Argument

The Loneliest Superpower

How did China end up with only rogue states as its real friends?

The rare foreign visitor to China during the Cultural Revolution often saw a huge placard at the airport boasting the farcical claim, "We have friends all over the world." In truth, Maoist China -- a rogue state exporting revolution and armed struggle around the world, and a bitter foe of the West and the former Soviet bloc -- was extremely isolated. It had a few friendships with countries like Ceausescu's Romania and Pol Pot's Cambodia; for a few bleak years, China's only true ally was tiny Albania.

Forty years later, a powerful and assertive Beijing has a lot more friends. Its economic presence is warmly welcomed by many governments (though not necessarily people) in Africa; European countries regard China as a "strategic partner," and China has forged new bonds with leading emerging economies like Turkey, Brazil, and South Africa. Yet besides Pakistan, which depends on China for military and economic assistance, and which China supports mainly as a counterweight against India, Beijing has a shocking lack of real allies.

Real strategic alliance or friendship is not a commodity that can be bought and bartered casually. It is based on shared security interests, fortified with similar ideological values and enduring trust. China excels in "transactional diplomacy" -- romping around the world with its fat checkbook, supporting (usually poor, isolated, and decrepit) regimes like Angola and Sudan in return for favorable terms on natural resources or voting against Western-sponsored resolutions criticizing China's human rights record. And the world's second-largest economy will remain bereft of dependable strategic allies because of three interrelated factors: geography, ideology, and policy. 

For one thing, China is situated in one of the toughest geopolitical neighborhoods in the world. It shares borders with Japan, India, and Russia; three major powers which have all engaged in military conflicts with China in the 20th century. It still has unresolved territorial disputes with Japan and India, and the Russians fear a horde of Chinese moving in and overwhelming the depopulated Russian far east. As natural geopolitical rivals, these countries do not make easy allies. To the southeast is Vietnam, a defiant middle power which has not only fought many wars with China in the past, but is apparently gearing up for another contest over disputed waters in the South China Sea. And just across the Yellow Sea is South Korea, historically a protectorate of the Chinese empire, but now firmly an ally of the United States. 

That leaves countries like Myanmar, Cambodia, Laos, and Nepal, weak states that are net strategic liabilities: expensive to maintain but that yield minimal benefits in return. In the last decade, China wooed more important Southeast Asian nations into its orbit with a charm offensive of free trade and diplomatic engagement. While the campaign produced a short-lived honeymoon between China and the region, it quickly fizzled as China's growing assertiveness on territorial disputes in the South China Sea caused Southeast Asian nations to realize that their best security bet remained the United States. At the last East Asian Summit in Bali in November 2011, most of the ASEAN countries spoke up in support of Washington's position on the South China Sea.  

China may be North Korea's patron, but the two countries dislike each other intensely. Beijing's fear of a reunified Korea motivates it to keep pumping massive aid into Pyongyang. Despite having China as its gas station and ATM, Pyongyang feels no gratitude towards Beijing, and rarely deigns to align its security interests with those of China: Consider North Korea's pursuit of nuclear weapons, which has dramatically worsened China's security environment. Worse still, Pyongyang repeatedly engaged in direct negotiations with Washington behind Beijing's back during the China-sponsored Six-Party Talks, illustrating that it was always ready to sell its "friend" and neighbor out to the highest bidder. Yet China has little choice but to smile and play nice, as its ties with a reunified Korea would be worse: If the democratic South absorbs the North, the new country would almost certainly continue and possibly strengthen its security relations with the United States, instead of growing closer to China.

Of all its neighbors, only Pakistan has produced genuine security payoffs for China. But as internal turmoil weakens the Pakistani state, the net benefits of this relationship are decreasing. China's expanding trade and security ties with the Central Asian autocracies face competition from Russia (their traditional protector) and the United States; these states may need China to balance against the other great powers coveting their resources and strategic locations, but they are too fearful of falling deeply into China's orbit to form genuine alliances with it.

If geography conspires to deprive Beijing of durable security allies, the Chinese one-party system also seriously limits the range of candidates that can be recruited into Beijing's orbit. Liberal democracies -- mostly prosperous, influential, and powerful -- are out of reach because of the domestic and international liabilities of forming an alliance with a dictatorship. China and the EU wouldn't forge a security alliance; the rhetoric elevation of their relationship to a "strategic partnership," is immediately made hollow by the existing EU arms embargo against China and incessant trade disputes.

Electoral democracies now constitute roughly 60 percent of all the states in the world, making the pool of potential political allies for China much smaller than it was in the 1960s and 1970s. Newly liberal democracies like Mongolia, a neighbor of China, are loath to be tied to an autocratic behemoth, particularly a neighboring one. Instead, they seek alliance with the West for security (and one imagines that Beijing wasn't thrilled at Mongolia and the United States recently holding joint military exercises). Today, China's much-vaunted Cold War ties with Romania and Albania have collapsed. Although their democracies are deeply flawed, both countries' leaders seem to understand that hitching their wagons to China would hurt their chances of being part of the West. Doing business with China is one thing -- and perhaps it's inevitable in a modern, globalized economy, but seeing eye to eye on foreign policy is another matter entirely.

Beijing's foreign policy strategy in the last three decades has not focused on building strategic alliances. Instead, the emphasis has been on maintaining a stable relationship with the United States and capitalizing on a peaceful external environment to promote domestic economic development. Chinese diplomacy post-Mao went into overdrive only twice: squeezing Taiwan when a pro-independence government was in power (1995-2008) and the occasions when it rallied developing countries to defeat the West's human rights campaign against China. These were the times when Beijing had to rely on its friendship (and veiled threats) to get its way, such as when it convinced states such as Algeria and Sri Lanka to boycott the Nobel Peace Prize Award ceremony in December 2010 honoring Chinese dissident Liu Xiaobo. But otherwise, Chinese leaders have firmly stuck to their belief that the most dependable way for a great power to safeguard its security and interests remains expanding its own capabilities while ignoring the rest of the world. 

Like other great powers, China has client states, such as North Korea and Myanmar.  If North Korea has shown how a vassal can become a dangerous trouble-maker, Myanmar illustrates why a patron should never take its charge for granted. Until the recent political thaw in Myanmar, China thought it had the isolated military junta in its pocket. But the generals ruling Myanmar apparently had other plans. They abrogated a contract with China to build a controversial dam and, before Beijing could make its displeasure known, released political prisoners and invited U.S. Secretary of State Hillary Clinton to Yangon for a historic visit. Today, Myanmar appears to be slipping away from the Chinese orbit of influence.

Farther afield, China may have a few countries with which it is truly on friendly terms, such as Hugo Chávez's Venezuela, Robert Mugabe's Zimbabwe, and the Castros' Cuba. But these are, by and large, states headed by political pariahs that are skilled manipulators of great powers. Besides access to natural resources and backing at the U.N., important as they are, good relations with such states generate little value for Beijing. In any case, the rulers of these states are old and ailing. When new, better democrats take their place, the relationship with China may cool.

Russia is the closest thing China has to a powerful quasi-ally. Their shared fear and loathing of the West, particularly of the United States, has brought Moscow and Beijing ever closer to each other. Yes, their common economic interests are dwindling: Russia has disappointed China by declining to deliver advanced weapons and energy supplies, while China has not lent enough support to Russia in its feud with the United States over missile defense and Georgia. But in a strictly tactical sense, China and Russia have become partners of convenience, cooperating at the United Nations Security Council (UNSC) to avoid isolation and protect each other's vital interests. On Iran, they coordinate closely with each other to moderate the West's pressures on Tehran. On Syria, they twice jointly vetoed UNSC resolutions to protect the Assad regime. Yet any honest Russian or Chinese would tell you point-blank that they are no allies; their strategic distrust of each other makes genuine alliance impossible.

The growth of Chinese power has created the dreaded "security dilemma": Instead of making Chinese more secure, its growing power is striking fear among its neighbors and, worse, has elicited a strategic response from the United States, which has pivoted its security focus toward Asia. The emerging strategic rivalry will severely test Beijing's diplomatic skills. The strategic choices available in terms of strengthening its alliance structure are few. Most Asian states want the United States to maintain its critical balancing role in the region; friends China can make in other parts of the world bring nothing to bear on this rivalry. There are, however, two difficult but promising paths China can take. One is to resolve the remaining territorial disputes with its neighbors and then throw its weight behind a regional collective security system which, once in place, could alleviate its neighbors' fears, moderate the U.S.-China rivalry, and obviate the need for China to recruit allies. The other is to democratize its political system, a move that will once and for all eliminate the risks of a full-fledged U.S.-China strategic conflict and bring China "friends all over the world." The first may be a reach, too little, too late -- and don't hold your breath for the latter.

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Argument

Brazil's European Dream

Why Brasilia sees the euro crisis as a once-in-a-generation opportunity.

The news that Brazil has overtaken Britain to become the world's sixth largest economic power is being touted as a sign that that the longtime "country of the future" has finally arrived. While the celebrations have been somewhat muted by concerns over slowing GDP growth and the country's still-heavy dependence on high energy and food prices, Brazil is heading into the coming global showcases of both the 2014 World Cup and the 2016 Summer Olympics with more than its usual swagger.

But this emerging economic prominence is raising the question of just what kind of actor Brazil will be on the world stage. In the past 20 years, Brazil has become well known for turning crisis situations into geopolitical opportunities, becoming a leading voice in international forums devoted to AIDS, poverty, and even the environment. And now, it is doing it again with a challenge that Brazilians understand all too well: a debt crisis.

Only this time, it's Europe in need of a helping hand, not the former Portuguese colony in Latin America. At an EU-Brazil summit held in Brussels last October, President Dilma Rousseff told European leaders, who had asked for assistance: "You can rely and count on us." As an initial strategy, Rousseff and her finance minister, Guido Mantega, considered using their foreign exchange reserves -- estimated at $352 billion -- to purchase debt through treasury bonds. However, after consulting with her BRIC colleagues at a meeting in Washington last November, Brazil decided that buying EU bonds would be too financially risky, and proposed instead to indirectly assist Europe by donating an estimated $10 billion to the International Monetary Fund.

There is a grander strategy at work here beyond seeking to help Europe in its hour of need. The IMF contributions stem from Rousseff's intention to maintain a tradition that began under her predecessor, President Luiz Inácio Lula da Silva, of using foreign assistance as a means to strengthen Brazil's international reputation and influence. Yet another example is Brazil's annual contributions to the World Bank, which have averaged $253 million from 2004 to 2009. Brazil was the first nation to contribute -- $ 55 million -- to the World Bank's Haitian Reconstruction Fund. From 2003-2007, Brazil also gave approximately $340 million to fund the U.N.'s operations. Lula also increased Brazil's contribution to the U.N.'s World Food Program from $ 1 million in 2009 to $ 27 million in 2011.

There's also the satisfaction of seeing the tables turn. Because of Brazil's recent economic success and reputation, the IMF has approached Brasília for help for the first time. Back in 1998, it was the Brazilian government, under President Fernando H. Cardoso, that was running to the IMF for assistance. Brazil was trying to recover from a capital flight of roughly $30 billion dollars, triggered by a lack of foreign investor confidence due to exorbitant debt and recession. To help quell investor speculation that Brazil would default (like Russia did months earlier), the IMF provided a bailout package of $41 billion on the condition that Cardoso prune government expenditures by 20 percent and reform the pension system.

Then in 2001, after a steep decline in foreign investment, currency depreciation, and a debt crisis in neighboring Argentina, Brazil essentially begged the IMF to help avoid a default on its external debt. This time the government received $15 billion in exchange for reducing federal expenditures and maintaining a primary budget surplus of approximately 3.75 percent through 2005.

Today, Brazil seems to be relishing the opportunity to impose conditions on the IMF: Last October, Brasília made it crystal clear that it will not help the IMF should it decide to continue imposing austerity measures on European states. Much to Brazil's chagrin, however, last month the IMF and the EU provided a bailout package of 130 billion euros to Greece with stiff austerity measures attached, grudgingly passed by Greece's parliament -- a slight that may explain Brazil's delayed assistance to the IMF. What's more, Finance Minister Mantega has told the EU that Brazil will only provide IMF support as long as the EU strengthens its Central Bank and if other European nations contribute to the European Financial Stability Facility, the special relief fund set up provide a firewall for heavily indebted economies.

Rousseff also wants an expanded role for Brazil within the IMF, along with the other BRICS, mainly through increased quota shares and voting rights. She has joined her colleagues from China, India, Russia, and South Africa in emphasizing that the IMF needs to recognize the importance of the world's largest emerging economies and allow for opinions and recommendations from nations that have overcome their economic hurdles and that more accurately represent the developing world.

Despite the IMF Governing Board's agreement in 2008 to increase the BRICS' quota and vote shares, and despite the Board deciding to shift more than 6 percent of the quota shares to them and other nations last December, these recommendations have yet to be officially adopted and ratified into the Articles of Agreement. What's more, analysts and the BRICS believe that these changes are insufficient, especially in light of the US and Europe's substantially higher quota shares, voting rights, and the BRICS' growing importance to the global economy. Mantegna and Rousseff hope that the Euro crisis will be an opportunity to address this imbalance.  

Europe's crisis has also accelerated the shifting power dynamics between Brazil and its former colonial power, heavily indebted Portugal. Rousseff has not only proposed to buy Portuguese treasury bonds, but she has also considered the possibility of early buybacks of Brazilian bonds held by the Portuguese government, which would help reduce Portugal's debt by retiring bonds at a discount while stabilizing the bond market. While Mantega has expressed his reservations, given Portugal's potential inability to repay and the legal limitations on using Brazil's foreign reserves for buying debt, Rousseff still seems firmly committed to these options, stating that she will do "everything to help" and pledging to lend a hand.  Rousseff views Portugal's recession as an opportunity to strengthen bilateral political and economic ties, helping overturn years of jealousy and envy over Brazil's success. And she has often invoked simple gratitude as a motive, referring to Portugal's past assistance in Brazil's time of economic crisis.

But cultural affinity and altruism can only explain so much. Several Brazilian companies have invested in Portugal in recent years, with a total investment of $ 65 million in 2008, increasing to $ 310 million in 2009. Rumor has it that Petrobras, Brazil's state-owned oil company, is planning to purchase 33 percent of Galp, Portugal's leading petroleum company. Portuguese businesses have also invested heavily in Brazil. And in January 2011, Portugal's Telecom acquired 25 percent of Brazil's biggest land-line phone company, Oi, for $5 billion. Last year overall, Portugal's investments ranged from the energy sector, to tourism and construction, tallying approximately 25 billion euros.

Of course, engaging with Europe carries risks at a time when Brazil's own economic future -- generally attributed to high tax rates, inflation, an overvalued currency, and high public sector deficits -- isn't exactly guaranteed. The government projects the country's economic growth will not exceed 3.4 percent this year -- it was 2.7 percent last year, down from 7.5 percent in 2010 -- so Brasilia may not have very much cash to spare come 2013.

Despite these economic risks, Rousseff's European strategy is a smart move. By providing financial support in time of need, Brazil can strengthen its partnership and economic relationship with several European countries, as well as with the IMF. And by lending a hand, Rousseff may be able to garner more European support as she strives to boost Brazil's influence within the U.N. system and the IMF. Through these calculated endeavors, Rousseff can signal that Brazil isn't just arriving on the international scene, it's here to stay.

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