A 10th October Lowy Institute Analysis by Thomas Wright explores "how US foreign policy would change should Donald Trump or Hillary Clinton win the US presidential election. Wright argues that a Trump presidency could see the United States undermine the liberal international order that it helped to establish. Clinton, by contrast, would be a more traditional internationalist president".
"Trump’s foreign policy will very likely be informed by his core beliefs: opposition to America’s alliance relationships; opposition to free trade; and support for authoritarianism, particularly in Russia".
"Clinton’s foreign policy is likely to reflect a more traditional internationalism, but may also distinguish itself from the Obama administration by a greater effort to deal with regional challenges to order in the Middle East, Europe, and Asia".
"If Clinton wins, she will need to respond to growing populist and nationalist sentiment in America in favour of limiting US engagement in the world".
Never before is an American presidential election been watched and debated so closely by so many nations, most of all the world's rising powers. All, not least Russia and China, are geared up in anticipation of a potential paradigm shift in the dynamics of the world order.
A Brookings Institution analysis by Jeffrey Bader dated 10 October "A framework for U.S. policy toward China" offers some possible pointers on how a new US President, particularly if Clinton wins, may re-calibrate policies in relation to a rising China.
A McKinsey Quarterly article of October 2016 shows that although resource strains have lessened, new technology will disrupt the commodities market in myriad ways.
In particular, the article points out that -
"Technologies, many having little on the surface to do with resources, are combining in new ways to transform the supply-and-demand equation for commodities. Autonomous vehicles, new-generation batteries, drones and sensors that can carry out predictive maintenance, Internet of Things (IoT) connectivity, increased automation, and the growing use of data analytics throughout the corporate world all have significant implications for the future of commodities. At the same time, developed economies, in particular, are becoming ever more oriented toward services that have less need for resources; and in general, the global economy is using resources less intensively.
There are five takeaways -
Resource prices will be less correlated to one another, and to macroeconomic growth, than they were in the past.
You will have more influence over your resource cost structure. Resource productivity remains a major opportunity.
You may find resource-related business opportunities in unexpected places.
The resource revolution will be a digital one, and vice versa.
The sheer scale and complexity of Article 50 negotiations for the UK to leave the EU discourages a leap in the dark. Once Article 50 is triggered, the clock will start to tick to the UK's huge bargaining disadvantage. So the dynamics work in favour of more deliberation.
However, the longer it takes, the greater the sense of foreboding. And the more the unattractiveness of Brexit may become clear. It is quite possible that at some point after 2017, an early general election may have to be called to approve or reject a likely unsatisfactory bargain, which could effectively mean that Brexit may not happen.
My prognosis is reinforced by an insightful analysis on the UK Constitutional Law Association website by constitution lawyers Nick Barber, Fellow, Trinity College Oxford, Tom Hickman, Reader, UCL and barrister at Blackstone Chambers and Jeff King, Senior Lecturer in Law, UCL.
The authors explain clearly why in a robust constitutional democracy, the UK government cannot invoke Article 50 which triggers a 2-year automatic "guillotine" severing UK's membership of the European Union without the specific consent of the UK Parliament.
Section 2 of the UK's European Communities Act 1972 confers on UK citizens a host of rights, powers, liabilities, obligations and restrictions as part of the European Union. These cannot be removed unilaterally by the government, even supported by a Referendum, without prior consent of the Parliament.
The authors explain that "There are very good reasons for involving Parliament. With its broad range of representatives and peers, various pertinent committees with extensive evidence gathering powers, it is an institution that has the expertise and legitimacy to discuss the implications of various withdrawal options and any framework conditions or further approvals that Parliament may want to stipulate. The referendum was silent on the terms of withdrawal. Such terms should be matters for cross-party discussion in open Parliament rather than among the front bench of a (divided) single party in closed Cabinet meetings".
Moreover, the process of unravelling UK's many rights and obligations as a member of the European Union is likely to be highly complex and time-consuming. The analysis points out that "Parliament could conclude that it would be contrary to the national interest to invoke Article 50 whilst it is in the dark about what the key essentials of the new relationship with the EU are going to be, and without knowing what terms the EU is going to offer".
The authors contend that "If the UK seeks to obtain some form of framework agreement on key terms before invoking Article 50, once these terms are in place, Parliament could then trigger the Article 50 procedure to effect exit, perhaps with only details left to negotiate by the Government. Immediately upon an agreement being finalised the UK would no longer be part of the EU. This option would comply with the outcome of the referendum".
However, it begs the question whether the EU is prepared to or can in fact start negotiating a framework agreement with the UK without Article 50 being triggered first. The provisions of Article 50 are quite specific.
What is more, negotiating the un-bundling of UK's rights and obligations in the World Trade Organisation (WTO) from the European Union is just as complicated and time-consuming, if not more so. Click here Again, the WTO is in no position to promise the UK anything before the UK regains a separate identity outside the EU. Nor would any country within or outside the WTO be able to negotiate with the UK for any bilateral trade agreement absent such separate status.
Faced with this chicken-and-egg situation, Theresa May quite wisely appointed the three "Brexiteers" to handle this hot chestnut. As the EU is unlikely to allow the UK to eat its cake and have it at the same time, tough negotiations are likely on balancing access rights to the EU with core EU principles like freedom of movement of people, which happens to be the key sticking point of the "Leavers".
So the more both sides bandy key issues to test the waters, the more it will become clear to those who voted to leave that a final deal, even if one can be reached in time, could be very unpalatable. The more so, therefore, would there be demand for negotiating terms be first debated and authorised by the Parliament before Article 50 is triggered.
There is no legal compulsion as to how soon Article 50 must be triggered. Naturally the EU wants the UK to pull the trigger as soon as possible and a lot can be said about ending the uncertainly. But as the analysis points out, "uncertainty needs to be weighed against other imperatives, such as the need to comply with the UK’s constitutional requirements and the need to ensure that Brexit is effected consistently with the national interest". With all the to-ing and fro-ing, before we know it, the next general election date will not be far off.
The Fixed Term Parliament Act sets the date of the next general election in 2020. An early election is possible with a two-thirds majority support of MPs or by the government of the day engineering an artificial no-confidence vote on itself (which would be highly unlikely), according to an article in The Independent dated 12 July, 2016.
Either way, as remorse is already setting in and as the prospect of an unpalatable deal increasingly looms large, Theresa May, despite her initial promises to the contrary, may well be able to call an early general election to give her the mandate on whether to trigger Article 50 regardless or to abandon the exercise altogether. If so, after all the fuss and costs of uncertainty, Brexit may not happen after all.
P.S. My above prognosis is consistent with what The Economist(8th October) outlined as what may appear implacable conundrums in securing an acceptable Brexit outcome in a protracted and highly-contentious multi-state and multi-dimensional process.
An article by The Red (Team) Analysis Society, a non-profit geopolitical consultancy, expounds upon Russia's grand plan to exploit the massive energy resources of the Arctic and its increasing navigability to boost Russia's global clout at a time when the Arctic's economic and geopolitical potential is being opened up by climate change.
Russia's new and more powerful icebreakers capable of breaking up to 3 metres thick ice are making it possible for Russian and Chinese cargo convoys to ply along the Northern route all year around. This route follows the Siberian coast to and from the Bering Strait to the Russian and European northern ports from Norway to Rotterdam.
Concurrently, the Russian ministry of Defence is rapidly militarising the Arctic, through the creation of the Joint Strategic Command North and the deployment of nuclear submarines and other naval assets. Click here
As I heralded in March 2014, the Arctic Region is poised to change the world. Click here.
On the one hand, the world could become even more closely connected physically if a visionary China-Russia-Canada-America high-speed rail should ever become a reality. On the other hand, the Arctic is likely to become a proxy arena for great-power geopolitical rivalry, as highlighted in the Red Team article.
Either way, it is no surprise that China is quietly boosting economic and geopolitical ties with the Arctic region, especially its largest player - Russia.
An Economist Intelligence Unit 2016 assesses how a re-balancing China’s relationship with Africa and Latin America will evolve in the years ahead.
The report contains the following highlights -
"China continues to play a pivotal role in both Africa and Latin America as a trade partner, investment facilitator and financial backer, but there are big questions over how this relationship will evolve in the years ahead in view of instability and uncertainty caused by China’s economic rebalancing act."
"In Africa, China is adopting a more interventionist stance in its dealings to protect its commercial interests, strengthening its trade ties across a wider range of product markets, investing further in strategic supply bases, and pushing ahead with trade- and investment-facilitating finance initiatives".
"Chinese firms remain engaged in Africa and are positioning to snap up extractive sector investments at lower prices, with a view to securing longer-term strategic supplies. This is already taking place in Copper-belt countries such as Zambia, the Democratic Republic of Congo (DRC) and Congo (Brazzaville)".
"Chinese firms are well-placed financially, and strategically connected to tap into growing demand from Africa’s low-income masses, as well as exploit growing demand from parts of the urbanised upper low to lower-middle income segments of Africa."
"Trade and investment by China into Africa will seek to consolidate its presence on the continent, tap into its fast-growing consumer markets, establish production bases closer to its end clients, exploit Africa’s free-trade deals (among regional economic communities and with major international partners), and set up production bases to feed value chains and consumer markets back in China".
"In Latin America and the Caribbean, the direct impact of weaker demand from China, and its indirect effect in the form of lower commodity prices, has forced difficult policy adjustments, particularly for South America’s commodity exporters, which are still ongoing. The Economist Intelligence Unit projects a contraction in regional GDP of 0.3% in 2016".
"Partly in response to concerns of policymakers there to the problem of a growing trade deficit, China has attempted to reboot its relations with Latin America, focusing on investment and technical co-operation, in an increasingly diverse number of sectors that have the potential to improve infrastructure, boost research and development (R&D), and raise the region’s long-term growth rate".
"The expected convergence of Chinese incomes with Latin American per head incomes should also help the region to make some competitiveness gains going forwards, particularly in areas in which it has comparative advantages, such as agribusiness, with the potential to rebalance trade relationships".
"For Latin America to take full advantage of these opportunities, productivity-enhancing reforms and improved intra-regional trade will be necessary in the coming years."
The report points out that "China is Africa’s single biggest trade partner following years of stellar growth since the early 2000s, which reflected China’s insatiable appetite for Africa’s energy products and raw materials, as well as its ability to place a wide range of goods on the African continent.".
China has been effective in tapping into Africa's fast-growing and massive low-priced consumer market populated by its rising lower-middle-class. At the same time, China is replicating her successful model of special economic zones in partnership with a host of African countries, with 15 such zones already established in coastal regions (except Mauritius) and five more planned for coming decades. These are set to accommodate manufacturing and other businesses diversifying or re-locating from China or other places owing to rising costs and other competitive pressures and Africa's attractive development dynamics. They are also poised to support creation of African jobs and development of local skill sets which have become no longer competitive in China and other localities.
As for Latin America, the Report flags up the so called 1+3+6 Plan outlined by President Xi during his state visit in 2014. This entails one plan (the 2015-19 China–Community of Latin American States Co-operation Plan) with three engines (trade, investment and finance), and six priority sectors for co-operation (energy and resources, infrastructure construction, agriculture, manufacturing, scientific and technological innovation, and IT).
A year later, during his visit to Africa, Premier Li Keqiang outlined the so called 3x3 Plan which sets out three priority development initiatives (IT, electric power and logistics), with emphasis on three key actors - government, society and the private sector.
Africa's has huge development potential thanks to its massive young demographic dividend and rich agricultural resources as "food basket" for the world. However, as the Report shows, many African and Latin American countries remain over-dependent on extractive industries. This is becoming increasingly unsustainable as the world is shifting from energy and resource-intensive industries, driven by China's re-balancing and the collapse of energy prices.
How resource-dependent African and Latin American countries will cope is likely to depend on their ability to capture their respective long-term competitive advantage by diversifying into carefully-targeted "linkage industries", supported by vigorous, sustainable policies and measures. On this front, my power-point presentation at a 2015 conference in Zambia - African sustainable development through "quality" extractive industries - may offer some useful food for thought.
A Brookings InstitutionOrder from Chaos ProjectAsia Working Paper No.3 of March 2016 by Jeffrey Bader, a Brookings senior fellow affiliated with the John L. Thornton China Centre. He was the first Director of the China Centre, and was John C. Whitehead Senior Fellow in International Diplomacy from 2012 to 2015. He served in the U.S. government for 30 years in various capacities mostly dealing with U.S.-China relations, including as Special Assistant to the President for National Security Affairs from 2009-2011.
The following extracts may serve to capture the flavour of the Paper -
"By examining China’s goals, what China is not doing, and its contributions to global prosperity, Jeffrey Bader outlines three broad policy options for the United States to respond to the China challenge:
Containment, confrontation, or untrammelled strategic rivalry;
Global cooperation, regional resolve."
"In their extreme versions, the strategies of accommodation and untrammeled rivalry make assumptions about American resilience and Chinese strength that are dubious.
"The accommodation argument, much like the contention in the 1970s that the United States needed to accommodate radically to an emerging multipolar world, seems to project a United States that remains static, that fails to innovate, and that proves unable to maintain its military, political, economic, and cultural advantages. As Lee Kuan Yew said, those who bet against the United States in the 20th century didn’t come out so well, and we have it in our power to ensure, through domestic rejuvenation, that the America short-sellers in the 21st century meet the same fate. A central premise of accommodation also seems to be that China’s rise has a kind of inevitability about it, and that the trajectory of U.S. and Chinese economic strength and national power are converging. Recent weakness in the Chinese economy and signs that systemic reform will remain very challenging undercut the notion that we can make straight line projections from China’s success in the last 20 years in moving from underdevelopment to medium income status."
"The argument for embrace of untrammelled strategic rivalry makes more confident assumptions about U.S. strength and adaptability. But it does not persuasively explain how the United States will be able to subordinate other demanding domestic and foreign priorities to confronting the ambiguous challenge that China poses. Like the proponents of accommodation, its advocates sometimes postulate a China that is 10 feet tall and whose nefarious intentions and secret master plan lie behind normal developments. It dismisses, incorrectly in my view, the wisdom in the trope that if we treat China as an enemy, it will surely become one. Security rivalries lead to security dilemmas and distort destructively the behaviour of those trapped in them. If we conspire to make China an enemy, then every problem we deal with, including Iran, North Korea, climate change, and global terrorism, will become orders of magnitude more difficult to manage. Finally, confrontation with a country that will be our number one trading partner, the major trading partner of many of our friends in Asia and elsewhere, and a foundation of the global economy will impose considerable costs on our own economy and those of numerous other countries and create severe strains with friends who would be negatively impacted."
"Options 1 and 2 have their prominent advocates in the current policy literature, but each would jeopardise important U.S. interests—the former by putting at risk U.S. allies and values, the latter by demanding a greatly expanded U.S. military presence in the region without ensuring greater security. So what kind of actions should the United States take to achieve a balance between acceptance of a larger global role for a constructive China while drawing lines against coercion in China’s neighbourhood? On global issues, a sensible option 3 approach should look for issues on which China, because of its own evolving interests, can and should play a greater role in supporting the global system. A few examples might include:
• Cybersecurity and cyber innovation; • Protection of the rights of foreign investors; • Adoption of the standards of the Foreign Corrupt Practices Act; • Central bank coordination, especially at times of global market instability; • Fisheries treaties and conservation. • Protection of intellectual property rights."
"In addition, there are political, economic, and security measures the United States should adopt, globally and regionally, to protect its interests in the face of the Chinese challenge, including projecting clarity about our commitments to allies, defending principles and international norms in maritime areas, and restricting access to the U.S. market for companies that engage in cyber-theft. But there are opportunities as well for U.S.-China cooperation, such as along with South Korea in constraining the North Korean nuclear weapons program and with the Chinese-sponsored Asian Infrastructure Investment Bank on worthwhile projects."
As a huge country with a vastly different political system, a population the size of a fifth of mankind and many provinces at different stages of development, the trajectory of China as a relatively-recent integral part of the global order admits no simple black-and-white interpretations and responses. The reading of China is made the more difficult when China is now at a critical crossroads of development both economically, socially, ecologically, politically, and geopolitically, not to mention other new challenges to global stability. Jeffrey Bader's more nuanced analysis is therefore timely.