Thursday, September 15, 2011 at 5:19 AM

Countries Queuing Up to Become as Indebted to China as US

Posted by Anthony L. Hall

There is a decidedly ominous slant to news reports suggesting that the United States and Europe are now becoming as dependent on China’s cash as they are on Mideast oil. Specifically, that Italy is just the latest country to queue up to sell its sovereignty for an economic bailout.

The Italian government is making approaches to China with the aim of selling the cash-rich Asian country ‘significant’ quantities of Italian bonds and investments in strategic companies.

(The Financial Times, September 12, 2011)

But these reports invariably fail to note that, just as the Mideast has a mutual dependence on the U.S. and EU as indispensable markets to sell its oil, China has a mutual dependence on them as indispensable markets to sell the products that have endowed it with the cash the entire world seems to be begging for these days.

In other words, reports about China using its cash to extract hegemonic political concessions from these countries ignore the fact that inherent in this mutual dependence is mutually assured destruction (MAD) if political (or military) strife impinges too much on these economic relationships.

This is not the case, however, with the dependence on China’s cash that poor countries in Africa, Latin America and the Caribbean are developing. This is why the glee with which China announced, and Caribbean countries received, news this week of $1 billion in loan guarantees to fund a potpourri of infrastructure projects is so troubling.

Incidentally, am I the only one expecting a revolution to erupt in the Far East that makes the one now unfolding in the Middle East look like a neighborhood brawl? Because this is what  is bound to happen when the 750 billion peasants still living in the Chinese countryside find out that their leaders have been spending trillions buying up political influence and trophy properties around the world instead of providing them with basic necessities like electricity and running water. But I digress….

I’ve been sounding a cautionary note about what China’s buying spree portends for Africa, Latin America and the Caribbean for many years. Yet the potential consequences, especially for the tiny island nations of the Caribbean, are so truly ominous that I have no reservations about beating this dead horse … again.

Instead of finding a new way to do so, however, I shall suffice to reprise a February 3, 2010 commentary entitled, World beware: China calling in loan-sharking debts:

Western leaders have made a mockery of their condemnation of the brutal crackdown on Tibetan monks by heeding China’s warning against meeting with the Dalai Lama in any official capacity. In fact, UK Prime Minister Gordon Brown appeased the Chinese by refusing to meet with him at No. 10, choosing instead to meet only at the residence of the Archbishop of Canterbury. This enabled Brown to claim that he was meeting the Dalai Lama “in a spiritual rather than political capacity.”

(Punishing China for its brutal crackdown on Tibet? Hardly…, The iPINIONS Journal, July 28, 2008)

As this opening quote indicates, the Chinese can be forgiven for thinking that even President Obama would heed their extraterritorial directive against meeting with Tibetan spiritual leader the Dalai Lama. And they were undoubtedly emboldened last year, when Obama appeared to do just that. Specifically, he snubbed the Dalai Lama on the eve of his (Obama’s) first state visit to China.

His spokesman, Robert Gibbs, insists that Obama’s meeting with the Dalai Lama was always scheduled for later… Far more credible is that Obama is snubbing the Tibetan leader because the Chinese would consider such a meeting ahead of his state visit to China next month an insult. And frankly, given the unprecedented and unparalleled power China now has to affect the economic and geopolitical interests of the United States, appeasing the Chinese to this degree seems far more prudent than pusillanimous.

(Obama upsetting liberals, appeasing China?! Calm down folks, The iPINIONS Journal, October 6, 2009)

But the day of reckoning on this directive for Obama, as well as the Chinese, is drawing nigh. The White House announced yesterday that Obama intends to welcome the Dalai Lama later this month. On cue, the Chinese reacted variously like an angry parent disciplining a willful child and a loan shark dealing with a delinquent debtor.

A meeting would be totally at odds with international accepted practices and would seriously undermine the political basis of Sino-U.S. relations … If the U.S. leader chooses this time to meet the Dalai Lama, that would damage trust and cooperation between our two countries, and how would that help the United States surmount the current economic crisis?

(Zhu Weiqun, the Communist Party official in charge of enforcing China’s global effort to marginalize the Dalai Lama)

I applaud Obama for calling China’s bluff. Not least because any real attempt to squeeze the U.S. financially would amount to an unprecedented case of cutting off one’s nose to spite one’s face. After all, the U.S. market is even more indispensable to China’s economic growth than China’s credit is to the U.S.’s.

Meanwhile, they’re only directing that the Dalai Lama should be shunned today. But who knows what extraterritorial directive the Chinese will issue pursuant to their perceived national interest tomorrow…?

Moreover, consider for a moment what passive-aggressive hegemony they have in mind if they already presume that they can dictate who the president of the United States can invite to the White House…. And it’s an indication of their supervening jingoism that the Chinese are proffering the demonstrably specious notion that the U.S. would be acting the same way if the president of China were meeting with the leader of a secessionist movement from the United States (if such a creature even exists).

(Much is being made of China’s concurrent grievance with the U.S. over arms sales to Taiwan. But I believe China has a right to exercise a sphere of military influence over Taiwan based on the same principle (such as it was) that entitled the U.S. to do so over Cuba during the 1962 missile crisis. And I fully expect that, despite commitments under the Taiwan Relations Act (TRA) to defend Taiwan, if (or when) push comes to shove, the U.S. will defer to China over Taiwan just as the Soviet Union deferred to the U.S. over Cuba.)

All the same, this episode should serve as a warning to all countries around the world that are not just lapping up China’s largesse, but heralding it as a more worthy superpower than the United States. After all, China is spitting imperious and vindictive fire at the rich and mighty United States over a relatively insignificant matter like meeting with the Dalai Lama. Therefore, just imagine what it would do to a poor and weak country in a conflict over a truly significant matter.

I anticipated that the Chinese would be every bit as arrogant in the use of their power as the Americans. But I never thought they would use it for such an irrational and plainly unwinnable cause.

In point of fact here, in part, is how I admonished countries in the Caribbean and Latin America in this respect six years ago:

What happens if China decides that it is in its strategic national interest to convert the container ports, factories and chemical plants it has funded throughout the Caribbean into dual military and commercial use? Would these governments comply? Would they have any real choice? And when they do comply, would the U.S. then blockade the entire region – as it blockaded Cuba during the missile crisis?

Now, consider China making such strategic moves in Latin America or Africa where its purportedly benign Yuan diplomacy dwarfs its Caribbean operations. This new Cold War could then turn very hot indeed….

(China buying up political dominion in the Caribbean, The iPINIONS Journal, February 22, 2005)

It clearly does not bode well that China has no compunctions about drawing moral and political equivalence between its beef with the U.S. over the Dalai Lama and the U.S.’s beef with it over internet espionage, unfair trade practices, human rights abuses at home and support for indicted war criminals like President Bashir of Sudan abroad. Because irrational self-pity in a regional menace like North Korea is one thing; in a global power like China it’s quite another.

Still, when all of the chest-thumping and saber-rattling are done, I am confident that cooler heads will act to prevent a trade war (or worse) between the U.S. and China pursuant to the same principle that prevented a military war between the U.S. and Soviet Union: the sobering and inescapable recognition that it would only lead to mutually assured destruction; i.e., it would be MAD!

NOTE: China getting its nose bent all out of shape over the Dalai Lama’s visit is made all the more boorish and irrational when one considers not only that Obama is just following the precedent set by his predecessors, but that he has stated repeatedly that he considers Tibet a part of China and the Dalai Lama nothing more than a spiritual leader.

Related commentaries:
World beware

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