Axis of the Sanctioned 2021

The U.S. increased the size of the target on its chest when it used its financial muscle to sanction and impose tariffs on countries that failed to comply with its post-WWII capitalist, democracy-centered, moralistic international order.  As a consequence, the U.S. now resembles the deer in Gary Larson’s famous Far Side cartoon (shown below in “Finally”).  The sanctioned and tariffed countries – China, Russia, Iran, North Korea, Syria, Cuba, the Afghan Taliban and Venezuela – quickly realized that they had a common enemy.  Whatever their differences and disagreements, their interests allied them against the U.S.  They accordingly have been taking concerted action, treating “the enemies of my American enemy as my friends.”  Those actions have intensified and are gaining traction.

TLR’s first “Axis of the Sanctioned” commentary was published on June 21, 2019 (here).  TLR has updated that commentary several times over the past 20 months, including on August 9, 2019 (here), in “America’s Forthcoming Foreign Policy Crisis” on March 29, 2020 (here), in “The Hegemon’s Handbook” on April 24, 2020 (here), in “When is a Nation ‘At War’?” on September 13, 2020 (here) and, most recently, in “Soaring Dragon, Resting Eagle” on March 14, 2021 (here).  The existence of that Axis was acknowledged by the media in late March, for example in a Wall Street Journal editorial entitled the “China-Iran Axis,” a New York Times column on “An Alliance of Autocracies? China Wants to Lead a New World Order,” a Bloomberg column titled “China Signs 25-Year Deal with Iran in Challenge to the U.S.,” and a Times of London article that “Russia Seeks Alliance with China to Beat U.S. Sanctions,” as well as in a March 20th lead editorial in The Economist, a focus of which was the Trump Administration’s lack of success in coercing China through tariffs and sanctions.  An example highlighted by The Economist was the Trump Administration’s effort to ban Huawei from doing business with other countries, including countries allied with the U.S. (Huawei is a leading global 5G hardware company that America believes provides China with the ability to spy on other countries’ governments and businesses).  The Economist explained that, of the 170 countries that use Huawei’s products, “only a dozen or so have banned it.  Meanwhile [during the same period], the number of Chinese firms worth over $50bn has risen from seven to 15.“  America’s approach, The Economist concluded, has been a failure, and is an indication that America’s hegemonic power and influence are waning.

Yes, Virginia, there is an Axis of the Sanctioned.  It coalesced after years in which sloganeering and ineffective sanctioning and tariffing failed to materially weaken America’s enemies.  They were instead incentivized to combine their efforts to undermine America.  And yes, Virginia, the members of the Axis truly have “waged war against America” – in literal 21st Century ways.  The American public has been ignorant of oblivious to that reality.  War in the 21st Century need not be waged by ships, planes, drones and troops.  Cyberwarfare, technology tools, manipulated media, and resource monopolization – among other weapons – now provide multiple fronts on which battles can be waged, victories won, and tributes exacted.  While America has been sleeping (for nigh on four three two Administrations now), its enemies have been actively prosecuting their wars.  America needs to be pursuing strategies that further its national interest.  It needs to prevent what otherwise would become the inevitable outcome – should the U.S. and China in fact be Destined for War, as warned by Graham Allison in his book of the same name, America otherwise will be the loser.

As Bill Maher aptly put it in a recent rant editorial, while half of America “is having a never-ending Woke competition deciding whether Mr. Potato Head has a dick, and the other half believes that we have to stop the lizard people because they’re eating babies,” China, Russia and Iran (among others) are working together to unseat America as global hegemon, overtake the U.S. economically, replace the Dollar with the Yuan, and substitute a centrally-managed, anti-democratic, Chinese Communist Party-led international order for the American one.  Meanwhile, America is consumed with its internal divisions.  The left worries that the right is fascist, racist, anti-democratic and depraved, and America’s right worries that the left is fascist, socialist, cancel culture-centric, and supported by Godless sexual deviants.  With both extremes crowding out the middle, there is no consensus for dealing with the erosion of America’s power and its economic and political influence.  America, you see, has more serious, potentially calamitous international problems than its provincial partisan domestic ones.

It’s been less than 20 years since China began executing its plan to achieve global hegemony … and Putin’s Russia began executing its plan to restore a Soviet-style empire. These plans were not understood – or were misunderstood – by succeeding generations of American leadership.  A few examples convey the thoughtfulness and reach of the Chinese strategy, an incredibly comprehensive plan for global supremacy, a plan now being coordinated with Russia and Iran, and a plan supported by an increasing number of nations previously aligned with America.  China has adopted:

            A robust mercantilist template:  It joined the World Trade Organization to gain access to global markets while functionally ignoring anti-protectionist provisions, enabling Chinese industry to steal trade secrets, repel global competitors from domestic markets, and subsidize key Chinese competitors.  It thereby became an integral participant in global supply chains, rapidly leap-frogging up the value chain.  It has built dependency relationships with developing countries through “debt trap loans” that finance local infrastructure (for example, in Sri Lanka, Zambia, Kenya, Ecuador, Pakistan, Malaysia, Indonesia, Kyrgyzstan and Laos) and through trade agreements (for example, with America’s allies in Asia, Europe and South America).

            A straightforward approach for military domination:  Chinese Communist Party General Secretary Xi Jinping announced in 2017 that China intended to attain global military supremacy no later than 2049.  China already has the largest army and navy in the world, the most sophisticated arsenal of conventional ballistic and cruise missiles with the greatest ranges, and the world’s largest force of advanced long-range and surface-to-air defensive missile systems.

            A camouflaged cultural template:  China has exported Chinese-centric entertainment and financed Mandarin-language movie production.  Using the leverage of a domestic audience of >1.3 billion, it also has pressured foreign filmmakers to conform to its cultural norms (as explained by the Heritage Foundation here).

            A propaganda spiritual template:  The Confucius Institute is a “not-for-profit public educational organization” that operates under the auspices of the Chinese government.  According to a Chinese Politburo member, the Confucius Institute is “an important part of China’s overseas propaganda set-up.”  There now are more than 530 Confucius Institutes operating in ~142 countries.

            Spreading the Communist Party philosophy:  China is promoting Xi Jinping Thought [on Socialism with Chinese Characteristics for a New Era] which expresses the policies and ideas of the Chinese Communist Party and forms the basis for China’s vision of a Chinese-led international order.

            A determined technology template:  China adopted its Made in China 2025 plan with the goal of achieving dominance in ten strategic industries by 2025.  At “halftime,” MIC 2025 has shown itself to be a stunning success … so much so that America finally took notice of it … and China changed its name.

            A geographic annexation policy:  China annexed Tibet in 1951, absorbed Macau in 1999, annexed Hong Kong in 2021, and has delineated its intention to annex Taiwan ominously soon within the next number of years (as previously discussed by TLR here and here).

            A geographic expansion policy:  To enforce its asserted “nine-dash” line of sovereignty in the East and South China Seas, China built artificial islands and militarized them.  China claims territory in 18 bordering countries and, to the west, China has initiated armed skirmishes with neighboring India over disputed border areas.

            An ingenious trade, tribute and military expansion template:  China’s enormous Belt and Road Initiative (BRI) will tie Asia, Europe, Africa, and South America to China … economically, militarily and politically.  BRI is an ingenious scheme to create vassal-like relationships between China and 152+ client countries.  Alarmingly, 19 countries across Latin America already have joined the BRI.  China’s BRI will invest trillions of dollars to build and connect infrastructure – largely employing Chinese workers and contractors, a clever way to finance economic stimulus that runs money from the Chinese government through client nations and then to Chinese companies.  China has used the resulting economic leverage to obtain strategically important military and commercial concessions, obtaining major port facilities in Sri Lanka, Myanmar, Malaysia, Pakistan, Djibouti, Greece, Italy, the Dominican Republic and Panama, and by building railways and highways … while successive American governments have passively watched.

            An ambitious financial markets template:  China in mid-March released its “Outline of the 14th Five-Year Plan (2021-2025) for National Economic and Social Development and Long-term Objectives Through 2035.”  Among other things, it plots the rise to preeminence of Chinese capital markets and investment banking businesses, Chinese financial services, Chinese corporate listings, and markets for the trading of securities and commodities …, all at America’s expense.  America, meanwhile, continues to add regulatory burdens to its financial services industry.

            Aggressive diplomacy:  China released a report last week critical of human rights in the U.S., using as its theme George Floyd’s plea to police that “I can’t breathe.”  In a recent confrontation with Secretary of State Antony Blinken, Yang Jiechi, a top China diplomat, cited racism, police brutality and the mishandling of the Covid-19 pandemic as evidence of America’s decline, stating that “The United States does not represent international public opinion….”  Yuan Peng, president of a government think tank, wrote the same day that “The United States should lower the tone of democracy and human rights and talk more about cooperation in global affairs,” adding that “The era when it was possible to make up a story and concoct lies to wantonly meddle in Chinese domestic affairs is past and will not come back.”  America’s contempt for the U.N. has enabled China and its allies to leverage their positions to craft new international rules.  In December 2019, the U.N. General Assembly at Russia’s request began drafting a global treaty to combat cybercrime, with the U.S. losing the vote 79-60 – a sign of declining influence.

            Executing the Axis alliance:  China is aligned with Russia on energy, military exercises, U.N. policy, building a base on the Moon, and the Dollar-Yuan competition.  It formally added Iran last week with a comprehensive strategic agreement that includes politics, military and defense cooperation, port development, and a commitment to invest $450 billion in energy, petrochemicals, and other sectors.  With more than $20 billion/year in support, Iran (with China by its side) is being incentivized to expand its influence in Iraq, Lebanon, Yemen, and Syria.  The agreement places Iran under China’s security umbrella in a challenge to America (much as has been the case with North Korea).  It strengthens China’s international reach and is a logical Middle East follow-on to China’s inroads with Saudi Arabia and the UAE (with which it is partnering to produce millions of doses of its Sinopharm vaccine, firmly placing Chinese-sponsored manufacturing and economic interests in America’s former sphere of influence).

            A new space race:  China has invested billions in its space program.  It plans to have a crewed space station by 2022 and send Chinese astronauts to the Moon soon thereafter in an overt challenge to U.S. space supremacy.  In 2020, it became the first country to land a lunar probe on the dark sign of the Moon, has sent a probe into orbit around Mars, and is developing rockets using SpaceX-patterned technology.

            A dominant currency:  The decline of the US Dollar and the rise of the Chinese Yuan – and its forthcoming digital counterpart – were discussed by TLR most recently in “The Fracturing US Dollar” (here) and “America’s Perpetual Motion Machine” (here).  Use of a digital Yuan, even on a limited international basis, would sidestep evade undercut U.S. sanctions … and weaken the US Dollar as the world’s reserve currency.

America, meanwhile, sleeps wrestles with its internal demons.

America’s responses to the wide-ranging, well-executed, and adeptly coordinated challenges presented by China and its Axis allies have been narrow, poorly-executed and scattershot.  North Korea has openly scorned American threats and violated American sanctions (as have Venezuela, Cuba and the Taliban).  Russia has been brazenly testing NATO’s air and sea defenses …, understandably so after America failed to confront Russia after it carved up Georgia, then annexed Crimea, and then created an eviscerated, partitioned Ukraine.  Russia currently is massing heavy equipment along the Ukrainian border in supposed preparation for a military exercise … or perhaps as a test of the Biden Administration.  As one Moscow official put it, “Maybe these are exercises, maybe more.”  Venezuela (where Russia has placed aircraft and troops) and Cuba remain thorns in America’s Western Hemisphere side and soon may be joined by some of their neighbors – China today is South America’s top trading partner and its second largest investor.

China and its Axis allies have been diligent, strategic and goal-oriented.  America for the last 12 years has slept talked big and carried a little stick (as previously addressed by TLR here), withdrawing from global entanglements and, recently, disdaining globalization as well as its long-standing alliances, eschewing their benefits because of their imperfections.  America’s neglect has led China, Russia and Iran to formalize their alliances.  Continued isolationism will further damage American interests … and encourage further Axis expansionism.  America’s internal, partisan divisions are a potentially fatal distraction.  Its past time to wake up!  Historians have seen this movie before.

Finally

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