Sanctions and counter-sanctions, Russia, Iran

31 March 2021

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1. Sanctions and counter-sanctions

The US, the EU, the UK and Canada, in coordination, imposed sanctions last week on Chinese officials and state entities over human rights abuses in Xinjiang. The US has previously sanctioned Xinjiang Production and Construction Corps (XPCC), Xinjiang Public Security Bureau (XPSC) and six officials in July 2020. Last week, the US added two more officials to the sanction list.

In the same week, the EU, the UK and Canada imposed sanctions on four Chinese individuals and XPSC. Notably, they did not impose sanctions on Chen Quanguo, who is a Politburo member and the Communist Party Secretary of  Xinjiang Uyghur Autonomous Region. Chen is the most senior Chinese official sanctioned by the US.

In retaliation, China then imposed counter-sanctions on a long list of individuals and entities. The list includes two US individuals, one Canadian individual, one Canadian entity, nine UK individuals, four UK entities, ten EU individuals and four EU entities.

Unlike the UK, EU, UK and Canadian sanctions, China’s sanction targets included people that are not politicians or government officials as well as non-government organisations. For example, the list included a lawyer, a law firm, three scholars, and an independent think tank.

Targeted sanctions for human rights

There are ongoing debates on whether targeted sanctions are effective in combating human rights abuses, especially against a big and powerful country like China. Certainly, such coordinated and public sanction sends a strong message to Beijing. But these targeted sanctions together are unlikely to be enough to change Beijing’s calculus in its policies towards Xinjiang.

However, targeted sanctions may be the best tool that countries have available in sending a message to China. After all, a general sanction would significantly damage diplomatic relations as well as being detrimental to these countries’ own economic interests.

For sanctioned individuals, their incentives lie in carrying out directives from the Party Centre. These targeted sanctions are unlikely to deter them from doing that.

Human rights abuses in Xinjiang are occurring under the watchful eyes of Xi Jinping and the Politburo Standing Committee, the highest decision-making body in China. Yet, no one has sanctioned Xi or any Politburo Standing Committee members. This is unsurprising, as sanctioning a head of state or a head of government would be seen as an extremely hostile action.

So this is what we are left with — an action that is unlikely to be effective in changing the human rights situation in Xinjiang. But there are not many alternatives.

Unsurprisingly, China retaliated with its own list of sanctions. From Beijing’s perspective, it doesn’t really care what the sanctions are for. What it sees is that some countries are imposing sanctions on it, so it must retaliate in kind in order to appear strong internationally.

Researchers and think tanks

Among those sanctioned by China include German scholar Adrian Zenz, Swedish scholar Björn Jerdén, UK scholar Jo Smith Finley and German think tank Mercator Institute for China Studies (MERICS). Adrian Zenz and Jo Smith Finley are scholars working on Xinjiang while Björn Jerdén has conducted research on Confucius Institutes.

As for MERICS, according to the nationalistic Global Times, MERICS’s sins include publishing on human rights in China and refusing to be interviewed by Chinese media. MERICS has released a statement expressing regret for China’s decisions and rejecting the allegations. Four senior personnel from the US think tank Center for Strategic and International Studies (CSIS) released a rather substantial statement supporting MERICS.

Even before this latest sanction, as the CSIS statement notes, China researchers were already working in an increasingly restrictive and sometimes hostile environment:

But in the last few years, China has gone significantly further in obstructing independent research and constructive scholarly exchange. China has been more restrictive in issuing visas for scholars, particularly those who work on topics that could reflect negatively on China’s claims of good governance. Field research is increasingly risky, even for those focused on topics like economics and business.

...

Chinese officials now routinely and publicly criticize researchers whose work they do not agree with, and we also personally know of instances in which Chinese officials and visitors have threatened U.S. experts on China when visiting the United States. There are also cases of Chinese officials going so far as to threaten Chinese-born scholars with the punishment of their families in China for publishing opinions abroad that do not align with those of Beijing.

Needless to say, the harassment of these scholars is unacceptable. Furthermore, such actions only turn people away from pursuing China studies. China may believe this will lead to less negative reporting and public opinion of China. But in fact, the reverse is likely to be true.

Scholars and researchers working on China contribute to a fuller and more nuanced understanding of China. Without this nuanced and contextual background, reporting and public opinion of China is likely to be even more simplistic and caricatured.

If China wants a more “positive” coverage by scholars and researchers, then it should try to improve its soft power rather than relying on the blunt instrument of coercion. It should fund more exchanges and loosen restrictions rather than trying to stop exchanges.

For universities and other research institutes, they should be mindful of the pressure that China researchers are under, and ensure that these researchers are not penalised for the restrictions they are facing. This may include sponsor and host dissident scholars and consider how to support researchers when they’re unable to do fieldwork in China.

Xinjiang cotton

Amidst all this, “supporting Xinjiang cotton” has become a viral movement on Chinese social media. There is currently a boycott of movement of several clothing brands, including H&M, Nike, and Burberry. Many celebrities have joined in, severing their relationship with these brands.

Regina Ip, Hong Kong Executive and Legislative Council Member, also joined the act:

The timing of this “consumer boycott” is highly suspicious. The statement by H&M was from September last year, but was recently dug out by the Communist Youth League on Weibo after the sanctions were announced. H&M happens to be a European (Swedish) company.

The consumer boycott has gained momentum. Many people online are angry that Western brands are “boycotting Xinjiang cotton”. So the battlelines have been drawn between “boycotting” and “supporting” Xinjiang cotton, while the underlying reason for the “boycott” (i.e. any human rights concerns) is usually overlooked.

However, the overwhelming voices online “supporting Xinjiang cotton” is partly a result of censorship. Some have tried to voice their support for “Xinjiang people” instead. But their posts, and even their accounts, were banned afterwards. 

Yet such attention on Xinjiang could backfire for the government, as people become curious about the reason behind the “boycott” in the first place. Authorities will likely try to tone down the online excitement soon.

This “consumer boycott” follows on from similar consumer boycotts in China, including over the designation of Taiwan in 2018. Companies are again being caught in the middle of a geopolitical stoush.

The main focus of companies is profit maximisation. In the last few decades, companies have also pursued corporate social responsibility (CSR). But this is often done to enhance the company’s reputation and brand, with the view of improving the bottom line (a cynic’s perspective).

In this instance, companies may have to consider whether using or abandoning Xinjiang cotton is better for profit, by taking into account the likelihood, the scale, and the length of possible consumer boycotts in different countries. This is on top of other considerations, such as government action, which are likely to have more impact on the business.

In the long run, if similar incidents happen more regularly, then it may lead to a bifurcation of global businesses, in a similar vein as we are already seeing in technology platforms (FAANG and BAT).

2. Beijing’s friends

The rise in friction and tension between the West and China in recent years has given Beijing added impetus to bolster ties with non-Western countries. Last week was a big week in this regard.

On 23 March, foreign ministers of China and Russia issued a joint statement of solidarity against the West. A few days later, on 27 March, Beijing and Tehran signed a 25-year strategic cooperation agreement.

Both Beijing and Washington are trying to coordinate partners against each other. Since becoming President, Biden has emphasised coordinating China policy with allies and partners. And indeed, we have seen evidence of increased coordination and consultation between the US and its allies and partners in the lead-up and following the US-China Alaska summit (e.g., QUAD meeting). 

Similarly, Beijing has also been working hard at coordinating with its partners. There are four main drivers pushing Beijing to bolster ties with non-Western countries. First, Beijing wants to ensure that it is not isolated, both strategically as well as diplomatically on issues such as human rights.

Second, against the increasing coalescence of Western pressure on China, Beijing is trying to cement existing relations with like-minded countries in support of values and principles that it purportedly advocates, such as the sanctity of sovereignty and territorial integrity, and non-interference.

Third, China’s economic relationship with the US and others have taken a hit due to political tensions. The conditions for foreign investment and research collaborations between China and the West have deteriorated in recent years too. Economic and technology partnerships with non-Western countries are assuming greater importance in China’s economic strategy.

Finally, Beijing is looking for partners to work with on multilateral, including regional issues. This is especially so because China is trying to assume a greater role in global governance. Emerging regional powers, including countries in the BRICS grouping, are increasingly relevant to China’s expanding global ambitions.

With this very brief background, let’s get into recent developments!

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Beijing and Moscow

On 22 and 23 March, Russian Foreign Minister Sergey Lavrov met with his Chinese counterpart Wang Yi in Guilin, China. The result was a joint statement by Beijing and Moscow. 

Both China and Russia have come under criticisms from the West on human rights issues and their increasing assertiveness. Both have felt the pressure of Western criticism and sanctions. The joint statement rejects the values that the West purportedly upholds. It is a rebuke of  universal values, Western-style democracy, rules-based order, and US unilateralism.

The joint statement starts off by stating that “[t]he world has entered a period of high turbulence and rapid change”, and urged the international community to work together in establishing “a fairer, more democratic and rational multipolar world order”. In the world imagined by Beijing and Moscow, the West (and US in particular), would be displaced from its dominant position in the international system. China, Russia, and other emerging powers would expand their relative influence.

Following this, the document addresses four issues: human rights, democracy, international law, and multilateral cooperation. 

On human rights:

All human rights are universal, indivisible and interrelated....The promotion and protection of human rights is a common task for the international community, which means its members should pay equal attention to a systematic implementation of all categories of human rights. It is time to stop attaching a political agenda to the topic of human rights and abandon the practice of using it as a pretext for interfering in the internal affairs of other states and applying double standards...

    (bold emphasis added)

On democracy: 

[T]here is no single standard for a democratic model. The legitimate right of sovereign states to independently determine their own trajectory of development needs to be respected. Interference in the internal affairs of sovereign states under the pretext of “promoting democracy” is unacceptable.

On international law: 

All states, without exception, should make efforts to maintain the inviolability of the international relations system, in which the United Nations plays a central role, and of the world order formed in accordance with international law...In the context of the escalating global political turbulence, there is a need to hold a summit of the permanent members of the UN Security Council in order to establish a direct dialogue between them on ways to resolve common problems facing humanity, in the interests of maintaining global stability.

On multilateral cooperation: 

Countries must jointly respond to challenges and threats of a global nature; jointly uphold the authority of multilateral platforms and improve their efficacy; help optimise the system of global governance; jointly protect peace and strategic stability...the main instrument that should be used in international affairs is a dialogue aimed at rapprochement of all countries, not disunion; at cooperation, not confrontation.

Given the convergence of interest, the cooperation between Beijing and Moscow will likely become deeper in the years to come. The two have already agreed to build a permanent lunar base together. What more can you want!

But in all seriousness, US pressure on Moscow and Beijing is driving the two closer strategically despite the competitive aspects of their relationship, including in the Far East and Central Asia. 

At the media appearance with Wang Yi announcing the joint statement, Sergey Lavrov remarked:

all has been quiet on the Western front, whereas the East offers a very intense agenda, which is getting more varied every single year.

All Quiet on the Western Front is the English title of the 1929 novel Im Westen nichts Neues by German WWI veteran and novelist Erich Maria Remarque. The novel told of the senselessness and brutality of war, and its soul-destroying effects. Wittingly or unwittingly, Lavrov conjures a sense of an impending clash with the West in the same breath in which he talked about a bright partnership with China.

Beijing and Tehran

On 27 March, Beijing and Tehran signed a 25-year strategic cooperation agreement during Chinese Foreign Minister Wang Yi’s visit to the Middle East. This deal aims to build closer economic and political ties between the two countries, and includes cooperation in energy and infrastructure sectors. There is very little public information on the specifics, with some reports putting the dollar figure of this deal at $400 billion.

We have three observations on this deal. First, some of the same drivers that are driving China and Russia together are also driving China-Iran collaboration, namely, a common opposition in a West that is pressuring both countries.

Second, the deal undermines US efforts to isolate Iran politically. Beijing is against US unilateral sanctions on Iran, and has urged the Biden Administration to return to the negotiating table without preconditions. During his meeting with Iranian President Hassan Rouhani, Wang Yi stated that:

In view that the [US’] unilateral sanctions against Iran violate international law and cause harm to the Iranian people, the international community should work together to oppose any acts of bullying by powers...

The unilateral withdrawal of the former U.S. administration from the [Joint Comprehensive Plan of Action] JCPOA [that is, the Iran nuclear deal] created a bad precedent for non-compliance with international agreements, which was condemned by the international community. The new U.S. administration hopes to return to the JCPOA, and we welcome it. China believes that upholding the JCPOA means upholding multilateralism and upholding the authority of the UN Security Council. The JCPOA, not a revolving door, can't be willfully withdrawn from and joined in by the United States. The United States should reflect on the damage to regional peace and international stability caused by its withdrawal of the JCPOA, and reflect on the losses it has caused to relevant countries. The unilateral sanctions on Iran should be lifted as soon as possible, and the long-arm jurisdiction on relevant countries, including China, should be lifted.

Third, no, China is not about to supplant the US power in the Middle East. While it is true that China is expanding its influence in the region, it is also trying to balance its relations with Iran on one hand and Saudi Arabia on the other, and that balancing act has just became harder with the latest deal with former.

China Story

  • James Laurenceson: Costly Choices: Establishing the Facts of Australia’s China Policy Since 2016: With the relationship between Australia and China now in a stalemate and the possibility it could get worse, leading local protagonists have taken to telling a story of how things came to be. But it’s in no small part a self-serving tale, seemingly designed to deflect having to take some responsibility.

  • Kerry Liu, How are financial markets reacting to concerns over Chinese influence in Australia? Chinese influence has been the subject of heated debate in Australia since 2016. A key quandary for Australia is how to retain the benefits of its economic relationship with China while at the same time protecting its interests and values. In a recent paper, I examine how financial markets have responded to increasing concern over Chinese influence in Australia. My findings indicate that while these concerns have increased volatility of both stock market and government bond yields, and negatively affected the share prices of individual firms that are heavily reliant on Chinese markets, the overall effects are essentially insignificant.