Category Archives: defense policy

Leverage

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Since so many American businesses—Apple, Alphabet, the NBA, to name a few—put their individual fiscal game ahead of American values, especially regarding Hong Kong and its citizens ongoing struggle for their own liberties (which just happen to lie at the core of our values), here are some thoughts on the fiscal value of Hong Kong to the People’s Republic of China.

Since 1997, mainland Chinese companies have raised $335 billion by floating in Hong Kong, tapping a broader range of shareholders than they could onshore.
…since the Hong Kong dollar is pegged to its US equivalent, and the city has no capital controls, a listing there can generate hard currency for foreign takeovers and investments. It would be harder to use a Shanghai stock sale for the same goal.

And [emphasis added]

For global investors, Shanghai and Shenzhen have become more accessible. But investors typically prefer Hong Kong’s legal protections, and they have other concerns about mainland markets, including the difficulties of moving money out.

And

Hong Kong is by far the largest offshore center for bond sales by Chinese firms. Companies can borrow for longer than they can onshore and, crucially, can raise funds in hard currency….

And

Hong Kong serves as the main offshore hub for yuan loans, bonds, and trading.

Interestingly [emphasis added],

When it comes to dollar bonds, big state-backed banks and industrial companies even prefer to sell these in Hong Kong…. US deals would be overseen by American regulators and would require greater disclosure.

And

Hong Kong is a preferred location for Chinese and international financiers or business people to conduct transactions because it has a Western-style legal and regulatory system that is seen as fair and nonpolitical.

In sum,

…Hong Kong stands out from its mainland rivals for its rule of law, competent regulators, low taxes, free movement of capital, and use of English.
Neither Shanghai nor [the People’s Republic of] China’s free-trade zones “can really compete with what Hong Kong is and does….”
…
Hong Kong is still [the People’s Republic of] China’s financial window on the world, and the rest of the world’s financial window on [the PRC].

RTWT; there’s more.

Sadly, too many of our major corporations don’t have the moral underpinnings to exercise that leverage.  Apple’s Tim Cook would rather the prestige of sitting as Chairman of a major university in Beijing.  Alphabet would rather work on censorable search engines for the PRC and help develop AI tools for the PRC’s government and People’s Liberation Army than it would work with our own defense establishment on such tools or refuse to support PRC censorship.  And we’ve seen, just in last couple of weeks, how the NBA as a whole, and its individual team staffs and players think their pocket books are more important than the rights of others.

Warren’s Assault on Hydrocarbons

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Progressive-Democratic Party Presidential candidate and Senator Elizabeth Warren (D, MA) want so ban new leases for oil and gas drilling offshore and on Federal lands, and she wants to ban fracking altogether. This assault on our national energy underpinnings would have far-reaching negative outcomes.

  • domestic natural-gas prices would jump to somewhere between $9 and $15 per million BTUs from last Friday’s $2.32
  • oil would rise to the $80-to-$85 range and could run to $150 during market shocks from last Friday’s $53.78
  • entire oil-field service companies would become obsolete
  • pipeline owners would suffer without replenishment, as existing wells peter out

Think how such price increases for basic transportation and such job losses would hammer “the little guy” that Warren pretends to so want to protect from Evil Big Business.

And some far-reaching positive outcomes: for Canada, Russia, and OPEC.

  • Canadian shale drillers
  • big global operators for which higher energy prices would offset losses on US assets.
  • Russia: our ability to free our friends and allies from dependence on Russian oil and gas
  • Russia and OPEC: the potential for political and economic dominance by these two from their enhanced ability to commit energy blackmail (both of which have demonstrated histories of engaging in such blackmail)—sources of market shocks

Here is a core part of Warren’s foreign policy.

Courage Under Fire

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Republic of China’s President Tsai Ing-wen, against the background of the People’s Republic of China President Xi Jinping’s abuse of Hong Kong citizens through his Hong Kong police, his functional abrogation of the solemnly agreed treaty with Great Britain governing the handover of Hong Kong to the PRC, and his parallel functional reneging on his government’s “one country, two systems” pretense vis-à-vis that city, has spoken against the PRC’s pretense of that toward her nation.

That framework, she noted, has brought Hong Kong to the brink of disorder.

Speaking from the presidential office building in the center of Taipei, Tsai accused China of using that same program to threaten Taiwan’s “regional peace and stability.”

Tsai went on:

We must stand up in defense. Rejection of “one country, two systems” is the biggest consensus among Taiwan’s 23 million people across parties and positions.
Over 70 years, we’ve endured all sorts of severe challenges, and not only do none of these challenges knock us down, they make us stronger and more resolute. One offensive after another, they’ve not made Taiwanese people yield.

This comes in the face of increasing international isolation inflicted on the RoC by the PRC.

Would that some American athletes and athletic associations had the same courage, especially given their far greater relative power and their complete safety from PRC actions.

“Rioting”

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Recall the teenage protestor in the Hong Kong protests earlier this week, the one who was shot in the chest at point blank range by a Hong Kong cop who thought he was being threatened by the boy.

A Hong Kong court charged 18-year-old student, Tsang (Tony) Chi-Kin, with rioting, a charge carrying a sentence of up to 10 years in prison. Tsang was among seven people charged with rioting on Thursday.
The secondary school student also faces two additional counts of attacking two police officers, punishable by up to six months in prison.

Riotous bastard dared to interfere with the cop’s bullet.  Nor were the cops in any great hurry to get the boy treatment or to let any protestors help him.  Despite that, he’s in stable condition in a Hong Kong hospital.

This is the kind of despotic tyranny that People’s Republic of China President Xi Jinping intends to impose on Hong Kong.  And on the Republic of China later.

Aid for Ukraine

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One of the topics discussed by President Donald Trump and Ukraine’s President Volodomyr Zelenskiy in “that telecon,” was the degree of aid Germany has provided Ukraine in the latter’s on-going struggle against Russia’s invasion and occupation of Crimea and eastern Ukraine.  Neither considered Germany’s actions anywhere near adequate.

Deutsche Welle demurs from that position.

[A]ccording to the latest OECD figures, Germany is the third largest donor to Ukraine after the European Union as a whole and the US.

Those amounts?

[F]igures provided to DW by the German Foreign Ministry indicate that since 2014, the country has pumped almost €1.2 billion ($1.3 billion) of bilateral financial aid into Ukraine. This total includes some €544 million of official development cooperation, €110 million in humanitarian aid, a financial loan of €500 million, and some €25 million for stabilization measures, such as conflict monitoring and the promotion of the rule of law.
Germany has paid another €200 million to Ukraine via EU aid contributions.

That works out to all of €240 million ($260 million) per year.  And none of it actual material assistance: no money at all for defensive weapons systems or even individual protective equipment, much less systems that would help Ukraine drive the invader back out.  And money for “conflict monitoring?”  Ukraine is already fully capable of watching the Russians in their nation.  The other aid, in other circumstances, would be very useful, but with Ukraine in the military and political straits in which it exists today, the results of that aid are very much in doubt in the face of that Russian occupation and the continued Russian effort to drag the nation back under the Russian yoke.

Third largest amount of aid behind the EU and the US: what a statement of the paltry level of aid that is—especially considering that, during the Obama years, the US also refused to provide any serious aid at all to Ukraine, limiting our “largesse” to blankets and medicines, but not a single bullet or other self-defense capability.

Returning to Germany’s alleged contributions: far from helping Ukraine, Germany has utterly betrayed the nation, functionally repudiating the Budapest Memorandum as it has.  Instead, Germany has pushed for the quickly-failed Minsk Protocol, and continues pushing for Minsk II.  Both of these codify the dismantling of Ukraine that the Memorandum was supposed to prevent—hence the betrayal.