How China Stiffed the World in Copenhagen

Why Beijing insists, "Don't look at our books!"

During the frantic final two days of negotiations at Copenhagen over the weekend, U.S. President Barack Obama and Secretary of State Hillary Clinton set a clever trap for Chinese Premier Wen Jiabao. Having just announced that the United States would establish and contribute to a $100 billion international fund by 2020 to help poor countries cope with the challenge of climate change, Clinton added a nonnegotiable proviso: All other major nations would first be required to commit their emissions reduction to a binding agreement and submit these reductions to "transparent verification." This condition was publicly reaffirmed by Obama, who argued that any agreement without verification would be "empty words on a page."

Everyone in the room knew that "all other major nations" primarily meant China. From the beginning, China has steadfastly refused to place its commitments within a binding framework or accept outside monitoring and verification of its progress toward any promised targets. But the eleventh-hour U.S. proposal immediately isolated China. The onus was now on Beijing to agree to standards of "transparent verification." If it did not, poorer countries standing to benefit from the fund would blame China for breaking the deal. Clinton's proposal had cunningly undermined Beijing's leadership over the developing bloc of countries.

Chinese officials retreated to their well-worn negotiation mantra, namely arguing that such demands were an insult to China and would be a violation of Chinese sovereignty and national interests. Wen had been outflanked and was angry, even leaving the conference center and subsequently snubbing Obama in a couple of previously planned bilateral and multinational meetings involving the U.S. president.

Which raises the question: Why such an extreme response? As Mark Twain reportedly said, there are three kinds of deceptions: lies, damned lies, and statistics. China has long been engaging in a dangerous game of manipulating important economic numbers and concealing domestic commercial realities. Despite all its progress over 30 years, Beijing is afraid to shine too bright a light in dark places, and even more afraid that outsiders might be allowed to do so. In important respects, the government actually embraces opaqueness as a perceived advantage. The thought of "transparent verification" was seen as the thin end of the wedge, allowing outside experts broad authority to peer into the workings of middle China. It would have caused Wen to feel the distinct pang of panic that guilty men feel when they realize the jig might soon be up.

For two decades, NGOs operating within China have struggled not only with wary officials in Beijing but more trenchantly with local officials for access and information. But teams of international economists, scientists, inspectors, and statisticians roaming China to gather information on carbon emissions and reduction initiatives would have been unprecedented. In promoting China, Beijing projects an image of order and competence to the world. In parts of its wealthier coastal cities, China is that. But these international teams would undoubtedly discover exactly how dysfunctional the heart of the country really is. They would see firsthand and report back how China's 45 million local officials remain the most formidable obstacle to improving transparency in China's sprawling economic structure -- protecting their turf, defending their privileges, arbitrarily enforcing the law, and when it comes to economic performance, blatantly cooking the books.

Indeed, China's economic numbers and statistics ought to be viewed as the most unreliable of any major economy in the world. For example, every quarter, China's National Bureau of Statistics (NBS) goes through the same ritual. Statistics come in from all over the country. The provinces take about two weeks to compile them, three times as fast as many smaller, developed economies with much more efficient processes for data collection. The NBS sorts through them, "consults" with senior government officials, applies a mysterious methodology to trim them into shape, and then spits out an annual GDP figure, always in the neighborhood of 8 percent, that is then diplomatically endorsed by organizations such as the World Bank andthe OECD.

Incredibly, provinces rarely fail to hit economic targets set for them by Beijing each quarter despite few changes in policy. Inaccuracy is also perpetuated by the fact that local officials are praised and promoted according to their capacity to meet centrally issued targets, while central officials themselves have limited means with which to verify local figures. Beijing is completely aware that these numbers are wildly inaccurate despite aggressively defending them after release. For the sake of its image and reputation, Beijing still wants to assure outsiders that it remains in charge even though in important respects it is not. It would not want a team of independent experts seeing for themselves the deception, dysfunction, and lawlessness that takes place throughout China under the watch of unaccountable local officials.

This lack of transparency strikes at the heart of China's credibility in any global climate-change agenda. Wen would not want foreign experts reporting to political masters in America and Europe that Beijing's capacity to compel local officials and locally managed, state-controlled enterprises -- some 120,000 companies and countless other subsidiaries -- to implement climate-change initiatives is extremely poor. This would simply strengthen suspicions that decentralized China cannot actually honor future commitments despite promises that it intends to.

Then there is the further problem of cheating in current and future carbon reduction schemes. Developed countries must feel confident that incentives offered to developing countries to cut emissions (in both absolute terms and emissions relative to economic growth) can be verified. Indeed, earlier this month, the U.N. body in charge of the Clean Development Mechanism, a proviso under the Kyoto Protocol allowing developed countries to purchase carbon offsets for funding "clean energy" developments elsewhere, suspended approvals for dozens of Chinese wind farms over suspicions that China had held back the building of planned wind farms and deliberately lowered previously allocated subsidies to make the wind farms eligible for funding -- industrial policies that would disqualify these farms from benefiting under the scheme. China has so far received carbon credits worth more than $1 billion, which is almost half of the total issued under the U.N.-run program.

China's government has vigorously denied that it is attempting to illegitimately manipulate the scheme. But the point is that there is no system for independent and external verification; nor is Beijing proposing to allow one. Meanwhile, China had previously pledged that up to 15 percent of its energy would come from renewable sources by 2020 and special efforts would be made to close dirty power plants, impose world-class vehicle-efficiency standards, and proposed various other measures to cut emissions. Again, developed countries suspect that China will receive plaudits and concessions from any future carbon emissions regime without actually keeping its promises.

Alas, given the desperation to announce a "deal," Obama backed down. The so-called Copenhagen Accord merely compels developing countries to self-report their emissions every two years and allow outside scrutiny of the data. China is off the hook for the moment, but whether this is enough to satisfy the U.S. Congress when deciding whether to approve any future binding agreement is another matter.



The Mideast Peace Deal You Haven't Heard About

Benjamin Netanyahu is much more serious about Middle East peace than most Americans realize. With U.S. diplomacy on the brink of a surprising success, it's time for the Palestinians to step up.

For a year or two at an early stage in his career, I commuted to and from our adjacent offices each morning and evening with Martin Indyk, later a top peace-process official of the Clinton administration at the Camp David negotiations and now vice president for foreign policy at the Brookings Institution. I had just left the Rand Corporation to work at AIPAC, the main pro-Israel lobbying organization in Washington.

Even in those pre-Oslo days of 1982 to 1983, Martin was a True Believer in the idea of a grand land-for-peace bargain between Israel and moderate Palestinians. Reviewing each day the latest installments in the Middle East epic as we rolled down Rock Creek Parkway, we argued all the way. I heaped scorn on any solution that required Israel to trust Palestinian intentions, and I held that Israel's security could only be based on a qualitative military edge and the balance of power. I told Martin that he and our mutual friends Dennis Ross, Aaron Miller, and Dan Kurtzer, though with the noblest of intentions, were pursuing an illusion.

Martin emphatically thought I was wrong about the Middle East, and he also thought I was blind to an enduring reality in Washington. He said that Democratic and Republican administrations of the left and right may come and go, and some presidents will have less confidence in Middle East peacemaking than others, but no U.S. president will be able to sustain a policy of benign neglect of the peace process for long. The American people, the United States' European allies, and U.S. friends in the Arab world all need to have a ray of hope. They need to believe that active diplomacy under U.S. leadership is bringing closer a resolution of the conflict between Israelis andPalestinians, because it is a conflict that roils other American interests and destabilizes U.S. relations in the region and throughout the world. Martin often cited our friend, the late Peter Rodman, who taught us that U.S. policy in the Middle East is a bicycle. You can keep your balance if you roll forward even at a snail's pace, but if you try to stand still you will fall off.

Martin never did succeed in converting me to the peace camp, but over time I saw the undeniable evidence that he was right about the imperatives of U.S. foreign policy. Sooner or later, every president turns to the peace process, and the Mideast advisors who move to the president's inner circle are the ones he thinks have the best ideas about how to move forward toward a contractual peace between Israelis and Palestinians.

I think Benjamin Netanyahu has gone through a personal evolution a little like my own. He continues to be profoundly skeptical that signing a piece of paper can put an end to this conflict. He is a fierce advocate of defensible borders and military strength as the true guarantors of Israel's security. Nevertheless, he has come back to a second term as prime minister with a deeper appreciation of the reality that his relations with the United States, Europe, and moderate Arab neighbors depend on the perception that he can be a partner in the search for diplomatic progress with the Palestinians. And he certainly knows that many harbor doubts about him.

That is why Bibi agreed to do something unprecedented, something that six previous Israeli prime ministers since the 1993 Oslo Accords (Rabin, Peres, Barak, Sharon, Olmert, and Netanyahu himself in his previous term) refused to do. Very much against the will of his party and coalition, Netanyahu consented to putting a freeze on "natural growth"of settlements. He has drastically curtailed the volume of construction starts,even in the "consensus" settlement blocs that he believes were conceded to Ariel Sharon by George W. Bush.

Now, below the radar, Netanyahu is making a series of additional concessions to Barack Obama and his Mideast peace envoy, George Mitchell. Their current priority is negotiating "terms of reference"to permit the resumption of Israeli-Palestinian negotiations (TORs in negotiators'vernacular). Dismissed by some as mere "talking about talking," TORs are in fact vital elements to create the parameters for serious negotiations. For example, then-Secretary of State James Baker shuttled around the region for eight months to negotiate the TORs that made the 1991 Madrid conference possible. All that was done just to phrase a letter of invitation that all sides could accept. The result was far from trivial; it was a framework that opened the way to all the direct negotiations that followed over the ensuing two decades.

Mitchell's challenge today is to define such a framework that can bridge differences between Netanyahu and his Palestinian counterpart, Mahmoud Abbas. Defying skeptics who say you can bridge a river but not an ocean, Mitchell keeps going at it, and his perseverance is paying off. While no one was watching, Netanyahu has in fact agreed to language that Mitchell can accept. With the Israeli agreement in his pocket, Mitchell is now working to bring Abbas around, according to sources close to the discussions.

The issues are not small. Abbas wants to enshrine the 1967 boundary as sacrosanct, even though that line was merely a military demarcation after the war that ended in 1949 and had never been recognized by the Palestinians or anyone else as a legal border. Reflecting the Israeli consensus, Netanyahu insists that future agreed frontiers have to meet Israel's security imperatives and reflect post-1967 demographic realities, whether or not they diverge from the former armistice line. But Netanyahu has accepted a solution based on Secretary of State Hillary Clinton's formulation: "an outcome which ends the conflict and reconciles the Palestinian goal of an independent and viable state based on the 1967 lines, with agreed swaps, andthe Israeli goal of a Jewish state with secure and recognized borders that reflect subsequent developments and meet Israeli security requirements."

Abbas wants Israeli territorial concessions in Jerusalem as a precondition for negotiations. Netanyahu hasaccepted that the Palestinians will bring their claims for Jerusalem to the table, but he is not going to make this or any other concession just to bring Abbas to negotiate. Mitchell's TORs will include implementation of all existing agreements between the parties, as well as the 2003 "Roadmap" for a two-state solution. These already define Jerusalem as a subject for discussion.

Abbas wants an absolute two-year deadline for the achievement of a permanent agreement. Netanyahu is accepting target dates for agreements, but he does not believe achievement can be guaranteed. Mitchell has the language he needs for the TORs regarding target dates.

Abbas wants language that obliges Israel to repatriate and compensate descendents of Palestinians who lost their homes in the upheavals before 1949. Netanyahu has agreed to participate in multilateral solutions for this "refugee" problem, provided these solutions do not include an obligation that will dilute Israel's own Jewish majority. Mitchell will point out that a solution to the refugee question is already incorporated in the documents to which the TORs will refer.

Abbas wants the 2002 Saudi-initiatedArab Peace Initiative to be the basis of negotiations. Netanyahu has agreed to have it listed among the references, though it is not among the signed agreements whose specific terms are binding. In any case, the Roadmap already contains a positive reference to the Saudi peace plan, and the Roadmap will be a major source document for the TORs.

The Palestinians eschew the concept of interim agreements because they fear that any temporary arrangements willbecome final. Israel believes that interim steps are a necessity for building confidence between the two parties. The Roadmap's Phase II already contains "the option of creating an independent Palestinian state with provisional borders and attributes of sovereignty," and the Oslo Accords are replete with interim steps. This will not be an obstacle to agreed TORs.

Mitchell has not announced the agreement with Netanyahu because delicate negotiations with Abbas still lie ahead. He did say on Nov. 25, "We have been in discussions with both Israelis and Palestinians for sometime regarding terms of reference for negotiations. We have closed many gaps between them. And while admittedly important differences remain, we've made very substantial progress."

Now, a month later, the work on the Israeli side is done. Netanyahu has put the ball in the Palestinian court.

Amos BenGershom/GPO via Getty Images