Heard an interesting bit on NPR this morning about the Buffett-Gates uber-charity that made passing reference to the challenge of security and stability when it comes to distributing aid. I expect to see a great deal more about this in the coming weeks.

When groups start passing the money hurdle (and a $60 billion foundation certainly has passed that hurdle), the other challenges to development will begin to dominate the popular consciousness. How to distribute aid to catastrophically corrupt and war-torn regions becomes the issue.

Once the issue is framed like this, we find ourselves in the realm of Barnett and DeAngelis’s thinking. Appropriately, DeAngelis has already commented:

You can’t parse development into its separate parts and expect to achieve societal transformation… Medical advances, the area in which Bill & Melinda Gates Foundation has concentrated much of its time and effort, will never reach those who need them without a sustainable infrastructure to make that happen.

Part of that sustainable infrastructure also needs to include the rule of law… bringing us to the need for SysAdmin expertiese and potential sources for the manpower such efforts require.

In Part 2 I discussed the importance of economic growth to the CCP’s continued power. In order to sustain this essential economic development, China needs large and secure sources of energy, and Beijing has increasingly turned towards Africa for this essential.

In order to secure access to these resources, China has been pursuing an aid-for-oil strategy where it exchanges infrastructure and sometimes weapons for energy. An indication of this strategy’s success is that almost thirty percent of China’s 2004 oil imports came from Africa. Compare this with the US, who receives ten percent of its oil imports from Africa. Such changes require serious diplmoatic effort; President Hu visited Algeria, Gabon and Egypt in 2003. Between 2005 and 2006, senior Chinese delegations have visited Nigeria, Namibia, Sudan, South Africa, Uganda, Republic of Congo and Angola to discuss resource deals. All of which comes during a time when American diplomatic attention has been consumed with mediation and goodwill missions.

Some look at this situation and see insidious Chinese schemes to undermine American power. While that can be a proximate need (Sinopec cannot drill oil already sold to Exxon), I have been making the case that one of the CCP’s ultimate interests (and consuming concern) is continued regime stability through unbroken economic growth. Therefore, Beijing won’t necessarily use its increased African influence to harm American interests. In fact, China’s increasing role as a contributor of peacekeepers to UN African missions indicates just how prepared it is to join international SysAdmin efforts.

One area for potential mistrust revolves around Beijing’s laisez faire approach to human rights. It uses arguments of sovereignty and the dichotomy between business and politics to deflect questions of the human rights record of its African partners (similar to the arguments it uses to deflect criticism from itself!). While all states will fail in one way or another to live up to their ideals, some argue that China’s “shame-based” culture is less concerned about applying principles for their own end and more worried about the consequences of breaking a given principle. Contrast this with “guilt-based” cultures (such as the West), which emphasize the idea that a principle has worth by itself and ought to be followed because it is correct (very Kantian). Also in One Billion Customers, James McGregor goes on to make a related argument that China is ideologically bankrupt. Communism tore down all competing ideologies and the market eruption has destroyed any vestiges of popular support for the Communist ideology. It is understandable, then, that a regime populated by people coming from such a history might put less of a priority on human rights and more of a priority on making sure the gravy train keeps rolling. I am not interested in morally relative justifications here; I am very concerned with not mistaking a hostile perspective for a different perspective.

None of the specific policies Beijing is pursuing in Africa (Foreign investment in the gap - $175 million in the first ten months of 2005 alone, military deployments to support international peace missions and increased global trade) are fundamentally counter to American principles or interests. We could choose to view the world as zero-sum game and therefore conclude that China’s advantage must necessarily mean our loss, and position ourselves as yet another obstacle in China’s challenging path towards prosperity and stability. Such a choice is not necessary. Such a choice is also not the proper course for America. There are ripe opportuntities for collaboration. For example, we are concerned about African stability because of our war with al Qaeda, while China is concerned about African stability because that’s where it’s getting an increasing amount of its oil from. Think each of us couldn’t benefit from some cooperation on such fronts?

This is part of why I believe that China will not inexorably evolve towards an opponent. Without framing policies in the context of the national interests that spawned them, one can soar off in any direction one pleases and create quite the frightening nightmare scenarios. To make wise decisions, and properly weigh the inevitible tradeoffs, we need to strive for this context.

If we can agree that a fundamental interest of the Chinese Communist Party is maintaining its hold on power, then challenges to that power could have significant influence upon China’s foreign policy. One such challenge the the CCP’s power is the danger non-performing loans (NPLs) pose to Chinese economic growth (and, by extension, social stability and the continued survival of the regime).

Stratfor has been warning of this danger for more than two years now, but over the past few months the worry has spread beyond the circles of private intelligence and business analysts. In May Ernst and Young, PricewaterhouseCoopers, McKinsey Global Institute, and Fitch Raings all issued reports concerned with the magnitude of China’s NPL problem.

Ernst and Young withdrew their report under Chinese presssure (the above link leads to their retraction), but it is difficult to dismiss such a unified chorus of concern. Gary Schmitt and Jared Feiger’s article in the Weekly Standard sums up the problem thus:

Those in China who want it fixed are hoping that, by bringing in Western financial partners, they can raise additional funds and, through a coupling of management techniques, begin to bring better practices to mainland banks. But they are running headlong against a well-established and well-connected system of elite corruption. And to protect that system, the Chinese are only allowing their non-Chinese partners minority ownership positions which, in turn, only give them a limited say over banking practices. Moreover, the nearly 170,000 state-owned enterprises being supported by the banks cannot, Beijing believes, be allowed to go out of business. China’s leaders are increasingly worried about rising unemployment and the social unrest that might follow. In addition, Beijing rightly suspects that allowing Chinese citizens to place more savings and profits in markets outside of China would result in a run on deposits that the state banks could not survive.
…The laws of economics may be complex, but they do, in the end, punish those who ignore their most rudimentary precepts.
…[China’s] banks remain a critical element in the regime’s strategy for self-preservation.

Reading the World extensively quotes from Stratfor’s analysis, expressing an even more dire outlook:

…how much pain can Chinese society withstand before it fractures? This is clearly a concern for Beijing as it tries, simultaneously, to reform the economy and to crack down on dissent. The Chinese, like anyone in this fix, try to put the best possible face on the situation. Which is why they exploded at Ernst & Young. But even the government in Beijing couldn’t shout down the ensuing tidal wave of financial reports; instead, they grumbled and pointed to the passages that said it could all be managed.

Perhaps it can. But if it can, it won’t be easy – and we doubt that it is possible. We have been writing about this problem for several years now, and people keep asking when the crisis will come. Our answer is simple: If this isn’t a crisis, what would a crisis look like? The Chinese financial system is sinking under nonperforming and underperforming loans. Mainstream Western analysts are all writing about the problem and calling for reforms that the Chinese cannot possibly implement in time to make a difference. At some point, the weight of evidence will shift the behavior of the Western financial community, and that will be that.

This looming crisis indicates that Beijing is maneuving from a position of relative weakness; we’re not facing 87,000 incidents of “public order disturbances” every year. China faces the spectre of social upheaval and - worst case - a fracturing of the nation. Continued economic growth is essential to Beijing’s continued control of an increasingly agitated society. Attempts to expand energy resources, like last year’s bid to purchase Unocal, are motivated by more than just the desire for profit. At stake is the survival of the Chinese regime. Did preventing Chinese ownership of Unocal protect an equally significant American interest? Please. We passed up an opportunity to further draw China into the global free market (something that is very much in our interest), and instead we boxed them out.

This is essential for American policy makers to understand, lest they overlook this strategic weakness due to their focus on Chinese tactical moves. Will the CCP feel the need to pump up nationalism with some anti-US rhetoric and saber-rattling? Perhaps. At the very least, don’t expect to see Beijing back down its rheotric on any front. When one has a weak hand, the only alternatives are bluffing or folding… and folding is simply not an option. But this does not mean that they are hell-bent on expanding their global influence at our expense.

This internal threat is far more immediate and dire than any threat posed by the United States. With a clear vision of the whole board, and thus an accurate assessment of the relative strength of each side, the US ought to recognize that China’s struggle for stability and prosperity does not endanger our fundamental interests. As we hedge against potential risks and handle day-to-day diplomatic issues, we need to do it within the context of an accurate strategic framework.

I finally had time to read the Richard Fisher’s article to which Sonny referred me. It contains some interesting examples of Chinese-Iranian cooperation, but that isn’t what motivates my response. Rather it is Fisher’s simplistic portrayal of China’s strategic interests.

Fisher does not explicitly argue that China’s strategic interests collide with ours, yet he tacitly implies this throughout the article. He warns readers that “…Chinese history shows that China looks after what she perceives as her own interests, not those of the United States,” as if this were unique. Of course China looks after her own interests; they are her interests after all! France looks after her interests, England her own, … every country does! Wohlstetter criticized analysts of the 1970s for tautological statements like “it would be dangerous to assume that China won’t resort to violence if she feels that her strategic interests are threatened.” This critique is still relevent.

The question isn’t whether there exist interests that China would aggressively defend; the question is (1) what are those issues and (2) are they contrary to American interests? Fisher remains silent on these question.

China’s foreign policy is not a binary variable that is either aligned with the US or opposed to the US. Fisher warns that “contrary to Western nuclear non-proliferation ‘values’ China has proven it will abet such proliferation to advance its interests,” but America will also bend non-proliferation values to advance its own interests (hello India!). Again, the question comes down to what China’s interests are and the degree to which they are incompatible with our own.

Part 2 will discuss one of China’s fundamental interests, and how it might affect its foreign policy.

Tdaxp has some nicely succinct points about the strengths and weaknesses of dashboards:

The big benefit of dashboards is they let you quickly understand quantified data. The huge drawback is they let you pretend that all quantified data is important, and all important data is quantified.

I agree, but would add an additional drawback: they let you pretend that all your quantified data is accurate. Managers can get so wrapped up in the snazzy visualizations and drill-down capabilities that they don’t stop to ask themselves if any of thier data actually reflects what is going on outside their office window.

Without the proper incentives, employees can easily game systems so that they report data they know will make reviewers happy, while keeping a true set of data offline. (This assumes that they need to keep true data for their own purposes. If they don’t, then there won’t be a record of the data anywhere.)

This is why I believe that as companies continue to fully evolve into information-age organizations, one’s job description will become increasingly tied to one’s network authorities. The digitally networked aspects of organizations will need to reflect the principles of transparency, trust and incentives that make successful organizations successful (be they industrial, information-age, or military).

On the recommendation of a friend, I’m reading Nuts: Southwest Airlines’ Crazy recipie for Business and Personal Success. Only about a third of the way though it so far, but it has some nice nuggets amidst the ponderous platitudes of business advice (”Give yourself the freedom to be yourself.”).

What comes through is an organization that exemplifies maneuver warfare principles (it would have been a great addition to Richard’s Certain to Win). Take, for example, the following passage:

Kelleher [SW’s chairman, president and CEO] does not put much stock in strategic planning. His conern is that writing something down in a plan makes it gospel. When the plans becomes gospel, it’s easy for people to become rigid in their thinking and less open to new, perhaps off-the-wall, ideas. Kelleher explains it this way:

Reality is chaotic; planning is ordered and logical. The two don’t square with one another. When USAir pulls out of six cities in California, they don’t call and tell me they’re going to do that. Now, if we have established a big strategic plan that is approved by our officers and the board of directors, I would have to go to the officers and the board and tell them we want to deviate from the plan. They would want to know why I want to buy six more airplanes. The problem is we’d analyze it and debate its merits for three months, instead of getting the airplanes, taking over the gates, and dominating California. The meticulous nit-pickingn that goes on in most strategic planning processes creates a mental straitjacket that becomes disabling in an industry where things change radically from one day to the next.

When a financial analyst chided Kelleher about not having a strategic plan, he said “We do have a plan… it’s called doing things.”

I feel like there is a Patton quote I encountered somewhere about the need to forget the detailed planning, get out there and do something (he used more creative and colorful language, of course). Also, I think I recently read someone talking about plans being useless but planning being indispensible.

Ultimately, the point is that SW has built an organization able to quickly exploit fleeting opportunities offered by a chaotic environment in order to out-compete and prevail. Good stuff. If Richards had written this book, however, he could have crammed the same insights into a third as many pages.

Iain Murray has an interesting article on TCS today, examining the role of resilience in climate change:

…many adaptation projects will be local in character. [Anyone getting a John Robb tingle?] This is true because global warming isn’t really global — it is having different effects around the world. Even within the United States, different regions are experiencing different effects. While the Northwest is warming, the Southeast is actually cooling. Frost-free Florida isn’t frost-free any more, which means the citrus industry is having to adapt there, as well. The question of whether the climate change there is anthropogenic in origins is irrelevant to the demonstrable need to adapt.

And what is needed to successfully adapt?

The precursor to adaptation is resiliency, which gives a society the capacity to adapt. Characteristics of a resilient society include a strong economy, the rule of law, high trust (lack of corruption, confidence in institutions etc) and a lack of regulatory barriers to innovation. A resilient society recognizes that the ingenuity of its citizens is, in Julian Simon’s words, its “ultimate resource,” not the presence of abundant natural resources, the leadership of a certain class or the teachings of a dead philosopher.

Murry clearly has a libertarian streak, and I’m not posting this to necessarily advocate such a position. The theme of resiliency interests me and the idea that it necessitates local solutions supported by trusted networks that reward success.

Henrik at Draconian Observations has an excellent post today on the significance of recent events in Somalia:

At the face of things, it is logical for the US to have chosen a number of warlords to support the case against terrorist breeding grounds. But only apparently, when the setup is not conceived holistically; where all actors are not given some legitimacy. A logic of complete friend-foe distinction doesn’t function when we are dealing with counter-insurgency-type goals. Moreover, and concomitantly, just because we choose to bet on some guys (chosen for pragmatic reasons), it doesn’t mean that their victory will be ours — or that the opposite is the case.

The use of proxies is not a priori good or bad strategy. It all depends upon context. Married to a multi-dimensional diplomatic, military and intelligence effort, proxies can be helpful. As a stand-alone all-or-nothing solution, proxies can be a disaster. I’m reading Intelligence Wars: American Secret History from Hitler to Al Qaeda, a marvelous complilation of Thomas Power’s writings, and it has been reminding me of just how wrong misguided proxy wars can get when they are divorced from a larger strategy that includes non-military factors.

It is akin to the question of whether you should invest in developing economies. You cannot answer the question intelligently without specifying what is already in your portfolio. In concert with an appropriate mix of stocks and bonds, some highly volitile stocks can increase the yield of one’s portfolio. If the rest of your portfolio is already populated by high risk foreign stocks, however, it is an awful idea to add even more to the mix.

If John Prendergast is right in today’s WaPo, then I fear we are in the latter case and not the former. Prendergast tells us that ” the State Department has just one full-time political officer working on Somalia — from neighboring Kenya, and he was just transferred out of the region for dissenting from the policy on proxy warlords. ” This indicates a poor level of coordination and exposes us to the dangers of a one-dimensional, proxy-only policy. I hope people are asking themselves “how balanced is our policy’s portfolio?”

William Lind’s latest essay, The Perils of Threat Inflation, is refreshingly coherent (as opposed to some of his writing). He makes a concise case for why strategic competition with China is unnecessary and would actually harm our strategic position.

First, on the question of why competition with China is unnecessary, Lind argues that

Under its “one China” policy, the U.S. recognizes that Taiwan is part of China. So the “Chinese threat” is that China may be able to deter or counter American intervention in a Chinese civil war. Who is the attacker here? If Britain or France had intervened on behalf of the Confederacy after the American South declared its independence, would the Union have seen such action as defensive? This points to the grand folly DOD’s China report represents, namely America allowing Taiwan, a small island of no strategic importance to the United States, to push it into a strategic rivalry with China.

Secondly, such a short-sighted strategic rivalry would scuttle what ought to be a natural partnership between the US and the PRC:

In a 21st century where the most important division will be between centers of order and centers or sources of disorder, it is vital to American interests that China remain a center of order. America needs to handle a rising China the way Britain handled a rising America, not a rising Germany.

This is a case where Lind’s centers of order/centers of disorder framework makes sense, since it allows him to recognize the convergence of strategic interests between our two nations. Tellingly, this recognition places him in violent agreement with Barnett. I doubt he is aware of this, which is a shame because much of Lind’s vitrol seems to be based upon a shockingly superficial understanding of Barnett’s thinking.

Compare Lind’s position to Barnett’s in Blueprint for Action:

The [Taiwan] strait remains the one potential military flashpoint that can still ignite East Asia and send this whole global economy up in flames in a heartbeat. China is the baby we can’t throw out with the bathwater dubbed the global war on terrorism… China is the United States of the early twenty-first century: rising like crazy but not really a threat to anyone except small island nations off its coast… somehow the sacredness of Taiwan’s self-perceived “independence” from China is worth torching the global economy over?

[The global economy would be torched, by the way, because two of its key pillars of stability would be actively trying to destabilize the hell out of each other, to use Lind’s perspective.]

Think back to the US Civil War. Imagine of Jefferson Davis and the leftovers of the Confederacy had slipped away to Cuba in 1865 and set up their alternative, nose-thumbing version of America on that island. Then fast-forward to, say 1905, and imagine how the United States would have tolerated some distant imperial power like England telling us what we could and could not do vis-a-vis this “loser” sitting just off our shore (p157-8).

They both even use an analogy to the Civil War! When I see this sort of convergence, it indicates to me that there is a very important and robust insight here. Let’s climb off the “Major War with China, oops I mean, Near-Peer Competitior” crazy train and get a more reasonable policy on China that recognizes the fundamental interests we have in common. If Lind and Barnett can agree on that, then we have at least a fighting chance of crafting a broad base of support for such a move within the important policy circles…