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Crypto Craze Creates Tax Problems, Especially for Americans

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By Robert W. Wood

Although some countries do not tax crypto gains, IRS has been clear that crypto is a property for tax purposes. Americans who fail to comply may face huge criminal tax charges. To resolve the tax problems faced by crypto investors, the IRS has two programs – the Offshore Voluntary Disclosure Program and the Streamlined program. What’s more efficient between the two is worth a closer look.

 

In general, the world has embraced bitcoin and other cryptocurrencies. In fact, it is hard to ignore the international sensation. It is also hard to ignore the stratospheric gains, though there have been some deep price drops too. Taxes in this volatile environment can be especially worrisome.

Some countries don’t tax crypto gains, and some may not even be clear on how to classify crypto for tax purposes. But the IRS is quite clear that crypto is property (not currency) for tax purposes. Israel recently reached the same conclusion. In the case of the IRS, of course, if you are a U.S. citizen or permanent resident, you must report taxes to the IRS on a worldwide basis.

Some Americans are still coming forward under tax amnesty plans started in 2009 when UBS and other Swiss banks were facing fines and threats of prosecution from U.S. authorities.

Even if you live and pay taxes abroad, you must file and pay the IRS every year. That still catches many people by surprise. Indeed, some Americans are still coming forward under tax amnesty plans started in 2009 when UBS and other Swiss banks were facing fines and threats of prosecution from U.S. authorities. In a way, that is where a curious crossover seems to be happening.

There has long been speculation that a special IRS amnesty program will be announced for bitcoin and other digital currency taxpayers. It would sure be nice. The number of crypto investors who are vocally worrying on whether and how to get into compliance with the IRS suggests that the IRS should try to welcome them home. There’s a good deal of tax cleanup that some people need to do.

Everyone knows that tax compliance with crypto has been poor. In a widely quoted report, the IRS has said that in 2014, only 802 taxpayers reported crypto gains. The compliance may have gotten better since then, but out of millions of impacted taxpayers, 802 is an astoundingly low figure, even for 2014. That is one reason why the IRS has trained its criminal IRS agents to pursue this.

It is also why the IRS is using tracking software to hunt crypto accounts, and why it successfully went after Coinbase accounts via summons. In the case of cryptocurrencies, amnesty seems overdue. Even government officials have mentioned the idea of an IRS tax amnesty. But for now, the IRS has not announced one. In the meantime, we still must file tax returns every year.

For crypto investors who need to rectify their past tax transgressions, there is no formal IRS program to control the risks and to guarantee a particular or formulaic tax result. A predictable tax and penalty result is what IRS amnesty programs usually provide. It was one reason why the IRS offshore account amnesty programs were such a resounding success. Over 50,000 taxpayers have participated, and the IRS has collected over $10 billion.

A guaranteed safe process and a predictable dollar result were clearly key to that astounding success. You can address bitcoin (or offshore accounts) without a formal amnesty, of course, but man taxpayers are reluctant. Even without a formal amnesty, amending a few returns to pick up additional income you failed to report is usually pretty safe.

Sometimes it is the taxpayer’s own behaviour in an audit that triggers the biggest criminal risk.

Among other factors, timing is key. If the IRS finds you first through an audit, you will clearly not be protected. In some cases, even criminal prosecution is possible. Corrections that look sneaky or less than transparent can also raise worries. Sometimes it is the taxpayer’s own behaviour in an audit that triggers the biggest criminal risk.

Indeed, most criminal tax cases arise from regular civil IRS tax audits. Timing and overall handling of an audit can be terribly important. What if you aren’t comfortable just preparing and filing a few tax returns, or a few or amended tax returns to correct your mistakes?

For more serious transgressions, traditionally, if you voluntarily go to the IRS through a lawyer to correct your tax problems before the IRS discovers them, you won’t be prosecuted. Admitting your mistakes isn’t easy, and one can feel pretty vulnerable with a powerful agency like the IRS. So, is there any way to guarantee a more predictable tax result now, even before the IRS announces a formal crypto amnesty?

With extensive data swapping deals between the IRS, foreign governments, and foreign banks, almost no offshore account is secret anymore.

Although there is not yet a no special IRS amnesty for crypto, there’s still one for offshore accounts. If you have an offshore account, the IRS amnesty can offer crypto investors a kind of back door. With extensive data swapping deals between the IRS, foreign governments, and foreign banks, almost no offshore account is secret anymore.

Even so, the IRS amnesty is still on the table. Offshore account holders can still safely fix their problems, even if they intentionally evaded reporting in the past. The cost of the IRS amnesty can be small compared to the risk of vastly larger civil penalties, and the threat of criminal prosecution. For offshore bank accounts, civil FBAR penalties alone can entirely wipe out foreign accounts.

There are two IRS programs, the OVDP, or Offshore Voluntary Disclosure Program, and the Streamlined program. The OVDP is a clean wash-your-hands kind of way to correct past tax filings and come clean. It involves filing up to eight years of tax returns (or amended tax returns) and FBARs.

You pay taxes, interest and a 20 percent penalty on whatever you owe. For most people, there’s also a 27.5 percent penalty on your highest offshore account balance. In some cases, that penalty can be 50 percent, depending on the bank and timing.

In contrast, the Streamlined program involves only three years of tax returns. You file six FBARs in Streamlined instead of three, to match the longer FBAR statute of limitations. The Foreign Streamlined program (for U.S. persons abroad) has no penalty. The Domestic Streamlined program involves a 5 percent penalty pegged to the highest offshore account balance over the six FBAR years.

Still, the Streamlined program requires a non-willfulness statement that can be risky in some cases. And Streamlined filings are subject to IRS audit. These audits can be brutal, so in choosing OVDP or streamlined, you should consider IRS audits. Thus, for crypto investors with risk, the OVDP seems a far better hook for resolving crypto tax problems.

As long as you are filing amended tax returns, other corrections unrelated to your foreign accounts can be handled too. After all, before you sign amended tax returns under penalties of perjury, you should make sure they are accurate. If you failed to report any other income, you should include it on your amended returns.

By its terms, the OVDP applies to foreign account matters. Other corrections are technically not part of the OVDP, so the IRS could pursue these items outside the OVDP. In reality, though, the IRS appears to be processeding them all together. In short, if you have other unrelated corrections to your returns, by all means make them.

In fact, cleaning up domestic tax problems is a feature of many OVDP cases. As the IRS puts it, domestic parts of a voluntary disclosure are subject to IRS examination. See IRS FAQ 7.1. Taxpayers can use the OVDP, but note on the Offshore Voluntary Disclosure Letter that they are also making a domestic voluntary disclosure. See IRS FAQ 24. The IRS appears to be accustomed to the usual full disclosure including domestic tax problems too.

A key IRS tradition is that even terribly noncompliant taxpayers who voluntarily step forward before they are found are usually not prosecuted.

To be sure, the domestic tax issues might be large, particularly given the dramatic run-up of crypto investments. However, the OVDP should still allow the IRS to collect taxes, interest, plus a 20 percent penalty on any unreported income. Remember, a key IRS tradition is that even terribly noncompliant taxpayers who voluntarily step forward before they are found are usually not prosecuted.

Plainly, OVDP tax return packages can fix domestic tax problems unrelated to foreign accounts. Usually, all seems to go fine, and there may be no real alternative. Given the costs, most taxpayers have an easier time deciding to file Streamlined rather than the more expensive OVDP. 

Notably, though, the OVDP precludes criminal prosecution and ends in a closing agreement. In contrast, Streamlined filers can face a civil audit or conceivably even prosecution. A key for any Streamlined filer is to be non-willful and to certify that.

Negligence, inadvertence, or mistake are all OK, but intent to conceal or to evade taxes is not. And the IRS has criteria for objective indicators.

Negligence, inadvertence, or mistake are all OK, but intent to conceal or to evade taxes is not. And the IRS has criteria for objective indicators. It is hard to say you were non-willful if you behaved secretively, did partial reporting of accounts or income, etc.

The bottom line is that crypto investors with tax problems might consider the OVDP. The facts and the details really matter, so getting competent professional tax advice is important. But, until the IRS has a special crypto amnesty, resolving such problems through the OVDP might be worth a look.

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About the Author

Robert W. Wood is a tax lawyer representing clients worldwide from offices at Wood LLP, in San Francisco (www.WoodLLP.com). He is the author of numerous tax books, and writes frequently about taxes for Forbes.com, Tax Notes, and other publications. This discussion is not intended as legal advice.

The Dark Plight of Immigrants in the Racist Era of Trump

Dark era of Trump

By Alvaro Huerta

This essay argues that President Donald J. Trump represents an existential threat to immigrants in the United States. Trump’s immigration rhetoric and policies consist of racist, xenophobic, enforcement-only and divisive positions. This includes his racist and belligerent isolationist and unilateralist policies. Trump aims to re-invent the country’s dark past with his racist slogan, “Make America Great Again.”

 

President Donald J. Trump represents an existential threat to immigrants in the United States. More specifically, Trump’s immigration rhetoric and policies consist of racist, xenophobic, enforcement-only and divisive (i.e., “us-versus-them”) positions. Moreover, Trump’s domestic positions on immigration interconnect with his foreign diplomacy based on isolationist and unilateralist policies. While former U.S. presidents espoused (and implemented) similar anti-immigrant rhetoric and policies, such as the Chinese Exclusion Act of 1882[1] and the internment of an estimated 120,000 individuals of Japanese heritage (both immigrants and citizens) during WW II,[2] Trump, during his presidency, aims to re-imagine and re-invent the country’s dark past with his racist slogan, “Make America Great Again” – which Trump originally claimed he coined; yet, Trump actually stole from the late President Ronald Reagan.[3]

Americans and people around the world shouldn’t be surprised by Trump’s current xenophobic (or anti-immigrant) rhetoric and policies, however. On June 16, 2015, for instance, when he delivered his “famous” presidential announcement speech (or “infamous,” depending on your political affiliation), Trump launched into a diatribe against Mexicans: “…When Mexico sends its people, they’re not sending their best. They’re not sending you. They’re not sending you. They’re sending people that have lots of problems, and they’re bringing those problems with us. They’re bringing drugs. They’re bringing crime. They’re rapists. And some, I assume, are good people…”[4][5]

Trump’s immigration rhetoric and policies consist of racist, xenophobic, enforcement-only and divisive positions. Moreover, Trump’s domestic positions on immigration interconnect with his foreign diplomacy based on isolationist and unilateralist policies.

In this racist speech, Trump clearly connected with a significant segment of the American electorate receptive to white nativism or white nationalism. UCLA History Professor Juan Gómez-Quiñones, in his brilliant essay, “La Realidad: The Realities of Anti-Mexicanism – A Paradigm,” posits that “U.S. anti-Mexicanism is a race premised set of historical and contemporary ascriptions, convictions and discriminatory practices inflicted on persons of Mexican descent, longstanding and pervasive in the United States…Anti-Mexicanism is a form of nativism practiced by colonialists and their inheritors…”[6]

While the dark history against African Americans is highly documented and well known, such as slavery, Jim Crow and police abuse, public knowledge of racist policies (historical and contemporary) against individuals of Mexican heritage (immigrants and citizens) is desperately lacking. For example, apart from the imperialist U.S. war against Mexico (1846 – 1848) – where Mexico lost half of its territory – throughout 1800s and 1900s, the U.S. government launched racist campaigns and policies towards Mexican immigrants and Mexican Americans (or Chicanos). Among many other draconian/inhumane cases, this included mass deportation campaigns of this racialised group, such as the “Mexican Repatriation” in the 1930s and “Operation Wetback” in the 1950s. In their insightful book, Decade of Betrayal: Mexican Repatriation in the 1930s, Dr. Francisco E. Balderrama and Raymond Rodríguez argue that an estimated one million individuals of Mexican heritage were deported, where an estimated 60 percent consisted of U.S. citizens.[7] In terms of “Operation Wetback,” then-President Dwight D. Eisenhower ordered the deportation of over one million individuals of Mexican heritage.[8]

In the tradition of Eisenhower, during his presidential campaign, Trump praised “Operation Wetback.”[9] By doing so, then-candidate Trump sent a clear signal to his white nativist base, whereby his immigration policies focused (to the present) on enforcement-only measures, like mass deportations of mostly brown immigrants. The underlying premise of Trump’s mass deportation fantasies (of the past) and policies (of the present) center on the eugenics ideology (a pseudoscience) and movement of the late-1800s to the present. Coined by Francis Galton, generally speaking, it’s based on the premise that to “advance” the human “race,” individuals with “good” traits/genes or “desirable” traits/genes should reproduce with each other.

Be it Mexican immigrants, Muslim Americans or black athletes, for his white nativist base, Trump represents the next “great-white-hope” to protect white Americans against the so-called brown and black “barbarians.”

Throughout history, the eugenics ideology has been used by racist individuals and groups, like Nazi leaders in Germany, to claim that one “race” or group is genetically superior than another “race” or group. Prior to the rise of Nazism, however, white Americans used this pseudoscience to argue that they were superior compared to racialised groups, such as African Americans, Native Americans, Asian Americans and Mexican Americans. For instance, as a way to justify racist policies towards African Americans throughout the late-1800s and mid-1900s, like residential segregation and whites-only spaces (public and private), white American leaders and average white citizens claimed (to the present) that whites were superior to blacks.

In his op-ed on the plight of undocumented youth, award-winning writer Michael D’Antonio connects Trump’s decision to end Deferred Action for Childhood Arrivals (DACA), which provides temporary deportation relief and work permits for qualified undocumented youth, to eugenics: “There is another distinction that sets Dreamers apart, of course: Most of them are from Mexico, and they are not white. Trump’s move to end DACA, therefore, must be understood within the historical context of America’s exclusionary immigration policies, the bulk of which have relied on the pseudoscience of eugenics.” [10]

In terms of being a divisive leader, Trump has played his “us-versus-them” card throughout his presidential campaign to the present. Be it Mexican immigrants, Muslim Americans or black athletes (e.g., black athletes in the National Football League who refuse to stand for the American flag due to police abuse), for his white nativist base, Trump represents the next “great-white-hope” to protect white Americans against the so-called brown and black “barbarians.” Under this context, Trump’s fetish or fantasy for a southern border wall, which Mexico will miraculously “pay for,”[11] makes absolute sense. Instead of focussing on bridges that unite us, for instance, Trump has been focusing on walls that divide us – and don’t work, according to Dr. Michael Dear[12] – allowing him (with the support of his xenophobic base) to become one of the most powerful men in the world.

Thus, while Trump has solidified his racist credentials, there’s no denying the large share of American supporters (e.g., almost 63 million voted for him against former Secretary of State Hillary Clinton on November 7, 2017)[13] who bought/buy his racist message. For example, of the millions of Trump supporters, how many abandoned him when he reportedly disparaged immigrants from El Salvador, Haiti and African countries during a White House-led meeting (January 11, 2018)?: “Why are we having all these people from shithole countries come here?”[14] To remove any doubt of his racist credentials, at this same meeting, Trump inquired about bringing more immigrants from countries like Norway.  

By examining Trump’s domestic immigration policies based on his racist, xenophobic, enforcement-only and divisive positions, we can better understand or examine his foreign positions based on isolationist and unilateralist policies. This includes negative, foreign diplomatic relationships or implications with so-called friendly nations. For instance, while Trump insists on building his border wall, where the tax payers will pay for it (not Mexico), what incentives does Mexico (as a so-called friendly nation) have to cooperate or trade with the United States, especially when other options arise in the future with other superpowers, like China? While Mexico’s ruling political party, the Partido Revolucionario Institucional or PRI, caves to Trump, there’s no guarantee that if a progressive party wins the presidential election on July 1, 2018, Mexico continue to capitulate.

Unless Trump gets impeached and his entire administration resigns, including the equally dangerous Vice President Mike Pence, a significant segment of the world, especially the historically marginalised and oppressed, will continue to perceive Americans in a singular gaze: “The Ugly American.”

In short, while the U.S. remains a superpower with asymmetric foreign relations throughout world, its leaders – Trump and the morally complicit Republican Party – and citizens must decide if they want to use their enormous military and financial power either for good or bad? Unless Trump gets impeached and his entire administration resigns, including the equally dangerous Vice President Mike Pence, a significant segment of the world, especially the historically marginalised and oppressed, will continue to perceive Americans in a singular gaze: “The Ugly American.”  

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About the Author

Dr Huerta is Assistant Professor of Urban and Regional Planning and Ethnic and Women’s Studies at California State Polytechnic University, Pomona. He is the author of Reframing the Latino Immigration Debate: Towards a Humanistic Paradigm (San Diego State University Press, 2013). He holds a Ph.D. from UC Berkeley and a B.A. and an M.A. from UCLA.

References

[1] “Chinese Exclusion Act (1882).” Harvard University Library Open Collections Program. Accessed on February 1, 2018. Online: http://ocp.hul.harvard.edu/immigration/exclusion.html

[2] Frail, Tom. “The Injustice of Japanese-American Internment Camps Resonates Strongly to This Day,” Smithsonian magazine (January 2017). Accessed on February 2, 2018. Online: https://www.smithsonianmag.com/history/injustice-japanese-americans-internment-camps-resonates-strongly-180961422/

[3] Margolin, Emma. “‘Make America Great Again’–Who Said It First?” NBC News (September 9, 2016). Accessed on February 1, 2018. Online: https://www.nbcnews.com/politics/2016-election/make-america-great-again-who-said-it-first-n645716

[4] Staff, “Full text: Donald Trump announces a presidential bid,” Washington Post (June 16, 2015). Accessed February 2, 2018. Online: https://www.washingtonpost.com/news/post-politics/wp/2015/06/16/full-text-donald-trump-announces-a-presidential-bid/?utm_term=.56b516e5af3a

[5] Huerta, Alvaro, “Trump’s anti-immigrant comments help Democrats,” The Gulf Today (July 18, 2015). Accessed on February 3, 2018. Online: http://gulftoday.ae/portal/9f29dd13-63c6-4798-924c-90f3fc626b51.aspx

[6] Gómez-Quiñones, Juan. “La Realidad: The Realities of Anti-Mexicanism – A Paradigm,” HuffPost (January 25, 2017). Accessed on February 8, 2018. Online: https://www.huffingtonpost.com/entry/guest-essay-la-realidad-the-realities-of-anti-mexicanism_us_5882f84ce4b0111ea60b9658

[7] Balderrama, Francisco E. and Raymond Rodríguez. Decade of Betrayal: Mexican Repatriation in the 1930s. University of New Mexico Press, 2006.

[8] Grossman, Roger, “The 1954 deportation of Mexican migrants and the ‘wetback airlift’ in Chicago,” Chicago Tribune. (March 4, 2017). Accessed February 8, 2018.

Online: http://www.chicagotribune.com/news/opinion/commentary/ct-flash-deportation-migrant-mexican-0305-20170303-story.html

[9] Martinez, Jack. “Republican Democrats Debate Immigration as Trump Praises Eisenhower’s ‘Operation Wetback,’” Newsweek (November 10, 2015). Accessed on February 9, 2018.

Online: http://www.newsweek.com/candidates-immigration-debate-392730

[10] D’Antonio, Michael, “Trump’s Move to End DACA has Roots in America’s Long, Shameful History of Eugenics,” Los Angeles Times (September 14, 2017). Accessed on February 9, 2018.

Online: http://www.latimes.com/opinion/op-ed/la-oe-antonio-trump-eugenics-daca-20170914-story.html

[11] Huerta, Alvaro. “No Deal on “S—hole’ Border Wall!,” ImmigrationProfBlog (January 25, 2018). Accessed on February 10, 2018.

Online: http://lawprofessors.typepad.com/immigration/2018/01/alvaro-huerta-.html

[12] Dear, Michael. Why Walls Won’t Work: Repairing the US-Mexico Divide, 2003. Oxford University Press, 2013.

[13] “Presidential Results.” CNN Politics. Accessed February 10, 2018.

Online: http://www.cnn.com/election/2016/results/president

[14] Dawsey, Josh. “Trump derides protections for immigrants from ‘shithole’ countries,” The Washington Post (January 12, 2018). Accessed February 10, 2018.

Online: https://www.washingtonpost.com/politics/trump-attacks-protections-for-immigrants-from-shithole-countries-in-oval-office-meeting/2018/01/11/bfc0725c-f711-11e7-91af-31ac729add94_story.html?utm_term=.07d3f07a4116

 

Trump’s Phony Trade War (1st of a 3-Part Series)

By Dr. Jack Rasmus

“What’s going on with Trump’s trade offensive? There’s a dual track policy underway: One a phony trade war with US allies; the other a potential (but not yet) trade war with China, that may also in the end prove less than a bonafide ‘trade war’ as well.”

 

Trump’s trade team heads off to Beijing this week of May 2018 to attempt to negotiate terms of a new US-China trade deal.  The US decision whether to continue the exemptions on Steel and Aluminum tariffs with the European Union occurs comes due this week as well.  And this past week Trump also declared “we’re doing very nicely with NAFTA”.

So what’s all the talk about a Trump ‘trade war’? Is it media hype? Typical Trump hyperbole?  Is there really a trade war in the making? Indeed, was there ever? And how much of it is really about reducing the US global trade deficit—and how much about the resurrection of Trump’s ‘economic nationalism’ theme for the consumption of his domestic political base in an election year?

One thing for certain, what’s underway is not a ‘trade war’.

Trump announced his 25% steel and 10% aluminum tariffs in early March, getting the attention of the US press with his typical Trump bombast, off-the-wall tweets and extremist statements. The steel-aluminum tariffs were originally to apply worldwide. But the exemptions began almost immediately.  In fact, all US major trading partners were quickly suspended from the tariffs—except for China.

By mid-March, Canada and Mexico were let off the tariff hook, even though they were among the top four largest steel importers to the US, with Canada largest and Mexico fourth largest.  Thereafter, Brazil (second largest steel importer), Germany, and others steel importers were exempted as well.[1]  And Canada, by far the largest aluminum importer to the US, accounting for 43% of US aluminum imports, was exempted for imports of that product.

 

South Korea ‘Softball’ Trade Template

The Trump administration’s signal to its allies was the US-South Korea deal that soon followed. The South Koreans were pitched a ‘softball’ trade deal. South Korea, the third largest US steel importer last year, was exempted from steel tariffs, now permanently as part of the final deal. So much for steel tariffs. Moreover, no other significant tariffs were imposed on South Korea as part of the bilateral treaty revisions.  No wonder the South Koreans were described as ‘ecstatic’ about the deal.

What the US got in the quickly renegotiated US-South Korea free trade deal was more access for US auto makers into Korea’s auto markets. And quotas on Korean truck imports into the US. Korean autocompanies, Kia and Hyundai, had already made significant inroads to the US auto market. US auto makers have become dependent on US truck sales to stay afloat; they didn’t want Korean to challenge them in the truck market as well. Except for these auto agreements, there were no major tariffs or other obstructions to South Korea imports to the US. Not surprising, the South Koreans were ecstatic they got off so easily in the negotiations.[2]  Clearly, the US-South Korea deal had nothing to do with Steel or Aluminum. If anything, it was a token adjustment of US-Korea auto trade and little more.

US auto makers have become dependent on US truck sales to stay afloat; they didn’t want Korean to challenge them in the truck market as well.

So the Korean deal was a ‘big nothing’ trade renegotiation. And so far as US trade deficits are concerned, steel-aluminum imports are insignificant.  Steel-aluminum tariffs do nothing for the US global trade deficit.  US steel and aluminum imports combined make up only $47 billion—a fraction of total US imports of $2.36 trillion in 2017.

The steel-aluminum tariffs were more of a Trump publicity tactic, to get the attention of the media and US trade allies.  And if the tariffs were the signal, then the South Korea deal is now the template. It’s not about steel or aluminum tariffs.  But you wouldn’t know that if you listened to Trump’s speech in Pennsylvania.  Canada and Mexico import more steel to the US than South Korea. But in a final NAFTA revision they too will be virtually exempted from steel-aluminum tariffs when those negotiations are completed.

 

NAFTA as South Korea Redux

 According to reports of the NAFTA negotiations, most details have already been negotiated with Mexico and Canada and the parties are close to a final deal. Typical of the ‘softball’ US approach with NAFTA—like South Korea—is the US recent dropping of its key demand that half the value of US autos and parts imported to the US be made in the US. That’s now gone. So a deal on NAFTA is imminent. Certainly before the Mexican elections this summer. But it will have little besides token adjustments to steel or autos.  Trump threats to withdraw from NAFTA were never real. They were always merely to tell his base what they wanted to hear.

For what Trump wants from NAFTA is not a significant reduction of steel, auto, or any other imports to the US. What the US wants is more access for US corporations’ investment into Mexico and Canada; more protection for patents of US pharmaceutical companies to gouge consumers in those countries like they do in the US; and a shift in power to the trade dispute tribunals favoring the US. He’ll sell the exaggerated token adjustments to his political base, which will applaud his latest, inflated ‘fake news’—while the big corporations and financial elites in the US will silently nod their heads in agreement for the incremental gains he’s obtained for them.

What the US wants is more access for US corporations’ investment into Mexico and Canada; more protection for patents of US pharmaceutical companies to gouge consumers in those countries like they do in the US; and a shift in power to the trade dispute tribunals favoring the US.

In the most recent development concerning NAFTA negotiations, Trump has extended the deadline for a final revision for another thirty days—a development which means the parties are very close to a final resolution.  The revisions will most likely look like the South Korean deal in many details—with quotas (not tariffs) on auto parts trade and more US access for US business investment and token limits on imports to the US.

 

Launching US-Europe Trade Negotiations: Macron’s Visit/Merkel’s Snub

 After NAFTA comes Europe, later this year and in 2019. Like the NAFTA negotiations, Europe deadlines on steel and aluminum tariffs were just extended another thirty days.  That’s just the beginning of likely further extensions. Europe will be less amenable to steel, aluminum or any other tariffs than the US NAFTA or South Korean partners.  French president Macron’s visit last week to the US should be viewed as the opening of negotiations on trade between the US and Europe. But the European economy is again weakening and France, Germany, the UK and others are desperate to maintain export levels, which is the main means by which they keep their economies going.

Europe also wants to keep the Iran Deal in place, which means important exports and trade for it, while Trump wants to end the deal as he’s promised his domestic political base.  A tentative agreement may have been reached between Trump and Macron during the latter’s recent visit to the US: Trump will formally pull the US out of the Iran Deal by May 12 but then will do nothing real apart from the announcement—much like the US withdrawal from the Climate Treaty. Europe will continue its trade deals with Iran. The US and Europe will then jointly try to negotiate an addendum with Iran. In short, France and Europe get to keep their business deals and Trump gets to pander to his political base before the elections in November. Like the Europe steel-aluminum tariff exemptions due this week, that announcement will soon follow as well within a week.

While Macron was treated like royalty by Trump during his visit to the US, German Chancellor Merkel, who followed within days, was treated more like a minor partner and snubbed.  The snubbing wasn’t about trade, however.  It was more about Germany’s refusal to participate in the Syrian bombings, as well as US dislike for the growing resistance in Germany to go along with extreme economic sanctions on Russia.  Long run, what the US has always wanted from Germany is to substitute US natural gas imports (which the US now has a surplus due to fracking technology) for Russian gas and for Germany to stop building gas pipelines with Russia. Trump will likely focus on political concessions from Europe while seeking only token changes to imports from Europe to the US. In other words, the content of a US-Europe trade deal may differ from NAFTA of South Korea but the ‘form’ will remain dominated by token adjustments, with little net import reduction to the US.

The UK economy is slowing rapidly, German industrial production has slowed in the last three of four months. And signs are accumulating that globally trade, upon which Europe is especially dependent, is slowing once again. The UK in particular is an economic basket case. Brexit negotiations are in shambles. And the Conservative Party’s days are numbered.  Trump therefore will not demand extreme concessions from the UK.  Nor will he from the rest of Europe, also now slowing economically—though not as severe as the UK—and important to Trump-US interests in concluding any trade deal with China, providing cover for US policy in the middle East, and with regard to Russian sanctions and US support for a collapsed Ukraine. Politics will dictate token trade adjustments with Europe.

 

Trump’s Political Objectives

 Except for the case of China, therefore, the Trump trade war is mostly tough talking trade for show.  Trump wants some token concessions from its US allies trading partners. Token concessions he can then ‘sell’ to his political base in an election year. He’s playing to his ‘America First’ economic nationalist political base, agitating it for electoral purposes next November.  He is in election mode, giving campaign speeches throughout the US as if this were September 2016 again. He may also be mobilizing that base in anticipation of the eventual firing of Mueller he plans and the political firestorm that may provoke from the traditional elites in the US.  He’s given them massive tax cuts and now some gains from trade negotiations without upsetting the global capitalist trade structure he once promised to do.

Trump is betting that delivering on taxes and trade to the elite will keep enough of them at bay. While delivering on immigration, the wall, and hyped (but phony) trade deals with US allies will convince his ‘America First’ political base he’s delivering for them as well. The so-called trade war is phony because it is designed to produce token adjustments to US trade relations with allies, which Trump will then inflate, exaggerate and lie about to his domestic political base, as they fall for his economic nationalism theme once again.

 

Is China the Trade Target?

But where does that leave US-China trade?  Certainly many believe that is headed for a ‘trade war’.  Tit-for-tat $50 billion tariffs have been levied by both the US and China on each other. Trump has threatened another $100 billion and China has said it will similarly follow suit.  Even the products to be tariffed have been identified—the US targeted a wide range of imports from China and China in turn targeting US agricultural products and other industrial goods from the US Midwest, and thus Trump’s political base.

The so-called trade war is phony because it is designed to produce token adjustments to US trade relations with allies, which Trump will then inflate, exaggerate and lie about to his domestic political base, as they fall for his economic nationalism theme once again.

Trump’s trade team is by now in Beijing.  It represents the major interest groups of Trump’s administration: Treasury Secretary Mnuchin—the bankers and big US multinational corporations. Trade representative hardliners, Robert Lighthizer and Peter Navarro—the Pentagon and US war production industries. And Larry Kudlow the Trump administration’s economic nationalists.  Will the Trump phony trade war apply to China as well? Or will it be an actual economic war? Is it really about reducing the US $375 billion annual trade deficit with China?  Or about US bankers wanting more access and ownership of operations in China?  Or is it about China’s attempt to technologically leapfrog the US in the next generation war-making and cyber security software capability?

The second part of this three part series will address the China-US element of Trump trade policy and strategy.

Featured image: VOA News: Trump Signs China Trade Measure

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About the Author

Jack Rasmus is author of the recently published book, ‘Central Bankers at the End of Their Ropes: Monetary Policy and the Coming Depression’, Clarity Press, August 2017. He blogs at jackrasmus.com and his twitter handle is @drjackrasmus. His website is http://kyklosproductions.com.

 

References

1. Shawn Donnan, “Trump Softens Steel Stance, With Exemptions for ‘Real Friends’”, Financial Times, March 9, 2018, p. 1

2. Alan Rapaport and Prashad Rao, “South Korea, Looking to Avoid Tariffs, Agrees to US Trade Deal”, New York Times, March 27, 2018, p. 7.

The Koreas Unified and at Peace? – How about Syria, Iran and Venezuela?

By Peter Koenig

Peace – in the Koreas, is what the world expects; and Peace in the world is what humanity expects, the vast majority – 99.9% of the world population wants peace, but it’s the 0.1% that commands war and destruction, since war and destruction is what runs the western economy. Literally. If peace would break out – what we in the west still call economy, though it’s a fraud, every day more visible – would collapse. In the US the war industry with all the associated production and service industries, including the Silicon Valley and banking – contributes more than 50% to GDP. Nobody notices and nobody says so. Naturally. Everything that might be revealing and thought-provoking, is lied about or hidden from the public.

This enormous Korean Peace Initiative is a flare of hope. The two Presidents, Moon Jae-in from the South and Kim Jong-un from the North have met last Friday, 27 April 2018, at the Peace House at Panmunjeom, near the 38th Parallel North, or the so-called Military Demarcation Line. It is the first time in more than 60 years that leaders of both Koreas have crossed the line – Mr. Moon to the North, and Mr. Kim to the South. They have declared their willingness to establish Peace, to sign a real Peace Agreement before the end of this year. At present, technically the two nations are still at war – a war sustained by the United States. The DPRK survives from day to day on a shaky armistice agreement from 1953. The American ferocious military forces and those of their NATO allies have totally destroyed, bombed to rubble and ashes North Korea at will, killing one third of her population, between 1950 and 1953. US-NATO did this despite North Korea’s offer to surrender long before the country was but a heap of ruins. Killing for spite, indulging in and enjoying the causing of horrendous suffering and death, is the sadistic and satanic way of the west.

This must be said and never forgotten. Although we look forward now – we, the world at large wants Peace, a live peace experience of Korea which could be replicated. The two leaders promise a number of joint actions and undertakings, including ridding the Peninsula of nuclear weapons – a very ambitious plan. Not because the two are not genuine in their endeavor but will Washington with more than 30,000 troops stationed in the South and a fleet of navy vessels and aircraft carriers as well as fighter jets and bombers – and a nuclear arsenal – withdraw their murderous toys? South Korea is a sovereign nation, she could request the departure of foreign occupiers, what the US is – but will the occupiers leave? – Or will the Pentagon, CIA or the White House invent a false flag event to nullify this peace effort? – Nothing is beyond Washington’s evil intention to hegemonize the world.

The two leaders promise a number of joint actions and undertakings, including ridding the Peninsula of nuclear weapons – a very ambitious plan.

And for DPRK’s President Kim Jong-un to recall – John Bolton, Trump’s National Security Advisor, said just a couple of days ago, referring to North Koreas denuclearization – “Libya should serve as a model”. You may remember in 2003 / 2004 Gaddafi was accused of hiding weapons of mass destruction (WMD), i.e. a nuclear arms development program. The west blackmailed him to get rid of it, against some ‘economic aid and favors’, of course. Gaddafi accepted. The western sicko leaders all became friends with him, the French then President Nicolas Sarkozy on top, who is now accused in French Courts of receiving up to € 50 million ‘illegal money’ (what is legal money by western standards?) from Muammar Gaddafi for Sarkozy’s 2007 campaign. Well, we also remember how in 2011 he was miserably tortured and slaughtered anyway, despite his concessions to the west on his alleged WMDs, by NATO forces led by France and viciously supported by Hillary Clinton, then Obama’s Secretary of State. Had Gaddafi kept his weapons, he may be still be alive and Libya and Libya’s people may still be prospering as they did before the US-NATO onslaught in 2011.

For now, the US of A seems to go passively along with the Peace Initiative. It’s more, the Donald is actually claiming credit for it. It is unbelievable but true. There is even a group of Trump supporters who will propose Trump for the Nobel Peace Prize. Imagine! – But why not, after all, Obama got the prize before he really started his Presidency – and then he bombed more countries and killed more people than any other US President in recent history. Yes, all is possible. We are living in a world where war is peace, where you are made believe that bombing a country to rubble will bring peace. Seriously. And the western people, brainwashed to the core, believe it.

We are living in a world where war is peace, where you are made believe that bombing a country to rubble will bring peace.

However, despite Trump the “peacemaker”, be on your guard. Iran’s Foreign Minister, Bahram Qassemi, so pointedly said – never trust any agreement or promise made by Washington. He referred, of course, to the 5+1 (Permanent Security Council Members, plus Germany, and, of course, Iran) Nuclear Deal that Trump wants to abolish, or at best renegotiate – for which he engaged his new little boyfriend, Macron, to call Mr. Rouhani to please agree to re-discuss the Nuclear Deal and the issue of Iran’s long-range missiles. Of course, Mr. Rouhani turned him off.

And, as I’m writing these lines, Netanyahu comes to the fore with the most flagrant of lies – but he knows with enough propaganda – the west will buy them, accusing with a bland PowerPoint presentation Iran of not adhering to the nuclear agreement and of running a secret nuclear program; he has allegedly ‘tons’ of documents to prove it. And he comes out with this absolute blatant falsehood 12 days before the deadline Trump set to decide whether or not to scrap the Iran Nuclear Deal. As the west, especially Europe and of course Master Trump, are all submissively on their knees in front of Israel’s guru, his message, repeated at nauseatum since the 2015 deal was signed, may catch on — and this, despite Europe’s (commercially inspired) adamant wish to adhere to the 5+1 Accord.

Iran is on her guard, and North Korea should be too.
—-
Peace in the Koreas – and in the future a unified Korea, unified families after more than 65 years; certainly, a dream for almost all Koreans. Yet, have the US motives to keep the DPRK under constant threat of war, under permanent fear, to keep the small country as an eastern entry point to Asia – to China and Russia – the same motive that started the war in 1950 – has that motive gone?

What does that mean for Syria, Iraq, Iran and Venezuela? – Trump at one point within the last weeks has said that the US is going to withdraw her troops from Syria. Really? – Or is this a well-orchestrated, but little veiled game – to give people hope for peace and then let them drop back into the ruins? – Remember this little ‘schmoozer’ guy, Macron, went to Washington with one of his priority requests – Donald, please do not leave Syria, we need you there.

Can you imagine – this little Rothschild implanted ‘call-me-president’ rascal has the nerve to say – we need you there? – Who in heaven does he think he is? – Let him militarize ‘his own’ (sic) country. France is already militarized and police patrolled like no other European nation – with the State of Emergency – effectively Martial Law – engraved in the French Constitution. Let the French people deal with Washington’s new baby poodle.

France and the UK, of course along with Washington, are also following Israel’s cue – destroy and partitian Syria and Iran – to create a Greater Israel, from the Euphrates to the Red Sea. And of course, the EU, miserable vassals of Washington, will keep their stranglehold with sanctions on Venezuela – Venezuela that has arguably together with Cuba, the best democratic system in the world, has never done any harm to anyone, let alone to those sanctioning countries. Even Switzerland had the audacity to join the EU’s sanction regime against Venezuela, a country that has been among the most pleasant partners of Switzerland in the past. One can only wonder, how low do these countries pull down their pants to please their ruthless Atlantists neofascist masters.

Peace in the Koreas — and in the future unified Korea, unified families after more than 65 years; certainly, a dream for almost all Koreans.

Will this noble Korean peace spirit stretch through the world and bring about a higher consciousness, one that strives for peace instead of war?

France is engaged in strikes, after strikes, after strikes against the Macron-imposed new labor reform laws that would literally strip French workers of most of the social and labor rights and benefits they have achieved since WWII – for what? – To make the rich richer, and the poor poorer. That’s what austerity is all about, has always been – the west calls it structural adjustment – what a euphemism! – And the people haven’t caught-on yet. Or is it the corrupt politicians that go along with it against the will of the people?
——
Peace in Korea – uniting again a historically peaceful and absolutely non-violent people – may be way more than a political act. It is a social compact of people; a vision to enshrine the non-violent nature of their culture upon Mother Earth, on a tiny fleck of earth in eastern Asia, on the Continent where the future lays – the East that brings human values back to the world, the OBI – One Belt Initiative of China, the broad economic and cultural cooperation enhanced by the SCO – Shanghai Cooperation Organization, led by China and Russia, and is already encompassing about half the world’s population, producing about a third of the globe’s economic output. – Could Korea be just that spark that ignites the engine to turning the massive ocean liner around, slowly but steadily – and, foremost – peacefully?

Featured Image: Business Insider: The Photos of Kim Jong Un and Moon Jae-in look eerily familiar to past Korea summits 

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About the Author

koenig-webPeter Koenig is an economist and geopolitical analyst. He is also a water resources and environmental specialist. He worked for over 30 years with the World Bank and the World Health Organization around the world in the fields of environment and water. He lectures at universities in the US, Europe and South America. He writes regularly for Global Research; ICH; RT; Sputnik; PressTV; The 21st Century; TeleSUR; The Vineyard of The Saker Blog; and other internet sites. He is the author of Implosion – An Economic Thriller about War, Environmental Destruction and Corporate Greed – fiction based on facts and on 30 years of World Bank experience around the globe. He is also a co-author of The World Order and Revolution! – Essays from the Resistance. 

The Flawed Story About Drugs and Human Rights in the Philippines

Human rights in the Philippines

By Dr. Dan Steinbock

For years, drugs and corruption thrived in the Philippines as policymakers engaged in external adventures ignoring domestic investment. The Duterte government is fostering a historical investment drive, while seeking to defuse the threat of drugs and corruption. So why is it penalized in the West?

Recently, President Duterte said that people should look to the Central Intelligence Agency (CIA) in case anything happens to him, referring to the US criticism against the war on drugs in the Philippines. “If my airplane explodes or a roadside bomb goes off, you can ask the CIA,” he said.

Timing matters. After former US Ambassador Philip Goldberg left Philippines in the aftermath of the 2016 election, he allegedly wrote a “blueprint to undermine Duterte within 18 months” – we are amid the deadline period.

Why the drug trade was ignored

Ironically, Duterte has taken the drug problem seriously, as most Filipinos whose neighborhoods have been invaded by drugs for more than a decade, particularly in the President Aquino III era. During the period, the drug problem was downplayed by the mainstream media and largely ignored by international media. Any efforts to educate the public on how to treat addiction was non-existent. As a Google Trend search demonstrates, it was only when Duterte began the war against the drugs that critics awoke, as evidenced by soaring story mentions about the Philippines and drugs in international media, mainly in the US and Europe (Figure).

Figure The Long silence about PHI drugs invasion until the Duterte Era

Sources: Google Trends; various Philippines, international, US and UN Sources

Under the watch of President Aquino and his Liberal Party (LP), drug syndicates began to produce meth in kitchen labs, which caused illegal drug trade to soar to $8 billion. US State Department warned drug trade and funding affected Philippines politics, as corruption undermined the rule of law. Yet, drug syndicates in Asia and Sinaloa, Mexico, saw the Philippines transshipment potential. The Discovery Channel showed drug trade and gang leaders’ luxurious life in the New Bilibid Prisons, with the involvement of former Justice Secretary Leila de Lima who allegedly received millions of pesos in payola money from drug lords.

Then the plans were derailed. In the 2016 election, Mar Roxas was Aquino’s designated successor – former interior minister and ex-investment banker in Wall Street – but failed to deliver a victory. Instead, Duterte triumphed.

Only days in the office, Duterte named five ‘narco-generals’ believed to be protecting drug lords that allowed shabu (meth) sales to flourish during the Aquino era. Some of them had been linked with Roxas who denied all ties with “Roxas generals,” even though some – including Deputy Director General Marcelo Garbo whom Duterte called a “protector of drug syndicates” – were among the police generals seen in closed-door meeting with Roxas’ staff at Novotel Hotel in Manila.

During his campaign Duterte warned the Philippines was on the way of becoming a “narco-state,” but LP leaders accused him of inflating the problem. Yet, the number of addicts had soared to 4 million people. Between July 2016 and November 2017, 4,000 drug suspects have been killed in 80,700 police operations with the arrest of 119,000 drug personalities, and at the cost of the lives of 86 police officers and soldiers and another 226 wounded.

LP meltdown and politicized rights debacles

As most Filipinos support Duterte and the drug war, the rights accusations have been offshored by politicizing human rights, amid the cataclysmic meltdown of the Liberal Party, as evidenced by the high-profile abuses of public office by President Aquino, Interior Secretary Roxas, Supreme Court Justice Maria Lourdes Sereno, Comelec Chair Andy Bautista, Secretary of Justice Leila De Lima, the ‘narco-generals,’ a slate of high-level government officials and dozens of senior executives.

The Aquino debacles alone – Manila hostage crisis, Typhoon Haiyan, Mamasapano massacre, and the Dengue vaccine scandal – are stupefying. Yet, the flawed story about Duterte as a threat surfaced in February, when he was seen as an impediment to democracy in the US intelligence community’s Worldwide Threat Assessment. In this misrepresentation, the dots can be linked with Goldberg, and the marginalized LP rights politicizers.

A key role in the Duterte misrepresentation belongs to Senator Leila de Lima, Aquino’s former Secretary of Justice, who has been glorified by CNN and BBC and as one of the “leading 100 global thinkers” by the Democratic Foreign Policy. In the Philippines, De Lima’s awards seem perversions of justice, including her 7-year affair with her lucratively-rewarded driver Ronnie Dayan who served as her money collector for drug protection and campaign financing. Despite imprisonment, her international accolades have escalated – from the EU and Inter-Parliamentary Union (IPU) parliamentarians to human rights NGOs – many of which are increasingly funded by private capital and represent Western interests.

None of these organizations intervened when drugs took over the Philippines, along with corruption and human rights violations.

Another role in the misrepresentation belongs to the Commission of Human Rights (CHR), which has been led by Chito Gascon since 2015. In mid-2017, Duterte and the House of Representatives sought to exhaust CHR budget as the politicized Commission had lost its credibility. Besides a human-rights lawyer, Gascon is a veteran LP leader. As he no longer could garner consequential rights support at home, he began feeding part of local media, which is in foreign ownership, and international media. What followed was a series of manufactured “events.”

In May 2017, Vice President Leni Robredo, another LP leader, sent a controversial video message on Philippines extrajudicial killings to the UN Commission on Narcotics Drugs, which featured Gascon. It was well timed by David Borden, head of the UN-accredited Drug Reform Coordination Network, also known as StoptheDrugWar.org which has been supported by Soros foundations.

In another case, when Duterte government invited UN Special Rapporteur Agnes Callamard to a public debate about the Philippines war on drugs, Callamard sneaked into Manila for an “academic” lecture, at the request of Gascon. Callamard has served at Columbia University’s Global Freedom of Expression Project whose major supporters include Soros foundations. Reportedly, Soros played a role in her appointment as UN special rapporteur.

Instead of democratic institutions in the Philippines, the rights leaders have relied on transnational NGOs funded by private capital – and guided by Western interests – to do the job. Amnesty International and Human Rights Watch are some of them.

International privatization of rights movements

Amnesty International (AI) sees the Philippines as the site of “thousands of unlawful killings by police and other armed individuals,” and portrays de Lima as a rights martyr. The tone has grown harsh since 2017 when James Gomez became AI’s director for Southeast Asia. While claiming professional neutrality, he considers the charges against de Lima “pure fiction” and Duterte’s policies “bloody and lawless.”

While AI claims to have millions of paying members around the world, it has changed drastically since its founding in the early 1960s by Peter Benenson. In 1966, Benenson himself stated that AI was infiltrated by British intelligence and resigned. Recently, AI has been criticized for excessive management pay, selection and ideological bias. While it claims to refuse donations from governments, it has received grants from the UK, European Commission, Rockefeller Foundation, US State Department and other governments – and Soros foundations.

In Human Rights Watch (HRW), the link has been the head of HRW’s Asia Division Phelim Kine, who has attacked most ASEAN leaders and made Philippines a prime target. In January, Foreign Affairs Secretary Alan Peter Cayetano denounced HRW for its “strategy of deception” in reporting on the government’s anti-drugs campaign.

Like Amnesty, HRW has been criticized for Western bias. It was created as a private US NGO in 1978, as a Cold War instrument to monitor Soviet Union’s compliance with the Helsinki Accords. In early ‘80s, Soros foundations gained leverage in the HRW; and in 2010 Soros cemented ties with a 10-year $100 million HRW donation. Since then, HRW’s record has been tarnished by allegations of partisanship, bias and an 2014 open letter by Nobel Peace Laureates criticizing HRW for intimate ties with the US government.

Amnesty, HRW and other well-meaning NGOs were initially founded by idealists who wanted to make a world a better place. Initially, the key question was whether a leader or a regime was making things better or worse for ordinary people. Now, it is more about abstract universals, which allows these NGOs to determine whether a particular leader or regime violates Western-conceived standards of human rights.

Financed largely by the US and Western Europe, these organizations focus on human rights violations in emerging and developing countries in which Western governments and private capital have substantial economic, political and strategic interests. That’s not about universal human rights and economic development, but about new human rights imperialism and old geopolitics.

Like the old tale about the boy who cried wolf, these NGOs raise alarm when it is warranted, but also when it is not. As the distinction between real and fake alarms grows blurry and politicization undermines their credibility , they are digging a grave to their noble cause.

The original commentary was released by The Manila Times on April 9, 2018.

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About the Author

Dr. Dan Steinbock is an åinternationally recognized strategist of the multipolar world. and the founder of Difference Group. He has served as at the India, China and America Institute (USA) , the Shanghai Institutes for International Studies (China) and the EU Center (Singapore). For more, see https://www.differencegroup.net/

EBR TV coming soon

We Won’t Get Fooled Again…Or Will We?

By Richard Westra

With the suspected chemical attack in the remaining rebel-held suburbs of Damascus on 4 April, it is apparent that the use of chemical weapons is indeed hard to solve. Needless to say, it is during these times that the citizenry needs to know better.

 

This isn’t happening, is it? Doesn’t anyone remember the British Iraq Dossier plagiarised from a U.S. doctoral student thesis? Or what about then U.S. Secretary of State Colin Powell making a fabricated presentation to the United Nations on the case for illegally attacking Iraq for its purported weapons of mass destruction? Fifteen years later Iraq, once a functioning, relatively well-to-do middle-income economy, is now a 21st century wasteland. Yet, somehow, so-called intelligence at that time dictated it was necessary to attack a sovereign state with a “preemptive strike” to forestall their attack on us.

Well, here we are again. But why now it may be asked? First, the world’s attention has recently been riveted on rogue state Israel unleashing its U.S. supplied military in a turkey shoot of unarmed Palestinian women and children protesting their lockdown in the giant open-air prison known as the Gaza Strip. So, while President Trump was trying to get back to his lost “America First” agenda, proclaiming an exit for U.S. involvement in Syria, guess what? There’s Israeli war mongering Prime Minister Benjamin “Bibi” Netanyahu braying in Trump’s ear, Israel first! And then we have the “Desert Stormy” factor to distract the U.S. domestic mass public from Trump’s alleged peccadillo’s.  

For his part, somewhat ironically, as he has been busy trying to bring France’s powerful unions to heel under the banner of fiscal prudence, French President Emmanuel Macron is now quick to squander the resources of his citizens on firing missiles into the air over Syria.

Let’s not forget British Prime Minister Theresa May. Before one shred of evidence was in, May and her buffoonish Secretary of State Boris Johnson had been hissy-fitting over an alleged deadly nerve agent attack on ex-spy Sergei Skripal and his daughter Yulia by, of course, who else, arch villain Russia. Yet, encumbered by the Brexit fiasco, facing waning popularity at home and, with the Skripal’s now recovering from the alleged diabolical assassination plot showing it up as almost an amateurish gag, why not bomb Syria! 

It seems lost on a world so easily manipulated by mainstream media talking heads that even if, and this really is a big if, chemical weapons were used in Syria several days ago, that the government of Bashar al-Assad is the culprit. Think about it. Finally after over a half decade of death and destruction the motley collection of jihadist groups that had been armed and financed by the U.S and its allies were staging a desperate last stand in Eastern Ghouta.

In fact most groups, except for the international terrorist Nusra Front, had already left. This means that if accounts of chemical weapons usage are to be believed, these were perpetrated either by Assad’s forces on his own people recently liberated from under jihadist truncheons and now seen waving Syrian flags in the streets. That would be nonsensical. Or, such usage would have occurred in the last area controlled by the Nusra Front the fighters of which, instructively, were getting ready to board busses and leave the following day.  

What is not fully grasped by most of us watching this theater of the absurd play out in front of our eyes is that there is actually another war going on in Syria besides that captured under the rubric of a Syrian civil war between Assad and an “opposition” supported by Western powers.

However things don’t stop there. What is not fully grasped by most of us watching this theater of the absurd play out in front of our eyes is that there is actually another war going on in Syria besides that captured under the rubric of a Syrian civil war between Assad and an “opposition” supported by Western powers. Another war of influence among Islamists pitting Saudi Arabian Wahabism and Qatari Salafism which, though largely cut from the same head chopping cloth, is playing out among their state sponsors. Ring a bell? Suddenly, Saudi Arabia and a close group of allies beholden to the Saudis blockade Qatar claiming Qatar is supporting terrorists? You’ve got it. And now that all of their jihadist proxies are dislodged from Damascus suburbs, noise is being picked up on a “deal” being cut to end that blockade. In fact the U.S.-Britain-France axis of destruction seems to be placating the Saudi’s by ratcheting up their arms sales to them and offering support for a Saudi led “Arab force” to step in to take over the occupation of Syrian territory controlled now by the U.S.?   

What is the saddest part of this whole story is that Syria along with Iraq and Libya were all erstwhile Soviet client states that were fiercely secular and imbibed inward focussed economic models. Such regimes resisted the neoliberal wholesale extroverting of dollarised, third world and middle income economies.  

Libya, as is well known, was the wealthiest economy on the African continent under Muammar Gaddafi’s tutelage. The current collapse of Syria’s economy is worse than that suffered by Germany during World War Two. And all of these secular states had been strong supporters of Palestine against Israeli occupation and apartheid.

History is littered with corpses left by their imperial exploits. Ditto France. Even the U.S coming out as a nation required a brutal Civil War where both sides slaughtered hundreds of thousands of “their own people”.

Were the hands of these regimes bloodless? No. Saddam’s brutality against communists and other democratic opposition to satisfy Western oil interests is legendary. But is there really any regime from the U.S. to Israel that can take any moral high ground today? The British..? History is littered with corpses left by their imperial exploits. Ditto France. Even the U.S coming out as a nation required a brutal Civil War where both sides slaughtered hundreds of thousands of “their own people”.   

When will the citizenry of supposed democracies around the world with their ostensibly “free” press ever begin to connect the dots? Or will all just sigh as platitudes and falsities are delivered by their governments justifying but another breach of what remains of international law? If there ever was an episode which illustrated the “manufacturing of consent”, this is the textbook example.

Featured Image: https://telanganatoday.com

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About the Author

Richard Westra is Designated Professor in the Graduate School of Law, Nagoya University Japan. His recent books include Socialism in the 21st Century, Unleashing Usury, and Exit from Globalization.

The Future of Bitcoin Governance and Trading

By John Christopher Norwood

Bitcoin exploded into headlines and investment portfolios in 2017, and rightly so. Business Insider reports that the world’s first and largest cryptocurrency today started the year at a value of just under $1,000 and skyrocketed to $14,500 by December 29 – a rise that equates to 1,300%.

This stunning growth has taken financial markets, governments, and the rest of the world by storm. Just five years ago very few could have predicted that Bitcoin will be a household term, in the same way that not a lot of people could have foreseen just how powerfully big data, social media, and artificial intelligence would reshape our world.

The Bitcoin frenzy may have died down a bit, but the cryptocurrency continues to hover at a strong US$8,450 as the overall cryptocurrency market eyes an impressive US$350 billion market cap. However, as amazingly futuristic these numbers and pieces of technology are, this is still – mind-blowingly, excitingly, decidedly – just the beginning.

Varying levels of governance 

Being a relatively new phenomenon, Bitcoin has yet to find a place in the larger established frameworks that govern financial exchanges. This is the same for the hundreds of cryptocurrencies on the market, and governments across the globe are still working to better understand how cryptocurrencies work and how best to regulate their use. The global debate not only revolves around the legality of Bitcoin and other cryptocurrencies, but also on matters such as taxability, regulation, and monitoring of mining activities, among many other vectors for use. Bitcoin prices are known to fluctuate according to different government decisions on their legality, which can vary and change sporadically.

In China, private individuals can hold and trade Bitcoins, but financial firms cannot. Meanwhile, Northern America is one of the friendliest regions for Bitcoin, and is home to 2,442 Bitcoin merchants.

For instance, in countries like Indonesia and Vietnam, it is legal to hold and trade Bitcoin, but illegal to use it as payment for goods and services. In China, private individuals can hold and trade Bitcoins, but financial firms cannot. Meanwhile, Northern America is one of the friendliest regions for Bitcoin, and is home to 2,442 Bitcoin merchants. Although Bitcoin is not officially recognized as legal tender in the US or Canada, they are still very much accepted on financial markets. European countries are also open to Bitcoin, being home to 2,060 Bitcoin merchants.

On the far end of the spectrum, other countries have banned or outlawed Bitcoin altogether. Bolivia has fined and even arrested some individuals over use of the cryptocurrency since 2014, while the Indian central bank has rejected cryptocurrencies in general.

Still others, which form the majority, have no current strong policies to govern Bitcoin use, but will likely begin development for them in the near future. Expect that even more European countries will have stronger stances on Bitcoin use and regulation, while countries like China and Korea will have larger crackdowns on Bitcoin mining.

A growing array of trading opportunities

The continuing debate on cryptocurrencies and their place in the world has not hampered the growth of investment and trading opportunities for Bitcoin. As cryptocurrency markets mature, large-scale institutional investments are expected to bring in more capital and financial products. These will open up opportunities for even more people to cash in on cryptocurrencies outside of Bitcoin exchanges.

One of the ways the market is already doing this is in Bitcoin spreads, which Nadex explains would allow investors to track and profit off of Bitcoin without actually owning them. This works by allowing investors to trade the price of cryptocurrency, which jives well with Bitcoin’s high volatility.

Meanwhile, Bitcoin exchange traded funds (ETFs) are getting more popular as a cheaper way to invest in and trade Bitcoin.

Meanwhile, Bitcoin exchange traded funds (ETFs) are getting more popular as a cheaper way to invest in and trade Bitcoin. Like any other kind of ETF, Bitcoin ETFs are marketable assets that can profit from tracking indices, where stakeholders can have a specific percentage.

Last but not least are Bitcoin stocks, which are smaller companies that invested into Bitcoin that offer dividends to shareholders. These come with risks, but have a looser correlation to Bitcoin price movements than the other Bitcoin-related investments.

In conclusion, there is much and more to be expected from Bitcoin and other cryptocurrencies in terms of investment opportunities and government policy. With billions at stake, it is likely that Bitcoin’s wild journey will get even more exciting.

For further information:

1. Business Insider: http://www.businessinsider.com/bitcoin-price-in-2017-review-2017-12
2. The World Financial Review: http://www.worldfinancialreview.com/?p=26619
3. CCN: https://www.ccn.com/bitcoin-price-surges-5-to-8450-as-cryptocurrency-market-eyes-350-billion/
4. How Much: https://howmuch.net/articles/bitcoin-legality-around-the-world
5. Lifewire: https://www.lifewire.com/where-is-bitcoin-illegal-4156601
6. Nadex: https://www.nadex.com/markets/cryptocurrency/bitcoin

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About the Author

John Christopher Norwood is a Florida-based financial advisor and writer with a passion for all things crypto. When he’s not in front of a laptop talking with clients or typing away about the latest in cryptocurrency, John likes playing soccer and hanging out by the beach with his wife and three dogs.

On the Joy of Not being a Listed Company

By David De Cremer

Being a listed company sure is beneficial and puts on an immediate and direct effect on the different aspects of the company. But will these effects stay in the long run or is it just for temporary convenience? In this article, Ren Zhengfei, Huawei’s founder and spiritual leader, talks about how Huawei’s conviction and determination on staying as a private company led it to where it is today.

 

It is a trend that no one in China can deny: Chinese companies flocking to go public. In 2015, when stock prices were crashing, the Chinese government introduced an embargo on new initial public offerings (IPOS) for a period of four months. Ever since the lifting of this freezing period, IPOS are receiving faster approval to facilitate financial contributions to the Chinese economy. In fact, according to the Wall Street Journal, in 2017, Chinese companies made up about one-fourth of the companies listed across the world. Interestingly, many of these companies decided to go public in the US. Reasons for this are that many Chinese companies do not meet the more stringent Shanghai and Hong Kong listing standards and consider the US to be a much more international market. At the same time, however, many also believe that China is set to continue having positive GDP growth, which is reflected by the increasing number of Chinese companies debuting on the Shanghai and Shenzhen stock exchanges. Important to note in this respect is that when entering the competitive market in China it does help to have a big company behind you. For example, when Chinese Search engine Sogou (SOGO) went public, their debut became a “big thing”, mainly so because heavyweight Tencent owned about 39 percent of the company. One thing that is, however, very clear: the demand for Chinese IPOS is high and has caused somewhat of a herding behaviour – companies keep coming to go public.

 

Going public as the Holy Grail in China or maybe not?

Being a public company or not, it is imperative that you have motivating leadership and dedicated hard-working employees.

Chinese examples like Tencent and Alibaba are inspiring as they were profitable when they went public. Right now, it is, however, acknowledged that these two companies are outliers and that in contrast, many smaller publicly listed companies have proven to be unprofitable. For example, Chinese education firm “Four Seasons Production” went public at the end of 2017 and immediately suffered a decline in value. This observation is slowly installing the feeling among companies that they do not necessarily have to rush to go public. As an example in case, Ant Financial Services Group has communicated to have no need to go public, despite being backed up by one of the two greats, that is, Alibaba.

This decline for companies to go public is an interesting evolution, particularly since achieving IPO is still seen somewhat regarded as a vaunted prospect. Companies do realise that going public requires intense preparation and, even more importantly, after having gained public status may not always facilitate (but rather complicate) decision-making within the company when it comes down to innovation, vision and purpose. Therefore, populating your company with external shareholders may not be a holy grail after all. In line with this assumption, Vermeulen (2010, p.196), noted, “that the idea that the primary beneficiaries are the company’s shareholders is not a law of nature … it’s a choice.” Indeed, although going public have a number of benefits, it is not a written law that any company should obey to. Shareholders invest money once a company goes public but how to grow for example, in innovative and value-driven ways will nevertheless still depend on your employees. At the end of the day, the same organisational challenge as always stands: being a public company or not, it is imperative that you have motivating leadership and dedicated hard-working employees. As it is acknowledged nowadays that a focus away from your employees to a focus on investors may bring many challenges, it has become clear as well that discussions have come to the fore whether employees should maybe become the primary stakeholder. As a response, some companies take pride in being employee-owned.

In the Chinese market, the most famous company being employee-led is the telecom giant Huawei. This Chinese telecom giant employs more than 170,000 people and serves more than 3 billion customers. In the fiscal year of 2016 Huawei´s revenue reached CNY521.574 billion (US$75.103 billion) and CNY37.052 billion (US$5.335 billion) in net profit. Since its foundation by Ren Zhengfei in 1987 Huawei is and has always been a private company owned largely by its employees (about 98.5%). This employee-owned status has often been looked upon in both stifling as admiring ways by Huawei’s competitors. Despite these conflicting attitudes, so far, their employee-owned status has worked out in very beneficial ways for Huawei. In fact, in its early days, Ren Zhengfei noted during a private meeting that “If we do not go public, we might someday take over the world.” It is Huawei’s conviction that it has gotten where it is today, and has been able to overtake some of its Western counterparts, because it has a long-term vision. The idea is shared within Huawei, that the reason why they have been able to survive beyond, for example, Motorola, Acatel-Lucent, and Nortel, is because they are not a listed company, and as such are not greedy and more willing to persevere. In fact, the company makes 10-year plans, while its competitors struggle to follow near-term fluctuations of the capital market. In their view, the capital market, so to speak, is a cold-blooded and impatient animal.

 

Distinguishing direct from indirect influence

Of course, very good reasons exist to go public. The major advantage of being listed is that it gives access to money that does not have to be repaid. If your stock jumps by going public, a direct and immediate effect on the company’s performance will be achieved. An important question, however, is whether such immediate financial input effect really makes your company a more vital, resilient and thus a competitive organisation on the longer term?

One of the values that Huawei nowadays focuses on exactly concerns their desire to be a highly vital and dedicated work place (De Cremer, 2017). According to Ren Zhengfei, organisational vitality can be developed and maintained by installing a spiritual work culture. In his view, in such a type of culture, employees are provided freedom of work to demonstrate their entrepreneurial spirit by introducing changes, innovations and projects they would like to pursue. Rewarding this kind of dedication and entrepreneurial success within the company not only allows the company to be able to rely on dedicated and passionate employees but also to innovate in ways that serves the values and long-term perspective of the company. In this process, every employee is treated as a “hero” who can contribute to the long-term survival of the company. Or, as Ren Zhengfei, puts it: “We want engines big and small to drive our team forward.”

The sustainability and growth of Huawei is empowered by an internal force rather than an external one – a force which can make the difference between being a successful private versus listed company, respectively.

All of this makes clear that the sustainability and growth of Huawei is empowered by an internal force rather than an external one – a force which can make the difference between being a successful private versus listed company, respectively. Indeed, as Vermeulen (2010) mentioned when talking about going public as a source of money: “I would say this source comes at a cost” (p. 194). According to Vermeulen this cost includes that the top of the company will have less time to devote to the internal workings of the company and thus be less effective in leading employees in motivating and inspiring ways. He considers this to be an enormous indirect cost.

 

Not going public requires strong leadership

A consensus exists among management scholars that the tone of the top is extremely important in creating a work culture that can motivate, cultivate, inspire and facilitate innovative and dedicated teams of employees. Those leading the company are usually regarded as role-models and employees at lower levels of the organisation tend to emulate the behaviours and decisions of those at the top. Therefore, if top management turns out to be largely absent – because of an extensive focus on external shareholders – any company will suffer on the longer term. A problem is that such longer-term indirect costs are not observed easily and even more difficult to measure. And, this situation represents a problem in the contemporary business world. Indeed, if you cannot clearly measure something, then it does not exist.

For Huawei the indirect effects as discussed above are one of the main reasons for not being listed. In fact, one of the main responsibilities of Huawei leadership is to promote organisational vitality that encourages employees to work hard in passionate and enthusiastic ways. By not being listed, the focus of leadership is on feeding the vitality of the organisation. They achieve this by ensuring that the energy levels of employees are promoted and channeled in such a way that teams make decisions on the long-term. Such a long-term focus promotes dedication and identification with the important values of the organisation. Not experiencing the stress associated with short-term targets and pressures, it allows employees to focus on working towards the fulfillment of the organisation, which is to make the customer happy. As Ren Zhengfei notes, “Too many “pies” will eat away at the very essence of the organisation, which is the worst form of death for an organism.” If the company remains private and its remuneration is on par with global industry standards, plus yearly dividends, it will not only attract and retain talented people, but also serve to maintain their will to fight on the long-term for the values that Huawei stands for. Up to now, Huawei has struck a successful balance.

Of course, being able to get your employees aligned with such a long-term perspective requires strong leadership. More precisely, it needs a kind of leadership not afraid of sacrificing the immediate influx of external capital to the benefit of having more time at hand to build the right organisational culture. Huawei’s founder and spiritual leader Ren Zhengfei is someone who holds this leadership ambition dear to heart. According to Ren, in order to cultivate teams of spirited young people, senior managers have the responsibility to provide guidance to these young managers. And, this guidance should not simply be a part of their formal contract with the company but go beyond it. Specifically, Huawei urges its senior leadership to take responsibility for the mistakes young managers make and put in effort to correct and re-direct where necessary in active ways. In essence, top executives delegate operating authority to local managers, but they have to keep oversight as they remain responsible. Executives therefore need to be proactive. In other words, these executives need to be able to guide and reinvent people who failed in another job so that they can adapt to the demands of a competitive business setting Huawei operates in. As Ren indicates, “Our managers need to have in-depth understanding of people to fully unleash the potential of each employee.” The ambition should be that all the diamond mines underneath [i.e. the potential of their employees] will be ours.”

It is clear that the choice for not going public invites those in leadership positions to stand up and help improve capabilities of employees during training and practice to help them grow and develop. This kind of leadership is effortful and requires dedication to the development of one’s workforce, but according to Ren Zhengfei, this should be the motivation of every talented manager in the company. As Ren says, “Our outstanding employees have to build their aspirations as world leaders”. As the famous saying in China goes: “When heaven is about to place a great responsibility on a man, it always first frustrates his spirit and will, exhausts his muscles and bones, exposes him to starvation and poverty, harasses him by troubles and setbacks so as to stimulate his spirit, toughen his nature, and enhance its abilities” This should be the motto for leaders at Huawei.

 

Will Huawei go public?

For Huawei the near future is to develop further spiritual leadership and an intrinsic sense of motivation to remain a vital organisation that survives.

In a speech during a market conference in 2017, Ren mentioned: “There is still a big gap between Huawei and Apple in terms of strategic insights. One reason is that we do not have as much capital of Apple”. As a response, Ren notes further that “a brand is a type of trust that a company’s management team brings to customers, we must gradually improve our capabilities and avoid a rush for quick results.” These statements make clear that Huawei sees most benefit for the growth of the company in further shaping and improving their work culture. For Huawei the near future is to develop further spiritual leadership and an intrinsic sense of motivation to remain a vital organisation that survives (De Cremer, 2017). In the words of Ren Zhengfei: “We [Huawei] need to have the right values, and work hard to create value for society … We need to have the right spiritual pursuits.” In addition, Ren also points out that “but great as American companies are, their American strategists have to succumb to the will of the capital market”, thereby making clear his desire to remain a private company that controls its own faith and strategy on the long term. Therefore, it seems that an initial public offering for Huawei is not about to happen soon.

Featured Image: Team building at Huawei Kazakhstan Photo Source: http://www.huawei.com/en/press-events/media-kit/gallery

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About the Author

David De Cremer is the KPMG professor of management studies at the Judge Business School, University of Cambridge, UK, a co-founder and co-director of the One Belt One Road research platform at the University of Cambridge and a visiting professor at HSBC Peking University Business School. Before moving to the UK he was a professor of management at China Europe International Business School in Shanghai. He is the author of the book Pro-active Leadership: How to overcome procrastination and be a bold decision-maker and co-author of “Huawei: Leadership, culture and connectivity”.

 

References

1. De Cremer, D. (2017). Organisational vitality: The life line of your company. The European Business Review, November-December, 44-50.

2. Vermeulen, F. (2010). Business exposed: The naked truth about what really goes on in the world of business. Financial Times Prentice Hall.

Betting Big on CPEC

"the khunjerab pass at china-pakistan border in xinjiang autonomous region, china. click for more:achinaai"

By Xiangming Chen, S.K. Joseph and Hamna Tariq

With the launch of the China-Pakistan Economic Corridor (CPEC), one fundamental question to ask is if this ambitious project will transform Pakistan and boost China’s ambitious Belt and Road Initiative (BRI). In this article, the authors assess the potential and prospect of CPEC in terms of its various opportunities and constraints and examine the economic potentials and social impacts of CPEC from the Pakistani national perspective using a subnational and local lens as well as from the Chinese vantage point and draw the broad implications of this two-sided analysis of CPEC toward a preliminary policy oriented conclusion.

 

Perched 4,693 metres above sea level in the Karakoram Mountains on Pakistan’s northern border with the southwestern region of Xinjiang, China, Khunjerab Pass, with an international border gate, stands lonely against the stunning snowy mountains around. On the Chinese side, besides an isolated army border control station and few adventurous tourists, the Pass is accompanied by a few scattered yurts and rarely seen white mountain yaks. Yet this place in a remote corner of the world heralds larger looming significance for both China and Pakistan. Its location defines the Pass as the only existing crossroad point for the ambitious China-Pakistan Economic Corridor (CPEC) that both countries have committed to building. While there are relatively few freight lorries running along the highway (G314) leading from Kashgar, China’s westernmost city and closest city to the Pass, CPEC is touted as a difference-maker for boosting Pakistan’s economic development and China’s Belt and Road initiative (BRI). As Pakistan’s Prime Minister Shahid Khaqan Abbasi is quoted in the Long Term Plan (LTP) for China-Pakistan Economic Corridor (2017-2030), “Pakistan-China bilateral ties are time tested; our relationship has attained new heights after the China-Pakistan Economic Corridor that is a game changer for the region and beyond”.1

With over $50 billion up from the original $46 billion for infrastructure construction mostly financed by China, CPEC is the single largest capitalised project ever mounted in Pakistan. It comprises the (re)construction of Gwadar port on the Indian Ocean, roads, railways, power stations and other facilities that aim to create sea-land transport connections between Gwadar and Kashgar. This south-north corridor through the length of Pakistan (see Map 1) is capable of stimulating national and regional economic development at a scale and speed not seen before. From Kashgar as China’s terminus of CPEC, this overland corridor will create the shortest access to sea for the country’s northwestern region and thus generating new growth momentum for this vast but lagging region. If successfully implemented, CPEC can serve the crucial overland bridge for linking China’s Belt and Road (see Map 2).

MAP 1: The Proposed $46-Billion China Pakistan Economic Corridor
Source: Wall Street Journal, U.S. Global Investors

MAP 2: The Geographical Scope of the Belt and Road Initiative (BRI) with Six Corridors
Source: Mercator Institute for China Studies, Berlin

Despite its hype for both Pakistan and China, as well as its broader regional and global importance, CPEC is just beginning to attract more attention as an ambitious cross-border project and a salient issue for research, although the latter has not kept pace with the project’s on-the-ground development.

CPEC from Pakistan’s National Perspective

As a result of Xi’s visit, a total of 51 agreements were signed between China and Pakistan having a total worth of $46 billion now over 50 billion which also included the development of CPEC. The originally intended $46 billion investment for CPEC has since been raised to $62 billion.

In April 2015, Chinese President Xi Jinping visited Pakistan. This was the second visit of China’s top leader to Pakistan since the beginning of the 21st century after Hu Jintao’s visit to Pakistan in 2006. During his visit, Xi stated, “this will be my first trip to Pakistan, but I feel as if I am going to visit the home of my own brother”, thus amplifying the friendly relations between both countries.2 As a result of his visit, a total of 51 agreements were signed between China and Pakistan having a total worth of $46 billion which also included the development of CPEC.3  The originally intended $46 billion investment for CPEC has since been raised to over $50 billion. The amount exceeds all foreign direct investment Pakistan has received over the last several years and is considerably more than all the aid Pakistan has received from the US since 9/11.4 This is more than 20% of Pakistan’s 2016 gross domestic product.

This project is basically a collection of infrastructure projects in Pakistan to develop Pakistan’s shattered economy. CPEC includes construction of modern transportation networks, numerous energy projects and creation of special economic zones. CPEC eventually aims at linking Pakistan’s port of Gwadar on the Indian Ocean to China’s landlocked Northwestern region of Xinjiang through a vast network of highways and railways. If this project becomes reality, Pakistan will be having a massive new network of roads, highways, railways and pipelines. The road will cover approximately 3,000 kilometers from Gwadar to Kashgar. The internal motorway is also a part of this project, which will be about 1100 kilometers long stretching from Lahore to Karachi, in addition to the Karakorum highway from Kashgar via Khunjrab Pass to Islamabad (Map 1). This is by far the largest infrastructural project ever mounted in the history of Pakistan. Several projects are already underway and are expected to be completed by as early as 2018, with the short-term plan of CPEC to be completed by 2020, the mid-term by 2025 and long-term by 2030.5

 

Economic potentials

Pakistan will reap several much needed benefits from CPEC that can and will improve the country’s development. First, CPEC is expected to enhance Pakistan’s employment opportunities along the route. Although thousands of Chinese workers have been assigned to construct the railways, pipelines and roads, most construction workers are locals. CPEC is projected to generate 2,320,000 jobs ultimately reducing Pakistan’s unemployment rate from 5.5% to 3.9%.6 According to Pakistan’s Minister of Planning and Development Ahsan Iqbal, at least 300,000 jobs have been created by CPEC thus far.7 A lot of these jobs will be for building three routes of roads to connect Gwadar to Kashgar, a considerable improvement over the only road now.

Stronger and more expansive transport infrastructure is expected to stimulate faster economic growth through more trade and investment. In fact, after the official launch of CPEC in 2013, Pakistan’s GDP annual growth rose from 4% to 5.5% in 2016. According to an IMF estimate, investment in CPEC will add $3 to $13 billion in output to Pakistan’s GDP through 2024.8 Other external advantages include greater trade through Gwadar port, which will play out its key location for facilitating trade among South Asia, Central Asia and the Middle East.  Pakistan will also benefit from improved energy supply as more China-invested and – built power stations come online. This, in conjunction with more special economic zones (SEZs) being built along the new or enhanced roadways, will allow Pakistan to strengthen its limited manufacturing sector, from assembling parts and components to localised production of parts, and encourage more Chinese companies to build factories in Pakistan as envisioned by the LTP for CPEC.9

CPEC will also improve Pakistan’s tainted international reputation. Tourism which currently makes up a small part of Pakistan’s earnings can benefit. The cross-border region where the road from Kashgar starts is considered to be a mountaineer’s paradise, since it is home to five of the “eight-thousands” (peaks above 8,000 metres), as well as more than 50 mountains over 7,000 metres. It is home to the world’s second highest peak K2 (Mount Godwin-Austen) straddling the China-Pakistan border and the Nanga Parbat, the world’s 9th highest peak in the Gilgit-Baltistan region of Pakistan. Previously, foreign tourists had been hesitant to climb these wondrous peaks, but due to increase securitisation for the Chinese officials and transformative infrastructure construction, this breathtaking region is now deemed safe.10 Local demand for traveling within Pakistan is increasing year on year, with an expected number of 50-plus million domestic tourists forecasted by the Pakistan Tourism Development Corporation (PTDC). CPEC is also expected to stimulate coastal tourism along the development axis between Karachi Port and Gwadar port as the two coastal centers or anchors of CPEC. 

The Pakistani government is betting that faster economic growth and lower unemployment through CPEC can alleviate poverty and thus reduce the threat of terrorism, especially in very poor and restive Baluchistan province. Pakistan has deployed a Special Security Division of 9,000 Pakistan Army soldiers and 6,000 paramilitary forces dedicated to the security of individuals working on CPEC, to prevent Chinese nationals from getting harmed.11 The LTP for CPEC calls for more rigorous safety precautions in the Gwadar region, especially at the port and in Gwadar Free Zone (see Photo 1). The management of Khunjerab Port will also be strengthened with 24-hour video surveillance along the China-Pakistan Highway from the border to Gwadar port.12 These security measures add cost to both the realised and potential economic benefits of CPEC.

Photo 1: A Pakistani security guard at Gwadar port, in front of a Chinese container ship
Source: http://cpecvela.com/cpec-effects-on-regional-connectivity/

 

Social impacts

CPEC goes above and beyond its economic influence and has led to unforeseen social impacts that have left many Pakistani residents stunned. Mandarin Centers have cropped up to teach Mandarin to children as young as eight. Schools have realised the extent of Chinese influence on Pakistani Society and have also started teaching Mandarin courses in class.13 Thousands of Chinese have settled not only in Gwadar and remote areas along the infrastructure routes and connections but also in the major cities of Lahore, Islamabad and Karachi. Chinese superstores in Lahore sell spices exclusively imported from China. Lahore even has a traditional Chinese medicine hospital linked to CPEC (see Photo 2).

Photo 2: A traditional Chinese medicine hospital linked to CPEC, Lahore, Pakistan
Source: Photo by Hamna Tariq

Most interestingly, the Pakistani media has attempted to appease a new national audience that has been exposed to growing Chinese influence. Chinese soap operas have replaced popular Turkish ones. The “Shan Masala” ad showing a Chinese woman in Pakistani clothes bringing Biryani to a Pakistani home has appealed to many locals. The Pakistani movie “Chalay Thay Saath” shows a budding romance between a Chinese male visitor to Pakistan and a Pakistani girl. While it may be too early to gauge the full social impact of CPEC, the latter has already triggered direct sociocultural repercussions for Pakistani society despite the wide cultural and religious differences between the two countries.

 

Turning a Local Lens to CPEC

While the national perspective on CPEC has revealed its large scale and broad impact, we turn to a local lens to shed light on the highly differentiated positions and roles of Pakistani cities in CPEC. Gwadar emerged as the first choice for the starting point of CPEC from southern end of the proposed corridor. A small fishing village on the coast of Makran with underdeveloped paved roads, schools and hospitals, Gwadar relied on exporting limited quantity of seafood caught by small finishing boats.

Since becoming the lynchpin of the CPEC, this small fishing village has been slowly transformed into a growing modern city. Due to the joint efforts of Pakistani and Chinese governments, Gwadar deep sea port has been built at a total cost of $288 million14 and handed over to China Overseas Port Holding Company (COPHC) for operation. It is capable of handling container offload of 300 to 400 million tons annually.15 According to a local businessman, “the construction site was a century old fisherman’s settlement called Mullah Band. The Pakistani government had to pay owners in the area to move out of the area. They were promised a school, hospital and playground but progress has been slow.”16 Over the past ten years, a high school with the playground has been established for students in Gwadar. An emergency hospital had been established under CPEC at a cost of $2.44million.17 Despite positive spillover effects from these investment projects, some local residents complain about not given priority for employment at the port. According to a local laborer, “when CPEC started I was happy that people like me will have lot of opportunities to make a decent living by working at the construction site but China has brought either its own workers or people of Punjab (the most populous province of Pakistan). They are taking away our living.”18

If China and Pakistan want CPEC to be successful, then both countries need to make a serious effort to engage local people in the development process by providing more employment opportunities.

The Baloch National Movement, a regional group advocating autonomy for Baluchistan where Gwadar is located, is against CPEC. Its leaders see CPEC as making the cause of obtaining autonomy even more difficult because a powerful China will be heavily vested in the region. Therefore, if China and Pakistan want CPEC to be successful, then both countries need to make a serious effort to engage local people in the development process by providing more employment opportunities, which leads people to question China’s motives for CPEC.

While a deep sea port has been developed at Gwadar, SEZs have been planned to its northeast, in the province of Sindh. This includes Dhabeji, Thatta where 1000 acres have been set aside for the potential setup of cement, steel, pharmaceutical and chemical plants.19 Due to Dhabeji’s proximity to Karachi and ease of connectivity through M3 motorway to the north and Markran Coastal Highway to Gwadar, Chinese investors have shown a great interest in this SEZ. Many local businessmen in Sindh also are very optimistic about SEZ in Dhabeji because they are hopeful that Sindh will return to its glory days of industrialisation of the 1970s when Karachi and its surround areas thrived with industrial activity. As a local businessman put it, “I am already buying land in Dhebeji to setup a restaurant in the vicinity of the proposed plants because factory workers will buy lunch and dinner between their shifts. I remember in 1970, Karachi and urban areas were lucrative business ventures for us. Lots of foreigners also visited the area for business dealings.”20 CPEC will prove to be a major impetus for generating employment activity in Sindh province because government has signed a memorandum to provide tax holiday to plant owners and incentives on hiring local workers. Local governments in Pakistan are trying to compete for Chinese investment, which has surpassed that from the US. Between 2013 and 2017, Chinese investment in Pakistan amounted to $1.2 billion compared to US investment at $505 million. Relative to Chinese investment’s intention to improve the economic situation of average Pakistanis, many perceive American companies such as Philip Morris and Proctor & Gamble as investing only to enrich their subsidiaries in Pakistan.21

CPEC will prove to be a major impetus for generating employment activity in Sindh province because government has signed a memorandum to provide tax holiday to plant owners and incentive on hiring local workers.

In northern Pakistan, Gilgit is the last major city before CPEC reaching the Chinese border and Kashgar. The most important section of the highway running from Burhan, Hasan Abdal to Kashgar is called Karakoram Highway or KKH with a total length of 887 kilometers. Under CPEC, KKH is going through upgrades including the construction of second lane to facilitate the traffic flow at a cost of $1.26 billion from China’s Import-Export Bank as a low interest loan.22 This has reduced the commuting time from Islamabad to Gilgit from 28 hours to 16 hours. The immediate effects of KKH enhancements are felt as domestic tourism has significantly increased. According to a local businessman, “it is due to CPEC that now we have a reliable highway connected both to the Chinese border and our city. The new road has brought 500,000 Pakistani tourists. I get my shipments from China on time and my customers are happy. I buy Chinese items because they are in demand such as dinner sets, clothes, appliances etc.”23 CPEC has begun to generate some sustainable economic activities in this remote region and lessen its dependence on government’s monetary support.

Another prominent CPEC project is a data cable from Gilgit to Islamabad at a total cost of $44 million.24 The data cable will increase the Internet bandwidth for people in northern Pakistan. It will allow local businessmen to stay in touch with their Chinese counterparts through phone and the Internet. As this area has always been a historic trade route between traders in Xinjiang and Gilgit, enhancing road and communications linkages will further strengthen cross-border trade ties. Similar to the Pakistani government’s effort to secure Gwadar port, the Chinese government has provided funding for security vehicles to patrol the KKH regularly to maintain law and order in the area.25

The locals have mixed feeling about CPEC and its effects on Gilgit. On one hand, the business community is very content that highway improvement makes it easier to trade as cargo can move with less delay; but at the same time, the businesspeople want projects that can and will do even more for economic development. People of Gilgit are happy to see more lorries pass through and drivers stop to buy food and spend money on lodging. In addition, they hope CPEC projects can generate employment on a larger scale. They want to see SEZs like the ones proposed in Sindh and elsewhere in Pakistan. The Pakistani government should take plight of people in Gilgit very seriously because since the independence of Pakistan, this area has remained very underdeveloped. With CPEC, Pakistan has a great opportunity to develop this area and demonstrate its true commitment towards the people of Gilgit. From a geostrategic point of view, developing this area with an increased Chinese business presence will help to deter India’s long-standing claim for Gilgit Baltistan as an Indian territory. It may even create an opening for both India and Pakistan to resolve this territorial dispute and co-exist more peacefully on the Subcontinent.

 

CPEC from the Chinese Side

As an integral part of the BRI, the implementation and success of CPEC matters a great deal to China and its new stature and role in the global economy, much more than just solidifying an already close relationship with Pakistan.

From the Chinese side to echo Pakistan’s Prime Minister, CPEC represents, in President Xi’s own words, “a strategic decision by our two governments and peoples to build a China-Pakistan community of shared destiny.”26 More strategically, China sees CPEC as the only one of the six corridor-shaped components27 of the BRI that can truly link the overland Belt and maritime Road (see Map 2). The BRI includes over 60 countries, about 65% of the global population and close to 40% of the world’s GDP. Since its launch in 2013, China has invested $60 billion in BRI-related projects and is committed to invest $800 billion over the next five years.28 Enshrined into the Charter of the Chinese Communist Party (CCP) in 2017, the BRI is advanced as heralding China’s new inclusive approach to globalisation by “promoting the connectivity of Asian, European and African continents and their adjacent seas and establishing and strengthening partnerships among the countries along the Belt and Road.”29 As an integral part of the BRI, the implementation and success of CPEC matters a great deal to China and its new stature and role in the global economy, much more than just solidifying an already close relationship with Pakistan.

The strategic significance of CPEC has attracted China’s investment and operational priorities that are compatible with Pakistan’s. Gwadar port again stands out. Moving oil and goods from the Middle East and Eastern Africa through Gwadar to Xinjiang is over 10,000 kilometers shorter than going around to China’s coast by sea. It also avoids sailing through the narrow and vulnerable choke point of the Strait of Malacca. China has pushed very hard to finish the upgrading of Gwadar port, which became operational in November 2016. Moreover, China helped Pakistan to complete the first phase of the construction of Gwadar Free Trade Zone in 2017, a whole year of schedule, and has already sunk $270 million into the project, with the remaining three phases to be completed by 2030 when CPEC is scheduled to wrap up.

Up north, China has been assisting Pakistan to build the Karot Hydropower Dam Project on River Jehlum, a tributary of the Indus River, located in Punjab province. With an installed capacity of 720MW and costing $1.4 billion, the Karot Dam will be Pakistan’s fifth largest and add considerable power supply to Pakistan’s most populous province and beyond. Broken ground at the beginning of 2016, the dam will create over 2000 jobs and be completed in 2020 through built-operate-transfer (BOT). After 30 years of operation, it will be transferred to the Pakistani government. The project has already attracted a $300 million loan from China-led Asia Infrastructure Investment Bank (AIID) and the first ever targeted financing by the Silk Road Fund linked with the BRI.30   Gwadar port and Karot dam exemplify China’s infrastructure-centric approach to working with Pakistan on CPEC.

 

Kashgar is the key

If Gwadar, Karachi and Gilgit are key Pakistani cities for CPEC as discussed earlier, Kashgar of Xinjiang region, as China’s terminus of CPEC, holds the key to China’s major efforts to make CPEC successful. Kashgar and other western cities began to benefit from growing investment and more favourable policies under China’s “Go West” development initiative launched in 2000. But the BRI and CPEC have accelerated the infusion of domestic resources to Kashgar. In advancing both spatially targeted initiatives, the Chinese government has designated the most wealthy coastal cities of Shenzhen and Shanghai as partners for directly supporting Kashgar’s development. This administrative fiat led the Shenzhen government to give $1.5 billion for building a new campus for the University of Kashgar. Companies from Shenzhen and Shanghai have set up factories in Kashgar’s Economic and Technological Development Zone established in 2010. For example, with government financial incentives and guaranteed orders for army uniforms, a clothing company in Shenzhen has set up a large factory in the zone and sent technical supervisors to train the large number of Uyghur women hired locally (see Photo 3). More recently, the Chinese state elevated an expansive region encompassing the city of Kashgar to a national level SEZ, with the package of special incentives originally granted only to Shenzhen and three other coastal SEZs. This designation is clearly intended to further elevate Kashgar’s crucial status and role in anchoring the Chinese end of CPEC.

Photo 3: A Chinese foreman is supervising Uyghur female workers in a clothing factory set up by a company from Shenzhen, Kashgar, China
Source: Photo by Xiangming Chen

As an ancient Silk Road city, Kashgar is well located to facilitate the success of CPEC as a crucial nexus for the BRI. Its historic bazaar, which served as a central market for the Silk Road for over 2,000 years, received a facelift in November 2017 when the Kashgar government announced that the bazaar would be relocated to the brand new and much more spacious Kashgar Central and Western Asia International Trade Center. An important project for 2018 built by wealthy Zhejiang province, the center will cost $708 million, have 1.35 million square metres of construction space, house over 10,000 vender stalls and create nearly 100,000 jobs for the central market and its various auxiliary facilities.31 Once completed, the new central market will attract more traders from Central and South Asia such as Kazakhstan and Pakistan who have trekked long distances to shop at the old bazaar (see Photo 4). However, cross-border trade between China and Pakistan will continue to be limited by the single-lane road over high mountains through the Khunjerab Pass, which lies several driving hours away from the city of Kashgar itself.    

     Photo 4: Pakistani shoppers at the central bazaar, Kashgar, China
Source: Photo by Changhong Xu

 

Conclusion

The challenging natural terrain on either side of the Khunjerab Pass forms a formidable barrier to creating a smooth and sustainable long corridor of commerce between Gwadar, Pakistan and Kashgar, China. It also symbolises the equally, if not more, challenging geopolitical obstacles to the success of CPEC. India sees CPEC as a threat as it runs through or by the contested territory in Kashmir that India claims as its own. India is also worried that Pakistan and China use CPEC to counter India in jostling for influence in South Asia and beyond. In response, India has invested $85 million in Iran’s Chabahar port located near the Pakistani border and Gwadar port. Pressuring Pakistan on doing more to contain terrorism and in sympathy with India regarding CEPC, the US government has recently threatened to withdraw its massive aid to Pakistan. In quick and strong response, Pakistan decided to adopt the Chinese yuan (RMB) as an international currency, allowing deals to be done directly between the Pakistani rupee and Chinese yuan. The concern by both India and the US about the potential use of Gwadar port by the Chinese navy could lead to more tension surrounding CPEC.

While some of the external environment may not be favourable to CPEC, the Pakistani government has firmly committed to the project’s economic rationales and goals in spite of recent changes in its top leadership.

While some of the external environment may not be favourable to CPEC, the Pakistani government has firmly committed to the project’s economic rationales and goals in spite of recent changes in its top leadership. As former Prime Minister Shaukat Aziz told CNBC, “When you build a road or a highway through an area where there is none, you create economic activity, you create jobs, secondly new cities come up along that route, thirdly you have industrial estates coming so a lot of job creation takes place.”32 He went on to say, “We have seen over the years that in areas that have grown fast and where economic growth is strong, extremism and terrorism reduces.” This logic may have influenced the decision to choose Gwadar port in and road route through Baluchistan province, whose insurgency movement has threatened political stability and led the Pakistani government to introduce special security to the region. The same rationale has also motivated the Chinese government to channel heavy investment into Kashgar for CPEC (see earlier) to improve the standard of living for the Uyghur population as an economic means of countering its potential receptivity to the influence of extreme Islamic ideology from across the border. It remains to be seen if CPEC can ultimately deliver this big combined economic-political benefit for both sides.

Given the long-term horizon of CPEC stretching toward 2030, it is critical to anticipate the uncertain future of Pakistan serving the large loans from China financing the massive infrastructure projects now and going forward.

Finally, given the long-term horizon of CPEC extending toward 2030, it is critical to anticipate the uncertain future of Pakistan serving the large loans from China financing the massive infrastructure projects now and going forward. According to the Gwadar port revenue sharing and control agreement, China Overseas Ports Holding Company will receive 91% share of the revenue while only 9% will go to Gwadar Port Authority for the next 40 years. Moreover, for the next 20 years Pakistan would have to repay $3.5 billion annually for loans taken under CPEC. CPEC loans may add $14 billion to Pakistan’s total public debt, raising it to $90 billion by June 2019.33 Due to China’s strict loan conditions, Pakistan has recently excluded the $14 billion Diamer-Bhasha dam on the Indus River in Pakistan-occupied Kashmir from CPEC, as this project also appears intrusive to India’s controlled Kashmir. Putting this uncertain or even risky prospect aside, Pakistan is betting big on CPEC as a potentially transformative development project. And China is also betting big on it as the key to implementing the BRI. As both governments work to make CPEC successful, its ultimate impact should be measured by how it can really benefit the communities and people along this lengthy cross-border corridor. 

Featured Image: The Khunjerab Pass at China-Pakistan border. 

Acknowledgements

Field research by Joseph and Tariq in Gilgit, Gwadar, Islamabad, Karachi and Lahore in Pakistan during July 2017 and January 2018 was supported by student research grants from the Thomas Urban China Research and Teaching Endowment and the Luce Foundation LIASE grant respectively through the Center for Urban and Global Studies of Trinity College. Chen’s field visit to Kashgar, Xinjiang, China in August 2017 was supported in part by the Paul Raether Distinguished Research Fund at Trinity College. Some ideas and analyses in this article were presented and discussed at a Mini Symposium on the China-Pakistan Economic Corridor (CPEC) by Joseph and Tariq as part of the Global Vantage Point Series at the Center for Urban and Global Studies of Trinity College on November 28, 2017. We thank Shafqat Hussain, Shafiq Parvez and Chinmay Rayarikar for sharing their interests in and understandings of CPEC.

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About the Authors

Xiangming Chen is Dean and Director of the Center for Urban and Global Studies and Paul Raether Distinguished Professor of Global Urban Studies and Sociology at Trinity College, Connecticut. He is also a distinguished guest professor at Fudan University and an adjunct professor in the Graduate School of Shanghai Academy of Social Sciences, Shanghai. His most recent book is Global Cities, Local Streets: Everyday Diversity from New York to Shanghai (with Sharon Zukin and Philip Kasinitz), published by Routledge in 2015 (Chinese edition, 2016; Korean edition, 2017).

S.K. Joseph is currently a senior at Trinity College, Connecticut, majoring in International Relations. He takes an interdisciplinary approach to economic and social development and its effects on the society.

Hamna Tariq is currently a sophomore at Trinity College, Connecticut, majoring in Urban Studies and International Studies. Her research focusses on the political, economic and social impacts of the China-Pakistan Economic Corridor on Pakistan.

 

References

1. Long Term Plan for China-Pakistan Economic Corridor (2017-2030), Ministry of Planning Development & Reform Government of Pakistan: accessed from www.cpec.gov.pk.

2. Ishaan Tharoor, “What  China  and  Pakistan’s  special  friendship  means,”  The Washington Post,  April 21st 2015: accessed from https://www.washingtonpost.com/news/worldviews/wp/2015/04/21/what-china-and-pakistans-special-friendship-means/?utm_term=.958f0ad4ecf5.  

3. Arushi Kumar, “China pressuring Pakistan on terrorism,” The Diplomat, September 17, 2017: accessed from https://thediplomat.com/2017/09/china-pressuring-pakistan-on-terrorism/.

4. Riaz Ahmed and Hong Mi, “China-Pakistan Economic Corridor and its social implication for Pakistan: How will CPEC boost Pakistan’s infrastructures and overcome the challenges?” Arts and Social Sciences Journal (April 2017),  2: accessed from https://www.omicsonline.org/open-access/chinapakistan-economic-corridor-and-its-social-implication-on-pakistan-how-will-cpec-boost-pakistans-infrastructures-and-overcome-t-2151-6200-1000265.php?aid=88335.

5. Same as Note 1.

6. “CPEC  to   generate  2.32  million  jobs  in  two  years,” The  News,  January  5th  2017:  accessed  from  https://www.thenews.com.pk/print/176948-CPEC-to-generate-232m-jobs-in-two-years-report.

7. Silk Road Rebirth: Writing a New Chapter for the Silk Road (in Chinese), a report by Cushman & Wakefield Greater China, 2018.

8. Same as Note 7.

9. Same as Note 1.

10. “How will CPEC boost Pakistan’s economy,” Deloitte, 2017: accessed from https://www2.deloitte.com/content/dam/Deloitte/pk/Documents/risk/pak-china-eco-corridor-deloittepk-noexp.pdf.

11. Raza Khan, “15,000 troops of Special Security Division to protect CPEC projects, Chinese nationals,” Dawn, August 12th 2016: accessed from https://www.dawn.com/news/1277182

12. Same as Note 1.

13. Shazia Hassan, “How Pakistan is becoming China’s land of opportunity,” Dawn, June 7, 2017: accessed from https://www.dawn.com/news/1337997.

14. Zofeen Ebrahim,“ What’s happening at Pakistan’s Gwadar port,” Chinadialogue, June 2017: accessed from https://www.chinadialogue.net/article/show/ single/en/9869-What-s-happening-at-Pakistan-s-Gwadar-port-.

15. Shahrukh Syed, “Gwadar port to handle 300-400m-ton load of goods annually: Chinese report,” Pakistan Observer: accessed from https://pakobserver.net/gwadar-port-to-handle-300-400m-ton-load-of-goods-annually-chinese-report/.

16. Presentation by Hamna Tariq (see the Acknowledgements section).

17. Benram Baloch,“Hospital under CPEC project inaugurated in Gwadar,” Dawn Newspaper. May 8, 2017: accessed from https://www.dawn.com/news/1331742.

18. From an interview in Gwadar by S.K. Joseph.

19. Salman Siddiqui, “Dhabeji zone attracts investors ahead of inclusion in CPEC,” The Express Tribune, October 13, 2017: accessed from https://tribune.com.pk/story/1529692/dhabeji-zone-attracts-investors-ahead-inclusion-cpec/.

20. An interview by S.K. Joseph.

21. Ismail Dilawar, “China’s Silk Road push in Pakistan edges out U.S. investments,” Bloomberg L.P., April 12, 2017: accessed from https://www.bloomberg.com/news/articles/2017-04-12/china-s-silk-road-push-in-pakistan-edges-out-u-s-investments.

22. National Highway Authority, Ministry of Communications, Government of  Pakistan: accessed from https://www.google.com/maps/d/u/0/viewer?mid=1Ypl-rj2JVeefZ7SgKF9yNHV41zk&ll=30.506664016184775%2C68.9295112290497&z=4.

23. Interview by S.K. Joseph.

24. Kashif Mughal, “CPEC fiber optic cable between Pak-China.” PakChina, May 23, 2016: accessed from http://pakchina.pk/cpec-fiber-optic-cable-between-pak-china/.

25. Same as Note 23.

26. Same as Note 1.

27. The Belt and Road initiative (BRI) is geographically structured along six corridors, and the maritime Silk Road; 1) New Eurasian Land Bridge, running from Western China to Western Russia; 2) China – Mongolia – Russia Corridor, running from Northern China to Eastern Russia; 3) China – Central Asia – West Asia Corridor, running from Western China to Turkey; 4) China –Indochina Peninsula Corridor, running from Southern China to Singapore; 5) China – Pakistan Economic Corridor (CPEC), running from South-Western China to Pakistan; and 6) Bangladesh – China – India – Myanmar Corridor, running from Southern China to India; Maritime Silk Road, running from the Chinese Coast over Singapore and India to the Mediterranean.

28. Same as Note 7.

29. Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road, issued by the National Development and Reform Commission, Ministry of Foreign Affairs, and Ministry of Commerce of the People’s Republic of China, March 28, 2015: accessed from http://en.ndrc.gov.cn/newsrelease/201503/t20150330_669367.html.

30. Same as Note 7.

31. Reported by the Kashgar city website, November 14, 2017.

32. “China-Pakistan railroad will help curb extremism,” Jessica Hartogs with former Pakistani PM, Special to CNBC.com, May 18, 2016: access from CNBC.com.

33. “Sri Lanka leases Hambantota Port to China: Is this the beginning of Chinese debt trap in South Asia?” Shelly Mahajan, the South Asia Program at Hudson Institute, January 14, 2018: accessed from http://www.southasiaathudson.org/blog/2018/1/14/sri-lanka-leases-hambantota-port-to-china-is-this-the-beginning-of-chinese-debt-trap-in-south-asia.

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