Tuesday, 13 April 2021

 

Somaliland and Taiwan: Two territories with few friends but each other

Published
Mohamed Hagi (R), Somaliland's Taiwan representative, bumps elbows while posing with Taiwan's Foreign Minister Joseph Wu during the opening ceremony of the Somaliland representative office in Taipei on September 9, 2020
image caption Somaliland's mission in Taiwan opened in September last year

Both Taiwan and Somaliland are basically fully functioning territories which proudly declare their independence but neither is recognised internationally and now, as Mary Harper reports, they are moving closer together.

"Welcome to our humble office," says Chou Shuo-Wei Amir, the Third Secretary at Taiwan's diplomatic mission in Somaliland.

In fact, "humble" is misplaced as the mission is rather swish, located in a large villa next to the ministry of religious affairs in Somaliland's capital, Hargeisa.

A Taiwanese flag flutters gently in the warm breeze - its red, white and blue colours striking against the clear blue sky.

Although some see their relationship as bizarre, Somaliland and Taiwan are in many ways natural bedfellows.

Angering China and Somalia

Both are unrecognised internationally and both have larger neighbours - Somalia and China - which insist they are part of their territories.

Somaliland and Taiwan established diplomatic relations last year to the fury of those neighbours.

Somalia denounced Taiwan for becoming friends with Somaliland. Chinese officials travelled to Somaliland and insisted it sever ties with Taiwan.

It is possible that China sees Taiwan's relationship with Somaliland as a potential disruptor of its Belt and Road Initiative, whereby it plans to develop sea and land trade routes across Asia, the Middle East and Africa.

An obstructive Somaliland, with its highly strategic Berbera port, could block the continuity of its Maritime Silk Road along the eastern coast of Africa.

Allen Chenhwa Lou
BBC
Somaliland is Taiwan's gateway to East Africa, from here I represent Taiwan in 10 East African countries"
Allen Chenhwa Lou
Taiwan's representative in Somaliland
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China might also be eyeing the Somaliland-Taiwan friendship a little nervously because it has established its first overseas military base anywhere in the world, in neighbouring Djibouti.

Taiwan sees Somaliland as the first step in its ambitions in the region.

"Somaliland is Taiwan's gateway to East Africa," says the Taiwanese representative in Somaliland, Allen Chenhwa Lou, sitting under a picture of his president, Tsai Ing-wen.

"From here I represent Taiwan in 10 East African countries, including Kenya and Ethiopia."

Somaliland is one of just two African territories to have full diplomatic ties with Taiwan. The first was the tiny nation of Eswatini, which forged ties way back in 1968.

'Somaliland's big brother'

Mr Lou describes the relationship between the two territories as "win-win". Taiwan offers assistance in agriculture, technology, education, healthcare, elections and energy. Somaliland has a strategic location, rich fishing stocks, natural resources and tourism potential.

"Somaliland calls Taiwan its 'big brother'," says Mr Lou. "But I prefer to see our relationship as a sharing and cooperative one. We will always be together with Somaliland.

"We do not need to seek independence right now because we are already independent. What we both need is recognition. Both of us share this difficult situation."

Presentational grey line

Somaliland and Somalia

A Russian made mig fighter jet that was used in 1989 seen hanging in Hargeisa as a monument of reminder to the people of Somalilan
IMAGE COPYRIGHT AFP

    But not everyone in Somaliland is impressed with the new-found friendship and wonder whether losing China as an ally is a price worth paying.

    "Two naked people cannot help each other," says livestock trader Ismail Mohamed. "We need the superpower China much more than we need little Taiwan."

    Businesswoman Muna Aden is also sceptical.

    "The relationship with Taiwan shows the madness of Somalilanders," she says.

    "We thought Somaliland made overtures towards Taiwan as a way of trying to attract China by saying: 'If you don't marry us, we will marry the other one'. We never expected them to forge ties.

    "It is a big mistake which China will never forget."

    But the authorities in Somaliland are not budging. Acting Foreign Minister, Liban Yousuf Osman, defends the relationship, saying the two territories have shared values of democracy and freedom.

    "We welcome any country that wants a relationship with Somaliland, including China. But we won't kick out Taiwan because of China."


     

    Putin again threatens war with Ukraine. The West must be ready to respond.

    Russian President Vladimir Putin at the Kremlin in Moscow on April 8.
    Russian President Vladimir Putin at the Kremlin in Moscow on April 8. (Sputnik)
    Opinion by the Editorial Board
    April 9, 2021 at 1:58 a.m. GMT+8

    VLADIMIR PUTIN is facing mounting public discontent over Russia’s stagnant economy and poor response to covid-19. He was embarrassed by a YouTube video — viewed more than 115 million times — of the palace he built for himself, and stung by President Biden’s description of him as “a killer.” With parliamentary elections approaching in September, independent polling shows that only 27 percent say they would vote for his ruling party — and 41 percent, an all-time high, say they do not want him to seek another presidential term.

    And so Mr. Putin is turning to a familiar diversionary tactic — raising tensions to just below the boiling point with neighboring Ukraine and its pro-Western government. Since February, a cease-fire negotiated last summer has been shredded by Russian-backed forces in two eastern provinces they have partly controlled since 2014. A number of Ukrainian soldiers have been killed, including two this week. Meanwhile, Russia has sent thousands of regular troops to reinforce already-large deployments near the international border and in the Ukrainian province of Crimea, which Moscow claims to have annexed.

    Mr. Putin has succeeded, at least, in getting the West’s attention. The U.S. European Command raised its alert level to “potential imminent crisis,” the highest level. In the past week, Ukrainian President Volodymyr Zelensky has received supportive phone calls from Mr. Biden, British Prime Minister Boris Johnson and NATO Secretary General Jens Stoltenberg. French President Emmanuel Macron and German Chancellor Angela Merkel raised Ukraine in a video call with Mr. Putin last week; the chairman of the Joint Chiefs of Staff, Gen. Mark A. Milley, meanwhile called his Russian counterpart. On Thursday, Ms. Merkel spoke to Mr. Putin again, telling him to reverse the military buildup.

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    Predictably, the Kremlin’s propaganda machine is portraying Ukraine as the aggressor and warning of a war that will “destroy Ukraine,” as Foreign Minister Sergei Lavrov put it. Both Russian and Ukrainian analysts are skeptical that Mr. Putin would launch an all-out assault; the sour mood of his citizens would not be improved by a stream of military casualties. But he may be looking to deliver a quick bloody nose to Ukrainian forces, following which he could demand that Mr. Zelensky deliver political concessions in exchange for a new cease-fire. He also may hope to undermine Mr. Biden’s effort to rebuild U.S.-European relations by exacerbating transatlantic differences over Ukraine.

    Western governments will hope that their diplomatic flurry will deter Mr. Putin — but they must be prepared if it does not. The United States, which has helped Ukraine with military equipment and training, should be prepared to deliver further materiel if Ukrainian forces come under attack. And Western governments should have fresh sanctions ready: Among other things, any aggression should spell the end of the already controversial Nord Stream 2 gas pipeline between Russia and Germany. Mr. Putin must not be allowed to use war against Ukraine as a way to escape from his deepening domestic political trouble.

     

    Putin Has His Eye on Ukraine. Biden Must Stare Him Down.

    Troops massing on Russia’s western border may be a ploy to deter U.S. sanctions — or they may signal the world’s next geopolitical crisis.

    Updated on 
    Song of himself.
    Song of himself. Photographer: Alexander Zemlianichenko/AFP/Getty Images

    Russia is massing troops ­— reportedly as many as 20,000 — along its border with Ukraine.  Is President Vladimir Putin simply testing Washington, seeking leverage to push back on sanctions that are about to be announced for the poisoning and imprisonment of opposition leader Alexey Navalny and the hack of SolarWinds Corp.?

    Or is he actually preparing again to invade a sovereign state and carve another chunk or two out of its territory? How can President Joe Biden’s administration deter yet another violation of international law?

    While Ukraine is not a part of the North Atlantic Treaty Organization, when I visited it as supreme allied commander in 2013, I found a very willing partner in the Ukrainian armed forces. After high-level meetings in Kyiv, I headed south to the best part of the trip — a visit hosted by the chief of the Ukrainian navy at their premier naval base, on the strategically vital Crimean Peninsula.

    We drove down in a convoy of black SUVs, but had time to stop at several of the Crimean War battlefields, including the “Valley of Death,” where the British Light Brigade famously charged, immortalized in the poem by Lord Tennyson. I remember thinking at the time how small the peninsula seemed and how ironic it was that the great powers of the day — the British, French, Ottoman and Russian Empires — had once been locked in a bloody and ultimately frustrating war over that small slice of territory jutting into the Black Sea.

    Ukraine in 2013 was a strong partner with NATO. It sent troops to our missions in Afghanistan and the Balkans, and was considering deploying a warship on the NATO counter-piracy mission off East Africa. Yet the next year, Putin invaded Ukraine and annexed Crimea. He also destabilized the entire nation by funding rebels in the Donbas region, flooding the country with Russian passports, and using a witch’s brew of Special Forces in unmarked uniforms; clandestine attacks; weaponized social media, and a naval blockade.

    On that 2013 visit, I remember the naval chief, a pleasant and thoughtful admiral, lamenting the presence of Russian warships in the port of Sevastopol. He said: “One day, the Russians will simply take over our base. We’ll be lucky if they don’t just take the whole country.”

    I thought he was being alarmist. Now I realize we didn’t do enough to deter Putin, and the lesson for me is that we need to do more now if we don’t want a repeat of the 2014 invasion.

    Putin wants a menu of delights: another slice of Ukraine that would directly connect the Crimean Peninsula with Russia’s landmass; a Russian-speaking vassal state in the Donbas region; a Ukraine that is frightened out of pursuing membership in NATO; a demonstration to his own population that he pushes Russian nationalism around what they call their “near abroad”; and a signal to the West that further sanctions will only lead to more trouble in the neighborhood.

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    Will Putin actually invade again? The good news is that it seems less likely than in 2014. The Ukrainian armed forces are better armed and trained, largely with U.S. assistance. But with Putin, you never know — and he may believe the U.S. domestic turbulence and division, coupled with the obvious challenges of the pandemic on both sides of the Atlantic, are sufficient distractions. He’s made similar bets before — in Syria and Georgia as well as Crimea — and is willing to take a chance and deal with the consequences later.

    The best course for the Biden team is to look into of the eyes of the man the U.S. president correctly called a “killer” — and call his bluff.

    That means providing Ukraine more offensive weapons, especially antitank and anti-armor surface-to-surface missiles, and commensurate training for the Ukrainian armed forces directly by the U.S. European Command. It also means sending U.S. naval warships to operate in the Black Sea (the Pentagon is moving a couple of destroyers up from the Mediterranean through the Bosporus this week); placing additional sanctions on Russia in general and Putin’s cronies in particular in response to the SolarWinds hack and the Navalny poisoning; and continuing NATO engagement with Ukraine, including placing it in a Membership Action Plan, a precursor to joining the alliance. (It was good news that Secretary of Defense Lloyd Austin announced on Tuesday that 500 additional troops will be stationed in Germany from the fall, reversing the Donald Trump administration’s planned drawdown.)

    This is not just about Ukraine — there are bigger stakes at play in the international system. China, surely, is watching how the West responds in Eastern Europe as the U.S. simultaneously seeks to maintain Taiwan’s independence.

    America and its allies need to stand firm in the face of a Russian mobilization on the Ukrainian border. It is never a good idea to give in when a bully starts posturing.

    (Updates with Pentagon plan to increase troop strength in Germany in 11th paragraph.)

    This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

    THE CONUNDRUM OF THE REPRODUCTION OF CAPITALIST SOCIETY - MARX AND COLLETTI (Revised and Expanded Version)

     One of the best summaries of the essential problem of economic theory and of the solution offered by Karl Marx is in Lucio Colletti’s From Rousseau to Lenin. The problem is, of course, to explain how a society of private producers with “individual labours” can ever co-ordinate its productive activities so as to ensure its successful reproduction. For Marxist theory, this is the equivalent of establishing how concrete social labour, which is unmeasurable and incommensurable, can be equalized or homogenized and abstracted so that it can be measured. It is well worth our while to reproduce here the entirety of Colletti’s account of the problem which, we must aver, far excels what we ourselves could ever achieve!

    THE THEORY OF VALUE AND FETISHISM The decisive point which, I believe, remains misunderstood in all these interpretations is, as already indicated, the concept of ‘abstract labour’; i.e. (a) how this abstraction of labour is produced, and (b) what it really means. The first part of the question is relatively straightforward. According to Marx, the products of labour take the form of commodities when they are produced for exchange. And they are produced for exchange when they are products of autonomous, private labours carried out independently of one another. Like Robinson Crusoe, the producer of com-­

    8 3

    modities decides by himself how much and what to produce. But unlike Robinson Crusoe he lives in society and hence within a social division of labour in which his labour depends on that of others and vice versa. It follows that while Crusoe carried out all his indispensable labour by himself and relied only on his own labour for the satisfaction of his needs, the producer of commodities carries out only one determinate form of labour, the products of which are destined for others, just as the products of the other producers’ different forms of labour go to him. If this social division of labour were a conscious and planned distribution to all its members on the part of society of the various necessary types of labour and quantities to be produced, the products of individual labour would not take the form of commodities. For example, in a patriarchal peasant family there is a distribution of the work which the members themselves must carry out, but the products of this labour do not become commodities, nor do the members of the family nucleus buy or sell their products to each other.“ On the other hand, in conditions of commodity production, the work of individual producers is not labour carried out at the command or on behalf of society: rather it is private, autonomous labour, carried out by each producer independently of the next. Hence, lacking any conscious assignment or distribution on the part of society, individual labour is not immediately an articulation of social labour; it acquires its character as an aliquot of aggregate labour solely through the mediation of exchange relations or the market. Now Marx’s essential thesis is that in order to exchange their products, men must equalize them, i.e. abstract from the physical-natural or use-value aspect in which one product differs from another (corn from iron, iron from glass, etc.). In abstracting from the object or concrete material of their labour they also abstract ipso facto from that which serves to differentiate their labours. ‘Along with the useful qualities of the products themselves, we put out of sight both the useful character of the various kinds of labour embodied in them and the concrete forms of that labour; there is nothing left but what is common to them all . . . human labour in the abstract.”  Hence in abstracting from the natural, sensory objectivity of their products, men also and simultaneously abstract from what differentiates their various subjective activities. ‘The Labour . . . that forms the substance of value is homogeneous labour-power, expenditure of one uniform labour-power. The total labour-power of society which is embodied in

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    the sum total of the values of all commodities produced by that society counts here as one homogeneous mass of human labour-power, composed though it be of innumerable individual units. Each of these units is the same as any other, so far as it has the character of the average labour-power of society and takes effect as such. By now it should be clear that the process whereby ‘abstract labour’ is obtained, far from being a mere mental abstraction of the investigator's, is one which takes place daily in the reality of exchange itself (‘When we bring the products of our labour into relation with each other as values, it is not because we see in these articles the material receptacles of homogeneous human labour. Quite the contrary: whenever by an exchange we equate as values our different products, by that very act we also equate, as human labour, the different kinds of labour expended upon them. We are not aware of this, nevertheless we do it.')'”

    As Colletti rightfully reminds us, the central problem of the critique of capitalism is to explain how concrete labour can be turned by capitalists into abstract labour – or in other words how social labour, which cannot possibly be measured and remunerated individually, can turn into an aggregate of individual labours remunerated individually as wage labour. Notice two things immediately. One is that Colletti refers to “the social division of labour” when in fact he should be referring to “the division of social labour”. The distinction is crucial because by referring to the social division of “labour”, Colletti implies that there is only one total aggregate of homogeneous “labour” that is naturally divided by “society”. In one simple move, thus, Colletti has reified both “labour” and “society”. What Colletti should have done, instead, is to stress the fact that the division of social labour – hence the character of “social labour” and of “society” itself – changes from social formation to social formation, from feudalism to capitalism, for instance.

    Because he fails to make this vital distinction, Colletti is then forced rightaway to replicate and perpetuate Marx’s initial fallacy and conundrum, that is, to assume that capitalist society reproduces truly and effectively without any form or shape of “planning” simply by means of the market exchange of “commodities” which, in turn, automatically turns into the abstraction of concrete social labour. The obverse is also true: Colletti equates communism with a planned society. The conundrum then becomes, of course, to explain how “individual labours” based on “private property” and therefore also “individual production decisions” can ensure the efficient yet un-planned reproduction of capitalist society. This is a conundrum because it is an evident mystery to see how an unplanned economy can actually co-ordinate itself in reality through unplanned market transactions!

    The problem with Colletti’s excellent description of the problem of the social synthesis or the co-ordination of human activities for the reproduction of society is in the final part: the part where he follows Marx in stressing that the equalization of living labour as abstract labour is due to the very act and practice of market exchange. By so doing, Colletti uncritically subscribes to the Marxian contention that concrete labour is abstracted through the unconscious acts and practices of individual independent agents – by means of market exchange and not by means of orchestrated political coercion!

    Now, it is true that, as Marx and Colletti maintain, concrete social labour can be abstracted or equalized or homogenised only when the products of that social labour are exchanged, and thence also “priced”, as individual commodities – because once products (commodities or “goods”) are priced individually, it is entirely obvious and it follows necessarily that the concrete social labour behind their production must be treated as if it were homogeneous abstract labour rather as concrete social labour. But the pricing of the products of social labour for market exchange – their treatment as individual products separate from all other products – and therefore the homogenization and equalization of the concrete social labour that pro-duced these “products” can only take place if and only if there is an institutional political regulation and thus necessarily political co-action or co-ercion behind such equalization and homologation as abstract individual wage labour of the concrete social labour that went into their production!

    As we explained above, Marx tries to solve this conundrum of how concrete social labour can be transmuted into abstract individual labours measurable and remunerated as wage labour in two ways – a realist and a phenomenological way. The realist solution assumes that there is an aggregate of socially necessary labour time that is then redistributed by means of individual autonomous market transactions which, because totally unplanned, can then result in regular market anarchy and economic crises. The problem with the realist solution to the conundrum of capitalist market reproduction is that there is and there can be no such thing as “socially necessary labour time” because the minute we try to define what is “socially necessary” we fall into a tautology: what is socially necessary is what is socially necessary for capitalist society to reproduce itself – which is determined by market transactions. But market transactions or exchanges are ex post facto explanations, or rather, rationalizations! In other words, market exchanges fall into the fallacies of tautology first – socially necessary labour time determines market prices and market prices determine socially necessary labour time – and the fallacy called post hoc ergo propter hoc - because it is the final market-clearing prices that rationalize socially necessary labour time in causal terms – as “necessary” labour time! In reality, if Colletti and Marx allowed that capitalist industry, far from being unplanned, is actually very politically and coercively planned, the conundrum would disappear, and we would have to describe how this planning or regulation takes place. Once again, the difficulty arises because Colletti and Marx assume that there is a mythical “social division of labour”, that is to say, an invariable “society” independent of modes of production, and one invariable aggregate “labour” available to that mythical “society”. What we are affirming here is that instead we must refer to historically specific “social labours” that are politically managed for specific social formations or modes of production. This way, we can consign the mythical notion of “the market” to the scrapheap of social theories to which it belongs.

    Now, once Marx and Colletti perceive that it is impossible for market prices to explain the equalization of concrete labour into abstract labour, it is then a natural tendency for them to insist on the phenomenological explanation of this mysterious (not “mystical” as Marx describes it in the chapter on commodity fetishism) transmutation by means of a psycho-sociological phenomenological collective hypnosis (a “social imaginary” as Sartre and Althusser would label it) – commodity fetishism! The reason why Colletti, like Marx, has to fall back (a) on fusing the realist theory of value with the phenomenological theory of fetishism, and consequently (b) on con-fusing socialism with “planning” and capitalism with “lack of planning” because he identifies “social labour” with “planned labour” and “individual labours” with “unplanned society”! In reality, all societies rely on concrete social labour for their reproduction The difference between social formations rests on the kind of social labour that they employ and on the use they make of their production.

    Because without planning the reproduction of capitalist society cannot rely solely on “the market”, then Marx and Colletti, who insist strenuously on the “unplanned” or “market” essence of capitalism, must of necessity rely on the notion of “commodity fetishism” or that of “socially necessary labour time”. For it is impossible or tautological to explain how “the market” can ensure the reproduction of capitalist society once we realize that market explanations are always and everywhere ex post facto rationalizations of social reproduction: they are valid only until such time as economic crises show the catastrophic inadequacy of “market solutions” – at which time we all become aware of the utter futility of “market equilibrium” accounts of capitalism!

    Let us show how Colletti falls back on (a) first:

    THE LABOUR THEORY OF VALUE The inadequacy and simplification of the concept of ‘economy’, which, as we have seen, is an element more or less common to all the tendencies of Marxism in the Second International, helps to explain the foundation, during the same period, of an interpretation of the labour theory of value from which even later Marxism has been unable to free itself. This

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    interpretation consisted in the reduction of Marx’s theory of value to that of Ricardo, or even to the theory of value which developed in the course of the ‘dissolution of the Ricardian school’. Its hallmark is the inability to grasp, or even to suspect, that Marx’s theory of value is identical to his theory of fetishism and that it is precisely by virtue of this element (in which the crucial importance of the relation with Hegel is intuitively evident) that Marx’s theory differs in principle from the whole of classical political economy.

    And also at pg.93:

    Since ‘value’ is now considered as the objectification of human labour-power, the critical scientific or anti-fetishistic discourse of Capital comes to coincide with the self-consciousness of the working class (a further proof of the unity of science and ideology). For just as wage labour, by recognizing the essence of ‘value’ and ‘capital’, sees that essence as an objectification of ‘itself’ (and hence reaches self—consciousness through this knowledge), the working class, by becoming conscious of itself, achieves — for profit and rent are forms derived from surplus value — the knowledge of the origin and basis of other classes and hence of society as a whole. This point serves to indicate the profound difference between Marx and his Marxist but (more or less consciously) Ricardian interpreters. They failed to grasp the organic unity between the theory of value and the theory of fetishism and therefore could not avoid confusing two totally distinct things.

    And now we illustrate both (a) and (b):

    On the one hand, in dividing its total labour force between different employments, society must take account of the labour-time involved in each of these employments. On the other hand, we have the specific way in which this law operates under capitalism where, in the absence of a conscious or planned division of social labour, the labour-time required by the various productive activities is presented as an intrinsic quality in the products themselves, as the ‘value’ of a ‘thing’. This confusion between the law of labour-time (which applies to all societies) and its fetishized realization in the world of capital and of commodities, or between the principles of planning and the law of value is the root of modern revisionism

    Here Colletti, like the Ricardians and revisionists he is critiquing, clearly mistakes capitalism with the Planlosigkeit – the lack of planning and anarchy which, together with the theft of labour time, was the essential point of attack of Marxist and Social Democrats against capitalist industry! The problem with capitalist industry is most emphatically not “the absence of a conscious or planned division of social labour”! The problem is the organized, regimented political coercion of living labour for the sake of the accumulation of dead labour for the further coercion of living labour! It is only through political coercion that concrete social labour can be turned into abstract individual wage labour.

     

    BEFORE WE HELP THE PHILIPPINES, WE WANT DUTERTE'S HEAD ON A PLATTER TO HOIST WITH A SHARP POLE!

    Philippines Boosts Patrols to Counter China in Contested Sea

    Chinese vessels moored at Whitsun Reef on March 7.
    Chinese vessels moored at Whitsun Reef on March 7. Source: Philippine Coast Guard

    The Philippines has deployed extra vessels to patrol the South China Sea where Chinese ships had been spotted at a disputed reef as tensions deepen between the two nations.

    Four Philippine Navy ships have been sent to back up Coast Guard and fishing vessels at Whitsun Reef, Reed Bank and the Spratly Islands, the South China Sea task force said in a statement Monday. “Sea assets are and shall be continuously deployed to different areas” for patrol, the statement added.

    The Philippine Department of Foreign Affairs summoned China’s Ambassador to the Philippines Huang Xilian on Monday to express “displeasure over the illegal lingering presence” of Chinese vessels in Whitsun Reef, the agency said in a statement Tuesday.

    Tensions between the Philippines and China have been rising since more than 200 Chinese vessels were seen moored at Whitsun Reef -- within the Philippines’ exclusive economic zone, -- on March 7, with the Southeast Asian nation later warning of a barrage of diplomatic protests if Beijing did not remove its ships. The U.S. also earlier aired concerns over China’s “maritime militia” in the area.

    Beijing had said the boats were sheltering from the wind and described the U.S. characterization of the fishing boats as “maritime militia” as ill-intentioned, with Chinese Foreign Ministry spokesman Zhao Lijian telling a regular briefing in Beijing on April 9 the craft were normal and legitimate.

    An armed Chinese Navy vessel was also reported last week to have chased down a civilian craft carrying a Filipino news crew in the area.

    U.S. defense and diplomatic officials have discussed recent South China Sea incidents with their Philippine counterparts, as the longtime allies resumed military drills and discussed faster coronavirus vaccine shipments.

    Monday, 12 April 2021

     

    Secrecy and Abuse Claims Haunt China’s Solar Factories in Xinjiang

    The world’s green power surge depends on polysilicon made in China’s remote Northwest. No one really knows what’s going on inside the facilities.

    By Dan Murtaugh in Singapore, Colum MurphyJames MaygerBrian Eckhouse

    In the wilderness of the Gobi Desert sit two factories that churn out vast quantities of polysilicon, the raw material in billions of solar panels all over the world. It’s a four-hour drive from Urumqi, the capital of the Xinjiang region at the center of China’s crackdown on Uyghurs and other Muslim minorities. The only structures that rise up among miles of rolling snow-covered fields are the chimneys of coal-fired power plants, belching white smoke.

    Almost no one outside China knows what goes on inside these factories, or two others elsewhere in Xinjiang that together produce nearly half the world’s polysilicon supply. State secrecy cloaks the raw material for a green boom that researchers at BloombergNEF project will include a nearly tenfold increase in solar capacity over the next three decades. Solar is set to grow by about a quarter this year after record installations in 2020 backed by almost $150 billion in investment. That means millions of homeowners buying solar panels everywhere face moral uncertainty: Embrace the green future, and you have no way of knowing if you're purchasing products made by forced labor and dirty coal.

    Companies and governments are also growing uneasy about their reliance on a region rife with allegations of human-rights abuses. Three owners of Xinjiang’s polysilicon refineries have been linked to a state-run employment program that, according to some foreign governments and academics, may at times amount to forced labor. China denies such accusations and recently insisted that journalists and diplomats are free to go see for themselves.

    That’s why two Bloomberg reporters went to Xinjiang in March, after weeks of unsuccessful requests for factory tours. Such visits aren’t unusual elsewhere in China. But this time a security apparatus sprang into action. Upon our landing in Urumqi, two police officers boarded the plane, one with an automatic weapon slung across his chest and a photo identifying one of the reporters in hand. After questioning on the tarmac, we left the airport. For the next three days agents followed us everywhere, obstructing all attempts to speak to locals and deleting our photos.

    The veil over Xinjiang has made the search for answers about the links between China’s labor program and its solar industry a job for outside researchers—who, it turns out, have found potentially telling details just by combing through public records.

    Residents stop for a chat nearby the Xinjiang International Grand Bazaar in downtown Urumqi.
    Residents stop for a chat nearby the Xinjiang International Grand Bazaar in downtown Urumqi. Photographer: Colum Murphy/Bloomberg
    Shoppers walk past the Xinjiang International Grand Bazaar in Urumqi, capital of China’s Xinjiang province.
    Shoppers walk past the Xinjiang International Grand Bazaar in Urumqi, capital of China’s Xinjiang province. Photographer: James Mayger/Bloomberg
    The barricaded square in front of the Erdaoqiao Mosque and bazaar in Urumqi.
    The barricaded square in front of the Erdaoqiao Mosque. All visitors must pass a security checkpoint. Photographer: James Mayger/Bloomberg

    The owner of one polysilicon factory, GCL-Poly Energy Holdings Ltd., said in a 2019 report that it had accepted 121 poor minority workers from the Uyghur heartland in southern Xinjiang. Photos posted by the local government in June 2017 show workers, lined up in blue uniforms, about to be sent by the labor program to companies including East Hope Group Co., an aluminum smelter that in recent years also started producing polysilicon in Xinjiang. The previously unreported document was found by Adrian Zenz, a German researcher based in Minnesota who’s become a chief source of data about the labor program in Xinjiang—and thus a focus of China’s wrath.

    The documents are troubling, because the solar power surge that’s one of the great hopes in the race against global warming depends on the crucial supply of Xinjiang-made polysilicon. Some of the Western nations leading the transition to cleaner energy have also accused the Chinese government of committing genocide in Xinjiang. In March, the U.S., U.K., European Union, and Canada put new sanctions on China over alleged human-rights abuses. The U.S. has already banned imports of cotton and tomatoes from the region. The substance needed for solar panels could be next.

    Xinjiang’s Polysilicon Factories

    Four of the world’s biggest producers are based in the region

    Note: Suspected re-education camps and detention facilities identified by ASPI.

    Sources: Australian Strategic Policy Institute, Bloomberg reporting

    With national leaders committing to carbon-neutral futures, a new record for solar panel installations is expected this year—more than 185 gigawatts, according to BNEF, or enough to power all of Brazil when the sun is shining. Xinjiang will produce about half of the polysilicon in these panels, based on BNEF projections, and China will account for more than 80% of the overall supply. But consumers can’t track the provenance of their panels, since raw materials from multiple factories mix together along the solar supply chain. Even if they did find a link to Xinjiang, what goes on inside the four factories remains unknown.

    On the second day in Xinjiang, a solicitous propaganda official from the economic zone that houses the GCL-Poly and East Hope facilities trailed behind our car, even at a petrol station. At East Hope, he told us that executives from the headquarters in Shanghai had left instructions not to host journalists in Xinjiang. A representative for the GCL-Poly plant said pandemic health regulations made a visit unsafe.

    It didn’t matter that China’s coronavirus outbreak has been largely contained, and we’d tested negative for Covid-19 just hours before.

    The Chinese government says that accusations of forced labor in Xinjiang are lies invented by rivals intent on sabotaging the world’s second-biggest economy. “If it were that simple, I think at this point you’d have these companies allowing in third-party auditors alongside international journalists to give scrutiny of what they’re doing,” says Nathan Picarsic, co-founder of Horizon Advisory, a Washington-based consulting firm.

    Picarsic’s team in January released an analysis of the Xinjiang solar industry’s ties to the government’s labor transfer program. Horizon’s findings dovetail with many of the documents retrieved by Zenz, as does an October report by S&P Global Market Intelligence. All three relied on information that had been out in the open, in state media reports and company statements mentioning the program.

    China says its labor transfer program trains workers and sends them to factories as part of an effort to help poor ethnic minorities find better employment. But academics and activists identify the practice as part of a long history of using coercive state structures to oppress China’s Muslims, strip them of their culture, and separate them from their families. The state’s repression in Xinjiang intensified in the 2010s after a series of deadly terror attacks by Uyghurs seeking greater political and cultural autonomy. Chen Quanguo, the Communist Party secretary appointed by President Xi Jinping, has pursued a policy that a United Nations panel has said may have led to more than 1 million Muslims being placed in internment camps. Uyghurs who’ve been through the camps describe harsh conditions, including physical and sexual assault.

    The Solar Industry's Xinjiang Problem
    The Solar Industry's Xinjiang Problem
    Video: Suma Hussien/Bloomberg Quicktake

    “It has become almost impossible to talk of voluntary labor among a group of people who are in immediate danger of being incarcerated for no reason whatsoever,” says Rune Steenberg, a Xinjiang expert based in Berlin who works with the Uyghur diaspora.

    Those who participate are sometimes given wages and a degree of autonomy to choose the type of work they do. But there’s no freedom to refuse to sign factory contracts. “There would be repercussions against your family and potentially against you,” Steenberg says. “You would be marked as someone who’s uncooperative.” The International Labour Organization’s convention on forced labor, which China has yet to ratify, defines the practice as work done “under the menace of penalty.”

    Researchers such as Picarsic and Zenz have been trying to peek into the black box of Xinjiang for some time. Zenz’s findings have already helped exacerbate a clash over human rights that’s pitted China against the U.S. and Europe. Corroboration by academics, activists, and former Uyghur prisoners has provoked the Chinese government into a personal confrontation. In March it held an almost three-hour press conference to rebut claims about human-rights abuses made by Zenz, and authorities say they support lawsuits against him by several Xinjiang-based companies.

    Zenz doesn’t have access to any hidden government archives or whistleblowers regarding forced labor. He and his researchers simply search for companies or products they suspect might be tied to the labor program using Google and Baidu, China’s most popular search engine. Sometimes the researchers use Google’s cache function, which saves copies of websites that might be blocked or taken down.

    Yet this basic method has turned up an April 2018 statement on the Xinjiang government’s website with a reference to TBEA Co., parent company of the Xinte Energy Co. polysilicon factory, accepting as many as 300 poor workers from Hotan. This is an area with a large Uyghur population that’s been targeted by the government’s assimilation policies. Another TBEA document, from August 2019, indicates the company’s open participation in the labor transfer program. It’s an upbeat account of a corporate official who’d been stationed in Hotan for two years, with details about how he aided government agents by going into villagers’ houses to “spread the Party’s policies” and “prescribe the right medicine” to alleviate poverty.

    “It shows the company not only accepting transferred laborers but being directly implicated in the coercive and intrusive recruitment usually done by the government,” says Zenz. “The No. 1 medicine prescribed is the labor transfer program.”

    Sources: Satellite image via Maxar Technologies, Bloomberg reporting

    That corporate pride about uplifting the poor people of Xinjiang turns to secrecy when journalists show up. A policeman stood at the government office near the Xinte facility, and two men carrying leather briefcases stepped out from a gray car following behind. A guard at the complex said all the polysilicon executives were busy in a meeting. “Don’t take any pictures,” he said.

    Back in Beijing, Xu Guixiang, a spokesman for the Xinjiang government, said at a briefing that the government “would never” interfere in journalists’ reporting. “I don’t think such things exist,” he said of the armed officers who met us on the plane and cars that followed us around. “If you encounter any of the scenarios you mentioned, please let us know.”

    No nation produces as much as China along every step of the solar supply chain. And because the global solar industry needs all the polysilicon it can get, it won’t be able to turn its back on Xinjiang anytime soon. “Any silicon-based solar panel may have at least a small amount of Xinjiang silicon,” says Jenny Chase, head of solar analysis at BNEF. “Only a few modules can be guaranteed free of it.”

    China’s Solar Dominance

    Its manufacturers have far surpassed other countries’ at every step of the supply chain

    Note: Capacities include plants that have been commissioned, are under construction or have been announced.

    Source: BloombergNEF

    Corporate customers from California to Vietnam and South Australia to Spain are scrambling to set eyes on most of their key solar suppliers. That’s where a guy from St. Louis named Andy Klump comes in.

    Klump arrived in Beijing in 2003 and wound up in a job that had him roving around solar factories that were just starting out. He witnessed the rise of the industry firsthand, back when China was still an underdog facing U.S. and German manufacturers. As the supply chain shifted, foreign companies that wanted to tour Chinese facilities and review records would fly in advisers, some of whom were jet-lagged and didn’t speak the language.

    “There are a ton of problems you can run into when you don’t have someone on the ground,” Klump says. “A paper trail isn’t enough.” He founded Clean Energy Associates to offer audits and now runs a team of about 145 people. Klump has never been to the polysilicon factories in Xinjiang, as CEA clients only recently began making requests for visits and haven’t contracted a trip yet, even as published reports about other industries in the region have made clear the risk of abuses.

    Even the one producer in the region that hasn’t been linked to the labor transfer program by researchers rebuffed our efforts to get a clearer view. Daqo New Energy Corp. is a U.S.-listed company that has described its Xinjiang subsidiary as a pilot program of Xinjiang Production and Construction Corps, a government-run organization that’s been sanctioned by the U.S. for ties to alleged human-rights abuses including mass arbitrary detention.

    At the Daqo facility, about an hour outside Urumqi by train, guards in brown camouflage ordered away would-be observers. Daqo, along with the other three polysilicon companies, didn’t respond to multiple attempts to seek comment on our trip and the documents uncovered by researchers. (In an earlier statement the company said it has a “zero-tolerance policy” toward forced labor.)

    The murkiness of working conditions in Xinjiang is reason enough for solar companies and investors to be wary. A further complication comes from why those factories are in the region in the first place: an abundance of cheap coal power.

    Turning sand into polysilicon is an extremely energy-intensive process. Electricity accounts for about 40% of a factory’s operating costs, which is what makes Xinjiang so appealing. It has some of the cheapest power rates in the country, even if burning the dirtiest fossil fuel taints the climate benefits of the solar panels eventually produced. All four factories are located near coal power plants in Xinjiang, where cities such as Urumqi and Kashgar have at times had some of the worst air quality in China.

    Cheap Coal

    Xinjiang has some of the lowest power rates in China

    Sources: Satellite image via Maxar Technologies, Bloomberg reporting

    Unable to determine the working conditions in these Xinjiang factories, some governments and companies have decided it’s safer to steer clear of the region altogether. At least 175 companies, including global utility giants Duke Energy Corp. and Engie SA, have signed a nonbinding pledge by a U.S. trade association to avoid forced labor. The same organization has urged members to move supply chains out of Xinjiang.

    Units of Chinese solar giants Longi Green Energy Technology, JA Solar Technology, and JinkoSolar Holding also signed the document; all three had multiyear contracts to buy polysilicon from Xinjiang-based manufacturers at the time. The companies didn’t respond to questions about the agreements.

    The supply chain is already shifting as scrutiny increases. Xinjiang’s polysilicon producers are planning new factories outside the region. Firms are setting up tracing networks so companies can document whether their solar panels contain Xinjiang polysilicon. That would allow for a two-track export system: one for countries that don’t want any polysilicon from the region, the other for those that don’t mind it.

    This might merely be a fix on paper. There are many ways for polysilicon from Xinjiang to find its way into the final product. Some wafer companies that buy the material operate huge factories that might mix it up with polysilicon from elsewhere in China. Even if the supply chains are kept completely separate, profits ultimately flow back to the four polysilicon companies—meaning they’d face little economic punishment for any participation in the labor transfer program.

    Global demand will keep growing. Prices for the material have more than doubled since a year ago, and previous supply disruptions have led to significant spikes. “If only a couple of nations take action on China, it will be a reshuffling of the supply chain, nothing more,” says Dustin Mulvaney, a professor of environmental studies at San José State University. “The elephant in the room is the lack of information.”

    Whatever more comes out about life inside the polysilicon factories in Xinjiang, it’s not going to come from trying to speak to the workers there now. Only at Xinte’s plant near Urumqi did we even see a group of workers as they streamed in for afternoon shifts, dressed in hard hats and dark-blue overalls. Some stopped to listen to questions. They all gave the same response: The company wouldn’t allow them to speak to outsiders.

    —With assistance from Saijel Kishan and Philip Glamann

    • Editors: Sharon Chen and Aaron Rutkoff
    • Photo Illustration by 731; Getty Images (6)
    • Design and development: Adrian Leung
    • Photo editor: Elaine To
    • Additional photographers: Qilai Shen, Tomohiro Ohsumi/Bloomberg;
      Patrick Landmann/Science Photo Library

     

    THE LORD GIVETH, AND THE LORD TAKETH AWAY....THE DAY OF JUDGEMENT DRAWS NEAR FOR RATLAND CHINA 

    Red Lights Flashing in Credit Markets as Huarong Concern Grows

    Red lights are flashing in Asian credit markets, where concern is mounting that a selloff in one of China’s largest bad-debt managers will spread to other heavily leveraged borrowers.

    The Markit iTraxx Asia ex-Japan credit-default swap index of investment-grade bonds widened about 2 basis points, after recent reports of a looming restructuring at bad-debt manager China Huarong Asset Management Co., traders said. The gauge is set for a seventh day of increases, the longest streak since December 2018, and is at its highest since October last year, according to data from CMA.

    Asian credit-default swaps widened further, in longest streak since 2018

    The concerns about Huarong that are shaking the wider Asian debt market started after the firm joined dozens of Hong Kong-listed companies in failing to publish its 2020 earnings by a March 31 deadline. Caixin attributed the delay to plans for a significant financial restructuring.

    That’s been pushing up broader measures of financing costs as well. Asian investment-grade dollar note spreads widened about 2-3 basis points more on Tuesday, traders said. They are also set for a seventh-straight day of expansion, the longest streak in more than five months, and are at the highest in more than two months, according to a Bloomberg Barclays index. Chinese property company bond prices also tumbled.

    “Due to perceptions of Huarong as a systemically important entity and bonds being widely held, concerns over its near-term liquidity are having a spillover impact on spreads,” said Ek Pon Tay, a senior portfolio manager for emerging market debt at BNP Paribas Asset Management. Regulators may eventually need to shore up market confidence, he said.

     

    THE FINANCIAL PLAGUE IS COMING! CURTAINS FALLING FOR RATLAND

    China Huarong’s Worsening Bond Rout Stokes Market Contagion

    Updated on 
    • Other Chinese dollar bonds also slump, Asia credit risk widens
    • Speculation of worst-case scenario circulating among traders

    Growing panic over the financial health of one of China’s largest bad-debt managers spilled into the broader market, as traders circulated a Caixin report that openly considered the worst-case scenario for the company.

    China Huarong Asset Management Co.’s $300 million 3.375% bond due May 2022 tumbled 8.4 cents on the dollar to 80.8 cents, while a 5% bond maturing in 2025 fell 10 cents to 79.3 cents, Bloomberg-compiled prices show. In a commentary dated Monday, Ling Huawei, managing editor of Caixin Media and Caixin Weekly, discussed the possibility of a China Huarong bankruptcy.

    The selloff spread to other high-yield Chinese dollar notes, with some property bonds falling by a record. Asia’s investment-grade dollar debt spreads widened as much as 3 basis points, while a gauge of Asia credit risk widened for a seventh straight day, set for the longest rising streak since 2018.

    “Huarong is a $22 billion curve and as a distressed situation it dwarfs anything that we have seen in the Asia credit market before,” said Owen Gallimore, head of trading strategy at Australia & New Zealand Banking Group. “This is a fatal event for a few trading desks and small funds.”

    China Huarong's dollar bonds hit fresh lows Tuesday

    Bonds linked to the company have plunged this month after China Huarong failed to publish its 2020 preliminary results by the March 31 deadline, with Caixin attributing the delay to plans for a significant financial restructuring. The stock has been suspended in Hong Kong since April 1. The company has until the end of the month to release its final earnings report. China Huarong’s biggest shareholder is the country’s Ministry of Finance.

    China Huarong has been under a shadow since its then chairman Lai Xiaomin came under investigation in 2018. Under his watch, the company expanded into areas including securities trading, trusts and other investments, deviating from the original mandate of disposing bad debt. Lai was put to death earlier this year for bribery after a brief trial, an unusually harsh sentence for such a crime.

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