Latin American governments air differences at Mercosur summit; Hugo Chavez dominates meeting

Chavez ... promised to "decontaminate" South America's main trade bloc of its founding ideas: U.S.-supported free market policies and privatization of state industries.

I am republishing the entire report because it's a good snapshot of current government relations in the Mercosur region. See report and Wikipedia for background on Mercosur.

Mercosur leaders grapple over direction
by Michael Astor
The Associated Press via Business Week, January 19.
Venezuelan President Hugo Chavez called Friday for South America's governments to take greater control of their economies, while Brazil's president urged respect for differences at a summit marked by sharply divergent visions for the Mercosur trade bloc.

As the two-day summit ended with 11 of South America's 12 leaders on hand, the heads of state engaged in a rare bout of public squabbling at their final session, an exchange of nation-on-nation criticism that illustrated deep divisions and raised questions over whether the fractured bloc can be revitalized and expanded.In comments broadcast to reporters live on closed circuit television, Bolivian President Evo Morales complained about the prices Brazil pays for Bolivian natural gas, then criticized Colombia's conservative President Alvaro Uribe over U.S. anti-drug aid to Colombia.

A clearly irritated Uribe used his speech to defend himself. Meanwhile, the leaders of Paraguay and Uruguay -- which have the smallest economies in the Mercosur bloc -- complained that their nations are constantly patronized by Argentina and Brazil, which have the continent's two largest economies.

Silva tried to smooth over the differences, saying that the leaders must "respect the internal political differences that our countries adopt to confront the challenge of development."The leaders themselves, split politically by a continental drift to the left, are struggling to determine whether Mercosur should continue on the free market path it's been on since it was founded in 1991, or veer toward Chavez' vision of South American socialism.

"One of the proposals I will dare to make is that in each one of the our countries the state have a greater presence in the economy," Chavez said, adding that he thought too much of the region's economy was controlled by multinational corporations.

Silva, who was elected as a leftist but who embraces free market economics, said the bloc was essential for the region to advance and become a bigger player on the world stage.

Despite its problems, Silva said, Mercosur trade has grown to $30 billion (23 billion euros) in 2006 from $4 billion (3 billion euros) in 1990.

"There has never been such a promising political climate for the integration of Mercosur," Silva said.

However, the summit was overshadowed by Chavez, who accused the United States of using Venezuela's largest phone company to spy on him and promised to "decontaminate" South America's main trade bloc of its founding ideas: U.S.-supported free market policies and privatization of state industries.

Brian Penn, a spokesman for the U.S. Embassy in the Venezuelan capital of Caracas, declined to comment on the accusation about spying.

Chavez's recent moves to shut down an opposition television station and rule by decree even seemed to place the country at odds with the group's commitment to democracy. [1]

Venezuela became a full Mercosur member last year, but the country has still not met all the criteria in terms of the common tariff structure.

Despite their differences on economic policy, Venezuela has grown to be one of the largest trading partners with Brazil and Argentina. Today Venezuela accounts for more of Brazilian trade than Britain or France.

And Silva and Chavez signed important oil deals to build a refinery in Brazil, explore for oil in Venezuela and begin technical studies on a natural gas pipeline stretching 3,100 miles from Venezuela to the northeastern Brazilian city of Recife.

Silva also welcomed Bolivia, which has just requested full-membership in the bloc, as well as any other nations that wanted to join.But Argentine President Nestor Kirchner questioned the wisdom of granting Bolivia exemptions to the bloc's common tariff and said he preferred to do more for Paraguay and Uruguay.

Paraguay and Uruguay are pondering trade deals with the United States out of frustration with Mercosur, and analysts say the bloc would be hurt if they left.

The inclusion of Bolivia and possibly Ecuador could also tilt the trade bloc even further to the left.Morales, a strident leftist, suggested he won't support boosting Bolivia's association with Mercosur to full membership until the bloc outlines its future path.

The Southern Cone Common Market, or Mercosur, unites some 250 million people with an annual economic output of $1 trillion, or about 76 percent of the total for South America.

Mercosur's full members are Argentina, Brazil, Paraguay, Uruguay and Venezuela. Bolivia, Chile, Ecuador and Peru hold associate membership, meaning they don't have voting rights and do not have to comply with Mercosur tariff rules on goods imported from outside the bloc.

1) Pulling the Plug on Anti-Chavez TV: Venezuela's Decision Not to Renew Station's License Draws Accusations of Censorship by Juan Forero, Washington Post Foreign Service, January 18, 2007

[...] The case has attracted widespread attention from officials in Washington and Latin America, for whom the non-renewal of a license has echoes of right-wing dictatorships of the past, when newspapers and broadcasters were closed if they veered from the party line. Though self-censorship and slayings of journalists remain common, particularly in Colombia and Mexico, the closing of a media outlet for political reasons has not occurred in years. [...]

Frankenstein at the United Nations: Confucius say you kowtow. And a few words about democracy's soft underbelly

Pundita, dear, your crystal ball seems to be working well these days. You launched your China Frankenstein series less than two weeks before China shot down their satellite. I am surprised you did not put up a "Frankenstein in Space" post. May I suggest that you place the Frankenstein series on your sidebar for handy reference?

I also note that the day before Bernanke warned Congress that the graying of America's population would have serious affects on the economy, you quoted Thurow's 1997 warning about the strains that the aging baby boomer population would place on democracy.

Not bad for a crystal ball you purchased at a yard sale.
Boris in Jackson Heights

Dear Boris:
The early warning came in August 2006, with a report that China had laser-illuminated a US satellite -- targeted it, in other words. China's action to shoot down their satellite is a sharp reminder on how a powerful military dictatorship does things on the foreign relations front. Hang the debris cloud from the satellite hit; China has been trying to set up a UN conference on heading off space weapons programs. The US has been blocking the effort on the grounds that there is no ams space race.

So to push the issue forward at the UN, China's generals okayed the hit on their satellite, despite the large debris cloud this would create, and with full knowledge that the action would set off an international uproar. And with full knowledge that the US and Russia abandoned anti-satellite testing in part because destruction of satellites causes so much space debris.

It's important for democratic governments to understand that China's "peaceful rising" does not mean they want to take their place alongside the Western powers. China wants to rise above today's powers.

China's dictators have a simple philosophy when it comes to dealing with the nations that were most responsible for pulling China out of ruin: We kowtowed to you for decades, now you kowtow.

Beijing does not want to be 'part' of the world community; they want to rule it. Part of this is because China's leaders have talked themselves into believing they have no choice but to continue to defend their oppressive government. They feel driven to demonstrate to the world that China's form of government is superior to democracy.

Another factor is China's old civilization, which the Chinese never tire of invoking. The civilization is one of emperors. Imperial thinking permeates Chinese philosophies. The Cultural Revolution did not purge the mindset because it is so deeply embedded in Chinese culture.

Until all this understanding translates into policy in Brussels, Tokyo, the US and Moscow, China's generals will continue to set benchmarks for their peaceful rise, of the kind we saw with the destruction of their satellite. China wanted to make a point at the United Nations, and now they've made it.

As for Ben Bernanke's remarks, he gave the same warnings in October 2006. The warnings have been building for decades from many quarters in the US.

The importance of Thurow's observations on the same theme is that they point to a larger issue: whether democracy and capitalism can continue to peacefully coexist in the US, once major entitlement programs dry up or are greatly curtailed.

The issue transcends US borders; it affects every democracy that is trying to make capitalism work. Thurow observes that globalized business chips away at the cement holding democracy and capitalism together, which is programs that benefit citizens who cannot survive under a capitalistic system without assistance from the state.

Once a business can move operations offshore to avoid, say, low-cost medical insurance for US employees, the cost for insurance transfers to the individual taxpayer, if the state picks up the tab. This situation can only play out in so many ways before the taxpayer revolts. The state is then forced to nationalize or re-nationalize key business sectors in order to come up with the revenue to fund assistance programs.

From there, it's a hop and a skip to the scenario in von Hayek's Road to Serfdom. At some point along the road, the state revokes liberties to impose more socialism than most citizens want. Poof! Democracy disappears or becomes a stage show.

Keeping democracy functioning smoothly is a balancing act between capitalism and socialism. Globalization is upsetting the balance. Thurow's comments point to the soft underbelly of democracy, which resists innovation when politician's votes are at stake. Fixing Medicare and Social Security prior to an outright collapse of the systems will mean pain; the solutions require leadership rather than politics, which runs on compromise and sticking with the status quo until a system finally collapses.

Thank you for the suggestion, Boris; as soon as I can find time I'll implement it.

The Great Capitalist Peace has come and gone

Last week while I was working on the Capitalism vs Democracy essays, I received an email from a reader, Dr. Ernie, who mentioned the "great capitalist peace" policy promoted by Messrs. Anatol Lieven and John Hulsman in their book, Ethical Realism.

As I've stated before on this blog, I have not read the book. But if Dr. Ernie has correctly interpreted the relevant passages, it seems that Lieven and his buddy are proposing that US foreign policy ditch the democracy doctrine and replace it with a capitalist doctrine.

Evidentially they argue that (somehow) this would bring about a "Great Capitalist Peace," as the authors call it, in which American hegemony would be eclipsed by the sheer success of nations the world over. That happy state of affairs would then somehow result in homegrown democracies in nations that had previously resisted democracy.

In other words, if Kim Jong-il's government could only become as rich and powerful as the US one, democracy would bloom in North Korea.

I can't even dismiss that attempt to eclipse the democracy doctrine as a college try because I assume college students interested in the topic know about the infamous Washington Consensus.

A wag noted that there never was a Washington consensus because economists disagreed on how to pull Latin America out of economic ruin. However, the Washington Consensus was overwhelmingly a laundry list of capitalist-oriented measures that were implemented with greater or lesser success in Latin America in the late 80s and the 90s. And they had applications outside Latin America and strongly colored US foreign policy in the 1990s and the runup to 9/11.

It was the list of measures that transformed the antiglobalist movement from a bunch of granola eaters and union bosses to where it is today, with ties to terrorist organizations and the clear-cut agenda of destroying the power of the United States of America. Indeed, the economist who coined the term "Washington Consensus" once noted that the antiglobalists couldn't even hear the term without "foaming at the mouth." He was barely exaggerating.

I don't know where Hulsman spent the 1990s, but I think Lieven is too sophisticated to have seriously proposed returning to September 10, 2001 and trying to pretend that the next day never happened, so I have no idea what he's up to in that book.

The world we knew on September 10 is gone, forever; it's gone because it was built on willful blindness. Many policy analysts in Washington and Brussels really believed at the time that globalization and its pro-free market orientation had already ushered in a great capitalist peace. And they took a patronizing attitude to the antiglobalist movement.

Again, I haven't read the book, but if the quotes Dr. Ernie sent me are indication, there have been more sophisticated attempts to get rid of the democracy doctrine, which is anathema to transnational corporations, antiglobalists, terrorists, state sponsors of terror, military dictatorships, and transnational crime syndicates.

The big question is whether the doctrine is still anathema to Brussels. Up until very recently I would have said yes. But in December a British analyst appearing on Fox Cable said bluntly that the new view in Europe is that immigrants assimilate or get out. He was speaking specifically of the Muslim immigrants, but the point is that Brussels might be looking at the democracy doctrine in a different light now that Europeans are getting their head screwed on straight.

If that is the case, the Eurocrats -- formerly the US Democrat Party -- will have to retrench because they follow the Brussels party line. I don't know where that would leave Mr Lieven.

"The business of America is business," it's said. But the foremost business of the US federal government is to defend America. US foreign policy needs to get its head out of economics books.

Capitalism vs democracy, Part 2: Help! Help! The ark is sinking!

The system that has held democracy and capitalism together for the last century has started to unravel.

In 1997, the same year that Fareed Zakaria coined the term "illiberal democracy," economist Lester Thurow gave a stark warning about the growing tension between capitalism and democracy in the era of globalization.

In the years since the tension has placed ever greater strain on newer democratic governments in developing countries, often leading to illiberal democracy that careens toward oppressive government. Poorly considered "cookie cutter" free market reforms packaged in aid and development assistance have only contributed to trends against genuine democracy in developing nations.

Yet US foreign policy has blithely continued to back free market reforms regardless of their applicability on a country-by-country basis. So it's as if we're bailing water on one side of the boat and pouring in buckets of water on the other. Slowly the democracy ark is sinking despite the large number of democracies to emerge in the past quarter century.

What is illiberal democracy? It's the kind I lampooned in the 2005 Democracy Stage Show Kit post; it looks like a duck but quacks like a moose. Put more formally:

[...] the term is almost always used to denote a particularly authoritarian kind of representative democracy, in which the leaders and lawmakers are elected by the people, but abuse their power while in office. This may be due to either widespread corruption or the absence of an adequate legal framework to restrain the power of the elected government. Thus, although free and fair elections do take place, the people are cut off from real power.(1)

What was Lester Thurow's warning?

[...] Historically the social welfare state and social investments in education have been used to make capitalism and democracy compatible. The state would take actions (progressive taxes, for example) to equalize market outcomes, and would help provide for necessities (with, say, a special tax benefit for home mortgages). The state would provide support when individuals are no longer wanted by the market (pensions, health care, unemployment insurance), and would help individuals get marketable skills (public education) so they could earn a good living. [...]

The elderly are putting this system at risk. Ever larger government expenditures on ever more numerous elderly voters have to be financed by reducing social welfare benefits for other groups, by cutting social investments in the future (education, infrastructure, and research), or by raising regressive payroll taxes.

The last becomes impossible with globalization. Higher payroll taxes raise the effective wages that firms have to pay and end up simply driving industries and employment abroad -- as is now dramatically visible in Europe. Those left behind have to pay higher and higher taxes to support the elderly. Lower social investments in education, skills, infrastructure, and knowledge generation (research) make American companies and workers less competitive in world markets. With lower earnings, both are less able and less willing to pay the taxes necessary to finance investments in their own future. [...]

The system that has held democracy and capitalism together for the last century has started to unravel. As earnings distributions widen due to globalization and a skill-intensive technological shift, and as government seems unable or unwilling to do anything about it, that majority of workers who face lower real earnings has to become disaffected sooner or later with democracy. [...] (2)

Now one can argue that in America there are forces mitigating the grim scenario Thurow describes but that's just the point: China and other big US trade partners are not buying up government debt in a newly emerging democracy trying to follow the free market prescription for prosperity. Yes, the vast and powerful American nation has options other nations don't, but you can apply Thurow's warning to say, present-day Latin America to appreciate his argument.

Does all this mean that the US should abandon our great emphasis on capitalism and focus instead on shoring up the most basic infrastructures of democracy? With the ghosts of von Mises and Ayn Rand scowling over my shoulder -- sometimes yes and sometimes no; it depends on the country situation and US objectives at the time.

What we need to abandon is the cookie-cutter approach to promoting US foreign policy goals. We don't need to cast off our ideals; we need to retire the theoretical bubbles in which the ideals are applied to vastly different situations. We need to modernize our approach by making it more empirical. We need to stop applying the same schema to vastly different phenomena.

An example of thoughtlessly applying the same schema to wildly different conditions is the economic 'shock therapy' theory pushed by Jeffrey Sachs. It worked in some cases; it had no hope of working in others. Yet the theory was prescribed and applied wholesale to every government that bought the idea that shock therapy was the new Promised Land -- no matter what the country conditions.

You can't prevent theoretical bubbleheads like Sachs from acting as advisors to governments, but it doesn't follow that the US Department of State and other US foreign policy organizations have to live in a theoretical bubble. Yet that's exactly where Paul Bremer was living while he oversaw the CPA, with infamous results. That's exactly where US envoys to Venezuela were living, with the result that Iran's military now stands behind a shrewd populist who is planning to make himself ruler for life.

Meanwhile, China's envoys run around the globe with open checkbooks and ask governments in other developing nations, "What do you want?"

Here we come to a snag. It's not just political exigencies that prevent State from adopting an empirical, case-by-case approach to foreign relations; it's also insufficient manpower and inadequate data filters. There's virtually limitless data readily available about any country you can name; the task is filtering the data so it becomes information useful to tailoring a US foreign policy initiative to a specific country.

Yet no amount of database wizardry and additional personnel will work, unless there's a change in mindset. The highly empirical information age arrived some time ago, but key US policy institutions have yet to join the modern era. They are still looking for the next new Promised Land: the one theory that will explain everything, fix everything.

Somewhere I hear laughter. Maybe it's the ghost of Bruce Lee, who transferred the empirical approach to martial arts. He taught that self defense is not a particular system of fighting; it's a fight for your life. From that view, you learn as many means of defense as you can and practice, practice, practice combining and applying them to every new fighting situation you meet with.

If US advisors would only remember that foreign relations are pegged to defense and not systems of economics and government, they'll avoid the land mines in US aid and development assistance without betraying core US principles.

1) Wikipedia

2) The Boston Globe, One nation divisible: As government's role recedes, capitalism and democracy clash. I am grateful to Michael Eisenscher for preserving the article on the Internet.

Capitalism vs Democracy, Part 1: What is a foreign policy, anyhow?

It is fair to say that for almost a quarter century prior to September 12, 2001, the United States of America did not have a foreign policy; we had economics theories fobbed off as foreign policy. So from the long view it could be considered a kind of cosmic comment on insane policymaking that America's twin cathedrals to neoliberalism, globalization and economics 'shock therapy' were blasted to rubble.

One would hope that the catastrophic attack on the World Trade Center marked the end of the Insane Era in US foreign policy, but at this time the application of defense doctrine to US foreign policy should be considered a blip. There is no guarantee that the policy will outlive the Bush presidency. What's more, there's no guarantee that US foreign policy won't revert to a showcase for economics policy once Bush leaves office.

There was much right about the Reaganomics revolution -- for America. There was much right about Thatcher's economics revolution -- for Britain. There was much right about unrestricted global trade -- for the rich countries. And when viewed on a limited basis, the revolutions had positive consequences when applied to several countries. The revolutions had terrible consequences for developing countries that did not have the government and private sector infrastructures in place to accommodate a radical shift to privatization and free market economics, which could not count on NATO to come to their defense, and which had big trouble coming up with enough petrodollars to purchase energy to fuel their experimental market economy.

The fall guy for the debacles should have been the International Monetary Fund and their structural adjustment program. (Here's a foreign policy tip for governments: If you're going to do something that you're only hoping will work, you need a front man.) But no, the US government under Bush 41 and Clinton wanted to be the world standard bearer for neoliberalism, shock therapy and globalization.

So here we are today, with a good portion of the world hopping mad at the United States for pushing disastrous economic policies on them. And with foreign policy advisors who are still seriously wondering whether it's strictly necessary to work the concept of national defense into a nation's foreign policy.

To be continued tomorrow.

Great leaps in China's civil rights movement

Today is Martin Luther King Day in America. I'm celebrating the life and legacy of Martin Luther King by highlighting two stories on China's progress on the civil rights front. Cynics will say that China's seeming turnaround on Darfur is due to arm-twisting. But those live in freedom are in the slog era of foreign relations, where patience and persistence are the most effective tools.

I'll tell you why it's so hard for Americans in particular to have patience for this kind of work: because it's in the American gene code to place a very high value on individual effort. So no matter how many times we have it explained to us, we have a hard time imagining what it's like not to believe in the vast power of individual effort.

The good news is that humans are a quick study, once we get in the swing of something. That's why Jeane J. Kirkpatrick was way off the mark, when she wrote in 1979:

In the relatively few places where they exist, democratic governments have come into being slowly, after extended prior experience with more limited forms of participation during which leaders have reluctantly grown accustomed to tolerating dissent and opposition, opponents have accepted the notion that they may defeat but not destroy incumbents, and people have become aware of government's effects on their lives and of their own possible effects on government. Decades, if not centuries, are normally required for people to acquire the necessary disciplines and habits.(1)

A few years after those words were written the Soviet Union dissolved and democracies sprang up among peoples who could barely the imagine the concept.

Kirkpatrick overlooked the power of human nature and individual effort. So keep talking; hear? Think of an hourglass you're filling with a tiny pinch of sand grains each time you talk. One day, just a pinch will finally fill up the glass. The talk doesn't have to be couched in the words of politics or social justice. A story about your personal struggle or the struggle of a relative or ancestor can be that final bridge to understanding.

For decades Chinese leaders have fallen back on the violent upheavals in America caused by our civil rights movement, when they argue for their authoritarian government. So if you're of a polemical bent, you can point out to Chinese acquaintances and colleagues that the civil rights protests of black Americans did not balkanize America just because this country is a democracy. So if China's leaders live in fear of a balkanization -- well then, get busy and democratize.

Most importantly, Jeane Kirkpatrick overlooked that time is a highly subjective phenomenon. When love and dedication are coupled with the human will, a century's needed efforts may collapse into months or even the wink of an eye.

Enough chitchat. Now it's time to celebrate progress in the human rights struggle. Americans, take special note in the following story of the Chinese emphasis on dignity and saving face, which do not have a high place in the modern American lexicon. Note also the concern about how China is perceived on the world stage. Now, during the runup to the 2008 Olympics in China, is the best time to redouble actions supporting China's civil rights efforts:

Public Shaming of Prostitutes Misfires in China: Traditional Discipline Draws Angry Outcry
By Edward Cody, Washington Post Foreign Service
December 9, 2006
BEIJING, Dec. 8 -- To local officials combating Shenzhen's reputation as a den of vice, it seemed like a good idea, the perfect way to dissuade provincial girls from turning to prostitution in the big city and frighten away the men who patronize their brothels. So after raiding the karaoke bars, saunas and barbershops where prostitutes often ply their trade, police officers in the southern Chinese boomtown paraded about 100 women and their alleged johns in the street, using loudspeakers to read out their names and the misdeeds they were accused of committing. News photographers snapped away while thousands of residents lined up to take in the show.

The spectacle, which took place Nov. 29 in the Shenzhen district of Futian, was in many ways unremarkable for a nation in which wrongdoers have long been subject to public humiliation. In particular, it recalled the Great Cultural Revolution of the 1960s and '70s, when Chinese accused of being intellectuals or reactionaries were routinely paraded in front of jeering crowds that found entertainment in ridiculing them, insulting them and sometimes beating them.

But times have changed, the Futian Public Security Bureau discovered. Instead of being praised for cracking down on vice, the Futian police came under a hail of criticism for violating the right to privacy of those who were paraded about in public.The swift outcry, in newspaper interviews and on the Internet, provided a dramatic illustration of the distance this vast country has traveled since the Cultural Revolution, when many people embraced such tactics and even those who opposed them were afraid to speak up for fear of retribution.

The reaction helped explain why U.S. and other Western complaints about human rights restrictions in China are sometimes ignored here. Although Chinese and foreign activists can point to many remaining abuses, particularly by police forces such as Futian's, many Chinese view the human rights situation as such an improvement over times past that they would rather emphasize how far they have come than how far they have to go.

"This shows that the public has a stronger sense of human rights and privacy protection," said Kang Xiaoguang, a sociologist with the Rural Development Institute at the People's University of China.

"Twenty years ago, this kind of parade would have been greeted with unanimous applause," he said. "But now it gets more criticism than support because more people realize their rights should be protected. And of course, they have more channels to voice their criticism, like the Internet."

An outraged Shanghai lawyer, Yao Jianguo, started the uproar over Shenzhen's tactics last Friday with an open letter to the National People's Congress, the Chinese legislature. In it, he charged that the Shenzhen parade was illegal under current laws and likely to have a "baneful influence" on the Chinese people and the country's reputation abroad.

"These people were just alleged criminals," Yao complained. "It was not yet determined that they had violated the law. The police publicly humiliated them, which violates the legal process. This brutal form of punishment has long been abandoned by our society with the development of civilization and a legal system."

The All-China Women's Federation also voiced a complaint, deeming the parade an insult to the image of Chinese women, news media reported.

"The public parade damages the criminal suspects' self-esteem," a spokeswoman said. "With the development of human civilization, such barbaric punishment has no place in modern society."

[...] many Chinese citizens thought the police went too far this time. Over the past week, they have spoken out -- with relative anonymity -- on the Internet. A few upheld the tactic as effective dissuasion and noted that the prisoners wore surgical masks to shield their identities. But most agreed with Yao.

"Even while carrying out the law, police should well respect human rights," one commentator said. "Is there any article in Chinese law saying that police can parade people in front of the public? If there isn't, then who empowered you to do that?"

Another upset writer accused the Futian police of going back to the bad old days. "Public exposure? That was the kind of thing that happened during the Cultural Revolution," he said. "Those who made prostitutes parade in the street lost face just as much as those who were put on parade."

Focusing on the law, another contributor noted that prostitution is usually considered a violation of the social order and is punished by administrative detention rather than a criminal conviction and formal prison time.

"These are legal citizens, enjoying dignity endowed by the constitution," the writer said, "so it is unlawful for the police to parade them in front of the public."

Now for the Darfur story:

China Given Credit for Darfur Role: U.S. Official Cites New Willingness to Wield Influence in Sudan
By Edward Cody, Washington Post Foreign Service
January 13, 2007
BEIJING, Jan. 12 -- The U.S. special envoy to Sudan said Friday that China has pushed the Sudanese government recently to help resolve the bloody Darfur conflict and ease the plight of the region's nearly 3 million refugees.

The Chinese intervention marked a shift from past policy under which Beijing seemed reluctant to use its influence in Sudan, according to the envoy, Andrew S. Natsios. "I think they're engaging much more aggressively," Natsios said at a news briefing after four days of talks here with Chinese officials.

President Hu Jintao announced during a Chinese-African summit conference last November that he had urged the Sudanese president, Omar Hassan al-Bashir, to work with U.N. and other envoys to end the fighting, Natsios recalled.

In addition, he said, China's U.N. ambassador, Wang Guangya, was critical to securing Sudan's participation in a recent international accord aimed at replacing a flagging African Union peacekeeping force in Darfur with a larger U.N. contingent.

The Bush administration has long urged China to put more pressure on the Sudanese government, citing large-scale Chinese oil purchases, investment and weapons sales as tools that could be used to persuade Bashir to cooperate more fully with U.N. attempts to broker a peace accord.

China, however, has viewed Sudan mainly as an important source of petroleum, a key element in Chinese foreign policy as the booming economy here creates a growing thirst for energy imports. [...]

Human rights activists will point in answer to China's unusual use of their veto this weekend to help block the US-led resolution condemning Burma's human rights record. Yet it's to be kept in mind that China saw the venue for the resolution -- the UN Security Council -- as the big sticking point.

The argument is that the resolution should have been brought before the UN Human Rights Council -- that lame and corrupt commission -- because Burma does not pose a security threat to other nations. The argument is not quite true, considering Burma's proximity to India and the Burmese refugees in India.

In any case, putting the resolution before the security council was a resounding slap at the ineffectiveness of the human rights council -- a good move on the part of the US. That China dodged the issue does not change their position in Africa, which will increasingly come under fire from the African Union if China does not step up to the plate on Darfur. More than any other nation, China has influence with Sudan's government.

1) Dictatorships and Double Standards, Commentary Magazine, November 1979.

The chickens come home to roost for State's failed policies in Latin America

On Saturday Iran's President Mahmoud Ahmadinejad kicks off a four day visit with the presidents of Venezuela, Ecuador and Nicaragua, who are being sworn in within days of each other after recent election victories -- and who are sworn enemies of free market policies. Rafael Correa, a supporter of Mr Chavez and his anti-Americanism, assumes the presidency of Ecuador on Monday. Ahmadinejad will also meet with Evo Morales, the left-wing President of Bolivia who took office a year ago.

At least the Pentagon is getting their head screwed on straight and realizing Iraq is not Poland; they're trying to jump start state-owned Iraqi industries that Paul Bremer wanted privatized. But the US Department of State, the US Congress, and USAID still have a ways to go before they stop trying to act like Margaret Thatcher in their policy toward developing countries outside Europe.

Of course free markets are superior to ones that are rigidly state-controlled. But one cannot exclude millions of a developing country's poorest from an economic miracle, and not expect political repercussions that savage a young democracy.

I return to the theme of priorities, which I mentioned in my recent posts on the Millennium Challenge Account. First we sacrificed democratic principles at the drop of a hat in order to fight Soviet Communism. Then we were willing to deal with any ruling class around the globe, no matter how corrupt and oppressive, which agreed to sell out their country's key industries to foreign investors.

Why don't we try something new for a change, and set forth a defense-based foreign policy -- instead of an economics-based policy -- that sticks to the core issue of democracy?

Nowhere are US foreign policy priorities more skewed than in Latin America. So how's that been working out for the US?

February 2006: "Bolivia has not previously had the close relationship with Iran that Cuba and Venezuela have been developing. But Bolivia's new president, Mr. Morales, has talked recently with Ahmadinejad about forming a trilateral energy alliance between Iran, Venezuela, and Bolivia. Among other things, it would provide Bolivia with expertise to nationalize its oil and gas industry."(1)

January 10, 2007: [President Hugo] Chavez said the constitution would be changed to allow the government to take control of the natural gas industry from foreign companies, which now have wide rights in the [Venezuela energy] sector. Earlier this week, he said he would increase state control over four key oil production projects. Those projects [...] are operated by U.S. firms such as Exxon Mobil and Chevron as well as foreign multinationals Total of France and BP. [...](2)

January 11, 2007: "During 16 years, the people endured the consequences of this neo-liberal economic model," [Nicaraguan President Daniel] Ortega said, referring to the free-market policies of his three conservative predecessors. "What benefits has this model brought us? Where is the wealth? [...] Poverty and hunger ... make the vast majority of Nicaraguans suffer, no matter what political party they belong to."

Many Nicaraguans expect new aid deals to be announced after Iranian President Mahmoud Ahmadinejad arrives in Managua for a visit Sunday.(3)

So what should the US government do in response? At the moment, envoys should haul suitcases full of cash, and attache cases full of the type of aid and development assistance proposals that Mr Ortega likes, when they pay their respects.

Then everybody concerned needs to put on their thinking cap and figure out the differences between privatization and democracy. Once they climb that mountain, figure out the differences between foreign investment and democracy.

1) Latin America's leftist regimes get cozy with Iran by John Hughes for The Christian Science Monitor.

2) Chavez Would Abolish Presidential Term Limit by Juan Forero for The Washington Post.

3) After Long Hiatus, Ortega Returns to Office in Nicaragua by Hector Tobar and Alex Renderos for the Los Angeles Times.

Does Osama speak Mandarin? The Great Game, 21st Century style

(Today's planned post has been bumped to Monday.) The other day Baron Bodissey at Gates of Vienna published a piece titled The Middle Kingdom and the Crescent, which examines the murky question of whether the ETIM (East Turkestan Islamic Movement) has terrorist ties -- hey! Where are you going? Didn't you read Kipling when you were a child? Resign yourself to learning about peoples and places that are quaint only from a far distance. Where was I?

East Turkestan does not exist as far as China's government is concerned, but it's located in Xinjiang, China's largest province. East Turkestan, as it used to be called before Mao's troops overran it, is peopled mostly by the Muslim Uygur (pronounced 'weegur') people. The Uygurs want their own country back, and they have a pretty good case.

The question the Baron examines is whether ETIM, a violent separatist group, has ties with al Qaeda.

It's an interesting piece because it examines intel from different angles, including the US reasons after 9/11 for going along with China's designation of ETIM as a terrorist organization.

All I will add to the story is that one has to keep The Great Game in mind. It so happens that the Uygurs are sitting on top of large oil and gas reserves in Xinjiang. That's all we really need to know, isn't it, to see how the chips are falling.

Of course Beijing will slap the terrorist label even onto a Uygur knitting bee. And no matter how much the US government frowns on ETIM, unofficially Washington is giving a cordial welcome to Uygur activists.

But to return to the Baron's question, what about the Uygur connection to al Qaeda? Well, put yourself in the place of a Uygur: Help from bin Laden, help from the US Congress, help from bin Laden, help from the US --

Now put yourself in Osama's place: Should I take refuge in China while at the same time angering Beijing?

There have been too many Osama sightings in China -- in Xinjiang, no less -- to dismiss the stories. Then there is the history:

[...] It should be recalled that representatives of China’s Peoples’ Liberation Army (PLA) had met and struck a deal with Osama. Osama was to restrain an [Uygur] uprising in [Xinjiang]. In return, PLA had agreed to build the communication network in Afghanistan which was then ruled by the pro-Osama Taliban. The Memorandum of Understanding was signed on the 9/11 day itself. Nothing has happened subsequently to suggest a weakening of ties between Osama, Taliban and PLA. [...](1)

So, whatever ties ETIM had with al Qaeda years back, I doubt that Osama has many friends in ETIM at this time because the safest place for him right now is in China. And China's secret police are everywhere in Xinjiang. You can't take a pee in Xinjiang without this being noted by undercover agents and ratters.

Even if I am right, that says nothing about ETIM ties with other Muslims in other parts of the world sympathetic to the Uygur cause. And it says nothing about ETIM ties to other terrorist organizations, which they very definitely have. They really don't need to depend on help from al Qaeda.

But it all boils down to this: oil talks, nobody walks. Thus, the outline of today's Great Game.

1) Who's Hu in South Asia: Decoding India-Pakistan-China relations by Rajinder Puri, September 2006.

Bye-bye Venezuela: Shall we blame this on Negroponte or sunspots?

(If you missed yesterday's post, it's because I didn't publish it until after 3:00 EST.Technical glitches.)

"Mr Chavez also announced he would nationalise key businesses, declared himself a Trotskyist and cited the ideas of Marx and Lenin.[...] problems facing key Chavez allies - Bolivia, Ecuador's president-elect and Iran - may make him want to establish this phase of the [socialist] revolution before the 2014 deadline he has set.

Hugo Chavez denies that he wants to follow the Cuban model of government; I think he's telling the truth. It's early days, but it looks to Pundita as if he's working toward the Libyan model. That wouldn't exactly make Chavez a communist. It would make him a king. As long as the price of oil stays high, he might just get away with his revolution.

I am telling you with a straight face that some observers claim that Hugo Chavez's leap to the extreme left happened when he learned that John Negroponte was taking the number two job at the US Department of State -- such is his hatred of Negroponte, so the gossip goes.

Mr Chavez needed no encouragement to show his true colors once he was reelected. And, sad to say, Negroponte will not have the Latin American account when he arrives at State. He'll be responsible for Iraq and Northeast Asia -- including China and North Korea, freeing up Condoleezza Rice to concentrate on the Israel-Palestine issue and Iran. But one can assume that Negroponte's vast experience with commies such as Chavez will be useful to State's initiative in the Latin American region, if State can locate Latin America on a map.

Chavez accelerates on path to socialism
By Nathalie Malinarich
BBC News
Venezuelan President Hugo Chavez had always said that with his new term in office, beginning on 10 January, the socialist revolution would start in earnest. And, after his resounding victory on 3 December, he has wasted no time.

Before even being sworn in for the third time, Mr Chavez has said that he wants to merge all his coalition partners into a single party, warned he will not renew an opposition TV channel's licence and announced he will nationalise key businesses. He has also called on the National Assembly to give him the power to rule by decree and replaced his Vice-President, Jose Vicente Rangel, seen as a key figure in his previous administration. While some of the announcements themselves have not come as a complete surprise, for many, the intensity and pace of the change has.

'Surprises'
Exactly what the so-called deepening of the Bolivarian Revolution - named in honour of the 19th Century independence hero - would entail was not made clear during the presidential campaign.

Whatever its shape, the notion of the socialist days to come fills Mr Chavez's supporters with hope and his opponents with dread. With each speech, Mr Chavez gives more details of what he plans to do. Swearing in his cabinet two days before his own inauguration, Mr Chavez explained that the new era would be backed by "five engines", which would:

> allow him to rule by decree
> lead to socialist constitutional reforms
> reinforce popular education
> change the geometry of power (a point which he has yet to explain)
lead to the "explosion of communal councils"

In the same address, Mr Chavez also announced he would nationalise key businesses, declared himself a Trotskyist and cited the ideas of Marx and Lenin. Chavez backers, or Chavistas, say the revolution will lead to social equality - his critics argue it will turn him into a Castro-like autocrat.

Political analyst Alberto Garrido says Venezuelans are likely to hear many more radical policy announcements in the coming days, months and years. "In this 'permanent revolution' we are in for endless surprises," he says.

Mr Garrido says the revolution that is being established in Venezuela is unique and does not follow the Cuban model, as many of the government's critics say. One of the innovations announced by Mr Chavez is his Cabinet, he adds. Its members are now "ministers of popular power" - they have a direct link to the people and are expected to operate more like a team than a classical Cabinet. The ministers - who are mostly younger than their predecessors - will be expected to spread the revolution from the streets.

Battles ahead
Another sign of the changing times, observers say, is Mr Chavez's decision to replace Mr Rangel as vice-president.

Mr Rangel was an important figure in the "transition period" that ended with the December elections - he was seen as someone who could reach out to other groups. His replacement, Jorge Rodriguez, is described as a radical who does not tolerate dissent. But Mr Chavez is not carrying out his revolution in isolation. Mr Garrido says international affairs may be playing a part in what he says is Mr Chavez's decision to go faster down the path of his "21st Century socialism". He says that problems facing key Chavez allies - Bolivia, Ecuador's president-elect and Iran - may make him want to establish this phase of the revolution before the 2014 deadline he has set.

Another possible factor behind Mr Chavez's recent announcements may have been the nomination to the US state department of John Negroponte - known to be very critical of the Venezuelan president - Mr Garrido says.

On the international front, Mr Chavez will also be keen to continue spreading his own brand of socialism abroad, which once again will set him on a collision course with the US and other Western nations. That will not be the only battle on his hands. Mr Chavez's recent announcement that he will not renew the licence of the country's most viewed terrestrial channel, RCTV - which he accuses of having backed a failed coup against him in 2002 - is likely to lead to a wider confrontation with the media.

Whatever happens, it looks likely that the world will be hearing a lot more about President Chavez's revolution.

Millennium Challenge Account: America's first truly modern foreign policy initiative shoots itself in the foot

In yesterday's post we saw that while traditional types of US foreign aid and development assistance for the poorest countries continue, the Millennium Challenge Account (MCA) represents an experiment in basing foreign aid (in this case, financial grants) on an objective set of criteria. Before we turn to a discussion of the criteria we need to ask, "Objective, according to what standard?" The standard is US defense.

The post 9/11 era of asymmetrical warfare, whether covertly mounted by governments or carried out by decentralized cells, inverts the Cold War pyramid of war. During the Cold War neither superpower feared a catastrophic attack from a client state in the poorest world regions. Today, even a relatively poor developing nation with a small military that is not technologically advanced can fund a series of guerilla-style attacks to bring down a major government.

From that viewpoint, modern US defense policy and its foreign policy adjunct give high priority to defusing situations that lead a developing nation to launch armed aggression against the United States.

A very weak government tends to establish an oppressive regime; such governments are the prime generators of social conditions that are fertile ground for internal unrest, aggression against neighboring states, and the designation of the Bogey Man. The Bogey Man in this context is a nation or group (e. g, America, the Jews) that a government blames for its shortcomings.

While oppressive government can arise from several causes and conditions, as a general rule it's seen today largely as a failure of a national government to address overwhelming internal problems in the social or economic spheres and/or external problems in the defense sphere. In other words, weak governments with bad policies and/or inadequate administration are seen as the prime candidate for takeover by factions that would seek to make war on the United States.

That reasoning is the foundation for devising a US foreign aid/development assistance program that aims to help a cooperative government create or strengthen national programs that defuse internal social unrest and reduce external conflicts. In short, the idea is to use financial assistance in a way that helps a developing nation crank out good government.

Just what constitutes good government? From many sources, including the World Bank and International Monetary Fund -- which have extensive experience dealing with truly atrocious governments -- and from the historical record, today we have a pretty good idea of the criteria.

So let's take a look at the MCA criteria; while you read, see if you notice something very odd about one item on the list:

The funds in the Millennium Challenge Account will be distributed to developing countries that demonstrate a strong commitment toward:

Good governance. Rooting out corruption, upholding human rights, and adherence to the rule of law are essential conditions for successful development.

The health and education of their people. Investment in education, health care, and immunization provide for healthy and educated citizens who become agents of development.

Sound economic policies that foster enterprise and entrepreneurship. More open markets, sustainable budget policies, and strong support for individual entrepreneurship unleash the enterprise and creativity for lasting growth and prosperity. (1)

Stumped? Okay; I''ll give some hints. (Regarding the second quote, ignore the sour grapes about President Bush's motives for tripling US aid to Africa; see the entire article for that discussion):

"The idea to revive state-owned industries [in Iraq] has come full circle. Iraq's economy under Saddam Hussein was state-controlled. When the first U.S. team arrived, its members looked to reenergize the industries as a key element in jump-starting the economy. But the subsequent Coalition Provisional Authority, run by L. Paul Bremer, opted to scrap the effort and emphasize a free-market economy, even though Iraq was ill equipped to make a dramatic conversion. The failure of a free market and the lack of both local and foreign investment has led the Defense Department to launch a massive reassessment."(2)

"[President Bush] has tripled direct humanitarian and development aid to the world's most impoverished continent since taking office and recently vowed to double that increased amount by 2010 -- to nearly $9 billion. [...] Some advocates suspect that the Bush administration's interest in Africa is motivated more by business ambitions than altruism. Grants made by the Millennium Challenge Corp., a foreign aid program developed by Bush with the aim of rewarding poor countries that practice good governance, are also partially predicated on whether countries have open markets that allow widespread foreign investment."(3)

"[Russia] has come to a point where further economic development will, to a large degree, be determined by the state of its political and judicial institutions. To achieve an economic breakthrough, it is no longer sufficient to have good labor and land legislation, laws on banks and bankruptcy, taxes and budgets. All these laws and regulations have to be implemented in practice, which requires an efficient state machine, just courts, and a good law enforcement system. In other words, Russia needs its basic state institutions to function efficiently."(4)

Still stumped? Okay, one more clue; again, ignore the sour grapes part:

"I know a lot of activist groups who believe that the president's stated commitment to Africa is, at best, a play on words," said Nii Akuetteh, executive director of Africa Action, a Washington-based advocacy organization.

"First of all, much of the aid is emergency food or medical aid, rather than true development assistance. Then there are conditions that are attached where the emphasis is more on countries that open up their markets so American companies can go in and privatize things like water and electrical service or have access to certain resources."(3)

Akutteh is not talking about the MCA disbursements, which are outright grants. But consider the observation about a privatization condition in the context of Bremer's confounding decision, noted above. Imagine a nation where the key industries and services are bombed to rubble or in ruins for decades, where the only government administrative efficiency is repressing dissent, where the rule of law is absent, where the judicial system is a mockery -- and along comes Paul Bremer and says, 'What this country needs straight off the bat is a free market economy.' Try to imagine, then apply the MCA "open markets" condition.

Ladies and Gentleman of the Millennium Challenge Corporation:

What planet do you reside on, if you think that the criteria of a 'free market economy' and 'opening a country's markets to foreign investment' are top priority for a weak government? In a nation that doesn't even have a rule of law or the judicial system to enforce the rule?

What are you smoking, if you think you can dam the tide of repression by demanding that a nation struggling toward a semblance of modern government strengthen itself by allowing foreign investors to take over key industries in the country? When the nations don't even have the courts system, the banking system, the law enforcement, the -- the everything that Russia had to build from scratch after the Soviet Union dissolved?

The reasoning behind the government approval for MCA is supposed to be strategic -- you know, that concept having to do with national defense? On my knees, Ladies and Gentleman of the MCC, if you want a strategy to strengthen weak government in poverty-stricken nations that have only a few trappings of modernity, you need a reasonable set of priorities before establishing a reasonable set of criteria. Helping US corporations buy up the country is not seen as a high priority by the target population and recipient government. And in fact, not seen as priority by anyone who can chew and walk.

On my knees, Ladies and Gentleman of the MCC, globalized trading principles do not equate to freedom and the rule of law. Just look at China, if you don't believe me. Wake up! Then set up a list of priorities for how a government should go about meeting criteria for sound government, and apply the list before analyzing qualification factors.(5)

Then splash water on your face and ask whether the experience of Western Europe in the post WW2 period should be the model for hauling a nation out of ruins. Ask yourselves, "What national government experience would make the best model in this era?" For the answer watch carefully; don't blink:

"I don't know that the Iraqi government has ever demonstrated ability to lead the country, and we shouldn't be surprised," said retired Army Lt. Gen. Jay M. Garner, who was the first U.S. official in charge of post-war Baghdad.

"You'll never find, in my lifetime, one man that all the Iraqis will coalesce around." Iraqis are too divided among sectarian, ethnic and tribal loyalties, he said, and their loyalties are regional, not national.(2)

Now, what other country could Garner be describing? Well, several in this era. But what country started out with the same set of basic problems and has made great progress within less than a decade toward solving them? Why that would be Russia, wouldn't it?

So to accomplish the goals of the Millennium Challenge Account, Ladies and Gentleman of the MCC, swallow your pride and ask Russia's government for advice on how they would go about bringing in good government in Iraq. You don't have to follow every advice but at least ponder it all, and try to apply general principles that correct the flaws in the MCA criteria.

Keep in mind -- or finally confront -- that Western Europe is an inadequate development model for today's poorest developing nations because they are not under the protection of NATO. Much of the government's revenue in the poorest countries goes to defense because they cannot be guaranteed that the United States and its NATO partners will come rushing to their aid in case of an invasion. Russia shared this problem in the wake of the Soviet Union's dissolution. So again, Russia makes a valuable model when sorting out priorities for where to put funds that support good government.

The Millennium Challenge Account is a very important initiative that deserves far more attention than it's received in the US media. And it deserves more attention from Congress. Although the MCA is underfunded for it's objectives, it needs the kinks worked out before pouring on the megabucks. Greater public awareness of the initiative can help in the fine-tuning process.

1) From the USAID fact sheet on MCA

2) The Washington Post, January 7, 2007.

3) Bush has quietly tripled aid to Africa.

4) The risks and traps of the new reform stage in Russia by Vladimir Mau for Rossiyskaya Gazeta and RIA Novosti, December 2006.

5) From The Heritage Foundation paper on the MCA:

To qualify for the MCA, a country must score above the median[26] for half of the indicators in each policy area—that is, it must be above the median in at least three of the six performance indicators that measure good governance, two of the four that measure investment in people, and three of the six that measure economic freedom. It must also be within specified income levels.[27] The Bush Administration also has determined that countries must pass the “control of corruption” indicator to qualify.[28]

Foreign aid, development assistance, and the war on terror

For more than a decade in the runup to 9/11 Israel warned about the funneling of foreign aid to terrorists, but the West was not ready to concede the point until the post-9/11 era. The war on terror has clearly established the close relationship of foreign aid and development issues to today's type of warfare:

Whether a government is simply very weak and thus, a target for takeover by terrorists (or criminal syndicates in league with terrorists), or whether the government is sympathetic to a terrorist cause, Western foreign aid and cheap development loans make easy pickings for transnational terror armies.

At the same time China's "peaceful rising" has translated to anti-democratic, anti-American policies administered through foreign aid and cheap development loans to despotic regimes in energy-rich countries and weak democracies in developing countries.

The recent Pundita "Frankenstein" posts on China's relations with African and Latin American countries document the trend. The posts underscore that just as the West is attempting measures to insure that foreign aid and development loans don't fall into the wrong hands, China is writing checks to any repressive regime that opposes US policy and not asking questions about what happens with the money.

I won't carry the analogy far, but in one sentence China is playing Sparta to America's Athens. To every argument the US makes in favor of democracy, China points to the success of their nation's military dictatorship. That China has depended on the democratic nations for their success is not something a poverty-stricken, isolated dictatorship wants to hear when China dangles aid in front of them.

And it so happens that Africa has become an important front in the war on terror -- and also China's prime aid target, as the nation attempts to sew up energy concessions on the African continent.

Meanwhile, William Easterly and other economists, in time with a mountain of data, have shredded the notion that traditional foreign aid and development assistance can meet their stated goals in the poorest regions.

The evidence is now overwhelming that the Cold War's cynical use of foreign aid and development loans to support governments sympathetic to one side or another of the struggle reaped weak governments and despotic regimes. The governments took the aid and low-cost loans and spent them in ways that only entrenched the causes of poverty and oppression. Yet it is now patently obvious that the unaddressed causes of poverty and oppression played into the hands of the transnational terrorists and governments that fund them.

The US has ignored the mountain of data to the extent that we are throwing aid at any government, no matter how repressive, which claims to eat terrorists for breakfast and makes at least a pass at fighting terrorism. But there is nothing like the point of a gun to encourage clear thinking. So governments of the wealthy nations under threat from the terrorists -- and they are all under threat -- have pored over the mountain of data and asked, "Is there any kind of aid policy we can devise that actually works to reduce poverty in the poorest nations?"

To which William Easterly replies: No, you idiots; read the data again. (Forgive his tone; he worked for the World Bank.)

Is Easterly right? Yes, but this being wartime, the most compelling argument will not dissuade the Western nations from trying to use aid to help win the war on terror. Also, you can't really argue against noblesse oblige; if the rich want to give to the poor, that's a good thing provided the largesse doesn't hold the rich hostage and renders more help than harm.

Yet it's just the specter of doing harm that prompts Easterly's most cutting diatribes -- and Pundita's. This blog has pounded home the point that while it's one thing to do no good, to pile serious harm on top of ineptness is what all reasonable people should try to prevent in the 21st century.

Is there a way for the US to have their cake and eat it, too? Use aid as a tool of war and also encourage developing nations to make sound governance policy; the latter on the theory that sound government removes underlying causes of poverty?

Enter the Millennium Challenge Account. I'll tell you straight off the bat that I don't think Easterly is a fan of MCA, if one follows the logic of his basic argument:

"...it is a fallacy to think that overall poverty can be ended by a comprehensive package of “things,” like malaria medicines and clean water. The complex poverty of low-income societies will slowly give way to prosperity the same way it happened in rich countries, through the gradual homegrown rise of political and economic freedom. This is NOT an easy quick fix—“democracy” and “free markets” evolve from below with a lot of supporting social norms and institutions, they cannot be imposed from the top by the IMF [International Monetary Fund], World Bank, or U.S. Army."(1)

But one can make out an argument that if you use aid to support "social norms and institutions," you can help a government that is trying hard to move toward democracy and free markets, and which simply needs money to bring about certain reforms, such as shoring up their judicial system.

From that view, you can devise an objective set of criteria about what makes for good government and allocate grants on a scale of how well a developing country meets, or tries to meet, the criteria.

That is the reasoning behind the MCA grant criteria, which are not really new. Membership in the European Union is predicated on a set of criteria that reflect key elements of good government. So today the members of the EU, who represent half a billion of the world's people, live in freedom and relative prosperity and exhibit reasonably sound government practices. That is an astonishing, inspiring accomplishment -- yet it's predicated on meeting membership requirements, rather than development requirements. The question is whether the idea behind the EU criteria work as well when applied to countries that do not seek membership in a bloc. We'll dip into the question tomorrow.

1) William Easterly

India-Pakistan-China: Siachen glacier and Pakistan-India peace negotiations

Today's essay will be posted at noon. In the meantime you can get a crash course on the history of India's appeasement of Pakistan and analysis of where things stand now from Baron Bodissey's The peace process in Kashmir at Gates of Vienna.

My only quibble is with Sarla Handoo's observation that Pakistan's president is "not bothered by terrorism." He's bothered by it, but he's more bothered by China's arm twisting. Negotiations on the Siachen glacier need to be seen in that light.

Bottom line: The United States of America has a history of being a fickle friend to Pakistan, but China is always there. You can bet that Pakistan's government is watching very closely the US discussion about whether the US should withdraw soon from Iraq. Their reasoning is that if the US leaves Iraq in the lurch, Pakistan is next up.

I can't quibble with these observations by the Baron:

Exchange “Israel” for “India” and “Egypt-Jordan-Syria” for “Pakistan”, and you have the Palestinian problem in a nutshell:

> Mujahideen irregulars are employed as proxies to fight on behalf of an outside Islamic country.

> A militarily superior foe is pressured by the Great Powers to relinquish strategically important territory to a weaker enemy after attaining a clear military victory.

> A moral equivalence is established between the aggressor and the defender, so that “both sides” are continually urged into a “peace process” which notably disadvantages the defender, but fails to attain an actual peace.

> The conflict is never resolved. It continues year after year, decade after decade, with the implication that only more concessions by the original defender to the original aggressor can ever bring it to a close.

Frankenstein, Japan and Taiwan

China watchers note that in recent weeks Edward Cody, of The Washington Post's Foreign Service, has been filing one highly informative report after another on China and the Post has been publishing them.

China is somewhat loosening their controls on foreign journalists in the year running up to the 2008 Olympics ("somewhat" is the operative word). But it could be that the articles reflect a shift, however slight, in the US State Department view of China now that Robert Zoellick is gone from Foggy Bottom.

The Post editorial view of US foreign policy reflects State's view. So if the newspaper is highlighting a somewhat more realistic view of China (the operative word is "somewhat"), this is a hint of at least a slight shift in State's policy. State continues their tussle with DoD about a tougher US approach to China, but Pundita grasps for any straw in the matter.

In Blueprint for Action, Thomas P. M. Barnett advises that the US "lock in China at today's prices;" i.e., make China a full partner in global strategy by the "Core" nations (chiefly, the NATO countries). The advice, as with State's policy on China, is out of synch with China's "peaceful rising" policy and military buildup. The advice speaks to the situation in the 1990s, not today's.

While Taiwan remains a big issue for China, which is methodically buying off Latin American and African countries that recognize the island nation, China's generals are greatly concerned about Japan's rapid military buildup. The buildup is greatly due to North Korea's nuclear belligerence policy.

It is almost funny that China does public hand wringing about the NK nuclear buildup, given their part in it. It's just that China's generals didn't expect that Japan could turn on a dime.

Edward Cody's December 30 report for TheWashington Post, China Offers Glimpse of Rationale Behind Its Military Policies.

BEIJING, Dec. 29 -- China warned Friday that the military landscape in northeast Asia is getting "more complicated and serious" because of North Korea's nuclear weapons program and tighter defense cooperation between Japan and the United States.

The Chinese views on regional security, articulated in a government white paper on national defense, provided a rare glimpse into the strategic assessments that underlie decisions and priorities of the secretive Chinese military and the Communist Party's policymaking Central Military Commission.

In part, the paper was designed as a response to repeated complaints from the Bush administration that China has not explained the rationale behind its long-term military improvement program. China's announced military budget has risen about 10 percent a year recently, reaching $35.4 billion in 2006, and Pentagon specialists estimate that also counting equipment expenditures would more than double it.

Along with Taiwan's pursuit of independence, the government pointed out as particular security challenges North Korea's missile tests last summer and its maiden nuclear test in October, which undermined Chinese-led diplomatic efforts to create a nuclear-free Korean Peninsula. The most recent round of nuclear negotiations took place last week and ended in stalemate, creating doubts about the utility of continuing the three-year-old six-nation talks.

In listing Chinese concerns, the white paper also cited a U.S.-Japanese effort to build a regional missile defense shield based on U.S. ships equipped with the Aegis radar system and a U.S.-Japanese missile now being developed. The joint defense system, portrayed as protection against a North Korean attack, has been criticized by Chinese officials and commentators because it also could blunt China's missile threat in the event of U.S.-Chinese hostilities over Taiwan.

Chinese officials have expressed concern that Taiwan could eventually be integrated into the U.S.-Japanese system, providing a counterweight to China's increasing missile threat against the self-ruled island. That fear was not explicitly conveyed in the white paper, but Japan's growing willingness to assert itself militarily was cited as a strategic concern for military planners in Beijing."

America and Japan are strengthening their military alliance in pursuit of operational integration, and Japan seeks to modify its peace constitution and exercise collective self-defense," the paper said. "North Korea launched missiles and had a nuclear test. The situation in the Korean Peninsula and northeast Asia is getting more and more complicated and serious."

The paper said China's military improvements are part of the country's overall modernization and economic expansion. The effort will continue apace, it added, seeking to "lay a solid foundation" by 2010, make "major progress" by 2020 and "reach the strategic goal of building informationized armed forces and being capable of winning informationized wars by the mid-21st century."

Moving from infantry to high-tech naval and aerial warfare has been a major goal of China's military modernization. It has entailed the shedding of thousands of untrained foot soldiers and a concerted effort to replace them with trained technicians able to function in the world of computerized weaponry.

The white paper said, for instance, that the army's relative strength in the Chinese military has dropped by 1.5 percent, while that of the navy, air force and Second Artillery Force -- China's missile and nuclear corps -- rose by 3.8 percent. Overall military strength has fallen by 1.7 million troops since 1985 and is estimated to stand at 2.3 million, still the world's largest force.

The People's Liberation Army "has made new progress toward the goal of being proper in size, optimal in structure, streamlined in organization, swift and flexible in command and powerful in fighting capacity," the paper boasted.

But it provided no details on the new ships, warplanes, missiles, submarines and computer systems that, according to U.S. officials, have increased China's lethal power in the region and made any confrontation over Taiwan a riskier proposition for the United States than it would have been a decade ago.

As it has before, the government warned that any step by Taiwan's President Chen Shui-bian to move toward formal independence by changing the territory's constitution would be a "grave threat" to peace and stability across the Taiwan Strait, suggesting it could trigger military intervention. President Hu Jintao, who as head of the Central Military Commission is commander in chief of the armed forces, has told visitors he has no plans to attack Taiwan but would have to act if the island took a decisive step toward formal independence.

John Negroponte to State, at last!

If you have been wondering why President Bush sacrificed John Bolton, now you know. There will still be a Senate fight over John Negroponte's confirmation as second in command at the US Department of State, and the Left is having conniptions about Bush's choice. But that's the price the Eurocentrics in Congress will have to pay for keeping Sri Bolton out of the United Nations.

And with the ascension of a law and order guy to the top post at the UN, Bolton's presence is not so critical there, whereas State can't make headway until someone like Negroponte takes over the number 2 post there.

Negroponte is no Robert Zoellick; he is not confused about where America's national security interests lie, and he doesn't believe that unrestricted trade will save the world. Thank God. Everybody with half a brain knows that a judicious mixture of carrot-and-stick keeps the world on keel, and Negroponte knows how to wield both.

Also, Negroponte's vast experience in Latin America -- you know, that place to the south of the US -- is a huge bonus for American foreign policy. And by the way, he speaks Spanish.

No handwringing about his leaving the post as Director of National Intelligence after being there a scant two years. Before Bush could nominate a truly good fit for the post, he needed a clear idea of how US intel agencies were working with each other and where the bottlenecks were.

Negroponte's real job as the director was to wrest order out of the chaos of reports about interagency infighting and pass on the information to Bush. Negroponte's nomination to the post said more about the thinness of suitable candidates than his credentials to manage intelligence agencies.

But making him the Deputy Secretary of State is a master stroke. If Negroponte makes it through the confirmation process, we have the beginnings of a truly US-centric foreign policy, and one that will give due importance to US relations in the western hemisphere.

Speaking of the western hemisphere, the editor of a blog that is dedicated to reporting on that region contacted me the other day, which is how I learned about the blog. I invite Pundita readers to bookmark the blog, which is sorely needed: Western Hemisphere Policy Watch.

All right; that's enough good news for one day. Time to knuckle down to today's Pundita post on China's moves in Vietnam. I'll grant it's a lot of reading, but good US foreign policy decisions depend on understanding just exactly what Beijing means by their policy of "peaceful rising;" thus, the Frankenstein series......

Frankenstein in Vietnam: China's factory owners find less picky pastures

"According to entrepreneurs in China who spoke on condition of anonymity for fear of angering government officials, leaders in coastal areas have been encouraging pollution-intensive industries such as plastics, steel and electronics to consider relocating to Southeast Asia."(1)

"Pundita! I asked for a summary of where US foreign policy stands now and I get a series of posts on China. Is all this leading somewhere?
Caesar in San Francisco"

Dear Caesar:
It's all about pattern recognition. Until we recognize the patterns, we don't know where we stand. If we don't know where we stand, how can we formulate rational foreign policy?

Now we turn to Vietnam because the country is a great case study for our purpose. I'm starting with a blurb on Vietnam's security issues with China because they illustrate one pattern. No matter how much trade China does with another country, if the country is anywhere near China they are vulnerable to China's territorial claims.

Although it doesn't publicly proclaim it, China -- as in the case of Taiwan -- historically has considered Vietnam a renegade southern province. They named it An Nam, or "the Pacified South."

China's killing of Vietnamese fishermen in the Vinh Bac Bo (Gulf of Tonkin) in January 2005, in fact, has added to a consistent pattern of Chinese southern expansionism: conquest of the Paracel Islands in 1974; invasion of the northern provinces of Vietnam in 1979 and subsequent annexation of 8,000 square kilometers of borderland; occupation of the Spratley archipelagoes the same year and acquisition of 12,000 square kilometers of territorial waters in the Vinh Bac Bo conceded by Hanoi under the 2000 Vinh Bac Bo Pact.

Not content with forcing territorial concessions from Hanoi, China is also building up its naval force and setting up a string of naval bases along the sea lanes in the Eastern Sea to protect oil shipments from the Middle East. The Washington Times recently revealed that a previously undisclosed internal report prepared for Defense Secretary Donald H. Rumsfeld noted that "many Pentagon analysts believe China's military buildup is taking place faster than earlier estimates, and that China will use its power to project force and undermine U.S. and regional security."(2)

Now we turn to China's business relations with Vietnam, which point to other patterns. Vietnam has one of the most corrupt governments in modern times; this is just the type of government that China prefers dealing with. Note also the conditions in China that drive factory owners to offshore in Vietnam. I am publishing the entire article because it's worth ten policy papers on China:

China Ventures Southward
In Search of Cheaper Labor, Firms Invest in Vietnam
by Peter S. Goodman
Washington Post Foreign Service
December 6, 2005
HANOI -- Before he left his native China two years ago, Li Shaoxing was losing money at his plastic-bag factory in the center of the country. Though his homeland had become synonymous with plentiful cheap labor and limitless manufacturing spoils, he was grappling with rising wages, energy shortages and flat prices for his goods.

So, much as capitalists have always done, Li went looking for an easier place to profit. He ventured south of the border, putting up a factory here in a new industrial park in northern Vietnam, where wages are roughly one-third cheaper than at home and where workplace safety and environmental standards are in scant evidence.

"The competition in China is intense, and the investment in Vietnam made sense," Li said, sitting in his air-conditioned, glass-fronted office, as 500 workers toiled in an adjacent factory bay amid the clatter of machinery and the smell of melting plastic. "In this area, workers have a hard time finding jobs. They are happy for any work, and they are willing to eat a lot of bitterness.

"Much as manufacturers in the United States have transferred jobs to Latin America and just as Western European factories now look to Poland and Hungary, China's modern-day capitalists are increasingly focused on wringing profit from Southeast Asia. They are tapping new markets for sales and farming out work to people willing to labor for less than at home and in even tougher conditions. In a global economy driven by the pursuit of lower costs and fatter profit -- a drive that has led so many multinationals to low-wage China -- Southeast Asia is emerging as China's own version of China.

"It's a bit like the United States and Mexico," said Deng Weiwen, general manager of TCL (Vietnam) Corp., the local arm of the giant Chinese television maker, which established a factory outside Ho Chi Minh City in 1999. "China and Vietnam complement each other."

In Vietnam, Chinese entrepreneurs have found a country -- much like their own -- in the midst of a wrenching transition from communism toward an economy governed by market forces. Chinese investors are already accustomed to doing business in a place where personal relationships and access to power often trump the law.

"We have no problem understanding that bribes have to be paid to get things done," said Zou Qinghai, a textile entrepreneur who heads the chamber of commerce for the Chinese province of Zhejiang in Hanoi. "Vietnam's way of developing is simply a copy of China's.

"For now, China's investment in Vietnam remains in infancy. Since 1988, Vietnam has attracted more than $50 billion, with roughly half coming from Taiwan, Singapore, Japan and South Korea, according to state figures. Mainland China has injected only $734 million while competing for foreign investment.

But much mainland money is filtered through partners in Hong Kong, which has sunk $3.7 billion in Vietnam since 1988, according to state figures. Chinese investment has surged in recent years. China has become Vietnam's largest trading partner, with two-way commerce expected to reach $7.5 billion this year, according to government figures.

"We figure that China will develop faster in the future, and Chinese businesses will have more interest in investing outside of the country," said Nguyen Anh Tuan, vice director for Vietnam's Foreign Investment Agency in Hanoi. "The potential for Chinese investment in Vietnam is very great."

Foreign multinationals with factories in the Pearl and Yangtze river deltas -- China's principal manufacturing zones -- are increasingly exploring Vietnam and other areas of Southeast Asia as alternatives to expanding in the Middle Kingdom. This is particularly so for Japanese firms, which fear the consequences of diplomatic sparring and street protests over Japan's perceived unwillingness to take responsibility for wartime atrocities.

Among Chinese companies in Vietnam, many have focused on locking up natural resources and energy. In October, as Chinese President Hu Jintao visited Hanoi, China National Offshore Oil Corp. signed a deal with a local energy firm to jointly explore for oil and gas in Vietnam's Beibu Bay.

Chinese manufacturers are now expanding into Vietnam, in part to lock up shares of the Southeast Asian market ahead of the creation of a planned free-trade agreement with China. Textile and garment-makers are shifting to Vietnam to sidestep quotas on their shipments into Europe and the United States.

Some investment is propelled by stricter enforcement of environmental standards in some areas of China. According to entrepreneurs in China who spoke on condition of anonymity for fear of angering government officials, leaders in coastal areas have been encouraging pollution-intensive industries such as plastics, steel and electronics to consider relocating to Southeast Asia.

A strong push is coming from Wenzhou, a city in Zhejiang province south of Shanghai that has long served as a locomotive for growth in China's private sector.In recent months, officials in Wenzhou have convened roundtables with local entrepreneurs to encourage major polluters to move. At one meeting, a vice mayor of Wenzhou specifically declared that high-polluting industries would be deprived of access to land, water and electricity, according to two participants.This year, the Wenzhou city government and the Zhejiang provincial government have jointly organized roughly 50 all-expenses-paid trips for local businesses to survey prospective industrial sites in Vietnam and elsewhere in Southeast Asia, the entrepreneurs said.

While few would describe China as a beacon of labor safety or high wages, Chinese investors acknowledged in interviews that Vietnam beckons as an even cheaper, less regulated place to run a factory.

"Here, the workers can really accept hardship," said Qing Song, deputy general manager at Lifan Vietnam, a motorcycle factory opened outside Hanoi by a Chinese company. "Whatever requirements you set out for them in a day, they meet."

At the factory on a recent afternoon, men uncoiled sheaths of aluminum without protective gloves, while others operated heavy machinery without goggles or earplugs. The work went on beneath corrugated aluminum ceilings in poorly ventilated structures. Men in flip-flops used a donkey cart to move bricks to a construction site.

For Li, Vietnam has offered refuge from the brutal competition of Chinese business. Born and raised in Wenzhou, he launched his plastic-bag factory in Henan province in 1992 as a joint venture with a local cement maker. They supplied animal feed and fertilizer companies with plastic sacks.

In the first years, wages in impoverished Henan ran as little as $12 per month. But as China has boomed and factories proliferated, wages climbed, reaching about $72 at the Henan factory. At the same time, China's appetite for energy has exceeded its generation capacity, forcing factories such as Li's to shut down during key hours.

A flood of cheap bank credit has nurtured many competing factories, keeping prices down and eroding profits. Today, Li's Henan factory sells bags for roughly the same price as five years ago even while the costs of plastic and energy have increased by nearly one-fifth."Now," said Li, "we can't make any money."

In November 2002, Li took a vacation to Hanoi. As he walked tree-lined streets navigated by bicycle rickshaws, past fading French colonial villas and peddlers selling bowls of noodles, he might have been in his own country a decade earlier. At home, there was too much competition. Here was a frontier of opportunity."

I just had this feeling that I had to go out of the country and invest," he said. "It just seemed interesting and exciting."

The following month, he returned to Hanoi -- this time to look for a new factory site. Over the next several weeks, he and a translator rode all over northern Vietnam, meeting with the local governments that controlled land.He examined local market conditions, determining that -- unlike at home -- he could compete."

I used a means of deception," Li said, smiling. "I would visit other bag factories and pretend to be a customer and then ask for their prices," he said.

By January 2003, Li had settled on a new industrial park an hour's drive north of Hanoi. It was an undeveloped area of rice paddies, but it sat on the Friendship Highway connecting Vietnam to southern China, making it easy for Li to bring in Chinese technicians to construct and operate the factory.

He settled on a 50-year lease with the local government, which seemed pleased when he told them he would have jobs for 500 workers. The local minimum wage was $30 a month.

Still, Li needed approval from the Chinese government, which regulates capital leaving the country. By March 2003, less than six months after his first visit, he had the formal blessing to transfer $1.5 million to Vietnam to launch the factory. By May, construction had begun."

I knew if I was going to act, I had to act fast," Li said. "I couldn't be considering the pros and cons."These days, Li dons a blue suit as he crisscrosses Vietnam in search of customers, mostly state-owned animal feed factories. It is a new country, but so much is familiar -- the contractor who used shoddy materials in building the factory, the "special fees" and "expediting charges" that he hands customs agents at the port."

We Wenzhou people are used to that," he said. "In fact, it works for us. It's really convenient. A lot of things work quicker."

Li brings in materials from China to keep costs low. He lives in a factory dormitory room shared with another Chinese manager. He speaks no Vietnamese. He plays poker with the other Chinese managers and sometimes watches Chinese television via satellite. Mostly, he works.

"I'm not here to feel comfortable," he said. "I'm here to make money."

Special correspondent Eva Woo contributed to this report.

Now we turn to an utterly correct, impassioned and doomed plea from an American who protested extending PNTR to Vietnam:

Forum: Vietnam lures United States into trade deal
by Scott Johnson, an advisor to the Montagnard Foundation.
03/09/2006, The Washington Times
[...] a lure has been cast out to the United States [by Vietnam], just prior to Congress' scheduled vote on Permanent Normal Trade Relations (PNTR) with Vietnam this month, a lure to catch the U.S. Congress.

PNTR, you see, is a stepping stone for entry into the WTO and the proponents of PNTR will argue economic engagement is the key to Vietnam's development. They will say 'we must engage economically with Vietnam and this will assist Vietnam in changing its repressive ways."

This is what the U.S. trade lobby argues, and to be fair they have a point. However, Vietnam's northern neighbor (and communist brother) China, has spoiled the "miraculous cure all" remedy of economic engagement. The United States indeed granted PNTR to China some years ago and it didn't result in any great reforms.

Judging from a comment by Iowa Sen. Charles Grassley, Republican chairman of the Senate Finance Committee, one can see that China has actually ruined the image of economic engagement. Mr. Grassley stated in a Senate hearing on PNTR negotiations for Vietnam that, "We need to make sure that we aren't played for a sucker in the case of Vietnam, as we have been with China."

The question should really be, how does the United States do things differently to ensure Vietnam does indeed bring about the promised human rights reforms? Admittingly this is a dilemma as Vietnam has a history of diplomatic trickery and is one of the most corrupt nations in the world. But we can safely say that outright appeasement will not work.

Once Vietnam gains PNTR and accedes to the WTO, there are few if any sticks left to wield against Hanoi. [...]

[T]he United States needs to engage Vietnam, but not with a weak position on human rights. Now is the time to stand strong with the dissidents, time to show courage and state loud and clear that the United States will not tolerate repressive governments in the pursuit of trade deals.[...]

Now we turn to the bottom line:

A Trip-Up Before Key Trip,
Oxford Analytica November 2006, republished in Forbes
[...] President George W. Bush on Nov. 15 traveled to Singapore, on the way to the Asia Pacific Economic Cooperation (APEC) summit in Hanoi, Vietnam, on Nov. 17. The day before Bush's trip, Congress failed to pass a bill granting Permanent Normal Trade Relations (PNTR) status to Vietnam. For Asian leaders, the PNTR debacle may suggest that the U.S. administration is weak and unable to deliver on its trade agenda.

On his first trip to Vietnam, Bush had planned the delivery of PNTR status to Hanoi as a key goodwill gesture. Vietnam officially joined the World Trade Organization last week, and the United States will be out of compliance with WTO rules until it passes PNTR for Vietnam. In Hanoi, Bush had hoped to demonstrate U.S. resolve to close trade deals by presenting PNTR to Vietnam and signing the U.S.-Russia WTO Agreement with Russian President Vladimir Putin.

However, the administration's PNTR plans went awry yesterday when the House of Representatives refused to put the legislation to a simple majority vote, after the defeat of a vote on Nov. 13 under "suspension" rules, which would have required a two-thirds majority to pass.

The earliest that Vietnam's PNTR status can come before Congress again will be in December, but with the Democratic agenda gathering steam, there is no guarantee that the measure will pass quickly. The administration's best opportunity for passage will come before the end of the year, since Democrat support for PNTR is dissipating.

Despite the embarrassing PNTR defeat, Bush's trip to Vietnam should produce some significant gains:

-- Intel deal. Last week, Hanoi increased Intel's (nasdaq: INTC - news - people ) license to operate in Vietnam four-fold.

-- Boeing purchases. The Export-Import Bank made loans to Vietnam that will enable it to purchase four Boeing (nyse: BA - news - people ) 787s for its national airlines. [...]

As he is only the second sitting U.S. president to visit Vietnam since the end of the war, Bush's trip to Hanoi (and Ho Chi Minh City) is his most important stop in his tour of Southeast Asia, which will also include visits to Singapore and Indonesia. Political instability in Washington's two bilateral security treaty allies in Southeast Asia--questions about President Gloria Arroyo's political legitimacy in the Philippines and the military coup in Thailand--have kept them off Bush's agenda.

Washington had hoped to use Bush's visit to Vietnam as a vehicle for strengthening relations with the Association of Southeast Asian Nations (ASEAN). Earlier in the year, the United States proposed a formal U.S.-ASEAN summit on the margins of the APEC meeting.

APEC presently excludes Burma, Laos and Cambodia as members. This automatic exclusion was convenient for the United States, which refuses to conduct high-level meetings with Burma. As the APEC host, Hanoi was eventually persuaded to accede to a smaller "ASEAN-7" meeting.

Last week, Washington threatened to back out of the U.S.-ASEAN summit if Thai Interim Prime Minister Surayud Chulanont attended while Thailand was still under martial law. However, the White House later agreed to accept a promise from Bangkok to lift martial law in the near future. This confusing climb-down may make Southeast Asian leaders wonder if the United States is sincere about its desire for a closer relationship with the region as a whole.

PNTR still has a chance of passing in Congress before the end of the year, but its temporary defeat has hurt U.S. credibility, both in Vietnam and in Asia as a whole. With his party's midterm election defeat and the defeat of the PNTR legislation, Bush may have difficulty at APEC overcoming the impression of an administration in disarray.

The above says nothing about offending US dairy farmers who export to Vietnam but God forbid the perception at APEC that US foreign policy is in disarray, so the first thing overboard is the democracy doctrine:

Congress Approves PNTR for Vietnam, Extends Trade Preference Programs
(December 18, 2006) As one of its final acts, the Republican-led 109th Congress earlier this month sent to President Bush a package of trade legislation that included permanent normal trade relations (PNTR) with Vietnam and renewed expiring trade preference programs, including the Generalized System of Preferences (GSP).

The legislation passed the U.S. House of Representatives by a vote of 212 to184 and the U.S. Senate by a vote of 79 to 9. "We are extremely pleased that Congress was able to pass this important trade package before it adjourned," said Clay Hough, IDFA senior vice president.

"Both PNTR for Vietnam and the extension of the Generalized System of Preferences are important to IDFA members, because they will allow U.S. companies to compete more effectively in domestic and global markets."

Last year, U.S. dairy exports to Vietnam were valued at $50 million. Once Vietnam is admitted to the World Trade Organization, which is expected to happen January 11, the country has agreed to cut its tariff rates on finished dairy products by 5% over the next five years. PNTR will give U.S. companies increased market access.

"IDFA supported the GSP extension because it allows products important to the dairy industry to enter the United States at a preferable duty rate," Hough said. "We expect U.S. dairy companies will benefit from this trade preference program." Although GSP was extended for two years, the administration can choose to revoke trade preferences after six months on certain products that are deemed able to compete effectively in the U.S. market without tariff relief.

Other trade legislation in the package included the Miscellaneous Trade and Technical Corrections Act (MTB) and the Andean Trade Preferences Extension Act (ATPEA). The MTB amends the U.S. Harmonized Tariff Schedule (HTS), modifying duty rates for certain products. IDFA had strongly opposed including language in the MTB that would increase tariffs on milk protein imports, and was pleased that the final legislation did not contain any regulations that would adversely affect U.S. dairy companies.

Regarding ATPEA, IDFA supports the bilateral free trade agreements that United States signed this year with Peru and Colombia, and believes that extending trade preferences for these countries is an appropriate measure. "IDFA looks forward to working with the new Congress next year to move the free-trade agenda forward to the benefit of the U.S. dairy industry," Hough said.

1) From The Washington Post article shown above.
2)30 years after the Vietnam War: China remains a threat by Thi Q. Lam, Pacific News Service, April 14, 2005