Friday, November 2, 2018

Mike Pompeo, China, International Aid and the Pot and the Kettle

Secretary of State Mike Pompeo was recently interviewed by Laura Ingraham and provided the world with a glimpse into the current administration's agenda for China and made some comments that epitomize America's world view.

"Ms. Ingraham: I want to move to China, Mr. Secretary, because we’ve seen in recent weeks nothing that’s surprising to you or me, because we’ve been following this issue of Chinese stealing our intellectual property and bribing, attempting to bribe foreign officials, including here at different times in the United States – business officials, excuse me – to gain access to technology, critical technology in manufacturing, aviation, and so forth. Now we have this chipmaker ban in place that garnered a lot of attention, and it’s trying to – I guess we’re trying to target that state-owned chipmaker in China over national security concerns. How is that going to fit in to our overall aggressive stance against this expansive Chinese behemoth?

Mike Pompeo: Laura, China is probably, over the long term, the biggest challenge, national security challenge that faces our country. You saw the indictments of 10 Chinese persons for the alleged theft of intellectual property, aviation-related intellectual property. This is a story that’s been going on for years. This is the first administration that has been prepared to push back against China, and we’re doing so on all fronts. So where the semiconductor piece fits in is it’s part of a mosaic of our strategic effort to push back against this continued Chinese effort. It begins with trade. We want, the President has demanded fair and reciprocal trade with China. We’ve demanded that they not steal our intellectual property. We talk with some frequency about the enormous violation of religious freedom that’s taking place against the Uighurs in China. We’re very worried that China will put the people in many countries around the world, in Africa and Central America and Latin America, in a debt trap that will cause those countries decades of pain.

It is a multipronged effort on behalf of all of the United States Government, at the President’s direction, to convince China to behave like a normal nation on commerce and with respect to the rules of international law.

Ms. Ingraham: Yeah. I mean, I know you have to go, Mr. Secretary, but just so people understand this. Our trade policy with China has had a real effect inside China. They already have structural weaknesses within China at large, but they had the weakest manufacturing growth in more than two years in China, and the yuan has slid, manufacturing stalled, and their ambitions as a result have been affected. But they’re still lofty, and we do finally have an administration who’s seeing this with eyes wide open." (my bolds)

As background, according to the database from China - Africa Research Initiative or CARI, between 2000 and 2017, China's government, banks and contractors have extended $143 billion in loans to various governments and state-owned enterprises throughout Africa as shown here:

Angola is the biggest beneficiary of China's credit, receiving $42.8 billion over the past 17 years.  The types of China's credit varies from official development aid, export credits and suppliers' credits.

While Mr. Pompeo is concerned about the amount of debt under the guise of development aid that China has issued to African nations (and others around the world) and the possibility of pain for these regions in the future, the honour of being the world's greatest foreign assistance lender still lies with the United States as shown here from the 2016 government publication U.S. Overseas Loans and Grants Obligations and Loan Authorizations (1945 to 2016):

According to the Council on Foreign Relations and the Congressional Research Service, using the broadest definition of aid (including military and security assistance) in fiscal 2016, foreign aid totalled $49 billion or 1.2 percent of the federal budget.  In 2016, aid was divided  into the following categories:

Long-term development aid (42 percent) provides ongoing funding for projects to promote broad-based economic growth and general prosperity in the world’s poorest countries. More than half of this goes to bilateral health programs, including treatment of HIV/AIDS, maternal and family health, and support for government health-care systems, mostly in Africa. This also includes funding to multilateral institutions such as the World Bank and the UN Development Program.

Military and security aid (33 percent) primarily goes toward helping allies purchase U.S. military equipment, training foreign military personnel, and funding peacekeeping missions. A smaller slice goes to “non-military security assistance,” which includes counternarcotics programs in Afghanistan, Colombia, Peru, and elsewhere, as well as nonproliferation and counterterrorism efforts.

Humanitarian aid (14 percent) is spent to alleviate short-term humanitarian crises, such as those resulting from famine, earthquakes, war, state failure, or other natural or man-made disasters. This includes State Department and Defense Department disaster relief efforts, as well as purchases of U.S. agricultural goods and funding for organizations such as the International Red Cross and the UN High Commissioner for Refugees.

Political aid (11 percent) is intended to support political stability, free-market economic reforms, and democratic institutions. Programs include governance and justice system reforms, backing for human rights organizations, and support for peace talks and treaty implementation.

The ten largest recipients of economic aid are mainly African nations; Kenya, Nigeria, Tanzania and Ethiopia with Africa as a whole receiving 32 percent of the total American foreign aid.  It is interesting to note that 44 percent of the aid is designated to help nations beef up their military power (more support for the U.S. military-industrial-Congressional complex) and to ensure that the nations benefitting from this magnanimous generosity implement democratic reforms that are in the "American mold".

Additionally, if we compare the level of U.S. foreign aid to Africa to the aid offered by its OECD peers, we find the following:

Let's close with a couple of thoughts.  It is interesting to hear Washington criticize China over its global foreign aid program and feign concern over the potential for future pain resulting from over-indebtedness to this rogue nation, particularly given that a significant portion of America's foreign aid is designated to support the military infrastructure and promote its preferred version of democracy in less fortunate nations around the world.  As well, Mr. Pompeo's admonition that China operate within the rules of international law is akin to the pot calling the kettle black given America's penchant for ignoring international law when it is convenient to its agenda, often behaving like a rogue nation that it fears so much.

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