Red Line: Palestinian state, Chinese economics and Michele Bachmann

Participants: Ekaterina Kudashina, Sergei Strokan, Mira Salganik, Gershon Baskin, Alexander Gabuyev

Ekaterina Kudashkina: This week we’ll start with the Middle East, where Palestinian leader Mahmoud Abbas launched a major diplomatic offensive to win international recognition of an independent Palestinian state at the upcoming 66th UN General Assembly, which opens Sept. 20. We will then follow U.S. Vice President Joe Biden to China to discuss the future of the Chinese economic model. And finally, in our last section we will look at Michele Bachmann ‑ a rising star of American politics and one of the leading Republican contenders to challenge Barack Obama at the next year’s presidential election.

Sergei Strokan: Well, let me say, it looks like there is no state at the end of Palestinian tunnel, I deeply regret that, but this is how actually things stay now. And there is a lot tension in the region, a lot of animosity.

Ekaterina Kudashkina: In our first heading, Beyond the Headlines, we will discuss the latest brave Palestinian move to make a breakthrough on the issue of independence. After more than six decades of heading towards an independent Palestinian state, Palestinian leader Mahmoud Abbas has finally run out of patience. Abbas pledged to seek recognition of Palestinian statehood at the very start of the upcoming 66th UN General Assembly. He wants no more negotiations with Israeli leader Benjamin Netanyahu.

Sergei Strokan: This time the Palestinians look very determined, they look full of resolve. President Abbas was in Lebanon this week. To me it looks like last-minute preparations before launching the crucial diplomatic offensive to make a Palestinian state a reality, not leaving it a distant dream any more. Until recently, Lebanon was the only Arab state that had not officially recognized the Palestinian state. 

President Abbas wants to make the breakthrough a matter of weeks, not decades – this is the crucial difference. It looks as if he is sending the world a clear signal: enough is enough, we don’t want to wait any more, as you said in your preface, and we have every right to get it now.

Ekaterina Kudashkina: And what about the other side?

Sergei Strokan: Israelis have so far called the Palestinian leader’s decision “regrettable.” While refraining from any strong language in official statement, I believe they sent Palestinians a stern warning: The idea of a unilateral recognition of a Palestinian state will never work.

Ekaterina Kudashkina: It is interesting, but let me expand this issue a little bit. The Israeli political establishment is not homogeneous.

Sergei Strokan: Definitely, there are moderates in Israel as well as in Palestine who believe that there is no option, so they have to find a two-state solution and they have to work out a formula of proper peaceful coexistence. At the same time, there hawks on both sides who are rocking the boat.

Ekaterina Kudashkina: Many UN members are supporting the idea of the Palestinian statehood, even such large players like Brazil, for instance.

Sergei Strokan: But the question is not how many countries are supporting it, but who is not supporting.

Ekaterina Kudashkina: But if it comes to voting in the UN?

Sergei Strokan: As you know, the Obama administration would never support that. The veto-holding United States definitely would not allow it just to be passed through the Security Council.

Mira Salganik: But there is a way out: Palestinians have the right to address the General Assembly directly bypassing the Security Council.

Sergei Strokan: But this would be definitely an act of despair. Actually, this remains me of Lenin’s classic call: “Let us get involved in a fight first, and then we shall see.”

Ekaterina Kudashkina: But where will this “fight first and see later” approach finally bring the Middle East and the whole idea of Palestinian state? What would happen to the Mideast peace process?

Sergei Strokan: We were speaking about hawks and moderates and unfortunately the prospects look rather gloomy. While UN diplomats are getting themselves ready for a big fight over Palestinian statehood, analysts are speaking about a shadow of new Palestinian uprising looming heavily over the Middle East.

Mira Salganik: So, what is to be done?

Sergei Strokan: I will refer to the opinion of Alon Ben-Meir, professor of international relations at the Center for Global Affairs in New York. Here is a long, but thought-provoking quote from one of his recent comments: “Coexistence between Israel and the Palestinians is inevitable and, short of catastrophic developments, the two peoples are doomed or destined to live between the Mediterranean and the Jordan River. They must now decide on the quality of that coexistence. Do they want live with mutual hatred and fear while demonizing one another or do they want to live in peace and amity and realize the biblical prophecy of making their shared land the true Land of Milk and Honey?”

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Ekaterina Kudashkina: So, according to Professor Ben-Meir, no peace will ever be forged, let alone endure, unless both sides understand and appreciate each others' fears, concerns, hopes and dreams.

Sergei Strokan: But now, I think, we have to speak about Russia, and Russia’s role in preventing conflict. My idea is that the potentially explosive situation over the issue of a Palestinian state makes Russian diplomacy in the region a true uphill battle.

Moscow is not the only part of the Middle East Peace Quartet, it is comprised of the United States, the European Union, Russia and United Nations. But it is only Russia that enjoys top priority partnership ties with Israel while maintaining close contacts with Palestinians, including the leadership of Hamas.

Ekaterina Kudashkina: So your idea is that Moscow should use all mechanisms of preventive diplomacy to avoid another bloodbath and another grand diplomatic fiasco, which would cripple the idea of Palestinian state.

Sergei Strokan: Yes, there is no option and diplomacy is running out of time. We have to keep in mind that the recent developments in the region. The region is in flames and already diplomacy has messed up a lot of things, so the flames are everywhere.

In Egypt, military forces remain in power but they are trying to somehow revamp the development strategy and turn to the Islamic world and this comes as an unpleasant surprise both to Israel and to the United States. And you have seen what happened in Syria. So, just imagine, Palestinians with their problems, Palestinian refugees who are everywhere in the region, so this is another public act, this is another explosion.

Ekaterina Kudashkina: Now our guest speaker is Gershon Baskin, founder and CEO at the Israel and Palestine Center for Research and Information in Jerusalem.

Gershon Baskin: I think that the Palestinians have been quite successful getting a large number of countries to recognize the Palestinian statehood and to agree to support the Palestinian call for membership in the United Nations in September. According to what I understand, there are about 122 or 123 countries of 193 countries of the United Nations who have recognized the State of Palestine and apparently would support the Palestinian membership call in the UN in September. They need to get through the Security Council in order to gain membership in the United Nations and they need a two-thirds vote of all the members of the United Nations, but right now the other major obstacle is that the United States has threaten to veto the resolution for the Palestinian statehood membership in the UN, in the Security Council, and this is the hurdle which they seemingly cannot overcome.

If the United States or any of the five prominent members of the UN Security Council veto this resolution, then the State of Palestine cannot become the 194th state member of the United Nations, but they can bring the vote to the General Assembly, which will call on the Security Council to recognize Palestine and it will call on the world to recognize Palestine within the 1967 borders and East Jerusalem as its capital. I think there is no question that the Palestinians will have an overwhelming majority, and it is important to them to have a two-thirds majority, so that they can say: if the United States had not vetoed this, we would become members ‑ and this is a very important symbolic act for which they need 129 states and they are almost there.

Ekaterina Kudashkina: But how strong are the chances that the United States would eventually decide not to veto this decision?

Gershon Baskin: I think that the United States at this point will not veto if there was an Israeli agreement, some form of the resolution, if it was an Israeli agreement to go along with the plan, that granting Palestine membership in United Nations would advance the peace process. Right now those conditions have not been met. The American fear is that the Palestinians are going to the UN in order to prevent negotiations from taking place and that is clearly not the Palestinian position. President Abbas has said over and over again that we are going to the United Nations because negotiations are not possible now, because Israel refuses to freeze its settlement building in the occupied territories.

If Israel continues to build in the occupied territories and refuses to negotiate the process, the frustrated Palestinian people will say “enough is enough.” We have a threat of financial collapse of the Palestinian authorities. There is no progress and no economic development; the Palestinian economy is going to be strangled by the occupation. The United Nations vote is a symbolic act aimed at clearing the playing field a little bit by creating a situation where the negotiations would be state to state. I think that the Palestinians might be seeing an opportunity to try and seek international sanctions against Israel.

Ekaterina Kudashkina: And now for more politics and its small wonders. U.S. Vice President Joe Biden is currently on a visit to China. According to news reports, the aim of his trip is to ease the concerns of the Chinese leadership related to U.S. debt crisis and its aftermath. Interestingly enough, recently I saw a fair number of stories sharing a common thesis: the new wave of the economic crisis both in the U.S. and the eurozone has become another argument the Chinese leaders use to illustrate the success of the Chinese economic system over the free market economies.

Now Between the Lines, in which we usually discuss something that we believe to be one of the most interesting and provocative newspaper stories of the week. This time it’s a piece entitled “China’s newly rich are flaunting wealth — and giving Communist rulers a headache” run by the “Washington Post.”

Sergei Strokan: So your point is that by looking at the Chinese attitude to wealth we might draw some conclusions. Well, I agree. Do you remember that for several decades the Chinese government has been appealing to its people to get wealthy?

Ekaterina Kudashkina: Well, and being disciplined and good citizens, some of them have obeyed. Look, what the story says: “At a time when Europe and the United States are still struggling with stagnant economies, China has emerged as the premier long-term market for luxury products. According to the Ministry of Commerce and industry statistics, the Chinese bought $12 billion in luxury goods last year. According to McKinsey and Company management consulting firm, China will account for 20 percent of all worldwide luxury sales by 2015.”

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Sergei Strokan: When the 2008 crisis hit, remember what the Chinese were doing to comfort the shock?

Ekaterina Kudashkina: Well, as far as I remember, as their exports crushed, they started to develop home consumption. Judging by the size of GDP, the Chinese economy is rated as the world’s second, right after the U.S. However, the Chinese population exceeds 13 hundred million and the U.S. is home to roughly 300 million – making it more than four times smaller.

I checked the World Luxury Association website and according to its latest report: “China has replaced the U.S. to become the world’s second largest luxury goods consumer, only second to Japan.” The report also said Chinese people consume about 27.5 percent of the world’s luxury products. Luxury goods consumers in China are mainly aged between 20 and 40 with a good education. Many experts predict that China will become the world’s largest luxury consumer by 2015, considering the current rocketing increase rate.

Mira Salganik: It is very interesting. Doesn’t it remind you of the 1990s in Russia, when people suddenly started getting rich or were allowed to get rich and they were not shy to show it off.

Ekaterina Kudashkina: Experts say that often happens to those who used to live in poverty for a long time. Yet, I tend to see it otherwise. I guess it’s a matter of culture. I remember how people in Norway were absolutely indignant with one of their countrymen, who is quite rich and who decided he’d buy himself an island. They were offended. They just said it wasn’t right. That’s their vision, their attitude. And mind you, Norway was not always splashing in oil. Some 50 years ago those people were having tough time putting their economy on track.

Mira Salganik: I agree with you that is largely a matter of tradition. Like you said, Japan is the largest luxury market. But incidentally the Japanese do not splash it.

Sergei Strokan: Few people remember, but some 40 years back Japan was in just as a bad shape and people were really poor, they did not have shelter, they did not have enough food, and after that they were very industrious, very motivated – and at the same time collectivism which prevailed over individualism.

The idea was that your company is not just a place where you work but this is a place where you spend most of your life and your family life is just a supplement to that. This is a foundation on which this Japanese economic miracle was built and one of the results of this was an emergence of new Japanese rich and their offspring who enjoy luxury, emergence of new Western-type Japanese elite which is ridiculed by the old guard.

Ekaterina Kudashkina: So, the drive for luxury is not a part of their culture but it is a part of the Western culture that was important to Japan.

Mira Salganik: It is tied up to the influence of the mass media, which is a global phenomenon, but I guess since the mass media started not in Asia but in the European culture, the Asian culture reacts to it stronger.

Ekaterina Kudashkina: Right. But getting back to China – Sergei, you believe that the luxury boom is the result of the government’s policy over these decades?

Sergei Strokan: Do you have another explanation? 

Ekaterina Kudashkina: No. But I’d still like to point out to a mere fact that China’s luxury market is bigger than the U.S., but its GDP per capita is several times smaller. To make a long story short, that picture might point to a growing gap between the rich and the poor. And that spells trouble – it’s definitely a higher risk of social instability growing tensions even in a tightly-held country like China.

Sergei Strokan: But that is not new. Inflation, income inequality, dislocated economic development…. Though I agree, that the trend seems to be growing stronger. 

Mira Salganik: Do you mean to say that they are growing so rich that they are becoming hostage to their own success?

Ekaterina Kudashkina: Let’s listen to what Alexander Gabuyev, an expert on China and participant of the UN Millennium Program, told me about the changes in the Chinese official policies.

How do you think the ideology changed over recent years, when China has somewhat shifted its economic policy towards more open, more free patterns of operation? Did it somehow affect the ideology of the party?

Alexander Gabuyev: Yes. I would make my point towards more important factors: one of them is, as you said, the economic development and huge transformation in China; the second – Tiananmen Square and the loss of faith in Communism among both the party and the population. The real ideology in China is now actually fading away and the party really tries to fill in that vacuum by promoting a sort of patriotism or even a sort of nationalism. They really try to convince the population that China is a big country, it is emerging as one of the world leaders, it should deserve a better place on the world stage. The party is becoming less and less communist and more and more Chinese.

Ekaterina Kudashkina: From what I saw when they were handling the recent economic crisis, they started to promote inner consumer demand, home consumer demand and they were giving subsidies to people just to boost their buying ability.

Alexander Gabuyev: But still China is a country with huge gaps among the population groups and between different regions, and given the scope of the problems China is facing and the size of the country, it could be very threatening to the regime’s stability and that is why it should be not only rhetoric but also quite a detailed action plan to combat these illnesses like inequality, and so on.

Ekaterina Kudashkina: Getting back to the Washington Post story, it quotes Michael Ouyang, a representative of the World Luxury Association in China. He says: “The government is facing a conflict. They don’t want to promote luxury because they are worried people who cannot afford it will see the advertisements. But they don’t want to limit luxury products because it’s good for the economy. So they’re facing a dilemma.”

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Sergei Strokan: They’ll solve it. Have any of you heard anything about the New Left in China? Let me outline it to you. Last month, the Center for Strategic and International Studies (CSIS), published a report that looked into the New Left in China. These people believe that China’s current economic reform should not only focus on boosting the economic growth but also on establishing a solid social safety net and enhancing social equity.

According to CSIS, the New Left's views have become popular with the Chinese people, who are increasingly dissatisfied with the current economic development path and seek alternatives to solve the inequality problem arising from the market reform.

Ekaterina Kudashkina: Which also means they are aware of the challenge and are looking for solution. Good for them.

And now we move to our final section, Face in the News. This time it’s a charismatic politician, Michele Bachmann, a rising star of American politics, both controversial and enigmatic.

Last week we spoke about Ukrainian opposition leader Yulia Tymoshenko – the Gas Princess as she is called – whose name is invariably found in the world ratings of the most influential women of the world.

Unlike Tymoshenko, Michele Bachmann has just started her run for presidency. However, Newsweek magazine has already labeled her as “The Queen of Rage”.

And she has confidently won the recent Republican straw poll in her hometown of Waterloo, Iowa.

Sergei Strokan: But it is not only her impressive start in the Republican race for the White House that has made world headlines. Analysts and world media are calling Michele Bachmann a new type of American politician – admired by some and denounced by others.

Mira Salganik: We really have seen quite a lot of publications about her. But on the other hand, don’t forget that it is summer time, and in summer there is usually a lack of news. My point is that we should not rush into conclusions, she is still a political limbo, don’t forget, she is only taking her first steps.

Ekaterina Kudashkina: As for the cover story in Newsweek about “The Queen of Rage” to me the funny thing is that it enraged feminists! I can hardly imagine that Michele Bachmann with her deeply conservative outlook can one day win the sympathy of a feminist movement, but nevertheless, the president of the National Organization for Women Terry O'Neill said that the cover of the magazine was "sexist."

Sergei Strokan: To me this is the biggest joke, the feminists’ reaction – at least we are in Russia, so I think I can say this. But let us come back to this three-term Minnesota congresswoman who is a 56-year mother of 5, who won the Iowa Straw Poll and put her name in the top tier of the GOP’s presidential candidates. Now she is calling her win “the very first step toward taking back the White House!"

Mira Salganik: Analysts say that at least to Iowan voters it is Bachmann's Christian rhetoric that acts as the primary motivator of their support. And she lays it really thick – in a recent speech she said: "God has mightily put his hand, a blessing upon this nation. We can never think we did this ourselves. It was an Almighty God that gave it to us."

Ekaterina Kudashkina: You know, I read a lot about Michele Bachmann these days, and not only in American media. Some of her critics said that instead of troubling herself with the idea she represents all the people, well, she is pandering to her white, evangelical mid-western and southern base. So, according to some of her opponents, this is a new breed of American politicians, as she doesn’t care for the other electoral groups.

Mira Salganik: How can you win the hearts of moderates if you say that default would have been better for America than the Republicans’ deal with Obama? Such views if implemented might put at risk the wellbeing of millions! How can a person become a president of the United States, making such statements! Not surprising that the Republicans are apprehensive of her splitting their electorate.

Ekaterina Kudashkina: Too much rhetoric, very little of a sound program, development strategy, she has not submitted job creation plan. And I wonder – just imagine she wins the presidency – what would happen to U.S. relations with Russia?

Sergei Strokan: Let us be frank – we can expect nothing good as Russia doesn’t fit into the vision of the world of such a “Queen of Rage.” There will be a lot of rage, a lot of lecturing. But I am sure her chances as presidential hopeful are remote. Let us keep fingers cross.

Ekaterina Kudashkina: There is a lot of talk of Michele Bachmann as a new type of politician, but doesn’t this rising star remind you of Sarah Palin – another good-looking mother of many children cashing on discontent of grass-root hardcore America, madder than ever before at all these Democrats, supporters of gays and abortions, the big talkers that are undermining America’s greatness? 

Sergei Strokan: I think, this will be an uphill battle for her. You mentioned Sarah Palin, you compared her to another presidential hopeful of 2008, so, as you see, four years after Sarah Palin didn’t pass this test to me. And where is she now?

The Queen of Rage should draw a lesson from Sarah’s phenomenon. She should think how to move on the presidential throne with her newly-discovered crown. And if she does not find the way, it would be a mess.

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