EU China Roiling Relations

How did Western automakers fall so far behind? China’s competitive advantages start with its economic strategy to dominate the global EV market, which can be traced back more than a decade.

by Kazi Anwarul Masud

 

June 23, 2024

 

11 mins read

 

People visit the booth of Chinese carmaker Xpeng during the 2023 International Motor Show in Munich, Germany, Sept. 5, 2023. (Xinhua/Ren Pengfei)

Mary Gallagher, a regular contributor to World Political Review, has written the following article depicting how Chinese electric vehicle manufacturing is posing a hindrance to the development of EU-China relations. She writes about the first in-person summit in Beijing since 2019. The European Union and China concluded their first in-person summit since 2019 this week, with European Commission President Ursula von der Leyen and European Council President Charles Michel traveling to Beijing to meet with Chinese President Xi Jinping and Premier Li Qiang.

Two issues were prominently displayed: EU-China trade imbalances and China’s continued support for Russia despite its invasion of Ukraine. While the latter has fundamentally shifted Europe’s view of China, it was the economic issues that dominated the discussions at the summit. The EU complained vociferously about the yawning gap in trade flows, with von der Leyen calling the EU’s $400 billion trade deficit with China “unsustainable.” Von der Leyen had already announced an anti-subsidy investigation into Chinese electric vehicle (EV) batteries in October. But the question of Chinese subsidies is only the tip of the iceberg when it comes to the two sides’ conflicting ideologies and competition over the green energy revolution in the automotive industry. Unsurprisingly, little progress was made at the summit, for the simple reason that the two sides’ positions are ultimately irreconcilable.

China’s superior position in the EV industry poses immense challenges to the EU, not just with regard to the competitive disadvantages of European legacy automakers, though those are severe. Limiting imports of Chinese EVs and EV batteries in order to expand EV manufacturing in the EU would undermine the credibility of the EU’s commitment to its green energy goals, as well as its ability to maintain a principled economic openness as protectionism and industrial policy become the norm everywhere else. As with the reshoring goals of the U.S., expanding European EV production will also fuel increased trade union activism in new EV and battery plants, which will drive up wages and, in turn, the costs of EVs to consumers. As a result, the EV challenge from China is not just a question of economics or technology. It is a confrontation between the social and political institutions on which China’s economic successes are built and the EU’s core liberal tenets and values. Unfortunately, in the green transition to EV technology, Western governments and corporations are woefully late to the game, limiting the EU’s options for confronting China’s competitive advantage. If it enacts tariffs on Chinese EV imports into the EU due to unfair subsidies, the EU would be adopting protectionist measures that it has so far resisted, in stark contrast to former U.S. President Donald Trump and President Joe Biden. This also risks delaying the EU’s own goals to phase out internal combustion engine vehicles by 2035 in exchange for supply chain resiliency.

Meanwhile, the EU’s ability to attract EV investment and manufacturing back to the EU will be hampered by stricter environmental regulations and strong trade unions that are already striking against Tesla in Scandinavia. As with the successful United Auto Workers strike this fall targeting EV manufacturing plants in the United States, Western trade unions have targeted these new industrial sectors for unionization in order to regain their former power and influence. Yet investors and manufacturers will compare labor unrest in Western centers of EV manufacturing against a labor regime in China that is dominated by pliant unions and Communist Party suppression of worker activism.

CHINESE SUCCESS IN ADOPTING COMPETITIVE ADVANTAGE IN LABOR-INTENSIVE AND LOW-END MANUFACTURING ECONOMIC MODEL

How did Western automakers fall so far behind? China’s competitive advantages start with its economic strategy to dominate the global EV market, which can be traced back more than a decade. In 2009, China began to rethink a development model too dependent on labor-intensive, low-end export manufacturing and a domestic automotive industry that was completely dominated by foreign joint ventures with Western and Japanese firms, including Volkswagen, Toyota, and GM.

To quote automotive industry expert Mike Dunne, China’s strategy in EVs is the same as its successful strategy in solar panels: “Build up massive capacity. Achieve scale. Reduce costs. And then export like a bat out of hell all over the world.” Chinese companies now produce two-thirds of all EV batteries, and China has cornered the market in mining and processing key mineral components. This is in part due to China’s decentralized political economy, which has allowed for extreme competition within the domestic EV industry, with local governments and banks eager to provide cheap money and land to prop up local EV employers.

Overcapacity has already been achieved in the production of traditional internal combustion engines vehicles, with the sector now producing at least 15 million more cars per year than China alone can consume. As a result, Chinese car exports are booming to Russia, Southeast Asia, Australia, and Latin America. But overcapacity is now spreading to the EV market as well, with domestic EV champions like BYD rapidly building export capacity.

RAPID EXPANSION OF THE CHINESE AUTOMOTIVE INDUSTRY DUE TO XI JINPING’S GLOBAL DEVELOPMENT INITIATIVE

The rapid expansion of the Chinese automotive industry has been accelerated by the decision to shift government investment from the property sector to the manufacturing sector. This accords with Xi’s desire to prop up the “real economy” over the financial sector and to fund production by firms rather than consumption by households. But this decision requires that the resulting overcapacity be exported overseas. For Europe, a large increase in cheap EVs manufactured in China, even those built by European firms like VW and BMW, risks a political backlash. It also risks the future of Europe’s legacy firms, which are far behind China’s domestic homegrown successes in EVs and losing market share in China fast.

So as impressive as China’s economic and technological success in the EV space is, it’s bad news for Europe’s legacy automotive firms and the governments that seek to champion them. Worse still for Europe and the West, China has other successes that it can tout beyond its ability to lead the global transition to EVs, both to other countries and to big business. Xi’s Global Development Initiative, which he announced in 2021, is a vision for development that prioritizes “new opportunities” for developing countries to leverage the digital economy and the green energy transition. Both are bright spots of Chinese success and innovation, from TikTok in the digital space to CATL, the world’s largest EV battery maker, in the auto industry.

CHINESE CURRENT DOMINANCE IN THE GLOBAL SOUTH

China’s current dominance lends credibility to Xi’s overseas sales pitch that China can lead the way for other countries in the Global South to “leapfrog” stages of economic development in the same way China has. Finally, China’s political system all but guarantees quiescent labor and docile trade unions that are nothing more than appendages to the Communist Party. The transition from internal combustion engine vehicles to EVs will remake the industry, with employment implications for autoworkers everywhere, which is why the UAW focused on battery plants in its fall strike in the United States. Tesla faces growing union membership in its Gigafactory outside Berlin, and the Tesla supply chain is up against strong union action in Sweden and now Denmark. As the likelihood of EU tariffs on Chinese EV imports grows, the EU is set to look more like the U.S., with protectionist industrial policy to encourage local production and an emboldened labor movement eager to capitalize on the energy transition. This might be good for Europe, but it will be bad for EU-China relations.

WORLD ECONOMIC FORUM ON THE RISE OF CHINA

The World Economic Forum, in a brief history on the rise of China, reported that China’s meteoric rise over the past half-century is one of the most striking examples of the impact of opening an economy up to global markets. Over that period, the country has undergone a shift from a largely agrarian society to an industrial powerhouse. In the process, China has seen sharp increases in productivity and wages that have allowed it to become the world’s second-largest economy. While the pace of growth over recent decades has been remarkable, it is also important to look at what the future might hold now that a large part of the gains from urbanization have been exhausted. A new paper published attempts to do just that, looking back over China’s growth story between 1953-2012 and using the data to model plausible scenarios for the country up to 2050. The first two decades following the founding of the People’s Republic of China in 1949 were marked by periods of substantial growth in per capita GDP, followed by sharp reversals. The authors suggest this represented the success of the First Five-Year Plan, during which “6000 Soviet advisers helped establish and operate the 156 large-scale capital-intensive Soviet-assisted projects,” significantly increasing the pace and quality (productivity) of industrialization in the country. However, it was followed by the Great Leap Forward (1958-1962), which undid many of the gains by worsening incentives through banning material incentives and restricting markets. These reforms were then unwound between 1962 and 1966, leading to another period of productivity and per capita GDP growth, before the events of the Cultural Revolution set the economy back once again.

According to the authors, the Third Plenary Session of the 11th Central Committee of the Communist Party in December 1978 was the defining moment in shifting the country from its unsteady early economic trajectory onto a more sustainable path. It laid the groundwork for future growth by introducing reforms that allowed farmers to sell their produce in local markets and began the shift from collective farming to the household responsibility system. A year later, the Law on Chinese Foreign Equity Joint Ventures was introduced, allowing foreign capital to enter China, helping to boost regional economies. Although it took until the mid-1980s for the government to gradually ease pricing restrictions and allow companies to retain profits and set up their own wage structures, this helped to boost GDP from an annual average of 6% between 1953-1978 to 9.4% between 1978-2012. It also increased the pace of urbanization as workers were drawn from the countryside into higher-paying jobs in cities. This process of market liberalization led to the establishment of China as a major global exporter. It eventually allowed for the reopening of the Shanghai stock exchange in December 1990 for the first time in over 40 years and, ultimately, to China’s accession to the World Trade Organization. These reforms had a significant impact both on per capita GDP and the pace of the falling share of the labor force working in the agricultural sector. The good news for the global economy is that the authors of the paper claim that the Chinese economy can continue to see relatively robust levels of growth, albeit significantly lower than we have seen over recent decades.

While the average growth rate of real GDP between 1978-2012 has been an impressive 9.4%, that figure could decline to between 7-8% between 2012-2024 in the authors’ base case. This is significantly higher than most commentators believe is likely given clear signs of a slowing economy in China’s recent economic data. Of course, such long-range projections should be treated with a great deal of caution, but the trajectory is already clear – growth is slowing. This is to be expected for an economy of China’s size, as compounding makes it harder and harder to deliver the same rate of growth from a higher level of GDP. Moreover, the factors that have driven the country’s expansion over recent decades will also have to shift in their relative importance. For example, the numbers of people making the shift from agricultural jobs into higher value-add city jobs are likely to decrease, and the process of urbanization will therefore not be able to add as much to output per worker as it has done in the recent past. Also, the catch-up process that has delivered significant productivity growth in the country is also likely to slow as Chinese industry gets closer to the technological sophistication of its Western counterparts. The initial gains of adding hundreds of millions of workers to the global labor supply are also quickly fading. Instead of allowing low-cost exports to drive growth, China will increasingly have to rely on expanding its own domestic demand to meet the government’s ambitious growth targets. Achieving this, however, will require further reforms to release Chinese consumers’ spending power and build the foundations of a more balanced economy.

SHOULD THE RISE OF CHINA BE OF CONCERN TO THE WORLD?

I had written elsewhere about Robert McNamara’s apprehension, namely how the world had come close to annihilation. Robert McNamara, in 2003, former Defense Secretary, recalls how close the world had come to annihilation. Then US Secretary of Defense, McNamara appeared in a documentary program called The Fog of War. Here he reflects on the decisions and outcomes of the Cuban missile crisis: “Under a cloak of deceit, the Soviet Union introduced nuclear missiles into Cuba, targeting 90 million Americans.

The CIA said the warheads had not been delivered yet. He said to President Kennedy the US needed to do two things. First, the US needed to develop a specific strike plan. The second thing the US would have to do is to consider the consequences. Kennedy was trying to keep the USA out of war. McNamara was trying to help him keep us out of war. And General Curtis LeMay was saying, ‘Let’s go in, let’s totally destroy Cuba.’ On that critical day, the US had two Khrushchev messages. One basically said, ‘If you’ll guarantee you won’t invade Cuba, we’ll take the missiles out.’ Then before we could respond, we had a second message that had been dictated by a bunch of hardliners. And it said, in effect, ‘If you attack, we’re prepared to confront you with masses of military power.’

At the elbow of President Kennedy was Tommy Thompson, former US ambassador to Moscow. Tommy Thompson said, ‘Mr. President, I urge you to respond to the soft message’… In the first message, Khrushchev said this: ‘We and you ought not to pull on the ends of a rope which you have tied the knots of war. Because the more the two of us pull, the tighter the knot will be tied. And then it will be necessary to cut that knot, and what that would mean is not for me to explain to you. If people do not display wisdom, they will clash like blind moles and then mutual annihilation will commence.’ McNamara said, and this is very important: in the end, we lucked out. It was luck that prevented nuclear war.

We came that close to nuclear war at the end. Rational individuals: Kennedy was rational; Khrushchev was rational; Castro was rational. Rational individuals came that close to the total destruction of their societies. And that danger exists today. The major lesson of the Cuban missile crisis is this: the indefinite combination of human fallibility and nuclear weapons will destroy nations. And he said, ‘Gentlemen, we won. I don’t want you ever to say it, but you know we won, I know we won.’ It’s almost impossible for the US people today to put themselves back into that period. In my seven years as Secretary, we came within a hair’s breadth of war with the Soviet Union on three different occasions. Twenty-four hours a day, 365 days a year for seven years as Secretary of Defense, I lived the Cold War.”

CONCLUSION

The world today, enmeshed as it is, cannot ignore the rise of China as an aspirant for a place at the table that has set the rules governing the world for almost fifty years, led by the US. However, with the emergence of multipolarity, the only superpower has to take the help of the European Union and also Scandinavian countries, which would welcome other European countries into the fold of NATO despite NATO’s rule of coming to the rescue of a partner in distress. In this milieu, forgotten are the days of boar hunting by the then Finnish President and the General Secretary of the Soviet Communist Party.

China wants to be the superpower in Asia, which the US is not yet willing to concede. Present-day Americans are not familiar with the Vietnam War and the body bags brought home. Nor are they familiar with Ho Chi Minh and his legacy of defeating the US and its fleeing from the battlefield, as they did in Afghanistan. The aspirations of the Third World Countries, some holding nuclear weapons, cannot be wished away. Adventurists, if any, have to take into account the cost of their adventures, which would mean total annihilation. The world yet has to bite its nails that mad adventurists like the North Korean ruler do not force Japan and South Korea into the nuclear race despite the presence of US troops in their countries.

 

Flags of Saudi Arabia and Israel.

Saudi Arabia’s Quest For Peace With Israel – OpEd

 June 13, 2024  0 Comments

By Ambassador Kazi Anwarul Masud

Saudi Arabia has always sought peace with Israel, although it dreaded the consequences of publicizing its intent. In 1965, the Arab public ridiculed Tunisian President Habib Bourguiba when he proposed to resolve the Arab-Israeli conflict based on the United Nations’ 1947 partition plan. Given the slow-paced and cautious Saudi foreign policy and its aversion to making dramatic decisions, Crown Prince Mohammed bin Salman realized the need to prepare the Saudi people for active peace with Israel after decades of vilifying Jews and condemning Israel’s existence. He delegated the task of re-socializing the population to the local media, invariably reflecting and rationalizing official foreign policy shifts.

 This paper traces the origins of Saudi peace endeavors with Israel even before the state’s establishment in 1948 and MBS’ hopes for normalization. It then sheds light on the Saudi people’s opposition to peace with Israel, which mandated the government’s decision to use the local media to convince them of the merits of peace, given the Saudi royals’ traditional emphasis on securing broad consensus before making consequential decisions. 

Saudi Peace Track Palestine caught the attention of Ibn Saud amid the rising strife between Arabs and Jews in the 1930s. However, given his preoccupation with consolidating his rule in Arabia and maintaining relations with Britain and the United States, he was uninterested in what happened there. Despite Ibn Saud’s Wahhabi legacy and its blatant hostility not only to Christians and Jews but also to other Islamic groups, he determined his position on the Jews and Zionism based on protecting the strategic interests of his kingdom in the Arabian Peninsula, as he had no ambitions to expand the scope of his rule outside it. Palestine did not mean a lot to him. One of the essential principles of Ibn Saud’s policy was cooperation with Britain and the United States to ensure that the balance of power in the Middle East would not tilt in favor of his Hashemite rivals in Iraq and Jordan at the expense of his fledgling kingdom. Ibn Saud resisted making any sacrifices on behalf of the Palestinians that might harm Saudi Arabia, and his aid to the Palestinians consisted of minimal money and weapons, which he sent secretly to them. Ibn Saud believed in the possibility of coexistence between Arabs and Jews with the help of Britain, which was responsible for regional security. In the 1940s, Ibn Saud worked within the Arab League to reject proposals that would harm the interests of the United States and Britain, avoided commitments to provide significant aid to the Palestinians, and opposed war against the Jews. 

In 1948, when Israel declared its independence and the Arab League armies invaded Palestine, Ibn Saud contented himself with symbolic participation by sending a small, untrained contingent under Egyptian command, which contributed little to the Arab war effort. The dramatic regional developments after the defeat of the Arab armies prompted Ibn Saud to cease interference in the Arab-Israeli conflict. The Saudi leadership subtly welcomed Egypt’s signing of the Camp David Peace Accords with Israel in 1978. 

SAUDIS BEGAN TO SEE IRAN AND NOT ISRAEL AS BIGGEST STRATEGIC THREAT

Nevertheless, the success of the Iranian Revolution in 1979 and Tehran’s efforts to export it to the Arab region triggered the Iraq-Iran war in 1980. The Saudis began to see Iran, not Israel, as their biggest strategic security threat. In 1981, then-Saudi Crown Prince Fahd presented a peace proposal at a summit in Morocco that included establishing a Palestinian state in the West Bank and Gaza, with East Jerusalem as its capital, in exchange for providing guarantees for peace among all countries in the region. However, the summit ended abruptly four hours after its start due to the refusal of Syria, Iraq, Algeria and Libya to accept the security of Israel. The gathering reconvened a year later and implicitly recognized Israel’s right to exist, provided it agreed to establish a Palestinian state and dismantle West Bank settlements. 

Twenty years later, Saudi Crown Prince Abdullah presented an initiative at the Beirut summit that demanded Israel’s withdrawal from the Golan Heights and the establishment of a Palestinian state in exchange for comprehensive normalization. However, Syria objected to normalization and substituted it with peace because normalization belongs to the people and not to governments. Peace and Its Discontents In 2016, MBS launched Vision 2030 to transform Saudi Arabia economically, culturally and socially. Soon after King Salman designated him as crown prince, he set out to consolidate his domestic powers and pursue the challenging task of modernization through economic diversification away from oil, which had eluded Saudi kings since 1970.

 He believed in the necessity of making peace with economically developed and technologically vibrant Israel to fulfill his desire to transform Saudi Arabia into a modern country. However, MBS became concerned about the Saudis’ reaction to making peace with Israel. His fears came true with the publication of a recent public opinion poll. The survey, carried out by the Washington Institute for Near East Policy a few weeks after Hamas’ October attack, showed that most respondents saw Israel as a weak and divided state. The overwhelming majority of them believed the ongoing war between Israel and Hamas was a victory for Arabs and Muslims. Almost all respondents also agreed on the necessity for Arab and Islamic countries that recognize Israel to immediately sever all diplomatic, political and economic relations with it. Strikingly, only 16 percent of Saudi respondents said that Hamas should stop calling for the destruction of Israel and accept a two-state solution based on the 1967 borders. The Media Joins In Saudi newspapers do not hide the kingdom’s desire to achieve peace with Israel because it is in line with the country’s initiatives since 1981, which Riyadh associates with achieving a just, comprehensive and sustainable solution to the Palestinian issue. Saudi media condemned what Hamas did last October, stressing that Hamas must understand that Arabs reject it. Saudi Arabia views Hamas as living in a grand illusion, including the futility of its project to establish a Palestinian state from the Jordan River to the Mediterranean Sea. 

Some Saudi newspapers compared the Hamas attack on Oct. 7 to the 9/11 attacks, proposing that there was a hidden goal for Hamas to sabotage Saudi intentions to solve the Palestinian problem. Saudi media discourse shows solidarity with Gaza’s civilians and demonization of Hamas. It also criticizes the extremeness of the Israeli military campaign, even though the Saudi Al Arabiya TV channel extensively covered the horrific stories of the victims of the Hamas attacks. Saudi criticism of Israel does not hide the fact that according to research firm Oil Change International, Saudi Arabia sent 151 oil shipments to Israel during the first six months of the war. The Saudi media presents itself as merely an observer of the war in Gaza, yet tacitly suggests that the kingdom keeps the door open for normalization with Israel and that the ball is in its court. The Saudi media focuses on legitimizing normalization with Israel, whose preconditions vacillate between Palestinian statehood and improving the Palestinians’ quality of life. What is striking is the frequent appearance of Israeli officials and analysts on Al Arabiya, which is an implicit indicator of Israel’s gradual introduction into the Saudi public. Most Saudis do not know anything about Israel other than what they have learned over the decades since its establishment and the emergence of the refugee problem. The late King Faisal’s portrayal of Zionists, in addition to communists, as perpetrators of a cosmic conspiracy played a significant role in shaping the Saudi collective consciousness about Jews in general and Zionism in particular. The Saudi media never mentioned Israel except to warn against it, overwhelming majority of them believed the ongoing war between Israel and Hamas was a victory for Arabs and Muslims. Almost all respondents also agreed on the necessity for Arab and Islamic countries that recognize Israel to immediately sever all diplomatic, political and economic relations with it. Strikingly, only 16 percent of Saudi respondents said that Hamas should stop calling for the destruction of Israel and accept a two-state solution based on the 1967 borders. The Media Joins In Saudi newspapers do not hide the kingdom’s desire to achieve peace with Israel because it is in line with the country’s initiatives since 1981, which Riyadh associates with achieving a just, comprehensive and sustainable solution to the Palestinian issue. Saudi media condemned what Hamas did last October, stressing that Hamas must understand that Arabs reject it. Saudi Arabia views Hamas as living in a grand illusion, including the futility of its project to establish a Palestinian state from the Jordan River to the Mediterranean Sea. Some Saudi newspapers compared the Hamas attack on Oct. 7 to the 9/11 attacks, proposing that there was a hidden goal for Hamas to sabotage Saudi intentions to solve the Palestinian problem. Saudi media discourse shows solidarity with Gaza’s civilians and demonization of Hamas. It also criticizes the extremeness of the Israeli military campaign, even though the Saudi Al Arabiya TV channel extensively covered the horrific stories of the victims of the Hamas attacks. Saudi criticism of Israel does not hide the fact that according to research firm Oil Change International, Saudi Arabia sent 151 oil shipments to Israel during the first six months of the war. The Saudi media presents itself as merely an observer of the war in Gaza, yet tacitly suggests that the kingdom keeps the door open for normalization with Israel and that the ball is in its court. The Saudi media focuses on legitimizing normalization with Israel, whose preconditions vacillate between Palestinian statehood and improving the Palestinians’ quality of life. 

What is striking is the frequent appearance of Israeli officials and analysts on Al Arabiya, which is an implicit indicator of Israel’s gradual introduction into the Saudi public. Most Saudis do not know anything about Israel other than what they have learned over the decades since its establishment and the emergence of the refugee problem. The late King Faisal’s portrayal of Zionists, in addition to communists, as perpetrators of a cosmic conspiracy played a significant role in shaping the Saudi collective consciousness about Jews in general and Zionism in particular. The Saudi media never mentioned Israel except to warn against it. Unlike the Qatar-based Al Jazeera, Al Arabiya has adopted a moderate stance toward Israel. In the past few years, former Saudi officials and pro-government social media influencers have publicly criticized the Palestinians for wasting opportunities to solve the conflict, sharing sharp posts saying “Palestine is not my issue.” A prominent Saudi journalist and advocate of normalization claimed that Israel is living in a post-9/11 atmosphere and that there is currently no room for reason in Prime Minister Benjamin Netanyahu’s calculations. The journalist stressed that Netanyahu should not waste the unprecedented opportunity for peace with the kingdom. However, after the storm of post-Oct. 7 repercussions subsided, he expressed optimism about the future. The journalist mocked the senseless wars caused by Hamas since Israel’s withdrawal from Gaza in 2005 and even all the Arab-Israeli wars since 1948. He expressed dissatisfaction with the behavior of some Arab academics and intellectuals who failed the test of reason. Saudi media expressed the need to forge peace with Israel as quickly as possible, warning that the details of the agreement could derail normalization. These details lie in direct talks between Israel and the Palestinians, which could extend for years. The Saudis are fully aware that Israel will not accept Palestinian statehood based on the failure of the peace processes between the two parties, starting with the Camp David Accords in 1978, the Oslo Accords in 1993, and the Middle East Quartet’s 2003 Roadmap for Peace. Therefore, Saudi media advocates peacemaking as soon as possible and separates it from the Palestinian statehood track. The Peace Drive Goes On Saudi Arabia will not forgive Hamas for jeopardizing normalization talks with Israel. MBS bases his country’s foreign policy on the principle of Saudi Arabia first. Therefore, despite the number of Palestinian civilian deaths due to the war, no red lines stand in the way of his strategic choice to normalize relations with Israel, regardless of what happens in Gaza or the possibilities of establishing a Palestinian state. However, MBS faces a domestic challenge due to growing Saudi popular support for Hamas, which has come to embody resistance to Israel. Saudi Arabia can significantly influence. 

CONCLUSION

 Saudi Arabia will not forgive Hamas for jeopardizing normalization talks with Israel. MBS bases his country’s foreign policy on the principle of Saudi Arabia first. Therefore, despite the number of Palestinian civilian deaths due to the war, no red lines stand in the way of his strategic choice to normalize relations with Israel, regardless of what happens in Gaza or the possibilities of establishing a Palestinian state. However, MBS faces a domestic challenge due to growing Saudi popular support for Hamas, which has come to embody resistance to Israel. Saudi Arabia can significantly influence the U.S. to stop the war. But it has refrained from doing so, focusing instead on exploiting the war to pursue its interests. The Saudis want to sign a defense agreement with the United States and revive peace negotiations with Israel to establish a joint economic partnership and fulfill some of its development goals, which have hit a snag recently. The Saudis do not trust the ability of the inherently corrupt Palestinian Authority to reform itself, which is what Western countries demand as a prerequisite for talks on a two-state solution.

 

Effects Of Indo-China Political Tension In Global Framework – OpEd

 June 23, 2024  0 Comments

By Ambassador Kazi Anwarul Masud

Mayuri Banerjee a Research Analyst with the East Asia Centre at the Manohar Parrikar Institute for Defense Studies and Analyses (MP-IDSA), New Delhi. Her research focus is on India-China relations. She primarily looks at the role of memory and trust in India-China relations after the 1962 war and Indian media’s perception of China. In an article she traced the history of the Sino-Indian border dispute has a long and complex history. If one were to look for some key points one could mention: Aksai Chin: One of the disputed territories is Aksai Chin, which is administered by China but claimed by India. It lies at the intersection of Kashmir, Tibet, and Xinjiang. Aksai Chin is mostly uninhabited high-altitude wasteland, but it has significant pasture lands at the margins. McMahon Line: The other disputed territory is south of the McMahon Line, in an area formerly known as the North-East Frontier Agency (now Arunachal Pradesh). The McMahon Line was signed between British India and Tibet as part of the 1914 Simla Convention, but China disowns this agreement, stating that Tibet was not independent when it signed the Simla Convention.

1962 Sino-Indian War: The conflict escalated in 1962 when Chinese troops attacked Indian border posts in Ladakh in the west and crossed the McMahon Line in the east. The war resulted in significant casualties.  There were border clashes in 1967 in the region of Sikkim, despite an agreed border. In 1987 and 2013, potential conflicts over the Line of Actual Control (LAC) were successfully de-escalated. Recent Tensions: Multiple skirmishes broke out in 2020, leading to dozens of deaths in June. Agreements signed in 1993 and 1996 aimed to address the boundary question, including confidence-building measures and defining the LAC. Various dispute resolutions have been established over the years.  In summary, the India-China border dispute remains ongoing, with historical roots and periodic tensions. Diplomatic efforts continue to find a resolution to this complex issue. Assessing the success of Border Dispute Management Talks and Confidence-Building Measures. The success of the bilateral dialogue mechanisms and confidence-building measures described above needs to be assessed according to three aspects; management of border conflict, addressing the bilateral trust deficit, and resolution of the border dispute. A cursory review of the state of affairs indicates that, in all three aspects, both countries have achieved minimal success. For instance, in the matter of border conflict management, the maintenance of peace and tranquility along the LAC has been one of the most important stated objectives. Although China and India have been able to avert a major 1962-style confrontation, the number of military incursions by China has risen sharply, from 334 in 2014 to 606 in 2019.   

The Galwan Valley military standoff led to severe military clashes; and the stalemate continues. Simultaneously, local feuds between the armies have inclined toward more violence, that is from fist fights and throwing stones, the armies of the two sides have resorted to more violent measures including the use of clubs studded with nails or wrapped with metal barbed wire.  These instances point toward a lack of local-level communication and understanding, which persists amid the backdrop of diplomatic proclamations of friendship and cooperation. Likewise, despite high level political and diplomatic exchanges and frequent meetings of the top leadership, the trust deficit between the two countries has only widened. There exists the perception of a considerable security threat on both sides as India and China have moved rapidly to upgrade their border infrastructure and military capabilities along the disputed border on the sidelines of the Special Representative Talks and Joint Working Group meetings. In recent years, a vigorous border infrastructure race has developed between the two countries, wherein both sides have engaged in building extensive road and railway connections on their respective sides of the border, upgrading military facilities, and increasing overall troop deployments for quick mobilization. This in turn has aggravated insecurities in both countries and is considered one of the primary reasons for the frequent border skirmishes along the LAC. In particular, the Doklam (2017) and Galwan Valley (2020) clashes were triggered by road-building activities undertaken by China and India, respectively. Apart from upgrading military infrastructure along the border, both sides have also invested heavily in modernizing their conventional and non-conventional combat forces as an indication of battle preparedness to the other.   In view of increasing military capabilities, assertive behavior and intense distrust, the notion of peace along the LAC seems dependent on the political wisdom of their respective governments. Even after fifteen rounds of Joint Working Group meetings and eighteen rounds of Special Representative Dialogues, the border dispute is far from being resolved. Even though the negotiation process follows a generous principle of package settlement through a sectoral approach, the two countries have failed to go beyond routine delegation meetings and joint declarations. 

The ascent to power of Xi Jinping in China and Narendra Modi in India, known for their strong leadership and corporate style of politics, had raised hopes for a final settlement of the border dispute, but domestic political considerations and strategic threat perceptions continue to severely constrain the ability of these political leaders to undertake sweeping decisions to resolve the dispute. The border dispute undeniably remains one of the major issues impinging on Sino-Indian bilateral ties. Experts contend that there are multiple factors today which sustain the border dispute. The first is the geographical constitution of the disputed areas: The rugged, featureless terrain and extreme weather conditions make determination of the precise alignment challenging. Subsequently, implementation of border agreements on the ground also remains elusive. Second, there is asymmetry in the level of urgency for the settlement of the border dispute. In contrast to New Delhi’s endeavors seeking a quick settlement, Beijing has staunchly resisted any fast-tracking of the resolution process, arguing that the border dispute is a complicated question and should be negotiated only when conditions are favorable. 

The primary reason for this difference in approaches is that the disputed border does not pose a security threat to China, and therefore Beijing is willing to wait for a more beneficial resolution. In contrast, New Delhi sees the border dispute as source of instability and worries and that China would use the unresolved border to bully India. The third factor inhibiting the resolution of the border dispute is intense nationalism in both countries. For China, the border dispute is intrinsically linked to Tibet and the Dalai Lama, and since the CCP has always projected the Tibetan government-in-exile in a negative light, territorial concessions involving Tawang will not only endanger China’s own rule in Tibet but will also be seen domestically as sign of weakness; a terrifying prospect for the Chinese leadership. As for India, no political party would be able to propose a territorial exchange with China without seriously jeopardizing its electoral prospects, as the memories of 1962 war continue to haunt the Indian national psyche. Lastly, along with the boundary dispute, new issues have begun to stir trouble in Sino-Indian bilateral ties. India’s concerns regarding China’s diversion of the Yarlung-Tsangpo/Brahmaputra river water, the China-Pakistan Economic Corridor, and China’s growing influence in South Asia have emerged as new irritants for Indian policy makers. 

Similarly, Beijing too is annoyed by India’s increasing proximity with Southeast Asian countries and its diplomatic-military exchanges with the United States, Japan, and Australia. These issues further erode political will in both countries and in this context territorial exchange by swap or political settlement appears a daunting task. As evinced by the recent Galwan Valley clashes, managing the border dispute is both a political and an economic exigency for India and China because any major confrontation between the two countries will not only hurt the long-term prospects for development of both, but will also have significant repercussions on Asian stability and prosperity. Therefore, the policy-making elites of both countries need to frame innovative solutions like creating soft borders through civilian, cultural, and economic exchanges, and involving local communities in managing the border.  Such an approach can help reduce the number of military encounters between the two countries and create an enduring peace in the border region. 

The two countries should also aim toward building strategic trust through open dialogue, exchange of information, and verification mechanisms along the disputed border. Enhancing military-to-military communication, technological collaboration and engagement on multilateral platforms remain indispensable toward building trust. Public perception is another key area that needs to be urgently addressed through civilian exchanges. This would go a long way toward dispelling stereotypes and negative perceptions. Track-II dialogue involving strategic-affairs experts and academics from the two countries could also be organized to identify new areas for cooperation. For the foreseeable future, the border dispute will remain a pressing challenge in Sino-Indian ties, however, it is in the national interest of both countries to prioritize their larger bilateral relationship, while at the same time erecting confidence-building measures and dialogue mechanisms to better preserve the benefits accruing from the relationship.  The border dispute undeniably remains one of the major issues impinging on Sino-Indian bilateral ties. 

Experts contend that there are multiple factors today which sustain the border dispute. The first is the geographical constitution of the disputed areas: The rugged, featureless terrain and extreme weather conditions make determination of the precise alignment challenging. Subsequently, implementation of border agreements on the ground also remains elusive. Second, there is asymmetry in the level of urgency for the settlement of the border dispute. In contrast to New Delhi’s endeavors seeking a quick settlement, Beijing has staunchly resisted any fast-tracking of the resolution process, arguing that the border dispute is a complicated question and should be negotiated only when conditions are favorable. The primary reason for this difference in approaches is that the disputed border does not pose a security threat to China, and therefore Beijing is willing to wait for a more beneficial resolution. In contrast, New Delhi sees the border dispute as source of instability and worries and that China would use the unresolved border to bully India. The third factor inhibiting the resolution of the border dispute is intense nationalism in both countries. 

For China, the border dispute is intrinsically linked to Tibet and the Dalai Lama, and since the CCP has always projected the Tibetan government-in-exile in a negative light, territorial concessions involving Tawang will not only endanger China’s own rule in Tibet but will also be seen domestically as sign of weakness; a terrifying prospect for the Chinese leadership. As for India, no political party would be able to propose a territorial exchange with China without seriously jeopardizing its electoral prospects, as the memories of 1962 war continue to haunt the Indian national psyche. Lastly, along with the boundary dispute, new issues have begun to stir trouble in Sino-Indian bilateral ties. India’s concerns regarding China’s diversion of the Yarlung-Tsangpo/Brahmaputra river water, the China-Pakistan Economic Corridor, and China’s growing influence in South Asia have emerged as new irritants for Indian policy makers. Similarly, Beijing too is annoyed by India’s increasing proximity with Southeast Asian countries and its diplomatic-military exchanges with the United States, Japan, and Australia. 

 The famous newspaper The Diplomat in a report on the US containment of the Sino-Indian relations has reported that The United States and India have just completed a ministerial dialogue between the U.S. secretaries of state and defense, Antony Blinken and Lloyd Austin, and their Indian counterparts, Minister of External Affairs Dr. Subrahmanyam Jaishankar and Minister of Defense Rajnath Singh.  This “2+2 Dialogue” was preceded by a video conference between U.S. President Joe Biden and Prime Minister Narendra Modi, and both leaders said they looked forward to meeting again shortly in Tokyo. Although the “2+2” was nominally focused on international security and was the first to occur since the Russian invasion of Ukraine, the world’s two largest democracies paid relatively little attention to the largest international assault on democratic values since World War II and what Russia’s assault means for international peace and security. In a Joint Statement remarkable for its 13-page length and the breadth of its coverage, only a short paragraph dealt with the situation in Ukraine. There was mention of a humanitarian crisis, a condemnation of civilian deaths, a call for the cessation of hostilities, and lip service to the principles of the United Nations Charter, but nothing more. 

India’s hesitancy to work as a full partner of the U.S. in furthering international peace and security on the basis of India’s own democratic values when it comes to Russia and Ukraine. This hesitancy can be more fully understood by examining Jaishankar’s framework for U.S.-India relations. Jaishankar’s views are of tremendous importance to the Modi government and to Modi himself. Not only has Jaishankar been the minister of external affairs since the start of Modi’s second term, but he became foreign secretary soon after Modi began his first term as prime minister, an office to which Modi arose without extensive experience in international security matters. A thumbnail and easily accessible statement of Jaishankar’s international framework can be found in his talk to the Atlantic Council on October 1, 2019. This framework is important not only because of the office held by Jaishankar, but also because it is largely a distillation of the views of many Indians, particularly those of India’s traditional academic and governmental elites. Jaishankar holds a Ph.D. from Jawaharlal Nehru University and is personally and professionally connected to prominent Indian governmental circles. The Jaishankar doctrine is grounded firmly in history and in two analytic divides: East vs. West and India’s political vs. non-political interests. As expressed in the Atlantic Council talk, the bedrock of his East vs. West analysis is “two centuries of national humiliation” during which “the West” extracted some “$45 trillion” in value from India (as well as subjecting China to a single century of national humiliation). In this formulation, the U.S. is definitely a part of “the West” and India a part of the “the East.” Thus, the U.S. presumably bears some responsibility for the two centuries of national humiliation experienced by India at the hands of the British Empire. This analysis leaves aside the fact that the U.S., like India, was a colony of the British Empire and fought two wars against the British for its independence. It had nothing to do with the “$45 trillion” extracted by the British Empire from India, and yet this Indian colonial experience is somehow relevant to U.S.-India relations. 

Unspoken is the concept that Russia and the Soviet Union were not and are not now part of “the West,” but, like India, are part of “the East” and outside any responsibility for India’s historic “two centuries of national humiliation.” Make no mistake that Jaishankar’s concept of “the West” is now centered on the United States. This concept evidently derives from U.S. leadership of a network of treaty obligations that were designed to constrain the Soviet Union and international communism. At one point in his talk, Jaishankar references Japan and South Korea, and even all the OECD countries, as part of “the West.” In this analysis, “the West” has become not a geographic designation but a political concept apparently growing out of the Cold War. Again, India is not a part of “the West.” Adding to the historic estrangement caused by colonialism, the U.S., as the leader of “the West,” has imposed on India a “Goldilocks” policy of both supporting India and suppressing India. According to Jaishankar, this is to ensure that India is neither too weak nor too strong but, like the porridge in the Goldilocks story, somewhere in between. Prime historical examples of this, according to Jaishankar, are the 1962 invasion by China, where the U.S. supported India, and the 1971 war for the independence of Bangladesh where the U.S. was not supportive. This historical interpretation of East vs. West fits snugly with the other major dichotomy of the Jaishankar doctrine, namely the political vs. non-political aspects of the East-West relationship. 

A strength of the Jaishankar doctrine is that it allows for a full range of cooperation on “non-political” aspects of the U.S.-India relationship.  There is a recognition that the United States has had a policy of strengthening India from an economic developmental perspective and has been a fount of growth for world development generally. Now that India has largely dismantled its top-down economic model, or “license raj,” the way is open for full cooperation on all “non-political” fronts. However, when it comes to “political” endeavors, i.e. those having to do with international security and strategic matters, the aforementioned East vs. West analytic dichotomy requires that the relationship must be more circumscribed. The Cold War ended badly for India in the sense that the USSR and Russia were no longer the strong sources of support they had been up until the collapse of the Soviet Union. Still the political nature of the India-Russia relationship seems to require that India maintain a distance from the United States and the West where Russia is involved. This distancing is often referred to by Indian commentators as “strategic autonomy.” A key component of this strategic autonomy seems to be resistance to outside requests, comments, or even questions concerning India’s strategic or political choices. Apparently still influenced by what Jaishankar formulates as the two hundred years of national humiliation by the West, such entreaties may be viewed as infringements on strategic autonomy if not national sovereignty.  To achieve full and equal partnership between the world’s two largest democracies, the U.S. needs to do more in working with India to satisfy India’s needs for arms and energy without bending to Russia. The 2+2 made continued progress on the arms front. Greater oil, gas, atomic, and renewable energy support also seem to be making progress. 

A full U.S.-India partnership requires that India adjust the analytic approach which contributes to India standing aside when it comes to opposing the Russian invasion of Ukraine. The old “East vs. West” dichotomy no longer applies to U.S.-India relations, if it ever did. Certainly, India and the U.S. are different, but these two great democracies have far more in common than India has with the traditional pillars of “the East” – Russia and China. This is particularly true when it comes to the fundamental value and rule of the post-World War II era: that nations must refrain from the use of force against the territorial integrity or political independence of any state. Some may seek to justify the Russian invasion of Ukraine on the basis of U.S. transgressions of the past. This is simply a reiteration of the schoolboy amoral justification of “he did it too.” Two wrongs still do not make a right and the rule of law requires that each situation be judged on its own merits. In the case of the Russian invasion of Ukraine, the use of force is singular in its breach of the rules that have kept the planet from another world war over the past seventy years. The dichotomy between political and non-political interests is also in need of adjustment. India is no longer a new republic struggling to throw off the remnants of British colonialism and rightly sensitive to perceived restraints on its sovereignty. 

India is a great power. The U.S. needs to treat India like a great power, and India needs to act like one. Great powers do not take umbrage at requests or criticisms simply because they are from foreigners. Rather they evaluate such entreaties and make judgments as to what is in their interests in the present and the future. Great powers work with others to strengthen their own security even where it involves binding commitments. Reality is not divided into political and non-political spheres. In today’s world some issues traditionally viewed as “non-political” are as important to national security as any traditionally “political” issues. The internet of things and the hacking of systems comes to mind. The opposite is also true. Numerous “political” issues from defense procurement to immigration have enormous “non-political” consequences.

The essential point is that strategic decisions should be premised on present and future interests, including fundamental values. The U.S. and India must make decisions based on present realities and future needs, not premised on an analysis of the superseded past. These decisions should not be bound by historical conceptions of East vs. West or political vs. non-political. The U.S. and India should recognize that present decisions are setting precedents. If the Russian use of death and destruction and nuclear threats in regard to Ukraine are successful, the use of these tactics by authoritarian regimes such as China is sure to follow. This is a manifestation of the violent approach to international affairs that has plagued mankind throughout history and now again faces the U.S., India, and the world.