Courcy's Intelligence Brief - 6 March 2013

Items

  • China’s dangerous myopia

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    Our growing worry about China is less that it is the coming superpower, employing unmatchable Machiavellian statecraft to become the dominant power of the 21st century; it is more that China’s current rulers are making a very poor job of calculating where the best interests of China lie.  Over the past year we have chronicled carefully the self-defeating policies being followed by China in the East and South China seas.  The point we want to emphasize this week is that the dangers associated with China’s misplaced policy of increasing tensions in the east are due to be compounded over the near-to-medium term by increasing dangers in the west, – particularly after the West’s withdrawal from Afghanistan in 2014.  It seems extraordinary that China is continuing to fuel tension in the east when a crisis is brewing, unbidden, in the west.

    It has been clear for some time that a crisis is developing in Central Asia, where the ex-Soviet republics of Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, and Turkmenistan are all facing, in varying degrees of magnitude, potential catastrophe as their Soviet-era human and physical infrastructure disintegrates.  Three of these states border China.

    In a powerful report issued in 2011, which we highlighted at the time, the International Crisis Group (ICG) noted: “Quietly but steadily Central Asia’s basic human and physical infrastructure – the roads, power plants, hospitals and schools, and the last generation of Soviet-trained specialists who have kept all this running – is disappearing.  The equipment is wearing out, the personnel retiring or dying.”  The ICG concluded that the two worst-affected countries, Tajikistan and Kyrgyzstan, faced “catastrophic systemic collapse” and that Uzbekistan and Turkmenistan were “heading in the same direction”.  In a more recent report on Central Asia, the ICG has evocatively referred to “a regional downturn in stability due to the rotting from within of some of its states and spillover from Afghanistan”.

    China, it is true, has invested large sums in Central Asia in an attempt to stabilize the region.  Trade with the region has grown from just over $500m in 1992 to around $30bn.  There have been large investments in energy in Kazakhstan, Turkmenistan, and Uzbekistan and significant loans to Kyrgyzstan and Tajikistan, where China has supported important infrastructure projects.  But the danger is that China’s economic commitments will prove insufficient to secure stability in the light of the long post-Soviet neglect and the destabilizing effects of Nato’s 2014 pullout from Afghanistan.

    Furthermore, by backing the existing corrupt and unpopular local elites, and because much of China’s investment is seen to be a self-serving grab for natural resources, often environmentally degrading and involving corruption and bad labour practices, China is at risk of being associated with the problem not the solution – or at least not the solution that is being propounded by the Islamist opposition forces, which are the forces most likely to be boosted by the Western retreat from Afghanistan.

    The possibility of an ‘Arab Spring’ style domino effect in Central Asia is hardly less of a worry for China, particularly as there are influential sections of China’s policymaking elite who view the Arab Spring as part of a US-conceived conspiracy to spread democracy and to undermine CPC rule in China.

    China wants to maintain the status quo in Central Asia, but the status quo is not viable – and the problem for China is that instability in Central Asia cannot be quarantined.  It is bound to leak into China’s restive Muslim province of Xinjiang, where Uighur separatist groups such as the East Turkestan Islamic Movement (Etim) will feed off any post-2014 jihadist resurgence in Afghanistan and Central Asia.

    The early 1990s provides a warning to China.  The collapse of the Soviet Union, the Afghan war, and the rise of political Islam all fed into the outbreak of civil war in Tajikistan in 1992 and the unrest that spread to Xinjiang between 1989 and 1993.  An important additional consideration is that it is two Central Asian countries that border China, Kyrgyzstan and Tajikistan, that are seen to be most vulnerable to a post-2014 jihadist resurgence.

    For the time being China remains insistent that it would never contemplate military intervention in Central Asia, but well-placed sources believe that this total commitment to non-intervention is eroding and may not stand up to the demands of unpredictable events.  A widespread threat to Chinese citizens or a threat to the 1,800km gas pipeline linking Turkmenistan and Xinjiang could provoke a rethink, which in turn could provoke a crisis with Russia.  Despite their ostensible partnership in Central Asia through the SCO, Russia and China are rivals in the region between whom there is a low level of trust.  The choices that are looming for China in Central Asia will be stark ones.

    Meanwhile, in the east…

    But while this crisis is brewing on China’s western borders, Beijing is continuing to pursue policies in the east that add to regional instability.

    In last week’s issue we reported on how Japan is seeking to shore up crucial alliances as China continues with its belligerence in the East and South China seas.  This need has been reinforced by news that China is to increase its official defence budget by 10.7% in 2013, the third straight year of double-digit increases.  A key objective for Japan is to improve relations with South Korea despite the difficult historical baggage and their continuing dispute over the Liancourt Rocks (controlled by South Korea, which knows them as the Dokdo Islands, and claimed by Japan as the Takeshima Islands).

    Japan has been making overtures to South Korea’s new president, Park Geun-hye, with Japan’s Prime Minister Shinzo Abe saying that he considers good Japan-South Korea ties as “of primary importance for the stability of East Asia”.  The US is equally keen for a smoothing of relations between Japan and South Korea.

    And China continues to make Japan’s case for it.  On 3 March, for instance, South Korean defence sources let it be known that Chinese warships have been regularly patrolling within the South Korean navy’s “area of operations”(AO) in the Yellow Sea without prior notification.  Military sources say that Chinese destroyers and escort vehicles have been entering the Korea Air Defence Identification Zone (Kadiz) “once or twice a week”.  The Kadiz was designated by the US in 1951 in order to prevent clashes in air space around the Korean Peninsula.  These recent Chinese transgressions suggest that China no longer recognizes any restrictions or special protocol in the AO.

    Commenting on this development, South Korea’s Yonhap news agency noted: “The Asian giant’s latest military move sparked concern over the South Korean Navy’s lack of capacity to handle long-range missions, with its role mostly limited in defence against North Korea.”

    Last month, South Korea’s Admiral Choi Yon-hee said that the navy will push to deploy two more naval task forces over the next 20 years in response to the increasing threats.

    Japan’s Foreign Minister Fumio Kishida commented on 5 March, in response to the news of China’s double-digit defence budget increase, that Japan “intends to continue watching China’s defence policy and its military strength closely”.  China, for its part, claims implausibly that its increased defence spending is contributing to regional stability.  On 4 March, a spokesman for the 12th National People’s Congress (NPC), Fu Ying, told a press conference: “China’s peaceful foreign policies and its defensive military policies are conducive to the security and peace of Asia.  It’s not good news to the world that a country as large as China is unable to protect itself.”  On the other hand, of course, China has taken an entirely negative view of Japan’s first increase in defence spending for 11 years.

    So, in summary, we have the highly perplexing sight of China continuing to feed tensions in the east just when a potentially catastrophic security crisis is germinating to its west, and all at a time of leadership transition when internal contradictions could well begin to build again.

    On the domestic front, there has been nothing in new leader Xi Jinping’s first days as party leader that has suggested he has either the appetite or capacity to be a reformer.  He may have talked about imposing “enhanced restraint and supervision” on the use of power, but he has also imposed new restraints on internet usage and he has warned against making the mistakes made by the USSR’s communist rulers.  In a speech for internal CPC consumption made in December, he warned: “The key is what to reform and what not to reform.  There are things we have not changed, things we cannot change, and things we will not change no matter how much time passes.”

    The prospect, then, is for more of the same, at home and abroad, from Beijing.  And while there may be no reason to doubt that the US and its allies can protect their interests in the East and South China seas from Chinese bullying, Beijing’s recent decision-making track record must be a concern.  As the difficulties accumulate (as they are set to do), this track record does not inspire confidence that Beijing will make the right choices.  JdeC.

  • Venezuela after Chavez

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    Following the death of Venezuela’s President Hugo Chavez on 5 March, elections will be called within 30 days.  Chavez’s personally appointed heir, Vice-President Nicolas Maduro will win.  The key points are:

    -Maduro’s win should ensure the continuation of the radical left-wing administration until 2018.

    - Neighbouring Brazil and Colombia will push Maduro to moderate policy and to move towards a more digestible social democracy.  However, this would be to go against the increased radicalization envisaged by Chavez in his government plan for 2013-19 – and Maduro is a strong believer in the Bolivarian Revolution, as he is in the Cuban revolution.

    - Maduro’s problem is that he lacks Chavez’s charisma and will, as a result, find it harder to gloss over Venezuela’s economic and social problems.

    - Ramping up oil production will be essential to Maduro’s success and this may include deeper Chinese engagement.  China is already heavily invested in the Orinoco oil belt

    - Those with a vested interest in the crony capitalism of the Bolivarian Revolution (including some sections of the military) are interested primarily in perpetrating their power, and should Maduro show signs of failing the most likely beneficiary will be the president of the national assembly, Diosdado Cabello, who was Chavez’s deputy in the ruling party.  Cabello will be the one to watch if Maduro falters.

  • Differing interpretations of Iranian talks

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    In the latest nuclear talks with Iran, which ended in Kazakhstan’s capital Almaty on 27 February, the Western powers demanded as before that Iran cease enriching uranium to 20% and that it give up its existing stockpiles.  In return for progress towards these goals, they promised to enable Iran to participate once again in the international gold trade and that some other sanctions would be lifted.  The talks ended with an agreement to resume in early April.  One doveish interpretation of Iran’s response is alarming Israel.

    Israel’s own response has been predictably negative.  On 3 March, Israel’s Prime Minister Binyamin Netanyahu said: “I was briefed over the weekend on the major powers’ talks with Iran on the nuclear issue.  The American representative briefed National Security Adviser Yaakov Amidor on these talks.  My impression from these talks is that the only thing that was achieved was to stall for time which Iran intends to continue enriching nuclear material for an atomic bomb, and it is indeed continuing towards this goal.”  The following day, Netanyahu told the American Israel Public Affairs Committee (Aipac) by video link: “Words alone will not stop Iran.  Sanctions alone will not stop Iran.  Sanctions must be coupled with a clear and credible military threat if diplomacy and sanctions fail.”

    Netanyahu will have been encouraged that US Vice-President Joseph Biden also supported the possibility of military action when he told Aipac: “We are not looking for war. We are looking to and are ready to negotiate peacefully, but all options, including military force, are on the table.”

    Biden added, however, that the important thing is to exhaust all other options before resorting to military action, and Netanyahu, we are told, is now resigned to having to wait at least until the completion of the next round of talks.  However, he will be on high alert for any signs that Western prevarication could go beyond that, and he will be alarmed by one interpretation that has gained some momentum in Europe.  It is being said that the widespread presentation in Iran of the Almaty talks as a success may be intended to prepare the population for an eventual compromise deal.

    To support this contention, it is pointed out that senior Iranian officials were quick to call the talks “positive” and to say that the West was moving from a strategy of “pressure and negotiation” to one of “negotiation and cooperation”.  On 1 March, Foreign Minister Ali Akbar Salehi went as far as to say “the nuclear issue will be solved in the foreseeable future”, and a similar positive spin was put on the talks at Friday prayers by Imams who are known to be close to supreme leader Ayatollah Ali Khamenei – and he is the one who will make the final decision.

    This is no doubt all true, but where Israel would differ is in making the considerable jump to assuming that this means that Iran is preparing the population for compromise.  For those who have made that jump, this is another argument to support the idea that nothing should be done ahead of Iran’s presidential election in June.  For Israel, on the other hand, Iran’s tactics are all about gaining time and getting its nuclear programme beyond the point at which it can be stopped or seriously delayed by Israeli military action.

  • Risk pointers

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    *** A Saudi reaction to Iran nuclear talks.  The Saudi Arabian daily al-Watan responded sceptically on 28 February to the ostensibly positive outcome of the latest round of nuclear talks between Iran and the UN Security Council five permanent members plus Germany (P5+1).  The Saudi daily said that the relatively soft tone emanating from the Western powers shows that “the Western camp in the 5+1 group is facing a genuine dilemma regarding this dossier and does not want to stir matters up at this particular point in time”.

    The paper then went on to warn: “The 5+1 group’s clear failure to adopt a united position on the Iranian nuclear file, which is a threat to the entire region, reflects the entire international community’s failure to maintain peace and prevent the proliferation of banned weapons.”

    And, for good measure, it added: “The region’s issues cannot be separated from one another.  They are largely interconnected.  It simply makes no sense to separate Tehran’s nuclear programme from Iran’s clear backing for the Syrian regime and its support and financing of Lebanese Hezbollah as well as other sectarian currents and groups in Iraq.”

    *** North Korean grain imports from China dive.  According to data from the Korea International Trade Association, the volume of grain imported from China by North Korea plummeted in January.  During January, North Korea imported 2,174 tons of grain.  This was just 9.2% of the total imported in December.  The figure of 2 tons of fertilizer imported in January was 20% of the December figure.

    Kwon Tae-jin, a researcher at the Korea Rural Economic Institute said: “The biggest reason is because China has recently begun to restrict grain exports to meet growing domestic demand.”  However, he added that bilateral tension caused by the North’s rocket launch and nuclear test over the past months “may also have affected the two-way grain trade”.

    *** More Chinese incursions into Japanese waters.  On 6 March, two Chinese fishery surveillance vessels sailed into Japan’s territorial waters around the disputed Senkaku/Diaoyu Islands.  This marked the 32nd incursion into Japanese waters by Chinese ships since September, when the Japanese government bought a number of Senkaku Islands from a private owner.

    According to Japan’s coastguard, three other Chinese vessels were seen in contiguous waters, and when warned not to enter Japanese waters they responded by saying that the waters were part of Chinese sovereign territory.