WORLD VIEW 09
Thursday, 16 April, 2015
ONLY SHOCK EVENTS COULD TRIGGER PAKISTAN'S FOURTH MILITARY COUP
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Wikistrat
ast year's mass anti-government protests against Prime Minister Nawaz sharif and led by politician Imran Khan generated much speculation about Pakistan's next military coup but of course it didn't happen. Instead, we witnessed a soft coup with army chief Raheel sharif overcoming internal military calls for an official takeover by personally negotiating stability behind-the-scenes. Does this mean the era of hard coups is a relic of the past in Pakistan, a country which has spent almost half of its 68-year existence under military rule? according to Wikistrat's latest crowdsourced analysis, a military coup is unlikely to take place in Pakistan before the 2018 election when Prime Minister sharif's term expires. Yes, there are multiple terrorism strains, recurring bouts of sectarian violence and electricity shortages, among other risk factors causing domestic instability. But the fact remains that the 2013 election marked a significant milestone for Pakistan's democratic development it was the first (relatively) peaceful transfer of power from one civilian government to another. It is only in the event of a major and unexpected threat to national security - i.e. a geopolitical shock event - that we will see the army disrupt the ongoing democratic transition by staging the country's fourth hard coup. Yes, Wikistrat's crowd of analysts did not see these geopolitical shock events as very likely by 2018. However, they are low-probability, high-impact events that - unlike the various socio-economic and political risks Pakistan faces - would impact the army's institutional interests and therefore trigger some form of intervention in national politics. Prime Minister sharif's crisis-ridden civilian government is unlikely to survive the following external threats to its stability, offering a possible pathway to a military coup in the next three years: Pakistan's civilian government and military are at odds over foreign and security policy with its neighbor, compelling the military to officially take over. Pakistan keeps the Kashmir issue alive and actively supports the insurgency. With mounting forces at the borders and the generals dictating key foreign policy matters, Pakistan moves close to an armed conflict with India. the firing incidents escalate and Indian forces reciprocate with equal or more firepower. the loss of life and damage
on both sides of the border compels both governments to find a military solution in the absence of a diplomatic solution, despite international condemnation. A StAndoff with AfghAniStAn Following the expected Us/NatO troops withdrawal in 2016, the afghan government is too weak to control the entire country and secure its borders. taliban activity increases in the south, allowing individual warlords to assert their authority in other parts of the country, often based on ethnic and tribal identities. afghanistan's neighbors, including Pakistan, become fearful of contagion to their own territories and move to stabilize the border areas. Pakistan's relations with the afghan government are hostage to the rise of the taliban. Convinced that Pakistan continues to support the taliban, the afghan government looks increasingly to Moscow and India for support, increasing tensions with Islamabad. afghan paranoia ironically forces Pakistan into more overt support for the taliban to preserve its own interests in afghanistan. tensions between Pakistan and afghanistan increase, prompting the military to take over and secure the nation. UyghUr terroriSm deStAbilizeS relAtionS with ChinA Pakistan's historically close relationship with China is put under intense pressure by a dramatic increase of Uyghur terrorism in Xinjiang and beyond. such terrorism is orchestrated by the Uyghur leader, abdullah Mansour, who is widely known to be hiding out in Pakistan's mountainous border region with afghanistan. this leads to the Chinese government formally asking Pakistan to draw out the Uyghur leader and deliver him to Chinese authorities. When Pakistan fails to deliver, China's government threatens to send forces across the border to secure Mansour and destroy any training camps. the seeds are planted for Pakistan's military to take over, as the civilian government struggles to deal with the Chinese threat diplomatically. Wikistart is the World’s 1st Crowdsourced Consultancy.this analysis included the participation of Ma Politics and International Relations students taking Political Risk & Prediction at New York University's Graduate school of arts & sciences.
Why America doesn't welcome China's new Infrastructure Bank Project syndicate Joseph estiglitz
the International Monetary Fund and the World Bank are poised to hold their annual meetings, but the big news in global economic governance will not be made in Washington D.C. in the coming days. Indeed, that news was made last month, when the United Kingdom, Germany, France, and Italy joined more than 30 other countries as founding members of the asian Infrastructure Investment Bank. the $50 billion aIIB, launched by China, will help meet asia's enormous infrastructure needs, which are well beyond the capacity of today's institutional arrangements to finance. One would have thought that the aIIB's launch, and the decision of so many governments to support it, would be a cause for universal celebration. and for the IMF, the World Bank, and many others, it was. But, puzzlingly, wealthy European countries' decision to join provoked the ire of american officials. Indeed, one unnamed american source accused the U.K. of "constant accommodation" of China. Covertly, the United states put pressure on countries around the world to stay away. In fact, america's opposition to the aIIB is inconsistent with its stated economic priorities in asia. sadly, it seems to be another case of america's insecurity about its global influence trumping its idealistic rhetoric -- this time possibly undermining an important opportunity to strengthen asia's developing economies. China itself is a testament to the extent to which infrastructure investment can contribute to development. Last month, I visited formerly remote areas of the country that are now prosperous as a result of the connectivity -- and thus the freer flow of people, goods, and ideas -that such investments have delivered. the aIIB would bring similar benefits to other parts of asia, which deepens the irony of U.s. opposition. President Barack Obama's administration is championing the virtues of trade; but, in developing countries, lack of infrastructure is a far more serious barrier to trade than tariffs. there is a further major global advantage to a fund like the aIIB: right now, the world suffers from insufficient aggregate demand. Financial markets have proven unequal to the task of recycling savings from places where incomes exceed consumption to places where investment is needed. When he was chair of the U.s. Federal Reserve, Ben Bernanke mistakenly described the problem as a "global saving glut." But in a world with such huge infrastructure needs, the problem is not a surplus of savings or a deficiency of good investment opportunities. the problem is a financial system that has excelled at enabling market manipulation, speculation, and insider trading, but has failed at its core task: intermediating savings and investment on a global scale. that is why the aIIB could bring a small but badly needed boost to global aggregate demand. so we should welcome China's initiative to multilateralize the flow of funds. Indeed, it replicates american
policy in the period following World War II, when the World Bank was founded to multilaterize development funds that were overwhelmingly coming from the U.s. (a move that also helped to create a cadre of first-class international civil servants and development professionals). the World Bank's assistance was sometimes overburdened by prevailing ideology; for example, the free-market Washington Consensus policies foisted on recipients actually led to deindustrialization and declining income in sub-saharan africa. Nonetheless, U.s. assistance was, overall, far more effective than it would have been had it not been multilateralized. Had these resources been channeled through america's own aid agency, policymaking would have been subject to the vagaries of development thinking (or the absence of reflection) from one administration to another. New attempts to multilateralize flows of assistance (including the BRICs countries' launch of the New Development Bank last July) are similarly likely to contribute significantly to global development. some years ago, the asian Development Bank defended the virtues of competitive pluralism. the aIIB offers a chance to test that idea in development finance itself. Perhaps america's opposition to the aIIB is an example of an economic phenomenon that I have often observed: firms want greater competition everywhere except in their own industry. this position has already exacted a heavy price: had there been a more competitive marketplace of ideas, the flawed Washington Consensus might never have become a consensus at all. america's opposition to the aIIB is not unprecedented; in fact, it is akin to the successful U.s. opposition to Japan's generous New Miyazawa Initiative of the late 1990s, which offered $80 billion to help countries in the East asian crisis. then, as now, it was not as if the Us were offering an alternative source of funding. It simply wanted hegemony. In an increasingly multipolar world, it wanted to remain the G-1. the lack of money, combined with america's insistence on flawed ideas about how to respond to the crisis, caused the downturn to be far deeper and longer than it should have been. that said, U.s. opposition to the aIIB is harder to fathom, given that infrastructure policy is much less subject to the influence of ideology and special interests than other policymaking areas, such as those dominated by the U.s. at the World Bank. Moreover, the need for environmental and social safeguards in infrastructure investment is more likely to be addressed effectively within a multilateral framework. the U.K., France, Italy, Germany, and the others who have decided to join the aIIB should be congratulated. One hopes that other countries, both in Europe and asia, will join as well, helping to fulfill the ambition that infrastructure improvements can raise living standards in other parts of the region, as they have already done in China. the author is Professor at Columbia University and a Nobel Laureate in Economics.
NATIONS LINE UP TO JOIN CHINA-LED INFRASTRUCTURE BANK yaleGlobal Will hickey
March 31 marked the deadline for charter founders to line up for the new China-led asian Infrastructure Investment Bank, or aIIB initiative. at the last moment Norway, taiwan and others rushed to find the good graces of the Chinese opportunity. Many countries seek asian influence, and Washington has been miffed by Chinese rejection of its traditional actors – the World Bank, the International Monetary Fund and the asian Development Bank. the Us and Japan, initially cool but now perhaps contemplating some eventual partnership, will remain on the sidelines. a Chinese proverb says “they sleep in the same bed but dream different dreams.” the aIIB founding members are a diverse group with a range of investment agendas: south Korea, marginalized in the asian Development Bank, and despite Us misgivings, expects to take a stake of upwards of 5 percent in the aIIB. With it heavy equipment industry, Hyundai, Doosan and infrastructure prowess in everything from roads to ports to bridges with Gs, Hanwha and POsCO, south Korea will not play second-place against Japanese industry. australia, another country the Us had leaned heavily on not to join, counts China among its main export markets for coal, copper and iron ore through its mining giants BHP, Rio tinto and Leighton – creating the industrial might for major infrastructure projects. the United Kingdom, the first major EU country to clamor for aIIB membership, mystified Washington by keeping it out of the loop during secret negotiations.
While the UK’s major interests in accommodating China are unclear, it undoubtedly hopes to regain asian influence lost after the handover of Hong Kong in 1997. switzerland, Germany and France no doubt seek to market their engineering and technical skills via an aBB, thyssen or EDF to any big-scale infrastructure projects in asia for water, power plants or electrification. In short, a new development bank with China’s financial support via its $4 trillion in reserves is too big to pass up. a main question regarding the new Chinese initiative is will it be effective or merely an iconoclast offset to established western development interests? the Chinese development model of technology transfer and infrastructure development, including highways, ports, railways, has brought millions out of poverty and into a middle class existence. Exporting this model, and not just labor-intensive manufactured products to western nations, could prove the next leg up in China’s ascent as a credible, newly emerging superpower. Of course, skepticism abounds. In fact, the Us stated "We are wary about a trend toward constant accommodation of China, which is not the best way to engage a rising power." Oddly, these words are reminiscent of the heated 1944 economic maneuverings at Bretton Woods between British economist John Maynard Keynes and Us technocrat Harry Dexter White. the British system was in decline, the rising actor of the United states was challenging pound sterling supremacy that the British Empire did not want to relinquish. Yet, as the Guardian pointed out in 2014, “strategically, the United states
cannot keep on shoring up an obsolete economic order in asia.” asia is in need of approximately $800 billion in infrastructure per year. However, investment today is not merely defined in financial capital, but also human capital. the IMF and the World Bank have demonstrated human capital effectiveness perhaps too well, with a deep bench of talent, gathered from much of the developing world, and now in need of reform. Perhaps no other organizations have such an agglomeration of financial, economic and legal knowledge to work with on hand for their many projects, most no doubt politically mandated and recently geared towards European “rich-country” challenges including Greece and Ukraine. the Chinese model of development has been traditionally a “one size fits all” straightjacket due industrial planning and state-sponsored enterprises that tend to ignore such matters as human and labor rights, and the environment. It is capitalintensive investment, with an engineering mindset intensely focused on processes and physical results. these are not minor concerns in formation of a new regional investment bank. Domestically, China’s one-party state brooks no dissent regarding laborrelated protests, equitable pay, air pollution or other industrial project environmental concerns. acidic smog in major Chinese cities is off the charts with health concerns taking a backseat to fullspeed growth, mostly due to burning coal for steel production and electricity generation. the three Gorges Dam was planned and mandated from Beijing, without significant local input. Historical
sites were submerged, some aquatic species, such as river dolphins, destroyed, and villages relocated without debate and many not receiving promised compensation in return in the process. Recent chemical and refinery spills in major Chinese rivers such as the Hei and Yellow rivers have poisoned many. the overall track record is not good. sri Lanka and perhaps Nicaraguaga can serve as international examples. In the former, Chinese investment in a costly port and useless airport was approved under former sri Lankan President Mahinda Rajapaksa for his hometown, Hambantota, a non-strategic location. such projects were no doubt to pave inroads for a larger Chinese presence in south asia, but proved costly for sri Lanka. Newly elected leader Maithripalasirisena has sought to renegotiate or cancel them, despite Beijing’s objections. In Nicaragua, large-scale Chinese investment would no doubt be the driver of a second canal across the pan-american isthmus. If the three Gorges dam were any benchmark, the project’s outcome could prove controversial: a technological marvel, but wracked with social and environmental concerns. If negligent behaviors are tolerated in new infrastructure projects in, say, dams for Cambodia or electrification in Mongolia for political reasons, the aIIB could garner negative media treatment in a socially connected world, which would only reaffirm Us critiques for western, not asian-led, investment actors who enforce high standards. any capital intensive infrastructure project must be handled carefully, and planners must consider that we all share an interconnected world, where problems can-
not simply be swept under the carpet. Domestically, China is now tackling problems such as smog and corruption more aggressively, but whether or not these politically mandated initiatives influence regional thinking with needed investment projects in less developed countries such as a Laos or Bangladesh remains to be seen. Nonetheless, these regions could receive immense benefits learned from China’s infrastrucure “Great Leap Forward.” Perhaps the best outcome to a Chinese-led aIIB is transparency and cooperation among all actors. Yet, the venue and leadership must be seen as “all China” in substance and form. asia is now the “pivot,” and with so many countries signing on, population giants such as India and Indonesia, should be institutionalized in their roles, perhaps with an Indian director of the aIIB, based in Jakarta, the world’s second largest metro area. such moves would seal greater cooperation with the two. China has stated that while open to other venues, shanghai is its preferred choice. the key takeaway is that success of the aIIB will not be solely defined in capital largess and engineering excellence. It must incorporate and embed human-capital development and social issues in its processes and, perhaps most importantly, address environmental and natural resource concerns of our shrinking planet. Only then will the bank and all its development projects have real legitimacy and value. Will Hickey is associate professor and capability advisor for the School of Government and Public Policy in Indonesia.