A 'Euro-union' poses challenge to China

2012-07-06Asia Times

BEIJING - The European Union, by agreeing on June 28 to direct bank refinancing, stepped back from the abyss of a split and averted for now a global financial crisis that could have been caused by the growing differing yields on national bonds. German Chancellor Angela Merkel caved in allegedly due to mounting pressures from fellow EU countries, including super-ally France and profligate Italy and Spain.

However, because by vetoing the euro-bonds Merkel did not cede ground on the very sensitive issue of sharing debt burdens, a further crisis is possible. But certainly now it is less likely because of the new measures and significantly because Europe has proven able to find a feasible although minimal solution when confronted with dire straits.

Many details will need to be fleshed out in the coming days and weeks, and most importantly, Italy and Spain have to prove able to pursue the drastic changes necessary to bring their economies back in line with those of the more virtuous northern countries. Yet now Europe has a little more time to address those issues and there is more room for hope.

The possibility of a greater political union on the old continent has perhaps never been closer in a millennium, since the times when an empire that christened itself sacred and Roman ruled the region. This has occurred also because a cultural offspring of Europe, the United States of America, has coaxed Germany to compromise with the Latin Europeans.

This is a significant u-turn compared with the hostility to the euro that the US showed at the birth of the new currency, which de facto took place with the signing of the Treaty of Maastricht in February 1992, a few weeks after the end of the Union of Soviet Socialist Republics (it dissolved between the end of August and December 1991) and a little more than two years after the collapse of the Soviet empire on November 10, 1989.

United States President Barack Obama was certainly pushed to this position because his re-election in November is at stake, and a financial crisis starting in Europe could quash the still-faint signs of recovery in America. But the emergence of a political union in Europe has a far larger breadth and significance than its effect on a mere presidential election.

All major steps in the history of the present EU have been marked by significant geopolitical goals that strategists on both sides of the Atlantic were trying to achieve. The economic benefits and calculations of the union came after, not before, the political plan for the union.

In the early 1950s, three German-educated Catholics - Konrad Adenauer (from Germany), Robert Schuman (for France, but born in German annexed Alsace-Lorraine), and Alcide De Gasperi (born and raised in Austria-dominated Trentino) - began working on a common market. This was to help grow the economy of Western Europe and integrate it so that it would be stronger against the economic and political threat of the Soviet Union.

This European community soon evolved as a main force to fight for the welfare of the Western people, showing to all in the West and the East the concrete advantages of the Western system against the weaknesses of the socialist system.

Since the beginning, the political union was intended to be the bulwark of Atlantic resistance against the westward expansion of communism, and so it was until 1989. After that, the EU pushed for a political union with a new common currency, the euro.

This at the time irked America, which feared that in a world without other rivals, the euro could challenge the dollar and the EU could whittle some of the US power. Moreover, America was concerned about the political union of a bunch of countries in Western Europe and it was concentrating on consolidating the end of the Soviet empire.

Europe's eastward growth
These two goals could be achieved together by pushing the EU to expand eastward to former Soviet territory, reaching even the newly independent Baltic countries, which only months before were part of the USSR territory. This new EU, which expanded in a few years to 27 countries, had two advantages for the US: it was too big and too diverse to work toward a political union. Moreover, the new members of the EU felt greater loyalty to Washington, which had supported their independence from the Soviet empire and their accession to the EU, than to Brussels, which had been at times reluctant to accept them.

Until a few years ago, the US was content that the EU had not grown into a unitary political reality able to counterbalance America, as some strategists in Russia and China had hoped. Moreover it had created a powerful unified market that could further influence both the ex-USSR - look at the temptation in Ukraine to join the EU - and also make inroads in the Middle East, drawing applications from Turkey and Morocco.

This position held until the 2008 financial crisis. The crisis proved many things to America. The crisis engulfed the world, but China managed to remain ahead of it, using the opportunity to become bigger than Japan in terms of gross domestic product (GDP). China thus proved its resilience to catastrophes, and confirmed that its drive to grow economically could continue until sometime in the next decade, when it might actually have a GDP larger than that of the US.

Moreover, as Washington was trying to reach out to Beijing in 2009 for what was then termed the Group of Two (G-2), China in some ways seemed to spurn these attempts, failing to give something substantial to Obama during his trip in November 2009 and further floundering on an agreement with the US at the Copenhagen conference on the environment, which took place in December of the same year.

These facts and the events of the following couple of years (growing tension about sea-border issues between China and its neighbors, from Japan to Vietnam and the Philippines) have led Washington to the conclusion that it needs to concentrate on China and Asia for the foreseeable future.

This realization didn't change even during the wave of uprisings in the Middle East [1], the "jasmine revolutions" that changed regimes in Tunisia, Egypt, and Libya and are now shaking Syria. Here, for instance with the Libyan revolution, the US pushed Britain and France to take a central role, while the US provided only information support. The ongoing instability in the Middle East (exacerbated by the jasmine revolutions and the threat of a war or sudden attack on Iran that could shake the weak foundation of Tehran's regime), the never-quashed ambitions in Europe, and the situation in Russia under a dexterous, clever, and cunning Vladimir Putin, have changed completely the US perceptions of the EU, even without considering the dangers of a financial crisis spreading from Europe.

The US does not now need a shaky Europe clustered around a timid Germany and exposing weaker countries to the contagion of jasmine revolutions from the Middle East or the temptation of a tricky embrace by still-authoritarian Russia.

In other words, the US needs the peace of mind and the material support of the EU in the Mediterranean so that Washington can concentrate in the Pacific. Without this, Europe - almost under siege by Russia and by the confusion and commotion in the Middle East - would totally distract the US from Asia and China.

China - and the rest
In Asia, certainly China is the main concern, but in no way it is the only one. Tomorrow, India could pose a challenge similar to that of China now. Indonesia, the largest Muslim country, could become a serious issue. The possible sudden decline of Japan is a great worry, as is the possibility of the continuing instability spreading from Thailand to the whole of Indochina. However, despite these concerns, Asia is poised to remain the economic powerhouse of the world for the near future. All these elements demand attention from the US, which also needs to feel safe about its old backyard.

Then, in contrast to 20 years ago, America needs a more politically united Europe. This would not counterbalance the US power but would support it. In fact, if Asia continues to grow led by China, Europe - even more frightened by China's development than the US - could unite and provide America with great support.

Because of all of this, as we said, despite Merkel's qualms about unreliable Italians and Spaniards, there could be greater room for political union. This could then create a front to engage and contain Russia and the exuberant Middle Eastern countries. This also should inspire some deep rethinking in China.

The issue that will divide and focus countries at the next meeting of the 10-member Association of Southeast Asian Nations starting in Phnom Penh on July 6 will be about the super thorny South China sea, a stretch of waters with a few hundreds islands and rocks claimed in part or in all by China, Taiwan, Vietnam, Malaysia, Philippines, Brunei and Indonesia.

Those waters, never clearly and undisputedly marked by any country, are also the sea-lanes for near and far away nations trading to and from the region; also for this reason it is an issue the US feels it has the duty to look into.

These waters are the tip of the very complicated issue of China's borders and, as they can arouse nationalistic sentiments in the whole region, they can also be a dangerous issue for China just as Beijing, after the re-election in Taiwan of President Ma Ying-jeou this year, is historically improving its ties with the island to the point that Beijing could for the first time envision a possible political re-unification with the island.

Therefore, Beijing finds itself increasingly involved in new border disputes that could have potentially explosive consequences abroad (kindling conflicts and frictions with other countries) and also internally (fueling fierce domestic arguments about how to handle the issues and the foreign forces).

Beijing has been trying to hold a tactical balance on the issue, saying it is not claiming the waters but only the islands in the South China Sea; thus it is trying to exclude any friction with non-neighboring countries interested in the freedom of navigation. It has scored some successes and gained further room for maneuver [2]. It has withstood confrontation mainly with the Philippines, though refraining from any military action. But no radical solutions are in sight.

It seems ironic that Taiwan was considered for decades the paramount foreign-domestic issue, and now, as it is almost solved, many other, more complicated issues are popping up. This is simply because China's economic and political growth has created many new issues and has flashed out some hidden ones. It will be the case even in the future, a fact ignored by many analysts who don't consider that China's development and dynamic will solve some of its problems but will create some new ones, often in areas unexpected.

The evolution of Chinese politics is impossible to separate from its recent history, and thus to look clearly at its present border issues, one could refer to a couple of essays, that spotted the problems before they surfaced. Five years ago [3] (well before before the initiative with the South China Sea by US Secretary of State Hillary Clinton), it was clear that China could not pose a global threat, as it was caught in a complicated web of border friction and that it had to solve those issues first.

This was something that could take a lot of time and learning on the part of China about its neighbors and the United States, the country that had been a lubricant and a protagonist of relations in Asia for almost a century. This was an evolution of the situation noticed in 1995, when centrifugal forces were splitting China, but there were also centripetal drives drawing the rest of Asia to China [4]. Here the Taiwan question was impossible to separate from the rest of the regional issues, and even the resolution of the Taiwan question would not solve China's borders issues, a point that seems fully recognized only now.

In fact, the Chinese borders, as delineated by various controversial claims, are not definitively drawn and historically settled. This is not unique to China or Asia, where practically all countries have disputed borders with their neighbors. In Europe, it took centuries and two world wars to reach the end of border disputes - and this held only in Western Europe. The situation in the east is still shaky. One can then take a skeptical view and think that these controversial claims will also be solved through a couple of world wars. But things could also go in other directions.

In fact the battle of Asia, if "fought" peacefully, could radically change not only the region, but the world. This is something China, the main factor in current global change, should bear in mind most of all. It is not a game of China or Asia. It is about the world and what shape it will have in the future.

It all comes down to borders

To see this more clearly, we should go back to the present Chinese borders.

For China and for the entire world, the concept of borders has changed dramatically in the past century. In ancient times, China was made of a "core" and a "periphery". The periphery was made of territories and states, which had special and different relationships with the core, and this made up what was the Chinese world. All territories in the region shared cultural concepts with the core in part or in whole, and they were to a greater or lesser degree part of a Chinese civilization. In a way, Korea and Vietnam had tighter relationships with China's core than, say, what is now modern Tibet. Japan was linked to Beijing more closely than what is now the city of Kashgar, in Chinese Xinjiang.

In the course of the past 150 years, this political geography has dramatically changed, and territories that had looser links with the Chinese capital have become completely independent - or are now fully integrated into what is modern China. For instance, Xinjiang, Tibet, and Manchuria, which until a few centuries ago did not belong to the Chinese "core", are now fully integrated and fully part of the one China. Contrariwise, northern Vietnam or Korea, which had been at times full parts of the Chinese empire, are now totally independent. In this way, the whole concept of geography and of China's borders has to be rethought.

It is impossible to transfer concepts that belong to imperial China and use them in a situation with very different borders and perceptions of borders - but also to challenge the present Chinese borders basing oneself on imperial concepts.

In a way, China is now both smaller and bigger than in the past. It is smaller because it no longer has political clout in territories it once loosely controlled. It is also larger now that it fully controls regions like Xinjiang and Tibet, which previously had a looser link with the Chinese core.

However, history has continuity, and cultural perceptions are bred from the culture of the past. Therefore, it is easy for Chinese political leaders or decision-makers to think of replicating imperial geography with a core, present China, and a periphery, the rest of Asia around its borders. Even if China thinks in this way, however, the result would be radically different from the imperial past.

The core and the periphery of the past had a special balance in terms of population and wealth. The Chinese core was at least twice as rich and populous as all of the periphery put together. That is, Japan, Korea, Vietnam, Mongolia, and northern Indo-China were only at best half as rich and populous as the Chinese core.

Now if we look at it, the inclusion of regions like Tibet and Xinjiang into the Chinese core has expanded China's geography. Countries that were out of the Chinese world, like India or Pakistan, are now its neighbors. Territories like Kazakhstan, Turkmenistan, or Kyrgyzstan, which were far removed from the Chinese core, are now closer, and so are Malaysia, Indonesia, and the Philippines, which have now become close neighbors thanks to claims in the South China Sea.

However, the sum of these neighbors creates a very different balance with China. The total GDP and the total population of these countries around China are in fact not half of China's, but almost twice China's population and wealth. In these numbers, there is the impossibility of recreating the type of ties that existed before between China and its world.

Not only that, China, to sustain its imports, exports, and growth, has stretched out to the whole world. China is buying and selling in Africa, America, and Europe - all places that didn't exist in Chinese political geography until a century ago. Therefore, how can China try to solve its border clashes?

These clashes with its neighbors are spawned from a history without any clear limits between China and its neighbors. In reality, China can solve these problems two ways. China could go to war with its neighbors, which is the classic geopolitical solution. However, if this is the case, then we rest our case, and there is not much else to say.

If China goes to war, it will surely lose one way or another and suffer millions of deaths. China in Korea in the early 1950s almost won in the battlefields against America but lost out as the US closed the markets around China. A similar event could occur in case of a military clash around China.

It would be a huge disaster for the country, and also for the rest of the world. Short of this disastrous outcome, China could think of solving its problems not simply by considering these frictions with the neighbors in a bilateral sense, but within the broader framework of a world in which China could have a greater role.

If there will be it, this will not be a China world, but a co-China world. What would that look like? Again, if China thinks of a "China world", it will easily be defeated and bring upon itself disasters because the Chinese are less than 20% of the global population. Its GDP could grow in the next decades but would be unlikely to become higher than 20-30% of the global GDP.

When China faced England at the time of the Opium War in 1840, its GDP was between 33% and 50% of the global GDP. That enormous size did not save China from a series of losses and humiliations in the hands of foreign powers and internal uprisings like that of the Taipings in the following decades.

In all these cases, the growth of China and its proven inability so far to create alliances with other countries would make China an easy victim of a global coalition of other countries joining hands to defeat and strangle China. Therefore, the only real solution for the country is a co-China world. It is impossible to consider in detail what this co-China world would be like, but we can see what should be its main drives.

The rise of America as global power occurred by creating continuity, both politically and culturally, with Britain, the former world power. Despite many clashes at the beginning of the rise of America, which gained independence from Great Britain and later was beaten in 1812, the two countries had at the turn of the 19th century already found a way of growing into each other.

Therefore, China now can only grow by creating a form of continuity with a world dominated by America. This continuity must be political and cultural. Too big a break could create conflicts and clashes, not only with America but also with the rest of the world, which has willingly or unwillingly accepted the American model.

The right word, in the right language
For instance, on the issue of democracy, one does not need a religious attachment to the concept of democracy, which is historically determined, to see its validity. Trying to impose on the world a non-democratic rising power would be very hard. This is simply because most countries are used to and feel confident in dealing with a power that has democratic structures.

Another element is the Chinese language. China can try to spread knowledge of the Chinese language, which can be very good, but to think of turning Chinese into a lingua franca, the way English currently is, is far-fetched. Modern Chinese people feel uneasy when foreigners speak Chinese with a strange accent. Imagine if the whole world were to speak Chinese with the wrong tones and the wrong accents. The first to feel queasy about that would be the Chinese themselves, not used to being spoken to in Chinese by non-native speakers, something any native English speaker has learnt for centuries.

Moreover, Chinese has proven a very difficult language to learn, to the point that after a few years even Chinese people who were taken out of the Chinese school system in their teens, a time when most youngsters would have fully mastered their mother tongues, feel more confident speaking their acquired language, say English, than their mother tongue, Chinese.

Of course, between America and Great Britain there was already a huge continuity, as America was born out as a former English colony. This continuity is not there between China and America. That is something on which the two countries should work without casting aside other rising or risen countries, which could band together to destroy a possible G-2. The balance between bilateral and multilateral elements is all to be invented and can be very tricky as one will need great imagination and realism to create this future. But only if China thinks beyond the limited and particular issues and on to the huge global questions, will it find the dimension and the scope to address its border frictions.

These frictions are, one by one, extremely complicated. On any single instance, if China were to give up its claims, this would kindle a huge domestic protest. Chinese nationalists would blame their government for the wholesale abandonment of national interests to foreign powers, something that could topple the government. On the other hand, if China were trying to force the hand of any of its neighbors, this would be considered an act of aggression against all of its neighbors and many other countries - something that could doom China's growth. This, in turn, could cause the implosion of China.

Will China be able to find a project to avert these impending disasters? This must be good for both China and the world, aligning the interests of China with those of the world.

The central question is: will China take the world along with others, or will China ruin itself trying to defend indefensible South China Sea islands?

Many people far from China hope for a war near China, a small one that is possibly scalable. This would make real the China threat, would engage China in a cold war, and in turn, might bring to power there a new dictator like Mao Zedong.

In fact, the sad truth is that the hero of Chinese nationalists, Mao the Helmsman, was the man that most helped the people who wished to keep China underdeveloped. During his 30 years of rule, thanks to land reform, the Great Leap Forward, and the Cultural Revolution, China's economy grew poorer and tens of millions died. Today, a new Mao, brought to power by Chinese nationalists, would deliver a confrontational China that could go to war and lose it one way or another, or might sulk into isolation. Both would be the ideal solution for those who really want to see the end of China as it is now.

What some foreigners want is clear. What is still unclear is what the Chinese people want for the future of their own country.

1. See here ( and here (
2. See Dai talks the talk, walks the line for Xi (, Feb 1, 2012.
3. See "The blessing of China's threat"( in La Stampa, June 4, 2007.
4. In La Cina ?? un giallo, Limes 1, 1995.  (2012-07-06 Asia Times)


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