Wednesday, May 18, 2022

China relation stakes are high

It was good to read Nigel Stirling’s article on international diplomacy and trade in last week’s Farmers Weekly.

Alan Emerson believes that New Zealand’s approach to international diplomacy is currently more resembling a circus than a well thought out, long-term strategy.

It was good to read Nigel Stirling’s article on international diplomacy and trade in last week’s Farmers Weekly.

I appreciated being able to see a sane, factual and informative article that outlined some of the decisions we’re going to have to make.

Life isn’t boring on the international stage, with the Ukrainian conflict and China’s treaty with the Solomons keeping us entertained.

Offering an alternative view, I strongly believe that New Zealand’s approach to international diplomacy is currently more resembling a circus than a well thought out, long-term strategy.

Our reaction to the Ukrainian crisis is a case in point.

We are bombarded about the atrocities committed by Russians against Ukrainian civilians and they are atrocities.

The problem I have is that we’re going back to the rhetoric of the Cold War that Russia is always bad and the United States is always good.

I accept that Russia has behaved appallingly in Ukraine, but I would have absolutely no doubt that the US would have committed atrocities in Iraq and Afghanistan.

We can read how Australian special forces killed civilians in Afghanistan and they certainly had significant issues in Timor.

NZ didn’t come out of Afghanistan blameless either, but there is no balance and there needs to be.

As the saying goes, the first casualty of war is truth.

Coming closer to home, we have the current contretemps with the Solomon Islands and its relationship with our biggest trading partner, China.

The Solomons are a sovereign country. 

They can choose who they do business with and, again simply stated, it is no other country’s business.

Australia and the US claim China is wanting to put a military base on the Solomons.

China emphatically denies the accusation.

The bodice ripping by Australia, US and, to a lesser extent, NZ has been frenetic and reeks of the old British Gunboat diplomacy of an earlier era. 

Colonialism is the politics of the past.

I can remember back to the 1970s when our then Prime Minister Norman Kirk invited the Chinese to establish an embassy in Wellington. 

Then leader of the opposition Rob Muldoon told the country that it was the beginning of the end. 

We’d soon have Chinese troops on Lambton Quay.

That obviously didn’t occur in the last 50 years and is unlikely to in the next 50.

Also, I don’t see a whole lot of difference from China having a base in the Solomons to the US having one there.

Going forward, my issues are:

Yes, Russia has invaded Ukraine and committed atrocities.

I would have no doubt that China would have known that Russia was going to invade.

The US and Europe are greatly annoyed that China hasn’t condemned the invasion, but it was never going to.

We now have NZ concerned about China in the Solomons and critical of China over its lack of criticism concerning Ukraine.

Surely we have illusions of grandeur.

China is currently our largest market and, yes, we must diversify more but that won’t happen overnight. 

On a more practical basis, China’s Belt and Road initiative involves a lot more sovereign countries than just the Solomons.

The US is now threatening a trade war with China, which will be interesting as it will hurt them more than it will China.

The most fascinating development in my view is the SWIFT money system and what’s likely to happen as regards world trade.

For the uninitiated, SWIFT is an international money and security transfer system with 11,000 member institutions and an average of 42 million messages a day.

It uses US dollars and the vast majority of world trade comes under the SWIFT banner.

Banning a country from SWIFT means a country’s ability to conduct international financial transactions has been disrupted.

It’s been political in the past. In 2012 it shut out Iran and in February this year it shut out Russia.

While the sanctions were devastating to Iran they need not be for Russia, as it has an alternative.

Russia has its own platform known as SPFS.

It has now combined with the Chinese system and expanded to include Turkey, Iran and Switzerland, among others.

According to the South China Morning Post, both Russia and China want the deals in their own currencies as against US dollars.

I hadn’t been aware of the magnitude of the transactions or the close economic ties and massive trade and tourism ventures between China and Russia.

If a chunk of world trade comes under the Russian-Chinese financial system it will involve us making some hard choices.

It will also put considerable downward pressure on the US dollar.

We have major decisions to make as a country that requires sane, knowledgeable and unemotive decision-making.

Sadly, all we are getting from the Government and the opposition is shrill bodice ripping and pointless sabre rattling.

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