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Is Macron a friend of the Rich?

Recently France has been swayed by large scale protests carried out by tens of thousands of its citizens in response to a series of economic reforms since the new government came to power in 2017. A growing mistrust amid the tax cuts on corporations and high earners while raising taxes for the working class has prompted the people to put pressure on the government to make big changes.

Emmanuel Macron founded the centrist movement named “En Marche!” in April 2016 and much to the surprise of many, won the elections the following year. The French saw promise in Macron’s manifesto, which promised significant economic reforms backed up by his relevant experiences both in the public and private sectors. The fragile economy and mistrust for the previous regime left the people with no options but to take a risk instead of voting far-right candidate Marine Le Pen. However as the recent “Yellow Vests” movement spread out in France the truths behind the reforms have only started to get publicity.

Historical information

Francois Hollande, who preceded Macron as President, failed to live up to expectations having faced major opposition from his proposed economic and employment reforms. He faced criticism for many issues including failing to address difficulties in integrating immigrants into the French society and even pandering to the right with his comments on stripping French citizens with dual nationalities off their citizenship following the high profile terrorist attacks that shook the country, including the Charlie Hebdo shooting in 2015 and the Nice truck attack in 2016. Hollande decided not to re-run for the election due to a combination of social, political and economic frailties and the huge mistrust shared among the French citizens.[1] Macron on the other hand was appointed Deputy Secretary General to Hollande in 2012, while also serving as Minister of Economy, Industry and Digital Affairs between 2014 and 2016, where he formulated several business reforms to aid the economy.[2]

Macron was born in Amiens, France and is an alumnus of the elite École Nationale d’Administration. He showed great aptitude in the areas of literature, politics and theatre at an early age and had been able to forge powerful connections during his time as an inspector at the French Finance Ministry during Nicolas Sarkozy’s tenure as President. However he switched civil service to work in investment banking at Rothchilde and Co where he swiftly rose up the ranks to become managing director before being appointed as Francois Hollande’s staff. [3] His most significant contribution in investment banking was his crucial role in advising Nestlé on its USD 12 billion acquisition of a unit of Pfizer in 2012 which earned the nickname- “the Mozart of finance”.[4]

Despite public protests as, the business reform package he introduced in 2015 as Finance Minister was forced through parliament by then Prime Minister Manuel Valls who invoked the special article 49.3 procedure which also received criticism from within the ruling Socialist party.[5] However he soon resigned (in 2016), and founded En Marche! And announced his candidacy for the 2017 presidential election. His manifesto attracted a lot of attention, and was even able to gain support from both the left and the right, especially through his proposals that aimed at lowering housing and corporate taxes, reforming pensions and welfare, and allocating substantial resources.

He became France’s youngest ever president by defeating Le Pen in 2017. He had received 66.1 percent of the 47 million votes cast. He had never held an elected post but it did not seem very difficult for him to achieve his objective.

Plans for the economy/budget:

The biggest test, and also Macron’s main objective has been to overhaul France’s economy. He inherited a very poorly performing economy from his predecessor with the biggest challenges being[6]:

  • 10% unemployment, and nearly one in four among under-25s
  • Bloated public spending (56% of GDP compared with 44% in Germany and 39% in the UK)
  • Low economic growth

 His twin aims are to boost investment and set up a “new growth model” that is both good for social mobility and the environment. Macron has been advocating a Nordic-style economic model that mixes spending cuts of 60 billion euros with a 50 billion euro stimulus package over the same period. The “spend and save” system that Macron plans is meant to mix targeted public spending with fiscal discipline as a Nordic model. Besides lowering corporate tax rate from 33 to 25 percent he also has plans to slash 120,000 jobs from France’s bloated civil service while lowering companies and households; tax bill by 20 billion euros.[7] These are part of the major economic reforms that Macron has planned while making France stick to the EU government deficit limit of 3 percent of GDP.[8]

Security and Defence

In light of the recent terrorist attacks that have rattled France and resulted in the loss of hundreds of lives, Macron has proposed increase in defence and policing by recruiting 10,000 new police officers and expand prison capacities. He also advocates the idea of an EU army, and has been promoting joint military projects and setting up a permanent European headquarters.

Some of his notable plans for governance includes reducing number of lawmakers by a third in both the Senate and National Assembly, banning the hiring of family-members as assistants of lawmakers, and banning consulting activity for people holding elected office.[9]

Foreign relations and others

France’s commitment to 2015 Paris climate agreement has been among the key global issues that Macron has promised to back-up and promote since his early days in the office.

When it comes to foreign relations he has voiced support for multilateral institutions such as the UN security council, however also supporting the promotion of the French language and Francophone institutions as “an essential vector of our influence and a weapon against the spread of radicalism”. He stands strong against the Syrian regime led by Bashar al Assad and wants him to answer for his crimes before an international tribunal while being a strong critic of Russian policy, backing EU sanctions following the Ukraine crisis.

Europe

Macron is pro-EU and has campaigned for greater cooperation and integration within the EU on fiscal, environmental and social regulation. In his European agenda he has expressed his plans towards a common fiscal policy, a joint finance minister, implementation of the banking union and a bolstered bilateral relations with Germany.[10]

Macron’s tenure as president

Macron came to power at a problematic time- he faced a massive restructuring of regional powers following the Brexit referendum, as well as US President Donald Trump’s reshuffling of American interests. These major changes made the situation a little more difficult from the very start, and especially after the shocking withdrawal of the US from the Paris climate accord, a decision made my Trump himself, who does not believe in climate change. This prompted Macron to offer France as a second homeland to climate researchers.

One of the first things he did was making a state visit immediately after his election to meet Angela Merkel in his quest for improved Franco-German relations and since forged a strong relationship with Merkel and agreed on a “common roadmap” for Europe. However Merkel has a more cautious approach than Macron when it comes to major issues concerning the EU.[11]

He has always been vocal about increased European cooperation on many issues, and has been pushing for a “European Army” to improve security in the EU-with Merkel quick to endorse Macron’s plan, and . Macron also voiced strong interests to pursue security dialogue with Russia seeking to improve EU-Russia relations especially in terms of security.

In France

Macron had been quick in pressing for reforms soon as he took charge- with one of his first significant contributions being against mass corruption and nepotism in French politics- introducing a ban on elected representative from hiring family members.[12]

Yellow vests movement

In the May 2018, a political movement arose that challenged Macron’s economic reforms. It has been named “Mouvement des gilets jaunes” or the “Yellow Vests Movement” where demonstrations started on 17 November 2018, months after it was created. The main protagonists of the now ongoing movement are the ordinary working and middle class French citizens who strongly feel that Macron is not the leader for the ordinary working class. What triggered the movement was the proposal to keep increasing a direct tax on fuel, as well as the carbon tax. Although Macron stated that these were part of his plans to reduce fossil fuel reliance but it has been widely criticised as an act of “taxing the poor to tackle climate change”.[13]

In his first budget Macron’s business friendly government had proposed trimming corporate rates and a “wealth tax” on the rich, explaining that boosting investment will aid the economy, however also increasing certain taxes such as one on low-income pensioners. While giving tax breaks to big corporations, plans of charging lower taxes on high-paid workers in certain industries have garnered mistrust from ordinary citizens and political rivals alike, with the left-wing calling him “Hero to the rich”.[14] He also moved to loosen hiring and firing regulations on companies to improve France’s paralysed labour market.

Protests have been going on for over a month and hundreds of thousands of French citizens have taken part in what seems to be an anti-Macron rebellion, with the premier making a U-turn by suspending the proposed tax hike amid the protests that have turned violent. French authorities have deployed nearly a hundred thousand security forces during several days of protests detaining thousands and using anti-riot weapons such as tear gas against protestors.[15]

In a very recent bid to end the standoff, Macron announced a package of measures for low-income workers estimated by economists to cost up to 15 billion euros. Besides suspending the fuel-tax hike plans for six months, he also announced raising the minimum wage by a 100 euros per month from 2019 while scrapping the recent increase in social security taxes on pensioners earning less than 2000 euros.[16]

The protests are still ongoing with protestors expecting their 42 directives to be accepted. However recently it has garnered criticism for a lack of leader and organisation, and violence by protestors and use of force by police has already resulted in over 500 injuries. Despite Macron announcing several major changes bowing down to protestors, there are many demands to yet to be met and it is not clear when or how the Yellow Vests Movement will end.

Conclusion

Macron, poised to become “Europe’s next leader” as Merkel nears her exit from politics, saw a major slump in his popularity since the protests. Falling out of favour may mean nationalists such as Marine Le Pen gaining support, and with the rise of the populism in Europe in the past few years, it may not come as a surprise if France leans towards the far-right. A major shift in powers may make the situation in the region volatile and with France being a major power in the EU, and with the UK poised to officially leave the EU in a few months, it would cause a major restructuring in regional powers and interests. Most concerning of all, with countries such as Italy, Hungary and Poland having already given in to populism, a major power joining their ranks will shake up the EU and prove to be a major challenge in the future of the EU. The current situation and its developments in France will have a significant impact on the economic and political stability in the rest of Europe.

[1] https://theconversation.com/where-did-it-all-go-wrong-francois-hollande-flops-out-of-presidential-race-69806

[2] https://www.biography.com/people/emmanuel-macron-050817

[3] https://www.nouvelobs.com/rue89/20160830.RUE5451/au-fait-il-faisait-quoi-chez-rothschild-emmanuel-macron.html

[4] https://www.ft.com/content/9bd62502-12cf-11e7-b0c1-37e417ee6c76

[5] Revault d’Allonnes, David (17 February 2015). “Loi Macron : comment le 49-3 a été dégainé comme un dernier recours”

[6] https://www.bbc.com/news/world-europe-39845905

[7] https://www.bbc.com/news/world-europe-39845905

[8] https://www.ft.com/content/37223e92-3319-11e7-bce4-9023f8c0fd2e

[9] https://www.reuters.com/article/us-france-protests/french-yellow-vests-protest-in-their-thousands-for-fifth-saturday-idUSKBN1OE0BF

[10] https://www.ft.com/content/37223e92-3319-11e7-bce4-9023f8c0fd2e

[11] “Emmanuel Macron and Angela Merkel pledge to draw up ‘common road map’ for Europe”. The Telegraph. 15 May 2017

[12] “France bans hiring of spouses by politicians in wake of Fillon scandal”. Reuters. 27 July 2017.

[13] https://www.politico.eu/article/macrons-mistake-taxing-the-poor-to-tackle-climate-change/

[14] https://www.thelocal.fr/20170927/hero-to-the-rich-macron-cuts-taxes-for-wealthy-in-first-french-budget-france

[15] https://www.reuters.com/article/us-france-protests-tax/france-drops-fuel-tax-hike-as-yellow-vest-anger-persists-idUSKBN1O40PQ

[16] https://www.france24.com/en/20181210-macron-france-tax-cuts-raise-wages-speech-yellow-vest-unrest

Modern Nations – Rise of Muslims Episode 7

Based entirely on the book by Ali Mahmood titled “Muslims” –

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In this episode, Author Ali Mahmood, looks at the emergence of Muslim nation states following the collapse of the Ottoman empire. He looks at the birth of modern Egypt, Pakistan, Afghanistan and Iran.

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5 Geopolitical Trends to watch in 2019

In today’s globalised world, many geopolitical events take place every year, and they have a long-lasting effects in time. So, considering what happened on the international scene in the year that has just ended, what are the top five global trends to watch in 2019?

1 – “America first”, America alone?

President Trump’s “America First” policy was put into practice various times in 2018. He introduced new tariffs to protect the US economy; he abandoned those agreements that he deemed contrary to America’s national interest; he criticised allies for free-riding on the US in security issues.

This is a trend that will continue as long as Trump remains in the White House, and that will have an important impact on the global order. For decades, the international system was centred on the US and its commitment to sustain its rules and provide security; albeit with limitations and largely for its self-advantage. But now, Washington prefers pursuing a narrow definition of its own national interest. This has already raised concerns with traditional partners; most notably with the European members of NATO to whom he demanded to spend more on defence. This divergence between the two sides of the Atlantic has cast doubts over the tenure of the Alliance. All this happens in a moment of renewed tensions with Russia, who in turn is taking benefit from the situation because in case of a confrontation, it will have to face a more divided and therefore weaker NATO. This uncertainty over the future of the Alliance damages European but also American interests: alienating its traditional allies risks to isolate the US and to reduce its international influence.

All this happens in a delicate moment for the US economy. While its GDP grew of almost 3% in 2018, its monetary policy is object of political debate as Trump accuses the Federal Reserve of being the “only problem” of America’s economy. If the Fed keeps on raising the interest rates to contain inflation, the US growth will slow down. This will also combine with the effects of tariffs plus the considerable public and private debt. Moreover, American stock markets have lost much value in the past year: the price of shares according to the Dow Jones index dropped of around 9.5% in 2018. And if the US economy slows, the rest of the world will follow.

2 – China’s economic slowdown

The world’s second-largest economy is also facing troubles. While it is predicted to grow of about 6.6% this year, which is still extraordinary given its size, the rate is no longer a double-digit figure as in the past. The Chinese economy is also slowing down, and this will inevitable have repercussions on the global scale. As economic prosperity is considered fundamental for social stability and for the rule of the Communist Party, the government is taking measures to maintain a steady growth. This explains various initiatives like “Made in China 2025” aimed at upgrading its industry, the huge investments in high-tech, or the far-reaching “One Belt, One Road” project.

Apart from purely economic issues, this will also have geopolitical consequences. Beijing has been increasing its worldwide presence in the past decade, notably through economic means; but if its growth slows down, its ability to sustain its greater plans in the Asia-Pacific and beyond will suffer. In this sense, the very plans it is implementing to boost its economy may result counterproductive: they are certainly ambitious projects with a great potential, but they are also very challenging. The enormous investments they require will result in a waste of resources if they do not translate into economic growth, and this will hamper China’s economy. As such, observing Beijing’s economic policies and its performance through 2019 will be an indicator of its future global role.

3 – The European (dis)Union

The EU will cross troubled waters in 2019. Anti-EU movements have risen everywhere, its economic recovery remains sluggish and each of its four most important members is not in the position to lead a reform of the common institutions. The United Kingdom will finally leave, but the exact terms are still undefined and a “No Deal” Brexit seems probable. This is the worst scenario, because it means uncertainty for economic and political actors alike. Italy is now ruled by a Eurosceptic coalition that has already clashed with the EU over immigration and economic policy. Germany continues opposing more economic integration in the form of a common fiscal policy, and Angela Merkel’s leadership has been weakened. In France, President Macron is calling for a reform of the EU and promotes further integration, but his popularity is at a record low and the country has first to deal with domestic issues.

Other members are also unable or unwilling to move the integration project ahead. The emerging countries of Central-Eastern Europe, notably Poland and Hungary, want to preserve their sovereignty and therefore oppose devolving more powers to the EU. Moreover, the Union has even initiated the infraction procedure for violation of core values against these two countries, thus leading to an open diatribe. Spain is focused on problems at home; while Greece is heading towards elections in 2019, and any change in its government could make the markets nervous and result in a renewed standoff with the EU.

As such, no state is in the condition to take the lead and move forward the much-needed reform of the Union. However, what is more worrisome is that the divergences do not simply concern the policies to implement, but the basic values of the EU and its very legitimacy are questioned and openly criticised. Considering also its complex institutional procedures, it is unlikely that the stalemate will be solved in 2019. On the contrary, it is likely that the EU will be even more divided at the end of the year.

4 – Sanctions on Iranian oil

Following President Trump’s decision to scrap the nuclear deal, a boycott on Iranian oil will be reintroduced in 2019. Given that it is largely dependent on oil revenues, the Islamic Republic will certainly suffer. The effects will not be only economic, but they will extend to the social sphere as well. Signs of discontent already appeared in late 2017 – early 2018, when mass protests erupted all over the country. As pressure increases on Iran’s economy, similar episodes may repeat in 2019 with destabilising effects on the region. Moreover, this means that Iran will have much less resources to sustain its goals abroad; notably in Iraq and Syria. As a result, it will have to reduce its international commitment and focus on domestic issues.

But this will also affect other countries who used to buy oil from Iran. China and India were its main customers, followed by Japan, South Korea and European countries. As sanctions come back into effect in 2019, such states will comply and change their import sources to avoid angering the US. This will impact the global oil market by putting an upward pressure on its price; even though many effects such as a less than expected demand may nullify this effect at least in part. Finally, while the intended effect of the boycott is to put pressure on the country and force it to negotiate another deal deemed more compatible with America’s interest, it is possible that the result will be the opposite. If Iran feels threatened enough by the US, it may decide to resume its nuclear programme after concluding that is the only way to ensure its national security. This is not likely, because Teheran would be even more isolated, but if this happens the whole region will be further destabilized.

5 – Tension with Russia

Relations between Russia and the US have not improved through 2018. Many important issues continue dividing them, like the war in Syria or Ukraine’s issue. The situation remains volatile in both cases, and the recent Kerch Strait incident has revived tensions between Moscow and Kiev. Additionally, there is another country to watch: Georgia. The new President Salome Zurabishvili has pro-EU Western views and openly calls for Georgia to join the EU and NATO. Russia will hardly accept such a scenario and may launch a military operation to prevent it, thus sparking another crisis in the post-Soviet space.

Moreover, a pillar of the longstanding strategic equilibrium between Russia and NATO has fallen: the Intermediate-Range Nuclear Forces Treaty, or INF. This agreement, dating back to the Cold War, prohibited the deployment of intermediate-range ballistic missiles in Europe, as they risked compromising the nuclear balance in the region: due to their limited range, such weapons enabled the Soviets to strike NATO in Europe without threatening the US territory, thus casting doubts among Europeans that in such an eventuality the Americans would have exposed themselves to retaliation by launching nuclear weapons on the USSR just to protect Europe.

Now that the Treaty is gone, a new arms race is likely to take place, and in fact this is already happening. Russia has tested several nuclear-capable ballistic missiles in 2018, and is rapidly working to deploy new hypersonic missiles capable of travelling at five times the speed of sound or more. The US is doing the same, and both powers are developing new weapon systems and doctrines to prevail on the other. But to pursue these objectives, Russia needs economic resources. Since oil is one of its main sources of revenues, Moscow will seek to coordinate with other producers to keep its price high enough to sustain its economy. This will largely determine the evolution of Russia’s role in 2019, but one thing is sure: Moscow will do its best to pursue its interests abroad, and as the Russian-American rivalry continues, the international scene will remain tense.

Where is Venezuela Heading?

Understanding Venezuela’s foreign policy

Venezuela often dominates the news agenda on account of its profound economic crisis and associated societal ills, including the dubious distinction of boasting one of the highest crime rates in the world.

Venezuela is often depicted as a revolutionary power owing to the so-called “Bolivarian Revolution” started by the late Venezuelan leader Hugo Chavez. Ideologically the Bolivarian revolution is a mix of Venezuelan nationalism, Pan-American regionalism and socialism.

Whilst enormous academic and media attention has focussed on how “Bolivarianism” has shaped Venezuela’s economic policy since 1998 (the year Hugo Chavez first came to power), comparatively small effort has been expended on understanding how the Bolivarian revolution has influenced Venezuelan foreign policy in the past two decades.

Welcome to KJ Vids. In this video we will examine the ideological, political and strategic considerations shaping Venezuela’s foreign policy.

 A Socialist revolution?   

Venezuela radically changed direction in the late 1990s with the advent of Hugo Chavez and his “Bolivarian” revolution. First elected to the presidency in December 1998 Chavez proved to be a remarkably resilient revolutionary leader in the face of massive internal and external opposition.

During his fifteen years at the helm of Venezuelan politics, Chavez faced determined opposition by US-backed political groups, widespread industrial unrest culminating in a general strike in 2002-2003 and an ill-fated coup attempt in April 2002. It is widely accepted in the expert community that much of the political, industrial and business opposition to Chavez was sponsored by the United States government.

But the nature of Chavez’s politics, and specifically his radical economic policies, intensified divisions in Venezuelan society leading to a highly charged polarised environment. Chavez’s support base was mostly amongst the poor – especially Venezuela’s indigenous (i.e. non-European) community – and the lower middle classes, whereas opposition to his rule was concentrated amongst the middle class, which is dominated by people of European origin.

Whilst drawing attention to Chavez’ shortcomings (in particular his demagoguery and single-minded pursuit of ideological-based economic policies) it is important to avoid the propaganda of his enemies who have tried to paint him as a dictator or failing that an authoritarian leader.

Throughout his 15-year reign Chavez operated within the confines of the Venezuelan constitution and by and large he respected the checks and balances of Venezuela’s democracy. By contrast, Chavez’s opponents consistently displayed disdain for Venezuela’s democratic institutions by continually fomenting unrest and attempting to overthrow Chavez through extra-illegal measures, notably an extended general strike and a failed military coup.

Chavez’s radical economic policies, and specifically his concerted attempt at the redistribution of wealth and opportunity, was fuelled by high oil prices in the first decade of the 21st century. The qualified success of some aspects of Chavez’s economic policies led to high hopes amongst left-wing activists in Latina America, and more broadly on the global stage, that Venezuela was successfully implementing a socialist economy.

But the reversal of these qualified successes, particularly after Chavez’s death in March 2013, has called into question the sustainability of “Chavismo”, Chavez’s quixotic take on the Bolivarian ideology. These shortcomings have come into sharp relief under the leadership of Chavez’s successor, Nicolas Maduro.

In the past couple of years Venezuela has been gripped by a severe economic crisis interspersed with riots and widespread civil disorder. On top of this the country suffers from multiple systemic societal disorders, notably one of the highest crime rates in the world.

The combination of these ills points to the failure of “Chavismo”, and specifically the socialist economic policies underpinning it. But before we rush to judgement on Venezuela, it is important to note that the final script has yet to be written. To that end, it is noteworthy that Maduro’s government is proving to be resilient in the face of concerted and ferocious opposition.

More importantly, the socio-economic base of “Chavismo” appears to be largely intact, in spite of Venezuela’s profound economic crisis. This speaks to the intense polarisation of Venezuelan society and raises the prospect of civil war further down the road, especially in the event of foreign intervention in Venezuela’s domestic affairs.

The “Bolivarian” foreign policy

Named after the 19th century Venezuelan military leader, Simon Bolivar, who liberated vast swathes of South America from the grip of the Spanish Empire, the Bolivarian ideology is essentially a form of pan-American nationalism centred on national sovereignty as the building bloc of Hispanic solidarity.

“Bolivarianism” has been utilised by a variety of political movements in South and Central America and it is elastic enough to serve a multitude of political goals and ends. But in its native Venezuela, Bolivarianism is associated with militarism and a tough and uncompromising approach toward notions of national sovereignty and independence.

Hailing from a military background, Hugo Chavez fit the conventional Bolivarian mould perfectly, but he was also sufficiently innovative to marry up elements of the Bolivarian ideology with his own socialist ethos. The result was “Chavismo” which has had a profound impact on Venezuela’s foreign policy.

Immediately after coming to power Chavez pivoted toward Socialist Cuba, a revolutionary state with a legendary anti-imperialist reputation. By extension, Venezuela distanced itself from the United States which from the very outset has attempted to overthrow Chavez’s Bolivarian revolution.

Chavez’s tough stance on American hegemony was entirely in keeping with his nationalist ethos and more importantly it resonated widely and deeply amongst nationalist communities across Latin America.

In trying to understand Venezuela’s post-1998 foreign policy, it is helpful to think of it as forming three concentric circles. The first circle is composed of the main political-ideological pillar of the Bolivarian revolution, which is centred on anti-imperialist sentiments, and specifically opposition to the US role in Latin America.

The second circle is centred on achieving Latin American unity and wider notions of pan-Americanism. In practise this involves greater engagement with Latin American states, in some cases to the point of interfering in the internal affairs of regional states with a view to strengthening nationalist and socialist movements.

The third circle is concerned with developing global positions, and specifically using Venezuela’s oil wealth to develop influence and outreach beyond Latin America. To that end, Bolivarian Venezuela has sought to develop strong ties with major non-Western powers, notably Iran and China.

Pushing back against America

During the early years of “Chavismo”, Chavez’s huge reputation and his massive influence on public opinion across Latin America was interpreted as the locus of a continent-wide Socialist “Pink tide”. The “Pink tide” was depicted as representing a decisive political and economic tilt toward the left, and by extension a decisive rejection of the dominant neo-liberal economic model.

In so far as the United States is the chief proponent of the neo-liberal economic model, Venezuela was necessarily in opposition to it. But contrary to conventional wisdom Chavez’s anti-Americanism was not primarily driven by socialist ideology. For a start, in the early years of his reign Chavez proved to be a moderate socialist in so far as he refrained from the root and branch rejection of the capitalist model.

Instead Venezuelan foreign policy developed an anti-American trajectory for primarily two reasons. First, in keeping with the Bolivarian nationalist ethos – and mindful of America’s consistent intervention in Venezuelan domestic affairs throughout the 20th century – the “Chavistas” had to be by definition anti-American.

There was also an immediate practical need for a tough attitude towards the United States inasmuch as Venezuela had a pressing need to contain American influence both domestically and more broadly in its immediate environment. This need intensified when the US government openly reached out to the Venezuelan opposition and leading industrialists with a view to fomenting unrest in the country.

Under Nicolas Maduro’s leadership attitudes towards the United States have hardened still further. This development is a direct reaction to hostile US policies which seek to isolate Venezuela in South America, in addition to weakening it from within by fomenting unrest and insurrection.

The forlorn quest for Latin American unity

The Chavistas never stop talking about South American unity. To be fair their vision of “unity” is not entirely unrealistic in so far as they envisage a broad-based solidarity bound by minimalist principals revolving around nationalism and a rejection of neo-liberal economic models. These principles resonate widely across the continent and they continue to energise a multitude of political parties and movements in every Latin American country.

More specifically, despite its economic crisis, neo-Bolivarian Venezuela continues to be a source of ideological inspiration across the continent. Notwithstanding these positive features, it is fair to say that Venezuela’s policy of promoting South American unity has failed.

For a start, the continent is as divided as ever and by extension American influence, particularly in Colombia, Brazil and Chile, is arguably as strong as it has ever been. Second, Venezuela is politically isolated on the continent as demonstrated by its strained relationship with the continent’s biggest power Brazil.

Furthermore, Venezuela faces hostility from neighbouring Colombia as Caracas has supported left-wing political and guerrilla groups in Colombia for the past 20 years. This has largely been a reaction to Colombia’s outreach to anti-Chavez groups in Venezuela.

A “global” foreign policy?

The Chavistas have always aspired to a global standing. Buoyed by high oil prices, in the first decade of the 21st century they set out to develop influence and sympathy across the world. This led to some strange policies, notably the decision in 2007 to supply cheap fuel to bus services in London, the capital of the United Kingdom. The deal was a flamboyant demonstration of gesture politics designed to strengthen the position of London’s then left-wing mayor Ken Livingstone.

Theatrics aside, Venezuela has undertaken serious moves on the international stage. The most important and far-reaching, both in terms of Venezuela’s global outreach and the reaction it elicits from the US government, has been Caracas’s alliance with the Islamic Republic of Iran.    

Originating in the close personal bond between former Iranian president Mahmoud Ahmadinejad and Hugo Chavez, the embryonic Iranian-Venezuelan alliance has persisted to this day (albeit at a less dramatic level), thus allowing Iran to establish a firm foothold in Venezuela. This is in keeping with the broader Iranian policy of penetrating Latin America with a view to achieving strategic parity with the United States.  

By developing strong ties to countries like Iran and China, Venezuela both improves its global standing and simultaneously acquires an insurance policy against American threats to overthrow the Bolivarian revolution.

In conclusion, whilst Venezuela has failed to achieve its core foreign policy objective of creating a united Latin American front, nevertheless it has successfully raised its international profile by developing sustainable ties with major non-Western powers like China and Iran.

The Ottoman Dynasty – Rise of Muslims Episode 6

Based entirely on the book by Ali Mahmood titled “Muslims” –

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The Ottoman dynasty governed the Muslims and built one of the largest empires the world has ever seen

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The POST-FINANCIAL CRISIS of GREECE and it’s economic prospects

Greece is just recovering from a severe economic recession, and it will take several years to consolidate economic growth and return to pre-crisis levels. But now that the worse seems over, various opportunities open up for Greece. The degree to which it will be able to manage this combination of challenges and occasion exploit will determine its course in the decades ahead.

The Financial-Economic History of Greece

Greece has a turbulent financial history marked but repeated bankrupts. Since its independence was recognized in 1830, it experienced five defaults, the last of which took place in 1932. Greece contracted its first debt from Great Britain even before becoming independent, as a mean to finance the armed insurrection against the Ottoman Empire. Unable to fully repay the interests for this loan, the Greek state had to declare its first bankruptcy while the War of Independence was still ongoing. Since then, it often contracted debts with foreign powers just to repay previous ones. A recurrent pattern can be identified in these crises. Greece received foreign loans, whose terms were not always advantageous; but it failed to repay debts and ended up declaring bankruptcy. The precondition for debt restructuring or cuts from foreign creditors was to apply austerity measures such as reducing government spending and imposing new taxes, which ultimately resulted in financial stabilization and readmission to international credit markets. Soon, investments and loans started flowing in again as foreign lenders were disposed and even eager to provide funds; but this always resulted in unsustainable levels of debt. Combined with domestic problems such as government overspending and corruption, this led to another debt crisis, thus restarting the cycle. A notable even occurred in 1898, when an International Committee was set up to monitor Greece’s public finances; thus anticipating the role of the EU institution in the most recent recession. The last default in 1932 also presents notable similarities with the recent situation, as that that crisis followed a major global-scale financial crunch; namely the 1929 Wall Street collapse.

After suffering huge human and economic losses during WWII and the Civil War that followed it, Greece managed to settle most of its external debt and experienced an exceptional economic growth; also thanks to US aid received via the Marshall Plan. It built infrastructures and promoted industrialization, the living conditions of its citizens greatly improved and its GDP growth rate was one of the highest in the world, second only to countries like West Germany or Japan. During this period, which goes roughly from the early 50s to the mid-70s and that reached its apex in the eight-year rule of Prime Minster Konstantinos Karamanlis of the New Democracy party between 1958 and 1963, the debt/GDP ratio fell to a record-low of 9.7% in 1959; and continued oscillating around 20-25% until the early 1980s. But since the Socialist Party (PASOK) took power it started rapidly growing, stabilizing at a high level of about 100% in the 90s and early 2000s. The return to power of New Democracy in 2004 did not change this course. This massive surge of public debt was largely due to uncontrolled and unproductive government spending combined with the effect of an economic slowdown plus structural inefficiency and lack of transparency, especially in the public sector. Yet, Greece achieved its objective of joining the Eurozone since its beginning in the 1999-2002 period; even though it did so by dissimulating the real entity of its debt; as otherwise the discrepancy from the financial stability criteria established by the 1992 Maastricht Treaty would have been too high for its admission. At that point, things started getting alarming, and Greece itself warned that the situation of its public finances was worse than it appeared; resulting in the country was put under observation by the EU Commission in 2005.

The Crisis

The 2008 US financial crunch had world-spanning effects; and in the EU it shook the very idea of European integration. The refusal of the US government to bailout Lehman Brothers resulted in the latter’s bankruptcy, which had chain effects on the world’s financial markets. States acted to prevent the collapse of major financial companies, as this would have had detrimental repercussions on national economies. But soon, this raised concerns over the ability of states to repay their own public debt; especially over those Eurozone states having the bigger debt/GDP ratio. Among them Greece stood out with its huge debt of more than 120% of GDP. This was the result of a combination of factors. The introduction of the Euro had caused wages to rise, thus deteriorating Greece’s competiveness. The trade balance went negative and the government deficit also reached 15% of the GDP in 2009. As the crisis struck the EU, loans from other countries begun to decline and their interest rates grew, meaning that Greece could no longer finance its deficit via cheap external debt. Moreover, while joining the Eurozone increased financial credibility and favoured trade thanks to lower transaction costs, it also deprived the country of its monetary sovereignty. Consequently, Greece could not counter the effects of the crisis by depreciating its currency; even though this would have been just a short-term solution.

At the height of the crisis, Greece found itself in a serious standoff with foreign investors over the terms of debt restructuring and cancellation. The so-called Troika, formed by the European Commission, the European Central Bank and the International Monetary Fund, demanded Greece to adopt harsh austerity measures to reorganize its finances as a precondition for a bailout; similarly to what had happened in previous cases. In this, Germany played a major role, because its banks owned the largest share of the Greek public debt. As such, Angela Merkel’s government acted primarily to protect the interests of Germany and its financial actors, who would have suffered significant losses in case of a Greek default with negative consequences for the German economy. Yet, given the relative small size of the Greek economy, a default would not have been fatal for the Eurozone; but Germany’s very decision made the situation worse. Berlin has always been very unwilling to implement expansionary economic policies to boost growth in the EU and assist countries facing economic troubles like Greece. For this reason, initially it insisted for a bail-in, which would have meant making private creditors withstand the costs of restructuring the Greek debt. However, Germany’s stance greatly undermined the market’s trust by creating fears among investors, thus further worsening the situation for Greece and the EU.

In the end, Greece had no choice but to implement the austerity measures demanded by the Troika; and in exchange it obtained three bailout programmes which included a cancellation of 100 billion euros of debts in 2011. Nevertheless, Greece plunged in a deep economic recession. Its GDP shrunk, and so did salaries. Unemployment grew to reach about 27% of the workforce in 2013, and it still remains above 20%. Living conditions worsened for large swathes of the population. Today, the government budget has returned in surplus, but due to the contraction of the economy the debt/GDP ratio has actually increased to a current level almost 189%.

But even more importantly, the crisis caused tremendous social harm, disrupting the lives of millions and sparking violent protests alimented by anti-EU and anti-German sentiments. This also arose the controversy over German reparations for WWII. Like other states, Greece was plundered by the Germans during their occupation, and it received some material compensation after the conflict in the form of equipment and commodities. But since the US wanted Germany to rapidly recover in an anti-Soviet logic, Greece and other countries were convinced to soon renounce to the remaining reparations. In addition, a 400 million marks loan that the Germans forced Greece to concede during the occupation was not included in the reparations; but today Berlin refuses to discuss the issue. Converting this amount to today’s dollars is very complex, but considering that in 1941 one dollar was worth 2.5 Reichsmark and accounting the changes in purchasing power of the USD, a rough estimate suggests that in 2017 the loan would have been worth 16.6 billion dollars. This is a huge sum, but still small compared to Greece’s 388 billion USD of debt.

What Prospects for Greece?

The acute phase of the crisis is over; yet, Greece will have to deal with its consequences for many years ahead. Its recovery is still shaky, unemployment is a problem and its debt/GDP ratio remains very high. In this context, the result of the 2019 elections and in general the future political orientation of the country is uncertain; as new economic turmoil may have negative effects on political stability and vice versa.

Still, there are also opportunities that Greece can exploit. Lower wages translate into a competitive advantage, and in the post-crisis scene there is plenty of opportunities for investment. More importantly, Greece’s large merchant fleet combined with its location give it the potential to become a Mediterranean trade hub. Being close to the Suez Canal, Greece can be seen as a gateway to Europe for Asian countries. China, in particular, has shown great interest in Greece as part of its “One Belt, One Road” initiative; and COSCO, its state-owned shipping company, acquired the majority of shares in the Piraeus Port Authority. Since then, both the container volume and revenues have greatly increased. Russia has also interests in Greece, because it is a pipeline crossroad: its Trans-Anatolian Pipeline (TANAP) is scheduled to connect on Greek soil with the Trans-Adriatic Pipeline (TAP) to reach Western Europe. Exploration for hydrocarbons in the Eastern Mediterranean is also opening opportunities for Greece, but is also accompanied by greater tensions with Turkey. Finally, as Washington’s relations with Ankara deteriorate, the former is building closer ties with Athens, who can take benefit from this.

Greece remain in complicated situation, but with a careful management it can fully recover. It must pay attention to its public finances, favour domestic saving, avoid contracting external debt, diversify its partners and attract foreign direct investments capable of sparking a positive economic spill-over. To what extend Greece will succeed in doing so will determine its future well-being and its role in international affairs.

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Always strive for better work. Never stop learning. Have fun a clear plan for a new project or just an idea on a napkin? Sky, land, and sea disappear together out of the world…

Israel’s Enigmatic relationship with India

India and Israel have been allies for much of recent history although the relations between these two countries have been low-profile and only started getting global attention in recent years. Besides having strong economic ties the two countries also share key strategic and military cooperation.

Surprisingly India-Israel relations were largely informal until 1991. Despite having some ties since the 1960s mainly owing to defence and intelligence cooperation, India did not formalise diplomatic relations due to having a pro-Arab and pro-Palestinian stance. However this gradually changed when they formally established diplomatic relations with Israel in 1992.[1]

History

India recognised Israel as early as 1950, but did not establish diplomatic ties until 1992. During the Suez crisis in 1956 the then Israeli foreign minister Moshe Sharett visited India as the Israeli army pushed into Egypt after Egyptian President Gamam Abdel Nasser nationalised the canal; while India played the role of mediator alongside the UK, the US and Yugoslavia.

During the Sino-Indian war in 1962, Indian PM Jawaharlal Nehru sought arms from Israel, writing to Israeli PM Ben Gurion, and he responded, forming the foundations for defense cooperation between the two countries. This paved way for increased bilateral cooperation over the years as India sought more arms in their war with Pakistan in 1965 as well as in 1971.[2]

Throughout much of the 1970 and 1980s, India kept its distance from Israel publicly due to its support for the Palestinian cause. India was a founding member of the Non Aligned Movement (NAM) that was supportive of anti-colonial struggles around the world which explains their support for the Palestine Liberation Organisation (PLO).[3] India was astonishingly one of the first non-Arab states to recognise Palestinian independence. There were several geopolitical issues that shaped India’s standpoint during the 1970s and 80s. The seemingly antagonist position between India and Israel also involved India’s diplomatic strategy of trying to counter Pakistan’s influence in the Arab world as well as of safeguarding its oil supplies from the Gulf.

There were other major motives behind India’s anti-Israel stance. India has a large Muslim population and their antagonism towards Israel played a major role in delaying diplomatic relations, as politicians feared that they may lose Muslim votes in key regions if they were to formalise ties.[4] Also,  was the fact that thousands of Indian citizens worked in the Gulf, helping keep its foreign exchange reserves afloat.

Security cooperation

Even before establishing formal ties, India and Israel managed to collaborate in specific areas, with India’s main intelligence agency RAW (research and analysis wing) and Israel’s Mossad having signed a secret cooperation agreement in the areas of security, intelligence and military equipment.[5] The two top intelligence agencies established relationships since the 1960s. This was remarkable because throughout the 1970s and 80s their bilateral relations were sour. The situation started to shift in 1989 as three major developments sowed the seeds of change: first, the beginning of the era of coalition politics in India; second, the beginning of Pakistan-sponsored insurgency in Kashmir; and finally, break-up of the Soviet Union and end of the Cold War coupled with the fall-out from the reversal of Iraq’s invasion of Kuwait.[6] Since the early 1990s, the growing insurgent activities in Kashmir sponsored by Pakistan heightened regional security environment of India and the then opposition party BJP kept pressurising the government to normalise relations with Israel. After the end of the Cold War, India, like many other countries had to make major changes to their foreign policy to accommodate the changing international milieu. It went towards economic liberalisation, opening its doors to other nations and subsequently formalised diplomatic relations with Israel. It was however kept low-profile due to India’s interests in the Middle East.

India gave a number of reasons to justify the 1992 opening of formal relations, which are as follows[7]:

  1. Israel’s criticality to what happens in West Asia and the Gulf, that is a part of India’s extended neighbourhood impacting its strategic space, energy supplies and the 6 million Indians living in the region.
  2. Sophisticated defence equipment , technology and systems from Israel; potential cooperation in security and defence including counter terrorism.
  3. Absence of any quid pro quo from the Arab states
  4. Agricultural prowess including related technologies of Israel.

More recently the economic rivalry between India and China plays a role in this context. The growing relations between China and Pakistan have raised insecurities, especially the fact that Pakistan are the largest recipient of Chinese arms. These issues gave India more reasons to build-up their own arms and as Israel are among the top arms manufacturers in the world with one of the best research and development facilities as well as a supposedly good counter-terrorism unit, there are more reasons to increase cooperation in the field of security and defence.

First Israeli PM visit to India[8]

Ariel Sharon was the first Israeli PM to visit India in 2003 and the bilateral relations between the two nations started gaining publicity. State visits from officials started to take place since the establishment of diplomatic relations. This laid the framework for further cooperation in various areas; Agreements on Cooperation in the field of Health Sciences and Medicine and on Cooperation in combating illicit trafficking and abuse of narcotic drugs and psychotic substances were signed in 2003. In the same year, more significant agreements were signed in the field of protection of the environment, and another on the exemption of Visa requirements of holders of diplomatic, official and service passports.

2005 saw a MoU on India-Israeli Research and Development Fund Initiative while in 2006 a major pact was signed in the field of agriculture cooperation.

 Bilateral trade

Bilateral trade progressed rapidly since 1992. From a base of USD 200 million in 1992 comprising primarily of diamonds, merchandise trade has diversified and the overall figure stood at an astonishing USD 5.19 billion in 2011. In 2016 the figure slumped to USD 4.16 billion in 2016 (excluding defence) with the balance of trade in Israel’s favour. Trade in diamonds constitutes over 53 percent of bilateral trade. After China and Hong Kong, India is Israel’s thirds largest trading partner in Asia. Currently the sectors forming the diversified bilateral trade include pharmaceuticals, agriculture, IT and telecom, and homeland security. India’s major exports to Israel include precious stones and metals, chemical products, textiles and textile articles, while major exports from Israel include precious stones and metals, chemicals and mineral products, base metals and machinery and transport equipment.

Cooperation between the two nations increased dramatically ever since the election of India’s new Hindu nationalist BJP government led by Narendra Modi in 2014. This was followed by a first ever visit by an Israeli defence minister in 2015. The current prime ministers Benjamin Netanyahu of Israel and Modi of India met for the first time at a UN General Assembly in 2014 where they discussed economic, technological, and agricultural collaboration for the future, while Netanyahu expressed his concerns about a nuclear Iran and the spread of radical Islam throughout Middle East.[9] In 2017, Modi made a stand alone visit to Israel- the first ever by an Indian PM.

Just weeks before modi’s historic visit, Netanyahu’s cabined agreed on measures aimed at increasing Israel’s non-diamond exports to India by 25 percent while establishing a new 40 million USD joint innovation, research and development fund. In July this year Israel Aerospace Industries (IAI) signed an agreement with India’s KSU in July 2018, to operate Israeli Taxibot semi-robotic vehicles at India’s New Delhi and Mumbai airports. Taxibot is connected to planes which taxi the airplanes from the airport’s jet bridge without the use of the airplane’s main engines.[10]

Israel in recent years have taken a strategic decision aimed at strengthening economic relations with China, Japan and India. Major Indian software companies including TCS, Infosys, Tech Mahindra and Wipro have began to penetrate the Israeli market. During PM Modi’s visit in July 2017, the first meeting of the newly established India-Israel CEOs Forum took place.[11]

Defence cooperation: military equipment and technology

Defence cooperation forms one of the strongest aspects of the bilateral relations

India is the largest buyer of Israeli military equipment, while Israel is India’s largest customer after Russia.[12]

Israel produces some of the most sophisticated, cutting edge weapons systems in the world and India have been major buyers for a while now. India buys weapons systems for their armed forces, including navy and air force.

Since the 1990s, India purchased UAVs, drones, airborne early warning and control (AEW&C) radar systems, anti-tank missiles and many more weapons systems in deals worth billions of dollars. In 2007, the two nations signed a 2.5 billion DSD deal to develop an anti-aircraft weapons systems in India, and in 2009[13], Israel sold Barak 8 air defence systems to India for a staggering 1.1 billion USD. In 2011 Indian army bought more than 1000 units of Israeli X-95 assault rifle to use in counterinsurgency operation. In 2011 there were reports of a deal in which India were to purchase a large number of Israeli Spike anti-tank missiles, launchers, and related equipment worth nearly a billion dollars, from Israel’s Rafael Advanced Defense Systems;[14]. Although the old contract with Rafael was cancelled, India has recently been on the verge of signing a 500 million USD deal with Israel to buy 4500 Spike missiles in a government-to-government purchase which could be finalised any moment.[15]

Israel also provides India with military technologies, and strategies for count-terrorism, including offering assistance following the 2008 Mumbai attacks.[16]

 Shifting Israel-Palestine stance

In 2015, India abstained from voting against Israel at the UN human rights commission signalling a shift in its Israel-Palestine policy. However in 2017 it voted for an Arab-sponsored resolution that rejected the US recognition of Jerusalem as capital of Israel.

 Conclusion

Despite a recent setback taking place due to India having voted against the US recognition of Jerusalem as the capital of Israel, the bilateral relations between the two nations have been growing stronger since the arrival of Modi making way for a new era of collaboration. In early 2018, Saudi Arabia opened its airspace for the first time ever to a commercial flight to Israel with the inauguration of an Air India route between New Delhi and Jerusalem.[17]

It seems today that the history of advocacy for the Palestinian cause is gradually diminishing as India is growing in alliance with Israel in more areas of cooperation and assistance. While India racks up more arms deals and equips its military with more sophisticated weapons systems and technology, it will be interesting to see further developments especially in the field of defence and security cooperation and find out what their main objectives are.

 [1] http://www.atimes.com/india-israel-relations-obscurity-certainty/

[2] https://www.livemint.com/Politics/k4CBHr4bIzoZ0O6OBOXw1M/India-Israel-ties-A-timeline.html ; https://www.tau.ac.il/humanities/abraham/india-israel.pdf

[3] http://www.rubincenter.org/meria/2004/12/pant.pdf

[4] Aafreedi, Navras (2012). “The Impact of Domestic Politics on India’s Attitudes towards Israel and Jews”. In Singh, Priya; Susmita, Bhattacharya. Perspectives on West Asia: The Evolving Geopolitical Discourses. Shipra Publications. pp. 171–183. ISBN 9788175416376.

[5] Pant, Harsh V. 2004a. ‘India–Israel Partnership: Convergence and Constraints’, Middle East Review of International Affairs (MERIA), vol. 8, no. 4

[6] https://www.tau.ac.il/humanities/abraham/india-israel.pdf

[7] https://www.tau.ac.il/humanities/abraham/india-israel.pdf

[8] https://www.tau.ac.il/humanities/abraham/india-israel.pdf

[9] https://www.jewishvirtuallibrary.org/history-and-overview-of-india-israel-relations

[10] https://www.jewishvirtuallibrary.org/history-and-overview-of-india-israel-relations

[11] https://www.mea.gov.in/Portal/ForeignRelation/Unclassified_Bilateral_briefb.pdf

[12] https://www.reuters.com/article/us-airshow-india-israel/israeli-defense-minister-lands-at-india-airshow-to-boost-arms-sales-idUSKBN0LM0WL20150218

[13] “IAI signs $2.5 billion deal with India – Israel Business, Ynetnews”. Ynetnews.com.

[14] https://en.globes.co.il/en/article-1000633160 ; https://www.thehindubusinessline.com/news/world/india-to-buy-israelis-spike-missile-for-1-b/article9749112.ece

[15] https://www.hindustantimes.com/india-news/india-set-to-seal-500mn-deal-with-israel-to-buy-4-500-spike-missiles/story-wdT2IufrQ4ldybZFX76X5K.html

[16] Horovitz, David; Matthew Wagner (27 November 2008). “10 hostages reportedly freed from Mumbai Chabad House”. The Jerusalem Post.

[17] https://www.independent.co.uk/news/world/middle-east/saudi-arabia-israel-airspace-riyadh-tel-aviv-flight-air-india-iran-flight-times-airlines-a8269891.html

The Mughal Empire – Rise of Muslims Episode 5

Babur was twelve years old when he became king. He was descended from Tamerlane on his father’s side and from Genghis Khan on his mother’s. Immediately he had to fight for survival. Babur dreamt of glory; he would take Samarkand, the seat of his great ancestor Timur.

In 1497 at the age of fifteen Babur marched on Samarkand and seized the city. But then he was ousted, to discover that meanwhile he had lost his own beloved home at Fergana. His whole world had collapsed; he was now no king at all.

He had lost Samarkand and was driven into exile, admitting, ‘I was reduced to a sore state and wept much.’ Harassed by rebellion, opposed by his army, without a home and reduced to a low point in his fortunes, he would fight back, ‘One or two reverses could not make me sit down and do nothing.’

What are China’s Interests in Afghanistan?

The inexorable economic rise of China is producing political and strategic repercussions in all directions. One of the more interesting cases is China’s growing interest in Afghanistan, a country wracked by multiple conflicts and intermittently occupied by foreign powers for nearly forty years.

China and Afghanistan are immediate neighbours as they share a short 76 km border. The border point is distant from urban centres on both sides as it interfaces with the extremity of the Wakhan corridor on the Afghan side, and the outer edge of the Chalachigu Valley on the Chinese side.

The immediacy of Afghanistan’s geographic proximity to China makes the country hard to ignore. But in view of Afghanistan’s profile as an essentially failed state which has been in political and military turmoil for four decades, China can hardly afford to take its eyes of the place.

Add to that the fact that global powers, notably two superpowers in the form of the former Soviet Union and the United States, have maximally intervened in Afghan affairs (notably by occupying the country), then we can legitimately wonder as to why China hasn’t also forcefully intervened in Afghan affairs. Not yet anyway.

Welcome to KJ Vids. In this video we will examine the reasons behind China’s growing involvement in Afghanistan.

What is the full extent of Chinese involvement in Afghanistan?

China is reportedly building its first military base in Afghanistan. It is important to note that the Chinese government denies these claims and only admits to building a training camp in the Wakhan corridor to train Afghan forces. According to Chinese military sources, Beijing is helping Afghanistan set up a mountain brigade in the remote north-eastern corner of the country.

But even if we take these Chinese denials at face value, the fact that China admits to training Afghan forces is in and of itself of great political and strategic import. It speaks to growing Chinese influence in Kabul and signals that China wants to get involved in the military affairs of its volatile western neighbour.

Despite its massive economic clout, and projections that it will displace America as the world’s biggest economy as early as 2032, China hasn’t invested in a big political presence overseas. It may surprise many viewers that China has only one avowed military base overseas and that’s situated in Djibouti.

The newly opened base in Djibouti is designed to serve multiple military and economic functions but above all it is going to provide China with vital experience in how to exercise and manage power projection well beyond its borders. It is perhaps China’s first step toward projecting hard power at a global level, akin to how Western powers flex their muscles on the world stage.

The training camp in the Wakhan corridor (with or without Chinese troops) is clearly not about power projection on the world stage. For a start it borders china and is in close proximity to the restive Chinese region of Xinjiang. China faces serious unrest in this region as a result of continually repressing the region’s indigenous Muslim community known as the Uyghurs. In that context, the base in the remote north-eastern corner of Afghanistan is focussed on counter-terrorism operations and to that end it is potentially more concerned with Chinese security than Afghanistan’s. More on this later.

But beyond latest reports of Sino-Afghan military cooperation, just how involved is Beijing in Afghanistan? Well, for a start China maintains a relatively large embassy in Kabul, a reflection of the scope of its operations across the country. China has an abiding economic interest in Afghanistan, primarily not because the country is attractive economically, but because Afghanistan is central to two of China’s core regional economic ambitions.

These are the Belt and Road Initiative and the China-Pakistan Economic Corridor. China needs a measure of stability and security in Afghanistan in order to safeguard its massive regional investments, stretching from Pakistan to Central Asia. To that end, China began to step up its activities in Afghanistan from 2014 onwards.

At the economic level, Beijing is involved in the Afghan economy in multiple ways. First, China gives Afghanistan direct financial aid. Statistics vary but according to conservative estimates Beijing has given Kabul at least $410 million in direct aid since 2014.

Second, China has emerged as Afghanistan’s biggest foreign investor, focussing mostly on minerals and other natural resource extraction. China was also the first country to begin extracting oil from the Amu Darya basin in northern Afghanistan.

But not all Chinese investment projects have progressed according to plan, in part because of lack of security but equally because of the nature of Chinese overseas economic and commercial enterprise. Concerns about contractual issues and the general aggressive and single-minded approach of Chinese firms – often to the detriment of local workers’ rights – have ground some projects to a halt. The best example is the Mes Aynak concession (concerned with copper ore extraction) which was awarded to Chinese firms more than ten years ago but which has so far failed to even get off the ground.

At the political level, China stepped up its involvement in Afghanistan in late 2014 by trying to set up a “forum” to revive peace talks between the Afghan government and the Taliban. This was followed by other initiatives, notably in partnership with Pakistan. But China’s attempt at peace-making has been largely unsuccessful, reflecting two inescapable facts. Foremost, China lacks experience in foreign conflict resolution. Second, as an ally of Pakistan, China is not seen as an honest broker by the Afghan government.

But to fully understand the drivers of China’s involvement in Afghanistan and Beijing’s desired outcomes we must take account of geopolitics and specifically China’s competition with major global and regional powers in this arena. Let’s start with India.

Undermining India in Afghanistan

Despite its substantial investments in Afghanistan – and notwithstanding its role as a major donor to the Afghan government – it is important to note that China is not in the first tier of active states in the Afghan arena. That distinction goes to three countries, namely the United States, Pakistan and Iran.

China belongs to a second-tier group of countries that are vying for influence in Afghanistan. The other member states of this tier are India and Russia. Similar to China, the Indians have also stepped up their activities in Afghanistan, although not in the sharp manner as Beijing post-2014. By contrast, New Delhi has incrementally increased its activities in Afghanistan since the overthrow of the Taliban in late 2001.

India has to tread carefully in Afghanistan so as not to draw Pakistan’s wrath. The latter remains the single most influential player in Afghanistan and in view of broader Indo-Pakistan hostilities, any significant movement by New Delhi inside Afghanistan is likely to draw a fierce reaction from Islamabad.

The Indian embassy in Kabul was bombed twice, in 2008 and 2009 respectively, causing dozens of fatalities. The 2008 attack – which killed 58 people including an Indian brigadier general – was attributed to Pakistan’s notorious Inter-Services Intelligence agency by US intelligence officials.

Unlike Pakistan, China is not interested in taking “kinetic” action against Indian interests in Afghanistan. In fact, the two powers are known to cooprate on joint projects in Afghanistan, notably developing the new Afghan diplomatic corps.

Limited cooperation notwithstanding, China is clearly interested at containing Indian influence in Afghanistan as any increase of influence there positively impacts India’s standing in the broader Central Asia region. India is fast making inroads in Central Asia – and although it cannot displace the two biggest actors in that arena, namely China and Turkey – nevertheless Beijing is fearful of the potential political impact of New Delhi’s outreach to Central Asian states.

Keeping America in check

As we have seen in relation to India, the strategic impact of China’s involvement in Afghanistan primarily serves to augment the role and standing of a Chinese ally, notably Pakistan.

The same pattern can be observed in relation to China’s view of and approach towards the US presence in Afghanistan. In hard power terms – specifically in terms of the deployment of military forces and centrality to the counter-insurgency campaign against the Taliban and its allies – the US is the dominant foreign power in Afghanistan.

But a more nuanced appraisal of power and influence projection in Afghanistan cannot fail but to identify Pakistan and Iran as the true dominant foreign powers not least because they are Afghanistan’s immediate neighbours and will continue to compete for dominance long after the US has departed the arena.

In view of its broader rivalry with the US, notably in the South China Sea, the People’s Republic does not the want the US to succeed in any conflict arena, let alone not one with massive geopolitical importance, as demonstrated by the longstanding and multi-faceted Afghan conflict.

To that end, China’s strategic posture in Afghanistan complements the role and standing of another one of its allies, notably the Islamic Republic of Iran. But whilst Iran takes active measures against US and broader Western interests in Afghanistan – by for instance allegedly directly supporting the Taliban in military operations – China is content to limit its containment strategy to the political and diplomatic levels.

The domestic dimension

Finally, in assessing China’s role and influence in Afghanistan, it is important to take full stock of the domestic considerations informing Chinese strategy. As stated earlier, China has a counter-terrorism stake in the conflict as it fears infiltration by Uyghur and other militants from Afghanistan into China’s restive Xinjiang region.

Furthermore, the Islamic State group is active in Afghanistan and by definition this jihadist group is deeply opposed to the Chinese presence that country. More broadly, the Islamic State (or Daesh as its detractors call it) is incensed by China’s massive repression of Uyghurs and other Chinese Muslims, specifically in Xinjiang but also across China as a whole. China fears that the Islamic State group may try to conduct operations inside China and the Wakhan corridor would be the preferred infiltration point. This explains China’s military interest in the corridor.

But beyond jihadist groups, all the authentic Islamic currents in Afghanistan are appalled by China’s treatment of the Uyghurs. The Chinese have reportedly imprisoned up to one million Uyghur Muslims in so-called “counter-extremism centres” which amount to concentration camps.

If China wants to be successful in Afghanistan, and ultimately to play a stabilising role by reconciling the Afghan government with its opponents, then it must also properly address concerns about its treatment of Chinese Muslim minorities.             

 

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