The lesson of the past decade is clear: one cannot buy an empire, nor can one purchase global influence. Only hard power can achieve that
As a preamble to our traditional weekly review, we would like to acquaint the reader with a notable publication that appeared on February 23 in the American newspaper The Washington Post. The article by Matthew Lynn bears a rather original title China tried to buy the world. But It failed.”
The author is Financial columnist for The Daily Telegraph and The Spectator. Since the United Kingdom is currently clearly drifting toward China and does not find it convenient to quarrel with Beijing, Lynn chose an American major business newspaper. The title of the article speaks for itself, but in order not to further complicate the already tangled US–China relationship, The Washington Post published the piece in the Opinions desk, thereby somewhat distancing itself from the author’s position.
The main idea Lynn advances is that financial and commercial power has its limits. That is, he is speaking about the old dispute between gold and sword. Recent events show how the power of trade capital (that is, the Chinese path) loses to military and political power (what Trumpism has brought with it).
Property rights to any asset, Lynn rightly notes, can be annulled by a court. He cites Panama as an example, where a local court canceled a concession granted by the Panamanian authorities to the Hong Kong company CK Hutchison. Another example, also from Latin America, is Venezuela, which, after the capture of President Maduro and the rise to power of his deputy Delcy Rodríguez, partially transferred control over its oil infrastructure by changing its legislation. Now the USA receives much more Venezuelan oil, while China and Cuba receive less. And this is despite the formal preservation of the ruling regime in the country and the Chavistas remaining in power.
Lynn reminds readers that other infrastructure facilities of greatest interest to China – ports and railways – can, under certain conditions, be nationalized, sometimes without any compensation. “A regulatory change can be imposed at will, and a central bank can devalue a currency, rendering a loan virtually worthless. There is little a distant shareholder or creditor can do about that. It can complain or appeal if it wants to, but in the end, the decision of the government in each country will be final,” Lynn explains.
In essence, the British journalist illustrates a plain but undeservedly forgotten truth in the era of globalization: only a sovereign state can protect assets, and only within its own territory. In all other cases, your assets in a foreign country can easily and effortlessly be seized. The Russian $300 billion in frozen funds in Europe is the most striking example of this.
“China can spend all the money on infrastructure it wants. The EU can regulate as much as it wants to. But in a crunch, it is only military force that counts. The country that can deliver men and weapons anywhere in the world at a moment’s notice is the only one that can shape the world to its own interests. China seems to have started to work that out, which may well explain why it has kept on increasing military spending at a rate well above its GDP growth. It realized that the Belt and Road program may have been a colossal waste of money if it can’t be backed up by hard power. The U.S. will have to match with higher spending of its own,” Lynn concludes.
The lesson of the past decade is clear: one cannot buy an empire, nor can one purchase global influence. Only military power can achieve that.
And the United States is quite unambiguously demonstrating how it intends to use military force around the world – from Latin America to Iran.
