Autocrats vs democracies: lilliputian economies vs giants
China, Russia and their client states are in a long-haul battle against liberal democracy.
President Biden’s European tour is organized as a crescendo of events to showcase the strength of the transatlantic alliance, the most powerful in the world, uniting 400M Europeans and 330M Americans and representing the majority of the G7, NATO and the UN Security Council. Liberal democracies' economic might is formidable: the EU GDP is 15 Trillion USD, America and Canada combined is 23 Trillion USD. If you add Japan (5T), Australia (1.4T) and India (2.8T), the major democracies’ weight totals 47.2T.
The enemies of democracies are the major autocracies: China (14.3T) and Russia (1.7T). Their combined GDP is a mere 16T, just above the total of the EU. That is a position of economic weakness. This weakness emboldens them to operate as a combined entity, in order to compensate for each other’s weaknesses.
Russia is a weaker and weaker nation, due to its failing demography, failing economy, and being encircled by NATO and the natural elements. Climate change and the northwest passage is a key to Russia’s unshackling.
This is where the condominium of interests with China comes in.
Both nations are seeing an increase in US financial sanctions against their leaders. The US has also started the countdown to delist all Chinese companies from US stock exchanges thereby cutting off their oxygen in the world's largest capital markets. A huge percentage of trade between China and Russia is happening via barter: China ships electronics, cars and all manufactured goods, in exchange for Russian oil and gas. Most of Putin‘s actions can be explained by his desire to provide his citizens with a stable source of manufactured goods and circumventing the global markets.
The West miscalculated when it expanded NATO well past the previously discussed entente, Putin told us everything about his thinking in 2005 when he regretted the demise of the USSR. Inexplicably European and American leaders seldom go back to this key speech. It explains Putin’s support of dissident troops in Georgia in 2008, his cavalier takeover of Crimea in 2014 and his constant support to Syria, linked to the Mediterranean naval base, Russia’s only permanent access to warm waters. It only takes a glance at a map to see that Putin‘s area of control, the European part of Russia, is a small principality within a huge Eurasian country. His continued support amongst random Russian citizens is due to a simple calculus on their part: in a one man one vote situation, the number of non-Russian ethnic citizens within the Russian federation guarantees that the European Russian candidate loses. The synchronous policies Putin is developing with his neighbour in China is 100% linked to this fact.
The genius of Nixon’s China overture was to break up geography, we are far from 1971.
Xi Jinping took a perfectly working institutional system, devised by Deng Xiaoping after the Mao debacle, and he has methodically wrecked it, piece by piece, driven by ego and misplaced ambition. He is in a race against time to amass resources for himself and his clan before it’s too late. China is weaker and weaker due to its failing demography. The bombshell census that was released in May shows what’s next: in less than a generation China will be in a very precarious situation, with a dwindling workforce having to fend for themselves, their children and their parents. China has anticipated this and passed the only law in the world that compels children to visit their parents at least once a year, noncompliance resulting in a fine.
China is weak because the CCP has had to show its hand by excommunicating Jack Ma from all business activities. This shows younger generations of Chinese citizens that, in the end, nothing belongs to them and everything belongs to the communists. The princeling phenomenon is mutating from the CCP circles to business circles, each clan and sub clan is working to insinuate itself into so-called private businesses. This will prove a poorly thought out decision, as it will further demotivate all private enterprise. Chinese tech entrepreneurs are applying for visas to the European Union and Canada. We would do well to welcome as many as we can, cutting off China from further innovation.
China is weak because, under the veneer of its space program and various other endeavours, it controls very little intellectual property of consequence. Tick-tock is a counter example of a Chinese success, and it should be examined as such. Where are the other examples of world-leading IP controlled by a mainland Chinese company? Most of the companies that the world sees as Chinese: Foxconn, Acer, TCL and others are actually controlled by Taiwanese interests. China being The reverse of an open society it does not respect the rule of law and therefore there is no possibility for world leading IP to flourish. China is also weak because it is killing the golden goose by making Hong Kong into a bland Chinese city that will ensure that all of the foreign talent leaves Sunil enough. It will also mean the end of the mainland China-Hong Kong business alliance, as the Hong Kong tycoons realize that they have been duped. By killing Hong Kong‘s role as THE open port into China, the CCP is also showing the world it has no respect for its own signature and nails another dagger into Deng Xiaoping‘s coffin. Xi is a short-term operator who thinks he can emulate Putin‘s kleptocracy and get away with it.
Both Russia and China are funding client states: in Europe, Asia, Africa and South America. The Iran naval expedition to Venezuela is surely a joint Russia Iran operation and is a test of the Monroe doctrine. The forced landing of the Ryanair flight in Belarus to apprehend an activist journalist was most probably sanctioned by Russia. Putin has never ceased to be the poster boy for Russian intelligence services and their merger with organized crime. The brazen assassinations within Europe the borders of Russian dissidents should help everyone understand the extent of this KGB mindset. China has also been testing the client state model with Ethiopia and is failing. It’s been testing an avatar of World Bank financing with Kenya’s Mombasa port. The pending court case between China and Kenya will be inflection points, whichever way the decision goes. All reports converge that China has overplayed his hand in Africa and the local populations are becoming increasingly uncomfortable with Chinese merchants in their midst. The Covid linked personal vendettas against Chinese citizens in Indonesia are a first wave of attacks. It remains to be seen if China will be able to defend their citizens outside their borders the way the UK and France routinely did in Africa.
The Chinese Russian condominium of autocracies has been working hard to destabilize liberal democracies: the various intelligence operations that have been surfacing publicly are a fraction of what’s going on. Former French PM Fillon is following in former German Chancellor Schroeder’s footsteps and becomes a paid pawn of Putin by accepting a board seat deep within the Russian oil and gas industry. This is one among a series of moves to influence European politics. The playbook against America is a bit more ambitious and involves a sophisticated hacker army.
President Biden is reaching out to transatlantic allies to rejuvenate the alliance of liberal democracies. The rollout of “Build Back Better for the World” as a response to the Chinese Belt Road is a brilliant gambit and one can already see how it unnerves China and Russia. This means that Biden, the G7 and more need to create a coalition of the willing. Geography is destiny as is demography. The Indian subcontinent enjoys rule of law, the English language as its business lingua franca, and some of the world's most innovative and high growth areas.
Bangladesh is a tiger in the making, India itself has many challenges but ample human capital to tap into. Pakistan should also be included so as to prevent it from being roped into the condominium of autocracies. As Jacques Attali wrote in his book I’m translating, now is the time for the very best of our world.