Land of blue gold

In a region fraught with mutual distrust, anxieties over water supply are raising tensions between I

Almost anything the Dalai Lama does can trigger protests from Beijing. But his November 2009 visit to the disputed territory of Tawang, in the remote north-east Indian state of Arun­a­chal Pradesh, was felt with particular resonance in China's capital. Relations between India and China have been bad-tempered for months, with nationalists on both sides urging their respective governments to act tough.

The Dalai Lama's presence in Tawang - which China sees as southern Tibet, and which was the birthplace of his eccentric but talented predecessor, the sixth Dalai Lama - reminds Beijing that this was once Tibetan territory. The current Dalai Lama first came through these parts in 1959, as a young refugee fleeing Chinese rule. He never returned to Lhasa. India's open-hearted hospitality to exiled Tibet­ans has annoyed Beijing ever since.

Arunachal Pradesh, nearly 33,000 square miles of lightly populated mountain and valley, is claimed by both India and China. Its people, largely Buddhist and ethnically Monpa, speak a language similar to Tibetan and have suffered long years of neglect by both states: a condition they no doubt prefer to being fought over. During the Indo-Chinese border war of 1962, Chinese troops occupied Tawang for more than a month. Now, China is reasserting its claim. India, in turn, is claiming more than 14,700 square miles of Chinese-controlled Aksai Chin, near the Kashmir border. Talks between the two countries have been held repeatedly over the past four years without resolution.

Today, the line of actual control is heavily patrolled by both nations: on the Indian side by troops housed in ramshackle, temporary huts, and on the Chinese by soldiers in concrete barracks marching along well-paved roads. The contrast has not escaped the notice of local people and is taken as a signal of intent.

The Dalai Lama's presence in Arunachal Pradesh and the warm welcome he received from his devout Monpa following are symbolic of the antagonism. But Beijing also issued a strong protest when the Indian prime minister, Manmohan Singh, visited Arunachal Pradesh last October during an election campaign.

Historically, China is Pakistan's ally and many in India believe that China maintains pressure along the 2,500-mile border that the two countries share to keep Indian forces tied down. There have been alarming reports in the Indian press of repeated incursions across the line of control by Chinese troops. The Indian government plays these incidents down, pointing out that the boundary is not only disputed but also ill-defined, and that these incursions need not be taken as provocation.

Behind the immediate stresses, there is jockeying for regional and international influence by two large, utterly developing economies, built on radically different political philosophies and lying in a region with both live and frozen conflicts. After 1962, relations were hostile for decades: China and Pakistan became ­allies, and India turned for support to China's enemy, the USSR.

The end of the cold war brought new conflicts based on ethnicity and religion, in a region with four nuclear powers. Recently, India has been alarmed by China's increasing presence in Sri Lanka and Nepal, historically Indian spheres of influence. Now, there is another factor to complicate relations - the impact of climate change on states divided by political boundaries but united in their dependence on the rapidly melting Himalayan glaciers for water, essential both for security and life itself.

Just a few miles across the line that divides Arunachal Pradesh from Tibet, the powerful torrent of what becomes the Brahmaputra River enters one of the most dramatic passages of its 2,000-mile journey to the Bay of Bengal. Rising on the slopes of the holy mountain of Kailash in western Tibet, it flows east, along the northern flank of the Himalayas, then enters one of the deepest gorges in the world, executing a hairpin bend before roaring south into Arunachal Pradesh.

To the engineers dominating the upper echelons of Chinese politics, who have the twin concerns of meeting China's ever-growing demand for energy and its need for water, the great bend of the Brahmaputra seems to offer an irresistible temptation.

Dammed if they do

Damming the great bend of the Brahmaputra is an idea with a long pedigree. It was first suggested as one of a series of global "megaprojects" by the Japanese in the 1970s. More recently, the Chinese government has made occasional reference to the plan. Though it remains a drawing-board idea, India suspects it is moving up the Chinese list of priorities.

Anxieties about China's intentions were inflamed in 2005 by the publication of the provocatively titled Tibet's Water Will Save China. Though it was not an official statement of policy, it was written by a former officer of the Chinese People's Liberation Army, Li Ling, and its wide circulation gave it sufficient stature in Indian eyes to merit careful scrutiny. Ling's enthusiasm for diverting Tibet's rivers, including the Brahmaputra, to northern China to alleviate the acute water crisis there fitted enough of the facts to set alarm bells ringing.

In many ways, it is an implausible project, but China's engineering record and its demonstrated love of ambitious dam projects are troubling to its neighbours, so much so, that many in India's security establishment have said that if China were to dam the Brahmaputra, it would be tantamount to a declaration of war. Doubts about the feasibility of the project, including those expressed by the more sober Indian civil engineers, have not dampened wider fears. For India, concern about China's ambitions for the Himalayan region rivals - and is linked to - its long-standing enmity with Pakistan. In the heated atmosphere of mutual suspicion, water has taken its place as a critical national security concern.

At a meeting between the Indian and Chinese foreign ministers in Bangalore in October, India sought, and reportedly received, reassurances over the Brahmaputra. China, Indian officials were told, is a responsible country that would not harm the interests of its neighbours. But reports that remote sensing has detected the beginnings of construction on the river at Zangmu, Tibet, continue to circulate.

Both India and China suffer long-term anxieties over water, now rendered more acute by the rapid melting of the glaciers of the Himalayas (from which all of the great rivers of Asia derive to some degree). In a region fraught with mutual suspicion and reciprocal bad faith, there are no source-to-sink, trans-boundary water management agreements in place and, currently, little prospect of any being negotiated to manage the sharing of what threatens to be a rapidly diminishing supply.

The dispute works both ways. While India protests about Chinese infrastructure investments in Pakistan-controlled Kashmir, which include roads and a £7.8bn dam, India has its own plans to dam the Brahmaputra in Aruna­chal Pradesh, which China opposes. India has drawn up plans for 42 dams in Arunachal Pradesh, which have the potential to produce nearly 28,000 megawatts of hydropower, equivalent to the entire hydro capacity built by India in the past 60 years.

The dispute over the dams went international in June when China attempted to block an Asian Development Bank loan that included £37m for projects in Arunachal Pra­desh. The bank should not invest, China said, as the state was disputed territory. India responded by saying that it would finance the projects itself and stepped up its military presence in the region, deploying another 60,000 troops to the neighbouring state of Assam in addition to the 40,000 already stationed there. The shadow war games rapidly spread across the Himalayas, as China initiated military exercises. In September, India responded by stepping up the state of alert on the line of control in Kashmir.

The status of India's legal claim to Arunachal Pradesh is complicated and rests on the unresolved argument about the historic status of Tibet. It centres initially on an exchange of notes during the negotiation of the Simla Accord in 1914, under Henry McMahon, the then foreign secretary of British India. China, Tibet and Britain negotiated the accord, which resulted in the contentious McMahon Line that, for the British at least, defined the border between India and Tibet. The Tibetans conceded the territory that became Arunachal Pradesh to British India in return for a British promise, never honoured, to recognise Tibetan autonomy.

Chinese water torture

China rejected the Simla Accord and insists that Tibet did not have the status to sign any international agreement. If India were to rest its case on the accord, it would imply that Delhi recognised Tibet's authority to negotiate and conclude international agreements: a step that Beijing would take as severe provocation. The British, at the time, insisted on a distinction ­between China's acknowledged "suzerainty" over Tibet and full sovereignty, but the picture was further complicated last year when the Foreign Office abandoned the distinction, for current policy at least, as "anachronistic".

After Simla, neither side paid much attention to the disputed territory, and the Tawang monastery continued to pay taxes to Tibet until the 1950s. Shifting regional geopolitics have made this, and other Himalayan regions, the focus of potentially dangerous rivalries.

For the Tibetans in exile, these developments carry their own threat. Rising tension between their Indian hosts and Beijing is not good news. India has been a generous host to some 150,000 Tibetans who now live there, to the Dalai Lama and his government in exile, and to refugees who continue to arrive.

Yet there are voices in India which argue that, in the face of China's growing assertiveness, the cost to India of this spiritual and material solidarity is getting higher. It is not hard to find Indian analysts who believe that both India and China need a comprehensive agreement on the main points of contention between them - the border and the disputed territories, the fair management of declining water supplies, and the scientific and technical co-operation that such agreements would demand.

The question that many ask, but nobody has yet answered, is whether the price of a comprehensive agreement will be the special status and security that India's Tibetan exiles have enjoyed for more than half a century. Such a bargain would certainly please Beijing. For India, it is still a long way from official policy, but some argue it would be a price worth paying.

 

Isabel Hilton is editor of chinadialogue.net

 

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This article first appeared in the 18 January 2010 issue of the New Statesman, Palin Power

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Lexit: the EU is a neoliberal project, so let's do something different when we leave it

Brexit affords the British left a historic opportunity for a decisive break with EU market liberalism.

The Brexit vote to leave the European Union has many parents, but "Lexit" – the argument for exiting the EU from the left – remains an orphan. A third of Labour voters backed Leave, but they did so without any significant leadership from the Labour Party. Left-of-centre votes proved decisive in determining the outcome of a referendum that was otherwise framed, shaped, and presented almost exclusively by the right. A proper left discussion of the issues has been, if not entirely absent, then decidedly marginal – part of a more general malaise when it comes to developing left alternatives that has begun to be corrected only recently, under Jeremy Corbyn and John McDonnell.

Ceding Brexit to the right was very nearly the most serious strategic mistake by the British left since the ‘70s. Under successive leaders Labour became so incorporated into the ideology of Europeanism as to preclude any clear-eyed critical analysis of the actually existing EU as a regulatory and trade regime pursuing deep economic integration. The same political journey that carried Labour into its technocratic embrace of the EU also resulted in the abandonment of any form of distinctive economics separate from the orthodoxies of market liberalism.

It’s been astounding to witness so many left-wingers, in meltdown over Brexit, resort to parroting liberal economics. Thus we hear that factor mobility isn’t about labour arbitrage, that public services aren’t under pressure, that we must prioritise foreign direct investment and trade. It’s little wonder Labour became so detached from its base. Such claims do not match the lived experience of ordinary people in regions of the country devastated by deindustrialisation and disinvestment.

Nor should concerns about wage stagnation and bargaining power be met with finger-wagging accusations of racism, as if the manner in which capitalism pits workers against each other hasn’t long been understood. Instead, we should be offering real solutions – including a willingness to rethink capital mobility and trade. This places us in direct conflict with the constitutionalised neoliberalism of the EU.

Only the political savvy of the leadership has enabled Labour to recover from its disastrous positioning post-referendum. Incredibly, what seemed an unbeatable electoral bloc around Theresa May has been deftly prized apart in the course of an extraordinary General Election campaign. To consolidate the political project they have initiated, Corbyn and McDonnell must now follow through with a truly radical economic programme. The place to look for inspiration is precisely the range of instruments and policy options discouraged or outright forbidden by the EU.

A neoliberal project

The fact that right-wing arguments for Leave predominated during the referendum says far more about today’s left than it does about the European Union. There has been a great deal of myth-making concerning the latter –much of it funded, directly or indirectly, by the EU itself.

From its inception, the EU has been a top-down project driven by political and administrative elites, "a protected sphere", in the judgment of the late Peter Mair, "in which policy-making can evade the constraints imposed by representative democracy". To complain about the EU’s "democratic deficit" is to have misunderstood its purpose. The main thrust of European economic policy has been to extend and deepen the market through liberalisation, privatisation, and flexiblisation, subordinating employment and social protection to goals of low inflation, debt reduction, and increased competitiveness.

Prospects for Keynesian reflationary policies, or even for pan-European economic planning – never great – soon gave way to more Hayekian conceptions. Hayek’s original insight, in The Economic Conditions of Interstate Federalism, was that free movement of capital, goods, and labour – a "single market" – among a federation of nations would severely and necessarily restrict the economic policy space available to individual members. Pro-European socialists, whose aim had been to acquire new supranational options for the regulation of capital, found themselves surrendering the tools they already possessed at home. The national road to socialism, or even to social democracy, was closed.

The direction of travel has been singular and unrelenting. To take one example, workers’ rights – a supposed EU strength – are steadily being eroded, as can be seen in landmark judgments by the European Court of Justice (ECJ) in the Viking and Laval cases, among others. In both instances, workers attempting to strike in protest at plans to replace workers from one EU country with lower-wage workers from another, were told their right to strike could not infringe upon the "four freedoms" – free movement of capital, labour, goods, and services – established by the treaties.

More broadly, on trade, financial regulation, state aid, government purchasing, public service delivery, and more, any attempt to create a different kind of economy from inside the EU has largely been forestalled by competition policy or single market regulation.

A new political economy

Given that the UK will soon be escaping the EU, what opportunities might this afford? Three policy directions immediately stand out: public ownership, industrial strategy, and procurement. In each case, EU regulation previously stood in the way of promising left strategies. In each case, the political and economic returns from bold departures from neoliberal orthodoxy after Brexit could be substantial.

While not banned outright by EU law, public ownership is severely discouraged and disadvantaged by it. ECJ interpretation of Article 106 of the Treaty on the Functioning of the European Union (TFEU) has steadily eroded public ownership options. "The ECJ", argues law professor Danny Nicol, "appears to have constructed a one-way street in favour of private-sector provision: nationalised services are prima facie suspect and must be analysed for their necessity". Sure enough, the EU has been a significant driver of privatisation, functioning like a ratchet. It’s much easier for a member state to pursue the liberalisation of sectors than to secure their (re)nationalisation. Article 59 (TFEU) specifically allows the European Council and Parliament to liberalise services. Since the ‘80s, there have been single market programmes in energy, transport, postal services, telecommunications, education, and health.

Britain has long been an extreme outlier on privatisation, responsible for 40 per cent of the total assets privatised across the OECD between 1980 and 1996. Today, however, increasing inequality, poverty, environmental degradation and the general sense of an impoverished public sphere are leading to growing calls for renewed public ownership (albeit in new, more democratic forms). Soon to be free of EU constraints, it’s time to explore an expanded and fundamentally reimagined UK public sector.

Next, Britain’s industrial production has been virtually flat since the late 1990s, with a yawning trade deficit in industrial goods. Any serious industrial strategy to address the structural weaknesses of UK manufacturing will rely on "state aid" – the nurturing of a next generation of companies through grants, interest and tax relief, guarantees, government holdings, and the provision of goods and services on a preferential basis.

Article 107 TFEU allows for state aid only if it is compatible with the internal market and does not distort competition, laying out the specific circumstances in which it could be lawful. Whether or not state aid meets these criteria is at the sole discretion of the Commission – and courts in member states are obligated to enforce the commission’s decisions. The Commission has adopted an approach that considers, among other things, the existence of market failure, the effectiveness of other options, and the impact on the market and competition, thereby allowing state aid only in exceptional circumstances.

For many parts of the UK, the challenges of industrial decline remain starkly present – entire communities are thrown on the scrap heap, with all the associated capital and carbon costs and wasted lives. It’s high time the left returned to the possibilities inherent in a proactive industrial strategy. A true community-sustaining industrial strategy would consist of the deliberate direction of capital to sectors, localities, and regions, so as to balance out market trends and prevent communities from falling into decay, while also ensuring the investment in research and development necessary to maintain a highly productive economy. Policy, in this vision, would function to re-deploy infrastructure, production facilities, and workers left unemployed because of a shutdown or increased automation.

In some cases, this might mean assistance to workers or localities to buy up facilities and keep them running under worker or community ownership. In other cases it might involve re-training workers for new skills and re-fitting facilities. A regional approach might help launch new enterprises that would eventually be spun off as worker or local community-owned firms, supporting the development of strong and vibrant network economies, perhaps on the basis of a Green New Deal. All of this will be possible post-Brexit, under a Corbyn government.

Lastly, there is procurement. Under EU law, explicitly linking public procurement to local entities or social needs is difficult. The ECJ has ruled that, even if there is no specific legislation, procurement activity must "comply with the fundamental rules of the Treaty, in particular the principle of non-discrimination on grounds of nationality". This means that all procurement contracts must be open to all bidders across the EU, and public authorities must advertise contracts widely in other EU countries. In 2004, the European Parliament and Council issued two directives establishing the criteria governing such contracts: "lowest price only" and "most economically advantageous tender".

Unleashed from EU constraints, there are major opportunities for targeting large-scale public procurement to rebuild and transform communities, cities, and regions. The vision behind the celebrated Preston Model of community wealth building – inspired by the work of our own organisation, The Democracy Collaborative, in Cleveland, Ohio – leverages public procurement and the stabilising power of place-based anchor institutions (governments, hospitals, universities) to support rooted, participatory, democratic local economies built around multipliers. In this way, public funds can be made to do "double duty"; anchoring jobs and building community wealth, reversing long-term economic decline. This suggests the viability of a very different economic approach and potential for a winning political coalition, building support for a new socialist economics from the ground up.

With the prospect of a Corbyn government now tantalisingly close, it’s imperative that Labour reconciles its policy objectives in the Brexit negotiations with its plans for a radical economic transformation and redistribution of power and wealth. Only by pursuing strategies capable of re-establishing broad control over the national economy can Labour hope to manage the coming period of pain and dislocation following Brexit. Based on new institutions and approaches and the centrality of ownership and control, democracy, and participation, we should be busy assembling the tools and strategies that will allow departure from the EU to open up new political-economic horizons in Britain and bring about the profound transformation the country so desperately wants and needs.

Joe Guinan is executive director of the Next System Project at The Democracy Collaborative. Thomas M. Hanna is research director at The Democracy Collaborative.

This is an extract from a longer essay which appears in the inaugural edition of the IPPR Progressive Review.

 

 

This article first appeared in the 18 January 2010 issue of the New Statesman, Palin Power