Weekly Overview
Estimated Reading Time: 4 mins, 58 sec.
Unreliable E.U.
E.U. and China completed negotiations of the Comprehensive Agreement on Investment [CAI].
It is yet to be ratified by the E.U. parliament.
But we can already comment on general principles.
It is not necessary to delve into extreme particulars of the deal.
I doubt China will abide by most of the finer nuances anyways [if history is any guide].
Suffice it to say, E.U. believes it has secured generally favorable terms.
Like elimination of quantitative restrictions, equity caps or joint venture requirements for E.U. businesses [notably in automotive and financial services too] in a number of sectors.
+ end to forceful transfer of IP sensitive tech to joint venture partners [yeah we shall see about that].
But that is not our main concern here.
The main issue is this: E.U. did not consult with the U.S.
I am not even talking about the outgoing Trump administration.
They could have waited a few more weeks for the Biden admin to take over.
Now, granted E.U. could counter-argue that Merkel said early in 2020 that she hoped to complete the deal by the end of the year.
But why? is that arbitrary deadline that much more important than waiting few more weeks to coordinate with an ally?
Especially when the incoming National Security Adviser, Jake Sullivan did explicitly ask for precisely that…
So after being openly reminded about the importance of coordination with the U.S. they chose not to wait.
Why?
Because E.U. is signaling that it no longer wants to be a junior partner in this relationship.
That they furthermore do not want to partake in the upcoming cold war 2.0 with China.
Benefiting from the U.S. institutions and protections, E.U. proved to be an unreliable partner.
By revealing their hand, they have also lost a lot of leverage over China.
China is now sure [if previously it was merely suspecting] that E.U. does not want to become an active participant in the upcoming U.S./China showdown.
This will of course reinforce Chinese belligerence, and further validate its assertive foreign policy.
So in effect, E.U. not only damaged its own hand, but had also indirectly decreased America’s leverage over China.
Of course E.U. tried to rationalize it all away with their own allegedly realpolitik arguments.
That supposedly, this deal will strengthen E.U.’s soft power over China.
That it can now seek Chinese commitments for reforms in human rights etc with more leverage.
All that is of course a total nonsense.
Just days after the announcement of the finalized deal, China jailed 50 pro-democracy activists in Hong Kong.
Timing of this incident was crucial.
China was sending a message to the EU: nothing has changed. You cannot expect changes in my domestic policy. If you insist on them, you will still fail, and only demonstrate your own impotence.
Of course, even before this incident, Chinese reluctance to commit to actual reforms [that were sought by the E.U. only on the surface level] highlights this point further.
E.U. wanted to [or so it claims] get China to sign up to the International Labour Organization’s convention prohibiting forced labour.
China did not sign up.
Instead, it merely agreed to make “continued and sustained efforts” to ratify the relevant ILO conventions.
yeah right…
What is the probability that China would follow through?
Is it more or less likely than a 500 pound morbidly obese individual’s new year resolution of ‘‘continued and sustained efforts’’ to not consume 5 lbs of cheese cake per day?
In diplomatic language ‘‘continued and sustained efforts’’ is a polite way of saying FU.
‘‘continued and sustained efforts’’ would presumably not be a satisfactory standard if it were to apply to terms that actually were important for the E.U.
They would presumably [or hopefully] not accept that standard in regards to forced tech transfers.
So why accept it here?
Because clearly, E.U. is paying a lip service to this issue.
And no, let’s not automatically equate a lack of idealism with practice of realpolitik.
In tandem with the U.S., a lot more could have been achieved.
Forced labour/Uyghur issue is actually a very strong realpolitik leverage point against China.
If China gave way on this issue, [amongst other things] this would have:
1) increased self-confidence in regional U.S. allies, seeing that China can be forced to cave in,
2) Lowered CCP leadership’s estimate of Xi Jinping - damaging his authoritative charisma, and potentially providing an opening for another assertive leader to rise up - causing infighting and instability in the CCP leadership ,
3) Increased morale of Uighur people - potentially encouraging them to seek more political rights - thus further weakening central state grip over western China,
4) Resuscitated pro-democracy movement in Hong Kong - by giving those activists some hope that China can indeed backtrack. That all is not lost,
5) Signaled to Putin that China is not as steadfast as it seemed - this would then encourage him to diversify his foreign policy options, potentially encouraging him to ease tensions with the U.S.
Instead, E.U. decided to grab what it can.
Poor vision, little ambition.
Unreliable ally.
Good luck with that deal and Chinese promises.
China has consistently violated both bilateral and multilateral trade agreements.
In fact, just a month before completing this deal with the E.U., China applied draconian tariffs on Australian wine - in clear violation of the free trade agreement with Australia.
Pompeo’s final strike
U.S. is lifting long-standing diplomatic restrictions on contacts between American and Taiwanese officials.
Pompeo’s labeling of these previous restrictions is fascinating:
‘‘The United States government took these actions unilaterally, in an attempt to appease the Communist regime in Beijing. No more."
an attempt to appease
Of course, the natural questions is, ‘‘what took you so long to stop the appeasement?’’
Nevertheless, this is a great move, and labeling it as appeasement will bind the new administration to these changes as well.
Since no one would want to go back to being an appeaser.
So far so good. Pompeo is leaving a strong legacy.
Thereafter, he adds the following:
‘’Our two democracies share common values of individual freedom, the rule of law, and a respect for human dignity. Today’s statement recognizes that the U.S.-Taiwan relationship need not, and should not, be shackled by self-imposed restrictions of our permanent bureaucracy."
permanent bureaucracy!
Obviously, no one for a second believes that such an important policy on a highly sensitive issue was only in place due to bureaucratic impediments.
This was added solely as a face saving measure for China.
That supposedly, nothing in substance has changed.
And if nothing substantively has changed, then this should not be interpreted as even a slight deviation from the one China policy.
Clearly, a lot of things have changed. But it is smart to be diplomatic and ease China into a non-confrontational adjustment to new realities.
Pompeo concludes with an explicit gesture towards China:
‘‘The United States government maintains relationships with unofficial partners around the world, and Taiwan is no exception’’
Reiterating Taiwan’s lack of official recognition by calling it an unofficial partner, was not ideal however.
Previous face saving implicit statement was sufficient.
There was no need to go further.
This statement consequently hinders America’s ability be too flexible in regards to Taiwan - since it is once again repeated that Taiwan is not formally recognized.
Overall grade: A . Could have been A+ without that last statement.
How could we have rephrased that last bit for a stronger effect?
Here is how ‘‘ The United States maintains relationships with partners all around the world, regardless of their current status, and Taiwan is no exception’’.
Using the term current status, would have given a nod to China whilst maintaining a veiled threat - that the status in question is current only - implication being that it can always change…
Iranian diplomacy - a gift that keeps on giving
Iran seized a South Korean vessel as a hostage for its $7bn stuck in South Korean banks [due to U.S. sanctions].
Iranian government spokesperson, Ali Rabiei, denied taking the SK tanker as a hostage, and added the following gem: “But even if there is any hostage taking, it is done by the Korean government….It has seized more than $7bn of our money under baseless excuses and does not even let us use it for goods which are not apparently subject to sanctions at a difficult time for our people when imports . . . of medicine are very important.”
but even if there is any hostage taking..
Translation: we most definitely did take it as a hostage.
Part of America’s wider asset freezing sanctions was to pit Iran against more countries and not just the U.S.
To get it thoroughly isolated by the international community.
It works - partly due to Iranian amateurish diplomacy.
Lashing out in every direction...
Instead, they could have rallied global public opinion positioning themselves as a victim - oh look we need money for Covid. Tell the world domineering America to unfreeze our money! people are dying!
Naturally, this campaign would require approximately 10% more IQ capacity.
For its part, South Korea must not yield to this pressure.
Doing that would create a terrible precedent - not only would this encourage Iranian repetition of these tricks, but North Korea would also become bolder in poking its southern neighbor.