Sunday, June 02, 2013

Obama-Xi Summit

The good thing is neither President Obama nor President Xi Jinping are driven by any 'larger than life' zeal to make some epoch changing deals in the upcoming summit. Both sides have set no expectations, nor leaders are depending on the summit to deliver something crucial for their political survival. Such a relaxed setting as well as workmanship like approach will do well for both leaders.

Part of the reason why there are no set expectations is Obama Administration has not set any well defined agenda to deal with China. The Administration has done a good job in not precipitating any crisis with China, but at the same it has remained 'list-less' in its China Policy, except say 'Asia Pivot' in some sense. Clearly, the summit is an opportunity for Obama Administration to come out in setting the tone for remainder of the term. Whether it results in a 'concrete communique' or not is besides the point. Because Obama is in his last term whereas Xi Jinping is only starting his first term. For Xi Jinping, as he establishes himself with rest of the Party and Chinese Military apparatus; he would be reluctant to commit anything which will stretch his credibility with his brass. Besides he is going to wait out Obama to deal with the next American President too. For Obama Administration, Republican control in Congress is going to actual help while dealing with Xi since China would prefer to deal with a softer Obama than rabid Conservatives in Congress harping about Human Rights with shrill. (When a President is Republican, business interest lobby of GOP takes over and human rights issues are relegated into the background. When a President is Democrat and Republicans are in Opposition; human rights issue comes up strongly limiting business agenda a Democratic President wants to pursue with China. Well, that is the way Politics works in USA and Chinese will be well aware of that.)

There are number of important issues to be thrashed out between USA and China. Of those, a summit of this kind should make progress on following ones.

1. Obama Administration's Asia Pivot (while sending your Defense Minister before the summit to make appropriate noises in that part of the world) and following 'song and dance furry' for sure would have alerted China when it comes to South China disputes. That dispute is primarily about oil and gas extraction from disputed waters. Nations (China, Philippine, Vietnam and others) are fighting to establish their sovereign rights so that 'extraction' can be claimed subsequently. China wants to grab all of these waters; but more organized response by other nations and America's involvement have slowed down this Chinese aggression. But China is unlikely to back down here, considering it's immediate 'voracious resource needs'. 

Even though the conflict is about sovereign rights, the dispute is not about people or usable land. This means one choice available here would be 'common sharing' of resources as extraction is undertaken. Since America does not have any claims on the area or what proceeds come out of that while at the same time can deliver on necessary military capabilities to protect interests of his partner nations; America can propose 'principles' for shared exploitation of natural resources out of the area while separating out administrative aspect of the area. Pairing diplomatic initiatives along these lines while showing the spine by military projections in South China sea, America can contribute to resolution of this issue constructively. Any loosening of tensions in that area are naturally advantageous to all parties.

Once such an approach shows promises in South China sea disputes, same approach can be adopted for the China-Japan island disputes too.

2. As far as nuisance of North Korea goes, it seems nothing much can be done apart from sharing of notes as both countries do not have much control on what madness goes in that country. China for sure has leverage and it has weighed upon that regime. But it is doubtful whether China would risk pushing North Korea so much that the regime collapses and China becomes the destination of refugees from that country. However, Obama-Xi reiteration that Korean Peninsula must remain nuclear free, could be a good gesture to let North Korea know that no one wants it to cross the red line. 

3.Many in West have been making a case of corrosive impacts of Chinese State Capitalism on world pecking order. Advances of Chinese State Capitalism in rest of the world are not that much different than Private Capitalism of West conquering corners of the world. To that extent nations must insist on reciprocity of market access. If China wants to fund a transportation in a country, it also needs to allow transportation companies from rest of the world in its domestic market. 

Economic vulnerability and lack of Political Will will not make European countries to hold a line in this matter. But President Obama can and he should make it clear to President Xi that such 'reciprocity' is needed if China's State Capitalism wants to expand in USA. President Obama would have Republicans in Congress fully supportive in this regard. 

4. If there is any hot topic making some public presence, then it is of 'hacking of networks of American Corporations and Security Establishments'. Chinese military has interest in hacking Pentagon's network for obvious reasons (same way Pentagon might be hacking Chinese military networks). But for Corporations, Chinese intrusions are about stealing their IP and corporate plans. That is something American companies would be expecting Obama Administration to come heavily on Chinese President. Obama Administration must ask Chinese government to stop all these hacking episodes or else consequences will be going 'open about these episodes' to expose perpetrators.

Without network hacking America should be having enough satellite intelligence on Chinese weapon system. In other words a case can be made that security intelligence can be achieved without Pentagon undertaking hacking of Chinese military network. This means USA can forcefully demand Chinese military stop intruding American networks. There is much more for USA to loose by Chinese hacking - considering IP edge of American companies - than gains by intruding Chinese systems. 

5. Finally the most delicate issue is of human rights. No Communist party chief - who is not an elected leader - is going to like anyone pointing non-democratic nature of the power in China. Like all Presidents before, President Obama also has to live with this situation as is. But like all his predecessors, President Obama still needs to remind President Xi about China's unfinished business - undemocratic political system, lack of freedom of speech and overall protection of human rights. While it is true that Xi Jinping is expected to undertake reforms soon so as free movement of Chinese citizens within China is possible and at some point China will need to throw away 'one child' policy too just to sustain its again population; America and the world has been patient and will be patient for China to undertake these crucial reforms. 

Buying ports and getting earth digging rights in corners of Earth can only take China's State Capitalism so far. All this Knowledge based Economy will continue to remain illusive for China. In what country a young and enterprising youth would like to write path breaking 'software code' if the State itself does not honor any intellectual property? In having this summit in California next to Hollywood and Silicon Valley; this is the precise message President Obama exactly needs to deliver to President Xi unequivocally. How to do that diplomatically, courteously and without offending these Communist Party Chieftains; that is a task cut out for President Obama.

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