Brazil, Mexico, Russia, China

Several articles on geopolitical issues with implications for Venezuela found on the Web this morning.

Brazil’s blinkered barrier
The decision by the authorities in Rio de Janeiro to encircle a favela (shanty-town) with a 650-metre-long, 3-metre-high, concrete barrier marks a significant psychological step for Brazilians.

Human rights groups have denounced the barrier, likening it to Israel’s security barrier. Environmental campaigners have dismissed claims that it will help to protect the Atlantic rainforest from illegal occupation and improve security and living conditions for slum residents.

Nevertheless, the move will probably be quite popular amongst many residents of Rio, outside the favelas, who are sick of years of violence which have turned their city into a civil war in all but name. There are 4,000 murders in Rio every year, more than the total number killed over 30 years in Northern Ireland and surpasses the annual death rate of all but the world’s most violent conflict zones. Many of Rio’s favelas are already heavily barricaded enclaves, patrolled by armed teenage narco-trafficants, which outsiders can often only enter with the permission of the controlling drug gang. When the police storm in, it is by frontal assault and they are treated, and behave, like an army of occupation.

The wall is due for completion at the end of the year and could be followed by several others.

The authorities claim that the wall will help them win back the favelas from the drug gangs. It is part of a strategy which has seen the deployment of large-scale military police force in some favelas along with increased social investment to win the “hearts and minds” of local residents. The Brazilian government has even invited officials from Britain to draw on their experiences from Helmand province in Afghanistan and Basra in Iraq.

Since neither of these occupations could remotely be described as successful, the new strategy smacks of a certain desperation. It is also an implicit admission that one of the central national characteristics by which Brazilians like to define themselves is built on a myth.

Brazil was the last country in the world to abolish slavery and around half of its population could broadly be defined as black. The country likes to think of itself as a “racial democracy” and has never suffered from the overtly racist policies of US segregation or South African apartheid. Yet a glance at any social or economic statistic shows that black people suffer from overwhelming disadvantage in what is also the most unequal major country in the world.

Nearly half a million Brazilians have been murdered in the last decade. Brazilians are angry and scared about what is happening in their country and desperately looking for solutions. Walling off the favelas offers one such option – like the “wild west bonus” that Rio’s governor once offered to police officers for shooting criminals dead – but until Brazil is prepared to tackle the poverty, inequality and social exclusion that underlie the violence it will be no panacea.

As one human rights activist commented: “This is something that is very similar to what Israel does to the Palestinians and to what happened in South Africa.” Indeed, it is difficult to understand why the poor of Brazil do not merit a similar international outrage.

Mexico’s criminal insurgency
By JOHN P. SULLIVAN
LOS ANGELES, Dec. 18 (UPI) — Behind the headlines about kidnappings, assassinations and shootouts, the escalating conflict in Mexico between drug cartels, gangs and the police is evolving into a kind of criminal insurgency.

Vying for domination of the lucrative drug trade, the cartels are seeking both market control and freedom from government interference. Tijuana, Ciudad Juarez and other border towns are racked with violence. Mexico City itself is not immune. Corruption joins the extreme violence and helps fuel Mexico’s downward spiral.

Drug murders in Mexico have more than doubled this year to nearly 5,400, with 943 occurring in November alone. On Nov. 30 nine decapitated victims of the drug wars were discovered in Tijuana. Within the past few weeks, Mexican “drug czar” Noe Ramirez Mandujano was accused of taking $450,000 in bribes from Sinaloa’s Pacific cartel. Five hundred municipal police in Tijuana were replaced because of fears that they were corrupt. Mexico’s liaison to Interpol, Ricardo Gutierrez Vargas, was arrested under suspicion of leaking information from criminal intelligence databases to the cartels. A newspaper office in Culiacan, Sinaloa’s capital, was also attacked with grenades.

Mexico is under siege by a set of interlocking, networked criminal insurgencies.

The drug mafias have abandoned subtle co-option of the government to embrace active violence to secure safe havens to ply their trade. This de facto “criminal insurgency” threatens the stability of the Mexican state and already has started to reverberate north of the Rio Grande. The Los Angeles Times reported penetration of Mexican cartels into at least 195 U.S. cities, including Atlanta, Boston, Seattle and Honolulu — not to mention Los Angeles.

Not satisfied with their feudal outposts in the Mexican interior and along the U.S.-Mexico frontier, the cartels are also starting to migrate southward. From Central America to the Southern Cone, they are setting up business as far away as Argentina and across the South Atlantic to Africa. Money fuels global expansion, and transnational organized crime has learned it can thrive in the face of governmental crisis.

The cartels are joined by a variety of gangs in the quest to dominate the global criminal opportunity space. Third-generation gangs — that is, gangs like Mara Salvatrucha (MS-13) that have transcended operating on localized turf with a simple market focus to operate across borders and challenge political structures — are both partners and foot soldiers for the dominant cartels. Gangs and cartels seek profit and are not driven by ideology. But the ungoverned, lawless zones they leave in their wake provide fertile ground for extremists and terrorists to exploit.

Concrete steps are under way to contain Mexico’s criminal insurgencies, but more needs to be done to stem the cross-border onslaught. The Merida Initiative — a $400 million U.S. aid package to Mexico — is a good first step. It enhances information sharing and promotes efforts to build effective civil police. But too much emphasis (41 percent of the funds) is directed to technology solutions. More concern must be placed on human and social dimensions.

Other Merida efforts soon will be implemented. To enhance effectiveness, five elements must be prioritized. First, rout out corruption. Next, accelerate reforms in policing and enhance cross-border police training. Build new avenues for cross-border information exchange and cooperation, and, finally, support community-based initiatives for economic development and human services. Together, these efforts can help build government legitimacy and assist communities themselves to resist cartel penetration and gang domination.

Mexico obviously must take the lead in securing its internal security, and President Felipe Calderon has taken concrete steps to do so. Yet Mexico cannot go it alone. The reach of transnational narco-cartels and gangs has global consequences. U.S. border states can and should play a role.

Despite an exponential surge in violence, the situation south of the border remains largely obscure to the American public. The cross-border cartel-gang nexus must become part of our own national security debate.

A fly on the wall at Davos.
Davos Man is fighting for his survival
Is it possible for evolution to go backwards? Could Darwin’s 150th anniversary be remembered as the year when natural selection went into reverse? It’s a question probably only David Attenborough could answer with authority. Which is why we have to hope that he’s in Switzerland this week – so that he can watch the most highly evolved mammal on the planet struggling to maintain its supremacy, in the one environment it feels totally secure. Davos.

Davos Man is the inhabitant of the ultra-chic Swiss ski resort which is home every year to the World Economic Forum, a gathering of the globe’s most powerful politicians, businessmen and influence-mongers.

For years now, merchant bankers turned finance ministers and former finance ministers who have found time in their lives for a little light banking have mingled in the queues to hear masters of the universe explain how to sweat assets, add value and spread risk. Normally on to other people’s balance sheets.

For many it would normally be the only time every year they queued for anything. Because Davos Man, the plutocrat’s plutocrat, has got used to living in a world where you rarely fly commercial, and if you do by some mischance find yourself on an airline, you never turn right; a world where supermarkets are not places where you make purchases but things you actually buy and sell; a world where your bank manager doesn’t manage your account, he runs your bank.

But now that world has vanished. Just like the climate cataclysm that robbed the dinosaurs of the lush vegetation on which they relied, the credit crunch has deprived Davos Man of the abundant hedge funds, plumply vulnerable family firms and juicy government contracts on which he used to feed. If he is to survive at all, he may have to reacquaint himself with habits that he imagined he had long outgrown. Like saying sorry. This week might be a good time to start.

Over in Moscow….
America’s Favorite Boogeyman
The fact that Russia is supposedly bad doesn’t make the United States better — or better off — at the end of George W. Bush’s presidency, when it is mistrusted by the world and is bogged down by two wars and a severe economic crisis. In this environment, is Russia a threat to the United States? Unlikely, but branding it as a dictatorship revives the old fears and diverts attention from the immense problems Washington faces today.

Barack Obama’s presidency promises to usher his country into a new era of post-unilateral decision-making, international diplomacy and coherent foreign policy making. This new era should also, perhaps, end senseless public animosity toward Russia that has continued since 1991, when the Soviet Union lost the Cold War and disappeared.

Becoming the world’s only superpower proved very damaging to the United States. It is no surprise that U.S. overconfidence bred hubris. In the 1990s, President Bill Clinton’s administration tirelessly reminded the former Soviets that they, the losers, should unwaveringly follow the lead of the all-powerful United States. President Boris Yeltsin’s privatization program was not speedy enough, at least as judged in a Washington anxious to spend as little as possible helping Russia. Any thoughts of a Marshall Plan to ease Russia’s path were dismissed in Washington as welfare for the communists.

Russia is certainly far from perfect, and its current return to authoritarianism is not all, or even mostly, Washington’s fault. But the economic arrogance from the Clinton era, coupled with the political egotism of the Bush years, was not a sound strategy, at least in terms of impact on Russia. Wagging the dog of Putinism can serve only one purpose — to appeal to the familiarity of the communist threat in order to cover up the United States’ own imperfections.

A CNN conversation with high school students once revealed that some of them equate Putin with Osama bin Laden, arguing that a diplomatic sit-down is not possible with either. What this “young generation of future policymakers” should have known is that although Russia continues to occupy 11 time zones, it’s not the Soviet Union, no longer communist or locked in self-imposed isolation from the world. But even Thomas Friedman, The New York Times foremost authority on internationalism, in one interview called Putin’s Russia “the Soviet Union.” Although Putin is by no means the ideal democrat, he is no Stalin either.

Indeed, how much better was Pervez Musharraf, the former Pakistani president whom the Bush administration hailed as a beacon of democracy even as the Taliban regrouped in his country’s tribal regions? Or Afghanistan’s Hamid Karzai, another purported democrat who arguably presides over the most corrupt government in the world? What about Georgian President Mikheil Saakashvili, a politician who under the guise of democracy has been silencing Georgians who protest his rule? Then there are of course Hugo Chavez and Mahmoud Ahmadinejad. And the United States’ own claim to fame was former Vice President Dick Cheney, a perverse constitutional theorist and modern Dr. Strangelove if there ever was one.

But Russia is the butt of political jokes, the focus of Sarah Palin’s foreign policy ire and the new Red Scare for The New York Times. And let’s not forget Hollywood, where the Russians have returned, after a brief interval, as the designated bad guys. In the latest “X-Files: I Want to Believe,” Russians are the horrible dog trainers and organ harvesters; in the 2004 “Hellboy,” the mummified Grigory Rasputin seeks to spread evil around the world; in “Hitman,” we have a bad Russian president, his criminal double and his corrupt brother; even in the Coen brother comedy “Burn after Reading,” Russia is made into an enemy, albeit a fake and funny one. In “The Golden Compass,” the latest in a series of grand fairy tales that attempted to take Americans’ mind off their troubles, the villainous animals speak perfect Russian.

We all need a good enemy. As U.S. Defense Secretary Robert Gates once shrewdly pointed out, the talk of a new Cold War fills him “with nostalgia for a less complex time.” Indeed, the world made a glib sort of sense back then — communism vs. capitalism, good vs. evil empire.

Terrorism is too amorphous, bin Laden you actually have to catch and the Arabs as the enemy is, somehow, politically incorrect.

We shouldn’t be unfair to the Chinese. They too would make an excellent adversary, but China is too mysterious for a simple us-versus them confrontation with its middle kingdom of Jet Li, kung fu and capitalists posing as communists. China also produces toys, medicine and everything else for U.S. consumers; even if tainted, leaded or spiked, there is no living without them.

Russia, on the other hand, remains a distant land of ballet, bombs and Dostoevsky. The Cold War mystery has defrosted, but the familiarity of the threat remains conveniently alive.

What makes Russia a great enemy is that unlike bin Laden, you don’t need to worry too much about it — not yet. But if the Russians continue to be treated as if the first Cold War never ended, the new Cold War will actually arise.

On Russia’s “soft power” offensive against the United States
Paul Goble’s blog WindowonEurasia publishes this gem:
Having discovered that economic power does not immediately translate into political influence and may in fact alienate those it is supposed to attract, the Russian government needs to identify new ways to influence the West but finding that its options are not nearly as good as many in Moscow had thought, according to a Russian analyst.

And the most effective way to do that, Andrey Pronin writes in an essay posted today on a Moscow State University portal that has often served as a source of foreign policy ideas for the Russian government, is for Russia to deploy what he calls its “soft force” against American “soft power” (www.ia-centr.ru/expert/3624/).

That will not be easy, he argues, because “at the present moment, Russia does not have those cultural forms which can be exported to the West and converted into political influence.” As a result, Russia needs “a new national project,” that that would promote Russia as an intellectual center where “new social initiatives and humanitarian technologies” are promoted.

To that end, he argues, Russia should not try to match the Americans militarily – the U.S. is simply too strong in that sector – or make the mistake of focusing on keeping “in its orbit” the former Soviet states. Instead, Moscow must “focus on the United States” and deploy an ideological agenda that will undercut Washington’s influence.

Russia should present the US with “an ideological challenge,” by forming “a new international with the most educated groups in the West.” Such an approach, Pronin says, would allow Russia to “repeat the success of the USSR which was able to ideologically split the West and find for itself numerous allies” within the latter.

“In the 1940s and 1950s,” the Moscow analyst continues, “a significant part of the most respectable Western intelligentsia held leftist views and openly sympathized with the USSR, and English aristocrats worked for Soviet intelligence services on the basis of their convictions in this regard.”

Today, he says, Russia needs to find “allies interested in itself within America” and to “form a pro-Russian lobby, a circle of influential people who respect and support Russia and who will exert an ever greater pressure on the political establishment of the United States” on behalf of Moscow.

In Soviet times, Moscow allied itself with the West’s “outsiders.” But now, Pronin suggests, Russia must take advantage of the opportunity it has to “form a union wit5h the most educated part of Western society, the scientific and artistic avant garde of America” and thus to promote “a reformation of the United States.”

That won’t be accomplished simply by media programs directed at Western and especially American audiences, Pronin says. It will occur only if the Russian Federation can transform itself into a center of innovation where scholars can share ideas on how to “humanize” globalization and satisfy the very real but currently unsatisfied spiritual strivings of Western intellectuals.
Given the problems the West is now experiencing – and Pronin argues that “the US today in many ways recalls the USSR of the period of Brezhnev’s stagnation – Russia has “a chance to do so by providing a “new global project in place of neo-liberal globalization which has discredited itself.”

If Russia is able to promote such an agenda, he continues, Moscow “can win the sympathy of American intellectuals” and thus advance its political agenda by recruiting them as allies. But unfortunately, “contemporary Russia does not have sufficient possibilities for the realization of this project” on its own.

Moscow needs allies, and the two most obvious ones are India and China, neither of whom Pronin suggests is comfortable with American-style globalization. If such a “union of the three giants” is formed, he concludes, Russia will occupy the leading role of a scientific and innovative center and the developer of humanitarian technologies and standards.”

Both the sources of Pronin’s argument – the past of the Soviet Union – and the problems with it – Russia is unlikely to be able to present itself in the way that he advocates or gain the allies he hopes for – are obvious. But that such arguments are being offered and in such a respectable place suggests that at least some in the Russian government may be listening to them.

If they are and if some Russian officials do in fact try to act as Pronin suggests, that could pose serious challenges for the United States in particular and the West more generally, especially if most commentators in the West assume that what he is saying is not only absurd but completely impossible.

Toppling the US from its sole global superpower perch is all the rage in Putin’s circle.
This article citing Igor Panarin’s forecast of America’s disintegration in 2010. Check out the map attached to the WSJ article. It reminds Caracas Gringo of Joe Garreau’s map of the “Nine Nations of North America.”
As if Things Weren’t Bad Enough, Russian Professor Predicts End of U.S.
MOSCOW — For a decade, Russian academic Igor Panarin has been predicting the U.S. will fall apart in 2010. For most of that time, he admits, few took his argument — that an economic and moral collapse will trigger a civil war and the eventual breakup of the U.S. — very seriously. Now he’s found an eager audience: Russian state media.

In recent weeks, he’s been interviewed as much as twice a day about his predictions. “It’s a record,” says Prof. Panarin. “But I think the attention is going to grow even stronger.”

Prof. Panarin, 50 years old, is not a fringe figure. A former KGB analyst, he is dean of the Russian Foreign Ministry’s academy for future diplomats. He is invited to Kremlin receptions, lectures students, publishes books, and appears in the media as an expert on U.S.-Russia relations.

But it’s his bleak forecast for the U.S. that is music to the ears of the Kremlin, which in recent years has blamed Washington for everything from instability in the Middle East to the global financial crisis. Mr. Panarin’s views also fit neatly with the Kremlin’s narrative that Russia is returning to its rightful place on the world stage after the weakness of the 1990s, when many feared that the country would go economically and politically bankrupt and break into separate territories.

A polite and cheerful man with a buzz cut, Mr. Panarin insists he does not dislike Americans. But he warns that the outlook for them is dire.

“There’s a 55-45% chance right now that disintegration will occur,” he says. “One could rejoice in that process,” he adds, poker-faced. “But if we’re talking reasonably, it’s not the best scenario — for Russia.” Though Russia would become more powerful on the global stage, he says, its economy would suffer because it currently depends heavily on the dollar and on trade with the U.S.

Mr. Panarin posits, in brief, that mass immigration, economic decline, and moral degradation will trigger a civil war next fall and the collapse of the dollar. Around the end of June 2010, or early July, he says, the U.S. will break into six pieces — with Alaska reverting to Russian control.

In addition to increasing coverage in state media, which are tightly controlled by the Kremlin, Mr. Panarin’s ideas are now being widely discussed among local experts. He presented his theory at a recent roundtable discussion at the Foreign Ministry. The country’s top international relations school has hosted him as a keynote speaker. During an appearance on the state TV channel Rossiya, the station cut between his comments and TV footage of lines at soup kitchens and crowds of homeless people in the U.S. The professor has also been featured on the Kremlin’s English-language propaganda channel, Russia Today.

Mr. Panarin’s apocalyptic vision “reflects a very pronounced degree of anti-Americanism in Russia today,” says Vladimir Pozner, a prominent TV journalist in Russia. “It’s much stronger than it was in the Soviet Union.”

Mr. Pozner and other Russian commentators and experts on the U.S. dismiss Mr. Panarin’s predictions. “Crazy ideas are not usually discussed by serious people,” says Sergei Rogov, director of the government-run Institute for U.S. and Canadian Studies, who thinks Mr. Panarin’s theories don’t hold water.

Mr. Panarin’s résumé includes many years in the Soviet KGB, an experience shared by other top Russian officials. His office, in downtown Moscow, shows his national pride, with pennants on the wall bearing the emblem of the FSB, the KGB’s successor agency. It is also full of statuettes of eagles; a double-headed eagle was the symbol of czarist Russia.

The professor says he began his career in the KGB in 1976. In post-Soviet Russia, he got a doctorate in political science, studied U.S. economics, and worked for FAPSI, then the Russian equivalent of the U.S. National Security Agency. He says he did strategy forecasts for then-President Boris Yeltsin, adding that the details are “classified.”

In September 1998, he attended a conference in Linz, Austria, devoted to information warfare, the use of data to get an edge over a rival. It was there, in front of 400 fellow delegates, that he first presented his theory about the collapse of the U.S. in 2010.
“When I pushed the button on my computer and the map of the United States disintegrated, hundreds of people cried out in surprise,” he remembers. He says most in the audience were skeptical. “They didn’t believe me.”

At the end of the presentation, he says many delegates asked him to autograph copies of the map showing a dismembered U.S.
He based the forecast on classified data supplied to him by FAPSI analysts, he says. He predicts that economic, financial and demographic trends will provoke a political and social crisis in the U.S. When the going gets tough, he says, wealthier states will withhold funds from the federal government and effectively secede from the union. Social unrest up to and including a civil war will follow. The U.S. will then split along ethnic lines, and foreign powers will move in.

California will form the nucleus of what he calls “The Californian Republic,” and will be part of China or under Chinese influence. Texas will be the heart of “The Texas Republic,” a cluster of states that will go to Mexico or fall under Mexican influence. Washington, D.C., and New York will be part of an “Atlantic America” that may join the European Union. Canada will grab a group of Northern states Prof. Panarin calls “The Central North American Republic.” Hawaii, he suggests, will be a protectorate of Japan or China, and Alaska will be subsumed into Russia.

“It would be reasonable for Russia to lay claim to Alaska; it was part of the Russian Empire for a long time.” A framed satellite image of the Bering Strait that separates Alaska from Russia like a thread hangs from his office wall. “It’s not there for no reason,” he says with a sly grin.

Interest in his forecast revived this fall when he published an article in Izvestia, one of Russia’s biggest national dailies. In it, he reiterated his theory, called U.S. foreign debt “a pyramid scheme,” and predicted China and Russia would usurp Washington’s role as a global financial regulator.

Americans hope President-elect Barack Obama “can work miracles,” he wrote. “But when spring comes, it will be clear that there are no miracles.”

The article prompted a question about the White House’s reaction to Prof. Panarin’s forecast at a December news conference. “I’ll have to decline to comment,” spokeswoman Dana Perino said amid much laughter.

For Prof. Panarin, Ms. Perino’s response was significant. “The way the answer was phrased was an indication that my views are being listened to very carefully,” he says.

The professor says he’s convinced that people are taking his theory more seriously. People like him have forecast similar cataclysms before, he says, and been right. He cites French political scientist Emmanuel Todd. Mr. Todd is famous for having rightly forecast the demise of the Soviet Union — 15 years beforehand. “When he forecast the collapse of the Soviet Union in 1976, people laughed at him,” says Prof. Panarin.

Meanwhile, across the Eurasian landmass, China’s internal turmoil is growing.
The Year of the Ox will bring little prosperity for the Chinese
Beijing’s “authoritarian capitalist” model has gone as far as it can. Chaos, corruption and indecision have been ignored
By John Lee
Twelve months ago, a well-known bear on the Chinese economy revealed to me that a China-sceptic such as himself was treated by his colleagues as a bit of a crackpot, an angry old man, or sometimes, more patronisingly, as somewhat of a curiosity. Arguing that the Chinese model was seriously flawed was almost like denying that global warming was occurring, he said wryly. Only unreformed socialists were on his side, he quipped. But in the first two weeks of 2009 he has been invited to speak at more conferences and approached to write more articles in prominent publications than the whole of the previous year.

The American model of free markets may be on trial, but so is the Chinese model of “authoritarian capitalism”. Today is officially Chinese new year. It will usher in the Year of the Ox, symbolising prosperity through fortitude and hard work. But prosperity is increasingly hard to come by. The Shanghai Exchange has seen its index decline by two thirds. The Chinese export sector, responsible for 40 per cent of Chinese growth over the past decade, is tanking. Some estimate that 20 per cent of factories in the Pearl River delta area have already closed down and half will be gone by the end of the year.

Overall economic growth is likely to dip below the 8 per cent mark – the point at which unemployment (and therefore unrest) begins to rise dramatically. If we look at informal but probably more accurate indicators, such as power consumption, the Chinese economy is close to stagnating and even contracting. Power use in China fell 9.4 per cent in November 2008. December figures have not been released.

This is despite the trillions of dollars – in addition to the half-trillion- dollar stimulus package – that its state-owned banks regularly but inefficiently pump into state-controlled businesses to maintain the growth levels enjoyed up to now. Domestic investment (from bank loans) was responsible for around half of Chinese GDP growth. Even before the onset of the financial crisis, there was an estimated one trillion worth of bad loans in the Chinese financial system as a result of this flawed investment strategy. A new and massive spate of bad loans is inevitably around the corner for Chinese banks.

Even before the global financial crisis, those in absolute poverty (earning less than US$1 a day) doubled in China over the past decade. More than 400 million had seen their net incomes decline over the same period despite record GDP growth. It is no wonder that domestic consumption growth has been slow and will not be able to take up the slack as the export sector suffers. Instead China must rely on state-led fixed investment to keep growth at 8 per cent, despite acknowledging that this strategy is becoming more inefficient and wasteful, and therefore increasingly unsustainable. The general economic outlook is so dire that the Chinese President, Hu Jintao, has increasingly issued warnings about the possibility of political and social collapse.

The persistent idea that the Chinese economy was “decoupling” from the West and would provide a buffer for Asia now seems absurd. The Chinese model is clearly not as sound and resilient as many believed. But the amazing thing is not that China is suffering. The facts and figures always suggested that it would in the event of an American and European slowdown. The amazing thing is that so few experts saw it coming; and those that did were dismissed or ridiculed.

In a 2005 essay on why intellectuals tend to get the big questions of their day wrong rather than right, Owen Harries argued that intellectuals are “slaves of fashion” and that they essentially “think in herds”. So, too, do economists and policy wonks, it seems. The question, as far as the hype behind the China model is concerned, is who led the herd? I would hazard a guess and say that there are three distinct groups.

The first are those with economic interests in the continued hype surrounding the Chinese economic miracle: businesses and their “strategic advisers” who benefited from activity in China, investment banks who made a bundle from multibillion-dollar deals and consultants advising clients how to make it in this world of 1.3 billion people and unlimited possibilities. Even high-profile and very credible people who served in presidential administrations got in on the act.

The second are national and NGO policymakers and wonks who have wisely advocated engagement with China in order to encourage Beijing to rise peacefully. The reward of engagement for the Chinese was said to be prosperity for all and a more peaceful and contented China that would please the rest of the developed world. No need to focus on flaws in Beijing’s model when much larger political objectives were at stake.

The third are made up of a diverse group of intellectuals (and a few malcontents) who were seeking an alternative to Western and American-style capitalism as the way to go. Most believed in the Chinese model of “authoritarian capitalism” in good faith and saw the “Beijing Consensus” as an alternative that avoided chaos, corruption and indecision when it came to developing countries.

Unfortunately, the inconvenient truth is that chaos, corruption and indecision (in the form of a stalled reform process) are precisely the problems with the Chinese model that have been largely ignored until now.

The China story is far from finished. China will eventually still rise, but it will need a different model to to do so. Its “authoritarian capitalist” model has almost gone as far as it can go.

President Hu put a positive spin on 2008 by concluding that “for the Chinese people, 2008 was a very extraordinary and uncommon year”. For 2009, the omens are much more ominous.

Finally, remembering the good old days of Christian Western Empire:

Christian map of the world c. 1596

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About Caracas Gringo

Representing less than 0.00000000001515152% of the world population as of 31 December 2011.
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