(This column was published in DNA edition dated September 29, 2010.)
Conventional wisdom has it that economic interdependence between any two countries lowers the probability of conflict between them. The Golden Arches Theory of Conflict Prevention, propounded by globalisation guru and flat-earther Thomas Friedman, holds that no two countries with a McDonald’s franchise will ever go to war; that theory has since been disproved by the Kargil war and conflicts elsewhere. Friedman later advanced the Dell Theory of Conflict Prevention – that no two countries that are part of a major global supply chain, like Dell’s, will wage war against each other – but this time his theory came with important caveats.
China’s rapid integration with the global economy since 2001, when it was admitted into the WTO, offers plenty of scope to test the Dell Theory’s validity. Perhaps on no other front has China’s ‘economic diplomacy’ scored as well as it has with Taiwan, the de-facto independent island over which China claims territorial sovereignty. Until 2008, when a pro-independence party was in power in Taiwan, geo-strategists were convinced that the tense relationship across the Taiwan Strait was the most likely flashpoint for armed conflict in the region, which would inevitably draw in the US as Taiwan’s security guarantor.
Since 2008, however, after a pragmatist leader was elected Taiwanese President, economic and cultural relations between China and Taiwan have improved dramatically. Buoyed by closer economic engagement with China, Taiwan’s economy is poised to grow at the fastest rate in over 20 years. Of course, even today over a thousand Chinese missiles target Taiwan, as China keeps the gunpowder dry; but just last week, Chinese Premier Wen Jiabao acknowledged that the missiles “might one day” be withdrawn. In every way, China’s economic diplomacy with Taiwan is securing it mileage for its political agenda of eventual Taiwanese reunification – without conflict – and is thereby validating the Dell Theory.
It’s hard, however, to draw a similar sanguine conclusion about China’s relations with its other neighbours. For all their greater economic integration with China, and their dependence on Chinese growth (particularly after the 2008 financial crisis), South East Asian and East Asian states have faced in recent months a very muscular assertion of China’s territorial claims over disputed territory, which has escalated tensions.
An earlier round of Chinese muscle-flexing in the South China Sea, following up on the suspected sinking by North Korea of a South Korean Navy vessel, rattled smaller South East Asian littoral states so much that they invited the US to patrol the sea lanes. And last week, after a Chinese fishing boat rammed into Japanese coast guard vessels near a disputed island that both sides claim as theirs, China escalated the conflict – and eventually tasted blood when a badgered Japan released the captain of the Chinese boat.
In all these cases, it was ‘war minus the shooting’ as China leveraged the other countries’ economic dependence on it to extract political gains. And as the Japanese experience shows, it’s working for China. This shows up the limits of the Dell Theory’s validity: closer economic integration may be an antidote to traditional armed conflict, but when that economic embrace translates into excessive dependence, it enfeebles dependent states politically as well, which is no less ruinous than military inferiority.
In today’s world, economic leverage is the more effective ‘weapon of mass destruction’, which can be deployed with just as much lethality as armed conflicts in an earlier time. China has demonstrated in recent weeks just how potent that weapon is.