Is the US Response to Ukraine a warning for Taiwan?

The question after Ukraine’s experience is whether the US is more interested in an economics-based approach to foreign policy or a principles-based approach

By Anil Madan

As I write today, we are in perilous times. Vladimir Putin’s forces are destroying Ukraine’s infrastructure, people’s homes, water supplies, electricity, and crimping food supplies. The Ukrainian people, faced with a desperate situation, have touched the hearts of all who condemn these atrocities and are willing to speak up. It is not clear if the Ukrainians can hold on and for how long. Whereas we admire and respect the courage of the Ukrainians, they face formidable ground forces and air power arrayed against them.

The war of Ukraine has not been lost. It is too early to give up hope that the brave Ukrainians will prevail even as we fear the worst. It is not, however, too early for an autopsy of President Biden’s failed effort to prevent a Russian invasion of Ukraine.

Shock waves from Ukraine reach Taiwan. Pic – The Guardian

In recent months, there has been much talk in the United States and western countries that we are seeing a rise in authoritarianism around the world and that we are witnessing a war between Democracy and Authoritarianism. Although the United States has proudly proclaimed itself as the world’s leading Democracy, the lament about authoritarianism versus Democracy, represents a subtle shift. For decades since the beginning of the Cold War with the Soviet Union, and the development of policies of containing the spread of Communism, the contests between the United States and both the Soviet Union which devolved to Russia, and China, have been cast as the struggle between Capitalism and Communism. To be sure, from time to time, the struggle has been pitched as being between free and democratic societies versus dictatorships or tyrannies, but the main thrust has been to emphasize the free market and capitalist foundations of the US and the west as the superior infrastructure of their economic systems over the Communist or centrally planned models.

The tools of Capitalism to deal with conflict

If we look back at the response of the US to real or imagined transgressions by China, Russia, or other countries, against whom it cannot use force, the resort has been to imposing sanctions by using financial tools and coercive exclusion from financial and commodity markets. These are the tactics a Capitalist with monopoly power might use. Of course, when the US has dealt with or “disciplined” less powerful countries, it has resorted to the use of military force. So, it was no surprise that when President Biden warned President Putin that if he invaded Ukraine, he spoke in economic terms and promised that the US would impose wide-ranging severe economic sanctions. This approach reflects the historical nature of US policy that looks to the tools of Capitalism to deal with conflict.

At the same time, President Biden immediately backpedalled and made it clear that his threat of sanctions did not mean that US forces would engage Russian forces on behalf of Ukraine. In fact, he made it clear that US forces would not be deployed against Russian forces. President Biden’s snapback may or may not have left open the question just how much would it take to engage the US. So, shortly after that initial warning and backpedal, President Biden announced that the US would defend “every inch of NATO territory.” This, of course, was an indirect invocation of Article 5 of the NATO Treaty that commits every member country to defending any other member that is attacked. However, he made it unmistakably clear that Putin was free to invade Ukraine without facing US or NATO military power.

The contrast between the approach to Ukraine and to NATO countries was palpable. Undoubtedly, one can justify the difference in approach to Ukraine and the NATO countries by the simple fact that Ukraine is not a NATO country. There is, however, a certain poignancy to announcing that Poland, Hungary, the Czech Republic, Bulgaria, Estonia, Latvia, Lithuania, Romania, Slovakia, and Slovenia are worthy of defending whereas Ukraine must fend for itself albeit with as much aid as the US and the world can provide. In short, Ukraine, albeit a Democracy, demands only the economic response whereas NATO membership commits the US to a political response.

Using distinctions such as Capitalism and Communism to describe the difference between the US and its western allies on the one hand, and China and Russia on the other hand, was historically consistent with economic reality since Russia and China, were communist nations whereas the US and its western allies were capitalist. And, in turn, “Communist” came to be synonymous with “authoritarian” or “oppressive.” In fact, in an exercise of elision between economic and political concepts, Capitalist and Democratic countries, particularly the US, declared themselves synonymous with the “free world.”

Capitalism in China and Russia

In contrast to his use of economic threats in warning Putin, when it came to condemning the Russian invasion of Ukraine, President Biden and spokespersons for his administration have focused on Putin’s attack in political terms, one directed to the Democracy that Ukraine represents rather than in economic terms. There is a mixed message here. The political message from the US and the West is that Democracies are free but whatever China and Russia represent, they are neither Democracies nor Capitalists, and certainly not free societies. The last is, of course, true — neither China nor Russia is a free society.

But the rest of the syllogism may not hold. China argues, as noted below, that it is a democracy. More importantly, the US and the western world have missed that both China and Russia have evolved fairly refined and successful economies that are just as capitalist as the western economies. Of China, this is virtually self-evident but as soon as one understands that Russia is a major player in the world’s oil and gas supply, there should be no question on that score either. Let us not be distracted by the notion that only a very select elite few benefits from capitalism in China and Russia.

There is a new reality in play. Neither the US nor any of the NATO countries has a monopoly on Capitalism. Indeed, an argument can be made that China may have surpassed them all in becoming the world’s most successful Capitalist economy — leave aside that the benefits of such capitalism are limited to an elite few. Indeed, between China being the manufactory of the world and Russia being a major supplier of energy to the world, Xi Jinping and Vladimir Putin may represent the height of capitalism.

Nor, it should be noted, does China cede the title of “Democracy” to America. When US Secretary of State Blinken met in Vancouver shortly after President Biden was inaugurated as President, Yang Jiechi, Director of the Office of the Central Commission for Foreign Affairs, during his well-chronicled 17-minute diatribe stated: “The Chinese people are wholly rallying around the Communist Party of China. Our values are the same as the common values of humanity. Those are: peace, development, fairness, justice, freedom and democracy.” (italics supplied). Indeed, he went further and proclaimed China a Democracy: “The United States has its United States-style democracy and China has Chinese-style democracy.” (italics supplied).

Now although President Biden has imposed wide-ranging sanctions on Russia, he has left its energy exports of oil and gas untouched. Germany and other European countries depend on Russian natural gas. The US imports Russian oil to ensure that its coastal refineries operate at peak efficiency. A White House spokesperson explaining the lack of sanctions in this area, stated: “We don’t have a strategic interest in reducing the global supply of energy.” There you go again, once more, the capitalist reality trumps principled political positions.

Treaty obligations & strategic interest

Getting back to President Biden’s statement about protecting every inch of NATO territory, we should not lose sight of the fact that Article 5 of the NATO treaty does indeed contemplate the use of force against Russia if it attacks a member country. Whether the threat of such force remains viable given Biden’s virtual assurance to Putin that he had nothing to fear in the way of a direct NATO response if he should invade Ukraine, remains to be seen. If Russia does attack Poland, Latvia or Estonia, what is going to happen?

And if we consider the implications for Taiwan, we have to start with the fact that there is no similar treaty obligating the US to come to Taiwan’s defense if China should attack. There is no longer a treaty obligating the US to defend Taiwan but the Taiwan Relations Act that obligates the US to provide Taiwan with defensive capabilities.

How comfortable should Taiwan be about this? Just as the US does not have a strategic interest in reducing the global supply of energy, it surely has no strategic interest in disrupting the vast trade with China. The US and China trade $60 billion worth of goods and services every month. The US trade deficit with China is approximately $40 billion per month or just under $500 billion per year.

A capitalist’s response would surely not involve shutting off his source of supply.

On the other hand, Taiwan is a major supplier of semiconductor chips to the US and is pretty much indispensable in that respect.

A capitalist’s response would surely not involve shutting off his source of supply.

Overlaid on these purely capitalist considerations is the fact that Taiwan is a DEMOCRACY.

The question after Ukraine’s experience is whether the US is more interested in an economics-based approach to foreign policy or a principles-based approach. The US may already have ceded enough leadership when it comes to capitalism.

When it comes to balancing however many semiconductor chips we need against the $60 billion of monthly trade, which side will the US choose?

It is not clear whether political principles will trump capitalist economics.


* Published in print edition on 4 March 2022

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