- The FT has news that London’s position as the dominant global financial hub is slipping, with the UK capital now tied with New York for top spot in the latest rankings. Elsewhere Barry Eichengreen and Kevin H. O’Rourke examine the latest economic data comparing the present crisis with the Great Depression across a range of indicators (including global output, world trade, and equity markets). Robert Shiller, meanwhile, explains the difficulties of using past experience to predict the course of the current crisis.

- European Geostrategy suggests that EU security and defence policy is like a jazz band and explains why a White Paper providing a “grand strategy” is needed. EUobserver, meanwhile, has news on the emerging shape of the European diplomatic service – its structure and staffing – as member states gear up to secure the important EEAS secretary general post.

- Elsewhere, Constanze Stelzenmüller takes an in-depth look at the travails of German security policy, offering insights into how it might evolve. Highlighting the lack of strategy, she argues that “fundamental decisions regarding German security policy have been repeatedly forced into the Procrustean bed of moral necessity, domestic imperatives, or the demands of external alliances.”

- Finally, over at openDemocracy, Andy Yee explores the “hedgehog’s dilemma” between China and the West, highlighting a gradual acceptance of different core values. TIME magazine, meanwhile, assesses the slow progress toward democracy in Hong Kong and the possible wider implications from Beijing’s perspective.

Yale’s Jeffrey Garten thinks America needs to face up to a key fact: it doesn’t have the leverage to deal with China on its own. So, he says, it needs to partner up with others:

It doesn’t take a genius to see that America needs more help in dealing with China. That’s why we must shift from what is primarily a bilateral and at times unilateral, pound-the-chest approach to one involving more support from other key countries, many of whom are also having big problems with China, including the European Union and India.

This enhanced multilateralism must be based on at least two premises that are hard to discern in U.S. policy today. The first is that China is not just bursting on the global stage, but rather is changing the world as it does so. Put another way, we can forget about trying to force China into conforming to Western rules and institutions without allowing the country a big voice in reshaping those arrangements to serve its own needs. Secondly, the U.S. and its partners are better off compromising with China on these arrangements so long as they have rules and enforcement mechanisms. The key goal must be to encourage China to obey laws and regulations that are agreed upon.

Not sure I’m wholly convinced that Van Rompuy and his travelling circus are the missing link in getting China to be a constructive world citizen – but hey, we can dream.

I don’t like cell phones.  Never have, never will.  Reading this, I like them even less:

You’re not supposed to send dirty jokes by mobile phone in China, but don’t worry: service providers have some other great, inspiring content that has the government’s enthusiastic support.

Today’s Economic Daily includes a short article on “red snippets” (红段子) the positive, uplifting text messages that are now being rolled out on a national scale after a successful five-year trial in Guangdong and a few other places.

These messages have a dual purpose: taking the place of the dirty jokes and mocking attacks on the establishment that are the focus of the latest mobile content clean-up campaign is only one half of their role. Officials from the government and major industry players are also talking about using positive SMS to build up “the spirit of Chinese culture for an Internet age,” a sort of soft power against the encroachment of vulgar American pop culture.

Xie Zhenhua, the China Mobile Communications Association official who is the public face of the project, says they’re the modern equivalent of Tang poetry or the Three Character Classic. One example cited by most articles was forwarded more than 150,000 times the year it was created: “China’s rise and the people’s prosperity: we work hand in hand toward that glorious day.”

I just thought that being a new superpower would be more, you know, fun.

There are disturbing reports floating around today that the Chinese government has “ordered its reserve managers to divest itself of riskier securities and hold only Treasuries and US agency debt with an implicit or explicit government guarantee.”

The FT, and the city analysts it has spoken to, are speculating that the move may be in retaliation for US arms sales to Taiwan and Obama’s decision to meet the Dalai Lama.

In other cheery news, Iran is promising the ‘demise’ of the liberal capitalist system. But that’s supposed to be tomorrow.

In sync with Chinese Vice Premier (and likely PM-in-waiting) Li Keqiang’s address at Davos, an interesting piece appeared today in the Global Times (the international news arm of the Chinese Communist Party’s official People’s Daily, i.e. a mouthpiece), which is revealing about the Chinese leadership’s continued ambivalence towards projecting China as an emerging superpower. Excerpts of the article entitled ‘managing the world’s rising expectations‘ follow:

The world has been expecting more from China, especially since the financial crisis. But between the increasingly high expectations and China’s real capabilities, there is a huge gap, which is evident in the 2010 World Economic Forum that opened Wednesday in Davos, Switzerland.
At the forum attended by about 2,500 leaders from over 90 countries and regions, China is expected by many to purchase Greek bonds, to continue holding US treasury bills, and to lead global recovery while under the onslaught of protectionism.
Even those who are blaming China’s monetary and trade policies for causing tensions in the post-crisis period expect that China should save the world’s economy.
Though such expectations may boost national pride among a section of Chinese, there is a strong case for China to remain clear-headed about the reality it is facing.
On the one hand, it is an emerging economy, with its 8.7 percent GDP growth in 2009 and its soaring middle class population.
On the other hand, it remains a developing nation, with its per capita GDP ranked 106th and over 100 million people below the World Bank indicated poverty line.
The world’s expectations, unless cautiously managed by China, could jeopardize the hard-earned fruits of labor accumulated in the past six decades.

As The Economist once shrewdly observed, “China’s own world view has failed to keep pace with its growing weight. It is a big power with a medium-power mindset and a small-power chip on its shoulder.” The cautious attitude of the leadership reflects concerns that a ‘superpower’ role in international affairs would: (i) make it difficult for China to avoid adopting positions that will add complexity to decision-making and may be at odds with the raw pursuit of national self-interest; (ii) divert its attention and resources away from addressing domestic issues. The more cynical, such as Yan Xuetong, the Director of the Institute for International Studies at the elite Tsinghua University,  go as far as to suspect a Western conspiracy to ‘trap’ China and ‘exhaust our limited resources’ by locking it in to onerous international agreements and obligations. Li Keqiang’s  address at Davos was in keeping with Deng Xiaoping’s dictum of keeping a low profile in international affairs. It was a reminder that the national interest will remain paramount even as China’s voice and involvement on global affairs rises. Along similar lines, see also the report on China’s participation at Davos in today’s FT: ‘West too busy with its crises to engage east’.

A tragic tale from the Khaleej Times of the UAE:

At long last there is a foreign minister on the international scene with ice-cold blood in his veins and an uncomplicated, unemotional comprehension of national interest. His name is Kieren Keke. He carries the flag for Nauru, an eight-square-mile island-nation of 11,000 inhabitants in the South Pacific famous on two counts.

It is the smallest republic in the world, and its principal source of revenue was through the export of phosphates formed by bird droppings [guano]. That was undoubtedly the most valuable bird waste in history, but the republic killed the local version of the golden egg by selling more phosphate than the birds 
could drop.

When the money ran out, Nauru’s imagination blossomed. It invested millions of dollars from its national saving in a London musical. The musical flopped, wrecking the country’s bank balance. It then tried to solve Australia’s troublesome problem by providing a base for immigrants en route to the Pacific El Dorado, in return for suitable compensation. Regrettably, the refugees wanted refuge in Australia rather than amidst lost bird droppings.

But Nauru’s imagination remained fertile. In 2002 Nauru took $130 million from China to break relations with Taiwan. In 2006, presumably after this sweetener was exhausted, it reopened links with Taiwan. It is not known whether there was a financial angle to this decision, but the track record tells its own story. This year Nauru recognised Abkhazia [population: 215,000], one of two “nations” that Russia “liberated” from Georgia in 2008. The price: $50 million. Mr Keke has also paid a visit to the second region, South Ossetia, possibly with an accountant as travelling companion. The message has gone to every chancery: if the price is right, Nauru, a full member of the United Nations, will oblige.

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Ninety minutes from now, Barack Obama will give his Afghanistan speech, and almost certainly say he wants NATO allies to send 10,000 more troops to match 30,000 new U.S. personnel.  It’s a bit iffy, but my guess is that he’ll get about half that number from the Europeans.  This will make everyone feel good about transatlantic cooperation after a few months of stories about how America doesn’t love Europe any more. 

But, as I argue in a new piece for the Indian magazine Pragati this week, the fact that NATO will cough up a few more troops shouldn’t conceal the lack of a real strategic debate in Europe about Afghanistan:

The quality of strategic debate on Afghan affairs in EU capitals is far lower than that in Washington. “We ask what pulling out of Afghanistan would mean for the transatlantic alliance,” one respected French strategist admits, “but not what it’d do to Afghanistan.”

He could go further. Although European commentators are typically well-informed about Pakistan’s instability, they rarely put “AfPak” in a wider strategic regional context.

How would a NATO failure in Afghanistan affect relations between China and India? What impact would it have on Russia’s Central Asian ambitions, or Iran’s defiance of the West? These are not questions you are likely to hear seriously discussed in Europe.

Why so? Here are a few possible reasons:

Defence intellectuals and politicians share an underlying duty of care for soldiers in the field. If—as many European observers have concluded—those soldiers are being killed for a lost cause in Afghanistan, it would be immoral not to prioritise their welfare and sacrifices.

But power politics has to be factored in too. And the Afghan case confronts Europeans with the harsh fact that their global power is diminished. Yes, they could fly more troops to Central Asia. But they would still be secondary players (by a very long distance) to the Americans—and China and India would still have far greater influence in the region.

European analysts who see Afghanistan in transatlantic terms (“What does this do to NATO?”) are in denial on this point. The future of Afghanistan is clearly of far greater significance to the triangular strategic relationship between China, India and the United States than it is to European affairs. But no-one likes to admit they are a second-order issue.

I’m not the first person to argue that the EU should measure its global influence by Asian metrics. I’ve previously cited the work of James Rogers here – he focuses on maritime security, and the Indian Ocean in particular. James blogs at European Geostrategy – a new outlet with lots of good contributors – and so does Luis Simon, who has been thinking about the EU’s place in Eurasia. I recommend their stuff.

But I also recommend another new piece by Tomas Valasek of CER on European policy towards Iran – which obviously rivals Afghanistan as a test of Europe’s relevance in the Eurasian wilds.  He has a warning for the EU’s new foreign policy chief:

Catherine Ashton, like Javier Solana before her, will be expected to maintain dialogue with Tehran while the UN debates sanctions, and after the Security Council agrees a new regime. But one wonders if this is the EU’s last hurrah on Iran. If the combination of sanctions and talks fails, and if Israel strikes Iran’s nuclear facilities, Tehran will certainly call off the EU-led talks. The other choice before the world is to start working on containing a nuclear Iran, by making its neighbours feel secure (so as to discourage them from building nuclear weapons themselves). But this will almost certainly be a job mainly for the US, rather than the EU. So while Baroness Ashton will spend a lot of time on Iran at the beginning of her term, the EU may gradually lose its leading role.

We can add that to the list of “scenarios we aren’t thinking enough about”…

China won much praise (and prestige) for its prompt and bold response to the unfolding global financial crisis, announcing a fiscal stimulus package worth 14% of its GDP in November 2008, well ahead of other major economies (this compares with a fiscal expansion of 2.5% of GDP for the US, 4% for Japan and Germany, and roughly 2% of GDP for G20 countries as a whole). On the face of it, the Chinese stimulus seems to have paid off: the economy has clearly bottomed out and is once again set on a high growth course. But, as I argue in a forthcoming article in the China Environment Series – versions of which are published on Policy Innovations and Chinadialogue – there are serious concerns about the sustainability (economic and environmental) of the stimulus.

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- With Angela Merkel re-elected as German Chancellor, and the CDU-CSU now forming a coalition with the free-market FDP, Mary Dejevsky assesses the implications for the country’s domestic politics. Alan Posener suggests that Frau Merkel has the potential to be the new Thatcher, while Der Spiegel takes a look at the implications for forming a coherent German foreign policy.

- Staying with shifting politics, WPR assesses the potential for changes in Japan’s international outlook, particularly towards the US. The Asia Times examines the domestic machinations and their likely impact on the new government’s foreign policy priorities.

- Elsewhere, the New Yorker talks to Columbia economist, Joseph Stiglitz, about his concerns over the current economic crisis and the need to address not just market failure, but government failure too. Catch the video here. The FT’s analysis section, meanwhile, assesses the flaws in “efficient markets” theory and explores what might take its place.

- Finally, following last week’s round of summitry at the UN, complete with rhetorical flourish from Muammar al-Qaddafi, Foreign Policy has a list of “The Top 10 Craziest Things Ever Said During a UN Speech” – Qaddafi joins Castro, Khrushchev and Ortega among others.

I recently blogged about UN peacekeepers’ efforts to save the world by planting trees in places like Darfur and the Congo (I even featured on the New York Times website discussing this “new vogue of environmental priorities”).  Now an eagle-eyed reader sends these, well, gritty photos of two of the 30,000 trees planted so far – in this case, by top members of the UN mission in Timor-Leste.

The other 29,998 trees are doing just fine, I’m sure…

- Writing in the New Yorker, Malcolm Gladwell explains how “the roots of Wall Street’s crisis were not structural or cognitive so much as they were psychological”. Overconfidence among bankers, he suggests, in addition to the more familiar arguments about poor regulation and simple incompetence, played a significant role in the financial crisis.

- The Prospect blog, meanwhile, discusses how “the Indian Ocean is emerging as a focus for Chinese logistical and naval expansion” – something being felt acutely in Washington and New Delhi. Staying with the US and India, WPR takes an interesting look at Hillary Clinton’s recent trip to South Asia.

- Elsewhere, the Channel 4 News blog has more details about the UK’s upcoming Iraq War Inquiry – suggesting that it is due to hear “mountains of evidence” and, given the expansive nature of its remit, is unlikely to have lawyers present.

- Finally, Adam Roberts has an interesting piece in The World Today assessing the current state of the Geneva Conventions. Sixty years later, he ponders, are the laws of war still relevant to the changing nature of conflict?

Who do you think wrote this poem?

“My Ideal World.” It begins: “If I had my ideal world I would not allow weapons and atom bombs anymore. I would destroy all terrorists with the Hollywood star Jean-Claude Van Damme. I would make people stop taking drugs…” He wrote a somewhat chilling short story called “My Father Was a Ghost,” in which his father haunts him by pretending to be a spirit.

Can’t guess? It’s Kim Jong Chol, second son of probably-dying North Korean despot Kim Jong Il, or so says well-known Asian politics site Gawker.  Sadly, he’s not the son likely to take control in Pyongyang. One can only imagine the joyous international reaction to a covert Belgo-Korean mission to take down Bin Laden…

-Foreign Policy magazine has news that Hillary Clinton is planning to raise her foreign policy profile with a speech next week at CFR.  It suggests ”smart power” will be the central theme – something which formed the core of her Senate confirmation hearing (pdf) and which her British counterpart, David Miliband, has opined on (pdf). The article also highlights how:

Clinton and Obama aides alike say the administration has one of the most effective secretary of state-White House relationships and balanced national-security teams of the past several terms. They note that Clinton has excellent relationships with the other national-security principals, a strategic investment that could pay dividends down the road.

-Sticking with the Clinton theme, Bloomberg reports that James “It’s the economy, stupid” Carville, former strategist to President Bill Clinton, is to advise Ashraf Ghani in his campaign for Afghanistan’s presidential elections this August. PR Week, meanwhile, has news that social media will form a central element of Ghani’s campaign. A former Afghan finance minister and UN and World Bank official, he is also well known for his work on failed states.

-Speaking of which, Le Monde diplomatique has a report on Burma and the “Orwellian methods” the regime is using in “tightening its stranglehold over its people”. Pressure from Beijing and New Dehli is central, it suggests, and achieving this requires a renewed push from the international community.

Last month, I gave a quick overview of media coverage of Ban Ki-moon as he reached the half-way point in his term at the UN.  There’ve been positive pieces and negative ones, but the prize for least constructive criticism still goes to Jacob Heilbrunn’s FP piece on Ban as the “world’s most dangerous Korean”.  That’s silly, however you view the SG.  It has sparked an even sillier response from Moon Chung-in, a Korean prof:

Why is Heilbrunn targeting Secretary-General Ban? It is difficult to think of any reason, besides the fact that Heilbrunn is a well-known Jewish neoconservative. During the situation in Gaza last January, Ban was the first foreign leader to visit the scene. While denouncing Israel’s barbaric actions and expressing the position that those responsible needed to be found and punished legally, he requested an immediate unilateral cease-fire from the Israeli government. The world, and Arabs in particular, sent an unprecedented message of praise to the Secretary-General. Ban also visited the U.S. Congress in March and criticized the nation as a “deadbeat donor,” for not having submitted its 1 billion dollars in UN dues. This kind of behavior would be enough to generate objections from a neoconservative like Heilbrunn who regards the benefits of Israel as paramount and argues that the UN is useless.

This must not shake us. The people should be unstinting in their support and encouragement for Secretary-General Ban, who is working to speak for those without power and without voices to stand on their side in creating a better world.

Oh dear. This is not merely name-calling with anti-Semitic overtones. It is also wrong. As Robert Koehler - who has followed Korean reactions to Ban impressively closely – notes Heilbrunn is best known as a critic of the neocons.  Ban has responded to the last month’s criticism with dignity.  He doesn’t need this sort of help.

Many development and humanitarian NGOs already regard their human rights brethren with a degree of exasperation for their no-compromise stance on Darfur and Northern Uganda  – where their successful push for International Criminal Court referrals in each case made life much harder for agencies trying to negotiate ceasefires or deliver help to people, without producing any obvious results in terms of conflict resolution or bringing baddies to justice. Having watched Human Rights Watch’s manoueverings on Burma over the weekend, I can see their point.

On Friday, HRW sallied forth for some incandescent briefing against Ban Ki-moon after Ban reportedly told General Than Shwe, the head of the ruling junta, that “I appreciate your commitment to moving your country forward”.  Cue the following response from HRW in the Guardian:

“That is absolute nonsense,” said Brad Adams, a Burma specialist at Human Rights Watch. “It’s just what we implored him not to say, to make these diplomatic gaffes. Than Shwe has steadily moved his country backwards.”

Then, over the weekend, Ban toughened up his line substantially.  During a speech to 500 officials, diplomats and opposition politicians in Rangoon, he castigated the regime for refusing to allow him to meet with Aung San Suu Kyi, saying it had “missed a very important opportunity” ahead of next year’s elections, in that

“allowing a visit to Daw Aung San Suu Kyi would have been an important symbol of the government’s willingness to embark on the kind of meaningful engagement that will be essential if the elections in 2010 are to be seen as credible”.

“I am deeply disappointed,” Ban concluded. So how did HRW react to the regime’s rebuff and to Ban’s tougher line?  Here’s the FT this morning:

“None of it was a surprise; his disappointment was almost a foregone conclusion,” said David Mathieson, a Burma researcher for Human Rights Watch. “It’s them saying, ‘We are going ahead with what we want to do and we don’t care what you think about it. The idea that you can come here and fix everything the west wants – forget it.’”

Damned if you do, damned if you don’t, seems to be the line coming from HRW HQ – but then, it’s a pleasantly straightforward messaging strategy to sit on the sidelines and accuse anyone who tries to engage with the regime of being a sell-out (and no doubt it plays well with HRW’s members in these tough fundraising times). (more…)