The New Silk Roads

by Peter Frankopan

  Such successes do not scratch the surface of what is going on in India and China, whose adoption rates of new financial technologies (FinTech) for money transfers and payments, savings and investments and borrowing are far higher than any other country in the world—including the US.64 In both countries, the scope for growth seems to be almost limitless. Ant Financial, hived off from the e-commerce giant Alibaba before the latter floated in the world’s largest initial public offering (or IPO) in history in 2014, led a fundraising round in the summer of 2018 that valued the cashless payment business at a jaw-dropping $150bn—more than the value of Goldman Sachs.65 This makes the valuation of India’s Paytm (in which Alibaba is a shareholder) of just $10bn look conservative—not bad for a company only founded a few months before Prince William and Kate Middleton got engaged in autumn 2010.66

  This all sounds impressive—because it is. But the success of new businesses should not mask the fact that in most sectors and most industries, the West still leads the way. That is not lost on Vladimir Putin, who has directed Russian state institutions to switch to domestic technology as a means to cut imports—though few expect this order to bear meaningful fruit, given how underfunded research and development have been in the past, and how limited a role entrepreneurs and businesses play in investing in innovation.67

  Nevertheless, Russia’s awareness of the need to develop its own capabilities is a key theme in Moscow’s thinking. Significant resources have been spent on developing cybertechnologies. At confirmation hearings to the position of Commander, US Cyber Command and Director of the National Security Agency, Lieutenant General Paul Nakasone noted that the Kremlin is the “most technically advanced potential adversary” that the US faces, capable of using sophisticated tactics, techniques and procedures against “US and foreign military, diplomatic and commercial targets.”68

  As well as developing tools to use against foreign and domestic targets, Russia has also been working on improving its own defences to protect from attacks from outside.69 That might seem ironic given Russia’s own use of cybertechnology in everything from presidential elections, to the Brexit campaign in the UK, to ransoming businesses and the theft of intellectual property. Indeed, in April 2018, the US Department of Homeland Security, the FBI and the United Kingdom’s National Cyber Security Centre issued a formal alert about Russian state-sponsored attempts to target hardware that controls internet traffic.70 Nevertheless, like other countries, Russia has experience of having to deal with ransomware and with hacks on its banking system, mobile telephony and government agencies, which it is keen to avoid or prevent in the future.71

  In the West, one of the most important contemporary questions concerns the monetisation of data—and about the legality and ethics of corporations like Facebook gathering and deploying information about users and even about users’ friends and contacts who are not on social networks. In the East, the issue is about the weaponisation of data and the relationship between the digital world and state interests, perceived or otherwise.

  In Russia, for example, Facebook was told that if the personal data of those who used the business were not stored on Russian servers, access to the site would be blocked.72 Not only that, but it recently emerged that Facebook had also been allowing Russia’s largest technology corporation, Mail.Ru Group, to have access to personal user data. “We have a responsibility to protect your data,” wrote Mark Zuckerberg in a Facebook post—while not admitting that his company had been sharing it with a company with deep and close links with the Kremlin, a fact that emerged only later.73

  Russia’s way of monitoring the digital activities of its own citizens and, presumably, those of others too, lay behind the blocking of the encrypted Telegram messaging service, as well as virtual private networks (VPNs) that enable the bypassing or concealment of localisation services.74 In Turkey, meanwhile, regular state interference with social media sites is coupled with government actions that purport to prevent “abnormal” messages on the day of presidential elections.75

  Then there is China, where the three largest telecoms companies—China Mobile, China Unicom and China Telecom—are state-owned, where the government has taken steps to block VPNs as part of an internet “clean-up,” and where access to sites like Google, Facebook and Twitter is blocked.76 In one part of the world, monitoring what citizens routinely do online is used to drive corporate revenues; in another it is considered a matter of national security.

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  This is about more than just noting different approaches to the same question. In fact, it is closely linked to the wider changes that have been taking place over the last twenty-five years. We are living through a transformation and a shift that is epochal in its scale and character, similar to what happened in the decades that followed the crossing of the Atlantic by Columbus and those who soon followed him, and the near-simultaneous rounding of the southern tip of Africa by Vasco da Gama that opened up new maritime trade routes between Europe, the Indian Ocean, South Asia and beyond. Those twin expeditions, just over 500 years ago, laid the ground for a dramatic shift in the world’s centre of economic and political gravity, placing western Europe at the heart of global trade routes for the first time in history.77

  Something similar is happening today, albeit in reverse. Asia and the Silk Roads are rising—and they are rising fast. They are not doing so in isolation from the West, nor even in competition with it. In fact, quite the opposite: Asia’s rise is closely linked with the developed economies of the United States, Europe and beyond. The demand and needs for resources, goods, services and skills in the latter have stimulated growth in the former, creating jobs and opportunities and serving as a catalyst for change. The success of one part of the world is connected to that of the other—rather than coming at its expense. The sun rising in the East does not mean that it is setting on the West. Not yet, at least.

  What is striking, however, are the reactions to change in East and West. In one, there is hope and optimism about what tomorrow will bring, while in the other anxiety that is so acute that countries are more and more divided, to the point that some senior politicians like Madeleine Albright, formerly US Secretary of State, have openly questioned whether “the democratic banner can remain aloft” in the West amid the “storm clouds that have gathered”—and warned that we should be vigilant of the lessons of history in order to prevent the return of fascism.78

  Some might consider such alarm as overstated. But the fact that comments like these are being aired in the mainstream media is itself revealing of the crisis of confidence and the concern about the direction of travel in the West in a time of change. Whatever one’s own political persuasion and views, it is not hard to see that something important is happening in the world. “It’s crystal clear,” Aladdin sang to Princess Jasmine twenty-five years ago, “that now I’m in a whole new world with you.” It is worthwhile trying to understand what that is—and to consider the implications and consequences.

  | THE ROADS TO THE HEART OF THE WORLD |

  Events of recent years make it hard to argue with the assessment that the age of the West is at a crossroads. In the United States, Donald Trump was elected president after campaigning to “Make America Great Again.” It was essential that the US change direction, he had said repeatedly during the election campaign. The very future of the country hung by a thread. “Either we win this election,” he told voters in Colorado Springs three weeks before polling day, “or we lose the country.”1

  The US was in free fall, he said time and again during the campaign. Desperate measures were needed to save the country, Trump declared when announcing his candidacy in the summer of 2015. “Our country is in serious trouble,” he said. “We don’t have victories anymore. We used to have victories, but we don’t have them.” Other countries had grown rich at America’s expense. “When did we beat Japan at anything?” he asked. “They send their cars over by the million
s, and what do we do? When was the last time you saw a Chevrolet in Tokyo? It doesn’t exist, folks. They beat us all the time.”

  Mexico and China were problems, too. It was time for dramatic action—or the US was doomed. “I would bring back waterboarding,” Trump said in one televised debate with Republican rivals, “and I’d bring back a hell of a lot worse than waterboarding.”2 Then there were the infamous plans to build a wall with Mexico that Trump promised would be “an impenetrable, physical, tall, powerful, beautiful, southern border wall.” Action was needed against China, too, Trump repeatedly said. “We can’t continue to allow China to rape our country and that’s what they’re doing.”3

  After his inauguration, Trump promptly set about pulling out of the multiple agreements that the previous administration had signed up to, detaching the United States from the international mainstream in the process. This included signing an order to “permanently withdraw” from the Trans-Pacific Partnership on his first day in office, promising that this was a necessary step if he was to “promote American industry, protect American workers, and raise American wages.”4

  Then there was the Paris Climate Accord, which Trump described as “simply the latest example of Washington entering into an agreement that disadvantages the United States to the exclusive benefit of other countries, leaving American workers—who I love—and taxpayers to absorb the cost in terms of lost jobs, lower wages, shuttered factories, and vastly diminished economic production.” As a result, he announced in June 2017, the United States “will cease all implementation” of the accord with immediate effect and thereby avoid the “draconian financial and economic burdens the agreement imposes on our country.”5

  In addition to these withdrawals were steps such as issuing an executive order banning all nationals from Iraq, Syria, Iran, Libya, Somalia, Sudan and Yemen from travelling to the US;6 instructions to cancel “the last administration’s completely one-sided deal” with Cuba (“effective immediately”);7 and steps—the “first of many”—to impose tariffs on more than a thousand products that would eventually affect some $50–60bn of imports from China.8

  These dramatic switches of direction point to a world that is changing fast and where political leaders—and voters—are both demanding and choosing sharp changes of course. Europe has seen the rise of the far right, with Marine Le Pen of the National Front (FN) contesting the French presidential election as one of the two highest-ranked candidates in the preliminary round in mid-2017; in Germany, the Alternative für Deutschland (AfD) not only won its first ever seats in the Bundestag elections in September of the same year but became the third largest party in the process—with ninety-four MPs elected to parliament.

  Frictions in Europe centre on questions about immigration and national identities. But they are fuelled by the fear—real or imagined—that radical action is needed either to slow down change or to reverse it. In Hungary, barbed-wire fencing has been constructed along the border with Croatia and Serbia, while the failure to ensure the independence of the judiciary and freedom of the press, and the growing lack of protection for minorities, has led to calls in the European Parliament for sanctions to be imposed by the EU on one of its own members—so dramatic is the “clear breach…of the values on which the Union is founded.”9

  This followed calls to punish Poland over similar concerns about the rejection of liberal values that were so intense that, in December 2017, the EU deployed Article 7 of the Lisbon Treaty, obliging Warsaw to reverse judicial reforms. “We have a dispute with the Polish government,” said Jean-Claude Juncker, the President of the European Commission; at least, he added reassuringly, “we are not at war.”10

  The stresses and tensions within Europe, the difficulties of member states to see eye to eye about major internal issues and the failure to deal effectively with arrivals of refugees and economic migrants from outside Europe have put an enormous strain on the ideals and integrity of the European Union itself. The EU seems to have “serious problems with its founding principles,” declared Italy’s Deputy Prime Minister, Luigi di Maio, in the summer of 2018. Perhaps the time has come, he said, to no longer make contributions to the European Union’s annual budget.11

  The breakdown in confidence was epitomised, however, by the referendum campaign held in Britain in the summer of 2016, when 52 per cent of those who voted chose to recommend leaving the EU—even though the process and consequences of doing so remained not so much obtuse as unknown.

  In the build-up to the referendum, the European Union was presented as being part of the problem, not part of the solution for Britain’s future. The EU, said Boris Johnson, was “a job-destroyer engine” that did deep damage to the British economy.12 The customs union between all the members of the EU was a “complete sell-out of Britain’s national interests,” said another prominent proponent of Brexit; “luckily,” however, noted yet another senior politician, Britain has “old friendships” with other countries that could be rekindled and with whom better trade agreements could be reached—countries, as it so happened, that had almost all once been British colonies.13 To advance into the future meant looking to the past.

  Whatever the long-term significance of Brexit turns out to be, the fact is that across many parts of the developed world in the West, politicians, voters and governments are taking steps to diminish cooperation with each other, to disengage from agreements that were made in the past and which now appear to be unwanted, imperfect and, indeed, counterproductive. The hopeful optimism of working towards common interests and mutual benefits has given way to suspicion and distrust and, more importantly, towards action designed to allow each to go their own way. Theresa May used her first visit to a G20 summit as prime minister in the autumn of 2016 to inform the startled heads of the world’s most powerful countries that Britain would become “the global leader in free trade”—an aspiration not lacking ambition or nerve in the circumstances: it is hard to offer to lead others when one’s own house is in an obvious state of chaos.14

  The relentless focus on the White House, on Brexit and on the day’s latest breaking news in the familiar corridors of power in the West means there is limited focus on what is going on elsewhere in the world. This blindness is particularly strong when it comes to large-scale developments that have regional, and indeed trans-continental consequences. Following the same stories and same personalities comes at the cost of being able to see the big picture.

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  The themes of isolation and fragmentation in the West stand in sharp contrast to what has been happening along the Silk Roads since 2015. The story across large parts of the region linking the Pacific through to the Mediterranean has been about consolidation and trying to find ways to collaborate more effectively; the trend has been about defusing tensions and of building alliances; the discussions have been about solutions that are mutually beneficial and provide the platform for long-term cooperation and collaboration.

  These have been facilitated by multiple institutions that both enable dialogue and take practical steps to deepen ties between states—multilateral financial institutions such as the Asian Development Bank and the new Asian Infrastructure Investment Bank, but also groups like the Shanghai Cooperation Organisation, the Eurasian Economic Union, the BRICS summits, the Trans-Pacific Partnership (albeit without US participation) and the Regional Comprehensive Economic Partnership—the last of which includes countries from South East Asia along with China, India, South Korea, Japan, Australia and New Zealand. Together, these have a combined GDP of almost $30tr—or 30 per cent of global GDP—and represent 3.5 billion people. Negotiations to create a “modern, comprehensive, high-quality and mutually beneficial economic partnership agreement” have intensified, raising the prospect of what one economist has called the largest free trade deal in history.15

  Not surprisingly, progress towards collaboration has not been uniform across Asia and beyond. Nor wo
uld it be fair to make light of a series of very significant hurdles, antagonisms and rivalries between peoples and individuals that have the potential to be so destabilising as to have a regional and in some cases a global impact. Nevertheless, it is striking that the world is spinning in two different directions: de-coupling and going it alone in one, and deepening ties and trying to work together in another.

  Many of the resource-rich states in Central Asia, for example, have been exploring ways of working together practically and with some effect. In March 2017 the presidents of Turkmenistan and Uzbekistan inaugurated a new railway bridge across the Amu Darya River at Turkmenabat-Farab—an important intersection that will help improve connections not only between the two countries but open possibilities for long-distance trade too.16 Then there is the cooperation by Central Asian republics with initiatives such as those intended to help Tajikistan reinforce its southern border with Afghanistan, including an operation aimed at blocking drug smuggling, or the opening up of new checkpoints in the second half of 2017 in the Osh, Batken and Jalal-Abad districts in Kyrgyzstan to make crossing the border to Uzbekistan easier and quicker.17

  Improving relations boosts exchanges. For example, bilateral trade between Kazakhstan and Uzbekistan increased by 31.2 per cent in 2017 alone, while new initiatives aim to increase this further still in the coming years.18 Whether the declaration in Kazakhstan that 2018 will be the Year of Uzbekistan and the reciprocal nomination of 2019 in Uzbekistan as the Year of Kazakhstan will make a material difference remains to be seen.19 Statements about “two fraternal people…marching side by side on the path of economic development” and seeking mutual advancement based on “eternal friendship and strategic partnership” are glossy soundbites that should not be taken too seriously. Nevertheless, they do serve to underline that a common narrative is being spun that talks of mutual interests, common pasts and a joint future.20