Welcome to Bundle of Contradictions

"A foolish consistency is the hobgoblin of little minds"

Dear friends,

Thanks for signing up to this occasional newsletter. I decided to launch Bundle of Contradictions to share thoughts, recommendations and updates on the various places and issues that I cover as a foreign policy analyst for the Lowy Institute (chiefly Southeast Asia and Hong Kong).

What is Bundle of Contradictions all about?

As a journalist, I learned to “simplify and exaggerate”. As an analyst, I’m always under pressure to come up with over-arching frameworks to explain the world. But politics, like life itself, is rarely so straightforward.

I’ll use this newsletter to highlight the contradictions I observe. Being contradictory, I will also sometimes make the case that things are indeed much simpler than people imagine.

The title was inspired by my forthcoming book, Man of Contradictions: Joko Widodo and the Struggle to Remake Indonesia (published by Penguin Random House on September 1 as part of the Lowy Institute Paper series). The first English-language biography of Indonesia’s president, the book is an attempt to make sense of one of the world’s most important and least understood leaders.

As I grappled with Jokowi’s many inconsistencies, one of his ministers told me that the president was a “bundle of contradictions”, an embodiment of the deep tensions in modern Indonesian history. It reminded me of the classic lines from Ralph Waldo Emerson, the American essayist: “A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines… To be great is to be misunderstood.”

So what’s been going on in the last month? Other than finishing the edits to my book, I’ve been busy watching Hong Kong, where Beijing has effectively eradicated the city’s remaining autonomy, pondering the impact of Chinese economic coercion and thinking about the future of Southeast Asia (which like Hong Kong cannot escape China’s looming shadow).

The death of Hong Kong (again)

People have been forecasting the death of Hong Kong for quite some time, as the Chinese Communist Party has tightened its squeeze on the city’s freedoms, autonomy and separate identity. Tania Branigan and Lily Kuo have a good long read for The Guardian on how we got here. The fears about Hong Kong’s demise, of course, pre-date the handover in 1997, with this 1995 article by Fortune a case in point.

But the last month has been truly - and sadly - destructive for Hong Kong’s unique status as a (mostly) free city in China and an example that Marxism-Leninism and liberal democratic values can find a modus vivendi.

As last year’s unprecedented pro-democracy protests fizzled out, Beijing indicated that it was going to crack down hard on the city and take more direct control of Hong Kong affairs. That prompted me to write a piece for Nikkei Asian Review in mid-May arguing that, despite the freedoms and autonomy promised in Hong Kong’s mini-constitution, the effective “Basic Law” was becoming: “what Beijing says, goes”.

The actual Basic Law was always a deeply contradictory document. Democrats like to highlight the cuddly, liberal parts about rights, freedoms and autonomy. But there are plenty of authoritarian-friendly elements too, from Beijing’s right to vet senior appointments, to its power to issues directives and “interpret” the Basic Law, and the requirement for HK to implement national security legislation.

Speaking of which, after HK failed to bring in said legislation during the last 23 years, China’s rubber-stamp parliament decided to do it for Hong Kong. (One delegate to the National People’s Congress actually voted against the proposal, prompting a diplomat friend to wonder whether a trapdoor in the Great Hall of the People had immediately opened up beneath the naysayer.)

Although we haven’t seen the wording of the law yet, the manner of its introduction is almost as damaging as whatever comes next. With Beijing promulgating a law for Hong Kong, it has become clear that the city no longer has any meaningful autonomy. I worked on a few pieces to help explain what’s going on:

• I wrote about what the national security law means for international investors for the Australian Financial Review - in short, it’s getting harder for businesses to bury their heads in the sand.

• Many outsiders are struggling to understand why Beijing doesn’t just leave tiny Hong Kong alone to fester in its own divisions. I tried to explain “why Beijing feels compelled to destroy Hong Kong’s freedoms” for the Sydney Morning Herald.

• To make sense of whether, in fact, Hong Kong is dead yet, I argued at the University of Cambridge’s Centre for Geopolitics that it’s helpful to distinguish between the city’s autonomy, its freedoms and the “Two Systems” construct. This is the nub of it:

  Macau offers a practical, if depressing, example of a Chinese special administrative region that has no effective autonomy and minimal freedom but still has a distinct “System” and enjoys unique economic privileges. But Hong Kongers will not accept such a fate so meekly

I also chaired a Lowy Institute online discussion with three passionate and insightful people who have been at the heart of recent events in Hong Kong, in their own different ways: Dennis Kwok, a pro-democracy legislator who has been targeted for disqualification by Beijing, Bonnie Leung, who organised last year’s mass protests against the extradition bill, and Sue-Lin Wong, who replaced me as the South China correspondent at the Financial Times and is soon joining The Economist.

With the three speakers dialing in from Hong Kong, it seems we were lucky that we didn’t get booted off Zoom.

How to handle China’s economic threats?

This is a question faced by the growing number of companies and countries that fall foul of the Chinese Communist Party’s many red lines. It used to all be about the three Ts (Taiwan, Tibet and Tiananmen). But now you can add Hong Kong to the list of sensitive subjects, as well as Xi Jinping himself and the South China Sea (technically a nine-dashed rather than a red line).

I’ve long been interested in the effectiveness of China’s economic boycotts and wrote a Big Read with FT colleagues about the issue back in 2017. (It’s available to non-subscribers in a free PDF thanks to the Macau Daily Times.) The piece looked at the history of Chinese boycotts, chiefly against the West and Japan. Here are a couple of nuggets:

In 1905, US President Theodore Roosevelt called for reform of a discriminatory law restricting Chinese immigration after an “especially injurious” boycott of US cotton. “It is short-sighted indeed for us to permit foreign competitors to drive us from the great markets of China,” he warned.

In his 1933 Study of Chinese Boycotts, CF Remer, a professor of economics at the University of Michigan, argued they had a strong “psychological” impact on the target nation, even if China also suffered economic blowback. “Boycotting by a single nation is like the labour strike,” he wrote. “The threat to strike is powerful; the strike itself is likely to be costly and inefficient.”

For some more recent advice on how to manage an ever more assertive Beijing, Natasha Kassam, my colleague at the Lowy Institute, and Darren Lim of the Australian National University wrote a great piece for The Guardian. China hawks tend to argue for economic diversification and those more sympathetic to China argue that Australia should take greater heed of Beijing’s sensitivities. But Natasha and Darren insist that the impact of boycotts is more psychological than financial and, therefore, nations should rely on resilience and sangfroid. Keep calm and carry on!

Resilience is also a mindset. We may be punished for staying true to our values, and we should be prepared – psychologically, as well as pragmatically. It goes without saying we should not compromise on our fundamental beliefs. But more attention is needed on the factors that are wholly within our control. Beijing may be immune to our condemnation of its coercive tactics, but the resilience of Australia’s liberal democratic institutions and expert industries is in our hands.

It’s a different challenge for individual companies caught in Beijing’s cross-hairs, as HSBC and Cathay Pacific have found out in the last year. The FT produced a very good analysis of the “geopolitical tightrope” that HSBC must walk between Beijing and the West. This quote gets to the heart of the matter:

“From the time you join HSBC, it is repeated over and over again, ‘We are a multipolar business, we do not take sides, we are apolitical, we are guests in every country’,” said an executive at the bank. “But the complexities of HSBC mean we get caught out more than anyone else,” the executive added. “We are trying to thread the needle with half of Hong Kong society versus the other half. Half our shareholders are still western and the rest are in Asia.”

When this delicate dance with Beijing goes wrong, it’s can go very wrong. Cathay Pacific found that out last year, when it was threatened by the Chinese aviation regulator and pushed to defenestrate its chairman and CEO after they failed to stamp out democratic spirits among some of their staff. But now the airline is seen to be toeing the line, it got a bailout from the Hong Kong government, which saved it from collapse. Of course, the Hong Kong government says the bailout has nothing to do with politics.

What will Southeast Asia look like in 2035?

That was the difficult question I tried to answer for a website set up by the National Security College at the Australian National University.

Making broad, long-term predictions is a fraught exercise. But it is a useful way to re-examine our underlying assumptions and think laterally about the forces that are our shaping our world.

Not that I want to be a doom-monger, but I think many analysts are far too optimistic in their base assumptions for Southeast Asia.

So what will the region look like no 2035? My answer in short: “economic growth in Southeast Asia will taper off, regional integration will stagnate and Southeast Asian governments will move closer to China.”

Failure to develop a more unified ASEAN and to deliver on promises of high economic growth will push Southeast Asian nations closer to China. Unable or unwilling to jointly balance against China,, they will instead seek ever greater individual accommodations with Beijing. Their economic weaknesses will prompt them to rely increasingly on Chinese investment, which can be implemented more quickly and comes without the ceaseless demands for reform beloved by Western governments. These growing interdependencies with China will generate new frictions but, given Beijing’s growing dominance, Southeast Asian governments will push back sparingly and with due deference. There is a higher chance that South China Sea claimant states will cut China-friendly deals with Beijing than there is of them going to war with their mighty northern neighbour over their long-running territorial disputes.

Read the full analysis here.

Blast from the past: paranoia and US politics

Having been trained as a historian, I have a sad habit of looking back in time for parallels, precedents and general inspiration. Many things that we think are new are re-treads, and I’m not just referring to films and TV series. With Donald Trump and US political polarisation on everyone’s minds again, I’d recommend this seminal 1964 essay by historian Richard Hofstadter, The Paranoid Style in American Politics.

American politics has often been an arena for angry minds. In recent years we have seen angry minds at work mainly among extreme right-wingers, who have now demonstrated in the Goldwater movement how much political leverage can be got out of the animosities and passions of a small minority. But behind this I believe there is a style of mind that is far from new and that is not necessarily right-wing. I call it the paranoid style simply because no other word adequately evokes the sense of heated exaggeration, suspiciousness, and conspiratorial fantasy that I have in mind.

That’s all for this first edition. Thanks for reading. If you enjoyed Bundle of Contradictions, please tell your friends, family and colleagues.

And if your interest in Jokowi was piqued, my book is on pre-sale, with free global delivery at Book Depository, and with the Kindle versions available for pre-sale on the respective US, UK and Australia Amazon sites.

Take care,

Ben