Posted on 07/31/2015 10:19:20 PM PDT by TigerLikesRooster
Beware the perils of a ‘Little Britain’ and a ‘Little Japan’
by Yoichi Funabashi
Jul 10, 2015 Article history
Japan and Britain have responded in completely different ways to the China-led initiative to create the Asian Infrastructure Investment Bank (AIIB), which the United States has opted not to join.
In a rebuff to the U.S., Britain was the first Group of Seven member to announce that it would join the AIIB as a founding member. Out of courtesy, Britain informed the U.S. government of its intention just one day before its official announcement.
Some within the U.S. government are still vocal in their indignation. These were the resentful words of one top American official with whom I spoke: “The strategy worked, up until the point at which basically the Chinese bribed the British. The Chinese offered Cameron a vice presidency in the bank, they offered London to be the clearing house for RMB transactions in Europe. My point is that our strategy of staying out worked until we lost the British, and we lost them basically because of a geopolitical bribe, which is fine.”
Japan, on the other hand, has bound itself entirely to the U.S. At present, it shows no indication of seeking a membership in the AIIB. Within Japan there is some unease that Washington will one day bypass Tokyo and join hands with China, although the U.S. has made assurances that this is not the case. Those assurances are probably genuine. Japan’s position is that it has no current plans to join the AIIB. But the opposition of Republicans in Congress is such that the U.S. cannot join the AIIB.
It is easy to understand why Britain considers its national interest and strategies in City-centric terms. In Britain, the City is essential to London’s economy, and London’s economy is essential to the British economy. London’s economy comprises a full 22 percent of the national economy.
When it comes to British politics, however, there has been an outpouring of Scottish nationalist opposition to the United Kingdom and British nationalist opposition to the European Union. The collision of these two streams of nationalist magma has unleashed an anti-EU dynamic and awakened popular sentiment for a “Little Englandism.” Having turned its back on Europe, Britain will likely be drawn inexorably closer to China.
Unlike Britain, if Japan decides to join the AIIB it would become a central, full-fledged Asian member of the bank. An increase in Asian infrastructure investment would be to the enormous advantage of Japan. In this area, Japan has enormous experience, funds, and human resources.
If Japan does not join the AIIB, the bank risks being unable to secure a solid rating for bonds issued in international financial markets. It is precisely because China understands this risk that Chinese President Xi Jinping personally took on the role of explaining the concept behind the AIIB to Prime Minister Shinzo Abe during their April meeting.
In Xi’s thinking, China’s vision for the AIIB is for the bank to serve as an Asian solution to Asian problems — and that new security concepts should be realized as the region explores a path for Asia that ensures security for all. As such, there is a risk that China will use the bank to pursue an Asian Monroe Doctrine that excludes the U.S. from the region. This is precisely why Japan must join the AIIB.
In essence, however, the AIIB is an initiative for constructing a regional order: it is an opportunity to outline a future vision for Asia’s economy and industry, and ultimately, to determine how Asian countries will work together to build the Asia of the future.
If Japan does not join the AIIB, it will inevitably give the impression that it has turned its back on the rest of Asia. And if Japan officially decides not to participate, inward-facing tendencies may transform into a true “Little Japanism” doctrine.
Behind the missteps by the U.S. and its allies regarding the AIIB is the weakening of American leadership and the oversensitive response of the U.S. to this perception.
With regard to Britain’s membership in the AIIB, the U.S. publicly voiced concerns over its “constant accommodation of China,” in a partial criticism of the U.K.’s move to join the bank. But this also served to drive home the point that the U.S. fears British membership in the AIIB could be viewed as a hedge against the declining power of the U.S.
In Japan’s case, there is a strong risk that Japan’s membership in the AIIB would serve to isolate the U.S. completely, further weakening American leadership and sending the entirely wrong message to China. This is a concern for both Japan and the U.S.
Japan and Britain share anxieties about the weakening of the American leadership.
Like a concerned father, Britain is trying to shake up the U.S. in order to bring it back to life. Financial Times columnist Martin Wolf has rebuked the U.S. for its reaction to Britain’s AIIB membership: “if Britain’s choice makes clear to U.S. policy makers that leadership is not a right but has to be earned, the decision could well prove beneficial. … [The world] will not stop, just because the U.S. can no longer engage.”
By contrast, Japan is behaving like a mother embracing her child, or like a child clinging to his mother, refusing to be separated.
If the U.S. is no longer unable to exert the leadership required to preserve and develop the liberal international order, then it will be up to its allies and other friendly nations to fill the resulting vacuum of influence in order to defend this system. This presents a new kind of challenge.
Neither Britain nor Japan can afford the luxury of secluding itself behind doctrines of a Little Englandism or a Little Japanism. Both countries must become stakeholders and seek to establish their influence in their respective regions — Britain in the EU, Japan in Asia — while working to build free and open regional orders.
P!
China has a primitive banking system and bond market. This shouldn’t go far.
If you like your alliance, you can keep your alliance.
In one aspect, this is a China’s way of buying off wary neighbors with the promise of large infrastructure projects in their countries. It is more political than economic. Once Chinese economy and financial markets are in full retreat, this will shrivel quickly.
Given that Great Britain has largely been taken over by foreign interests, especially those of the Mid/Far East, joining the AIIB was an obligation.
And the politics are for the region: why give more power to China? Japan should respond by setting up its own investment bank in Asia and invite the US in. They’d get Phillipines, Vietnam, Australia and most of SE Asia, too.
“If the U.S. is no longer unable to exert the leadership required to preserve and develop the liberal international order...”
Seems someone was so exited to get wordy they got a bit type tied there.
Their own writing style as in:
“All your bases are belong to us.”
ARF! Yea.
I think we’d be happy to be “no longer unable to exert leadership” :-)
China has a much more efficient welfare-driven economy than the US does. Mainly because they have a cheap law-enforcement policy, which is essential in welfare states. “A week of law officer training never fed a child!” as the socialist say.
Thus, China has the money so the pipers play their tune. We have the debt and so other countries pat us on the head.
Three of the five largest banks in the world are Chinese.
Numbers 1, 2 and 3 in fact. The largest American bank is number five.
Just saying.
“Three of the five largest banks in the world are Chinese. Numbers 1, 2 and 3 in fact. The largest American bank is number five.”
China’s four largest banks are state owned and you are getting government approved reports about them. I can’t imagine anyone taking China’s officially reported figures seriously.
They have a manipulated currency. They have quota restrictions on their bond market. They have a huge real estate and stock market bubble that is in the early stages of collapsing. The Renminbi isn’t a threat to anyone except the unlucky people who hold it.
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