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Will the West sanction China on our behalf?

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Sunday, 20 July 2014 - Last Updated on July 21, 2014
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With the recent downing of a civilian airliner in a Eastern Europe, just as the sinking of a civilian cruise ship in the Atlantic had catalyzed the belated entry of the United States in World War II, this latest incident in the Ukraine argues well for even more aggressive sanctions as a weapon against erring rogue states.

When global economic giants use their might to punish or, in the extreme, otherwise wage undeclared wars to change regimes in those countries who defy not simply their economic brawn but more important, their military superiority, the first line of offense after the default saber-rattling or the sailing forth of a couple of aircraft carriers and frigates is usually to threaten with economic sanctions.

The nature of international economic sanctions has changed radically since last considered against Russia due to the Crimean, and now, the Ukrainian conflicts. International sanctions are now more personal, intimate, directed at officials, and only as a matter of publicity, also against the state. The difference would be more apparent given the likelihood of their in-effectivity against China as a result of on-going controversies in Asian waters where individual culpabilities of the Chinese hierarchy are fuzzier.

When once they involved embargoes on trade and the freezing of national accounts, economic sanctions have recently gone retail, focused on personal financial assets of government officials – a far more complex form of punishment absent direct culpability against the actions of the larger state that is accused. Sans court proceedings and basic due processes other than those applied by western media, such sanctions are illegal.

As for the Chinese, their officials are unlikely to have financial assets in economies that are effectively net debtors. The United States owes much more to a China than the latter does the former as China continues to gobble up American debt papers.

For smaller, more vulnerable economies dependent on western markets for banking, trade, investments and capital, as well as those deeply indebted, cursed as net deficit debtors where balance of payments are concerned, such can be a fearsome ploy.

But recent global events show that sanctions only work against previously ailing economies and banana republics. But not against superpowers.

Largely characterized with command economies, when the west refuses to buy from them, as they are largely dependent on exporting, their economies wither. They eventually default, first, on domestic debt, and then on larger, global debt. Investors in the economy are forced to divest as debt funding dries up.

Others, long-petrified by previous sanctions have acclimatized and are not so much threatened as a virtual shot fired across the bow as had been the case when Barrack Obama threatened to annihilate Syria for its gassing of dissidents, skipping diplomacy and debate altogether and going immediately for the jugular.

An increasing number of countries have chosen the way of non-alignment, a wise choice really, given increasing fundamentalism and polarization, brought on by western intolerance, where the difference between villains and heroes blurs.

In the ongoing crisis in the Ukraine, note Russia is playing the democratic, the-people-have-a-sovereign-right-to-choose card. On the other hand, many in the opposite side of the now imaginary iron curtain forcedly foisted a government elected amid uncertainty where an ad hoc dispensation stood.

The world is upside down and spinning on its head. Note dichotomies and deviations from the norm. Communist Russia appears to be fighting for the right of self-determination for Eastern Ukrainians. Across the Atlantic, democracies spend billions for renditions and for prisons like Guantanamo – a virtual loophole in the precious bill of rights statutes. Never mind the brazen violation of Geneva conventions where, rather than principle, international borders serve as demarcations between right and wrong and between punishment and torture.

Given the fluid nature of global politics, as we naively pin hopes on the threat of western sanctions arrayed against our “big, bad neighbor” for going beyond encroaching and actually annexing our sovereign waters, we consequently embrace the brawn of others in our fight to gain recognition and respect from China. Never mind others who likewise do not seem to take our pleas for fair play seriously. We are picking our battles and picking our enemies.

Unfortunately, that is about the extent of our tact. Otherwise, it is time to wake from our puerile reveries and dreams of a blue coat cavalry arriving in the nick of time.

Our tough-talking testosterone-charged officials should remember their Economics 101. Trade, and economic sanctions applied as deadly ordinance, explode prematurely and is indiscriminate. It does not need a shooting war for the United States to lose in an extreme conflict with China. Or for that matter, for our republic to go down with it. All it needs is the first shot fired across the bow with lethal economic sanctions as its warhead.

A comprehensive package of sanctions, to be effective, includes am embargo on trade, the cessation of capital flows, the suspension of payments,and the termination of creditor-debtor relationships. Do the math. In both the Russian and Chinese arenas, it is the west that will will be paying the higher and infinitely more painful price. Russian energy is essential to the European Union. China supplies a substantial portion of everything the free market uses and holds nearly all of the United States’ debt papers enough to effectively intervene in the latter’s fiscal management.

So what is the likelihood of western sanctions applied against China ever happening on our behalf?

The chances are nil.

It’s all a game of expediency. Sanctions are not applied so much as to protect the rights of states deemed victimized as they are primarily intended to protect the interests of those imposing them. If sanctions against China would not be in the better interests of interlopers given mutual trade relationships, then our cries for sovereignty matter less, if at all they might even be considerations between superpowers.

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Dean de la Paz (78 Posts)

Dean dela Paz is an investment banker. He is a consultant in the fields of finance and banking and has packaged some of the most prolific public offerings in the Exchanges. He is a member of the Executive Committee and sits in the Board of one of the oldest financial institutions in the country. He is likewise an energy consultant having served on the Boards of several foreign-owned independent power producers and as CEO of a local energy provider. He is currently the Program Director for Finance in a UK-based educational institution where he also teaches Finance, Business Policy and Strategic Management. A business columnist for the last fifteen years, he first wrote for BusinessWorld under the late-Raul Locsin and then as a regular columnist for the Business Mirror and GMANews TV. He also co-authored a book and policy paper on energy toolkits for a Washington- based non-government organization. He likewise co-authored and edited a book on management.


About Dean de la Paz

Dean dela Paz is an investment banker. He is a consultant in the fields of finance and banking and has packaged some of the most prolific public offerings in the Exchanges. He is a member of the Executive Committee and sits in the Board of one of the oldest financial institutions in the country. He is likewise an energy consultant having served on the Boards of several foreign-owned independent power producers and as CEO of a local energy provider. He is currently the Program Director for Finance in a UK-based educational institution where he also teaches Finance, Business Policy and Strategic Management. A business columnist for the last fifteen years, he first wrote for BusinessWorld under the late-Raul Locsin and then as a regular columnist for the Business Mirror and GMANews TV. He also co-authored a book and policy paper on energy toolkits for a Washington- based non-government organization. He likewise co-authored and edited a book on management.