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Is an Attack on Ukraine the First Step of a Sino-Russian Pact?

Published by Anonymous (not verified) on Mon, 21/02/2022 - 10:33pm in

Is an Attack on Ukraine The First Step of a Sino-Russian Pact?

CJ Werleman looks at evidence that a Russian invasion of Ukraine is likely to trigger a wider security crisis with China in the Indo Pacific region

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Despite Norway’s record gold medal haul, which saw them topped the medal table at the Beijing Games, it was Russian President Vladimir Putin who dominated and overshadowed the 2022 Winter Olympics, from the opening ceremony on 4 February to the extinguishing of the Olympic flame a full two weeks and two days later.

Will Russia invade Ukraine was the question on the international media’s lips, not which skier will win take home gold in the Games’ blue-ribbon event – the men’s and women’s downhill. This question was answered on Saturday, when Russian backed separatists began shelling targets in eastern Ukraine, according to local reports.

One of the least discussed aspects of Russia’s march to war against a sovereign European nation is the role China has played in creating safeguards for Moscow in the event of diplomatic and economic retaliation from Europe and the United States, with the leaders of both countries signing a 5,300-word joint statement on the eve of the Games that speaks of an “unprecedented” closeness between Beijing and Moscow.

“They share a common view on the international situation; they both believe the West is falling, that it’s in a constant crisis, and this gives them a chance to change the status quo,” said Jakub Jakobowski, a senior China fellow at the Warsaw-based Centre for Eastern Studies, in a recent interview. “The communiqué shows they believe they have a chance to be the leaders in changing this status quo”.


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This new Russia-Sino pact has two broad objectives: Beijing to help Moscow kick the United States out of Europe, and for Moscow to help Beijing oust the US from the South China Sea.

Russia’s invasion of Ukraine is step one, with step two being China’s likely imminent invasion of Taiwan. Steps three through whatever will include a widening of these kinetic and hybrid military interventions.

During his recent visit to Australia, US State Secretary Antony Blinken didn’t mention China by name, but warned, “Others are watching. Others are looking to all of us to see how we respond [to Russian military aggression in Ukraine],” while three senior US officials told Bloomberg News that Beijing is gauging US response to Russian military aggression as a proxy for how the US would deal with a Chinese military attack on Taiwan.

This view is also shared by Hugh White, Australian National University emeritus professor of strategic studies, who warns that if the US shows a “lack of appetite” for a full-scale military conflict over Ukraine, then China will be emboldened to move on Taiwan.

“The more confident Xi is that the Americans understand they can’t win the war, the more likely he is to take the risk,” says White. “I think there’s a serious danger that Xi will convince himself that America won’t fight over Taiwan”.

In other words, a Russian invasion of Ukraine is likely to trigger a security crisis in the Indo Pacific region for the US and its allies, including Taiwan, Japan, South Korea, Australia, India, the Philippines, and Vietnam.

A record 39 Chinese military aircraft flew over [Taiwan’s] territory on 22 January

For this reason, analysts are recommending that if Russia invades Ukraine, then the US and its allies must also sanction China. 

In a recent article for Foreign Policy, Aaron Arnold, a senior associate fellow at the Royal United Services Institute’s Centre for Financial Crime and Security Studies, argues, “Putin has found an economic lifeline in Beijing that only Washington DC can destroy”.

“If Washington expects to convey a credible deterrent against a Russian invasion of Ukraine using financial and economic sanctions, it will need to signal its resolve to impose secondary sanctions against China in the same breath,” says Arnold, who points to a new oil and gas deal signed between Moscow and Beijing worth more than $117 billion.

The US will need to move quickly, given China is likely to resume its military incursions into Taiwan’s air defence identification zone. A record 39 Chinese military aircraft flew over the island’s territory on 22 January, forcing Taiwan to scramble its fighter jets in response, which Taiwan has been forced to do more than 3,000 times during the past two years at a cost of nearly $1 billion to Taiwanese taxpayers.

These sorties are described not only as a “prelude to war,” but also have increased in frequency and force since Chinese President Xi Jinping declared in October of last year that the “reunification” of the country with Taiwan “must be fulfilled,” despite Beijing’s claims over Taiwan having no basis in international law.

But while Beijing has made no secret of its intent to take Taiwan by force, it’s unlikely the US will respond as meekly as it has against Russia over Ukraine. It’s inconceivable that President Biden, or any future US President for that matter, will rule out the use of military force in the South China Sea, as Biden has in eastern Europe.

It’s just a simple geopolitical reality that Indo Pacific, a region that will soon account for more than 50% of global GDP, means far more for US strategic interests than a former Soviet state that most Americans feel indifferently towards.

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If China does little or nothing to stop China from taking Taiwan, Beijing will be well on its way to “fulfil its ambitions to supplant the United States and our leadership role in the rules-based international order,” warned US Admiral Phillip Davidson, last year.

But the US must be proactive, not reactive to China’s military aggression, because Beijing is busy escalating tensions in the region, as illustrated last week when a Chinese People’s Liberation Navy vessel shone a military-grade laser at an Australian Air Force plane in Australia’s territorial waters.

Dan Blumenthal, director of Asian studies at American Enterprise Institute, argues there are an array of options for the US military to deter a Chinese military invasion of Taiwan, including the deployment of a small force to help protect Taiwan’s leadership and pre-position logistics and munitions on the island; initiate strategic discussions and joint military exercises between QUAD members Japan, India and Australia; and state clearly the punitive diplomatic and economic measures Beijing will suffer.

“They [the US and its allies] need good options, or the chances of doing nothing increase,” he says.

Ultimately, US hegemony in the Indo Pacific has delivered the region its longest period of peace and prosperity since time immemorial, but if this run is to continue uninterrupted, then the Biden administration must respond decisively, credibly, and forcefully if needed.

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The Crisis in the Taiwan Strait

Published by Anonymous (not verified) on Sat, 15/01/2022 - 12:45am in

image/jpeg icontaiwan-strait.jpg

For some months now the atmosphere over the stretch of sea that separates China from Taiwan has become very heated, but this has become more intense in recent weeks.

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Will the World Stand Up and Recognise that Taiwan Does Not Belong to China?

Published by Anonymous (not verified) on Wed, 05/01/2022 - 12:29am in

Will the World Stand Up and Recognise that Taiwan Does Not Belong to China?

CJ Werleman assesses the likelihood of President Xi Jinping launching a Chinese invasion of the island state based on a widely unchallenged falsehood of territorial claim

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United States military officials and security analysts differ on whether China will carry out a military invasion of Taiwan after Beijing hosts the winter Olympic Games next month, but all remain clear-eyed about the likelihood of war – with the memory of Russia invading and occupying Crimea just days after it hosted the games in 2014 firmly in their minds.

They are also mindful that China has been intensifying its sorties into Taiwanese airspace during the past two years; to demoralise and break-down the island state’s will to resist. In 2020 alone, Chinese sorties forced Taiwan’s Air Force to scramble and intercept China’s fighters and bombers more than 3,000 times at a cost of nearly $1 billion to Taiwan’s taxpayers. 

During a four-day period last October, China flew a record 150 of its military aircraft – including fighter jets, nuclear-capable bombers and refuelling aircraft – into Taiwan’s airspace. It was an act described as a “prelude to war”. That same month, China’s President Xi Jinping declared that the “reunification” of the country with Taiwan “must be fulfilled”.

Two years earlier, in what would be his first major speech on Taiwan, President Xi Jinping warned that Taiwan’s reunification was inevitable. “We make no promise to renounce the use of force and reserve the option of taking all necessary means,” he said. “Taiwan’s independence goes against the trend of history and will lead to a dead end.”

Taiwan considers itself a sovereign state – as do the governments of 17 countries, while 23 million Taiwanese citizens travel the globe on Taiwanese passports. But, somehow, the international media has come to accept Beijing’s telling of the story – that Taiwan is a breakaway province and an “integral part of China”. Worse, China’s intent to ‘retake’ Taiwan has become widely accepted by the international community as a fate accompli.

In other words, what happened to Hong Kong with inferred Chinese military force will inevitably happen to Taiwan but with actual military force – so what’s the point of challenging what China believes rightly belongs to it?


In a War Between America andChina Over Taiwan, Who Wins?
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But Chinese insistence on the idea that Taiwan is an integral part of China has “failed to convince the roughly 23 million Taiwanese”, observes Evan Dawley, an associate professor of history at Goucher College and author of Becoming Taiwanese: Ethnogenesis in a Colonial City, 1880s-1950s. “Chinese views have been much more effective in shaping international opinion, but they do not change Taiwan’s modern history or the reality that Taiwan is a country,” he has said.

More than that, China does not possess any entitlement to Taiwan based on ancient or recent histories. In fact, the Qing Dynasty only partially annexed Taiwan in 1684, before happily ceding Taiwan to the Japanese in 1895, having viewed the island only as a shield that could be easily surrendered.

When the Chinese Communist Party was still an insurgent movement in 1928, it viewed Taiwan as a separate nation, as did the Nationalist Government. It was not until 1942 that the Chinese Communist Party made its first claim to Taiwan.

“In reality, it’s not a pre-eminent matter of manifest destiny,” notes Peter Hartcher, author of Red Zone: China’s Challenge and Australia’s Future. “There are few things so common in world affairs. There are some 150 current such disputes around the world… what distinguishes countries is not whether they have such disputes, but how they handle them. Whether they respect international law, or whether they force their will onto others.”

To that end, China under President Xi Jinping has become a serial and flagrant violator of international law – in particular the UN Convention for the Law of the Sea, for not only laying territorial claims to islands and atolls hundreds and thousands of kilometres away from its shores but also in transforming them into military bases or what have been described as “unsinkable aircraft carriers”.

Rather than seeking mutual cooperation, China has exerted raw power over its neighbours, having annexed territory from India and Bhutan in the Himalayas, and parts of the Philippines’ exclusive economic zone, which Manila likened to Nazi Germany’s annexation of Czechoslovakia.

China is now capable of controlling the South China Sea in all scenarios short of war with the United States,” US Admiral Phillip Davidson, the head of Indo-Pacific Command, told Congress in 2018.

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If Indo-Pacific is to realise a continuation of what has been the region’s longest period of peace and prosperity since time immemorial, then it falls upon the international community to resist Beijing’s mythical claims to entitlement over Taiwan. 

“Taiwan’s Government is democratically elected – we have a President, we have a Parliament,” said its Foreign Minister Joseph Wu in 2019. “We issue visas, we issue passports. We have a military and a currency… Taiwan exists by itself; Taiwan is not a part of any other country.”

A Chinese invasion of Taiwan would not only spark a decades-long regional-wide war – dragging in Japan, South Korea, India, Australia, Vietnam and the Philippines – but also give Beijing “control over some of the world’s most cutting-edge technologies, and the ability to choke-off oil shipments to Japan and South Korea – leverage it could use to demand the closure of US military bases in both countries”, according to Chris Horton, a Taipei-based journalist.

Until now, China has shown restraint – but only because the Beijing Olympics are fast approaching. After that, however, “all bets are off”, says Lyle J. Goldstein, founder of the China Maritime Studies Institute.

If recognising Taiwanese sovereignty – as 17 countries already do – is enough to deter a Chinese military invasion, as some analysts contend, then what on earth are we waiting for?

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Five Shocking Scenarios for the Year of the Tiger

Published by Anonymous (not verified) on Sat, 01/01/2022 - 6:50pm in

Published in Japan Forward 1/1/2022

Making predictions is a mug’s game. Who in 2019 would have forecast the state of the world as it is today?   Rather than try to guess what is most likely to happen next, we might benefit more from imagining possible futures that would have a significant impact on the world.

Here are five that that might be lying in wait for us, ready to pounce with a blood-curdling roar. They cover energy, finance, the pandemic, economics and geopolitics. Some are quite plausible. One is highly unlikely, but has the potential to turn our world upside down.

Tail risks should never be dismissed, especially when the tail concerned belongs to a tiger.

Tokyo Stock Market Bargain Sale:  Tesla Eats Honda, Apple Eats Sony

Back in the late 1980s, the Japanese stock market accounted for half of global market capitalization, while Japan’s share of global GDP was a mere 13%. Japanese companies went on a massive shopping spree which included the purchase of the Rockefeller Centre by Mitsubishi Real Estate and Columbia Pictures by Sony, the latter being the subject of a notorious cover picture on Newsweek magazine.

NewsweekCover

Now the positions are reversed. The US stock market accounts for 56% of world stock market capitalization, but only 21% of world GDP. So far mega takeovers of non-US companies have been few and far between, but there is little doubt that the Godzilla-scale market capitalization of the major US tech companies gives them every opportunity.

No doubt, the Japanese government would be disturbed by the prospect of one of its most prestigious companies being gobbled up by an America giant. However, given the geopolitical realities, which are that Japan needs the U.S. much more than the U.S. needs Japan, it would be hard to refuse.

tesla

What could Japan do before Godzilla stomps into in Tokyo Bay? There is one obvious solution – to take companies off the stock market altogether. In fact, this is likely to become an increasingly popular manoeuvre in many countries as managements seek to avoid the ever more stringent demands of ESG (Ethical, Social, Governance) oriented-investors.

If Japanese blue chip companies are bargains in the eyes of foreign managements, why don’t Japanese managements and financiers buy them up first?

Taiwan Emergency: Xi Gambles Big

Geopolitical risk has risen sharply with the rise of a much more assertive and technologically advanced China in the last decade. So far the leadership’s strategy has been to use deception and incremental moves to achieve its goals, as in the brilliantly executed appropriation of the South China Sea and the crackdown on Hong Kong. But in the case of Taiwan, a more drastic and confrontational approach would be necessary.

There are two reasons why the leadership might opt to move sooner rather than later. First, the United States is currently a bitterly divided nation and President Biden is preoccupied by domestic issues. Yet by the middle of the decade there could well be an anti-China alliance and trade bloc stretching from India to Japan, with the Japanese and Taiwanese economies increasingly integrated in the high-tech area.

The second reason is that the Chinese economy’s best days could well be behind it. There might even be Japan-style “lost decade” as real estate prices slump, the finances of regional governments crumble and the working population starts to shrink. History tells that authoritarian governments have sought to overcome economic doldrums by whipping up nationalist sentiments and engaging in aggression.

An invasion of Taiwan would be the largest seaborne operation since D-day. There would be many casualties, but China would certainly prevail without Western military intervention. No doubt, there would be boycotts, sanctions, condemnations in the United Nations, and probably a deep worldwide recession as supply chains collapsed.

The shock value would be equivalent to 9/11, indeed greater in its overall impact on the global balance of power. China would have succeeded in ousting the United States as a dominant actor in East Asia, just as the United States ended Japan’s supremacy by force of arms 75 years ago.

So the key question is what would the West do in the case of a move on Taiwan. Or, rather, what does the Chinese leadership believe the West would do.

The End of Japanification:  Double Digit Inflation

Japanification, shorthand for “becoming more like Japan”, is a concept that originated in the world of finance and economics. After Japan’s asset bubble burst in the early 1990s, economic growth slowed dramatically, deflation set in and interest rates slumped to levels far below what was considered normal elsewhere.

Domestic and foreign media latched onto social problems seemingly related to economic stagnation– young hikikomori recluses, parasite singles who stayed in the parental nest into their late twenties, a fertility rate far below what was needed for replacement. The nadir of such commentary was a 2013 BBC documentary, “No Sex, Please, We’re Japanese”, which claimed that the low birth rate was caused by lack of libido.

As time passed, it became clear that super low interest rates, weak growth and the related social pathologies were far from being exclusively Japanese. The same phenomena could be seen across the developed world.  As of 2019, many believed that worldwide “Japanification” was inevitable; that deflation was our destiny, thanks to structural forces such as demographics, the price transparency of internet shopping and the weak bargaining power of organized labour.

Then along came Covid and the conventional wisdom was turned upside down as inflation suddenly took off, reaching levels not seen since the 1970s in some countries. US consumer price inflation reached 6.8% in November 2021, with the UK equivalent at 5.1% and even inflation-phobic Germany at 5.2%.

Even in disinflationary Japan, there have been price hikes for theme park tickets, “gyudon” beef bowls, mayonnaise and materials like cement and steel. According to the Bank of Japan’s Tankan survey, the number of companies expecting to hike prices is at its highest level in 30 years.

A transient phenomenon, as Chairman of the Federal Reserve Jay Powell stated, or the shape of things to come? We don’t have a gold standard these days. We have a political standard. If inflation is perceived as a huge problem by the public, governments will tackle it. If other problems are perceived as much more serious – such as inequality, social fracture and climate change – they will leave inflation on the backburner.

And in the case of any future economic crisis – whether caused by an epidemic or a natural or manmade disaster – cash transfers of money created by the central bank to individuals and companies will be expected. The Covid era precedent cannot be undone.

If an inflation cycle is starting, it will last for years and only when the pain is widely felt will policymakers seek to crush it. In some countries, double digit price rises will have been registered by then.

For Japan, the good news would be that the Bank of Japan might finally hit its 2% inflation target!

Energy Crunch: Triple Digit Oil Price

The COP-26 climate conference in November was, predictably, a failure. The Paramount Leader of China, the world’s largest polluter, did not show up at all, being busy at home greenlighting record levels of coal production to cope with freezing conditions in northern areas. Prime Minister Narendra Modi of India, the world’s third largest polluter, did attend and made sure that in the final agreement the words “phasing out” of coal were changed to “phasing down”.

How could it be otherwise? As we reach the point when actions are expected, not just fine sentiments, the more likely that poorer countries in particular will back away from the rich country consensus. Even in the richer countries, some governments may get the jitters as the true cost of the green energy transition becomes increasingly clear to their electorates.

In his book “The New Map”, energy expert Daniel Yergin concludes that “oil will maintain its pre-eminent position as a global commodity, still the primary fuel that makes the world around.”  That is now a minority view, but what if he is right? America shale companies are producing much less than before due to bankruptcies and ESG restrictions on capital availability. For the Western oil majors, years of ESG-driven underinvestment in global capacity makes supply less responsive to price signals.

These are the factors that have driven the oil price up from the absurd “inverse bubble” of minus $37 dollars for a barrel in April 2020 to its current level. But what would happen in the eventuality of a full opening of the world economy, with planes packed with tourists criss-crossing the world and offices and factories buzzing with activity?

We could be heading for the outrageous “Peak Oil” price levels of 2008 in no time at all.

In Praise of Reality: The Tiger Roars in ‘22

We are living in an era of unprecedented change, or so we are told. Personally, I have my doubts. Trains represented dizzying change; for the first time in human history, people were able to travel faster than on the back of a horse. Planes were change. Travelling to the moon was change.

Electric cars, by contrast, have been around for half a century. The Facebook business model of free product in exchange for advertisements is not that different from how commercial TV works. Zoom calls are just a cheaper version of videoconferencing.

Hyping up present day phenomena in comparison to the past is so common that we hardly notice. Such is the case with Covid-19 too.

With the dominant variants declining in virulence, it is possible that 2022 is the year in which we finally learn to live with the disease and restrictions can be lifted. If so, to what extent will our world have changed permanently and to what extent will the “old normal” reassert itself?

Working from home is more convenient and saves commuting costs, but misses out the industry gossip, mentorship and camaraderie that binds an organization together. Remote learning takes away the tension and focus of being stuck in a classroom with your peers and a bad-tempered teacher. Remote conferences lack the one thing that makes conferences worthwhile: networking over drinks in the hotel bar. Remote tourism leaves out the crazed taxi-drivers, smell of the streets and failed attempts to speak the language that make the experience so memorable.

The Covid era has made all of us part-time versions of Japan’s “hikikomori” social recluses. No doubt, some people will have got used to a virtual existence and may choose to move into Mark Zuckerberg’s “metaverse” permanently. Others will want to make up for lost time and party louder and longer than ever before, newly conscious of the unprogrammable pleasure of interacting with real people in the way it has always been done.

That seems to be what happened 100 years ago when the Spanish Flu, a far worse plague on humanity than Covid finally fizzled out. Next up was the Roaring Twenties, a byword for hedonism, technological innovation, free-spirited women and artistic experimentation.

There’s no reason why it shouldn’t happen again. Let’s hope the Year of the Tiger can echo some of that that Jazz Age roar.