Sunday, 16 June 2019


US may strip Hong Kong's special status

The more that Beijing chips away at Hong Kong's civil liberties and autonomy, the more certain it is that Washington will strip the enclave of its special status.
Ambrose Evans-Pritchard
Hong Kong's survival as a global financial hub can no longer be taken for granted.
The extradition battle being fought out on the streets of Wan Chai is inextricably tied to the larger Sino-US struggle for superpower hegemony.
The more that Beijing chips away at Hong Kong's civil liberties and autonomy, the more certain it is that Washington will strip the enclave of its special status.
Once this line is crossed, the US will cease to recognise the territory as an independent member of the World Trade Organisation. It will cut off access to sensitive technologies. Hong Kong will be subject to the same painful tariffs faced by exporters from mainland China.
9News reporter Renae Henry is in Hong Kong, where violent demonstrations have taken over the city.
Many of the 1,400 US firms operating there will decamp, setting off an exodus towards Singapore. The Hong Kong model as we know it will no longer be viable.
The US has been slow to act as China systematically erodes the "one nation, two systems" model established by Britain and China in 1984. The mood has suddenly changed.
The Hong Kong Human Rights and Democracy Act introduced in the US House and Senate last week - backed by both parties - cocks the trigger on what amounts to a sanctions regime covering trade, finance, and technology.
"If all this rolls out, Hong Kong is going to be just another Chinese city," said one of the drafters.
The text links directly to the Emergency Economic Powers Act and calls for punitive action if Beijing further eviscerates the enclave's legal autonomy. For the current status quo to continue, the US administration must justify to Capitol Hill why the territory still deserves special treatment under the US Hong Kong Policy Act of 1992.
The rating agencies have begun to issue warnings. Fitch says its AA+ grade "rests on the assumption that the territory's governance standards, rule of law, policy framework, and business and regulatory environments remain distinct from that of mainland China".
Carrie Lam, Hong Kong's chief executive, suspended the extradition bill over the weekend but remains defiant. She called the legislation a necessary objective - a "good thing" - and left no doubt that the authorities are playing for time.
Swarms of demonstrators again poured out into the streets yesterday. Their goal has changed. They now demand Ms Lam's resignation. The protests carry an echo Tiananmen Square about them.
While the news focus has been on the danger of extradition to China for such offences as "picking quarrels" or "running an illegal business" - standard charges used to suppress dissent in China - Hong Kong's business elites are just as alarmed by other clauses.
The bill calls for "freezing and confiscating the assets of persons wanted for crimes in other jurisdictions". It brings the vast wealth of Hong Kong within reach of the Communist Party for the first time.
Financial centres are famously "sticky". It is not easy to destabilise a well-established hub. But political shocks can bring matters to a head.
Antwerp was Europe's thriving commercial hub and the world's richest city in 1560, a freethinking outpost of the Spanish Habsburg empire. The fall was swift once the Habsburgs began to choke its liberties and the counter-reformation reached fever pitch.
Credit Suisse says there are over 850 individuals in Hong Kong who are each worth more than $US100m ($145 million). Reuters reported that one tycoon with political "exposure" in China is already shifting sums of this magnitude to accounts in Singapore.
Paul Chan Mo-po, Hong Kong's financial secretary, issued a warning last month about capital flight but blamed the stress on large outflows from China through the Shanghai Connect link, mostly by foreign investors alarmed over the deepening trade conflict. That is unlikely to be the whole story.
The Hong Kong Monetary Authority has had to intervene repeatedly over recent months to defend the long-standing dollar peg. It forced up interbank Hibor rates last week to levels not seen since 2008, triggering a "short squeeze" to burn the fingers of speculators and shore up the currency.
Such action drains liquidity and is untenable over time. Monetary tightening by the HKMA - forced to shadow the US Federal Reserve - has slowed economic growth to a ten-year low. Retail sales contracted over the three months from February to April.
Protesters chant outside of the Office of the Chief Executive. Justin Chin
A long squeeze risks popping Asia's most overheated property boom.
The Bank for International Settlements says Hong Kong's "credit gap" - an early warning indicator for banking crises - was running at over 30 percentage points of GDP above its long-term trend as recently as early 2018. This was the most extreme reading anywhere in the world. It has left an overhang of leverage.
Hong Kong is the financial gateway in and out of China, a conduit for Chinese companies with $840bn of US dollar debt. Its banking system is 8.3 times GDP, comparable to Iceland before its system blew up in 2007. A sudden loss of confidence in Hong Kong would have global systemic consequences.
Events in Washington are moving fast.
The bill in Congress tees up sanctions against those "complicit in suppressing basic freedoms in Hong Kong". It effectively stamps the scarlet letter on the enclave's top leadership.
The bill demands a clampdown on sales of dual use technology and action to verify whether China is using Hong Kong as a back door to circumvent US tariffs.
Ultimately it is the prerogative of President Donald Trump to decide whether to suspend special status.
He has been coy on the issue, stating distractedly last week that "I hope it all works out for China and for Hong Kong". Mr Trump is unlikely to stand in the way of Congress for long. Hong Kong's protests offer him another irresistible weapon against Beijing.
One bad tweet from the Oval Office and east Asia's super-rich may take matters into their own hands.


Capitalism and Parliamentary Democracy in the Sociology of Max Weber

As our friends would know by now, we have constantly and even more stridently denounced in this Blog the misguided - whether by choice or by sheer inanity or indeed clinical insanity - attempts by "the Left" to pursue a new type of "identity politics" that only serves to disperse and divide what should be instead a unifying drive toward the emancipation of society and the pacification of existence. But the question comes immediately to mind: what, if anything, can be the end-goal of this "unifying drive",  what can be its underlying human interests, and what can serve as its historical agency to lead us there? We believe that the clear analysis and critique of capitalist-liberal ideology and of its political expression - parliamentary democracy -, on one side, and, on the other side, its material productive support - the material foundations and reality of capitalist production and distribution - is the necessary precondition for the creation of a historical agency that can be the material carrier toward the achievement of this unifying goal. So here goes the next section of our study on Liberalism versus Capitalism.

As we hinted above, Weber’s position represents a regression with respect to Constant’s still clear and sharp distinction between “freedom” and “guarantees”, between active participation in politics and passive “enjoyment” of constitutional “rights and liberties”. Both Constant and Weber maintain the metaphysical notion of “possession”, of the “in-dividual’s” natural right to the pro-duct of individual labors. But whilst Constant still preserves the validity of the Classical notion of “freedom” which, to his mind, has been eclipsed by the complexity of the “socialisation” occasioned by “the system of needs and wants”, for Weber, instead, this classical “freedom” or Freiheit never existed! It was never “real”, but was only a “meta-physical” delusion. What is real for Weber, what is physical, is the “greed-dom” of conflicting individual self-interests that have finally found their most “rational” expression as the end-result of the “ascetic Ideal” that has debouched into “the iron cage of modern industrial labor”. Constant’s liberalism remains tied to the ideology of “Enlightenment” in its British or French or German varieties all of which see “freedom” as the final re-solution of human conflict, as “the end of history” in both senses of the word – the conclusion and the final goal of history. Weber’s Entwurf instead has already overcome this “enlightened” version of bourgeois civil society and conceives of “free-dom” not in a telelological, millenary sense, but only as the negative by-product of “greed-dom”.

Far from being the Hegelian Vergeistigung, the apotheosis of human universality as a stage of the Objective Spirit in the extrinsication of the Idea (cf. Philosophie des Rechts, final section on “Welt-geschichte”), or the “guarantee” of the “neutrality” of its institutions whether actual as in the Liberal utopia or “potential” in the Socialist - yet founded for both these ideologies on the “scientific” enforcement of the Law of Value (even in the Marxian framework where instead the “withering away” of the State is anticipated once capitalism is superseded), - for Weber instead the “State” exists not as an end but purely as an instrument, as a means – and most important as a means and an instrument that by definition cannot be “neutral” but must be wielded by a particular class or “human community” intended as a sub-set of society!

Ultimately, one can define [78] the modern state sociologically only in terms
of the specific means peculiar to it, as to every political association, namely,
the use of physical force….Today the relation between the state and violence is an
especially intimate one. In the past, the most varied institutions—beginning
with the state—have known the use of physical force as quite
normal. Today, however, we have to say that a state is a human community [a “group”, a class]
that (successfully) claims the monopoly of the legitimate use of
physical force within a given territory. Note that 'territory' is one of the
characteristics of the state. Specifically, at the present time, the right to
use physical force is ascribed to other institutions or to individuals only
to the extent to which the state permits it. The state is considered the
sole source of the 'right' to use violence. Hence, 'politics' for us means
striving to share power or striving to influence the distribution of power,
either among states or among groups within a state. (PaB, p.78)

The well-nigh universal consensus in interpretations of Weber’s political sociology is that because Weber insists on the need for the State as a “means” or instrument to hold its “monopoly of physical force” in a manner that is “legitimate” – because of this condition, many conclude thereby that for Weber the Political or “legitimacy” takes priority and has primacy over Economics! To be sure, Weber does stipulate that if a state is to claim and hold successfully a monopoly over “the legitimate use of physical force”, then it needs a modicum of “inner assent”. But far from postulating what many have called “the autonomy of the Political” in the sense that the “power” of the State is based solely or predominantly on its “legitimacy”, Weber is speaking of a very specific type of “legitimacy” – that is to say, a “successful” legitimacy, one that comes not from the base (from the demos, “from the bottom up”) but from the vertex (from the “leadership”, “from the top down”) of the social pyramid of power and authority! And this “legitimacy” rests for him precisely on “the social question”, that is to say, on that “sphere of necessity”, on that “struggle for existence” dictated by “the scarcity of means”, by the Economic, upon which the “autonomy” or “freedom” of the Political is founded! Let us read Weber carefully:

Let us now turn to parliament.
First and foremost modern parliaments are assemblies representing
the people who are ruled by the means of bureaucracy. It is,
after all, a condition of the duration of any rule, even the best
organized, that it should enjoy a certain measure of inner assent from
at least those sections of the ruled who carry weight in society. Today parliaments
are the means whereby to manifest outwardly this minimum of assent. (165)g

Die modernen Parlamente sind in erster Linie Vertretungen der durch die Mittel der Bürokratie Beherrschten. Ein gewisses Minimum von innerer Zustimmung mindestens der sozial gewichtigen Schichten der Beherrschten ist ja Vorbedingung der Dauer einer jeden, auch der bestorganisierten, Herrschaft. Die Parlamente sind heute das Mittel, dies Minimum von Zustimmung äußerlich zu manifestieren.

Clear is the “division of labor” indicated by Weber between “the bureaucracy” on one side, which simply “administers” to “the most basic needs of social life” (that is, the “rationality” of capitalist enterprise that has now become “social capital” and on whose “profitability” the entire reproduction of “the society of capital” is dependent), and "modern parliaments" on the other side which exist as a "means to manifest outwardly this minimum of assent”. It is the “bureaucracy”, which is both “official” (military and civilian) and “private” (capitalistic), that effectively “rules the people” independently of their assent or dissent!  “A measure of inner assent outwardly manifested by means of parliaments” is essential for Weber not to the definition of a State, of its rule, but only as a “condition of its duration”. Weber therefore assumes the pre-existence of a pyramid of “power” (potestas) that runs from officialdom to private capitalistic enterprise that “rules the people” of a modern nation-state who are in turn merely “re-presented” by an assembly called “parliament” which they have “selected” to secure for the “rule” – that is, importantly, for the “bureaucracy”, official and private – “a certain measure of inner assent”, which means “legitimacy and authority”, “from at least those sections of the ruled who carry weight in society”! After all, it is difficult to conceive of a State that “ruled” without the “inner assent” of “at least those sections of the ruled who carry weight in society”, whether or not they themselves in reality held the reins of State power in that society or whether they allow their “representatives” to do it!

Indeed, it is all but evident from Weber’s indisputable adherence to elitarian theories of politics (from Pareto to Mosca to his Archiv colleagues Michels and Schumpeter) that he always intended by “legitimacy” and “inner assent” not so much - if at all! – “democratic consensus” but rather “the use by the State of its monopoly of physical force instrumentally on behalf of the powerful elites in society”! By this last phrase Weber means principally the owners of capital – because we must remember that a nation-state is “a nation-state among many”, in the sense that capital is free to be withdrawn from the territory of a nation-state. This is a point – the “circulation” of capital as a tool of “disciplining” their representative governments on the part of the bourgeoisie – to which Constant gives great prominence.

Still, it is evident that not only officialdom but also private capitalist enterprise needs, in turn, a minimum of legitimacy in terms of its ability to provide for the needs and wants of most members of a society, in particular its workforce which is part of “those sections who carry weight” because, as we saw in Part Two, the “rationalization” operated by the advent of capitalist industry is dependent on the “exact calculation”, or “profitability”, that is specific to a society founded on “the rational organisation of free labor under the regular discipline of the factory”! Thus this “inner assent” (legitimacy and authority) at least under what Weber calls “modern capitalism” seems to depend very much for him on the ability of “the rulers” (the combined bureaucracies, public and private) to deliver the goods of economic growth and development; - and on the means to ensure that this happens, first, in a manner that does not endanger the wage relation and, second, in a manner that perpetuates the existing system of political domination, that is, by means of a “tool”, the State, that dispenses political power in accordance with a pool of economic resources drawn from the productive activities of workers.

Thus, it is not so much that Parliament is “the means by which this inner assent [its legitimacy] becomes manifest” in the sense that Parliament merely ex-presses or is a mere mouthpiece for “the system of needs and wants”, “the iron cage of modern industrial labor”. Rather, Parliament is the means by which this “inner assent is made manifest” in an objective instrumental organicist sense!

Today parliaments are the means to manifest outwardly this minimum of assent.

Die Parlamente sind heute das Mittel, dies Minimum von Zustimmung äußerlich zu manifestieren.

It is not an accident that Weber uses the impersonal, almost passive voice (“to manifest”) here and refers to “parliaments” generically to convey strongly the sense that a particular “parliament” is not the instrument of the “people”, of the demos, whose “inner assent” it is there to re-present. Quite to the contrary, Weber is saying that “parliaments generally” are the new “organic tools” or “institutional instruments” by means of which the particular structure and form of politico-economic power constituted by the capitalist bourgeoisie “in the Occident” manifests itself outwardly or ostensibly as "legitimate", as "inner assent", as a “show of support”! It follows therefrom that “inner assent” is not a “spontaneous manifestation” of popular democratic consensus formed autonomously by “the people”. Furthermore, Weber’s use of the plural “parliaments” is clearly intended to stress the transience of individual parliamentary terms or governments against the constancy – the “duration” [Dauer] – of “bureaucracies! Instead, for the State bureaucracy "to claim successfully" its monopoly over the use of physical force, it must secure this “minimum of assent” by means of parliaments! In other words, this "minimum of assent" must be “garnered and governed” by the ruling bureaucracy, in the sense that it must be “gathered”, “interpreted”, “shaped” and “directed” (and even “purchased”venally, grex venalium) through the “separation” of workers from “the machinery of State” (the bureaucracy) and their “individual division of labor”. It is evident, therefore, that Weber always intended “legitimacy” to be part and parcel of his “instrumental” definition of the State and not a separate requirement or criterion for its definition! For him, there is no viable State without “legitimacy” intended in this special instrumentalist and elitarian sense:

It is, after all, a condition of the duration of any rule, even the best
organized, that it should enjoy a certain measure of inner assent from
at least those sections of the ruled who carry weight in society.

Weber never intended the Political to be fundamentally autonomous from the Economic, from “those sections of the ruled who carry weight in society”! Indeed, the Political reflects the “sphere of freedom” only to the extent that “freedom” is intended either as sheer arbitrium – as mere “arbitrariness” that is inconsequential in terms of the overall structure and division of power in society; – or else as the articulation of those relevant interests, the interests of “those who carry weight in society”, whose “inner assent” is needed for the State, in its organic and instrumental function as “a community with the legitimate use of physical force”, to exert its constituted rule “for any length of time or duration”.

In a modern state real rule, which becomes effective in everyday life
neither through parliamentary speeches nor through the pronouncements
of monarchs but through the day-to-day management of the
administration, necessarily and inevitably lies in the hands of officialdom [Beamtentum, bureaucracy], both military and civilian. The modern high-ranking officer even
conducts battles from his ‘office’. (145)

Weber makes a point that Arendt seems to share about the “difference” between “political administration” and “private enterprise” in that the latter is much more “technical” and even represents the realm of“necessity”. And Socialism cannot overcome this “necessity” because its very political organisation is elitist and ends up preserving the “oligarchy” of private industry:

The revolution [of Germany, 1918] has accomplished, at least in so far
as leaders have taken the place of the statutory authorities, this much:
the leaders, through usurpation or election, have attained control over
the political staff and the apparatus of material goods; and they deduce
their legitimacy—no matter with what right—from the will of the governed.
Whether the leaders, on the basis of this at least apparent success,
can rightfully entertain the hope of also carrying through the expropriation
within the capitalist enterprises is a different question. The direction
of capitalist enterprises, despite far-reaching analogies, follows quite
different laws from those of political administration. (PaB, p82)

The State, through Parliament, articulates those “normative goals”, those “evaluations” that then become “unambiguous” and are pursued rationally-technically or “scientifically” in relation to available “scarce means”. Once again, as we showed in Part Three, Weber forgets that even when“economic science” is applied “correctly” or “rationally”, the task is made paradoxically impossible by the fact that the “scarcity” of means depends on the “market prices” of those “means” – which is the classical circulus vitiosus (more simply put, we cannot know what means are “scarce” until“the market” prices them – but the market is supposed to price them on their“scarcity”!). For this reason, even on Weber’s own “presupposition-less”assumptions, the task of Parliament or “parliaments” to determine“democratically” the political will of the nation is quite simply impossible given that there is no scientific or automatic way of determining not only the“goals” of government, but also the “means” available to achieve them!

For liberalism, Politics and Economics need to be “homologated”, - the one “guarantees” the other, but one cannot invade the other’s sphere! Yet this is what the negatives Denken does, not through the Economics, but through the Eris, the Strife, the polemos, through the impossibility of “reconciliation” of self-interests. Indeed, as ought to be amply evident by now, it is simply impossible for Weber to distinguish neatly between Politics and Economics for the simple reason that he quite correctly defines Economics in very broad terms as the area of social life in which there is a“scarcity of means”, wherever there is a “struggle for existence” (cf., ‘Objektivitat’, pp.64-5 in MoSS), or what he called in his Inaugural Address "the economic struggle for life" – which for him is just about in all areas of social life. But especially in modern capitalism - defined as "the rational organisation of free labor under the regular discipline of the factory", it is in the factory that this “scarcity”and this “struggle” are concentrated and where the sphere of necessity in society is separated from the sphere of freedom – from “cultural life”, as Weber styles it.

Friday, 14 June 2019


A ‘Troublemaker’ Faces Hong Kong’s Future

As Beijing cracks down, Jimmy Lai, the publisher of Apple Daily, explains why he’s determined not to leave and why he thinks Xi Jinping is overreaching.

Hong Kong
Residents of this city love their home and their freedom. China’s latest intrusion threatens both, forcing Hong Kong residents to contemplate an imminent future when they’ll have to abandon one to cling to the other. Jimmy Lai, a media tycoon who’s been called “the Rupert Murdoch of Asia,” seems almost hurt when I ask which he will choose.
“I’ve been one of the troublemakers. I can’t just make trouble and then leave,” he says. “No, we will stay. Our media will stay until the last day—until they either close me or close our business, or arrest me or whatever.”
Mr. Lai, 71, has been making trouble for the Chinese government since the Tiananmen Square massacre of June 1989. He’s financially supported Hong Kong’s pro-democracy political parties and founded the pro-democracy Next magazine in 1990 and Apple Daily in 1995. The publications have criticized the Chinese Communist Party and its influence over Hong Kong politics. When Britain handed the territory’s sovereignty to Beijing in 1997, Hong Kong was designated a special administrative region, supposedly governed under the principle “one country, two systems.” But since President Xi Jinping assumed power in 2012, Beijing has grown even less tolerant of Hong Kong’s independence.
Hong Kong Chief Executive Carrie Lam is now pushing a bill through the Legislative Council that would authorize the local government to extradite to mainland China persons deemed fugitives by Beijing, including Hong Kong residents and foreigners. “If she can do it, she can actually hand over Hong Kong to Xi Jinping, in a cage,” Mr. Lai says. “There will be a big reward for her.”
The fugitive law would mean “that the Chinese so-called judiciary system is going to replace Hong Kong’s,” Mr. Lai says. Beijing could “nab anybody from here to put in a Chinese jail” and subject him to unfair trial, arbitrary detention, and worse. Chinese officials could use the power to shake down businessmen. Pro-democracy activists, religious practitioners, lawyers, journalists and booksellers would visit or live in Hong Kong at their own risk.
Mr. Lai would be an obvious target, but he doesn’t want to talk about that: “Why should I think about this? Why should I fear before the fear comes?” Already he has been conspicuously followed, targeted by hackers, and threatened by Hong Kong’s criminal gangs. In 2009 he was the target of a thwarted assassination plot. In 2013 someone left a hatchet and a knife outside his doorstep. In 2015 his house was firebombed. He still gets death threats.
If Mr. Lai has reason to feel vulnerable, so do thousands of Hong Kong people who lack his status, wealth and international mobility. Last Sunday more than a million people, roughly 1 in 7 residents, turned out to protest the extradition bill. On Wednesday thousands braved tear gas and rubber bullets to protest. The manicured streets and upscale shopping malls near the Legislative Council building resembled a war zone.
Ms. Lam has refused to withdraw the bill. Beijing has doubled down in its support, and Hong Kong’s protesters have doubled down in opposition. Is another Tiananmen Square in the offing?
Mr. Lai weighs the question. On the one hand, China’s rulers don’t care about human rights: “To them, Hong Kong is just a percentage of the total population in China, which is just 0.5%. They don’t look at us as a people.” On the other hand, a brutal televised crackdown would look bad: “When you’re sure that the whole world is watching, you have to think twice.” Still, “it’s not totally impossible.”
Mr. Lai believes Mr. Xi is more vulnerable than he looks. Since 1949 the Chinese Communist Party has been a game of thrones, with the toughest political operators prevailing. But Mr. Xi abolished presidential term limits, concentrating power like no leader since Mao. Mr. Lai likens him to a king or emperor presiding over a feudal system: “The government becomes a court government, the same as in the old times.” That makes enemies of those shut out of power: “Whenever they see opportunity, they will fight back.”
Mr. Lai describes Mr. Xi as “definitely a hard-core Communist” who looks especially strong because technology gives him “a power of controlling the people unprecedented in human history.” China is creating a surveillance state, using high-tech to track faces, movement and associations.
But Mr. Lai believes Mr. Xi is overreaching: “When you have concentrated all the power on yourself, you’re also concentrating all the responsibility on yourself. Every mistake becomes your mistake. When you have shared power, you have shared responsibility.” Mr. Lai doesn’t rule out an internal coup because Mr. Xi is holding “an impossible job.”
Mr. Lai says China runs on an implicit social contract in which the Communist Party denies the people political liberty but offers economic prosperity. That bargain has come under threat as the U.S. and Europe grow weary of Beijing’s abuses of the international order and cyber and intellectual-property theft. Then came Donald Trump, who “understands the Chinese like no president understood,” Mr. Lai says. “I think he’s very good at dealing with gangsters.”
China’s Communists are “materialists,” Mr. Lai says, whereas the old Soviet Union at least had an ideology. The problem for the Chinese is that communism “has been debunked,” Mr. Lai says, while the West still has its moral authority, expressed in rule of law and respect for human rights. Mr. Lai sees a clash of civilizations and believes Western values will prevail.
China’s investment initiative, known as One Belt, One Road, is running into trouble because of its values—or rather its lack of them. Beijing assumed that foreign leaders would accept loans at usurious rates if they could take a cut or use it for their own political purposes. But Mr. Lai says Mr. Xi failed to understand that citizens would feel enraged when they learned of corrupt dealings that left their countries in hock to Beijing.
Similarly, with the extradition legislation, Mr. Xi counts on Hong Kong’s leaders to sell out their own people for political advancement. But Mr. Lai says Beijing fails to appreciate how the British imparted a reverence for the rule of law to the colony they ruled beginning in 1842. “For us, colonialism was something that was a gift by God because we were the only Chinese who had freedom,” Mr. Lai says.
China is betting on might, he says, while Hong Kong is betting on right: “We don’t have weapons. We don’t have raw power.” But Hong Kongers do have a lot to lose. Young people were the backbone of this week’s protests, but they don’t have the money or the ability to immigrate. “They’re stuck. The only alternative is to fight.” The challenge is to keep that fight peaceful.
Mr. Lai speaks admiringly of Christians who stood between protesters and police on Sunday, singing hymns to ease tension. On Wednesday younger protesters stockpiled bricks, which older activists sat on to prevent the youngsters from hurling them at police. “We have nothing except our moral power, which is exactly what the Chinese government doesn’t have,” Mr. Lai says. “That’s exactly where we can win.”
Yet his mood shifts from optimistic to bleak as he admits that unless Mr. Xi is ousted, the best possible outcome is delay. “Beijing obviously intends “to take total control of our freedom,” Mr. Lai says. Even if the extradition bill is somehow stopped, “Hong Kong is doomed, because the intention is there.” 
Hong Kong nonetheless presents more than one dilemma for Mr. Xi. A reputation for the rule of law made it a global financial capital. “So if our rule of law is undermined, our financial center status would be sickened,” Mr. Lai says. The extradition bill has also created a new generation of activists committed to Hong Kong’s self-government. Given the booming business between China and Hong Kong, it’s harder for Beijing to control information about the protests from spreading inside China.
Hong Kong’s relative freedom also attracts wealthy people from the mainland. “They come here to buy real estate—not just for the real estate,” Mr. Lai says. “By buying real estate and staying here, they’re also buying the rule of law, the safety of their life, the freedom, the human-rights protection.”
Mr. Lai’s own riches-to-rags-to-riches family history testifies to that allure. His parents had amassed wealth in the shipping industry, but his family was “very progressive,” so that “my father actually tried to help the Communists.” They paid the family back by confiscating its wealth. His father wanted to flee, but the Communists wrongly suspected he had money hidden abroad. He had to borrow money from Hong Kong friends to buy permission to leave. 
Once Mr. Lai’s father arrived in Hong Kong around 1951 or ’52, he was unable to pay his lenders back, so he hid, leaving his family including Jimmy in China. At age 11 Jimmy went to work in a railway station carrying baggage and heard tales of Hong Kong’s wealth and opportunity. He pestered his mother for a year to let him leave before she helped him get a permit for Macau, then a Portuguese colony. He made it to Hong Kong by stowing away in a fishing boat and he began work in a clothing factory that produced sweaters and gloves. He was 12.
“The rest is history,” Mr. Lai says. He became a manager at the factory, used his earnings to invest in the stock market, and bought his own garment factory at 27. Thus began Giordano, which Mr. Lai developed into an international clothing chain. After Tiananmen, Mr. Lai decided to go into media “because I thought media delivers information—information is freedom.” Where other publications self-censored, Next and Apple Daily criticized Beijing. Readers loved it.
Mr. Lai became a self-made billionaire by making the most of Hong Kong’s economic freedom and rule of law. He now faces the same choice his father once did: With the Chinese Communist Party in charge, should he stay or go? “I think those guys who think communism or socialism is cool again are those who have never had the history in their blood,” Mr. Lai says.
He has a British passport, but he says he would never flee Hong Kong. “If I do that, my kids, my grandkids would despise me. My wife will despise me.” Fighting for Hong Kong has become his life’s work. “How many years do I have to live, 20 years?” he asks. “Whatever happens, I will be here.”
Ms. Melchior is a Journal editorial page writer.


The Pirates of Tehran
If Iran won’t change its behavior, we should sink its navy.

Bret Stephens
By Bret Stephens
Opinion Columnist
June 14, 2019

Secretary of State Mike Pompeo said Thursday that Iran was responsible for the attacks in the Gulf of Oman.
Win Mcnamee/Getty Images

Secretary of State Mike Pompeo said Thursday that Iran was responsible for the attacks in the Gulf of Oman.CreditCreditWin Mcnamee/Getty Images
On April 14, 1988, the U.S.S. Samuel B. Roberts, a frigate, hit an Iranian naval mine while sailing in the Persian Gulf. The explosion injured 10 of her crew and nearly sank the ship. Four days later, the U.S. Navy destroyed half the Iranian fleet in a matter of hours. Iran did not molest the Navy or international shipping for many years thereafter.

Now that’s changed. Iran’s piratical regime is back yet again to its piratical ways.

Or so it seems, based on a detailed timeline of Thursday’s attacks on two tankers in the Gulf of Oman provided by the U.S. Central Command, including a surveillance video of one of Iran’s Islamic Revolutionary Guards Corps patrol boats removing an unexploded limpet mine from the hull of one of the damaged tankers.

The Iranians categorically deny responsibility. And the Trump administration has credibility issues, to put it mildly, which is one reason why electing a compulsive prevaricator to the presidency is dangerous to national security.

In this case, however, the evidence against Iran is compelling. CentCom’s account notes that “a U.S. aircraft observed an IRGC Hendijan class patrol boat and multiple IRGC fast attack craft/fast inshore attack craft (FAC/FIAC) in the vicinity of the M/T Altair,” one of the damaged tankers. The Iranian boats are familiar to the U.S. Navy after decades of observing them at close range. And staging deniable attacks that fall just below the threshold of open warfare on the U.S. is an Iranian specialty.
Trump might be a liar, but the U.S. military isn’t. There are lingering questions about the types of munitions that hit the ships, and time should be given for a thorough investigation. But it would require a large dose of self-deception (or conspiracy theorizing) to pretend that Iran isn’t the likely culprit, or that its actions don’t represent a major escalation in the region.
A video released by the United States Central Command reportedly shows an Iranian Navy patrol boat  approaching a Japanese-operated tanker and removing an unexploded mine.
US Central Command , via Agence France-Presse — Getty Images

A video released by the United States Central Command reportedly shows an Iranian Navy patrol boat  approaching a Japanese-operated tanker and removing an unexploded mine. CreditUS Central Command , via Agence France-Presse — Getty Images
That raises two questions, one minor, the other much more consequential.

The minor question is why the Iranians did it. There has been a pattern of heightened Iranian aggression for nearly two months, including highly sophisticated attacks on four oil tankers near the Emirati port of Fujairah on May 12.

This might be seen as a response to the resumption of major U.S. sanctions, which have had a punishing effect on Iran’s economy. Except that Tehran did nothing to moderate its behavior after the nuclear deal was signed, and most sanctions were lifted, in 2016.

It might also be seen as an effort by regime hard-liners to sabotage the possibility of a resumption of nuclear negotiations. It’s hard to believe it was just a coincidence that the attacks on the ships, one of which was Japanese, coincided with the visit to Tehran by Prime Minister Shinzo Abe of Japan. Then again, the I.R.G.C. was a major economic beneficiary of the nuclear deal, so it’s not exactly clear why it would want to stop a new one.
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The most likely explanation was offered by Mark Dubowitz of the Foundation for Defense of Democracies, who suggested that Iran’s purpose was “to demonstrate that Trump is a Twitter Tiger.”

It’s not a bad guess. The Iranians know that vainglory and timidity often go hand in hand.

Trump went from apocalyptic to smitten with Kim Jong-un in a matter of weeks after concluding that the risks of a confrontation with North Korea just weren’t worth it. He’s delivered similar mixed messages toward Tehran. Driving a crisis in the Middle East so that the U.S. president can “solve” it with a fresh nuclear deal on even easier terms than Obama’s would be a canny Iranian gambit.

Which brings us to the consequential question: What’s the proper U.S. response?

It can’t be the usual Trumpian cycle of bluster and concession. Neither can it be the liberal counsel of feckless condemnation followed by inaction. Firing on unarmed ships in international waters is a direct assault on the rules-based international order in which liberals claim to believe. To allow it to go unpunished isn’t an option.

What is appropriate is a new set of rules — with swift consequences if Iran chooses to break them. The Trump administration ought to declare new rules of engagement to allow the Navy to engage and destroy Iranian ships or fast boats that harass or threaten any ship, military or commercial, operating in international waters. If Tehran fails to comply, the U.S. should threaten to sink any Iranian naval ship that leaves port.

If after that Iran still fails to comply, we would be right to sink its navy, in port or at sea. The world cannot tolerate freelance Somali pirates. Much less should it tolerate a pirate state seeking to hold the global economy hostage through multiplying acts of economic terrorism.

Nobody wants a war with Iran. But not wanting a war does not mean remaining supine in the face of its outrages. We sank Iran’s navy before. Tehran should be put on notice that we are prepared and able to do it again.


UBS puts chief economist on leave as ‘pig’ row deepens

China brokerage cuts ties with Swiss bank over swine fever remarks UBS last year received approval to become the first foreign bank in China to take a controlling stake of its local securities joint venture © Reuters Share on Twitter (opens new window) Share on Facebook (opens new window) Share on LinkedIn (opens new window) Share Save Save to myFT Topic Tracker Hudson Lockett and Daniel Shane in Hong Kong, Stephen Morris in London 3 HOURS AGO Print this page147 UBS has placed its chief economist on leave after a Chinese financial group suspended business with the Swiss bank because of his remarks about swine fever in China, which drew the ire of a nationalist tabloid and prompted calls by an industry group for his removal. On Friday, a spokesperson for Haitong International Securities said the company had cut ties between its Hong Kong unit and UBS across all business divisions based on “a collective decision made by the senior management”. 

Shortly after, a UBS spokesman told the Financial Times: “We confirm that we have asked Paul Donovan to take a leave of absence as we review this matter, to evaluate whether further steps need to be taken”. The sudden outpouring of vitriol for the Zurich-based bank comes amid tense trade negotiations between Washington and Beijing and heightened scrutiny of western companies operating in China. “Chinese consumer prices rose. This was mainly due to sick pigs,” Mr Donovan, an economist at UBS, said on Wednesday in comments about the impact of African swine fever in China. “Does this matter? It matters if you are a Chinese pig. It matters if you like eating pork in China. It does not really matter to the rest of the world.” UBS’s action shows executives are not taking any chances over the imbroglio, which could threaten the foothold it has recently established in China. Last year it received approval to become the first foreign bank in China to take a controlling stake of its local securities joint venture and it has been ranked as the top-performing foreign fund house for the past two years.

 The charge against Mr Donovan was led in part by Hao Hong, head of research at Bank of Communications International, the state-run Chinese bank’s Hong Kong unit. Mr Hong called the comments “distasteful and racist language” in a Twitter post. Mr Hong refused to explain what exactly about Mr Donovan’s comments was racist or offensive when reached by the Financial Times. Stephen Matthews, a linguistics professor at the University of Hong Kong, said: “The perceived insult is derived either from a misreading of the English text by a non-native speaker, or from a poor Chinese translation. Either way, the author is not at fault.” But Mr Hong’s interpretation was quickly picked up by the Global Times, a state-run Chinese tabloid, which said on Thursday in a Twitter post that the comments had “sparked an uproar across Chinese social media”. 

Although the bank and Mr Donovan issued apologies for the comments, which were also pulled from UBS’s website, the controversy continued to snowball. Recommended The Top Line Rachel Sanderson Dolce & Gabbana’s not so sweet reckoning in China The Chinese Securities Association of Hong Kong, which represents the brokerage arms of many Chinese banks in Hong Kong, rejected the bank’s response on Thursday and called on UBS to fire Mr Donovan. Lin Yong, chief executive of Haitong’s Hong Kong unit, is also head of the securities association. It is unclear how much regular business the brokerage arm had with UBS before cutting ties. Under its “Deals and Awards” page, parent company Haitong Securities provides only a single example of a business link: it served as financial adviser for UBS Global Asset Management’s acquisition this year of Portuguese heating supplier EnergyCo and its subsidiaries.