The BRICS Development Bank: The Future of South-South Cooperation?

Conclusion of the BRICS Summit in South Africa.

The BRICS countries (Brazil, Russia, India, China, and South Africa) announced their intention to fund a new development bank to challenge what they perceive as the Western-dominated agenda of the international financial institutions (IFIs). The move, which came about two weeks ago, has generated considerable discussion both of the charges leveled by the BRICS against the IFIs and about the role of the BRICS in global politics more generally.

The BRICS’s new development bank would be funded through an initial donation from each of the five countries, though considerable debate over what precisely the new bank will do. And therein lies the fundamental problem. The idea of South-South cooperation, that is, the exchange of resources, knowledge, and technology between developing countries, has been popular since the 1970s. Its proponents argued that South-South cooperation could reduce developing countries dependence on the developed world and could lead to a shift in the international balance of power away from the first world. But little real progress has been made.

And that precisely is the issue. As the al Jazeera article announcing the BRICS development bank noted, “Disputes remain over what the new bank will do, with all sides trying to mould the institution to their own foreign or domestic policy goals, and with each looking for assurances of an equitable return on their initial investment.”

Collectively, the BRICS countries represent approximately for one-quarter of global economic activity and are home to about 40 percent of the world’s population. And yet their interests are often at odds, reflecting the diversity of their political and economic experiences. Blogging at Project Syndicate, political economist Dani Rodrick argues that, “just about the only thing these countries have in common is that they are the only economies ranked among world’s 15 largest that are not members of the OECD.” Rodrick notes that in the structures of their economies (Russia and Brazil depend on commodity exports, India on Services, and China on manufacturing), their political systems (Brazil and China are democracies, China and Russia are not), and on their global position (China is rising while Russia is a superpower in decline), the BRICS have little in common.

Further, apart from the development bank proposal (which still lacks any real details), the BRICS have failed to articulate a coherent global policy in any real sense. Rodrick argues that the  BRICS have played “a rather unimaginative and timid role” in global politics, while  Joseph Nye notes that the diversity (indeed, the rivalry) between the BRICS countries undermine their potential to work together to develop a coherent challenge to the existing global political and economic infrastructure.

What do you think? Does the BRICS bank represent a challenge to the international financial institutions? Can Brazil, Russia, India, China, and South Africa present a new impetus for South-South cooperation? Or do the stark differences between the countries undermine the potential for effective cooperation? Take the poll or leave a comment below and let us know what you think.

North Korea’s Nuclear Test

South Korean Television covers the North Korean Nuclear Test

On Monday North Korea tested a nuclear device, prompting sharp criticism from the Obama administration and provoking renewed discussions of expanded sanctions in the United Nations Security Council. The Central Intelligence Agency reported that Monday’s test was more powerful than previous nuclear tests conducted by the North Korean government in 2006 and 2009.

The test, conducted in direct violation of UN Security Council resolutions, led North Korea’s closest ally, the People’s Republic of China, to summon the North Korean ambassador in protest. The North Korean government defended its action as an act of self-defense necessitated by “U.S. hostility,” and promised to continue its efforts if necessary. According to the United States and its allies, North Korea is operating in violation of its obligations under the nuclear Non-Proliferation Treaty, or NPT.

What does the NPT actually do? The nuclear Non-Proliferation Treaty spells out the obligations of signatory states under three separate areas. First, non-nuclear weapons states agree not to pursue the development or deployment of nuclear weapons. Second, recognized nuclear weapons states (under the NPT, these are China, France, Russia, the United Kingdom, and the United States, who coincidently are also the five permanent members of the UN Security Council) agree to undertake efforts towards total nuclear disarmament. Finally, the right of all states to the peaceful use of nuclear power is guaranteed.  However, there are several nuclear weapons states which are not party to the treaty. India, Israel, and Pakistan—all of which are believed to possess nuclear weapons—are non-signatories and thus fall outside the obligations of the treaty. North Korea was a signatory but formally withdrew from the agreement in 2003. Iran remains a signatory to the treaty but is believed to be developing nuclear weapons in violation of its treaty obligations. South Africa developed nuclear weapons in the 1980s but decommissioned its nuclear stockpiles in the early 1990s, making it the only state ever to voluntarily decommission an existing nuclear weapons capability.

So is North Korea in violation of its obligations? The answer depends on who you ask. The United States’ position (generally supported by the international community) is that North Korea’s nuclear program violations its international obligations. North Korea, however, regularly asserts that it withdrew from the NPT and can therefore pursue a nuclear program in its self-defense.

This, of course, raises the broader question about the effectiveness of nuclear weapons as a deterrence. The doctrine of mutually assured destruction, popularized during the Cold War, suggests that the threat of total destruction associated with the use of nuclear weapons by two nuclear weapons powers renders the use of those weapons unfeasible, as no winning strategy could result. The use of nuclear weapons is essentially self-defeating. But the threat posed by possessing nuclear weapons—indeed, the prestige of nuclear weapons—is a powerful motivator for states to pursue such weapons, often even in the face of high social and political costs, as the cases of Iran and North Korea attest.

What do you think? Does North Korea’s nuclear program present a threat to the United States? Is North Korean nuclear policy best explained as a rational pursuit of the national interest? And how does international law help us understand the debate surrounding the North Korean nuclear program? Take the poll or leave a comment and let us know what you think.

Pollution and Development in Beijing

Sunrise over Beijing’s polluted skyline.

Air pollution in the Chinese capital Beijing reached levels deemed hazardous to human health over the weekend. According to World Health organization guidelines, air is “unhealthy” when the tiniest particles (PM 2.5) reach 100 micrograms per cubic meter. Individuals are usually warned to remain indoors when they reach 300 micrograms. Unofficial readings from the U.S. embassy recorded levels over more than 800 micrograms per cubic meter. Inhaling such particles can cause respiratory infections and increase the likelihood of developing lung cancer and heart disease.

Pollution in Beijing and other Chinese cities is primarily the result of the country’s rapid economic development. In Beijing, air pollution is derived from two primary sources: car exhaust and coal dust.

The environmental Kuznets curve helps to make sense of this relationship. According to curve, there is a relationship between environmental quality and economic development. As countries industrialize, environmental degradation (pollution, etc.) tends to increase until the country reaches a particularly level of development, at which point it begins to fall. The theory is that a “clean environment” is a post-material demand. Individuals living in deep poverty place a clean environment relatively low on their list of priorities, which generally focus on more immediate survival concerns. However, once those survival needs are satisfied, individuals begin to demand other rights. This theory has been advanced to explain everything from environmentalism to democratization and minority rights.

In the case of the environment, there is clear data that suggest that—for many contaminants—the curve holds true. Interestingly, the tipping point, the level of economic development at which pollution begins to decline, appears to vary by pollutant. Lead, for example, begins to decline at a relatively low level of economic development, while air pollution (particulates) decline at a higher level. For others—most notably carbon dioxide emissions—there appears to be no decline, and levels of CO2 emissions continue to increase in step with the size of the economy at all levels of development.

The environmental Kuznets curve raises some interesting questions for sustainable development. If correct (and the theory is itself contested), it suggests that sustainable development is really about transitioning countries from a relatively low point on the curve to a higher point. Once at that higher point, the level of economic development would result in local incentives and demands for a cleaner environment. But the lack of relationship between the level of development and levels of certain pollutants, such as greenhouse gasses, are reason for concern.

What do you think? Does China’s economic development raise environmental concerns? How might Chinese development be made greener? Take the poll or leave a comment below and let us know your thoughts.

A Look Forward in the Global Economy

Beijing, the World’s 10th Most Polluted City.

The Organization for Economic Cooperation and Development released some interesting data yesterday, which was picked up on by the Guardian’s Datablog.

First, have a look at the three minute video produced by the OECD highlighting its findings.

Then have a look at the Guardian’s Datablog graphics, which provide a side-by-side comparison of the composition of the global economy in 2011 and the projected figures for 2060.

The key takeaway point here is that the United States’ and OECD’s share of global economic activity is in decline. In 2011, the United States alone accounted for 22.7 percent of all global economic activity, and the OECD countries collectively accounted for about two-thirds (64.7%) of the world’s economy.

China (17%) and India’s proportion of the global economy respectively will increase from 17 percent and 6.6 percent today to 27.8 percent and 18.2 percent of the global economy by 2060. Economic growth in the developing world will outpace that of the developed world, such that by 2060 the United States’ share of the global economy will have declined to 16.3 percent, and the OECD’s collective share will have declined to 42.3 percent.

The data are interesting, but we need to pause and think about what they actually mean. A couple of issues emerge.

First, as liberal political economy tells us, economic growth is not a zero-sum game. The developing world’s rising share of the global economy has not been at the expense of the developed world’s economy over the past forty years. Rather, as the “economic pie” has grown larger, countries like China and India have been able to capture a larger portion of the economic growth.

But the changing structure of the global economy does raise other issues which are more zero-sum.

Economic growth in the developing world raises concerns over access to non-renewable resources like coal, oil, and rare earth minerals. Already competition over minerals between the United States and China has led China to restrict exports. Further, competition between China and the United States for access to non-renewable resources has escalated. As other countries enter the fray, demand for such resources is likely to intensify.

Additionally, the nature of economic growth may give reason for pause. Historically, economic growth has been a highly polluting affair. The environmental Kuznet’s curve suggests that pollution increases with economic growth until a country reaches a particular level of development, after which protective regulations are imposed and the environment begins to improve. In this respect, China’s pattern of economic growth echoes the pattern established by Great Britain, the United States, Germany, and other developed nations as they industrialized. But the prospect of expanded pollution, dramatic growth in carbon emissions, widespread deforestation, and so on raise concerns about the sustainability of economic growth that are not addressed in the OECD report.

What do you think? Does the OECD forecast give reason for concern? Or is it merely part of a continuing trend of economic growth in the world? Take the poll or leave a comment below and let us know.

Development, China Style

Angola’s Presidential Ballot

Angolans are voting in the country’s second national election since the end of a 27 year civil war a decade ago. Incumbent President José Eduardo dos Santos, whose ruling Popular Movement for the Liberation of Angola (MPLA) has governed the country since 1979, is expended to soundly win reelection.

Angola today is a far cry from the country ravaged by a 27 year war involving three separate liberation movements and external intervention by the former Soviet Union, Cuba, the United States, and apartheid South Africa. That war, which resulted in the deaths of more than 300,000 Angolans, left deep scars on the country. But today, Angola is growing rapidly. Angola is home to extensive oil reserves, and has experienced rapid, double-digit economic growth since the 1990s. Between 2001 and 2010, Angola experienced the highest rate of economic growth in eh world, averaging 11.1 percent per year.

But Angola’s development has not been without its shortcomings. Despite its rapid economic growth, most Angolans remain desperately poor. Life expectancy and infant mortality rates are among the worst in the world. And economic inequality has increased, as a relatively privileged few benefit from the country’s newfound wealth while most continue to live in poverty.

As the New York Time notes,

Angola is one of several African countries that have molded their governments, in an unspoken fashion, on what is widely known as the Chinese model. Leaders who have been in power for decades in countries like Angola, Ethiopia, Rwanda and Uganda have delivered considerable economic growth and, by some measures, improvements in health, education and development.

Leaders of these nations, all of them scarred by internal conflict, have offered their citizens an implicit bargain of development and stability in exchange for robust democracy.

An election poster of the ruling MPLA party in Luanda

The exact nature of the “Chinese model of development” is contested. Nevertheless, at its core, Chinese development was defined by a combination of selective economic liberalization combined with continued political control. China’s economic opening was the result of specific and selective political decisions made by the Chinese Communist Party. Further, Chinese development brought into question the link between democracy and capitalism that hand long been assumed in the development literature. Angola, like many other developing countries, appears to be moving towards that model, encouraging economic liberalization while restricting political liberalization and democratization.

Certainly there is historical reason to question the connection between democracy and development. South Korea, for example, experienced rapid economic growth by selectively liberalizing the economy (in the context of extensive state regulations, much like China) but simultaneously maintained a repressive and undemocratic government. Indeed, South Korean economic development, which averaged an impressive 9.2 percent per year from 1961 to 1979, occurred largely while the country was a military dictatorship. Clearly the relationship between democracy and development is not clear cut.

What do you think? Does China present an alternative model for economic development in Africa? How does Chinese development differ from the historical patterns of industrialization and development experienced in the West? And perhaps most importantly, how are democracy and development connected?

Mercantilism, Relative Gains, and the U.S.-China Relationship

Should Americans be more concerned about maintaining economic superiority over China than enjoying economic growth themselves?

In a recent blog post, professor and foreign affairs analyst Daniel Drezner cites some interesting results from a recent poll investigating Americans’ attitudes toward national security and foreign policy.  One revealing question touches on issues of mercantilism and relative gains, important concepts in the field of international relations (and the subfields of International Security and International Political Economy, or IPE).  From Drezner’s post:

“[Question 57] asked respondents whether they preferred a high growth world in which ‘the average American’s income doubles, but China grows faster than the United States and China’s economy becomes much larger than America’s’ or a low growth world, in which ‘the average American’s income increases by only 10 percent, but the U.S. economy remains much larger than China’s.’ A majority (50.7%) preferred the low growth world, thus supporting my long-standing argument that Americans are stone-cold mercantilists.”

An American who favored the first option in this question (high American gains even though China gains more and grows relatively stronger) would prefer absolute gains.  In contrast, Americans who favor the second scenario (low American gains that nevertheless allow the U.S. to maintain relative superiority over China, our main “peer competitor”) are most concerned about relative gains.  Relative gains are associated with the realist approach to world politics and with mercantilism.  Absolute gains are associated with the idealist approach and with economic liberalism, or capitalism. 

While Drezner is overgeneralizing when he leaps from a mere 51% preference for scenario #2 to the conclusion that “Americans are stone-cold mercantilists,” he is correct in linking relative gains concerns with mercantilism.  Mercantilism was the dominant economic philosophy prior to the industrial revolution and the rise of capitalism.   Mercantilism views wealth as finite and economics as a zero-sum game, meaning that a gain for one country can only come at the expense of a loss for someone else.  Such a view naturally leads to a focus on maintaining or improving one’s relative position vis-a-vis other international actors, and it is no accident that this perspective was accompanied by imperialism and efforts to gain every trade advantage possible.  In contrast, economic liberalism believes that wealth can be created, so states need not fight over how a finite “pie” will be distributed–the pie can be enlarged and everyone can benefit.

What do you think?  Are 51% of Americans correct to focus on maintaining their position over China even if this means less absolute prosperity for themselves?  Are they wisely looking beyond mere economics to the broader implications of a much stronger China?  Or is this kind of thinking outdated and self-destructive?

Can Realism Solve America’s (and the World’s) Foreign Policy Problems?

Former Bosnian Serb General Ratko Mladic is on trial for war crimes, including genocide, for his role in the 1992-95 Bosnian War. Stephen Walt argues that Bosnia is one of the few things realists might have gotten wrong over the past two decades.

Noted realist and Harvard professor Stephen Walt recently made a blog post entitled “What if realists were in charge of U.S. foreign policy?”  It offers a top ten list of ways the world would be better off with realists in charge, rather than the coalition of “neoconservatives and liberal internationalists” that Walt suggests have made a mess of U.S. foreign policy.  Recall that the realist approach to international relations is pessimistic about the prospects for lasting peace and cooperation and emphasizes national interests, stability, and a balance of power, while idealists (sometimes called liberals) believe morality should play a role in foreign policy and are optimistic that trade, international organizations, and democracy can help to promote peace and cooperation among states.  This previous blog post provides an overview of realism and idealism in the context of democracy promotion in the Middle East.

Some of the items on Walt’s top ten list include:

#1: No War in Iraq

#3: Staying out of the nation-building business

#6: No Balkan adventures

#7: A normal relationship with Israel

#8: A more sensible approach to nuclear weapons

#10: A growing focus on China

Walt is certainly a master at articulating the realist critiques of recent American foreign policy and suggesting how realists would have “done better” if at the helm.  For a similar (and more entertaining) argument for the superiority of realism that uses characters from the Godfather as representatives of realism (Michael Corleone), liberal institutionalism (Tom Hagen), and neoconservatism (Sonny Corleone), see the short book entitled The Godfather Doctrine.

But is Walt’s depiction unduly rosy and aided by the benefit of hindsight?  To hear Walt tell it, most of America’s (and many of the world’s) problems could be solved by enlightened realist policies.  His top ten list doesn’t grapple with the uncertainty or the complexity of the tradeoffs that confront policymakers on a host of issues, and he only briefly acknowledges that staying out of Bosnia, Kosovo, and Libya  may have had some humanitarian downsides (e.g., genocide in the case of Bosnia).

What do you think?  Does Walt’s list make a compelling case for the superiority of the realist approach to world politics? (He explains each point on his top ten list).  Or does his commitment to the realist perspective create “blinders” to the weaknesses or ambiguities of implementing a realist foreign policy?

Realism, Idealism, and the fate of Chen Guangcheng

Chinese dissident Chen Guangcheng with his wife and son in 2005.

Chen Guangcheng, a blind Chinese dissident and human rights lawyer, made a daring escape from house arrest this week and somehow made it to the U.S. embassy in Beijing, where he now sits.  This will make for an uncomfortable visit to China later this week by Secretary of State Hillary Clinton and Treasury Secretary Timothy Geithner as they meet Chinese officials in a ”Strategic and Economic Dialogue.”  As explained in this New York Times analysis, the politics of this case are complex and militate against an easy solution for several reasons: (1) President Obama is under domestic political pressure in his reelection campaign to show toughness on China, (2) the Obama administration has praised Mr. Chen as a human rights leader, making it difficult to simply hand him over to the Chinese authorities, (3) moderate Chinese officials are under pressure from hardliners who will likely claim this incident is part of a U.S.-driven conspiracy to embarrass China, and (4) China’s economic and military rise has given its leaders greater self-confidence in dealing with America than at any time in recent memory.

Beyond these broad political constraints, Mr. Chen’s fate will depend on whether the Obama administration is more willing to act according to realism or idealism.  These opposing approaches to world politics emphasize very different priorities and methods.  For realists, the national interest (defined largely in terms of economic and military power) reigns supreme, and issues like human rights, the environment, and economic development are frequently viewed as an unnecessary distraction unless they directly affect the national interest in some way.  For idealists, these “values” issues should not be crowded out by national interests, narrowly defined, since we live in a global village and cannot divorce ourselves from the fate of other human beings.

Realist presidents like Richard Nixon and George H. W. Bush have been willing to downplay Chinese human rights violations because a stable security and trade relationship with the rising Asian power is seen as vital to America’s national interests.  Presidents with stronger idealist inclinations, such as Bill Clinton and Jimmy Carter, have decried the subordination of human rights to crass material self-interest but when in power have frequently pursued policies not much different from their realist counterparts.  If the Obama administration (which has shown some evidence of both realist and idealist tendencies at different times) chooses to focus on America’s economic and security interests, Mr. Chen may very well find himself back in the hands of Chinese authorities before long.  If, on the other hand, their concern for human rights (or fear of the domestic political costs of “caving” to China) is sufficiently strong, a prolonged standoff with China could result–with serious implications for the U.S.-China relationship.

What do you think?  Should the U.S. return Mr. Chen to Chinese custody?  What are the consequences of doing so?  Of refusing to do so?  Do you expect the Obama administration to act according to the dictates of realism or idealism in this case, and why?

Free Trade, Neo-Mercantilism, and the “Rules” of International Trade

President Obama shakes hands in the Oval Office with Xi Jinping, the current Vice President (and presumptive next President) of China.

President Obama welcomed Xi Jinping, China’s “president in waiting,” to the White House this week for a high profile visit.  Obama warned the visiting leader that China must play by the rules of international trade, a comment reflecting American concerns about Chinese currency manipulation, intellectual property transgressions, and other barriers to free trade.  But economic analyst Clyde Prestowitz questions the wisdom of Obama’s “lecture” in his latest blog post:

“It sounded right and fair and slightly tough as it was carefully crafted to do by top White House political advisers, and the president may even believe it. But he shouldn’t have said it.”

Why shouldn’t Obama have criticized China for not playing by the rules?  Prestowitz argues that there are no universally agreed upon rules for international trade; rather, there are (at least) two different games being played simultaneously, by different actors, with different sets of rules.  Some states embrace economic liberalism, or free-market capitalism, which emphasizes comparative advantage, free trade, and limited government intervention in economic affairs.  Others–particularly those who are not benefiting from the trend toward greater globalization and free trade–favor mercantilist policies, which emphasize national wealth and the protection of domestic industries from foreign competition through tariffs and other trade barriers.  Prestowitz spells out which parts of the world are playing each game: 

“The global economy is, in fact, sharply divided between those who are playing the free trade game and those who are playing some form of mercantilism. Of course, there is a spectrum of attitudes and policies, but roughly speaking the Anglo/American countries, North America, and parts of Europe are playing free trade. Most of Asia, much of South America, the Middle East, Germany and parts of Europe are playing neo-mercantilism. It’s like watching tennis players trying to play a game with football players. It doesn’t work, and insisting on playing by the rules doesn’t help, because both sets of teams are playing by the rules — of their game.”

What do you think?  Are America and Europe really playing by their own rules of free trade?  Is free trade or mercantilism (or some combination of the two) a better approach for achieving prosperity?  Does America have the right to tell China how to play the game of international trade?

Will America’s “Power Play” in Asia Backfire?

In an address to the Australian parliament on November 17, President Obama declared "The United States is a Pacific power, and we are here to stay."

Political psychologists define mirror imaging as the common human tendency to assume that other actors share one’s own values, perceptions, and calculations.  When this assumption is incorrect, as it frequently is in dealings with foreign actors, it can lead to intelligence failures such as Pearl Harbor and flawed strategies such as America’s approach to the Vietnam War.  Simply put, a failure to understand how a foreign actor is viewing your country’s actions, interpreting your motives, and weighing costs and benefits greatly increases the likelihood that you will make costly errors in predicting that actor’s behavior.

The United States has just achieved what several foreign policy experts have described as a stunning diplomatic victory in Asia.  It has isolated China, strengthened military, economic, and political ties with China’s neighbors, and reasserted American dominance in the Pacific.  But is America badly miscalculating the likely response from China by projecting its own calculations about the irrationality of challenging America into the minds of the Chinese?  Walter Russell Mead suggests as much in a recent blog post:

“An intense debate in China will now turn even more pointed. There will be some who counsel patience, saying that China cannot win an open contest with the US and that its only hope is to stick with the concept of ‘peaceful rise’…others will argue that the international system as it now exists, and American power in it, are weapons in the hands of a country which is deeply hostile to China and its government and that the US will not rest until China, like Russia, has been reduced to impotence. They think (they really do) that our aim is to overthrow the Communist government, replace it with something weak and ineffective — as in Yeltsin’s Russia — and then break up its territory the way the Soviet Union broke up. Taiwan, Tibet, Xinjiang, perhaps more will be split off until China is left as a weak and helpless member of an ever more ruthless American order. To act like a ‘responsible stakeholder’ in the international system would be to tie the knot in the noose intended to hang you; China must resist now, and ally itself with everyone willing to fight this power: Iran, Russia, Syria, Venezuela, Pakistan, perhaps even Al-Qaeda. And rather than trying to prop up the international capitalist system, China should do what it can to deepen crises and aggravate tensions.”

What do you think?  Is America’s challenge to Beijing on its “home turf” a wise approach or has the Obama Administration badly miscalculated by assuming that all of the powerful actors in China recognize the futility of challenging American dominance?  What will be China’s response to America’s first move in this new “great game,” as Mead calls it?