White House Chronicle

News Analysis With a Sense of Humor

China’s Not-So-Secret Weapons — Rare Earths

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In October 1973, the world shuddered when the Arab members of the Organization of Petroleum Exporting Countries imposed an oil embargo on the United States and other nations that provided military aid to Israel in the Yom Kippur war. At the same time, they ramped up prices.

The United States realized it was dependent on imported oil — and much of that came from the Middle East, with Saudi Arabia the big swing producer. It shook the nation. How had a few foreign powers put a noose around the neck of the world’s largest economy?

Well, it could happen again and very soon. The commodity that could bring us to our knees isn’t oil, but rather a group of elements known as rare earths, falling between 21 and 71 on the periodic table. This time, just one country is holding the noose: China.

China controls the world’s production and distribution of rare earths. It produces more than 92 percent of them and holds the world in its hand when it comes to the future of almost anything in high technology.

Rare earths are great multipliers and the heaviest are the most valuable. They make the things we take for granted, from the small motors in automobiles to the wind turbines that are revolutionizing the production of electricity, many times more efficient. For example, rare earths increase a conventional magnet’s power by at least fivefold. They are the new oil.

Rare earths are also at work in cell phones and computers. Fighter jets and smart weapons, like cruise missiles, rely on them. In national defense, there is no substitute and no other supply source available.

Like so much else, the use of rare earths as an enhancer was a U.S. discovery: General Motors, in fact. In 1982, General Motors research scientist John Croat created the world’s strongest permanent magnet using rare earths. He formed a company, called Magnequench. In 1992, the company and Croat’s patents were sold to a Chinese company.

From that time on it became national policy for China to be not just the supplier of rare earths, but to control the whole supply chain. For example, it didn’t just want to supply the rare earths for wind turbines; it insisted that major suppliers, such as Siemens, move some of their manufacturing to China. Soon Chinese companies, fortified with international expertise, went into wind turbine manufacture themselves.

“Now China is the major manufacturer of wind turbines,” says Jim Kennedy, a St. Louis-based consultant who is devoted to raising the alarm over rare earths vulnerability. A new and important book, “Sellout” by Victoria Bruce, details the way the world handed control of its technological future to China and Kennedy’s struggle to alert the United States.

At present, the rare earths threat from China is serious but not critical. If President Donald Trump — apparently encouraged by his trade adviser Peter Navarro, and his policy adviser Steve Bannon — is contemplating a trade war with China, rare earths are China’s most potent weapon.

A trade war moves the rare earths threat from existential to immediate.

In a strange regulatory twist the United States, and most of the world, won’t be able to open rare earths mines without legislation and an international treaty modification. Rare earths are often found in conjunction with thorium, a mildly radioactive metal, which occurs in nature and doesn’t represent any kind of threat.

However, it’s a large regulatory problem. The Nuclear Regulatory Commission and the International Atomic Energy Agency have defined thorium as a nuclear “source material” that requires special disposition. Until these classifications, thorium was disposed of along with other mine tailings. Now it has to be separated and collected. Essentially until a new regime for thorium is found, including thorium-powered reactors, the mining of rare earths will be uneconomic in the United States and other nuclear non-proliferation treaty countries.

Congress needs to look into this urgently, ideally before Trump’s trade war gets going, according to several sources familiar with the crisis. A thorium reactor was developed in the 1960s at the Oak Ridge National Laboratory in Tennessee. While it’s regarded by many nuclear scientists as a superior technology, only Canada and China are pursuing it at present.

Meanwhile, future disruptions from China won’t necessarily be in the markets. It could be in the obscure but vital commodities known as rare earths: China’s not quite secret weapon.

Nuclear Booms in Asia as New Reactor Ideas Flourish in U.S.

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By Llewellyn King

The nuclear electric industry has sustained some mighty blows in the United States and Western Europe in recent years. It might be reeling, but it is not out and it is not going down for the count. Taken globally, things are good.

The need to curb carbon in the air, to service a growing world population and the surging cities are impelling nuclear forward. At the annual summit meeting of the U.S. Nuclear Infrastructure Council (NIC) in Washington, this future was laid out with passion: Nuclear power is experiencing a growth spurt but not in the United States and Western Europe, except for Britain.

Nuclear demand is high where air pollution is at its worst and where economic activity is fast and furious — in Asia generally, and in China and India in particular.

Vijay Sazawal, president of IAEC Consulting, told the NIC meeting that India would be adding two reactors a year to its nuclear fleet moving forward. China and India are building half of the 60 new reactors under construction worldwide, according to Andrew Paterson of Verdigris Capital Group, which studies nuclear.

Paterson predicted world electricity demand will double by 2050 and that most of the demand would come from the megacities of Asia, Africa and Latin America. He said, “By 2030, China will have 15 megacities (10 million or more people) and 150 cities with more than 1 million people.”

Wind and solar energy, the other carbon-free electricity sources, also will grow dramatically but will be constrained by their land needs. Big cities are ill-suited to roof-mounted solar, and windmills require large acreages of open land not found near megacities.

In the United States, the shadow of the Westinghouse bankruptcy is passing over the nuclear community. How could a once-proud and dominant company get its sums so wrong that it has been forced into bankruptcy? The collapse of the company — which was building two plants with four reactors in South Carolina and Georgia, four reactors in China, and was engaged in projects in the United Kingdom and India — will be studied in business schools for generations to come. Bad management, not bad nuclear, has brought Westinghouse and its parent Toshiba to its knees.

But nuclear believers are undaunted. Nuclear advocates have a kind of religious commitment to their technology, to their science and to the engineering that turns the science into power plants.

I have been writing about nuclear since 1970, and I have featured it on my television program, “White House Chronicle,” for more than 20 years. I can attest that there is something special in the passion of nuclear people for nuclear power. They have fervor wrapped in a passion for kind of energy utopia. They believe in the great gift that nuclear offers a populous world: a huge volume of electricity.

The kernel here, the core belief, the holy grail of nuclear is wrapped up in “energy density”: how a small amount of nuclear material can produce a giant amount of electricity in a plant that has few moving parts, aside from the conventional steam turbine. As designs have evolved and plants have become “passive” in their safety systems, the things that can go wrong have been largely eliminated.

To understand energy density think this way: The average wind turbine you see along the highway turns out 2 megawatts of electricity when there is wind, a trifling amount compared to the 1,600 megawatts a new nuclear plant produces continuously — and probably will produce for 100 years before it is retired.

Asia, choking on air pollution and with huge growth, needs nuclear. America is not gasping for new generation: demand is static and there is a natural gas glut. Also, there is land aplenty for solar and wind to be installed.

But U.S. nuclear creativity, even genius, will not rest. The United States is on the frontier, pioneering a generation of wholly new reactor concepts, mostly for small modular reactors and even big new reactors, which may first be built in China and India but, like so much else, will be “thought up in America.”

At nuclear conclaves like the NIC meeting, there is sadness that the U.S. market is stagnant. But there is incandescent hope for the future.

Trump’s Foreign Policy — Punish Friends, Reward Enemies

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The Great Rift Valley extends from Syria down through east Africa to Mozambique. It is a huge depression with volcanic action, lakes and steep-sided gorges. Think of the Grand Canyon and start multiplying.

When contemplating President Donald Trump’s foreign policy, I think of the Great Rift Valley: the largest gash in the Earth’s surface.

The president, in the incoherence of his foreign policy, is creating great gashes between traditional allies that will leave scars down through history. He also appears to be set on empowering our putative enemies, Russia and China.

Many of us White House watchers think it is quite possible that some of those around the president had questionable relations with the Russians both during the campaign and after the election. Their motivation remains unclear. Also unclear is why Trump is so pro-Russian.

Russia’s motivation is known: It wants the United States to lift the sanctions imposed after Russia invaded Crimea and started a surrogate war in eastern Ukraine.

It is also clear that Russia has an interest in destabilizing Europe, whether it is by manipulating its energy supply or interfering in its elections, as it tried to do most recently in France. Russia has a policy and it is hostile to European and North American interests from the Arctic to the Balkan states.

Trump could end the whole Russian business very quickly by finding out — if he doesn’t already know — who in his immediate circle did what, why and when. He could tell us himself of his involvement.

China is another Trumpian riddle. He campaigned against China for job snatching, currency manipulation, the trade deficit and its incursions into the South China Sea.

In a classic East meets West scenario, Trump, the self-styled dealmaker, was going to sit opposite Chinese President Xi Jinping and negotiate. But when they met at the White House, all points of contention evaporated; even freedom-of-navigation operations by U.S. warships in international waters near contested reefs in the South China Sea were curtailed. Either there was no negotiation, or Trump folded.

There is a Potemkin village quality to Trump’s claims to have opened opportunities for U.S. firms in China. China has not abridged its local participation laws, so U.S. companies doing business there still have to have a Chinese partner, which must have equity control. It is a system the Chinese use to steal U.S. expertise and technology. As to Trump’s claim of Chinese currency manipulation, it has disappeared — maybe it was a dubious issue all along.

If all of this is in the hope that China might stop North Korea building nuclear weapons and delivery systems for them. Well, that has been a vain hope of other presidents. China has no interest in curbing Kim Jong-un for its own reasons and because of the leverage, paradoxically, it gives China with the United States.

But what history might judge as the more egregious Trumpian folly in Asia is his abandonment of the Trans-Pacific Partnership, a carefully crafted deal to keep the economies of United States and 11 other Pacific nations growing without China, which would not have been a partner. Now the gap left by the United States is being filled by China, as are other gaps. Europe, deeply disturbed by U.S. softness to Russia, climate change policies, protectionist rhetoric, and vitiation of past practices and agreements, is looking reluctantly to China for stability in a crumbling world order.

The goals of Trump’s foreign policy are obtuse, subject to stimuli known only to him — examples include his unexplained enthusiasm for Saudi Arabia, and his complete hostility to everything done by President Barack Obama, including the Cuba opening. The results, though, are not in doubt: gladness in Moscow and Beijing and sadness and confusion in London, Paris, Berlin and among our friends worldwide.

So far Trump’s exploits are not only capricious, but also very dangerous, slamming those countries that share U.S. values and encouraging those who oppose our interests. These rifts will not heal quickly. Once a nation is labeled untrustworthy, it is distrusted long after the creator of the distrust has left the field. The rifts remain, great gashes in global confidence.

Crime, War and Mischief Are the Internet Norms

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By Llewellyn King

The big news coming out of the G7 meeting in Japan will not be about establishing international norms for cybersecurity. That will only get an honorable mention at best. But maybe it should get greater attention: the threat is real and growing.

Consider just these four events of the recent past:

The electric grid in Ukraine was brought down last Dec. 23 by, it is believed, the Russians. Because of its older design, operators were able to restore power with manual overrides of the computer-controlled system.

The Hollywood Presbyterian Medical Center in Los Angeles was ransomed. This crime takes place when a hacker encrypts your data and demands a ransom, often in untraceable bitcoin, to unlock it. The hospital paid $17,000 rather than risk patients and its ability to operate.

While these ransom attacks are fairly common, this is the first one believed to have been launched against a hospital. Previously hospitals had thought patient records and payment details were what hackers would want, not control of the operating systems. Some of the ransoms are as low as $3,000, with the criminals clearly betting that the victims would lose much more by not settling immediately, as did the medical center. The extortionists first asked for $3.6 million.

In a blockbuster heist on the Internet, the Bangladesh central bank was robbed of $81 million. The crooks were able to authorize the Federal Reserve of New York to release the money held in an account there. They would have got away with another $860 million, if it were not for a typing mistake. In this case, the money was wired to fraudulent accounts in the Philippines and Sri Lanka.

Target, the giant retailer, lost millions of customer records, including credit card details, to an attack in February 2014. Since then, these attacks on retailers to get data have become common. Hackers sell credit card details on what is known as the “black web” to other criminals for big money.

Often the finger is pointed at China, which will not be at the G7. While it may be a perpetrator, it also has victim concerns. There is no reason to think that Chinese commerce is not as vulnerable as that in the West.

China, with the help of the Red Army, is blamed in many attacks, particularly on U.S. government departments. But little is known of attacks Chinese institutions sustain.

Governments want to police the Internet and protect their commerce and citizens, but they are also interested in using it in cyberwar. Additionally, they freely use it in the collection of intelligence and as a tool of war or persuasion. Witness U.S. attempts to impede the operation of the centrifuges in Iran and its acknowledged attacks on the computers of ISIS.

As the Net’s guerilla war intensifies, the U.S. electric utility industry, and those of other countries, is a major source of concern, especially since the Ukraine attack. Scott Aaronson, who heads up the cybersecurity efforts of the Edison Electric Institute, the trade group for private utilities, says the government’s role is essential, and the electric companies work closely with the government in bracing their own cyber defenses.

Still, opinions differ dramatically about the vulnerability of the electric grid.

These contrasting opinions were on view at a meeting in Boston last month, when two of the top experts on cybersecurity took opposing views of utility vulnerability. Juliette Kayyem, a former assistant secretary for intergovernmental affairs at the Department of Homeland Security who now teaches emergency management at Harvard’s Kennedy School of Government, said she believed the threat to the electric grid was not severe. But Mourad Debbabi, a professor at Concordia University in Montreal, who also has had a career in private industry, thinks the grid is vulnerable — and that vulnerability goes all the way down to new “smart meters.”

The fact is that the grid is the battleground for what Aaronson calls “asymmetrical war” where the enemy is varied in skill, purpose and location, while the victims are the equivalent of a standing army, vigilant and vulnerable. No amount of government collaboration will stop criminals and rogue non-state players from hacking out of greed, or malice, or just plain hacker adventurism.

Governments have double standards, exempting themselves when it suits from the norms they are trying to institutionalize. Cyber mischief and defending against it are both big businesses, and the existential threat is always there. — For InsideSources

The Collision Course in the South China Sea

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By Llewellyn King

When I was learning to fly, one of the lessons was that if you see an object on the horizon that is seemingly stationary but getting larger, watch out. It is probably an aircraft closing with you.

Trouble with China in the South China Sea is on the horizon of U.S. strategic concerns and getting larger. A major confrontation may be at hand.

China claims sovereignty over the Spratly and Paracel islands in the South China Sea. Its claims have been disputed by Brunei, Malaysia, the Philippines,Taiwan and Vietnam.

Ignoring these neighbors’ territorial claims, China has built artificial islands on otherwise submerged reefs in the Spratly archipelago. They have built runways, capable of landing military jets, on Fiery Cross and Subi reefs, and are building one on Mischief Reef.

Vietnam and the Philippines have also built up reefs, but on a smaller scale, and mostly to help their fishing fleets.

Offshore islands, real or summoned from the deep, are trouble. Argentina and Chile nearly went to war over the Beagle Channel Islands, off the inhospitable tip of South America, until Pope John Paul II brokered a peace deal in 1984.

Britain and Argentina most certainly did go to war in 1982 over the Falkland Islands, which Argentina claimed then and still claims.

Nations use territorial disputes not only to divert attention from domestic problems, but also to heal the real or imagined wounds of history.

China feels, reasonably, that it was kicked around in history. Britain occupied parts of it, most notably Hong Kong, and then acted as a drug lord in the 19th-century Opium Wars. In the 20th century, China was invaded by Japan.

Now, as the world’s second-largest economy and most populous nation, China is feeling assertive.

But all of Asia, and by extension the rest of the world, is invested in this dispute: one third of the world’s shipping passes through the South China Sea, and its rich fishing grounds are a vital food source for the region.

The Chinese bolster their claims with a 1947 map showing what is known as the “nine-dash line,” or the cow’s tongue because of its shape, in the South China Sea. This line extends around the sea and encloses 90 percent of the area; by historical standards this is a whopper of a claim for territory, and one which threatens U.S. allies in the region as well as our shipping.

The Chinese claims appear to be in total violation of international law,  particularly the United Nations Convention on the Law of the Sea, which the United States has not ratified, and which China ratified in 1996.

The dispute with claims and counterclaims is laid out in a new, dispassionate report by the Boston Global Forum, a Harvard professor-heavy think tank.

The United States responded to the China’s claim of territorial integrity for its artificial islands after a long delay, testing the right to navigate by sending the USS Lassen, a guided missile destroyer, through the 12-nautical-mile zone off Subi Reef on Oct. 27. China has reacted angrily with aerial exercises.

The USS Lassen’s transit of the reef appears to have divided the White House. At one point, Defense Secretary Ashton Carter would not acknowledge in public that it had actually happened, or that U.S. aircraft might test the Chinese claim to territorial air rights.

These actions are known as freedom of navigation operations, or FONOPS. It is a term we will hear more of if the United States and China cannot divert from their brinkmanship in the South China Sea.

The United States does not favor any nation’s claim to islands, or even rocks, in that sea. It does, though, have a vital interest in checking Chinese expansion and the interests of its Asian allies who expect a robust U.S. response to China’s island grab — and claim to a whole ocean. — For InsideSources.com

The Rare Earths Problem: A U.S. Solution

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Rare earth elements – there are 17 of them – have the world’s manufacturing by the throat. They are, as John Kutsch, director of the Thorium Energy Alliance, says, “the great multipliers.” They make metals stronger, generators more efficient, cell phones smaller, television sets sharper, and laptops lighter. They are, in their way, as important to modern manufacturing as energy.

At one time, the United States was a major supplier of rare earths — with supplemental supplies coming from countries around the world, including Australia and Brazil. Today, 90 percent of the rare earths the world uses come from China.

The use of rare earths is as important in lasers and jet engines as it is in aiming cruise missiles, which means the United States, and the rest of the world, has a huge vulnerability: China controls the supply of new war-fighting material. All U.S. defense manufacturers – including giants Boeing, General Electric and Lockheed Martin — are dependent on China. Now China is demanding that U.S. companies do more of their manufacturing there: China wants to control the whole chain.

Yet, as the rare earth elements industry is quick to assert, rare earths are not rare; they are scattered generously throughout the world. So why China’s dominance?

China has three main advantages. The first is that in 1984, leader Deng Xiaoping adopted a major initiative, the so called 863 Program, to move China from being a simple supplier of raw materials and products, enhanced by cheap labor, to being an industrial powerhouse and scientific giant. Rare earths were one of the areas singled out in the program.

The second advantage is that the Chinese ignored – and, to a large extent, still do — the environmental costs of rare earths’ extraction. The environmental damage is described by those who have been to one of two major Chinese sites, which have a combined population of 17 million, as catastrophic, with mountains bathed in acid to remove the sought-after rare earths, resulting in lakes of acid.

China’s third advantage is a natural one: It has a lot of ionic clay, which contains rare earths without the associated uranium and thorium.

About the time China was ramping up its plans to dominate the world rare earths market, the United States, in conjunction with the International Atomic Energy Agency in Vienna, began to regulate so called source materials. These are materials which, at least in theory, could be fashioned into weapons. In reality, those associated with rare earths are not in sufficient quantity to interest potential proliferators.

But the regulations are there. Many in the rare earths elements industry believe that it was these regulations — particularly as affecting thorium — that crippled production around the world and essentially closed down the U.S. industry, just as demand was escalating.

There is a commercial market for uranium. While hardly any thorium is used nowadays, it was once used in some scientific instruments and mantles for lighting. Thorium is akin to uranium in atomic weight, and it is a fertile nuclear material. That means that it can be used in a nuclear reactor, but it has to be ignited by a fissile material, such as enriched uranium or plutonium.

Thorium is radioactive, but mildly so. It is an alpha emitter, which means it can be shielded with tissue paper and will not penetrate the skin. However, it has a half-life of 1.5 billion years.

The answer, according to James Kennedy, a science consultant and rare earths expert, is to develop a reactor using thorium instead of uranium. This reactor, called a molten salt reactor, is inherently safe, say its passionate advocates, and would be a better all-around nuclear future. The technology was pioneered by one of the giants of the early nuclear age, Alvin Weinberg, at the Oak Ridge National Laboratory, but abandoned under pressure from enthusiasts for light water reactors, the kind we have today.

The Thorium Energy Alliance believes that the United States and other countries should develop a cooperative to source rare earths from the existing mining of phosphates and metals and store the thorium until it becomes a useful fuel. A bill to do this is making its way through Congress, but its chances are slim. Short of putting a value on thorium and isolating it, the chances of a rare earth elements industry reawakening in the United States, or elsewhere, is rare. — For the Hearst-New York Times Syndicate

Nuclear Teetering on the Economic Precipice

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This will be a bleak Christmas for the small Vermont community of Vernon. It is losing its economic mainstay. The owner of its proud, midsize nuclear plant, which has sustained the community for 42 years, Entergy, is closing the plant. Next year the only people working at the plant will be those shuttering it, taking out its fuel, securing it and beginning the process of turning it into a kind of tomb, a burial place for the hopes of a small town.

What may be a tragedy for Vernon may also be a harbinger of a larger, multilayered tragedy for the United States.

Nuclear – Big Green – is one of the most potent tools we have in our battle to clean the air and arrest or ameliorate climate change over time. I've named it Big Green because that is what it is: Nuclear power plants produce huge quantities of absolutely carbon-free electricity.

But many nuclear plants are in danger of being closed. Next year, for the first time in decades, there will be fewer than 100 making electricity. The principal culprit: cheap natural gas.

In today’s market, nuclear is not always the lowest-cost producer. Electricity was deregulated in much of the country in the 1990s, and today electricity is sold at the lowest cost, unless it is designated as “renewable” — effectively wind and solar, whose use is often mandated by a “renewable portfolio standard,” which varies from state to state.

Nuclear falls into the crevasse, which bedevils so much planning in markets, that favors the short term over the long term.

Today’s nuclear power plants operate with extraordinary efficiency, day in day out for decades, for 60 or more years with license extensions and with outages only for refueling. They were built for a market where long-lived, fixed-cost supplies were rolled in with those of variable cost. Social utility was a factor.

For 20 years nuclear might be the cheapest electricity. Then for another 20 years, coal or some other fuel might win the price war. But that old paradigm is shattered and nuclear, in some markets, is no longer the cheapest fuel — and it may be quite few years before it is again.

Markets are great equalizers, but they're also cruel exterminators. Nuclear power plants need to run full-out all the time. They can’t be revved up for peak load in the afternoon and idled in the night. Nuclear plants make power 24/7.

Nowadays, solar makes power at given times of day and wind, by its very nature, varies in its ability to make power. Natural gas is cheap and for now abundant, and its turbines can follow electric demand. It will probably have a price edge for 20 years until supply tightens. The American Petroleum Institute won't give a calculation of future supply, saying that the supply depends on future technology and government regulation.

Natural gas burns cleaner than coal, and is favored over coal for that reason. But it still pumps greenhouse gases into the atmosphere, though just about half of the assault on the atmosphere of coal.

The fate of nuclear depends on whether the supporters of Big Green can convince politicians that it has enough social value to mitigate its temporary price disadvantage against gas.

China and India are very mindful of the environmental superiority of nuclear. China has 22 power plants operating, 26 under construction, and more about to start construction. If there is validity to the recent agreement between Chinese President Xi Jinping and President Barack Obama, it is because China is worried about its own choking pollution and a fear of climate change on its long coastline, as well as its ever-increasing need for electricity.

Five nuclear power plants, if you count Vermont Yankee, will have closed this year, and five more are under construction in Tennessee, South Carolina and Georgia. After that the new plant pipeline is empty, but the number of plants in danger is growing. Even the mighty Exelon, the largest nuclear operator, is talking about closing three plants, and pessimists say as many as 15 plants could go in the next few years.

I'd note that the decisions now being made on nuclear closures are being made on economic grounds, not any of the controversies that have attended nuclear over the years. 

Current and temporary market conditions are dictating environmental and energy policy. Money is more important than climate, for now. — For the Hearst-New York Times Syndicate

Vietnam Welcomes America with Open Arms

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No grunt slogging through the jungles of Vietnam could imagine that in 2014, 41 years after the end of the Vietnam War, the Vietnamese would be welcoming back Americans as investors, tourists, advisers and protectors.

Next year is a big year in Vietnam. It is the 40th anniversary of the fall of Saigon, on April 30, 1975. It is also the 20th anniversary of the normalization of U.S. relations with Vietnam, a country where so much American and Vietnamese blood was spilled.

The Vietnam War started in the Eisenhower Administration, dragged down Lyndon Johnson’s presidency, and was ended in the Nixon Administration amid controversy that tore America apart and has informed its foreign policy ever since.

It will be remembered in the annals of war for the limits it revealed on mechanized fighting, and the challenge of asymmetrical fighting and wrong-headiness. But it also deserves mention in the annals of peace for the surprising speed in which the war has been put aside, especially in Vietnam, where the gory past has been buried and the future embraced.

Today’s Vietnam is a place where the United States is admired and emulated. And the Vietnamese want nothing so much as to be closer to Americans.

Twenty years ago when I traveled from Hanoi, south along the spine of the country, to Ho Chi Minh City, formerly Saigon, I was astounded by the way the war had been willfully forgotten: people I met did not want to talk about it.

Da Nang still was set about with hardened bunkers, Hue, which had been the national capital until 1945, was a sad ruin, but people were determinedly forward-looking. They wanted to know three things: how could they get American goods, how could sell their goods in the U.S. market, and what was the United States going to do about China?

A generation later, Vietnam is more passionate in its desire to get close to the United States. The government of Vietnam is making a new push for American investment, particularly in the privatization of infrastructure, which is still government-controlled and beset by inefficiency and corruption.

Vietnam Report, a business and data service, has just released a comprehensive white paper, prepared by Corr Analytics, a New York-based risk management consultancy, that paints an agreeable picture of investment opportunities, particularly in those industries that the Vietnamese government is anxious to hive off to the private sector. Of 432 projects identified by the government, Corr has honed in on what it believes to be the 31 best-investment targets. These range from opportunities — from a few million dollars to over $7 billion — in finance, infrastructure, manufacturing and petroleum.

The backstory is that Vietnam needs more than U.S. investment. As it struggles against China in the South China Sea, over territorial claims on small island groups that are thought to contain large hydrocarbon reserves, Vietnam wants the United States to be a visible friend.

There is even talk that the United States, might establish a naval base at Cam Rahn Bay, its legendary base and deep-water port during the Vietnam War. This, the argument goes, would compensate for the loss of the naval base at Subic Bay in the Philippines. Come back, Yanks.

Several analysts have told me that they believe Vietnam to be an excellent investment opportunity, but there are concerns. The government is nominally communist and there is only one party: the Communist Party. It is avowedly pro-business but faces human-rights issues, press-freedom issues, and the impartiality of the judiciary is questionable. Corruption is widespread and debilitating.

Yet Forbes magazine is looking to Vietnam as the new Asian investment haven. In the World Bank’s Ease of Doing Business rankings, according to Corr Analytics, Vietnam is ahead of major investment destinations such as China, India and Brazil. Vietnamese Prime Minister Nguyen Tan Dung has made it clear that his country is open for business – particularly American business.

Tourism is growing, especially at Vietnam’s superb beaches. Lauren Graham, who stars in the NBC drama “Parenthood,” has taken a bicycle trip with her father, a Washington lobbyist and fluent Vietnamese speaker.

Some who fought in Vietnam have joined the ranks of its boosters, like Tom Patterson, the famed Harvard professor, who is helping to develop a high-technology village near Nha Trang and Cam Rhan Bay, where he was once stationed.

The generational change also has made a difference. Much of the Vietnamese population was not born during the war. A new generation of Americans has been shaped by war in the Middle East not in Asia. — For the Hearst-New York Times Syndicate

 

How to Steal the Sea, Chinese Style

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In history, countries have sought to increase their territory by bribery, chicanery, coercion and outright force of arms. But while many have sought to dominate the seas, from the Greek city states to the mighty British Empire, none has ever, in effect, tried to take over an ocean or a sea as its own.
But that is what China is actively doing in the ocean south of the mainland: the South China Sea. Bit by bit, it is establishing hegemony over this most important sea where the littoral states — China, Taiwan, the Philippines, Brunei, Malaysia, Indonesia, Singapore and Vietnam — have territorial claims.
The importance of the South China Sea is hard to overestimate. Some of the most vital international sea lanes traverse it; it is one of the great fishing areas; and the ocean bed, near land, has large reserves of oil and gas. No wonder everyone wants a piece of it — and China wants all of it.
Historically China has laid claim to a majority of the sea and adheres to a map or line — known as the nine-dash map, the U-shape line or the nine-dotted line — that cedes most of the ocean area and all of the island land to it. The nine-dash map is a provocation at best and a blueprint for annexation at worst.
The mechanism for China’s filching of one of the great seas of the world is control of the three island archipelagos, the Paracel, Spratly and Pratas islands, and several other smaller outcroppings, as well as the seamounts, called the Macclesfield Bank and the Scarborough Shoal. Between them, they consist of about 250 small islands, atolls, keys, shoals, sandbars and reefs. Very few of these are habitable or have indigenous people. Some are permanently submerged, and many are only exposed at low tide.
Yet if China can claim title to them, it can use them to extend its hegemony into the area around them. First, it can claim the standard 12 miles of territorial waters around each land mass and it also can claim an economic zone of influence of 200 miles from the most dubious “island.” Ergo, China can connect the dots and grab a large chunk of the South China Sea.
China is reclaiming land – actually building a new artificial island — in the disputed Spratly Islands. The two-mile-long island will have an airfield that, China’s foreign ministry claims, will be used for air-sea operations. The other claimants, think otherwise, especially Vietnam. The United States has called for China to halt the island project.
China has been both stealthy and obvious about its strategy. It has increased its trade with the claimants; and in some cases has made generous contributions to their infrastructure development, but not in the South China Sea. In its maritime provocations, China has been careful to use its coast guard, not its navy, as it extends its grasp on the archipelagos, and inches forward to total domination of anything that looks like land in the waters off its southern coast.
The Philippines has sought international legal redress under the United Nations Convention on the Law of the Sea, a treaty which the United States has not ratified, limiting its legal maneuvering, according to Barry Nolan of the Boston Forum, a policy analysis group that has studied the South China Sea crisis this year. China denies the legitimacy of international law in what is says is an internal matter.
To my mind, we are seeing is a new kind of imperialism from China, a gradual annexation of whatever it wants; quiet aggression, just short of war but relentless. This is China’s modus operandi in Southeast Asia, Africa and other places. It squeezes gently and then with greater strength, like a lethal constrictor snake.
Southeast Asian countries are arming, but China’s naval forces are growing faster. Also, it has the cash and the people to do what it wants. The U.S. “pivot to Asia” has done little to reassure China’s neighbors. Their nervousness is compounded by the ease with which Russia was able to annex Crimea and is proceeding into Eastern Ukraine unchecked. What’s to stop China grabbing some useless islands, and then a whole sea?
The ancient concept of oceans as commons is under threat. The Chinese dragon walks and swims. — For the Hearst-New York Times Syndicate

The Real Investment Africa Needs Is in Its Women

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The great African summit in Washington last week was largely theater; necessary and important, but still a work of fiction.
If you knew nothing about the subject, you might think that U.S. business, in an extraordinary historical oversight, has overlooked opportunity-rich Africa. Actually, America's trade with Africa has been in free-fall since 2008. China’s trade with Africa is reaching new heights every year, including this one. It more than doubles ours now.

For a decade, Africa — nearly all of its 54 countries — has looked east, and China has seized the opening. Yet the Chinese presence in Africa hasn't helped its underlying problems. Instead, it has put money in the pockets of the ruling elites and has turned a blind eye to the excesses of those elites.

China's interest in Africa, brilliantly and cynically exploited, has been in raw materials. A theme at last week's Washington summit was that there was something wrong with exploiting raw materials, and that value-added manufacturing — which creates real wealth and real jobs — could just be wished into being with more investment dollars.

China has flooded the continent with its lowest-quality exports – goods that wouldn’t make it onto the shelves of Walmart — and has even cheated the Africans out of the best jobs that its raw materials-hungry policy has created by bringing in Chinese workers.

The Africans get even less out of the Chinese colonization, by another name, than it did out of the European version in the “scramble for Africa” in the last decades of the 19th century. But the elites are allowed a free hand with their kleptocracy, their human rights violations, and their indifference to the condition of their own people. This sets up an asymmetrical competition with Western laws against bribery, fair trade practices, and the fact that American and international companies cannot be directed to serve a political purpose by their home governments.

President Obama made a good, even a great start, before the summit when he called for an end to the bad old ways of Africa. But his words weren't echoed by the delegates.

The long-term future of Africa lies in fundamental reforms within its social and political structures — and one in particular: its attitude toward women. If you spend any time there, two things are apparent: women have a raw deal, yet they — not the oil or the chrome or the copper, but the used and abused women of Africa — are its future.

Women hold Africa together and suffer in silence. They are the ones bent over with primitive implements in the fields, inevitably with their latest infant strapped to their backs. They are the ones who must endure marriage during puberty, bear children before their bodies are fully formed, and face the world’s highest rates of death during childbirth.

In shiny office buildings in Accra or Lusaka, it is the women who are moving the work forward. If you need something done, from a permit to an airline reservation, seek out a woman in an office. However, very few women make it to those jobs.

On the farms in Africa, it is the women who have managed small cooperatives, mastered micro-credit and provide family life. But they still must bend over their budzas with their youngest child strapped to their backs. The budza is a kind of hoe used for weeding, tilling and sowing. In its way, it is also a symbol of female enslavement; light enough for a woman to use all day long.

The women of Africa need to be told often and in every way they are special. They need to know that they have value beyond sex and work; that they are not an inferior gender, that they are the future.

The summit touched, in passing, on the talent and the plight women, as the male leaders talked the talk of international good intentions. But the women of Africa need recognition. Give them the tools of education and opportunity and they will do the job.

The budza needs to be retired, as does the culture of female enslavement of which it is the symbol. — For the Hearst-New York Times Syndicate