do also take a look at the speech by President Bush a good fortnight ago in which he addresses poverty and terrorism. He was preparing himself for the U.N. meeting on poverty alleviation in Monterrey in Mexico, for the first time President Bush came out in favor of international economic aid and he announced an increase of $5 billion, which is an increase of 14 percent in American spending on that score. Gradually the American administration is overcoming its distaste for development aid and this opens for new initiatives and a much broader acceptance around the world of the American leadership in the fight against terrorists. Having said before that they do not concern themselves with the causes, only with the outcome, the American perspective is going to be broader. Because at home Bush fights on the two fronts of chasing terrorists and protecting the American economy against the effects of terrorism. Should the Americans not be able to look for the same combination when they are making their analysis with other countries in focus?

But then what is the economic ramification? Let me take one example, the Global Fund to fight Aids, Tuberculosis and malaria: Secretary General Kofi Annan has been asking for $7-10 billion and he has got something in the range of 1.8. Or let us take the report from the “Commission of macro economics and health,” led by Harvard professor Jeffrey Sachs: A dollar wisely invested in health will give an economic return six times the investment. In order to halve poverty by the year 2015 one should invest 66 billion a year in health and at the same time save 8 million lives. He asks for .01 percent of GDP or a penny out of only every 10 dollars.

Make love — not war was one of the more well known slogans from the American opposition to the Vietnam War. A similar slogan can be discerned from the practice of Norwegian peace building, be it in the Middle East or in South Africa: Don’t make war, make money. The question is how to give broad groups of the society a stake in the peace process. An economic stake might be a good one. trade is better than a demonizing of the adversary. The development of positive images is important as well.

Peace is made between enemies. When Prime Minister Yitzak Rabin on the lawn of the White House in Washington in September 1993 shook the hand of Chairman Yassar Arafat, it was a handshake between enemies.

The Oslo process for peace in the Middle East was a breakthrough, and it was a beginning. The process died out. But a new process based on the Saudi initiative might be fruitful under the new circumstances even if rejected by Israel. The American initiative in the Security Council for the first time asking for a Palestinian state, along with a secure Israel, is a new beginning.

The Oslo process could start because the PLO was weakened during the Gulf war. The Oslo process got under way also because of the will of the leaders on both side to make a try — and to some extent the sheer luck that there were some Norwegians who had the imagination to grab the opportunity when they saw it emerging. The Oslo process could have been led to fruition in Camp David. But the parties were too far apart and even the American president could not knock their heads together. The recent American position in favor of a Palestinian state has to be seen in the broader context once again of handling Iraq. But never the less: Use the opportunity when opportunity presents itself.

The secrecy of peace processes is extremely important. The few Norwegians involved in the Oslo process did not even inform the American government before the deal was struck behind closed curtains in Oslo.

The Oslo process was something which further more took place on the top of the political hierarchy. This is political leadership. It was lacking the actual involvement of popular support. It was an affair for leaders only. It was lacking in democratic anchorage.

I am proud to have been in on the initiatives of broadening the process through the Shalom-Shalam effort. On the level of my local Rotary Club back in Oslo, we started a student visitors program for Palestinian and Israeli to the Oslo University Summer School. It has created a forum of communication and discussion of alumnae, which has been active on the Internet all through the current turbulence since the second Intifada started when Ariel Sharon took office in Israel.

The model of pairing students from either side of a conflict has to be done carefully in order to be effective. But it could be used in places where it has not been tried out.

I realize the difficulties for outside facilitators to take over some of the responsibility. And with reverses in the process, people who earlier took a chance for peace might come under acute risk of life. When tensions and emotions are running high, collaborators — real or imagined ones — are not seldom hung.

The Norwegian role in the Oslo process was the one of a facilitator. Someone in which the parties had a trust, which was necessary for a beginning. It started by luck through possibilities made at the grassroots level and it was forwarded by chance when political leaders saw the possibilities. A prerequisite was the trust in both parties for Norway earned through a long engagement in the region. You cannot facilitate peace by jumping into the region as a bolt from the blue.

But the process was one for the parties and not for the facilitator. When it showed that they were not willing or not able to carry it through, it stopped. Peace must be made between enemies, and it is the enemies who have to do it!

The truce making in Sri Lanka this winter provides an interesting model. The Norwegian role once again was one of facilitator. The important thing to observe is that the question of peace is a question to be solved by the parties involved. Take Africa in general with all its violent conflicts. You might have a strategic view as to how to make peace, but you have no chance from the outside to make the basic solutions. The devil might be in the details. And the details are for the locals to handle. It is all-important.

The other aspect of the Sri Lankan peace process is that the facilitator has not recently come in from the blue. The Norwegian role has been played over years and the Norwegian engagement has been there for a longer period. The building of trust is necessary. It takes time and sustainability.

I take for granted that neither the Taliban nor the al-Qaeda could be talked into peace and collaboration. And the same goes for some countries suspected of harboring terrorists.

But on the other hand, not all conflicts can be solved through military intervention from the outside. The Norwegian effort in Sri Lanka might be looked upon as an example of facilitating the solving of a conflict by peaceful means. It has gained broad international attention, exactly as a demonstration of that fact.

It is at times possible without airpower, but with “soft power.”

The future in which one grabs the possibilities and does what the German statesman Otto von Bismarck said about politics; When you hear the foot steps of the Lord in the garden, use the opportunity to step forward immediately and take a piece of his mantel. Initiatives for peace can be taken by a variety of actors. Only a few are in the position to act often. But time and circumstances change and one has to make use of the right moment for the right setting. But I think a role for peace presupposes an active mental preparation and training.

We should be inspired of a vision of a world in which we have vastly improved possibility to have the common man have health, education, and a meaningful employment and thereby a basis on which to fulfill his and her potential. But please do not come saying that this is too tough an ambition in the developing world, while it is no problem in the industrialized world. It is a challenge all over where there are human beings.

In a situation like that, even Robert S. Macnamara would have to rewrite his notion of history and not talk of short interludes but of long periods in which all human begins could fulfill his or her potential.


(*) The Acceptance Speech Upon having been awarded the Ihsan Dogramaci prize for International Relations for Peace at Bilkent University, Ankara, Wednesday April 3.

(**) Norwegian Professor, an expert on disarmament.

Visits: 251

Balkans: Heavensgate for the EU stability Prof. Dr. Hüseyin BAĞCI – 17 February 2001, Turkish Daily News

Balkans: Heavensgate for the EU stability

Prof. Dr. Hüseyin BAĞCI – 17 February 2001, Turkish Daily News

The meeting of the three Balkan states presidents in Plovdiv (Bulgaria) is concerned mainly with soft security issues like illegal drug traffic, preventing illegal migration and enhancing the security cooperation among the police forces. Therefore, the main idea of  this regular meeting since 1997, initiated by the Bulgarian President Stayanov, serves  other purposes among many common problems between Bulgaria, Romania and Turkey.

Indeed, Bulgaria is one of the key countries in the Balkans and its orientation since early 90’s towards the European Union is remarkable. What’s even more remarkable is that the EU is considering Bulgaria a “corner stone” in its Balkan Policy. It pays great attention to its political developments and supports it financially in order to speed up its membership negotiations. It is also expected that Bulgaria, despite some major shortcomings in the economic field, does not have “political or social obstacles” for EU membership, i.e. no public opposition to the EU, as it is not the case in Romania and now increasingly in Turkey. The Bulgarian president is widely respected in European circles and his constructive approach, not only towards Turkey but also to the Turkish minority in Bulgaria, is a positive step for his country which was harshly criticized in the 80’s under Todor Jivkov’s repressive policies.

On the other hand, Turkish-Bulgarian relations are a success story in international relations of how two neighbors can change the political atmosphere from tense to relaxed within one decade. No doubt, the Bulgarian politicians since early 90’s changed their attitude towards Turkey in so sincere a way that this new orientation could only be welcomed by recent Turkish governments.

In his detailed account on Bulgarian-Turkish relations, (Turk -Bulgar Iliskileri, 1983-1989, Cilt 1, [1983-1985,] Avrasya Stratejik Arastirmalar Merkezi Yayinlari, Balkan Arastirmalari Dizisi. No.2, Ankara 2000) former Turkish Ambassador to Sofia Omer E. Lutem explains how Bulgarian governments repressive policies had been implemented during the Cold War Years and how the Turkish government, under Turgut Ozal, tried to prevent it, using all instruments of international politics and diplomacy. Therefore, the fact remains that thousands of families suffered under this and a wave of forced migration was a result in the Summer of 1989, where also the revolutions in eastern Europe has started. The fall of the Iron Curtain and a reduced influence of the Russian Federation over the Balkans countries during the time of Boris Yeltsin’s leadership, in particular Bulgaria, was among the most successful countries of former “Soviet Satellites” to transform itself into a democratic and functioning market system despite the fact that the change of constitution was not so difficult than in many other former communist states, when compared.

One should also take notice that despite the fact that Turkey was nearly declaring war in the summer 1989 because of forced migration of more than 350,000 Turks from Bulgaria, all the Turkish presidents since then, Turgut Ozal, Suleyman Demirel and now Ahmet Necdet Sezer, show a continuity for improving relations and currently there are no big controversial issues between Turkey and Bulgaria. On the contrary, these regular meetings serve to increase the trust and fight against common danger in and outside the region.

Turkey’s support for Bulgaria’s membership into NATO is interesting because in the early 1950’s Bulgaria closed its border to Turkey as a result of Soviet pressure so it’s now a surprise that Turkey has become part of the capitalistic world and imperialism. Today, it is the irony of history that Turkey supports Bulgaria’s candidacy and most importantly, how it was a wise and long fetched policy of Turkish government then to join NATO. If Turkey was not in NATO today, most likely, the membership would be not so easy. Example, ESDP of the EU!!

Romania’s President Iliescu is the most experienced president among these three because he is a “survivor” in both systems. No doubt, Romania is also on the way to the EU with great French support but, concerning the NATO membership, it will be a little bit difficult. The main reason for this is that Romania experiences increasing anti-EU and anti-NATO opposition. Also Romania was proud to be in a “non-nuclear free zone” during the Cold War years and opposed again the Soviet system under Chaucesku as far as it could. Romania today on the other hand is one the best trade partners of Turkey and is the most cooperative one also within the Black Sea Economic Cooperation. Turkey’s policy towards Romania has been traditionally very good and no major conflict does exist between the two countries.

President Sezer is well aware how important is it to increase relations with Bulgaria and Romania and continue the cooperation also as the candidate countries for the EU membership. Steyanov, Iliescu and Sezer as the “Trioka of the Balkans” give a positive image to every direction of dialogue that is important for the Balkans. In 1988, there was the idea of “Balkan Helsinki” including Yugoslavia at that time. Today, Yugoslavia has also “returned to the Balkan politics” and no doubt, without Yugoslavia, the Balkan stability and cooperation will be less effective. In other words, Yugoslavia should be taken in to the process, despite the remaining facts and problems of the “post-Milosevic Yugoslavia.”

The stability and security of southeast Europe, or in classical terms Balkans, can only be guaranteed by a strong dialogue and cooperation where all the countries are present. Historically, Turkey, Bulgaria and Romania have always been in the forefront like today. Not only the EU, but also Russia follows the Balkan developments very closely and let’s not forget, of course, the new American administration. Turkey as a NATO country should support further the Bulgarian and Romanian membership into NATO. As in the Vilnius Declaration of May 2000, NATO should extend its invitation to Bulgaria and Romania to join NATO. It is very clear that all the three countries will not join the ESDP in the foreseeable future.

The meeting in Plovdiv was good one. A stable and economically active Balkans is in Turkey’s best interest. The Balkan’s have always been a gateaway for nations and people and it seems that it will remain so. In particular for Turkey, it is also a “heavensgate to Europe,” in the sense of the EU membership, well remarked.

Visits: 167

RECENT ECONOMIC SITUATION IN GREECE Interview with Assist. Prof. Dimitris Tsarouhas, April 19th 2010

RECENT ECONOMIC SITUATION IN GREECE

Interview with Assist. Prof. Dimitris Tsarouhas, April 19th 2010

What do you think are the causes of the economic crisis in Greece?

The causes are many and the current crisis only one expression of the structural economic problems Greece’s has. I would say that the fundamental problem is a chronic lack of competitiveness which has eventually burst out into the open following Greece’s entry into the Eurozone area.  Entry into the Eurozone area has instead of becoming a motivation for the improvement Greece’s economic performance has in some respect become an excuse not to implement reforms that have been long overdue. These reforms are many and, in fact, should not be limited to the economic sphere only. When it comes to the economy itself we are fundamentally talking about the need to make both the public and private sector work more efficiently. That is something that has not happened in Greece and I believe at the heart of the current problems of Greece is this chronic lack of competitiveness, as it has been manifested over the last few years.

The EU wants to seem to be in control over the situation and the Germans have been cryptic in their announcements, but they finally agreed to the idea of offering Greece a loan. Do you think the situation in Greece will lead to any serious disagreements in the European Union?  Will it cause problems in inter-EU relations and in the functioning of the Eurozone? There are upcoming elections in some EU countries; will Greece become a part of the election rhetoric? 

There are two things to mention. First of all, this is not a bilateral loan. What has been agreed upon both in late March and then again in early April is that the EU would come to the rescue of the Greek economy should the Greek economy, i.e. the Greek government, be unable to raise funds in the open market. This is not a bilateral loan and the Greek government has repeatedly said that it is not after a bilateral loan.

Secondly, I would agree with the assessment that disagreements have risen between Germany and the other countries in the Eurozone. I would say that there has been a clear disagreement and here the issue is not Greece anymore. Here the issue is the Eurozone. The German government has taken the position that any Eurozone economy which finds itself in difficulty – it happens to be Greece now it could have been Spain or Portugal, and in fact it maybe Spain and Portugal in the future – should find the way out themselves. The predominant opinion in the EU, and one which I also share, is that within the Eurozone mechanisms of assistance are necessary, not because anyone wants to bail out any particular economy – in this case, the Greek economy – and of course no tax payer wants to bail out the failings of another economy.  Greece’s fundamental economic problem is one which it needs to sort out itself.  However, here we are talking about the functioning of the Eurozone and the credibility of the Eurozone’s own common currency. The vast majority of the opinions, as expressed by the European Commission, the European Central Bank and by the vast majority of EU member states and Eurozone states is that when a country finds itself in difficulty, there needs to be a mechanism of assistance so that the credibility of the Euro in the international market will not go down and the Eurozone economy, as whole, is not going to suffer. So, yes, there is a disagreement there, there is a misunderstanding on the part of Germany – or there possibly a failing on the part of the current German government to appreciate the need for a mechanism that will build on a certain amount of sovereignty so as to help not Greece, Spain or Portugal individually but Eurozone collectively.

Why can they not see it? They probably can, but the answer is very much related to internal politics and the fact that the current German coalition government composed of the Christian Democrats and the Free Democrats are suffering from a lack of direction, a lack of popularity and it has upcoming local elections, in which its opinion poll ratings seem to be quite low. So the idea of creating an image according to which Germany somehow going to be asked to bail out Greece is a very comfortable image and I am sure it sells well domestically, but it does not do much to help the Eurozone.

Greece was offered 30 billion Euros by Eurozone members and the IMF also offered to pitch in another 15 billion Euros. Should the loans be insufficient to alleviate Greece’s economic problems, might Greece seek money from other sources in the future?

Yes. First of all let me clarify that I am not familiar with the details of the last few days the picture I left this prior to our conversation was a mixed representation group featuring IMF and EU would be coming to Athens but they might have been delayed because of the ash-cloud. They were meant to go to Greece today and speak with the respective ministers to decide on the details of how a possible package would look like. So, both the amount of money you mentioned and the actual mechanisms are not clear to me and I do not wish to take position on an issue I do not know all the details of. What I can say is that Greece has a large debt to defend and the debt runs, to a very large extent, until May for the year 2010. However, we are also talking about tens billions of Euros of debt that need to be supported for 2011 and 2012 as well. My assumption is, and I am sure the Greek government has worked this out; any kind of package will be fairly medium-term. There is going to be a need to cover financial needs over the next 2-3 years.

Will the funds be enough? Goodness knows. My prediction is that they will be, for one simple reason: if this package was to be made available in terms that would allow the Greek state to borrow with reasonable interest rates, I think that would be enough. I do not think any extra measures would be necessary. I think the Greek government has taken enough measures on the domestic front to raise revenues and it is to be hoped that this will happen. With regard to the debt it needs to defend, I think that such a package would be a good deal. However, to me it seems to be very important to understand what the nature of the problem is. The nature of the problem is not an attempt by Greece to be bailed out – this is not what the Greek government is requesting. What the Greek government is requesting, and legitimately, that it be allowed to borrow – no state aid – in the open market with normal interest rates. The picture we have had is one of utter amazement and confusion, because despite the repeated messages being sent out by the European Union that it is ready to come to Greece’s aid, the markets refuse to reduce the interest rate on the basis of which they lend money to the Greek state. We are talking about interest rates which are clear robbery: 6-7%; in some respects, hundreds of millions of Euros extra. There is a speculative game being played out and Greece is the first victim of this in the Eurozone. I hope not that others will follow. This game has been based primarily on two pillars. The first one is the unregulated free market, which is a dogma the Europeans are now paying dear. Secondly, the absence of mechanisms within the Eurozone to prevent such speculation from taking place. That is the nature of the problem and is what the Eurozone economies and the Greek government has to face. It is only to be hoped that the problem will be solved the problem in a way that will make sense for all of them.

Have you been to Greece recently? What is going in Greece, domestically? What do the Greeks think about the current economic situation and the EU?

I have not been to Greece in recent months but from what I read, the people are very disappointed with the fact that their economic conditions are getting worse. They are angry at the political establishment and by that I mean both previous governments and the current one. On the basis of the latest data that I have seen, they are not very optimistic about the future. They believe that the future, at least over the next 3-4 years, is going to be much worse than the recent past. That, of course, is to be expected. It is something that happens in all such occasions when a crisis is revealed. I should also add the public is very much worried precisely because it sees that the economic prospects for the future are very bleak. This is not simply about the present. I am afraid that most people believe, or have reason to believe, that the effects of the austerity measures the Greek government has taken are going to start hitting in the next few months and in a few years to come. They have not yet hit the Greek economy. When they start doing so, things will be gravely seriously and I think the people can foresee this. They can see that the tax measures that have been taken and the budget cuts will all hit them in the years to come. The consequences will be very large and I am afraid quite dramatic in some cases.

Visits: 191

RECENT ECONOMIC SITUATION IN GREECE – INTERVIEW WITH ASSIST. PROF. DIMITRIS TSAROUHAS, (APRIL 19TH 2010)

RECENT ECONOMIC SITUATION IN GREECE

Interview with Assist. Prof. Dimitris Tsarouhas, April 19th 2010

What do you think are the causes of the economic crisis in Greece?

The causes are many and the current crisis only one expression of the structural economic problems Greece’s has. I would say that the fundamental problem is a chronic lack of competitiveness which has eventually burst out into the open following Greece’s entry into the Eurozone area.  Entry into the Eurozone area has instead of becoming a motivation for the improvement Greece’s economic performance has in some respect become an excuse not to implement reforms that have been long overdue. These reforms are many and, in fact, should not be limited to the economic sphere only. When it comes to the economy itself we are fundamentally talking about the need to make both the public and private sector work more efficiently. That is something that has not happened in Greece and I believe at the heart of the current problems of Greece is this chronic lack of competitiveness, as it has been manifested over the last few years.

The EU wants to seem to be in control over the situation and the Germans have been cryptic in their announcements, but they finally agreed to the idea of offering Greece a loan. Do you think the situation in Greece will lead to any serious disagreements in the European Union?  Will it cause problems in inter-EU relations and in the functioning of the Eurozone? There are upcoming elections in some EU countries; will Greece become a part of the election rhetoric? 

There are two things to mention. First of all, this is not a bilateral loan. What has been agreed upon both in late March and then again in early April is that the EU would come to the rescue of the Greek economy should the Greek economy, i.e. the Greek government, be unable to raise funds in the open market. This is not a bilateral loan and the Greek government has repeatedly said that it is not after a bilateral loan.

Secondly, I would agree with the assessment that disagreements have risen between Germany and the other countries in the Eurozone. I would say that there has been a clear disagreement and here the issue is not Greece anymore. Here the issue is the Eurozone. The German government has taken the position that any Eurozone economy which finds itself in difficulty – it happens to be Greece now it could have been Spain or Portugal, and in fact it maybe Spain and Portugal in the future – should find the way out themselves. The predominant opinion in the EU, and one which I also share, is that within the Eurozone mechanisms of assistance are necessary, not because anyone wants to bail out any particular economy – in this case, the Greek economy – and of course no tax payer wants to bail out the failings of another economy.  Greece’s fundamental economic problem is one which it needs to sort out itself.  However, here we are talking about the functioning of the Eurozone and the credibility of the Eurozone’s own common currency. The vast majority of the opinions, as expressed by the European Commission, the European Central Bank and by the vast majority of EU member states and Eurozone states is that when a country finds itself in difficulty, there needs to be a mechanism of assistance so that the credibility of the Euro in the international market will not go down and the Eurozone economy, as whole, is not going to suffer. So, yes, there is a disagreement there, there is a misunderstanding on the part of Germany – or there possibly a failing on the part of the current German government to appreciate the need for a mechanism that will build on a certain amount of sovereignty so as to help not Greece, Spain or Portugal individually but Eurozone collectively.

Why can they not see it? They probably can, but the answer is very much related to internal politics and the fact that the current German coalition government composed of the Christian Democrats and the Free Democrats are suffering from a lack of direction, a lack of popularity and it has upcoming local elections, in which its opinion poll ratings seem to be quite low. So the idea of creating an image according to which Germany somehow going to be asked to bail out Greece is a very comfortable image and I am sure it sells well domestically, but it does not do much to help the Eurozone.

Greece was offered 30 billion Euros by Eurozone members and the IMF also offered to pitch in another 15 billion Euros. Should the loans be insufficient to alleviate Greece’s economic problems, might Greece seek money from other sources in the future?

Yes. First of all let me clarify that I am not familiar with the details of the last few days the picture I left this prior to our conversation was a mixed representation group featuring IMF and EU would be coming to Athens but they might have been delayed because of the ash-cloud. They were meant to go to Greece today and speak with the respective ministers to decide on the details of how a possible package would look like. So, both the amount of money you mentioned and the actual mechanisms are not clear to me and I do not wish to take position on an issue I do not know all the details of. What I can say is that Greece has a large debt to defend and the debt runs, to a very large extent, until May for the year 2010. However, we are also talking about tens billions of Euros of debt that need to be supported for 2011 and 2012 as well. My assumption is, and I am sure the Greek government has worked this out; any kind of package will be fairly medium-term. There is going to be a need to cover financial needs over the next 2-3 years.

Will the funds be enough? Goodness knows. My prediction is that they will be, for one simple reason: if this package was to be made available in terms that would allow the Greek state to borrow with reasonable interest rates, I think that would be enough. I do not think any extra measures would be necessary. I think the Greek government has taken enough measures on the domestic front to raise revenues and it is to be hoped that this will happen. With regard to the debt it needs to defend, I think that such a package would be a good deal. However, to me it seems to be very important to understand what the nature of the problem is. The nature of the problem is not an attempt by Greece to be bailed out – this is not what the Greek government is requesting. What the Greek government is requesting, and legitimately, that it be allowed to borrow – no state aid – in the open market with normal interest rates. The picture we have had is one of utter amazement and confusion, because despite the repeated messages being sent out by the European Union that it is ready to come to Greece’s aid, the markets refuse to reduce the interest rate on the basis of which they lend money to the Greek state. We are talking about interest rates which are clear robbery: 6-7%; in some respects, hundreds of millions of Euros extra. There is a speculative game being played out and Greece is the first victim of this in the Eurozone. I hope not that others will follow. This game has been based primarily on two pillars. The first one is the unregulated free market, which is a dogma the Europeans are now paying dear. Secondly, the absence of mechanisms within the Eurozone to prevent such speculation from taking place. That is the nature of the problem and is what the Eurozone economies and the Greek government has to face. It is only to be hoped that the problem will be solved the problem in a way that will make sense for all of them.

Have you been to Greece recently? What is going in Greece, domestically? What do the Greeks think about the current economic situation and the EU?

I have not been to Greece in recent months but from what I read, the people are very disappointed with the fact that their economic conditions are getting worse. They are angry at the political establishment and by that I mean both previous governments and the current one. On the basis of the latest data that I have seen, they are not very optimistic about the future. They believe that the future, at least over the next 3-4 years, is going to be much worse than the recent past. That, of course, is to be expected. It is something that happens in all such occasions when a crisis is revealed. I should also add the public is very much worried precisely because it sees that the economic prospects for the future are very bleak. This is not simply about the present. I am afraid that most people believe, or have reason to believe, that the effects of the austerity measures the Greek government has taken are going to start hitting in the next few months and in a few years to come. They have not yet hit the Greek economy. When they start doing so, things will be gravely seriously and I think the people can foresee this. They can see that the tax measures that have been taken and the budget cuts will all hit them in the years to come. The consequences will be very large and I am afraid quite dramatic in some cases.

Visits: 125