Congo Copper, the Three Gorges Dam, and America's $6.6 billion Imperial Rounding Error in Iraq

My piece in Asia Times this week is China plays long game on Congo copper.

For students of the IMF vs. Chinese theories of economic development, I think the details of the Chinese struggle to keep this project going in the teeth of Western disapproval strikingly illustrates some conspicuous and interesting differences.

For people who like a good anti-imperialist horse-laugh, there's this excerpt:

United States Secretary of State Hillary Clinton took a swipe at China in a June 11 press conference in Zambia, urging African nations to resist "new colonialism" and for foreign investors to practice "good governance".

    "We saw that during colonial times, it is easy to come in, take out natural resources, pay off leaders and leave," Clinton said in Lusaka, the Zambian capital, before flying off to Tanzania. "And when you leave, you don't leave much behind for the people who are there. We don't want to see a new colonialism in Africa."

    Although she didn't mention China by name, officials traveling with Clinton said she wanted to stress that African countries should hold Chinese investors to the same standards that they apply to Americans and Europeans. Clinton said the United States didn't want any foreign governments or investors to fail in Africa, but wanted to make sure that they give back to local communities. "We want them to do well, but also we want them to do good," she said. [1]

This declaration appeared at the same time that America's most conspicuous post-colonial initiative in Africa - the bombing of Libya - was entering its third month with a cost approaching US$1 billion and no end in sight.

It was the same week that the world got another look at the US exercise of good governance in Iraq, courtesy of the Special Inspector General for Iraq Reconstruction. The George W Bush administration had airlifted $12 billion in cash into post-conquest Iraq. $6.6 billion - more than half - cannot be accounted for. It is now assumed that it was stolen, perhaps "the largest theft of funds in [US] national history".

The LA Times reported:

    U.S. officials often didn't have time or staff to keep strict financial controls. Millions of dollars were stuffed in gunnysacks and hauled on pickups to Iraqi agencies or contractors, officials have testified.

    House Government Reform Committee investigators charged in 2005 that U.S. officials "used virtually no financial controls to account for these enormous cash withdrawals once they arrived in Iraq, and there is evidence of substantial waste, fraud and abuse in the actual spending and disbursement of the Iraqi funds."

    Pentagon officials have contended for the last six years that they could account for the money if given enough time to track down the records. But repeated attempts to find the documentation, or better yet the cash, were fruitless. [2]

In the requisite ironic coda, it turns out that the billions weren't even American taxpayers' money. The US government pulled the cash from the Development Fund for Iraq administered by the Federal Reserve Bank of New York. The fund accumulated the proceeds from Iraq's energy exports during the Saddam Hussein oil-for-food sanctions years for eventual disbursement for the benefit of its true owners: the citizens of Iraq.

Tough luck, Iraqi citizens.

If China decides to take the US fiduciary meltdown in Iraq as precedent for its overseas activities, the bar for "doing good" and "giving back" to the local community is going to be extremely low.

For those keeping score, $6.6 billion is 66 million $100 bills. It is 72 tons of shrink-wrapped cash. It is the payload of three C-130 Hercules transports.

It is also the stated value of the Sino-Congolese infrastructure-for-copper agreement, trumpeted as the "deal of the century".

The much-touted neo-colonialist Chinese penetration of the Democratic Republic of Congo , in other words, is roughly equivalent to an American imperialist rounding error.

My article of the week before, Three gorges dam crisis in slow motion, looks at some of the TGD's highly publicized problems.

The dam is something of an overpriced fiasco.  The reservoir is starting to demonstrate a lot of the unattractive characteristics of a stopped-up toilet.  Billions of dollars will have to be spent in Sichuan dealing with the consequences of the dam: building more dams upstream to trap silt; constructing pollution-treatment facilities; stabilizing the reservoir banks to prevent landslides and dangerous, tsunami-esque wave surges; and maybe finding a new home for the port of Chongqing if China's hydrologists are outmaneuvered by the masses of silt marching upriver to the city's port.

The TGD is also a metaphor for big, bad China.  The PRC forged ahead and built the dam in the teeth of post-Tiananmen criticism of the regime, its leadership style, and its economic policies as symbolized by the TGD. 

So, international critics tend to pile on whenever some problem crops up in the vicinity, even when the link to the dam is tenuous at best.

In my piece, I take issue with accusations that the TGD was cause of the prolonged drought in the Yangtze River basin.  Long story short, holding water behind the dam was probably a factor in the dramatic but temporary drying-up of the shallow floodplain lakes Dongting and Poyang.  However, the dam did not cause the droughts.  More importantly, with an apparent trend toward longer droughts broken by brief, severe rainstorms, the big dams will play a big role in alleviating rather than exacerbating droughts.

As I complained in my piece on the misreporting of the Dalai Lama's statements on the death of Bin Laden , there seems to be a tendency toward laziness blogginess in the major news outlets.  Please, MSM, leave lazy blogginess to lazy bloggers!

...some outlets decided to use the Yangtze basin drought as a news hook for the story. As the Washington Post reported, "Amid severe drought, Chinese government admits mistakes with Three Gorges Dam." [1] CNN pitched in with "Has the Three Gorges Dam created Chinese drought zone?" [2] Associated Press: "China drought renews debate over Three Gorges Dam." [3]

In example of the bloggy "it would be irresponsible not to speculate" writing that news outlets increasingly turn to in order to fill their pages and attract readers, Elaine Kurtenbach of AP reported the allegation that "many villagers and some scientists suspect the dam ... could also be altering weather patterns, contributing to the lowest rainfall some areas have seen in a half century or more."

A modicum of research - ie recollecting that the Yangtze experienced one of the biggest floods in its history in the not-too-distant past, that is to say 10 months ago - casts doubt on this particular exercise in empirical inquiry.

The Yangtze River basin historically has a surplus of water, not a dearth, and this situation is likely to persist. Research on the effects of climate change on the Yangtze River basin predicts that global warming - not the TGD - will bring more rainfall in brief, more intense episodes from the summer monsoon. It was therefore undoubtedly a matter of considerable but not unexpected relief to the government as Xinhua reported that the drought broke under torrential rains - as much as 10 inches in some localities.

Who’s Bold? Who’s Ignoring Obama’s China Rollback Strategy?

Not China.

In the secret history of the Obama administration’s campaign to roll back Chinese inroads in Africa, Western shenanigans in the Democratic Republic of Congo will deserve a separate chapter.

The West blocked China’s massive $9 billion dollar ore-for-infrastructure project in order to protect its flagship project—Freeport McMoRan’s Tunke Fungurume copper mine--and show the DRC who was boss down in the heart o’ darkness (hint: it wasn’t the DRC government or the Chinese).

The Chinese project is going ahead, albeit on a reduced scale.

However, looking at the current balance of forces in the DRC, the project now looks as much as another point of Chinese exposure to Western leverage as it does a masterstroke in China’s African diplomacy.

I document the atrocities at Asia Times in my article: China has a Congo copper headache

When trends in Africa, the Middle East, and South Asia are examined, I think the US-PRC dynamic is pretty clear.

The Obama administration is reasserting U.S. influence in resource-rich regions that China penetrated during the distracted and internationally unpopular Bush administration.

Now the U.S. is cannily framing and choosing fights that unite the U.S., the EU, and significant resource producers, and isolate China and force it to defend unpopular positions alone.

Cases in point: Copenhagen climate summit, non-proliferation, and Iran sanctions. Next up: RMB valuation.

By my reading, China is pretty much a one-trick pony in international affairs.

It offers economic partnership and cash.

What it doesn’t have is what the U.S. has: military reach, moral leadership, heft in the global financial markets (Beijing’s immense overexposure to U.S. government securities is, I think, becoming less of an advantage and more of a liability), or a large slate of loyal and effective allies that help it dominate the global discourse and exert a decisive influence over international organizations.

When President Obama recommitted the United States to multilateralism, the countries that had grudgingly sided with China during the Bush years quickly fell into line with the U.S.

China got stuck with the rather miserable roster of Sudan, Myanmar, North Korea, and Iran and a political, economic, and human rights regime that provides a ready-made justification for criticism and containment by the liberal democracies of the West.

And the U.S. is quietly chipping away at Myanmar and Sudan.

The United States is also making good progress in pursuing the most destabilizing initiative (I’m not making a value judgment here, just a factual statement) of the next twenty years: encouragement of India’s rise from Afghanistan through to Myanmar as a rival and distraction to China.

The Chinese realize this and they are nervous.

As I wrote last week on the occasion of the Beijing visit of the top Obama China hands, James Steinberg and Jeffrey Bader:

China’s playpen [according the Obama playbook] is supposed to be Greater China: the PRC, Taiwan, Hong Kong.

A pretty major chunk of the world, but still not an attractive option for China, which sees itself competing with Japan for regional supremacy in Asia and isolated and relegated to second citizen status in key resource regions such as the Middle East and Africa.

According to this theory, the Obama administration should give China a free hand in dealing with Taiwan and Tibet.

But, of course, the Obama administration isn’t doing that.

I’ll repeat the bolded excerpt from Qin’s statement here:

But in the past two months, on the Taiwan and Tibet-related issues, the US violated the principles enshrined in the three joint communiqués and China-US Joint Statement, seriously disrupted the development of China-US relations and caused difficulties for the bilateral cooperation in major fields.

What Beijing is saying is, You’re trying to stick me in the Greater China box…and now you’re f*cking with the box! Are you trying to say China’s only legitimate sphere of influence is the 25% of the PRC’s area that is occupied by Han Chinese?

What Beijing wanted from Steinberg and Bader was an acknowledgment of a legitimate sphere of interest for China by the United States—including Taiwan and Tibet—in order to alleviate the PRC’s worries about President Obama’s geopolitical initiatives, initiatives that, by accident or design, are pushing China into a corner.

Pretty clear to me.

But it looks like I’m the only one who thinks so.

After Steinberg and Bader came back from Beijing, Foreign Policy Josh Robin posted a blog piece whose tone was one of headshaking disbelief at China’s Taiwan obsession:

Several China experts close to both sets of officials said that Deputy Secretary of State James Steinberg and National Security Council Senior Director Jeffrey Bader went to China with the understanding that they would have substantive discussions on some key issues of U.S. interest, but the Chinese side used the opportunity to try to bargain for an end to U.S. arms sales to Taiwan, something Beijing has wanted for decades and now feels bold enough to demand.

"It was all about Taiwan," said Bonnie Glaser, senior fellow at the Center for Strategic and International Studies (CSIS), "The message that the Chinese are giving us is ‘We've had enough; we're fed up. We've been living with this issue of U.S. arms sales for too long and it's time to solve it.'" [emph. added]

For bonus points, we can also play the game, Who’s clueless? Beijing or Washington?

"There is a strong push from Beijing to get that core issue as their big ask and there's a desire to reopen discussions about what a plan to eliminate arms sales to Taiwan would look like," [Charles Freeman of CSIS] explained. "There is some sense that we can trade Iran for Taiwan, but that's a non-starter for the Obama administration. The Chinese don't seem to understand that."

China considers Taiwan part of China.

Nobody considers Iran to be part of the United States.

Which might mean that China’s call for non-interference on Taiwan might more legitimate than U.S. demands that everybody join in a united front dogpile on Iran.

And the Obama administration’s invocation of the stern god of political convenience to ignore Chinese concerns on Taiwan begs the question of why it’s not OK for China to simply declare that Iran sanctions is a “non-starter” for them.

The true significance of whether China feels it has a legitimate and significant beef on Taiwan issue brings up the talking point:

China: nervous or emboldened?

The Cable piece takes the “emboldened” China side, stating that China apparently “now feels bold enough to demand” changes in Taiwan policy.

And Willy Lam, the veteran China watcher who got his walking papers from the South China Morning Post because of his informed and critical views on the PRC, made the same point in Asia Times.

Say it ain’t so, Willy!

What is new is China's much-enhanced global clout in the wake of the world financial crisis, which is coupled with a marked decline in America's hard and soft power.

More importantly, the Chinese Communist Party (CCP) leadership is gunning for a paradigm shift in geopolitics, namely, new rules of the game whereby the fast-rising quasi-superpower will be playing a more forceful role. In particular, Beijing has served notice that it won't be shy about playing hardball to safeguard what it claims to be "core national interests".

However, the only “core national interest” Lam identifies are…Taiwan & Tibet, which the U.S. has already recognized as parts of China.

And the “hardball” tactics, he invokes are pretty tame measures: like withholding China’s OK for U.N. sanctions, complaining to Western countries over providing a welcoming haven for dissidents, and playing footsie with Pyongyang.

I think of “hardball” more along the lines of using missile defense systems in Eastern Europe as a bargaining chip, threatening sanctions that would cut off some of China’s oil imports, hey, maybe even selling arms to a renegade province and holding a White House meeting with the leader of a Tibetan dissident outfit.*

You get the picture.

Finally, Lam indirectly undercuts his point and supports mine by citing China’s fears of containment.

A likely factor behind the apparent softening of Beijing's diplomatic gambit could be fears of a backlash from countries that have been burnt by the fire-spitting dragon. General Yang Yi has warned of the danger of the emergence of an "anti-China coalition" in the West. "Some Western nations may adopt the formula of 'making individual moves to produce the effect of concerted action' - and join the 'contain China' camp one after the other," he said. Under this scenario, the well-known strategist added, "[anti-China] measures may come one after the other the rest of the year."

A late February commentary by the Beijing-run Hong Kong journal Bauhinia also drew attention to the possible worsening of the international climate this year. The monthly magazine noted that Western countries' dependence on China might lessen in the wake of the global economic recovery. "It is possible the West will put more pressure on China over issues such as Tibet, Xinjiang, human rights, the value of the yuan as well as trade protectionism," the commentary said. "Forces calling for the 'containment of China' may also rear their head."[emphasis added]

Note, by the way, all of the areas of concerns cited by Lam in the Bauhinia article are within China’s borders—not exactly the priorities of a self-confident, burgeoning superpower eager to make its mark on the world.

And notice that they are couched in terms of the West’s decreased reliance on China—may I say boldness?--not as a reflection of China’s indispensability and heightened assertiveness.

So I’m willing to remain the outlier vis a vis The Cable and Willy Lam.

I don’t think the Obama administration is unaware of the nature of China’s Taiwan and Tibet concerns—rooted in geopolitical anxiety, not boldness.

I also don’t think that it is unhappy that media commentary buys into the “emboldened China” line, making its job of rolling back China that much easier.


*The Obama administration’s arms sale to Taiwan and meeting with the Dalai Lama were rather nuanced and not particularly provocative. However, from Beijing’s perspective, I think they feel the U.S. already has its thumb firmly planted in China’s eye; grinding it a little less isn’t much of a concession.