Category Archives: Politics

Will China’s Economic Slowdown Derail Reform?

Creative Commons photo courtesy of NicorA year ago, my colleague Nicholas Consonery and I wrote an article for The Fletcher Forum arguing that China’s transition into an era of slower economic growth is a positive sign because it gives Beijing a political window to address more acute structural challenges and vulnerabilities. This past summer, some symptoms of slower growth surfaced, including declining exports, a stock market crash, and a devaluation of the RMB, triggering an exodus among investors and reviving doubts regarding President Xi Jinping’s administration. But this is not unexpected, and we had said that the “government (and economy) will face major bumps along the way.” China’s volatility represents setbacks but not the fundamental derailment of reform, and it remains premature to fear an inevitable “hard landing” for Chinese markets.

For all the hysteria, financial disruptions have not fundamentally damaged China’s real economy. Despite short-term shocks, the A-shares stock market correction has had limited impact on consumption, as most household wealth remains in banks or real estate, and on investment, as corporate financing relies mainly on debt. Furthermore, despite the much-publicized 30 percent crash in June, the Shanghai A-shares index is still up roughly 40 percent over the last year. On the currency side, rates have stabilized and even appreciated after the recent devaluation. The decision to devalue now looks less like a policy blunder and more as an intentional move to boost the RMB’s bid for inclusion in the IMF’s Special Drawing Rights foreign exchange reserves.

Beijing’s experiment to reform capital markets over the past two years has been a push-pull process. On several occasions, regulators rolled back relaxations when markets spun out of control, taking some missteps in the process. When securities on the stock market looked destined to enter freefall, regulators backtracked on ceding control and engaged in an ill-advised intervention, bailing out state-owned enterprises (SOEs) and halting initial public offerings. Recognizing its own mistake, Beijing went on to arrest top individuals who oversaw the rally and then executed the intervention. When investors again panicked after Beijing allowed the RMB to devalue by 3 percent over two days in August, the People’s Bank of China instituted tighter capital controls to stem speculation, cooling down short-term volatility at the cost of backtracking on capital account liberalization. Yet, these setbacks only occurred because China is experimenting with reducing control and opening up its capital markets. These experiments are a positive sign for reform, even if it means greater financial volatility in the future.

This same push-pull process is reflected more broadly in efforts to implement President Xi’s ambitious reform plan to put the economy on a more sustainable path, as outlined in the Chinese Communist Party’s Third Plenum in late 2013. China’s leaders want to liberalize the economy and address the needs of a rising middle class, but must balance those priorities against both political and economic forces resistant to change.

In the political realm, the Communist Party has centralized power to overcome resistance against reform. The Xi administration launched an unprecedented anti-corruption campaign led by Politburo Standing Committee member Wang Qishan, cracking down on toughened sectors such as energy and finance, and setting the stage for reform in those sectors. Also, the Party set up “leading small groups,” running parallel to government ministries but commanded by a core team under Xi or other members of the Politburo Standing Committee. The tightened grasp on power dismayed observers hoping to see more political reform, but has arguably better equipped President Xi to implement his economic reform agenda and pursue economic liberalization.

On dealing with the slowing economy, reform goals have sometimes given way to short-term relief for growth. Under pressure to achieve a GDP growth rate target of around 7 percent this year, already the lowest since 1991, the Ministry of Finance announced in September that it would adopt a “more forceful” fiscal policy to stimulate the economy. The increased spending will not be a repeat of the 4 trillion RMB injection of 2009, but it is nonetheless perverse to Beijing’s aim to expand services and consumption as the main drivers of growth. China has also had to relax its aggressive effort to cap local debt, as slowing growth dwindles local revenues and undermines local governments’ ability to repay. In June, the National Development and Reform Commission allowed local government financing vehicles to refinance their debt, partially rolling back efforts by the Ministry of Finance to restrict backchannel financing and replacing it with provincial bond issuance.

Looking more broadly, however, China’s economic transition under President Xi and Premier Li Keqiang has remained largely on course. A landmark reform plan for China’s SOEs, finally passed in September, will bolster private-sector participation and transparency. On factor price reform, the government authorized an electricity sector reform plan in March, while more reforms on the oil and gas sector are expected by the end of this year. Strides have also been made to meet the rising demands of China’s middle class: environment and food and drug safety regulators have all been given more authority, and the government has taken steps to dismantle both the hukou household registration system and the one-child policy. Finally, pessimism over the sluggish 6.9 percent growth rate in the third quarter of this year misses a more important data point: for the first time, services and consumption accounted for more than half of the country’s GDP. Concerns about China’s financial volatility, political centralization, or increased economic stimulus are certainly valid, but to fixate over them is to ignore progress in these significant areas that had long stalled under the Hu-Wen era.

Recent volatility in the financial system is not the beginning of the end for China, but rather the growing pains of a government experimenting with relaxing its tight grip. Despite challenges posed by slower growth, there is little indication that China has abandoned reform, or is on course for a hard landing. As President Xi told the Wall Street Journal in September, his government will have to “crack hard nuts and ford dangerous rapids” on the path to reform. Reforms have not been smooth, and the push and pull in different areas testify to the magnitude of this challenge. But as long as Beijing recognizes that it is in its own best interests to allow the economy to slow down and move toward a more sustainable path, then reform will continue.

Visual Perspectives on the Refugee Crisis

The refugee crisis is inescapable in today’s news. Striking visuals emerging from Europe, the Middle East, and Africa illustrate a story of both desperation and hope. These images allow viewers to stand for a moment alongside migrants and refugees fleeing their home countries in search of a new life and new opportunities.

On November 14-15, the Tufts Institute for Global Leadership (IGL) and VII Photo Agency mark 10 years of collaboration with a series of seminars and workshops at VII Perspectives: Migration. VII founder and Chair of IGL’s Program for Narrative and Documentary Practice, Gary Knight, will be joined by leading VII photojournalists for two days of dialogue and hands-on experience. A selection of several of the photographers’ work on the refugee crisis is highlighted below.

Photos by Ashley Gilbertson

Ashley Gilbertson’s images capture refugees – mostly from Iraq, Syria, Pakistan, and Afghanistan, as well as regions of the Balkans and Africa – on their way into and through Europe during September 2015.

The exodus of people from Africa, Central Asia, and the Middle East to Europe is the largest movement of people since World War II. Working in the refugee transit centers, which see thousands of people daily, the photographer notes that conditions at some of the camps are getting slightly better. However, some conditions – such as five hour train rides packed so tightly there is no room to move beyond the spot people are standing – reflect challenges in addressing the scale of the crisis.

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Photos by Maciek Nabrdalik

Maciek Nabrdalik’s work from September 2015 depicts the journey of refugees as they arrive on the Greek island of Lesvos in rubber dinghies. These individuals continue their journey across the island, eventually headed for ferries to Athens, and beyond.

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Photos by Franco Pagetti

Franco Pagetti’s images from September 2-3, 2015 in the Strait of Sicily capture the work of the Migrant Offshore Aid Station (MOAS) and Medecins Sans Frontieres (MSF).

MOAS is a humanitarian search and rescue operation assisting vessels in distress in the central Mediterranean Sea. MOAS vessels use remote piloted aircraft to monitor the seas and provide real-time intelligence to MOAS and the rescue coordination center of Malta and Italy.

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Photos by Ed Kashi

In November 2013, photographer Ed Kashi went to Iraq and Jordan, working with the International Medical Corps (IMC). IMC is a humanitarian non-profit organization that provides aid and relief to those affected by conflict and crisis.

The photographer’s work reflects IMC’s efforts to increase awareness and improve not only the physical, but also the mental health of young refugees plagued by depression, fear, suffering, and the sense of a life turned upside down. His images intimately illustrates the plight of this lost generation.

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Photos by Ron Haviv

Like Maciek Nabrdalik’s, this selection of Ron Haviv’s photographs are centered on the Lesvos, Greece. There, he has captured the work of volunteers helping refugees to arrive safely, as well as the migrants’ journey once they have made it to shore.

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Why the UK Will Vote to Leave the EU

8210248737_ca900f1384_kOn the morning after this year’s UK general election, Prime Minister Cameron called a referendum on the UK’s membership in the European Union. The bill to prepare it is currently going through parliament with the referendum likely being held before the end of 2017 and probably as early as 2016, meaning that a vote could be just a few months away. Prime Minister Cameron does not see it, but the UK is rushing headfirst towards the door marked “exit.”

Public opinion polling shows one third of the electorate in favor of leaving, one third for staying, and one third undecided. This was also the case in 1975, the year of Prime Minister Harold Wilson’s referendum, in which almost all the “undecideds” were won over by the pro-Europe campaign. But there are some crucial differences between the 1975 referendum and this one.

In 1975 British business overwhelmingly backed the “Yes to Europe” campaign, which outspent the “No” campaign by a factor of 12 to 1. Now, business is more divided and rules governing political donations and campaign spending make such a spending difference impossible. Indeed, the campaign to withdraw has thus far raised more money than the campaign to stay.

In 1975 the newspapers and the broadcasters backed continued UK membership, as did the vast majority of political leaders. That is no longer the case. Since 1979, three powerful media magnates have poisoned the political atmosphere through constantly badmouthing the EU and many government ministers have joined them. The attitudes of the major political party leaders, David Cameron of the Conservative Party and Jeremy Corbyn of the Labour Party, are lukewarm at best.

In 1975 the “undecided” third of the electorate was open-minded and—by the end of the campaign —reasonably well informed. This time the UK population understands less about the EU than the people of almost any other EU country. Public opinion research shows those “in the middle” are far more likely to vote to leave. Polls find that 15 percent of the population might be won over if they think exiting will lead to economic disaster. A further 19 percent feel the EU has no impact whatsoever on their lives. And both sets of people feel uncomfortable with UK membership, having no trust in politicians and associate words like “hope,” “strength,” and “future” more with leaving the EU than with staying. Moreover, an increasing number of people believe that if Britain votes to leave it will not be the end of the story; they expect a second referendum to ensue. Yet studies of previous referenda show that a second referendum is extremely rare.

David Cameron’s “renegotiation” of the terms of our membership is likely to be a damp squib. Our EU partners have made it clear that change to EU treaties is not on their agenda. For every partner Prime Minister Cameron finds to back the reforms he seeks, there is at least one against. He believes he can have a “British Europe,” but this is no more achievable than a “French Europe” or a “German Europe.” By definition, the European Union is a carefully crafted compromise whose rules are revised rarely and only by consensus. “Teaching Johnny Foreigner a thing or two” may appeal to some conservatives, but the Prime Minister’s refusal to join other areas of EU cooperation, such as the resettlement of refugees, means he finds few friends when he needs them.

The most worrying thing to me about this referendum is my strong sense that the political establishment cannot win it. Many are unable to bring themselves to say anything good about Europe, so will rely on negative arguments. Such arguments nearly backfired in Scotland’s referendum on independence last year. Though defenders of the status quo in Scotland narrowly won the vote, they lost the argument by a large margin. They articulated no positive vision for the future, while those seeking to leave argued with emotion and passion, just as the anti-Europeans do.

At stake in the UK are over 50 percent of the country’s exports. Financial services, food businesses, and manufacturing would be hit particularly hard by a break from the UK’s main market partners. Also at stake are the rights of Britons to work, study, live, marry, own property, and even benefit from hospital treatment on the continent, as well as workers’ rights agreed at the EU level such as the right to holiday pay for part-time workers. Finally, at stake is the United Kingdom itself. A majority in Scotland will almost certainly vote to remain in and a majority in Northern Ireland will likely do the same. A majority to come out in England, the largest component of the UK, would likely hasten the break-up of the UK.

Will Britons turn their backs on a political project which has brought seventy years of peace to Western Europe? On free movement rules which allow a Frenchman to manage Arsenal Football Club, a Dutchman to run Manchester United and a Portuguese to steer Chelsea? On membership of a club which gives 500 million Europeans as strong a voice in world affairs as twice as many Indians and three times as many Chinese speakers?

Not understanding the consequences, they might. The only way it can be prevented is for ordinary Britons to recognise that the London political elite cannot win this campaign and to organize now to make sure their country does not sleepwalk out of the EU.

America’s Myanmar Mistake

Andrew Mercer

Photo courtesy of Andrew Mercer


If Rwanda was Bill Clinton’s greatest regret and Darfur was George W. Bush’s, Myanmar may well become President Barack Obama’s. U.S. Myanmar policy, occasionally praised as one of Obama and Hillary Clinton’s greatest foreign policy accomplishments, is flavored by willful blindness toward the government’s persecution of Rohingya Muslims.

Myanmar citizens will cast their ballots on November 8th in an election that excludes 800,000 Rohingya voters, dozens of Muslim candidates, and a host of other minorities. Even Nobel Peace Prize-winner Aung San Suu Kyi’s National League for Democracy (NLD) party has refused to run Muslim candidates. After a summer-long media onslaught on the great promise of the country’s “free and fair elections,” the news is catching up: in Myanmar’s elections, people of certain ethnicities and religions are less equal than others.

The election is perhaps least fair for the stateless Rohingya. At the moment, 140,000 of them are wasting away in ghettos and internally displaced persons camps in Rakhine State. They have little hope of returning to their land and businesses, which have been effectively confiscated, and they are at the mercy of the country’s ruthless security forces.

In fact, reports from the Yale Law School’s International Human Rights Clinic, the International State Crime Initiative, and an Al Jazeera investigation have concluded that there is strong legal evidence for classifying persecution against Rohingya as state-sponsored genocide.

Lamentably, this classification may not matter—at least as far as the U.S. government is concerned. Rohingya are already widely considered victims of ethnic cleansing. By 2013, the human rights community had begun hinting at genocide, after leaked draft legislation and regional orders revealed that the Myanmar government and military were actively engaged in restricting the Rohingya’s most basic rights.

However, in Washington, few are willing to use the term “genocide.” They worry that, if they do, they will not be taken seriously, particularly since the U.S.-Myanmar relationship is considered such a success story.

Given the lack of concern the issue is receiving, it is not surprising that the U.S. government has done little to ease the Rohingya’s plight. Tolerance programs at the U.S. Embassy in Yangon, paltry amounts of humanitarian assistance to the Rohingya, and admonishments against religious discrimination are about all the U.S. has offered to the country, which has been rocked by an ethno-religious identity crisis since violence broke out in Rakhine State in mid-2012.

The Obama administration has avoided identifying the crisis as ethnic cleansing and has not acknowledged the government’s active role in perpetuating systematic persecution. The administration often frames the Rohingya situation as a “challenge” that has arisen from “hate speech” caused by the lifting of restrictions on freedom of expression and by the Race and Religion Protection Laws that undercut the government’s “efforts to promote tolerance, diversity, and national unity.”

But the government’s lifting of some restrictions on basic freedoms of speech and expression is hardly the cause of violence, be it “intercommunal” or state sponsored. The Rohingya cleansing is not a natural consequence of a transition to democracy, but a consequence of the government’s discriminatory policies and violence.

Ethno-religious violence has been a favorite direct and indirect tool of the military regime since the 1960s, and the current government remains adept at silencing “hate speech” on topics against its interests. The Myanmar government has led a sustained, targeted campaign against the Rohingya for decades including through the 1974 Emergency Immigration Act, the 1982 Citizenship Law, and particularly horrific episodes of violence since 1978. Given this history, it is utterly impossible—despite the Obama administration’s best efforts—to see the Myanmar government as an agent of tolerance, diversity, or national unity.

Outside of the Obama administration, some politicians have tried to hold the Myanmar government accountable for its abuses. A bipartisan group on Capitol Hill, including Senators Marco Rubio, Bob Menendez, Bob Corker, and Ben Cardin, has realized the culpability of the government, writing a bill to limit full U.S. engagement with a country at war with its minorities. In Myanmar, well-institutionalized violence and discrimination are rooted in a Buddhist-Burman nationalism that continues to rationalize state attacks on minority groups across the country. This is precisely why no number of tepid and toothless admonishments from a half-hearted U.S. will ever end the Rohingya’s torment.

More recently, in October 2015, U.S. Deputy National Security Advisor Ben Rhodes traveled to Myanmar to discuss “U.S. expectations” of the upcoming election. However, those “expectations” remain unclear—and so far they seem to be largely nonexistent. Already, the Myanmar government has disenfranchised the Rohingya, excluded Shan and Kachin townships from elections, blocked overseas advance voters, and refused to allow Aung San Suu Kyi to run for president.

Rather than clarifying that a Muslim-free election won’t be taken seriously by the leader of the free world, the Obama administration has through the International Foundation for Electoral Systems provided funds to Myanmar’s Union Election Commission— which banned Rohingya parliamentarians from running. Some Obama administration officials have even said that the U.S. will view the election as legitimate as long as the Myanmar people do.

That argument is disingenuous at best. It ignores the basic criteria for credible elections and the evidence that many people are already being excluded from voting. Moreover, it discounts the chorus of civil society voices speaking out for plurality and religious tolerance in Myanmar.

There is assuredly an argument to be made that extending an open hand to Myanmar’s leaders without focusing on human rights could be a way to eventually lead the country to act as a responsible state. But minimizing the Rohingya’s plight as a mere human rights issue, rather than taking seriously the likelihood of a state-sponsored genocide, may stop the White House from developing a coherent plan of action. This could give Myanmar time and space to conduct a partial extermination of the Rohingya.

Some hold flickering hope that the NLD’s anti-Muslim stunt was just a political one. They hope that the party will sweep the election and somehow demonstrate the political resiliency and capacity to fight back against the nation’s powerful police and security forces, dogmatic government officials and parliamentarians, and Rakhine extremists for the sake of 800,000 disenfranchised Rohingya the international community has already written off. It may be possible, but without a little moral, principled, and honest support from the U.S., we may soon be talking about Barack Obama’s greatest foreign policy regret.