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7 Jul, 2017 08:46

Sanctions against Russia are self-defeating, produce no result – ex-US govt. adviser

The leaders of the world’s most powerful countries are meeting at the G20 summit, and in a globalized world, the problems they share are more common than ever. Threats are crossing borders – from terrorism to cybercrime, from migration to economic crises. Could globalization be doing more harm than good?

Can world powers find a unified approach to the problems? And with a growing backlash against globalization, can its advance be hindered? We ask a former US government adviser and senior research fellow at the National University of Singapore – Parag Khanna.

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Sophie Shevardnadze: Parag Khanna, great to have you with us on our program, welcome.

Parag Khanna: Thank you.

SS:So we start with German leader’s latest initiative - she wants to make Africa one of the main topics for the G20. The idea is to spur investment, to alleviate poverty and stem the migrant flow from Africa to Europe. But these initiatives have already been in place before, and nothing really came out of it. Do you think it could be empty words this time or Africa is a facade for something else going on?

PK: You have taken the words right out of my mouth, because it is not the first time that Africa or migration or infrastructure or poverty alleviation are either G20 priorities, G7 priorities or EU priorities, and of course Germany and other major Western powers at any given time are chairing one of these bodies and they’re always shifting their priorities… So, I don’t think there’s anything new. I think there’s an acuteness, obviously, to the migration problem, particularly coming out of Africa and the Arab world that is front and center in the German political system right now, so I’m not surprised that they’ve decided to do this. But let’s also remember, most importantly, that the Barcelona process of the EU (that goes back to early 1990s) was a significant diplomatic focus on North Africa, on the need for investment, on the need to create jobs, on the need to stem migration flows. Does that sound familiar? Because that was almost 25 years ago. So, here we are. And Germany… it’s great that they’re doing this, but I want to see action, not just talk.

SS: So while it’s coming up again and it’s going to be in spotlight - poverty really does drive uncontrolled processes like migration and other things like terrorism as well, but economic incentives aren’t going make this go away overnight - what should be done in between?

PK: Not overnight, but it would be nice to start, because they do work. Let’s take the example of Turkish migration into Europe. The economic growth of Turkey prior to the crisis was so strong for a lasting period of time, that Turkish migration into Europe was net zero. Let’s take Mexico and the U.S. - there’s, right now, net zero migration between Mexico and the U.S., because Mexico is a fast-growing economy. So, let us be absolutely clear, it works, economic development works to keep people in their home countries, to be part of that growth story and modernization story and even to draw back the expatriates. So, when you say: “doesn’t work immediately” - no, it doesn’t, but it would be nice to start right now, because it really is the top priority.

SS:Regarding migration - Merkel has said that the average age in Niger or Mali is something around 15, while the average age in Germany is 43. So you have this aging population, right, so maybe it’s not such a bad thing to have an inflow of migration coming into Europe? Maybe you need fresh blood, actually, to make economy work even better?

PK: There’s migrants and there’s migrants. There’s refugees and then there’s PhDs, right? Those are two different things. I actually went to high school in Germany, I partially grew up there at the time, a lot of people thought that I was Turkish, though I am Indian, actually, but I speak German like a German, so I fit in. But, when new migrants who are coming in, who think they’re coming in just temporarily, who don’t necessarily have skills that the host country needs - just because they’re bodies, human bodies, it doesn’t mean they’re going to fill the specific gaps in German society. Every country knows what their gaps are - is it mechanics, is it teachers, is it cleaners, is it doctors, is it technicians? The labor shortage that exists across Europe generally is in multiple categories - IT professionals - that means you need people from India and from Brazil and from Russia, not from Mali, right? Or people in the elderly care industry, because as you’ve pointed out, they’re aging populations - that means you need Filipinos, not necessarily people from Mali. So, countries are going to be a lot more careful now about who they let in, for how much time, under what conditions and why. That’s not something we can be critical of, because they don’t all have the same degree of capacity to absorb migrants. A country like Luxembourg or Hungary cannot absorb as many migrants as Germany can or Sweden can. So, we have to see things from the point of view of Germany, of France and so forth.

SS:Do you think G20 is an adequate organisation to tackle issues like these? G7 is a very tight club, the G20 has more members - but then, can they come to a unanimous decision on issues like that?

PK: I’ve been immensely critical of these very formal club-like bodies, for a long time, and written books criticizing them, because they are… whether they are tight clubs or loose clubs - they’re non-binding clubs and all they do is take the mood of themselves... I actually just call it “group therapy”, and that’s really what it is - it’s just getting together to complain, not necessarily to produce a lasting positive agenda. We don’t really see the G20 achieving coordinated infrastructure investment, sensible bank coordination, coordinated geopolitical approaches or diplomacy - none of those things have ever happened within G20. You would be hard-pressed to come up with a single issue where there really is a long-term actual G20 cooperation. Just because 20 countries sign on to something... Look at the underlying structure - as with things like NATO, you know that at the end of the day it’s just one or maximum two countries that are driving the agenda.

SS:So you have the EU that now is turning to Africa, but then you have China that’s been there for decades and decades already, stepping up with the TPP which the U.S. withdrew from, it’s started this ambitious Silk Road project - the route that’s going to go all the way to Europe… Do you feel like we see Chinese hegemony coming in place? Can China be a global leader?

PK: Couple of things. In terms of Europe and Africa and China it’s sort of the other way around, because Europe has been there for centuries as a colonial power, but the volume of trade between Europe and Africa is relatively steady, and because Europe has not liberalized its agricultural policy, it’s been difficult for Africans to export more to Europe as much as they would like to. China and India - Asia, more broadly, we should say - has been the key driver of Africa’s growth, not only in terms of exports of African commodities, but also what we call the super-cycle in economics - high commodity prices for Africans and for Latin-Americans and high demand for Asia. That was the perfect symbiosis for the last 15 years and now, of course, Chinese infrastructure investment into Africa, particularly East Africa, but really 6 or 7 countries - has been very-very strong, huge, and it’s helping to create a foundation for future economic growth in a couple of countries. Remember, Africa is 53 counties, 80% of Chinese investment goes into five of those countries. So, China is helping certain specific countries. It is not uplifting an entire continent. China certainly does not want to be a hegemon. I’m a very strong supporter of “One Belt, One Road”. I have been writing about the precursors to “One Belt, One Road”, I have been travelling these new silk routes here in Kazakhstan, for almost 20 years, and I strongly believe that infrastructure is going to be very critical to help to create new economic purpose and role for Central Asian countries, especially at a time when energy prices are going to be permanently low for a very long time. We know this is going to affect Russia, Iran, Nigeria, Brazil - all of the oil-producing countries in the world have to get used to a new normal. Infrastructure investment is critical in driving the next wave of growth. So, whatever China is doing, whether it's in a few African countries, or across Eurasia, can be used in a very positive way. Now it’s up to those countries that are hosting the infrastructure, like Kazakhstan and others in Central Asia - they now have to make the most of it. They should not be asking China what to do after they’ve just received billions of dollars of new infrastructure from China.

SS:But, do you feel like West and China could maybe somehow clash over who gets more financial benefits or a foothold in Africa?

PK: To be honest, all of history is about clashing over what I call “the supply chain” - tug-of-war, right, it’s a tug-of-war. You and I are connected by a rope and it’s all about who gets the largest share of the rope.

SS:I mean, how big that clash can be? Could it be an actual conflict between West and China over Africa?

PK: You have to specify West - I mean, the U.S. is not continuous power to Eurasia…

SS:Let’s say Europe.

PK: Well, Europe has very enthusiastically signed on to “One Belt, One Road”, because, of course the most of the largest engineering and procurement and construction companies in the world are either European or Chinese, Korean, Japanese, Indian. They’re either European or they’re Asian. “One Belt, One Road” is a huge opportunity for all of them to benefit from building these new corridors of trade and commerce, oil and gas pipelines, electricity grids, railways, Internet cables - this will be great for European companies, this will be great for Chinese companies, it will smooth the flow of trade between the two.

SS:There’s still that intangible rivalry, right, between the EU or the West, as a broader word, and China?

PK: I don’t really think that we can speak about a coherent West anymore, because “One Belt, One Road” is proving just how divided the West is. Remember that under President Obama, the U.S. went to great efforts to try and convince European leaders, European governments not to join the Asian Infrastructure Investment Bank, but all of them did. They did not listen to the U.S.. Europe has a very different attitude towards Russia, very different attitude towards China, very different attitude towards Iran, than the U.S. does. Clearly, Europe is very pro-engagement, right, in ways that America is not. Personally, I take the European view.

SS:What do you make of Africa itself and its stance - I know it’s also a broad word, because you want to talk specifically of each country, but let’s try to take it all - do you feel like it’s going to take advantage to see how China reacts and some of the European countries react in terms of investment in Africa, or it’s just going to stay there and let itself be exploited?

PK: I’m happy to talk about Africa, I’m a geographer anyway. So, to me, there’s a meaning to Africa, but economically and politically it’s very fragmented. You can generalize somewhat about West Africa, East Africa and Sub-Saharan Africa, and Arab sort of North Africa, but what you’re describing is this phenomenon that I call “multialignment”. Multialignment is what happens when it’s a multi-polar world, when Europe is a Great Power, China is a Great Power, Russia is a Great Power, America is a Great Power - all of them are competing for influence to get the deals, to do the projects, to sell the weapons - whatever the case may be - with countries like Kenya, like Ethiopia, like Egypt, like Nigeria. What smart countries do when they are on the receiving end of all of this interest from around the world is they practice what I call this multialignment. They say: “Well, we want to maintain good relations with everyone. Let’s do certain things with China, certain things with America, certain things with Europe, certain things with Russia, certain things with India - and then we will win!”. So, we have to realize now that countries, African countries, Central Asian countries, Latin-American countries like Brazil - they have a right to see the world with themselves at the center. I mean, we now live in the world where every country is putting itself at the center. No country is saying “America is at the center”, “China is at the center”. Everyone sees themselves there. So they want to play all sides. That is also, I think, a very evolutionary step, in how the world is organized. I also think it’s quite positive.

SS:You have said that America is so far removed geographically from the rest of the world that it actually suffers from ignorance. What do you think will happen with Trump at the helm of the country. Do you feel like maybe America is going to be left behind? Is it even possible, when it’s the number one economy in the world?

PK: It’s certainly not going to diminish the ignorance, because the President himself takes so much attention, that even less time is spent on studying and analyzing the rest of the world. But leaving that aside, I like to quantify things - it’s not just about America’s historical role, I like to be very-very concrete: America is the world’s largest oil and gas producer, right? Its oil exports to China, to Asia, are increasing, even though the TPP agreement was not ratified. So, America’s role in global energy markets is very significant. America’s role in global finances is, of course, central - it’s the role of the dollar, it’s the size of the capital markets. America's role in technology is very-very significant. America’s role in defence, in military relationships is very significant. So, in these 4 areas, not to mention language and culture, of course America is still… It doesn’t matter if its number one or number two - it depends on where is it number one or number two. But on a global basis the fact is that the U.S. is so central in these key areas of global management and global markets. That means that no matter who’s president actually of the U.S., the U.S. is still going to play these roles, because it’s important for America to do them. So, you see the self-correcting nature of the system. By the way, in my opinion, it doesn’t correct fast enough, but the self-correcting nature meaning that trade continues to grow even though the U.S. decided to step out of the TPP agreement. So, there’s a system that is greater than just America, and America has to choose what parts of the system it wants to continue to play a strong role in and even lead. Obviously, it’s very ambivalent about that decision right now.

SS:What about inside the U.S.? I mean, Trump’s election obviously showed that a democratic process can actually split people, not only unite. Do you feel like U.S. is in for a long period of ideological splintering?

PK: We have to be clear that  political divide and polarisation in the U.S. predates President Trump, right, this has been going on for a long time…

SS:I’ve lived in the States for ten years, and I have a lot of friends from both camps, and I’ve never seen anything like this before.

PK: Correct.

SS:They’ve been clashing like there’s no tomorrow…

PK: Maybe this last election has brought really to the surface some things that were there. We know that income inequality, wage stagnation, gerrymandering of political districts, polarisation, the lack of effectiveness in Congress - these are well documented trends going back decades, and now they're really acute and manifest to the point where people describe this system as being seized with a kind of paralysis. So you are absolutely right that it’s never been this bad. And it does tell us a thing or two, not about democracy as a theory or principle - it just tells us about the way democracy is being practiced, right now.

SS:Are we talking in particular in America?

PK: Yes. I mean, you could also look at the flaws or the failures or the mistakes in policy-making or the lack of policy-making in the UK or other democracies. You could look, in fact, at Australia, they have a different PM every single year. No system is perfect, whether it's democracy or not a democracy. I personally work in the field of governance, I’m interested in the capacity of the state, capacity of the government to make effect long-term decisions and policies that benefit the maximum number of people. That is my only interest, and if I see a weakness in a way the U.S. is doing that - of course, there are weaknesses - and I want to remedy those.

SS:You’re not the only person who says that the American democracy or even the American capitalism is quivering right now. You propose - what? Technocracy instead of…?

PK: I propose something I call a “Direct Technocracy”, which combines the idea of direct democracy, which is, of course, highly democratic - that’s the way the country of Switzerland is run, and there is certainly no better democracy than Switzerland, but with technocracy, which is, to say, a very professional managerial class of civil servants, who are very neutral, who are utilitarian, who are meritocratically selected rather corrupt, and whose purpose is to take the very complex inputs of the world, economic issues, the domestic issues, foreign issues, and to find a way of balancing them versus the desires of the people, the fiscal constraints that the country faces, and to come up with credible consensus long-term policies. They have to do it in consultation with the people.

SS:What you’re describing is great and Singapore goes by the same type of technocracy - by do you think that it’s viable for a huge country like America?...

PK: Absolutely.

SS:Switzerland is…

PK: The countries that need this most are the large countries, because the small countries are actually doing a pretty good job of it. So when I wrote this book on technocracy, I looked at what are the best-ranked governments in the world, for effectiveness of the government, the credibility of the government, the public support for the government, the lower inequality - all of these things are better in small countries than in large countries. The lesson is not that it does not apply to big countries, the lesson is that big countries need to think of themselves in terms of their components, their constituent parts. And that is why in the wake of the election of Trump and divisiveness that is there in the Congress, the states and cities are saying: “We’re going to do things our way, we’re going to stick with Paris climate agreement, because we know that we can make money off of exporting clean technology and because it’s the right thing to do. We’re going to try to have our own way of regulating migrants and protecting migrants because we need them in our state. We want to raise our local taxes, state taxes, so that we can invest in infrastructure, because Washington is not giving us infrastructure spending”. That’s called devolution and the way you take a big country and make it function well, like a small country, is by taking those 50 states, and saying: “How can we make each of those states better?” - and then the whole country, the whole of the U.S. will eventually function better.

SS:I want to talk about a book that you wrote: “Connectography”? Am I pronouncing it right?

PK: You are.

SS:So in the 90s there was a lot of talk about globalising, a lot of talk about erasing borders in general - that’s what you speak about in that book. But you know, the world isn’t always listening to predictions, right? You have national interest tariffs that are on the rise, you have Brexit, you have TPP that’s crashing - what’s up with globalisation?

PK: That’s a great question, and that’s a big question. The funny thing is,  I don’t worry at all about globalisation. I think we should all go to bed soundly at night when we think about the big global picture. I think we should worry about getting our own house in order a lot, lot more. The reason people talk so inaccurately about globalisation, they treat it like something to be switched on and off. “TPP was not passed by the U.S. - therefore world trade is dead”. That’s absolutely not true, trade in goods is growing, digital trade is growing, services trade is growing, right? Trade does not depend on one agreement or another agreement, and as soon as the U.S. pulled out of TPP, all the other TPP countries decided to meet and get together and move forward with TPP, and even China decided to become an observer of TPP, while the U.S. left TPP. So don’t worry at all about globalisation. The number of people crossing borders is growing, the amount of capital flowing across borders is growing, volume of trade is growing, the flow of data is growing - in every possible metric globalisation is advancing, not retreating. Let’s ask ourselves: what are we doing as a country, what is Russia doing, what is Germany doing, what is Mali doing, what is America doing to maximise the reality of globalisation, to benefit themselves? That’s the only question that anyone should be asking - it is how do I, as a person, I as a city, I as a country - get the most out of this global connectivity.

SS:So, the connectivity that you’re describing - how the world is going to look and is looking already. Does this mean no more conflicts between the countries? Because, you know, China and America, they are rivals on the global scene, but their trade and economies are so intertwined, it’s really like crazy to imagine a conflict between them. Is a state-based conflict a thing of the past?

PK: Well, we have less border disputes than ever before, we have less active, hostile, sovereign border disputes than ever before, which is, obviously, a good thing. That doesn’t mean that there aren’t rivalries that could flare up. In the book what I do is I look at the last 25 years, since the collapse of the Soviet Union, since the end of the Cold War, and I say, look, there have been predictions of war between China and Japan, China and America, China and India, India and Pakistan, North and South Korea, with Iran, with Russia - lots of predictions of war, about nine, to be specific. None of those nine wars have broken out. Why? One of the reasons, and perhaps the most significant reason is that rivals are actually very deeply connected to each other. You remember the Cold War - although we were very young. The United States and Soviet Union did not trade a lot with each other. Today, China and America are among each other’s largest trading partners, right. So, it’s a very different world in a very short amount of time, and connectivity - physical connectivity, the networks of connectivity, the financial and trade connectivity are so intense, even among rivals, that it creates an obstacle, or a barrier, or a tripwire to military escalation in a much stronger way, much stronger restraint that we had before.

SS:That brings me to the question of sanctions, because sanctions is the tool of today - now different countries use sanctions to punish each other, because no one wants to fight a real military war. But if we’re as connected as you’re saying, and it’s going to get even more so in the future - is it going to come to a point where you can’t sanction a country because you’re going to end up hurting yourself in the end?

PK: That’s already true, and we’ve of course seen this in the dynamic between Western countries and Russia. European food producers, European industrial exporters have certainly suffered as a result of the sanctions on Russia, so it has been self-defeating in some ways. It certainly has not changed the way in which countries are relating to each other, so it’s not modifying the political behaviour… It’s very difficult to define sanctions in such a way that you can argue that they actually work effectively. I’ll be honest with you. Whether it’s Cuba, whether it’s Iran, whether it’s Russia - they just don’t actually work. One of the reasons that they don’t work is actually structural. It’s because they aren’t actually being implemented fully. It goes back to multi aligned… Some countries may be sanctioning Iran, but others are not - so therefore there’s always a way around it. So I don’t believe that sanctions are the right way. Just about ever, I always believed that engagement is going to get you to the result you want faster than sanctions. Problem is - we just don’t try because we think that sanctions are synonymous with being tough, with talking tough, with having a firm line… But I only care about results, and sanctions do not deliver results.

SS:Khanna, thank you very much for this wonderful interview.