TGIF: Is Self-reliance a Libertarian Ideal?

TGIF: Is Self-reliance a Libertarian Ideal?

An Associated Press article published a few days ago reported on disagreements among libertarians over what, if anything, the government may properly do about the coronavirus pandemic. My purpose here is not to comment on the quotes from the various libertarians. I prefer to focus on just one sentence by the author, Hillel Italie.

It’s this one: “Libertarian principles of self-reliance and minimal government have been around for centuries.”

Only the part I emphasized — the reference to self-reliance — interests me today.

At first, that term may seen unexceptional — even to many libertarians — in an article about libertarianism. A term like self-reliance (along with rugged individualism) is often associated with the libertarian philosophy, again, even by many libertarians. But is that term really pertinent? Or is it misleading and subversive of public understanding? I say the latter.

It’s certainly true that libertarians believe that people should not rely on the government because government is force (to recall the quote erroneously attributed to George Washington). But by what reasoning does one equate eschewing reliance on the state with self-reliance? Is there nothing else but the self to rely on? Society perhaps? It’s hardly a novel idea. It’s especially not novel among libertarians.

Are libertarians against insurance for their lives, homes, automobiles, and medical needs? I don’t think so. What’s insurance? It’s a large number of people, mostly strangers, pooling their resources in case of a long-shot catastrophic event that would bankrupt any one of the individuals. Insurance is the opposite of self-reliance, but it’s perfectly libertarian.

Are libertarians against voluntary associations for fellowship and other nonmaterial values? I don’t think so.

Is the symbol of libertarianism the hermit, Randy Weaver, or Ted Kaczynski sans letter bombs? Again, I don’t think so.

Can advocates of a political philosophy who spend so much time, ink, and electrons praising free markets, global free trade, specialization, and the division of labor hold self-reliance as a core aspiration? Can the people often described by their opponents as “Adam Smith fundamentalists” be regarded as worshipers of self-reliance. No way! The Wealth of Nations is a paean to social cooperation. Libertarian hero Ludwig von Mises, author of Human Action, nearly called his magnum opus Social Cooperation. That’s the second-most-used phrase in the very long book. What’s the most-used phrase? Division of labor, another way to say “social cooperation.”

I suspect that the term self-reliance actually works as a subtle smear of libertarians. It’s a way to portray them as churlish, “selfish,” antisocial. But as we can see, no grounds exist for that portrayal. When Simon and Garfunkel sang, “I am a rock; I am an island,” they were singing no libertarian anthem — not by a long shot. (Sorry, Neil Diamond, neither was “Solitary Man.”)

Libertarians are in no way advocates of — gotta love this one — atomistic individualism. Rather, they are, as I suggested long ago, better described as champions of molecular individualism. They form associations for all kinds of reasons. (Alexis Tocqueville noticed this feature of early America’s rather libertarian masses.)  Even the non-Aristotelians among libertarians agree that human beings are social animals, which means that the individual’s best shot at flourishing is in a society — as a long as it’s a free society, of course.

When libertarians themselves are confused about this matter, they undercut their own case. I have often heard libertarians condemn the welfare state because it discourages self-reliance. I’ve even heard libertarians demonize people who accept food stamps and Medicaid or Social Security benefits.

But that’s not the problem with the welfare state, or the social safety net. The problem is with the armed tax collector, not the recipients.

There’s nothing wrong with wanting a social safety net. It’s telling that when people are free to do so, they set up their own voluntary safety nets.

Before the growth of the national welfare state in the United States, working-class and middle-class Americans hedged against the risky, uncertain future by joining mutual-aid societies, also know as fraternal societies, lodges, and in England, friendly societies. These were not only sources of fellowship; they were also voluntary welfare organizations built on the insurance principle. (They were mostly member-owned societies, rather than for-profit companies.)

In the 19th century and the first few decades of the 20th century, working men and women joined these societies, among other reasons, to obtain various insurance benefits. They paid in when they were healthy and working, and drew benefits when they were not. Societies also paid funeral benefits so that families were not left with large debts when the breadwinner died. Some organizations even kept doctors under contract to provide affordable primary care to their members and families. (The state-linked medical societies did not like this “unfair” competition that lowered their incomes.)

Importantly, the societies were competitive and often part of nationwide networks: they boasted of their superior benefits in order to attract and retain members. Moreover, blacks and other minorities responded to racial and ethnic discrimination by forming their own — successful — societies. (See David Beito’s history, From Mutual Aid to Welfare State: Fraternal Societies and Social Services, 1890-1967. Also see my video.)

The libertarian case against the welfare state, then, is not that it undermines self-reliance. It’s that the state is 1) coercive and 2) bound to provide an inferior product because it’s a monopoly with captive customers (taxpayers).

Quite possibly, a libertarian may say he has something else in mind by the term self-reliance. He might mean that he thinks for himself. Fair enough. People ought to think for themselves, though even here we must issue a caveat. F. A. Hayek taught us that even someone who thinks for himself benefits by relying on knowledge that other people possess. Society — the market specifically — extends our intellects by enabling us to act on knowledge of which we would otherwise be ignorant. (Prices are carriers of such knowledge.) Yes, we each must sift through what we learn from others, but we could not flourish without that input.

Going back further than Hayek, Aristotle noted that much of what we can reasonably be said to know includes second-hand “reputable beliefs” picked up from society. I’m comfortable in saying I know the earth is spherical, but I could not confirm that personally. To be sure, which of these beliefs are accepted as reasonable is up to each individual; the proof of the pudding will be in the acting. (See Roderick T. Long’s liberating Reason and Value: Aristotle versus Rand.)

Thus for a variety of reasons, self-reliance is no part of the libertarian vision. It’s time we corrected the record.

Peter Navarro’s  Conversion

Peter Navarro’s Conversion

In a July 20th editorial, the Wall Street Journal offered this pithy appraisal of one of the Trump administration’s top economic advisers on the negative consequences of the burgeoning U.S. trade war with the rest of the world: “Peter Navarro says the harm is a ‘rounding error.’ He’s out of touch.”

Navarro is an economist and director of the Office of Trade and Manufacturing Policy (OTMP), a White House agency created by President Trump. He is one of the rare economists to occupy a high-level advisory role in the White House. A Harvard University Ph.D., he is a stiff protectionist, which is rare among economists.

In June, the OTMP published a report titled “How China’s Economic Aggression Threatens the Technologies and Intellectual Property of the United States and the World.” It argues against the Chinese government’s rule-breaking mercantilism and industrial policy, which are deemed unfair, exploitative, and even extortionist. (Mercantilism includes both protectionism against imports and the promotion of exports.)

This raises the general question of what a national government’s trade policy should be toward a foreign country whose government pursues a mercantilist industrial strategy. A related issue is that Navarro himself was once a promoter of free markets and free trade (and was a contributor to this magazine in its early years). There is, of course, nothing wrong with changing one’s mind; if new evidence contradicts one’s theories, one should change one’s mind. But is today’s protectionist Navarro right, or the young, free-trade Navarro of a few decades ago?

Iran Sanctions Aren’t Just Counterproductive, They’re an Act of War

Iran Sanctions Aren’t Just Counterproductive, They’re an Act of War

Having unilaterally stepped out of the Iran nuclear deal in May, the Trump administration reimposed sanctions on the Islamic Republic earlier this week, part of another so-called “maximum pressure” campaign.

The new sanctions will target Iran’s purchases of U.S. dollars, precious metals trading, industrial software, Iran’s coal industry and its automotive sector. Sanctions on Iran’s oil industry are also set to begin in November.

All of the above is sure to inflict pain on Iran’s civilian population.

Indeed, that is a common intended effect of sanctions: to impose suffering on civilians in hopes they will pressure their own government to comply with American demands.

Not only does such an economic offensive amount to an act of war, the idea that sanctions will spur citizens to action is not borne out in practice, especially in Iran. The more likely result is to inspire a siege mentality in the populace—who instead view their leaders as their protectors—while also reinforcing hatred for the West.

Iraqi Prime Minister Haider al-Abadi put it well in a recent press conference: “[S]anctions destroy societies and do not weaken regimes.”

Speaking of Iraq, consider the sanctions imposed on that country under the Clinton administration. Though they were “worth it” in the well-known words of an American diplomat, they also killed hundreds of thousands of people. Those sanctions didn’t just fail to provoke Iraqis to overthrow Saddam Hussein, they inspired hatred for the United States the world over (including in the mind of Osama bin Laden, who used this stain on America’s record as a propaganda device).

Using sanctions to bully Iran’s citizenry, then, is not a viable strategy.

The new round of sanctions is also unlikely to accomplish the administration’s more immediate goal: bringing Iran back to the negotiation table.

Trump’s unilateral withdrawal from the JCPOA can only be taken by Iranian leadership as the deepest insult, the greatest sign of bad faith. Iranian President Hassan Rouhani, long a major backer of the deal, has drawn a hard line in the sand, stating that Iran will not negotiate as long as the US continues to violate the terms of the deal reached in 2015.

Resistance from Abroad

A handful of world powers, among them US allies, are chafing against the renewed sanctions. With the obvious exception of the US, the P5+1 states (France, UK, China, Russia, plus Germany) insist they’re sticking to the nuclear deal. Compliance with American sanctions in this case would amount to a violation of the deal on the behalf of the other signatories, as the normalization of trade relations is one of the JCPOA’s terms.

China, Iran’s biggest oil customer, recently reaffirmed its position that it would not go along with the sanctions, a major damper on Washington’s aims. Because there’s not a huge amount of US-Iranian business to cut off in the first place, to achieve the intended effect the US must pressure other countries into halting trade.

The EU is pushing back, too. In May, soon after Trump pulled out of the JCPOA, the foreign ministers of France, Germany, Britain and Iran were already working on what they called a “nine-point plan” to keep Iran in from the cold.

EU officials are also working to update a statute known as the “Blocking Regulation,” which was initially drawn up in 1996 to prohibit institutions under EU jurisdiction from complying with American secondary sanctions related to Cuba.

Primary sanctions include the freezing of assets, restrictions on US citizens from doing business with the sanctioned entity, or outright trade embargoes. Secondary sanctions, on the other hand, involve pressuring allies to stop doing business with the country in question. Companies that fail to go along are cut off from the American financial system.

For European businesses, that threat could prove more compelling than the Blocking Regulation itself. Companies may simply avoid the regulation and comply with the sanctions for the sake of staying in the good graces of US finance.

Earlier this week President Trump promised worldwide secondary sanctions for anybody who continued dealings with Iran, which puts European companies between a rock and a hard place.

Several large European firms have already announced they’d be getting out of Iran due to the sanctions:

A French shipping company (CMA CGM), two French car manufacturers (PSA and Renault), and a French oil company (Total) have ceased operations and investments in Iran. The same goes for a large Danish shipping firm (Maersk) and a German auto company (Daimler).

SWIFT

Of particular importance for Iranian trade relations is the Society for Worldwide Interbank Financial Telecommunication, or SWIFT, an institution that facilitates financial transactions across borders between several different countries.

SWIFT is based in Belgium and resides under the jurisdiction of the EU. Going forward, it’s crucial that the EU keeps that organization from complying with American demands, which would cripple Iran’s ability to do business internationally.

There is a possibility that the Trump administration could impose sanctions on SWIFT itself, but the costs of interfering with such a significant institution may be prohibitively high.

Given the staunch resistance offered by the P5+1 nations, as well as a few unlikely dissidents, it remains to be seen what kind of teeth the new round of sanctions will have. Beyond dispute, however, are very real tensions growing between the US and its imperial satellites in Europe, a welcomed silver lining in an otherwise dismal situation.

Central Planning Doesn’t Work Internationally, Either

Central Planning Doesn’t Work Internationally, Either

It is baffling how some who defend freedom and free markets domestically are willing to abandon those assumptions when considering the border and beyond. Our immigration, foreign policy, and international relation policies often endorse a command and control framework and ignore relevant economic insights that promote freedom.
Trade, immigration, foreign aid, and military intervention all illustrate the point. All reflect anti-market attitudes to some degree and instead rely on central planning.

Trade

The United States has generally taken a liberal approach to trade with other nations. Yet, the history of free trade is still marked with notable illiberal turns from the general pro-trade attitude. The most prominent example may be the Smoot-Hawley tariffs of the Great Depression. These tariffs possibly exacerbated the economic downturn by raising the costs of various goods and destroying “the vulnerable capital structure” which was recovering from the recent stock market crash.
Yet, despite a general pro-trade attitude, we have often fought a rhetorical battle against economic nativism. The slogan “Buy American” is frequently popular, and though we have generally avoided high costs to import and export since the Second World War, we have found roundabout methods of discriminating against foreign goods, subsidies being the primary example. Subsidies such as those reaped by sugar and other agriculture industries often exist to protect against foreign commodities, often under vague and baffling national security justifications. Once examined, there appears to be no real discernible interest outside of protectionism.
High tariffs, protectionism against foreign goods, is centralized planning. In this instance, a central body selects a few domestic winners instead of by market processes—the actions of consumers and producers—in order to arrange the economy as those in charge believe best.
High tariffs are again becoming politically popular, as some describe current trade arrangements as “unfair.” This is setting a course for a trade war between nations, specifically China. Part of the desire to engage in ultimately harmful trade policy arises from economic misunderstandings regarding trade deficits and comparative advantage, but some of the trouble arises from a hubristic planner mentality which believes the planner knows best which items should originate in the United States and which should not. With this arrangement, most everyone loses, especially in the long run.

Immigration

The current immigration system is highly restricted. With an annual worldwide limit of 675,000 permanent immigrants (with a few exceptions) allowed into the United States, and a per-country limit divided among that number, the demand for legal entry far exceeds the supply. This is the type of cap which encourages gaming and illegal activity. What I call the “black market signal” illustrates the point. With an estimated 11.4 million unauthorized immigrants in the United States, we see that the lack of supply for entry creates a strong incentive to come in without authorization, much like price caps or bans on other goods or services, a hard cap on immigration encourages illegal entrants. The black or illegal market signals a need to increase the supply.
Caps on markets often create perverse incentives, especially when market demand far exceeds the allotment. The closer the price to the natural balance between the supply and demand, the lower the incentive to find alternatives. With imposed limitations on a good or service the demand for work-a-rounds and substitutes increases. In this instance, illegal immigration is such a substitute for difficult to attain legal immigration.
Some believe we can discriminate based on merit; those who are most qualified deserve to migrate. But this suffers from the same central planning fallacy. There is certainly a demand for high-skill workers, but that is not to say there is no demand for other types of workers. The idea that a central planner knows what levels of skill are in high demand or may arise with more immigration have yielded to the hubris of central planners.
One bright spot is once people become more aware of how difficult it is to legally migrate to or remain in the United States they become more sympathetic to reform. That doesn’t mean that the attitude toward immigration is a default market approach, but at the least, it indicates the possibility of a more market-orientated attitude than current policy reflects.
There is also the reasonable argument that immigrants are not simply goods crossing borders but are people, and people come with costs. As George Borjas puts it, “We wanted workers, but got people instead.” Though this is true, there are costs to immigration, it is worth putting this into perspective: the overall effect of immigration is positive, and we are probably imposing greater material costs on all involved with our current restrictions. Some studies estimate huge worldwide increases in wealth with permissive immigration policies, but the easiest compelling case to note is that many migrants are willing to take substantial risks and bear costs to improve their lot and find opportunity here. In truth, the cap we have placed is one on individual opportunity.
I heard it said the best immigration policy is to have one. But the truth of the matter is we have one that is incompatible with human nature and economic incentives; as a result, it appears we have none at all.

International Aid

In truth, we tend to exaggerate how much aid the United States government gives to other countries. It is, in reality, a very small amount of the total annual budget, often less than one percent of the budget. Despite the low amount, changes to the current approach may be justified on the grounds that the aid often fails to achieve the developmental goals for which it was intended. Often times foreign aid, well intended, ends up bankrolling human right violations. Most importantly, it fails to recognize the rights of those it is meant to help.
Economist William Easterly explains:

The sad neglect of the rights of the poor… follows from the ideas behind the global war on poverty. Those who work in development prefer to focus on technical solutions to the poor’s problems, such as forestry projects, clean water supplies, or nutritional supplements. Development experts advise leaders they perceive to be benevolent autocrats to implement these technical solutions. The international professionals perpetrate an illusion that poverty is purely a technical problem, distracting attention away from the real cause: the unchecked power of the state against poor people without rights. The dictators whom experts are advising are not the solution — they are the problem.

His thinking has helped shift some of the approaches to foreign aid, but at the heart of it all, effective aid has been limited because of a centralized approach. In the alternatives, adopting an approach that reinforces individual rights to property, provides access to markets, and respects personal autonomy would be more effective.
Similarly, Nobel laureate Angus Deaton notes that counties that receive the most aid in sub-Saharan Africa are the least democratic, a possible explanation being that much of the past foreign aid has removed the incentive for internal reforms. He observes that those on the ground, the people, are better able to decide what helps improve their condition, not a central planner, be it our government, theirs, or even well-meaning non-governmental organizations.
Better aid has been addressed by various thinkers. Chris Blattman suggests the best aid is simply cash donations, while others encourage employing a thoughtful, tailored approach to aid such as effective altruism. Regardless of the details, without first discarding notions of central planning and then embracing encouragement of and respect for individual rights, solutions will fail to reach the desired ends.

Military Intervention

The United States currently has over 800 oversea bases. That is several times more than any potential geopolitical foe with Russia topping the list with nine, while our allies France and United Kingdom have about 12 to each of them. Not only that, but the US is constantly mired in foreign conflicts, having intervened in at least five other countries since the Iraq/Afghanistan war. It is clear the United States has a military-industrial complex problem. The propensity for military action has come to define the United States at home and abroad.
Much of this over-extension of the United States military may or may not be justified on moral grounds, but it is certainly questionable on economic terms. And this is more than the large price-tag we see come out of the Pentagon, which is a few times greater than the next biggest spender. It’s about applying economic principles to military interventions.
As economist David Henderson astutely observes, Hayek’s insight on the knowledge problem is applicable to foreign policy, which warns against intervention due to the difficulties in knowing the “particularities of time and place.” As Henderson states:

When governments intervene in the domestic economy, they almost always do damage. One of the main reasons is that they don’t have—and can’t have—the information they would need to plan the economy well. As Nobel Prize winning economist Friedrich Hayek argued in a classic 1945 article, “The Use of Knowledge in Society,” the information that matters most for economics decisions is held in the minds of the hundreds of millions of market participants.

Similarly, when governments try to intervene in other countries, they are even more ignorant about those countries than they are about their own. This can have disastrous consequences. Consider the Middle East and ISIS. Where did ISIS come from? As President Reagan used to say, let’s take a trip down memory lane.
That is to say, relevant information is difficult to obtain—if not impossible—thus the costs and probability of successful intervention weighed against the benefits require a cautious approach. The nature of the relevant information for a successful campaign is diffused and dispersed among the population of the relevant country. How a people react, and will react in years to come, to foreign intervention often leads to negative second-order effects and unintended consequences. These results are hard to predict and consequently, the United States’s record of military intervention is mixed at best.
This is further complicated by the fact that political incentives are often short-run and at times contrast with the ultimate improvement of a conflicted area. Regardless of the initial good intentions and policy goals, intervention is easily captured by politics.
There are a lot of corrupt, illiberal, and even dangerous governments in the world. The relevant question is, then, how do we best incentivize reform? Through trade, relationships, travel, and example or military action? Though China remains a likely geopolitical opponent, trade has likely done more to establish peace than any military posturing. All things considered, a more hesitant approach is merited.

Freedom Is the Answer

There are a few explanations for the high tolerance of central planning abroad. First, it may be due to what Bryan Caplan calls anti-foreign bias. Generally speaking, and not just in the United States but everywhere, there is a strong attachment to that which is similar and familiar over foreign. As a result, we frequently shape policy and vote to reflect that bias, which means we are more willing to aid those who look and sound familiar over those who do not. This bias is likely compounded by the fact that it is difficult to perceive the costs of policies implemented abroad.
Second, government has a central planning bias generally. It is in the nature of government to “do something” unless limited by politics or constitutional restraints. That isn’t to say government actors do not find a way to work around those limitations, but it is also no coincidence that the areas of greatest government discretion, that to do with the border and beyond, are also areas with fewer political or structural checks.
It is important we recognize that these are biases, and a bias can often be corrected. Applying economic principles and insights helps adjust these biases toward better policy and outcomes.
If the consequences of central planning are domestically detrimental, we will likewise see a similar detrimental impact on international policy. Instead of central planning for others, we should embrace presumptions and policies which encourage freedom.
Reprinted from Medium.

The Antiwar Comic: The Korea Situation

China’s Plan to End the Petrodollar

This article originally appeared at Anti-Media. 

 

Financial analysts are increasingly pointing out that China has some very grand plans when it comes to petroleum markets, and that if those plans succeed, the U.S. could see the dollar threatened as the top global currency. From CNBC on Tuesday:

“China is looking to make a major move against the dollar’s global dominance, and it may come as early as this year.

“The new strategy is to enlist the energy markets’ help: Beijing may introduce a new way to price oil in coming months — but unlike the contracts based on the U.S. dollar that currently dominate global markets, this benchmark would use China’s own currency.”

While analysts agree that China faces an uphill battle in dethroning the petrodollar — currently used to price two-thirds of the world’s marketed oil — widespread adoption of the “petroyuan” would, as CNBC wrote, “mark a step toward challenging the greenback’s status as the world’s most powerful currency.”

China’s plan is to peg oil to the yuan through crude oil futures contracts — agreements to sell a specific commodity at a specific price and date. The country says its petroyuan, which some are predicting will launch before the end of the year, will be fully convertible into gold on Shanghai and Hong Kong exchanges.

The establishment of the petroyuan will allow countries seeking to limit their dependency on the dollar — as well as circumvent U.S. sanctions — to buy and sell oil through an alternative means. This is no small thing, says Gal Luft, co-director of the Institute for the Analysis of Global Security.

“Game changer it is not — at least not yet,” Luft told CNBC. “But it is another indicator of the beginning of the glacial, and I emphasize the word glacial, decline of the dollar.”

Challenges to the petroyuan’s success are many, including the fact that markets have been trading in dollars for over four decades. Another, says John Driscoll, director of JTD Energy Services in Singapore, is the Chinese government itself.

“My biggest reservations are the role of the Chinese central government, potential state intervention and favoritism toward Chinese companies,” Driscoll told CNBC. “China may be world’s fastest growing and most formidable energy consumer, but its central government plays a dominant role in the energy sector.”

But as the world’s largest importer of crude oil, some analysts say China is in a position to make demands. This is precisely what it will do with Saudi Arabia, predicts Carl Weinberg, chief economist and managing director at High Frequency Economics. He also says this will have a domino effect in global markets.

“I believe that yuan pricing of oil is coming and as soon as the Saudis move to accept it — as the Chinese will compel them to do — then the rest of the oil market will move along with them,” he told CNBC in early October.

Adam Levinson, a hedge fund manager at Graticule Asset Management Asia, appears to agree. He told Bloomberg Tuesday that the launch of the petroyuan will be a “wake up call” for any investors who haven’t been paying attention to China’s plans.

The Antiwar Comic: The Korea Situation

China's Plan to End the Petrodollar

This article originally appeared at Anti-Media. 
 
Financial analysts are increasingly pointing out that China has some very grand plans when it comes to petroleum markets, and that if those plans succeed, the U.S. could see the dollar threatened as the top global currency. From CNBC on Tuesday:
“China is looking to make a major move against the dollar’s global dominance, and it may come as early as this year.
“The new strategy is to enlist the energy markets’ help: Beijing may introduce a new way to price oil in coming months — but unlike the contracts based on the U.S. dollar that currently dominate global markets, this benchmark would use China’s own currency.”
While analysts agree that China faces an uphill battle in dethroning the petrodollar — currently used to price two-thirds of the world’s marketed oil — widespread adoption of the “petroyuan” would, as CNBC wrote, “mark a step toward challenging the greenback’s status as the world’s most powerful currency.”
China’s plan is to peg oil to the yuan through crude oil futures contracts — agreements to sell a specific commodity at a specific price and date. The country says its petroyuan, which some are predicting will launch before the end of the year, will be fully convertible into gold on Shanghai and Hong Kong exchanges.
The establishment of the petroyuan will allow countries seeking to limit their dependency on the dollar — as well as circumvent U.S. sanctions — to buy and sell oil through an alternative means. This is no small thing, says Gal Luft, co-director of the Institute for the Analysis of Global Security.
“Game changer it is not — at least not yet,” Luft told CNBC. “But it is another indicator of the beginning of the glacial, and I emphasize the word glacial, decline of the dollar.”
Challenges to the petroyuan’s success are many, including the fact that markets have been trading in dollars for over four decades. Another, says John Driscoll, director of JTD Energy Services in Singapore, is the Chinese government itself.
“My biggest reservations are the role of the Chinese central government, potential state intervention and favoritism toward Chinese companies,” Driscoll told CNBC. “China may be world’s fastest growing and most formidable energy consumer, but its central government plays a dominant role in the energy sector.”
But as the world’s largest importer of crude oil, some analysts say China is in a position to make demands. This is precisely what it will do with Saudi Arabia, predicts Carl Weinberg, chief economist and managing director at High Frequency Economics. He also says this will have a domino effect in global markets.
“I believe that yuan pricing of oil is coming and as soon as the Saudis move to accept it — as the Chinese will compel them to do — then the rest of the oil market will move along with them,” he told CNBC in early October.
Adam Levinson, a hedge fund manager at Graticule Asset Management Asia, appears to agree. He told Bloomberg Tuesday that the launch of the petroyuan will be a “wake up call” for any investors who haven’t been paying attention to China’s plans.

The Antiwar Comic: The Korea Situation

Chinese President to Cement Control as China Assumes Role of Top Global Superpower

This article originally appeared at Anti-Media. 

 

Next Wednesday, the 19th National Congress of the Communist Party of China will begin. The week-long event, during which President Xi Jinping will further cement his control of the government, comes at a pivotal time for the Asian superpower.

Countries in the region — and, indeed, much of the rest of the world — are increasingly looking to China for guidance. For years, in fact, the media has painted the image of China overtaking the United States as the dominant force on the planet.

As Anti-Media has previously observed, evidence suggests that under a freshly anointed Xi,  a post-Congress China may be ready to fully embrace this role of world leader. An article from its state-run Xinhua News Agency last week, titled “China offers wisdom in global governance,” speaks directly to this shifting geopolitical tide.

But Anti-Media has also explored China’s glaring problem in the midst of all its power projection. As the country seeks to present a strong, unified front to the international community during the Congress — the “One China” it very much wants to be recognized — Hong Kong and Taiwan continue to push for independence.

On Tuesday, the president of Taiwan, which China views as a breakaway province, used a speech at the capital city of Taipei to, as Reuters wrote, “warn that the self-ruled island would not bow to pressure” from Beijing.

“Today, on our National Day, we should remember that democracy and freedom are rights that only came following the joint efforts of all Taiwanese people,” said President Tsai Ing-wen. “As a result, the government must make the utmost effort to safeguard Taiwan’s values of democracy and freedom, as well as our way of life.”

In the speech, which focused on her ideas for building a better Taiwan, Tsai says her administration is dedicated to improving the Taiwanese military. In doing so, the delicate line the leader must walk, even while holding her ground on the issue of self-determination, is clear to see:

“Although we are strengthening our military capabilities, we do not seek war. We remain committed to maintaining peace and stability both in the Taiwan Strait and across the region. Meanwhile, we will continue to safeguard Taiwan’s freedom, democracy, and way of life, as well as ensure the Taiwanese people’s right to decide our own future.”

Tsai went on to say that Taipei and Beijing have thus far been able to “maintain the basic stability of cross-strait relations” and that she hopes both sides can be “pragmatic and realistic” in future exchanges.

A large chunk of Tsai’s speech, however, was focused on how Taiwan is working to get as far out of China’s sphere of influence as possible — precisely what China doesn’t want. Specifically, Tsai discussed the New Southbound Policy (NSP), described by Taiwan’s Central News Agency (CNA) on Wednesday:

“The NSP seeks to increase cooperation with Southeast Asian and South Asian countries, as well as New Zealand and Australia, as a means of reducing Taiwan’s trade and investment reliance on China.”

CNA was reporting on the fact that President Tsai just pledged to establish a $3.5 billion fund to assist countries involved in the NSP project. In her Tuesday speech, Tsai said flatly that the purpose of the NSP is to help Taiwan achieve a “more advantageous position in international society.”

It will be interesting, to say the least, to see what happens following the Party Congress. If a more forceful China decides to flex a little muscle, the stubbornly independent Taiwan could make for a very convenient target.

The Antiwar Comic: The Korea Situation

Trump’s trade war with China on hold after China agrees to North Korea sanctions

This article originally appeared at Anti-Media. 

 

The United States’ much-hyped trade war with China appears to be on hold at the moment. On Monday, the Trump administration made a conciliatory gesture to the Asian superpower following its agreement to restrict North Korean exports of coal, iron, lead, and seafood. From Bloomberg:

“President Donald Trump plans to wait at least a week and possibly longer on moving forward with a trade investigation of China on intellectual property violations after the country backed UN Security Council sanctions on North Korea, an administration official said.”

The unnamed administration insider told Bloomberg that while Trump and his team “remain concerned over what the U.S. perceives as Chinese violations of intellectual property” and that a trade investigation is still an option, the White House wanted to “encourage and reward China’s cooperation on North Korea and is balancing national security concerns against domestic economic considerations.”

While the idea of a trade war with China is nothing new under Donald Trump — the president has long held that China has an unfair advantage in its trading policies with the U.S. — analysts have been particularly concerned lately due to Trump’s continuing frustration with China over the issue of North Korea’s missile program.

Speculation was high last week that the Trump administration was preparing to take unilateral action against China via the little-used Section 301 of the Trade Act of 1974. That section allows the president to impose tariffs or trade restrictions in the name of protecting U.S. commerce.

A White House announcement on the Section 301 investigation had even been scheduled for last Friday. But by Thursday, as POLITICO reported last week, the announcement was postponed “at the urging of United Nations and State Department officials, who are in the sensitive final stages of convincing China to sign on to a U.N. resolution that would impose new sanctions on North Korea.”

“There are broader talks about diplomatic considerations,” a Trump administration official told POLITICO.

Whether or not Trump’s backing off on the trade angle was what ultimately got China to go along with sanctions, the fact remains that China did go along — knowing full well it would be the one hardest hit in economic terms.

“Owing to China’s traditional economic ties with North Korea, it will mainly be China paying the price for implementing the resolution,” Chinese Foreign Minister Wang Yi said Monday while speaking at a forum in Manila, according to statement released by the foreign ministry Tuesday.

“But in order to protect the international non-proliferation system and regional peace and stability, China will, as before, fully and strictly properly implement the entire contents of the relevant resolution,” the statement cited Yi as saying.

The sanctions are aimed at slashing a full third of the Hermit Kingdom’s annual $3 billion in exports.

Patrick Cronin, an Asia specialist with the think tank Center for a New American Society, told CNN that “for China to join, on top of the international community, sends a signal to North Korea that this is serious economic damage if they don’t find a way to reduce those sanctions and the pressure from that.”

United Nations ambassador Nikki Haley agrees that if nothing else, China’s decision to go along with sanctions marks a move toward international cohesion on the North Korea issue.

“What this is going to do is send a very strong message and a united message,” she told NBC in an interview Tuesday.

Donald Trump himself struck a similar chord, tweeting:

“After many years of failure, countries are coming together to finally address the dangers posed by North Korea. We must be tough & decisive!”

The Antiwar Comic: The Korea Situation

Trump's trade war with China on hold after China agrees to North Korea sanctions

This article originally appeared at Anti-Media. 
 
The United States’ much-hyped trade war with China appears to be on hold at the moment. On Monday, the Trump administration made a conciliatory gesture to the Asian superpower following its agreement to restrict North Korean exports of coal, iron, lead, and seafood. From Bloomberg:
“President Donald Trump plans to wait at least a week and possibly longer on moving forward with a trade investigation of China on intellectual property violations after the country backed UN Security Council sanctions on North Korea, an administration official said.”
The unnamed administration insider told Bloomberg that while Trump and his team “remain concerned over what the U.S. perceives as Chinese violations of intellectual property” and that a trade investigation is still an option, the White House wanted to “encourage and reward China’s cooperation on North Korea and is balancing national security concerns against domestic economic considerations.”
While the idea of a trade war with China is nothing new under Donald Trump — the president has long held that China has an unfair advantage in its trading policies with the U.S. — analysts have been particularly concerned lately due to Trump’s continuing frustration with China over the issue of North Korea’s missile program.
Speculation was high last week that the Trump administration was preparing to take unilateral action against China via the little-used Section 301 of the Trade Act of 1974. That section allows the president to impose tariffs or trade restrictions in the name of protecting U.S. commerce.
A White House announcement on the Section 301 investigation had even been scheduled for last Friday. But by Thursday, as POLITICO reported last week, the announcement was postponed “at the urging of United Nations and State Department officials, who are in the sensitive final stages of convincing China to sign on to a U.N. resolution that would impose new sanctions on North Korea.”
“There are broader talks about diplomatic considerations,” a Trump administration official told POLITICO.
Whether or not Trump’s backing off on the trade angle was what ultimately got China to go along with sanctions, the fact remains that China did go along — knowing full well it would be the one hardest hit in economic terms.
“Owing to China’s traditional economic ties with North Korea, it will mainly be China paying the price for implementing the resolution,” Chinese Foreign Minister Wang Yi said Monday while speaking at a forum in Manila, according to statement released by the foreign ministry Tuesday.
“But in order to protect the international non-proliferation system and regional peace and stability, China will, as before, fully and strictly properly implement the entire contents of the relevant resolution,” the statement cited Yi as saying.
The sanctions are aimed at slashing a full third of the Hermit Kingdom’s annual $3 billion in exports.
Patrick Cronin, an Asia specialist with the think tank Center for a New American Society, told CNN that “for China to join, on top of the international community, sends a signal to North Korea that this is serious economic damage if they don’t find a way to reduce those sanctions and the pressure from that.”
United Nations ambassador Nikki Haley agrees that if nothing else, China’s decision to go along with sanctions marks a move toward international cohesion on the North Korea issue.
“What this is going to do is send a very strong message and a united message,” she told NBC in an interview Tuesday.
Donald Trump himself struck a similar chord, tweeting:
“After many years of failure, countries are coming together to finally address the dangers posed by North Korea. We must be tough & decisive!”

The Antiwar Comic: The Korea Situation

Senior Military Official: North Korean Missiles Aren’t a Threat to U.S. Cities

This article originally appeared at Anti-Media.

 

Geopolitical moves are being made on the issue of North Korea. A day after South Korea’s new government offered to hold military talks with its neighbor to the North, the United States’ second-highest ranking military official admitted Tuesday that North Korean missiles lack the accuracy to effectively target U.S. cities.

On Monday, South Korea’s defense ministry proposed that representatives from both the South and North Korean militaries meet at the border village of Panmunjom in North Korea for talks.

“We make the proposal for a meeting…aimed at stopping all hostile activities that escalate military tension along the land border,” South Korea’s defense ministry said in a statement.

The man in charge of North Korean affairs, unification minister Cho Myoung-gyon, said his country “would not seek collapse of the North or unification through absorbing the North” and suggested a positive response from Kim Jong-un’s government would represent a show of good faith.

“North Korea should respond to our sincere proposals if it really seeks peace on the Korean Peninsula,” Cho said, adding that ifNorth Korea chooses the right path, we would like to open the door for a brighter future for North Korea, together, by cooperating with the international community.

The defense ministry’s overture falls in line with the approach advocated by new South Korean president Moon Jae-in, who supports diplomatic talks with the North led by South Korea.

Recently, ahead of the G20 summit in Germany, Moon stated that the need for dialogue” with North Korea is “more pressing than ever before because the situation had “reached the tipping point of the vicious cycle of military escalation.”

North Korea has yet to respond to the South’s proposal.

Meanwhile, on Tuesday, the primary driver of the “evil North Korea” narrative, United States appeared to go against the grain and actually downplayed the effectiveness of Kim Jong-un’s nuclear weapons program — or, at least, one senior defense official did. From Reuters:

“North Korea does not have the ability to strike the United States with ‘any degree of accuracy’ and while its missiles have the range, they lack the necessary guidance capability, the vice chairman of the U.S. Joint Chiefs of Staff said on Tuesday.

Speaking before the Senate Armed Services Committee, General Paul Selva said North Korea’s July 4 intercontinental ballistic missile (ICBM) test showed that the country has no hope of hitting a U.S. target with any “reasonable confidence of success” and that recent talk about its ability to strike Alaska or the Pacific Northwest is overblown:

“What the experts tell me is that the North Koreans have yet to demonstrate the capacity to do the guidance and control that would be required.”

While the general’s admission isn’t on the same level as the actual act of diplomacy just demonstrated by South Korea, the fact that the U.S. military is walking back — even if only just a step or two — a narrative it fought so hard to establish is itself worthy of commentary.

So what gives? Why, in the last two days, have both the U.S. and ally South Korea suddenly taken a softer line — again, in their own ways — on the North Korea issue? Are all parties concerned about to knock off the rhetoric and allow the Hermit Kingdom to continue to fire missiles into the sea?

Not likely. As with most other issues of geopolitical significance in that region of the world, these moves likely have far more to do with China.

On Wednesday, President Donald Trump and Chinese President Xi Jinping will meet in Washington, D.C., for annual bilateral talks, this year dubbed the “U.S.-China Comprehensive Economic Dialogue.” It will be the third meeting between the two men, after Xi’s visit to Mar-a-Lago three months ago and their discussions on the sidelines of the G20 summit in Germany.

Recently, Trump reignited concern over a trade war between the U.S. and China when he said he was considering slapping import tariffs on steel. But these kinds of tactics are nothing new ahead of economic negotiations, as the Washington Post noted last Friday:

“In 1981, the Reagan administration convinced Japan to reduce the number of cars it was exporting to the United States in a bid to boost the U.S. auto sector. In 1984, the administration used the tactic again with the steel industry, as it told dozens of countries to either limit their steel shipments to the United States or lose access to the American market.

In an article published Sunday titled “U.S.-China trade talks sputtering at 100-day deadline,” Reuters outlined how results from economic negotiations between the two countries have been less than encouraging since Trump and Xi first met at Mar-a-Lago. The general consensus is that Donald Trump needs a major win with China to prove he’s sticking to the “America first” guns that got him into the White House.

Noting that “North Korea has cast a long shadow over the relationship between Trump and Xi, Reuters points out that the Hermit Kingdom and its nuclear weapons program has been a hindrance to cooperation for the U.S. president:

“Trump has linked progress in trade to China’s ability to rein in North Korea, which counts on Beijing as its chief friend and ally.”

On Tuesday, the Associated Press also highlighted how Trump has used the issue of North Korea as a bargaining chip at the negotiating table with China:

“As a presidential candidate, Trump attacked China for refusing to pressure Pyongyang to back off from developing nuclear weapons. After the Mar-a-Lago summit, though, Trump praised Beijing for agreeing to help deal with North Korea. As a reward, he abandoned his vow to accuse China of manipulating its currency to benefit Chinese exporters.

So it may be that this one-two punch from the United States and ally South Korea was a coordinated effort to ease tensions and create an atmosphere conducive to cooperation ahead of critical negotiations between the U.S. and China.

It may be that the Trump administration is signaling that it would be willing to back off on pressuring China to rein in Kim Jong-un if China is willing to make concessions on the economic front — and give Trump the win he needs.

The Antiwar Comic: The Korea Situation

Senior Military Official: North Korean Missiles Aren't a Threat to U.S. Cities

This article originally appeared at Anti-Media.
 
Geopolitical moves are being made on the issue of North Korea. A day after South Korea’s new government offered to hold military talks with its neighbor to the North, the United States’ second-highest ranking military official admitted Tuesday that North Korean missiles lack the accuracy to effectively target U.S. cities.
On Monday, South Korea’s defense ministry proposed that representatives from both the South and North Korean militaries meet at the border village of Panmunjom in North Korea for talks.
“We make the proposal for a meeting…aimed at stopping all hostile activities that escalate military tension along the land border,” South Korea’s defense ministry said in a statement.
The man in charge of North Korean affairs, unification minister Cho Myoung-gyon, said his country “would not seek collapse of the North or unification through absorbing the North” and suggested a positive response from Kim Jong-un’s government would represent a show of good faith.
“North Korea should respond to our sincere proposals if it really seeks peace on the Korean Peninsula,” Cho said, adding that ifNorth Korea chooses the right path, we would like to open the door for a brighter future for North Korea, together, by cooperating with the international community.
The defense ministry’s overture falls in line with the approach advocated by new South Korean president Moon Jae-in, who supports diplomatic talks with the North led by South Korea.
Recently, ahead of the G20 summit in Germany, Moon stated that the need for dialogue” with North Korea is “more pressing than ever before because the situation had “reached the tipping point of the vicious cycle of military escalation.”
North Korea has yet to respond to the South’s proposal.
Meanwhile, on Tuesday, the primary driver of the “evil North Korea” narrative, United States appeared to go against the grain and actually downplayed the effectiveness of Kim Jong-un’s nuclear weapons program — or, at least, one senior defense official did. From Reuters:
“North Korea does not have the ability to strike the United States with ‘any degree of accuracy’ and while its missiles have the range, they lack the necessary guidance capability, the vice chairman of the U.S. Joint Chiefs of Staff said on Tuesday.
Speaking before the Senate Armed Services Committee, General Paul Selva said North Korea’s July 4 intercontinental ballistic missile (ICBM) test showed that the country has no hope of hitting a U.S. target with any “reasonable confidence of success” and that recent talk about its ability to strike Alaska or the Pacific Northwest is overblown:
“What the experts tell me is that the North Koreans have yet to demonstrate the capacity to do the guidance and control that would be required.”
While the general’s admission isn’t on the same level as the actual act of diplomacy just demonstrated by South Korea, the fact that the U.S. military is walking back — even if only just a step or two — a narrative it fought so hard to establish is itself worthy of commentary.
So what gives? Why, in the last two days, have both the U.S. and ally South Korea suddenly taken a softer line — again, in their own ways — on the North Korea issue? Are all parties concerned about to knock off the rhetoric and allow the Hermit Kingdom to continue to fire missiles into the sea?
Not likely. As with most other issues of geopolitical significance in that region of the world, these moves likely have far more to do with China.
On Wednesday, President Donald Trump and Chinese President Xi Jinping will meet in Washington, D.C., for annual bilateral talks, this year dubbed the “U.S.-China Comprehensive Economic Dialogue.” It will be the third meeting between the two men, after Xi’s visit to Mar-a-Lago three months ago and their discussions on the sidelines of the G20 summit in Germany.
Recently, Trump reignited concern over a trade war between the U.S. and China when he said he was considering slapping import tariffs on steel. But these kinds of tactics are nothing new ahead of economic negotiations, as the Washington Post noted last Friday:
“In 1981, the Reagan administration convinced Japan to reduce the number of cars it was exporting to the United States in a bid to boost the U.S. auto sector. In 1984, the administration used the tactic again with the steel industry, as it told dozens of countries to either limit their steel shipments to the United States or lose access to the American market.
In an article published Sunday titled “U.S.-China trade talks sputtering at 100-day deadline,” Reuters outlined how results from economic negotiations between the two countries have been less than encouraging since Trump and Xi first met at Mar-a-Lago. The general consensus is that Donald Trump needs a major win with China to prove he’s sticking to the “America first” guns that got him into the White House.
Noting that “North Korea has cast a long shadow over the relationship between Trump and Xi, Reuters points out that the Hermit Kingdom and its nuclear weapons program has been a hindrance to cooperation for the U.S. president:
“Trump has linked progress in trade to China’s ability to rein in North Korea, which counts on Beijing as its chief friend and ally.”
On Tuesday, the Associated Press also highlighted how Trump has used the issue of North Korea as a bargaining chip at the negotiating table with China:
“As a presidential candidate, Trump attacked China for refusing to pressure Pyongyang to back off from developing nuclear weapons. After the Mar-a-Lago summit, though, Trump praised Beijing for agreeing to help deal with North Korea. As a reward, he abandoned his vow to accuse China of manipulating its currency to benefit Chinese exporters.
So it may be that this one-two punch from the United States and ally South Korea was a coordinated effort to ease tensions and create an atmosphere conducive to cooperation ahead of critical negotiations between the U.S. and China.
It may be that the Trump administration is signaling that it would be willing to back off on pressuring China to rein in Kim Jong-un if China is willing to make concessions on the economic front — and give Trump the win he needs.

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