Biden launches ‘China House’ to counter Beijing’s growing clout

“The Biden administration..launched “China House,” the centerpiece of its effort to strengthen its diplomatic heft in its global rivalry with Beijing.
The State Department-based unit is designed to eliminate silos among sometimes redundant government bodies, giving U.S. officials from within State and beyond a central clearinghouse to share information and shape policy on China, State officials told POLITICO”

“China House — formally known as the Office of China Coordination — replaces the China Desk in the State Department’s East Asian and Pacific Affairs bureau. The new entity will employ roughly 60 to 70 personnel, including liaisons from other parts of the department such as the Africa and Latin America bureaus, as well as people detailed from other U.S. departments and agencies who may focus on topics such as technology or economic policy.

“The sheer scale, scope, complexity and stakes of the China challenge required us to think, collaborate, organize and act differently,” a senior State Department official said. “It could not be managed alone through the bilateral desk approach.” The official spoke on condition of anonymity because the discussion involved sensitive diplomatic matters.”

A Battle for the Arctic Is Underway. And the U.S. Is Already Behind.

“In January, when an undersea telecommunications cable connecting this far-flung Arctic archipelago to mainland Norway and the rest of Europe was damaged, Norwegian officials called to port the only fishing vessel for miles, a Russian trawler. Police in the northern city of Tromsø interviewed the crew and carried out an investigation into the incident, which was seen as a major threat to the security of Norway and other nations, including the United States. Had there not been a back-up cable, the damage would have severed internet to the world’s largest satellite relay, one that connects the National Oceanic and Atmospheric Administration (NOAA), NASA and other government agencies from around the world to real-time space surveillance.
The investigation’s findings were inconclusive, if worrisome. Something “man-made” had damaged the cable, but Norwegian police could not prove the Russian fishing vessel was responsible, authorities told me. The police allowed the fishing boat crew to return to their ship and set back out to sea.”

“today, this Arctic desert is rapidly becoming the center of a new conflict. The vast sea ice that covers the Arctic Ocean is melting rapidly due to climate change, losing 13 percent per decade — a rate that experts say could make the Arctic ice-free in the summer as soon as 2035. Already, the thaw has created new shipping lanes, opened existing seasonal lanes for more of the year and provided more opportunities for natural resource extraction. Nations are now vying for military and commercial control over this newly accessible territory — competition that has only gotten more intense since Russia’s invasion of Ukraine.”

“For the past two decades, Russia has been dominating this fight for the Arctic, building up its fleet of nuclear-capable icebreakers, ships and submarines, developing more mining and oil well operations along its 15,000 miles of Arctic coastline, racing to capture control of the new “Northern Sea Route” or “Transpolar Sea Route” which could begin to open up by 2035, and courting non-Arctic nations to help fund those endeavors.

At the same time, America is playing catch-up in a climate where it has little experience and capabilities. The U.S. government and military seems to be awakening to the threats of climate change and Russian dominance of the Arctic — recently issuing a National Strategy for the Arctic Region and a report on how climate change impacts American military bases, opening a consulate in Nuuk, Greenland, and appointing this year an ambassador-at-large for the Arctic region within the State Department and a deputy assistant secretary of defense for Arctic and Global Resilience. America’s European allies, too, have been rethinking homeland security, increasing national defense budgets and security around critical energy infrastructure in the Arctic as they aim to boost their defense capabilities and rely less on American assistance.

But 17 Arctic watchers — including Norwegian diplomats, State Department analysts and national security experts focusing on the Arctic — said they fear that the U.S. and Europe won’t be able to maintain a grip on the region’s energy resources and diplomacy as Russia places more civilian and military infrastructure across the Arctic, threatening the economic development and national security of the seven other nations whose sovereign land sits within the Arctic Circle.”

“In Norway’s High North, a term used to describe the Norwegian Arctic territories, no fewer than seven Russian citizens have been detained over the last few months for flying drones, prohibited under the same bans for Russian airlines in European airspace. The drones were discovered flying near areas of critical infrastructure. One of those arrested in October was Andrey Yakunin, 47, the son of Vladimir Yakunin, the former president of Russian Railways and an ally of Russian President Vladimir Putin who was sanctioned by the State Department after Russia’s annexation of Crimea in 2014.”

The Afghanistan Deal that Never Happened

“McKenzie was flying to Doha, Qatar that day to offer the Taliban a deal: Keep your forces outside the capital so the U.S. can evacuate tens of thousands of Americans and Afghans from the city, and we won’t fight you.

But by the time McKenzie landed, the offer was DOA. Taliban fighters were already inside the presidential palace, and Afghanistan’s president, Ashraf Ghani, had fled the city. The Afghan government the United States had worked so hard to keep afloat for 20 years had collapsed in a matter of hours.

McKenzie had to think fast. His mission, to conduct a massive air evacuation from Kabul’s one functioning airport, had not changed. So, on the way to Doha’s Ritz Carlton, he came up with a new proposal. Don’t interfere with the airlift, he told the Taliban’s co-founder, Mullah Abdul Ghani Baradar, and we won’t strike.

The general, who spoke to POLITICO Magazine by video call almost exactly one year after the fall of Kabul, walked away from the meeting with a deal that would allow the U.S. military to control the airport while they undertook the largest air evacuation in U.S. history, flying out more than 120,000 people in the span of two weeks.

But during the meeting, he also made what critics say was a strategic mistake that contributed to what became a chaotic, deadly evacuation: refusing the Taliban’s offer to let the U.S. military secure Afghanistan’s capital city.

McKenzie defended his decision during the interview, noting that he did not believe it was a serious proposal, and in any case securing the city would have required a massive influx of American troops, which could have triggered more fighting with the Taliban.

At the end of the day, the U.S. military didn’t have many good choices.”

“I got on the airplane on Sunday morning. While I was on the airplane over, I was getting reports that the Taliban is in downtown Kabul, they’ve actually overrun the city. By the time I met with them, they had significant forces inside the city. So I said, ‘Look, we can still have a solution here. We’re going to conduct an evacuation. If you don’t interfere with the evacuation, we won’t strike.’

Mullah Baradar said, off the cuff, ‘Why don’t you come in and secure the city?’ But that was just not feasible. It would have taken me putting in another division to do that. And I believe that was a flippant remark. And now we know in the fullness of time that Mullah Baradar wasn’t actually speaking for the hard-line Taliban. I don’t know if he could have delivered, even if he was serious about it.

I felt in my best judgment that it wasn’t a genuine offer. And it was not a practical military operation. That’s why they pay me, that’s why I’m there.

By and large, the Taliban were helpful in our departure. They did not oppose us. They did do some external security work. There was a downside of that external security work, and it probably prevented some Afghans from getting to Kabul airport as we would have liked. But that was a risk that I was willing to run.”

“I believe the proximate defeat mechanism was the Doha negotiations [on a peace deal]. I believe that the Afghan government began to believe we were getting ready to leave. As a result, I think it took a lot of the will to fight out them.”

“You can go back to the very beginning of the campaign, when we had an opportunity to get Osama bin Laden in 2001, 2002 and we didn’t do that. The fact that we never satisfactorily solved the problem of safe havens in Pakistan for the Taliban. There are so many things over the 20-year period that contributed to it.

But yes, I believe that the straw that broke the camel’s back and brought it to the conclusion that we saw was the Doha process and the agreements that were reached there.

It’s convenient to blame the military commanders that were there. But it was the government of Afghanistan that failed. The government of the United States also failed.”

“It’s very hard to see in Afghanistan after we left. We had 1 or 2 or 3 percent of the intelligence-gathering capability that we had before we left. All our intelligence told us that the Taliban would probably allow space for al Qaeda to reassert itself and at the same time, they’re unable to get rid of ISIS. I think both are going to be entities that are going to grow.

The fact that al Qaeda leader Al-Zawahri was in downtown Kabul should give us pause. It tells you first of all, that the Taliban obviously negotiated the Doha accord in complete bad faith. They said they wouldn’t provide a safe haven for al Qaeda. What’s the definition of a safe haven if it’s not the leader in your capital city?”

Biden’s latest global infrastructure plan is all about competing with China. That’s a problem.

“Global power is often seen as a zero-sum game, and policymakers in Washington fear that China’s growing influence is coming at the expense of the US. Yet they haven’t offered an alternative to the BRI, instead largely chastising China for its intentions behind it and discouraging countries from joining it.

But that changed at the Group of Seven (G7) Summit last month, when President Joe Biden announced the Partnership for Global Infrastructure and Investment (PGII). With the PGII, G7 governments and private funders aim to invest $600 billion in low- and middle-income countries over the next five years, with $200 billion specifically earmarked from the US.

The motivation isn’t hard to discern: Counter China’s BRI. “Imitation is the sincerest form of flattery,” said Jorge Heine, a professor at Boston University and Chile’s former ambassador to China. “It has finally dawned on Western countries that there is actually a need for infrastructure in countries in Africa, Asia, and Latin America.””

“In his remarks announcing the PGII, Biden stated: “I’m proud to announce the United States will mobilize $200 billion in public and private capital over the next five years.” Despite that promise, however, the real money the US government has committed is far from $200 billion — adding up to about $170 million.

That discrepancy comes in part from how the US plans to finance this agenda. Kenny told me the US and the European Union have been keen to mostly rely on the concept of financial leverage. For example, a government may offer to finance $1 of an infrastructure project with the idea that this will then spur and be matched by $10 of investment from the private sector. “There’s this idea that you get from the millions and billions to these hundreds of billions by leveraging the private sector,” Kenny said. But, he added, “the fact is the record of that has been grim.” Rather than a one-to-10 public-private financing ratio, “we’re seeing a low one-to-one.”

The US is relying on leveraging to fund the PGII for two reasons. One, Congress is unlikely to authorize any more money for this kind of initiative, especially given its failure to pass increased funding for domestic programs (the rebranding of the initiative from “Build Back Better World” was no coincidence). So leveraging private companies “makes small amounts of US government money look bigger,” Kenny said, while enabling the administration to take credit for the whole promised sum.”

“The other reason, according to Kenny, is a deeply embedded ideological belief, stemming back to the Washington Consensus of the late 20th century, that the private sector beats government when it comes to delivering on goods like infrastructure. Reliance on the private sector also has the added benefit of preferring US companies and workers for various development projects, but Kenny added that US policymakers genuinely appear to believe this method makes these projects more affordable to low- and middle-income countries.

This line of reasoning is shaky, though, as public-private partnerships like the ones the PGII proposes are often very complex.”

“China and the BRI have had a different model, which has proven more successful. Kenny told me that China has been more willing to finance infrastructure that will be owned and operated by Global South governments. Fundamentally, this allows projects to be built faster and more cost-effectively as governments are already responsible for most infrastructure (approximately 83 percent of infrastructure investment worldwide is government-financed, per a 2017 study), and they don’t need to bargain and haggle with private companies.”

“One key way for the US and G7 to support the Global South would be to better use existing multilateral institutions like the World Bank and regional development banks like the African Development Bank, especially because, as Kenny told me, the World Bank actually can do the concept of leverage pretty well. While the US is proposing the approach of a “bespoke retailer” that pursues public-private deals one project at a time (each maybe a $100 million investment), the World Bank is like a big “wholesaler” that leverages money from the whole market (in the range of hundreds of billions) to support a range of public sector projects.

“Governments put in a little bit of capital to the World Bank, which then goes out and borrows massive amounts on private markets, issuing bonds at a 10:1 ratio,” Kenny said, meaning that they can get a lot of money for construction and development projects for the Global South. The World Bank also used to be much more engaged in financing hard infrastructure like roads and railways, only for priorities in terms of what is funded to change in recent decades. A massive recapitalization of the World Bank, Kenny said, could be an important place to start.

Dean Baker, senior economist and co-founder of the Center for Economic and Policy Research, also suggested the issuance of “special drawing rights” (SDRs) from the IMF to shore up the central banks of countries in the Global South. SDRs effectively act as “coupons” from the IMF — the closest thing to the world’s central bank — and they function like cash transfers to countries in times of crisis.

SDRs were most recently issued to support countries around the world facing a financial crunch during the Covid-19 pandemic, and were used by low- and middle-income countries to pay for vaccines and other health care needs. However, as the authors of a Brookings Institution analysis of SDRs during the pandemic found, high-income and upper-middle-income countries currently receive the majority of SDRs, so distribution would need to become more equitable.

The US would also be wise to focus on its strong suits. As Kenny wrote in a recent article, the best way the US could help build the human capital of the world by way of providing scholarships and visas for access to its world-leading institutions of higher education, as well as increasing the number of work visas issued. And many of these migrants would end up sending capital back to their home countries in the form of remittances. A 2019 IMF study found that remittance flows total up to greater amounts of cash to low- and middle-income countries (China excluded) than overseas development aid.”

“A final option for the US is to ditch the global competition frame and collaborate with China to invest in the Global South. Baker argued that the “competition basically makes zero sense” due to the global scale of issues like the climate crisis, pandemics, and global development more generally.”

“Fundamentally, the Global South hasn’t necessarily bought into the geopolitical ideological competition of “democracy vs. autocracy” between the US and China. The Global South, as seen in its position toward the Russian war on Ukraine, is increasingly pursuing a strategy of what Heine termed “active nonalignment,” meaning rather than siding with either of the big powers in this supposed “new Cold War,” they’re more narrowly focused on their own economic growth and development.”