Taiwan is currently in the midst of an identity crisis. The island nation desires to retain its official Republic of China (ROC) designation while half-heartedly nursing an unconsummated claim to the mainland. Instead, it is relegated to the status of “Chinese Taipei.” This diplomatic ambiguity does the island-state no favors in coaxing, much less obtaining, formal recognition as a sovereign country. It does even less to distinguish Taiwan, at least in diplomatic terms, from mainland China. To be sure, the thought of coexisting side-by-side with another Sinic-based polity is nigh heresy in Beijing. There is probably no higher political transgression than to loudly entertain the very idea of an independent Taiwan within Zhongnanhai, the headquarters for the Communist Party of China (CPC), which also serves as China’s central government.
Taipei squandered the opportunity to break free of the cross-strait ambiguity in 1989 at the height of the June crackdown by Beijing when Western powers and China’s citizens recoiled from the death toll and sheer violence unleashed at Tiananmen Square. Had Taipei formally declared independence then and there, it would have established a credible precedent. Though the move was unlikely to garner immediate recognition, Beijing would not have been able to overturn it without risking further internal instability or throwing an ill-equipped conscripted army into a complex cross-strait invasion. Today, the People’s Liberation Army (PLA) is a far cry from its Maoist iteration of the past, and China’s citizens are mainly in line with an ethnocentric-based nationalism that was mostly absent during the Mao and Deng years.
There is But One China
Half of this problem lies in Taiwan’s retention of the moniker Republic of China and its widely ignored, but constitutional, claim to the mainland. Both are legacies bequeathed to Taiwan by Chiang Kai-shek, who himself aspired to rule over a unified China. Both remain points of contention on the international stage. Additionally, the CPC threatened a kinetic form of “Chinese Reunification” after Taiwanese “desinicization” (sic) efforts. Thus, while denied use of “ROC” outside of Taiwan, its official existence and unresolved mainland claim indirectly serve Zhongnanhai’s narrative — at least for its domestic audiences — that the peoples on both sides of the strait yearn for “reunification.”
Repudiating both would buttress Taiwan’s position as standing apart from China rather than being perceived as a failed pretender for the throne. The present uncrowned King of Greece is a royal consort to the British Queen, a gentle fate to be sure. Trotsky suffered far worse: an icepick to the head. And it conforms with the first leg of the Shanghai Communiqué by resolving Kissinger’s “constructive ambiguity” that there is but one China. It is this re-framing of perspective that Zhongnanhai possibly fears more than a formal declaration of independence bearing the name “ROC.”
Mandate of Heaven
Repeated questioning – or is it discrediting? – of CPC’s one-party rule via the simplistic narrative of “Communism vs. democracy” does Taiwan no favors. While it might score points with pundits and politicians in the U.S. and Europe, it has by far failed to secure formal recognition from governments there. And how does one ascertain legitimacy without a ballot? The fact that more than a billion Chinese citizens pay taxes with and save in renminbi emblazoned with Mao’s face, strongly suggests they deem CPC to be “legitimate” for practical purposes. And what is money but, as Geoffrey Ingham of Cambridge University advocates, “a system of social relations based on power relations and social norms”? It can be argued the moment Germans burnt reichsmarks for heating or used them as wallpaper, marked the beginning of the end for the Weimar Republic and heralded the ascendancy of Adolf Hitler. Such a shift has yet to take place on the Mainland.
Some would argue that Taipei should ungrudgingly acknowledge the CPC’s mainland legitimacy under the “Mandate of Heaven”, a political justification used since ancient times to justify the rise or fall of Chinese emperors. It was even enthusiastically adopted by foreign conquerors such as the Mongols and the Manchus that established the Yuan and Qing dynasties, respectively.
Recalling the titular characters romanticized in the famous Chinese classic Romance of the Three Kingdoms, Taiwan is somewhat reminiscent of Liu Bei in his opposition to Cao Cao. The former, a warlord claimant to the imperial throne and a supposed heir to the Han dynasty circa 1-2 CE, contended with the latter who controlled the emperor Xian of the eastern Han dynasty. Present-day Liu Bei, rather than emulate his historical predecessor, should instead render unto Cao Cao what is Cao Cao’s.
Contrasting the “Mandate of Heaven” rule with pluralistic political participation, which denies such divine intercession, would serve better in advancing the cause for a separate, yet distinct, Sinic-based polity. Taiwan’s recent success at averting the coronavirus pandemic, sans WHO membership or a highly centralized rule enabling mass mobilization with minimal resistance, merely affirms such.
Taiwan, in the long run, cannot expect other countries to buy into its present stance when it cannot convince itself, much less its audience across the strait, that an independent Taiwan is not merely an “old wine in a new bottle”. Otherwise, Taipei would do better to negotiate a far less ambiguous future under “One Country, Two Systems”. Ultimately, a raison d’etre for independence would first necessitate the cognitive deportation of the highly monolithic Chinese philosophical and political worldview, mainly colored by Confucius and Qin Shi Huang, the first emperor of unified China, back to the mainland where it truly belongs.
Teoh Jit Khiam works in private practice. He writes on topics concerning Asian politics and history.
This article has been republished with permission from our partner, Stratfor. The original version was first published in Stratfor’s WORLDVIEW and can be found here.
HIGHLIGHTS
Hassan Diab, who is set to become Lebanon’s new prime minister, will not overcome the country’s political, economic or security challenges.
Prolonged political paralysis will heighten Lebanon’s economic crisis, and potentially spark violence as major factions like Hezbollah struggle to hold onto power.
Heightened tensions between the United States and Iran could also lead to more sanctions on Lebanon, or even to open conflict there.
Lebanon’s new candidate for prime minister, Hassan Diab, stands little chance of breaking Lebanon’s political deadlock. And he will face even greater challenges than political paralysis, such as a worsening economic crisis and security crises as Hezbollah turns to stronger tactics to maintain its influence and as the chances grow of a U.S.-Iran regional conflict that could draw in Lebanon.
The Big Picture
Lebanon is engulfed in political paralysis and economic crisis, and its prime minister candidate, Hassan Diab, will not have many ways to overcome either. As the economy worsens, Lebanon’s security situation will become even more precarious. Meanwhile, rising tensions between Iran and the United States could spark a conflict that brings a regional war to Lebanon itself.
Daunting Prospects for Domestic or Foreign Support
Diab, who is set to succeed longtime Prime Minister Saad al-Hariri as prime minister, will face substantial hurdles. These include winning the support of a protest movement that will not accept a prime minister with ties to the establishment, which they blame for Lebanon’s economic crisis and long-standing corruption. They also include simultaneously winning the support of either the country’s March 8 alliance, to which Hezbollah belongs, or the March 14 alliance, to which al-Hariri’s Future Movement belongs. To maintain the support of either of the alliances, Lebanese prime ministers must dole out state support to them and their adherents. But it is precisely that sort of insider activity that is motivating protesters to take to the streets. Protests have helped accelerate Lebanon’s economic crisis by disrupting the economy, driving away tourists and causing capital flight. By pleasing either protesters or politicians, a prime minister angers the other, making it much harder to govern. At the same time that securing domestic support will prove daunting, foreign support will be harder to find. Lebanese prime ministers have often been able to govern thanks to foreign largesse. That support, which in the past has taken the form of direct U.S. or French aid and favorable bond purchases from Gulf Arab states, has allowed the government to spend lavishly to keep its own supporters happy, often through providing government jobs or favorable contracts. But foreign benefactors have become unwilling to grant Lebanon new aid unless it enacts austerity measures, a requirement that would cut the funds the government needs to maintain patronage networks.
This will undermine the political consensus among Lebanon’s major parties (and their associated militias) that has kept them from challenging the sectarian political system, which since independence has guaranteed that a Christian will serve as president, a Sunni as prime minister and a Shiite as speaker of parliament. Moreover, the nonsectarian nature of the Lebanese protest movement undermines Lebanon’s sectarian political system, challenging traditional political players.
Few Good Options for Politicians
Lebanon’s government and political insiders have little recourse. They cannot rally protest movements against their political enemies, like the March 8 and March 14 alliances did in 2005 after Prime Minister Rafik Hariri’s slaying created a political crisis. Today, with the bulk of the protesters angry at all political parties, the alliances don’t have the same rallying power. Beirut can’t increase spending to alleviate the country’s economic woes either, given the drop in foreign aid, the government’s indebtedness and its dwindling foreign reserves. Diab is not immune to these challenges. Though a relatively apolitical Sunni, he faces strong resistance from the protest movement in large part because he’s seen as too close to Hezbollah — and therefore as too much of a political insider. He also lacks the kind of foreign allies to tap for aid that al-Hariri had, though even if Diab did ask, aid would probably not be forthcoming anyway. He is therefore likely to struggle to accomplish much once in office, and may not stay there long. But even obtaining and exercising power effectively would still not solve three other major problems bedeviling the country: the economy, Hezbollah and potential U.S.-Iranian conflict.
The Economy, Hezbollah and U.S.-Iranian Conflict
Lebanon’s deeply unstable economy is worsening. Some major Lebanese bonds are due as early as March, and foreign exchange reserves, a bulwark the country had built up in case of a crisis, are strained by a combination of U.S. banking sanctions aimed at Hezbollah and the deteriorating economy. The United States has broken with its previous policy by bringing sanctions against Lebanese banks and upsetting the country’s delicate internal balance. In 2020, it is likely to seek to further sanction Hezbollah — and by extension Lebanon’s economy, since Hezbollah is entangled with much of Lebanon’s business. These sanctions would worsen Lebanon’s economic situation and complicate any potential foreign bailouts. The longer the economic crisis goes on, the more likely Lebanon is to run short of basic goods and be unable to pay state worker salaries, issues that will impact all sects and political parties. That will weaken the insiders’ hold on their old loyalists and strengthen the protest movement. In a bid to salvage whatever legitimacy they can, Lebanon’s factions — especially Hezbollah — will pivot from financial incentives to physical intimidation, potentially sparking a civil crisis. Hezbollah and its allies would prefer to avoid civil conflict, but they do not want to lose their gains from the May 2018 election, when a Hezbollah ally became the country’s health minister, giving him significant patronage powers. They also do not want to see the emergence of a less sectarian Lebanon, since this could cause voters in Hezbollah turf to consider backing another party. To prevent this outcome, Hezbollah has already sought to cow Shiites into not participating in protests.
Hezbollah will not purposefully stoke a civil conflict lest things get out of hand, but its increased use of physical intimidation may spawn one anyway.
But while Hezbollah will not purposefully stoke a civil conflict lest things get out of hand, its increased use of physical intimidation may spawn one anyway, by setting up potential clashes between Hezbollah and protesters, the Lebanese army or other armed political factions. Any ensuing confrontations could eventually spark civil conflict. If that happens, foreigners are likely to get involved. The Americans, the Israelis, the Iranians, the Gulf Arabs and even the Syrians, Russians, and Turks all have an interest in shaping the country’s security situation. Meanwhile, no Lebanese faction has the power to stop the U.S.-Iran conflict, the ramifications of which could hit Lebanon, whether via sanctions or outright military conflict. Should this come to pass, Lebanese political paralysis would get even worse, while the country would face an economic and security crisis unlike anything since its 2006 war with Israel. Moreover, Hezbollah, Tehran’s most capable proxy, could find itself as the spearhead of Iranian retaliation against Israeli or American targets. Doing so, however, would invite a massive Israeli and/or U.S. response in Lebanon. And a military conflict of that scale would usher in yet another troubling chapter in Lebanon’s crisis-ridden history.
Editor’s Note: The map accompanying this assessment has been replaced to correct a mislabeled city name.
As the world’s leading geopolitical intelligence platform, Stratfor brings global events into valuable perspective, empowering businesses, governments and individuals to more confidently navigate their way through an increasingly complex international environment. Stratfor is an official partner of the Affiliate Network.
This article has been republished with permission from our partner, Stratfor. The original version was first published in Stratfor’s WORLDVIEW and can be found here.
HIGHLIGHTS
Spain will be governed by an untested coalition that does not control a majority in parliament, which will render the policymaking process more complex and limit the new government’s effectiveness.
The Spanish economy is slowing, and a combination of risk factors (from ongoing trade disputes with the United States to unresolved secession disputes with Catalonia) will contribute to even slower growth in 2020.
Companies operating in Spain will deal with greater fiscal pressures and a government that will seek to backtrack on some of the labor market reforms that were introduced during the peak of the economic crisis in the early 2010s.
Spain has just appointed its first coalition government since the return of democracy in the late 1970s, but the new government will struggle to pass structural reforms at a time of growing political fragmentation and slowing economic growth. Prime Minister Pedro Sanchez, who won a vote of investiture in parliament on Jan. 7 and will lead a coalition between his center-left Socialist Party (PSOE) and the left-wing Unidas Podemos (UP), will have to deal with a worsening economic environment, a precarious labor market and secession pressure from Catalonia. Companies operating in Spain, for their part, will face higher taxes and the reversal of some of the market-friendly policies that were introduced during the peak of the economic crisis in the early 2010s.
The Big Picture
In recent years Spain’s political system has become more fragmented, general elections have become more frequent and structural reforms have become harder to implement. For the most part, the Spanish economy has been immune to political events, growing nonstop since 2014. But that immunity is ending, and Spain’s new coalition government takes office facing slowing growth, unresolved secession disputes in Catalonia and a precarious labor market.
Between the 1980s and early 2010s, Spain had single-party governments led by either the PSOE or the center-right People’s Party. But in recent years, a combination of factors ranging from the economic crisis to corruption scandals led to the emergence of new political parties on the left and the right. As a result, Spanish parliaments have become more fragmented, early elections have become more frequent, and governments have had a harder time implementing policy. This development explains why Sanchez is the first prime minister to lead a coalition government since the end of Gen. Francisco Franco’s dictatorship in the late 1970s.
In a further complication, PSOE and UP do not control the majority of seats in parliament, meaning members of the coalition will have to first agree on policy with each other, and then seek support in parliament on a case-by-case basis. This will open the door to disagreements between the coalition partners and create a complex legislative process wherein the government will need to make concessions to smaller parties in parliament to pass legislation. Policymaking will, therefore, become more complex, slower and subject to constant pitfalls.
This complex political landscape will subject companies operating in Spain to recurrent uncertainty, both about the survival of the government and about future policy. The Spanish Constitution makes it hard for the opposition to oust a government, rendering the chances of a successful no-confidence motion against Sanchez low. However, disputes between the PSOE and UP could lead to the dissolution of their alliance that almost certainly would lead to an early election. At the same time, parliament’s fragmentation may force the government to modify or abandon its policy proposals, making it difficult for businesses to make long-term predictions about the continuity of policy.
Businesses in Spain, particularly in sectors such as banking and energy, probably will face greater fiscal pressure since the new government is expected to try to raise taxes on high earners and large corporations. For example, the PSOE and UP have agreed to introduce a tax on financial services, which will affect Spain’s robust financial sector. PSOE and UP have also agreed to backtrack on some labor reforms introduced during the peak of the economic crisis in 2012 by making it harder for companies to dismiss workers, reducing the use of temporary contracts and giving priority to collective bargaining on salaries instead of company-specific negotiations. Without a parliamentary majority of its own, the PSOE-UP alliance will have to reach out to smaller parties to introduce reforms in taxation and the labor legislation. Center-left parties such as the Republican Left of Catalonia (ERC), Mas Pais and EH Bildu could endorse these reforms, but they will make demands of their own in exchange for their support.
A Slowing Economy
Spain’s economy has largely been immune to the country’s increasing political complexity and uncertainty, growing every year since 2014 thanks to a combination of business-friendly measures introduced by Madrid during the economic crisis and a generalized improvement in the eurozone economy during the late-2010s. But that immunity seems to be over. Most forecasts predict that Spain’s GDP growth will slow in 2020 and 2021. This slowdown is connected to multiple foreign and domestic factors.
Trade disputes between the European Union and the United States will continue in 2020 and take their toll on Spain’s economy. The United States introduced higher tariffs on some Spanish exports such as olive oil and wine in 2019, and the White House could raise tariffs on additional products in 2020, especially if the European Union targets the United States with its own tariff hikes. This move would dent the Spanish economy because the United States is Spain’s main non-EU export destination (roughly 5 percent of Spanish exports go to the United States). In addition, Madrid’s plan to introduce a tax on digital companies (a decision the White House would oppose vehemently) could also prompt the U.S. administration to retaliate with additional tariff hikes.
At the same time, Brexit-related uncertainty will ease during the early months of 2020 but will return by the end of the year. The United Kingdom almost certainly will leave the European Union on Jan. 31 and will remain in the single market until Dec. 31. But should London and Brussels fail to reach a comprehensive trade deal by the end of 2020, and should London refuse to request an extension to remain in the single market, significant disruptions in trade would follow. The United Kingdom is Spain’s fifth-largest export destination (almost 7 percent of Spanish exports go to Britain), while millions of British tourists visit Spain every year. New barriers to trade (such as having to implement World Trade Organization tariffs if the United Kingdom and European Union fail to reach a trade deal by year’s end) would damage Spanish exports, while a weaker pound vis-a-vis the euro would lead to fewer British tourists in Spain — to name only two of the many consequences of weaker EU-U.K. economic ties.
The new Spanish government will also deal with domestic economic problems, particularly connected to the labor market. While Spain’s unemployment rate has been falling fast in recent years, it remains the second-highest in the European Union after Greece’s. Spain also has high rates of youth unemployment (around 30 percent) and a serious problem of long-term unemployment (people who have been out of work for more than a year find it much harder to find jobs than those unemployed for only a few months). Finally, Spain has the European Union’s highest rate of workers under temporary contracts: One employee in four is under a fixed-term contract, twice the EU average. This precarious labor market drags down domestic consumption and investment, which, in turn, undermines economic growth. The PSOE-UP alliance will seek to address these problems through reform in labor legislation, but it will need to persuade like-minded parties in parliament to join the effort, which will not be easy.
Unresolved Catalan Issues
The new Spanish government will also have to deal with Catalonia’s push for independence. The region will not secede from Spain any time soon, but the secession issue will continue to generate friction between Madrid and Barcelona and raise questions about the future of Spain’s territorial integrity.
Sanchez will benefit from the tense relationship between Catalonia’s main pro-independence forces, Together for Catalonia (JxC) and the ERC, which reduces the chances of a coordinated push for secession. JxC and ERC, which compete to be the region’s main political party, advocate different strategies to achieve independence. Some JxC members want to take unilateral measures to secede from Spain, while the ERC favors a more pragmatic strategy that includes dialogue with the central government in Madrid.
Their competition will increase in 2020 because Catalonia probably will hold an early regional election. This vote means that pro-independence parties will not be strong enough or united enough to seriously threaten Spain’s territorial integrity. Moreover, Sanchez’s promise to keep an open dialogue with Catalan secessionists and to improve ties between Madrid and Barcelona suggests that the central government will seek appeasement rather than confrontation to deal with the rebel region.
An important fact remains unchanged. Madrid will not authorize a legally-binding independence referendum in Catalonia, and the region’s pro-independence parties will not stop demanding it.
An important fact remains unchanged. Madrid will not authorize a legally-binding independence referendum in Catalonia, and the region’s pro-independence parties will not stop demanding it.
However, an important fact remains unchanged. Madrid will not authorize a legally-binding independence referendum in Catalonia, and the region’s pro-independence parties will not stop demanding it. The situation of the pro-independence leaders who were jailed after the unilateral declaration of independence in 2017 will also continue to create issues between Madrid and Barcelona.
PSOE and UP have promised to introduce a “fairer” mechanism to distribute state funds among Spain’s autonomous communities and to “reduce the ambiguity” in the policy attributions of the central state and the regional governments, both of which are meant to appease Catalonia. But they will struggle to win enough support in parliament to pass these reforms. As a result, tensions between Madrid and Barcelona probably will not be as extreme as they were in 2017 when Catalonia unilaterally declared independence, but long-term questions about the future of the region will not go away either.
So, while companies operating in Catalonia will see some degree of stability in 2020, their doubts about the future of the region will remain unanswered. Political uncertainty so far has had a modest effect in Catalonia because the region’s economy has grown nonstop since 2014. However, Spain’s National Institute of Statistics recently reported that Catalonia’s regional GDP grew at a rate lagging the average for Spain as a whole in 2017 and 2018. In the meantime, thousands of companies have moved their legal seats out of Catalonia to other Spanish regions since Catalonia’s independence declaration in 2017. While the vast majority of these companies retained operations and workers in Catalonia, the change of legal seat highlights the concern that the independence process has created among businesses in the region.
While Sanchez’s appeasement strategy probably will lead to a decrease of frictions between Madrid and Barcelona, it will create the risk of a nationalist backlash among Spain’s conservative parties. The People’s Party already has announced that it will take to the streets to protest Sanchez’s decision to keep the dialogue with Catalan separatists open, and the right-wing Vox party could do the same.
At the same time, the European Court of Justice recently ruled that ERC leader Oriol Junqueras, who was elected to the European Parliament in May, enjoyed parliamentary immunity when he was sentenced to 13 years in prison in October for his participation in the illegal Catalan independence referendum in 2017. The final decision on whether Junqueras should be released from prison is in the hands of the Spanish Supreme Court, but the European court’s ruling in favor of a convicted Catalan separatist could exacerbate Euroskeptic sentiments in Spain, particularly among Vox voters. Even if Sanchez tries to calm frictions with Catalonia, the situation in the region will continue to be a central element in Spanish politics.
An important fact remains unchanged. Madrid will not authorize a legally-binding independence referendum in Catalonia, and the region’s pro-independence parties will not stop demanding it.
As the world’s leading geopolitical intelligence platform, Stratfor brings global events into valuable perspective, empowering businesses, governments and individuals to more confidently navigate their way through an increasingly complex international environment. Stratfor is an official partner of the Affiliate Network.
Teoh Jit Khiam works in private practice. He writes on topics concerning Asian politics and history.
As the world’s leading geopolitical intelligence platform, Stratfor brings global events into valuable perspective, empowering businesses, governments and individuals to more confidently navigate their way through an increasingly complex international environment. Stratfor is an official partner of the Affiliate Network.
