When the Soviet Union collapsed in 1991, the Russian Soviet Federal Socialist Republic (RSFSR) acquired the status of an independent nation and became known as Russia or the Russian Federation. The CPSU nomenklatura occupied all the new government positions in the autonomous republics and other non-Russian ethnic territories. Boris Yeltsin, himself a leading member of the old nomenklatura, did not have a team in waiting to rule Russia, and it was natural that he would turn to those who had experience of governing the Soviet Union. In a third of the eighty-nine territorial entities of the Russian Federation he appointed governors, heads of government and other top executives from the old nomenklatura. About one third had been ‘red’ directors of state-owned enterprises, but this did not reimpose the Soviet system. There were numerous amendments to the constitution, one of which defined Russia as a ‘sovereign, federal state, created by the peoples historically united in it’. During 1990 and 1991, due to the weakness of the centre, power flowed to the regions and Yeltsin quipped: ‘Take as much sovereignty as you can swallow.’ This led to autonomous republics within the RSFSR declaring sovereignty even before the demise of the Soviet Union. The most striking examples were Tatarstan and Chechnya-Ingushetia which quickly split into two autonomous republics. Chechnya declared independence as its goal.
There was a real danger that Russia would fragment just as the Soviet Union had done. To overcome this, agreements were signed between the federal centre and the regions and those seeking independence. An ‘asymmetric federation’ had evolved by 1993, and each member gained significant de jure and de facto powers.
Conflict between Yeltsin and the opposition reached a point where a peaceful resolution, in the president’s eyes, was no longer possible. In October 1993, he turned the instruments of coercion, the military and the police, on the opposition and attacked the White House, the parliament. Blood flowed and the first phase of Russia’s post-1991 development was over. Force was deployed to resolve a political impasse. The new constitution conferred sweeping powers on the president and was dubbed a super-presidential constitution, but it stated that in dealing with the federal government ‘all territories shall be equal.’ Given the asymmetrical federation which existed, this did not reflect reality. Tatarstan, Bashkortostan, Yakutia-Sakha, Sverdlovsk oblast and St Petersburg enjoyed greater autonomy than the others and they also paid less federal tax; the reason for this was the clout of the regional leaders.
When Vladimir Putin became president in 2000 he set out to change the nature of Russian federalism and established seven (and then eight) federal districts, appointed members of his own clan as heads and endowed them with far-reaching powers. He launched a campaign against asymmetrical federalism by imposing the dominance of federal over local laws and ending the tax and other economic benefits which existed. A war was launched against the Chechen separatists in 1999 to bring that republic to heel.
On the face of it, therefore, Russia is now a unitary state where federalism only exists on paper, but this is only part of the story. The top-down or power vertical in Russia is a myth, and the role of Vladimir Putin, as the Father of the Nation, is kept alive by media propaganda which nourishes the belief in a strong leader to save Russia.
The huge windfall during the 2000s from oil, gas and commodity exports has been spent mainly on preserving the central government and on vanity projects such as the Sochi Winter Olympics. Much of it disappeared because of corruption, but some was channelled into a Reserve Fund and a National Wealth Fund. The opportunity to create development-promoting institutions in the economic, social and political spheres was missed, and reform is avoided because it could disturb the distribution of power at the top.
The de facto independence of governors breeds corruption. They suppress local opposition and any independent media, obtain rents from local businesses and are often involved in the running of these businesses. The term ‘burness’ or bureaucratic business has been coined to describe this phenomenon and, as a consequence, it is difficult for small- and medium-sized businesses to set up and develop in such an environment.
The most extreme case of the loss of central control is to be found in the North Caucasus, especially Chechnya. There Ramzan Kadyrov effectively runs the republic on his own terms, helped by federal subsidies. Some local laws are based on Sharia or Islamic law, and the largest mosque in Russia is in Grozny, the capital.
The conclusion is that no unitary state, in the classical meaning of the term, exists in Russia. What exists is a spontaneous confederation in a weak legislative framework, with common political and social institutions and different statuses enjoyed by the regions. Even the statement that the state is held together by ‘securocrats’ – the military, political police and the militia – is not accurate as corruption now reaches the top levels of the military.
Parliamentary and presidential elections in Russia since 1991 have always been rigged, and there have been protests, but these have little effect. This changed in 2011–12 when Muscovites, in particular, demonstrated against the blatant manipulation of the results.
Large cities are not as dependent on the state as the medium and small cities. The 319 monotowns – where there are only one or two industries, usually part of the military-industrial complex – are the most dependent, as without government contracts and subsidies they would collapse. They resent the advent of democracy and the market economy because they associate them with the loss of their traditional way of life where the state provided employment and social benefits. They are the heartland of support for Putin and look to him for survival. These people are conservative, patriotic and resistant to change.
All major publications and media are now run by those loyal to the Putin clan. The main message is that there is no alternative to Putin, but his popularity began to dip after 2010 because of declining incomes. In 2013 they were 62 per cent with the opposition climbing to 36 per cent.
Then the president had a great stroke of luck. The Maidan protests in Kyiv (Kiev in Russian) in February 2014 led to the flight of President Viktor Yanukovych and the election of a new pro-Western president and government. Moscow regarded its naval base in Sevastopol, Crimea, as of critical importance for national security. Crimea, with a majority ethnic Russian population, after a referendum, was annexed by Russia in March 2014. Conflict broke out in Donetsk and Luhansk oblasts – with large ethnic Russians populations – and they declared themselves people’s republics. Insurgents attempted to expand their reach aided by ‘volunteers’ from Russia. A bloody civil war was the result, and about 1.3 million of the original 3.3 million inhabitants have fled – most to others parts of Ukraine but half a million to Russia and 100,000 abroad. The US and the EU imposed economic sanctions, and a new Cold War got under way. The annexation of Crimea was wildly popular in Russia and Putin’s approval ratings – as high as 80 per cent – hit a level unseen since 2000.
Putin has worked tirelessly to forge closer ties with former Soviet republics. The Commonwealth of Independent States proved a disappointment, but the Customs’ Union and the Eurasian Union promise more, and they consist of Russia, Belarus, Armenia and Kazakhstan. Does Putin want to recreate the Soviet Union? No. True, he has said that the collapse of the Soviet Union was the greatest geopolitical disaster of the twentieth century. On the other hand, he has expressed the view that anyone who does not mourn the passing of the Soviet Union has no heart but anyone who tries to recreate it has no head.
Putin has forged a close relationship with the Russian Orthodox Church. The Duma passed a law returning all Church property seized during the Soviet era, and this made the Orthodox Church one of the largest landholders in the state. Over the past 15 years, Putin has ordered state-owned energy companies to contribute billions to the rebuilding of thousands of churches destroyed during the Soviet era, and around 25,000 churches have been built or rebuilt since the early 1990s. The church has the right to teach religion in schools and to review all draft legislation before the Russian Duma.
The election of Patriarch Kirill in January 2009 strengthened bonds as the Patriarch and Putin share a common vision of Russian national identity and exceptionalism. According to this vision, Russia is neither European nor Asian but rather a unique society representing a special set of values which are believed to be divinely inspired. The Church partners the state, and this is the ideological justification for Putin’s crackdown on dissent and the repression of civil society and other religious groups.
The basis of Putin’s legitimacy was, until recently, the increasing standard of living. Now with the economy flagging, emphasis has switched to Putin as the Father of the Nation who is defending it against a hostile West which is attempting to impose its will on Russia. Vyacheslav Volodin, deputy chief of staff of the presidential administration, coined the slogan: ‘If there is Putin – there is Russia, if there is no Putin – there is no Russia.’ In St Petersburg, he has been portrayed as an angel spreading out his hand to bless the city’s inhabitants, and the same city has unveiled a statue of him as a Roman emperor. Vladislav Surkov, a close associate, has revealed that Putin is a ‘man whom fate and the Lord sent to Russia’.
When Vladimir Putin was re-elected president in February 2012, the Patriarch acclaimed him with the words: ‘He is a miracle of God.’ In April 2015, the Patriarch consecrated a new church to the ‘special forces’, the KGB and FSB, who gave their lives for the Fatherland. When there were demonstrations against Putin because of the atrocities in Chechnya, the Patriarch’s spokesman commented: ‘Organised forces with foreign support are behind this.’ Kirill maintains that ‘in Russia a strong, centralised form of rule is typical: without this nothing gets done’ (The Times, 9 May 2015).
The Russian mode of rule is referred to as sistema, the system. Alena Ledeneva (http://www.russia-direct.org, 4 May 2015) defines it as a network-based system of governance. Characteristics are the limited nature of property rights; the manner in which the legal system can be manipulated by the authorities to remove anyone they dislike; the double standards of the Russian Orthodox Church, which is involved in politics and which justifies the actions of corrupt officials; the all-embracing corruption which pervades power institutions; and the powerlessness of the individual vis-à-vis sistema.
It is based not on what you know but who you know, and another factor is doublethink. If a politician helps another to get a job it is corruption, but if you help a friend to get a job, it is friendship and mutual help. Politics is virtual – in other words, merely a façade. There are democratic elections, but the results are always rigged. Sistema exists in many countries such as Silvio Berlusconi’s Italy and in Central Asia where it surfaces as clanism, neo-patrimonial power or patronal politics. Traditionally, proximity to the tsar meant proximity to power and wealth. Hence being near Putin opens up huge opportunities, and no other centre of power is permitted to emerge. Property rights are insecure (there is no freehold, only leasehold in Russian law), and even the wealthiest oligarch is ready to hand over his assets to the state without a whimper. In China, there is guanxi (system of social networks and informal relationships which facilitate business and other deals), and paying bribes is a way of life. However, it is not as suffocating as in Russia because small- and medium-sized businesses (SMEs) can prosper. A reason for this is that China does not have an abundance of oil and gas – the natural resource curse. Thus people there have to work hard to generate wealth. In Russia sistema has been remarkably successful and has ensured stability and if the country collapsed, new power holders would emerge who would most likely develop their own form of sistema.
There are about twenty million Muslims (95 per cent are Sunni) in Russia, and Moscow has the largest Muslim population of any European city. This is about one in seven of the population, but present trends indicate that some young Muslims are being radicalised and at least 3,000 are fighting with Islamic State in Syria and Iraq, the majority of whom come from the Caucasus. Russia, in common with many other European states, has to contend with Islamism in their midst.
On 28 December 2015, a 400-page tome of pronouncements by President Putin, Words that Change the World, was sent to about a thousand politicians and officials. It consists of nineteen speeches, articles and campaign pledges dating back to the president’s appearance at the UN General Assembly in 2003. A letter accompanying the gift explains that the speeches would allow readers to understand the ‘moral principles and reference points which led to extremely important domestic and foreign policy decisions’. The president constantly insists that the UN should be paramount in global decision making. The anthology includes the president’s speech at the Munich security conference when he railed against US dominance, claiming it had ‘overstepped its national borders in every way’, and it also includes his speech in 2014 confirming Russia’s annexation of Crimea which, he claimed, had been ‘handed like a sack of potatoes’ to Ukraine in 1954. Another striking comment, in 2012, was that ‘any person living in our country should not forget his faith and ethnicity but before everything else, he must be a citizen of Russia and be proud.’
After the collapse of the Soviet Union, the Russian economy went into freefall. Egor Gaidar headed a team of economists who introduced shock therapy to reform the moribund planned economy. Hyperinflation wiped out savings, and privatisation of industry was set in train. The Central Bank engaged in quantitative easing, also known as printing money, as tax returns were very small. The oil industry was the biggest prize, and those who acquired major stakes became known as oligarchs, but Prime Minister Viktor Chernomyrdin made sure that the gas industry, Gazprom, remained nationalised. Yeltsin lurched from crisis to crisis and was kept afloat by IMF and other loans. The economy grew 1.4 per cent in 1997, which was quite an achievement given that the average annual decline between 1992 and 1996 had been 9.4 per cent, but the economy collapsed like a pack of cards in 1998, and Russia defaulted on its debts.
Then a miracle occurred as economic growth between 1999 and 2008 skyrocketed. Russia’s per capita gross domestic product (GDP) doubled in constant prices (average annual growth of 7 per cent) and grew sixfold in nominal dollars – from $270 billion to $1.7 trillion in current prices as oil prices rose fivefold during these years. Then the global crisis of 2008–9 hit Russia very hard, and in 2009 the economy contracted by 8 per cent, more than any other major economy. The economy recovered and recorded 4 per cent growth in 2010 and in 2011 but then stagnation set in and there has been decline ever since. The slowdown occurred before the annexation of Crimea and the fighting in eastern Ukraine which exacerbated the economic situation (Aron 2015: passim). The economy declined by 3.9 per cent in 2015. The oil price is a key factor as oil and gas revenues made up 52 per cent of the budget and 68 per cent of export revenues in 2013. An oil price of $52 a barrel is needed to balance the 2016 budget, but the oil price at present is around $40. Military expenditure was cut 3.6 per cent in 2015 and 5 per cent in 2016.
One of the consequences of the downturn is capital flight and it reached $151.5 billion in 2014 or about 7.5 per cent of GDP. This was almost three times the previous year’s amount.
Poverty has been increasing and embraced 22.9 million in the first quarter of 2015. In early 2016, the Russian Academy of Sciences estimated that 25 per cent of the population was below the poverty line. Russia’s population, in January 2016, was an estimated 146.5 million.
Russia has been turning more and more towards China. A $400 billion gas deal was signed in November 2014. Trade turnover is rising rapidly, and the Russian Central Bank is to create a new funding instrument in yuan. However it can normally only be used in bilateral trade. Trade turnover with the Middle Kingdom is a key priority, but it declined 27 per cent in 2015 due to falling oil and commodity prices, and Chinese investment in Russia has been disappointing. President Putin and President Xi Jinping are forging a closer relationship and meet several times a year.
Economists have recommended structural reforms based on secure property rights, the rule of law and a reduction in the number of state-owned enterprises. These recommendations have fallen on deaf ears. Why? The political will is not there to reform because it would upset the balance of interests at the top. How did the Putin clan come to dominate the economy?
A few days after Vladimir Putin was inaugurated as president on 7 May 2000, he signed a decree creating Rosspirtprom (Russian alcohol industry). State shares in seventy alcohol enterprises were transferred to it, and it became a cash cow at a time when oil was cheap, and the state thus took over booze from the mafia. Putin established two groups: the economics group and a business group. The latter’s function was to establish control over property and financial flows.
By spring 2008, according to Olga Kryshtanovskaya, a leading sociologist, the Putin clan made up about 80 per cent of the country’s top political leadership. Most members were from the former KGB, GRU (military intelligence), the military and the Ministry of Internal Affairs (people with epaulettes), and about a quarter of the elite migrated from St Petersburg to Moscow with the president.
In January 2003, sixty-six of the largest companies in which the state held controlling stakes were placed under Putin’s management. Four main sectors of the economy were chosen: finance; the fuel and energy complex; the military-industrial complex; and infrastructural enterprises – from transport to various forms of communication. One estimate is that the Putin clan controlled, in 2014, about 15 per cent of the Russian GDP which works out at about $280 billion. It can be understood as a vertical holding company, and it has its own credit facilities; its own oil and gas wells which provide a constant flow of cash; its own pipeline systems; its own transport services; its own media services; its own security services; and its own control system of parliament and of the electoral system. All this can be dubbed Rossiya Inc.
Russia’s goal after the demise of the USSR was to join the club of ‘civilised nations’. It dreamed of becoming as rich as the leading Western countries and expected money and aid to achieve this, but the West did not reciprocate. Moscow waited for a new Marshall Plan but got only loans and, it must be confessed, poor advice from American and other experts. Andrei Kozyrev, the first post-communist foreign minister – he now suns himself in Florida – was sacked for being too pro-Western. In other words, Russia’s kowtowing to the US had not paid off. Russia was dependent on IMF and other loans and could not pursue a foreign policy which reflected national interests.
Putin’s foreign policy has much in common with that of Prince Alexander Gorchakov, the master diplomat of the nineteenth century:
- Realpolitik (copying Bismarck);
- Supreme self-confidence that Russia is one of the world’s leading powers;
- An unshakable belief in the utility of hard power;
- The belief that Russia will always play a leading role in international affairs.
Putin has learnt from hard experience to cling to his own beliefs, reject foreign concepts of right and wrong, and defend national interests even in the face of overwhelming odds. He has a neo-Hobbesian vision of the planet where the strong dictate to the weak, and this flows from this conviction that small states have to concede to large states. He does not want to recreate the Soviet Union, but he claims a proprietorial right to decide what happens in the space occupied by the former Soviet Union.
Putin began as a pro-European committed to partnership with the European Union, the US and NATO but changed his mind as NATO and the EU expanded to Russia’s borders. He favours a greater Europe – embracing Russia – and is multipolar and pluralist, but the EU prefers a wider Europe which would exclude states which do not conform to the Western model. Estonia, Latvia and Lithuania, former Soviet republics, and Poland, the Czech Republic, Slovakia, Hungary, Romania and Bulgaria, all former members of the Warsaw Pact, have joined NATO and the EU. Putin regards the EU’s decision to oblige Ukraine to choose between closer ties with Russia or closer ties with it as the genesis of the present conflict.
The turning point in relations with the West was Putin’s hard-hitting speech in Munich in February 2007, which was partly due to his exasperation at Western policies but also stemmed from his belief that he had little to lose by attacking Washington and its NATO allies (Lo 2015: 23).
While Putin was at the Olympic Games in Beijing, in August 2008, Georgia became embroiled in a conflict in South Ossetia. Russia responded and occupied Abkhazia as well, and ethnic Georgians were expelled from South Ossetia. These two regions were recognised by Russia and would have preferred to join Russia, but Moscow has not moved to incorporate them.
Putin was greatly offended by the US support of public demonstrations against him in 2011 and early 2012, and one can trace a hardening of attitudes towards the US from this date. During the 2012 presidential campaign, the US was pilloried as the fount of all evil. Until the world financial crisis of 2008, economic growth was the bedrock of his legitimacy, but it is now the renaissance of the Russian nation. One can characterise his foreign policy as an anti-agenda with Russia as the spoiler, but this changed dramatically in September 2013 when Putin intervened successfully in the dispute over Syrian chemical weapons.
The reset with the US from 2009 to 2011 promised much and eventually disappointed, but it did produce the START agreement of 2010 which was the most significant achievement since 1993. There is now an ideological divide or schism between Russia and the West with the former remaining conservative and traditional and the latter liberal; the gulf between these two is now as wide as between communism and capitalism. Russia does not believe it has anything to learn from the West but only craves one thing: advanced technology.
The increase in Russian defence spending added to the tension, and NATO responded with exercises near the Russian border. This was to reassure the Baltic States and Poland that NATO would come to their aid if attacked, and it was made clear to Moscow that Article 5 of the NATO Charter, which states that an attack on one member is an attack on all, was still in force. Russia’s deputy minister of defence complained that the West was forcing Russia to engage in a new arms race.
During an interview with the German magazine Bild, published on 12 January 2016, Putin stated that there had been a conversation between Valentin Falin and Egon Bahr, the father of Ostpolitik, in 1990, in which Bahr had proposed that a new alliance be formed in Europe, ‘separate from NATO’ that would include Central European countries, the US and the Soviet Union. Putin complained that, instead of pursuing the Bahr plan, NATO had expanded in Europe which was a grave mistake and a manifestation of Western post–Cold War triumphalism. ‘Leading NATO member nations should have refused to accept new member states into the Alliance,’ insisted Putin; ‘you are not obliged to accept applications.’ The vision of a neutralised Europe, with the US and Russia as equal partners, Moscow holding a recognised sphere of influence along with veto power on strategic decisions, and NATO pared down or fully disbanded, could perhaps have been achieved if Moscow had pressed harder, but the opportunity was lost and Putin still laments that. According to him, Russia’s main mistake ‘in the last 25 years’ has been not to ‘state our national interests from the very beginning: if we had, maybe today the world would look more balanced.’ Putin made clear Russia does not want to play the role of a superpower because it is too expensive. According to the president, Russia ‘is the fifth or sixth world economy – today in trouble but with good growth potential’. He angrily rejected President Obama’s assertion that Russia is a ‘regional power’ as it is too big and present in too many regions – Europe, Asia, the Arctic and the Pacific – a world power by definition. Putin was signalling that present-day Russian ambitions are less than those of the Soviet Union during the Cold War, and a possible future ‘Yalta 2.0’ – an agreement to divide spheres of influence and settle scores to ‘balance’ the world and make it a safer place – would not cost that much. The entire West or possibly several leading European countries, including Germany, must take the offer and strike a deal, even when Moscow is slightly humbled by an economic downturn. There are conditions, of course, such as accepting the Crimean annexation as just and absolutely legal. Ukraine must be accepted as a Russian de facto protectorate and the government in Kyiv pressured to accept constitutional reform, transforming the country into a loose federation, and discouraged from seeking any form of integration in the EU. All sanctions imposed over Crimea must be lifted and fighting in eastern Ukraine stopped. The US and its allies must accept Bashar al Assad as the legitimate president of Syria, and Putin rejects all claims that he is responsible for massacres. ‘He is defending his nation against outside aggression by armed terrorists. Any civilian casualties are collateral and are the ultimate fault of the armed opposition and those who support them’ (Eurasian Daily Monitor, 14 January 2016).
Putin’s statement that Russia was the ‘fifth or sixth world economy’ was correct in 2015, but the situation has changed. The rouble fell from thirty-three to the dollar, in June 2014, to eighty-four roubles, in January 2016. This resulted in GDP shrinking from $2.1 trillion, in June 2014, to under $1 trillion, but it recovered to sixty-eight to the dollar in April 2016.
On another occasion, ruminating about Russian rulers – his heroes are Peter the Great and Catherine the Great – Putin commented that the ‘greatest criminals in our history were those weaklings who threw power to the ground – Nicholas II and Gorbachev – and allowed power to be picked up by hysterics and madmen’. On the October Revolution:
Letting your rule be guided by an idea is right but only when it leads to the right results, not like it did for Vladimir Ilich [Lenin]. In the end, that idea led to the fall of the Soviet Union. We did not need a global revolution. They [the Bolsheviks] placed an atomic bomb under the building that is Russia and the bomb exploded.
On balance, has foreign policy been a success or a failure under Putin? According to Bobo Lo, it has been ‘outstandingly successful’. The humiliated nation of the 1990s has transformed itself into a ‘resurgent global power’ and ‘one of the influential and competitive poles in the modern world. It is more independent, more indispensable, more self-confident and more influential than at any time since the fall of the Soviet Union’ (Lo 2015: 199). The West needs Russia more than ever, and this implies it must treat Russia with respect and as an equal. Russia backs Syria’s President Bashar al Assad with weapons and diplomatic support in the UN and elsewhere. The Russian relationship goes back to the 1950s, and Moscow is keen to retain influence there. Russia has the ability to surprise, and this was illustrated in September 2015, when Sukhoi jets and attack helicopters arrived in Syria and engaged in combat missions as did ground forces. Russia thereby influenced the course of the civil war, but Moscow engaged in a ‘partial withdrawal’ of its forces in March 2016. A ceasefire and talks in Geneva held out hopes of an end of the war.
The downing of a Russian passenger plane, en route from Sharm el Sheikh, Egypt, to St Petersburg on 31 October 2015, resulted in Russia engaging in a bombing campaign directed at Daesh or Islamic State but also against opponents of al Assad. Relations between Moscow and Ankara plummeted after a Turkish F-16 shot down a Russian Su-24 bomber on 24 November 2015, accusing it of violating Turkish airspace. Moscow maintained that the jet had not strayed into Turkish airspace.
Russia has been trying to improve relations with Japan for a long time, but the main sticking point is the status of the Kurile Islands. Japan has accused Russia of boosting military infrastructure in the South Kurile Islands of Kunashir and Iturup and has made clear that it wishes Moscow to discuss the sovereignty of all the South Kurile Islands. In 1945, the Soviet Union acquired the South Kuriles after Japan capitulated, but Tokyo and Washington have never legally recognised the Southern Kuriles as part of the Soviet Union or Russia, and no peace treaty between the two countries has been signed since 1945. The Moscow Declaration of 1956 ended the state of war and re-established full diplomatic relations between Moscow and Tokyo. According to the declaration, Moscow promised, after a peace treaty had been concluded, to transfer sovereignty of the islands of the Lesser Kurile Chain – Shikotan and the uninhabited Habomai Islands – to Japan. President Putin has renewed the offer, but Tokyo flatly rejects it.
Prime Minister Dmitry Medvedev has stated that seventy billion roubles ($1 billion) will be invested in the South Kurile Islands to develop them and improve living standards there. Of the eighteen major Kurile Islands, only four are inhabited, and of these, three are in the south. The entire population of the Kuriles is under 20,000 so the investment per capita is huge. Medvedev declared that
we are rebuilding not only the civilian but also the military infrastructure of the Kuriles. The build-up began some time ago and is now well under way. The Kuriles are strategically important for the defence of Russia and our military presence will be enhanced.
On 22 October 2015, Sergei Shoigu, minister of defence, announced that a military base is to be built in the Kurile Islands. Russia’s interest is not only military and political. The world’s ‘richest known deposit of rhenium, a rare earth element used in alloys to create components for missiles and supersonic aircraft technology is on Iturup, near the Kudryavy volcano. Besides rhenium, there are thousands of tonnes of titanium, iron ore, gold and silver in the Kuriles.’
Two nuclear-armed submarines will patrol from Kamchatka into the Russian-controlled Sea of Okhotsk. Keeping control over the entire Kurile chain, including Kunashir and Iturup, is regarded as essential to keep US and allied naval anti-submarine forces out of the Sea of Okhotsk. The Lesser Kuriles – Shikotan and Habomai – are viewed as strategically less important, and Putin appears disposed to handing them back to Japan, but Tokyo will not settle for these two and wants all of the islands back. Tension between Tokyo and Moscow is set to continue (Eurasia Daily Monitor, Vol. 12, no. 138, 23 July 2015).
Now for some good news. In July 2015, the US and Russia introduced visa-free travel for indigenous inhabitants of Chukotka and Alaska. The passports of Alaskan natives will contain an insert to that effect. It only applies to those who have relatives living in Chukotka or Alaska. This term applies to those who have blood relatives, a member of a tribe or those who share a linguistic or cultural heritage with indigenous peoples of the neighbouring territory. Inhabitants need an invitation and can stay up to 90 days in the neighbouring country. Russians have been able to enter parts of the US without a visa since 2012, and a visa-free regime exists for the American island of Guam and the Mariana Islands in the Pacific Ocean.
President George H. W. Bush received an unexpected present on Christmas Day 1991: Gorbachev’s head on a platter. Well, not quite. The Soviet leader had just announced he was stepping down as president, and the end of Gorbachev was the end of the Cold War. Bush went on television to explain to the American people the significance of the event. The collapse of communism meant the end of the Cold War and that the US had won, and he congratulated the people on the victory of their values. The language became more grandiloquent in the Union address in January 1992. ‘Changes of biblical proportions’ had occurred and ‘by the grace of God, America won the Cold War.’ A new era had dawned. A ‘world once divided into two armed camps’, he declared to the US Senate and House of Representatives, ‘now recognises one sole and preeminent power, the United States of America’. The audience roared its approval.
This was in marked contrast to the language used at the Malta summit in December 1989, when it was stated that the Cold War had ended in cooperation with Gorbachev. Just a few hours before Bush’s Christmas message, the White House declared: ‘Working with President Reagan, myself, and other allied leaders, President Gorbachev acted boldly and decisively to end the bitter divisions of the Cold War and contributed to the remaking of a Europe whole and free’ (Plokhy 2012: xiii–xv).
Throughout 1991, Bush had downplayed his influence and been very modest about his contribution to events. Suddenly this all changed, and grandiloquent language took over and framed the narrative which the American people inter-nalised about the ending of the Cold War. In reality, the Soviet Union had imploded, but the story now was that US policies had played a decisive role in bringing communism to an end and the Soviet Union to its knees. This was writing history in dreamland. We now know that Bush’s preferred scenario was for the CPSU to continue to exist. The main reason for this was the fear that the four Soviet republics with nuclear weapons could lose control of them.
America was now the sole superpower, and the myth that it was omnipotent, omniscient and omnipresent took hold and led to terrible consequences. The exceptionalism of the Soviet Union had turned to ashes, but the exceptionalism of the US had triumphed. Exceptionalism was missionary and both superpowers believed it was their duty to spread their values to all corners of the earth, but now America had no competitor when it came to spreading the gospel of the good life.
How was Russia to be treated? It was there for the taking, politically and economically. Russia expected a grand partnership which would elevate the country to the pinnacle of the civilised world. The US had no intention of according Russia star treatment and so began the bitter disillusionment with the brave, new post-communist world. Russia was humiliated time after time as it came begging for money to Washington to keep afloat, but the dream was still there when Vladimir Putin became president in 2000. He expected respect and got very little. Gradually things turned sour and have ended in a new Cold War. How did this happen?
The exit of the Soviet Union from Afghanistan was followed by the defeat of the Taliban. Washington regarded this as a job well done and left. This permitted the Taliban to regroup and out of this came al Qaeda and Osama bin Laden. The attack on the World Trade Center in New York and the Pentagon on 9/11 by al Qaeda was an existential shock to Americans. How could such a thing happen on US soil? The response by President Bush was the war on terror, but at the best of times this is a very vague concept. How can one launch a war against such an intangible opponent as terror?
So it was back to Afghanistan to wipe out al Qaeda there, but after fifteen years and counting, the Taliban have still to be beaten. A primary objective was nation building. The tribes could be brought together and a Western-style state created with free and fair elections, a parliament and a free market economy. Just like America, in other words. Did the Afghans want to become like Americans? No one stopped to ask this simple question. It was assumed that outsiders knew best what was good for the Afghans.
The biggest international intervention of the last fifty years saw over a million troops, which cost more than $1 trillion, left 3,500 foreign dead and tens of thousands injured. Britain declared the war over in 2014 but still has 500 troops there and the US still there as well. Out of the Afghan Taliban came the even more aggressive Pakistan Taliban.
By far the greatest blunder was relations with Pakistan and, especially the Inter-services Intelligence Agency (ISI). The West gave Pakistan $20 billion to wean it away from the Taliban but, in reality, Pakistan created, nurtured, trained and funded the Taliban which became America’s number one enemy after 9/11. Thus Pakistan was playing a double game, and an inner core, the S division of ISI, helped the Taliban undermine the government in Kabul. Their aim was for the Taliban eventually to take control, a scenario which Pakistan always favoured. Indian influence had to be kept out of the country, but China may be the big winner in the end.
The next big nation building project was Iraq, and it was invaded in 2003 on the pretext that Saddam Hussein had weapons of mass destruction, but they had been removed before the invasion. The reasons for invasion were flimsy, but that was ignored and the advice of Middle East experts – don’t invade – was ignored. After taking Baghdad the Iraqi army and police were disbanded.
The invasion also ended the ‘covenant of security’ that forbade Muslims in non-Muslim countries from harming those who provide them with protection. The first attack in Europe soon followed: the Madrid bombings of 2004. Then in November came the murder, in Amsterdam, of the film-maker Theo van Gogh. The covenant was officially renounced in the UK by Omar Bakri Muhammad in January 2005, and six months later came the 7/7 attacks. It is not surprising that Europe is the target of many attacks as it is home to the greatest number of jihadi veterans or radical preachers, and the world centre is London. These veterans ‘groom’ foot soldiers to carry out their missions, most of whom are ‘misfits’ or those with a grievance.
On 1 May 2003, George W. Bush delivered his ‘Mission Accomplished’ speech on board the USS Abraham Lincoln. He appeared quite unaware of the fact that he had presented the Iranian regime with the victory over Iraq which they had failed to achieve in eight years of brutal fighting. With the Iraqi army pulverised, the way was open for a pro-Iranian Shiite regime to take over in Baghdad which would profoundly alter the geopolitics of the Middle East. George H. W. Bush had established links with Saddam to ensure a balance of power there, viewing him as the best bulwark against an ambitious Tehran. When the US pulled out of Iraq in December 2011, Iranian leaders must have felt deep satisfaction that Washington had done their work for them as Iraq was now weak, divided and open to Iranian influence. It had taken thirty-one years of struggle and sacrifice, from 1980 to 2011, to secure the victory the leadership had craved, and the greatest irony of all was that its greatest foe, the Great Satan, had enabled it to celebrate this sweet victory.
Donald Rumsfeld, US secretary of defense from 2001 to 2006, ruminating about Iraq has concluded:
I’m not one who thinks that our particular template of democracy is appropriate for other countries at every moment of their histories. The idea that we could fashion a democracy in Iraq seemed to me unrealistic. I was concerned about it when I first heard these words.
That is putting it mildly and is reminiscent of Robert McNamara’s comments about the Vietnam War: we should never have been there in the first place, and we are abysmally ignorant of foreign cultures. Rumsfeld went on to mention that NATO and the UN are no longer fit for purpose. The West should start a new Cold War–style offensive against Islamic State, and removing Colonel Gaddafi from power in Libya left the region more dangerous. President Obama has abdicated leadership and opened the door to Russian expansionism (The Times, 6 June 2015).
The US has spent billions of dollars training an Iraqi army, but it is mainly Shia and is reluctant to defend Sunnis. The quagmire of Iraq has spawned Islamic State (also called Daesh, ISIS [Islamic State in Iraq and Syria] and ISIL [Islamic State in Iraq and the Levant]), a Sunni fundamentalist group, determined to take over Iraq and Syria. The rise of IS has drawn in Shia Iran and Shia Hezbollah in Lebanon. They also want to keep President al Assad, an Alawite Shia, in power in predominantly Sunni Syria. The US, under the cautious President Obama administration, provides aid, training and air power in the fight against al Assad. Boots on the ground is not an option after the coruscating experiences of Afghanistan and Iraq.
Economic growth widened the gulf between the coastal cities, and the rest of China and cities, towns and villages began to manage their own local economy. Those which could attract foreign investment became richer and richer and, inevitably, corruption and crime flourished. The ‘princelings’, the sons and daughters of the party-state elite, have built up their own business empires, and these included members of Deng’s family. Bandit gangs became a major problem, and smuggling contraband goods, especially drugs, became enormously lucrative. The mayor of Beijing became involved in a massive scandal in 1989 and was expelled from the Politburo and sent to jail for eighteen years. Jiang Zemin’s ideology became nationalism, and the nation’s ire was turned on Japan. ‘Spiritual pollution [Western ideas]’ was not to infect China. Inflation reached 22 per cent in 1994, but Zhu Rongji managed to bring it down. He was formally made prime minister in 1998 and was popularly known as the ‘economic emperor’.
Deng’s model can be seen as three rungs of a ladder. The coastal region would develop first, then the central region and the western region last, and this meant that the coastal region received huge benefits initially. By 2005, the coastal region accounted for more than 90 per cent of exports and imports, and it received 85 per cent of foreign investment which exceeded $70 billion annually. Public capital expenditures being channelled to the coastal provinces increased from 50 per cent in the mid-1980s to 65 per cent in the mid-1990s.
The inner group in the Politburo, the Standing Committee, runs the country. Each member is responsible for a sector of the economy or the state, and they work behind closed doors and attempt to be invisible. The Central Military Commission, always headed by the party leader, ensures that the military remains loyal to the party. Double-digit increases in the annual military budget are now a feature of Chinese life. In order to ensure that the military concentrates on purely military affairs and does not become a state within a state, it was forced to give up almost all its economic interests and hand its enterprises over to the state. The fear was that it would slip out of party control. Despite this, many military officers have extensive economic interests.
News or information is of critical importance as Beijing has to ensure that it tells the story. The Central Propaganda Department of the CC contains a formidable army of officials to ensure that editors and authors understand where the red line of permissible comment is. Ideology is functional and hence is infinitely flexible, but there is one chink in the armour: Hong Kong. The colony retains a special status, and it is possible to publish radical books there – for example, a book on the number of deaths during the Great Leap Forward (a taboo subject) was published there.
How were relations with the sole superpower to develop? Beijing was nervous about the future, meaning the ability of the Communist Party to retain power. There was the view after the collapse of the Soviet Union that nation states were giving way to globalisation. President Clinton spelled out his vision at the UN General Assembly in September 1993. The goal of the US was to expand the number of states which were market-based democracies until humanity achieved a ‘world of thriving democracies that cooperate with each other and live in peace’. Promoting human rights aggressively was to become the cornerstone of American policy, and this was based on the belief that democracies do not go to war but autocracies are violent and often export terrorism. Chinese leaders perceived Clinton’s vision as an attempt to subvert their state and keep it weak. Washington proposed dialogue on many issues, but no one seems to have realised that this implied the Chinese should gradually negotiate away the pillars of their own system. Beijing’s response was predictable: it would never give in to pressure from abroad. It never had and never would. Washington thought of the post-Soviet world as unipolar, but Beijing wanted it to be multipolar. Relations reached an impasse in March 1994, when Secretary of State Warren Christopher met Li Peng, the Chinese prime minister. The exchanges were brutal as Li made clear that Chinese human rights policy was not the business of the US, and that the US should address its own human rights problems before criticising China.
The US got the message and placed less emphasis on forcing human rights concessions out of the Chinese; this led to Jiang Zemin visiting the US in 1997, and President Clinton visiting China a year later.
Hong Kong, Britain’s richest colony, returned to Chinese sovereignty on 1 July 1997. Jiang Zemin beamed as the Chinese flag was raised and the Union Jack was lowered, but Hong Kong will retain its separate identity within China for fifty years. British citizens, for example, do not need a visa to visit the former colony. Chris Patten, the last governor, ruffled some feathers by attempting to introduce democracy shortly before the handover. Called a ‘sinner for a thousand years’, Patten was doing something that Britain had always refused to do, but British businessmen did not side with him. Li Peng, the chief Chinese negotiator, confided that his main objective had been to reassure local business leaders that their wealth was safe under Beijing rule as a massive outflow of money was the last thing China wanted, and the ex-colony retained its own currency, the Hong Kong dollar. Consultative democracy will be practised. In other words, Beijing will decide who rules, and there was talk of Hong Kong residents choosing their leader in 2017. If elected, he will be acceptable to Beijing as well. The People’s Republic cannot countenance the democracy bug entering from the former colony. In 1997, over 800,000 Hong Kong citizens left, clutching British passports, but since then over half a million have returned as they believe they can make more money there. Another reason for returning is that they found the work ethic in Canada, the US and Australia too laid back. The Chinese like to work hard.
Macau returned to the Motherland in 1999, and it is the gambling capital of China, with the state taking 90 per cent of the profits. China now has native speakers of Portuguese which is very good for business with Brazil, Angola and other former Portuguese colonies. Jiang could derive great satisfaction from the fact that China had managed to drive away all the foreign ‘devils’: Russian, French, German, Italian, British, Portuguese and Japanese. There was only one territory left, Taiwan, to complete the restoration of ‘one China’. It had been ruled by Japan from 1895 to 1945 and thereafter by Chiang Kai-shek’s Guomindang as the Republic of China. Chiang ruled with an iron fist until his death in 1975 at age 87; his son, Chiang Ching-kuo, continued Guomindang rule until his death in 1988. Taiwan became an Asian ‘tiger’ economically and gradually acquired its own identity. Democratically elected presidents engaged in negotiations with Beijing, and a cautious rapprochement has been evident. Taiwan’s business community invests heavily in the People’s Republic. As long as the US provides a security umbrella, Taiwan will prosper and will retain its independence.
At the 17th Party Congress in 2007, Hu Jintao was voted another five years in power, and he talked of ‘scientific socialism’ and defended the party’s monopoly of power. Social harmony was a goal in a country in which the gulf between the rich and poor continued to widen. Two members of minority parties were made ministers in 2007 but, as in other communist countries, this was merely a token gesture. The eight minor parties, disrespectfully dubbed ‘flower pot’ parties, are controlled by the CPC. There are contested elections at village level, but local activists complain that communists ensure that they dominate the lists.
The 2008 Olympic Games were a great triumph for Beijing. The city was cleared of dissidents, factories were relocated to cut down on pollution and China won most gold medals. The Middle Kingdom’s message to the world was ‘we’ve arrived.’
The sixtieth anniversary of the People’s Republic on 1 October 2009 was marked by an extravaganza which showed the world China’s military and economic might.
A scandal occurred when Bo Xilai, the flamboyant party leader in Chongqing, was sacked. As head of the self-governing municipality – it counts thirty-two million inhabitants – Bo had been aiming high. He had wanted to become one of the members of the Politburo Standing Committee at the 18th Party Congress. He was promoting a Mao cult with red songs, statues and eulogies to the Great Helmsman; in other words, he wanted to ride to power on the back of Mao. Unwisely, he fell out with his chief of police, Wang Lijun, who eventually sought asylum in the US consulate in Chengdu. The Americans debriefed him and then handed him over to the Ministry of State Security – the secret police.
Bo’s wife, Gu Kailai, was accused of murdering Neil Heywood, a British businessman. She was found guilty and received a suspended death sentence. One of Heywood’s roles was apparently to move large amounts of the family cash abroad. Gu was a prominent lawyer whose company oversaw every important contract with a foreign firm. Their son attended the British public school Harrow and Oxford, Harvard and Columbia Universities, and wealth oozed from the family.
The 18th Party Congress finally met a month late, in November 2012, due to infighting over who would be promoted. Xi Jinping became secretary general of the party and also assumed the roles of president and chair of the Central Military Commission. Li Keqiang became prime minister in March 2013. The Politburo Standing Committee was reduced from nine to seven members. Xi and Li are the Fifth Generation leaders born in the 1950s, but the other five members are all members of the Fourth Generation leaders born in the 1940s. So Xi and Li will have to wait until the 19th Party Congress, in 2017, to renew the Standing Committee with their nominees, as the other five will all be near or past the age of retirement, which is 70 years.
The rising standard of living has seen the emergence of a Chinese middle class. Credit Suisse, in its 2015 Global Wealth Report, estimates that China has now surpassed the US as the country with the largest middle class. It defines members of the middle class as those with wealth (not income) of between $50,000 and $500,000; almost 110 million people now fit this criterion compared to 92 million in the US, and this figure is expected to grow substantially by 2025. It could represent about a half of the urban population by that date. China’s population is expected to level off at about 1.5 billion. Traditionally, an expanding middle class develops a thirst for capital, information and consumer choice. China’s response is to strengthen its control over traditional media to counter the increasing number of bloggers who have millions of followers between them. The CPC now counts about eighty-eight million members or 13 per cent of the adult population. An official report stated that in 2007, 88 per cent of those with personal fortunes of over $14 million were children of top party and government officials. One can assume that many of them found their way into the party, and this means that the CPC is already a middle-class party. Students are joining the party in growing numbers. Less than 1 per cent of students were members in 1990 but in 2011, this had risen to 11 per cent.
Some analysts regard the new middle class as consisting mainly of members of the political elite who have been able to convert their patronage into economic wealth, and the term ‘black collar class’ has been coined to describe them. They dress in black, drive luxury black cars, have hidden incomes and links to organised crime, live with mistresses and lead secret lives. It all sounds like a James Bond movie! The private wealth of members of the elite has become a thorny problem. Just before the Party Congress, the New York Times reported on the wealth of the leading families with the information coming from a Chinese source. For instance, the family of Wen Jiabao was estimated to be worth $2.7 billion.
It is instructive that the teachings of Confucius (551–479 BC) are now being studied. Confucius did not found a religion; his values are secular and aim at creating a harmonious and happy society. There are no classes, so class conflict is absent and all people are equal. When communist leaders claim that their goal is a harmonious society in which everyone is happy, they are echoing Confucius; in January 2011, the rehabilitation of the sage was complete when his statue was unveiled on Tiananmen Square.
Xi Jinping is concerned that the core Marxist ideology has suffered a meltdown in the course of the country’s reforms. During the summer of 2014, the party started an ‘ideological education’ programme in rural areas. Training young Marxists is something which has not been done for quite a few years, and the goal is to produce young cadres who will continue the cause and apply Marxism in their practical work. Xi is also concerned by university lecturers criticising China’s development, so he has ordered them to defend the ‘moral bottom line’ and resist the corrosive creep of Western values. Foreign textbooks are to be strictly limited and Marxism and Chinese values funnelled directly ‘into the heads of students’. Any sort of discussion which includes blaming party leaders is to be ‘banished from the classroom’. Some universities have been told closed-circuit television cameras will be installed in the lecture theatres. The crackdown on academic freedom has seen many academics suspended, sacked and in two cases sentenced to long periods in prison. Those teaching law, economics and history are under the greatest scrutiny, but one lecturer got round the prohibition of teaching comparative constitutional law by sharing discussions in his car.
How does one explain this policy? Xi Jinping is facing the same problem as Mao, Jiang Zemin and Hu Jintao: the fundamental problem that the state does not wither away after the workers take power. Interest groups emerge under socialism. Jiang Zemin talked about the three represents:
- The party should embrace advanced social production forces;
- Advanced culture;
- Represent the overwhelming majority.
Hu Jintao evolved the concept of the harmonious society. Nowadays, hundreds of thousands of Chinese study abroad, millions learn English and millions travel abroad, so why tell universities to cut back the number of foreign textbooks at a time when China is catching up with the outside world? The case of the teacher of constitutional law provides a clue. The party is fearful of foreign ideas (‘spiritual pollution’) entering China’s mainstream. Traditionally, the party solution is to accentuate ideological education and insist that cadres and others study set texts. At present, that means chiefly Xi Jinping’s writings and he articulates the Chinese Dream or becoming number one in the world, but there is a contradiction here. The party has already dumped Marx’s economics so that means only parts of Marx’s opus are relevant to China today.
How is the Chinese Dream to be achieved if foreign ideas are shut out? This only applies to culture and especially the social sciences. Every Chinese girl aspires to have a Gucci handbag or a Versace dress, and that is fine as it strengthens the legitimacy of the party because everyone is getting richer. The Chinese Dream underlines Chinese exceptionalism, but it is different from American exceptionalism as it does not proselytise; it does not claim that its contemporary institutions are relevant outside the Middle Kingdom (Kissinger 2012: xiv).
The US discovered that soft power or cultural influence was a powerful weapon and contributed to the demise of the Soviet Union. As regards China, it can stress the rule of law, human rights, democracy, the accountability of officials and so on, and the American argument is that if China is to become the leading power in the world, it can only do so by becoming more like the US. China is a middle-income country, but no country, as yet, has become an advanced country without first adopting democracy understood in the Western sense, and this deeply worries the Communist Party.
Relations with the US have two faces. Keep out American ideas on society but welcome American technology and science; Beijing cannot afford to fall out with Washington and vice versa. America does not fear Chinese cultural influence, but China does fear American cultural influence. The party has a powerful weapon which it can deploy when under pressure: nationalism. Every child learns about the century of humiliation. The sign: ‘No dogs or Chinese’ is trotted out when Shanghai is mentioned, but the problem is that there never was such a sign in Shanghai so it is a cleverly crafted cultural myth. The party can turn the tap of nationalism on at a moment’s notice – after all, it controls the narrative – and provide one that suits itself. Xi’s goal is to ensure that a Chinese political culture evolves which is devoid of foreign influence, and he can point to the fact that the American economic model or Washington Consensus has failed. Is the American political model heading for the rubbish bin of history? The Chinese Party will do all in its power to achieve this, but will it succeed?
How did Beijing react to the financial meltdown in the West in 2008? It launched a huge fiscal stimulus package amounting to about 16 per cent of GDP to ensure that the economy grew by at least 8 per cent in 2009. (Investment forms part of GDP.) Eight is a lucky number in Chinese. Add to that bank lending to state corporations of about 25 per cent of GDP and one can grasp the impact of state direction of the economy. In 2010, it was estimated that the top 1 per cent of Chinese society had a net worth of between $3 trillion and $5 trillion, and this means that there is surplus capital looking for investment opportunities. There are an estimated sixty-four million empty apartments in China, but this does not mean they are unsold as they have been bought as an investment and left empty.
Astonishingly, Mao Zedong Thought made a comeback during the sixtieth anniversary celebrations of the founding of the People’s Republic on 1 October 2009. Banners proclaiming Mao Zedong Thought were carried by students from Beijing University and others during the parade, and this began a trend. Statues of Mao began appearing in various cities and towns, including his birthplace. One, in Chongqing, was seven storeys high.
Why should the egalitarian Mao make a comeback among elite students? It had to do with the factional struggle among the leaders of the party and government. There are three main factions in the party leadership. President Hu Jintao (until 2012) is patron of the Communist Youth League (CYL) faction; as a former leader of the CYL he has been promoting former CYL cadres to top party and government posts. Another faction, called the princelings or offspring of former leading party, government and military officials, is headed by President Xi Jinping. The third faction is the Shanghai group.
In August 2011, Xi delivered a remarkable speech to students. He told them that the world ultimately belonged to them: ‘The world is yours and it is also ours; but ultimately the world belongs to you. Young people are like the sun at eight or nine in the morning. The future rests with you.’
What is remarkable about this speech? Xi was echoing Mao word for word, but the Great Helmsman was addressing a group of Chinese students at Moscow University on a visit to the Soviet Union in 1957, and this underlined Xi’s commitment to aspects of Maoism. The military was one of his power bases, and it is no surprise to find that he wholeheartedly supports the modernisation of the Chinese military. His military supporters prefer the more aggressive foreign policy stance of Mao to Deng Xiaoping’s policy of ‘biding one’s time and hiding one’s talents’.
Riots in Tibet and Xinjiang in 2008 revealed that Beijing has failed to integrate these Buddhist and Muslim areas into the mainstream of Han Chinese culture. There is a growing concern that these border regions are becoming more and more alienated from Beijing rule. A problem for Han Chinese is that the thin air of Tibet means that cadres have to be rotated every three years.
An increasingly educated population will expect a greater say in how China evolves, and this is already occurring as the Internet flourishes and spreads ideas. There is the Great Chinese Firewall which attempts to exclude access to many sites, but the IT literate can find ways round it.
One of the striking features of modern Chinese life is the revival of religion. Why is this? Daoism is one of the traditional religions, and one can observe numerous restored temples throughout China; many Chinese make the traditional pilgrimage to a temple at New Year. Among the five religions officially recognised by China are Catholicism and Christianity or Protestantism. They are differentiated in the Chinese mind by different terms for God, different transliterations of the names of the Apostles and so on. Protestantism is now regarded as ‘post-denominational’, and Presbyterian, Lutheran, Methodist, Anglican and Baptist are labels which no longer are relevant. Chinese believers always wanted a unified Christian church which was authentically Chinese. A National Christian Council was set up in 1922 to foster unity but did not make much headway. Under Mao all foreign missionaries were expelled.
Protestantism, however, enjoys no unity of doctrine, and many indigenous churches, such as the True Jesus Church and the Little Flock, sprang up. These were often founded by breakaway groups from other churches. Eventually Western denominations were channelled by the state into the Three-Self Patriotic Movement. These are the churches which Western leaders attend on Sunday mornings when visiting China. Those who refused to join the new union were mercilessly persecuted and went underground. The Cultural Revolution closed down all churches for a decade. There had been about 20,000 churches open in the late 1960s, but the Red Guards burned all the Bibles and Christian literature they could lay their hands on. A new China Christian Council was established in 1980, and it became a member of the World Council of Churches. Pentecostalism, which had appeared at the beginning of the twentieth century, proved very popular. Arguably it is the fastest growing part of Protestantism in China today.
Churches have many fine buildings and provide a social venue for local believers. Underground or unregistered churches are also expanding rapidly, and their pastors are routinely jailed but they grasp the opportunity to engage in pastoral work there. There were an estimated one million believers half a century ago, and this has now swelled to about 130 million with the Three Self-Patriotic Movement claiming twenty million. Many of the underground churches are vociferously supported by the Chinese diaspora in the US and Taiwan, who advocate a more aggressive stance vis-à-vis the state. All believers are conservative and regard the Bible as the literal truth and have little time for the niceties of biblical criticism. In other words, they are fundamentalists. The new emerging middle class is attracted to Protestantism, and Western observers are astonished to observe young, well-dressed Chinese in Shanghai heading for church on Sunday mornings. Many find the underground churches the most attractive.
The Roman Catholic Church – the faithful are estimated at twenty-five million – has survived and is attracting converts. New churches are also being built and are easily recognised with their bell towers and crosses.
So what is the appeal of Christianity? Christian churches appeal to three social groups: those who have lost their family connections and are lonely; those who find it difficult to cope with the rigours of the new China with its emphasis on self-help and individual success; and the new, educated middle class. The church provides a new family and a sense of belonging for the first two groups with many coming to faith through dreams, visions and miraculous healings.
Buddhism and Islam are widely practised. Muslims are mainly concentrated in Xinjiang, but they can be observed in many parts of China wearing their distinctive skull caps.
Women have gained most under communism and China’s market economy. In two generations, they have left the back-breaking work in agriculture – face to the ground and back to the sky – and become urban dwellers. They are no longer sentenced to a life of drudgery, bearing and raising a family under the heel of their mother-in-law, who made clear to them that they were the property of their husband and family. Now educated, they can pick and choose who they wish to marry in the cities, and they feel liberated and regard the future as theirs. They negotiate how free they will remain during the marriage and if they are not satisfied, divorce is easy. There is only one problem: Chinese husbands expect their wives to be less intelligent but also to obey them. There is nothing worse for the male ego than being contradicted in bed. This reveals that many have not yet adjusted to the new norms of Chinese life but some have altered their ways; I have been in Chinese families where the husband was as tame as a pussycat. Every wife’s goal – pregnancy outside marriage is still frowned upon – is to have a son, and he is treated like a ‘little emperor’. Now the one-child policy has been relaxed (it never applied to ethnic minorities); if both spouses have no siblings, they can have two children. This applies to an estimated ninety million families, but experience in other countries reveals that this policy may have little effect.
Arguably, the one-child policy revolutionised the role of females. The brainchild of Chinese rocket scientists, the only technical group to survive the Cultural Revolution unscathed, it was introduced in September 1980. The trigger was Mao’s comment that ‘mankind must control itself and reach a planned increase,’ trumpeted far and wide during the Cultural Revolution. This led to over a million abortions in Shandong province in 1971 alone. The policy was also part and parcel of the desire to plan everything from Beijing. Female infanticide was traditional in a China which regarded the continuity of the family as imperative and only in the male line. The son was to support the parents in their old age and bury them when they died. The tragedy of the one-child policy which caused endless misery (a girl could only marry at twenty and have a child at twenty-four) as enforcers aborted foetuses deemed outside the plan, was that the policy – which, according to official sources, prevented the birth of an extra 400 million babies – was a tragic mistake, as the best contraceptive is capitalism. Rising incomes result in falling birth rates as can be observed in Thailand and Taiwan. A county in a poor province was kept as a test case, and the one-child policy did not apply to it. The result? Birth rates there are now lower than the Chinese average.
The one-child policy spawned a huge bureaucracy of over fifty million officials as there was one spy per ten households. An extra child could cost between two and ten years’ annual salary, and obviously, few families could afford this. Female fertility in the 1960s was 6 but is now down to 1.7, which is below the 2.1 needed to reproduce the population. This has led to a gender imbalance which will result in about forty million males in 2020 incapable of finding a wife. Kidnapping of girls and selling them on to prospective husbands is common. Over 100,000 North Koreans girls have sought refuge in China and, it is said, were sold on to sex-starved males for $1,500 each. Another alternative is to purchase an expensive life-size sex doll, modelled on porn stars with real hair and indestructible nipples, and make love to it – or should this be her? The country’s total working age population peaked in 2015, and the number of rural workers between the ages of twenty and twenty-nine, in 2030, may only be half its present level. Now, ten million retire each year while the total workforce shrinks by seven million. China currently has five working adults to every pensioner, but this will gradually change to two adults struggling to support one child and four elderly parents who are living longer due to modern medicine. The number of over-60s, in 2015, was over 200 million, but by 2050, it is estimated that a quarter of the population will be sixty-five or older. There are now over a million families who have lost their son; they face a bleak future and will find it difficult to gain admission to a care home or even get a burial plot. These situations will have momentous consequences for the world economy and the Middle Kingdom’s role in the world.
One of Chairman Mao’s goals after 1949 was to bring about the equality of males and females. Females say they can make money from a stone and are better than males at accumulating wealth. There are now 145 female billionaires (expressed in US dollars), an almost sevenfold increase in the past twenty years, outpacing the fivefold expansion of their male counterparts over the same period. However, there are 1,202 male billionaires. That said, females have yet to climb the tree of political power. The female revolution has been astonishing and climbing the Communist Party ladder may be their next challenge.
So how does one explain China’s astonishing economic performance over the last thirty years? Is there such a thing as a China model? Is China’s experience unique? No, it is not. Other countries have recorded very rapid growth – such as Japan, Brazil, Singapore and South Korea – but they have never maintained it for so long. So what is China’s secret? It is based on several pillars. One is the huge population which has permitted a flow of rural migrants to augment the labour supply, and then there is the fact that household incomes are deliberately depressed. The undervalued yuan means that foreign goods cost more. Chinese put their savings in banks, and the government sets the borrowing and the savings rates. Borrowing by state enterprises (80 per cent of investment comes from bank loans) is set about 4 per cent below the equilibrium rate, and correspondingly household savings are reduced by that amount; this means that households are subsidising banks and industry. The economy in China is capital-intensive, not labour-intensive. Domestic consumption in China in 2000 amounted to about 45 per cent of GDP, but in 2008 this was down to 35 per cent – an astonishingly low figure – but some economists think the rate is higher. US domestic consumption may be as high as 70 per cent.
Growth has slowed, and this was inevitable. The official figure for 2015 was 6.9 per cent, but according to the Li Keqiang index, which measures electricity consumption, credit growth and rail cargo – it is named after the Chinese prime minister, who devised it when he was a provincial governor – the present growth is between 3 and 4 per cent. Chinese fixed investment is now $5 trillion a year, as much as North America and Europe combined. Capital outflows are climbing to 10 per cent of GDP as China’s real effective exchange rate has moved upwards by 30 per cent since 2012. Wages have also been rising as the flow of cheap labour from the villages dries up; this has led to lower corporate profits, and some shipbuilding companies have gone bankrupt. Vast road and rail building projects are under way to keep construction companies employed. There are ghost cities, which are immaculate because they are empty.
The new five-year plan (2016–20) envisages growth of 6.5 per cent with fifty million new jobs being created and the urban population swelling to 60 per cent. These appear to be overambitious targets.
Seeing into the future is a futile business. In the early 1960s, Paul Samuelson, the Nobel Prize-winning economist, predicted that the Soviet economy would overtake the American as the world’s largest economy in the 1980s or 1990s. Ouch! According to Michael Pettis, of Peking University,
there have been 30 or 40 growth miracles since 1945 and every single one has ended either in a debt crisis or a lost decade or two of very low growth. The only different thing about China is that the level of indebtedness and economic imbalances are greater than anything witnessed before.
(Ed Conway, The Times, 30 September 2015)
The yuan has dropped its peg to the dollar and is now valued against a basket of currencies which includes the dollar. Beijing is now attempting to achieve a minor miracle: control domestic monetary policy; keep its exchange rate fixed; and permit money (capital) to flow in and out of the country at will. However, international experience has shown that a government can only control two of these three at any one time. In order for the People’s Bank of China to control monetary policy, it needs to allow the yuan to float against other currencies. The IMF has recently added the yuan to a basket of leading world currencies. London is bending over backwards to accommodate China in an effort to become the world’s main offshore centre for trading the yuan, and Zimbabwe has even made the Chinese currency legal tender in return for writing off $40 million of its debt. As Beijing unpegs its link to the dollar, interest rates will have to rise to attract foreign capital and prevent money flowing out of the country. The problem is that no country has managed a transition of its monetary system, such as China is at present undergoing, without inflicting pain on its own citizens and the rest of the world. The way ahead is going to be rocky (Ed Conway, The Times, 19 January 2016).
Xi Jinping is amassing more power than any leader since Mao and Deng, and he has used this to remove those who oppose him. For instance, about forty generals and 40,000 officers have been cashiered for corruption, but because corruption is endemic in society, this charge can be levelled at anyone. Xi’s anti-corruption drive has penetrated all sectors of the party and government, and tens of thousands of party, government and business officials have been imprisoned and ruined. Even minor party officials have been caught in the net. The highest ranking casualty is Zhou Yongkang, the former security chief, becoming the first member of the Politburo Standing Committee to be disgraced. Another target are the managers of SOEs. Over a hundred officials did not wait to be charged and moved to the US and Canada, as these countries have no extradition treaties with China. These officials shifted money offshore in the past and then their families, and over a trillion dollars has been squirreled out of China illegally.
In October 2014, the ‘Spirit of Xi Jinping’ was elevated to the same level as the teachings of Mao and Deng, and it is now placed on a par with Marxism-Leninism, Mao Zedong Thought and Deng Xiaoping Theory. The party newspaper, People’s Daily, claimed that Xi’s ‘brilliant talks and instructions represent a new way of thinking, new perspectives, new conclusions and new demands… Xi has grasped the new demands of the era as well as the new expectations of the masses’. A Hong Kong critic wrote that ‘Xi, the new emperor, is wielding the knife to stifle Western ideas and to impose orthodoxy… The clock is being turned back and we seem to be in the midst of a quasi-Cultural Revolution’ (China Brief, Vol. 15, no. 5, 6 March 2015). Xi shocked many economists by claiming that communism is an ‘attainable goal’, and this reverses Deng Xiaoping’s assertion that China was only in the first stage of building socialism and the process could take a hundred years. He has also revived Mao’s policy of tight party control of literature, the arts and all creative work. Democratic centralism has been re-emphasised, and party members have been warned not to engage in ‘groundless criticism of major Party policies’.
In December 2015, Xi went one step further and declared himself the ‘Core of the Leadership’. The party now expects cadres to demonstrate ‘absolute loyalty’. In March 2016, an article by Mao titled ‘Work Methods of Party Committees’ was circulated. The message was simple: there is only one big boss and he is Xi. The media was warned to reflect truthfully party policy, and total loyalty was demanded of the military. No wonder many assumed that Xi saw himself as the Mao of the twenty-first century. Party leaders, according to the constitution, only serve ten years, but Deng Xiaoping omitted to write this into party statutes. Xi could stay longer than ten years. Another way of reading Xi’s démarche would be to regard him as a nervous leader who is expecting troubled times ahead.
The preceding analysis concentrates on domestic issues. How do these impinge on foreign policy? The first thing that is obvious is that the growth of the economy was given top priority, and this involved attracting foreign investment and know-how, including technology transfer. The SEZs were a great success and would not have been possible without good relations with the US, which opened its markets to Chinese goods. Cheap Chinese goods keep down prices and inflation in the US and the European Union.
So the most valuable Chinese export may well turn out to be no inflation. The Chinese producer price index reveals that prices have been falling for four years. Wholesale prices were down 4.8 per cent in 2015 compared to the year before, one of the largest annual falls ever recorded. Deflation in Chinese factories has a worldwide impact. After the global financial crisis of 2008, Chinese state and private enterprises invested heavily and gross capital formation, compared to 2006, has risen threefold. This splurge has been financed by debt: Beijing’s total social financing (total credit) rose from 120 per cent of GDP in 2008 to 250 per cent in 2014 ($26 trillion).
The result of this investment surge is that Chinese industry has overcapacity. So China has too many factories producing too many goods, and world demand cannot keep pace. The solution adopted has been to slash prices, and practically no one now pays full price for Chinese goods. Overcapacity is most serious in the fashion industry. Cheaper Chinese goods have led to factory gate prices falling in the US, Germany and Japan. Producer prices in the US are down by 0.7 per cent year on year, in Japan by 2.4 per cent and in Germany by 1.3 per cent, and this is a completely new phenomenon.
Why are manufacturers able to reduce their prices? One reason is that oil is cheaper. The Chinese domestic market is not developed to the point where it can absorb the overcapacity of Middle Kingdom industry. So China can be thanked for ensuring that inflation rates in the developed world stay low. This situation is likely to continue for some time because of China’s overcapacity (The Times, 20 July 2015).
Although China has a centrally planned economy, part of the economy is acting strangely. One of the reasons for the rapidly expanding debt mountain is shadow or black banking. The borrowed money found its way into assets, and the stock market skyrocketed over the year to 2015 by 150 per cent. Inevitably, the bubble burst, and some 13.5 trillion yuan (£1.4 trillion or $2.17 trillion) was wiped off the value of shares on the Shanghai and Shenzen stock exchanges from mid-June to 8 July 2015. There are over ninety million Chinese investing (speculating would be a more precise term) in the stock exchanges and were encouraged to do so by the party daily, and stocks were a safer bet after the housing bubble burst, according to conventional wisdom. Beijing reacted by ordering state-owned companies not to sell shares, and it became illegal to buy large numbers of shares. Pension funds and the social security fund were forced to buy more shares. The regulators then encouraged investors to borrow even more (against their apartments, if necessary) and buy shares, but the vast majority did not. These panic moves were an attempt to regulate the market, but Beijing discovered that in a market economy this is extremely difficult to achieve. The party has now realised that it cannot run the market as if it were a football team as too many players do not obey orders.
Another concern for Beijing is that the yuan has risen by about 20 per cent against the euro. Meanwhile, Japan is trying to force down the value of the yen, and as a consequence the yuan rose 16 per cent in 2015. With wages rising, some specialists believe that China has lost its competitiveness. The yuan has now joined the IMF’s elite group of major currencies (US dollar, pound sterling, euro and yen) held as global reserves, and this is called the special drawing rights basket. The fund deems the currency to be ‘freely usable’ but not fully convertible, and this means that the decision was not an economic but a political decision, designed to draw China into global governance. Li Keqiang is behind the move and hopes to use the prestige which will flow from joining the world’s elite currencies to overcome vested interests in the Communist Party and promote free market reforms. It is a huge risk for Beijing as there are $17.3 trillion in Chinese deposit accounts, and a large proportion is held by rich Chinese who will be permitted to switch half their assets into foreign stocks and property under the new rules. The yuan weighting in the SDR will be 10.92 per cent.
Stable relations with Washington were and are of critical importance in the development of modern China, and Beijing avoids any overt confrontation with the US. Gone are the days when there was brinkmanship over Taiwan. Deng’s foreign policy consisted of the Middle Kingdom keeping its head down, as foreign policy consisted of fostering good commercial relations with the world. However, foreign trade always has another dimension: security. The ‘string of pearls’ bases from China to Myanmar (Burma), Bangladesh, Sri Lanka and Pakistan are just the beginning. The Middle Kingdom is becoming a naval power and wishes to expand its ‘string of pearls’ around the world. How does it proceed? It offers loans and builds infrastructure. In Sri Lanka’s case it provided the military might which permitted Colombo to defeat the Tamil Tigers in 2009 after a twenty-six-year conflict. In Pakistan, China is developing the port of Gwadar and from there is building roads, rail links and pipelines to Xinjiang.
At present, China is becoming more self-confident on the international stage and is pushing its own agenda. The days when Beijing kept its head down are in the past, and now it is raising its head above the parapet higher and higher. It is no longer a game player but becoming a game changer.
Brazil, Russia, India, China and South Africa make up the trading organisation BRICS. It has a total GDP of $32 trillion, occupies 26 per cent of the earth’s surface, accounts for 16 per cent of world trade and 42 per cent of global population, but China has emerged as the dominant partner. Now Brazilian and Peruvian trade turnover with China is larger than that with the US. A $10 billion transcontinental railway from Peru to Rio de Janeiro, Brazil, is being built and will cut the cost of exporting Brazilian maize, soya bean, oilseeds, iron and other products to China. China has native Portuguese speakers in Macau. In July 2015, a New Development Bank, with an initial capital of $50 billion, and a Currency Reserve Fund, with capital of $100 billion, were established – China is to contribute $41 billion, Russia, Brazil and India $18 billion each and South Africa $5 billion. The reserve fund is to help members and other states which encounter short-term liquidity problems.
China was extraordinarily lucky that the moment it launched its expansion overseas globalisation was just beginning. From being a bit actor on the African and Asian stage, it has become a leading actor. The rules of globalisation were set by the rich countries, the US and the EU in particular, but China is now rewriting those rules and jettisoning many of the norms and conventions adopted by the West. For the first time, there is a new kid on the block which is challenging successfully the hitherto unchallenged dominance of the West in the Third World.
This has been achieved by putting together a barter system in which China gets hydrocarbons, minerals, timber and other materials and, in return, African states get new dams, railways, airports, hospitals, ports and schools. The Chinese companies go for large projects which few international firms would contemplate. A major reason is that they are state-owned, so if they lose some money, the state pays the bill. The Chinese Export-Import Bank and other state banks offer to fund projects which involve Chinese companies, Chinese materials and Chinese labour.
Africa was forgotten by the West after the Cold War, so China seized the opportunity to enter the continent and learn international business. There was also the fact that Africa was a vast treasure trove of raw materials and energy which were greatly in demand for China’s rapid economic growth. Xi Jinping visited the continent shortly after becoming leader, and other top leaders visit annually. Few Western leaders bother to go there, but the Chinese understand the value of personal contacts with national leaders. Trade turnover has exploded and reached $200 billion in 2012, up twentyfold since the beginning of the millennium, and is now way ahead of the US and the EU.
China is building the continent’s infrastructure, but roads lead to mines, railway lines to ports, and ports where exports to China are possible. Along with the engineers and labourers come the entrepreneurs and small traders. There are at least a million Chinese now in Africa, and they are to be found everywhere working from dawn to dusk to make money. For instance, in Zambia they are chicken farmers, and in Mozambique they farm large areas of the country. Timber is illegally felled and shipped to the Middle Kingdom. Money talks. In Ghana, China put together a $13 billion loan package with the first tranche of $3 billion, and this was more than the country had received from Western sources during fifty years of independence. This permitted the Bui Dam, under way for forty years, to be developed. In 2011, the World Bank loaned all African countries a total of $2.2 billion (French 2014: 187–8).
Africa has notched up some world firsts: Luanda, the capital of Angola, is now the most expensive city in the world because almost everything has to be imported, and Luanda also has the largest shopping mall in Africa, staffed by Chinese.
Not everything has gone according to plan. After Colonel Gaddafi was ousted in Libya, Beijing, in February 2011, arranged for 36,000 Chinese workers to be evacuated. The operation went smoothly because of China’s good relations with Greece and Malta. Greece supplied two boats, and when the Chinese landed in Crete, the prime minister welcomed them.
Natural resources make up two-thirds of Africa’s exports, but in Nigeria and Angola oil and gas constitute 97 per cent with most of the rest diamonds, but this puts them at the mercy of commodity prices. Nigeria used to have a vast textile industry employing 350,000 workers. Imports are banned, but they have come in from China and elsewhere and almost wiped out the indigenous producers. The Western oil majors have linked up with the Chinese to control the African oil industry. Shell companies in Hong Kong control the trade through Moscow, London, New York, Pyongyang and Shanghai, and then money is then transferred into numbered bank accounts (Burgis 2015: 226–30). The average African sees little of this wealth.
China is shaping the future of Africa whose population is expected to double from one to two billion by mid-century and 3.5 billion by the end of the century. That will be more than double China’s population. For the Chinese the future is bright: the future is black.
The Chinese understanding of Realpolitik and strategy differs from that of the West. They have learnt from historical experience that not every problem has a solution and not to concentrate on one specific aspect of a problem. China has always been surrounded by enemies with greatly differing traditions and aspirations. This has led the Chinese to avoid an all-or-nothing approach and to elaborate a multilayered, long-term approach to security.
Chinese are much taken by wei qi (a game of surrounding pieces) which is based on strategic encirclement. The board has a grid of 19 by 19 lines. Each player has 180 pieces, or stones, each is of equal value, and the objective is to encircle the opponent’s stones in various parts of the board. Each player reacts to the other’s move. At the end, the margin of advantage is small, and the identity of the winner is not always obvious.
Chess – the national passion of Russia – on the other hand, is about total victory. The vast majority of games end in victory by attrition or, perhaps, by a swift dramatic gambit, but it is also possible to settle on a draw. Chess is about a decisive battle, and wei qi is about a protracted campaign. The chess player aims for total victory, but the wei qi player strives for relative advantage. The chess player sees all the pieces the adversary has, but the wei qi player has to take into account not only the stones on the board but also the reinforcements the adversary may deploy. Chess teaches the Clausewitzian concepts of ‘centre of gravity’ and ‘decisive point’ whereas wei qi teaches the art of encirclement. The good chess player tries to eliminate his opponent’s pieces by a head-on attack, but the wei qi player scores by moving into empty spaces. Chess teaches single-mindedness and wei qi strategic flexibility.
Chinese military doctrine avoids head-on confrontations and concentrates on psychological advantage to achieve victory. The key text is Sun Tzu’s The Art of War, originally published in 513 BC. It consists of observations on strategy, diplomacy and war, and found expression in the tactics and strategy of Mao Zedong during the Chinese Civil War and Ho Chi Minh during the Vietnam War. Vo Nguyen Giap adopted Sun Tzu’s principles of indirect attack and psychological warfare against the French and Americans; the French, Americans and Soviets paid a heavy price for ignoring Sun Tzu’s opus (Kissinger 2012: 22–6). An example of this was when Khrushchev ruefully admitted that the Soviets did not understand the Chinese at all.
Russia’s foreign policy has always been to balance relations with the US, Europe and China, but now Moscow is moving closer to China, and a Eurasian political, economic and military grouping is forming from St Petersburg to Shanghai.
In 2013, the EU accounted for about 50 per cent of Russia’s foreign trade – some $417 billion – and about 30 per cent of Europe’s energy came from Russia. Germany has about 6,000 companies engaged in business there, but Europe joined the US in applying sanctions to Russia, and twenty-five years of Russian-Western cooperation began to unravel. Putin favoured a ‘greater Europe’ from Lisbon to Vladivostok which would embrace economics, culture and security. Russia would have provided Europe with natural resources and a pathway to Asia and the Pacific. The key player, Germany, eventually turned this opportunity down.
The shooting down of a Malaysian Airlines passenger plane over Ukraine in July 2014 was a turning point. Russia blamed the Ukrainians for the disaster and the Ukrainians blamed Russia. Germany blamed Russia and hardened its attitude towards sanctions. Mikhail Gorbachev’s idea of a ‘common European home’ led to a closer relationship between Russia and Europe, centred on Germany, but in 2014 divorce was looming on the horizon.
The US expected China to strongly condemn the annexation of Crimea and involvement in eastern Ukraine based on the principles of territorial integrity and non-interference in domestic affairs, but China chose to abstain in the UN Security Council vote in March 2014 along with fifty-seven other states. Why did China abstain? It viewed the Western-backed colour revolution in Kyiv as a greater threat to its security than Russia’s actions. Russia’s falling out with the US left it with little option but to seek a closer relationship with Beijing, but the Chinese were faced with a dilemma. Under no circumstances could they fall out with the Americans as the two countries were forging a ‘new type of great power relationship’, to quote Xi Jinping. Beijing expects a long period of peaceful competition with Washington which would eventually tilt in China’s favour.
As it turned out, China has been the greatest beneficiary of Russia’s falling out with the West and was the largest economy outside the anti-Russian coalition. Trade turnover in 2014 was $95 billion. At the Asia-Pacific Economic Cooperation summit in Beijing in November 2014, Xi placed himself physically between Obama and Putin. The message was clear: the Cold War triangle of Washington, Moscow and Beijing is a thing of the past. Now the relationship has changed with China at the top and enjoying better relations with the other two than they have with one other.
China’s relations with the US are becoming more competitive. Sino-Russian relations are laid down in a treaty signed in 2001 and the border issue was settled in 2004.
The Russian Navy took part in joint naval exercises with the Chinese Navy in the East China Sea, and the two countries engaged in a celebration of Japan’s defeat in 1945. Russia’s relations with South Korea have not been materially damaged by the fallout over Ukraine. Other US allies in the region, Taiwan and Singapore, place good relations with Washington ahead of relations with Moscow.
The Eurasian Economic Union embracing Russia, Belarus, Armenia, Kazakh-stan and Kyrgyzstan promotes, from 2015, the free movement of goods and common policies. Russia would like it to become a political, military and cultural union as well, but Kazakhstan will only agree to an economic union as it wishes to remain a sovereign state.
Both Russia and China view Western campaigns to promote democracy and human rights in their countries as attempts to destabilise them, and they resent Western criticisms and regard Western media as biased. In 2011–12, Vladimir Putin blamed street protests on American support for Russian civil society, and Beijing saw a foreign hand behind the protests in Hong Kong in 2014.
With Moscow no longer having a foot in the Western camp, the two countries’ assessment of world events is converging. China’s ambition – the Chinese Dream – is to return to its natural position of dominance in Asia and then eventually the world. Russia’s vision is much more modest, and it would like to establish itself as a leading great power in Eurasia and further afield. Beijing reads American pressure on Russia as an attempt to force it to obey its rules, and it is also seen as a warning and a deterrence to China. Beijing does not expect the US to subjugate Russia, and a pro-Western or chaotic Russia is not in its interest. Russia and China regard American dominance of the world to continue for several more decades but see that power gradually weakening; this will afford China greeter room for manoeuvre and Russia more freedom of action.
Putin and Xi are closer than previous leaders and expect to be in power into the early 2020s. This adds greater continuity to their policies.
Greater Europe from Lisbon to Vladivostok has been replaced by Greater Asia from St Petersburg to Shanghai. China became an importer of Russia’s natural gas for the first time in 2014 (hitherto almost all had been exported to Europe) and is developing a greater appetite for Russian oil. In February 2015, Russia stated that Chinese companies could acquire majority stakes in Russia’s strategic oil and gas fields, except those on the continental shelf. The sanctions have reduced the influence of Britain’s BP and the US’s ExxonMobil, and Chinese companies are likely to take advantage of this. The EU is also pursuing a policy of less reliance on Russian energy imports.
China is investing in high-speed rail links to Moscow via Kazakhstan and modern sea ports in Primorsky krai on the Pacific coast. The Northern Sea shipping route from Asia to Europe across the Arctic is another project.
China’s Silk Road Economic Belt (SREB, also known as One Belt [sea], One Road), a regional trade and transport system which eventually will see trains running from Beijing to London, is a natural partner for Putin’s Eurasian Economic Union. The SREB will run for over 8,000 miles from Beijing to St Petersburg. The twenty-first-century Maritime Road will start in Beijing, then down to the South China Sea, South Pacific Ocean, Indian Ocean, through the Suez Canal, the Mediterranean Sea and then up the Danube. A $40 billion fund is available for projects along the route.
China is wooing the EU to link up with the SREB. A proposed $358 billion Investment Plan for Europe is on the table, but Brussels is proceeding slowly as it is aware that EU companies encounter considerable difficulties in China and are excluded from certain sectors and projects.
The Shanghai Cooperation Organisation (SCO) comprises Russia, Kazakhstan, Kyrgyzstan, China, Tajikistan and Uzbekistan, with Afghanistan, Iran, Mongolia and Pakistan having observer status. Belarus, Turkey and Sri Lanka are partners in dialogue. India and Pakistan are expected to become full members soon. The SCO will oversee the Silk Road development and has become the centrepiece of Beijing’s foreign and trade policy towards countries along the route. Latin America is left out, but a canal is being built in Nicaragua which will rival the Panama Canal.
China wants advanced Russian military technology transfers, especially in air and missile defence. Traditionally, Moscow has hesitated to provide Beijing with cutting-edge technology but appears now to have concluded it has no other choice. There have been regular joint military exercises, and in 2015, they held joint naval exercises in the eastern Mediterranean.
The relationship between Russia and China is not an equal one. Economically, the Middle Kingdom dwarfs Russia, with some Beijing commentators already referring to Russia as the junior partner. Russia was a vassal state under the Mongols from 1240 to 1480, and it does not wish to repeat the experience. Khrushchev would not treat Beijing as an equal, and this led to decades of enmity. The boot is now on the other foot, and Xi needs to be sensitive to Putin’s needs. Russia dominated relations with China from the Treaty of Nerchinsk in 1689 until recently, and it will be difficult for Russians to accept a junior role.
When Xi attended the seventieth anniversary celebrations of victory over Germany in Moscow on 9 May 2015 – Chinese units also marched in the parade – he signed thirty-two agreements, and large yuan loans were extended to Russian banks. It will become easier for Russian companies to invest in China and Chinese companies in Russia. The Russian rouble is too weak to become a major international currency, but the yuan has that potential.
When the IMF was set up in 1944, President Roosevelt was determined that the Big Four – the US, UK, Soviet Union and China (in that order) – would have greatest control over it and the World Bank. To justify this political decision, an economic rationale had to be devised. A young American economist, Ray Mikesell, was given the task of turning economic statistics about the Allied economies into a ranking which would place the Big Four at the top. There was a problem: based on economic criteria, the Soviet Union and China did not qualify for a top-table place. France’s trade turnover was greater than that of the USSR and China combined, but because Roosevelt and de Gaulle did not see eye to eye, France had to be excluded. Eventually Mikesell devised a set of equations which did the job. They were so abstruse that the delegates could not understand them and consequently were voted through. Hence the Big Four got the lion’s share of the voting rights at the IMF and World Bank. When the French delegate realised what had happened, he created such a fuss that France was given a seat at the top table. Several months later, Mikesell’s equations were used to determine voting rights and national contributions at the United Nations. The US, UK, Russia, China and France are still the five permanent members of the UN Security Council and have the right of veto.
There were repeated efforts to update the formula, and the latest was in 2010 which gave emerging economies more voting power and relegated Old World economies to second place. The IMF proposed raising China’s voting shares from 3.8 per cent to 6 per cent. This was well below the US’s 16.7 per cent and the right to veto decisions it does not favour. China felt insulted given its economic rise. In December 2015, the US Congress ratified it (The Times, 22 December 2015).
In 2015, China’s response was to set up the Asian Infrastructure Investment Bank (AIIB) with capital of $50 billion and invited other countries to join as shareholders. The Obama administration tried to dissuade countries from joining, but this backfired spectacularly. Allies such as the UK and Australia ignored Washington’s pleas and were among the fifty-seven founding members. Russia initially declined to join but eventually did. The AIIB will develop into a strong competitor for the World Bank, the IMF and the Asian Development Bank – all dominated by the US. Xi maintained in 2014 that it was for the people of Asia to run Asian affairs, and Chinese money is to promote this. An estimated $8–10 trillion is needed to develop Asian infrastructure between 2010 and 2020.
America’s answer is the Trans-Pacific Partnership (TPP) which will set rules for an estimated 40 per cent of world trade. China has mentioned it may join. There is also the Transatlantic Trade and Investment Partnership with the EU and the goal is a free-trade area.
China’s main competitor in Asia is India. Prime Minister Narendra Modi visited the Middle Kingdom in May 2015. The Chinese foreign minister talked about a ‘Chinese whirlwind’ sweeping the world, and Xi said a waking China is a ‘peaceful, amiable and civilised lion’. When Xi visited India in September 2014, lots of business initiatives were signed which included Chinese investment of $20 billion. Since then progress has been slow with the Chinese complaining about Indian red tape and the Indians complaining of import barriers.
In April 2015, Xi pledged $45.6 billion over fifteen years while on a visit to Pakistan to build roads, railways, oil, gas, fibre-optic cables and power generation plants to create an ‘all-weather strategic partnership of cooperation’. The plan is to link Kashgar in Xinjiang with Gwadar Port in Pakistan. The money is a loan and interest will have to be paid on it. The Chinese project dwarfs the US loan of $7.5 billion over five years in 2009 to Pakistan, but it was spread too thin and proved ineffective.
In September 2014, Modi was in Japan and a Beijing newspaper commented that he wanted to work with Japan to contain China. Barack Obama was also in India; he and Modi issued a statement on their ‘strategic vision for Asia-Pacific and the Indian Ocean region’. There is an unresolved territorial dispute in Arunachai Pradesh bordering on Tibet which flares up from time to time when Chinese troops appear in what India regards as its domain. Chinese GDP is over seven times that of India, but India’s population is already 1.25 billion and will surpass China’s during the next decade. Militarily, India is no match for the Middle Kingdom, so it must balance relations with the Middle Kingdom and the US and gain concessions from both.
It is not surprising that Washington views relations with China as of primary importance in the near and long term. It appears to be gradually withdrawing from Europe and the Middle East and focusing on Asia, especially East Asia. Beijing has made no secret of the fact that it regards a US presence in the region as illegitimate, and America may be a Pacific power, but this does not extend to East Asia. China has laid claim to the South China Sea and is claiming an area equivalent to one and a half times that of the Mediterranean Sea. But this is not new as Chiang Kai-shek expressed the same sentiments. A nine-dash line has been drawn which overlaps with the Exclusive Economic Zone claims of Brunei, Indonesia, Malaysia, the Philippines, Singapore, Taiwan and Vietnam. It is thought there are large reserves of hydrocarbons under the sea. The Spratly and Paracel Islands are the subject of bitter disputes. China claimed the Scarborough Shoal which the Philippines regarded as its territory; China took it over in 2012, but the US Navy did not come to Manila’s assistance, and it is now de facto Chinese territory. The situation has now changed, and the Obama administration is playing a much more active role. Its main point is that it wishes to ensure free navigation of vessels in international waters and air travel. China wishes to resolve disputes on a one-to-one basis and rejects international arbitration. Its view is illustrated by a comment that the Philippines is a small nation, implying that small nations should concede to large nations. The littoral states want the US Navy to protect them. China’s naval ambitions do not stop in the East China Sea, and maps have appeared which reveal that its maritime zone of influence extends to Hawaii.
Another problem is the building of Chinese bases on islets which have been expanded to take jet aircraft. One estimate is that they have created about 2,000 acres of new territory. The Subi Reef is claimed by the Philippines, Taiwan and Vietnam, but China has effectively taken it over. Other areas in dispute by China, the Philippines, Vietnam and Taiwan are the Duncan, Woody, Thilu and Itu Aba Islands; the Southwest Cay and the Mischief, Fiery Cross, Hughes, Swallow and Johnson South Reefs. According to the UN Convention of the Law of the Sea, the right to twelve nautical miles (one nautical mile = 1.15 miles) of maritime territory can only be claimed around true islands, not man-made structures on submerged objects such as Subi Reef. China is not observing this law at present.
The conflict with Japan over the Diaoyu-Senkaku islands in the East China Sea in 2014 almost boiled over. The dispute is about eight uninhabited islands near Taiwan, and nationalist feelings in both countries were ramped up by the respective governments. As a result, Japan is increasing its defence budget and views China as a potential aggressor.
China and America – Chimerica – are now in a symbiotic relationship, and they form the G2 which will dominate the world stage. America has a huge trade deficit with China and China, in turn, buys US bonds to make it possible for the US to continue importing so many goods from the Middle Kingdom.
President Barack Obama’s first official visit to China took place in November 2009. The body language underlined the fact that the Chinese, for the first time since 1949, felt themselves in the ascendancy. If China becomes too aggressive it will provoke a response from Uncle Sam. Contiguous states, such as Vietnam, were historically vassal states of China and have no wish to return to this status. They will rely on the US to resist Chinese domination. All this has the makings of a slow-burning Cold War in Asia.
The collapse of the Soviet Union was a disaster for the Democratic People’s Republic of Korea (DPRK). Deprived of spare parts and oil and power, most of the industry stopped. One estimate is that industrial output in 2000 was half of that in 1990 and factory managers began selling their machinery to China as scrap metal.
Agriculture suffered more than industry, as chemical fertiliser was used liberally, but factories depended on Soviet inputs. There was extensive irrigation supported by pumping stations, and when power failed, the pumps stopped. Torrential rain in 1995 and 1996 led to a collapse of state agriculture, and the public distribution system stopped functioning, and even privileged elites failed to get their rations on occasion. The famine of 1996–9 led to many deaths, and the lowest estimate is about half a million or 2.5 per cent of the population.
How did people survive? They rediscovered capitalism. One estimate is that between 1998 and 2008 income from the shadow market economy accounted for 78 per cent of total household income. The same pattern observed in China occurred in North Korea as reform came from below. Unlike China, however, the state refused to disband the grossly inefficient state farms. Farmers, therefore, had to find virgin and abandoned land to till, and mountain slopes were brought into cultivation.
In cities, barter appeared but money soon took over, and huge markets were visible in 1995. Most market traders were female, and this was because all able-bodied males had to work in a state enterprise. Married women could stay at home and look after the children, so the main breadwinner was female. Most restaurants are now privately owned, and sometimes the capital comes from relatives in China. Technically the restaurant is state-owned and managed by an official agency, and the private owner agrees to pay the municipal authority a rent or bribe and everyone is happy. The retail sector follows the same pattern. Over half of the shops are, in reality, private businesses, and private transport has developed rapidly. The best guarantee of unrestricted trading is to register the vehicles as belonging to the military. China accounts for 90 per cent of imports and exports, but minerals are handled by the state whereas other goods, especially food, are private (Lankov 2013: 202–6).
The collapse of the command economy led to a weakening of the state as lower-level officials turned a blind eye to illegal activities in return for a bribe. Travel controls melted away, and passports were issued for the first time in 2003 to regulate travel to China. Women took to wearing trousers and riding bicycles in cities – previously banned activities.
Kim Jong-il was known for his love of Western luxury, and among his treasures was a cellar with 10,000 bottles of the finest wines. Kim the elder decided to sacrifice living standards in his bid to acquire an atomic bomb and the country is now a nuclear state. Five rounds of talks by the People’s Republic of China, the US, Russia, Japan, the Republic of Korea (South Korea), and North Korea, between August 2003 and February 2007, resulted in the Yongbyong nuclear reactor being closed down. In February 2005, North Korea stated it had nuclear weapons for ‘self-defence’, and in September 2015 the Yongbyong nuclear plant was again in operation.
The DPRK economy is in a parlous state, but aid from China will ensure that the state does not collapse; it supplies 90 per cent of its energy and 80 per cent of its consumer goods. One way of grasping how crippled the DPRK has become is to observe a satellite picture at night of the Korean peninsula. The north is almost entirely black while the south is bright with lights.
As the food situation stabilised, the authorities decided to introduce reforms in 2002. Consumer prices rose sharply and enterprises were permitted to acquire inputs and sell their output and wages depended on performance. Private markets were sanctioned, but the more conservative elements in the leadership lobbied for capitalism from below to be reined in. In 2005 it was announced that the public distribution system would be restored. The state grain monopoly was reimposed but soon failed as lower-level officials declined to implement it. In 2006 males were banned from engaging in private trade, but this had little effect as females dominated market trading. So the following year, women under fifty were forbidden to trade, but this led to riots and the ban being ignored. There was draft legislation, to be introduced in 2009, to permit market activity only three days a month and to ban the sale of industrial goods, but the law was never enacted. In order to eliminate profits from private trade, a currency reform was introduced in 2009, and this echoed the currency reform in 1947 in the Soviet Union. Stalin’s aim was to wipe out black market profits made during the war and after, and it was effective. However, in North Korea it resulted in rapid inflation as workers and officials were awarded huge wage increases, but the supply of goods did not increase.
Kim Jong-il was succeeded by one of his sons, Kim Jong-un, on 13 April 2012. He had been a pupil at the Liebefeld Steinhölzli School outside Bern, Switzerland, between 1998 and 2000. He was presented to the nation at a massive military parade, in October 2010, marking the sixty-fifth anniversary of the Korean Workers’ Party. Significantly, on the reviewing stands were Korean generals but also Zhou Yongkang, head of China’s domestic security apparatus. The symbolism was evident: the leader was supported by the army, party and China.
Kim Jong-un also has a magical touch. During an inspection, he miraculously created a new synthetic fertiliser which can produce 15,000 tonnes of wheat on a 9,000 m2 piece of land. The problem of hunger has been solved!
He has a beautiful wife, Ri Sol-ju, who appears with him on occasion, but he has a ruthless streak, and there have been public executions of criminals, those caught watching South Korean DVDs and USBs, and Christians. This reveals that many, perhaps half a million, watch foreign videos and a million may listen to foreign broadcasts. There are now about 20,000 North Koreans in the South, and they prepare DVDs to be smuggled into the North. Balloons containing US dollars are released near the Demilitarised Zone to float into the North.
Kim Jong-un decided, in December 2013, to humiliate publicly his uncle and second in command, Chang Sung-taek. He was removed from a meeting by guards on live TV and accused of being ‘idle, womanising and ideologically sick… of gambling, taking drugs and counter-revolutionary factional acts’. Never before has a top official been dismissed in this fashion. He was then shot, and his entire family, including North Korea’s ambassadors to Cuba and Malaysia with their wives and children, were wiped out. The minister of defence, Hyon Yong-chol, was executed in front of a crowd of officials by a four-barrel anti-aircraft gun. Kim Jong-un has been photographed riding a Ferris wheel, on a ski lift, watching a missile
test at sea and inspecting fish, fowl or cattle. He has decreed that all males copy his hair style with monitors cutting off locks if they are longer than two centimetres (0.8 inches). They are to imitate his bouffant which emerges upwards from shaved patches above his ears. Women have been told to adopt a bob similar to that of Ri Sol ju, Kim’s wife; the only people excluded are performers. Kim has adopted the same hairstyle as his grandfather, the founder of the state, and there have even been rumours that he has undergone plastic surgery to make him resemble his grandfather more closely.
Xi Jinping and Kim Jong-un have still to meet, and Kim defied China by staging North Korea’s third nuclear test in 2013. That said, the Treaty of Friendship, Cooperation and Mutual Assistance between China and the DPRK, signed in 1961, which contains a clause on mutual defence against foreign aggression, is still in force. Then Kim broke UN resolutions by testing missiles. In March 2015, Beijing replaced its ambassador with a senior Communist Party official, but it is not certain if he has met the ‘Great Marshal’ yet. Kim was expected to turn up in May 2015 at the seventieth anniversary celebrations of Germany’s defeat in Moscow, but he cancelled at the last moment. China is not keen on Russia improving relations with Pyongyang. The Chinese news agency Xinhua reported that relations with the DPRK were ‘as close as lips and teeth’ (Sunday Times, 17 May 2015).
When Liu Yunshan, a member of the Politburo Standing Committee, visited Pyongyang in October 2015, he failed to extract from Kim Jong-un an explicit promise to desist from testing nuclear weapons and missiles. In January 2016, Pyongyang announced an underground hydrogen bomb test and a month later the launch of a nuclear satellite. China’s response was acerbic. An editorial stated that nuclear tests were a deep-seated deformity of the DPRK’s security policy and nukes ‘could not compensate for the weak national economy as well as critical deficiencies in other areas of defence’. The article concluded that North Korea was using nuclear weapons as a ticket to a nuclear club to force other states to pay it tribute. It ‘believed that they would guarantee the country would have every resource and opportunity brought to its door… this is completely unrealistic’ (Huanqiu Shibao, 6 January 2016). Kim Jong-un has threatened South Korea, Japan and the US with nuclear strikes if they attack his country.
Pyongyang is slowly becoming like any other East Asian city, which is a startling change from a decade ago. There is a property boom, and the nouveau riche are indulging in cars, clothes, perfume and chocolate biscuits. Property prices are thought to have risen thirtyfold this century, with the most expensive costing £130,000 in a country where the average wage is £1 a month. All property is owned by the state, so how do people acquire apartments? By ‘swapping’. The person moving to a less desirable property is compensated in US dollars with a bureaucrat arranging all the paperwork for an agreed bribe. Who are the new rich? State enterprise managers who effectively run their companies as private businesses, and then there are the merchants who buy and sell food and household items. The banks do not pay interest, so the only way to spend large amounts of money is to invest in property. Refrigerators and computers are all the rage, but the Internet is off limits for all except a small elite. Professor Andrei Lankov, regarded as the leading specialist on the country, puts it succinctly: ‘Kim Jong Un has no choice, He’s like a man on the fourth floor of a burning building. If he jumps, he may well be killed but if he doesn’t jump, he will certainly die’. Another trend can be observed which is typical of East Asia, especially China. Every successful man has to have a few mistresses, and the richer he becomes, the greater the number of beautiful girls in his harem (The Times, 18 April 2015).
In 1989, on his last visit to Havana, Gorbachev declared that the Soviet Union opposed theories and doctrines justifying the export of revolution and counterrevolution. Castro was apoplectic in public and private and mocked the Soviet worker’s fear of unemployment and lack of sugar (Cuba’s main export).
However, Cuba surprised the world after the collapse of the Soviet Union in 1991 by continuing as a communist state. As in other communist states, the party proved to be the most effective institution backed up by the instruments of coercion – the military and political police – and about a fifth of the population is trained to bear arms. The key to retaining power was to ensure that the ruling elite remained united. Cuba is dominated by Fidel and Raúl Castro, and the charismatic figure of Fidel with his cap, beard, cigar and fatigues is central to the survival of a system which is neither democratic nor economically successful. Fidel loves to talk and is in his element in his interminable monologues. I find them very good practice for honing my Spanish, but if one does not understand a sentence or idiom, he comes back time and again to the same theme. In other words, he repeats himself ad nauseam, and if one listens to him for fifty hours, one has heard his complete vocabulary. On the podium, waving his hands and gesticulating, Castro gave the impression of being another Moses leading the children of Israel to the Promised Land. Moses did not make it, but neither will Fidel get to full communism.
Castro to his doctor: ‘Doc, I am suffering from insomnia.’ ‘Try reading your own speeches.’
The other aspect to retaining power is to imprison and kill opponents. Fidel will not enter into a dialogue about policy because he is aware his own position is weak, and the more eloquent opponents are shot. Another reason why opposition is not more manifest is that hundreds of thousands of Cubans have left the island illegally for the US, Latin America and Europe. There is now a Cuban community on Lanzarote, in the Canary Islands, for instance.
The mass base of support is among the poor. Without communism, a proportion of the population would feel marginalised. Literacy rates before the revolution, at 75 per cent, were among the highest in Latin America. Control of the media means that there is no political or cultural debate which challenge accepted norms. This had led to the emigration of a large number of Cuban writers and artists. Science and engineering education have been promoted but, as one graduate engineer informed me in the late 1990s, she had no intention of working as an engineer because the pay was little better than that of an ordinary worker. She said that many graduate girls preferred to work as prostitutes because they could earn much more. Castro, on one occasion, said that Cuba had the most highly educated prostitutes in the world, but this should not be revealed to the outside world!
Cuba has a large black population, and they were enthusiastic supporters of the regime in the early days, but only one black, Juan Almeida Bosque (died 2009), became a member of the ruling elite. He took part on the storming of the Moncada fortress and was imprisoned afterwards; he was one of eighty-two insurgents who sailed on the Granma from Mexico to Cuba. He proved himself an able military commander as leader of the Third Eastern Front and was vice president and a member of the Politburo of the Communist Party of Cuba. He was said to mediate on occasion between Fidel and Raúl Castro, both strong-willed comrades, but real power rested with Fidel Castro, el Comandante en Jefe or the boss.
The collapse of the Soviet Union in 1991 was a disaster for Cuba. The sugar industry could no longer compete and began to decline rapidly. Life is hard for most Cubans, and one told me that it is usual for family rations to run out in the third week of every month. Traffic is light compared to other capital cities. Old bangers, dating from the 1950s, dominate. Another striking feature about the capital is the total absence of commercial advertising.
A bonus for the Castros (Raúl is now in command as Fidel is incapable physically of running the country on a day to day basis) was Hugo Chávez of Venezuela. He took up the baton of anti-Americanism in Latin America and attempted to forge an alliance of left-wing states including Venezuela, Bolivia, Argentina and Ecuador, but Brazil declined to join. Venezuela provides oil at discounted prices, and Cuba sends medical professionals, among others, to Venezuela, and this continues under President Maduro.
A bitter Cuban joke sums this up:
What are the Cuban revolution’s three greatest failures? Breakfast, lunch and dinner.
In September 2010, Fidel came to a stunning conclusion: ‘The Cuban model does not even work for us anymore.’ Later he warned that Cuba was ‘on the edge of a precipice’ and the fifty-year battle to produce a successful, communist Cuba had failed. A Party Congress in April 2011, the first in fourteen years, began reintroducing capitalism. Barbers, plumbers, locksmiths and others in the service sector will now be working for themselves, and the list of permitted trades totals 151. Restaurants have sprung up, and entrepreneurship, suppressed for half a century, has reappeared. A typical burger and salad costs a week’s wages, but business is booming. Doctors are only paid $25 a month, which is not enough to live on, so they must find a secondary occupation. The buying and selling of cars, houses and apartments (but not land) is permitted once again, and transactions are in US dollars. Estate agents have reappeared, and commission for a $50,000 apartment is $300. Farmers may lease land and employ labour, and many have grasped the opportunity to farm on their own account again. Needless to say the flesh business is expanding all the time, but the girls pay a tax.
Cuban Americans can now visit and bring in huge quantities of goods, which can be sold in the markets. They also provide capital to help their relatives start businesses, and this is already worth billions a year. Foreign tourism is booming and bringing in billions of dollars annually. It is like going back fifty years, and there are even steam trains to transport the people.
Havana, once a beautiful city replete with colonial architecture, is falling down and crumbling away. The state does not have the resources to repair buildings, so the private sector will have to step in. Painful decisions about loss-making industry and agriculture have still to be taken. Cuba has revealed that the old adage ‘abolish capitalism and fail economically’ is true.
Where has the inspiration for the second Cuban revolution come from? China, of course. Beijing has shown that a Communist Party can retain power while running a capitalist economy. Havana hopes that taxes from private businesses and tourism can fund healthcare (the best in Latin America), education and pensions.
Communism in Cuba is solid and is likely to remain while Raúl is in power, but when he goes, the risk is that it may fragment. The equation ‘Cuban Communism = Castroism’ may turn into reality. In December 2014, President Obama announced that diplomatic relations with Cuba would be re-established, and they were on 20 July 2015. Many in the million-strong Cuban exile community in Florida were not amused. On 21 March 2016, Obama became the first US president to visit Cuba since Calvin Coolidge in 1928. Will the embrace of American capitalism prove fatal for Cuban communism?
Current communist states
- People’s Republic of China: October 1949–
- Republic of Cuba: January 1959–
- Democratic People’s Republic of Korea: September 1948–
- Lao People’s Democratic Republic: December 1975–
- Socialist Republic of Vietnam: July 1976–
Former communist states
- Democratic Republic of Afghanistan: April 1978–April 1992
- Socialist People’s Republic of Albania: January 1946–March 1992
- People’s Republic of Angola: November 1975–August 1992
- Azerbaijani People’s Government: November 1945–December 1946 (in present-day Iran)
- People’s Republic of Benin: November 1975–March 1990
- People’s Republic of Bulgaria: September 1946–December 1990
- People’s Republic of the Congo: January 1970–March 1992
- Czechoslovak Socialist Republic: July 1960–March 1990 (People’s Republic of Czechoslovakia: February 1948–July 1960)
- People’s Democratic Republic of Ethiopia: September 1987–May 1991
- German Democratic Republic: October 1949–October 1990
- Political Committee of National Liberation (Greece): December 1947–August 1949
- People’s Revolutionary Government of Grenada (West Indies): March 1979–October 1983
- People’s Republic of Hungary: August 1949–October 1989 (Republic of Hungary: May 1945–August 1949)
- Democratic Kampuchea (Cambodia): April 1976–January 1979
- People’s Republic of Kampuchea: January 1979–October 1991
- Republic of Mahabad (Iran): January 1946–December 1946
- Mongolian People’s Republic: November 1924–February 1992 (Communist from July 1921)
- People’s Republic of Mozambique: June 1975–December 1990
- Republic of Nicaragua: July 1979–April 1990
- People’s Republic of Poland: June 1945–July 1989
- People’s Republic of Romania: December 1947–65; Socialist Republic of Romania: 1965–December 1989
- Somali Democratic Republic: July 1976–January 1991
- Union of Soviet Socialist Republics (Soviet Union): December 1922–December 1991; Soviet Russia: October 1917–December 1922
- Tuvan People’s Republic: August 1921–October 1944
- Democratic Republic of Vietnam: September 1945–July 1976
- Provisional Revolutionary Government of the Republic of South Vietnam: April 1975–June 1976
- People’s Democratic Republic of Yemen: November 1967–May 1990
- Democratic Republic of Yemen: May 1994–July 1994
- Socialist Federal Republic of Yugoslavia: November 1943–October 1991/April 1992
There are states which declare themselves socialist but not Marxist-Leninist
- People’s Republic of Bangladesh: 16 December 1971–
- Multinational State of Bolivia: July 2006–
- Great Socialist People’s Libyan Arab Jamahiriya: September 1969–September 2011
- Democratic Socialist Republic of Sri Lanka: September 1978–
- Syrian Arab Republic: 1961–
- United Republic of Tanzania: April 1964–
- Bolivarian Republic of Venezuela: 1999–
- People’s Republic of Zanzibar: 1964 (now part of Tanzania)
States which formerly declared themselves socialist but not Marxist-Leninist
- People’s Democratic Republic of Algeria: September 1963–February 1989
- Burkina Faso
- Republic of Cape Verde
- Republic of Ghana
- People’s Revolutionary Republic of Guinea: 1958–84
- Guinea-Bissau
- Republic of Iraq: July 1958–July 1979
- Democratic Republic of Madagascar: December 1975–August 1992
- Republic of Mali: December 1968–January 1992
- Republic of Nicaragua
- Portuguese Republic: April 1974–July 1976
- Democratic Republic of São Tomé and Príncipe
- Republic of Senegal
- Republic of Seychelles
- Democratic Republic of Sudan: 1969–85
- Republic of Suriname
- Tunisian Republic
- Republic of Uganda
Note: The first socialist republic in history was the Paris Commune (March–May 1871). It was inspired by many socialist thinkers, including Karl Marx, and it introduced many policies which later were regarded as Marxist. Lenin drew the important conclusion that in order to succeed, the revolution had to use terror to annihilate its enemies to retain power.
Estimated deaths as a result of attempting to establish a communist society
-
Soviet Union
Civil War (1918–21): 9 million
Collectivisation and gulag: 22 million (includes famines)
Total: 31 million
-
Eastern Europe
1.5 million
-
People’s Republic of China
Civil War (1945–49): 3 million
Imposing communist rule (1949–51): 3 million
Great Leap Forward (1958–61): 45 million of whom 2.5 million were executed
Cultural Revolution (1966–76): 1 million
Labour camps: 27 million
Total: 79 million
-
Democratic People’s Republic of Korea
2 million
-
Republic of Vietnam
1 million
-
Kampuchea (Cambodia)
2 million
-
Afghanistan
1.5 million
-
Africa
1.7 million (the greatest bloodletting was in Ethiopia)
-
Latin America
150,000
The gross total comes to about 120 million
The numbers of deaths caused by the phenomenon of communism vary widely, but it is not possible to calculate the exact number of fatalities. The preceding numbers are simply an estimate, and they do not include the civil wars before the communists came to power.
