Islands and the Silk Road


“There are decades where nothing happens; and there are weeks where decades happen” - Tolstoy

Over the past fortnight people in the United Kingdom (UK), and perhaps some outside the UK, have been inundated with news on the island nation's decision to leave the European Union (EU). The upset of the result was stunning and the speed of the subsequent economic and political reverberations nauseating. But while it can be tempting to think of Brexit with a kind of tunnel vision (we will get through this!), Brexit is not so much a solitary event as it is a part of a wider dislocation between China, as representative of outward-looking developing countries, and the UK, representative of developed countries that are increasingly turning inward.

Many people in the UK have decided that internationalism does not work for them. By turning inwards, the Leave camp argued, Britain can escape the 21st century: the movement of capital, people and goods; the diminished power of nation states, the diversity and multiculturalism of open societies. The Leave campaign fuelled ideas of British nationalism, and more particularly English exceptionalism – ideas of empire and imperial mercantilism, while at the same time propagating the idea that British people are the ultimate victims of globalisation. This noxious dualism, a kind of national schizophrenia, was predicated on the idea that foreigners are taking advantage of the British.

But these are ostrich politics. Internationalism is not a foreign aid program that we participate in to feed the hordes beyond our borders. Internationalism is instead the pragmatic response to the knowledge that the fates of our countries are intertwined. By choosing to weaken the ties with its neighbours, the UK weakens itself.

Passing the Torch

When looking beyond the national level, the UK’s referendum on the EU reveals a continental divide. While Europe and the United States are experiencing the rise of politicians who question globalisation, China and Central Asia are working to strengthen the bonds between them, adopting outward-looking foreign policies.

On the 24th of June, the UK signalled its intent to diminish its ties with the EU. Ironically, on the same day as the UK’s referendum on EU membership, China officially embarked on its journey towards constructing a vast, global commercial network, with the China-led Asian Infrastructure Investment Bank (AIIB) announcing its four inaugural projects worth $509mn. These include:

The newly founded AIIB is expected to play a decisive role as an investment arm for Xi Jinping’s ambitious “One Belt One Road” project (OBOR). Through OBOR, China’s president Xi Jinping is aiming to exploit trade and investment opportunities beyond China’s borders, potentially going as far as relocating manufacturing plants abroad as internal (labour) costs rise. More generally, Xi’s outward-looking initiative combines an appetite for increasing the country’s regional soft power, exporting its culture as well as economic over-capacity.

The dominance of this agenda in Xi’s foreign policy is especially visible in China’s foreign direct investment strategy. During the first five months of 2016, for instance, an estimated 52% of China’s investment went to projects in countries labelled as members of the OBOR ‘club’ – notably Central Asian countries (Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan and Turkmenistan). This presents an opportunity for certain Central Asian countries to diversify their economies. Following the collapse of commodity prices in the past year, moving away from their established reliance on natural resources by investing in trade and logistics has become an important target for these countries. In turn, by connecting Europe to Asia, the region is likely to reap the lion share of China’s expected cumulative investment of $4 trillion in all OBOR countries (note that the Marshall Plan was worth $130 billion in current dollars).

One of the particularly shocking aspects of Brexit is that the UK has long been a champion of free trade and liberalism. Today, in its rejection of internationalism, the UK has handed on the torch to China.

#Pakistan #Indonesia #Bangladesh #Tajikistan #UnitedKingdom #EuropeanUnion #SilkRoad #AIIB #Trade

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