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The Human Rights Blog of the Leitner Center for International Law and Justice


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Usurious counterweights: the human rights impact of the Asian Infrastructure Investment Bank

By Chris Beall

By the end of this year, proposals for the new, China-led Asian Infrastructure Investment Bank (AIIB) are expected to take full effect, thereby producing the first real and substantive counterweight to the status quo system of public international development and global finance that the world has ever seen.

TRACING THE HISTORY

To understand the potential impacts of this development requires a general sense of the process that brought us here, and the motivations that have propelled the creation of the AIIB. Oddly enough, that history traces its origins to a small resort town in rural New England, and the world-changing conference held there just over seventy years ago.

In July 1944, Bretton Woods, New Hampshire served as the stage for the United Nations Monetary and Financial Conference, a three-week gathering that hosted some of the world’s most influential economists and financiers. Their task was nothing short of overwhelming: to reformulate the global monetary order, and set regulatory policies that would govern international post-War economics. In this, the Bretton Woods Conference certainly succeeded.

Far from some seedy and exploitative high-finance conspiracy, the goals of the Bretton Woods Conference itself were commendable. Faced with World War II’s destruction of a good portion of the world’s industrialized economies, the plan was to create a system of public lending that would facilitate (mostly European) reconstruction, while also paving the path to an integrated and cooperative financial order that would stymie the underlying economic sources of global world wars.

In this, John Maynard Keynes’ proposals at the Conference are instructive. Negotiating for Great Britain, Keynes proposed the creation of an international lending institution that would essentially incentivize (read: force) the reinvestment of excess capital from surplus-nations into the empty coffers of debtor-nations, thereby allowing robust and largely autonomous sovereign state-spending projects. As the archetypical critic of flawed austerity policies, Keynes’ proposal would have provided developing nations with access to much-needed investment capital, and allowed them some semblance of freedom in crafting development plans curtailed to their individual needs.

Considering the havoc wrecked on the global periphery under British colonialism, it was an ironically unfortunate development that, in this instance, Britain’s position at Bretton Woods no longer carried the roar of the Commonwealth’s lost Victorian hegemony. Instead, a new international hegemon had entered the fray—a nation that had fared quite well economically during the war, and at the time possessed two-thirds of the world’s gold reserves. Not looking to have its own massive surpluses doled out in faraway places, the United States put its foot down. Without getting into the specifics, Keynes’ benevolent international lender was construed as something else entirely: an essentially U.S.-led, U.S.-dictated body of public lending institutions, that would set international lending policies in ways that primarily favored, to no surprise, the investing economy of the United States of America. Thus came about the birth of the International Monetary Fund (IMF) and the World Bank.

Considering the catastrophic progeny of these institutions, one might reasonably wonder why viable public lending alternatives have not cropped up sooner. The essential business model of the Washington Institutions over the past 60 years has been to take desperate, bankrupted nations, and condition life-boat capital injections on the forced implementation of austerity measures, structural adjustment programs and statewide debt-peonage. If nation X, for whatever reason, can’t pay its bills, the solution of the IMF has been to offer rescue packages in exchange for not only repayment with interest, but also economic reform obligations that gut public sectors, clamp down on state spending and eradicate social welfare systems. In terms of the World Bank, development has been blindly premised on returns on investment, with concerns toward something as moralistic as human rights or environmental impact entirely absent.

This logic stems from a very narrow and neoliberal conception of 21st century capitalism: damn your schools, your hospitals and your public works programs, only privatization and the attraction of predatory foreign investment can elevate savage economies unto the enlightened community of fiscally responsible nations. Never mind those real people with a reliance interest on crucial public services, nor those whose income depends on state spending—creative destruction!—it’ll hurt before it gets better. In short, a nation’s health is measured strictly in capital inflows, and without seeming to realize that capital can and does often leave as quick as it comes, nothing attracts the vultures like the carrion of a freshly dead public sector.

Whatever the reason for the lasting power of the Washington Consensus, the impact of a U.S.-tailored IMF and World Bank has not been lost on those very nations and populations that occasionally find themselves helplessly knocking at the counter of the IMF and the World Bank. And so, here at last, comes China’s AIIB.

AN ALTERNATIVE BANK

The proposed logic of the AIIB is to provide a Chinese alternative to the U.S.’s global lending system, the only real global lending system that has existed for the past half a century. For the first time, developing nations in Asia will have an alternative when it comes to taking on public loans. It’s hardly surprising, then, that the United States has tried pressuring our traditional allies from having anything to do with this new institution. So far, these efforts have failed, and I, for one, welcome such failure.

If we’re going to concede to the capitalist logic that espouses the dynamism of capitalism—the only logic that currently holds force in our world—then it seems entirely disingenuous to then deny the capitalist logic that competition will foster more favorable consumer circumstances. In this case, more favorable for nations shopping for loans. If the IMF and the World Bank are forced to compete for the debt of developing nations (at least in Asia, anyway), then I cannot help but feel that those developing nations actually stand to gain from the mere presence of an AIIB. The strong-arm monopoly power of structural adjustment programs and forced austerity measures could finally face a worthy opponent in the AIIB. Indeed, the IMF and the World Bank’s recent self-criticism and subsequent policy shifts seem to support this assertion.

And yet, there’s more to the story. Nobody actually believes that the AIIB is going to be some benevolent people’s lending institution, along the lines of Keynes’ rejected Bretton Woods proposals. Unfortunately, it would take a worldwide catastrophe and a global concentration of priorities on the level of World War II to even narrowly jar open that window again. Instead, the AIIB will be a China-centric international lending body, which will ultimately serve Chinese interests and Chinese dominance in the region. Lest we forget that self-interest is still the crux of the logic of capitalism.

Nor does to say that developing nations will benefit from lender competition and choice inherently mean that international human rights will share in this benefit. Even in the absence of an AIIB, China has shown a pretty cold calculus when it comes to with whom it does business. We might question whether we want some particular regimes to be given unrestricted access to capital and the infrastructure that solidifies their political power. Whatever largely unutilized sway the World Bank might have had in attaching rights-focused strings to their lending packages is about to be rendered moot by a competitor with an outright blind regard for their clients’ conduct in the world. China’s own human rights record, especially in terms of rights-focused development, leaves a lot to be desired. This should worry us, even if we admit that the demonstrated concerns of the United States were always more rhetorical than substantive. Likewise, when it comes to the type of industrial development we would like to see in the world. China is perhaps one of the few modern powers with a more reprehensible global warming attitude than that of the United States. Again, we have reason to lament so much lost potential throughout the World Bank’s monopoly era.

But these concerns, while real and worthy, should not be mistaken for the actual concerns of U.S. efforts to stop the AIIB. Sure, they’re being cited by the Obama administration, who is espousing the high lending standards of our precious World Bank. But in reality, this is just nation-states behaving as nation-states do. The AIIB will increase Chinese influence in Asia, and U.S. influence will diminish there in the process. Perhaps this whole question boils down to whether that development is something you would like or not like to see in the world. Surely, there are arguments to be made for both sides.

BANKING FOR HUMAN RIGHTS?

So, what to take away, then? The recent shifts in the IMF and World Bank’s own policies are certainly positive developments, and regardless of how much these shifts correlate with the AIIB’s founding, they should be celebrated as such. If the Washington Institutions were to follow through with these changes—here, a corrective jubilee would be a great start—perhaps there is some core competency to be carved out in this newly competitive space. Perhaps something along the lines of a truly sustainable development lending institution—the (sigh) Whole Foods of public international finance—is on the way. A quality-focused differentiation strategy could separate Washington from the AIIB: a system where debtors opt for, perhaps even pay slightly more for, lending packages that will grant them diplomatic kudos in exchange for their adherence to the radically different priorities of a reformed Washington Consensus: lending and development that plays particular attention to environmental and human rights concerns. This would allow global development along lines that the US would ostensibly like to see in the world, while simultaneously curbing China’s rising influence in a positive manner. Maybe. Perhaps, on the other hand, the unfettered access of rogue regimes to Chinese capital will blow up in the faces of the AIIB, thereby teaching the whole world some warm and fuzzy lesson in the process. Taking from current events elsewhere, Iran’s strained investments in Syria, for example, could prove instructive.

Or, perhaps the most we can hope for, is that the coexistence of the World Bank and the AIIB provides some constrained and relatively safe space for the U.S. to come to terms with the rise of Chinese hegemony in the region, in a manner that protects the interests of both nations and promotes mutual cooperation among them. In short, “a case for accommodation, not confrontation.” Such a development would be welcome for the future of international human rights in any return to a bipolarized world. If parallels may be drawn to the Cold War, using the rise of the AIIB to foster accommodation and cooperation, rather than a coming century of US-Chinese hostility, might be doing the whole world a favor. If the United States cannot prevent the ascent of Chinese predominance, then perhaps we can at least gracefully bow out of regional hegemony in a manner that positively influences China’s future in Asia. Perhaps in doing so, the United States can in some small way live up to its rhetorical human rights promise. Put differently: perhaps Keynes’ wisdom at Bretton Woods was at least partially premised on that, at the time, Great Britain knew a thing or two about the twilight of empire. Whatever comes next, maybe our own practices will share in this wisdom.

To cross your fingers is one thing. To hold your breath is another.

Chris Beall is a Staff Writer for Rights Wire.

The views expressed in this post remain those of the individual author and are not reflective of the official position of the Leitner Center for International Law and Justice, Fordham Law School, Fordham University or any other organization.

Photo credit: Richard Schneider/Creative Commons

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Tom, Jerry and the Beijing Five

By Jennifer Li

Sometimes, lawyers are most effective when using cartoon analogies. “The Chinese government is a like cat,” explained Liu Wei, a lawyer from China, on a recent afternoon in New York. “And NGOs in China are like a small mouse. The cat will humor the mouse and sit quietly while watching the mouse play. The cat is not worried about losing control of the mouse. But if that mouse grows too large, the cat will no longer just sit by.”

In the two days preceding International Women’s Day on March 8, 2015, five prominent women’s rights defenders were detained by Chinese authorities in the cities of Guangzhou, Hangzhou and Beijing. These activists – Li Tingting (also known as “Li Maizi”), Wu Rongrong, Zheng Churan (nicknamed “Datu,” or “Big Rabbit”), Wang Man and Wei Tingting – are young, prominent women’s rights activists who, at the time of their detention, were preparing to launch a nationwide campaign on raising awareness about sexual harassment aboard public transportation. According to reports, the activists were initially detained under suspicion of “picking quarrels and provoking troubles” – an oft-cited basis for detaining political dissenters. After failing to secure approval for formal arrest from the prosecutor’s office before the legal limit of 30 days, the police attempted to even further prolong the detention of the women under the charge of “gathering crowds to disrupt order in public places.” On April 13, after 37 days in detention, all five women were granted a “release on guarantee pending further investigation,” a bail-like procedural measure that places constraints upon their freedom of movement and communications, and subjects them to future summons for additional interrogation. All criminal charges against the activists remain.

The unlawful detention of the five women activists garnered widespread attention outside China, drawing calls for their release from foreign governments and officials, including Samantha Power, U.S. Ambassador to the U.N., and Hillary Clinton, former U.S. Secretary of State. Indeed, the circumstances and conditions of their detention were plainly inconsistent with not only international legal norms and standards, but also Chinese domestic law. At the time of their detention, several women were not shown proper warrants; none had access to counsel until nearly a week after they were all transported from their respective cities to Beijing; and at least one of the activists, Wu Rongrong, was not provided immediate access to critical medical care and treatment. These and other actions by the Chinese authorities were in violation of China’s constitution and other domestic laws, including the Criminal Procedure Law and Law on Lawyers. The conditions of the activists’ detention were also inconsistent with international treaty and customary laws on the freedoms of opinion and expression and the treatment of persons in detention, as enshrined in the Universal Declaration of Human Rights, the International Covenant on Civil and Political Rights, and the UN General Assembly resolution on women’s human rights defenders, among other instruments.

The recent detentions reflect an energized effort by the Chinese government to crack down on perceived political dissent. Liu, who has worked for years on women’s rights and children’s issues in China, describes the activists’ detention as a bellwether of the government’s renewed suppression of civil society in the country. “There will be a before [the Beijing Five],” she predicted, “and an after.” Liu described the three short years between 2010 and 2013 as a period of relative relaxation for NGOs inside China – when the Chinese government was merely mouse-sitting, so to speak. Whether organizations worked on issues relating to labor rights or women’s rights, they operated in a culture of relative stability – or, as the Chinese like to say, crossed the river by feeling the stones (摸着石头过河).

Starting in late 2013, however, the government under President Xi Jingping began to demonstrate an increased vigilance to realizing a “socialism with Chinese characteristics” system of governance, which, according to an August 2013 Chinese Communist Party (CCP) directive, includes a rejection of certain “universal values.” Among the seven-fold perils of universal – but, specifically, “western” – values that the CCP pledged to purge are the promotion of civil society, press independence and “universal values” that take the form of freedom, democracy and human rights.

As Liu explained, the end of 2013 signaled the beginning of some mafan (麻烦) for Chinese NGOs. Mafan is a Chinese term that can be broadly used in several ways, for example as an innocuous noun (“inconvenience”) or as slightly more serious adjective (“troublesome”). It can also be used as a verb (for example, “Would it mafan the Chinese authorities if I asked for my lawyer?”). In the case of NGOs and human rights defenders, that mafan has taken the form of increased censorship, intimidation, harassment and arbitrary detentions, all simultaneous to the diminishing of space to engage in advocacy work. As a further reflection of official hostility toward civil society in China, last December the government introduced a draft law that would greatly restrict the funding and operations of foreign NGOs, as well as domestic NGOs that work with foreign organizations, within China. The draft law claims to be intended to bolster “national security and social stability,” but activists fear it will be used as a tool to further the harassment of NGO workers and place restrictions on their activities, as well as to further the expulsion of foreign NGO workers.

Indeed, the detention of the women activists seem arbitrary and the activities for which they were detained – to put up posters and join a march to raise awareness about sexual harassment – innocuous. All five activists were affiliated with Yirenping Center, a non-profit that promotes gender equality and provides services to individuals with H.I.V., hepatitis, and physical disabilities. On March 26, security agents raided the Beijing offices of Yirenping, the second time it has raided a Yirenping office in less than a year. Liu speculates that the detention of the activists for their activities – combatting sexual harassment and disease – have been merely a means to an end, the government’s way of going to extreme and disproportionate lengths to silence alleged political agitators.

The increased government measures forcing Chinese civil society underground also coincided with two politically sensitive periods last year – the 25th anniversary of the 1989 Tiananmen Square protests (known inside China as the June Fourth Incident) and the Hong Kong student protests. When asked whether the government’s tightened restrictions on NGOs might have been a response to the Hong Kong protests, Liu expressed skepticism, observing that the protests actually drew little attention from people inside China. By the same token, few in China today are aware of the detention of the women activists. But if more people become aware of their detention, she warned, the government would face significant backlash. “These are educated, Chinese girls in their 20s and 30s who were fighting sexual harassment,” she said. “Can anyone actually say they are not in support of fighting sexual harassment? The Chinese community would no doubt be very sympathetic to theses girls.”

Foreign lawyers and organizations seeking to help alleviate the pressure on Chinese NGOs and human rights defenders may face internal resistance. “The Chinese have always been of the mindset that one must solve one’s own problems,” Liu explained. Regardless, the critical problem remains that Chinese people are not aware of the ways their freedoms have been suppressed, and the concept of human rights can be difficult to understand and internalize when there is little basis for comparison.

But that seed of recognition can take root quickly. Liu offered her mother as an example, “This is my mother’s first time outside of China. She does not speak English and does not socialize with Americans. But after only a year, she has gained enough exposure from day-to-day life here to understand that the Chinese government is oppressive. She was surprised at the way the American authorities were open to criticism after the Ferguson case. The way people protested on the street without any interference from the police officers, who just stood by and let them!”

Jennifer Li is a Staff Writer for Rights Wire.

Photo credit:  Z4nclr4/Creative Commons