A War on Two Cold Fronts: the Real Enemy and the False
In a dark room I have a séance with smoke and mirrors. Some fool really does walk in the door and kneel down before me. I kick him away, continuing my indulgence, when another fool breaks down the door, wielding a butcher-knife to overthrow me.
- Xi Chuan, from “What the Eagle Says”
It is the most perfect nemesis - our enemy sees our values as a threat, and the only way to defeat them, is to enforce them. The victory of the West in the Cold War is rightfully seen as a victory for economic freedom, rule of law, and human rights. These are distinctly Western institutional values, and relatively recent ones, which are often taken for granted as the natural aspirations of mankind. And in their optimism in the years since 1991, as they basked in the glow of our prosperity and self-confidence, the West had all but forgotten how to think like anybody but themselves. Victory is predicated on understanding the enemy. Did they ever know how? Past official Western commentary has often made mountains out of molehills, and molehills out of mountains. Post-war Japan “lacked the daring and ingenuity” to become corporate innovators, Asia “lacked the individualism” to create a modern economy, and China would “of course” eventually become an open, liberal society. It is as if the West lives in a world of funhouse mirrors, never catching a glimpse of anything that isn’t a distorted image of itself.
A Cold War is not simply a struggle between major powers. It is a specifically contemporary phenomenon, born of the structural peculiarities of 20th century state expansion. In short, Cold War is postmodern war: nuclear missiles make “conventional war” impossible, and hence, ever-less conventional. The new convention is what Carl Schmitt called partisan war – a totalising war fought at every scale, from the peasant and the pamphleteer, to the generals and the machines of enterprise. There are no neutral civilians, and there are no neutral parties, and at best, there are only buffer states. Schmitt rounded out his theory with a grandiose prediction – all future wars will be partisan wars – wars of total ideology, fought against implacable enemies. It is psychic warfare, through propaganda and subversion, a trade war, through markets and finance, street protest, and ultimately, a war of total domination. Or, in the words of Russian military strategist Valery Gerasimov, hybrid warfare. It is a war we are already in, and must fight, but fortunately, one which can be won without firing a shot, if we can know ourselves, and know our true enemy.
Smoke and Mirrors
NATO was created to defeat the Soviet Union. After it fell, it embraced a confident stage of evangelism, spreading liberal democracy around the world, by force as often as by diplomacy, alternately called neoliberalism or neoconservatism by various pundits of various partisan stripe. This form of mission creep has brought it into conflict with Russia, and has turned a screw into a nail simply because it is used to using a hammer. Contrary to popular belief, General Gerasimov was not describing a new Russian attitude to global conquest. This mistaken impression can be attributed to two things: a modicum of exaggeration on the part of Mark Galeotti, and what Peter Hitchens calls Munich Syndrome – every conflict is seen as WWII, all dictators are Hitler, all doubters are Neville Chamberlain, and all buffer states are the Sudetenland.
This is to completely misread Russia, a country whose contemporary vision is deceptively simple: old-fashioned national sovereignty. In the post-Soviet unipolar moment, Russia capitulated utterly, suffering a decade of chaos and foreign vampirism. They believed the West would respect the post-Soviet diplomatic boundaries, and supplicated itself to American liberal advisors, flogging their state assets in a fire-sale extravaganza that turned it into a hollow gangster state; the new Hobbesian social contract of Vladimir Putin – order and security, in return for obedience and loyalty. Russia just wants to be left alone, with “a little” elbow-room.
Russia has had the same permanent geopolitical interests since the Mongol horde rolled through the gates of Moscow – drain the enemy by feint and attrition, and secure a maximum buffer zone. The communist evangelism of the Soviet era has given way to the arms-length defensive realpolitik of the status quo ante. The West’s intervention in Ukraine, Georgia and the Baltic states created a hot atmosphere of claustrophobia in Moscow. Attempting to model this strategic threat, the military strategists of Russia came up with what they called “non-linear war”, popularised by the documentary filmmaker Adam Curtis, who painted a Joker-esque caricature of a shifting chaotic mischief-maker hell-bent on ruling the ashes of Europe. There is something to this - out of defence against foreign-sponsored liberal democracy activists and Western encroachment, Russia has adopted the approach of cynically undermining Western idealism by casting it as shallow hypocrisy.
But what Gerasimov actually says, is that we have seen a blurring of the distinction between war and peace in the postmodern world. His example is the Arab Spring, and I quote:
“a perfectly thriving state can, in a matter of months and even days, be transformed into an arena of fierce armed conflict, become a victim of foreign intervention, and sink into a web of chaos, humanitarian catastrophe, and civil war. […] the role of nonmilitary means of achieving political and strategic goals has grown, and, in many cases, they have exceeded the power of force of weapons in their effectiveness.”
This is not a Russian plan, but a characterisation of how it sees the United States’ foreign policy for, not just the past 30 years, but since the dawn of the postmodern era in 1945. Economic sanctions and diplomatic isolation are accompanied by support for ideologically aligned political parties, who protest, incurring the wrath of the police, and guerrilla groups, who pressurise and destabilise the state, bleeding its resources. They are supplemented by funded propaganda, and finally naval and airspace blockades, which precede seizure of a weakened, demoralised and disoriented state apparatus. Physical invasion is the last step of war.
The United States calls it “regime change”. The casual use of this term hides its radical character. It is a transformation, not merely of the heads of state, but of the total ideology of the society, to be in line with Western liberal democracy. It is the neoconservative objective, though perhaps there was not so much “neo” or “conservative” in that doctrine, except for the explosion of post-Cold War self-confidence which accompanied it. The optimistic belief that people will see the Western way of life is superior if we only show it to them, is not an American peculiarity, but the domain of Soviet Russia and Communist China, and the British Empire too.
That is precisely how Russia perceives their situation – the target of a long-term regime change strategy. And they are unequivocally correct. The support for Alexey Navalny, the diplomatic sanctions, and the rapid geopolitical encroachment on its borders, the absorption of the Baltic states, and the support the West provided to assist the deposition of the (admittedly corrupt and unpopular) Yanushenko government in 2014 was, to quote a famous American, “déjà vu, all over again”. With Secretary of State Victoria Nuland intervening to secure a takeover government, pumping millions if not billions into the Maidan movement, even senators like John MCCain and Chris Murphy rode in to address to crowds, openly calling for a new NATO expansion.
The Kneeling Fool Stands Up
It was a slap in the face, and Putin wasn’t having it. This felt a little too much like the Golden Horde, riding in to demand tribute. As Russia saw it, Ukraine (like Georgia before it) was an opportunity to play the game by “Western rules”. The Maidan protesters, fortunately for Russia, contained a small, but visible contingent of rabid neo-Nazis. Exploiting this opportunity, Russia pumped news contacts in the West, and filled their RT newsfeed with images of Ukrainian white supremacists. Mirroring the breakup of Yugoslavia, they spun the narrative of local militia forming out of insecurity, all the while pouring in their little green men. When Crimea was seized, Putin copied the playbook from the fall of Yugoslavia; Kosovo was made independent through a combination of NATO military peacekeeping and a referendum. Russia wanted their own “NATO-stan”, and a referendum was all they needed to secure the petty fiefdom an independence. How could the West object, when they created the standard?
Russia’s only hope for long-term retaliation was to turn to the weapons of the weak – subversion. But its subversion efforts have been underwhelming in size. There is no massive network of Russian-sponsored overseas think-tanks, schools, or lobby groups, and only one significant media outlet – RT. Their bot-driven protest manipulation was scary at first, but very quickly suppressed. Their strongest play to date has been to discredit the American electoral system, which cost them nearly nothing. Borrowing from the analysis of Russia expert Stephen Kotkin, the aim of Putin’s approach to Clinton and Trump’s campaign staff was not to solicit collusion, but to give enough suspicion of collusion to wreck either party’s chances of bipartisan legitimacy. Clinton, being an experienced politician, turned down the offer for a meeting. But the Trumps were not so smart. And even if they did nothing treasonous in that meeting, they did something very stupid, which is just as bad.
The gleeful and exaggerated psychosis which followed suit, earning the moniker “Trump Derangement Syndrome”, had newscasters and Democrat politicians screaming in neo-McCarthyist tones about how Russia was stealing the election, and would hack into and shut off American heating systems as the winter came down. Liminal legal complications resulting from the pursuit of this Russian bogeyman have cascaded into exploratory investigation after exploratory investigation – in any organisation, someone is always dirty, you just need to find the dirt, culminating in our ongoing impeachment drama. Meanwhile, an embittered Hillary Clinton has embarked on a world tour to warn of "Russian meddling", sowing doubt in the validity of European election outcomes.
And while we are busy bickering over the petty victories of a struggling sub-arctic gangster state, our real enemy slides out of focus, and into a hidden position to strike.
The Fool with a Butcher-Knife
In 2013, the 18th Central Committee of the Chinese Communist Party met for its third plenum, during which it laid out the most ambitious transformation plan since the reforms of Deng Xiaoping. It was presided over by a radically changed leadership, purged of many senior “princelings”, and all moderates. Xi Jinping personally constructed a document for the ideological direction of the new deep and substantial reforms, known by the cryptic epithet “Document 9”. In this document, Xi and his apparatchiks outline the great threats to the CCP. All of them are Western values. The rule of law as the West sees it, with an independent judiciary, legislature, and fundamental constitution, is anathema to the aims of the Communist Party. So is freedom of the press, civil society, human rights, universal values, and any form of economic freedom or reliable property rights. Furthermore, any criticism of the official CCP position on the narrative of history and dialectical materialism is seen as “historical nihilism”, and ought equally to be purged. More severe than the old fascist dictum, the plenum has declared that there is nothing outside the Party.
This system which China is pushing, comes on the back of the most unconscionable violence, cruelty and repression. They have undertaken the most dramatic program of social and ethnic cleansing seen since 1945. They tissue-type every prisoner of conscience, be they Christian, Muslim, Buddhist or Falun Gong, and sell their organs on the black market, extracting them while they are alive, shovelling their bodies into industrial-scale crematoria. They violate the sovereignty of every neighbouring country, and bribe every state they trade with, coordinating the bribery from a central office in Beijing. Over 90% of the fentanyl in the United States is shipped from China, not just legally, but through their contacts in Iran and Hezbollah, who have direct shipping routes into illicit US markets.
CCP thugs organised through the triads, beat up protesters against Chinese power with impunity. Chinese emigrants are made to send remittances and cooperate politically through threats against family members back home. Through the Confucius institute, it fosters a program of academic propaganda, and organises students to crush protest and engagement in CCP-critical organisations through entryism and physical intimidation. Politicians are bribed, individuals are targeted, and threats to the homestuck relatives of Chinese expats are used to coerce them into suppressive tactics overseas, including beating human rights protesters. While The Economist has insisted on downplaying the cyber threat, the potential for China to use their centrally-controlled 5G network for censorship overseas is not just a theory but an already practiced reality.
China supports, wherever it can, anti-democratic authoritarians, lending them the use of its extensive totalitarian surveillance technology. Their project is as black and luciferian as it comes. Whereas the Soviets imagined some degree of universalism, the Chinese demand only vassalage and supplication. Every one of their client states has become ever more totalitarian over time. China is waging a global war of domination in four spheres – ideology, finance, trade and technology; much like the doctrine of Gerasimov’s hybrid warfare, invasion is a final step, a last resort. But their strategy is much more subtle and comprehensive, guided by a total ideology. By shoving Xi Jinping thought down the throats of every party apparatchik and every graduate student, and demanding universal, uncritical submission to their “superior” system, China’s ambitions are unmatched in modern history, and for fairly apparent reasons, unchallenged in the present.
Chasing the Dragon...
China, as we all know, has grown very rapidly. In 2013, in order to take advantage of this boon, President Obama signed a waiver of the Dodd-Frank act, which forces companies to adhere to a basic framework on transparency regarding the risks of financial investments. This waiver allowed companies to invest unlimited quantities in Chinese corporations without these corporations having to abide by the necessary financial regulations which apply to others. The result has been predictable. Currently, Western corporations, desperate for guaranteed long-term high growth rates, are lurching towards a policy of unwavering ideological supplication to Chinese will. Despite the trade war, American investment in China grew at 1.5% year-on-year, totalling $6.8 billion in the first half of 2019. This has included American state pension funds.
David Cameron, in his zeal to link the UK to what he perceived as the future masters of the universe, offered sweetheart deals on key infrastructure points, from Hinkley nuclear power station to Drewry . They have purchased ports in the Netherlands, Belgium, Greece and Portugal, and secured vetoes on criticism of their human rights record from both of the latter. They have secured support from strongman dictatorships from Venezuela to Iran, taken control of Australia’s water, key strategic islands in the Pacific, build whole cities across Africa, and seized 99-year leases form Pakistani and Sri Lankan ports, all as part of a coordinated effort to suck in resource trading partners through easy finance. A pound of flesh for every mile of road.
And it is not only the finance which China controls. By leveraging publications’ access to Chinese markets, it has forced censorship in several franchises, including Bloomberg, the major finance news agency. This strategy obscures criticism of China’s financial health by muddying the commentary with uncritical adulation from respected analytical sources in need of Chinese markets, much like the American tech sector has embraced radio silence on Chinese practices in service of financial opportunities. They see the miracle of Chinese statistics, and want a ticket to the mandate of heaven.
...or a Paper Tiger?
But as I write this article, China is busy bailing out several rapidly disintegrating regional banks. The shortfall in liquidity caused by capital flight through Hong Kong is bleeding China’s currency reserves to anaemic levels. Hong Kong property is being sold like Weimar Deutschmarks. Most of the optimism in China comes from the belief that the total control allows China to magic its way upwards. But this is a lie. China’s economy is entirely based on credit and leveraged foreign reserves. They can only buy foreign resources using dollars, because the yuan is the international equivalent of monopoly money. Even the South African Rand is a more reliable trade medium – the Yuan’s best recent trading volume was $1.7bln in July last year. The ZAR sees $60bln despite severe financial downgrades.
That means they cannot buy commodities on the international market with their own currency, and rely on foreign investment to survive. Kyle Bass, founder of Hayman Capital Management, says the following of the Chinese system:
“When you grow a credit system much faster than you grow GDP, which is what China has done, especially since 2008, they expanded their banking system assets, let’s say the amount of credit in their system, 50% of the size of their entire GDP every year for five years. Imagine if we lent $10 trillion into the (US) economy in one year. It would explode up, double digits, but then we would have a massive hangover, a lot of loans that go bad and we’d have to restructure them… (In actuality) we grow our credit system about the size of our GDP growth, call it 2%-3%. Today, we have about $20 trillion in GDP and about $20 trillion in banking assets… In China…, they have about $13 trillion at today’s exchange rates in GDP… They have $55 trillion worth of credit in their system. Mind you, we have the most advanced largest economy in the world. we have $20 trillion, they have $55 trillion.”
“The IMF has said, publicly, the level of non-performing loans (in China) exceeds 7%. China has said it’s 1%. We think it’s more like 20%-25%. To put it in perspective, in the Asian Financial Crisis, 1998-2001, 2002, about 35% of Chinese loans went bad and they had to restructure their financial system… If a third of the Chinese loans go bad, we are talking about $15-$16 trillion dollars of loans going bad. They only have $2 trillion of equity in their system… In the US Financial Crisis, our entire banking sector lost about $800 billion and we recapitalized it. I am telling you that China’s going to lose at least $3 trillion if not $5 trillion in their… first recession.”
In China, as investment shrivels to 5-year lows, and despite all sensible advice, the response has been even more leverage, reducing minimum capital ratio requirements and expanding construction. But the construction industry has been building straw houses for years now, many of which are crumbling or empty. The Chinese economy is so heavily leveraged that British firms will no longer invest; David Cameron’s retirement project, a joint British-Chinese fund, has failed to secure a single investor. The Belt and Road Initiative is nothing more than an attempt to externalise the credit-driven life-support for their construction industry, which has crowded out the Chinese skyline with crumbling ghost cities.
Xi’s efforts to close his fist on the helm have choked off the previously stratospheric growth. They now rely on external investment and hyper-accelerated industrialisation. The ageing population, the debt crisis, the loss of capital controls through Hong Kong, out of which billions of Chinese investments are leaking, and the trade war with America will culminate in one final, painful choice. If China collapses, down comes the world economy, a new Great Recession. But if China doesn’t collapse, by our increasing financial entanglements, the West (and the rest) become beholden to the whims of the CCP for eternity, their credits transformed into a tribute stream. Like they say, you owe the bank $1000 dollars, you’re in trouble. You owe the bank $1 million, the bank is in trouble. By rescinding the exemption from the DFA, the United States can force China to open its books, and expose them for the hollow beast of corruption they are.
The Nature of the Beast
There are two things we have failed to learn about China: what it is, and what it wants. And both of those can be summarised by a single proposition: China is economically and politically comparable, and morally indistinguishable, from Nazi Germany. It has a single goal, which is world domination, which it readily admits to every single businessman and diplomat it deals with in private. Its human rights violations are not a matter of marginal political freedoms. It is the most totalising system of political control ever seen in world history. Internally, the Party sees its own constitution’s bill of rights, and human rights in general, as potentially destructive of Communist power, and aims explicitly, not just to ignore them, but to counteract them at a global scale. They attack economic freedom, universal values and freedom of expression. And Xi is absolutely correct – with these tools, the Party can be defeated.
By utilising NATO as a geopolitical bulwark to defend our smaller allies, by enforcing trade regulations, by speaking out against human rights abuses, and by holding corporations to account for their dealings with the enemy, and by enforcing bans on transporters of illicit or substandard Chinese goods, the US can force the Chinese economy to collapse under its own contradictions and false promises, without firing a single shot. For all Trump’s flaws, he is the first Western leader to take China at all seriously. He is also the only president to see, albeit vaguely, how to beat them. By printing money and cutting off American investment and trade, they increase the pressure on China to default on their debt. It isn’t the hard, principled option we need, but it is the rough-and-ready resistance strategy we have for now. Trump only needs to resist the temptation to open the investment taps again, which is a major temptation, considering the boon it would be for the stock market at a time when his re-election is ahead.
As a result of certain financial regulations which have been the mainstay of American commerce for a century, the US holds over 90% of the world’s investment-grade assets. If the world falls, America will stand, and will have the power to protect Europe from the worst of the effects of the collapse, which is imminent and unavoidable. And all the West has to do to defeat them, is to stick together, to form a united front, and enforce the values they already know to be self-evident – that all men are born free, and equal before the law, and that the law shall be enforced with impartiality.
Ceterum censeo Partia Communista Sinicem esse delendam.