Saturday, June 13, 2015

Today's links

U.S. foreign policy has reached a turning point, as analysts from across the political spectrum have started to dust off Cold War-era arguments and to speak of the need for a policy of containment against China. The once solid Washington consensus behind the benefits of “constructive engagement” with Beijing has fallen apart, wsj

Kevin Rudd, the former Australian prime minister (and himself a China expert), summarized Beijing’s perception of U.S. goals in five bullet points in a recent Harvard study: to isolate China, contain it, diminish it, internally divide it and sabotage its political leadership. WSJ

in one important respect, history is repeating itself: Both China and the U.S. have started to view each other not as partners, competitors or rivals but as adversaries. wsj

But in Shanghai last year, Mr. Xi declared that “it is for the people of Asia to run the affairs of Asia, solve the problems of Asia and uphold the security of Asia.” wsj

The disputes in South China sea has gone back several decades ago, but it got truly acrimonious only after the US pivot to Asia. It looks like who the real culprit is obvious. I think all these China bashing by the posters merely hinged to justify their own imperialism.

1--SF's crazy housing bubble
2--The truth about ISIS

3--The dictatorship of finance capital: Greece and Ukraine
4--Central Asian countries choose Iran as transit route for bulk cargoes Alternative to US-controlled ocean passageway

5--New Silk Road Could Open Up Massive Investment Opportunities

There should be no mistake: The United States will fly, sail, and operate wherever international law allows, as we do all around the world,” US Secretary of Defense Ash Carter said in response to China’s recent arms buildup in the South China Sea. He also added that the United States intended to remain “the principal security power in the Asia-Pacific for decades to come.”
Without mentioning China, Carter also makes his view clear that the US takes a dim view of Beijing's strategy in the region, and his statement was intended to make clear that the US has no intention of backing down.

"We already see countries in the region trying to carve up these markets…forging many separate trade agreements in recent years, some based on pressure and special arrangements…. Agreements that…..leave us on the sidelines. That risks America’s access to these growing markets. We must all decide if we are going to let that happen. If we’re going to help boost our exports and our economy…and cement our influence and leadership in the fastest-growing region in the world; or if, instead, we’re going to take ourselves out of the game,” Carter said in a speech to the McCain Institute at Arizona State University in April.

6--Iran seriously expanding Russia trade ties
“We can work with the Russians to implement railway projects and part of the work in power plants. We can buy some oil equipment and basic goods from the Russians. They have also some technologies in the mining sector.”
Iran and Russia have recently decided to start shipment of the Iranian oil to the market. The arrangement is for Russia to sell 500,000 barrels of Iranian oil per day....

In a 1947 article in Foreign Affairs, he wrote that the U.S. “has it in its power to increase enormously the strains under which Soviet policy must operate, to force upon the Kremlin a far greater degree of moderation and circumspection than it has had to observe in recent years, and in this way to promote tendencies which must eventually find their outlet in either the breakup or the gradual mellowing of Soviet power.” Kennan’s strategy—to bleed the Soviet Union through nonprovocative resistance—offered comfort to Europeans who feared that they faced a stark choice between war and capitulation. ...

For its part, Iran has prepared three ports in the Caspian Sea and added six ships to its fleet for cargo trade with Russia following an agreement signed in March.

7--Minister of Petroleum Bijan Zangeneh says he has told Iranian negotiators to press the Americans on removing ban on business by US companies in Iran
Negotiations between Iranian and American teams are limited to Tehran’s nuclear program but at the heart of the talks are US-led sanctions which prevent international companies from trade with Iran.
US firms have engaged in no major business in Iran since the 1979 Islamic Revolution but intensified Western restrictions imposed in 2011 also forced European and other international companies to leave the country.
Iran is now opening its massive energy industry for international business amid hopes that a final nuclear agreement would lift sanctions.
But Zangeneh said in his recent talks with foreign energy managers he had made it clear that the environment for their operation in Iran has totally changed after the sanctions.

“I have told foreign oil companies that Iran’s situation has changed very much compared with 10 years ago and the capabilities of Iranian manufacturers have become very strong under the sanctions.
“For their work in Iran, foreign oil companies must adopt a policy of market for market in which Iran cedes a part of its market to them and foreign companies give a portion of their regional market to Iran in return.”
Zangeneh said most Iranian projects defined for development are EOR (enhanced oil recovery) and IOR (improved oil recovery) plans.
“Some companies think we want money. No, our issue is not merely money. Our most important need is technology and any procurement from Western companies must be done so that it leads to transfer of technology and strengthening of national know-how.”

8--China Warns Japan to Stay out of South China Sea

9--Clumsy US Policy in Asia Pacific to Aggravate Sino-American Relations

Obama's "Asia Pivot" strategy is aimed first and foremost at containing Beijing's economic, military and political development in the region.

So far, Washington has boosted its relationship with Tokyo, China's longstanding political rival, as well as with India and a number of Southeast Asian countries.
Furthermore, the United States has escalated its surveillance of the disputed waters of the South China Sea, prompting China to accuse Washington of territorial incursion...

Liao pointed out that the other side of the coin is that China and the United States are too dependent on each other and interconnected economically. They also have shared interests in terms of national security. In this light the countries can hardly resort to "pure competition," the analyst stressed.

"Given China's rise and our relationship with them, the United States cannot be effective in the Asia-Pacific [region] by leading from the front. We cannot approach the region as the indispensable nation. China is extremely sensitive to any indications that America is gathering a team of allies in Asia, believing that we are doing so at their expense," Liao remarked.

Washington should accept the idea that it cannot just contain China. Instead the US leadership must change their approach and seek compromise with the Asian Dragon, the analyst deems.
However, according to Liao the United States should not give up its attempts to remain "first among equals" in the Asia-Pacific region, strengthening ties with Southeast Asian nations.
Cooperation with China, on the other hand, is half the battle for a successful "Pivot to Asia," she highlighted.
"If we continue to rely on old habits, recent headlines of a looming military conflict will persist," Liao warned.

10---Pentagon Presses China to Halt S. China Sea Projects, Beijing Stands Firm

While hosting a top Chinese general on Thursday, US Defense Secretary Ashton Carter repeated Washington’s call for Beijing to put a stop to its land reclamation projects in the disputed South China Sea.
Despite the demand, Carter stressed to General Fan Changlong, vice chairman of China’s Central Military Commission, that the Pentagon remained committed to expanding military contacts with China.

11--Ukraine to get new IMF loans despite inability to repay private lenders

12--Imperial decline now visible everywhere

The AIIB joins the New Development Bank that China also set up last year in partnership with Russia, India, Brazil and South Africa. Also known as the BRICS bank, it took its place alongside the pre-existing Shanghai Cooperation Organization (SCO) development bank as part of a new global financial infrastructure operating independently of Washington. The SCO has also established its own currency reserve to help cushion its members against financial shocks or crises, such as the one that emanated from the US financial system in 2008.

Taken together, we are able to chart the relative decline of US hegemony and unipolarity, unfolding economically, geopolitically, culturally and militarily. The dangers as this process unfolds are evident in the spread of extremism and fanaticism as regional allies increasingly pursue their own agendas, regardless of how damaging to US interests they may be in terms of sowing instability.

As with the Roman Empire centuries before it, Washington is learning that the only thing permanent in this world is impermanence, especially imperial power resting on foundations of hypocrisy and injustice.

13--Can China Be Contained?
As tensions with China rise, U.S. foreign policy thinkers are dusting off ideas from the Cold War—and questioning the long-standing consensus for engagement with Beijing

U.S. foreign policy has reached a turning point, as analysts from across the political spectrum have started to dust off Cold War-era arguments and to speak of the need for a policy of containment against China. The once solid Washington consensus behind the benefits of “constructive engagement” with Beijing has fallen apart...

Deng Xiaoping struck a pragmatic balance between the opportunities of economic engagement with the West and the dangers posed by an influx of Western ideas. “When you open the window, flies and mosquitoes come in,” he shrugged.
Today, Mr. Xi is furiously zapping the bugs. A newly proposed law would put the entire foreign nonprofit sector under police administration, effectively treating such groups as potential enemies of the state. State newspapers rail against “hostile foreign forces” and their local sympathizers....

“If we don’t write the rules, China will write the rules out in that region,” Obama  told The Wall Street Journal in April. ...

Can the USA be contained?
With 800 military bases  worldwide and  fighting  and killing people in several countries all over the world, this would be the right question. To ask if China can be contained is pure nonsense.

Actually the growing conflict between the two is due to only one reason. The US wants China to be her serf and obey her every command. On the other hand China will not compromise her status an an independent and sovereign nation

But the annual Pew Global survey indicates that 87% of the Chinese people approve on how things are going for them. Are you now deciding and dictating your will on the Chinese people?

14---Pentagon Asks China to Stop Island Building in South China Sea (Again)

“Secretary Carter reiterated U.S. concerns on the South China Sea, and called on China and all claimants to implement a lasting halt on land reclamation, cease further militarization, and pursue a peaceful resolution of territorial disputes in accordance with international law,” a Pentagon statement said.
China’s official press agency, Xinhua, reports that Fan reiterated China’s right to establish military facilities on its sovereign territories, downplaying the dispute. The United States should “take the higher ground to look into the far future by paying more attention to other, more important regional and international issues,” the article paraphrased Fan as saying.

In the South China Sea disputes, by contrast, defining the status quo is much more complicated. To begin with, the disputes involve multiple states claiming territorial features with a range of legal identities – islands, rocks, low-tide elevations, underwater reefs, and artificial installations – as well as resource rights and control over maritime spaces. The status quo there encompasses all of these aspects, and this is important to keep in mind if the concept is to provide analytical clarity.
In breaking down the various components that comprise the status quo in the South China Sea, the most basic distinction to make is between territory and maritime space. For the former, identifying the territorial status quo is far from simple; for the latter it poses some almost insurmountable challenges....

It is not useful to view changes to the status quo as deviant acts of rule-breaking “bad behavior” requiring corrective punishment. Such actions are certainly undesirable in that they may encourage other claimants to respond in kind. But they are widely committed, and not inherently escalatory like coercive actions, and in most cases they don’t clearly contravene international law. What would challenge Asia’s rules-based order is the potential use of new “facts on the water” for coercive purposes. It is this possibility that interested parties in Asia’s maritime disputes should focus on defining as unacceptable.
Andrew Chubb is a PhD candidate in International Relations at the University of Western Australia and the author of the South China Sea Conversations blog.

As The Diplomat has noted, Japan has become more active on the South China Sea issue this year. Whether it’s exploring the idea of joint patrols of the area with the United States or boosting defense ties with the Philippines, one of China’s rival claimants in the disputed area, the Shinzo Abe administration is making its presence known in the South China Sea – and Beijing is not happy about it.
China dismisses the notion that Japan has any real interests at stake in how the South China Sea disputes are handled. Beijing refuses to acknowledge Japanese (and U.S.) claims that freedom of navigation through this vital shipping lane is at risk. Writing for the Chinese-language edition of Financial Times, Chinese scholar Xue Li argued that Japan’s loudly voiced concern for South China Sea shipping lanes is a “facade” and that Japan’s real motive was a wish to maintain political influence in Southeast Asia and bolster its own position on the East China Sea territorial disputes.

16--Global investors have yanked $9.3 billion from stocks in developing countries in the week to Wednesday, the most since the depths of the global financial crisis in 2008

17--Fed tantrum sets off biggest exodus from emerging markets since 2008 

A gathering boom in the US brings forward the long-feared moment of Fed tightening, setting off dollar fears and a rush for the exits from emerging markets...

The IMF fears a “liquidity storm” once the Fed starts to tighten, causing them to pull out en masse. It has repeatedly called on EM economies to beef up their defences and curb ballooning credit before it is too late. The great worry is what will happen if Fed action causes the dollar to spike dramatically and drives up global borrowing costs, transmitting a double shock through the international financial system.

This would amount to a “margin call” on $9 trillion of off-shore dollar debt, a figure that has exploded from $2 trillion fifteen years ago.
The Bank for International Settlements estimates that emerging markets now account for €4.5 trillion of this dollar debt, an unprecedented sum that escaped control over the last seven years as cheap liquidity from zero rates and quantitative easing in the West spilled into Asia, Latin America, and the rest of the EM nexus.

“Emerging markets have shifted from being a major support to world trade growth to a significant drag. Nothing like this has been seen since the worst period of the global financial crisis in 2008-2009,” he said.

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