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Monthly Archives: June 2018


Sydney Morning Herald, Latika Bourke, 30 June, 2018

“I think the British government has now woken up to the fact that the Chinese are not on our side on a number of issues,” [Lord] Howarth says.

John Hemmings, a close observer of China at the Westminster think tank the Henry Jackson Society, agrees.

“Despite Brexit, some aspects of UK government have quietly begun to shift into the new paradigm vis a vis a rising geopolitically ambitious China,” he says. “On the home front, they have begun to follow the lead of countries like the US, Germany and Australia in screening Chinese state-led investing into sensitive sectors of the economy.”

 

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Ambiguity the only certainty as the dust settles on the Singapore summit

http://www.eastasiaforum.org/2018/06/17/ambiguity-the-only-certainty-as-the-dust-settles-on-the-singapore-summit/

East Asia Forum, with James Amedeo, 17 June, 2018

Since the founding of the Democratic People’s Republic of Korea (DPRK) in 1948, no acting US president had met with a North Korean leader. Early on the morning of 12 June 2018 in Singapore, all that changed. In the historic meeting, US President Donald Trump and North Korean leader Kim Jong-un agreed to ‘establish new US–DPRK relations in accordance with the desire of the peoples of the two countries for peace and prosperity’.

This line from the joint statement Trump and Kim released after the Singapore summit is a small example of the document’s larger theme: ambiguity. The only substantial part of the joint statement is the two leaders’ agreement that dialogue between the United States and the DPRK will continue into the future.

If we compare the Singapore summit joint statement to previous US–DPRK agreements, it is closer in nature to the 2000 Joint Communique than to the 1994 Agreed Framework. The Agreed Framework involved concrete steps to denuclearise the Korean Peninsula. It stated that North Korea would switch from using graphite-moderated reactors (which use unenriched uranium as fuel) to using light-water reactors (which use water as fuel).

The Joint Communique and the Singapore summit document, on the other hand, use highly diplomatic language that avoids stipulating concrete steps to denuclearisation. The only specific policy outcomes of the 2000 Communique and the Singapore joint statement are about the recovery and return of US soldiers’ remains from the Korean War. This endeavour requires little effort from the North Koreans while providing a small political victory for the United States.

The main push of the Singapore agreement is North Korea’s continued commitment to complete nuclear disarmament of the Peninsula as agreed in the 2018 Panmunjom Declaration. That’s a win, particularly for South Korean President Moon Jae-in who promised this to South Koreans.

But there is little else to commend the document. There is no mention of North Korea’s human rights transgressions, which could become a major stumbling block to passing future DPRK-related policies in the US Congress. There is a hint at establishing diplomatic relations, but it’s not clear whether this is merely a commitment to better relations or a commitment to formal diplomatic relations. Will a peace treaty be on the table? Again, it is not clear.

Even though the joint statement itself is ambiguous, there may be more going on behind the ink. Trump announced after the summit that he will suspend US military exercises with South Korea. He also mentioned that he expects Kim to dismantle his nuclear arsenal ‘very quickly’.

But spoken agreements tend to carry little weight in comparison with written ones. Trump could take back his decision to suspend military exercises at a moment’s notice just as Kim could decide to restart his nuclear program. The important mission in the future is to secure a more conclusive written deal instead of these loose spoken commitments.

The joint statement allocates the responsibility for ‘follow-on negotiations’ to US Secretary of State Mike Pompeo and ‘a relevant high-level DPRK official’ — a rather oblique reference to North Korea’s diplomatic team.

The main question going forward is: how can Pompeo secure a deal of substance without the North Koreans walking away? In 1994 US diplomat Robert Gallucci, the head of the US delegation that was sent to negotiate the Agreed Framework, faced the same question. His answer was to find out what the Kim Jong-il regime wanted.

Kim Jong-il’s desires and his son’s desires are the same. In his 2018 New Year’s speech, Kim Jong-un acknowledged that the successful development of North Korea’s nuclear weapon program is complete and that it is time to shift to focussing on economic development. Pompeo should use this information to achieve a deal with North Korea. Lifting economic sanctions, providing aid or including North Korea in China’s Belt and Road Initiative are concessions that could fulfil Kim’s economic development desires.

In return, the United States must request the closing of nuclear reactors like the one in Yongbyon. Evidence suggests that the Yongbyon site was operational and producing plutonium for North Korea’s nuclear weapon program as recently as April 2018. The closing of this plant along with others like it will be key to entering a ‘nuclear freeze’, which may be a compromise on denuclearisation that Trump is willing to agree to.

Had somebody said in 2017 that Kim and Trump would someday shake hands they most likely would have been laughed out of the room. US–DPRK relations have come a long way from the use of inflammatory language like ‘dotards’, ‘red buttons’ and ‘rocket men’ — but that does not mean that the hard work is over. There are still major question marks going forward, particularly around the area of North Korea’s human rights record.

While the US–DPRK joint statement from the Singapore meet has little substance, it is significant that Trump and Kim agreed to continue negotiations. Going forward Pompeo’s goal will be to turn this ambiguity into concrete guidelines that can be monitored and followed.


It’s not just Rolls-Royce: China is stealing every technology that isn’t nailed down

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The Telegraph, 16 June, 2018

The arrest two days ago of a Rolls Royce engineer for allegedly spying on his employers on behalf of China did not shock many in aerospace. It’s no secret that China is attempting to develop an indigenous aerospace industry and will do everything it can to get its hand on modern Western-designed jet engines. Such is the complexity of these engines that they are virtually impossible to reverse-engineer.

But this story has become a bit of a motif of late. Nearly every week, we hear of another story of alleged hacking of corporate secrets by some Chinese entity – or, worse, resorting to outright robbery, as might have happened to Pelamis Wave Power, a Scottish alternative energy company that saw a Chinese start-up appear only months after its offices were burgled.

So what’s behind it all? What is driving these stories? Well, to some extent, China is a driver of its own success and a driver of its own reputation. Over the past two decades, China has been implementing policies that some say unfairly help its firms to acquire foreign technology, either at home in the Chinese market, or abroad, when they invest in overseas markets, including the British one.

Rather than developing indigenous technologies, they prefer to steal, beg or borrow those of others, leapfrogging up the technology ladder. And they don’t mind stooping to different means: China’s current domination of solar energy technologies is alleged to have come after Chinese hackers stole files on panel technology from Solar World America. The subsequent government support for Chinese firms to build solar panels at much cheaper prices than US and European firms put many Western solar power companies out of business.

Are these policies illegal according to the World Trade Organisation? Indeed, they are, but getting them to that stage takes political support from their own governments.

The Chinese government policy most associated with this issue is Made in China: 2025, which has been widely criticised by the US government, the German government, among many others. According to James Lewis, a technology expert at the Washington-based Center for Strategic and International Studies (CSIC), the policy seems to have three stages.

The first is to require foreign firms attempting to enter China’s market to hand over their intellectual property in critical sectors such as robotics, alternative energies, quantum, and new energy vehicles. The second is to provide government subsidies to Chinese firms to go out into the international market and sell these newly-acquired products for cheaper prices. The third is to dominate these sectors by driving out foreign competitors.

According to Peter Navarro, an economic advisor to Donald Trump, these sectors have a strategic implication for the future of Western security, as national governments look more and more to the high-tech sector for the next generation of military technologies.

The news this week that the European Council and European Parliament have passed investment screening mechanisms shows that Western governments are seeking to maintain a level playing field for their own firms and stopping buy-outs that either seem driven purely by the desire of China to gain intellectual property with military connotations. Germany passed legislation last year screening investment and the US has also tightened up its own Committee for Foreign Investment in the United States (CFIUS), making sure that Chinese firms cannot simply swoop in and buy high-tech firms and give their IP to Chinese competitors.

The May government is current considering a White Paper on investment-screening, having already tightened up the current Enterprise Act (2002) and broadened the remit of the Competition and Market Authority (CMA). Given China’s voracious appetite for British high-tech and the impact its theft has on British companies, this is a welcome and appropriate response. Britain is open for business, but in a fair way that gives all sides a level playing field.


Just Denuclearization? What Trump Really Wants from Kim

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ISPI, 11 June, 2018

As we approach the US-North Korea summit in Singapore, there is much speculation about the potential outcome. Will the US persuade North Korea to lay down its nuclear weapons programme? Will North Korea use the negotiations to incrementally secure resources and gains from the US side while keeping its trump card to the very end? Much speculation on the outcome has also centred around thetwo men’s personalities, since so much of what has been different this time around seems to stem from their personal choices. Certainly, President Trump’s personal involvement in the North Korea issue seems unprecedented and was a major factor in the back-and-forth of pre-summit diplomacy that we saw.

Despite this, the US national interests and strategic objectives under President Trump have been broadly consistent with past administrations. Despite North Korea’s accusations that Washington’s “hostile policy” has meant that it desires regime change, the fact is that few American administrations have openly sought regime change on the Peninsula, perhaps realizing that it is too large a can of worms, and has subsequent repercussions for North-South reunification, and could lead to tensions with China. Instead, the US objective from every president since Bill Clinton to Donald Trump has been to push North Korea to denuclearize and in returnto help it develop economically.

A testimony to this can be found in every letter sent to the North by various American presidents. According to a senior official at the time, President George W. Bush promised in his 2007 letter that the US would normalize relations completely with the North if they carried through their disarmament. In his letter – according to then-special envoy Stephen Bosworth – President Barak Obama asserted that “the United States is prepared to work with allies [and] partners in the region to offer…North Korea a different future”. In addition to the promises of economic aid, it is highly likely that all US presidential letters to North Korea have made security guarantees to the North; or at least guarantees of the survival of the regime.

In all this, Trump has been no different. But how is he different, and how does this affect the US negotiating style, its normal objectives, and its possible outcomes? If we deal with these one-by-one, we can see that his negotiating style, coming from his background as a real estate mogul, leaves much to be desired in among practitioners of classical diplomacy. It is a maximum pressure approach, which combines close personal relations with disruptive and sudden tactical changes, designed to off-balance his opponent. Despite its unpopularity among many European and American diplomats, the style has a certain resonance with Kim Jong-un, because of the centrality of the leader-as-negotiator. One might say that the historical antecedent for the upcoming meeting in Singapore was the Treaty of Tilsit, where two men – in history France’s Emperor Napoleon and Russia’s Tsar Alexander – meet one-on-one in a raft on a river and decide the fate of nations. The centrality of the leader in this position has not been a popular one in the history of liberal democracies – for obvious reasons.

So how will this affect the US normal objectives? In The Art of the Deal, Trump argues that thinking big is key, “I like thinking big. I always have. To me, it’s very simple: if you’re going to be thinking anyway, you might as well think big.” So, what does this mean? Does this mean that Trump is willing to throw normally-staid US positions to the wind? Is the US troop presence on the Korean peninsula a card? Does Taiwan play a part in persuading China to move behind his deal? Will he bargain away major pieces of the US position in Northeast Asia for the quick win? This is perhaps the most evident fear among both the US foreign policy establishment and among US allies and explains much of the back-and-forth shuttle diplomacy to Washington and Florida by US regional allies. The most famous example of a President nearly bargaining away the national security of his US allies must be that of President Reagan at Reykjavik, who nearly negotiated away US nuclear weapons with an enthusiastic Mikhail Gorbachev, with neither man really considering the fact that China would still be a nuclear weapons state.

If we must predict the outcome of US negotiations in Singapore, we must admit that they will be steered by US national interests – as interpreted by one man, Donald Trump. Obviously, he will have the support and expertise of his national security team, but he will ultimately decide on the US positioning. And the primary question will not be whether he goes for theeasy big win – that myth is dispelled by a reading of Art of the Deal which seeks the best deal – but whether he allows for the sort of long-term incremental disarming process that North Korea will undoubtedly request. The longer North Korea has weapons, the better its chances of survival are, and the better its negotiating leverage. And that does not sound like “thinking big”. To President Trump, that will sound like “thinking small”. And then where will we be?

And the answer to that, will come on June 12th.


Chinese strategy in full force in Australia

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Sydney Morning Herald, with Dr Andrew Foxall, 3 June, 2018

Don’t be fooled by last week’s China Zhejiang–Australia Trade and Investment Symposium in Sydney. For all the positive spin put on the event, Canberra is increasingly wary of the influence Beijing reaps from its investments.

But China’s influence doesn’t flow solely from this. It uses a combination of diplomatic and political pressure, manipulation of its diaspora, illicit financing of political parties, and propaganda. According to some, Beijing spends up to US$10 billion ($13 billion) a year on its overseas operations. If this sounds familiar, it is because these are tactics taken straight from the KGB playbook Russia has followed for well over a decade.

Russia’s aim has been to portray itself as a great power on the world stage. Its tactics are often crude and short-term. China’s, by contrast, are slow-burning and systemic. Beijing’s ultimate ambition is to create a Sino-centric regional order, based around tianxia – an imperial concept that puts China at the centre of nations. This strategy is in full force in Australia.

The effects are striking. Former Labor foreign affairs minister and one-time NSW premier Bob Carr is facing demands that he be expelled from the party because of his deep links to China; he directs a think tank founded with a donation from a Chinese billionaire with close Communist Party links and is alleged to have enlisted Labor senator Kristina Keneally to use estimate hearings to ask pro-China questions. Last December, Sam Dastyari resigned from the party over his dealings with a Chinese billionaire.

Other opportunities to exert influence abound. China is Australia’s biggest export market, and Beijing is currently hampering imports of Australian wine and delaying a big meat-export deal. One-third of all foreign students at Australian universities are Chinese, and the families of Chinese students who have criticised their country while studying here have received warnings. China is now using lawfare and illegal occupation of the South China Sea in order to exert pressure on Australia and other countries who depend on its sea lanes.

Speaking last year, Malcolm Turnbull said that “our system as a whole had not grasped the nature and magnitude of the threat”. He was talking about the Chinese threat in Australia, but he could just as easily have been talking about the West as a whole.

In New Zealand, Jian Yang, a Chinese-born sitting MP, was investigated last year by the national intelligence agency in connection with the decade he spent teaching in military and intelligence academies in China – a fact missing from his CV. In Britain, China has developed arrangements with two major British newspapers, The Daily Telegraph and the Daily Mail, and pressured Cambridge University Press into censorship. Elsewhere, it has leant on a number of Western capitals to conform to its view of Taiwan as a province of China.

On the face of it, the threats posed by Beijing should be manageable; each relates to a particular issue that falls under the responsibility of a particular ministry of government. In reality, however, they are difficult to deal with. For the Communist Party, there is no distinction between its business executives, spies, police chiefs, media stars, crime bosses and its politicians. The same people play multiple roles. Everyone, ultimately, is on the same team. The similarities between China and Russia are obvious.

In a report released last week by The Henry Jackson Society, a London think tank, Robert Seely, a British Conservative MP, argues that the Kremlin is waging a “new kind of conflict … in which military and non-military tools are combined in a dynamic, efficient, and integrated way to achieve political aims”. In this conflict, Russia “makes use of at least 50 tools of state power”, ranging from assassinations and blackmail to cyberattacks and disinformation.

Although Seely calls this “contemporary Russian conflict”, he notes that the tools are also being used by other authoritarian states – including China.

Highlighting the threat is a start; the real question is how to deal with it. Unlike elsewhere, the debate about Chinese influence is at full blast in Australia. Duncan Lewis, the head of ASIO, recently told lawmakers in Canberra: “Hostile foreign spies are currently conducting harmful activity … on an unprecedented scale.” In response, Canberra is mulling tough counter-measures, which would require anyone acting on behalf of a foreign state to publically register their activities – akin to the Foreign Agents Registration Act in the US.

But, as Seely’s report makes clear, the questions raised by the behaviour of China and Russia are much broader. They relate to how Western states collectively defend themselves in an age when authoritarian states turn the freedoms of open societies against those same societies.

China is playing a game of divide-and-rule between Western countries as well as inside Australia. Its aim is to weaken individual countries – and, in doing so, make them vulnerable to Beijing’s influence. But as a member of the Five Eyes intelligence-sharing alliance and a NATO partner, Australia should remember that it has powerful friends.

Jeremy S. Maxie

Energy & Political Risk Consultant

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