Tag Archive for: book review

Bookshelf: ‘Vampire state: The rise and fall of the Chinese economy’

After three decades of record-breaking growth, at about the same time as Xi Jinping rose to power in 2012, China’s economy started the long decline to its current state of stagnation. The Chinese Communist Party would like us to believe that the country’s massive problems are under control and that the economy can easily be kickstarted. But few analysts are convinced.

Ian Williams was a long-time foreign correspondent for Channel 4 News and NBC, based in Moscow, Hong Kong, Bangkok and Beijing, and has written extensively about China. In his latest book, Vampire State: The rise and fall of the Chinese economy, he takes a particularly tough view, suggesting that China’s economic miracle was just a mirage all along.

As Williams sees it, China’s economic reforms were half-hearted from day one and designed first and foremost to ensure that the CCP would remain in power. The West expected economic reform to be followed by political reform and US president Bill Clinton even used this argument with Congress to justify China’s accession to the World Trade Organization in 2001. But political change was never on the CCP’s agenda. Rather, China’s ‘socialist market economy’ was intended to bend economics and business to the party’s will and keep the CCP firmly in the driver’s seat.

With China’s economy now in deep trouble, Williams argues that the party-state is the problem rather than the solution. Like a vampire, the party-driven control structures are draining the life-blood out of the economy. Not satisfied to control the country’s huge state-owned enterprises, in recent years the CCP has tightened its centralised mechanisms and expanded its presence into the boardrooms of private companies.

Williams’s analysis starts from the domestic economy, where an enormous property bubble has deprived local governments of income from the sale of land rights, creating huge industrial surpluses and driving youth unemployment up and consumer prices down.

With limited options for addressing this deflationary spiral, China has resorted to exporting its problems. Casting a wide net, Williams reviews the global reach of China’s economic operators, from the expansive infrastructure lending of state-owned policy banks throughout Africa, Asia and Latin America to Chinese racketeers in the border regions of Laos, Myanmar and Thailand.

For all Beijing’s talk of borrower-friendly policies and no-strings-attached lending, China is an unforgiving creditor. When its massive infrastructure projects run into trouble, it prefers providing rescue loans that tighten its control over the assets it has created to writing down debt, squeezing the poorest borrowers in the process.

Williams takes a particularly dim view of China’s business and investment environment, citing numerous examples of a business-unfriendly public sector, biased legal system and unreliable private partners. The fine line between the voluntary transfer of know-how and technological theft is a major danger zone. Many foreign investors have been trapped into ‘voluntarily’ handing over business secrets only to find themselves edged out by their Chinese partners. Investors have also learned the hard way that the Chinese court system rarely works in their favour.

Overseas cooperation between China’s public sector and its state-owned and private enterprises is exceptionally tight, whether in trade policy, research and development, the ‘borrowing’ of technology or development of human resources. The Chinese army, for example, describes sending scientists to study in Britain as ‘picking flowers in foreign lands to make honey in China’.

Williams has researched his book thoroughly, travelling the length and breadth of China to study local-level problems first-hand. He also visited countries throughout Asia and elsewhere impacted by China’s economic policies. His research included wide-ranging interviews, from the foreign minister of Lithuania and other government leaders, business executives and human rights activists to the manager of a massage parlour operating on the border between Laos and Thailand.

Can China bounce back, or is the miracle over? According to Williams, Xi is not able to implement the reforms needed to get the economy back on track simply because they would threaten the CCP’s grip on power. As a result, the Party is ‘frozen in the headlights’. The cautious balance between stimulating the economy and ensuring stability struck this month by the National People’s Congress is consistent with this diagnosis.

Williams analyses China with his eyes wide open. His refreshing book is a must read for anyone dealing with China’s economy, from public sector trade negotiators to private businesspeople and investors.

Bookshelf: The conscience of the CCP, whose death triggered Tiananmen

Hu Yaobang is one of China’s unsung heroes.

Inside China, anyone who can remember the bloodshed in Tiananmen Square in June 1989 will also remember the well-respected Hu. But outside China, we tend to forget that the violently quelled demonstrations were triggered by his death just seven weeks earlier. The popular Hu served as the head of the Chinese Communist Party from 1980 until 1987, when supreme leader Deng Xiaoping removed him from office for his outspoken views.

For many years the CCP stifled discussion about Hu and downplayed his significance, and it was only in 2015, 100 years after his birth, that his image was officially rehabilitated. Biographies in Chinese are readily available, but an English-language biography is long overdue.

In The Conscience of the Party: Hu Yaobang, China’s communist reformer, Robert Suettinger reconstructs Hu’s life against the backdrop of China’s tumultuous recent history and the deep divide in the CCP between conservatives and reformists. A long-time scholar of Chinese politics, Suettinger has worked for the US State Department and the Central Intelligence Agency, and was director of Asian affairs at the National Security Council under president Bill Clinton.

Hu was born into a poor peasant family in Hunan province and left school at 14 to join the Communist Youth League and Mao Zedong’s revolution. Intellectually gifted and amicable, Hu rose rapidly through the ranks of the People’s Liberation Army and the CCP, spending much of his career handling organisational issues and propaganda. Fifteen years as head of the youth league made him particularly popular among young Chinese.

Early in his career, Hu was an ardent Maoist. But as the chairman’s mistakes piled up during the Great Leap Forward and the Cultural Revolution, Hu’s scepticism grew, as did his outspokenness. Mao purged and rehabilitated Hu twice along with several other critics. But between purges, Hu oversaw the rehabilitation of thousands of cadres, which gained him wide support.

Suettinger is at his best detailing the backroom politics within the CCP. To finalise the ouster of Mao’s chosen successor, Hua Guofeng, in 1980 Deng selected Hu to take over as the titular leader. Initially Hu was CCP chairman and, once that title was abolished, became party general secretary. However, there was never any doubt that real power lay with Deng, who needed Hu’s support to stave off his adversaries.

Suettinger also debunks the notion that Deng was Hu’s mentor. Hu and premier Zhao Ziyang both wanted China to cast off the shackles of Maoism and worked closely with Deng in the early 1980s. But differences soon emerged, particularly between Deng and Hu. Unlike Deng, who was focused on reforming the economy, Hu wanted broader political reform, particularly in the CCP.

Hu’s accommodating approach to student demonstrations in 1986 is often cited as the cause for his ouster. However, Suettinger makes a compelling case that Hu’s efforts to reform the party, abolish lifelong tenure for senior cadres and rejuvenate the party leadership were the real reasons. On several occasions Hu suggested that Deng, who was 82 at the time, should lead by example and retire. For Deng, this was a step too far.

The inner workings of the CCP can be brutal. Once Hu’s fate had been decided, he underwent a gruelling life meeting—a gathering where participants engage in self-criticism—to confess his errors and be criticised by a group of leading cadres. The six tortuous days left Hu broken and humiliated, and he tendered his resignation. He was allowed to retain his politburo seat but was otherwise sidelined and ignored.

Suettinger also shines a light on the origins of China’s economic reforms. The CCP’s central committee plenary in December 1978, when Deng launched the reform and opening of the economy and confirmed his position as the country’s leader, is generally heralded as the turning point. Less well known is the fact that Hu did much of the heavy lifting. He was rewarded with a promotion, but the CCP has subsequently played down his role.

Since coming to power in 2012, Xi Jinping has consolidated his grip on the CCP, stacked the leadership with acolytes and removed term-limits on his own tenure. However, tensions between conservatives and reformists are running high behind the scenes. With the economy in trouble, Xi will need to work hard to secure a fourth term at the 2027 party congress. Suettinger’s analysis of the power play within the CCP offers valuable pointers about how an eventual succession might pan out.

Suettinger spent a decade researching Hu’s life, digging into little-known Chinese archives, memoirs and websites. The result is an authoritative biography that at long last gives Hu the credit he deserves.

From the bookshelf: ‘Suharto’s Cold War’

The murder of six of Indonesia’s most senior army leaders on 1 October 1965 by elements of the country’s communist party became a major turning point in Indonesia’s modern history. It would bring to an end the first phase of Indonesia’s independence, under President Sukarno, the leader of Indonesia’s struggle for independence from the Netherlands.

In the ensuing turmoil, General Suharto was able to take control of the military, ultimately edging Sukarno out of the presidency and becoming the second and longest serving president of Indonesia.  Under Suharto’s leadership, the military and related organisations orchestrated a ‘politicide’ in which at least half a million leftists were killed.

In a recent book, Suharto’s Cold War: Indonesia, Southeast Asia, and the World, Mattias Fibiger takes us through subsequent events, as Suharto works to consolidate his regime and ensure that communism would never again take hold in the Indonesian archipelago. Fibiger, a professor at Harvard Business School, is the first scholar to offer a work of Indonesian history based on the central archival records of the Suharto regime.

A key theme of Fibiger’s narrative is the pivotal role of international capital in the global Cold War against communism. As part of his New Order policy, Suharto pursued international economic expertise and influence to rebuild the Indonesian economy and consolidate his power.

In the immediate aftermath of the murder of the generals, Suharto pushed Japan to halt economic aid to the Sukarno regime. This exacerbated Indonesia’s economic crisis, driving social unrest and helping bring to an end the Sukarno presidency.

Suharto then mobilised international aid from donors such as the United States, Japan, the International Monetary Fund and the World Bank. They shared a keen interest in supporting Suharto’s anti-communist regime. Thus, the Inter-Governmental Group on Indonesia was created, grouping donor countries to coordinate foreign aid to Indonesia and provide strong international support for economic recovery. Most importantly, although anti-communist, Suharto was no democrat. He was staunchly authoritarian.

To rebuild the economy, Suharto attracted international private investors to Indonesia’s rich natural resources, especially logging and mining. This enabled him to consolidate his anti-communist coalition by fending off internal opponents.

After the inauguration of a military aid relationship with the US, Suharto was able to buy the loyalty of the navy, a branch of the military that was loyal to Sukarno and had close links to Moscow.

While Cold War capital supported his authoritarian regime, Suharto would gain some independence with the rise in oil prices in the 1970s.

Suharto’s furthered his anti-communist campaign in Southeast Asia, working to ensure that Indonesia’s neighbours were governed by anti-communist governments and Chinese influence was contained.

For example, Indonesia joined forces with Malaysia to combat a communist insurgency on the island of Borneo where they share a border. And Suharto worked with President Marcos of the Philippines against the Moro secessionist movement.

Fibiger also argues that Suharto tried to remake Southeast Asia in Indonesia’s image by propagandising Indonesia’s national resilience doctrine. It promotes maintaining a strong, integrated system across all aspects of national life. Thus, when other Southeast Asian elites faced moments of political crisis, they would draw on this ideology.

Today, the Association of Southeast Asian Nations—a political and economic union of 10 states —that plays a major role in regional and global governance. But its creation in 1967—then counting just five members: Indonesia, Malaysia, the Philippines, Singapore and Thailand—was initially motivated by Indonesia’s desire to contain communism.

Suharto’s anti-communist campaign in Indonesia and further afield in Southeast Asia was an important phase in the global Cold War. Fibiger’s book provides fascinating insights into this period of history, including the ever-present encouraging hands of the US, Britain, Japan and Australia—although it is never clear what was the motivation for Suharto’s anti-communist tilt.

Much has also happened in Indonesia since these times. In the beginning of the 1980s, Indonesia’s domestic Cold War ended as political Islam was perceived as a greater regime threat than communism, according to Fibiger. Then followed the Asian financial crisis, the end of the Suharto regime, and democratisation.

But Indonesia remains a good partner of the West, even though it carefully avoids taking sides in the current great power rivalry. We can only regret that in recent years the US has had difficulty finding much time to invest in this important friendship—something which will likely get worse with the changes in Washington.

From the bookshelf: ‘Passcode to the third floor’

To call Thae Yong-Ho’s career trajectory remarkable is an understatement. Following a stellar career as a North Korean diplomat, culminating in his appointment as deputy ambassador in London, at age 54 Thae and his family defected to South Korea. However, once in Seoul he quickly tired of his sinecure at a think tank, entered politics and within four years of defecting was elected to South Korea’s national assembly. And in his free time, he wrote a book.

Thae is one of the highest-ranking officials ever to defect from North Korea and his book, Passcode to the third floor: An insider’s account of life among North Korea’s political elite, is the most detailed insider account so far written about the country’s political system. Thae not only describes the dramatic personal events leading up to his defection; he also provides a tell-all account of how North Korea’s government works, including its top leadership, foreign ministry and security apparatus.

Thae entered government service in 1988 and his book spans nearly three decades of foreign and security policy, from the country’s nuclearisation to the power transition from Kim Jong-Il to Kim Jong-Un. Like most North Korean diplomats, he studied at Beijing’s Foreign Languages University and the Pyongyang University of Foreign Studies. Classes in negotiation skills were particularly rigorous and taught trainees how to prepare physically and mentally, as well as a range of tactics from occupying the high ground to breaking negotiations.

Thae sees Kim Jong-Il’s gradual rise to power in the 1970s as the turning point that made North Korea’s authoritarianism absolute. Kim shifted decision making from the cabinet to the Workers’ Party of Korea and, ultimately, to himself. He introduced a highly centralised system of administrative control, with written proposals sent up to his secretariat on the third floor of the party’s central office, and orders handed down. Even trivial matters were decided at the top, while ministries were kept isolated from each other. Kim Jong-Un has kept the system unchanged.

North Korea’s top bureaucrats lead a well-rewarded but precarious existence, at constant risk of being called to the third floor. Praise is rare, while minor slip-ups may require a self-criticism session. Major errors can lead to banishment from Pyongyang or a spell in one of North Korea’s notorious prisons. Thae describes one harrowing instance when Kim Jong-Un was displeased with an official and ordered his immediate execution.

He also recounts how intimidation and the siloed structure of North Korea’s bureaucracy affect the management of its diplomatic relations.

In 2014, North Korea’s national defence commission learned that Britain’s Channel 4 was producing a fictional TV series about a British scientist being detained and forced to help North Korea to develop nuclear weapons. Without consulting the foreign ministry, the defence commission wrote directly to the British foreign office demanding that Channel 4 halt production and threatening an ‘unimaginable act of retribution’. The British government was shocked, and the embassy in London was left to convince its counterparts that North Korea had no plans for a terrorist strike.

When a nearby London hairdressing salon put up a picture of Kim Jong-un with a caption referring to his ‘bad hair day’, the diplomats’ careers were on the line. Thae and a colleague quickly visited the salon and demanded that the owner take the picture down. ‘When we speak nicely, it’s best to listen’, they threatened. The British tabloids had a field day with the incident.

North Korea watchers fall in two broad groups: pessimists who see little prospect for change and optimists who, despite the recent hardening of North Korea’s policies, see scope for an eventual opening and even some form of denuclearisation. Thae falls firmly in the former category.

Thae’s pessimism derives from what he sees as Kim Jong-Un’s deep-seated insecurities. Kim’s mother was never formally recognised as Kim Jong-Il’s wife, and there are no photographs of him with his grandfather Kim Il-Sung. As a result, Kim is insecure about his all-important bloodline and feels he has to use strong-arm tactics to bolster his position, not least by continuing to develop North Korea’s nuclear arsenal. Thae doesn’t think this will change.

Given the abundance of personalities in Thae’s account and the similarity of many Korean names, the book would have benefitted from a list of key players, a family tree of the Kim dynasty and an index. But compared with the treasure trove of information that Thae offers, these are minor shortcomings.

Passcode to the third floor is a fascinating read for both specialists and generalists.

From the bookshelf: ‘War’

Russia’s war on Ukraine, the war in the Middle East and the yawning chasm between liberal Americans and MAGA supporters defined much of the presidency of Joe Biden and are likely to define the political landscape for the initial years of Donald Trump’s second presidency.

In his latest book, War, Bob Woodward provides a vivid inside account of the three intertwined conflicts, casting fresh light on recent global events and providing the reader with tools to compare the outgoing and incoming administrations.

Woodward and his colleague Carl Bernstein, both working at The Washington Post, rose to instant fame in 1972 for their coverage of the Watergate scandal, which led to the resignation of US president Richard Nixon. Their book about Watergate, All The President’s Men, has been hailed as ‘the greatest reporting story of all time’.

Woodward has gone on to author or co-author a further 22 books about US politics, including several about Trump’s first presidency, and still has a desk at The Washington Post. More than half a century of reporting on the US political establishment has given him access to inside sources that other journalists can only dream of.

Woodward’s research is meticulous and his sources impeccable. As a result, War brims with direct quotes from US and world leaders and their aides that provide fresh perspective on recent political dealmaking.

Woodward takes us behind the headlines to the minute-by-minute decision-making that has shaped key political outcomes. The reality that he describes is often very different from that depicted by the media.

When Israeli Prime Minister Benjamin Netanyahu in April 2024 ordered a missile strike on Iran that killed the ranking commander of the Islamic Revolutionary Guards, and Iran responded with a massive missile strike on Israel, Netanyahu was ready to retaliate in kind and the elements were in place for all-out war. Woodward provides a blow-by-blow account of the exchange between Netanyahu and US President Joe Biden that convinced the former to back down.

Ultimately, Netanyahu agreed to a ‘small precision retaliatory response’ while sending Iran a back-channel message that Israel was ‘going to respond but we consider our response to be the end’. Iran did not respond further and, thanks to Biden’s intervention, a major crisis was averted. The reader can only speculate how Trump would have handled the situation.

Woodward also contemplates what drives presidents Vladimir Putin and Donald Trump. He reminds us that Trump views everything through a personalised prism. At a 2018 press conference in Helsinki following a summit with Putin, Trump accepted the Russian leader’s denial of meddling in the US presidential elections at face value, despite having seen extensive evidence to the contrary, and had great difficulty subsequently withdrawing his remarks. ‘[Putin] said very good things about me’, Trump explained to his aides, ‘why should I repudiate him?’

In stark contrast, Putin is driven by a deep frustration with the collapse of the Soviet Union and a desire to restore Russia to greatness. In October 2021, Biden’s intelligence directors presented him and his closest advisers with conclusive intel that Putin intended to invade Ukraine. Woodward details the incredulous responses within the US administration and among its closest European allies trying to understand why the usually low-key Putin would make such a high-risk move.

When confronted about the planned invasion by secretary of state Antony Blinken, Russian foreign minister Sergei Lavrov denied the intel point blank, blustering ‘Are you serious with this stuff?’ Interestingly, Blinken concludes that Lavrov, who is not part of Putin’s innermost circle, probably had not been kept fully in the loop.

Woodward details many other high-level exchanges. In late 2022, German Chancellor Olaf Scholz was unwilling to authorise other European countries to supply Ukraine with German-made top-of-the-line Leopard battle tanks without the United States matching the move by providing M1 Abrams tanks, which Biden was reluctant to do. Blinken and other senior staffers spent long hours convincing Biden to announce the decision without immediately providing the tanks, thus allowing Germany to go ahead.

In October 2022, Russia publicly accused Ukraine of preparing to use a dirty radioactive bomb, and indicated that it would consider this an act of nuclear terrorism to which it would respond. Woodward provides a fascinating account of the tense phone call from US Defense Secretary Lloyd Austin that convinced his Russian counterpart Sergei Shoigu to back down from the implied nuclear threat.

For Blinken, convincing Netanyahu and his war cabinet to allow the first shipment of humanitarian aid into Gaza was no less challenging.

On balance, Woodward considers the Biden presidency a success. At the centre of this success lie teamwork and continuity. Biden’s tight-knit team from the State and Defense Departments, National Security Council, Joint Chiefs of Staff and CIA worked together throughout his term to pursue a sound and coherent foreign policy. Woodward provides a set of benchmarks against which to assess the incoming US administration.

From the bookshelf: ‘Who Will Defend Europe?’

Despite frequent US calls for NATO to lift defence spending, most of its European members kept pocketing a peace dividend in recent years by running down their armed forces and defence industries. They imagined that war would never return to Europe and that in any event they could rely on the US to defend them.

Both assumptions were illusory, as Keir Giles argues in a new book, Who Will Defend Europe? Giles is a senior fellow at Chatham House and director of the Conflict Studies Research Centre. He has been an active and prescient analyst of Russia, especially since the invasion of Ukraine, notably in his books Moscow Rules and Russia’s War on Everybody.

As Giles notes, many commentators argue that Russia can no longer be considered a major security threat. It has not been able to achieve its ambitious goal of conquering Ukraine despite its size advantage and has lost enormous numbers of troops and military equipment.

But this viewpoint is shortsighted, writes Giles. Russia has built back its land forces, offsetting losses. The rest of Russia’s military—its air force, navy and nuclear forces—is relatively unscathed. When hostilities come to a halt, Russia will be able to quickly rebuild its military for more adventurism. Indeed, according to off-the-record interviews with European defence and intelligence chiefs that Giles conducted, Russia will be preparing for its next attack on a European NATO member country in the coming few years.

The enormous challenge of countering Russia beyond the traditional battlefield was also highlighted by British MI5 Director General Ken McCallum in a recent speech, when he said: ‘While the Russian military grinds away on the battlefield, at horrendous human cost, we’re also seeing Putin’s henchmen seeking to strike elsewhere, in the misguided hope of weakening Western resolve.’ He said Russia ‘is on a sustained mission to generate mayhem on British and European streets: we’ve seen arson, sabotage and more.’

Writing before the 5 November presidential election, Giles says that, regardless of the results, the US will likely be less committed to defending NATO’s European members. Through the ongoing conflict in the Middle East, it is apparent that the US is more committed to defending Israel than Ukraine, with fewer restrictions being placed on Israel’s use of American military equipment. US military leaders in the Indo-Pacific are also competing with NATO for resources as they consider the possibility of a conflict with China in 2027, widely deemed to be a greater priority than Europe.

Ukraine is a shield holding back Russian aggression from Europe, writes Giles, but European reactions are quite diverse. Frontline states such as Poland and Finland are taking the Russian challenge seriously and ramping up defence expenditure. Germany has announced a major increase in defence spending, but it will take a long time for this to translate into improved capabilities. Moreover, while most European NATO countries are now aiming to achieve the organisation’s defence spending target of 2 percent of GDP, it seems that much higher contributions will be necessary.

Giles is rather despondent about the state of the military in Britain, his home country, where it seems to be in a shambles. While the new Labour government’s strategic defence review is welcome, conducting it postpones the timing of reform of the military by one year, and the government has announced that it will not be increasing defence spending.

Another area of concern is Giles’ perception that, because of their soft and comfortable lifestyle, Britons may not come together to defend its nation and values, as it did during World War II. While the same concern would apply to some other European countries, the need to defend your country and values is a relatively easy sell in Sweden, Finland and Poland.

Giles also laments the reluctance of some leaders to speak openly about the gravity of Europe’s security situation. Most European economic and political systems have not woken up to the threat, or if they have, they are not doing anything about it. European populations are mostly unaware of threats to their countries’ security.

Overall, Who Will Defend Europe? is a well-written book, offering detailed insights and perspectives on the gravity of Europe’s security situation, which will have spillover effects worldwide.

From the bookshelf: ‘Backfire: how sanctions reshape the world against US interests’

Economic sanctions have become the weapon of choice in the United States’ diplomatic and strategic arsenal. Trade tariffs, export controls and other financial penalties offer a quick means to punish ‘bad behaviour’, whether by terrorist groups, drug cartels or national governments. Over the past two decades, the US has imposed more sanctions than the United Nations, the European Union and Canada combined.

From a government point of view, sanctions are low cost. They may be drafted by a handful of civil servants, but the burden of implementation falls on multinationals and banks. And sanctions tend to boost the approval ratings of the leaders who impose them. No wonder policymakers like to use them to fill the diplomatic space between ineffective declarations and high-risk military operations.

However, sanctions have a poor success rate, have high economic costs, and may also have massive unanticipated consequences for innocent bystanders.

North Korea is a case in point. Despite being subjected to some of the toughest sanctions ever applied, North Korea’s regime has remained in power and continued its weapons testing undeterred. In response to sanctions, Pyongyang has developed sophisticated illicit tools to generate foreign exchange and support the lifestyles of the country’s elite. Decades of sanctions have pushed North Korea deep into poverty. The burden is borne by the poor, many of whom live on the brink of starvation. By any yardstick, sanctions on North Korea are a failure.

As the use of sanctions has soared, so too have the compliance and opportunity costs for the private sector. Major deals have been lost and entire supply chains redirected due to ill-conceived measures.

By relying so heavily on sanctions, is the US shooting itself in the foot?

Agathe Demarais is the global forecasting director of the Economist Intelligence Unit. While working for the French Treasury in Russia and Lebanon she learned about sanctions firsthand. In Backfire, which will be published on 15 November, she examines the extensive downsides to US-led sanctions and suggests a way forward in a world that is increasingly polarised between liberal and authoritarian regimes.

In 2002, the US Congress considered sanctioning oil companies doing business with Sudan, to pressure the country’s leaders into ending a brutal civil war. The US administration, however, was opposed, noting that sanctions would damage American businesses, work counter to Washington’s commitment to the free movement of capital, and force multinationals to raise capital outside the US. Congress backed down, but the debate rages on.

When American founding father Benjamin Franklin in 1763 learned that Great Britain would tax its colonies’ imports, he replied, ‘You cannot hurt us without hurting yourselves.’ The same holds true of sanctions today. When the US in the 1980s restricted grain exports to the Soviet Union, Argentina and Brazil quickly filled the gap left by US companies. And when it sanctioned Iranian and Venezuelan oil exports in 2019, Russia stepped in.

Estimates put American business opportunities lost due to sanctions at as much as US$50 billion a year. And sanctions-related regulations have pushed banks’ risk and compliance costs through the roof.

Sanctions also hurt the innocent. In response to Iraq’s 1990 invasion of Kuwait, US-led sanctions cut off the country’s food and medical supplies. Estimates put the resulting death toll at up to half a million, mainly children. In 1996, Madeleine Albright, the then US ambassador to the UN, said that reining in Iraqi leader Saddam Hussein was ‘worth it’, words that she later retracted as a ‘terrible mistake’.

Demarais confirms previous findings that sanctions fail about two-thirds of the time, and that successes are often only partial. Her book includes an important discussion on when sanctions can be expected to work.

To be effective, sanctions should be short term, have a narrow goal, target a country with significant ties with the US, and be backed by American allies. In stark contrast, US sanctions tend to be long term, target dictatorships with few ties to the US, and have broad objectives such as regime change. The US often goes it alone, with little consultation with allies or other interested parties. It should therefore not be surprised when its sanctions fail.

Demarais wraps up with a discussion about the current decoupling of the US and China. She debunks the notion that decoupling would be beneficial to the US and the West. At the business level, decoupling would be difficult and enormously costly, given closely integrated global supply chains. And at the geopolitical level, decoupling would leave Beijing freer to pursue its own agenda in political hotspots like Taiwan.

The heyday of US-led sanctions is drawing to a close. Demarais predicts that a self-reliant China will increasingly undermine US sanctions on Iran, North Korea, Russia, Venezuela and other authoritarian regimes.

Backfire provides valuable pointers for policymakers. If US-led sanctions are to retain any effectiveness, Washington will need to rethink its approach. It should become more strategic, learn from past failures, work more closely with other governments, and pay heed to the impact of sanctions on the strategic thinking of both allies and adversaries.

From the bookshelf: ‘Fear of abandonment: Australia in the world since 1942’

The timely new edition of Allan Gyngell’s Fear of abandonment highlights how Australia’s strategic environment has become decidedly more complex since the first edition was published just four years ago.

The book is a masterpiece on the history of Australia’s foreign policy. Gyngell takes readers on a journey that starts in 1942, when Australia only reluctantly assumed responsibility for its foreign policy, following the Australian parliament’s ratification of the British Statute of Westminster of 1931, long after other dominions like Canada and South Africa had been brave enough to do so. While the first edition concludes with a chapter titled ‘A fragmenting world—2008–2016’, most analysts and observers at the time saw Australia destined to reap the benefits of a burgeoning ‘Asian century’—something that seems much less obvious today.

The title, Fear of abandonment, conveys a strong message, and distinguishes Australia from the way the American founding fathers, such as George Washington, spoke of their fear of foreign entanglements. Gyngell argues that Australia’s anxiety was that we would be forgotten about. Ever since the first British colonists experienced that long and anxious wait for the arrival of the second fleet in Port Jackson, we seem to have been standing here on this remote continent waving our hands in the air, crying out to the rest of the world, ‘Don’t forget about us!’

Gyngell contends that Australia’s strategic dilemma was how to protect a small population occupying a large continent, far from its markets and the places from which all except Indigenous Australians, who have been here for at least 60,000 years, originally come. From the end of World War II onwards, every Australian government has employed three strands of foreign policy to address that dilemma.

The first strand is Australia’s relationship with a great and powerful friend, namely the United States. The second is support for a rules-based world order, in which Australia could play a part. And finally there’s engaging with the neighbouring region to shape it in ways conducive to Australia’s interests. But all of these strands of Australia’s foreign policy have been challenged in recent years and provide the substance for a new chapter titled ‘Sovereign borders’.

Gyngell recounts the surprise election of Donald Trump to the presidency of Australia’s most important strategic ally. Trump would call into question most of the foundations of post-war US foreign policy, including free trade, multilateralism, the value of alliances and the idea of American leadership itself. This was a worrying time for Australia, aptly expressed in 2018 by Foreign Minister Julie Bishop when she said, ‘Our closest ally and the world’s most powerful nation is being seen as less predictable and less committed to the international order that it pioneered.’ But, Gyngell notes, Australia seemed to maintain better relations with President Trump than most other allies by skillfully ‘walking on eggshells’.

Australia’s engagement with its Asian and Southwest Pacific neighbourhood has been a mixed bag. The relationship between China and Australia deteriorated sharply after 2016, and by the end of 2020 Chinese sanctions had been applied to many Australian exports and high-level contacts. Japan has much in common with Australia, being caught between its American ally and the Chinese market, and the relationship between Tokyo and Canberra reached a ‘new level of closeness’.

Mutual anxieties about China also fostered closer political and defence ties with India. A ‘comprehensive strategic partnership’ was established, but the economic relationship remains underdone. Australian anxieties about China’s forays into the Pacific drove its ‘Pacific step-up’ and a focus on economic cooperation and integration. But heightened attention to the Pacific led to Southeast Asia being marginalised, with sharp cuts to official development assistance, especially for Indonesia.

The past few years saw the dissolution of the rules-based world order, to which Australia is so attached, writes Gyngell. How so? In short, during the second decade of the 21st century, both the US and China ceased to be status quo powers. ‘The US judged that the investment it had made in the existing order had stopped delivering it the “returns” it deserved. China … was no longer willing to act as a stakeholder in a system designed by others … [I]t wanted the order to conform better to its own growing power.’

Perhaps more than anything, Covid-19 highlighted the deterioration of the world order, as international cooperation to address this pandemic was woeful. It exacerbated things by provoking decoupling, deglobalisation and a breakdown of the international system. As for Australia, Covid has caused a hunkering down and a fear of the outside world—sentiments that may linger for some time.

The emerging new world over the past four years has led to much rethinking in Australia, as reflected in the government’s 2017 foreign policy white paper and 2020 defence strategic update. The Indo-Pacific has now been adopted as a new framing device for Australia’s foreign policy. Another upshot has been greater participation in ‘minilaterals’ like the Quadrilateral Security Dialogue and the India–France–Australia ministerial dialogue. But Gyngell laments that Australia’s responses to its new challenges tend to emphasise national security rather than traditional diplomacy.

Australia’s most recent foray into minilateralism is the new enhanced trilateral security partnership called AUKUS, involving Australia, the United Kingdom and the United States. This will support Australia in acquiring nuclear-powered submarines and involve deeper information and technology sharing. While AUKUS arrived on the scene after the publication of the new edition of Fear of abandonment, Gyngell has been quick to signal caution about the arrangement. He laments that ‘AUKUS will be a sign to our neighbours that the Anglosphere is back. That Australia is in its comfortable place, locked down and hanging out with the family.’ Indeed, AUKUS is yet another vindication of the book’s title.

Gyngell’s new chapter is tinged with pessimism. He argues that today’s Indo-Pacific strategic environment is defined by political divisions and economic decoupling, not the integrated and inclusive Asia–Pacific community Australia once hoped for. He concludes that, ‘Everything Australia wants to accomplish as a nation depends on its capacity to understand the world outside its borders and respond effectively to it.’ And that’s no easy task.

In an interview in 2018, Gyngell said, ‘I can’t think of a more challenging time to be a policymaker in Australia’—a comment that he frequently reiterates. But there may be no better preparation for a foreign-policy maker than the history outlined in the new edition of Fear of abandonment, which is a veritable tour de force. For as George Kenan wrote over 60 years ago, ‘If we plod along … unaided by history, … none can be sure of direction or of pace or of the trueness of action.’

From the bookshelf: ‘The great decoupling’

China has become a peer competitor with the US for a wide range of technologies, a remarkable feat for a country that was bereft of most modern technologies just four decades ago.

China has been a technological power for most of its recorded history and accounted for half of the world’s engineering inventions in the period leading up to the Industrial Revolution period. Yet it never developed a culture of science and missed the Industrial Revolution, writes Nigel Inkster in his new book, The great decoupling: China, America and the struggle for technological supremacy.

This meant that China was highly vulnerable when it came into contact with the industrialised West and Japan in the 18th century, with devastating consequences for the country. China would remain a technological backwater until its reform and opening up, launched by Deng Xiaoping in the late 1970s.

Inkster, a veteran of the British Secret Intelligence Service, now at the London-based International Institute for Strategic Studies, offers a forensic history of China’s technological development. He argues that, somewhat curiously, it was the writings of American futurologist Alvin Toffler that helped China’s reformist leaders see the importance of information and communications technologies in promoting the country’s economic modernisation.

The burgeoning economic interdependence with the US provided a pathway to technological progress for China, writes Inkster. As China opened its economy, it attracted investment in low-end manufacturing activities, notably the assembly of mobile phones and computers.

This enabled China to develop its technological capabilities, which were enhanced by returning Chinese talent that had been educated in the US and worked in Silicon Valley. The Chinese tech sector has also benefited from massive government subsidies and the exclusion of American tech giants from the Chinese market, a theme that could have been better developed by Inkster.

As China’s capabilities grew, so too did its discomfiture with reliance on American technology, particularly after the revelations in 2013 by Edward Snowden on US tech-enabled surveillance.  China has been promoting indigenous manufacture of technology and the concept of cyber sovereignty ever since. For Beijing, this means the right for countries to police content transiting their sovereign space. Digital and quantum technologies have also enabled China to become a major global intelligence power.

The election of Xi Jinping in 2012 as general secretary of the Chinese Communist Party proved to be a major event in China’s technological development, writes Inkster. Xi grasped the importance of technology. He set the goal of China becoming the leading global technology power in the world by 2035. China is very keen to reshape the world order in its favour and is using its growing dominance in technology to shape global norms and standards for how these technologies are employed. Xi’s vision is encapsulated in the phrase ‘community of common destiny for mankind’, which is code for a China-led world order.

China’s rise as a technological power has put it on a collision course with the US, which wants to maintain its global technological supremacy. Inkster argues that China’s technological rise is a ‘Sputnik moment’ for the US. In recent years, the US has been pushing back against China, a policy led by Donald Trump’s administration and continued, for the moment, by President Joe Biden. The US wants to constrain China’s ambitions and give US companies breathing space to catch up for 5G mobile telecommunications. After all, most of the fundamental technology for Huawei’s 5G is actually American.

The ‘great decoupling’ on the tech front is starting to happen, as the US tries to disentangle its research and development and supply-chain connectivity with China. The US is now denying China access to advanced components, controlling its tech investments in the US, and putting restrictions on joint research activities and Chinese students and migrants in America.

The US has banned Huawei from its 5G network and succeeded in encouraging most Western countries to follow suit. But decoupling will be slow, and partial. Because it results in less collaboration, decoupling will likely have an adverse impact on innovation in both countries. Decoupling has also created some difficult geopolitics, particularly regarding Taiwan, which has cornered the global market for high-end semiconductors—something China can’t make and has no likelihood of making soon.

Who will win this technological competition?

The US enjoys the advantages of incumbencies—it got there first. America is ahead for most technologies and China is playing catch-up. The US has much greater strengths in foundational science, which is still a weakness for China.

But the US also has its own problems. It isn’t producing the educated people that it needs, so it has to rely on migrants. And while it’s been able to attract some of the world’s best talent, China will now be much less of a source.

For its part, China has shown remarkable ingenuity in the application of existing technologies. And it is now showing a capacity to innovate, despite the doubts of many Westerners. In some of the higher order technologies like quantum encryption, China is clearly leading the global field.

Perhaps China’s greatest risk is that political concerns about security could end up stifling entrepreneurship and innovation. At the same time, the Chinese party-state is able to employ a whole-of-nation approach to technological development that is inconceivable in a liberal democracy.

Inkster concludes that it’s far from certain that the US will win this technology competition with China. And the US will need to accept that in some areas of technology, China will dominate.

The strong point of Inkster’s book is that he traces China’s long-term technological development in the broad context of China’s history, civilisation and evolving identity. But that may also be the book’s shortcoming, as the narrative of China and America’s struggle for technological supremacy is at times clouded by the volumes of contextual information.

That said, the book contains a wealth of information on an issue that is critical for our understanding of US–China rivalry and is an excellent reference for all scholars of Sino-American relations and international relations more generally.

From the bookshelf: ‘China’s civilian army: the making of wolf warrior diplomacy’

When Zhou Enlai, China’s newly appointed premier and foreign minister, in November 1949 addressed the initial recruits for China’s Foreign Ministry, few of the 170 assembled graduates, local administrators and peasant revolutionaries spoke a foreign language. Twelve of China’s first 17 ambassadors were former military officers, including nine survivors of the Long March. Only three had previously been abroad.

Seven decades later, China’s vast network of embassies and missions is matched in global coverage only by the foreign service of the United States. Today, China’s diplomats are fluent in foreign languages, are well versed in international affairs and assertively pursue their country’s interests.

They have also recently demonstrated significant overreach, earning themselves the moniker ‘wolf warriors’. Recent examples range from China’s ambassador to the United Kingdom threatening his host country with retaliation for banning the Chinese telecom giant Huawei from bidding for the country’s 5G network to Chinese diplomats in Fiji gate-crashing the Taiwanese national day celebration and beating up the hosts for ‘openly displaying the flag of a “false country”’.

Several of China’s most prominent diplomats have gained notoriety for their overt aggression. In March 2020, Foreign Ministry spokesperson Zhao Lijian suggested that the Covid-19 virus originated in the United States and had been brought to Wuhan by the US Army. ‘Be transparent! Make public your data! US owe us an explanation!’, he famously tweeted.

In China’s civilian army, Peter Martin, a political reporter for Bloomberg News, examines how China’s diplomatic service has evolved from its modest beginnings into the current corps of wolf warriors. Martin’s book is ambitious, covering the seven decades from the founding of China’s foreign service to the present day.

When Zhou set up the Foreign Ministry, he wanted China’s diplomats to be professional, regimented and obedient to the central leadership. ‘Foreign affairs cadres are the People’s Liberation Army in civilian clothing,’ he told the assembled recruits, making it clear that he expected military-style discipline. This mantra is still cited by China’s diplomats, who are generally required to avoid informal contact with their counterparts.

Martin highlights key turning points in China’s diplomacy. The 1954 Geneva Conference of the ‘big five’ to discuss the future of Korea and Indochina marked a diplomatic coming out for Zhou, who invited Charlie Chaplin to dinner at the villa rented by the Chinese delegation. At the 1955 Non-aligned Conference in Bandung, Zhou’s extemporaneous speech gained him a standing ovation and laid the foundation for relations with the developing world.

Even the Foreign Ministry wasn’t immune to the vagaries of Mao’s Cultural Revolution. Youthful diplomats ganged up on their senior colleagues, and many were recalled to Beijing for self-criticism and re-education. By 1967, only one ambassador remained in post.

Two recent turning points stand out. While the West was struggling to respond to the 2008–09 global financial crisis, China implemented a massive economic stimulus that gave its economy—and its self-confidence—a boost. The following year, Foreign Minister Yang Jiechi famously reminded an ASEAN forum that ‘China is a big country and other countries are small countries, and that is just a fact’. Xi Jinping’s assertiveness has further empowered China’s diplomats. In 2019, he called on them to show more fighting spirit. The message was clear. The most outspoken wolf warriors have been rewarded with rapid promotion.

Martin has done his homework, including wading through the memoirs of over 100 Chinese diplomats. The task wasn’t much fun, he concedes, but it yielded fascinating results. When China’s diplomats arrived in New York in 1971, they might as well have landed on another planet. Martin describes the delegation’s shock at the city’s neon signs, shop fronts and strip clubs. When China set up its embassy in Canada in 1970, its diplomats initially thought that the well-appointed old-age home next door was a ruse to deceive them about living conditions in the West. It took them a while to grasp the reality of the economic gap between China and market economies.

The book brims with little-known facts about China’s top diplomats, and the personal and family relationships that have advanced their careers. In 1936, Huang Hua, who would succeed Zhou as foreign minister, served as interpreter when Edgar Snow interviewed Mao for his book Red star over China. In the 1970s, Yang, who would go on to become China’s top diplomat, interpreted for George H.W. Bush when he was head of the US liaison office in China, establishing a relationship that would serve him well decades later as ambassador in Washington.

China’s traditional diplomatic tools include using well-researched flattery to win over counterparts; putting on a show for foreign visitors; displaying theatrical anger to exert pressure on the other party; and insisting that responsibility for the relationship lies with the other side. ‘It is up to the United States to take the initiative,’ Deng Xiaoping told a visiting (and retired) Richard Nixon when the US froze relations following the violent suppression of demonstrations in Tiananmen Square.

Wolf warriors are effective at making China’s position clear. However, they are patently ineffective at the diplomatic art of convincing the other party to act ‘because they come to see doing so as in their own best interest’. A senior European diplomat lamented that after dealing with China for four decades, he had no Chinese counterparts he could genuinely call friends.

Despite the vast literature on China that has emerged in recent years, little has been written about China’s diplomatic corps. Martin’s thoroughly researched book fills a major gap, and should be required reading for all diplomats dealing with China. The ‘PLA soldiers in civilian clothing’ have come a long way since Zhou set out his initial vision, but in a way little has changed.