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    China Business
     Jun 19, 2009
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Group of Two the wrong number
By Henry C K Liu

Part 1: The song stays the same
Part 2: A dangerous balance
Part 3: The New Deal dollar and the Obama dollar
Part 4: Brzezinski's G-2 grand strategy

As former US National Security Advisor Zbigniew Brzezinski's "Group of Two" (or G-2) concept of a US-China convergence in geopolitical interests is not yet official US policy, China is likely to merely keep monitoring signs of its evolution in US policymaking without direct formal official response, while exploiting the concept's diplomatic possibilities for improving bilateral relations.

Although China desires well-deserved recognition of it as a world


power by the sole remaining superpower, albeit one that is fading, a G-2 in the context of hawkish realpolitik generally associated with Brzezinski's world view would go against China's long-standing preference for multilateralism that would allow it to form bilateral partnerships and special relations around the globe and to participate as an independent power in regional organizations.

China rejects G-2 concept
On May 20, at the end of the 11th China-EU summit held in Prague, attended by European Commission President Jose Manuel Barroso, Czech President Vaclav Klaus, whose country holds the rotating EU presidency, and EU foreign policy chief Javier Solana, Chinese Premier Wen Jiabao took the opportunity to assuage European concerns by dismissing as "groundless" the view that China and the United States - through the framework of a G-2 - will monopolize world affairs in the future.

"Some say that world affairs will be managed solely by China and the United States. I think that view is baseless and wrong," Wen told the press. "It is impossible for a couple of countries or a group of big powers to resolve all global issues. Multipolarization and multilateralism represent the larger trend and the will of the people."

The statement, while dismissing the prospect of G-2 hegemonic condominium, does not specifically deny the usefulness on strong bilateral relations between China and the US, nor the beneficial possibilities of close China-US cooperation on global issues.

China has always been committed to an independent foreign policy of peace and has continued to pursue a win-win strategy of opening up, said Wen. "It stands ready to develop friendly relations and cooperation with all countries and it will never seek hegemony."

Wen said China remains a developing country despite remarkable recent socio-economic achievements and that its modernization will continue for a long time with the unceasing efforts of many more generations.

Shanghai Cooperation Organization (SCO)
Even if the idea of a US-China G-2 should become official US policy, China still will have to ensure that a formal G-2 framework does not affect the strategic intent of the Shanghai Cooperation Organization (SCO), an interstate mutual-security organization originally founded in 1996 by the governments of China, Kazakhstan, Kyrgyzstan, Russia and Tajikistan. Initially known as the Shanghai Five and organized as a multilateral confidence-building mechanism to peacefully resolve legacy border disputes and to demilitarize the long border between China and the new independent states of the former Soviet Union, the Shanghai Five was joined by Uzbekistan in 2001 after which the members renamed the organization as SCO.

A permanent organ of the SCO is the Regional Anti-Terrorist Structure (RA-TS), established in 2004 and headquartered in Tashkent, Uzbekistan. The RA-TS promotes cooperation between SCO member states against cross-border security threats from terrorism, separatism and extremism. The US, by its past actions, while being a selective opponent to terrorism and extremism after the September 11, 2001, terrorist attacks, had been a covert and sometimes overt supporter of separatism in other countries during and after the Cold War. The problems related to al-Qaeda, the Taliban and Afghanistan are classic examples of "blowback" from the handiwork of America's Central Intelligence Agency (CIA).

Mongolia, an independent state created in the early 20th century by foreign imperialist supported separatism from a China then beset with internalpolitical upheaval, won SCO observer status in 2004. Iran, Pakistan, and India became observers in 2005.

In 2005, with SCO support, Uzbekistan called for a fixed time schedule for the withdrawal of US forces from the Karshi-Khanabad Air Base (KKAB) in southern Uzbekistan. After the 9/11 terrorist attacks on the US, Uzbekistan had been solicited to become a strategic partner of the US, cooperating with US forces on counterterrorism activities and allowing US use of the KKAB for antiterrorist purposes in return for US security guarantees and supply of military equipment.

The Uzbek government subsequently grew apprehensive of US instigation of pro-democracy color revolutions in other post-Soviet states such as Georgia, Ukraine, and Kyrgyzstan. An SCO declaration of support for Uzbekistan's decision to end its military cooperation with the US added geopolitical weight and accelerated the US's withdrawal, which was completed by the end of 2005.

The Soros Foundation, along with the CIA, was accused of supporting and even planning the color revolutions in order to serve Western interests. After the Orange Revolution in Ukraine, several Central Asian nations took action against the George Soros' Open Society Institute (OSI). Uzbekistan closed the OSI regional offices, while Tajik state media accused OSI-Tajikistan of corruption. The Guardian newspaper in the UK claimed that the United States Agency for International Development (USAID), the National Endowment for Democracy, the International Republican Institute, the National Democratic Institute for International Affairs and Freedom House were directly involved in the color revolutions. Both the Washington Post and the New York Times also reported substantial US involvement in these political events.

SCO 2009 Summit
The SCO has now moved into a new era of pragmatic cooperation that will benefit its member states and the international community. The SCO holds its 9th annual summit this week (June 15, 2009) in Yekaterinburg, central Russia. The city is the administrative center of Sverdlovsky Oblast (federal subject) on the eastern side of the Ural Mountain range and is the most populous oblast within Asian Russia.

Soon after the Russian Revolution, on July 17, 1918, Tsar Nicholas II and all members of the imperial family were executed by Soviet revolutionaries at the Ipatiev House in Yekaterinburg. US spy plane U-2 pilot Gary Powers was shot down in 1960 over Yekaterinburg. In 1977, the Ipatiev House was demolished by order of Boris Yeltsin, who later became the first president of the Russian Federation.

The 2009 summit is being held on the eighth anniversary of the establishment of the SCO. The People's Daily Online, citing the Xinhua news agency as its source, this week commented that:
Under the guidance of the Shanghai Spirit, which enshrines mutual trust and benefits, equality, negotiation and respect for cultural diversity, the SCO has evolved into an efficient mechanism for maintaining common benefits for and promoting cooperation among member states. It has also grown into a major force in facilitating the realization of lasting peace and common development.

The SCO also has made crucial contributions to the establishment of a just and rational international order ... Member states at the first SCO conference on Afghanistan held March 27, 2009, in Moscow reached consensus on comprehensive cooperation against terrorism, drug trafficking and organized crime. The defense ministers of SCO member states also endorsed a cooperation plan for 2010-2011 after an April 29, 2009 meeting in Moscow. A series of cooperation documents concerning transborder organized crime, money laundering and oil and gas pipeline security were signed after the first meeting of the SCO interior and public security ministers in Yekaterinburg on May 18, 2009.

A series of trade and investment projects are being implemented, including transportation projects involving China, Kyrgyzstan and Uzbekistan. ... Moreover, SCO members have also started to discuss a joint mechanism against the ongoing global financial crisis.

Trade volumes between China and the other member states have increased at an average annual growth rate of 30% - from US$12.1 billion in 2001 to US$67.5 billion in 2008. By the end of 2007, China has provided the other SCO members with investments worth US$13 billion.
Amidst the current financial crisis, strengthening economic and financial cooperation among SCO member states helps to enrich cooperation within the organization's framework. SCO member states - China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan - adopted a program of multilateral trade and economic cooperation in 2003. Since then, cooperation in security and economic matters has gradually evolved, with economic cooperation gaining an increasingly important influence.

On June 14, Xinhua reported:
In October 2005, the SCO banks consortium was established, indicating the start of financial cooperation among the member states. Since then, the members have been cooperating by offering financial support to key projects ... In the financial sector, China's Banking Regulatory Commission signed a memorandum of understanding on bilateral supervision cooperation with Central Asian member states. The central banks of the SCO members also signed financial cooperation treaties.

Beijing and Moscow held several financial cooperation meetings, the two central banks signed multiple bilateral agreements, and the commercial banks of the two countries established broader business ties. ... Strengthening economic and financial cooperation is an inevitable choice for SCO members in order to meet the challenges of regional integration and globalization. It also is an important measure to cope with impacts from the global financial crisis.
The report adds that China has provided a preferential credit of more than US$900 million for the SCO.

SCO different from NATO
The SCO is not a mutual defense pact, unlike the North Atlantic Treaty Organization (NATO) which is a military alliance that has since expanded its original defensive mandate way beyond the North Atlantic region to carry on offensive operations in the Balkans, Afghanistan and Iraq.

On April 16, 2003, NATO agreed to take command of the International Security Assistance Force (ISAF) in Afghanistan. The decision came at the request of Germany and the Netherlands, the two nations leading ISAF at the time of the agreement, with unanimous support of all 19 NATO governments. The handover of control to NATO took place on August 11, the first time in NATO's history that it took direct charge of an offensive mission outside the North Atlantic theatre.

Since its establishment, SCO member states have held joint military exercises, most recently in 2007 near Russia's Ural Mountains. Still, the SCO serves more as a forum to discuss multilateral issues of trade and security than a fully-developed counterpart of NATO, which has expanded its sphear of operation way beyond the North Atlantic region.

On October 27, 2007, the SCO signed an agreement with the Collective Security Treaty Organization (CSTO) whose members are Armenia, Belarus, Kazakhstan, Russia and Tajikistan, in the Tajik capital Dushanbe, to broaden cooperation on issues such as security, crime, and drug trafficking. Joint action plans between the two organizations were signed in early 2008 in Beijing. Uzbekistan became a full member in 2008. CSTO is an observer member of the UN General Asembly.

The CSTO charter reaffirmed the desire of all participating states to abstain from the use or threat of force. Signatories would not join other military alliances or other groups of states, while aggression against one signatory would be perceived as an aggression against all. To this end, the CSTO holds yearly military command exercises for the CSTO nations to have an opportunity to improve inter-organization cooperation.

The largest-scale CSTO military exercise held to date were the "Rubezh 2008" exercises hosted in Armenia where a combined total of 4,000 troops from all seven constituent CSTO member countries conducted operative, strategic, and tactical training with an emphasis towards furthering efficiency of the collective security element of the CSTO partnership

The CSTO grew out of the Commonwealth of Independent States (CIS), a regional organization whise members are former Soviet Republics. CIS first began as the CIS Collective Security Treaty (CST) which was signed on May 15, 1992, by Armenia, Kyrgyzstan, Russian Federation, Tajikistan and Uzbekistan in Tashkent. In 1993, Azerbajian signed the treaty on Septemeber 24, Georgia on December 9 and Belarus on December 31. The treaty came into effect on April 20, 1994.

SCO and the Eurasian Economic Community
The CIS is similar to the original European Community. Although the CIS has few supranational powers, it is more than a purely symbolic organization, possessing coordinating powers in the realm of trade, finance, lawmaking, and security. It has also promoted cooperation on democratization and trans-border crime prevention. As a regional organization, CIS participates in UN peacekeeping forces. Some members of the CIS have established the Eurasian Economic Community (EurAsEC) with the aim of creating a full-fledged common market.

Continued 1 2  

The Complete Henry C K Liu

China says 'no thanks' to G-2
(May 29,'09)

G-2 too simple for reality (May 16,'09)

Khamenei rides a storm in a tea cup

2. Obama lights North Korea's fuse

3. Sri Lanka drifts closer to the East

4. Rafsanjani's gambit backfires

5. The yuan lies in waiting

6. The world is now changed

7. Iran's enemies are circling

8. Indian scientists bridge the audio divide

9. The meaning of the Tehran spring

10. Hedgehogs and flamingos

(24 hours to 11:59pm ET, June 17, 2009)


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