Report card on the 100 days of Mahathir 2018 – Part 2

August 23, 2018

Q: This is a question from Jeremy 179 – In Part 1 of this series you mentioned that China will accomodate Mahathir if he decides to pull out of agreed mega projects. According to you. This is because the Chinese do not want to commit public relations hara kiri before the world. But how does this policy of appeasement square off with the need for signatory countries to honor agreements. How would OBOR be realized without a legal framework that ensures that all parties will undertake what they agreed?

A: Concerns real or imagined of hidden agendas associated with mega projects which draw on soft loans are not new. Not at all. These concerns are just dressed up as new. Even the IMF and to a certain degree the ADB had to live with the ignominious appeallation of proxies that furthered the foreign policies of America and their reliable allies. And to understand why there is so much anxiety it would seem it is simply because getting third world countries hooked on low interest loans to build dams, highways, airports etc etc is perhaps the most efficient way for another country to exert influence over a regime.

To some extent these fears are indeed valid. As there is no shortage of white elephant and dictator ego stroking projects financed and built by the Chinese. If you go to Sri Lanka you will see the world’s most empty airport. If you are driving in Montenegro to Serbia on the new highway suddenly it will end right in the middle of nowhere and you will see a cow and green fields. Even in certain parts of Africa, you can take a train and suddenly it will stop somewhere smack in the desert and you will have to continue the rest of the journey by camel or bullocart. Such horror stories are plentiful and they are realer than real. And of course most people would automatically buy into the belief the primary motivation has to do with China’s rapacity. To some extent I don’t deny that may well have been the case, especially in Africa specifically Etiophia and when it came to the Chinese militarizing Djibioti.

But the primary reason why any superpower would consider funding expensive infrastructural projects in the third world has more to do with the theory of how best they may hope to perpetuate their sphere of influence. My point it is all about empowering agency and nothing whatsoever to do with rapacity. And to understand the nexus of this train of logic, one needs to go back to the early intellectuals just around the period when the Marshall plan was rolled out. I think it was during the period of the Berlin airlift when many Western intellectuals in the field of social political science began to ask – why did WW2 happen? Now many believed it had more to do with WW1, that is to say WW2 was simply a conflagaration that arose directly from that epic conflict. But there was one notable thinker who differed from the rest. His name was Charles Kindleberger. Who formulated the theory that the reason why WW2 came about was because America failed to supply public good when it took over the role of Great Britian as the pre-eminent super power of the period. Now the term public goods doesnt refer to park benches or street lamps. Rather it is a technical jargon that refers to peace, law and order, equal opportunities, access to rule of law, right not to be asked only yes or no questions in a Parliamentary committee hearing etc etc. What spawned the cold war was not so much what the militaries did or did not do in the West. Rather it was the sublimely clever way in which thinkers like Kindleberger had planned to rebuild a ruined Europe with the Marshall plan. This spooked Stalin to such a degree. He responded with what we refer to the cold war today. This was how it started.

Now if you ask why was the soviets so enamored by the Marshall plan it had everything to do with lateral thinking. This is where intelligence acquires an edge and even has the power to be scary. As unlike the Treat of Versailles that sowed the seeds to WW2. What the Marshall plan attempted to do was to revive western Europe by allowing Germany’s industrial region to get back on its feet. This was a bold step, but it is in line with the very idea formulated by Kindleberger, notably the creation of critical mass in the form of public goods.

Its hard to say to what extent soviet planners were influenced by Kindlebergers thinking, but if we look at the innards of the Molotov plan and even the structure of how the Comninform was organized. It would not be wrong to say the soviets were very much influenced by Kindlebergers thesis regarding public good.

In 1965 when China ventured into the African continent. It was Kindlebergers thesis that Chao Enlai used as the basis of Sino African cooperation. Why is this long wind bag history lesson so important? And what does it have to do with answering your question Jeremy 179?

It is important because when we look at how China is investing in its capacity to influence, much of it has to do with the throughput of its public goods quotient in the form of infrastructural projects. While the US continues to do the direct opposite by raising tariffs and levies that only serves to erode overall global economic growth and development potential.

Having said all that. I do agree some of China’s infrastructural projects are just no brainer lemons. But to say all or most of them are lemons is very far fetched. As many of them. Do have the capacity to generate public good.

(To be cont)

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