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An Erosion of Confidence in China

“There is no Alan Greenspan or Mario Draghi in China,” said Peng Junming of Beijing-based Empire Capital Management, referring to the former chairman of the Federal Reserve and the current president of the European Central Bank. Peng, a former official of the People’s Bank of China, highlighted one weakness of his country’s financial system. When stocks started to slide in June, no top official appeared in front of the cameras to reassure nervous investors.

The Wall Street Journal thinks Beijing’s silence is significant. “The rescue effort is missing one feature found in markets elsewhere: a senior figure stepping forward to stop the panic,”  the paper noted on Tuesday.

There are, in fact, leaders who the Chinese people see with some regularity, namely the general secretary of the Communist Party, Xi Jinping, and the premier of the central government, Li Keqiang. Neither Xi nor Li, however, has gone on the record over the stock rout. 

In Cuba, Neither Bread Nor Freedom

I’ve only visited Cuba once, in late 2013, so it’s hard to say for sure what kinds of changes Raul Castro has brought to the island since he took the wheel from his brother Fidel, but it appeared at that time that little had changed. Aside from a refurbished old quarter, Cuba looked like it was described in the 1980s or even the 1950s--though surely the urban decay is much more advanced now than it was in the 1950s.

James Bloodworth has been more than once, though, and says hardly anything has changed in the last five years. Here he is in The Daily Beast:

Perusing the drab shop fronts in Havana, resplendent with fly-blown posters of Che Guevara, Camilo Cienfuegos and other “heroes of the revolution,” I alighted on the self-evident problem with communism: Communist economies produce not what the worker needs but what a government bureaucrat has decided to make available for purchase. 

The last time I visited Cuba, in 2010, the country was supposedly on the cusp of great change (at least if you were listening to the regime’s apologists in the Western media). Yet five years later and the “reforming” Cuba of Raul Castro looks almost identical to the country ruled despotically for almost half a century by his older brother. The Soviet-style shortages persist, listless youth continue to mope everywhere on street corners and the octopus-like tentacles of the state still reach into every corner of Cuban life.  

[…]

Yet despite the increasingly cordial relationship between Raul Castro and Obama, the supposed changes in Cuba are almost entirely cosmetic. Indeed, on the streets of Havana the only discernible sign of transformation is the increasingly visible presence of a small but newly minted petit-bourgeoisie, tolerated by the Castro regime because (for the moment at least) it is unwilling to challenge the Stalinist center. Apart from this (though you wouldn’t know it from listening to White House press conferences) Cuba remains, as the revolutionary-turned-dissident Carlos Franqui once put it, “a world where the people are forced to work and to endure permanent rationing and scarcity, where they have neither rights nor freedoms.”    

Dissidents are still sent to jail, but they don’t spend as much time there. Instead they are released earlier and sent home to live under total surveillance. It’s an improvement, I guess, but the nature of the regime hasn’t changed an iota. It’s not going to change as part of American-Cuban normalization, either.

The US normalized relations with Vietnam despite the lack of political freedom there, and it normalized relations with China back when Mao was still in charge. Nothing bad happened to the United States because of it, and nothing bad will happen to the United States as a result of normalizing relations with Cuba.

One could make the argument that everyday Cubans will benefit if the economy improves—it’s better to have bread without freedom than to have neither—but I’m not convinced that Raul Castro is ready to embark on a Vietnam- or China-style liberalization of the economy. Not if virtually nothing has changed while he has been in charge, and he has been in charge now for seven years—enough time to transform the economy drastically the way the Vietnamese have if he wanted to.

Bloodworth isn’t convinced either.

Havana is “opening up” because it wants hard currency and access to markets; the only ideology underpinning the Cuban revolution these days is self-preservation and replication, and for that the regime needs an injection of cash. This means that, as in the past, the Castro regime appears to be visibly loosening the screws; however, it is doing so with a wrench firmly in hand, ready to tighten them again once the economic storm has passed.

One thing that will change as a result of normalization, however, is that the government will no longer be able to blame the United States for the scarcity brought about by its own ecnomic imbecility. 

Obama Panders to Ethiopian Dictatorship

On Monday, while visiting Ethiopia, President Obama qualified his mild criticisms of Ethiopia by saying his observations were made “from a position of respect and regard for the Ethiopian people, and recognizing their history and the challenges that they continue to face.”

Ethiopia is a dictatorship. It holds a large number of journalists and dissidents in its jails. In the last election, the ruling party received an absurd 100% of the vote. Nevertheless, in a joint press conference with Prime Minister Hailemariam, President Obama twice referred to Ethiopia’s “democratically- elected government.” Prime Minister Hailemariam chimed right in, saying his country was on “the right track” and was a “constitutional democracy.” According to the prime minister, “two decades of democratization” were not enough to overcome “centuries of undemocratic practices and culture in this country.”

De-Communization, Hannah Arendt, and Ukrainian Nationalism

It’s about 100 days since Ukraine passed its de-communization laws and guess what? The sky hasn’t fallen. The fascists haven’t taken over. Repression hasn’t set in. Which is exactly what those of us who were arguing for the laws were saying all along.

Iran is not Iowa

Leon Wieseltier, unhappy with the Iranian nuclear deal for most of the usual reasons, zeroes in on the Obama administration’s failure to appreciate the chasm that separates the regime from its people.

It is true that in the years prior to the Khomeini revolution the United States tolerated vicious abuses of human rights in Iran; but then our enmity toward the ayatollahs’ autocracy may be regarded as a moral correction. (A correction is an admirable kind of hypocrisy.) The adversarial relationship between America and the regime in Tehran has been based on the fact that we are proper adversaries. We should be adversaries. What democrat, what pluralist, what liberal, what conservative, what believer, what non-believer, would want this Iran for a friend?

When one speaks about an unfree country, one may refer either to its people or to its regime. One cannot refer at once to both, because they are not on the same side. Obama likes to think, when he speaks of Iran, that he speaks of its people, but in practice he has extended his hand to its regime. With his talk about reintegrating Iran into the international community, about the Islamic Republic becoming “a very successful regional power” and so on, he has legitimated a regime that was more and more lacking in legitimacy. (There was something grotesque about the chumminess, the jolly camaraderie, of the American negotiators and the Iranian negotiators. Why is Mohammad Javad Zarif laughing?) The text of the agreement states that the signatories will submit a resolution to the UN Security Council “expressing its desire to build a new relationship with Iran.” Not a relationship with a new Iran, but a new relationship with this Iran, as it is presently—that is to say, theocratically, oppressively, xenophobically, aggressively, anti-Semitically, misogynistically, homophobically—constituted. When the president speaks about the people of Iran, he reveals a bizarre refusal to recognize the character of life in a dictatorship. In his recent Nowruz message, for example, he exhorted the “people of Iran … to speak up for the future [they] seek.” To speak up! Does he think Iran is Iowa? The last time the people of Iran spoke up to their government, they left their blood on the streets.

Is It Time for a New Welles Declaration?

“During these past few days the devious processes where under the political independence and territorial integrity of the three small Baltic Republics—Estonia, Latvia, and Lithuania—were to be deliberately annihilated by one of their more powerful neighbors, have been rapidly drawing to their conclusion.” Thus begins a declaration, issued 75 years ago this week, with which the United States government announced that it would not recognize the newly occupied Baltic states as part of the Soviet Union. The declaration, known as the Welles Declaration after Acting Secretary of State Sumner Welles, was joined by 50 other countries and lasted until the Baltic states gained independence five decades later.

North Korea Rolls Back Economic Reform

Kim Jong Un, the North Korean ruler, has reportedly ordered the removal of foreign products from his country’s markets. Said an official in North Hamgyong Province, “I was told by North Korea’s central authorities not to stop travelers from bringing in products from China through customs, but to strictly prohibit sales of the products in the market.”

The move at first looks like an attempt to target China, the source of many of the goods sold in the North, but Pyongyang could also be trying to implement a broad anti-reform agenda.

The President’s Preferred Bad Deal

“What is your preferred alternative?” President Obama challenged critics of his nuclear deal with Iran during a press conference last week. “There really are only two alternatives here,” he then claimed. “Either the issue of Iran obtaining a nuclear weapon is resolved diplomatically through a negotiation or it’s resolved through force, through war.”

Upon announcing the nuclear deal the day before, Obama made a similar point. “Consider the alternative,” he warned. “Consider what happens in a world without this deal. … No deal means a greater chance of more war in the Middle East.”

Ho Chi Minh's Nightmare

Six months ago I wrote a long essay about Hanoi for City Journal. The magazine is quarterly, and the story got bumped from the Spring issue since it's not time-sensitive, but it's in the Summer issue. Here's the first part:

After the Vietnam War ended in 1975, Hanoi, capital of a now-unified, Communist Vietnam, was a bombed-out disasterscape. Residents lived under an egalitarian reign of terror. The grim ideologues who ran the country forbade citizens to socialize with or even speak to the few foreign visitors. People queued up in long lines past government stores with bare shelves to exchange ration coupons for meager handfuls of rice. The only traffic on the street was the occasional bicycle.

Since then, however, Hanoi has transformed itself more dramatically than almost any other city in the world. Today, the city is an explosive capitalist volcano, and Vietnam is rapidly on its way to becoming a formidable economic and military power. “Many revolutions are begun by conservatives,” Christopher Hitchens once said, paraphrasing John Maynard Keynes, “because these are people who tried to make the existing system work and they know why it does not. Which is quite a profound insight. It used to be known in Marx’s terms as revolution from above.” That’s exactly what happened in Vietnam, though the revolutionaries weren’t conservatives. They were Communists.

Hanoi had a rough twentieth century. The French invaded and made it the capital of colonial French Indochina in 1887. The Empire of Japan seized the city in 1940 and annexed Vietnam to its fascistic Greater East Asia Co-Prosperity Sphere. Ho Chi Minh declared Vietnam an independent state after World War II, and his Viet Minh forces controlled a few scraps of territory, but the French returned in force in 1946 and didn’t leave until Ho’s Communist army forced them out in 1954. Hanoi then became the capital of the misnamed Democratic Republic of North Vietnam. Decades passed in squalor and brutality. Ho’s centrally planned Marxist-Leninist system ravaged the economy, and war with the United States and the American-backed government of South Vietnam—which included aerial bombardment of Hanoi itself—made the devastation complete. More than 1 million Vietnamese died.

The North Vietnamese won their civil war in 1975 and imposed the same draconian economic and political system on the South. Saigon, the South’s former capital, suffered when the North took over. “All the schools were shut down,” says Tuong Vi Lam, who vividly remembers when her side lost the war. “My aunts and uncles were in college and they had to quit. They just couldn’t get there. Property was confiscated and given to northerners. Communist propaganda was even put in our math books. We had questions like this: ‘Yesterday a soldier killed three Americans and today he killed five. How many Americans did he kill total?’ The books don’t have those kinds of questions anymore, but they did for five or ten years.”

Vietnam was finally independent and unified, but it fared no better than the Soviet Union, North Korea, or Cuba—and almost everyone knew it, including many in the Communist leadership. In the mid-1980s, a fight broke out between those who wanted to continue with the old system and those who had already benefited from quiet micro-capitalist reforms enacted in 1979 and wanted to expand them. Southerners made noise about returning to the pre-Communist system that they knew, from personal experience, worked much better. The relative economic success of other Southeast Asian nations, especially Thailand, was obvious even to the ideologues.

The advocates of change won the argument, and in 1986, the government officially abandoned Marxist-Leninist economics and announced the Doi Moi reforms, defined as an attempt to create a “socialist-oriented market economy.” Presumably, party leaders left the word “socialist” in there because they were embarrassed by Marxism’s failures and couldn’t admit that they’d been wrong. Or perhaps they feared that their remaining supporters were allergic to the word “capitalism.” No matter. Vietnam officially junked Communism a mere 11 years after imposing it on South Vietnam.

State subsidies were abolished. Private businesses were allowed to operate again. Businessmen, investors, and employees could keep their profits and wages. Farmers could sell their produce on the open market and keep the proceeds instead of giving them up to the state. The results were spectacular. It took some time for a middle class to emerge, but from 1993 to 2004, the percentage of Vietnamese living in poverty dropped from 60 percent to 20 percent. Before Doi Moi, the command economy contracted, and inflation topped out at over 700 percent; it would eventually shrink to single digits. After years of chronic rice shortages, Vietnam became the world’s second-largest exporter of rice, after Thailand. Progress hasn’t slowed. In 2013, Vietnam’s economy grew by 8.25 percent. “The number of malls, shopping districts, and restaurants is amazing compared with when I was a kid,” says motivational speaker Hoan Do. “Eighteen years ago, the entire country was broken down. There was hardly any technology, but now even poor people can go to an Internet café and log on to Facebook and YouTube.”

The South led the way. “When the Communist leadership decided in the mid-1980s to put Karl Marx and Adam Smith into an economic blender and see what came out,” reporter David Lamb wrote, “Southerners, exposed to capitalism for decades, were far more comfortable than their northern brethren in adapting to the demands of free markets.” Yet Hanoi eventually liberalized, too, and though it still lags behind Saigon (which the government renamed Ho Chi Minh City in 1975), it has made breathtaking economic progress.

Hanoi’s economy looks and feels entirely unregulated; the city bursts with activity. Though luxury boutiques, technology stores selling Apple products, high-fashion clothing outlets, and international food chains are easy to find, individual street-front proprietorships predominate. The state still owns or controls some of the largest companies, but the vast majority of businesses are too small to be centrally managed. On a single block, I saw the following for sale: Vietnamese flags, Ho Chi Minh T-shirts, candles, incense, bolts of cloth, used clothing from the U.S., fake money to burn in offerings to ancestors, Angry Birds toys, exotic fruit, meat skewers, iPhones, tea, jewelry, Italian shoes, French pastries, spices, herbs, motorcycle helmets, bootleg CDs, bootleg cigarettes, Japanese BBQ, carpets, funeral boxes, silk, paintings, and bootleg paperbacks with misspelled blurbs on the back.

The city is extremely business-friendly. I asked a local man who works for an American company how hard it is for foreigners to invest and go into business in Hanoi. “The Vietnamese government makes it easy,” he says. “Just present them with a business plan, tell them what you want to do, and you’re good to go.” The same goes for small businesses. All you have to do, he says, “is rent the space, pay the taxes, and that’s it.”

The United States didn’t normalize diplomatic relations with Vietnam until 1995, so American companies got into the game only recently, but their presence is evident now. It’s impossible to miss the Starbucks, KFC, Pizza Hut, and Burger King franchises. General Motors, Dell, Visa, General Electric, and countless others have invested here, too. The Vietnamese want more and will soon get it: Washington is poised to enact the Trans-Pacific Partnership (TPP) with 11 Pacific Rim nations, including Vietnam. The TPP will remove outdated bureaucratic trade obstacles on both sides while enforcing labor standards, environmental protections, and intellectual property rights.

Vietnam even boasts its own high-technology start-ups. “The incubation and funding of tech start-ups is still a fragmented segment of our economy,” says Nguyen Pham, founder of the start-up incubator 5desire, “but we’re working on streamlining the process and modeling it rigorously after those in Silicon Valley. We organize technology events that attract world-class foreign speakers and investors. One of our notable events was Hackathon Vietnam 2014, where we partnered with Formation 8—a well-known venture capitalist firm from Silicon Valley—and with the ministry of science and technology in Vietnam. More than a thousand people attended, more than 60 percent of them developers.”

I’ve been to 15 formerly Communist countries, plus Cuba, which is still Communist. (See “The Last Communist City,” Spring 2014.) Vietnam is the only one with good cuisine. I can’t recall enjoying a single quality meal in Europe’s former Communist bloc. Marxism bulldozed restaurants along with everything else, and chefs in post-Communist Europe haven’t had much time to master their craft. Cuba’s food is still mostly terrible, though a handful of restaurants are privately owned and offer tolerable fare. The biggest problem there is a chronic shortage of quality ingredients. Yet Vietnam—still nominally Communist—somehow has outstanding food everywhere, even on the street. It must be some combination of the ingredients, the cooks, and the cuisine itself.

Prosperity never guarantees an aesthetically pleasing urban environment, but Hanoi is easy on the eyes. The city center is dominated by the charming but chaotic old quarter and the more stately and orderly French quarter, just minutes away on foot. Both neighborhoods are anchored by Hoan Kiem Lake, the city’s cultural center. Its name means “returned sword,” after the weapon that the gods supposedly gave Emperor Le Loi in the fifteenth century, which he used to drive out the invading Chinese. Hanoi sparkles with lakes—Hoan Kiem is only the most famous—and it’s studded with an even larger number of ancient Buddhist pagodas with vertical Chinese characters on the walls.

The most exquisite buildings are French and Chinese, but the simpler Vietnamese homes can also be striking. Many look as though the architects mashed Victorian, French, brownstone, and Thai architecture together, and then squeezed the final product into a vise to make it taller and narrower. (Homes and businesses get taxed by their width.) Vietnam’s Communists were wrong about almost everything, but at least they elided some of the mistakes made by their comrades elsewhere in the war against anything old. Hanoi is blessedly free of an asteroid belt of Soviet-style garbage architecture on the outskirts, the kinds that blight so many formerly Communist cities in Europe. I did see a few soul-crushing structures made of poured concrete, but for the most part, these kinds of buildings were never built, or were torn down, or have been overwhelmed by an explosion of new and better construction. Hanoi has grown exponentially since its worst days—the city’s population, under 1 million in 1979, now exceeds 7 million, making it larger than every American metropolis but New York—so perhaps the ugly stuff has just been obscured.

Read the rest in City Journal.

The War Arrives in Turkey

A suicide bomber killed 28 people in the Turkish city of Suruc, just across the Syrian border from the Kurdish city of Kobane that ISIS fought for and lost last year.

Kobane has been devastated, and the site where the blast occurred hosted a meeting of pro-Kurdish groups discussing how to rebuild the city.

No one has claimed responsibility yet, but the attack comes mere days after Turkey supposedly made its very first attempt to crack down on ISIS with a wave of mass arrests.

Maybe the Turkish government only arrested people to get Western critics off its back. And maybe the government has finally woken up to the fact that ISIS, unlike the Kurds, is a threat to the entire human race.

ISIS won’t inevitably attack any place on earth. Micronesia is probably safe. So is Belize. North Korea has other problems. But Turkey is right next to ISIS. If Syria, Iraq, Egypt, Libya, and Tunisia aren’t safe, neither is Turkey.

China’s ‘Core Interests’

Two weeks ago, Thailand forcibly repatriated more than 100 Uighurs, ethnically Turkic Muslims, to their home region of Xinjiang, in China’s northwest. Beijing asserted the Uighurs were aspiring Islamist terrorists, a label authorities often apply to those seeking to preserve Uighurs culture, language, and religion. One of these is Ilham Tohti, a secular professor and blogger sentenced to life in prison in 2014. His “crime” was to argue it is Beijing’s harsh policies that lead to radicalization and stoke conflict between Uighurs and ethnic Han Chinese. 

These unfortunate people may be the largest known group whose return China has demanded but other countries, including Cambodia and Malaysia, have also forced back Uighurs to China, where they face imprisonment. Their plight ought to prompt greater attention to what’s happening in Xinjiang, but also to the rationale Beijing uses to justify it.

China’s Last ‘Immortal’ Dies

Wan Li died last week, according to his son. Bloomberg called him the last of the Chinese Communist Party’s “Eight Immortals,” revered post-revolution-era figures. He was 98.

Wan, a reformer, oversaw the breakup of agricultural collectives in eastern Anhui Province, paving the way for family farming. He retired in 1993 after serving as chairman of the National People’s Congress as well as Beijing party chief, railway minister, and vice premier. In 2004, Wan boldly called for liberalization of the party’s decisionmaking.

Syrian Refugees, Through a Rose-Colored Lens

One of the entries in the recent American Film Institute documentary film festival was Salam Neighbor, made by two young American filmmakers who were embedded for a month at the enormous Zaatari refugee camp for Syrians in Jordan. Chris Temple and Zach Ingrasci were allowed to live in a UN tent in January and February of this year. Their aim, they said at a special presentation of the movie in Washington, was to shed light on an aspect of the current Middle East turmoil generally given short shrift by the Western media. In other words, news reports concentrate on the fighting and the shifting balance of territorial control, but the fate of refugees is generally relegated to a footnote in the story.

An Uncertain Future

Ian Bremmer, president of the Eurasia Group, argues that the deal with Iran is better than no deal even though he doesn’t expect Iran to stick to its side of the bargain, even though he thinks “the arbitration mechanisms will be challenging,” and even though he expects no one to be as interested in reimposing sanctions in the future as the United States will be.

It’s a tough case to make, and he admits that it’s a close call, but his upbeat argument is more worth reading than most because he acknowledges that the deal’s critics have a strong case.

More convincing, to me anyway, is Elliot Abrams’ argument that Iran got a far better deal than it had any right to expect.

Truthfully, though, this could go either way. Paul Berman, in an interesting short piece for Tablet, argues that the nuclear deal will work smashingly well if political change comes to Iran in the short or medium term and that it will be a disaster if it does not.

The deal will turn out to be a disaster because, in the short run, it will strengthen the Islamic Republic conventionally and, in the long run, will strengthen the Islamic Republic unconventionally—and, all the while, the Islamic Republic will go on treading the dead-end path of violence and rigid ideology and the dream of eradicating demonic enemies. It is hard to imagine how, under those circumstances, the deal will reduce the chances of war…

And if the deal turns out to be a good deal? This could be the case on one ground only: if the deal promotes the kind of Iranian interaction with America and the world that, as the years go by, will erode the appeal of “rigid ideology.” And the deal will turn out to be good—better than good, magnificent—if it buys sufficient time to allow the erosion to take place and the change in thinking to occur. Everything depends on this one point.

Indeed, everything does depend on that point.

Look. No one has any idea, really, what’s going to happen in Iran over the next couple of years. That country has been on the verge of revolution against the regime for some time now, and almost pulled it off after Mahmoud Ahmadinejad’s rigged election.

Perhaps it will happen next year or the following year. Or perhaps the regime will stagger onward for decades like the Soviet Union did, long after it should have expired.

None of us knows. And because we don’t know, we can’t really know if this deal will work out or not. But if Iran doesn’t change for the better—and the regime certainly isn’t planning to change for the better—we’re going to have to start over from zero.

Two Mass Graves: Ukrainians and Jews

I discovered two mass graves in the forest near my mother’s home town in western Ukraine, Peremyshlyany, located 47 kilometers east-southeast of Lviv.

The former Przemyślany is also a former shtetl. Its prewar population was about 5,000; its current official population is 7,000–8,000, though, given the large number of residents working abroad, it’s probably closer to the prewar level. The composition of the town has changed dramatically. The Jews and Poles, who comprised about 45 percent apiece of the prewar population, are gone: killed, expelled, or fled. About 90 percent of the prewar Ukrainian population had also been killed or expelled, or had fled. Most of the town’s current Ukrainian inhabitants have no roots in Peremyshlyany, being the progeny of villagers who settled there after World War II.

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