Cooperation for a Peaceful and Sustainable World : Part 2 9781781906569, 9781781906552

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COOPERATION FOR A PEACEFUL AND SUSTAINABLE WORLD PART 2

Contributions to

Conflict Management, Peace Economics and Development Volume 20 SERIES EDITOR

MANAS CHATTERJI BOOKS IN THE SERIES

Eurasia: A New Peace Agenda, edited by M. D. Intriligator, A. I. Nikitin & M. Tehranian Military Missions and Their Implications Reconsidered: The Aftermath of September 11th, edited by G. Caforio and G. Ku¨mmel Managing Conflict in Economic Convergence of Regions in Greater Europe, by F. Carluer Cultural Differences between the Military and Parent Society in Democratic Countries, edited by G. Caforio Conflict and Peace in South Asia, edited by M. Chatterji and B. M. Jain War, Peace, and Security, edited by J. Fontanel and M. Chatterji Armed Forces and Conflict Resolution, edited by G. Caforio, G. Ku¨mmel and B. Purkayastha Regional Development and Conflict Management: A Case for Brazil by R. Bar-El Crisis, Complexity and Conflict, by I. J. Azis Putting Teeth in the Tiger: Improving the Effectiveness of Arms Embargoes edited by M. Brzoska and G. A. Lopez Peace Science: Theory and Cases by P. Gangopadhyay and M. Chatterji Advances in Military Sociology: Essays in Honor of Charles C. Moskos (Two Volume Set) edited by Giuseppe Caforio Arms and Conflict in the Middle East, by Riad A. Attar Economics of War and Peace: Economic, Legal, and Political Perspectives, edited by Benjamin E Goldsmith and Jurgen Brauer Conflict, Complexity and Mathematical Social Science, by Gordon Burt Frontiers of Peace Economics and Peace Science, edited by Manas Chatterji, Chen Bo and Rameshwar Misra Ethnic Conflict, Civil War and Cost of Conflict, edited by Raul Caruso Governance, Development and Conflict, edited by Manas Chatterji, Darvesh Gopal, Savita Singh New Wars, New Militaries, New Soldiers: Conflicts, the Armed Forces and the Soldierly Subject, edited by Gerhard Ku¨mmel and Joseph Soeters

Contributions to Conflict Management, Peace Economics and Development Volume 20

COOPERATION FOR A PEACEFUL AND SUSTAINABLE WORLD PART 2 EDITED BY

LI JUNSHENG The Center for Fiscal Development, China

CHEN BO Institute of Defense Economics and Management, China

HOU NA Central University of Finance and Economics, China

United Kingdom
North America
Japan India
Malaysia
China

Emerald Group Publishing Limited Howard House, Wagon Lane, Bingley BD16 1WA, UK First edition 2013 Copyright © 2013 Emerald Group Publishing Limited Reprints and permission service Contact: [email protected] No part of this book may be reproduced, stored in a retrieval system, transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise without either the prior written permission of the publisher or a licence permitting restricted copying issued in the UK by The Copyright Licensing Agency and in the USA by The Copyright Clearance Center. Any opinions expressed in the chapters are those of the authors. Whilst Emerald makes every effort to ensure the quality and accuracy of its content, Emerald makes no representation implied or otherwise, as to the chapters’ suitability and application and disclaims any warranties, express or implied, to their use. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library ISBN: 978-1-78190-655-2 ISSN: 1572-8323 (Series)

ISOQAR certified Management System, awarded to Emerald for adherence to Environmental standard ISO 14001:2004. Certificate Number 1985 ISO 14001

CONTENTS LIST OF CONTRIBUTORS

vii

FOREWORD

ix

ACKNOWLEDGMENT

xi

IS CHINA THE SECOND MILITARY POWER?
A DEFENSE INDUSTRY PROSPECTIVE Huang Chaofeng

1

DEFENSE EXPENDITURE, BUDGET DEFICITS, AND INCOME DISTRIBUTION IN INDIA (1970
2009) Zhonghou Guo, Yiwen Jiang and Huibin Yu

25

DEFENSE EXPENDITURE AND ECONOMIC GROWTH UNDER EXTERNAL PREDATION Liu Taoxiong and Hu Angang

39

TERRORISM AND INTELLIGENCE-LED COUNTERTERRORISM IN CHINA Wang Shacheng

65

CHINA
AFRICA RELATIONS: MAKING SENSE OF THE DISCOURSE Seifudein Adem

79

RATIONAL MODEL OF CONFLICT: WAR AND PEACE IN SOUTH ASIA Richard Barrett, Samir Deger-Sen and Somnath Sen

95

v

vi

CONTENTS

MILITARY KEYNESIANISM: AN ASSESSMENT J. Paul Dunne

117

DEBT AND PEACE IN POST-CONFLICT COUNTRIES Fabrizio Carmignani

131

INDIAN COMMITMENT TO NO FIRST USE OF NUCLEAR WEAPONS: FIRST STEP TOWARD GLOBAL NUCLEAR DISARMAMENT P. M. Kamath

157

SRI LANKA: ETHNIC CONFLICT AND THE CONFLICT MANAGEMENT PROCESS Prashant Amrutkar 175 FOUR STUDIES IN NON-STATE EXPERIMENTS WITH PEACEMAKING IN CONTEMPORARY INDIA Samir Kumar Das

197

MILITARY EXPENDITURE AND ECONOMIC GROWTH IN SOUTH ASIA Hou Na and Chen Bo

213

IS CHINA AN EMERGING SANCTIONING STATE? Liu Jianwei

225

LIST OF CONTRIBUTORS Seifudein Adem

Institute of Global Cultural Studies, Binghamton University, Binghamton, NY, USA

Prashant Amrutkar

Department of Political Science, Babasaheb Ambedkar Marathwada University, Aurangabad (Maharashtra), India

Hu Angang

School of Public Policy and Management, Tsinghua University, Beijing, PRC

Richard Barrett

Department of Economics, University of Birmingham, Birmingham, UK

Chen Bo

Institute of Defence Economics and Management, Central University of Finance and Economics, Beijing, PRC

Fabrizio Carmignani

Griffith Business School, Griffith University, Brisbane, Australia

Huang Chaofeng

College of Humanities and Social Sciences, National University of Defence Technology, Changsha, PRC

Samir Kumar Das

University of North Bengal, Darjeeling, India

Samir Deger-Sen

Yale Law School, Yale University, New Haven, CT, USA

J. Paul Dunne

School of Economics, University of Cape Town University of Cape Town, Rondebosch, South Africa

Zhonghou Guo

Department of Defence Economics, Military Economics Academy, Wuhan, PRC vii

viii

LIST OF CONTRIBUTORS

Yiwen Jiang

Department of Defence Economics, Military Economics Academy, Wuhan, PRC

Liu Jianwei

Institute of Defence Economics and Management, Central University of Finance and Economics, Beijing, PRC

P. M. Kamath

Honorary Director, The VPM’s Centre for International Studies, Mumbai, India

Hou Na

Institute of Defence Economics and Management, Central University of Finance and Economics, Beijing, PRC

Somnath Sen

Department of Economics, Rollins College, Florida, USA; Department of Economics, University of Birmingham, Birmingham, UK

Wang Shacheng

Institute of Defence Economics and Management, Central University of Finance and Economics, Beijing, PRC

Liu Taoxiong

School of Social Sciences, Tsinghua University, Beijing, PRC

Huibin Yu

Department of Defence Economics, Military Economics Academy, Wuhan, PRC

FOREWORD After the World War II, the literature on Conflict and Peace studies was dominated by the mutual relationship between the United States and Soviet Union, and also with matters indirectly related through East European countries. Although there was no direct confrontation between the United States and China, the relationship was unfriendly particularly at that time of Korean and Vietnam Wars. But basically it was a period of super power competition between the United States and the Soviet Union. After the fall of the Soviet Union, the scenario changed. Since then, the world has become multipolar. The world is now dominated by two new super power nations namely the United States and China. India is a major factor in this equation, but mainly it is a two power competition. Although the United States is much stronger militarily, China will catch up in the end. However, a number of factors have come up to influence this competition. Some of them are: (1) globalization and economic interdependence, (2) environmental degradations, (3) terrorism, and (4) competition for resources particularly in Africa. In some sense, these factors could restrict the magnitude of escalation of conflict between these two countries. India’s good relationship with the United States and sometimes adversary competition with China could also dampen this possible escalation. The key to avoid this confrontation and possible conflict is cooperation principally related to the four factors mentioned before and mutual reduction of military spending. Some of the chapters in this volume address the subjects of military spending, terrorism, environmental conditions, and competition for resource availability. This book highlights the need of a nonviolent Gandhian way of cooperation for a peaceful and sustainable world. Manas Chatterji Series Editor

ix

ACKNOWLEDGMENT We would like to thank the Institute of Defence Economics and Management, Central University of Finance and Economics for strong support. We are especially grateful to Professor Wang Guangqian, Chancellor of Central University of Finance and Economics and Professor Li Junsheng, Vice-Chancellor of The Central for Fiscal Development, China. We wish to thank Yang Jing and Zhang Guangtong, Vice-Dean of the Institute of Defence Economics and Management for their hard work. We also wish to express our gratitude to Associate Professor Yu Dongping and Zhang Haiyan for their assistance in preparing this volume.

xi

IS CHINA THE SECOND MILITARY POWER?
A DEFENSE INDUSTRY PROSPECTIVE Huang Chaofeng ABSTRACT China’s defense industry is analyzed by comparing the technical level of the military and civilian products manufactured by China’s nuclear, space, aviation, shipbuilding, ordnance, and electronics industries with their advanced counterparts. Generally, China’s defense industry is about 20 years behind the global leaders. Thus, it is inappropriate to declare China’s emergence as the world’s second military power. However, if it continues on its current development trajectory, it will attain that status in the near future.

INTRODUCTION China’s military power was ranked second in the Yellow Book of International Politics in 2010, released by the Chinese Academy of Social Sciences in December 2009 (Shenming, Yizhou, & Shaojun, 2010). The Tokyo News arrived at the same conclusion 2 years earlier, when it declared

Cooperation for a Peaceful and Sustainable World, Part 2 Contributions to Conflict Management, Peace Economics and Development, Volume 20, 1
23 Copyright r 2013 by Emerald Group Publishing Limited All rights of reproduction in any form reserved ISSN: 1572-8323/doi:10.1108/S1572-8323(2013)00020.2005

1

2

HUANG CHAOFENG

that the PLA was the world’s second military power in its editorial on January 21, 2009. As early as 2004, China was ranked second in a National Security Index put out by India’s National Security Council Secretariat (Financial Express, 2004). However, what is the real status of China’s military power? The defense industry is a foundation and a determinant of a country’s military power. China’s military power is examined in this article by analyzing the technical level of the military and civilian products manufactured by China’s defense industry, including nuclear, space, aviation, shipbuilding, ordnance, and electronics industries.

NUCLEAR INDUSTRY The nuclear industry is the most secret area of China’s defense industry and a source of pride to the Chinese people, as one of only five declared nuclear powers. Little information about China’s nuclear industry is available to the public. Most of the limited information that can be accessed is about civilian and commercial projects. The rest reveals only a fragment of China’s nuclear weapons situation. The dearth of official and reliable information makes the assessments of China’s nuclear capacity an arduous undertaking. Nuclear production of electrical power is the major and representative way to assess the status of nuclear technology industrialization. Through analysis of nuclear power plant (NPP) projects in China, the capacity of China’s nuclear industry can be evaluated and understood to a great extent. Tables 1 and 2 detail information on the NPPs either running or constructing at present in China. According to Tables 1 and 2, whether in their construction or operation, about half of China’s NPPs and their technology were obtained from foreign countries, such as France, Canada, Russia, United States, etc. From the view of localization rate,1 China has made good progress in improving its civilian nuclear technology and manufacturing since the beginning of importing nuclear power technology from more advanced countries. For example, the localization rate of Daya Bay NPP, the first NNP imported from France in the late 1980s, was less than 10%, while the localization rate of Fuqing I NPP, which also used technology from France, reached 75%. Though having made significant progress, China has not mastered several of the crucial techniques necessary for improving NPP operations. These include heavy casting and forging, main circulating pumps, nuclear

PWR CNP300 China 300 1 >70% 03.20.1985 12.15.1991 04.01.1994

PWR M310 France 984 2 80% 12.26.2008

Reactor type Technique Technique source Unit capacity, Mwe Set(s) Localization rate Start date

PWR AP1000 USA 1250 2 >70% 04.19.2009

08.18.2007 Sanmen I

PWR CPR1000 China 1000 4 ≈60%

Hongyanhe I

PWR EPR France 1750 2 50% 12.21.2009

02.18.2008 Taishan I

PWR CPR1000 China 1000 4 >75%

Ningde I

PWR AP1000 USA 1250 2 ≈60% 12.28.2009

05.10.2008 Haiyang I

LMFBR
Russia 250 1


Experimental

Constructing NPPs in China.

Source: Nuclear Energy Information of China, www.heneng.net.cn.

Start date

PWR CPR1000 China 1000 2 Set 1>50% Set 2>70% 12.15.2005 Qinshan IV

Reactor type Technique Technique source Unit capacity, Mwe Set(s) Localization rate

Lingao II

Table 2.

HTR HTGR China 200 1 >70% 03.2010

11.21.2008 Shidaowan I

PWR M310 + France 1000 2 75%

Fuqing I

PWR CNP650 China 650 2 ≈70% 04.25.2010

12.16.2008 Changjiang I

PWR CPR1000 China 1000 6 ≈83%

Yangjiang

4 HUANG CHAOFENG

Is China the Second Military Power?
A Defense Industry Prospective

5

classified pumps, nuclear classified valves, digital control system, and highly complicated welding technique for nuclear equipment (Nuclear Energy Information of China, 2009). As China was mastering the second generation of nuclear energy technology, other countries had already developed the third generation technology successfully. For example, Westinghouse Electric’s generation III AP1000 reactor design technology was approved by the United States. Nuclear Regulation Commission in 2004. In order to apply state-of-the-art technology, China has decided to import this AP1000 technology for the construction of its future NPPs (Xue & Liping, 2010). At the same time, China made a localization plan of “importing, digesting, absorbing, and re-innovating” on nuclear energy technology. Although U.S. companies have promised to transfer this technology to China, whether China can fulfill this plan currently is still unanswered. Moreover, the most optimistic estimate is that China will not be able to fully utilize these advances until several more NPPs are completed. Therefore, it will take about 10 years or longer to fully succeed in mastering this third generation technology. This means that the gap of civilian nuclear technology between China and the more advanced countries is more than a decade; the manufacturing technology gap for key equipment is much greater. In order to disengage from technology dependence on advanced countries, or to even become a technology leader in nuclear energy technology, China has started unilaterally exploring the fourth generation NPP, such as the Shidaowan I NPP (a demonstration NPP of HTGR technology). In regard to other kinds of nuclear technology, especially nuclear warhead techniques, there are no public data available from the Chinese government. However, some facts show that China’s warhead techniques are fairly advanced in certain areas. For example, the Wen Ho Lee espionage case of 1999 revealed that the United States. had uncovered China’s mastery of the miniaturization technique for nuclear warheads. The gap of nuclear weapons between China and advanced countries is mainly demonstrated by nuclear weapon delivery vehicles, such as intercontinental ballistic missiles (ICBM), nuclear-powered submarines, and long-range bombers. They will be discussed in a later section of the chapter.

SPACE INDUSTRY As one of several countries in the world that can launch satellites and conduct manned space flights, China has made its space industry a key priority

6

HUANG CHAOFENG

for full development since the 1950s. China’s space industry has had a number of great achievements, such as successful satellite, ICBM, and manned spaceship programs, as well as a successful demonstration of an anti-satellite kill. It is remarkable that space industry programs meant to foster public support, termed “Atomic Bomb, Missile, and Satellite Spirit” and “Manned Space Flight Spirit,” have greatly inspired progress in Chinese defense technology and have become an important part of patriotism education in China. But how does its capability compare with that of advanced countries? Huang Chunping, the former Commander-in-Chief of China’s Manned Space Program, estimated that the gap between China and the United States or Russia is about 15 years (Yang, 2007). Is it exact? Manned spacecraft and the satellite navigation and positioning system are two important military and civilian products of the space industry. The Shenzhou spacecraft has become the pride of the Chinese, after astronaut Yang Liwei’s successful mission to space in 2003. According to Zhang Qingwei, the former general manager of China’s Aerospace Science and Technology Corporation and the former deputy commander-in-chief of China’s Manned Spacecraft Program, the technology level of Shenzhou was nearly the same as that of Russia’s Soyuz TM in the 1990s from the viewpoint of three indicators: reentry mode, landing precision, and maximum G forces (Saichun, 2003). In fact, the Shenzhou strongly resembled the Russian Soyuz spacecraft, which was first launched in 1967. Table 3 is a comparison of Shenzhou and Soyuz TM. China believes that space will be the focus of global competition in the future. They are engaging in several large-scale space projects, such as the Beidou Program, which is an independent Chinese satellite navigation and positioning system. Though its performance is currently inferior to that of Table 3. Comparison of Shenzhou and Soyuz TM. Total mass, t Diameter, m Re-entry mode Landing accuracy Maximum G forces, g First launch First manned launch Last launch Source: Zuo Saichun (2003).

Shenzhou

Soyuz TM

7.8 2.5 Lifting ± 9 km 3.24 1999 2003

7.0 2.2 Half-ballistic Radius > F ðkÞ = yðkÞ > > < ð1 þ θÞ2 θ f  > > > yðkÞ − f ðkÞ = > : θ ð1 þ θÞ2 Obviously, in order for the existence of the government’s strategy, assume that the following inequality holds all the time. yðkÞ >

ð1 þ θÞ2 f θ2

ð14Þ

From expression (1), we have: pðf ; FÞ = p = θ=ð1 þ θÞ In other words, under the assumed condition that both the predator and   government adopt the strategy f ðkÞ and F ðkÞ, the protected proportion of country C’s output is always p*. It is clear that under the tolerant strategy, country C can spend part of its resources on national defense, but part of its output is still plundered. Therefore, its defense expenditure is limited. This is what the word “tolerant” really means. Theorem 1. Assume that the government and predator adopt the tolerant strategy, and kð0Þ > ð1 þ θÞ2 f =ðAθ2 Þ, then there is the unique equilibrium growth path. On the path, the capital and consumption always have positive growth rate. Moreover, consumption’s growth rate is fixed, and expressions (15)
(17) hold. γ c = γ  = Aθ=ð1 þ θÞ − ρ − δ

ð15Þ

Defense Expenditure and Economic Growth under External Predation

2  θA f 4kðtÞ þ  c ðkÞ = ρ − 2  ð1 þ θÞ γ þρ−

3



c0

 = ρ−

2  θA f 4kð0Þ þ   ð1 þ θÞ2 γ þρ−

49

θA ð1 þ θÞ2

 5 θ

ð16Þ

3 θA ð1 þ θÞ2

 5 θ

ð17Þ

The initial consumption is given in expression (17), and expression (16) gives a policy function of c with respect to k on the equilibrium path. Therefore, the family’s optimal MPE strategy is given as well as the predator and government’s strategies are given as f*(k) and F* (k). Although the chosen return relevant variable is capital per capita when we define the MPE strategy, accurately speaking, in the process to get expression (16), k should be the capital of the considered family. But under the family symmetry condition, these two things are equal. Since there is only one equilibrium growth path, we can get a policy function c* (k) according to this path, as expression (16). Growth Path under the Submissive Strategy The superscript “&” shows the value under the subject strategy. Assume directly that the predator and government’s MPE strategies are as follows: f & ðkÞ = 0

F & ðkÞ =

qffiffiffiffiffiffiffiffiffi f Ak − f

ð18Þ

ð19Þ

Now country C’s defense expenditure is always zero; this is what the word “submissive” means. In order to guarantee the validation of expression (19), assume always that: yðkÞ ≥ f

ð20Þ

50

LIU TAOXIONG AND HU ANGANG

Theorem 2. Assume that the government and predator adopt the submissive strategy and kð0Þ ≥ f =A, then there is the unique equilibrium growth path, which is tending to the stable status. In the stable status, the values of capital and consumption are determined by expressions (21) and (22).

k& =

Af ðρ þ δÞ2

ð21Þ

c& =

ρAf ðρ þ δÞ2

ð22Þ

Since there is only one equilibrium growth path, we can get a policy function c&(k) according to this path, as expression (22) shows.

The Growth under the Friendly Strategy The idea here is that there is no conflict under the friendly strategy. Both the predator and the government don’t invest anything into conflict. The superscript “#” shows the value under the friendly strategy. Assume directly that the predator and government’s MPE strategies are as follows: 

FðkÞ = F # ðkÞ = 0 f ðkÞ = f # ðkÞ = 0

ð23Þ

According to expression (1), p = 1. Now, the model is a standard neoclassical Ak growth model; meanwhile, the following theorem is presented: Theorem 3. Assume that the government and predator adopt the friendly strategy, then the economic system has a unique equilibrium growth path on which both consumption and investment have constant growth rates, and the expressions (24) and (25) hold. γ #c = γ #k = γ # = A − ρ − δ

ð24Þ

c# ðkÞ = ρkðtÞ

ð25Þ

Defense Expenditure and Economic Growth under External Predation

51

Since there is only one equilibrium growth path, we can get a policy function c#(k) according to this path, as in expression (25).

The Growth Path under the Fully Protected Strategy The superscript “$” shows the variable’s value under the fully protected strategy. Assume that the predator and government adopt the fully protected strategy, as follows: 

F $ ðkÞ = 0 f $ ðkÞ = Ak=θ − f =θ

ð26Þ

The basic idea to give this strategy is that country C chooses a proper defense input so that the predator’s best response is to give up predation given the defense input. Obviously, p = 1 under the strategies described in expression (26), which means that the output is protected completely. Theorem 4. Assume that the government and predator adopt the fully protected strategy; then the economic system has the unique equilibrium growth path, on which the consumption has a constant positive growth rate, capital growth rate tends to the consumption growth rate, and there are expressions (27) and (28). (

γ $c = A − ρ − δ lim γ $k = γ $c = A − ρ − δ

ð27Þ

t→∞

  A f kðtÞ þ c$ ðkÞ = ρ − θ ðA − ðA=θÞ − δÞθ

ð28Þ

Consumption grows at a constant rate, the same as the one under the friendly strategy, under which there is no conflict input. This is because that under both of the situations the outputs are full protected. The difference is that country C has to input part of its resources into defense here. The capital growth rate tends to the consumption growth rate asymptotically, and the policy function for c, c$(k) has its new form as well.

52

LIU TAOXIONG AND HU ANGANG

MPE Dynamic Equilibrium Growth Path According to the above discussion, with different conflict strategies assumptions of the government and predator, there are different equilibrium growth paths for the economy. When the government and predator adopt the tolerant strategy and friendly strategy, consumption has a constant positive growth rate all along, and the growth rate under friendly strategy is higher. While under the submissive strategy, the economy tends to a stable state in which both consumption and capital are fixed. However, for these cases, the equilibria are still only equilibria for resources allocation between consumption and investment. The complete equilibrium needs to consider that whether the international conflicts are at the state of equilibrium. Here is a MPE strategy which attains equilibrium in both international and domestic level, and all of the above growth paths may appear in this equilibrium. Theorem 5. The following strategy is a MPE equilibrium:

FðkÞ =

f ðkÞ =

cðkÞ =

8 # F ðkÞ = 0 > > > pffiffiffiffiffiffiffiffi > > > < F & ðkÞ = f Ak − f

if f =A < kðtÞ ≤

> > >  > > > F ðkÞ = :

if kðtÞ >

θ yðkÞ ð1 þ θÞ2

8 # f ðkÞ = 0 > > > > > > < f & ðkÞ = 0 > > >  > > > : f ðkÞ =

8 # c ðkÞ > > > > > > < c& ðkÞ > > >  > > > c ðkÞ :

θ f yðkÞ − 2 θ ð1 þ θÞ

ifkðtÞ ≤ f =A

ð1 þ θÞ2 f Aθ2

if kðtÞ ≤ f =A if f =A < kðtÞ ≤ if kðtÞ >

ð1 þ θÞ2 f; Aθ2

ð1 þ θÞ2 f Aθ2

if kðtÞ ≤ f =A if f =A < kðtÞ ≤ if kðtÞ >

ð1 þ θÞ2 f; Aθ2

ð1 þ θÞ2 f Aθ2

ð1 þ θÞ2 f Aθ2

53

Defense Expenditure and Economic Growth under External Predation

The equilibrium path should consist of three phases. In the “c-k” diagram (Fig. 2), corresponding to the heavy line in the figure, we obviously have the following conclusions: (1) When k ≤ f =A, all players’ strategies refer to the situation of friendly strategy. Therefore, there is no conflict and no property being plundered. Both the consumption per capita and capital per capita have a constant positive growth rate. (2) When k > ð1 þ θÞ2 f =ðAθ2 Þ, all players’ strategies refer to the situation of tolerant strategy. A fixed proportion of the output is plundered, consumption per capita has a constant positive growth rate, and c is linear with k. (3) When f =A < k ≤ ð1 þ θÞ2 f =ðAθ2 Þ, all players’ strategies refer to the situation of submissive strategy. Consumption per capita and capital per capita tend to be a fixed value asymptotically. According to expressions (7) and (21), we know the capital stock in the stable state is: k& =

Af ðρ þ δÞ2

=

A2 f ðρ þ δÞ2 A

>

ð1 þ θÞ2 Aθ2

f

Therefore, the economy must reach the growth path under the tolerant strategy before it reaches the stable state. Obviously, the above-mentioned phases take place in sequence. The key point is that the growth rates in all phases since the beginning is greater than 0 so that k can keep going up from k(0) until the time when it is greater than k&. In the equilibrium path’s first phase, namely the friendly equilibrium phase, the condition to ensure a positive growth rate is the c

A B

k f

Fig. 2.

2 (1 + θ ) f

Aθ

2

Af ( ρ + δ )2

The Growth Path in the Dynamic Equilibrium.

54

LIU TAOXIONG AND HU ANGANG

same to the classical growth model. More important is the condition that ensures the economy to evolve from the second phase, namely submissive equilibrium phase into the tolerant equilibrium phase. As part of the expression (7), θA > ð1 þ θÞðρ þ δÞ, that is, θ > ðρ þ δÞ=ðA − ρ − δÞ. This condition not only ensures that the tolerant equilibrium phase’s growth rate is positive, but also ensures that the above expression holds. Therefore, the economy can reach the growth path under the tolerant strategy before the economy reaches the stable state. As mentioned previously, θ is used to measure both sides’ relative level of technology in conflict; in other words, it is possible to reach the tolerant equilibrium path only if country C’s defense technology is above a particular level. Besides, the greater the ρ and δ are, the higher the lowest-needed value of θ. It means that when the future is less important, there must be a higher value of θ to ensure the motivation to pursue the long term positive growth rate.13

Fully Protected Dynamic Equilibrium In part B, we give a dynamic MPE equilibrium of the model, and on the equilibrium growth path, country C’s economy will tend to a constant positive growth rate at last. But in this MPE equilibrium, only when the capital stock is extremely low can the economy be free from being plundered, and as the output increases, there is a fixed proportion of output being plundered all along after the economy reaches the tolerant equilibrium growth path. It is likely that the conclusion is inconsistent with our intuition because after a country grows strong enough, it should have the ability to protect its output completely. The following paragraphs will give a subgame perfect dynamic equilibrium, called the fully protected equilibrium in which the output is protected completely, and then prove that this equilibrium can only appear after k is large enough. Meanwhile, the subgame perfect dynamic equilibrium in part B is called the basic MPE equilibrium. The following theorem can be proved. Theorem 6. When θ is high enough and k(0) is large enough, there is a subgame perfect equilibrium, as follows: The predator’s strategy: if country C’s government always chooses f = f $ ðkÞ in the whole history, it chooses F = F $ ðkÞ in the current period; if country C’s government has ever violated it before, it chooses the basic MPE strategy.

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The country C government’s strategy: if its own decision meets f = f $ ðkÞ in the whole history, it keeps choosing f $ ðkÞ; if it has ever violated f = f $ ðkÞ before, it chooses the basic MPE strategy. The family’s strategy: if the government always chooses f = f $ ðkÞ in the whole history, it chooses c = c$ ðkÞ; if the government has ever violated it before, it chooses the basic MPE strategy. It should be pointed out that this equilibrium has not been a strict MPE, for the strategies of both sides are related not only to k (Return Relevant Variable) but also to what has happened before. On the equilibrium path, country C’s output is protected completely; this is what the fully protected strategy and fully protected equilibrium means. This equilibrium is interpreted as that in order to obtain a better position, country C promises a defense input, and the predator can judge whether the promise is credible or not by the history and makes its choice. The crucial step in the proof to illustrate country C’s promise is enforceable by itself (namely credible). Because of that it will turn to the basic MPE if the promise is violated, and compared with the fully protected equilibrium, in the basic MPE, k and c will have higher levels in the current period, but the growth rate will always be lower from this period on. Therefore, when k(0) is large enough, the loss will always outweigh the gain whenever the government violates f $ ðkÞ and turn to the basic MPE. Theorem 7. When θ is high enough, the fully protected equilibrium is better than the basic MPE equilibrium for country C (including government and family). This theorem illustrates that, if the government is a rational agent of families, when the capital stock reaches a certain level, the government prefers the fully protected equilibrium growth path to the basic MPE growth path. As shown in Fig. 2, the last part of the heavy line (the basic MPE growth path) is replaced by the dashed line with arrows. The key condition to realize fully protected equilibrium is a high enough θ, which makes country C realize fully protected with less proportion of resources. In this way, though the proportion of consumption in the gross output is lower than the proportion in the tolerant equilibrium growth path, what is gained is more than what is lost in the long term because a higher growth rate makes the future gross output larger. However, if the value of θ could not reach the requirement, the proportion of input to realize full protection of the output is too high and the proportion of consumption in the output is too low. Though it makes fully protected

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equilibrium growth path have a higher growth rate, it still worsens the welfare than tolerant equilibrium growth path.

THEORETICAL IMPLICATIONS This chapter provides an analytical framework in which the international conflict and domestic growth are integrated in one model. It explains how to optimize the distribution of resources between the production and defense activities and the possible economic growth paths. This model has at least the following theoretical implications.

Determinant of Long Term Growth Nowadays, international circumstance is full of Hobbesian Rule, and the conflicts have never disappeared. This model illustrates that the existence of an external predator may make country C’s growth very different. Even if a country has a good enough interior market environment and production technology so that it can achieve stable economic growth without international conflict, it will have a lower growth rate and couldn’t even achieve long term stable growth while there is an external predator. Therefore, in the environment of international conflict, a country’s long term growth is the result of the interaction of international factors and internal factors. The long term equilibrium growth path is co-determined by the equilibrium of international conflicts and the balance between domestic consumption and investment. This country has to decide how to distribute its resources reasonably between the production and national defense all the time. The external predation may reduce economic marginal output, so what growth phase this country does locate in is decided by this country’s position in the international conflict equilibrium. In the submissive equilibrium, this country doesn’t pay the defense expenditure, or the defense expenditure is kept in a low level, which can be ignored by the predator. (In reality, it can also be illustrated as that the limited military expenditure is only used to keep the internal social order.) In this situation, though, the country has a positive growth rate in the primary phase, as the increase of its output, its temptation to the external world, becomes larger. Then there is more external predation, and the level of economic security reduces. If it doesn’t adjust security strategy, this country has to pay more and more “rent” to other countries in exchange for its

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peace. Therefore, the proportion of being plundered increases, actual capital marginal return decreases, and economic growth rate decreases gradually. If the government’s national defense strategy refuses to adjust, the economy will reach a fixed stable state at last. In the tolerant equilibrium, the government has to balance carefully all along between the security policy and growth policy. On one hand, national defense expenditure and this country’s gross output show relatively stable linear relation, that is, the defense expenditure climbs with the increase of gross output. On the other hand, this country will still tolerate part of its property being plundered by a predator. Under the condition of a high enough defense technology parameter and production technology parameter, the economy can realize long term stable growth. But the growth rate is lower than the growth rate in the neoclassical model without external predation. In the fully protected equilibrium, the government invests a larger portion’s output to the national defense, and the defense expenditure is positively correlated with gross output. The property of this country is totally safe. If the defense technology parameter and production technology parameter are high enough, the economy can also attain a stable growth rate, which is higher than the one in the tolerant equilibrium and is the same as the one under the environment without conflict. However, there is still a part of the resource that is distributed to the national defense department all along. The direct cause leading these phases’ transition in equilibrium is the capital stock’s accumulation, which makes the defender have ability to realize a higher defense level. The mechanism is that a higher defense technology parameter makes the realization of a higher defense level become a better choice when the capital accumulation has reached a certain level.

The Mechanism of Interaction between Growth and Defense Expenditure In terms of defense expenditure’s influence on economic growth, the existing research mainly involves two aspects’ mechanisms: one is defense expenditure that causes a part of resource flow into the defense department from the production department; the other is that as the defense department itself is productive, it can contribute products and its activities has positive externality to the productive department. In this chapter’s model, the first one still exists. In the tolerant equilibrium and fully protected equilibrium, there is always a part of resource that flows into the defense department. The second influence is ignored in this model. Empirical research shows that for many developing countries, there is no sufficient evidence to show that the defense expenditure has positive externality on

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production. More important, the model in this chapter describes a third influence mechanism, which is also one of the crucial innovations of this model, namely, defense expenditure’s influence on domestic marginal production return. In terms of the modern economic growth theory, the key point to the long term growth rate is the factors’ marginal return. Therefore, the third influence mechanism described by this model is more essential to a country’s long term economic growth path. The basic process is that the external predation allowed by economic insecurity will decrease the expected factors marginal return. The increase of defense expenditure improves the economic security; that is to say, the expected factors marginal return increases, so that the long term growth rate is also improved. There is no doubt that the defense expenditure of the country that is plundered and the predator’s predation expenditure interact with each other. In the equilibrium, the factors marginal return decides the long term growth rate.14 In terms of economic growth’s influence on defense expenditure, we can analyze the fundamental way of influence from the sides of supply and demand. In terms of supply, the improvement of gross output relaxes the agent’s budget constraints so that the country has the ability to input more resources to national defense. In terms of demand, every improvement of the output makes the defense become more valuable. The temptation for the external predator is increasing, which causes much more predation and raises the degree of economic insecurity. So the demand to defense expenditure is raised. In the document on defense expenditure, though they have paid attention to the external threat, generally, the external threat’s seriousness is considered an exogenous one. While in the model of this chapter, by the conflict’s equilibrium analysis, the exogenous threat is endogenized. In other words, changes of this country’s wealth have an effect on the external threat so that the process in which the economic growth influences economic growth has been explored more deeply. Meanwhile, from the model, we can get a more important new insight: because the sustainable economic growth is accompanied by the continuous accumulation of the capital stock, so it may cause one country’s adjustment of defense strategy. This point will be discussed specifically in the following paragraphs.

The Optimal Growth: Balance between Safety and Development Since different equilibriums appear while the capital stock accumulates continuously, in different developing phases of a country, its government

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may face different options. When the capital stock is very low, according to Theorem 1, having no other choice, the government has to choose the submissive strategy and give up the defense input. Because at that time, this country is so poor that the predators are not very interested in it. So the country’s best choice is to rely only on the natural protection state. At that time, though the economy is unsafe, it can realize positive growth. When the gross capital stock increases to meet the requirement in Theorem 1, it is better for the government to choose to invest in national defense because if it adheres to the submissive strategy, the economy will stop growing at last. If it switches to the tolerant strategy, its safety will not become worse though it is still unsafe, and it still has the possibility to realize continuous stable growth. As the capital stock becomes larger, though tolerant equilibrium still exists theoretically, Theorem 7 illustrates that the whole society’s welfare will be improved if it adopts the fully protected strategy. So this model predicts that the best growth path needs the government to balance between security policy and development policy. A rational government should adopt different defense strategies in different development phases. When it is poor and less developed, it is more likely to choose the submissive strategy; after it has developed to a certain level, it is more likely to choose the tolerant strategy; and after it is strong enough, fully protected strategy is a better choice. The external environment also limits one country’s policy choice. In this model, the quality of the external environment is mainly measured by f . First of all, in all of the equilibriums, the higher f is the less the defense expenditure is, and the more the resource will be used in consumption and production. Therefore, the social welfare will be improved. Secondly, according to Theorem 5, the more important meaning of f is that: it determines what kind of equilibrium growth path will arise as the amount of capital stock lies in some interval. For example, the higher the value of f is, the earlier the government can adopt fully protected strategy so that it can obtain a higher growth rate.

CONCLUSION The chapter tries to build a long term growth model in the environment with international conflicts. The analysis here shows that a country’s long term growth is the result of the interactions of international factors and domestic factors. The long term equilibrium growth path is co-determined

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by the equilibrium of international conflicts and the balance between domestic consumption and investment. According to the different characteristics of conflict equilibrium, the equilibrium growth path may show in three phases, namely, submissive equilibrium growth phase, tolerant equilibrium growth phase, and fully protected equilibrium growth phase. When the initial capital stock is very low, it is in submissive equilibrium growth phase in which there is always a part of the wealth being plundered without defense investment; the higher the output is, the lower the economic growth rate is. When the capital stock increases to a higher level, it enters tolerant equilibrium growth path, in which there is positive defense expenditure and a fixed proportion’s output being plundered while the economy still has a positive growth rate in a stable state. When the capital stock is high enough, the fully protected equilibrium growth path may exist and defense expenditure is increased until external predation is prevented completely, and the stable growth rate is higher than in the tolerant equilibrium. The government’s different defense strategies lead to different growth scenarios. The equilibrium growth path needs the government to balance security policy and growth policy. Continuous economic growth will cause endogenous adjustment of defense strategy because a rational government will choose different strategies in different development phases. When the country is poor and backward, it chooses the submissive strategy. After it develops to a certain level, it switches to the tolerant strategy. When it is strong enough, the fully protected strategy is a better choice.

NOTES 1. See the discussion about the open economy in Barro and Sala-i-Martin (1992). 2. The characteristics of the three kinds of models are the basic method of a general empirical model trying to take into account all kinds of factors of national defense, including economy, politics, strategy, and so on, and it usually applies them directly into empirical research. Murdoch and Sandler (1985), Looney and Mehay (1990), and Kollias (1994, 1996) have mainly adopted and developed this kind of model, and then they did extensive research in the United States, Australia, Greece, Turkey, and so on. The neoclassical model’s foundation is the assumption of a rational government, which considers that the purpose of government is to maximize social welfare. When the total resource is finite, it needs to be distributed optimally to private and public departments, besides the assumption, in general, that the welfare consists of national security and consumption. The defense expenditure demand model, which bases on the decision process, doesn’t agree with the

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basic assumption that considers government as an independent rational human. It pays more attention to the actual process for one country to make the decision on defense expenditure (see Hartley & Sandler, 2001, pp. 70
85). 3. Though it is controversial to describe the international order in Hobbesian Rule, there are still many scholars who adopt and accept it, and they consider it as the most important difference between international society and domestic society (see Nye, 2002, p. 4). 4. Conflict economics considers that the conflict process has some essential economic features the same as the production process has. Just as the most basic means to analyze the production process is production function, in the formal economics literature on conflict, they generally adopt some functions to simulate the relationship between input and output of conflict behavior, and these functions are called the Contest Success Function. Hirshleifer (1989, 1994, 2000) introduces some general function forms. For the application of some functions, see Loury (1979), Tullock (1980), Rosen (1986), Appelbaum and Katz (1987), Dixit (1987), Hirshleifer (1989), Skaperdas (1996), Baik and Lee (2001, Baik (1998), and so on. 5. It is more reasonable that p is decided by the stocks of bilateral conflict inputs. But this has no substantial effect on the theoretical conclusions of this model. For simplicity sake, we treat conflict inputs as flows. 6. The assumption of lump-sum taxation can avoid the influence that the marginal tax rate may decrease the production marginal return. 7. There is a minor question about what the object being plundered is. For example, in the model of Grossman and Kim (1995, 1996b), productive capital, defense barricade, and weapons are the objects that can be plundered, while the economic output will not be plundered. However, in the model of Grossman and Kim (1996a), output and productive capital can be plundered, but the defense barricade and the weapons are a kind of expenditure much the same as consumption, which couldn’t be plundered. Here, we consider that output is the only object that can be plundered. 8. For the single family, capital stock can be negative theoretically. But there is a symmetry assumption, and we don’t consider the possibility that the whole country has a net debt in the environment with international conflicts; therefore, the capital stock per capita is more than 0. 9. The logarithmic utility function is adopted here, which is only for simplicity. To adopt other utility function, like u(c) = (c1
α
1)/(1
α), α>0, we can also come to this chapter’s crucial conclusion. 10. Thompson (1974) has put forward an idea that every country needs to distribute its wealth into the production and security areas rationally. 11. For the differential game and MPE’s detail illustration, see Fudenberg and Tirole (1991). 12. Because of the assumption that the predators randomly gain the chance to plunder, the predation input decision in different periods may be decided by different predators. 13. For how these parameters influence the equilibrium in different phases, it can be illustrated by solving with numerical values. Due to limitations on space, it is left out here. Anyone who needs it can get in touch with the author. 14. If defense expenditure is financed by marginal taxation, the increase of defense expenditure will also bring down the private investment’s marginal return.

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This influence is involved in much literature. However, in this chapter, we assume that the defense expenditure is financed by lump-sum taxation. For details, see the illustration in Section “The Actions of the Government and Family.”

REFERENCES Appelbaum, E., & Katz, E. (1987). Seeking rents by setting rents: The political economy of rent seeking. Economic Journal, 97, 685
99. Baik, K. H. (1998). Difference-form contest success functions and effort levels in contests. European Journal of Political Economy, 14, 685
701. Baik, K. H., & Lee, S. (2001). Strategic groups and rent dissipation. Economic Inquiry, 39, 672
84. Barro, R. J., & Sala-i-Martin, X. (1992). Public finance in models of economic growth. Review of Economic Studies, 59, 645
661. Boulding, K. E. (1962). Conflict and defense: A general theory. New York, NY: Harper & Row. Dixit, A. (1987). Strategic behavior in contests. American Economic Review, 77, 891
98. Friedman, D. (1977). The size and shape of nations. Journal of Political Economics, 85, 59
77. Fudenberg, D., & Tirole, J. (1991). Game theory. Cambridge: The MIT Press. Garfinkel, M. R. (1990). Arming as a strategic investment in a cooperative equilibrium. The American Economic Review, 80, 50
68. Grossman, H. I., & Kim, M. (1995). Swords or plowshares? A theory of the security of claims to property. Journal of Political Economy, 103, 275
288. Grossman, H. I., & Kim, M. (1996a). Predation and accumulation. Journal of Economic Growth, 1, 333
351. Grossman, H. I., & Kim, M. (1996b). Predation and production. In R. G. Michelle & S. Skaperdas (Eds.), The political economy of conflict and appropriation. New York, NY: Cambridge University Press. Hirshleifer, J. (1989). Conflict and rent-seeking success functions: Ratio vs. difference models of relative success. Public Choice, 63, 101
112. Hirshleifer, J. (1991). The paradox of power. Economics & Politics, 3, 177
200. Hirshleifer, J. (1994). The dark side of the force. Economic Inquiry, 32, 1
10. Hirshleifer, J. (2000). The macrotechnology of conflict. The Journal of Conflict Resolution, 44, 773
791. Kollias, C. (1994). Is there a Greek
Turkish arms-race? The view from Athens. Cyprus Journal of Economics, 7(1). Kollias, C. (1996). The Greek
Turkish conflict and Greek military expenditure, 1960
1992. Journal of Peace Research, 33(2), 217
228. Looney, R. E., & Mehay, S. L. (1990). United States defence expenditures: Trends and analysis. In K. Hartley & T. Sandler (Eds.), The economics of defence spending: An international survey (pp. 13
40). London: Routledge. Loury, G. C. (1979). Market structure and innovation. Quarterly Journal of Economics, 93, 395
410. Mejia, D. & Posada, C. E. (2002). Capital destruction, optimal defense and economic growth, Working Paper, www.banrep.gov.co/docum/ftp/borra257.pdf

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Murdoch, J. C., & Sandler, T. (1985). Australian demand for military expenditures: 1961
1979. Australian Economic Papers, (June), 142
153, Australia. Nye., J. S. (2002). Understanding international conflicts: An introduction to theory and history. Shanghai: Shanghai People Publishing House, 1
16. Rosen, S. (1986). Prizes and incentives in elimination tournaments. American Economic Review, 76, 701
715. Skaperdas, S. (1992). Cooperation, conflict and power in the absence of property rights. American Economic Review, 82, 720
739. Skaperdas, S. (1996). Contest success functions. Economic Theory, 7, 283
90. Sandler, T., & Hartley, K. (2001). The economics of defense. Beijing: Economic Science Press. Thompson, E. A. (1974). Taxation and national defense. Journal of Political Economy, 82, 755
782. Tullock, G. (1980). Efficient rent-seeking. In J. M. Buchanan, R. D. Tollison, & G. Tullock (Eds.), Toward a theory of the rent-seeking society (pp. 97
112). College Station, TX: Texas A&M University Press.

TERRORISM AND INTELLIGENCE-LED COUNTERTERRORISM IN CHINA Wang Shacheng ABSTRACT In general, the security situation for China’s sports pageants is quite stable, but still China needs to face up to the threats from both traditional and nontraditional security areas such as terrorism, separatism, and extremism. Terrorism is the biggest threat to China’s sports pageants. Effective security and defense strategies for the games require reliable intelligence. Reliable intelligence, however, is notoriously difficult to obtain even though we are immersed in vast quantities of information. How can we identify and obtain the useful intelligence from the vast sea of other less useful information? After analyzing the potential terrorism attacks and terrorists in the 2008 Beijing Olympic Games and the 2010 Guangzhou Asian Games, this chapter analyzes the potential means for counterterrorism at the games and tries to set up an intelligence study system based on the Information Galaxy (IG), which includes five parts of Sun (S), Earth (E), Moon (M), Information Sharing Environment (ISE), and IG. The relationships of SEM are just like the Sun, the Earth, and the Moon. All the methods especially need to cooperate in the

Cooperation for a Peaceful and Sustainable World, Part 2 Contributions to Conflict Management, Peace Economics and Development, Volume 20, 65
77 Copyright r 2013 by Emerald Group Publishing Limited All rights of reproduction in any form reserved ISSN: 1572-8323/doi:10.1108/S1572-8323(2013)00020.2008

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study of different cases in the IG system until valuable intelligence can be produced from the S, the S-E, the S-E-M, or the S-E-Ms. This chapter does not expect to put forward a complete and careful theoretical system of terrorism and Intelligence-led counterterrorism in China, but it still tries to establish a relatively complete theoretical framework, with a multi-disciplinary perspective of peace science, national defense economics, information science, and computer science, etc.

INTRODUCTION The 2008 Beijing Olympic Games and the 2010 Guangzhou Asian Games achieved full success finally in China. In general, the security situation for China’s sports pageants is quite stable, but still China needs to face up to the threats from both traditional and nontraditional security areas such as terrorism, separatism, and extremism. Terrorism is the biggest threat to China’s sports pageants. A sports pageant is a happy gathering for people from all countries but it’s also a big target for terrorism. China faces a lot of questions in holding a sports pageant. This chapter deals only with one facet: the possible terrorist threats and security.

TERRORIST THREATS TO A SPORTS PAGEANT IS REAL IN CHINA Terrorism and violence are not new to a sports pageant. Eleven Israelis, five guerrillas, and one police officer were killed during a siege at the 1972 Olympics in Munich. Two people were killed when a bomb exploded in Centennial Park during the 1996 Games in Atlanta. Terrorists reportedly planned to attack other Olympics but did not succeed. Since 9/11, international awareness of terrorism has heightened, and China’s security planners face a variety of challenges. Attacks on sporting venues are possible. Biological attacks can be microorganisms such as bacteria or virus or toxins that can kill or incapacitate people. INTERPOL says that there is no doubt terrorists are planning to release a plague virus at a major sports event. Experts are convinced that the bacteria will be distributed using something as simple as a child’s plastic horn. There are plenty of opportunities for an attack. Security sources say

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the idea of terrorists using toy horns to distribute a deadly virus is a significant possibility.1 Attacks against civil aviation are possible. A Chinese passenger jet that departed from the heavily Muslim region of Xinjiang was forced to make an emergency landing after the flight crew apprehended at least two passengers who authorities say intended to sabotage the airplane on March 7, 2008. No one was injured, and the plane was diverted to Lanzhou, in western Gansu province, before continuing on to Beijing. Authorities confirmed it at a meeting in which they also announced the killing and arrest of plotters allied with a radical Islamic Xinjiang independence movement who were planning terror attacks around the Beijing Olympic Games. Attacks against the torch relay are possible. The Olympic Flame was lit in Olympia, Greece, according to tradition on March 24, 2008. From March 24
29, the Torch Relay traveled across Greece, ending at the Panathinaiko Stadium, the site of the first modern Olympic Games in 1896. After the handover ceremony in the stadium, the Olympic Flame arrived in Beijing on March 31, 2008. The 2010 Guangzhou Asian Games flame was ignited in a traditional sun-ray ceremony at the Juyongguan pass of the Great Wall on October 9, 2010. The flame burnt at the November 12
27 Guangzhou Asian Games, following a one-month torch relay in Beijing, Harbin, Changchun, Haiyang, and 21 cities of the Guangdong Province. Some organizations and individuals were trying to politicize the Games and planned to disrupt the torch relay. Attacks through food are possible. Actually, China has hosted many big events, and there have been no problems regarding food safety in these events. Food to be delivered to athletes will be closely monitored throughout the process of production, processing, and transport. State-of-the-art technologies such as global positioning satellite systems will be used to help track food during the production and distribution process, according to organizing committee action guidelines. Other measures include staying vigilant on food safety and enhancing information collection, improving market entry system for food suppliers, strengthening food safety monitoring, and supervising systems; All food entering the Olympic Village and the Asian Games Village carried a logistics code to enable tracking. Chemical attacks are poisonous vapors, aerosols, liquids, or solids that have a toxic effect on the human body. They can be released by bombs, sprayed from aircrafts, boats, or vehicles. Some chemical attacks are odorless and tasteless. They can have an immediate effect or a delayed effect. Nuclear terror is possible. In March 2000, a plot to bomb a nuclear reactor 14 miles southwest of Sydney, Australia, was discovered, and rumors

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continue to circulate that Saudi militant Osama bin Laden and his supporters might target this year’s Summer Games there.

POTENTIAL TERRORIST GROUPS AT A SPORTS PAGEANT IN CHINA Terrorism is usually not a significant threat in China, where the authoritarian government takes an unflinching approach toward maintaining social stability. The terrorist threat to a sports pageant is relatively low in China, but China faces a growing long-term threat from Islamic separatists among the Uighur population in western China’s Xinjiang region. Although Uighur separatists have launched occasional bombings and assassinations, the last serious incidents were a decade ago. The East Turkestan Islamic Movement (ETIM) is a militant Uyghur organization that advocates the creation of an independent Islamic state of East Turkestan in the Xinjiang region of China. ETIM is considered a terrorist organization by the governments of China, Kazakhstan, and the United States, as well as the United Nations. East Turkestan is another name for Xinjiang. China’s main terror threat comes from ETIM. Although the group is believed to have no more than a few dozen members, terrorism experts say it has become influential among extremist groups using the internet to raise funds and find recruits. Chinese forces reported raiding an ETIM training camp in 2007 and killing 18 militants allegedly linked to al-Qaeda and the Taliban. The vast Muslim-majority region borders Pakistan, Afghanistan, Tajikistan, and Kazakhstan. More than 60% of its 20 million people are from the Uighur, Kazakh, Kyrgyz, Hui, Mongol, and other ethnic minorities, according to government statistics. About 7.5 million Uighurs, most of whom are Muslims, form the largest minority in Xinjiang. Millions of ethnically Chinese people have migrated to the region since it came under Communist Party control in 1949. The Communist Party has intensified its ideological battle with the Uighurs who seek an independent state in Xinjiang, linking them with terrorists and religious extremists as the “three evil forces.” Xinjiang is home to many ethnic Turkic groups, the largest of whom are the Uyghurs. Only a very small minority support the views of the ETIM. They do not represent the Uighur people. Al-Qaida is an international alliance of Islamic militant terrorist organizations founded in 1988 by Azzam (later replaced by Osama Bin Laden)

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and other veteran “Afghan Arabs” after the Soviet War in Afghanistan. Al-Qaida has attacked civilian and military targets in various countries, the most notable being the September 11, 2001, attacks. Al-Qaida has been labeled a terrorist organization by the United Nations Security Council, the North Atlantic Treaty Organization’s Secretary General, the Commission of the European Communities of the European Union, the United States Department of State, the Australian Government, Public Safety Canada, Israel’s Ministry of Foreign Affairs, Japan’s Diplomatic Bluebook, South Korea’s Foreign Ministry, the Dutch Military Intelligence and Security Service, the United Kingdom’s Home Office, Russia, the Swedish Ministry for Foreign Affairs, and the Swiss Government. Due to its secrecy and the structure of its semi-autonomous cells, al-Qaida’s size and degree of responsibility for particular attacks are difficult to establish. Some regional and ethnic conflicts in the world might cast a shadow or spill over into a sports pageant in China, and some international terrorist or extremist groups might make use of the event to launch attacks for their own purposes. Some organizations and individuals had tried to politicize a sports pageant and intervene in China’s internal affairs, and some others were planning to disrupt a sports pageant torch relay.

COUNTERTERRORISM AT A SPORTS PAGEANT IN CHINA At the 2008 Beijing Olympic Games, more than 500 detailed security plans have been mapped out, covering Olympic venues, counterterrorism, information exchange, and security for celebrities. At least 80,000 people would be directly involved in the security for the Games, including police officers, professional security guards, and volunteers. The Beijing bureau had offered professional training to 25,000 security staff; and the training of the rest would be completed before the Games. The responsibilities of the Ministry of Public Security (MPS) in China include the following: prevention, suppression, and investigation of criminal activities; the fight against terrorist activities; maintenance of social security and order; the fight against behaviors jeopardizing social order; control over traffic, fire, and dangerous objects; administration of household registration, identification cards, nationality, exit-and-entry, stay and travel of foreigners in China; maintenance of border security; protection of state-assigned persons, venues, and facilities; management of gatherings,

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parades, and demonstrations; security inspection on public information networks; supervision and instruction of security work in state organizations, mass organizations, enterprises, and important construction sites; and instruction of crime prevention work of community security commissions.2 In China, police can inquire about suspects in the street through their intuition and then finds the criminals. Within the MPS, there are departments such as the Central Office, Supervision, Personnel & Training, Public Relations, Economic Crime Investigation, Public Order Administration, Border Control, Criminal Investigation, Exit & Entry Administration, Fire Control, Security Protection, Public Information Network Security Supervision, Penitentiary Administration, Traffic Control, Legal Affairs, International Cooperation, Logistics and Finance, Drug Control, Science & Technology, Counterterrorism, and Info-communications, all assuming respective functions. Railway, navigation, civil aviation, forestry, and antismuggling public security departments are under the dual leadership of their superior administration and the MPS.3 The People’s Armed Police Force (PAP) is a paramilitary police force primarily responsible for law enforcement within the People’s Republic of China. In contrast to public security officers, PAP guards wear olive green instead of the dark gray or blue uniforms of the People’s Police. An individual policeman in the PAP is called an armed policeman. From January 1, 2005 to July 31, 2007, the position had been renamed “internal guard” with arm patches to reflect this change; new uniforms issued on August 1, 2007, carried the term for “Chinese Armed Police.” The PAP is estimated to have a total strength of 1.5 million, with over half its strength (800,000) employed in its internal security units. The PAP’s primary mission is internal security. Such units guard government buildings at all levels (including party and state organizations, foreign embassies, and consulates), provide personal protection to senior government officials, and provide security functions for public corporations and major public events. Some units perform guard duty in civilian prisons and provide executioners for the state. The PAP also maintains tactical counterterrorism (CT) units in the Immediate Action Unit (IAU), Snow Wolf Commando Unit (SWCU), and various Special Police Units (SPU). China’s People’s Liberation Army (PLA) stepped up counterterrorism training to ensure the security of the 2008 Beijing Olympic Games and the 2010 Guangzhou Asian Games. In 2007, the PLA established a security unit consisting of army, navy, and air force personnel. The PLA security unit mainly deals with nontraditional threats during a sports pageant, particularly biochemical and nuclear terror attacks. Under the comprehensive

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security plan of an important sports pageant, the PLA unit is responsible for air protection of all arenas and maritime safety of coastal venues. The unit helps the police and armed police forces prevent and deal with terror attacks as well as rescue operations in disaster or accident situations. The PLA is responsible for managing border control to prevent any terrorism activities and to stop East Turkistan terrorist organizations, adherents, or separatists getting to a sports pageant. It also prevents disruptions by organizations wanting to pressure the Chinese government during a sports pageant. Many PLA forces remain on alert in the air or at sea to ensure the safety of the sports pageant.4 The military bureau is the top command organization in charge of the security work of the PLA, and it is subject to both a sports pageant security command center and the Headquarters of the General Staff of the PLA. The counterterrorism effort of the games is a people’s effort, and does not depend on the Chinese government only. This is special in China. The most important counterterrorism force may be the “Red Armbands” who watch outside the gates of the communities. These “Red Armbands” are familiar with their communities and will question any strangers in them. There are many taxis and buses in the streets. Each bus and taxi will be a moving sentry box in the street. There are innumerable workers who send milk, water, newspapers, and so on door-to-door. They will also be used in counterterrorism efforts. Otherwise, the plainclothesmen, whose duty is to arrest the pickpockets on buses, will now work in counterterrorism. China also has a temporary residence permit that will aid its counterterrorism efforts. That is, to guarantee the safety of the host city at a sports pageant, people over 16 years of age who come to the host city for business or employment, or who plan to stay in the host city over one month, must register with the police as temporary residents. To guarantee the safety of the host city, the police check temporary resident permits to make sure that everyone in the host city is properly registered. People who fail to obtain the necessary permits may face a fine. International cooperation also ensures a sports pageant’s security. The objectives of a secure and smooth a sports pageant need full involvement and close cooperation from all countries in the world. Chinese law enforcement agencies have been actively co-operating and communicating with other countries and international organizations, through which good relationships have been established. All parties work together on the following four aspects in particular: to enhance information and intelligence exchange and perfect the security preparations for the Guangzhou Asian Games; to strengthen international cooperation in countering terrorism to prevent

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and suppress terrorist activities; to share practical experiences to prevent and handle accidents and emergencies; and to adopt effective measures to ensure the smoothness of the torch relay for a sports pageant, an important component of an important sports pageant. INTERPOL is the world’s largest international police organization with 188 member countries. Created in 1923, it facilitates cross-border police cooperation and supports and assists all organizations, authorities, and services whose mission is to prevent or combat international crime. Interpol would help organizers by providing details such as fingerprints and photographs of international criminal suspects. Assistance to be provided to Chinese authorities includes the deployment of an INTERPOL Major Events Support Team (IMEST) to the host city to provide immediate onsite technical and operational assistance. Via INTERPOL’s I-24/7 global police communications system, the team will not only have instant, direct access to INTERPOL’s full array of databases but will also be able to exchange urgent messages from all 188 member countries and vital police data such as fingerprints, images. and wanted persons notices. Prior to the start of a sports pageant, INTERPOL will provide analytical support to Chinese authorities through the provision of threat assessments on issues relating to sports pageant security and general transnational crime issues.5 As preparations intensify for a sports pageant, one issue concerns the extent to which the United States, including the military, should support security at the sports pageant to protect U.S. citizens and cooperate with the PLA or the paramilitary PAP, given concerns about China’s internal repression surrounding international events. The FBI is willing to offer its expertise to China on security issues relating to sports pageants. The FBI will offer all possible assistance to the host city, in terms of information sharing or other technical assistance. The FBI has advised Beijing and Guangzhou on security, and similar support will be given to a host city. The FBI began posting a liaison agent in Beijing in 2002, and China later began doing the same in Washington. China’s generally secretive police agencies have sought advice on sports pageant security from INTERPOL, the United States, Germany, Israel, Japan, and others. The 2008 Beijing Olympic Games and the 2010 Guangzhou Asian Games are international events; they are of great importance for the Chinese Government to research and develop advanced systems for to ensure safety and security. The facial recognition system is a computer application for automatically identifying or verifying a person from a digital image or a video frame from a video source. One way to do this is by

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comparing selected facial features from the image and a facial database. It is typically used in security systems and can be compared to other biometrics such as fingerprint or iris-recognition systems. The facial information includes terrorists and football hooligans provided by related countries. If poison gas is released in any game venues, the Detailed Meteorological System will detect the direction of the poison gas’s spread, the speed of the poison gas’s spread, and the areas in danger and transfer them to security personnel in time.6 The system was designed by The China Meteorological Administration. A Submarine warning system watches the water sports of the Games, such as sailing.7 The system was designed by The Chinese Academy of Sciences.

THE INFORMATION GALAXY OF INTELLIGENCE-LED COUNTERTERRORISM The Information Galaxy (IG) is an intelligence study system, which includes five parts: Sun (S), Earth (E), Moon (M), Information Sharing Environment (ISE), and IG. The S, E, and M represent different methods for analyzing information. The relationships of SEM are just like the Sun, the Earth, and the Moon. When SEM works, the information it needs comes from the ISE, IG, or both. Fig. 1 shows the structure of the IG. The analysis methods in M include multi-variant analysis, trend extrapolation, time series, webometrics, correlation analysis, and content analysis. As analysis methods on terrorism, they can be used not only independently

S E M

I SE

IG

Fig.1.

Structure of the Information Galaxy.

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but also cooperatively. In cooperation with other analysis methods (S and E), they are the foundation of the information analysis on terrorism using the analysis methods of S and E. Time series, trend extrapolation, and multi-variant analysis are quantitative analysis methods on terrorism. Content analysis is a research tool used to determine the presence of certain words or concepts on terrorism within texts or sets of texts. Texts can be defined broadly as books, book chapters, essays, interviews, discussions, newspaper headlines and articles, historical documents, speeches, conversations, advertising, theater, informal conversations, and any other occurrence of communicative language. Correlation analysis is one of the most promising methods for analyzing terrorism. The characteristics of terrorism intelligence are that we cannot get them easily via simple means or direct means but via complex means or indirect means. Correlation analysis includes qualitative and quantitative analysis. Quantitative analysis on terrorism is a statistical technique that evaluates the relationship between two variables; that is, how closely they match each other in terms of their individual mathematical changes. Qualitative analysis on terrorism is an intelligence process that evaluates the relationship between two variables. In most cases, qualitative analysis and quantitative analysis are often used hand in hand. Webometrics (also cybermetrics, web metrics) on terrorism tries to measure the World Wide Web to get knowledge on terrorism through the number and types of hyperlinks, the structure of the World Wide Web, and usage patterns. According to Bjo¨rneborn and Ingwersen (2004), the definition of webometrics is “the study of the quantitative aspects of the construction and use of information resources, structures and technologies on the Web drawing on bibliometric and informetric approaches.” The term webometrics was first coined by Almind and Ingwersen (1997). Webometrics promises to be an important new tool for analyzing terrorism. The analysis methods in E include analytic hierarchy process, decision tree and decision table, systems analysis, and optimization. As analysis methods of E on terrorism, they can be used to analyze information on terrorism independently and also to develop the result of M and support the analysis of S. The optimization method and systems analysis method both grew out of military operations and were rapidly developed during World War II. Of course, the optimization of intelligence projects is relative to actual effect. The method of decision tree and decision table refers to the risk analysis of terrorism. It can tell us that there will be several cases during the action of different intelligence projects; it can also tell us the result of different cases, but cannot tell us which case will occur. The analytic

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hierarchy process is a method for formalizing analysis on terrorism making where there are a limited number of choices, but each has a number of attributes, and it is difficult to formalize some of those attributes. As rapid developments in applied mathematics and computers, the optimization method, the systems analysis method, and the analytic hierarchy process all have very bright futures for helping to analyze counterterrorism. The analysis methods in S include behavior study, experience science, and logical thinking. They can be used to analyze terrorism independently, and they can also be used to complete and complement the results of M and E. Logical thinking is the process by which one uses reasoning consistently to come to a conclusion on counterterrorism. Based on the terrorism information, it runs by logic’s means of analysis and synthesis, comparison and classification, and conclusion and deduction. In information analysis on terrorism, although the logical thinking has the characteristics of qualitative analysis and common sense, its result is not often so precise and cannot be explained quantitatively. The method of experience science has the same characteristics and shortcomings. However, the reports on terrorism will be more authentic and credible once the conclusions of M, E, and S can perfect and complement each other. Of course, there are a lot of relative factors for information analysis on terrorism. If we use other methods of information analysis, it will cost more or be inefficient. Or for time reasons, the methods of logical thinking and experience science will be the first to choose. Specially, we should pay more attention

S S-E S E M

S-E-M I SE IG

Fig.2.

I N T E L L I G E N C E

S-E-Ms S E M

S E M

S E M

Information Analysis Flow Based on the IG.

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to the method of behavior study in that it has more about humanism. With the same intelligence, different terrorists may take different actions. We can analyze information on potential terrorism at the 2008 Beijing Olympic Games and the 2010 Guangzhou Asian Games by IG and get the intelligence we needed for counterterrorism. However, information analysis on terrorism is a complicated process that includes many steps and many elements. Fig. 2 is the information analysis flow based on IG. All the methods especially need to cooperate in the study of different terrorism cases in the IG system until valuable intelligence for counterterrorism is produced from the S, the S-E, the S-E-M, or the S-E-Ms.

CONCLUSION With the information environment changing quickly, the concept of traditional national security information management and information service has been challenged. This chapter does not expect to put forward a complete and careful theoretical system of terrorism and intelligence-led counterterrorism in China but still tries to establish a relatively complete theoretical framework, with a multi-disciplinary perspective of peace science, national defense economics, information science, and computer science, etc., and discusses the problems in this research field at a higher theoretical level. These problems are further research topics of the project group (Research on Terrorism which China faces and Intelligence-led Counterterrorism).

NOTES 1. The official web site of INTERPOL http://www.interpol.int/Public/Bio Terrorism/default.asp (accessed on 2011, January). 2. The official web site of the Ministry of Public Security http://www.mps.gov. cn/cenweb/English/index.htm (accessed on 2011, January). 3. Xinhua news agency. Elite counterterror police unit formed to guard Guangzhou Asian Games. October 13, 2010. 4. Xinhua news agency. Hong Kong, Guangdong, Macao Hold Tripartite Counter-Terrorism Drill. October 25, 2010. 5. The official web site of INTERPOL. INTERPOL support: A vital security component. July 9, 2010. http://www.interpol.int/layout/set/popin/layout/set/print/ News-and-media/News-media-releases/2010/N20100709b (accessed on 2011, January).

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6. The official web site of China Meteorological Administration (CMA) http:// www.cma.gov.cn/qxzt/ayqx/ayqxxw/t20070927_216340.phtml (accessed on 2011, January). 7. The official web site of the Chinese Academy of Science http://www.cas.cn/ html/Dir/2006/12/11/14/63/15.htm (accessed on 2011, January).

ACKNOWLEDGMENT I am grateful to the Belfer Center of the Harvard Kenney School for its generous help and thank the National Social Science Fund of China (ѝഭ⽮Պ、ᆖส䠁). The research in this chapter is supported by the National Social Science Fund of China: Terrorism and Intelligence-Led Counterterrorism in China (Program No: 10CGJ003).

REFERENCES Almind, T. C., & Ingwersen, P. (1997). Informetric analyses on the World Wide Web: Methodological approaches to “Webometrics”. Journal of Documentation, 53(4), 404
426. Bjo¨rneborn, L., & Ingwersen, P. (2004). Toward a basic framework for Webometrics. Journal of the American Society for Information Science and Technology, 55(14), 1216
1227.

CHINA
AFRICA RELATIONS: MAKING SENSE OF THE DISCOURSE Seifudein Adem ABSTRACT China
Africa relations have come under scrutiny recently, with more articles and books having been written on it in the last 10 years than in the preceding 50 years all put together. Despite the generous attention, however, the nature and outcome of China
Africa relations are far from clear. It is, in fact, as though the more one reads about China in Africa, the less one knows about it. The empirical evidence seems to lend support to the twin claims that China is looting Africa and that it is developing the continent. The massive literature and seemingly contradictory perspectives about Africa
China relations thus cry out for a disciplinary framework, disciplinary in both senses of that term. What are the divergent perspectives about Afro
Chinese relations? How did they emerge? What are the driving forces behind them? Is the sustained discourse about Afro
Chinese relations justifiable on empirical grounds? And is it a good thing for Africa in any case? These questions are addressed in this essay from the perspective of social constructivism.

Cooperation for a Peaceful and Sustainable World, Part 2 Contributions to Conflict Management, Peace Economics and Development, Volume 20, 79
94 Copyright r 2013 by Emerald Group Publishing Limited All rights of reproduction in any form reserved ISSN: 1572-8323/doi:10.1108/S1572-8323(2013)00020.2009

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INTRODUCTION Does discourse reflect reality or does it construct it? The answers we give to these deceptively simple questions define our theoretical position whether or not it is positivist or social constructivist. This essay is based on the social constructivist precept that the proliferating discourse about China
Africa relations not merely represents “reality” (reality as one sees it) but also produces meaning, with empirical “evidence” used in this circumstance serving as much for obscuring aspects of “reality” as for highlighting them. From an African(-ist) perspective, the issue surrounding the public and academic discourse about Africa-China relations boils down to whether China’s stepped-up activity in Africa is a boon for the continent. In this universe of discourse, on the one hand, are Sino-pessimists who see China as exploitative, which not only is already sucking Africa’s resources in order to fuel its own rapid industrialization but also is bound to destroy Africa’s development potential in the process. On the other hand, there are Sino-optimists who perceive China as the ultimate savior, capable of or willing to “develop” Africa. Between the two divergent views are those sitting on the fence for the time being, the Sino-pragmatists, who, although less sanguine about the potential outcome of Afro-Chinese relations, are willing to reserve judgment until the dust settles. The emergence of these divergent perspectives can be explained first in terms of the contradictions in Chinese activities in Africa in recent years, what may be called the dualism of China’s diplomacy in Africa. One of these contradictions is China’s tendency to invest both in resource-rich countries (such as Angola, Sudan, Congo Rep., Equatorial Guinea, and Nigeria) and in countries not yet known for producing or having resources critically important to China (for instance, Rwanda, Burkina Faso, Ethiopia, Central African Republic (CAR), Mozambique, Tanzania, Liberia, and Madagascar). Another manifestation is the multiplicity of actors on the part of China ranging from the state, semi-private enterprises, and private companies to private individuals. Then there is China’s emphasis on both bilateralism and multilateralism. In the traditional sense, China today has diplomatic relations with forty-four countries in Africa. In addition to one-on-one relations with African governments on a bilateral basis, China also has shown inclinations for diplomatic engagement about African issues with inter-governmental and regional organizations. Presently, China already

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has representatives not only at the African Union (AU) and New Economic Partnership for African Development (NEPAD) but also in the Common Market for Eastern and Southern Africa (COMESA), the Southern African Development Community (SADC), and the Economic Community of West African States (ECOWAS). The fourth expression of this diplomatic duality relates to China’s contributions to peace and conflict in Africa. In recent years, the Chinese personnel contribution to PKO activities in Africa has increased substantially. However, China’s arms have also contributed directly or indirectly to the perpetuation or, in some cases, to the escalation of violent conflicts in places ranging from the Congo to the Sudan and the Horn of Africa. Fifth, there is the issue of China’s collaboration with and defiance of the West both at the same time. China has sometimes acted in tandem with, for instance, the IMF, the World Bank, United Nations Development Program (UNDP) and Food and Agricultural Organization (FAO), and similar multilateral institutions on issues relevant to Africa. At other times, China has ignored the principles of some of these very institutions. If China’s dual diplomacy in Africa is manifested in some of the forms outlined above, the next logical question that should be addressed has to relate to its cause. The duality of China’s diplomacy in Africa is partly a function of the diversity in the continent with which China has come to deal. In Africa, multiple contradictions coexist. The continent is home to countries that are diverse in their resource endowment, level of political stability, and nature of governance. But the ambiguity of China’s behavior is rooted in issues that are far wider than what goes on in Africa itself. China’s international behaviors elsewhere, too, are often contradictory for a variety of reasons. Analysts still wonder, for instance, whether China is/would be a “radical revisionist” or a “moderate reformist” internationally. And there are signs that point to both predispositions. In spite of the fact that there is not a clear pattern yet of China’s diplomacy in Africa, or because of this fact, the aforementioned three perspectives now dominate the discourse about China’s activities in Africa. What is being suggested here is that the perspectives are divergent also because of the inherent nature of perspectives. Any given perspective by definition not only highlights a certain part of reality to some extent but also simultaneously makes the other part invisible. Optimists, pragmatists, and pessimists about the impact of Sino
African relations can all thus point to aspects of the dualistic Afro
Chinese relations that support their respective position.

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But there are also other pieces that we can assemble for a fuller understanding of how these perspectives emerged and why they coexist. China is a relative newcomer to Africa as an aspiring major power. This means that the Sino
African relationship has not yet fully crystallized and that it is too early to assess the wider impacts. It is, therefore, the interplay between the fluidity of the current state of Afro
Chinese relations and the underlying wishes, hopes, and fears about the future direction and impact of this relationship that also gave rise to the perspectives of Sino-optimism, Sinopragmatism, and Sino-pessimism. In other words, the perspectives reflect variable recognition of the underlying possibilities, which are contingent upon factors internal to China, Africa, and the global political economy in general. Let us now look at the expressions of these perspectives more closely.

SINO-OPTIMISM, SINO-PRAGMATISM, AND SINO-PESSIMISM For those who subscribe to Sino-optimism, China’s reentry into Africa is to be celebrated. Africa stands to gain much from closer ties with China. The tone of Sino-optimistic literature on Afro-Chinese relations is laudatory. The former president of Botswana, Festus Mogae (2009), asserted recently, “had China not come into existence as a partner for us we would have needed to create her” (see Shelton, 2007). Another Sino-optimist declared: “China is the only global power laying the tracks for an Africawide economic renaissance” (Olopade, 2008). Optimists remind us about the greater attention China has been paying to Africa in recent years and the seeming commitment that China has shown for assisting Africa’s development. They also point to the overall positive performance of and encouraging trends in African economies in the first decade of this century, a decade which coincided with China’s increased activities in Africa (see Dugger, 2010). Additionally, Sino-optimists point to the scores of projects ranging from roads, dams, and bridges to the Chinese-funded industrial zones that are under construction in many African countries. These projects, Sinooptimists say, are concrete embodiments of China’s commitment to Africa’s industrialization. For Sino-pragmatists, on the other hand, China’s greater involvement in Africa would be neo-colonial in consequence, if not in intent, since the logic

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of capital is the same whether those in the driving seat are Europeans, Americans, or Chinese. Sino-pragmatists point to the generally unchanged terms and structures of Africa’s economic interactions with China vis-a-vis those with the West. While China’s exports to Africa are processed and manufactured goods, the overwhelming proportion of China’s imports from Africa are primary products. But pragmatists also say that it is nevertheless too early to make a sweeping judgment whether the disadvantages of a deeper Afro
Chinese economic engagement would outweigh the advantages for Africa. A variant of Sino-pragmatism also maintains that the possibility of African renaissance hinges not merely on “the rupturing of past [hegemonic] patterns,” which China is doing globally, but also on “concrete African action.” As Sarah Raine put it, “handled properly, China’s interests in Africa present an opportunity for African development…” (see Cheru & Calais, 2010; Raine, 2009). And yet, Sino-pragmatists are generally more accommodative of China’s increased activities in Africa not only because Africa’s experience with the West had not benefitted the continent but also because China was coming to Africa without such historical baggage as slavery and colonialism. Sino-pragmatists hope that something good would come out of Africa’s closer economic interactions with China, and therefore it is at least premature to dismiss the potentialities. In this tone, one Sino-pragmatist has said recently: “Let us give the Chinese a chance in Africa … then put their feet to the fire if and when they do not do right by Africa…but before then, I am unwilling and quite splendidly disinterested in joining the bandwagon of hostilities directed at China…” (see Adujie, 2010; Dijk, 2009). For Sino-pessimists, China’s behaviors in Africa are reminiscent of the behaviors of European powers in the 19th century when the industrial revolution motivated them to “go out” in search of raw materials and markets. Sino-pessimists warn that the major impetus behind China’s “go out” policy (zuo ququ, in Chinese) too is the same: the need for resources and markets. The major difference, according to Sino-pessimists, is that China has recalibrated its approach and its rhetoric to the requirements of the 21st century, with the slogan of “developing mission” taking the place of “civilizing mission.” Sino-pessimists point to the similarities between Chinese and Western aid to Africa and insist that both are instruments for achieving certain strategic and diplomatic objectives and that both are instruments for gaining access to resources and that both seek to benefit from employment at home and are tied to the purchase of goods from home countries.

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In analyzing contemporary Africa
China relations, some Sino-pessimists go even further and suggest that the so-called the “Beijing consensus” is worse than the “Washington consensus” in that Africa’s terms of trade with China are worse than Africa’s terms of trade with the West. In fact, Africa has continuously run a deficit in its trade with China in recent years, whereas the continent has consistently run a surplus in its trade with the traditional trading partners in the West. The same critics of the so-called lopsided China
Africa relations recognize China’s renewed interest in Africa and its increased investment in the continent. However, they are also quick to add that China’s investment in Africa is generally more resource-seeking than efficiency-seeking, and in the long term, the former will only have the consequences of deepening and reinforcing the structural distortions of African economies by further biasing towards primary exports. Sino-pessimists thus argue that Africa’s engagement with China would perpetuate the structure of dependency and underdevelopment, which is already in place, and moreover inhibit or block Africa’s efforts to overcome them, hindering industrialization and reinforcing the old imperial division of labor in which Africa provided raw materials to Europe and bought consumer and industrial goods in return. It must be mentioned that Sinooptimists also do not reject the fact that China’s investment in Africa favors primary products or natural resource development. But they also add that compared to Africa’s traditional development partners, China has committed proportionally more capital for the infrastructure sector in Africa. And this would positively affect the efficiency of African economies in the long-term. What is more, Sino-optimists remind us that the steady increase in China’s investment in the continent in itself is a cause for celebration for a continent that is not known for attracting foreign investment. Even though Sino-optimism, Sino-pragmatism, and Sino-pessimism can be separated for analytical purposes, as we have tried to do above, it is often hard to do so in practice. Only rarely do analysts spell out explicitly the singular perspective that informs their analysis, which is why we need a set of strategies for teasing out the underlying paradigm from the seemingly disinterested historical and descriptive analyses about Afro
Chinese relations. We can perhaps start by looking at the tone and theme of the analysis. One would not, for instance, expect an optimistic reading of Afro
Chinese relations from an article bearing the title of China’s Foray into Africa as much as one would not expect an analysis that is hostile to China from an article presumably focusing on China’s Challenge to Western Hegemony in

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Africa. Similarly, if there is greater emphasis on Chinese interest in Africa’s extractive sector to the exclusion of other aspects of the relationship, the analysis is more likely to be either Sino-pragmatist or Sino-pessimist. An analysis that thematically focuses on China’s Investment in the Infrastructure Sector in Africa is likely to arrive at a more optimistic conclusion than one whose subject matter is China’s Oil Diplomacy in Africa. It is also logical to suspect that an article titled Africa’s Futures from NorthSouth to East-West? Would be at least more pragmatic than optimistic about future outcome. But a simple title such as China in Africa cannot tell us much about the perspective of the writer before we dig deeper into the text. One needs to be extremely cautious in all cases about making a judgment only based on thematic focus. It is said that one method we can use to determine whether a man is a carpenter or a plumber by profession is to look at the tools he uses. The same logic can be applied for understanding perspectives. We can therefore supplement the above strategy by paying special attention to the concepts that are systematically deployed in the analysis. If the key concepts are, for instance, “China’s scramble for Africa,” the analyst is most probably approaching the relationship from a Sino-pragmatic or a Sino-pessimistic perspective. On the other hand, if the key concept is “strategic partnership” between Africa and China, the writer is most likely to be a Sino-optimist. Could we get clues also from the national identity or geographical origin of the analyst? The answer is yes to some extent, but only if used with care. Not surprisingly, most Chinese analysts seem optimistic about the outcome of Sino
African relations for both sides as are many Africans. But, needless to say, not all Westerners are Sino-pragmatists or Sino-pessimists just like not all Africans are Sino-optimists. Is there a relationship between ideological predisposition of an analyst and his/her perspective and conclusions about Afro
Chinese relations? In order to answer this question, it may be useful first to look back briefly at the recent history of the discourse about development. Two views have dominated the development debate in the past half century. On the one hand, there was the view held by Marxist and neo-Marxist intellectuals that global capitalism has the propensity to under-develop Africa and that the solution was for Africa to disengage itself from the world capitalist system. On the other hand, right-leaning intellectuals saw the process of economic exchange between Africa and the West as a positive-sum game, beneficial to both sides, even if the benefit was never equal. A variant
or distant relative
of this paradigm maintained it was just too late to disengage from global capitalism, even if it was desirable to do so.

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Subsequent to China’s latest arrival in Africa, however, left-leaning intellectuals seem to be reversing their position by advocating Africa’s deeper engagement with China and by suggesting that this could accelerate Africa’s own development. At least at the moment there seems to be some type of correlation between ideology and discourse about Africa
China relations.

ON THE PREDOMINANCE OF SINO-OPTIMISM If the three perspectives are all articulated in contemporary discourse, it is undoubtedly Sino-optimism that captures the prevailing public and intellectual mood in Africa. This is in clear contrast to what is increasingly the case in Europe and the United States (see Casarini, 2009).1 One senior African diplomat has recently argued: … the relationship between China and Africa is coming under close scrutiny, but mostly, not in an objective manner, rather in a manifestly biased way which totally excludes the African perspective…[T]he colonial perspective, the condescending attitude towards Africa, is still vibrant. (Alemu, 2010, emphasis added)

The African perspective the diplomat was referring to is, of course, Sino-optimism. It would not be an exaggeration to say that Sino-optimism has been embraced almost uniformly by Africa’s ruling elites in all corners of the continent. It is also true that China’s activities in Africa have wider support among ordinary Africans. One logical question we can ask, therefore, is this: why is Sino-optimism so predominant in Africa today? What are the elements of China’s soft power in the continent? China’s soft power in Africa emanates from the positivism with which China is viewed in the continent: as strategic partner, as socioeconomic model, and as comrade-in-arms. We have indicated already that a segment of Sino-optimists views China as a genuine partner in Africa’s development efforts. Indeed, China has also expressed time and again solidarity with African countries in an attempt to overcome the challenges of economic underdevelopment.2 Many Sino-optimists are therefore almost certain that China would, by default or design, ignite the “African renaissance.” At least two elements of China’s economic diplomacy have reinforced the perception of China as Africa’s strategic partner. First, China’s approach emphasizes the building of visible and symbolic projects such as stadiums, conference halls, and parliament buildings in Africa. It is noteworthy, for instance, that in 2007 Beijing launched a Chinese-manufactured

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communications satellite into orbit on behalf of Nigeria.3 It was a first for China to build a commercial satellite and put it into orbit on contract for another country. Nobody expects Nigeria to become a space power as a result of its now having a satellite in the space, but the symbolic value of the project is not insignificant. Second, China’s approach emphasizes projects that are instantaneous and tangible in their outputs. A project that is aimed at building roads and dams is more tangible to ordinary people than one whose goal is the promotion of democracy and good governance. The simple observation made recently by the president of the China Export-Import Bank may indeed encapsulate the essence of China’s “smart diplomacy,” which seems to be winning a large number of supporters. In response to those who were critical of the Bank’s policy of lending money to African regimes with poor human rights records, the president said, “roads and radios are more urgent needs for Africans than human rights and freedom.”4 China is also viewed as a model in two ways. The first is premised on the presumed similarity between the socioeconomic condition in China and many African countries, especially in comparison of the latter to Western industrialized nations. Ai Ping, the former ambassador of China to Ethiopia, has for instance observed that “…China and Ethiopia share similar national conditions and are both faced with the same historical task of vigorously developing their economies” (Ping, 2005). The second reason why China is regarded as a model in Africa has more to do with the recent and continued success of the nation in modernizing its economy. “Chinese transformation,” observed the late Prime Minister Meles Zenawi of Ethiopia, “disproved the pessimistic attitude that ‘if you are poor once, you are likely to be poor forever’”5 The Ethiopian leader was not alone in his hopes. At about the same time, American scholar Horace Campbell was also saying, “The rapid rise of China is a testament that poor societies can rise beyond colonial exploitation and the mangled priorities of societies which ensure that colonial societies remain a producer of raw materials” (Campbell, 2008). Needless to say, embracing the Chinese model in this way is at the same time a strong statement of rejection of the Western model. We must note in passing that the perceptions of China as a partner and as a model are not necessarily compatible. One could admire and emulate China as a model without buying into the idea that China would (have to) be a partner committed to igniting Africa’s renaissance. Meiji Japan could be a model but not be a partner for African development. To the extent that China’s interests are dynamic and expansive, it does not also

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automatically follow that the two perceptions would remain compatible under all circumstances. And finally there is that element of China’s soft power in Africa, which is related to the African perception of China as a fellow traveler. As indicated already, China has no complicity in the trans-Atlantic slave trade. Neither was it part of the colonial scramble for Africa. In fact, China, like Africa, was a fellow victim of colonialism. China also has a good record of supporting Africa’s liberation movements during the era of anticolonial struggle even if it sometimes supported the wrong liberation movement. China’s longstanding solidarity with the liberation movements was later upgraded in many cases to bilateral and state-level diplomatic relations in the postcolonial period. As the late Prime Minster Meles Zenawi of Ethiopia put it, “Africa will never forget the historical role played by China in the struggle against colonialism.”6 This type of residual goodwill toward China from anticolonial solidarity has therefore partially provided the foundation for Sino-optimism, enabling the perception of the reinvigorated Africa
China relations as a case of old acquaintances forming new partnerships. A discussion of China’s soft power in Africa would not be complete without also touching on the “push factors,” those factors that turned Africa to some extent away from the West and toward China, even though the factors themselves had little to do with China. By the late 1990s, the abysmal failure of the Structural Adjustment Program (SAP), which was imposed on 36 African countries in 1989, had become clear with its increasing debt and devastating effect on African societies. Because of political considerations, including investment sanctions, several Western multinational companies had also already started to leave countries like Angola, Sudan, and Zimbabwe. Ian Taylor has thus observed: “China’s renewed interest in Africa coincided with the new-found attention of the West in promoting liberal democracy and human rights” (Taylor, 2006). By the 1990s, international institutions such as the World Bank had already begun to streamline their activities, limiting their projects to increasingly fewer sectors at the neglect of others considered crucial for economic development by Africa’s own leaders, including such sectors as agriculture, infrastructure, and industry. For all intents and purposes, the 1990s also marked a period when aid fatigue in the West set in, and with the end of the Cold War, the West began to give greater attention to Eastern Europe than to Africa. It was in this context when Africa was effectively cornered by the West and was searching for alternatives that China, whose reform launched in 1978 had already begun bearing some

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fruit by unleashing fast economic growth, zoomed in on Africa in its quest for sources of energy and raw materials. When China thus knocked at Africa’s doors in the mid-1990s, it was warmly welcomed and let in with its capital and new rhetoric. If it had not been for the confluence of factors at the right time, China could not have penetrated Africa to the extent it has, and certainly not as fast. In any event when all is said and done, what matters most is what China would (and could) do in (and for) Africa. It is all too easy to overstate China’s commitment and capacity to develop Africa. The extent of China’s contribution to African development will always be constrained by the nation’s vital needs and the convergence or divergence of its interests with those of Africa. As China continues to grow economically, increasing the developmental gap with Africa, the area of convergence of interest between the two also shrinks steadily. And the gap is indeed widening rapidly despite the rhetoric of “Africa and China as the largest developing continent and the largest developing country, respectively.” China is looking more and more like the industrialized nations of the West at least in terms of the structure of its economy and the composition of its imports and exports. When China changes in this way, so does its interests and behaviors
even if we accept for the moment the Sino-optimistic premise that China is a force for good in Africa today. The nature and impact of China’s activities in Africa would also vary not only from country to country in Africa but also from sector to sector, with China becoming a force for good in some and not necessarily in others. What is more, the impact of China in Africa would always be limited
limited not in the sense that it would be insignificant but in that China by itself could neither develop nor underdevelop Africa. Only Africans could do that.

CONCLUSION The maximum attention that Africa
China relations received in recent years is perplexing. Let us first consider China’s relative standing in Africa in terms of Foreign Direct Investment (FDI). Even after allowing for the mystery and complexity that shroud Chinese official statistics, the level of investment of other Asian countries in Africa is more substantial than China’s. China ranked only fourth after Malaysia, India, and Singapore in terms of investment in Africa in 2004 (Guerero & Manji, 2008). Why, then,

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does China get attention that by far exceeds the attention given to other Asian countries in this context? In response to this question, some would say, rightly, China is a would-be hegemon unlike the other three. But there may be more to the issue than that. The second aspect of the perplexity of the discourse about China in Africa is highlighted by the regional distribution of China’s FDI. From China’s total overseas FDI in 2006, the share of Africa was relatively small, 4 percent, compared to Latin America’s 26 percent and Asia’s 64 percent (ibid., also see Alden, Large, & Soares de Oliveira, 2008). China’s trade and official development assistance also shows a generally similar pattern.7 Why, then, do Afro
Chinese relations attract and get more attention than, say, Sino-Latin American relations? Would it be that the huge “infrastructure deficit” in Africa greatly magnifies China’s investment in the continent and draws more attention? This theory also does not fly because China’s investment in Africa is too modest (compared to that of other major powers’) to leave a major footprint. China’s FDI in Africa (about 9$ billion in 2009) (ibid.) is only a fraction of that of the United Kingdom, United States, and France. It must be noted that the phenomenon of excessive attention to China and Africa is not limited to generalizations at the continental level. The discourse at the level of individual countries betrays similarly gross (if sometimes unintended) distortions. Take Ethiopia, for instance. A week hardly passes without some news item in the national media about Sino-Ethiopian relations. Indeed, it is true that China is an important economic “partner” for Ethiopia. And yet the share of China’s trade with Ethiopia as of 2009 constituted less than 2 percent of China’s overall trade with Africa. China has also extended economic assistance to Ethiopia in recent years, but it is negligible (less than 1 percent) compared to what Ethiopia received from other donor countries and institutions. What is more, China ranked third in terms of FDI in Ethiopia in 2010, after Saudi Arabia and India, with the following breakdown in Ethiopian Birr: Saudi Arabia (50 billion), India (39.5 billion), and China (17.8 billion) (Malone, 2008).8 If empirical evidence thus shows that Sino-African relations are not yet the most important relations both for Africa and for China, what then is the driving force behind so much interest in Afro-Chinese relations? A tentative answer we can formulate for this fundamental question is that the deep interest was partly a reflection of the inevitable reaction to China’s accelerated activities around the globe. It should be reiterated, however, that it was the pace rather than the scale of China’s activities in Africa that justified the maximum attention.

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The clarion call was thus sounded, and the message was perhaps best encapsulated in the headline of a British newspaper: “How China is Taking Over Africa … and Why We in the West Should Be Very Worried” (Malone, 2008). The result was the emergence of a sustained discourse about the “China threat” in Africa. China was supposed to be posing a threat in Africa to longstanding Western interests at least in two ways. On the one hand, there was the growing popularity of the Chinese model of development, at least among Africa’s ruling elites, as a realistic alternative to the Western approach and increasing awareness that the promise of the Chinese model in Africa was beginning to be contrasted with what was regarded as the failed model of neoliberal capitalism. In this regard, Congressman Chris Smith, former chair of the subcommittee on Africa in the U.S. House of Representatives, recently articulated the “China threat” in this way: “People like Bashir [of Sudan], Mugabe [of Zimbabwe], and so many others love the Chinese model of control and secret police…I am very worried about the influence their bad human rights and bad governance model is having…”9 On the other hand, there is the seemingly limitless appetite of China for the world’s finite resources, such as oil, of which Africa is increasingly becoming an important producer. Needless to say, the West also has a longstanding interest in these critical resources. It is now a foregone conclusion therefore that there will be increasing rivalry between China and the West, a rivalry over markets and raw materials, particularly oil. And subSaharan Africa will be one of the battlefields in this rivalry if oil continues to be the major source of energy
as it is now. It was, in short, out of political and economic considerations that the discourse of Sino-pessimism was born in the West, one that inevitably excited the interest and captured the attention of many Africans and Africanists, too. As Fareed Zakaria has observed: “…as China moves into Africa, it is taking up political, economic and military space that was occupied by Britain, France and the United States. This will necessarily mean friction as each great power struggles to promote its own interests and its own conception of doing the right thing in Africa” (Zakaria, 2008). Sinooptimism and Sino-pragmatism were also reactions to the discourse about the so-called “China threat.” Let us pause for a moment and ask: does China really pose a threat to the West in Africa? The answer to this question depends on one’s perspective. If we assume Afro-Chinese relations will continue to grow and expand, China would increasingly become the West’s rival for some of the strategic raw materials. Even so, the West, China, and Africa would all

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benefit from a positive improvement in the African condition consequently even if the benefits will be unevenly distributed. As the liberal theory of international relations postulates all sides would be better off as a result of the enlargement of the pie. An Africa with thriving economy is a significant market for goods produced both in the West and in China. But if political realism informs our observation and analysis, the West would be the eventual loser, for the issue becomes relative gain: who gains how much more than the other? Is Afro-Sino-philia, the growing public and intellectual interest in Afro
Chinese relations a good thing for Africa? A Sino-pessimist, a Sinooptimist, and a Sino-pragmatist could all be Afro-Sino-philes to the extent that they devote extensive attention to the nature and impact of Afro
Chinese relations. An Afro-Sino-phile is, however, not necessarily an Afro-Sino-fanatic; but a Sino-optimist can be at the same time an AfroSino-fanatic. Similarly, a Sino-optimist can concurrently be a Sino-phobe to the extent, for instance, that that individual is convinced Afro
Chinese relations would benefit Africa in the long-term but loathes China for its role in propping up authoritarian regimes. In general, the proliferation of the discourse about Africa-China relations is a good thing for Africa. However, a discourse about this discourse is also badly needed, which is designed to induce China’s greater involvement and more positive impact in Africa, a discourse which is on a par with the attention China
Africa relations have received in recent years. Given the role discourse plays in the construction of reality, it is also a good thing that Sino-optimism now prevails in Africa. After all, social reality is born out of concerted action around a belief
even if that belief is sometimes different from what is out there.

NOTES 1. According to a recent survey, for instance, 53 percent of Germans, 66 percent of Italians, and 70 percent of French consider China as a threat. 2. Position Paper of the People’s Republic of China at the 65th Session of the UN General Assembly. Available at http://et.China-embassy.org/eng/zgxx/t752288. htm (accessed on October 14, 2010). 3. Washington Post, May 13, 2007 (online accessed on August 19, 2008). 4. Mentioned in Jakobson (2009). 5. The Ethiopian Herald, December 23, 2008. 6. Opening Remarks by Ato Meles Zenawi (2005).

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7. We should note, however, that China did become Africa’s top trading partner for the first time in 2009, and in aggregate, China’s FDI in Africa did grow from $490 million to $9.3 billion also in 2009. According to Chinese diplomatic source China’s FDI in Africa in 2009 was about $US 8 billion. Ambassador Liu Gujin, Special representative for African Affairs at the Chinese Ministry of Foreign Affairs, speech delivered at China-Ethiopia and China-Africa relations. Available at http://et.china-embassy.org/eng/zagx/t772346.htm (accessed on January 18, 2011). 8. “Saudi Arabia becomes Ethiopia’s top investment partner,” http://aigaforum. co/news/fdi.eth_2010.php (accessed on December 28, 2010). 9. U.S. House Foreign Affairs Sub-Committee Hearing on China, January 19, 2011 (carried on CSpan, January 20, 2011).

REFERENCES Adujie, P. (2010, July 26). Re: China bashing & foreign investments in Africa. Retrieved from [email protected] Alemu, T. (2010). The World, Africa, China and Ethiopia: China-Africa relations. A lecture delivered at China’s Foreign Affairs University (CFAU), April 15, 2010. Alden, C., Large, D., & Soares de Oliveira, R. (2008). China returns to Africa: Anatomy of an expansive engagement. Documento de Trabajo. Real Instituto Elcano Working Paper 51/2008. Retrieved from http://www.realinstitutoalcano.com. Accessed on June 12, 2009. Ato Meles Zenawi, H. E. (2005). Prime minsiter of the Federal Republic of Ethiopia at the second ministerial conference of the China-Africa cooperation forum. In K. Abrahama (Ed.), China comes to Africa: The political economy and diplomatic history of China’s relations with Africa (p. 198). Addis Ababa: Ethiopian International Institute for Peace and Development. Campbell, H. (2008). China in Africa: Challenging U.S. global hegemony. Third World Quarterly, 29(1), 100. Casarini, N. (2009). Remaking global order: The evolution of Europe-China relations and its implications for East Asia and the United States (p. 178). New York, NY: Oxford University Press. Cheru, F., & Calais, M. (2010). Countering ‘new imperialisms’: What role for the new partnership for African development. In F. Cheru & C. Obi (Eds.), The rise of China and India in Africa (pp. 221
242). Uppsala: Nordic Africa Institute. Dijk, M. (Ed.) (2009). The new presence of China in Africa. Amsterdam: Amsterdam University Press. Dugger, C. W. (2010). Report offers optimistic view of Africa’s economies. The New York Times, June 24, p. A.20. Guerero, D.-G., & Manji, F. (2008). Introduction. In D.-G. Guerero & F. Manji (Eds.), China’s new role in Africa and the South. A search for a new perspective (pp. 1
2). Cape Town: Fahamu. Jakobson, L. (2009). China’s diplomacy toward Africa. International Relations of the AsiaPacific, 9(3), 425.

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Malone, A. (2008) How China’s taking over Africa. Daily Mail, July 18. Mogae, F. (2009). A new development partner: New opportunities. In S. T. Freeman (Ed.), China, Africa and the African diaspora: Perspectives (p. 21). Washington, DC: Aasbea Publishers. Olopade, D. (2008, August 6). China’s long march across Africa. Retrieved from http://www. africa.com/blog/blog,chinaslongmarchacrossafrica,6.html. Accessed on April 29, 2010. Ping, A. (2005). Chinese and African views on China’s relations with individual African states. In K. Abrahama (Ed.), China comes to Africa: The political economy and diplomatic history of China’s relations with Africa (p. 233). Addis Ababa: Ethiopian International Institute for Peace and Development. Raine, S. (2009). China’s African challenge (p. 4). London: Routledge. Shelton, G. (2007). Afro-Chinese relations in an era of globalization. In K. K. Prah (Ed.), Afro-Chinese relations: Past, present and future (pp. 232
267). Cape Town: CASA. Taylor, I. (2006). Unpacking China’s resource diplomacy in Africa, Center on China’s Transnational Relations. Working Paper No. 19. the Hong Kong University of St. Andrews, p. 4. Zakaria, F. (2008). The post-American world (p. 117). London: W. W. Norton.

RATIONAL MODEL OF CONFLICT: WAR AND PEACE IN SOUTH ASIA Richard Barrett, Samir Deger-Sen and Somnath Sen ABSTRACT The chapter provides a theory of war and conflict issues, and applies the theory to the arms race and the possibility of war in the South Asian subcontinent. We try to give a new perspective on an old question: wars are not rational since they destroy the contestable resource over which disputes arise; yet, states that are rational frequently undertake them rather than going for the less costly option of settlement. In the chapter, a war game is played in which two states first build armaments and then, if they cannot achieve a settlement, fight a war, the outcome of which depends on strength of armaments, where at stake is a contestable resource. The anticipated outcome determines the bargaining threat point. “Technology” is a factor in any war, and so too is the cost of building armaments. States typically differ in technology and may also miscalculate their own relative technical position and war-fighting capability. Alternative models of settlement and war are presented in which states either believe the opposing state has the same perception of technical advantage, or else know the opposing state’s differing perception. Dynamic models, which include the effects of decay in information over

Cooperation for a Peaceful and Sustainable World, Part 2 Contributions to Conflict Management, Peace Economics and Development, Volume 20, 95
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time and strategic concerns, are examined. Finally, the results of the models are applied to the stylized facts of India-Pakistan rivalry and conflict, paying particular attention to institutional issues. It is demonstrated that the stylized facts of the Indo-Pakistani conflict and wars fit well with the theoretical conjectures of the analytical models. External conflicts and wars in South Asia are often related to internal causes, which allow the possibility of incomplete information; the two contending states miscalculate their own power in terms of war-fighting capability, so that war occurs.

INTRODUCTION Why do states indulge in arms races and fight wars, particularly when the costs of armaments and the destruction of resources through war seem increasingly prohibitive? Arms races, once the preserve of superpower politics, are now prevalent in the developing world (India-Pakistan, ChinaTaiwan, Iran-Iraq, Israel-Arab states, Brazil-Argentina, Turkey-Greece, North and South Korea—over the last two to three decades). Although the frequency of interstate “Third World” wars may be declining, they are still important enough in the developing world to warrant closer understanding. For poor countries, the economic costs of defense spending and wars are very high (see Deger & Sen, 1995). In the chapter, we aim to address the question as to why rational states eschew the outcome of settlement and fight wars. The theory constructed attempts to answer this intriguing question and to achieve a better understanding of the stylized facts of the India-Pakistan conflict. This conflict between the two major military powers of South Asia, and the concomitant arms race, has lasted for over six decades and produced four explicit wars and many “near wars.” Our theory discusses why rational states embark on such wars, and how various factors can enhance or reduce the probability of war. A question that may be asked at the outset is whether developing countries, with their myriad complexities, are subject to rationalist interpretations for any political phenomenon, let alone that of such an anarchic issue as war per se. However, in spite of structural dissimilarities, models applicable to Western societies seem applicable also to developing countries. Similar issues arise in development studies, and economists’ models of rational behavior in social choice, public choice, and rent-seeking are now

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accepted as the norm for understanding developmental problems. Thus we invoke the same logic for political relations and interstate conflict. To return to the original question, wars are not rational, yet states that are rational frequently undertake them. The core puzzle about the occurrence of wars is as follows: Given that wars lead to destruction and so to deadweight loss of some of the resources that the warring states are contesting, why do states not simply agree to the post-war distribution of resources and divide up the resources that would otherwise have been destroyed, thus achieving a Pareto improvement? In a classic paper from a political science perspective, Fearon (1995) hypothesizes that rational states go to war for three reasons: private information, dynamic commitment problems, and indivisible resources. The first and most intuitive reason is states do not know what the postwar distribution is ex ante; there is incomplete information and war itself acts as a mechanism to reveal which side has superior war-fighting capability. If however, as most believe, the probability of success in war is a function of the underlying balance of capability, then both sides can try to assess this probability. Moreover, both sides would be made better off if such information was public, since it would mitigate the need for war as an information revelation mechanism and avoid deadweight loss. There are two reasons why such information may not be available: First, it may itself be of a type that cannot be quantified or predicted ex ante. For example, war might be determined by intangible factors such as morale or battlefield tactics. Second, information may not be available because of incentives to mis-reveal capabilities. States may exaggerate their capabilities in order to persuade opponents to demand less in negotiations. Hence, there may be no mechanism short of war that reveals capabilities. The logic here is that of the familiar prisoners’ dilemma—both sides would be made better off if they both told the truth and avoided war, but the dominant strategy for both is to mis-reveal, thus reducing the credibility of information and making miscalculation and war possible. The second reason for war, as analyzed by Fearon (1995), involves dynamic commitment problems. This is based on the idea that the contestable resource itself might increase the war-fighting capability of the state winning it. Suppose the states were to avoid war in period T1 (say) by reaching a bargain that divided up the resource in proportion to their warfighting capability in T1, for example, a 70:30 split. This would increase state 1’s capability in period T2 (say). In T2, state 1 could demand more of the resource; if state 2 is rational, it must accept this offer (rather than lose this amount anyway as well as incur the cost of war). The problem reoccurs

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each new period until state 1 takes all of the contestable resource. In effect, there is no mechanism for binding the states into the bargain they initially make. For this reason, they have the incentive to fight in T1 in order to prevent the situation of progressively worse bargains (assuming that fighting achieves permanent settlement). The final reason for conflict is resources themselves are not divisible in ways that can be bargained over. The idea is that if, say, a territory has been imbued with particular symbolic, cultural, or historical meaning it may be impossible for either side to accept just part of it. However, as a resource has a value, some level of side payment must be able to compensate a state even for the loss of such a symbolically important resource. Thus, from a rationality perspective, it is difficult to make sense of the argument, unless either competing subjective valuation allows for no bargaining range, or states are resource-constrained in such a way they cannot make the necessary side-payments. Another type of reason for war is based on the possibility of a two-level game (see Garfinkel, 1994). Actions that are rational from the point of view of a leader might not be rational from the point of view of the state. For example, leaders might treat war as an end in itself, creating a rallyround-the-flag effect that might keep them in power. Alternatively, they might have made electoral (or selectoral) promises about the reacquisition of resources, thereby tying their hands to conflicts that are no longer militarily desirable. These models rely on separating the utility function of the decision-maker from the utility function of the state, and constitute a further rationalization of states undertaking wars that appear irrational. Finally, it is worth mentioning some reasons within the international relations literature for wars that are not rational. One such reason, a modification of one of the above reasons, concerns a territory or object worth any cost and whose worth is not fungible. For example, the value placed by Israelis and Palestinians on East Jerusalem may be such that any level of side-payment could not compensate them. Since in this case states are not using any normal metric such as utility, they are irrational. They are not following the “logic of consequences” but the “logic of appropriateness” (March & Olson, 2009) and are defending the inherent worth of a resource rather than make a utility calculus of strategies. Other irrational reasons for war might reside in the beliefs and perceptions of policymakers (Jervis, 1976), based perhaps on cognitive biases such as loss aversion and framing effects. Similarly, policymakers might make war decisions based on analogical reasoning, without fully appreciating the expected consequences (Khong, 1992). An analysis of these issues is beyond the scope of our .

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paper, since we concentrate on rational defense. However, our belief is that India and Pakistan behave as rational actors when choosing negotiated settlement or open conflict. The economics literature, particularly the seminal work by Brito and Intriligator (1985, 1995), concentrates on asymmetric information issues and shows there can be either a pooling equilibrium or a separating equilibrium, in which adversaries signal strength (or weakness). War, or open conflict, is the costly signaling method in a separating equilibrium. Our theory generates conflict without such asymmetry. Garfinkel and Skaperdas (2000), as well as Anbarci, Skaperdas, and Syropoulos (2002), add another major and dynamic dimension to this issue. They choose to treat war as creating the conditions for a permanent settlement, and so as a rational outcome of a long-run bargaining and utility maximization process. If the rate of discount is low, and the future is not highly discounted by nonmyopic states, then states with a long-term (infinite) horizon will choose war in the near term so that they can get the benefits of peace in the long term. Alternatively, the authors make the simplifying assumption that the defeated party is either eliminated or makes a very small and insignificant response in the future. Garfinkel and Skaperdas (2007, p. 678) states clearly: “Open conflict changes the future strategic position of the adversaries in different ways than a peaceful contract under the threat of conflict does.” Again, our theory generates conflict without appeal to the long run, or to a permanent settlement after conflict, or to an “enemy” eliminated (or made insignificant). To summarize, in the chapter we model some of the stylized facts of the India and Pakistan arms acquisition process and recourse to war (or its avoidance through settlement). In the process we build models of bilateral conflict. In the basic model of the second section, the traditional result that settlement dominates war is established; war is avoided. When there are differential costs of building armaments, the core result that settlement dominates war remains unchanged, independent of economic considerations. In the third section, we extend the basic model by allowing the two states to miscalculate their own power in terms of war-fighting capability, so that war may now occur. This answers our core question as to why rational states fight expensive wars rather than achieve settlement. A variation of the model is given in the appendix. Then, in the forth section, we examine the effects of growth and discuss both the elapse of time between wars and strategic concerns. In the fifth section, empirical application is made to South Asia, where India-Pakistan rivalry provides a good illustration of the theory. After a historical discourse on the evolution of the conflict, we

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explain the relevance of our theory to the stylized facts of the South Asian subcontinent. Particular regard is made to the institutional background to decisions that affect war and peace (see Deger & Sen, 1999, for an investigation of bureaucracy at work, as well as Siddiqa, 2007, for an insight into Pakistan’s military empire). The sixth section concludes.

THE BASIC MODEL Two states, 1 and 2, play a 3-stage game. State i is endowed with a resource, Ri, which on a one-to-one basis can be transformed into armaments, Ai, used to contest a resource, T. Ri is not contestable. The cost of armaments in terms of the endowed resource is thus unity. Later, we generalize this cost. In stage 1, state i chooses a level of armaments, Ai. In stage 2, the states seek to negotiate a settlement, (S1, S2), where S1 + S2 = T, i. e., they try to agree on a division of the contestable resource. Should they fail to agree, there is war. Should they agree, either state may in stage 3 use armaments to contest the settlement achieved. If war breaks out, the outcome is that state i wins Ti of the contestable resource, where: A1 γT A1 þ αA2 αA2 = γT − γT A1 þ αA2 αA2 T2 = γT ð0 ≤ γ < 1; α > 0Þ A1 þ αA2 A1 α = γT − γT A1 þ A2 α

T1 =

ð1Þ

We interpret α as a measure of technical advantage. For α < 1, state 1 is technically superior to state 2, while for α > 1 the opposite is the case; α measures relative technology, both actual and perceived, i.e., relative strength of military machine or war-fighting capacity. A crucial feature is that the states have the same perceptions, and we later relax this symmetry. When α = 1, the states have equal technology or a similar technical capability to wage war.

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It is clear from Eq. (1), since T1 + T2 = γT, we are assuming (1
γ)T of the contestable resource is destroyed by the war. What remains of the contestable resource, γT, is divided between, or captured, by the contestants during the process of war, the amounts depending on their relative strength. For greater plausibility, T1, T2, and (1
γ)T can be interpreted as average outcomes in an uncertain environment. For example, the coefficients of γT in Eq. (1) might be interpreted as the probabilities of winning the whole of the available contestable resource. T1 and T2 are then the expected values of the amounts states 1 and 2 win of the contestable resource T in fighting a war.For i = 1,2, let state i’s utility function be thus: Ui = Ri − Ai þ Xi

ð2Þ

where Xi is the amount state i obtains of the contestable resource. We assume, when the outcome of war is random and T1, T2, and (1
γ)T are averages, that Eq. (2) is a von Neumann-Morgenstern utility function. In this case, the states are risk neutral. We solve backwards: Stage 3: State i chooses war if Ti > Si, where (S1, S2) is the stage 2 settlement and (T1, T2) is given by Eq. (1), i.e., depends on the levels of armaments. State i opts for conflict if it can thus improve upon the settlement already obtained. Stage 2: We suppose (T1, T2), given by Eq. (1), determines the threat point for a bargaining game, the solution to which is a fifty-fifty division of the surplus, (1
γ)T. (See, for example, Nash, 1950.) Thus, for i = 1,2: Si = Ti þ

1 ð1 − γÞT 2

ð3Þ

Because of this outcome, since Si > Ti, there is no war. Stage 1: State i’s optimal level of armaments is obtained by maximizing Eq. (2). Since Xi = Si, the first-order condition is: ∂Ti =1 ∂Ai

ði = 1; 2Þ

ð4Þ

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Respectively, from Eqs. (1) and (4): αA2 γT = 1 ðA1 þ αA2 Þ2 A1 α γT = 1 ðAα1 þ A2 Þ2

ð5Þ

Dividing: A1 = A 2 =

α γT ð1 þ αÞ2

1

= α 2 γT 1 þ α1

ð6Þ

According to Eq. (6), both states choose the same level of armaments. The build-up is highest when there is parity in technology (α = 1) and decreases as the states become more unequal—as α deviates further from unity. Parity of armaments is a consequence of two off-setting effects. The more technically disadvantaged a state, the more it must spend on armaments in order to achieve a given increase in fighting capability, but also because the other state’s winnings are larger, the more the increase in fighting capability can achieve in expropriating these winnings. The two effects balance when parity of armaments is achieved. Build-up is highest with parity in technology, because this maximizes the inferior state’s winnings, and so what is available for the superior state to win, at parity of armaments, in increasing armaments. From Eq. (1): T1 =

1 γT 1þα

T2 =

α γT 1þα

ð7Þ

From Eqs. (3) and (7), the division of the contestable resource, T, obtained by the stage 2 settlement is: S1 =

1 1 γT þ ð1 − γÞT 1þα 2

S2 =

α 1 γT þ ð1 − γÞT 1þα 2

ð8Þ

The outcome of the game is that both states choose the same level of armaments, given by Eq. (6), but, as Eq. (8) shows, receive differing shares of the contestable resource whenever technology differs (α≠1). Most

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important, settlement is preferred to war since settlement pay-offs dominate those from war. With symmetric perceptions of technical advantage and so of relative war fighting capability, the states choose to settle. We have so far assumed the states have the same marginal costs of acquiring armaments, and to achieve greater realism it is worth relaxing this assumption. This will allow us to consider states with fewer resources, or smaller states, confronting states with more resources, or larger states— asymmetry of resources as well as of technology. Introducing differing marginal costs of acquiring armaments will have the effect of modifying the role of α, the measure of technical advantage. In the model presented above, state i’s uncontested resource, Ri, is convertible into armaments, Ai, on a one-to-one basis. We now suppose the cost of armaments in terms of endowed resource differs in general between states, i.e., for i = 1,2:1 Ci = ωi Ai ðωi > 0Þ ð9Þ This means state i’s utility function, Eq. (2), and Eq. (4) are replaced by: U i = R i − ωi A i þ X i

ð10Þ

∂Ti = ωi ∂Ai

ð11Þ

Thus Eq. (6) is replaced by: A1 A2 = ω2 ω1

A1 =

ω2 α γT ðω2 þ ω1 αÞ2

ω1 α γT ðω2 þ ω1 αÞ2

ð12Þ

β 1 γT þ ð1 − γÞT 1þβ 2

ð13Þ

A2 =

Eq. (8) is replaced by: S1 =

1 1 γT þ ð1 − γÞT 1þβ 2

where β=

S2 =

ω1 α ω2

ð14Þ

Differential costs in producing armaments have an effect on the settlement similar to that of technical advantage. β in Eq. (13) replaces α in

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Eq. (8). If state i’s armaments are technically more advanced (α < 1 for state 1) while its costs are lower (ω1 < ω2), then from Eqs. (13) and (14), we see that state i’s lower costs enhance its technical superiority and improve its pay-off. Lower costs can, on the other hand, compensate to a degree for technical disadvantage. The parameter β is a combination (multiplicand) of two factors: the technology parameter, α, and relative costs. Thus one of these can offset the other. Differential costs do, however, mean that the state with lower costs chooses a higher level of armaments. Overall, the outcome of the game with asymmetric cost functions is similar to the symmetric result in that settlement dominates war, providing perceptions of technology are the same on both sides.

HUBRIS AND WAR We extend the basic model by allowing the states to differ in their perception of α, i.e., of technical advantage or disadvantage. It turns out that differing perceptions mean wars can now occur. Let state i perceive the value of α as αi. Adapting Eq. (7), private beliefs are that war will yield the payoffs2: 1 α2 T1 = γT T2 = γT ð15Þ 1 þ α1 1 þ α2 Again suppose T1 and T2, now given by Eq. (15), provide the sticking points in the stage 2 negotiations, so that, if T1 + T2 ≤ T, the solution to the bargaining game is: 1 Si = Ti þ ðT − T1 − T2 Þ ð16Þ 2 If, however, T1 + T2 > T, there is no settlement and war breaks out. Thus, from Eq. (15), there is war if and only if 1 1 þ 1 þ α1 1 þ

1 α2

>

1 γ

ð17Þ

Since the right-hand side is greater than one, a necessary condition for Eq. (17) to hold is α1 < α2, i.e., each state’s assessment of technical advantage is more favorable to itself than is the opposing state’s assessment.

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Let α1 = αɛ1 and 1/α2 = ɛ2/α, where ɛ1 and ɛ2 are positive and α may be interpreted as the true state of relative technology. Substituting into Eq. (17) gives: 1 1 1 þ > 1 þ αɛ1 1 þ ɛα2 γ 1 þ ɛα2 þ 1 þ αɛ1 1 > 1 þ αɛ1 þ ɛα2 þ ɛ1 ɛ2 γ 2γ þ

γɛ 2 ɛ2 þ γαɛ1 > 1 þ αɛ1 þ þ ɛ1 ɛ2 α α

 ɛ2  ɛ 1 ɛ 2 þ αɛ1 þ ð1 − γÞ < 2γ − 1 α

ð18Þ

Eq. (18) shows there cannot be a war, however optimistic both states are about the outcome, if γ ≤ ½, i.e., if at least half the contestable resource, T, is destroyed by the war. Suppose, alternatively, ɛ1, ɛ2, and γ are close to unity. We can then approximate Eq. (18) by: 

     1 1 1 ɛ1 þ ɛ 2 < 2γ − α þ ð1 − γÞ = 2 þ α þ γ− αþ α α α

ð19Þ

Eq. (19) shows that the more destructive is war (low value for γ), the more states must miscalculate their military strength (low values for ɛ1 and ɛ2) for a war to occur. For fixed γ, the right-hand side of Eq. (19) attains a maximum when α = 1. Thus, Eq. (19) also shows that the more equal the two states are in terms of technology (the closer α to unity), the less they need to miscalculate (higher values for ɛ1 and ɛ2) for a war to occur.

DYNAMICS We suppose war brings together perceptions of technical advantage, so that immediately after a war at time t = 0, α1 = α2 = α. However, increasingly over time perceptions diverge, so that at t: α1 = αɛ1 = αð1 þ δÞ − t

1 ɛ 2 ð1 þ δÞ − t = = α2 α α

ð20Þ

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Substituting ɛ1 = ɛ2 = (1 + δ) − t into Eq. (13), we obtain, for a war to occur:     1 1 2ð1 þ δÞ − t < 2 þ α þ γ− αþ α α

ð21Þ

Thus, the time that elapses before a war occurs is given approximately, on replacing inequality by equality in Eq. (21), as:   1 1−γ t= 2þαþ α 2δ

ð22Þ

Suppose the contestable resource, T, grows over time. From Eq. (6), for α fixed, armaments grow at the same rate. However, from Eq. (22), the time t between wars is independent of the growth in T. It is, however, shorter: (a) The faster perceptions of technical advantage diverge (the higher δ). (b) The more equal in strength are the two parties (the closer α to unity). It is longer: (a) The more destructive is war (the lower γ). We can extend the model to take account of the fact it is easier for a state to defend home territory, i.e., territory under its control, than to attack foreign territory. The simplest way to register this is to allow the technical parameter, α, to depend on the share, θ1, of the contestable resource, T, in state 1’s possession3: α = αðθ1 Þ ðα′ðθ1 Þ < 0Þ

ð23Þ

Either a better settlement or successfully fighting a war increases the expected return from future settlements or wars. Let the discount factor for future utility be D, so that state i’s total utility is: ∞ X t=0

Dt Ui ðtÞ

ð24Þ

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At time t, prior to the build-up of armaments, let state i’s share of the contestable resource be θi(t
1) for t = 1,2,…, and the measure of technical advantage consequently α[θi(t
1)]. Then from Eq. (2): Ui ðtÞ = Ri ðtÞ − Ai ðtÞ þ θi ðtÞTðtÞ

ð25Þ

Using l’Hospital’s Rule, Eq. (4) is replaced by: ∂θi ð0Þ ∂θi ð1Þ ∂θi ð0Þ ∂θi ð2Þ ∂θi ð1Þ ∂θi ð0Þ Tð0Þ þ D Tð1Þ þ D2 Tð2Þ::: = 1 ∂Ai ð0Þ ∂θi ð0Þ ∂Ai ð0Þ ∂θi ð1Þ ∂θi ð0Þ ∂Ai ð0Þ

ð26Þ

We note that each term on the left-hand side of Eq. (26) is positive. Increasing armaments at t = 0 increases the share of the contestable resource at t = 0, which provides a platform that increases the share at t = 1, etc. It follows that the first term is less than unity. Comparing this with Eq. (4), we see that the equilibrium level of armaments is greater now that there are strategic considerations than when in the basic model there were none.

WAR AND CONFLICT IN SOUTH ASIA India and Pakistan became independent in August 1947, a sort of rebirth after many years of imperial British rule. The awakening was described by the Indian Prime Minister, Pandit Nehru, in these memorable words: “At the stroke of the midnight hour, as the world sleeps, India will awake to life and freedom.” The same could be said of Pakistan. The independence of the two countries came after almost 200 years of informal British rule and 90 years of formal British colonization as a single country. In terms of state institutions, budgetary mechanisms, macroeconomic policies, administrative services, educational attainments, and military strategy, the two newly independent countries had much in common. This common administrative heritage had considerable influence on government policy, not the least on the arms acquisition process and military expenditure dynamics. India and Pakistan have been described as “diversity in unity” (i.e., with numerous cultural and economic similarities but clearly differentiated foreign policy objectives and antagonized by the state formation process). Although there is a long history of cultural and racial similarity, the

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creation of the separate states began an arms race, produced possibly four major armed conflagrations, generated numerous small engagements and near wars, allowed the acquisition of a competitive nuclear power status, created various other internal conflicts, and fomented terrorism, all of which have continued for over fifty years. It is interesting that at the end of the Cold War, and after fundamental structural changes in geo-political relations across the world, when even the definition of security changed radically, the South Asian subcontinent represents possibly the only true example of a classical arms race. Military expenditure and arms imports in India and Pakistan have reflected their rivalry. The competitive arms race began almost at the birth of these two nation states, since most of the ordnance factories fell to India and Pakistan had to “catch up” at the beginning through arms importation. In response, and partly due to the Kashmir war in 1948, Pakistan also decided to have modest domestic arms production, initially mostly in small arms, but expanded into a large military industrial complex (see Siddiqa, 2007), which raised all categories of military spending, from procurement to operations and from maintenance to R&D. India’s arms production expanded rapidly, partly to offset the foreign exchange costs of importation but partly to stay ahead of Pakistan, whose arsenal was bolstered by sophisticated arms as U.S. military aid. During the 1950s, as a member of various U.S. sponsored treaty organizations (for example, CENTO), Pakistan acquired armaments by importation. India, on the other hand, following a policy of self-sufficient import substitution industrialization, decided to expand defense industries. After the SinoIndian war of 1962, India’s threat perception widened to include China and its security web expanded dramatically in the face of a hostile neighbor with a much larger military. With the Indo-Pakistan war of 1965, traditional rivalry continued and culminated in the 1971 war with the dismemberment of Pakistan and the formation of the state of Bangladesh from the old East Pakistan. The Russian invasion of Afghanistan allowed Pakistan to utilize U.S. concerns to build up a sizeable arsenal in the 1980s. India retaliated through importing Russian armaments and increasing the speed of defense industrialization, particularly in the production of aircraft. The late 1980s saw the nascent space and missile programs of both countries begin a period of expansion, as the sophistication of warfare created the syndrome of “invention is the mother of necessity.” Nuclear weapons tests in 1998 brought a new menace of arms rivalry to the sub-continent. In the Kargil “almost war” of 1999, both countries came very close to an actual all-out military conflict (including naval

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warfare and air strikes), averted at the last minute through intense negotiations and pressure by the international community (President Clinton issued stern warnings to the combatants) aghast at the possibility of two nuclear nations fighting an open conflict over territory. The 2000s has shown a continuing rise in military expenditure in both countries, partly fuelled by economic growth. Defense seems to have been a superior good, with high income elasticity of demand, and GDP growth has raised military spending disproportionately. However, in recent years, military expenditure as a share of GDP seems to be falling, partly as a result of ballooning budget deficits and rising public debt. This brief history shows that although other actors (China, Russia, and the United Sates) have been involved in the interaction between India and Pakistan during their arms acquisition process, in many ways they have been driven by an action-reaction arms race. Yet, it would be simplistic to believe that this was the only reason, indeed even the predominant one, for their respective military expenditures. A myriad of other factors, which include domestic conflicts, bureaucratic inertia, and the importance of the state in economic development, all made some contribution to the armaments acquisition dynamics. Although the dynamics of arms procurement has been highly significant in the South Asian subcontinent, there have been surprisingly few wars. India and Pakistan have fought four wars effectively in 1948 (over Kashmir), in 1965 (Kashmir and the Rann of Kutch in Sind and Rajasthan), in 1971 (Bangladesh), and in 1999 (Kargil and the Siachen glacier). All were based on a miscalculation of their own strength, where both countries expected a quick victory and to seize territory, particularly with the support of the local population. (Pakistan based its war calculations on the support of the Kashmiri population while India relied on the support of the Bangladeshi population.) On the other hand, there have been numerous warlike incidents and skirmishes—the correlates of war are significant. Most of these incidents have led to settlement, partly imposed by the international community (through sanctions and embargoes) but mostly through negotiations with the opposing power. Our models attempt to formalize this type of strategic war/settlement behavior. In the confrontation between India and Pakistan, both parties’ institutional framework encourages over-optimism about relative strength. As demonstrated in the third section this may lead to actual conflict, and experience on the subcontinent indeed has been of occasional war. India is the stronger, in technology and command of resources, but a feature of the model above is that it is the weaker as much as the stronger party that

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initiates conflict. This is consistent with the fact that Pakistan has initiated at least two of the four wars fought in the region. The model encompasses the asymmetry of the India-Pakistan arms race. India is of course the much larger state (with a much higher GDP) and spends much more on armaments than its smaller rival (though having a smaller share of GDP and the central budget). It also has a larger arms industrial base and stock of armaments. India, however, has a much more complex security web, with China as a principal belligerent opponent. Moreover, it aspires to be a regional power, and to naval supremacy in the Bay of Bengal (a major naval base at the Andaman and Nicobar Islands) and the Arabian Sea. Hence, the armaments devoted specifically to the Pakistan theater by India, especially after the 1971 war and the independence of Bangladesh, are comparable to those of Pakistan. While Pakistan has commitments to its west, its dominant strategy is containment of India. Thus, while in a wide sense there is asymmetry in war-fighting capability, there is less in a narrow dyadic sense. A second stylized fact, consistent with the theory of the section 3, is that the weaker party (Pakistan) may initiate wars as much as the stronger party (India). Thus, Pakistan initiated conflict in 1948 and (possibly) also in 1999. Building confidence, Pakistan has used broad strategy, both political and military, as well as tactical measures on the ground in an attempt to reverse the burden of being the “weaker” party. It has allied itself with the major Western powers (principally the United States), exploiting its geostrategic position in relation to the Afghan war and “war on terror”, and at great economic cost has imported high quality weaponry with a military advantage. A hallmark of Pakistan’s strategy has been low-intensity warfare, enlisting the home population of Kashmir and putting India at a disadvantage after 1971 (when Bangladesh was no longer available as a strategic counterbalance). In recent times, near parity in nuclear weapons has reduced India’s superiority—the doctrine of mutual assured destruction is valid for the region. A third stylized fact is the over-confidence, or “hubris” as we have termed it, which creates the misperception necessary for negotiations to fail and war to occur. This can happen if either (or both) state’s assessment of relative technical advantage (in a military sense) is more favorable to itself than is the opposing state’s assessment. The political situation in India and Pakistan encourages such misperception in both cases. In Indian democracy, political parties vie with each other to prove they are strong and resolute in defense of national security. A conflictual situation with a foreign country allows parties to outbid each other in fomenting

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the idea that India has the superior war-fighting capability. The Bhartya Janata Party (BJP) has risen to prominence in recent years through its over-confident assertion that India is militarily powerful (as well as economically strong). Although losing the last election, the BJP’s stance has had a natural impact on the acquisition of armaments. In the last budget, the Congress Party, while less belligerent in its attitude towards Pakistan, raised military expenditure, arms imports and arms production substantially—partly to outbid the BJP rhetoric prior to the then forthcoming elections. The Indian military has always been optimistic about its chances of success in any protracted war, partly because of the relative size advantage of India armament stocks and production but also due to its innate confidence that they have technically superior and more motivated forces (jawans or soldiers). This optimistic evaluation of capability also has a budgetary impact; parliamentarians are more prone to accept expanded defense budgets if they believe the military is efficient and capable. Yet in practice, as media reports have suggested, past optimism about India’s military “might” has not been justified when wars have been fought, particularly in the 1960s (China in 1962 and Pakistan in 1965). Pakistan has the opposite institutional setup. It has often been under military or authoritarian rule, with a succession of military governments in the six decades of its existence. The military considers itself the “savior” of the nation both in terms of internal stability and in terms of external security. Hence it creates a myth or aura of supreme power and relative invincibility. This allows miscalculation of its own ability and potential to win a war. It downgrades the perceived strength of the India opponent, putting undue faith in the complementary method of low-intensity warfare to reduce the effectiveness of India’s military forces (e.g., using local insurgency during combat operations in the military theatre). Pakistan’s military is also a major economic power, building up massive resources over many decades to bolster its influence over the body politic. It uses these resources, via extra-budgetary means, to increase defense capability over and above that provided by the government through official channels. Thus the military in Pakistan has a tendency toward “overconfidence,” a belief in a higher level of war-fighting capability than is warranted by objective or technical conditions.

CONCLUSION We have shown that simple models of bilateral confrontation over time, together with the likelihood of occasional conflict, are capable of providing

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insights into war and peace in South Asia. Unlike Hoffman (2008), we choose not to distinguish armaments for defense and attack and, unlike Garfinkel and Skaperdas (2000), choose not to treat war as creating the conditions for a permanent settlement. Nor do we utilize the tools of asymmetric information theory as in the earlier literature. A consequence is settlement and, if achievable, always dominates war. This, however, begs the question why war between states is observed. Without abandoning the assumption that states are rational, we propose models supported by institutional insights, which allow for the possibility that settlement is not achieved and there is war. A characteristic of our theory is the states have different technology. (Differing costs of producing armaments modifies the effect.) The states may misperceive their technical advantage, and when due to such misperception settlement cannot be achieved, there is war. War is more likely the more similar in technology (or costs) are the states, or the longer it is since the last war; war is less likely the more destructive is war. In South Asia, after the protagonists gained independence and prior to the full-fledged acquisition of nuclear weapons, there were occasional such wars. Wars took place approximately in the late 1940s, mid 1960s, early 1970s, and late 1990s. The time span from one war to the next has increased, and almost two decades separate the last two wars. The technology gap is widening. India is keen on developing self-sufficiency in armaments production. As India increases its scientific capability and goes for ultramodern technology such as space and missile technology, the capability gap is widening. Pakistan depends crucially on importing armaments. But the arms imports of Pakistan are more difficult to obtain when they have an offensive bias; most of the arms supplied by the United States are closely monitored, and the siphoning of foreign aid towards traditional war-fighting arms is now more difficult than in the 1980s. The widening capability gap may not, though, have a significant role. As nuclear weapons threaten the total destruction of the contestable resource (γ = 0), they may rule out war. Our model predicts that open India-Pakistan wars are now over, even though the underlying and deep causes of conflict remain.

NOTES 1. Average costs are constant for simplicity. For developing countries, it would be realistic to suppose they are increasing. Even when arms are received as foreign aid, their incorporation into the domestic military environment entails a resource

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cost that is increasing at the margin. When arms are domestically produced and maintained or military recruitment in manpower takes place, transforming domestic resources into armaments again creates costs that increase at the margin (Deger & Sen, 1995). 2. We implicitly assume each state believes the other state has the same beliefs as itself, while an alternative belief structure is investigated in the appendix. Note that, based on differing information sets, contradictory opinions can be “nearly rational.” 3. Or, equivalently, 1/α depends on the share, θ2, of the contestable resource, T, in state 2’s possession.

REFERENCES Anbarci, N., Skaperdas, S., & Syropoulos, C. (2002). Comparing bargaining solutions in the shadow of conflict: How norms against threats can have real effects. Journal of Economic Theory, 106, 1
16. Brito, D. L., & Intriligator, M. J. (1985). Conflict, war and re-distribution. American Political Science Review, 79, 943
957. Brito, D. L., & Intriligator, M. J. (1995). Arms races and proliferation, In T. Sandler & K. Hartley (Eds.), Handbook of defense economics (Vol. 1, pp. 109
164). Amsterdam, North Holland: Elsevier. Deger, S., & Sen, S. (1995). Military expenditure and developing countries, In T. Sandler & K. Hartley (Eds.), Handbook of defense economics (Vol. 1, pp. 275
308). Amsterdam, North Holland: Elsevier. Deger, S., & Sen, S. (1999). Military security and the economy: Defence expenditure in India and Pakistan, In K. Hartley & T. Sandler (Eds.), The economics of defence spending (pp. 189
227). London: Routledge. Fearon, J. D. (1995). Rationalist explanation for war. International Organisation, 49, 379
414. Garfinkel, M. R. (1994). Domestic politics and international conflict. American Economic Review, 84, 1292
1309. Garfinkel, M. R., & Skaperdas, S. (2000). Conflict without misperceptions or incomplete information: How the future matters. Journal of Conflict Resolution, 44, 793
807. Garfinkel, M. R., & Skaperdas, S. (2007). Economics of conflict: An overview, In T. Sandler & K. Hartley (Eds.), Handbook of defense economics (pp. 649
710). Amsterdam, North Holland: Elsevier. Hoffman, M. (2008). The social benefit of war, paper presented to the International Atlantic Economic Society Annual Conference in Savannah, Georgia, October 2008. Jervis, R. (1976). Perception and misperception in international politics. Princeton: Princeton University Press. Khong, Y. F. (1992). Analogies at war. Princeton: Princeton University Press. March, J. G., & Olson, J. P. (2009). The logic of appropriateness, arena-centre for European studies, Working Paper 04. Nash, J. F. (1950). The bargaining problem. Econometrica, 18, 155
162. Siddiqa, A. (2007). Military inc: Inside Pakistan’s military economy. London: Pluto Press.

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APPENDIX In the third section, we assume that state i perceives the technology parameter to have the value αi. For state 1, α1 = αɛ1 and for state 2, α2 = α/ɛ2. Also in the third section, each state believes the other state to have the same beliefs. In contrast, we now suppose each state takes into account the fact that the other state’s beliefs are different. It is convenient to redefine the perceived technology parameters as, for state 1, α1 = αɛ and, for state 2, α2 = α. The sum of the two states’ anticipated, though miscalculated, pay-offs after a war is therefore: T1 þ T2 =

A1 αA2 γT þ γT A1 þ ɛαA2 A1 þ αA2

ðA:1Þ

Assuming ɛ is close to unity, the right-hand side is approximated by expanding in a Taylor expansion about ɛ = 1, which gives: A2 α αA1 A2 A1 T1 þ T2 = γT þ ð1 − ɛÞ γT = γT þ ð1 − ɛÞ   γT ðA1 þ αA2 Þ2 A2 2 1þα A1

ðA:2Þ

Here, A1 and A2 are evaluated at ɛ = 1, and the terms involving differentiation with respect to A1 and A2 have cancelled each other out. Adapting Eq. (5), the two states’ first order conditions in choosing armaments are: αɛA2 γT = 1 ðA1 þ αɛA2 Þ2 A1 ðA:3Þ α

A 2 γT = 1 1 α þ A2 Again approximating by expanding in a Taylor expansion about ɛ = 1, and dividing, gives:   A2 A2 αA2 A2 − ð1 − ɛÞ −2 =1 A1 A1 A1 þ αA2 A1

ðA:4Þ

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Thus, rearranging Eq. (A.4): ! A2 α A2 ɛ − 2ð1 − ɛÞ =1 A1 1 þ α AA2 A1

ðA:5Þ

1

From Eq. (A.5), A2/A1 does not depend on how destructive war is (i.e., on γ). Thus Eq. (A.2) shows war is less likely (lower value for ɛ) the more destructive war is. From Eq. (A.5) also, A2/A1 increases with α, and so Eq. (A.2) shows war is more likely (higher value for ɛ) when the two states are close to technological parity (α = 1). These results are similar to those obtained with the alternative model of the third section.

MILITARY KEYNESIANISM: AN ASSESSMENT J. Paul Dunne ABSTRACT The recent recession has seen something of a resurgence in the debate over military Keynesianism. Recent commentators, who should know better, have claimed that it would make sense to stimulate the U.S. economy through increases in military spending, as though this has not been a commonly contested view over the last 40 years. A large, literature has debated the economic effects of military spending, and while it has reached no consensus, there is also little support for any belief that military spending is a good way of stimulating the economy. This paper makes a contribution to the debate by assessing the theoretical perspectives and the empirical approaches used. It then undertakes an analysis of the United States using a number of approaches, and the results suggest that the simple military Keynesian arguments still lack empirical support.

INTRODUCTION With the recent recession, and there has been something of a resurgence of military Keynesianism, the belief that military expenditure represents a

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useful, if not the only, form of state spending to use to stimulate the economy. In a Wall Street Journal article in 2008, Martin Feldstein suggested that any Department of Defense budget cuts were misguided. He suggested that the U.S. government recognized the need for increasing government spending to offset the decline in consumer demand in the economy and argued that a rise in military spending would be the best way to provide this stimulus. While showing a complete ignorance of, or disregard for, the research that has been undertaken on the economic effects of military spending, this view does seem to have other supporters/proponents, particularly in the United States. It is understandable that commentators might look to the post-World War II period and the stimulus to unprecedented growth rates provided by state spending, including massive military spending as the Cold War developed. Yet, today’s world and economy are rather different, with the Cold War having altered the relation between the military and the economy drastically and the post-Cold War changing it even further. These changes are argued to have made the military sector a burden on the economy, necessary for security but no longer of value in stimulating economic growth. Certainly, reviews of the empirical literature have tended to find a predominance of results showing negative or insignificant effects of military spending (Dunne & Uye, 2010), but many of these do not use specifically Keynesian models and vary in the length of time series and coverage. Given this renewed interest in military Keynesianism, this chapter takes the opportunity to revisit the issues involved. It considers briefly what the real arguments are in the debate over the economic functions of military spending and where they come from, provides a review of the empirical evidence, and then provides an econometric analysis for the United States. The next section briefly surveys the theoretical basis for Keynesian analyzes of the impact of military spending on the economy. This is followed by a section in which the adequacy of the Keynesian narratives in explaining the patterns of military spending over time relative to strategic explanations is evaluated. The following section provides an econometric analysis of the Keynesian arguments, using cointegrating VAR models with a long data set from 1929 to 2009. The final section then provides some conclusions.

MILITARY EXPENDITURE AND THE ECONOMY As a starting point it is useful to consider where military Keynesian ideas come from. A basic Keynesian perspective would see military spending as

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simply one component of government spending, with effective demand/ multiplier effects. In this way military spending can be good for an economy, getting it out of recession and helping plan expansions in effective demand. This can be on the basis of an IS-LM updated to account for changes in monetary theory and recently used by Atesoglu (2004), Pieroni, D’Agostino, and Lorusso (2008), and Smith and Tuttle (2008). This type of study tends to have output determined by military spending, civil spending, and interest rates and to find a positive impact of military spending for the United States, though the second paper is more nuanced and the last study actually finds a negative effect. In addition, Keynesian models that introduce an aggregate production function have tended to find negative effects of military spending (Dunne & Uye, 2010); while those using large structural models have also tended to show the existence of a “peace dividend” as the benefit of reducing military spending, and reallocating it have been termed (Gleditsch, Cappelen, Bjerkholt, Smith, & Dunne, 1996). It is also generally accepted, however, that war would have a negative impact upon the economy (Dunne, 1990; Agostino et al., 2011). A strand of Keynesian analysis has combined an effective demand macro economic perspective with a form of institutional analysis to provide a more complex understanding of the processes at work and the role of military power and conflict. This institutionalist perspective is predicated on the existence of MIC (Eisenhower), where internal pressures for increases in military spending and forces are independent of threat. They create inefficiencies in the economy and so can have negative economic effects (particularly as the nature of defense production changed during the cold war and became very different from civil). This can also have other externality effects through influences on the civil sector and crowding out (Dunne & Skons, 2011). This approach clearly argues for the damaging effects of military spending on the economy.1 A related perspective was developed from Marxist theory, with the most lasting contribution being by Rosa Luxemburg, who introduced a theory of underconsumption in which military expenditure provides a way to invest the surplus without increasing production capacities. This theory was later taken up by Baran and Sweezy (1966) in a manner that emphasized the monopoly nature of the post-war system. This approach saw military spending as important in preventing realization crises, through absorption of surplus without raising wages or capital. Other government expenditure could not do this.2 Baran and Sweezy were more circumspect than later proponents of the effective demand/underconsumption, Pivetti (1992, 1994) and Cypher (1987, 2007), who suggest that military spending

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is a conscious instrument of economic policy and that military spending has a stimulating effect on the economy.3 Thus when one looks into the way military spending is dealt with by Keynesians, there is no simple narrative, no clear military Keynesian theoretical perspective. The simple belief in the value of military spending in providing the best stimulus for economic growth is neither simple nor uncontested among Keynesians.

MILITARY KEYNESIANISM EVALUATED Historically, the effect of major wars means that military expenditures have shown much larger variations than any other category of government finance. In the United States, the share of National Defense Expenditures in GDP was less than 2 percent of GDP during the inter-war period, then rose with the war, peaking at around 50 percent of GDP in 1943 and 1944, and falling sharply with the end of World War II to around 7 percent before rising again to almost 15 percent in 1953 with the Korean War. Subsequently the share trended downwards, jumping upwards in the late 1960s with the Vietnam War, peaking at 10 percent in 1967 before continuing its downward trend till 1979, falling to 5.7 percent. With the Soviet invasion of Afghanistan, the election of President Reagan, and worsening relations with the Soviet Union; the share again rose, peaking in 1986 at 7.8 percent. As the Cold War thawed and then ended, the share fell, reaching a low of 3.8 percent in 2000. The Global War on Terror, after 2001, increased the share to just over 5 percent in 2008. By U.S. post-war historical standards, this is still quite low (Dunne & Smith, 2010). This discussion of strategic factors affecting the United States seems a reasonable explanation of the pattern of military burden in Fig. 1 but clearly excludes any economic rationale. An alternative perspective tends to start from the high unemployment of the inter-war period, interpreted as an inability of capitalism to generate enough effective demand, consumption, or investment to maintain full employment. Many forecast that World War II would be followed by a slump similar to that following World War I. This did not happen; the period from the end of World War II until the crises of the 1970s was one of low unemployment that, in retrospect, was labeled the golden age of capitalism (Glyn, 2006). As discussed above, some economists, such as Baran and Sweezy (1966), argued that military expenditure was the source of the extra effective demand that

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1949

1969

1989

US MILITARY Burden

Fig. 1.

2009 MB

US Military Burden.

stopped capitalism from sinking into depression since the United States and United Kingdom devoted a much higher share of output to the military than their previous peacetime norms. They suggested that military expenditure was used to offset the tendency to stagnation and unemployment and adjusted to stabilize the economy and thus was a blessing for capitalism rather than a burden. Empirically, there are a variety of problems with this argument. It is not clear that the Marxist or Keynesian theories outlined above actually predict such under-consumption tendencies. The strategic explanations, rooted in war and the communist threat, seem a better explanation of military expenditures than economic justifications. As we have seen, it is relatively straightforward to tell a strategic story to explain the share of military expenditure in the United States and very difficult to tell an economic story. Although World War II, the Korean Wars, and the peak of the Vietnam Wars were periods of relatively full employment in the United States, the strong downward trend in the share of military expenditure is not marked by any corresponding upward trend in unemployment. The communist threat may have been exaggerated, but it was certainly perceived as real. While economic factors were certainly important at a micro level, (weapons projects and base locations) they seem less so at a macro level. Military expenditure would be a very bad fiscal regulator because of the lags before it comes into effect: it takes too long to plan and implement to be an effective stabilizer (Smith & Dunne, 1994). Many countries with

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low military expenditure, in particular Germany and Japan, showed lower unemployment and faster growth than the United States and United Kingdom, though it could be argued that they benefited from the spillover from UK and U.S. military Keynesianism. There are other explanations for the golden age and why it came to an end in the 1970s. When the Cold War ended, the United Kingdom and United States cut their military expenditures substantially, and rather than sinking into unemployment both grew rapidly, benefiting from the peace dividend. The cuts in military expenditure reduced government deficits, which allowed lower interest rates, boosting investment in the technology boom of the 1990s. Thus, it does seem difficult to accept a simple Keynesian or underconsumption explanation.

ECONOMETRIC ANALYSES Moving beyond institutional and historical analyses of military Keynesianism there is a subset of the military spending economic growth literature that focuses specifically upon the econometric analysis of the Keynesian arguments. We can distinguish three approaches. First, Granger causality methods have allowed the complexity of any underlying theoretical arguments to be ignored by simply considering bivariate relations between military spending and growth, or with some ad hoc theoretical specification. Earlier studies used simple bivariate OLS analysis. At their simplest, these studies were simply testing if growth could be explained by its own lagged values just as well as it could by its own lagged values plus the present lagged values of military spending, i.e., if the coefficients on the military spending terms were jointly significantly different from zero. If so, it was considered that there was “Granger causality” from military spending to growth. A similar test could be conducted with military spending as the dependent variable. Developments of this form of analysis saw attempts to deal with possible long-run relations within the data, through cointegration analysis, which itself was superceeded by the use of the vector autoregression (VAR) framework model following Dunne and Vougas (1999). More formally, this analysis uses the result that if a set of variables are integrated of order one, I(1), that is they are stationary, I(0), after being differenced once (as seems common for economic variables) and there exist linear combinations of them, which are themselves stationary, then they are

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said to cointegrate. If there is cointegration, there must be Granger causality in at least one direction, i.e., some feedback that stops the I(1) variables from diverging. In dealing with I(1) data, it is convenient to rewrite the VAR in vector error correction model, or VECM, form ΔYt = ao dt þ ΠYt − 1 þ

k−1 X

Γi ΔYt − i þ ut

ð1Þ

i=1

And for the bivariate case—output y and military burden m—case Δyt = a110 þ a210 t þ π 11 yt − 1 þ π 12 mt − 1 þ γ 11 Δyt − 1 þ γ 12 Δmt − 1 þ u1t Δmt = a20 þ a220 t þ π 21 yt − 1 þ π 22 mt − 1 þ γ 21 Δyt − 1 þ γ 22 Δmt − 1 þ u2t

ð2Þ

This is estimated using the Johansen method in Microfit 5.0, which given the lag length of the VAR determines the number of cointegrating vectors, provides estimates of this long-run relation, and provides estimates of the individual error correction equations. Tests for Granger causality can then be made.4 Applying this approach to U.S. data for 1950
2009 gave the following cointegrating relation normalized on y, the log of GDP, with m military burden and t a trend5: yt =

−0:431 mt þ 0:038t þ zt ð0:093Þ ð0:002Þ

The short-run error correction equations, where z is the error correction term yt + 0.431 mt − 0.038 t were: Δyt = −0:107 zt−1 þ 0:110 Δyt−1 − 0:015 Δmt−1 þ v1t ð0:030Þ

ð0:125Þ

ð0:029Þ

SER = 0:022; R2 = 0:193 Δmt = −0:486 zt−1 þ1:339 Δyt−1 þ 0:322 ð0:106Þ

ð0:440Þ

Δmt−1

þv2t

ð0:101Þ

SER = 0:078; R = 0:438 2

So both the adjustment coefficients have the expected sign and are significant; both the lagged changes in GDP and military expenditure have significant effects on military expenditure, but neither of the lagged changes have significant effects on GDP. As Dunne and Smith (2010) argue, while it is common just to report the results of this test, knowing that there is

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Granger causality is of little interest in itself without knowing the sign. While there is a long run negative relation, measuring the sign of the effect is not straightforward in this framework.6 So while valuable, these techniques are difficult to use and have clear limitations. Indeed, to determine how Granger causality relates to economic causality requires an identified structural model, and different observationally equivalent just identifying assumptions may give very different causal pictures. This suggests it would be better to focus on the development and estimation of structural models rather than less theoretical statistical approaches (Dunne & Smith, 2010). The next two approaches do just that, but differ in the manner in which they specify the “Keynesian” theoretical arguments. The second approach considers underlying structural models based on the Keynesian IS-LM and combinations of Keynesian and neoclassical theory. Recent examples of these include the Keynesian model in Atesoglu (2002), Pieroni et al. (2008), Smith and Tuttle 2008, and Atesoglu (2009). The models are relatively well known and so will not be outlined here, but they do provide a commonly used reduced form specification that includes the logs of real GDP military spending, non-military spending, as well as the real interest rate; the LR tests suggested a second order VAR. Using unrestricted intercepts and restricted trends, the LR tests and model selection criteria actually suggested three cointegrating vectors for the log form, but we chose one as we expect this from the underlying theoretical model. yt = 0:173mt þ 0:418ct − 0:002rt þ 0:018t ð0:01Þ ð0:06Þ ð0:24Þ ð0:01Þ

With short run growth equation Δyt = 0:449þ0:993Δyt−1 þ0:059Δmt−1 þ0:053Δct−1þ 0:010Δrt−1 −0:012zt−1 ð3:7Þ ð0:8Þ ð3:4Þ ð1:7Þ ð3:0Þ ð3:5Þ

R-Squared = 0.48 S.E. of Regression = 0.035 with all variables in logs and r the real rate of interest and c nonmilitary spending. These results are relatively consistent with those of the papers cited with a positive effect of military spending in the long run, a similar magnitude to Pieroni et al. (2008) but much smaller than that of Atesoglu (2002). There is an issue in interpreting this model as an increase in military spending does not necessarily imply an increase in military burden.

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Military burden, the share of military spending in GDP, is probably the variable that best represents the Keynesian argument as it implies that more resources are allocated to the military sector, while increases in military spending even in constant terms may simply reflect an increase growth in the economy that allows more money to be spent on the military. This implies possible problems of causality and identification, as observing an increase in military spending could result from an increase in output; rather than a government using military spending to boost output, it may be a demand rather than a growth equation that is being estimated. This problem may well explain there being more than one cointegrating vector suggested for the model. A third approach estimates Keynesian models that might be considered closer in spirit to the effective demand type arguments, including the aggregate production function, e.g., Dunne and Nikolaidou (2005). In this specification output is a function of military burden, as well as taking nonmilitary spending and investment as shares of GDP. Given log(Mt/Yt) = log(Mt) − log(Yt) = (mt − yt) and that the other shares can be written in this way, we can write the model as below giving long run estimates: yt = − 0:125ðmt −yt Þ þ 0:271ðct −yt Þ þ 0:048ðit −yt Þ − 0:029ut þ 0:030t ð0:05Þ ð0:05Þ ð0:09Þ ð0:03Þ ð0:001Þ

With short run growth equation results Δyt = 1:106 − 0:049 Δyt−1 − 0:068 Δðmt−1
yt−1 Þ − 0:018 Δðct−1 −yt−1 Þ ð6:1Þ ð0:3Þ ð2:3Þ ð0:6Þ þ0:153 Δðit−1 −yt−1 Þ−0:091 ut−1 − 0:099 zt−1 ð2:7Þ ð5:2Þ ð5:9Þ

R-Squared = 0.55 S.E. of Regression = 0.017 which give the negative effect of military burden on output consistently found by these studies. Clearly, the implications of an increase in military burden are that military spending increases more than output, meaning that the military sector becomes relatively more important. This would seem to have a closer affinity with a Keynesian effective demand type argument as it would always reflect a change in priorities and policy and would reflect the role of a MIC.

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CONCLUSIONS With the recent recession, there has been a recent resurgence of military Keynesian attitudes from those who seem oblivious of the literature that already exists on the subject. Aside from the simple Keynesian perspective, a number more complex theoretical perspectives emerged, from Keynesian and Marxist schools of thought, with no clear theoretical consensus of the impact of militarism and military spending on growth but considerable debate using a range of empirical analyses. This paper has reviewed the theoretical perspectives and the empirical analyses, using U.S. data from 1929 to 2009. It is clear that there is, in fact, no clear Keynesian militarist theory beyond a simple treatment of military spending as one component of government spending and that this is contested by Keynesian economists. Considering the pattern of military spending in the U.S. economy, a strategic narrative seems rather more compelling than an economic one, suggesting military spending responded to strategic changes rather than played an important economic role and casting some doubt on the military Keynesian premise. Reviewing the econometric methods and models that have been used with a Keynesian framework also brought out some differences. Granger causality tests have been an important tool in the empirical analysis of the economic effects of military spending, but following Dunne and Smith (2011) their use has come under scrutiny. Test results are seen to be sensitive to the number of variables in the VAR, lag lengths, treatment of deterministic elements, the sample or observation window used, the treatment of integration and cointegration; the significance level used and statistical measures may not be informative about these choices. Since the parameters are not structural, they may not be stable over different time periods or different countries, as was the case with the empirical results here. It is important to recognize that Granger causality tests are uninformative about the direction of the predicted effects and that Granger causality measures incremental predictability not economic causality. To determine how Granger causality relates to economic causality requires an identified structural model, and different observationally equivalent just identifying assumptions may give very different causal pictures. Moving to consider the structural Keynesian models that have been used to motivate cointegrating VAR analyses, the paper identifies two types. The first uses the level of military spending in the VAR, the second, the military burden. The two approaches give different results, and it is argued that they reflect the two rather different theoretical perspectives within the Keynesian framework.

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Overall, this chapter provides some interesting empirical results that continue to bring into question the simple military Keynesian arguments that suggest military spending should be used to stimulate the economy. It suggests the more complex theoretical perspectives do have value, particularly the Marxist perspective in which the contradictory role is recognized and shows the importance of developing more structural models rather than using less theoretical statistical approaches. The main obstacle to developing more structural models is providing measures of the political and strategic determinants of military expenditures, such as threat (Dunne, Perlo-Freeman, & Smith, 2009).

NOTES 1. The military sector creates inefficiencies in the economy, particularly as the nature of defence production changed during the cold war and became very different from civil. This can also have other externality effects through influences on the civil sector and crowding out (Melman, 1970; Dunne, 1995). Melman (1974) underlines the harmful effects of militarism on the American economy such as the loss of competitiveness, the development of the bureaucracy, the fall in productive investment, and limited spillover effects from the military to the civil sector. Similarly, Dumas (1986) presents the military production as an economically noncontributory activity, which channels valuable productive resources and their outputs. 2. Using the “surplus” approach to Marxist analysis, which identifies value with observed quantities, so for example, profit in price terms is seen as the money representation of surplus value (Baran & Sweezy, 1966; Coulomb & Dunne, 2008; Howard & King, 1992). 3. Smith & Dunne (1994) provide a critique of Pivetti. 4. Recent examples of analyses using these techniques are Karagianni and Pemetzoglu (2009), Ozsoy (2008), and Kollias, Mylonidis, and Paleologou (2007). 5. Both the Johansen trace and eigenvalue tests at the 5 percent level suggest one cointegrating relation. 6. For instance, mt may be GC for yt , with coefficients on the first and second lags of m significantly different from zero but of opposite sign and roughly equal size, implying a short-run effect but no long-run effect.

REFERENCES Agostino, G., Dunne, J. P., & Pieroni, L. (2012). Assessing the effects of military expenditures on economic growth. In S. Skaperdas & M. Garfinkel (Eds.), Chapter 17; The Oxford Handbook of the Economics of Peace and Conflict. Oxford University Press, Oxford. Atesoglu, H. S. (2002). Defense spending promotes aggregate output in the United States— evidence from cointegration analysis. Defence and Peace Economics, 13(1), 55
60.

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Atesoglu, H. S. (2004). Defence spending and investment in the United States. Journal of Post Keynesian Economics, 27(1), 163
169. Atesoglu, H. S. (2009). Defense spending and aggregate output in the United States. Defence and Peace Economics, 20(1), 21
26. Baran, P. A., & Sweezy, P. M. (1966). Monopoly capital. New York, NY: Monthly Review Press. Coulomb, F. (2004). Economic theories of peace and war. Routledge, Abingdon. Coulomb, F., & Paul Dunne, J. (2008). Peace, war and international security: Economic theories. In J. Fontanel & M. Chatterji (Eds.), War peace and security (pp. 13
36). Bingley: Emerald. (Chapter 2). Cypher, J. M. (1987). Military production and capital accumulation: A comment. Journal of Post Keynesian Economics, 10(2), 304/309 (Winter 1987-88). Cypher, J. M. (2007). From military Keynesianism to global-neoliberal militarism. Monthly Review, June. Dumas, L. J. (1986). The overburdened economy: Uncovering the causes of chronic unemployment, inflation and national decline. Berkeley, CA: University of California Press. Dunne, P. (1990). The political economy of military expenditure: An introduction. Cambridge Journal of Economics, 14(4), 395
404. Dunne, J. P. (1995). The defence industrial base. In K. Hartley & T. Sandler (Eds.), Handbook in defense economics (pp. 592
623): Elsevier, (Chapter 14). Dunne, J. P., & Nikolaidou, E. (2005). Military spending and growth in Greece, Portugal and Spain. Frontiers in Finance and Economics, 2(1). Dunne, J. P., Perlo-Freeman, S., & Smith, R. (2009). Determinants of military expenditure: Arms races and heterogeneity in panel data. UWE Discussion Paper Available from http:// carecon.org.uk/DPs/0901.pdf Dunne, J. P., & Skons, E. (2011). The changing military industrial complex. In German in Wissenschraft & Frieden (German Peace Research Journal), Issue 2, April, pp. 14
18. Discussion paper version in English Available from http://ideas.repec.org/p/uwe/wpaper/ 1104.html Dunne, J. P., & Smith, R. P. (2010). Military expenditure and Granger causality: A critical review. Defence and Peace Economics, 21(5-6), 427
441. Dunne, J. P., & Uye, M. (2010). Military spending and development. In A. Tan (Ed.), The Global Arms Trade. London: Europa/Routledge, (Chapter). Dunne, J. P., & Vougas, D. (1999). Military spending and economic growth in South Africa: A causal analysis. Journal of Conflict Resolution, 43(4), 521
537 (August 1999). Gleditsch, N. P., Cappelen, A., Bjerkholt, O., Smith, R., & Dunne, P. (1996). The peace dividend. North Holland: Amsterdam. Glyn, A. (2006). Capitalism unleashed. Oxford Univeristy Press. Howard, M., & King, J. (1992). A history of Marxian economics: Volume II, 1929
1990. Basingstoke: Macmillan. Karagianni, S., & Pemetzoglu, M. (2009). Defence spending and economic growth in Turkey: A linear and non-linear Granger causality approach. Defence and Peace Economics, 20(2), 139
148. Kollias, C., Mylonidis, N., & Paleologou, S. M. (2007). A panel data analysis of the Nexus between defence spending and growth in the European Union. Defence and Peace Economics, 18(1), 75
85. Melman, S. (1970). Pentagon capitalism: The political economy of war, New York, NY: McGraw-Hill.

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Melman, S. (1974). The permanent war economy: American economy in decline. New York, NY: Simon & Schuster. Ozsoy, O. (2008). Defence spending and the macroeconomy: The case of Turkey. Defence and Peace Economics, 19(3), 195
208. Pieroni, L., D’Agostino, G., & Lorusso, M. (2008). Can we declare military Keynesianism dead? Journal of Policy Modelling, 30(5), 675
691. Pivetti, M. (1992). Military spending as a burden on growth: An underconsumptionist critique. Cambridge Journal of Economics, 16(4), 373
384. Pivetti, M. (1994). Effective demand, ‘Marxo-Marginalism’ and the economics of military spending: rejoinder. Cambridge Journal of Economics, 18(5), 523
27. October 1994. SIPRI (various years) SIPRI Yearbook. Stockholm International Peace Research Institute and Oxford University Press, Oxford. Smith, R., & Dunne, P. (1994). Is military spending a burden? A Marxo-marginalist response to pivetti. Cambridge Journal of Economics, 18, 515
521. Smith, J. S., & Tuttle, M. H. (2008). Does defense spending really promote aggregate output in the United States? Defence and Peace Economics, Taylor and Francis Journals, 19(6), 435
447.

DEBT AND PEACE IN POST-CONFLICT COUNTRIES Fabrizio Carmignani ABSTRACT Post-conflict economies are characterized by high, and often growing, levels of debt. At the same time, peace is particularly fragile in the aftermath of a conflict. This chapter studies how debt affects the risk of war in the 10 years that follow the end of a previous conflict. After controlling for per-capita income and other economic, political, and geographical factors, external debt is found to increase the risk of war. Conversely, the effect of domestic debt is negligible. The policy implication for the international community is clear: debt relief helps stabilize peace in war-torn economies.

INTRODUCTION The chapter investigates the effect of debt on the stabilization of peace in the aftermath of a civil war. This analysis is motivated by three observations. First, civil wars today are the most frequent form of large-scale violence. The chronology of conflicts compiled by Gleditsch (2004) reports 119 civil wars since the end of World War II and “only” 29 interstate wars.

Cooperation for a Peaceful and Sustainable World, Part 2 Contributions to Conflict Management, Peace Economics and Development, Volume 20, 131
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The death toll of civil wars is estimated to be approximately five times larger than the death cost of interstate wars (see, for instance, Fearon & Laitin, 2003), and the economic loss associated with a civil conflict can be quantified in more than 2% of GDP a year (Collier, 1999). Second, the risk of conflict is particularly high in the 10 years that follow the end of a previous conflict. Collier and Hoeffler (2004) estimate that the risk of war is 39% in the first five years of the post-conflict decade and then declines to 32% in the subsequent five years. However, in countries that have been at peace for at least 10 years, the risk of a new war is only 14%. That is, if a country can stabilize peace for 10 years after a civil war, then it is quite likely to remain at peace forever. Third, post-conflict countries are likely to experience significant debt dynamics. On the one hand, the need to finance reconstruction coupled with the lack of domestic resources and, possibly, improved credit worthiness following the end of violence might lead to rapidly growing debt stocks. On the other hand, within the framework of a reengagement strategy, the international community might grant post-conflict countries from various forms of debt relief. It is then important to understand how these dynamics can affect the likelihood of stabilizing the fragile post-conflict peace. The chapter brings together two separate strands of the literature. The first one is the fast expanding literature on the causes and consequences of civil conflict, which is extensively reviewed by Blattmam and Miguel (2010). Of particular interest here is the research on the determinants of post-conflict risk. This research has mainly focused on the impact that political and institutional factors, such as for instance democratization and elections, have on the probability of maintaining peace in the years following the end of a previous conflict. Nevertheless, a few papers have tried to account for the role of economic factors. Collier and Hoeffler (2004) provide evidence that good economic policies contribute to the stabilization of peace by increasing the aid absorption capacity of a post-conflict economy and hence its rate of economic growth. Faster growth and a rapid return of per-capita income to its pre-crisis level are in turn critical in preventing conflict reversion, as extensively documented by the subsequent analysis of Collier, Hoeffler, and Soderbom (2008). Collier and Hoeffler (2006) document the adverse effect of high levels of military expenditure on the likelihood of peace. Their analysis indicates that in order to maximize the chances of successfully completing the post-conflict transition, countries ought to quickly reallocate resources from military expenditure to dynamically efficient forms of redistribution, such as for instance public health and education. Adam, Collier, and Davies (2008) focus on the role of

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monetary policy and stress the risks associated with an excessive use of seigniorage to finance public expenditure. Carmignani (2010) and Carmignani and Gauci (2010) look at the role of fiscal policy in general, and at the allocation of resources between public consumption and public investment more in particular. They show that a larger share of government consumption determines a significant decline in the probability of peace in post-conflict African economies. All in all, it appears that economic factors and policies can play an important role in determining the risk of war during the post-conflict period. The second relevant strand of the literature concerns the effects of debt on a borrower’s macroeconomic performance. Theoretical models generally predict a negative effect of debt on the rate of economic growth (see, for instance, the seminal paper of Diamond, 1965, and the more recent contributions of Saint Paul, 1992; Adam & Bevan, 2005). Several channels can account for this effect. Primarily, higher debt is expected to crowd-out private investment by increasing long-term interest rates and by reducing a household’s incentive to save. Uncertainty about how the future course of economic policy will be affected by the increase in the stock of debt can also contribute to low investment, especially to the extent that investment decisions are partly irreversible. Furthermore, as debt accumulates, taxes will eventually have to be raised in order to assure debt sustainability. This will in turn have a distortionary impact on potential output. Krugman (1988) introduces the notion of “debt overhang” to describe a situation in which a country’s expected repayment ability on external debt falls below the contractual value of debt. This suggests possible nonlinearities in the debt-growth relationship. For instance, Cohen (1993, 1997) and Clements, Bhattacharya, and Nguyen (2003) suggest that up to a certain threshold, foreign debt accumulation can promote investment, and hence growth, while beyond such a point debt overhang will reduce investors’ willingness to provide capital. The empirical research has indeed confirmed that debt stocks above a certain threshold do have significant negative effects on growth. Pattillo, Poirson, and Ricci (2002) estimate that in a large sample of developing countries external debt significantly reduces per-capita GDP growth if the net present value of debt in percent of GDP is greater than 35%
40%. Clements et al. (2003) find somewhat lower turning points. Reinhart and Rogoff (2010) instead suggest that the relationship between government debt and real GDP growth is negative and strong for debt/GDP ratios below a threshold of 90% of GDP. For external debt, instead, they estimate a threshold level of about 60% of GDP. Finally, Cordella, Ricci, and Ruiz-Arranz (2010) argue that the thresholds

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might actually depend on the quality of policies and institutions. Their estimates indicate that in countries with good policies and institutions, the growth-reducing effect of debt kicks when debt rises above 15%
30% of GDP. In countries with bad policies and institutions instead, the threshold is lower. Interestingly, they also show that when debt grows above 70%
80% of GDP, it becomes irrelevant, in the sense that it no longer causes growth to fall. One can take stock of the literature and formulate a prediction on how debt is going to affect the risk of war in a post-conflict economy. Typically, in a post-conflict country debt is high and therefore it should negatively affect growth and output. Because faster growth and higher income seem to make peace more stable, then the expectation is that a higher level of debt should reduce the likelihood of a country to maintain peace throughout the post-conflict decade. However, there are potentially other transmission channels that need to be taken into account and which might make the theoretical prediction more ambiguous. Consider a game-theoretic representation of post-conflict peace dynamics based on the magnanimity game of Brams and Mor (1993).1 In this game, peace occurs if two parties agree on the allocation of the peace dividend. A party is assumed to be the first-mover and offers a certain allocation. The other party can accept or reject the offer. If the offer is accepted, then peace persists; if the offer is rejected, then the country goes back to war. The game has four possible equilibriums, two of which involve persistent peace. Intuitively, the probability of achieving one of these two peace equilibriums increases (i) the larger the peace dividend and (ii) the more equitable the allocation proposed by the first-mover. The question is, then, how is debt going to affect the size of the peace dividend and its allocation? The formal analysis in Carmignani and Gauci (2010) suggests that external debt might actually make the peace dividend larger, while the effect of public debt is more ambiguous. More external debt increases the amount of resources available to the government to finance public consumption and investment. This is likely to increase the peace dividend, especially in a context where the inefficiency of the tax administration and the small tax base constrain the mobilization of domestic resources. Furthermore, if external debt is mainly used to finance public investment (as it is generally recommended by the international community), then it can contribute to making the allocation of the peace dividend more equitable. In the post-conflict phase, public consumption appears to be rather easily appropriable by the government (i.e., the first mover) and its supporting constituencies, so that a large share of public consumption is

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135

expected to trigger grievances and a possible new escalation of the conflict. On the contrary, public investment generates benefits that are spread across the economy, but which are enjoyed only to the extent that peace is maintained. This therefore creates a dynamic incentive for both parties to remain at peace. Given the variety of channels that debt activates, the nature of its effect on the risk of war is ultimately an empirical matter. In fact, arguments for deeper debt relief for post-conflict countries (which have often emerged in the professional and academic debate) are based on the idea that high debt hurts the possibility to achieve a successful transition to peace and prosperity.2 However, to the best of the author’s knowledge, no previous paper formally estimates the effect of the level of debt on the probability of peace (or war) in a post-conflict situation. The purpose of this chapter is to fill in this gap. More specifically, the chapter estimates a probit model of war and peace for a group of war-torn African economies. From the probit estimates, it will be possible to assess the sign and size of the effect of debt on the risk of war after controlling for other political, institutional, and economic factors. In turn, this type of statistical information is critical to substantiate (or eventually reject) proposals to strengthen debt relief for post-conflict countries. The specific focus on Africa has a twofold justification. First, Africa has suffered a disproportionate share of civil wars, and peace in conflict-affected African countries has been fragile and short-lived (see also Bigombe, Collier, & Sambanis 2000). About half of all civil wars have taken place in Africa, and even today several countries on the continent are torn by civil conflict and/or going through a difficult post-conflict transition. Second, in a more practical perspective, debt data are now available for a relatively large number of African countries over a sufficiently long period of time. In particular, the databases compiled by the World Bank and the IMF provide a valuable source of information, which is then integrated using the information collected in Carmignani and Gauci (2010). The rest of the chapter is organized as follows. The second section presents some data on war and post-conflict in Africa as well as a simple set of summary statistics on the dynamics of debt in African war-torn economies. The third section introduces the econometric model. The fourth section discusses the results. The fifth section concludes by considering a few policy implications and by setting the directions for future research in this area. The chronology of war and post-conflict episodes and the detailed description of the variables used in the econometric analysis are then provided in Appendix A and Appendix B.

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DATA AND SUMMARY STATISTICS In this chapter, the post-conflict period is identified by the 10 years that follow the end of a civil war. Therefore, in order to code post-conflict periods for African countries, it is preliminarily necessary to compile a chronology of wars. Four main datasets are available to this purpose: the Correlates of War (Singer & Small, 1994), the PRIO/Uppsala database (Gleditsch, Wallensteen, Eriksson, Sollenberg, & Strand, 2002), Fearon and Laitin (2003), and Sambanis (2004).3 The main differences between these datasets concern (i) the threshold of violence required for an episode of violence to be classified as a civil war (e.g., the Correlates of War uses a threshold of 1,000 deaths while the PRIO/Uppsala dataset also provides a list of conflicts based on a threshold of 25 deaths), (ii) the definition of war beginnings and endings, and (iii) the treatment of civil wars that also involve outside parties. The estimates presented in the rest of this chapter are based on the chronology of African civil wars available from the PRIO/Uppsala database. In fact, results are practically unchanged when the econometric model is reestimated using the Correlates of War data. The full list of civil wars is reported in Appendix A.4 In total, there are 44 post-conflict episodes.5 Of these, 18 are “successful,” in the sense that peace lasted for 10 consecutive years. In another 20 cases, instead, war reoccurred before the completion of the post-conflict decade, on average about three years after the end of the previous conflict. These post-conflict episodes are labelled as “unsuccessful.” Finally, there are six cases of ongoing postconflict, that is, countries where as of today there is peace, but less than 10 years have passed since the end of the war. Debt data are from the World Bank African Development Indicators (WBADI), integrated by the International Financial Statistics (IFS) of the IMF and the data from the national statistical offices collected by Carmignani and Gauci (2010). The main variable of interest for the analysis is external debt, defined as the outstanding stock of direct liabilities of the government to the rest of the world in percent of the country’s GDP. In addition, domestic debt, defined as the outstanding stock of liabilities of the government to domestic entities (individuals and private sector companies) in percent of GDP, and total debt, defined as the sum of external and domestic debt, will also be considered. Note, however, that data on external debt are more widely available and perhaps more reliable. Moreover, external debt constitutes the large part of total debt of the typical post-conflict economy. This is why most of the empirical

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analysis will focus on estimating the relationship between the risk of war and stock of external debt. Some summary statistics are reported in Table 1. For each of the three debt variables, the table reports the mean and standard deviation for (i) the full sample of all observations (including years of conflict, postconflict, and peace after post-conflict and/or before a conflict) for all the African war-torn economies, (ii) the sample that only includes years of war, (iii) the sample that only includes years of peace (including post-conflict peace and peace after post-conflict), (iv) the sample that only includes years of post-conflict (including successful and unsuccessful post-conflict, a successful post-conflict being a period of 10 consecutive years of peace after the end of a conflict), and (v) the sample that only includes observations associated with successful post-conflict episodes. This latter bit of information is presented by year of post-conflict and by average over the entire decade. A few remarks can be made. First of all, debt appears to be on average higher in war times than in peace times. This is clearly consistent with Barro’s characterization of optimal debt policy (see Barro, 1979): because Table 1.

Summary Statistics of the Debt Variables. Debt External

Full sample War times Peace times Post-conflict Succesful post-conflict Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Average all years of successful post-conflict

0.771 0.856 0.612 0.957

(0.873) (0.986) (0.726) (0.805)

1.097 1.244 1.414 1.268 1.187 1.001 0.943 0.902 0.834 0.801 0.983

Domestic 0.121 0.141 0.114 0.129

(0.150) (0.165) (0.144) (0.168)

0.184 0.168 0.162 0.121 0.098 0.086 0.093 0.044 0.063 0.062 0.119

Note: In the first four rows, the number in brackets are the standard errors.

Peace times 0.892 0.997 0.726 1.086

(0.751) (0.685) (0.767) (0.987)

1.281 1.412 1.576 1.389 1.285 1.087 1.036 0.946 0.897 0.863 1.102

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FABRIZIO CARMIGNANI

the tax rate is kept constant in order to minimize distortions from taxation, a shrinking tax base means declining revenues in times of war while expenditures are probably increasing. The implication is then an increase in deficit and the progressive accumulation of debt (external and domestic). Second, debt in the post-conflict period is higher than debt in war and peace times. This might reflect the fact that in the post-conflict period a country experiences even stronger financing needs (i.e., the need to reconstruct infrastructures) coupled with extremely tight constraints on the mobilization of domestic resources (i.e., weak tax collection and administration capacity) and a possible improvement in its creditworthiness following the end of the conflict. Note that the statistics concerning all years of successful post-conflict imply that debt is on average lower in unsuccessful post-conflict episodes. However, the implied difference is relatively small for both external and domestic debt. Third, and perhaps more interestingly, the dynamic pattern of debt in successful post-conflict countries is characterized by an initial increase (in the first three years of the decade) followed by a steady decline. A possible interpretation for the observed decline is that after an initial period, countries start receiving debt relief and, at the same time, develop alternative mechanisms of resource mobilization, so that a smaller part of the expenditure budget has to be financed via debt. Debt in unsuccessful post-conflict episodes instead does not exhibit any initial increase and the average rate of decline is faster than in the case of successful post-conflicts. This rapid decline could reflect the progressive disengagement of borrowers who anticipate the failure of the post-conflict transition and the return to war. In general, however, the simple summary statistics in Table 1 only allow establishing stylized facts. In order to investigate any causal relationship between debt dynamics and success or failure of the post-conflict transition, a more formal model of the risk of war must be estimated econometrically. This is done in the next two sections.

MODELING FRAMEWORK The econometric framework is the familiar binary outcome model. Let i be a generic post-conflict episode and t a generic year in this episode. By definition, each episode lasts 10 years starting from the end of a civil war. Our objective is to model the probability p that a new war occurs as a function of a set of regressors x (which will obviously include debt variables).

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However, p is unobserved. What is observed is whether t is a year of war or peace. We can therefore define a dependent variable y as follows: yi,t = 1 if a war occurs in year t of post-conflict episode i and yi,t = 0 otherwise. The probability of yi,t = 1 conditional on the set of regressors xi,t can then be expressed as the following:

 pi ≡Pr yi;t = 1jxi = Fðxi Þ

ð1Þ

where F(•) is a cumulative distribution function and β is the coefficient to be estimated. There are four commonly used functional forms for Fðx′i βÞ: Logit Fðx′i βÞ =

ex′i β 1 þ ex′i β

x′i β

ð2aÞ

Probit Fðx′i βÞ = ∫ ϕðzÞdz

ð2bÞ

Linear probability Fðx′i βÞ = x′i β

ð2cÞ

Complementary log − log Fðx′i βÞ = 1 − expf − expðx′i βÞg

ð2dÞ

−∞

The linear probability model corresponds to a linear regression and therefore does not impose the restriction that 0 ≤ p ≤ 1. Of the other three functional forms, two, the logit and the probit, are symmetric around zero. The complementary log
log is asymmetric, and its use is often recommended when the distribution of y is skewed such that there is a high proportion of either zeros or ones in the dataset (see Cameron & Trivedi, 2006). It turns out that results are robust to the choice of the functional form. However, for the purpose of presenting the findings, preference in this chapter will be given to the probit model, which is also easier to estimate than the other two when any of the regressors are endogenous. Model (1) is then estimated by maximum likelihood. The sample consists of all the post-conflict years arising from the list of African conflicts reported in Table 1. However, in many cases data on the regressors x are

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FABRIZIO CARMIGNANI

available only since mid- or late-80s (in a few cases even later than that), so that several post-conflict episodes are only partially covered. In other words, the panel is unbalanced and the total number of observations available for estimation is around 160. The specification of the set of regressors x is driven by previous findings in the post-conflict risk literature. This literature emphasizes that the probability of a new war is a function of the speed of economic recovery and of the dynamics of democratization and institutional reconstruction. The level of per-capita GDP is used to account for the first factor. Per-capita GDP is a summary measure of the state of the economy, and there is plenty of evidence that it is one of the main determinants of the risk of war (see Miguel et al., 2004). A possible alternative is to use the rate of growth of per-capita GDP rather than the level. This will be done as part of the sensitivity analysis, and it turns out that results on the role of debt variables do not vary depending on whether the level or the growth rate of per-capita GDP is used.6 The data on GDP per-capita are taken from the WBADI. Democratization and institutional reconstruction are proxied by a measure of the quality of the polity. This is a summary indicator that measures the extent of democratic checks and balances and it is often interpreted as a broad measure of democracy/autocracy.7 Previous work (see for instance Collier et al., 2008) also uses dummy variables to capture the timing of elections. When included in model (1), the electoral dummy happens to be largely insignificant, and for this reason they are omitted from the results reported below. In addition to per-capita GDP and polity, x also includes a measure of ethnic fragmentation, land area, and total population. The ethnic variable is defined as the probability that two randomly selected citizens do not belong to the same ethnic group. Especially in Africa, civil wars arise from ethnic conflict. Therefore, more ethnically fragmented countries should be at greater risk of a large-scale violence. However, a possible counter-argument, suggested by Collier and Hoeffler (1998), is that in highly fragmented countries, coordination costs tend to be high, which in turn might reduce the ability of groups to organize and start a civil war. The source of the ethnic data is La Porta, Lopez-de-Silanes, Shleifer, and Vishny (1999). Land area and total population (both expressed in logs) are meant to account for size effects. Intuitively, in a bigger country, the periphery is likely to be more disconnected from the centre. Remoteness in turn can make rebellion easier. Similarly, the bigger the population, the larger the potential supply of rebels, and hence the more likely war will be. However, there is again a possible counter-argument: if security and military control are

Debt and Peace in Post-Conflict Countries

141

characterized by positive economies of scale, then the effect of size on the probability of war is not necessarily positive. The data on population and land area are from the WBADI. It is probably worth stressing that both ethnic fragmentation and land area are time invariant. This means that they do not change over time, and therefore they play the role of country fixed effects. In other words, they can explain why post-conflict risk differs across countries, but they cannot explain why the post-conflict risk changes over time within the same country. Obviously, the set of regressors x also includes the debt variables. In fact, as the summary statistics in Table 1 seem to suggest, the three debt variables are very highly correlated. This implies that if included all together (or even in pairs of two) among the set of regressors, they would cause problems of multicollinearity. The most immediate consequence of multicollinearity would be the increase in the standard errors of the estimated coefficients, so that there would be a higher probability of not rejecting the null hypothesis in a test of statistical significance of the estimated coefficients. To circumvent this problem, Eq. (1) will be estimated using only one debt variable at the time. More attention will be given to external debt. As already pointed out, this is because (i) external debt is by far the largest component of total debt in the African war-torn economies and (ii) countries are likely to experience important external debt dynamics during the post-conflict phase. A final important issue concerns the potential endogeneity of some of the regressors. Debt, per-capita income, and polity are all likely to be affected by the risk of war. For instance, as peace deteriorates and a conflict becomes more likely, some borrowers might decide to disengage. Alternatively, if borrowers do not disengage, the government, in the expectation of a new conflict, might decide to borrow more in order to finance a military build-up. In both cases, the risk of war can determine debt (internal and external) and not just vice-versa. Similarly, war clearly has a cost in terms of output loss. This then implies that the level of per-capita income also depends on the whether the country is at war or peace. A civil war is also likely to affect the quality of the polity by causing a suspension of the democratic process, a disruption of the constitutional mechanisms of checks and balances, and a collapse of the bureaucracy and public administration. Thus, all in all, reverse causality between risk of war and debt, per-capita income, and polity is
at least theoretically
possible. It is also possible that risk of war, per-capita income, debt, and polity are all jointly determined by some omitted variable. The estimation procedure must therefore account for the fact that these three regressors (debt, per-capita income,

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FABRIZIO CARMIGNANI

and polity) are potentially endogenous. To this purpose, a set of instruments (to be further discussed below) are used in the maximum likelihood procedure. Moreover, as a sensitivity check, an alternative estimation twostep sequential procedure that uses a minimum chi-squared estimator will be implemented. The maximum likelihood and the two-sequential procedures make similar distributional assumptions. The main difference between them is the computational algorithm, which is probably less cumbersome in the case of the two-step sequential procedure.8

RESULTS Three sets of results are presented. To start with, the model is estimated without instruments and using different assumptions about the function form of F(•) in Eq. (1). Then, instrumental variable estimates are reported. Finally, a few extensions and sensitivity checks are performed in order to check the robustness of the results concerning debt. Unless otherwise indicated, the reference debt variable is external debt.

Baseline Estimates The baseline results are reported in Table 2. Column I reports the probit estimates of the β coefficients, the associated p-value, and the partial derivatives ∂p=ð∂xj Þ = ðx′βÞβj . These partial derivatives are the marginal effects with respect to a change in the regressor xj, evaluated at the mean of regressors. Given that the dependent variable is coded as 1 if t is a war year, then a positive coefficient (or equivalently, a positive marginal effect) means that higher values of the regressors increase the risk of war. As can be seen, the effect of external debt is positive and statistically significant; that is, higher debt makes peace less stable in a post-conflict situation. Of the other regressors, three marginally fail to pass the zero restriction test. Ethnic fragmentation instead appears to significantly reduce the risk of war. As already discussed, this apparently counter-intuitive result can be explained in terms of coordination costs: in more fragmented countries, ethnic groups might find more difficult to coordinate and organize a rebellion. This in turn reduces the probability of a civil conflict. In Column II, the probit model is estimated on the full sample of all years and not just on the sample of post-conflict years. Results are qualitatively very similar to those reported in Column I. In particular, debt is

0.007 0.033 0.115 0.122 0.113 0.005 0.757 157

− 7.026 − 1.055 − 0.037 0.277 0.312 0.539 − 0.047

.. − 0.283 − 0.010 0.075 0.084 0.145 − 0.013

mfx − 3.170 − 0.600 − 0.024 − 0.077 0.115 0.242 0.095 334

est. 0.015 0.062 0.159 0.476 0.245 0.030 0.319

p-val − 7.462 − 1.191 − 0.007 0.264 0.370 0.576 − 0.072 157

est.

Probit

III

0.001 0.020 0.753 0.073 0.022 0.001 0.575

p-val

Baseline Estimates.

− 12.914 − 2.204 − 0.012 0.431 0.634 1.010 − 0.097 157

est.

Logit

IV

0.001 0.019 0.793 0.089 0.024 0.001 0.658

p-val

− 6.238 − 0.950 − 0.008 0.259 0.329 0.497 − 0.088 157

est.

0.001 0.027 0.683 0.069 0.032 0.001 0.445

p-val

Complementary log
log

V

Notes: GDP_pc, debt, and polity are lagged by one period in Columns III, IV, and V. GDP_pc, population, and land are all expressed in logs. P-value are computed from QML (Huber/White) standard errors and covariance.

Constant Ethnic fr. Polity GDP_pc Population Debt Land N.Obs

p-val

Probit

Probit

est.

II

I

Table 2.

Debt and Peace in Post-Conflict Countries 143

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FABRIZIO CARMIGNANI

again a factor of destabilization. Column III reproduces the probit estimates for the sample of post-conflict years using lagged values of the potentially endogenous regressors. If lagged values are to some extent predetermined relative to the risk of war, and reverse causality is the main cause of endogeneity, then lagging the regressors is an alternative way to deal with the endogeneity problem. Coefficients are now more precisely estimated, as denoted by the generally lower p-values. The evidence on external debt (and ethnic fragmentation) is however qualitatively the same. In addition, there is evidence of a significant population size effect: bigger population increases the risk of war. The finding that per-capita income also makes war more likely is probably more surprising and might be a specificity of the African sample to be investigated in future work. Columns IV and V present the estimates of the same model with lagged values, but using different functional forms of F(•): logit in Column IV and complementary log
log in Column V. Again, the qualitative flavor of the results does not change. While point estimates change a bit, especially between probit and logit, the sign and statistical significance of the coefficients is the same as in Column III. This can be taken as evidence that results are qualitatively robust to changes in the assumptions concerning the function form.

Instrumental Variables Estimates As discussed in the third section, a complete treatment of endogeneity requires the use of instruments. Once appropriate instruments are identified, it is possible (i) to test whether a regressor is effectively endogenous or not and (ii) run the probit estimates with instrumental variables using the maximum likelihood and/or the minimum chi square (two-step sequential) estimator. The following instruments are selected for the three potentially endogenous regressors: international trade openness (trade), distance from the equator (latitude), and country’s legal origins. International trade is a proxy of the strength of the economic links between a country and the international community. Other things being equal, tighter economic links should also imply that other countries (and possibly even private investors) are more willing to lend, which should ultimately result in higher external debt. At the same time, the risk of a civil (not international) war is unlikely to be strongly dependent on the extent of international trade, so that trade should be a valid instrument for debt. Distance from equator is a

Debt and Peace in Post-Conflict Countries

145

geographical factor that many previous studies have used to explain longterm cross-country differences in per-capita incomes (see, inter alia, Acemoglu, Johnson, & Robinson, 2001, and Rodrik, Subramanian, & Trebbi, 2004). Countries that are more distant from the equator tend to be less exposed to deathly diseases (e.g., malaria). This in turn increases labor productivity and therefore determines higher levels of per-capita income. However, it is difficult to think of a possible link between latitude and risk of war that does not work through per-capita income. In this sense, latitude as an instrument for per-capita GDP is most likely to be exogenous and valid. Legal origins have been identified as important determinants of institutional quality (La Porta et al., 1999). In the case of Africa, most legal systems originate from either the French Civil Code or the British Common Law. This latter was originally established as a tool to protect the parliament and the people against expropriations and abuses perpetrated by the Crown. As a consequence, institutions in countries with British legal origins tend to be characterized by stronger checks and balances, better enforcement of private property rights, and better governance in general. Conversely, the French Civil Code was mainly an instrument to facilitate the control of the State over the economy. Legal systems that originate from this Civil Code should therefore be associated with worse institutional quality. These considerations provide some basis for using legal origins as an instrument for polity.9 Having identified the instruments, it is possible to proceed with a test of exogeneity of the three regressors. To this effect, three versions of the probit model are separately estimated. Each of these versions includes the exogenous controls (ethnic fragmentation, population, and land) plus one of the three endogenous regressors, instrumented as discussed above. Then, a Wald test of the null hypothesis of exogeneity is performed on each of the three versions. If the null cannot be rejected for a version, then it means that the potentially endogenous regressor included in that version is in fact exogenous. This procedure yields the following results: for polity (instrumented by legal origins), the p-value of the null hypothesis is 0.1253; for per-capita income (instrumented by latitude), the p-value is 0.000; and for debt (instrumented by trade), the p-value is 0.2336. Therefore, it appears that only per-capita income is effectively endogenous. Based on the evidence from the exogeneity test, three sets of instrumental variable results are reported in Table 3. Column I shows the maximum likelihood estimates of the probit model with per-capita income as the only endogenous regressor. In addition to the estimated coefficients, the column provides the p-values of the null hypothesis that the coefficients are equal

− 8.766 − 0.825 − 0.064 0.783 0.326 0.682 − 0.178


Mfx

est.

mfx

157

0.001
4.960 0.000 0.093 − 0.224 0.042 0.748 0.025 − 0.019 0.013 0.302 0.042 0.217

0.097 0.092 0.017 0.884 0.000 0.186 − 0.354 0.000 0.281 − 0.048 0.014 0.907

5.388 0.001

p-val

157

− 9.592 − 0.903 − 0.070 0.857 0.357 0.746 − 0.195


est.

est. p-val

est.

est.

p-val

First stage of polity

est.

123

0.553

0.000
0.500 0.714 0.000 0.483

p-val

First stage of debt

0.171 11.419 0.000 0.229







0.545 2.838 0.000 − 0.354



0.816 − 3.059 0.000 0.067 0.000 46.884 0.000 − 0.261 0.000 − 0.293 0.324 0.162 0.000 − 3.229 0.000 0.138

p-val

First stage of GDP_pc

0.003 0.075 − 0.186 0.517 − 0.362 0.053 − 0.052 0.004
0.062 0.515 0.000
0.066 0.381 0.035 − 0.072 0.020 0.781 0.031
0.273 − 0.133 0.060 − 0.021


5.206 − 0.239 − 0.848

p-val

Second stage

Instrumental Variables Probit

III

Notes: In Columns I and II the endogenous variable is GDP_pc and the instrument is latitiude. In column III, the endogenous variables are GDP_pc, polity, and debt and the instruments are latitude, legal France, and trade. GDP_pc population, and land are all expressed in logs. P-values based on robust standard errors in Columns I and III.

N. Obs

Constant Ethnic fr. Polity GDP_pc Population Debt Land Latitude Trade Legal France

est.

First stage of GDP_pc

Two-Step Probit

Instrumental Variables Probit

Second stage

II

Instrumental Variables Estimation.

I

Table 3.

146 FABRIZIO CARMIGNANI

Debt and Peace in Post-Conflict Countries

147

to zero, and the marginal effects (computed as in Column I of Table 1). The results are qualitatively very similar to the probit estimates in Column III of Table 1. The main difference is that now the quality of the polity has a significant negative effect on the risk of war: as one would expect, a better polity reduces the likelihood of a civil war. This means that improving democratic mechanisms should help stabilize peace. Note, however, that this does not necessarily mean that elections stabilize peace. As already noted, when electoral dummies are added to the probit model, these tend to have largely insignificant coefficients. Turning to the main research question of this chapter, the instrumental variable estimates clearly confirm the finding from Table 1, namely that higher external debt hurts peace prospects. The estimated coefficients and marginal effects imply that a onestandard deviation increase in the level of external debt increases the risk of war by approximately 16%. In order to assess the validity of the choice of instrument, Column I also reports the estimated coefficients and associated p-values from the first stage regression of per-capita income on the exogenous variables and latitude. A necessary condition for latitude to be a valid instrument is that its coefficient in the first-stage regression is significant. This seems to be effectively the case. Moreover, when latitude is included directly in the probit model together with lagged per-capita GDP, its estimated coefficient is largely insignificant. From a purely econometric perspective, this suggests that latitude does not affect the risk of war after controlling for per-capita GDP, thus providing further support to its use as an instrument.10 Column II reestimates the same model of Column I, but using the alternative minimum chi square two-step procedure. Differences are, once again, negligible. Column III shows instead the estimated coefficient of the probit model when all the three regressors
debt, polity, and per capita income
are treated as endogenous and instrumented. The estimated coefficient of debt remains significant and positive, quantitatively very similar to Column I. Once again, the key result of this chapter is confirmed and is robust to the treatment of endogeneity. Turning to the other variables, the estimated coefficient of ethnic fragmentation becomes insignificant while the coefficient of land is now significant. Its negative sign however suggests that the risk of war is smaller in bigger countries. At the same time, the coefficient of population remains positive and significant. Therefore, the estimates indicate that two size effects of opposite sign are at work. Rationalizing these opposite effects might be an interesting avenue of future work.

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Similarly to Column I, Column III also reports the results of the firststage regressions. Because there are three endogenous regressors, there are also three first-stage regressions and each includes all the three instruments. All of the three instruments are strongly significant in the first-stage regression of the variable that they are supposed to instrument. Again, this is a necessary condition for the system to be correctly identified. Moreover, each of the three instruments largely fails to be significant in a probit model that includes the exogenous regressors plus the lagged value of the relevant endogenous regressor. As previously noted for latitude, this lack of significance can be interpreted as evidence that the instrument only affects the risk of war through its effect on the instrumented variable and therefore provides further support to the identification strategy.

Extensions and Sensitivity Checks Table 4 presents a number of extensions and sensitivity checks of the probit model. The purpose is always to check the robustness of the findings concerning the role of debt. Column I reports the estimates of a dynamic specification of the probit equation. The specification is dynamic in the sense that it includes the lagged value of the dependent variable; that is, the probability of being a war in year t is expressed as a function of whether or not a country was at war in year t − 1. A key estimation problem in this case is that with instrumental variables, the likelihood function becomes non-concave and cannot be maximized. Therefore, in order to deal with potential exogeneity as best as possible, rather than using instrument variables, percapita GDP, debt, and polity are lagged by one period. The estimates indicate a strong positive state dependence: the risk of war is higher if the country is already at war. The inclusion of lagged war does make the estimated coefficients of a couple of other regressors insignificant, but the coefficient of debt remains positive and strongly different from zero. In fact, the size of the marginal effect (not reported) somewhat decreases, but this is true of most other variables in the model and it is to be expected given the dynamic nature of the specification. Column II repeats the same exercise as Column I, but on the full sample of all years (rather than just the post-conflict years). Lagged war now seems to explain most of the variation in the probability of war. However, external debt remains a significant determinant of the risk of war, even though numerically the strength of the effect is somewhat reduced.

126

0.007 0.000 0.078 0.457 0.454 0.094 0.023 0.721



− 6.456 1.367 − 0.920 0.019 0.118 0.316 0.443 − 0.050



− 1.970 2.261 − 0.486 0.035 − 0.060 0.056 0.258 0.006



est.

303

0.231 0.000 0.271 0.101 0.604 0.666 0.074 0.958



p-val − 5.818
− 1.297 0.008
0.293 0.434 0.040 − 1.800


est.

155

Probit

III

0.002
0.011 0.734
0.038 0.004 0.723 0.250


p-val 0.143
− 1.094 0.000 0.440 − 0.044
− 0.180
1.267

est.

111

Probit

IV

0.940
0.096 0.989 0.026 0.859
0.384
0.205

p-val

− 2.980
− 0.272 − 0.029 0.797 0.306
− 0.599
0.574

est.

111

0.219
0.664 0.219 0.001 0.317
0.017
0.541

p-val

IV probit

V

Notes: The following variables are lagged by one period: (i) Column I: GDP_pc, polity, debt; (ii) Column II: GDP_pc, polity, debt; (iii) Column III: polity, debt, growth; (iv) Column IV: polity, GDP_pc, domestic debt. In Column V, GDP_pc is instrumented by latitude. GDP_pc, population and land are all expressed in logs. P-values based on robust standard errors.

Constant War lagged Ethnic fr. Polity GDP_pc Population Debt Land Growth Domestic debt N. Obs

p-val

Probit

Probit

est.

II

Extensions and Sensitivity Analysis.

I

Table 4.

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Column III presents the probit model estimated using the growth of percapita GDP rather than the level of per-capita GDP. Again, the likelihood function in the instrumental variables procedure turns out to be non-concave, and therefore the potentially endogenous variables are lagged by one period. Growth has the expected negative sign, meaning that a faster recovery should strengthen peace prospects, but statistically the effect is not different from zero. The other results are not much different from those of the models that include the level of per-capita income. In particular, debt still has a positive and significant coefficient. Finally, in Columns IV and V, external debt is replaced by domestic debt. The number of available postconflict observations decreases due to the lack of domestic debt data in some countries. The coefficients of the model are generally less precisely estimated. However, it appears that the effect of domestic debt is largely insignificant at usual confidence levels. In other words, it does not seem to be the level of domestic debt that affects the risk of war in the post-conflict transition.

CONCLUSIONS This chapter tests the effect of debt on the risk of war in post-conflict African economies. The key finding is that external debt effectively makes war more likely, while instead domestic debt seems to have no significant impact. The finding of an adverse role of external debt is robust to changes in the model specification, functional assumptions, and to the treatment of endogeneity. Other interesting results that emerge from the empirical analysis are: (i) ethnic fragmentation generally reduces the risk of war, most likely because it increases the coordination costs; (ii) polity is a factor of peace stabilization while instead per-capita GDP has perverse effects; (iii) a bigger population increases the risk of war, probably because it implies a larger supply of potential rebels; and (iv) war is characterized by strong state dependence, in the sense that the risk of war in year t increases if the country is already at war in year t
1. Taking stock of this evidence, one can conclude that early debt relief can provide a significant contribution to the peace process. Of course, in arguing in support of debt relief, one should not neglect the possible counter-arguments, including the often mentioned moral hazard effects. However, the estimates reported in this chapter very clearly quantify the cost in terms of increased sociopolitical unrest of high external debt in the aftermath of a conflict. Another policy implication that emerges from the

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empirical analysis is that a rapid improvement of the quality of the polity can indeed sustain peace. Now, this does not necessarily mean that elections stabilize peace. In fact, the electoral dummies turn out to have a largely insignificant effect. Here polity is mainly defined in terms of effectiveness of the checks and balances that characterize a democracy. Therefore, the recommendation to a post-conflict country would be to rebuild those institutions which prevent one party (or individual or faction or group) to abuse of its decision-making power. In other words, the type of democratization which is needed to stabilize peace is more complex than just voting. This conclusion is probably less in contrast with the findings of Collier et al. (2008) than what might appear at first sight. A few directions of future research are already mentioned in the previous sections. Another one that is worth flagging concerns the extension of the analysis to study the effect of international aid. Two research questions, in particular, appear most interesting: Does international aid affect the risk of war in the post-conflict decade? Is the marginal effect of aid in absolute value stronger than the marginal effect of debt? The answers to these questions would help the international community decide whether financial support to post-conflict countries should be primarily provided in the form of aid (i.e., official development assistance or budgetary grants), debt relief, or possibly a combination of these two.

NOTES 1. This game is discussed in details in Carmignani and Gauci (2010, chapter 2). Carmignani (2010) further develops the game’s theoretic representation of postconflict dynamics. 2. See inter alia, Alvares-Plata and Bruck (2008) for a comprehensive analysis of these issues. 3. See Sambanis (2004) and Blattman and Miguel (2010) for a comparative analysis of the four datasets. 4. The table also provides information on which post-conflict episodes have to be excluded because of lack of statistical information on the explanatory variables. 5. The list in Appendix A effectively reports 46 wars. However, 3 of these 46 wars were fought in the same country (Ethiopia) over about the same period of time. Therefore, for the purpose of post-conflict analysis, these 3 wars are merged into one, and the post-conflict period is assumed to start from the end of the last of the 3 conflicts. 6. One might argue that the level and the growth rate should be jointly included as regressors. In fact, because of the strong relationship between level of per-capita GDP and growth rate, the two variables are collinear. Therefore, when used jointly in the same regression, their coefficients are very imprecisely estimated.

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7. The variable is taken from the Polity IV database available at http://www. systemicpeace.org/polity/polity4.htm. It is very widely used in the political economy literature. Other similar measures are available from different datasets. However, all these measures highly correlate with the polity variable, and their use in the regression model (1) does not produce any change in the results concerning the debt variables. 8. Technical details on the two estimators for endogenous regressors can be found in Cameron and Trivedi (2006) and Greene (2008). 9. International trade is defined as the sum of exports plus imports in percent of GDP, and data are taken from the WBADI. Distance from the equator is simply measured as the latitude of the capital city of a country and data are from La Porta et al. (1999). For legal origins, a dummy variable is coded that takes value 1 if a country has French legal origins and 0 otherwise. The coding of this dummy variable is based on the information reported by La Porta et al. (1999). 10. It is also worth stressing that there is unlikely to be any reverse causality from the risk of war to latitude as latitude is fixed over time and unlikely to change to any significant extent because of a civil conflict.

ACKNOWLEDGMENTS I would like to thank Adrian Gauci, Ben Goldsmith, and seminar participants at the School of Economics of the University of Queensland for helpful comments. Any remaining error is solely mine.

REFERENCES Acemoglu, D., Johnson, S., & Robinson, J. (2001). The colonial origins of comparative development: An empirical investigation. American Economic Review, 91, 1369
1401. Adam, C., & Bevan, D. (2005). Fiscal deficits and growth in developing countries. Journal of Public Economics, 4, 571
597. Adam, C., Collier, P., & Davies, V. A. B. (2008). Post conflict monetary reconstruction. The World Bank Economic Review, 22, 87
112. Alvares-Plata, P., & Bruck, T. (2008). External debt in post-conflict countries. World Development, 36, 485
504. Barro, R. J. (1979). On the determination of the public debt. Journal of Political Economy, 87(5), 940–971. Bigombe, B., Collier, P., & Sambanis, N. (2000). Policies for building post-conflict peace. Journal of African Economies, 9, 323
348. Blattmam, C., & Miguel, E. (2010). Civil war. Journal of Economic Literature, 48, 3
57. Brams, S., & Mor, B. (1993). When is it rational to be magnanimous in victory?. Rationality and Society, 5, 432
454. Cameron, D., & Trivedi, K. (2006). Microeconomics using stata. Stata Press, Cambridge, UK. Carmignani, F. (2010). Public consumption and the stabilization of peace after a civil war. International Journal of Development and Conflict, 57
74. Demo Issue.

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Carmignani, F., & Gauci, A. (2010). Peace after civil war: The role of fiscal policy in post-conflict African economies. New York, NY: Nova Publishers Inc. Clements, B.J., Bhattacharya, R., & Nguyen, T.Q. (2003). External debt, public investment, and growth in low-income countries. IMF Working Paper 03/249. International Monetary Fund, Washington. Cohen, D. (1993). Low investment and large LDC debt in the 1980s. American Economic Review, 83, 437
449. Cohen, D. (1997). Growth and external debt: A new perspective on the African and Latin American tragedies. CEPR Discussion Paper No. 1753. Centre for Economic Policy Research, London. Collier, P. (1999). On the economic consequences of civil wars. Oxford Economic Papers, 51, 168
183. Collier, P., & Hoeffler, A. (1998). On economic causes of civil war. Oxford Economic Papers, 50, 563
573. Collier, P., & Hoeffler, A. (2004). Greed and grievance in civil war. Oxford Economic Papers, 56, 234
274. Collier, P., & Hoeffler, A. (2006). Military expenditure in post-conflict societies. Economics of Governance, 7(1), 89–107. Collier, P., Hoeffler, A., & Soderbom, M. (2008). Post-conflict risks. Journal of Peace Research, 45, 461
478. Cordella, T., Ricci, L., & Ruiz-Arranz, M. (2010). Debt overhang or debt irrelevance? Revisiting the debt-growth link. IMF Staff Papers, 57, 1
24. Diamond, P. (1965). National debt in a neoclassical growth model. American Economic Review, 55, 1126
1150. Fearon, J., & Laitin, D. (2003). Ethnicity, insurgency, and civil war. American Political Science Review, 97, 75
90. Gleditsch, K. (2004). A revised list of wars between and within independent states, 1816
2002. International Interactions, 30, 231
262. Gleditsch, N. P., Wallensteen, P., Eriksson, M., Sollenberg, M., & Strand, H. (2002). Armed conflict 1946-2011: A new dataset. Journal of Peace Research, 39, 615
637. Greene, W. (2008). Econometric analysis (6th ed.) Pearson Prentice Hall, New York. Krugman, P. (1988). Financing versus forgiving a debt overhang. Journal of Development Economics, 29, 253
268. La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. (1999). The quality of government. Journal of Law, Economics, and Organizations, 15, 222
279. Miguel, E., Satyanath, S., & Sergenti, E. (2004). Economic shocks and civil conflict: An instrumental variables approach. Journal of Political Economy, 112(4), 725–753. Pattillo, C., Poirson, H., & Ricci, L.A. (2002). External debt and growth? IMF Working Paper 02/69. International Monetary Fund, Washington. Reinhart, C., & Rogoff, K. (2010). Growth in a time of debt. American Economic Review, 100, 573
578. Rodrik, D., Subramanian, A., & Trebbi, F. (2004). Institutions rule: The primacy of institutions over geography and integration in economic development. Journal of Economic Growth, 9, 131
165. Saint-Paul, G. (1992). Fiscal policy in an endogenous growth model. Quarterly Journal of Economics, 107, 1243
1259. Sambanis, N. (2004). What is civil war? Conceptual and empirical complexities of an operational definition. Journal of Conflict Resolution, 48(6), 814
858. Singer, J. D., & Small, M. (1994). Correlates of war project: International and civil war data, 1816
1992. Interuniversity Consortium for Political and Social Research Study 9905.

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APPENDIX A: THE CHRONOLOGY OF AFRICAN CIVIL WARS War Name

War Period

Outcome of Post-Conflict

Chad vs. Frolinata Chad vs. Frolinat Chad vs. Frolinat Nigeria vs. Biafransa Nigeria vs. Muslim Fundamentalists Nigeria vs. Muslim Fundamentalists Uganda vs. Buganda Tribea Uganda vs. National Resistance Army Uganda vs. Lords Resistance Army Sudan vs. Anya Nyaa Sudan vs. SPLA-Garang Faction Sudan vs. SPLA-Garang Faction Sudan-Darfour Burundi vs. Hutub Burundi vs. Hutu Burundi vs. Tutsi Supremacists Burundi vs. Hutu Burundi vs. Hutu Liberia vs. Anti-Doe Rebelsa Liberia vs. NPFL & ULIMOa Liberia vs. National Patriotic Forcesa Liberia vs. Taylor South Africa South Africa Rwanda vs. Watusia Rwanda vs. Tutsi Rwanda vs. Patriotic Front Rwanda Sierra Leone vs. RUFb Sierra-Leone Angola vs. UNITA Angola vs. UNITA Angola vs. UNITA Zaire vs. Katanga & Leftistsa Zaire vs. Rebelsb DRC/Zaire vs. Kabila-ADFL Congo vs. Denis Sassou Nguemo Guinea-Bissa˜u Cameroon Algeria vs. Former Rebel Leadersb Algeria vs. Islamic Rebelsb

1966
1971 1980
1988 1990 1967
1970 1980
1981 1984 1966 1980
1988 1996
2001 1963
1972 1983
1992 1995
2002 2003 1972 1988 1991
1992 1993
1998 2000
2002 1989
1990 1992
1995 1996
1996 2000-2003 1989
1993 1999
2002 1963
1964 1990
1993 1994 1998 1991
1996 1998
2000 1975
1991 1992
1994 1998
2001 1960
1965 1993
1993 1996
2000 1997
1999 1998 1959
1961 1962
1963 1992
2000

Unsuccessful Unsuccessful Successful Unsuccessful Unsuccessful Successful Successful Unsuccessful Ongoing in 2010 Successful Unsuccessful Unsuccessful Ongoing in 2010 Successful Unsuccessful Unsuccessful Unsuccessful Ongoing in 2010 Unsuccessful Unsuccessful Unsuccessful Ongoing in 2010 Unsuccessful Ongoing in 2010 Successful Unsuccessful Unsuccessful Successful Unsuccessful Successful Unsuccessful Unsuccessful Ongoing in 2010 Successful Unsuccessful Successful Successful Successful Successful Successful Successful

155

Debt and Peace in Post-Conflict Countries

(Continued ) War Name

War Period

Zimbabwe vs. Patriotic Front Ethiopia vs. Eritrean Rebelsc Ogaden (Ethiopia vs. Somali Rebels)c Ethiopia vs. Tigrean Liberation Frontc Mozambique vs. Renamo

1972
1979 1974
1991 1976
1983 1978
1991 1979
1992

a

Outcome of Post-Conflict Successful Successful Successful Successful Successful

Data on the explanatory variables are not available and therefore the post-conflict periods

associated with these wars are not included in the econometric analysis. b Data on the explanatory variables are not available for the entire post-conflict periods associated with these wars. Only years for which data are available are then included in the econo-

metric analysis. c

Merged into a unique war over the period 1974
1991. In this case, the post conflict decade

starts from 1992.

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APPENDIX B: VARIABLES DESCRIPTION Variable War (dependent variable in all the regression models)

Per-capita GDP

Growth Ethnic fragmentation

Polity

Population Land External debt

Domestic debt

Total debt Latitude Trade

Legal origins

Definition Dummy variable taking value 1 if a given country in a given year is in a state of civil war. The list of civil wars is provided in Appendix A Log of per-capita GDP in constant US dollars (base year = 2000) Annual percentage change of per-capita GDP Probability that two randomly selected individuals will not belong to the same ethnic group Index of quality of the polity, measured on a scale from + 10 (best polity) to
10(worst polity). The index measures the effectiveness of democratic institutions in terms of checks and balances in decision making Log of total population Log of land area Outstanding liabilities of the government toward nonnational governments and other entities. It is expressed in percentage of GDP Outstanding liabilities of the government toward domestic public and private sector entities. It is expressed in percentage of GDP Sum of external and domestic debt Distance of the capital city from the equator Exports of goods and services plus imports of goods and services in percent of GDP Dummy variable taking value 1 if the legal system of a country originates from the French Civil Code

Source PRIO/Uppsula database

WBADI

WBADI La Porta et al. (1999)

Polity IV database

WBADI WBADI WBADI, IFS, and National Statistical Offices

WBADI, IFS, and National Statistical Offices

Own computations La Porta et al. (1999) WBADI, IFS, and National Statistical Offices La Porta et al. (1999)

INDIAN COMMITMENT TO NO FIRST USE OF NUCLEAR WEAPONS: FIRST STEP TOWARD GLOBAL NUCLEAR DISARMAMENT$ P. M. Kamath ABSTRACT India became a NWS (Nuclear Weapons State) most reluctantly in May 1998 despite her demonstration of nuclear weapons capability 24 years earlier in May 1974. Having assumed the new status as the sixth overt nuclear weapons state, India also declared her principled policy governing use of nuclear weapons in the event of a national security threat. The Indian Nuclear Doctrine was called “minimum deterrence”

$

Formerly Professor of Politics, Mumbai University and currently Hon. Director, VPM’s Centre for International Studies, Mumbai. His latest book is India’s Policy of No First Use of Nuclear Weapons: Relevance to Peace and Security in South Asia (Anamika Publishers, New Delhi, 2009).

Cooperation for a Peaceful and Sustainable World, Part 2 Contributions to Conflict Management, Peace Economics and Development, Volume 20, 157
173 Copyright r 2013 by Emerald Group Publishing Limited All rights of reproduction in any form reserved ISSN: 1572-8323/doi:10.1108/S1572-8323(2013)00020.2013

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by the BJP-led NDA government, but the Congress-led UPA government in 2004 renamed it as “credible deterrence.” But the heart of the vibrant Indian nuclear doctrine is its commitment to No First Use (NFU) of nuclear weapons. Nuclear weapons were invented by the United States (U.S.). First-ever use of atom bomb is also made by the Americans and a philosophic foundation for the discussion on NFU was also laid in the U.S. However, having put the NFU in the philosophic parlance, the U.S. in the Cold War International environment professed the doctrine for First Use (FU) of nuclear weapons. It is China that made a first public commitment to the NFU after it became the fifth nuclear weapons state. This chapter proposes to discuss Indian commitment to NFU as a first step on the long path toward global nuclear disarmament—or No Use (NU) of nuclear weapons. India saw Partial Test Ban treaty of 1963 as a step toward NU and also saw the discussions on NPT as another step toward nuclear disarmament as much as it wanted the big powers to see the CTBT too as a device aimed at putting world into NU bind. West, led by the U.S., was however only interested in using the CTBT to deny nuclear weapons status to threshold states, particularly India. As a self-declared nuclear weapons state, India has, in nuclear doctrine, committed itself to nuclear disarmament. Can there be an international treaty between the declared nuclear weapons states? Can India and Russia come together on the issue? Can they convince China to join? With three Asian nuclear weapons states committing themselves to NFU, U.S. can see economic sense in an international treaty on NFU. Is it possible to create a global public opinion in favor of NU of nuclear weapons? The questions will be answered based on research conduct on the subject.

After the Indian declaration of its newly acquired nuclear status as the sixth Nuclear Weapons State (NWS) in May 1998, the then Prime Minister, Atal Behari Vajpayee, and others in the foreign policy establishment stated that Minimum Nuclear Deterrence (MIND)1 is not negotiable. But India had to determine when, under what circumstances, and how it is going to use its nuclear weapons. Thus, the Prime Minister in the Parliament in May 1998 had stated the rudiments of its impending doctrine of MIND. Vajpayee had also declared India’s adherence to No First Use (NFU) of nuclear weapons. Hence, NFU became the main principle of the

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Indian doctrine of nuclear deterrence. NFU of nuclear weapons establishes that India is not trigger happy and will not be the first to take recourse in the use of nuclear weapons. India put NFU into the nuclear discussion in the country, as well as the world,2 which was also to become a firm formulation within Indian nuclear doctrine. The draft of Indian nuclear doctrine—MIND—as prepared by the National Security Advisory Board (NSAB) was released by Brajesh Mishra, the then National Security Adviser to Prime Minister Vajpayee on August 17, 1999.3 However, draft was officially adopted by the National Democratic Alliance (NDA) government at the meeting of the Cabinet Committee on Security on January 4, 2003 with minor changes.4 The annual report of the Ministry of External Affairs for 2002
2003, however, dropped the term “minimum.” Later in September 2004, as P. S. Chari points out, India’s then Defense Minister, Pranab Mukherjee, reportedly said that India needs a “credible” nuclear deterrence, dropping the term minimum.5 There were doubts as to whether the Indian doctrine of nuclear deterrence would continue in force if the government’s political complexion were to change after periodical elections. I had opined then that there is national consensus on the nuclear weapons programme as such that there will be no change in the policy even if the BJP goes out of power (see Kamath, 1999). This was proved correct after the May 2004 General Elections, which saw the Congress-led coalition government of the United Progressive Alliance (UPA) at the center assuming power. Prime Minister Manmohan Singh more than once reiterated that the doctrine of nuclear deterrence would continue to be the government policy. In an interview with CNN in Washington, DC, on July 20, 2005, the Prime Minister stated that his government is very much committed to no first use of nuclear weapons (see Wolf Blitzer, 2005).

NO FIRST USE OF NUCLEAR WEAPONS If the credible6 nuclear deterrence is the mind controlling the Indian national security policy, its heart is NFU—an Indian commitment not to be the first one to use nuclear weapons. This clearly establishes that Indian nuclear weapons are for defense and not for offense. India has already offered to sign a treaty with Pakistan on NFU. The offer is also applicable to China since it had made a commitment to a similar doctrine since 1964.

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The doctrine of NFU has been in the Indian strategic thinking since its first nuclear test in May 1974. Vajpayee, as the Minister for External Affairs, in the first non-Congress government led by Morarji Desai in 1977 is said to have used the concept of NFU the first time while attending the UN General Assembly session in 1977. If UPA dropped “minimum” in favor of “credible,” then the heart of the Nuclear Doctrine has remained intact even after the UPA’s coming to power. Though NFU came prominently into Indian strategic thought after the May 1998 nuclear tests, the Indian commitment to NFU was very much in Indian political thinking much before the NDA’s adoption of it. V. P. Singh’s government in 1990 spoke of the commitment not to use nuclear capability as an instrument of first strike. In his cabinet, Arun Singh was committed to it, as the then Army Chief General Sundarji was also an advocate of the concept. During his visit to Washington, DC, in May 1994 Narasimha Rao also offered to reassure Pakistan by pledging no first use of nuclear capability. Earlier in January 1994, the then Foreign Secretary J. N. Dixit had also made a similar offer to Pakistan.7 But once India declared herself, the sixth NWS had to come out with the nuclear doctrine wherein it made NFU the soul of the doctrine. This makes it clear that NFU has evolved over time, particularly since the 1970s, and was not developed after the nuclear tests in May 1998 as a tactic to defuse international adverse reactions to Indian tests.

EARLY ORIGIN OF THE NFU However, NFU has had global appeal. America has the unique distinction of having invented the atom bomb and also of experimenting with its use and the consequent realization of the catastrophic destruction it could bring about. Hence, Americans were also the first in proposing an NFU principle in its application. Republican Senator from Vermont Ralph Flanders made the earliest suggestion of NFU of nuclear weapons in 1949. On June 27, 1949, he introduced a resolution in the U.S. Senate stating “the atom bomb like biological warfare, wholesale poisoning, is not properly a military device directed against the armed forces of the enemy, but rather is a means for the mass murder of civilians.” Hence, he called upon the Truman administration in the U.S. to adopt an NFU policy.8 Around the same time, George Kennan, then Director of the Policy Planning Staff in the State Department, made a similar proposal within the

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Truman administration on 20 January 1950. In a memorandum to Secretary of State Dean Rusk, he wrote that the U.S. faced a fundamental choice on nuclear weapons. Without naming the options of (1) First Use (FU) and (2) NFU of nuclear weapons, he asked, “Are we to rely upon weapons of mass destruction as an integral and vitally important component” of U.S. “military strength….” or “to retain such weapon” in the U.S. “national arsenal only as a possible means of retaliation….” In the first case, “something which we have resolved, in the face of all the moral and other actors concerned, to employ forthwith and unhesitatingly at the outset of any, great military conflict.”9 He elaborated in the case of NFU nuclear weapons as “something superfluous to our basic military posture—as something that we are compelled to hold against the possibility that they might be used by our opponents.”10 Kennan considered this memorandum as “one of the most important, if not the most important, of all the documents” he “ever wrote in government” (Kennan, 1967). Kennan, of course, favored the second alternative of not using the nuclear weapons but bemoaned the fact that the U.S. paid lip service to the idea of the abolition of atomic weapons. He wanted the U.S. to take a public position—We deplore the existence of all weapons of indiscriminate mass destruction. We regret that we were even obliged to make use of one. The Chinese, so to say, borrowed the American intellectual property. It is clear that even before the Chinese went nuclear they had a firm commitment to NFU of nuclear weapons. At least one year before their first test, China reaffirmed its faith in NFU. Second, it declared that “China will never at any time or under any circumstances be the first to use nuclear weapons.” During the later years, it also added its commitment not to use or threaten to use nuclear weapons against any nonnuclear weapons states (see Kamath, 2007).

MAIN PRINCIPLES Then, what are the main principles of Indian policy of NFU? First, India will not be the first one to use nuclear weapons in any war with a nation that is known to possess nuclear weapons. Second, India has pledged not to use nuclear weapons “against states which do not possess nuclear weapons, or are not aligned” with other nuclear weapon states.11 However, if a nonnuclear power uses biological or chemical weapons

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(BCW), India will keep the option of using nuclear weapons open against such a state. It is fair proposition as India is a signatory to the Chemical and Biological Weapons Treaty and as such has destroyed all its holdings of BCW. Third, in the event of India becoming a victim of first strike with nuclear weapons by an adversary, India will use nuclear weapons as weapons of second strike to retaliate and “to inflict damage unacceptable to the aggressor.” Clearly Indian intentions were to prevent any adversary from using tactical nuclear weapons to gain battlefield advantages. In case that fails, India will respond with a massive second strike. In fact, amongst the members of strategic community, credibility of the deterrence depends on the effectiveness of second strike capability. Of course, if India becomes a victim of first strike by an aggressor, it is a failure of deterrence, and NFU cannot be a doctrine to communicate a sense of vulnerability to an adversary. Hence, fourth, the credibility of such deterrence would depend on not only sufficiency but also survivability of nuclear weapons. Of course, there is no clarity as to what constitutes a sufficient level of nuclear weapons; it all depends on the situation at a given time and the thinking of policy makers. The minimum of nuclear weapons and delivery systems needed in the case of one adversary would vary from another. There is no need for Indian government to ever define what it stands for. Hence, it was strange for the Clinton administration to pressurize India to declare what constitutes its minimum. It is next to impossible mathematically to state an accurate figure at any given time or to determine exactly the number of nuclear weapons required to make deterrence effective. This shows the dynamic nature of nuclear deterrence. Even if one makes an intelligent guess today, it might become outdated after some time. Fifth, the survivability of nuclear weapons, keeping with the doctrine of NFU, depends on dispersal of those weapons. A triad consisting of air force
based bombers, army controlled missiles, and navy-held submarines should help. India is obligated to make its nuclear weapons invulnerable to a surprise first attack by an adversary. A triad ensures that the dispersal of nuclear weapons ensuring flexibility of use makes defense complex deterrence stable. The Chinese have given maximum attention to make their defensive nuclear weapons safe by placing them “in caves and deep canyons,” hiding them well from adversaries (Lewis & Litai, 1988). Indian nuclear doctrine proposes to develop a triad of land-, sea-, and air-based assets. It is necessary to disperse nuclear weapons to avoid them from becoming easy sitting-duck targets in a first strike.

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The land-based nuclear assets are very easy targets in a nuclear strike against India. To make its commitment of NFU credible enough to any would-be adversary, it is necessary to develop air-based nuclear weapons. India has developed a missile program of a series of Agni missiles. While medium range nuclear-capable Agni II missiles with a range of 2500 km are developed and test-fired, what is crucial is Agni III missiles with a range of 3500 km that can retaliate against any attack from China. Submarine Launched Ballistic Missiles (SLBMs) play a very important role in the successful implementation of NFU. Land-based bombers, even if we develop ICBMs, have increasingly become vulnerable. On the other hand, the super powers so far have not been able to find a means to locate a Submerged Ballistic Missile Submarine on patrol. This has meant that submarine-based nuclear weapons have become more important in nuclear deterrence. Submarines have also become quieter with technology development, which makes them even more difficult to detect (Martin). Hence real test utility and credibility and efficacy of the triad under the commitment of NFU, in the ultimate analysis, depend on the acquisition of sea-based missile capability to carry nuclear weapons. Sea-based assets really can provide capability in stealth operations. Sea-based missiles can also ensure greater invulnerability of second-strike capability against enemy attack and hence their higher survivability that enhances credibility of the doctrine. Sixth, the NFU is a declaratory policy; hence, what are the verifiable means that distinguish it from the FU? There are at least three ways in which the NFU policy distinguishes itself from the FU policy. First, the nuclear weapons are not physically deployed. Second, nuclear warheads are maintained in a de-alerted or deactivated way. Removing warheads from the delivery system is the easiest way of de-alerting nuclear weapons (see Makhijani, 1998).12 Third, the nuclear weapons are maintained by the Atomic Energy Commission and not by the armed forces. As an exception, the SLBM-based nuclear weapons have to be in a submarine; de-alerting would be achieved by technical means such as “pinning open the motor ignition switches of missiles, making it impossible to fire them until the pins have been manually removed.”13

ADVANTAGES The Indian policy of NFU is not without its own rationale. Indian philosophy and the foreign policy mind are accustomed to negative thought

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processes. Brihadaranyaka Upanishad (chapter II, section iii) teaches Neti, Neti (nothing). After watching the destruction brought about by the atom bomb, Robert Oppenheimer is said to have uttered, Neti, Neti. India began its foreign policy with a negative approach, nonalignment. Indian independence was an outcome of Gandhian nonviolence. India being a reluctant nuclear weapon state, a commitment to NFU is logically and philosophically indicative of a policy of restraint in the use of WMD. The doctrine of NFU is more democratic in contrast to the FU. In first use, the nuclear weapons per force have to be placed with the armed forces for instant use. But in NFU, since nuclear weapons are used only for a second strike, the weapons could be held by a different agency other than the armed forces. Indian democracy as a nascent experiment did not bestow much confidence in the nation’s armed services, at least in the early period. After 66 years of independence, the distrust in the armed services has by now been considerably reduced. As a matter of fact, there is a small beginning in cooperation between the armed services and nuclear scientists with the initiation of cooperation for the involvement of three servicemen in the BARC in weapons manufacturing.14 Beyond that, there are political, global and national, economic, moral, and even practical advantages of the policy. Globally, it is in the interest of India, as a late entrant to the nuclear weapons club who is yet to be admitted even as a full member,15 to maintain a low profile on the use of nuclear weapons. Since international society has not yet grown beyond the self-help stage in protecting one’s own security, others accepted the seriousness of Indian security threat perceptions only when India went nuclear. India faced a national security threat from two fronts—from Pakistan on the northwest and from China on the northeast. Since India’s potential security threat emerged from China, India would not have been able to enter into an arms race with that country. China is also committed to NFU policy. Even then, Chinese nuclear weapons in terms of quantity and quality are superior to those of India. China also has in relation to India well developed means of a delivery system of nuclear weapons. A policy of minimum/credible nuclear deterrence with no first use only enhances India’s sense of security. It shows that India is not in competition with China in developing nuclear weapons. The fact that these weapons of mass destruction, if used at all, are used as weapons of self-defense makes sense globally. In domestic politics, though a majority was in favor of India going nuclear, there are sizeable politically left-leaning supporters of communist parties—but more so China-inspired and independently left-leaning

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forces—which were opposed to Indian nuclear tests. It was not uncommon to see communists demonstrating in India against the U.S. bomb (India was not in the picture in the 1980s talking about the bomb). For them, NFU is like a soothing balm for pain relief and expected to make it more acceptable. NFU as a politico-military doctrine should help to increase communist loyalty to India! It is also economically sensible, since India’s main concern has been economic development to uplift millions of people above the poverty line. As a policy, India had always limited resource allocation to armed forces at an absolute minimum level. P. V. Narasimha Rao had reduced the defense budget. When the Kargil Committee asked him as to why the defense was cut during his time he had replied, “That was because the nuclear deterrent was under development and that had priority (Subrahmanyam, 2004).” This shows budgetary crunch experienced by the government and compulsions of limiting at one end to meet the needs at the other. Alternative to the NFU is the First Use (FU); it would have meant India as an aggressive nation willing to strike fear of destruction by threatening the use of nuclear weapons. Such a position would inevitably mean keeping nuclear weapons in hair-trigger alertness inevitably in ready-to-fire position. That could mean also an invitation for pre-emptive attack by any adversary. It would have been an invitation in a developing democracy to armed forces to play a major role. NFU in association with minimum/credible deterrence really limits the role of nuclear weapons as weapons of retaliation. Hence, their role in military planning and budget should get limited. This would really help India to strengthen civilian control over the armed forces it has been so fortunate to maintain since independence. The NFU also, in a practical sense has certain benefits in policy formulation. India might say that its policy to go nuclear was compelled by the potential security threat from China. But having identified the source of threat and gone for a few nuclear weapons is only part of the solution. India needs to develop a delivery system for the nuclear weapons that are going to be used only in a second strike but in a massive way. India is yet to achieve the triad capability. It takes time, and the NFU provides that time for policy makers. A commitment to the doctrine NFU prevents or at least minimizes the possibilities of an accidental start of nuclear war; it lowers the risk of nuclear war by miscalculation. There have been several incidents of false alarms raised by failures in computers in western nuclear weapons states, creating a false alarm over incoming enemy nuclear-capable missiles. In the U.S., there have been many such incidents. In June 1980, there was alarm

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over the Soviet Union launching an SLBM attack, which was a computer malfunction (Weiss, 1983). At least in case of countries committed to NFU, they would not insist on taking any preemptive strike, as it would amount to First Use of nuclear weapons!

NUCLEAR DISARMAMENT Despite these advantages, there are a few who would like India to denuclearize and move toward nuclear disarmament. Former Chairman of the Atomic Energy Commission, P. K. Iyengar, for instance, stressed the need “to evolve a national consensus on the country’s short-term and long-term policies on nuclear deterrence and disarmament (Iyengar, 2000).” George Perkovich, an American scholar who worked on the Indian Bomb from an American perspective, says: “India lost much of the moral credibility it had as a champion of disarmament in the eyes of other states (Perkovich, p. 439).” But certain questions arise: Can India pursue unilateral nuclear disarmament, particularly when you are threatened by two nuclear neighbors? Did moral credibility help India to enhance her security in any way? Does morality govern nuclear policy? Isn’t it that in world politics, morality also depends on power? On the other hand, I think, H. V. Kamath, former member of the Constituent Assembly was right when he described, in the aftermath of the first Chinese nuclear test in October 1964, Indian pronouncements that “we can make the bomb, but we would not do it” as pig-headed (Perkovich, 1999).16 Similarly, it is appropriate here also to recall the words of another member of the Constituent Assembly, Professor Shibban Lal Saksena, who had said, “If we have not got the knowledge and the ability to use this power [of the atom], there is no virtue in our saying that we shall not use it for destructive purposes and that other people should not use it….”17 Critics of India’s nuclear weapons ought to note the fact that the U.S. decided to seek China as a partner in geopolitical balancing of the then Soviet Union in 1971 only because seven years earlier it had become a NWS. The U.S. also could agree to de-target their nuclear weapons against China only when China acquired modern nuclear weapons and capability to deliver them against the American territory. It shows that the states respect power, and only those who have power are listened to on international issues of significance. Hence, Indian NWS status should help her to pursue the idea of nuclear disarmament seriously.

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Thus, the Indian nuclear doctrine states, “global, verifiable and nondiscriminatory nuclear disarmament is a national security objective.” Advocacy of nuclear disarmament has been an important principle of Indian foreign policy since independence. India had played a significant and positive role in promoting nuclear disarmament through the Partial Test Ban Treaty, 1963. It is undeniably true that India has consistently taken an antinuclear stance in its foreign policy. In 1978, India proposed an international convention prohibiting use or the threat of use of nuclear weapons. During Rajiv Gandhi’s tenure as Prime Minister, India took a global step in promoting the Four Continent Peace Initiative in 1988 (see http://parliamentofindia.nic.in/ls//lsdeb/ls12/ses2/0527059801.htm). Hence, Indian military strategy, even after the acquisition of nuclear weapons, is not based on the use of these weapons of mass destruction. However, nuclear disarmament has to include all those who possess nuclear weapons and all those on the threshold of it. India now sees that she can speak on nuclear disarmament more authoritatively. But in pursuit of global disarmament, we need to change our approach: instead of pushing for total nuclear disarmament, in the beginning, we need to move step by step toward that goal.

HYPER SUPER POWER: MOVER OR MOWER? In the ultimate analysis, the goal of nuclear disarmament could be met only when the major nuclear powers—such as the five nuclear weapons states of the U.S., Russia, Britain, France, and China, who are also the five permanent members of the UN Security Council—take the lead in drastically reducing nuclear weapons held by them with the aim of achieving timebound nuclear disarmament. Of these, the U.S. needs to play an active role in giving up nuclear hegemony, and its NATO allies need to exercise their influence toward that goal. Toward that goal, the doctrine of NFU can be strengthened and made more relevant to the goal of nuclear disarmament globally if the Hyper Super Power of the day, the U.S., is made to take the NFU doctrine seriously and lend its moral and political support to it. But it is not able to do it, despite enjoying unchallenged power, and to rise gradually above its narrowly interpreted national interest. It has to ponder over the fact that if every nation pursues its national interest in a narrow perspective as it does, there will only be a proliferation of the number of NWS. Since the PTBT of

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1963 left underground tests as legal—only because of U.S. and USSR national interests—India conducted its first nuclear test in 1974 and declared itself as a NWS. Pakistan followed it. Instead, if the comprehensive test ban treaty had materialized in 1963 in place of PTBT, probably India would have limited itself to computer-simulated tests in a later period!18 If the U.S. adopts a NFU policy, it will be a major step toward nuclear disarmament. Such a pledge on the part of the U.S. can be unilateral, bilateral, or multilateral since NFU is a declaratory policy to begin with. It is not that the U.S. is totally unaccustomed to the NFU. An element of it, of not using nuclear weapons against a nonnuclear weapons state, was briefly practiced for four years by the Carter administration. There is no need for any international mechanism for its enforcement. For the U.S., such a policy even if it is unilateral would be less subjected to bureaucratic infighting between the State, Defence, and White House in policy making. Once there is a greater domestic consensus, NFU could also be considered for inclusion as an element of the War Powers Act, 1973. A policy of NFU restrains the President’s use or threat of use of nuclear weapons to the extent of making other nations willing to break such a pledge. The President always has the power to use nuclear weapons for retaliation in the unlikely event of a first strike. The U.S. might argue that NFU could always create uncertainties since nations could break their pledges, making NFU very fragile. This fear is similar to the one it had on the reliability of verification before it went ahead with the then Soviet Union on the Partial Test Ban Treaty in 1963. But it has worked fairly well in protecting the global environment much before nations became conscious of global warming or the role played by a clean “environment” in human welfare. But if the U.S. wants to add teeth to NFU, it can enter into a treaty on a bilateral or multilateral basis. The U.S. was hypercritical of Indian nuclear tests (see Kamath, 1999). The biggest anomaly in U.S. response to India’s nuclear doctrine is its failure to explain why it needs 12,000 nuclear warheads when it has proposed to de-target them against Russia and China. According to former CIA Director, Stansfield Turner, the U.S. needs only 200 warheads for an effective deterrence against a threat from Russia and China (Turner, 1998). The U.S. now justifies nuclear weapons on the ground of a challenge from rogue states and terrorist groups. For even to deter rogue states and friends-turned adversaries, so many nuclear warheads are unnecessary and waste of resources. In reality, is there any need to exceed the mass destruction 6 to 10 times more than Hiroshima?

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A MOVE TOWARD AN INTERNATIONAL TREATY ON NUCLEAR DISARMAMENT In conclusion, the Indian nuclear tests of May 11 and 13, 1998, have given a new direction to international relations. It has given an impetus to the emergence of a multipolar world with India as one pole the U.S., Russia, China, UK, and France as the other. Even though India would not like another nuclear armed nation on its northwest, with Iran pushing its nuclear ambitions forward, India or for that matter even the U.S. would not be able to prevent the emergence of new nuclear weapons states as long as they feel threatened. If China becomes politically more aggressive in East Asia, it may give birth to Japan to come out from its virtual NWS status. In the event of Iran going nuclear, it is obvious no force on the earth could prevent Israel from overtly becoming nuclear. NFU of India’s strategic doctrine could be considered, therefore, as a first step toward the ultimate emergence of No Use of nuclear weapons. Hence, India will continue to advocate
from a position of strength—a global nuclear disarmament. In other words, with nuclear power, a nation is believed more than a non-NWS when it advocates nuclear disarmament. India is weaker than the five other NWS, yet India has now acquired nuclear know-how, power, and capability. It is time for India to lead the other NWS with their destructive power of nuclear weapons to unite them to achieve global disarmament. The step has to be taken for a global treaty among the known nuclear powers and threshold states on a no-first use of nuclear weapons (Kamath, 1998). The 1995 Noble Peace Laureate, Sir Joseph Rotblat, had called for a treaty among nuclear weapon states that commits them never to be the first to use nuclear weapons. No first use, Rotblat rightly thought, “would open the way to the gradual, mutual reductions of nuclear arsenals, down to zero.”19 The only obstacle today in achieving that goal is the U.S. and Pakistan, which have based their doctrines of nuclear deterrence on the basis of a first use. That was it; later on nothing more was heard about it. A multilateral agreement under the UN Conference on Disarmament could bind the nations to a greater extent to follow the spirit of treaty. The definition of the use of nuclear weapons under the treaty should be so constructed as to include use of those weapons to blackmail non-nuclear nations as well. An Indian plea for a treaty on NFU of nuclear weapons as a first step toward nuclear disarmament cannot be dismissed as mere idealism in an anarchical international society, emerging from its comparative

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weakness of power.20 When President Woodrow Wilson sought to promote collective security through the League of Nations, he was not pleading for the world body acting on collective security on the basis of only weakness. Movement even on this new treaty on NFU has to be slow necessarily. Since China is the first one to internationally commit on NFU and continue it as state policy and successfully maintain the policy during the postCold War period, it should not have any problem in joining hands with India, which also has declared NFU as its stated policy on the use of nuclear weapons. However, as there is historic baggage of mistrust between the two as a result of the Chinese aggression of October 1962 and their unresolved border conflict, the two coming together may take some time. In this regard, Russia has a history of ambiguous commitment to NFU doctrine. But since the end of the Cold War, Russia had often spoken of a strategic triangle between Russia, China, and India. An analysis of the background of its reference to the strategic triangle shows that its frustration with U.S. policies in international relations affecting its friends or former allies has made it speak of forming a strategic alliance (Kamath, 1999). But with the end of the bipolar world of the Cold War period, major powers today other than the U.S., who obviously wants to retain its status as the number one power unchallenged, clamor for the emergence of a multipolar world. Russia, the European Union, India, and China, among others have all preferred a multipolar world. In a multipolar world, there could be issue-based alliances, but there cannot be any strategic alliance as proposed by Russia. However, Russia could take the initiative in promoting an understanding between India and China on the issue of NFU by joining them in making it the first stage of nuclear disarmament. Russia’s predecessor state, the Soviet Union, and China had announced during the Cold War their commitment to NFU of nuclear weapons. But after the end of the Cold War, Russia and China have been ambiguous on the issue. Hence, a successful conclusion of a No First Use treaty will greatly reduce the threat of nuclear war. But even here, a gradual movement toward the goal could be envisaged. Since the U.S. globally and Pakistan regionally see the need for retaining their nuclear weapons, India can pursue more vigorously such a treaty on NFU of nuclear weapons with China. Since Russian Prime Minister Primakov had in December 1998 proposed a strategic triangle between itself, China, and India, India could persuade Russia to take a lead in

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bringing India and China together on the issue of signing a NFU treaty. Later, others could be persuaded to join. With Russia joining in the efforts by the NWS to pledge themselves on NFU of nuclear weapons, India and China could firm up their efforts on promotion of the treaty on NFU. There is absolutely no perception of a security threat in the UK and France. These two together with Germany constitute troika in the European Union. The European Union has developed, in its background of long experience with war and destruction, a better appreciation of human rights. The treaty on NFU of nuclear weapons is a measure to ensure human rights and human life are promoted on a global plane. If the EU also joins in the promotion of a treaty on NFU of nuclear weapons, who is left out? Only two countries—the U.S. and Pakistan, who have nothing in common, except their love for first use of nuclear weapons. If global democracies come together to promote denuclearization, the U.S. could join other democracies in committing itself to NFU doctrine. While rejecting NFU offered by India, Pakistan in its pursuit of one-upmanship in politics unknown in the nuclear arena, had offered in May 2003 nuclear disarmament if India does the same, knowing full well that the Indian nuclear programme is not Pakistan-specific (Bennett-Jones, 2003). Yet there are saner voices in between in Pakistan. It is worth noting that then Pakistani Foreign Minister, Sartaz Aziz stated in November 1998 that Pakistan would not deploy nuclear weapons if India agrees to a similar restraint. This was a good offer, which should be taken up at the diplomatic level for further negotiations and formal agreement. These suggested steps could be unilaterally implemented. Once the U.S. joins the movement for treaty on NFU, Pakistan can be brought around to fall in line. However, Pakistan is likely to ask for its pound of flesh. The trends in India-Pakistan bilateral strategic relations seem to indicate that a claim for strategic equality is going to be a future emphasis in Pakistan’s policy. Having considered nuclear weapons, as an equalizer of strike force, it is bound to maintain it that way in all aspects of nuclear weapons and related agreements. It might agree for NFU if there is a parity of nuclear weapons. If the parity is the only condition, the global community could agree on it, on the condition that its economy is not pumped with oxygen by way of foreign aid from the global community. The destination of nuclear disarmament through NFU is not easy to reach, but it is better to move in that direction than embrace nuclear annihilation by insisting on the use of nuclear weapons.

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NOTES 1. Americans are fond of creating very attractive and meaningful acronyms. Under their influence, MIND is an acronym to indicate the Indian doctrine of nuclear deterrence. 2. Former German Foreign Minister Fischer made a suggestion in midNovember of 1998 that, in the absence of a threat, NATO adopt the proposal of no first use of nuclear weapons. In another instance at a meeting held in Maryland in March 2006, a listener asked President George W. Bush, whether he would ponder over a proposition “to consider a ‘no first use’ policy to help the prospect of nuclear [non] proliferation in the long run.” See P. M. Kamath, India’s Policy of No First Use of Nuclear Weapons: Relevance to Peace and Security in South Asia (New Delhi: Anamika Publishers, 2009), pp. 213 & 218. 3. For the complete text of the draft of the Indian Nuclear Doctrine, see Observer of Business and Politics (Mumbai), 20 August 1999. 4. There are two changes. First, while the draft had promised “assured retaliation,” the final document speaks of “massive response.” Second, the draft uses the term “unacceptable damage” while the final document speaks of “unacceptable punishment.” 5. IPCS’s Special Report 13, “India’s Credible Minimum Deterrence: A Report, February 2006, http://www.ipcs.org/IPCS-Special-Report-13.pdf. However, for the convenience of this article, I propose to use MIND as the acronym throughout the discussion, irrespective of whether it means a reference to it during the NDA term or the UPA since May 2004. 6. Minimum can be credible if every component of the nuclear deterrence, particularly triad, is in place. 7. In an interview with K. Subrahmanyam in New Delhi in November 2004. 8. Quoted by Halperin (1987). 9. See “memorandum by the counsellor (Kennan),” Foreign Relations of the United States, 1950, Vol. 1, p. 29 (Emphasis added). 10. Ibid. 11. For the text of the doctrine, see The Observe of Business and Politics (Mumbai and New Delhi), August 20, 1999. 12. For details of de-alerting and various ways, techniques, and benefits. 13. Ibid. (Author’s footnote ignored.) 14. Army Chief of Staff, General J. J. Singh lauded Army and BARC cooperation in having three officers trained in BARC. Times of India (Mumbai), August 26, 2005 15. U.S.-India Civil Nuclear Deal of 2005 is a de facto recognition of India as a NWS. 16. Quoted in Perkovich (1999). 17. Quoted in (Perkovich, p. 19). 18. Perkovich raises a hypothetical question: “…whether if a comprehensive ban had been agreed to in 1963 India would have gone forward with its nuclear weapon option.” India’s Nuclear Bomb, p. 58. 19. As quoted by David Krieger and Carah Ong, “No First Use”, April 2002, http://www..wagingpeace.org/articles/2002/04/00_krieger_no-first-use_print.htm

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20. I first had put forward this idea of a treaty on NFU of nuclear weapons in an article, “Indian National Security Policy: Minimal Nuclear Deterrence,” published in Strategic Analysis, Vol. 23, No. 8 (November 1999).

ACKNOWLEDGMENT The author wishes to acknowledge his grateful thanks to Ms. Anita, Academic Assistant, for her research assistance.

REFERENCES Bennett-Jones, O. (2003). Have nuclear weapons made South Asia safer? http:/newsvote.bbc.co. uk/mpapps/pagetools/print/news.bbc.co.uk/1hi/world/south_asia/3015 Halperin, M. H. (1987). Nuclear fallacy: Dispelling the myth of nuclear strategy (p. 8). Cambridge, MA: Ballinger Publishing Co. Iyengar, P. K. (2000). Imperatives before India. Frontline, 17(15), (July 24
August 4). Kamath, P. M. (1998). Post-Pokhran permutations. The Tribune (Chandigarh), June 17. Kamath, P. M. (1999). Is Primakov triangle theory workable? Free Press Journal (Mumbai), 14 January. Kamath, P. M. (1999). Indian nuclear strategy: A perspective for 2020. Strategic Analysis, 22(12), 1941
1942 (March). Kamath, P. M. (2007). No first use of nuclear weapons: Sino-Indian doctrine of peace. India Quarterly: A Journal of International Affairs, 63(2) (April-June). Kennan, G. F. (1967). Memoirs: 1925
1950 (p. 472). Boston, MA: Atlantic Monthly Press. Lewis, J. W., & Litai, X. (1988). China builds the bomb (p. 215). Stanford, CA: Stanford University Press. Makhijani, A. (1998). De-alerting: A first step. http://www.ieer.org/latest/de-alert.html Martin, L. (1982). The changing face of nuclear warfare (pp. 120
122). Harper & Row Publishers, New York. Perkovich, G. (1999). India’s nuclear bomb (pp. 19, 439). Berkeley, CA: University California Press. Perkovich, G. (1999). India’s nuclear bomb: The impact on global proliferation (pp. 118
119). Berkeley, CA: University of California Press. Subrahmanyam, K. (2004). Narasimha Rao and the bomb. Strategic Analysis, 28(4), 593. Turner, S. (1998). Caging the nuclear genie: An American challenge for global security. Colorado, US: Westview. Weiss, A.E. (1983). The nuclear arms race: Can we survive it? (pp. 50
51). Boston, MA: Houghton Mifflin Co. Wolf Blitzer (2005). Transcripts of Wolf Blitzer’s interview. Strategic Digest, 35 (9), 1151.

SRI LANKA: ETHNIC CONFLICT AND THE CONFLICT MANAGEMENT PROCESS Prashant Amrutkar ABSTRACT This chapter presents a critique of the so-called peace process through military action within the Sri Lankan ethnic conflict. There is a need to study this problem from the psychological, developmental, and humanitarian point of view. This chapter analyses the deep-rooted seeds of the problem, its historical background, its various domestic and international angles and perceptions, and the international angles as well as regional implications of the Sri Lankan Tamil insurgency. The nature of the problem, the effect of ethnic conflict in Sri Lanka on regional security, and the militarily remedization of the problem by Sri Lankan government and its result are focused on here. Finally, the study identifies the contemporary role of diaspora communities as a severe hindrance to a lasting peace in the country. Thus, the analysis concludes that lasting peace in the island is possible only through the promotion of a genuine liberal democracy, from both within

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and without. Suggestions for future peace, stability, and development have been put forward.

INTRODUCTION The complexity and magnitude of the Sri Lankan conflict have grown over the last five decades, making it one of the most protracted and devastating conflicts in the world today. With the prolongation of conflict, the chances for establishing peace have become distant, the gap between two communities (Sinhalese and Tamils) has widened, and new elements have been introduced to the conflict. The case of ethnic conflict in Sri Lanka is a much more complex business than a simple straightforward confrontation between the once wellentrenched minority, the Tamils, and the powerful but insecure majority, the Sinhalese. It is a classic case of a sense of relative deprivation. The exploration of the failure of the peace process in the island points to a combination of internal and external factors that impede the establishment of a liberal democratic political structure. Despite its reputation as a Third World democracy, the Sri Lankan polity has, since independence, increasingly developed into an illiberal democracy. Although possessing nominal features of a democracy, the Sri Lankan political system is saturated with highly undemocratic elements. Among these elements, the ethnocization of the society, confrontational politics, and violence are specifically addressed by this study. The 1983 Black July riots in Sri Lanka (the riots that began in the night of July 24, 1983) converted it into one of the most notorious killing fields in the world. There are two conflicting parties named: the Sri Lankan government (representing the Sinhalese) and the Liberation Tigers of Tamil Eelam (LTTE) (representing the Tamil community). The conflict was stopped by the Sri Lankan army on May 19, 2009, on the death of Velupillai Prabhakaran, LTTE leader. But there is a question about the peace management process adopted by the Sri Lankan government. If the discrimination, terrorization, and marginalization of the Tamil people continue, it won’t be long before a Prabhakaran clone surfaces. The challenge before the “victor” is to display humility, large-heartedness, and justice (Edirippulige, 2000). In 2009, following a swift military operation, Sri Lankan forces exterminated the LTTE Supremo, Velupillai Prabhakaran. There was perception

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that peace would eventually follow after this. The peace did come but it could prove to be a lull before the storm. The military operation against LTTE has left a huge chunk of civilian Tamil population totally dislocated that could violently react. Now is the better time to look back at the Sri Lankan government’s conflict management process and to suggest some remedies for future peacebuilding process.

ETHNIC CONFLICT An ethnic conflict or ethnic war is a war between ethnic groups often as a result of ethnic nationalism. They are of interest because of their apparent prevalence since the Cold War and because they frequently result in war crimes such as genocide. Academic explanations of ethnic conflict generally fall into one of three schools of thought: primordialist, instrumentalist, or constructivist. Intellectual debate has also focused on the issue of ethnic conflict, which has become more prevalent since the end of the Cold War, and on devising ways of managing conflicts through instruments such as consociationalism and federalization (Ethnic conflict).

Primordialist Accounts Proponents of primordialist accounts of ethnic conflict argue that “ethnic groups and nationalities exist because there are traditions of belief and action toward primordial objects such as biological features and especially territorial location” (Grosby, 1994). The primordialist account relies on a concept of kinship between members of an ethnic group. Donald Horowitz argues that this kinship makes it possible for ethnic groups to think in terms of family resemblances. There are a number of political scientists who refer to the concept of ethnic wars as a myth because they argue that the root causes of ethnic conflict do not involve ethnicity but rather institutional, political, and economic factors. These political scientists argue that the concept of ethnic war is misleading because it leads to an essentialist conclusion that certain groups are doomed to fight each other, when in fact the wars between them are the result of political decisions. Opposing groups may substitute ethnicity for the underlying factors to simplify identification of friend and foe.

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Ethnic Conflict in the Post-Cold War World Although the study of ethnic conflict has a long history, genuine interest in ethnic conflict beyond the comparative political science subfield dates from the collapse of the Soviet Union and Yugoslavia, both of which were followed by ethnic conflicts that escalated to violence and civil war. One of the most debated issues relating to ethnic conflict is whether it has become more or less prevalent in the post-Cold War period. At the end of the Cold War, academics including Samuel P. Huntington and Robert D. Kaplan predicted a proliferation of conflicts fuelled by civilizational clashes, tribalism, resource scarcity, and overpopulation. Ethnic Conflict Regulation A number of scholars have attempted to synthesize the methods available for the resolution, management, or transformation of ethnic conflict. John Coakley, for example, has developed a typology of the methods of conflict resolution that have been employed by states, which he lists as: indigenization, accommodation, assimilation, acculturation, population transfer, boundary alteration, genocide, and ethnic suicide (Coakley, 1992). McGarry and O’Leary (1993) have developed a taxonomy of eight macropolitical ethnic conflict regulation methods, which they note are often employed by states in combination with each other. They include a number of methods that are clearly morally unacceptable. • Methods for eliminating differences: (1) Genocide; (2) forced mass-population transfers; (3) partition and/or secession (self-determination); and (4) integration and/or assimilation • Methods for managing differences: (1) Hegemonic control; (2) arbitration (third-party intervention); (3) cantonization and/or federalization; and (4) consociationalism or power-sharing In the light of this discussion, the case of Sri Lankan ethnic conflict can be studied.

ETHNIC CONFLICT IN SRI LANKA The Sri Lankan Civil War was a war fought on the island of Sri Lanka. Beginning on July 23, 1983, there was an on-and-off insurgency against the

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government by the LTTE (also known as the Tamil Tigers), a separatist militant organization that fought to create an independent Tamil state named Tamil Eelam in the north and east of the island. After a 30-monthlong military campaign, the Sri Lankan military defeated the Tamil Tigers in May 2009 (Balasingham, 2003). For over 25 years, the insurgency caused significant hardships for the population, environment, and economy of the country, with over 80,000 people officially listed as killed during its course (Sri Lanka military). The tactics employed by the LTTE resulted in 32 countries (including the United States, India, Australia, Canada, and the member nations of the European Union) branding them as a terrorist organization. After two decades of fighting and three failed attempts at peace talks, including the unsuccessful deployment of the Indian Army (the Indian Peace Keeping Force from 1987 to 1990), a lasting negotiated settlement to the conflict appeared possible when a cease-fire was declared in December 2001, and a cease-fire agreement (CFA) signed with international mediation in 2002 (Guardian). However, limited hostilities renewed in late 2005, and the conflict began to escalate until the government launched a number of major military offensives against the LTTE beginning in July 2006, driving the LTTE out of the entire Eastern province of the island. The LTTE then declared they would “resume their freedom struggle to achieve statehood” (Ganguly, 2009; Jayasinghe, 2009; Sengupta, 2009). In 2007, the government shifted its offensive to the north of the country and formally announced its withdrawal from the CFA on January 2, 2008, alleging that the LTTE violated the agreement over 10,000 times (Ministry of Defence, Government takes policy decision to abrogate failed CFA). Aided by the destruction of a number of large arms smuggling vessels that belonged to the LTTE (Sri Lanka Navy) and an international crackdown on funding for the Tamil Tigers, the government took control of the entire area previously controlled by the Tamil Tigers, including their de-facto capital Kilinochchi, the main military base of Mullaitivu, and the entire A9 highway (Bloomberg), leading the LTTE to finally admit defeat on May 17, 2009 (From correspondents in Colombo).

The Beginnings of the Ethnic Conflict The Precolonial Situation The growth of Sri Lankan society is largely attributable to a process of continuous migration from the neighbouring India. The Sinhala or

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Sinhalese (74 percent) constitute the major ethnic group; the Sri Lankan Tamils, who inhabit the north and east form 12.6 percent; and the group known as Indian Tamils (19th-century migrants for work on plantations), 5.6 percent of the population. While Muslims constitute the third largest ethnic group (7.4 percent), there are also small minorities such as Burghers (people of mixed decent) and Malays. All the major groups in Sri Lanka belong to a similar ethnic mix of migrants from various parts of India, especially South India, to which there have been Southeast Asian, Arab, and European admixtures. In spite of this, each ethnic group today has a distinct identity with strongly held myths of origin; the Sinhala believe that they are Aryans from Bengal, the Tamils claim pure Dravidian origin, and the Muslims claim to be of Arab descent. The history of ethnic conflict in Sri Lanka is the history of the emergence of consciousness among the majority community, the Sinhala, which defined Sri Lankan society as Sinhala-Buddhist, thus denying its multiethnic character. The growth of this consciousness impinged on the minorities in Sri Lanka to the extent that internal resolution of problems became impossible. The Sinhala dominated the country from about the 5th century BC and succeeded in establishing a kingdom with its centre in the north-central province of the island. The term “Sinhala” was first used to indicate the royal family of the island, then extended to cover the royal retinue, and then further extended to include the people; this social process dating to about the 6th century AD is simultaneously the process of ethnic consolidation of the Sinhala people (Gunawardena, 1985). The Sinhala kingdom, which controlled the entire island most of the time, entered into relations of both alliance and hostility at various periods with the Chola, Pandiya, and Chera Kingdoms of South India. There were frequent invasions from these kingdoms, and also frequent alliances and intermarriage of the four royal families. There were thus strong links with India, especially South India. This long history of links with South India is still present in popular Sinhala consciousness, with perhaps the aggressive acts being best remembered. In the 12th and 13th centuries, certain developments in Sri Lanka determined its ethnic demography in a decisive way with effects that have continued to the present.1 The demographic distribution lays down a territorial basis for the major ethnic groups; in the case of the Tamils, the territorial concentration grew into a concept of a “traditional Tamil Homeland.” This did not arise for Muslims since they were scattered over the whole island, with a majority presence in only a part of the Eastern province.

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Religion also played a dominant ideological role in ethnic consolidation. Buddhism, introduced from India in the 3rd century BC, became the religion of the Sinhala as well as the state religion. Hinduism remained the religion of the Tamils. Apart from the conversion of a section of both Sinhalese and Tamils to Christianity during the colonial period, the incongruence between Sinhala and Buddhist on the one hand, and Tamil and Hindu on the other increased. The Colonial Period Social and economic developments during the early colonial period under the Portuguese and then the Dutch
commercialization of agriculture, the registration of title to land, registration of births and deaths, proselytization
contributed toward a freezing of ethnic boundaries.2 This meant, in effect, the consolidation of the Sinhala community in the central and southwestern parts of the island and of the Tamil community in the north and on the eastern seaboard. Economic developments during the occupation of the island by the British gave rise to two other phenomena, which made the ethnic picture in Sri Lanka even more complex. 1. The coffee plantations established by the British in the 19th century brought to Sri Lanka, as plantation labors, a population of over one million Tamil workers from South India. These were at first seasonal migrants, but with the development of tea plantations the majority became permanently domiciled on the plantations. The question of their citizenship rights became an issue that subsequently soured relationships between India and Sri Lanka. 2. Economic developments during this period were mainly in the central and western areas of the island. This left the Tamil community in a disadvantaged position. They sought to overcome this by moving in large numbers to employment in the state services, in the private sector, and by entering the learned professions. This process was helped by the growth of educational facilities in English in the Tamil regions, particularly the Jaffna peninsula. This meant not only that large numbers of Tamils migrated to the southern and central regions for the purpose of employment but also that Tamil traders established themselves in these regions. The local bourgeois thus created was multiethnic but predominantly Sinhalese with Burghers and Tamils, too, entering the various professions and the state services. The Sinhala bourgeois found its expansion constrained in various areas. The main import and export trade was dominated

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by the British and Indians, and retail trade throughout the country was dominated by Muslim and Chettiar traders. Sinhala traders could not break into these areas because of a lack of access to finance which was controlled by British bankers or South Indian Chettiars. The Sinhala professionals and the educated “petit-bourgeois” also felt this competition in so far as they had to vie with Burghers and Tamils for state and private employment. Workers at their own level found themselves confronted with migrant workers from Kerala and Tamil Nadu as well as with workers of indigenous minority groups (Jayawardena, 1986). These barriers to advancement were perceived by the Sinhala at all levels as being caused by the non-Sinhala elements. To understand why economic antagonisms should be perceived in ethnic terms, one must examine the way in which the Sinhala asserted a sense of national identity as the basis for winning political reforms, which would give them more power. Sinhala-Buddhist Identity In asserting a Sinhala identity and in legitimatizing Sinhala control of the country’s polity, the leaders of the Sinhala revivalist movement reconstructed an image of the Sinhala past using many elements of the “origin” mythology such as Sri Lanka becoming the land of Sinhala and the land of Dharma
the Buddhist doctrine. The belief was that the survival of the Buddhist religion was dependent on the survival of the Sinhala people, the people surviving as long as they espoused the doctrine and controlled the land consecrated to the religion. Thus the religion, the people, and the land were bound together in an indissoluble unity. Such a revivalist ideology attempted to establish Sinhala-Buddhist hegemony of the island antagonistic to non-Sinhala, non-Buddhist groups. It is this Sinhala-Buddhist consciousness that has resulted in the denial of the multiethnic and multireligious character of Sri Lankan society and in a refusal to accept the collective rights of other minority groups. This Sinhala-Buddhist identity is against all foreigners and minorities. Over the last 100 years, it has been asserted against Muslims, Christians, Tamil plantation workers, Malayalis, and Sri Lankan Tamils (Jayawardena, 1986).

POLITICAL REFORMS AND REASONS OF CONFLICT The agitation spearheaded by the political reformers of the early 20th century included the following.

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1. Unsolved question of citizenship: The question of citizenship of migrant plantation labors from south India was not been solved by the government. 2. Divide and rule policy: The British Governor (following the old stratagem of divide and rule) had nominated members to the legislature on the basis of ethnicity. 3. Ethnic representation: The unity of the bourgeois broke down over the question of ethnic representation. These reforms of 1931 did not meet with the favor of minority ethnic groups. The constitution would ensure the dominance of the Sinhala majority. 4. Unequal economic development: The development was mainly in the central and western areas of the island. The Tamil community was in a disadvantaged position. The government refused to allocate certain scarce resources to Tamil areas and sometimes even shelved internationally sponsored development projects in these regions. 5. Sinhala control over the countries polity: The constitution was enacted in the face of the minority, and minority fears were realized in 1936 when a totally Sinhala Board of Ministers was chosen. 6. The emergence of ethnic-based organizations: This was justified by the Sinhala Maha Sabha leader, S. W. R. D. Bandaranaike. 7. The revivalist ideology of Sinhala-Buddhist discarded the very idea of any right to the minority groups. 8. The Sinhala-educated intelligentsia reiterated the ideals of SinhalaBuddhist resurgence, which are against the English-speaking members of the upper class who wielded economic and political power. 9. The promotion of Buddhism as the national religion stirred a wave of anti-Tamil feeling. 10. Replacement of English by Sinhala: In 1956, Bandaranaike replaced English by Sinhala as the only official language. It had the unfortunate effect of alienating the Tamil-speaking part of Sri Lankan society. 11. Reduction of Tamils from civil services: The enactment of a new language policy as a means not only reduced the position of Tamils in state services but also seriously underrepresented them in terms of ethnic percentages in state services (Abeysekera, 1985). 12. Ethnic Sinhala hegemony existed in the field of education in the 1970s by a system of “standardization” for science students whereby “the minimum entry requirements for a Tamil student were higher than for a Sinhala medium student” (Bastian, 1985). This was clearly discriminatory and created the impression that the government deliberately reduced the opportunities available to Tamil youth in government

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service. This was an explosive grievance in a community that had long looked on education as the main means of social and economic advancement.3 State-aided colonization: After 1930, Sinhala settlements soon began to appear in the predominantly Tamil eastern province as well. This led to a shift in demographic patterns. (For example, in the Trincomalee district there was an increase of the Sinhala population from 20.7 percent to 33.6 percent between 1946 and 1981.) This process of state-aided colonization was seen not only as a threat to the political status of Tamils in the affected areas but also as a threat to the existence of Tamils as a community with its own linguistic and cultural identity. Radicalizing the Tamils: Ethnic outbidding had contributed to antiTamil action, and the next wave of anti-Tamil riots in 1958 again saw Sinhalese hoodlums operating with utter impunity. In many cases, the police failed to move against the rioters, a clear sign that the minority could no longer trust Sri Lanka’s institutions to operate with impartiality. Sinhalese radicals retaliated by staging large anti-Tamil riots in 1977 and 1981. Shockingly, official security forces and government supporters played a major role in these. In July 1983, orgiastic anti-Tamil riots spread like wildfire across the country, killing thousands of Tamils. Institutionalized Sinhala political hegemony: The republican Constitution of 1972 while proclaiming Sinhala as the official language declared that Buddhism had a “foremost place” in Sri Lanka, thus almost affirming a Sinhala-Buddhist state. It is precisely the history that persuaded the Tamils that coexistence with the Sinhala in a single polity was no longer possible. Illiberal Governance: The 1978 Constitution gave the presidency neardictatorial powers, which both President Jayewardene and Ranasinghe Premadasa (1988
1993) used freely against the separatists.

These were the main reasons for ethnic conflict or civil war in Sri Lanka.

THE TAMIL FACTOR IN POLITICS The Tamil ethnic group sought to counter this growing discrimination by demands at a political level. 1. Demand of balanced representation: Before independence, the Tamil Congress unsuccessfully demanded balanced representation
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3.

4.

5.

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percent of the seats for the Sinhala and 50 percent for the combined minority ethnic groups. Federal political structure and autonomy: Later, in the face of continuing discrimination a Federal Party emerged that asked for a federal political structure that would give Tamils a degree of autonomy in the areas inhabited by them, as well as adequate representation at the centre. Separate state: It was in this period of accelerated demands and rejection that Tamil political leaders concluded in 1976 that only a separate state could ensure the security and welfare of the Tamil people, a state carved out of the northern and eastern provinces of Sri Lanka to be called “Tamil Eelam.” Use of parliamentary democratic process: The established political party of the Tamils, the Tamil United Liberation Front (TULF), demanded a separate state and use of parliamentary democratic processes toward obtaining it. Adoption of bloodshed: Some Tamil youth, dissatisfied with the nonviolent policies of the TULF, formed groups that took up arms in the same cause.4

It is only necessary to state that it led to a protracted and bitter war in the northern and eastern parts of Sri Lanka during the course of which the state security forces were guilty of severe excesses, attacks on civilians, and serious violations of human rights of the Sri Lankan citizens, while the armed groups in turn resorted to brutal killings of both the Sinhala civilians and those Tamils thought of as “informers.” The number of deaths has been estimated at 6,000 by the government and 15,000 by Tamil groups; damage to property is incalculable.

MAIN PHASES OF CONFLICT In the Ethnic Conflict in Sri Lanka, there were six phases of conflict: Eelam War 1, 2, 3, and 4; India’s military intervention through the Indian peace keeping forces (IPKF) was also a part of the conflict; and the last and concluding phase of conflict began in 2007. Eelam War I (1976
1987) In this initial phase of civil war, the process of politicization of Tamil youth in the North and East started to form militant groups. The most prominent

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of these groups was the Tamil New Tigers (TNT), which changed its name to the Liberation Tigers of Tamil Eelam or the LTTE in 1976. The LTTE initially carried out a campaign of violence against the state.

Indian Involvement (1980
1990) India became involved in the conflict in the 1980s for a number of reasons, including its leaders’ desire to project India as the regional power in the area and worries about India’s own Tamils seeking independence. India became more actively involved in the late 1980s; the Indo
Sri Lanka Peace Accord was signed on July 29, 1987, by Indian Prime Minister Rajiv Gandhi and Sri Lankan President Jayewardene. Under this accord, the Sri Lankan Government made a number of concessions to Tamil demands, including the devolution of power to the provinces, a merger
subject to later referendum
of the northern and the eastern provinces into the single province, and official status for the Tamil language (enacted as the 13th Amendment to the Constitution of Sri Lanka). India agreed to establish order in the North and East through a force dubbed the IPKF and to cease assisting Tamil insurgents. Militant groups including the LTTE, although initially reluctant, agreed to surrender their arms to the IPKF, which initially oversaw a cease-fire and a modest disarmament of the militant groups. With the signing of the Indo
Lanka Accord, which was so soon after J. R. Jayawardene’s declaration that he would fight the Indians to the last bullet, there was a question on India’s peace mission. While most Tamil militant groups laid down their weapons and agreed to seek a peaceful solution to the conflict, the LTTE refused to disarm its fighters (Associated Press). The IPKF then tried to demobilize the LTTE by force and ended up in a three-year-long full-scale conflict with them. The IPKF also soon met stiff opposition from the Tamils. Simultaneously, nationalist sentiment led many Sinhalese to oppose the continued Indian presence in Sri Lanka. Calls for the withdrawal of the IPKF from both sides of the Sri Lankan conflict grew. This was the failure of the Indian peace mission. Support for the LTTE in India dropped considerably in 1991 after the assassination of ex-Prime Minister Rajiv Gandhi by the LTTE. India has since remained an outside observer to the ongoing peace process with frequent demands by many groups for the extradition of Velupillai Prabhakaran (BBC).

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Eelam War II (1990
1993), Eelam War III (1994
2005), and Eelam War IV (2006
2008) The 1990
2008 phase was full of conflict and bloodshed. This included the LTTE’s attack on Sri Lankan armed forces, suicide bombings on political leaders, army officers, crowded places, and civilian areas in the southern and western part of government-controlled areas in Sri Lanka. The struggle between the LTTE and armed forces for capturing and maintaining control over the northern and eastern parts of Sri Lanka was a continuous chain of struggles during this era.

The Last Phase of Conflict (2008
2009) In the last phase of conflict, armed forces captured LTTE-stronghold areas such as Parappakandal in Mannar District, the town of Mallavi (Gunaratna), and troops had captured Kilinochchi, which the rebels had used for over a decade as their de facto administrative capital (Hindu.com). The entire Jaffna peninsula was captured by the Sri Lanka Army by January 14, 2009 (Bloomberg.com). On January 25, 2009, SLA troops captured the town of Mullaittivu (Sepgupta), and on February 5, 2009, the military captured the last Sea Tiger base in Chalai (Ministry of Defence, Army captures last sea tiger base & clears entire Visuamadu area). The Sri Lanka Air Force openly vowed to destroy the entire leadership of the LTTE (BBC News, Senior Tamil Tiger leader killed). On January 2, 2008, the Sri Lankan government officially pulled out of the CFA (Agency France Press). This stage of the war has been marked by increased brutality against civilians and rapidly mounting civilian casualties. On March 26, 2009, the military claimed that there was only one square kilometre left in Tamil Tiger control outside the no-fire zone. Less than three years ago, the LTTE controlled 15,000 km2. On April 21, 2009, Sri Lankan troops reportedly launched a “final assault” against the LTTE, especially targeting its leader Vellupillai Prabhakaran.

President Declares Victory, May 16, 2009 Sri Lankan president, Mahinda Rajapaksa, declared victory on May 16, 2009. However, the war did not end until the following day. Sri Lankan troops raced to clear the last LTTE pockets of resistance. As the last LTTE

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strongpoint crumbled, Sri Lankan troops killed 70 rebels attempting to escape by boat. The whereabouts of LTTE leader Vellupillai Prabhakaran and other major rebel leaders were not certain; however, Sri Lanka’s government announced that Prabhakaran was dead on May 17, 2009 (Is LTTE chief Prabhakaran dead? Yes, says Lanka govt). Several other important LTTE commanders committed suicide. Upon hearing news of the Sri Lankan victory, people celebrated in Colombo. There are two ways to see the victory of the Sri Lankan government in the conflict: First, failure of the peace process by the government and second, failure of maintaining the liberal democratic structure in Sri Lanka.

FAILURE OF PEACE PROCESS AND LIBERAL DEMOCRATIC POLITICAL STRUCTURE The exploration of the failure of the peace process in the island points to a combination of internal and external factors that impede the establishment of a liberal democratic political structure. Despite its reputation as a Third World democracy, the Sri Lankan polity has, since independence, increasingly developed into an illiberal democracy. Although possessing nominal features of a democracy, the Sri Lankan political system is saturated with highly undemocratic elements. Among these elements, the ethnocization of the society, confrontational politics, and violence are specifically highlighted in this case. There were some diplomatic steps forwarded by the Sri Lankan government and the LTTE during the conflicting period, which were supported to create and maintain a positive atmosphere for peace talks. 1. Bandaranaike
Chelvanayakam Pact of 1958: S. W. R. D. Bandaranaike, Prime Minister and leader of the Sri Lanka Freedom Party (SLFP), arrived at an understanding with the leader of the Federal Party (the Bandaranaike
Chelvanayakam Pact of 1958), which gave Tamils a degree of regional autonomy, including control of the land settlement in their areas. However, Bandaranaike had to abandon the pact in the face of opposition from the United National Party (UNP) and was killed by a monk in 1959. 2. Peace talks in Thimphu: Peace talks between the LTTE and the government began in Thimphu in 1985, but they soon failed, and the war continued.

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3. Indo
Sri Lanka Peace Accord: This accord was signed on July 29, 1987, by Indian Prime Minister Rajiv Gandhi and Sri Lankan President Jayewardene. Under this accord, the Sri Lankan government made a number of concessions to Tamil demands, including the devolution of power to the provinces, a merger
subject to later referendum
of the northern and the eastern provinces into the single province, and official status for the Tamil language (this was enacted as the 13th Amendment to the Constitution of Sri Lanka). India agreed to establish order in the north and east through a force dubbed the IPKF and to cease assisting Tamil insurgents. Militant groups including the LTTE, although initially reluctant, agreed to surrender their arms to the IPKF, which initially oversaw a cease-fire and a modest disarmament of the militant groups. But after stiff opposition of Sri Lankan people and LTTE, IPKF was unable to do its job, and the problem still continues. 4. In the 1980s and 1990s, successive governments enacted a number of official acts to appease the Tamil community, including recognizing Tamil as an official language and merging the northern and the eastern provinces of the country. 5. A tentative cease-fire held in 1990 as the LTTE occupied itself with destroying rival Tamil groups. 6. A cease-fire was agreed in January 1995, but the ensuing negotiations proved fruitless. 7. By mid-2000, human rights groups estimated that more than one million people in Sri Lanka were internally displaced persons living in camps, homeless, and struggling for survival. As a result, a significant peace movement developed in the late 1990s. 8. Norway’s mediation: In February 2000, Norway was asked to mediate by both sides, and initial international diplomatic moves began to find a negotiated settlement to the conflict (Price). 9. Unilateral cease-fire: Hopes for peace gained ground as the LTTE declared a unilateral cease-fire in December 2000, but they canceled it on April 24, 2001, and launched another offensive against the government. 10. Toward the end of 2001, however, following the attacks of 9/11, the LTTE began to declare their willingness to explore measures for a peaceful settlement to the conflict. 11. On December 19, amidst efforts by Norway to bring the government and the Tamil Tigers to the negotiating table, the LTTE announced a 30-day cease-fire with the Sri Lankan government and pledged to halt

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all attacks against government forces (BBC News, Sri Lanka rebels announce truce). The new government welcomed the move and reciprocated it two days later, announcing a month-long cease-fire and agreeing to lift a long-standing economic embargo on the rebel-held territory (BBC News, Sri Lanka enters truce with rebels). Signing of Memorandum of Understanding (MoU): The two sides formalized a MoU on February 22, 2002, and signed a permanent CFA. Norway was named mediator. Peace talks in Phuket: The much anticipated peace talks began in Phuket, Thailand, on September 16, and five further rounds followed in Phuket, Norway, Berlin, and Germany. During the talks, both sides agreed to the principle of a federal solution, and the Tigers dropped their long-standing demand for a separate state. This was a key compromise from the LTTE, which had always insisted on an independent Tamil state, and it represented a compromise from the government, which had seldom agreed to more than minimal devolution. Both sides also exchanged prisoners of war for first time (BBC News, Upbeat opening for Sri Lanka talks). Peace talks in Geneva: The Norwegians continued efforts that produced a breakthrough when both parties agreed on February 7, 2006, that new talks could be held in Geneva, Switzerland, on February 22
23. These talks were reported to have gone “above expectations,” with both the government and the LTTE agreeing to curb the violence and to hold further talks on April 19
21 (BBC News, Sri Lanka foes to “curb violence”). Both parties agreed to unconditionally attend peace talks in Geneva on October 28
29, 2006 (Mallawarachi). However, the peace talks broke down because of disagreements over reopening the key highway, A9, which is the link between Jaffna and government-controlled areas in the south. Political pressure was placed on Mahinda Rajapaksa to find a political solution to the conflict; Rajapaksa called for a meeting with parliamentarians allied with the Tigers in March 2009, but they refused until the government resolved the humanitarian crisis faced by civilians trapped in the fighting (Sri Lanka says final standoff with Tigers approaches). On May 8, 2009, a group of independent United Nations experts called on the Human Rights Council to urgently set up an international inquiry to address the “critical” situation in Sri Lanka amid fighting between the army and Tamil rebels (UN).

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All these and other events show that the government of Sri Lanka as well as the LTTE was stepping forward for peace in the region, but the result was not positive.

CONCLUSION The tortured history of Sri Lanka’s peace process versus its ethnic minority is well known. Various aspects are behind it such as colonial history, ethnic outbidding, ethnic hatred, gap in development between two communities, development of illiberal democracy, ethnocization of the society, unfaith upon diplomatic ways, and failure of the democratic process. Not only the domestic elements but sometimes the ethnic disturbances in a country are exploited by a neighboring state like India. Any active involvement of India in this highly violated issue is a part of India’s dominant hegemonic role in the South Asian continent. India worries about her own Tamils seeking independence. The latter was particularly strong in the Indian state of Tamil Nadu, where ethnic kinship led to strong support for independence for Sri Lankan Tamils. India, through its intelligence agency R&AW, provided arms, training, and monetary support to a number of Sri Lankan Tamil militant groups, including the LTTE. The LTTE’s rise is widely attributed to the initial backing it received from R&AW. In this manner, Indian involvement is a big factor for this conflict. The contemporary role of diaspora communities is a severe hindrance to a lasting peace in the country. The revivalist ideology among SinhalaBuddhist hegemony was not accepted into the rights of minority groups. The promotion of Buddhism as the national religion stirred a wave of antiTamil feeling. All anti-Tamil policies of the Sri Lankan government widened the gap between the two communities. Radicalizing the Tamils and the anti-Tamil riots in 1958, 1977, 1981, and 1983 (Black July) were only oil on the fire. There was a peace process adopted by Sri Lanka government and the LTTE: the peace talks in Thimphu in 1985; the Geneva peace talks; the Indo
Sri Lanka Peace Accord on July 29, 1987, in Colombo; and the talks in Phuket, Thailand, on September 16, 2002. Both conflicting sides agreed to cease-fire many times, but there was no permanent cease-fire agreement among them. Norway was asked to mediate by both sides, and initial international diplomatic moves began to find a negotiated settlement to the conflict. But unfortunately it was helpless, and the problem remained

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unsolved. The deployment of IPKF from 1987 to 1990 did not turn out to be a great success as far as peace-keeping mission was concerned. But at last the government of Sri Lanka used its ultimate force and gave full stop to the diplomatic way of the peace process. There arises a question of the peace management process by the Sri Lankan government, in which the international community became just a spectator, international organizations like the UNO, which did nothing to protect rights of Tamils in Sri Lanka.

SOME SUGGESTIONS FOR PEACE Peace and stability in Sri Lanka is possible through some positive steps, which are as follows. 1. The government of Sri Lanka should seriously have a dialogue with the Tamils. 2. The government must concentrate on healing the wounds in the relationship between the Sinhalis and Tamils in the State. 3. Economic development: The government should work on economic development and solving the unemployment problem of the Tamils because massive numbers of poor unemployed youths are easily allured by insurgent groups. 4. The civil society, The NGOs and the community associations should come forward to work for peace. 5. Decentralization and devolution: Issues of decentralization and devolution of power lie at the core of the solution of ethnic conflict. 6. Equality: Equal status and equal opportunities to all communities will maintain brotherhood in the society. 7. Assimilation: Absorb and incorporate people and ideas into a wider society or culture. 8. Diplomatic ways: In the future, the Sri Lankan government should adopt diplomatic ways to solve confrontation. 9. Arbitration (third-party intervention): There are various patterns, mainly conflict waging, mediatory, intervening care for human rights, etc. 10. Contonization (a political or administrative subdivision of a country): In this case of conflict, federal political structure and autonomy is the solution. To sum up with what Bhupinder Brar has argued that South Asia should be looked as “a region of regions” rather than as a “region of

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states” (Brar, 2003), the suggestion followed from my belief that “regions” are culturally and socially more natural and historically more deeply entrenched in South Asia than are the states. Finally, the study identifies the contemporary role of diaspora communities as a severe hindrance to a lasting peace in the country. Thus the analysis concludes that lasting peace in the island is possible only through the promotion of genuine liberal democracy, both from within and without.

NOTES 1. When the hydraulic economy and civilization that had flourished in the northcentral plains came to an end, the Sinhala people migrated to the rain-fed areas in the central and southwestern regions of the island. The north-central plains reverted to jungle with a few scattered villages. With little control from the Sinhala kingdom, the Tamil people became concentrated in the northern and eastern coastal regions that were closest to that part of the Indian mainland also populated by Tamilspeaking people; eventually Tamils of the northern region established the Jaffna Kingdom at the end of the 13th century. 2. The Portuguese arrived in Sri Lanka in 1505 and occupied the southwestern littoral of the island and in due time the northern and eastern coastal regions. The Dutch succeeded them in 1658 and, as did the Portuguese, ruled the Sinhala and Tamil areas as separate regions. During this period, the Sinhala Kingdom continued to exist, first in the southwest and then in the hill country in Kandy. The British succeeded the Dutch in 1796 and eventually subdued the Kandiyan Kingdom in 1815. In 1833, they brought the whole island, that is, the areas occupied by the Sinhala and Tamils, within one administrative unit. 3. This system was replaced in 1978 by a system of “standardization” that was designed to give equal opportunities to students from educationally disadvantaged areas. However, since Jaffna was classified as an educationally advanced area, the net effect was very much the same. 4. These include, among others, the LTTE, Peoples Liberation Organization of Tamil Eelam (PLOT), Eelam Peoples Revolutionary Liberation Front (EPRLF), and Eelam Revolutionary Organization of Students (EROS).

REFERENCES Abeysekera, C. (1985). Ethnic representation in higher state services. In Ethnicity and social change (p. 243). Social Scientist Association, Colombo. Agency France Press. Government ends ceasefire with Tamil Tigers. Agency France Press. Retrieved from http://www.france24.com. Accessed on January 02, 2008. Associated Press, Sri Lankan military says, Tamil rebels abduct 2 rivals. Associated Press. Retrieved from http://www.chinapost.com.tw. Accessed on December 12, 2006.

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Balasingham, A. (2003). The will to freedom
An inside view of tamil resistance (2nd ed.), Fairmax Publishing Ltd., Colombo, Sri Lanka. Bastian, S. (1985). University admission & the national question. In Ethnicity and social change (p. 220), International Centre for Ethnic Studies, Colombo. BBC News. Senior Tamil Tiger leader killed. BBC News. Retrieved from http://news.bbc.co. uk. Accessed on November 02, 2007. BBC News. Sri Lanka enters truce with rebels. BBC News. Retrieved from http://news.bbc.co. uk. Accessed on December 21, 2001. BBC News. Sri Lanka foes to “curb violence”. BBC News. Retrieved from http://news.bbc.co. uk. Accessed on February 24, 2006. BBC News. Sri Lanka rebels announce truce. BBC News. Retrieved from http://news.bbc.co. uk. Accessed on 19 December 2001. BBC News. Upbeat opening for Sri Lanka talks. Retrieved from http://news.bbc.co.uk. Accessed on September 16, 2002. BBC, Tamil Nadu demands tiger extradition. BBC. Retrieved from http://news.bbc.co.uk. Accessed on April 16, 2006. Bloomberg, Sri Lankan forces capture last major rebel base in Northeast. Bloomberg. Retrieved from http://www.bloomberg.com Bloomberg.com. Sri Lankan military seizes last rebel base on Jaffna Peninsula. Bloomberg. com. Retrieved from http://www.bloomberg.com. Accessed on January 14, 2009. Brar, B. (2003). SAARC: If functionalism has failed, will realism work?. South Asian Survey, 10(1), 40. Coakley, J. (1992). The resolution of ethnic conflict: Towards a typology. International Political Science Review, 13(4), 343
358. Edirippulige, S. (2000). Ethnic conflict in Sri Lanka: Obstacles to the peace process. Retrieved from http://hdl.handle.net Ethnic conflict. Retrieved from http://en.wikipedia.org/wiki/Ethnic_conflict. Accessed on 17 May 2009. From correspondents in Colombo. Tamil Tigers admit defeat in civil war after 37-year battle. Retrieved from http://www.news.com.au. Accessed on May 17, 2009. Ganguly, D. (2009). Monitors say 4,000 dead in Sri Lanka. Fox News. Retrieved from http:// www.foxnews.com. Accessed on February 23, 2007. Grosby, S. (1994). The verdict of history: The inexpungeable tie of primordiality
A response to Eller and Coughlan. Ethnic and Racial Studies, 17(1), pp. 164
171, 168 Guardian, Ceasefire raises Sri Lankan peace hopes. Guardian. Retrieved from http://www. guardian.co.uk. Accessed on February 22, 2002. Gunaratna, G. Sri Lankan troops enter Tigers final frontier. Retrieved from http://www.colom bopage.com. Accessed on May 17, 2009. Gunawardena, R. A. L. H. (1985). The people of the lion: Sinhala consciousness in history and histography. In Ethnicity and social change (pp. 55
107). Social Scientist Association, Colombo. Hindu.com. Kilinochchi captured in devastating blow to LTTE. Hindu.com. Retrieved from http://www.hindu.com. Accessed on May 17, 2009. Is LTTE chief Prabhakaran dead? Yes, Says Lanka Government, MSN, India. Retrieved from http://news.in.msn.com. Accessed on May 17, 2009. Jayasinghe, A. (2009). Sri Lanka’s war seen far from over. Agence France-Presse. Retrieved from http://washingtontimes.com. Accessed on July 14, 2007.

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Jayawardena, K. (1986). Ethnic and class conflicts in Sri Lanka (Chapter 3 and 5). Navagama Printers, Colombo. Jayawardena, K. (1986). Ibid., pp. 14. Mallawarachi, B. Sri Lanka
Tamil Tigers Ok talks with Sri Lanka: Tamil Tigers agree to unconditional talks with Sri Lankan government. Conflict and religion, The Associated Press, Colombo. Retrieved from http://conflict-religion.boker.tv. Accessed on October 3, 2006. McGarry, J., & O’Leary, B. (1993). Introduction: The macro-political regulation of ethnic conflict, In J. McGarry & B. O’Leary (Eds.), The politics of ethnic conflict regulation: Case studies of protracted ethnic conflicts (pp. 1
40). London: Routledge. Ministry of Defence, Army captures last sea tiger base & clears entire Visuamadu area. Retrieved from http://www.defence.lk. Accessed on February 05, 2009. Ministry of Defence. Government takes policy decision to abrogate failed CFA. Retrieved from http://www.defence.lk. Accessed on January 2, 2008. Price, S. Norway role in Sri Lanka peace plan. BBC News. Retrieved from http://news.bbc.co. uk. Accessed on February 01, 2000. Sengupta, S. (2009). Sri Lankan government finds support from buddhist monks. The New York Times, Retrieved from http://www.nytimes.com. Accessed on February 25, 2007. Sepgupta, S., Sri Lankan troops take last rebel stronghold. New York Times. http://www. nytimes.com. Accessed on January 26, 2009. Sri Lanka military. Rebels trade death toll claims Reuters India. Retrieved from http://in. reuters.com. Accessed on March 1, 2008. Sri Lanka Navy. Sri Lanka Navy destroys the 10th LTTE arms ship 1700 km off Dondra. Retrieved from http://www.navy.lk. Accessed on October 08, 2007. Sri Lanka says final standoff with Tigers approaches. Retrieved from http://ca.news. yahoo.com UN. Urgent international scrutiny needed in Sri Lanka, say UN rights experts. Retrieved from http://www.un.org. Accessed on May 08, 2009.

FOUR STUDIES IN NON-STATE EXPERIMENTS WITH PEACEMAKING IN CONTEMPORARY INDIA Samir Kumar Das ABSTRACT While internal wars have acquired a new lease of life in the post-Cold War era and the capacity of the states has become limited thanks to globalization, non-state actors are seen to play an increasingly important role in handling and mitigating them. The paper focuses on four such interventions in contemporary India ranging from (a) parties themselves striving hard for bringing the conflicts to an end and (b) “third party” acting as a mediator to (c) both armed and unarmed interventions of organized nature and (d) initiatives individuals take while trying to resolve them. Not all such interventions are necessarily civil society interventions for the latter aim not only at ending conflicts but ending them in a way that establishes the principles of rights, justice, and democracy.

Cooperation for a Peaceful and Sustainable World, Part 2 Contributions to Conflict Management, Peace Economics and Development, Volume 20, 197
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INTRODUCTION Nuclear wars, or for that matter conflicts threatening to turn into such wars, seem almost avoidable today. The real threat comes from the growing number and ferocity of internal wars being fought in vast parts on an everyday basis, particularly of Asia, Africa, and Latin America. More than two-thirds of violent conflicts today falls under this category. States have killed their own citizens more than their enemies. As the Cold War came to an end and the threat of nuclear wars became distant, local wars fought within nations, localities, and regions are taking their toll on us. Groups and communities, hitherto lying dormant under strong states or the threat of local wars eventually spiraling into full-scale nuclear war, are up in arms on the basis of their ethnic and religious identities or various other forms of affiliation and are settling scores by spilling each other’s blood. Millions are displaced from their homes and are constantly on the move. The states and other political agencies are found to be increasingly inadequate to meet this threat. Simple military solutions—whether by state or other multilateral institutions—have already turned ineffective, at times counterproductive. With the proliferation of cheap and light weaponry across the globe, none of us feels safe and secure. While we are facing newer threats, our responses bear the legacy of the Cold War. Newer threats call for newer responses. Such issues as rights, justice, and democracy were always left to the sovereign states for decisions. And now with the disintegration or at least the loosening grip of states in many parts of the world, these issues have acquired a certain measure of autonomy from them. Thus, the state is no longer viewed as the sovereign agency for deciding the demands for homeland, rights of the indigenous peoples to justice, and albeit contentious claims over resources and environmental protection, etc. While issues of rights and justice refuse to be settled within the confines of predominantly state-centric “democratic” institutions already in place, we are yet to evolve appropriate institutions in this regard. Civil society institutions are often offered as a solution. These institutions—as some of the great liberal philosophers would have us believe—were required to keep the state under a leash, perhaps not to replace it. This paper highlights (a) the issues underlying some of the major conflicts in contemporary India; (b) four of the non-state initiatives and experiments with conflict resolution, which to my mind are important; and finally (c) some of the challenges they face while trying to manage and

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resolve the conflicts. The four studies assembled here are only a preliminary attempt at appreciating the complexities involved in the non-state experiments with peacemaking and conflict resolution in India. The chapter does not intend to go into the controversy of whether this entire plethora of initiatives undertaken by some of the non-state actors while seeking to resolve the conflicts can as well be designated as civil society initiatives. Being what they are, experiments are met with varying degree of success, and there is hardly any scope for valorizing or celebrating them. Nor should our portrayal of these initiatives give one a sense that state’s role as an actor in conflicts—whether by generating and abetting or by mitigating and resolving them—has in any way diminished. But it is important to note that the decade of the nineties has witnessed a rising intensity and incidence of conflicts on the one hand and an amazing proliferation of civil society on the other, or more broadly, non-state groups intent on resolving conflicts of some sorts.

I The report submitted very recently by the Administrative Reforms Commission describes “Maoist violence” as the single most potent source of conflict in contemporary India—potentially much more threatening than even the conflicts centering on secessionist and independentist demands. Prime Minister Dr. Manmohan Singh has described it as “the single biggest internal security challenge” confronting the country. Maoism in India has traveled from an unknown village of Naxalbari in West Bengal in the late 1960s to reach, by 2006, 509 police stations comprising 7,000 villages of as many as 11 states of the Indian Union covering the heart of India. This accounts for almost 26 percent of the country’s geographical area. About 35 percent of the country’s total population is now affected by Maoist violence. Approximately 6,000 persons have lost their lives as a direct result of this conflict in last 20 years, with an estimated 4,000 killings occurring in the last decade. According to government estimates, 4,666 persons have fallen prey to Maoist violence during 2002
2006. Overall 3,674 people have died in 3,032 insurgency-related incidents in Jammu and Kashmir, Northeast and Maoist violence alone between January 2004 and March 2007, making it the second deadliest region in the world after Iraq. Although insurgent attacks are specific to particular regions, Islamist militants strike all over the country (see Table 1).

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Table 1. Number of Deaths by Different Kinds of Violence (Jan 2004
Mar 2007). Islamic terrorista Left extremists Northeast terrorists Others Unknown

1878 974 751 16 55

Source: The Times of India (Kolkata, 1 September 2007, p. 8). a The data assembled here are government estimates and such terms as “terror” and “terrorists” are freely used in government circles. The use of such terms in this table does not necessarily mean that we too subscribe to them.

It has been estimated that about 41 percent of the fatalities have occurred in Jammu and Kashmir alone while 27 percent resulted from Maoist violence affecting 14 states—particularly Chhattisgarh, Andhra Pradesh, Jharkhand, Bihar, Maharashtra, Odisha, West Bengal, Uttar Pradesh, and Karnataka. About 20 percent of all fatalities were a result of the multiple insurgencies of India’s Northeast. More than 40,000 persons lost their lives in the J&K conflict since 1989 with an average of 100 persons killed per month. While 715 people died in 2005 in the Northeast, 627 were killed in militant violence in 2006. The “Maoist violence,” now 40 years old, differs from other insurrectionary movements at least in three respects: First, instead of aiming at secession from the Indian State, it intends to change the political system of the country and transform its socioeconomic structure. Second, because of this wider all-India perspective, it has been able to avoid interethnic and communal or religious feuds, which mar many other insurrections (like, Naga-Kuki, Bodo-Santhal, Karbi-Dimasa, Hindu-Muslim, and HinduSikh conflicts). Third, as for its tactics, unlike other conflicts it has generally avoided indiscriminate terrorist attacks that kill ordinary citizens on a mass scale—although in some areas it has destroyed public property and indulged in extortions from the common people.1 This does not however mean that the ethnic and communal conflicts are on the wane. As we enter global times, these old conflicts have undergone substantial changes as much as newer conflicts have emerged, making the task of resolution all the more complex and difficult. At one level, state’s control over people’s world of identities—not just in India but everywhere—has loosened. Thanks to globalization, our national identity is only one of many identities—and not necessarily the most dominant one—that

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we have today. At another level and as a corollary to it, globalization has made it possible for the otherwise locally and regionally based identities to bypass and cut across the national boundaries and become part of global and transnational networks. Most of the ethnic and communal groups today have their global links. The global has impinged on the local and vice versa, thanks to globalization. The process has offered to the locally based ethnic groups the opportunity of being in league with global actors and multilateral bodies. This has contributed to a certain sharpening of these identity-based conflicts. Globalization has transformed these conflicts into what in official circles is known as “terrorism.” According to Government figures, 47,371 persons have died due to terrorist violence during 1994
2005. As India turns into what USAID has recently designated as a “transforming economy,” newer conflicts have surfaced. The GDP is growing by about 9 percent, while the corporate sector is growing furiously at a little over 12 percent. Sensex has already crossed the 20000 mark. The savings rate is increasingly gaining in percentage terms and now stands at an impressive 33 percent mark. Yet, agriculture is lagging behind with only 2
3 percent rate of annual growth. Starvation deaths in the countryside are not uncommon. Agriculture is stagnating and the fragmentation of land due to the disintegration of families and overcrowding has apparently made land unproductive and trapped it in some form of low-employment equilibrium. Economic planning now focuses more on industry and the industrial strategy of acquiring mainly agricultural land and giving it to the private investors for setting up industries and Special Economic Zones (SEZ), which have already become a new source of conflict in many parts of India. SEZs are set up with the objective of attracting private investments by way of offering tax cuts and other infrastructural support. The Central Government has so far cleared 237 SEZs scattered over such states as Maharashtra, Andhra Pradesh, Karnataka, Tamil Nadu, Punjab, Haryana, Uttar Pradesh, and West Bengal after the passage of the SEZ Act in 2005. According to newspaper reports, in West Bengal alone, over 200,000 acres of land are supposed to be acquired by the government. In many parts of India, conflicts are taking place on the issue of government’s takeover of cultivable land. About a million small and medium-sized landowners and perhaps a few million more earning their livelihood from agriculture, whether as sharecroppers or landless agricultural laborers plus their families, are going to be affected by it. The signs of discontent are particularly visible in the states of Punjab, Maharshtra, Odisha, Andhra Pradesh, and West Bengal. New and hitherto unknown political

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organizations and alignments have come into being, cutting across ethnic and party lines. The conventional political parties do not seem to be in the forefront any longer. In many cases—such as in the cases of the Bhumi Uchchhed Pratirodh Committee (or the Committee for Resisting Eviction from Land) or the Krishi Jami Raksha Committee (Committee for the Protection of Agricultural Land) active in Nandigram and Singur of West Bengal—the new organizations that have come into being represent diverse forces at times in opposition to each other. In many cases, established political parties have also witnessed mass desertions at the local level resulting often in a certain swelling of the ranks of newly set up organizations. While all this shows a perceptible depreciation of established political organizations and parliamentary forces, one wonders whether these changes might translate into electoral reverses or not. Besides, many of these conflicts we mentioned are of an overlapping nature.

II Although different types of conflicts call for different forms and strategies for solution, there is a growing realization even in government circles that a simple law-and-order approach to the conflicts mentioned above will not be enough. After a close reading of memoirs and interviews, Ashis Nandy, for example, notes that fatigue has already set in, particularly in the ranks of the security forces, and a certain realization has dawned upon the policy makers that strong arm tactics will not pay in the long run (Nandy, 1989). The role of civil society groups and initiatives in managing conflicts and eventually settling and resolving them can hardly be underestimated. Although in recent years the surfacing of conflicts is often seen to be accompanied by a certain disintegration of civil society groups and initiatives, all is certainly not lost. In the context of the recent carnage in Gujarat, such civil society groups as Sabarmati Ashram—that could have played a crucial role in mending fences between communities had Gandhi been alive—were shut while protecting their auspices from the threat of vandalization by communal forces. As Teesta Setalvad of Communalism Combat reports: Where also amidst the savagery, injustice and human suffering is the ‘civil society’, the Gandhians, the development workers, the NGOs, the fabled spontaneous Gujarati philanthropy which was so much in evidence in the earthquake in Kutch and Ahmedabad! The newspapers reported that at the peak of the pogrom, the gates of Sabarmati

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Ashram were closed to protect its properties, it should instead have been city’s major sanctuary. Which Gandhian leaders, or NGO managers, staked their lives to halt the death-dealing throngs? It is one more shame that we as citizens of this country must carry on our already burdened backs, that the camps for the Muslim riot victims in Ahmedabad are being run almost exclusively by Muslim organizations. It is as though the monumental pain, loss, betrayal and injustice suffered by the Muslim people is the concern only of other Muslim people, and the rest of us have no share in the responsibility to assuage, to heal and rebuild. (Setalvad, 2002)

The ethnic and communal conflicts, in other words, do not spare the socalled civil society organizations so much so that these organizations provide the sites where the same conflicts are reenacted or played out. Yet some of the rather unconventional non-state organizations are seen to be playing an active role in mitigating if not resolving these conflicts. In this connection, I propose to refer to four of what I consider as major non-state experiments with conflict resolution in contemporary India. First of all, we may refer to the “Khopade pattern,” named after the famous police officer, Suresh Khopade, who introduced it in Bhiwandi, a medium-sized town of Maharshtra visited by frequent cycles of communal violence till the early 1990s. He learned from his experience as a police officer that Hindu-Muslim conflicts in Bhiwandi almost occur as regular cycles precisely because there is an acute lack of information flow across communities. While the Hindus do not have any live interaction with their Muslim counterparts, the Muslims similarly do not have any kind of live interaction with the Hindus. The result is that both these communities continue to harbor and be guided by certain stereotypes about the other transmitted to them by their respective processes of socialization. In the absence of any live interaction and information exchange, these stereotypes do not stand the test of verification. Besides, he also learned from his experience as a police officer dealing with communal riots that such mechanisms of information exchange (such as Peace Committees) otherwise put in place to preempt eruptions of communal violence crumble precisely at the height of communal violence and do not survive them (see Das, 1998).2 More than the mere presence of these mechanisms and the sense of false satisfaction that we often derive from them, what is most needed is their stability and the ability of these mechanisms to withstand the outbreak of communal violence and conflicts. As a solution he experimented with the idea of establishing mohalla, or neighborhood, committees consisting of an equal number of members drawn from each of the conflicting communities, and headed preferably by a police officer, and ensuring that they regularly meet and discuss issues amongst themselves without divulging their content to

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the outsiders. The equal representation of the Hindus and the Muslims with these committees will prevent the minority Muslims from being swamped by the Hindus while taking crucial decisions. In matters of mitigating communal conflicts and mending fences, the principle one should adopt is to treat the minority not as a minority but as a partner placed on an even platform. The police officer attached to the local police station will not offer any solution but will help the members in finding a solution. His duty is to facilitate, and certainly not to dictate. The task of facilitation ranges from holding regular meetings and bringing the rivaling parties together to providing protection to them during frenzied times. The model worked wonders. While neighboring Mumbai was a standing witness to the worst ever orgy of communal violence in 1992
1993, Bhiwandi was evidently spared of it (see Khopade, 1998).

III The first experiment requires government mediation. The mohalla committees are not left to fend for themselves, but each is kept under a police officer attached to the local police station, having a sense of the locality and the social milieu within which it functions. The policeman serves as the living bridge between communities at the peak of communal riots. This obviously makes a great demand on the will and integrity of the police officer for making these committees function effectively and take an active role in keeping communal riots at bay. But, the second experiment is conducted by the conflicting parties themselves—at times, though, at the instance of Church or any other civil society group. The Naga-Kuki conflict in the hills of Manipur that took its toll of over 600 human lives in early 1990s came to an end almost by that time precisely because the two militant organizations spearheading the conflict reached a mutually hurting stalemate. Although the church urged them to reach an agreement, they eventually came to realize themselves that the politics of vendetta would not be beneficial to either of them. At a time when the rivaling militant organizations are evenly keeled, neither is powerful enough to obliterate the other, and the violence between them does not show signs of subsidence. Continuation of violence gradually becomes a mutually losing game. As a result, the militants reportedly sat together at the instance of the church and demarcated and distributed the villages among themselves for the purpose of exercising control over them. The idea was to isolate the parties, reducing if not

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completely preempting any interaction between the communities. Virtual partition or segregation of the areas of influence is held as the key to the resolution of conflicts. While in the first experiment, the avoidance of conflicts is assumed to be predicated on the frequency and regularity of interaction and information flow between them, the second experiment is based on the opposite assumption that the interactions and information exchanges are responsible for the outbreak of conflicts between communities. The raison detre behind the partition of the subcontinent was also the same: the best way to resolve the conflicts is to keep the communities separate and erect a rigid wall between them. Many peacemaking efforts actually take on such lines. The temporary truce that was brokered between the Liberation Tigers of Tamil Eelam and the State of Sri Lanka at the Norwegian initiative was firmly embedded in the idea of partitioning the space and keeping the army and the LTTE separate so that the contacts and encounters between them might be kept at the minimum, if not completely ruled out. That the complaints of violation finally made the truce unworkable and a complete breach is a different matter. The Indo-Naga ceasefire that is continuing between the Government of India and the National Socialist Council of Nagalim (I-M) since 1997 is also based on the same assumption of quarantining the army from the militants and vice versa. Complaints and accusations of ceasefire violation are freely traded between the rivaling parties. This does not of course leave room for any interaction between the conflicting communities and therefore hardly generates any civility between them. Although peace is sought to be made through non-state initiatives, one still remains unclear whether such initiatives qualify as civic initiatives. In the theoretical literature developed on the subject, civil society is defined primarily as a space where people inhabiting it treat others civilly, that is to say, as individuals or groups with equal entitlements to rights, equality, and livelihood like theirs, and the two modalities of treating individuals and groups civilly and treating them as members of one or the other ethnic community are not only distinct but distinguishable. While the distinction between “us” and “them” is central to the formation of ethnic communities, a certain kind of non-dualistic ethics characterizes the coming into being of civil societies (Bryant, 1995). Partition reenacts the same dualistic logic while setting peacemaking initiatives in motion: The duality of either/or replaces both/and and neither/nor from the peace process (see Varshney, 2001).3 While the Naga-Kuki agreement mentioned above has provided for a reasonably stable peace in the hills of Manipur largely since 1993, partitions historically have ignited more conflicts than they have solved them.

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IV While in the second experiment third party mediation plays only a cosmetic mediating role (because the realization of the futility of conflicts emerges from amongst the parties), the third experiment aims at making peace possible only through third party mediation. It is interesting to note that in times of heightened ethnic and intercommunity conflicts when communal lines are hardened it is mostly the women who are seen to cross the ethnic lines. Men being what they are often find it beneath their honor to mend fences with the members of another community. In fact, athwass (a Kashmiri word that means handshake or the holding of hands as an extension of solidarity or trust) is the name of an initiative conceptualized at the Women in Security, Conflict Management, and Peace (WISCOMP) roundtable held in 2000 that brought together women from Kashmiri Pundit, Muslim, and Sikh communities for the first time in almost a decade since the conflict in its renewed form broke out in the Valley. The main objective of athwass is to familiarize them with the “contrasting realities and narratives” they hold and harbor toward each other, and this is expected to ensure transparency in their dealings with others and dissolve boundaries. Such interventions by women in conflict situations are by no means unique to Kashmir (Butalia, 2002). CRG keeps organizing a series of dialogues amongst the representatives from Eastern India and the Northeast with a view to mutually appreciate the respective positions and differences that keep the conflicting parties apart. While elaborating on the objective, the report on the first dialogue held in Kolkata in 2001 points out the following: We, the members of Calcutta Research Group feel that Bengal is not just adjacent to the states of the Northeast but is also related to the region through social, economic and political networks of human rights and peace. Therefore, as members of a young peace research group we have decided to hold this dialogue in Kolkata hoping that such a dialogue may bring out saner voices of peace in the region. It is in this spirit that CRG felt the necessity of organizing a civil society dialogue where all possible shades of opinion could be represented and rearticulated, organized and reshuffled in a manner that guarantees against privileging of any one of them. (Das & Banerjee, 2001)

Its strategic location in Kolkata gives it a relative distance and, most importantly, a vantage point to bring representatives from different communities otherwise at war with each other to feel relieved and repose confidence in the organizers who are otherwise not involved as parties to the conflicts in the region. At the heyday of conflicts when rivaling parties have virtually broken all normal channels of communication between them,

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third parties play a critical role in serving as a vehicle of communication between them. North East Peoples’ Initiative (NEPI) based in Guwahati and working from within the region seeks “to bring together experts and academics that (sic) can analyze the peace pacts of the past and activists who would attempt to share their experiences with some of these processes—their conditions for success and failure—in order to define the conditions for justice and peace in the region in the coming days.” The first seminar organized by NEPI in September 2005 was successful in drawing together organizations that were partisan and involved in mutual hostility and even conflicts.

V Besides, there have been secular experiments with mitigating conflicts and violence by non-state actors. These experiments may be secular in either of two ways: First, when the members of one community come to the rescue of another in a particular locality or neighborhood at a time when both of them are otherwise involved in a fierce conflict between them. Such examples of Hindus protecting mosques and Muslims protecting temples of their respective neighbors within the same locality are by no means rare. Sometimes political parties are instrumental in cross-mobilizing people to stop violence and arson during communal riots. The Tram Workers’ Union affiliated with the Communist Party of India, for example, while deploying their cadres followed the same logic during the “great Calcutta killing” of August 16, 1946 with the expectation that members of the same religious community are unlikely to attack each other (Banerjee, 2003). Second, the joint resistance by the Hindus and the Muslims (or whoever the rivaling communities are) form resistance groups and committees together on their own and seek to mitigate conflicts. Such groups and committees can function effectively to the extent that their members are able to transcend their narrow ethnic and communal interests. If they are unable to do so, they seek to use them as sites for promoting their interests. Such examples of counter-use are also not rare. For instance, if the Muslims feel compelled to make compromises and thereby peace with the Hindus, then peace achieved in this manner can only be fragile and unstable. The civil society argument in this context will be that “public reasons” (a la Rawls, for instance) must replace narrow ethnic and communal interests. Insofar as people are informed by “public reasons,” that is to say, reasons that are

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understandable to the other, and by common concern, they can be part of the same political undertaking that can alleviate ethnic and communal divisions that otherwise exist between them. The civil society should not be made a part of the slinging power game between the groups and communities. Beyond this point, the argument of common experiment with peacemaking has little agreement among its proponents. One section of proponents following the Gandhian tradition tends to argue that such secular forms of resistance also must be of a nonviolent nature. Violence being of a self-spiraling nature cannot be an answer to violence. Moreover, the exercise of violence per se is immoral and unethical. A softer version of this argument is that violence against interethnic violence must be strong enough to overpower it. Given that the State still wields a monopoly over the legitimate instruments of violence, non-state agencies are not supposed to have such means of superior counter-violence at their disposal. In its absence, what resistance can do is to change the rules of the game and pit nonviolence against violence. Not violence but the moral strength of having transcended the narrow ethnic and communal barriers could be the response to such ethnic conflicts. While this is an essentially moral argument, we have examples of people falling prey to violence because of their moral convictions. Nepaldeb Bhattacharya, an eminent Left leader from 24 Parganas (North) close to Calcutta (now Kolkata), was seriously injured when he stood between two irate mobs and tried to reconcile them. Moral strength may add to one’s physical vulnerability in times of riots and violence. This leads another section of proponents to advocate for secular and armed resistance to ethnic and communal conflicts. At one level, this contests the State’s theoretical monopoly over the legitimate instruments of violence. No State can approve of the presence of armed groups taking the law into their own hands within its territory and punishing those guilty of spreading communal frenzy. Viewed in this sense, there is a necessary antinomy between the two. But at another level, it also makes good the State’s lacuna of enforcing law and order and its inability to put a stop to ethnic and communal conflicts. In that sense, the armed groups only supplement and do not supplant the state. Like many other insurgent groups, the United Liberation Front of Assam (ULFA) based mainly in Assam believes too that people retain their right to violence only as a means of self-defense at a time when violence by the state only helps the “enemies of the people.” The riots that broke out in Nagaon in the wake of the demolition of historic Babari Mosque in December 1992 could have by newspapers accounts gone out of control—

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thanks to the inadequacy of the police force and the weapons at their disposal—had ULFA cadres not intervened in time and launched an armed campaign against the perpetrators of violence. As one report puts it, in the absence of adequate security preparations most of the junior and mediumlevel officers wanted ULFA cadres to take charge of the situation and keep the it under control (Bhaumik, 1992). One must keep in mind that the ULFA was already declared a banned organization by that time. The ULFA was committed to the task of punishing those who took part in the violence against the Bengali-speaking Muslims in 1983. Besides organized interventions, there are many other interventions, which because of their unorganized nature escape our notice. In this connection, I refer to individual interventions as an example. Since these interventions are made essentially by individuals—whether as medical practitioners or otherwise—they fear reprisals from the communities they belong to and grant interviews only on conditions of anonymity. Thus, a gynecologist, who had supervised the birth of baby born of an allegedly Bangladeshi woman held in Raiganj prison lockup in 2004 was subjected to severe forms of social ostracization. As anti-immigrant sentiment runs high, he and his family are denied almost all essential social services including those of barbers and washmen, and even vendors in the local market refuse to sell vegetables to them. Daily life becomes unusually difficult for this family. He has to go all the way to distant markets to stock provisions. The children of his locality refuse to play with his three daughters. The doctor on condition of anonymity told me: “I have done whatever I thought was necessary for me to do at that time; let others think of the nation. I have no regrets.” As a matter of fact, he has to suffer all this because of his personal convictions. He is nobody in the political world—neither a member of any political group nor an enthusiastic voter; nor is he known for his consistently radical political views. Yet he dared to cross the frontiers of the nation at the risk of being branded as an antinational while responding to his professional calling. A local doctor, an ordinary mortal—a devil in the locality, yet an ethical being! It is the ethicality of the ordinary that enables one to transcend the boundaries despite all the ambiguities and ambivalences involved in such initiatives. These examples are by no means rare (see Das, 2008).4 Although such interventions prove to be very effective in cases of interethnic and communal conflicts, civil society groups based primarily in urban and metropolitan centers are only slowly responding to the Maoist and landbased conflicts. This obviously speaks a lot about the nature of our civil society groups and institutions.

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VI We do not know whether it is possible to characterize these experiments as civil society experiments. The mainstream notion of civil society, heavily influenced by Western thinkers, views the latter as a space that is only pitted against the State but is civil in more positive terms. Any non-state space is not necessarily civil unless it treats all individuals and groups belonging to it as equal and fully rights-bearing citizens. In that sense, ethnicity based on an ineradicable dualism between “us” and “them” is antithetical to the very idea of civil society. But, such a non-dualistic ethic characterizing the mainstream notion of civil society may also emerge from within the ethnic groups and communities (see Uberoi, 1996).5 In simple terms, one does not necessarily have to stick to the otherwise commonplace ethnicity-civil society dichotomy in order to appreciate the role of civil society in a country like India. Indeed, the assumed dichotomy has inspired many reformulations of civil society, particularly the newly emerged concept of “political society.” Our studies are intended to throw insight into the possibility of reimagining civil society in a non-Western context. It demands an altogether different reading of our history and society. These studies also show that there is no civil society out there existing as a given space in a society shot with conflicts. The articulation of this space depends on the politically expedient character of negotiations by the non-state actors with the conflicts. The problem with the dichotomized view of civil society is that it seeks to define civil society as a space and not as a process whereby such a space gets articulated or does not get articulated or even articulated in a different manner. That is the reason why I have avoided the term “civil society” and used the politically less controversial term “non-state actors.” The involvement of non-state groups and initiatives in the peace process may not help infusing peace with the principles of rights, democracy, and justice. Civil society initiatives attempt to bring these principles to bear on it. We must keep in mind that the peace process unleashed by non-state actors may often culminate in the production of a very “illiberal” society.

NOTES 1. The point was mentioned by Sumanta Banerjee in his presentation in a seminar on Remaking the State: Conflicts and Peace Processes in South Asia, organized by the Nelson Mandela Centre for Peace and Conflict Resolution, Jamia Millia Islamia, New Delhi on March 9
10, 2007.

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2. Even established and organized political parties are unable to survive communal flare-ups. 3. Varshny, however, does not take into account the role of segregation and partition in mitigating ethnic conflicts. 4. For a theoretical analysis of democracy cutting across borders. 5. J. P. S. Uberoi, for instance, seeks to find the traces of such a non-dualistic ethic in the religious traditions of Sikhism and Shiite Islam and regards them as the basis of civil society. Such non-dualism makes us appreciate our differences from others and vice versa without being hostile toward them.

REFERENCES Banerjee, S. (2003). Asamanya birgatha. Calcutta: National Book Agency. Bhaumik, S. Sena-Police Nai, Nagaonke Banchalo ULFA Jangirai (in Bengali) [Not the Army, Nor the Police, the ULFA Militants Saved Nagaon] in The Ananda Bazaar Patrika, December 15, 1992. Bryant, C. G. A. (1995). Civic nation, civil society and civil religion. In J. A. Hall (Ed.), Civil society: Theory, history, comparison (p. 147). Cambridge: Polity. Butalia, U. (Ed.) (2002). Speaking peace: Women’s voices from Kashmir. London: Zed Books. Das, S. K. (1998). Dangar Dawai Naki Munider Matibhram? (in Bengali) [Solution to Communal Riots or the Muddle of the Wise?’] in Shubhashree, 37, Annual Number, 1998. pp. 33
34. Das, S.K. (2008). Democracy beyond borders: Indian democracy in the age of globalization, In B. Brar, et al., (Eds.), Globalization and the politics of identity in India. New Delhi: Pearson Longman. Das, S. K., & Banerjee, P. (Eds.) (2001). Civil society dialogue on human rights and peace in the Northeast, Calcutta (p. 1). Calcutta: Calcutta Research Group. Khopade, S. (1998). Bhivandi riots 1984. Mumbai: Granthali. Nandy, A. (1989). The political culture of the Indian state, in Daedalus, fall. Setalvad, T. (2002). Cry the beloved country: Reflections on the Gujarat massacre, in The Other Voice, March 2002, pp. 222
223. Uberoi, J. P. S. (1996). Religion, civil society and the state: A study of Sikhism. Delhi: OUP. Varshney, A. (2001). Ethnic conflict and civic life: Hindus and Muslims in India. New Delhi: OUP.

MILITARY EXPENDITURE AND ECONOMIC GROWTH IN SOUTH ASIA Hou Na and Chen Bo ABSTRACT In this study, we empirically investigate the effect of military expenditure on economic growth in the five South Asian countries of Bangladesh, India, Pakistan, Nepal, and Sri Lanka over the period of 1990
2006. By applying a Solow Growth Model, empirical evidences derived from panel estimation methods indicate that defense has a negative effect on economic growth in the region.

INTRODUCTION The effect of military expenditure on economic growth in developing countries has been investigated by many literatures. However, there is little consensus of the effect from defense on growth and the diversity seems to come from the use of different samples, different time periods and different theoretical and empirical methods. Military expenditure could have negative, positive, or insignificant effects on economic growth. For example,

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Dunne and Uye (2009) survey 102 studies on the economic effects of military expenditure and reveal that almost 39% of the cross-country studies and 35% of the case studies find a negative effect of military expenditure on growth, with only around 20% finding positive for both types of studies. The purpose of this chapter is threefold. First, it aims to examine the effect of military expenditure on economic growth for the five South Asia countries of Bangladesh, India, Pakistan, Nepal, and Sri Lanka, a region that is still mired in conflict with increasing military expenditures. Secondly, as suggested by Dunne, Smith, and Willenbockel (2005), the paper follows a model which integrates implications stemming from defense economics literature into the neoclassical growth model. Thirdly, it provides dynamic panel data estimates for the South Asia countries over the period 1990
2006, which are believed to give robust empirical results. The chapter is organized as follows: The second section briefly reviews the existing defense-growth nexus theoretical and empirical literature. The model and panel data estimation methods are presented in the third section. The forth section provides data and empirical results. Finally, the fifth section presents some conclusions.

LITERATURE REVIEW Military expenditure would have positive, negative, or insignificant effects on economic growth in developing countries. In general, supply side (Feder type) models reveal that defense spending has no significant or (relative small) positive effect on growth (Batchelor, Dunne, & Saal, 2000; Biswas & Ram, 1986; Mintz & Stevenson, 1995; Reitschuler & Loening, 2005; Yildirim, Sezgin, & Ocal, 2005). In contrast, demand side models are associated with a negative effect on growth (Deger, 1986b; Faini, Annez, & Taylor, 1984; Knight, Loayza, & Villanueva, 1996; Smith, 1980). The Deger type (demand and supply side) models tend to show a net negative effect from defense spending to economic growth in most studies (Deger, 1986a, 1986b; Deger & Sen, 1983, 1995; Deger & Smith, 1983; Dunne, Nikolaidou, & Roux, 2000; Galvin, 2003; Klein, 2004; Sezgin, 2001). In addition, causality relationships between military expenditure and growth have been widely discussed in both cross-sectional and individual countries’ studies (Chowdhury, 1991; Dakurah, Davies, & Sampath, 2001; Kollias et al., 2007; Kusi, 1994; Lee & Chen, 2007; Wijeweera & Webb, 2011).

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However, Dunne et al. (2005) argue that the growth models widely employed in defense literature are not used in mainstream growth literature. One should introduce popular growth models into the analyses of the defense-growth relationship, for example, the Barro, the Solow and Augmented Solow growth models which have only recently entered the relevant literature (Aizenman & Glick, 2003, 2006; Dunne & Nikolaidou, 2012; Hou & Chen, 2012; Knight et al., 1996; Murdoch & Sandler, 2002a, 2002b; Yakovlev, 2007). Thus, this chapter applies the Solow Growth model to investigate the effect of military expenditure on economic growth in the five South Asia countries.

THE MODEL AND PANEL DATA ESTIMATION METHODS The Model Based on the discussion of the economic effect of military expenditure and previous studies (Knight et al., 1996), the Solow model with military variable can be parameterized as: growth = a0 þ a1 lny0 þ a2 lnk þ a3 lnðn þ g þ δÞ þ a4 lnm

ð1Þ

where growth is the growth rate of income per capita in the observational period, y0 is the initial level of income per capita, k is investment proxy, (n + g + δ) is the growth rate of effective labor plus depreciation and m is military burden. Thus, the military variable is added into the Solow growth model in an ad hoc way.

Panel Data Estimation Methods Following the growth empirical literature such as Bond, Hoeffler, and Temple (2001) and Yakovlev (2007), the panel data methods applied in this study include static fixed-effect and Feasible Generalized Least Squares (FGLS) estimators and dynamic the first-differenced GMM and the system GMM estimators.

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The Static Panel: The Fixed-Effect Model and FGLS Estimator The FEM restricts the slope coefficients to be constant over both countries and periods and allows for an intercept coefficient, which differs by countries or by periods. The growth equation of FEM to be estimated has the following form: git = ηi þ ðα − 1Þlnyi;t − 1 þ β1 lnkit þ β2 lnðnit þ g þ δÞ þ β3 lnmit þ Eit

ð2Þ

for i = 1, …, N and t = 2, …, T Here the FEM is applied which allow for the unobserved countryspecific effect (ηi Þ. ηi capture differences in the initial level of efficiency. Furthermore, ηi may also reflect country specific components of measurement errors. So the estimation model specifies i-1 country dummies and applies the Least Squares with Dummy Variables (LSDV) estimator. However, the lagged dependent variable on the right-hand side of the growth equation is correlated with the error term. If there is autocorrelation and a country-specific heteroskedasticity, the problems of the static panel data model will be more severe and the normality and homogeneity of error assumption will be violated. The use of a White’s heteroskedasticity consistent covariance estimator with ordinary least squares (OLS) in fixed effects models can produce standard errors which are robust to unequal variance along the predicted line (Wooldridge, 2002). Hence the FGLS estimator is applied to control for the heteroskedasticity and firstorder autocorrelation in the error term. Dynamic Panel Approaches: The First-Difference GMM and the System GMM The first-difference GMM, proposed by Arellano and Bond (1991) is introduced into the growth literature by Caselli, Esquivel, and Lefort (1996, hereinafter CEL). The dynamic growth regression equation is firstly be taken the first-differences to remove unobserved country-specific effects and then in this first-differenced equation, levels of the series lagged two periods or more of the right-hand-side variables are used as instruments in the regression. By rewriting the above growth equation equivalently, the dynamic growth regression equation is: lnyit = ηi þ αlnyi;t − 1 þ β1 lnkit þ β2 lnðnit þ g þ δÞ þ β3 lnmit þ Eit for i = 1, …, N and t = 2, …, T

ð3Þ

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Taking the first differences, the first-differenced equation is: lnyit − lnyi;t − 1 = αΔlnyi;t − 1 þ β1 Δlnkit þ β2 Δlnðnit þ g þ δÞ þ β3 Δlnmit þ ΔEit ð4Þ for i = 1, …, N and t = 3, …, T Specially, the following assumptions are made. First, the transient errors are serially uncorrelated (i.e., E½Eit Eis  = 0 for i = 1, …, N and t ≠ s). Second, the initial conditions satisfy E½lnyi1 Eis  = 0 for t ≥ 2. Thus, lnyit − 2 and earlier values are correlated with Δlnyi;t − 1 , but not with ΔEit . The values of lnyit lagged two periods or more are valid instruments in the first differenced growth equation. As in recent empirical growth models, regressors, Xit (i.e., the row vector of variables lnkit , lnðnit þ n þ δÞ, and lnmit ) are all treated as endogenous variables. This means there exist correlations between the current value of regressors and current shocks to lnyit , as well as feedback from past shocks to lnyit . E½Xit Eis  ≠ 0 for s ≤ t and E½Xit Eis  = 0 for s > t are then derived. The moment conditions hold for the first-differences equations (Arellano & Bond, 1991) are as follows: EðΔEit yit − r Þ = 0; EðΔEit Xit − r Þ = 0

ð5Þ

where r = 2, …, t − 1 and t = 3, …, T. So the values of the endogenous regressors lagged two periods or more are valid instruments as well. In the presence of heteroskedasticity, autocorrelation and endogeneity, Yaffee (2003) recommends that first-differences GMM estimation with robust (the White and Newy-West) panel standard errors is a robust estimator. However, as shown by Blundell and Bond (1998, 2000) and Bond et al. (2001), when the time-series are persistent or close to random walk processes, the lagged values of the variables are only weakly correlated with the endogenous variables and are weak instruments. The first-differences GMM estimation also suffers from a loss of valuable observations. Under these conditions, the first-differences GMM estimation is likely to perform poorly and has poor finite sample properties (bias and imprecision). Instead, the system GMM estimator suggested by Arellano and Bover (1995) and Blundell and Bond (1998) is more plausible. The system GMM estimator combines two sets of equations: the standard set of equations in first-differences and an additional set of levels

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equations. The first set of equations is the same as discussed for the firstdifferences GMM estimation. The other set of levels equations is: lnyit = ηi þ αlnyi;t − 1 þ β1 lnkit þ β2 lnðnit þ g þ δÞ þ β3 lnmit þ νit Blundell and Bond (1998) provide the additional assumption that:



 E ηi Δyi2 = 0; E ηi ΔXit = 0

ð6Þ

ð7Þ

The sufficient conditions for these additional assumptions are for the series Xit and yit to have stationary/time-invariant means. These allow the use of the lagged first-differences of dependent and independent variables as instruments for the level equations. Blundell and Bond (1998) show that the system GMM estimator results in consistent and efficient parameter estimates, and has better asymptotic and finite sample properties than the straightforward first-differences GMM estimator. As an empirical matter, specification tests proposed by Arellano and Bover (1995) are applied to test the validity of the instruments in our GMM estimation. First, the Arellano-Bond test for the serial correlation is adapted to test whether there is a second-order serial correlation in the first-differenced residuals. The null hypothesis is that the residuals are serially uncorrelated. If the null hypothesis cannot be rejected, it provides the evidence that there is no second-order serial correlation and the GMM estimator is consistent. Second, the Sargan test for over identifying restrictions is used to determine whether there is any correlation between instruments and residuals. The null hypothesis is that the instruments and the residuals are not correlated (i.e., the validity of instruments). Failure to reject this null hypothesis means that the instruments are valid.

DATA AND EMPIRICAL RESULTS Data Data on the five South Asia countries are derived from several different sources for the period 1990
2006. Data on GDP per capita, investment and population are obtained from the Penn World Table 7.0. Data on military burden are taken from SIPRI online database. Table 1 display names, description, and summary statistics of the variables.

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Table 1.

Variable Descriptions. Description

Source

lny lnlagy

Log of real GDP per capita (Laspeyres) Lagged of lny

PWT 7.0

growth

the difference of lny and lnlagy

lnk lnngd m

Investment as a share of GDP Population growth rate n plus 0.05 Military expenditure as a share of GDP

Variable

Table 2.

PWT 7.0 PWT 7.0 SIPRI

The Growth Effect of Military Expenditure in South Asia, 1990
2006. OLS

lnlagy lnk

0.0164* (− 0.0083) 0.0472*** (0.0136)

FEM − 0.0050 (0.0142) 0.0610** (0.0168)

FGLS

DIF-GMM

SYS-GMM

− 0.0115 (0.0076)

0.0002*** (0.0000)

− 0.0031*** (0.0000)

0.0612*** (0.0176)

0.0268*** (0.0078)

0.0382*** (0.0117)

lnngd

− 0.0062 (0.0124)

− 0.0254 (0.0190)

− 0.0105 (0.0110)

− 0.0212 (0.0203)

− 0.0439** (0.0061)

lnm

− 0.0081* (0.0048)

− 0.0264** (0.0075)

− 0.0084** (0.0009)

− 0.0248*** (0.0079)

− 0.0085** (0.0041)

constant

− 0.2039** (0.0783)

− 0.0913 (0.0860)

− 0.1435*** (0.0634)**

− −

− −

− −

− −

− −

0.4606 0.5873

− 0.3040

Arellano-Bond test Sargan test

Notes: 1. Dependent variable is growth. Standard errors are shown in parentheses. 2. “DIF-GMM” is the first-differences GMM estimate and “SYS-GMM” is the system GMM estimate. Instrument used for DIF-GMM are lagged two and further periods of yit lnkit , lnðnit þ n þ δÞ, and lnmit . Instruments used for first differenced equations in SYS-GMM are lagged two and further periods of lnkit , lnðnit þ n þ δÞ, and lnmit ; for levels equations in SYSGMM are Δlnyit − 2 Δlnkit − 1 , Δlnðnit − 1 þ n þ δÞ, and Δlnmit − 1 . 3. The figures reported for the Sargan test and Arellano-Bond test are the p-values for the null hypothesis. 4. Significance levels: *** at 1%, ** at 5% and * at 10%.

Empirical Results The empirical results are reported in Table 2. The econometrics package used is Stata 10. The first three columns of Table 2 report the results using

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the OLS levels, FEM and FGLS estimators, respectively. The fourth column presents the results using the first-differences GMM estimator and the last column reports from using the system GMM estimators. Since in small samples, standard errors tend to be underestimated by the two-step estimator, our reported results from GMM estimators are the one-step estimates. Beginning with OLS results, the estimated coefficient on lnk is statistically significant and with the expected sign. lnngd is not significant. The estimated coefficient on lnm is negatively and significantly related to economic growth. However, the sign of estimated coefficient on lnlagy is unexpected. Then when a FEM estimator is used, the results show that lagged GDP per capita appears to be negative but insignificant. The estimated coefficients on investment and military burden are significant while lnngd is insignificant. Column 3 presents the results using the FGLS estimator. It allows the estimation in the presence of panel specific AR (1) autocorrelation and heteroskedasticity across panels. Only estimated coefficients on investment and military burden are significant. Using the first-differences GMM estimator, the estimated coefficients on initial income and investment are significant. The results show that military burden had a significant and negative effect on growth. The last column of Table 2 presents the system GMM estimate. We do not reject the null hypothesis of Sargan test which indicates the test statistics show a proper specification. All estimated coefficients are significant and with the expected signs. Here the estimate of the coefficient on lnlagy is negative and significant. Physical investment has a significant and positive effect on growth. Both the growth rate of population and military burden had a significant and negative effect on growth.

CONCLUSION This chapter investigates the effect of military burden on economic growth for the five South Asia countries of Bangladesh, India, Pakistan, Nepal, and Sri Lanka for the period 1990
2006, by employing the OLS levels, the FEM, the FGLS, the first-differences and system GMM estimators. When integrating a variable of military burden into the Solow growth model and after controlling for investment and population growth, the empirical results by robust dynamic panel estimators, system GMM provide strong evidences to support the existence of peace dividend. So this chapter makes

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a contribution to defense economics literature and the finding indicates that a decrease in military expenditure would stimulate economic growth in the five South Asia countries.

ACKNOWLEDGMENTS This chapter is supported by Leading Academic Discipline Program, “211 Project for Central University of Finance and Economics (the 4rd phase).”

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554. Wooldridge, J. M. (2002). Econometric analysis of cross-section and panel data. Cambridge, MA: MIT Press. Yaffee, R. (2003). Connect: Information technology. Retrieved from www.nyu.edu/its/socsci/ Docs/pda.pdf Yakovlev, P. (2007). Arms trade, military spending, and economic growth. Defence and peace Economics, 18(4), 317
338. Yildirim, J., Sezgin, S., & Ocal, N. (2005). Military expenditure and economic growth in middle eastern countries: A dynamic panel data analysis. Defence and Peace Economics, 16 (4), 283
295.

IS CHINA AN EMERGING SANCTIONING STATE? Liu Jianwei ABSTRACT China has showed its eagerness in using its economic strength in the very recent years. Is China going to be a major sanctioning state like the United States or the European Union? This chapter argues that although there have been an increasing number of economic sanctions imposed by China with its expanding national interests and growing diplomatic problems, China will still keep a low profile in using economic sanctions because of the restraining factors such as the WTO rules, inherent problems in its economy, the pursuit of a good reputation and its strategy of peaceful development. Thus the frequency and tactics of using economic sanctions may vary according to its rising economy and changing international situation, but that will go in a very limited way.

INTRODUCTION China’s economy growth and especially how it will be made use of, has been deeply concerned about by the rest of the world since the year 2010 when China’s economy surpassed Japan for it has frequently employed

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restricted economic measures in tackling international crisis. It was reported that China had blocked the shipment of rare earth element (REE) to Japan in answering the latter’s detainment of Chinese fishing crew who were caught near Chinese Diaoyu (Senkaku) Island between September and November of 2010. Eight months earlier, after the Obama Administration notified Congress of its intent to sell arms to Taiwan worth 6.4 billion dollars on January 29, 2010, China had for the first time openly declared to sanction American companies involved in the arms sales. During the Huangyan (Scarborough Shoal) island incident in April 2012, Chinese Customs enhanced quality inspections on fruits imported from the Philippines, which was seen as a warning signal of China to employ its economic muscle to advance national interests. With China’s increasing use of economic coercion, more and more curiosity and attention have been cast onto China’s unilateral sanctions. Is China changing from a sanction target to a major sanction sender after decades of economic growth? Why does China increase the use of coercive measures in recent years? Since the foundation of People’s Republic of China in 1949, several sanctions including unilateral, multilateral, economic and noneconomic ones had been imposed on China. At the same time, China also has resorted to economic sanctions to defend its national security and preserve the territorial integrity for several times during the past decades. However, only a little attention has been paid to China’s economic sanctions until the very recent years in contrast with the intense research on that of American or the United Nations. Although economic sanctions have been an attracting research topic in China for years, the majority of these research focuses on the efficacy of economic sanctions and those imposed by the United States.1 Studies on China’s economic sanctions in other countries just begin as well and most of them come as parts of China’s economic statecraft or economic diplomacy research. Clayton Bradley Doss III argued that China prefers to use inducements rather than economic coercion. The exercise of economic coercion is reactionary with limited political objectives such as signaling resolve, official protest or short-term shifts in a target state’s behavior (Doss, 2012). James Reilly found the increasing Chinese economic sanctions are more bark than bite, which is unlikely to deter Washington but will have certain impact on U.S. allies (). The rare but increasing use of economic sanctions of China is a new and important phenomenon. It is a new task for Chinese decision makers to make use of economic strength to protect China’s rightful expanding interests while not undermine its commitment of peaceful development. If China turns to be a major sanction sender after 30 years of economic

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accumulation, it will leave an impact on the relations between China and its neighbors, and even the world. This chapter will firstly make a brief analysis of China’s current stance on sanctions, and then probe into the causes of China’s growing use of economic sanctions in recent years. In the end, the characteristics and restrictions of China’s economic coercion will be explored.

THE FORMING OF CHINA’S STANCE ON SANCTIONS China was sanctioned repeatedly during the cold war by the two rival superpowers, while some of the measures still remain today. This kind of experience contributes to the shaping of China’s stance on economic sanctions. The United States imposed twice severe sanctions on China in the past six decades. The first ones began at the founding year of People’s Republic of China and were lifted, waived or superseded since the end of 1960s when the Sino-U.S. relations began to normalize. At the very beginning of 1949, U.S. President Harry Truman announced restricted trade measures against China in the light of the newly enacted Export Control Act. The trade restrictions were escalated to the level of those applied on the Soviet Union and Eastern Europe. After the outbreak of the Korean War, the controls were made even stricter (Rennack, 1997). Besides trade restrictions, noneconomic sanctions like arms embargo, travel bans and diplomatic sanctions were also imposed, which made the sanctions a comprehensive one. With the normalization of Sino-U.S. relations, U.S. sanctions were gradually lifted, which marked the lessening hostility and the improving cooperation between the two states. However, this momentum ended in June 1989 when new sanctions were imposed on China because of the Tiananmen Square incident. On June 5, 1989, President George Bush accused China of “violating human rights” and announced sanctions including suspension of high-level exchanges between the two countries and stopping the sale of all military equipment and weapons to China. In 1990, the U.S. Congress passed legislation to reinforce interim sanctions that President Bush had implemented. The sanctions included a continuance of the suspension of Overseas Private Investment Corporation financing; a continuance of the suspension of U.S. Trade and Development Agency financing; U.S. opposition to multilateral efforts to liberalize the application of export controls that limited goods or technology to China, etc. (Rennack, 2006).

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The Soviet Union also sanctioned China for its disobedience since late 1950s. On June 20, 1959, the Soviet Union terminated the Sino-Soviet agreement on new defense technology made in 1957 and refused to give any support in making an atomic bomb. On July 16, 1960, the Soviet Union notified China that it would withdraw all of the 1390 Russian experts in China within one month, which marked the termination of the 257 projects of technical cooperation and the 343 pieces of contract and its supplement between China and the Soviet Union. These sanctions gave a huge blow on Chinese industry and the plan of socialist construction, and made tremendous difficulties for China’s economic development (Shengzu, 1995). Besides the two superpowers, allies of the United States and the Soviet Union also involved in those sanctions against China to varying degrees. Nevertheless, they were hesitant sanctioning states where the restrictions often began to remove. These sanctions leave China a deep and distinct understanding of economic sanctions which have significantly influenced the shaping of China’s stance on sanctions. As one of the victims of the two superpowers’ sanctions, China could directly and profoundly feel the illegitimacy, moral deficit and low efficacy of economic sanctions.

Firstly, Economic Sanctions are Lack of Legitimacy Sanctio, the Latin origin of the word sanction, was the penalty specified for a transgression of a law or decree and particularly for a violation of a sacredness. The Latin origin thus suggests that a sanction is not simply a penalty imposed for a violation of the rules; it is a punishment for a “wrong” deemed to be immoral, or offensive to the moral conscience, and damaging to the interests of the community as a whole (Nossal, 1989). International sanctions are defined by Margaret Doxey as penalties threatened or imposed as a declared consequence of the target’s failure to observe international standards or international obligations (Doxey, 1996). As a result, exactly speaking, economic sanctions are different from economic statecraft or economic coercion, although the three terms are often used interchangeably. However, economic sanctions in practice are not as sacred as the sanctioning states claim. What lies behind the words “defending the international law” and “protecting human rights” is the pursuit of their selfish interests. U.S. sanctions imposed on China should be seen as the continuance of America’s assisting Chiang Kai-shek in combating Chinese Communism Party since the outbreak of Chinese civil war.

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China’s participating in the Korean War, which was often seen as the reason why sanctions were imposed, only works as an accelerator in the coming of U.S. comprehensive sanctions against China. To some extent, the second waves of sanctions aimed at China since 1989 result from Eastern Europe’s revulsion and the Soviet Union’s declining which made China less important in America’s chessboard. As the victim, China could directly and profoundly realize the hypocrisy of the hegemonic countries’ sanctions, thus is suspicious of the legitimacy of international sanctions.

Secondly, There Is a Moral Deficit in Imposing Sanctions The indiscriminate employment of sanctions not only may fail to change significant policies of the target, but also may cause a mass of unintended consequences to it such as humanitarian disaster, polarization of social classes and increasing criminalization, etc. (Jianwei, 2011). There is a remarkable difference between what the sanctioning state and the target concern. What the former wants to know is to what extent sanctions work while the later concerns about how to withstand the sanctions and reduce losses caused by them. As sufferer of sanctions, the target directly witnesses and experiences disasters resulted from sanctions and thus can profoundly feel the moral deficit of sanctions. Different experiences between the sanctioning state and the target lead to different memories of sanctions, which contribute to different perception on the morality of sanctions. As a direct victim of sanctions, China naturally gives a negative estimation on the moral level of sanctions.

Thirdly, the Efficacy of Economic Sanctions Is Doubtable China is a good case to prove the low efficacy of economic sanctions. Neither sanctions imposed by the United States nor were those by the Soviet Union successful if assessed by changes in China’s policies. The first waves of U.S. sanctions failed to destabilize the newly born Chinese government and prevent it moving closer to the Soviet bloc. Neither were the Tiananmen Square sanctions successful except in conveying disapproval and condemnation. Economic sanctions can signal resolve, demonstrate disapproval, and undermine the target’s economic growth, but hardly could make a fundamental change of policies of the target. The doubtful efficacy of sanctions is what China has learned through its own experience.

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Thanks to its unique experience and perception on economic sanctions, China holds a negative and prudent stance on economic sanctions. In principle, China disfavors the willful use or threat of use of sanctions in handling international relations; China disfavors the use of unilateral and comprehensive sanctions; the United Nations Security Council has the right to impose sanctions, but it must be prudent and take into account the negative consequences caused by sanctions in advance; China supports efforts to further reform the United Nations sanctions mechanism.

WHY DOES CHINA URGE TO SHOW ITS ECONOMIC MUSCLE? The negative and prudent stance on sanctions does not mean that China simply opposes the use of sanctions. China has begun to show its economic muscle unilaterally besides participating in sanctions imposed by the United Nations Security Council in recent years, which can be seen from the Sino-Philippines Huangyan Island incidence, China’s rare earth embargo against Japan and the 2010 Nobel Peace Prize incident. This chapter argues that the following four factors contribute to China’s increasing use of economic sanctions.

Growing National Interests Require Diversified Tools to Defend A country’s national interest is changing according to its economic growth, technological development, political awareness and the change of international situation. In past years, especially since the unveiling of America’s new Asia-Pacific strategy, China encounters a growing number of challenges from its neighbors. As territorial disputes with Japan, Philippines, and Vietnam intensify, it becomes a priority of China to protect its territorial integrity and maritime security. The content and ranks of China’ national interests is changing with its rising comprehensive national strength, expanding sphere of economic activities and deepening integration into international affairs. What accompanies China’s rise is growing expectation from the rest of the world, thus the reputation of a responsible power becomes a new element in China’s national interests, or at least becomes more important for China. In order to reduce mutual misunderstanding and maintain a good reputation, it is a must to pay more attention

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to advancing public diplomacy and cultural exchange which has been emphasized in President Hu Jintao’s report at the 18th Party Congress.2 The changes in China’s content of and perception on national interests can be seen clearly from the high importance placed on protecting Chinese oversea interests in the last decade. For example, Chinese ministry of foreign affairs has released “a guide for consular protection” and set up a column named “special travel alert” on its website.3 Diversified and multilevel tools are required to safeguard China’s growing rightful national interests. Military force, diplomatic works, foreign economic policy, and international law are all tools to protect a state’s interests. Military measures are of high efficiency but costly. What’s more, they are not consistent with the principles of China’s foreign policies such as opposing the willful use of forces. Political dialogue and international law are important and less costly, but they are not sufficient enough to cope with thorny security and territorial problems. Smart use of economic strength could do more. Critical support can be obtained through economic aid while economic sanctions that could cause substantial losses to the target will make it more prudently in making a decision. Compared with economic aid, China is a newcomer in employing sanctions to achieve diplomatic gains. Economic sanctions have many functions and advantages. They can demonstrate resolve to the targets, assuage domestic criticism and deter similar actions of the rest of the world. Therefore, it is important for China to prudently explore economic sanctions to safeguard its growing national interests.4

Increasing Diplomatic Disputes Need New Thinking to Cope With The rapid rise of a new power will have a fundamental impact on the international structure and then the international relations. In past years, China faced a growing number of thorny diplomatic problems with its neighbors, the United States and even some developing countries, which to a large extent could be called “growing pains.” To begin with, the rise of a new power will affect the relative power and interests of the current powers and subsequently trigger the latter’s containment. Although China’s economic progress has contributed to the growth of the developed economies, it has also augmented competitive pressure on them and reduced their interests in international organizations such as the IMF.5 What’s more, the decreasing superiority and the growing sense of relative deprivation boost the “China threat theory.” Consequently, the

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developed countries especially the United States emerge as the primary makers of diplomatic troubles facing China. Next, the regional structure will also be affected. States tend to see their rising neighbor as a threat because of psychological, informational, and historical reasons. As a result, they will either go to collective defense or draw outside powers in to make balance. Territorial disputes between China and some of its neighboring states get worse in the last decade, which is one of the consequences of structural changes in the Asia-pacific area and poses a severe challenge for China’s neighboring diplomacy. Another consequence of China’s rise is growing expectations of China responsibility from the developing world. For example, some African states require more economic aid and debt relief from China and hope to see China head to modify the unjust and unfair international order. However, these high expectations go beyond China’s capability and are inconsistent with China’s grand strategy. Once the expectations are not satisfied, relations between China and these states are inevitably impacted. Last but not least, faults and flaws in implementing China’s “going global” strategy also contribute to the increasing difficulties in China’s diplomacy. Selfish behaviors of some Chinese oversea companies, cultural shock and lack of official direction and supervision all have a lot to do with the escalation of small economic disputes to thorny diplomatic problems between China and the host countries. With the expansion and deepening of Chinese economic activities worldwide, diplomatic disputes caused by wrongful implementation of the “going global” strategy may be on the rise. As the occurrence and characteristics of these disputes are quite different from these in the past, new thinking and tools should be employed in dealing with them. Economic tools must be taken seriously together with the other means to prevent and cope with these new kinds of disputes that cannot be easily handled by a single tool.

Decades of Economic Accumulation Has Enhanced China’s Capability to Do Something The decision to impose sanctions primarily depends on two factors: the comprehensive economic power and the mutual interdependence between the sanctioning and sanctioned states.6 Economic sanctions not only hurt the target but also incur economic loss to the sanctioning state itself. Generally speaking, the great economic powers are also the major sanctioning states in the world because they can endure more losses caused by

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imposing sanctions and have more foreign economic instruments choices. The mutual interdependence also matters. Asymmetric interdependence empowers those who depend less than the others.7 Therefore, economic sanctions are not games exclusively of the great powers. If small states get favorable asymmetric interdependence against the great powers in some specific sectors, they can use economic sanctions to serve their interests as well. The steady growth of China’s economy during the last three decades has enabled China to make use of economic sanctions. China has gained a steady and rapid GDP growth since the policy of reform and opening started, and has surpassed Japan in 2010 becoming the second largest economy in the world. The economic success has enhanced the attractiveness of Chinese market, increased China’s foreign investment and aid, and strengthened its capability to bear sanction losses. Take foreign trade as an example, China has become the largest exporting country and the second largest one in international trade since 2009. What’s more, China has become the largest export destination of Japan, South Korean, ASEAN, Brazil, South Africa, and so on, the second largest one of the European Union, and the third largest one of the United States and India.8 The favorable asymmetric interdependence between China and its neighboring states, some of which also have territorial disputes with China, enable it to use economic tools to safeguard its rightful interests. Apart from that, China’s irreplaceability in certain economic areas such as the rare earth supply and great international travel demand is also an important tool in coping with diplomatic disputes.9

Domestic Studies Offer an Intellectual Support in Rethinking Sanctions The progress of Chinese domestic studies on sanctions has contributed to the gradual change of China’s thinking on and then the increasing use of economic sanctions. There are at least three remarkable progresses in Chinese domestic studies on sanctions. Firstly, academic research has replaced ideological criticism. Domestic sanctions “studies” began in harsh criticism on western economic sanctions, especially on their illegitimacy and low efficacy. During the last two decades, Chinese scholars have paid a serious and value-free attention on economic sanctions. Jian Jisong, a Chinese expert on international law points out, “the current international law has not prohibited unilateral sanctions,” although “they should be consistent with the overall interests of the

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international society and the current international law” (Jisong, 2007). And they have recognized for a long time that the dominant idea of sanctions has changed from comprehensive sanctions toward targeted or smart sanctions which have lessened the humanitarian consequences and reduced the moral objections in imposing sanctions from the international society. These value-free studies have laid a critical foundation on the objective evaluation of the efficacy of economic sanctions. Secondly, the issue of China’s economic sanctions has gradually become an academic topic. Impelled by the increasing number of thorny diplomatic disputes, some of Chinese scholars have turned to explore the feasibility of China’s economic sanctions policy. Liu Wei argues that use of economic sanctions has been necessitated by the growing international approval of economic sanctions, the increasing dependence of the neighboring states on China, and the lessening humanitarian consequences caused by sanctions (Wei, 2008). This point is echoed by Liu Jianping and Zheng Xutao who suggest that China should make economic sanctions a legal matter and establish a “law for imposing foreign economic sanctions” to make economic sanctions a lawful instrument of China (Jianping & Xutao, 2005). At the same time, some scholars have analyzed the feasibility and prospect of China to impose sanctions against Japan, the Philippines and Taiwan (Xinyu, 2012; Benhui & Li, 2006). At last, economic sanctions studies have gained attention from the government and interacted with the masses. It is a new phenomenon that Chinese officials directly show their interests in economic sanctions in recent years. Since the year 2004, the Ministry of Education and the National Social Science Fund have successively funded economic studies, which open a window for the academia to play a bigger role. What’s more, the studies also interact with the masses whose boycott against Japanese products and some international travels are impacted by the sanctions studies and in turn work as a stimulus in the sanctions research.

CHINA’S UNILATERAL SANCTIONS: CHARACTERISTICS AND RESTRICTIONS Although there were some sanctioning experiences in the past, the mode that China explores sanctions in recent years has been revealing lots of new elements such as diversified sanctioning tools and growing proactiveness. China’s sanction policy in the making is not only attributed to the learning

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from the western states’ sanctioning experiences but also shaped by its specific historical tradition, national conditions, and experiences of being sanctioned. Therefore, the emerging China’s unilateral sanctions have showed distinct characteristics.

Do without Declaration Being quite different from the United States’ publicly declared sanctions and the European Union’s euphemism “restrictive measures,” China seldom publicized its economic coercion. No official document or statement was issued to start or terminate sanctions either in China’s sanctions against the Philippines during the Huangyan Island incident or in the rare earth embargo against Japan in 2010. China tries to avoid using the word sanction even it has encountered incidents gravely threatening its national interests and has already taken countermeasures.10

Sanction Informally There are a series of laws or written regulations setting the basic principles, measures, and procedures of economic sanctions in the United States and the European Union. Yet no such formal documents can be seen in China. “Beijing Prefers to use vague threats, variation in leadership visits, selective purchases (or non-purchases), and other informal measures” (Reilly, 2012, p. 123). Although some Chinese scholars have been calling on making a law to formalize and normalize China’s economic sanctions for a long time, yet there is nothing signifying that China has made good preparations on that. Informality means flexibility which is of great importance to China who is short of sanctioning experience.

Pursue Limited Goals As one of the past targets of international sanctions, China knows exactly what sanctions can do and what they cannot. Economic sanctions may incur losses to the target, undermine its economic potential and impact its future decisions; however, they cannot guarantee the favorable changes in the target on issues of critical importance such as territorial disputes and national security. China‘s economic sanctions pursue quite limited goals

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including signaling dissatisfaction, demonstrating resolve, accelerating dispute settlement and assuage domestic criticism. In addition, China has not unrealistically relied on economic sanctions to obtain a thorough resolution of diplomatic disputes. What China expects from economic sanctions is their potential role in terminating a specific incident such Japan’s detainment of Chinese fisherman, Sino-Philippine confrontation on Huangyan Island.

Pragmatism Goes First All of the sanctions China imposed in recent years are simply to safeguard its core national interests rather than uphold the international law, preserve regional stability and protect human rights as the United States does. Take the only declared sanction as an example, Chinese spokesman of the foreign ministry said “the U.S. deeds gravely harmed China’s core national interests ” when explaining China’s preparation to sanction American companies involving arms sales to Taiwan.11 The principle of pragmatism in using sanctions distinguishes China from the western sanctioning states and the United Nations. These characteristics of China’s economic sanctions are rooted in China’s specific history and traditional culture, and have a lot to do with its current grant strategy. The frequency, number and tactics of China’s economic sanctions may change with the rising GDP, varying international situations and growing sanctioning experience. However, the pattern of China’s economic sanctions will be relatively stable in the future for it is restrained by the following factors. Firstly, regulations of international organizations like WTO work as a limitation. It took 15 years for China to join the WTO from which China has benefited enormously. Undoubtedly China has been shaped by WTO rules through its interaction with the other members, which has an impact on China’s foreign economic behaviors. To avoid punishment from WTO explains why China sanctions informally without declaration. For example, China was complained by the United States, European Union, and Mexico as early as the year of 2009 for its export restrictions on nine raw materials essential to high-technology manufacturing in violation of WTO rules. And WTO affirmed this complaint two years later.12 Although rare earth was not on that list, it surely dealt a blow to China’s use of rare earth as a weapon to punish Japan in 2010 and later.13 That will be a good reason why China denied there was a rare earth embargo during the Diaoyu

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Island incident in 2010 and why no such measures were taken in the later Sino-Japan disputes around territorial issues (see Doss, 2012).14 Secondly, the current economic strength and structure are not able to afford long-term and large-scale sanctions. China has made a remarkable economic progress in the past three decades. At the same time, China’s economy also faces a lot of structural problems. As far as the foreign trade is concerned, governor of the People’ Bank of China Zhou Xiaochuan pointed that it accounted for over 60% of China’s GDP in 2008 (Xiaochuan). What’s more, the export has a larger share (37% in 2008) in the GDP than the import (Weiying). On the whole, China is still on the lower site of global economic chain. Just as James Reily said, “the majority of China’s massive trade surplus still involves processing trade, or importing intermediate materials and exporting finished products. Selective trading bans would disrupt these complex production chains, chasing investors to alternative manufacturing locations such as Vietnam. China’s leaders can ill afford to undermine their export-driven manufacturing sectors amid global economic uncertainty (Reilly, 2012, p. 130).” Unless encountered wars or severe crisis, the low-profile and limited way of using sanctions will continue. Thirdly, unilateral sanctions go against the pursuit of a reputation as a responsible power. A good reputation is of great importance for China to reduce the haunting “China threat theory” and obstructions during its rise. The willful use of unilateral sanctions is going to undermine the efforts of constructing an image of responsible member of the international system and the limited trust between China and its neighbors. The pursuit of a good reputation has restrained the frequency and extent of China’s economic sanctions and prevented its reliance on coercive measures to handle disputes. Fourthly, the current stance on sanctions limits the probable change of China’s sanctions policy as path dependence does. China has announced its negative and prudent stance on sanctions plenty of times in various occasions. Among the three factors significantly influenced the formation of China’s stance, the traditional culture, sanctions sufferings and the grant strategy, only the third one is a variable. China adheres to the road of peaceful development which has been written into the official documents of the party and the government. Just as Dai Bingguo, a state councilor, explains, “China’s peaceful development is deeply rooted in its history and culture, shaped in China’s development and experience, based in China’s national conditions, consistent with currents of international cooperation and cemented with China’s national will (Bingguo, 2011).” In consequence,

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the current grant strategy of China has inherent stability and can be seen as a constant, which naturally will restrain the change of China’s economic sanctions policy.

CONCLUSION It is a common and prevailing phenomenon to employ one’s economic strength to serve the diplomatic and security needs. China’s economic sanctions are concerned not because China’s economic power has remarkably increased but because its intention or commitment to peaceful development has not been fully convinced of for the others. The increasing number of economic sanctions China employed in recent years results not only from its economic rise but also from the requirements of its expanding national interests and of coping with the increasing diplomatic problems. Progress of China’s domestic research on and the masses’ appealing for economic sanctions also contribute to the government’s decision of sanctions. However, that does not mean a significant change in China’s foreign policy and not go against its determination to insist the peaceful development road. What is certain that China’s thinking on economic sanctions is changing and has been reflected in the recent sanctioning practices. There are some special characteristics in China’s unilateral sanctions such as “doing without declaration,” “limited goals,” “sanctioning informally,” and “pragmatism.” With the steady rise of China’s economic power, the growing diplomatic problems and the accumulation of sanctioning experiences, the frequency and tactics of using sanctions may get changed. Nevertheless, China’s stance and policy on sanctions are unlike to be significantly modified as they has been shaped or restrained by the rules of international organizations, the inherent problems of China’s economy, the idea of peaceful development and its historical culture.

NOTES 1. An exception is Liang (2012). 2. The report can be reached in http://www.xj.xinhuanet.com/2012-11/19/c_ 113722546.htm. 3. See http://cs.fmprc.gov.cn/lsyj/. 4. There is a more detailed explanation in Jianping and Weishu (2009).

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5. “China, India win more IMF rights,” http://www.aljazeera.com/business/ 2010/11/201011625936739957.html. 6. It is undoubtedly economic sanctions, decision is also restrained by noneconomic factors such as military alliance, IOs. Here the chapter only pays attention to the economic factors. 7. This idea has been intensely discussed in the following books: Keohane and Nye (2011) and Hirschman (1980). 8. See the water paper on China’s foreign trade, http://www.gov.cn/jrzg/201112/07/content_2013503.htm. 9. The details of China’s international travel situation can be seen in http:// travel.sohu.com/s2012/2012chujingyou/. 10. There is an exception when the Obama administration decided to sell arms to Taiwan in 2010, which caused China’s unusual openly declared sanctions. 11. “Waijiaobu jiu zhongguo zhicai meiguo gongsi, Aobama huijian dalai deng dawen” [The foreign ministry responses to questions on China’s sanctions against American companies and the Obama-Dalai meeting], http://news.xinhuanet.com/ world/2010-02/02/content_12920583.htm. 12. “Shimao zuzhi chubu caijue zhongguo xianzhi jiuzhong yuancailiao chukou weigui” [WTO concluded China’s violation of rules in its export restrictions on nine raw materials], http://news.sina.com.cn/c/2011-02-22/014221990465.shtml. 13. The list includes bauxite, coke, fluorspar, magnesium, manganese, silicon carbide, silicon metal, yellow phosphorous, and zinc. 14. Chinese foreign minister Yang Jiechi and premier Wen Jiabao have, respectively, denied there is an embargo against Japan, and on March 13, 2012, 10 months after the 2010 Diaoyu Island incident, the United States, European Union, and Japan complained to the WTO on China’s restriction on rare earth export.

ACKNOWLEDGMENTS This chapter is supported by Leading Academic Discipline Program, “211 Project for Central University of Finance and Economics (the 4rd phase).”

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