Nightcap

  1. The ABCs of Israeli occupation Irfan Khawaja, Policy of Truth
  2. The board game of the alpha nerds David Hill, Grantland
  3. It’s now China against the world Lily Kuo, Guardian
  4. Majority rule, slavery, and Hobbes Michael Rozeff, LRC Blog

Nomic-nomics?

Perhaps the coolest thing I’ve found on the Small Internet so far is the game Nomic. From where I found it:

Nomic was invented in 1982 by philosopher Peter Suber. It’s a game that starts with a given set of rules, but the players can change the rules over the course of the game, usually using some form of democratic voting. Some online variants exist, like Agora, which has been running since 1993.

It’s a game that’s about changing the game. Besides offering a tempting recreational opportunity, I think this could be formalized in such a way to make it rival the Prisoners’ Dilemma (PD) in shedding light on the big social scientific questions.

The PD is a simple game with simple assumptions and a variable-sum outcome that lets it work for understanding coordination, competition, and cooperation. One of my favorite bits of social science is Axelrod’s Evolution of Cooperation project. It’s basically a contest between different strategies to an iterated PD (you can play a variation of it here). That the “tit for tat” strategy is so successful sheds a lot of light on what makes civilization possible–initial friendliness, willingness to punish transgressions, and willingness to return to friendliness after punishing these transgressions.

A fantastic extension is to create a co-evolutionary simulation of a repeated PD game. Rather than building strategies and pitting them against each other, we can be totally agnostic about strategies (i.e. how people behave) and simply see what strategies can survive each others’ presence.

The evolutionary iterated PD is about as parsimonious a model of conflict/cooperation as we could make. But there is still a lot of structure baked in; what few assumptions remain do a lot of heavy lifting.

But if the structure of the game is up for grabs, then maybe we’ve found a way to generalize the prisoners’ dilemma without assuming on extra layers of complexity.

Of course, the parsimony of the model adds complexity to the implementation. Formalizing Nomic presents a formidable challenge, and getting it to work would surely create a new

But even if it doesn’t lend itself to simulation, it strikes me as the sort of exercise that ought to be happening in classrooms–at least in places where people care about building capacity for self governance (I’ve heard such places exist!).

Let’s play!

A bit of stage setting, then let’s start a game in the comments section. I get the impression that this game is nerdier than Risk, so you’ve been warned (or tempted, as the case may be).

The basic premise is that are mutable rules and immutable rules (like Buchanan’s view of constitutions). Players take turns to propose rule changes (including transmuting rules from a mutable to an immutable state). As part of the process, we will almost surely redefine how the game is won, so the initial rule set starts with a pretty boring definition of winning.

We’ll use Peter Suber’s initial rules with some variations to suit our needs. The rules below will be (initially) immutable.

117. Each round will happen in a new comment thread. A new round cannot start until the rule change proposed in the previous round has been voted on. If technical problems result in having to start a new comment thread, that thread should include the appropriate reference number and it will be understood to be part of the same comment thread.

I will take the first move to demonstrate the format in the comments section.

118. The final vote count will be determined after 24 hours of silence. Players may discuss and cast votes, and change their votes. But after 24 hours of no new comments, the yeas and nays will be tallied and the outcome determined accordingly. In cases requiring unanimity, a single nay vote is enough to allow a player to start a new round without waiting the full 24 hours. The final vote will still occur (for purpose of calculating points) after 24 hours of silence.

Despite being numbered 118, this rule will take priority over rule 105.

119. Anyone who is eligible to comment is eligible to play. If it is possible to start a new round, anyone may start that round. In the event that two people attempt to start a round at the same time (e.g. Brandon and I post a comment within a couple minutes of each other) priority will be given to whichever was posted first and the second comment will be voided.

120. The game will continue until someone wins, or everyone forgets the game, in which case the winner will be the last person to have had their comment replied to.

Italy and the Belt and Road Initiative

There has been a growing scepticism with regard to the Belt and Road Initiative (BRI) project in many quarters, due to the lack of transparency with regards to terms and conditions as well as the economic implications for countries which are part of the project. A report published in April 2018 by the Center for Global Development (CGD) in Washington flagged 8 countries (including Pakistan, Maldives, Laos, and Djibouti) where the level of debts are unsustainable.

Apart from the red flag raised by a number of researchers, the removal of Pro-China leadership in countries like Malaysia, Maldives, and Sri Lanka has also resulted in problems with the BRI project, and China’s economic dealings (which are clearly skewed in favour of Beijing) with other countries is drawing more attention.

The most vocal critic of China’s economic links has been Malaysian Prime Minister Mahathir Mohamad. During a visit to China in August 2018, Mahathir, alluded to China’s trade relations with poorer countries as ‘a new version of colonialism’. Mahathir later on denied that his statement was targeted at China or the BRI. The fact is that the Malaysian Prime Minister did scrap projects estimated at well over $20 billion (which includes a rail project, East Coast Link, as well as two gas pipelines).

Top officials in the Trump Administration, including US Vice President Mike Pence, have also been critical of the BRI project for a variety of reasons. The major criticism from US policy makers has been the economic ‘unsustainability’ of the project as well as the point that the project is skewed in favour of China.

Italy to join BRI Continue reading

Government shutdown – private vs. public responses

The recent shutdown of the government in America has caused a midsize crisis for state employees leaving them unpaid for 35 days straight. Although the shutdown ended on the 25th of January, one can still draw a conclusion about the crisis handling from a public and a private perspective.

A failure of government

When you take a closer look at the history of governmental crisis management, you mostly look at a huge collection of mismanagement. In the last few years there has been a tremendous amount of intriguing works dealing with the failures of public crisis responses, especially the case of hurricane Katrina (Wikipedia here lists more than 100 references), which has been one the of most investigated disasters in recent history.

Crisis can provoke the good as well as the bad inside humans. One might think of the countless volunteers after nature catastrophes doing their very best to help. On the other hand, there have also been stories of grieving and plundering mobs on the streets, after hurricane Katrina for example. So, what we can say for sure is that crises push human behaviour to the extremes. Keeping this in mind it sounds reasonable to leave it to the government to set up an agenda of rules to coordinate humanitarian efforts. However, the government fails most of the time to deliver effective responses to crises, whether they are man-made or exogenous.

Not being able to find an agreement over the federal budget indicates that the government also has very limited options to offer to their employees. And indeed, Lara Trump gave some very handy advice to unpaid workers: “Listen, it’s not fair to you, and we all get that, but this is so much bigger than any one person. It is a little bit of pain but it’s going to be for the future of our country. […] Their children and their grandchildren will thank them for their sacrifice right now.” Yes, please explain to your children how you nearly starved to death because of a dispute over a wall. Sounds reasonable.

Whereas Donald Trump’s kind of clumsy attempt to clarify Ross Wilbur’s statement that government workers should take out loans (Maybe a small loan of a million dollars, huh?) was not too stupid at all. He emphasizes that worker should “work along” with local grocery shop owners they know. He was very clear that employees could not expect help from the government, but instead, they should look out for support on a local level. I do not think that this is a good method of communicating this issue, but it is for sure a very honest one.

Mac & Cheese

A 35-day shutdown, so to speak nearly a missed monthly wage, might not sound unbearable for a central European. But keeping in mind the saving habits of many Americans, a huge amount of government workers are facing existential problems. A recent FED survey found out that about 40% of the American population is not able to cover a 400$ emergency expense without selling or borrowing something.

Witnessing the inability of the government to provide payments for their workers, private enterprises reacted in a remarkable way. The huge food company Kraft rented space for pop-up stores in Washington in which they gave away food entirely for free. One of the most demanded products was Mac & Cheese. The celebrity Chef José Andrés provided free groceries for affected government worker through his NGO “World Central Kitchen.” When the government stopped caring, people started to do so.

Learnings

The overwhelming care for the unpaid government workers by the private sector further strengthened the role and importance of individual responsibility. In situations of crises, people tend to be less submissive to authority and focus on voluntary cooperation of human beings. I feel like it is important to mention here that I do not want to praise crises as a suitable method of bringing people together. But when we take a closer look at the history of humanity it becomes evident that instead of governmental decisions, voluntary human cooperation made our modern life possible. And in times of crises, people become clear about the relevance of these values and processes, which normally guide human progress subconsciously and unnoticed. Private responses to crises are a sign to me that humans are capable to display kindness, cooperation, and humanity beyond the borders of government.

Sri Lankan strongmen and Chinese initiatives: India’s neighborhood is as bustling as ever

On October 25, 2018 Sri Lankan President Maithripala Sirisena suspended Parliament (till November 16, 2018) and sacked his Prime Minister, Ranil Wickremesinghe, replacing him with Mahindra Rajapaksa (who served as President of Sri Lanka for a decade, from 2005 till 2015). Sirisena had wrested power from Rajapaksa in 2015. Wickremesinghe decided to battle it out, saying that Sirisena’s decision was illegal since none of the conditions under which a Prime Minister can be removed, under provisions 46(2) and 48 of parliament were applicable to the current situation. Rajapaksa announced that the President will reconvene Parliament on November 5, 2018.

Rajapaksa has been gaining ground in recent months

First, Rajapaksa, who had been written off totally, set up a new political outfit, SLPP (Sri Lanka Podujana Peramuna), which performed well in the local elections of February 2018.

More recently, Sirisena, who was initially considered Pro-China, accused Indian intelligence agency RAW (Research and Analysis Wing) of meddling in Sri Lanka’s affairs and plotting his assassination. He supposed to have denied this in a conversation with Indian Prime Minister Narendra Modi.

As President, Rajapaksa had a close relationship with China (there were allegations of a Chinese company even providing financial assistance for his campaign) and New Delhi was relieved to see his back.

The strategically important Hambantota Port Project was awarded to the Chinese during Rajapaksa’s presidency. China provided assistance to the tune of $190 million, and Sri Lanka had to lease out the project for a period of 99 years to Beijing in 2017, since debts to Beijing are mounting (total Sri Lankan debts to China are estimated at $13 billion). The Hambantota Project is now presented as a symbol of what has been referred to on more than one occasion as China’s debt trap diplomacy.

It would be pertinent to point out that the project had first been offered to New Delhi in 2010, but India declined stating that the project was not economically sustainable.

It would also be pertinent to point out here that, after his removal, Rajapaksa has made some statements in favor of close ties with both Beijing and New Delhi. Indian PM Narendra Modi has met him on both his visits to Sri Lanka. In September 2018 Rajapaksa was himself in New Delhi.

How to approach the China factor

While there is no clarity as to how long this new arrangement will last in Sri Lanka, there are some broader issues which need to be dealt with.

The first question which arises is: should New Delhi view China’s involvement with suspicion or work jointly? While there is absolutely no doubt that, in recent years, India too has tried to come up with its own responses to the China’s Belt and Road Initiative (BRI) in South Asia. This includes promoting greater connectivity within South Asian countries through the BBIN (Bangladesh, Bhutan, India, Nepal) framework on the one hand, while also exploring synergies with Japan in order to check Beijing’s growing clout on the other. This includes not just cooperation under the umbrella of Japan’s PQI (Partnership for Quality Infrastructure) initiative, but also in areas like infrastructure and energy (two key instances being the metro project in Dhaka, where India’s Larsen & Toubro and Japanese companies are working jointly for developing Line 6, as well as an LNG terminal in Sri Lanka where Petronet and Japanese companies are making a joint investment to the tune of $300 million).

During Wuhan Summit one of the important issues discussed was that India and China will work together in Afghanistan (only recently both countries set up a joint training program for Afghan Diplomats). Pakistan has been trying to obstruct any big ticket cooperation between both countries, and that is cited as one of the main reasons why Beijing is shying away from any big ticket investments into a joint project in Afghanistan.

If Japan and China can work together in connectivity projects (Japan has even expressed its willingness to join the BRI), as was discussed during Abe’s recent China visit, New Delhi and Beijing too can explore certain instances where they work together. It would be pertinent to point out that the Global Times made an interesting argument in favor of New Delhi and Beijing working in tandem for Sri Lanka’s infrastructural development. While this may appear to be a pipedream currently, in the long run it can not be ruled out given the changing geopolitical equations.

Apart from this, there are clear lessons for New Delhi: that it should not put all eggs in one basket, and realize that certain leaders will have good relations with China. A former Diplomat, Ashok Kantha, who was India’s envoy to Sri Lanka, made the point that India needed to stop looking at domestic politics from a lens of ‘Pro-India and Pro-China’, as this is too simplistic.

While India was apprehensive about the election of K.P. Oli as Nepalese Prime Minister, he has been speaking about close ties with both Beijing and New Delhi. During his visit to China in June 2018, Oli spoke about the possibility of Nepal emerging as a bridge between China and India.

In conclusion, New Delhi has to watch out for it’s own interests in South Asia, and should certainly ensure that no country has a stranglehold, but paranoia will be of no use. India needs to come up with viable alternatives to the BRI, while also being open to cooperation, as and when feasible. Apart from this, New Delhi needs to realize that countries in the neighborhood will give precedence to their own interests and even if they do maintain close economic linkages with China, it is not always targeted at India.

American protectionism and Asian responses

On October 10, 2018, a senior Chinese diplomat in India underscored the need for New Delhi and Beijing to work jointly in order to counter the policy of trade protectionism being promoted by US President Donald Trump.

It would be pertinent to point out that US had imposed tariffs estimated at $200 billion in September 2018, Beijing imposed tariffs on $60 billion of US imports as a retaliatory measure, and US threatened to impose further tariffs. Interestingly, US trade deficit vis-à-vis China reached $34.1 billion for the month of September (in August 2018, it was $31 billion). Critics of Trump point to this increasing trade deficit vis-à-vis China as a reiteration of the fact that Trump’s economic policies are not working.

Ji Rong, spokesperson of the Chinese Embassy in India, said that tariffs will be detrimental for both India and China and, given the fact that both are engines of economic growth, it is important for both to work together.

The Chinese diplomat’s statement came at an interesting time. Continue reading

Tokyo’s holistic approach to Africa needs to be applauded

A Ministerial meeting attended by representatives from 52 African nations was held ahead of the 7th Tokyo International Conference for African Development (TICAD) to be held in Yokohama in August 2019.

TICAD (which is co-hosted by the Government of Japan, The UNDP, World Bank Group and African Union Commission) was launched over two decades ago, in 1993, with the main objective being to bring back global interest in Africa (a number of key geopolitical developments, such as the end of the Cold War, had resulted in the global community shifting its focus away from Africa).

In the past two decades, TICAD forum has played a key role in Africa’s development. In recent years, the government of Japan has contributed to Africa’s development in a number of important areas. In the phase between 2008-2013, for example, the Government of Japan built a number of elementary and middle schools, upgraded healthcare and medical facilities, and also provided drinking water to rural villages.

During the last TICAD event, in 2016, held at Nairobi (Kenya), Japanese PM Shinzo Abe had committed $30 billion in assistance over a period of three years for key areas such as infrastructure and health care.

Beijing would be closely observing the recent meeting for a number of reasons. Continue reading

The EU’s laudable Asia Connectivity Strategy

The European Union (EU) has put forward a plan for enhancing connectivity within Asia, and has been dubbed as the Asia Connectivity Strategy.

The EU does not want to give an impression that the Asia Connectivity Strategy (ACS) is a counter to the Belt and Road Initiative (BRI). Yet, senior officials of the EU, while commenting on the broad aims and objectives of the project, have categorically stated that the primary goal of the Asia Connectivity Strategy is enhancing connectivity (physical and digital) while also ensuring that local communities benefit from such a project, and that environmental and social norms are not flouted (this is a clear allusion to the shortcomings of the BRI). There are no clear details with regard to the budget, and other modalities of the project (EU member countries are likely to give a go ahead for this project, before the Asia-Europe Meeting in October 2018). The EU has categorically stated that it would like to ensure that the ACS is economically sustainable.

Other alternatives to BRI: the US

It is not just the EU, but also the US, along with Japan and Australia, which are trying to create an alternative vision to the BRI.

Continue reading

China-Myanmar Economic Corridor and the limits of ‘Cheque Book Diplomacy’

On September 9, 2018 Myanmar and China signed a memorandum of understanding (MoU) for establishing the China-Myanmar Economic Corridor (CMEC), as part of China’s ambitious Belt and Road Initiative (BRI). The corridor will traverse a distance of approximately 1700 kilometres and seeks to connect Kunming (in China’s Yunnan Province) with Myanmar’s key economic points – Mandalay, Yangon, and Kyauphkyu.

According to the MOU, both sides have agreed to collaborate in a number of areas. Some of the important areas identified for collaboration by both countries are: infrastructure, construction, manufacturing, agriculture, transport, finance, human resources development, telecommunications, and research and technology.

Chinese Foreign Minister Wang Yi had first announced the proposal to build CMEC during his meeting with Myanmar’s State Counselor Aung San Suu Kyi in November 2017. The MOU had been finalized in February 2018.

The CMEC is an ambitious project from which Myanmar could benefit immensely. Yet, there have been apprehensions with regard to the economic feasibility of the project, and Myanmar does not want to meet the fate of other countries which have fallen into what has been dubbed as a ‘Debt Trap’.

Opposition to Kyauphkyu

There has been skepticism with regard to the BRI project in general, and China’s involvement in the SEZ and Sea Port to be set up in Kyauphkyu (a coastal town in the Rakhine Province) in particular. Large sections of the population have been questioning the economic rationale of the project – and the benefits for Myanmar. CITIC (China’s biggest financial conglomerate) was awarded both projects, but it had to reduce its stake from 85 percent to 70 percent in the Sea Port after vehement opposition from the local population. Locals found the 85-15 arrangement unreasonable. Fearing a debt trap, the NLD government in Myanmar has also reduced the initial value of the Sea Port project – a whopping $7.3 billion USD to $1.3 billion. There has been opposition to the SEZ as well (mainly on environmental grounds), and while the initial Chinese take in the SEZ (originally valued at $2.7 billion) was 51 percent, it is likely to be revised.

U Kan Zaw, a Minister in the erstwhile Than Sein government (and Chairman of the Kyauphkyu SEZ tender committee), confessed that Myanmar was not very keen for Chinese investment (it had sought investments from the UK and Europe), but it was not left with any other option once other countries declined to invest.

China beginning to acknowledge shortcomings of BRI projects

Of late Beijing has expressed a willingness to re-examine some aspects of BRI-related projects (including CMEC and the China Pakistan Economic Corridor – CPEC). On the face of it, at least Beijing seems open to addressing the worries of countries which are part of the BRI.

Chinese media itself is trying to send a message that Beijing is responsive to concerns of countries which are part of the BRI initiative. A recent example is an article in CGTN on CMEC, which acknowledged not just the drawbacks of the project, but also the fact that the response to CMEC has been tepid so far in Myanmar. Said the article:

CMEC is temporarily suffering from a cold reception, we believe that it is an excellent endeavor.

The authors of the article also makes a significant point: that Chinese businessmen are not familiar with Myanmar. While the article could be referring to the lack of familiarity with Myanmar’s policies, many host countries have been critical not just of the ‘one sided’ nature of Chinese economic investments, but their unwillingness to understand local cultures, and the fact that they remain aloof from the local population.

On a number of occasions, Chinese businessmen have even misbehaved with locals. In Pakistan, on two occasions, Chinese businessmen have beaten up policeman, and this did not go down well with the local population.

While alluding to the failure of big ticket infrastructure projects, the article also refers to the need for Chinese investments in ‘light industry’ as opposed to ‘heavy industry’ (in a reference to infrastructural mega projects, such as those which were scrapped by Malaysian Prime Minister Mahathir Mohammad).

One of the interesting aspects of CMEC is that Myanmar was keen to have third party investments, and not restrict itself only to Chinese investments. Investments will come from countries in South East Asia and East Asia — Thailand, South Korea, and Japan. While China’s economic presence in Myanmar is staggering, this has not gone unchallenged and of late countries like South Korea are also increasing their presence in Myanmar. The authors of the CGTN article also try to pitch for Chinese cooperation with other countries, arguing that joint investments will mean not only lesser economic and political burden for China, but that they could also reduce hostilities between Western and Chinese companies.

Finally, the article speaks about the need for greater cooperation between Myanmar and China in the sphere of agriculture (especially aquaculture), and that this cooperation should be economically beneficial for the local population.

Conclusion

It remains to be seen whether China will actually acknowledge the genuine concerns of countries participating in the BRI, and whether or not it will actually take some tangible steps to address the apprehensions. As stated earlier, Beijing seems slightly more flexible in its negotiations, but whether this is a short term trend (which many would argue is a consequence of Malaysian PM Mahathir Mohammad’s straight talking with China) or not remains to be seen.

China may be further compelled to change its approach towards overseas economic investments after the recent electoral rout of Abdulla Yameen (outgoing Maldivian President), considered to be pro-China. One trend which is clearly emerging, as was evident from the electoral verdict of Maldives, was that leaders (many of whom position themselves as strongmen) blindly following Chinese diktats for short term economic goals does not go down well with ordinary citizens, and China may need to address its perception problem by looking beyond Cheque book Diplomacy.

India’s approach towards BRI: Need for pragmatism

(new title)

Recently, China’s consular general in Kolkata, Ma Zhanwu, while speaking at a function, proposed a bullet train connecting Kunming (in China’s Yunnan Province) with Kolkata, the capital of India’s eastern state of West Bengal. Said Ma:

With joint efforts of India and China, a high-speed rail link could be established between the two cities.

It would be pertinent to point out that the proposal for a bullet train connecting Kunming and Kolkata had been discussed earlier at the Greater Mekong Subregion (GMS) meet in 2015. In fact, enhancing connectivity between India and China through the Kolkata-Kunming multi-modal corridor (officially the Bangladesh-China-India-Myanmar Economic Corridor, or BCIMEC), which covers a distance of 2,800 kilometres, has been under discussion for over 2 decades, through the Track II K2K (Kolkata-Kunming) dialogue. During former India Prime Minister Manmohan Singh’s China visit, in October 2013, sister city relations were established between Kunming and Kolkata.

In recent years, China has been pro-actively reaching out to West Bengal Chief Minister Mamata Banerjee, and has invited her to visit on repeated occasions, though she has been unable to visit (she was all set to visit in June 2018, but her trip was cancelled at the last moment). Apart from this, a number of Chinese investors have expressed interest in investing in West Bengal and even attended the Bengal Global Business Summit 2018.

Given the increasing emphasis on connectivity with South East Asia, through India’s North East (one of the key aims of India’s ‘Act East Policy’), it was believed that the BCIMEC would tie in neatly with India’s vision for connectivity.

However, tensions between India and China – due to the Doklam standoff as well as Beijing’s insistence that BCIMEC be included in its official Belt and Road Initiative (BRI) –  have contributed to a wane in New Delhi’s interest in the project, at least for the time being. The Rohingya crisis, and more general tensions between Bangladesh and Myanmar, are also a major impediment to the project.

The China Myanmar Economic Corridor: Why New Delhi should pay close attention

While a high speed train is an ambitious project, New Delhi can not be closed to the BCIMEC and should pay close attention to the China-Myanmar Economic Corridor (the Memorandum of Understanding for this project was signed on September 9, 2018). While the China-Myanmar Economic Corridor (CMEC) has been under discussion for some time, there have been numerous debates with regard to the economic implications for Myanmar (the Kyaukphyu Deep Sea Port project, as well as Special Economic Zones, have been contentious). The increasing debate on the issue of ‘debt trap diplomacy’ has only increased apprehensions within sections of the Myanma government (the stake of Chinese conglomerate CITIC in the deep sea port has been reduced from 85 percent to 70 percent due to domestic pressures). Myanmar has also made it clear that it would not like to depend only on Chinese investments, and the recently-signed MOU categorically states that third party investments from Japan, South Korea, and Thailand in CMEC projects are more than welcome. Interestingly, an article on CMEC in Chinese media acknowledges some of the apprehensions vis-à-vis CMEC, and also bats for closer cooperation between China and other Asian and Western countries.

The proposal for the bullet train connecting Kolkata-Kunming came days after the agreement had been signed between China and Myanmar. China would like to extend this corridor all the way to India (while speaking about rail connectivity between Kunming and Kolkata, the Chinese diplomat also spoke about an industrial cluster along the route).

How should New Delhi play it?

While New Delhi’s objections to the BRI are valid, it does need to shed blinkers. It is free not to participate in those components of the project with which it is not comfortable, but there are projects, like the BCIMEC, where it can easily find common ground with China. This will give a boost to India’s infrastructure in the eastern and northeastern part of the country, and complement it’s Act East Policy. If third countries are allowed to invest in CMEC, Indian companies should explore opportunities, as this will enhance their presence in Myanmar while also bolstering the Act East Policy.

China’s narrative in South Asia

Post the Wuhan Summit, there has been a clear change of narrative from the Chinese side. China has expressed its keenness to work jointly with India in Afghanistan – in capacity-building projects. This was unthinkable a few years ago.

China’s burgeoning economic relationship with Nepal has sent alarm signals in New Delhi. China’s decision to give Nepal access to its ports (Tianjin, Shenzhen, Lianyungang and Zhanjiang) raised the hackles in New Delhi. Pragmatists realize that New Delhi can not dictate Nepal’s ties with China, and the fact is that Kathmandu would like to benefit economically from its ties with both China and India.

Interestingly, China has been urging Nepal to strengthen economic ties with India. During his visit to Beijing, Nepal’s Prime Minister, K.P. Oli, made an unequivocal pitch for strong ties between Kathmandu and New Delhi (as well as Kathmandu and Beijing). He stated that the economic progress of both India and China was an opportunity for Nepal, and stated that Nepal wanted to emerge as a bridge between both countries, and would not like to get embedded in zero sum geopolitical games. Nepal’s former Prime Minister, Prachanda, during his visit to India, also referred to the need for close ties with both India and China.

India should also keep in mind a few other points

While many in New Delhi are pointing to Malaysian Prime Minister Mahathir Mohammad’s stand against Chinese projects, it is important to keep in mind that while the Malaysian PM has scrapped a few projects, he has continued to reiterate the relevance of the China-Malaysia relationship (there is need for nuance). Second, it is one thing to point out the shortcomings of the BRI project, but India needs to prove its own track record in big ticket connectivity projects (New Delhi has been extremely slow when it comes to the implementation of connectivity projects within the neighbourhood). Third, there are areas where India is already working with China, so rigidity and paranoia do not make much sense. If even Japan is willing to participate in certain projects of BRI, there is absolutely no reason why India should not at least be open to elements of the project. It is also important to look at connectivity from an economic dimension and not a narrow security prism as large sections of India’s strategic community do. Finally, New Delhi can not put all its eggs in the American basket. While India’s strategic relationship with the US has witnessed an improvement, and Washington has repeatedly spoken about the need for greater connectivity within the ‘Indo-Pacific’, the US is not likely to invest significantly in economic connectivity projects. India thus can not be totally dismissive of Beijing-led connectivity initiatives.

While New Delhi needs to exhibit pragmatism, Beijing on its part needs to address the concerns of India, and other countries, with regard to the BRI.

China and the liberal vision of the Indo-Pacific

Mike Pompeo’s recent speech (titled ‘America’s Indo-Pacific Economic Vision’) at the Indo-Pacific Business Forum hosted by the US Chamber of Commerce in Washington, DC, has been carefully observed across Asia. Beijing has understandably paid close special attention to it. Pompeo emphasized the need for greater connectivity within the Indo-Pacific, while also highlighting the role which the US was likely to play (including financial investments to the tune of $113 million in areas like infrastructure, energy, and digital economy). The US Secretary of State, while stating that this vision was not targeted at anyone, did make references to China’s hegemonic tendencies, as well as the lacunae of Chinese connectivity projects (especially the economic dimension).

The Chinese reaction to Pompeo’s speech was interesting. Senior Chinese government officials were initially dismissive of the speech, saying that such ideas have been spoken in the past, but produced no tangible results.

A response article in the Global Times is significant here. Titled ‘Indo-Pacific strategy more a geopolitical military alliance’ and published in the communist state’s premier English-language mouthpiece, what emerges clearly from this article is that Beijing is not taking the ‘Indo-Pacific vision’ lightly, and neither does it rule out the possibility of collaboration. The article is unequivocal, though, in expressing its skepticism with regard to the geopolitical aspect of the Indo-Pacific vision. Argues the article:

[…] the geopolitical connotation of the strategy may lead to regional tensions and conflicts and thus put countries in the region on alert.

The piece is optimistic with regard to the geo-economic dimension, saying that American investment would be beneficial and would promote economic growth and prosperity. What must be noted is that while the US vision for an ‘Indo-Pacific’ has been put forward as a counter to the Belt and Road Initiative (BRI) of China, the article also spoke about the possible complementarities between the US vision for an ‘Indo-Pacific’ and China’s version of BRI. While Pompeo had spoken about a crucial role for US private companies in his speech, the article clearly bats in favor of cooperation between the Indian, Japanese, Chinese, and US governments, rather than just private companies. This is interesting, given the fact that China had gone to the extent of dubbing the Indo-Pacific vision as “the foam on the sea […] that gets attention but will soon dissipate.”

While there is absolutely no doubt that there is immense scope for synergies between the Indo-Pacific vision and BRI, especially in the economic sphere, China’s recent openness towards the Indo-Pacific vision needs to be viewed in the following context.

First, the growing resentment against the economic implications of some BRI projects. In South Asia, Sri Lanka is a classical example of China’s debt trap diplomacy, where Beijing provides loans at high interest rates (China has taken over the strategic Hambantota Project, since Sri Lanka has been unable to pay Beijing the whopping $13 billion). Even in the ASEAN grouping, countries are beginning to question the feasibility of BRI projects. Malaysia, which shares close economic ties with Beijing, is reviewing certain Chinese projects (this was one of the first steps undertaken by Mahathir Mohammad after taking over the reigns as Prime Minister of Malaysia).

Secondly, the Indo-Pacific vision has long been dubbed as a mere ‘expression’ that lacks gravitas in the economic context (and even now $113 million is not sufficient). Developments over recent months, including the recent speech by Pompeo, indicate that the American Department of State seems to be keen to dispel this notion that the Indo-Pacific narrative is bereft of substance. Here it would be pertinent to point out that Pompeo’s speech was followed by an Asia visit to Indonesia, Malaysia, and Singapore.

The US needs to walk the course and, apart from investing, it needs to think of involving more countries, including Taiwan and more South Asian countries like Sri Lanka and Bangladesh in the Indo-Pacific partnership.

The Indo-Pacific also speaks in favor of democracy as well as greater integration, but countries are becoming more inward-looking, and their stands on democracy and human rights are more ambiguous than in the past. Japan is trying to change its attitude towards immigration, and is at the forefront of promoting integration and connectivity within the Indo-Pacific. Neither the US, nor India, Japan, or Australia have criticized China for its human rights violations against the Uighur minority in Xinjiang province.

Here it would also be important to state that there is scope for China to be part of the Indo-Pacific, but it needs to look at certain projects beyond the rubric of the BRI. A perfect instance is the Bangladesh, China, India, Myanmar (BCIM) Corridor, which India was willing to join, but China now considers this project as a part of BRI.

In conclusion, Beijing can not be excluded from the ‘Indo-Pacific’ narrative, but it cannot expect to be part of the same, on its own terms. It is also important for countries like the United States and India to speak up more forcefully on key issues pertaining to freedom of speech and diversity (and ensure that these remain robust in their own respective countries), given that one of the objectives of the Indo-Pacific vision is a ‘Free and Open Indo-Pacific’.

Beijing and the India-Pakistan conundrum

During the course of the Shanghai Cooperation Organization (SCO) meeting in China, and days before Indian Prime Minister Narendra Modi arrived in China for his summit with Chinese President Xi Jinping, an editorial in Pakistan’s premier English-language daily (Daily Times) titled ‘China’s re-assurance on CPEC‘ made an interesting point:

If anything Beijing has been asking Islamabad to engage with New Delhi and keep tensions to a minimum. Such an environment is also conducive to timely completion of various projects under CPEC [China-Pakistan Economic Corridor] and transforming South and Western Asia into a high economic growth zone. Keeping the economy first is a lesson that our state has yet to learn from its big brother in the hood.

Zardari’s recommendation in 2012

Interestingly, during his meeting with former Indian Prime Minister Dr Manmohan Singh, in April 2012, former Pakistan President Asif Ali Zardari (Pakistan People’s Party — PPP) had also stated that Pakistan and India should seek to follow the Pakistan-China model of engagement. Zardari meant that, like India and China, India and Pakistan too should follow an incremental approach, with more frequent high level interactions and a heavy focus on economic cooperation.

It might be mentioned that between 2012 and 2013 some important leaps were made in the economic sphere between both countries, with the most noteworthy development being the setting up of the Integrated Check Post (ICP) at Attari (Amritsar, India). The ICP’s motive was to accelerate bilateral trade through the only land crossing (Attari-Wagah) between India and Pakistan. During this period, a number of high level delegations interacted, including the Commerce Ministers of both countries.

Pakistan also seemed prepared to grant India MFN status, but a change of government (along with domestic opposition from certain business lobbies as well as hardliners) in Islamabad (2013) and then New Delhi (2014) meant that this decision could not go ahead. Since then, relations have been tense, and there has been no opportunity to make any progress on this.

Tensions in the past 4 years: CPEC and terrorism emanating from Pakistan Continue reading

Bolton’s Iran policy: could it strengthen the China-Russia-Iran-Pakistan axis?

John Bolton, who took over as Donald Trump’s National Security Adviser on April 8, has had significant differences with India on a number of issues in the past. As US Ambassador to the UN, he opposed India’s elevation to the United National Security Council (UNSC), even at a time when relations were at a high during the Manmohan Singh-Bush era. Bolton had initially opposed the Indo-US nuclear deal, though later he lent his support. While the Trump administration has sought to elevate India’s role in the Indo-Pacific region, Bolton has expressed the view that there are some fundamental differences between India and the US. In the short term, though, there is no serious divergence.

Bolton and Iran

What would really be of concern to India however is Bolton’s hawkish approach towards Iran. Bolton’s views are not very different from those of US President Donald Trump and recently appointed Secretary of State John Pompeo. Bolton is opposed to the Iran Nuclear Agreement signed between Iran and P5+1 countries in 2015. In 2015, the NSA designate called for bombing Iran, last year he had criticized the deal, and last year he had called for scrapping the deal.

The Iranian response to Bolton’s appointment was understandably skeptical. Commenting on Bolton’s appointment, Hossein Naghavi Hosseini, the spokesman for the Iranian parliament’s National Security and Foreign Policy Commission, said: Continue reading

BC’s weekend reads

  1. Could Kurds hold independence referendum this year?
  2. Meet Germany’s Alt-Right
  3. Tolerated theft, suggestions about the ecology and evolution of sharing, hoarding and scrounging [pdf]
  4. It’s time for some game theory, United Airlines edition
  5. Mormon Transhumanists

Pride and Subsidies

Freakonomics had an episode on the dramatic impact of subsidies on the visual effects (VFX) industry. Long story short: 1) VFX companies operate on razor thin margins, 2) the industry chases subsidies from competing local governments–Canada and London are  currently important locations, 3) Californian politicians want to bring these jobs back to LA, but doing so would probably be a net burden.

(Let’s put aside the issue of the state of California trying to play central planner by effectively creating different tax rates for different industries. That’s a bad idea for reasons we can explore later.)

Putting yourself in the head of a Californian, something about the policy feels right (maybe not for the typical NOL reader, but probably for the median voter). I’m sure you could convince the median voter that these subsidies are a bad idea, economically. But even so, I’d be willing to bet that you’d still get significant support.

I’m confident that if you were to talk this issue over with a representative sample of California voters–or X industry in Y region for similar industry upheavals–you could convince them of the probable negative impact of such policy and still see many voters at least weakly supporting the policy. Why? Because being able to point to a movie and say “that awesome explosion was made in my backyard,” is worth some degree of sacrifice for these people.

Perhaps people want our government to give us something to be proud of (God knows they give us enough things to be ashamed of!). Perhaps people have some latent willingness to pay to be able to say that some high status industry is in their community/city/state/country.

We like pride, but it costs us. This puts us squarely in the domain of economics. How do we figure out how to make the trade off between pride, and the price we must pay for it? Some cases seem easy, at least in hindsight–the sacrifice of the civil rights movement was a small price to pay for the pride generated–but cases like the VFX industry, aren’t so obvious, but still high stakes.

I don’t think we’re likely to be able to figure out the bill. We can be proud of NASA, movies, the post office, and whatever else. But how much of the cost can we attribute to engaging in activities that make us proud? We get the same issue in markets. I have more than brand loyalty for Honda (the maker of my motorcycle); I’m also proud to associate with Honda as an innovative company with a history of liberating the world’s poor.

A clever statistician or economist could estimate some important facts about how people tend to make these trade offs. Doing so could help us make better decisions, but can’t ultimately replace our own judgment.

Given the uncertainty we face we really have to make a decision about whether to err on the side of over- or under-provision of pride goods–and this is true in a variety of settings.

I suspect that the “let 1000 flowers bloom” approach is the appropriate one here. We don’t want to have one Secretary of Pride deciding to err on the side of over-provision and the result is that a bunch of children die from preventable causes so that we can all feel proud about how cool the latest domestically produced Fast and Furious movie is going to be. On the other hand, it would be a tragedy of slavery was never ended because it would interrupt business as usual.

Markets, civil society, and government face different sorts of pros and cons with respect to how they might make these trade offs. Arguing about them could create a new academic discipline at the intersection of ethics, economics, and sociology.

In all three spheres, there will be many very bad decisions made. But if you aren’t free to be wrong, you aren’t free. The question to ask is what sort of pride goods will tend to survive, and in which spheres?

What we can say for sure is that private, voluntary exchange and cooperation (free markets and civil society) at least allow us to choose our associations. And they require us to choose, and choose again on a regular basis. Our nation is mostly based on luck. Where we live tends not to change much. Voting with your feet is costly, so we should expect it to be that much harder to dismantle big mistakes. The political process routinely results in outcomes we’re ashamed of (about half of voters are ashamed of the results every presidential election!).

There aren’t markets in pride so it’s hard to know how the benefits compare to the costs. But we can (and do) exhibit pride in markets. We should probably do more of it. And perhaps we should also be more skeptical of government, even though we normally think of them as providing pride goods. On the margin, anyways, I think this is a good direction for most people to move. Be proud of your community because the people have whatever unique traits they do. Be proud of the brands you buy from for their contributions to the state of the art. Be proud of your local sports team.