The South China Sea – Is it a Core Interest?

[Ed. note – This piece first appeared at the Munk School of Global Affairs Portal.  It forms the second part of a three part examination by this humble blogger of the contemporary US-China relationship in the context of the South China Sea]

The predicted flashpoint for US-China relations has been for the last year and more the South China Sea (nan zhongguo hai 南中国海).  It is here that the US ‘China Threat School’ from the Washington beltway and the ‘China Can Say No’ (zhongguo keyi shuo bu 中国可以说不)from Beijing and the nationalists target US-China rivalry, competition and even conflict.  These experts and opinion makers see a growing inter-state rivalry. Each side urges their government to stand firm and defend the national interest.  What is it about the South China Sea that has marked it as such a central flashpoint?

In the recent past China has reasserted ‘historical’ claims over all the islets, including the Paracel and Spratly archipelagos and some 80 percent of the 3.5 million square kilometers along the nine-dotted U-shaped line (an old Guomindang assertion going back as far as 1947) Depending on interpretation this Chinese claim can be to all features, waters and resources or less aggressively a claim to all features and, for legal islands, a continental shelf and a 200 nautical mile Exclusive Economic Zone (EEZ) for each.  At least with respect to the former claim there appears to be no international legal ground or basis to assert such encompassing sovereignty. And even if both countries – that is China and the United States – rely only on the UN Convention of the Law of the Sea (UNCLOS) and rights acquired by EEZ, the two countries disagree on what that means.   The US  – remember the US has failed to ratify UNCLOS – argues that the coastal state is allowed to retain only special commercial rights in a zone while the Chinese argue that the coastal state can control virtually any activity within the EEZ.

The current expenditures on the Chinese navy – the PLAN – have been directed until recently to weapons systems that are designed for “access denial”. This earlier PLAN strategy appeared to be:  (1) to secure approaches to Taiwan and deny the US access to it; (2) to deny the US and other near Asian neighbors access to the South China Sea; (3) to protect China’s sea lane lines of communication; and (4) hinder generally others sea lane lines of communication.

But that doctrine and spending seems to be changing.  Recently the Chinese have been planning a form of power projection. The Chinese are contemplating trials for its first carrier, an ex-Ukrainian carrier called the Varyag that has been renamed the Shi Lang.   The Chinese Navy has been planning this launch apparently to be followed by the construction of its own carriers with a new doctrine of “far sea defense” – a far more assertive policy.  This doctrine, among other things, would see Chinese warships escorting commercial vessels that are crucial to the Chinese economy through as far as the Persian Gulf to the Strait of Malacca and on to China.

The rise in tensions – and the apparent rising assertiveness – of China in the region was initiated in part by what appeared to be China’s growing stake in the South China Sea.  Though it is somewhat complicated to tease out, it appears that rising tensions between the US and China over the South China Sea can be traced back to March 2010.  Then, two visiting US officials to China, Jeff Bader, at the time, senior director of Asian affairs at the National Security Council, and James Steinberg, Deputy Secretary of Defense held meetings with senior Chinese officials. They were were told by these Chinese officials (apparently State Councilor, Dai Bingguo, Foreign Minister Yang Jiechi and Vice Foreign Minister Cui Tiankai) that China would not tolerate any interference in the South China Sea and that the South China Sea was now part of China’s “core interest,” or at least so it was told to US and western media by US officials.  Such a statement it appeared elevated the South China Sea to equal status then with Taiwan and Tibet.  This South China Sea status was noted widely by western media particularly in the context of a Chinese Navy that had announced a new doctrine of “far sea defense” – a far more assertive policy, as noted earlier.

Though the western media has in the “on again- off again” tensions in the South China Sea repeated this declaration of “core interest” it may in fact not represent official Chinese views.  Chinese experts point to the statement by State Councilor Dai Bingguo.  Dai Bingguo is a senior Chinese official who has become one of the foremost and highest-ranking figures on Chinese foreign policy in recent years.  It was Dai Bingguo who remained at the G8 L’Aquila Summit after President Hu Jintao returned to China following riots in Xinjiang.  He has attended as a senior leader at the important US-China dialogues – The China-US Strategic and Economic Dialogue (S&ED).  At the second round in May 2010 – not long after the reported statement to US officials of “core interest”  – in which Dai Bingguo was in attendance – this is what Dai Bingguo said at his press conference on May 25, 2010:

Both sides recognized that China-US relations are of great significance to our two countries and the world and that cultivating and deepening mutual strategic trust between us is extremely important for the sound and steady development of China-US relations in the new era. The Chinese emphasized that while it may not be possible for China and the United States to agree on every issue, it is important that both sides observe the spirit and the principles of the three Sino-US joint communiqués and the China-US Joint Statement, respect and accommodate each other’s core interests and major concerns, and properly handle our differences and sensitive issues, especially concerning China’s core interests such as Taiwan and Tibet-related issues, (emphasis added) so as to consolidate the foundation of mutual trust.  If we keep to this right direction, we can overcome interferences, difficulties and obstacles, and take forward our relationship.

No mention of the South China Sea as a “core interest”.  In fact there is some reason to believe – without an official transcript – that what was said to the American officials was either not precisely conveyed, or was misinterpreted by officials and then the media.  So, apparently what was stated was that the South China Sea was “related to a China core interest” (sheji guojia hexin liyi –涉及国家核心利益) for instance the stability  and peaceful resolution of South China Sea disputes as opposed to say Taiwan which would be:  (Taiwan shi zhongguo de hexin liyi – 台湾是中国的核心利益) – Taiwan is a core interest of China.

Well diplomacy is all about words and words and their interpretation are made more difficult by two languages.  Unfortunately too many observers have stated or repeated a China position on the South China Sea that appears not to be official and feeds interests on both sides that see the other as a growing threat.  The story continues but careful diplomacy is called for on both sides.

Image Credit:  Wikimedia Commons an image of the USS Peleliu


Extending Leadership and Global Governance through ‘Security & Economic Dialogue’

 The completion of the US-China ‘Security and Economic Dialogue,’ (S&ED) marked an important step in the new US Administration’s policy of engagement with the large emerging market countries.  China begins that dialogue, but it will be continued with India in the near future.  While some may see this bilateral meeting as a nascent G2, in fact I suspect it will reflect ultimately more the US policy foundation for an enhanced Gx process.

President Obama chose in his opening remarks to ‘tick off’ the key global governance questions: climate change, sustainable energy use, stability and economic prosperity, the threat of nuclear proliferation, terrorism and international human rights:

 “Today, we look out on the horizon of a new century. And as we launch this dialogue, it is important for us to reflect upon the questions that will shape the 21st century. Will growth be stalled by events like our current crisis, or will we cooperate to create balanced and sustainable growth, lifting more people out of poverty and creating a broader prosperity? Will the need for energy breed competition and climate change, or will we build partnerships to produce clean power and to protect our planet? Will nuclear weapons spread unchecked, or will we forge a new consensus to use this power for only peaceful purposes? Will extremists be able to stir conflict and division, or will we unite on behalf of our shared security? Will nations and peoples define themselves solely by their differences, or can we find the common ground necessary to meet our common challenges, and to respect the dignity of every human being?

We cannot predict with certainty what the future will bring, but we can be certain about the issues that will define our times. And we also know this: the relationship between the United States and China will shape the 21st century (emphasis added), which makes it as important as any bilateral relationship in the world. That reality must underpin our partnership. That is the responsibility we bear.”

There are short term and longer term issues to tackle.  The Joint Press release (Press Release) reveals a meeting long on commitments to collaborate but very short on practical policy achievements at this time.  While this is just the first meeting following the Obama-Hu Jintao bilateral discussions at the sidelines of the London G20 Leaders Summit, it would be fateful for these and other future bilateral encounters to fall to rhetorical diplomatic commitments.  Unfortunately these rhetorical commitments came to mark the Bush and Clinton era meetings.

Nevertheless, a notable commitment that was identified is the agreement to have the two militaries expand exchanges at all levels.  Among those exchanges the Vice Chairman of the Central Military Commission, General Xu Caihou, will visit Washington this year to meet with Secretary of Defense, Robert Gates.  The two sides also declared as positive the results of the recent Ministry of National Defense – Defense Department Consultative Talks (DCT) in Beijing.

Clearly the global financial crisis is an immediate concern to both countries.  Of even greater concern to the Chinese is the continuing solvency of the US economy and concern that soaring deficits will erode the value of the US dollar to the detriment of China which holds such massive dollar reserves.  In fact China remains the largest holder of US Treasuries today.  The concerns expressed by the Chinese leaders echoed a continuing theme – China’s continuing doubts over the US reserve currency status in the global economy:  “As a major reserve currency-issuing country in the world, the US should properly balance and properly handle the impact of the dollar supply on the domestic economy and the world economy as a whole,” said Wang Qishan, China’s Vice Premier, at an event with Treasury Secretary, Tim Geithner at the talks. Wang Qishan later expressed satisfaction over US assurances and in the Press Release the two countries committed to the following:


“First, the United States and China will respectively take measures to promote balanced and sustainable economic growth in our domestic economies to ensure a strong recovery from the international financial crisis; these include measures to increase savings in the United States and the contribution of consumption to GDP growth in China.”

Possibly most disappointing was the progress – of which there was little – in the climate change area.  Though the two countries signed and released the, “US-China Memorandum of Understanding to Enhance Cooperation on Climate Change, Energy and thre Environment (MOU) released July 28, 2009, concrete progress seemed to allude these two major carbon emitters.

Both countries resolve to pursue areas of cooperation where joint expertise, resources, research capacity and combined market size can accelerate progress towards mutual goals. These include, as set out in the NYT, article by Andrew Revkin, but are not limited to:

1) Energy conservation and energy efficiency
2) Renewable energy
3) Cleaner uses of coal, and carbon capture and storage
4) Sustainable transportation, including electric vehicles
5) Modernization of the electrical grid
6) Joint research and development of clean energy technologies
7) Clean air
8 ) Clean water
9) Natural resource conservation, e.g. protection of wetlands and nature reserves
10) Combating climate change and promoting low-carbon economic growth

But Chinese officials continued to insist that major steps must first be taken by the developed countries in order to make climate change progress possible.

So we have a promising dialogue.  However, more engagement is required.

“The Architecture of Global Cooperation”

On Wednesday July 15th, Secretary of State, Hillary Clinton gave a major speech at the Council for Foreign Relations – a major foreign policy think-tank in the United States.  It was an opportune moment for a major speech on the course of American foreign policy.  President Obama had just returned from his 4th major leadership Summit since assuming the Presidency.  And as I pointed out in a recent blog post, “Speaking of Architecture – A Concluding Obama Comment at  L’Aquila” – the President began to openly comment on the current global governance structure – in particular the Gx process – in his last news conference at the G8 L’Aquila Summit in Italy.  And, Hillary herself was preparing to undertake a trip to India – a major emerging great power in the G5 constellation of powers -China, India, Brazil, South Africa and Mexico.

In her speech, Secretary Clinton, declared that the US was determined to build this, “Architecture of Global Cooperation,” which she stated required the US to, “devise the right policies and use the right tools.”  Now what is this “Architecture ofGlobal Cooperation.”  The speech provided some hints yet remains frustratingly vague.

Clinton signaled that the new American foreign policy is going to be made up of the following approaches:

  • updating and or creating new institutions for international cooperation with partners;
  • proceeding to engage those who disagree with the US – read that immediately as North Korea and Iran;
  • ‘development’ will be elevated to a major aspect of American foreign policy action;
  • the US will better integrate military and civilian action in conflict areas – read that as Iraq and Afghanistan;
  • better leveraging of key aspects of American power  – economic power and power generally – in the service of American foreign policy.

It is evident that this Administration is promoting a new multilateral action – one which they see as multipartner rather than multipolar.  Officials have begun to use this phrase – multipartner in many speeches.  As Clinton sees it the multipartner approach :

“… will lead by inducing greater cooperation among a greater number of actors and reducing competition, tilting the balance away from a multi-polar world and toward a multi-partner world.”

Now the Secretary of State recognizes that not all countries will accept this approach and in some cases the coalition will remain a power coalition designed to constrain or deter adversaries.  But to the extent she can, she and the Administration will bring the right tools and policies in a principled but pragmatic approach to create a common-sense policy. Somehow, this vision seems an awful lot like working with ‘friend and foe’ to advance the global governance agenda.  Good to find the US willing to extend the cooperation agenda but unclear that the conflicts of interest – Russia, Iran, North Korea – are likely to remain unresolved.

What then of the architecture of global cooperation?  On the substance side it is evident that the Secretary of State opens the agenda up – she pointedly notes that the China-US bilateral – meeting later in the month in Washington is  both an economic and strategic security one with a key rising power. This is potentially a serious effort to engage the Chinese but a small suspicion remains that this is more of an inter agency battle with Treasury to reengage State in the economic arena.  We need to watch the meeting closely later this month.

Like President Obama, Secretary of State Clinton, acknowledges that the global and regional institutions built most formidably after the World War II are no longer adequate and they must be, “transformed and reformed.”   And like Obama, Clinton suggests – repeating Obama – what is needed are institutions that:

“… combine the efficiency and capacity for action with inclusiveness from the U.N. to the World Bank, from the IMF to the G-8 and the G-20, from the OAS and the Summit of the Americas to the ASEAN and APEC, all these and other institutions have a role to play.  But their continued vitality and relevance depend on their legitimacy and representativeness and the ability of their members to act swiftly and responsibly when problems arise.”

But what is that?  It can’t be all these organizations – or can it? And if it is how does the agenda move forward?  And what of the critical dimensions – effectiveness, legitimacy and representativeness.  Yet other critical dimensions –  if leaders are to be believed – include also “equality and informality”.  The vessel of the “Architecture of Global Cooperation”  has been declared but the structure and contact remain maddeningly unclear.  The time to clarify is fast approaching.

Speaking of Architecture – A Concluding Obama Comment at L’Aquila

One of the continuing issues of this G8 L’Aquila Summit is how, or if, the structure of the G8, G8+G5 and G20 process is about to be transformed. With the appearance in November last year of the G20 Leaders Summit followed by the London April G20 Leaders Summit and now with the announced September 25th Pittsburgh G20 Leaders Summit, experts and the media especially have been waiting for both the demise of the G8 and the presumed crowning of the G20 as the sole Gx forum for global leaders.

CIGI Colleagues – Andrew Cooper, Gregory Chin with the assistance of Andrew Schrumm and Chatham House colleagues Paola Subacchi with the assistance of Ruth Davis have just completed an excellent stay and fine reportage at the L’Aquila Summit at: “Tracking the G8 L’Aquila Summit” – a visit well worth taking.  But the question of architecture remains top-of the-mind question for global governance.

And it would appear to be a ‘decision not yet made’.  Notwithstanding the almost universal view that the G20 will emerge as the successor to the the now ‘illegitimate’ G8 process there remains ‘no decision.’

A number of threads remain.  The Heiligendamm Process – what was defined by the Germans as a structured dialogue – has been continued for two more years by the G8 plus G5 Leaders.  This process – now renamed the HAP (Heiligendamm L’Aquila Process) will continue a policy dialogue with a number of Working Groups with the leaders of the G8 + G5 (Brazil, China, India, South Africa and Mexico) announcing that they:


…. will review progress at the end of the first year on the basis of a substantive report to Leaders for guidance at the Summit in Muskoka in 2010. A concluding report will be presented at the French Summit in 2011. This Process, which is a policy dialogue aiming at strengthening mutual understanding in the spirit of the work already undertaken, will focus on areas of common interest to the Partners, be forward-looking and produce tangible results.

Quietly supported by the OECD Support Unit led by its director, Ulrich Benterbusch, this policy dialogue has provided a setting where these countries have worked to, “enhance trust and confidence among the dialogue partners as well as develop common understanding on global issues.” A final Report of the HDP was issued at this Summit.

But the ‘final’ architecture remains unclear.  It is evident that the Italians sought to extend the reach of the G8 core by including the G5 on day two (the Italians even added 1 – Egypt to this G5 group).  On day three an even wider network of leaders including many from Africa were included.  The Italians called this a ‘variable geometry’ calling together those countries – and their leaders – that could best address the problem – whether climate change, development or food safety.  But variable geometry or not, the core G8 remained.

Evident or not, it’s not inevitable that the G8 will be subsumed by the G20.  It may just be the accidental consequence of the sequence of the current G8 Presidency but those who have recently held that annual rotating post have generally not been enthusiastic over the prospect of G8 enlargement.  Japan has favored the informality and influence of the smaller G8 and has been concerned that enlargement will inevitably include China ending Japan’s sole Asia representation role.  Italy has favored variable geometry but retaining the G8 core.  Canada has now assumed the Presidency of the G8 and has just initiated planning for the 2010 G8 Muskoka Summit. Canada too has been cool recently to expansion.  A loss of influence is inevitably arise for Canada and other ‘smaller’ G8 countries with the expansion of the G8 to a G13 or G20.

The key to architectural change is the United States.  It would seem that a clear statement from the Obama Administration favoring one structure or the other would likely influence members of the G8 – especially those less enthusiastic over expansion.  Early in the Administration’s life, it appeared that it would review and express a view on the current global governance architecture even as early as the G8.  But following the G20 London Summit, the Administration signaled that it’s priority for the G8 and the newly announced G20 Pittsburgh Summit was outcome and collective decisions and that the Administration would take no position on the future Gx process until after Pittsburgh.

Yet the tea leaves have been stirred – if only a little – in the concluding press conference by President Obama on Friday.  Take in what the President had to say to a question clearly focused on the Gx process and future architecture:


Q President, it seems that yesterday morning you had a very spirited and lively discussion within — with the G8-plus-5-plus-1, ignited by President Lula objection to the format, to the adequacy of the G8 as a forum. And, well, I would like — what was your argument in this discussion and whether or not you have the feeling that the days of the G8 are over? And a very — a second question, but very light, after six months wheeling and dealing with these international forums — G20, NATO, and G8 — do you find it more complicated or less complicated to deal with that than with the American Congress? (Laughter.)

THE PRESIDENT: Well, the — on the second question it’s not even close. I mean, Congress is always tougher. But in terms of the issue of the Gasoline and what’s the appropriate international structure and framework, I have to tell you in the discussions I listened more than I spoke, although what I said privately was the same thing that I’ve said publicly, which is that there is no doubt that we have to update and refresh and renew the international institutions that were set up in a different time and place. Some — the United Nations — date back to post-World War II. Others, like the G8, are 30 years old.
And so there’s no sense that those institutions can adequately capture the enormous changes that have taken place during those intervening decades. What, exactly, is the right format is a question that I think will be debated.
One point I did make in the meeting is that what I’ve noticed is everybody wants the smallest possible group, smallest possible organization that includes them (emphasis added).  So if they’re the 21st-largest nation in the world, then they want the G21, and think it’s highly unfair if they’ve been cut out.
What’s also true is that part of the challenge here is revitalizing the United Nations, because a lot of energy is going into these various summits and these organizations in part because there’s a sense that when it comes to big, tough problems the U.N. General Assembly is not always working as effectively and rapidly as it needs to. So I’m a strong supporter of the U.N. — and I said so in this meeting — but it has to be reformed and revitalized, and this is something that I’ve said to the Secretary General.
One thing I think is absolutely true is, is that for us to think we can somehow deal with some of these global challenges in the absence of major powers — like China, India, and Brazil — seems to me wrongheaded (emphasis added). So they are going to have to be included in these conversations. To have entire continents like Africa or Latin America not adequately represented in these major international forums and decision-making bodies is not going to work.

So I think we’re in a transition period. We’re trying to find the right shape that combines the efficiency and capacity for action with inclusiveness. And my expectation is, is that over the next several years you’ll see an evolution and we’ll be able to find the right combination. (emphasis added)

The one thing I will be looking forward to is fewer summit meetings, because, as you said, I’ve only been in office six months now and there have been a lot of these. And I think that there’s a possibility of streamlining them and making them more effective. The United States obviously is an absolutely committed partner to concerted international action, but we need to I think make sure that they’re as productive as possible.

While the reference to UN revitalization comes as something as a surprise, and given the last effort to revise the governance structures in 2005, I would think even more frustrating – and unlikely – than the Gx reform process, it is evident that the President and the Administration is giving thought to the future shape of global governance.  Look for expansion – and possibly soon.

Building Identity?

Following the end of the Shanghai Cooperation Organization Summit (SCO), the leaders of the BRICs – Brazil, Russia, India and China met formally for the first time on June 16th.  This leaders meeting caps a series of ministerial gatherings of either the BRICs or the G5 (Brazil, Russia, India, China, South Africa and Mexico).

In the run up to the Leaders meeting there was much speculation over the Leaders’ possible statements or actions in reducing the reserve currency role of the US dollar.  But as noted by ‘Dr. Doom,’ Nouriel Roubini, Professor of Economics at the Stern School of Business at NYU, in an online piece on, “the inaugural summit focused primarily on forging common positions on financial regulatory reform and climate change, rather than foreign exchange rate management.”  Still the fact that these Leaders met at all is slightly stunning and adds to the overall momentum for large emerging economies collaborative efforts.  But we need to be realistic about such collaborative action.

The large emerging market powers, whether in the G5 or the BRIC gatherings, are making their collective presence known.  However, much of their focus is on the global financial crisis and the Leaders club – the G20.  The G5 and BRIC gatherings have called for coordination and have identified the G20 as the appropriate forum for such collaboration. In the Sapporo Declaration of July 8, 2008 the G5 declared:

Given current global macroeconomic imbalances, it is essential to enhance policy coordination not only among advanced economies but also with emerging market economies, including by reinforcing existing multilateral mechanism for Coordination.  The Financial G-20 is an appropriate forum for this endeavor.

And the BRIC Finance Ministers just prior the G20 Leaders meeting in London expressed their support for the G20:

We consider that the G20’s position as the focal point to coordinate with global economic and financial challenges and to lead international efforts responding to the current crisis should be consolidated.

Finally,  in their joint statement following the historic Leaders meeting, the BRIC leaders declared:

1. We stress the central role played by the G20 Summits in dealing with the financial crisis. They have fostered cooperation, policy coordination and political dialogue regarding international economic and financial matters.

2. We call upon all states and relevant international bodies to act vigorously to implement the decisions adopted at the G20 Summit in London on April 2, 2009. We shall cooperate closely among ourselves and with other partners to ensure further progress of collective action at the next G20 Summit to be held in Pittsburgh in September 2009. We look forward to a successful outcome of the United Nations Conference on the World Financial and Economic Crisis and its Impact on Development to be held in New York on June 24-26, 2009.

Too many commentators have been quick to declare the successful collective leadership either for the BRICs or the G5.  It is evident that these countries are exploring collective action but there is a long way to go before declaring these clubs a permanent presence.  Meanwhile that leadership of the emerging market countries is focused on the G20 and its attention on the global financial crisis.

The BRICs work on lending to nations in distress

Since January the IMF has been working on the issuing of a first bond issue.  The bonds would be denominated in SDRs, with a maturity of 1 year and offered to Central Banks. Speculation has been rife for some time that the BRIC countries would be the principal purchasers of such bonds. The BRIC countries – Brazil, Russia, India and China met together just several days ago to work on possible terms of the bonds.  It is noteworthy that the BRICs again are seen as a self actualizing group and it appears that all are prepared to lend to the IMF in this way though it appears that the BRICs would prefer that their be a secondary market for the bonds to improve their liquidity.

While the BRIC targeting is noteworthy in and of itself, it would appear additionally that the bond issue is a means for the BRICs to contribute to nations in distress but also to avoid providing longer term commitments to the IMF.  Some, like Cornell’s Eswar Prasad, formerly the chief of the financial studies division in the research department of the IMF, see the bond issue as a means to put pressure on the IMF and leading members to increase the voting shares of countries Continue reading

The Bad News Continues

This week finance ministers are meeting at the International Monetary Fund (IMF) and the World Bank (WB).  In advance of the meeting the IMF release a Report yesterday that raised the total projected losses from the global financial crisis to banks and other financial institutions to $USD 4.05  trillion.  That’s a big number and few steps have been taken by the institutions to write down those amounts.

To date the IMF has loaned $55 billion to to countries such as Iceland, Ukraine, Hungary, Serbia, Romania, Belarus and Latvia. In a continuing effort to identify the impact on emerging countries in either the G5 or the N11 a November arrangement to loan funds to Pakistan was concluded.  Mexico has just concluded (March 24, 2009)  a flexible credit Continue reading

‘From Architects to Gardeners’ with Joshua Cooper Ramo

I first encountered (not literally mind you) Joshua Cooper Ramo in his description and analysis of what Ramo called the ‘Beijing Consensus’.  Difficult to unearth the consensus part of the story, but that’s for another post, still I was intrigued by his effort to describe a developmental approach that emerged from the ‘new’ China.  I was also interested in the fact that he lived – at least part time – in China (hat’s off to any ‘louwai’ (foreigner) for doing this) and that he was the Managing Director of Kissinger Associates though he’d previously been a journalist including a stint as foreign editor and assistant managing editor at Time Magazine.

So, with the recent publication of, The Age of the Unthinkable: Why the New World Disorder Constantly Surprise Us and What Can We do about It, I was drawn to it – not least because the book was focused on the failure of current Continue reading

Prevailing Winds and India

I had the great pleasure of attending a presentation at the C.D. Howe Institute here in Toronto by Montek Singh Ahluwalia, currently the Deputy Chairman Planning Commission of India.  Unfortunately these sessions, probably wisely, are undertaken as off-the-record discussions.  So, I cannot comment directly on what was said.

Mr. Ahluwalia has had a very distinguished public career spanning the World Bank, the IMF, the Ministry of Commerce and the Ministry of Finance in India as well as a special secretary to the Prime Minister in the latter eighties. His appointments, writings and research point to what can only be described as a thoroughly erudite public servant.

Not surprisingly the focus of questions centred on the state of India’s economy in the midst of the global financial Continue reading

N-11 and the Global Financial Crisis

 Late in 2005, Goldman Sachs (GS) introduced the concept of the N-11. As described by Dominic Wilson and Anna Stupnytska in the GS Global Economics Paper, No. 153  (March 28, 2007), “The N-11: More than an Acronym.”*

The N-11 appeared to be a GS effort to introduce a further tier of emerging economies and determine whether the next group of large developing countries with large populations had the potential to become ‘BRIC-like.’  Their summary conclusion:


“The diversity of the N-11 makes it difficult to generalise. But our projections confirm that many of them do have interesting potential growth stories, alongside reasonable scale, although their prospects vary widely and some face much greater challenges than others.  …Of the N-11, only Mexico, Korea and, to a lesser degree, Turkey and Vietnam have both the potential and the conditions to rival the current major economies or the BRICs themselves. Other N-11 economies – Indonesia and Nigeria in particular – have the scale to be important if they can deliver sustained growth. But while the rest of the N-11 may not have a BRIC-like impact any time soon, the Continue reading