The city of Hong Kong, which has enjoyed relatively free trading laws from mainland China and has established itself as a major trading centre over the years, may be at risk of capital fleeing due to draconian laws that China seeks to impose on it, curbing its trade and the political freedom it enjoyed.
The problem begins with Beijing's plan to enact national security laws in May 2020 over the whole country, including Hong Kong, which has had an independent judiciary, loose business regulation, low trade barriers and guarantees of freedom of expression until now. The national security law aims to target sedition and terrorist activities. This comes after anti-Beijing protests last year which had cases of extreme violence against the public.
This raises many questions for those doing business because there is a great fear that the definition of national security is so vague and ambiguous that China may accord severe punishment for petty crimes or dissent.
However, the Hong Kong officials have responded by support for the law. The Chief Executive, Carrie Lam, has said that this law addresses problems which the business sector has been “worrying about over the past year.” Leung Chun-ying, a top Chinese advisor, has said that the law does not “hinder foreign investors”, nor “hinder the freedom enjoyed by local residents”.
The fear still abounds, with a significant number of people seeking to flee the city, the largest fall in the local stock market since 2008 after the announcement of the security law and the doubling of the funds deposited in Singaporean banks, which is attributed to the situation in Hong Kong by economists.
Many investment firms have expressed their concerns on tightening of the grip by mainland China on Hong Kong. William Kaye, a longtime investor in China and founder of Pacific Group, the investment firm, has said that “what is just a trickle could become a flood of capital out.”
The US government has also lodged a strong protest with China against the imposition of draconian security law on Hong Kong. It is important to note that the USA has granted special status in trading to Hong Kong which has given some competitive advantages and contributed to the business growth of Hong Kong.
The US had warned China that with the new security law, the special status granted to Hong Kong will be revoked by the USA. As China failed to do so, the USA revoked Hong Kong’s Special Status through an executive order by President Trump on July 14, 2020.
A revocation of its special status would mark “the beginning of the death of Hong Kong as we know it,” Steve Tsang, director of the University of London’s SOAS China Institute, said last year.
Apart from the special status revocation, the same day President Trump also signed an Hong Kong Autonomy Act to impose sanctions on foreign individuals and entities for ‘contributing to the erosion of Hong Kong’s autonomy.’ Under this law, persons responsible for human rights violations in Hong Kong can be subject to sanctions like visa bans and asset freezes.
Hong Kong Chief Executive Carrie Lam, has said it’s “totally unacceptable” for foreign legislatures to interfere in Hong Kong’s internal affairs, and that sanctions would only complicate the city’s problems. She also gave reassurance to the investors that Hong Kong adheres to the rule of law and has an independent judiciary.
The Chinese attempt to exert greater control over Hong Kong and the protest by the local people with moral support from the international community has once again put the spotlight on the behaviour of China, as it is trying to establish itself as a global economic and military super power.
The people of Hong Kong have unfortunately become a pawn in the great game of geopolitical power projection. It is still too early to predict whether China will blink first and roll back the draconian law or Hong Kong will end up as collateral damage in China’s quest for a place on the high table of global power players.
Support us to bring the world closer
To keep our content accessible we don't charge anything from our readers and rely on donations to continue working. Your support is critical in keeping Global Views 360 independent and helps us to present a well-rounded world view on different international issues for you. Every contribution, however big or small, is valuable for us to keep on delivering in future as well.
This article explains the recent tensions between Iran and the United States, and presents it as a case of the ‘Security Dilemma’ theory in practice.
The Persian Gulf Crisis 2019-20
To understand the current crisis in Persian Gulf, we must look at the Iran Nuclear Deal of 2015, also called the Joint Comprehensive Plan of Action (JCPOA).
The JCPOA was signed between The E3/EU+3 (France, Germany, the United Kingdom, the Russian Federation, and the United States, China, with the High Representative of the European Union for Foreign Affairs and Security Policy) and the Islamic Republic of Iran, to permit nuclear capabilities for Iran exclusively for peaceful purposes, in exchange for the lifting of crippling sanctions.
JCPOA terms:
International Atomic Energy Agency representative in Tehran, Iran for talks on JCPOA implementation | Source: Tasnim News Agency
Under this accord, Iran had to reduce its Uranium stockpile by 98% to 300kg, maintain its level of enrichment at 3.67%, reduce the number of centrifuges, and only keep one of its Uranium enrichment plants active. It also had to redesign its reactor at Arak, so it could not produce weapon’s grade Plutonium. Until 2031, Iran is not permitted to make heavy-water reactors.
Further, it was to permit itself to regular inspection of their nuclear site by the global nuclear watchdog, the International Atomic Energy Agency (IAEA).
In return, Iran gained over $100bn of frozen assets overseas, and was permitted to allow trading in oil in international markets and use the global financial system for trade.
Trump Administration’s Revoking of the JCPOA
In 2018, the Trump administration reimposed some of the sanctions in Iran, despite Trump's election promise to reduce involvement in the Middle East. Countering the re-impositions, Iran threatens to resume Uranium enrichment. In May 2019, Iran suspends nuclear deal commitments, and gives other signatories a 60-day deadline to protect it from US sanctions, before resuming Uranium enrichment. The International Atomic Energy Agency (IAEA) reported that Iran had already increased Uranium production, but is unclear by how much.
President Trump signing executive orders, imposing sanctions on Iran | Source: Shealah Craighead via White House
In May 2019, the US increased military deployment in the Persian Gulf, reportedly to prevent what the termed was a “campaign” between Iran and its proxies to threaten US oil shipping in the Strait of Hormuz.
The Tanker Crisis
In June 2019, two tankers were set ablaze in the Gulf of Oman, using mines. The US blamed Iran for these blasts, but Iran denied the charges.
In the same month, Iran Islamic Revolutionary Guard Corps (IRGC) shot down a US surveillance drone, escalating tensions and causing the US to name the IRGC as a terrorist organization.
In July 2019, the British Royal Marine Commandos seized an Iranian tanker off the coast of Gibraltar, as it was suspected to be en route to Syria, in violation of EU sanctions. The US declared that anyone assisting the ship would be considered an accomplice of terrorist groups, namely the Iran’s Islamic Revolutionary Guard.
In retaliation, Iran seized British-flagged tanker in the Strait of Hormuz.
The Iranian tanker was released six weeks later, on the condition that they do not unload their cargo of 2.1million barrels of oil in Syria.
December Air Strikes
In December 2019, the K-1 Air Base in Iraq was attacked by an unconfirmed party, killing one American contractor. This base hosts Americans (amongst other nationalities) who are responsible for training Iraqi troops in counter-terrorism. The Americans alleged that the attack was carried out by Kataib Hezbollah, which denies it. Kataib Hezbollah is a rebel group (recognized as a terrorist group by the US) backed by Iran. The Iraqi’s alleged that ISIL was responsible.
In retaliation for the killing of the American Contractor, the US launched air strikes on the weapons depot and command centres of Kataib Hezbollah in Iraq and Syria in the same month, reportedly killing 25 militiamen.
Iraq and Iran condemned the attack, and on 31 December, 2019, Iraqi militia attacked the US Embassy in Baghdad. In response, the US conducted airstrikes at the Baghdad International Airport in January 2020, killing the Commander of Iranian Quds Force, General Qasem Suleimani, the second most powerful man in Iran.
These escalations, placed within the context of US invasions of Iraq and Afghanistan, provide a good example of the Security Dilemma theory and how it plays out in practice.
What is the Security Dilemma?
Before delving into the theoretical definitions it is worth reminding ourselves that States do not behave as they do because a theoretical model demands them to. Rather, most theoretical models are based on observations of real-world behaviour of states, and seek to explain said behaviour. The Classical Realist theory, of which the Security Dilemma is a part, is amongst one of these, and I endeavour to highlight some of the key points of this theory.
The Classical Realist theory holds that States (or State-actors) are the basic unit of any international system. They are the most important actors, as there is no authority higher than them. The international system is fundamentally anarchic, with every actor left to their own devices with no supranational oversight. Each State finds it in their own self-interest to provide their own means for security. Security comes with the ability of the State to exercise its power, and thus Power Hegemony and Security are inextricably linked. In other words, since no State can rely on a supranational authority to provide security (an every-man-for-himself scenario), it is in each State’s best interest to understand the power distribution across all state-actors and maximize power for themselves, as the ultimate security. This results in a zero-sum game, with one actor’s loss being another’s gain. In providing absolute security for one’s own State, one leaves others insecure. The resulting power imbalance manifests in conflict, and for the Realist it follows, therefore, that Conflict is the natural state of affairs.
This, in essence, is the Security Dilemma: Striving for absolute security leaves others absolutely insecure, thus providing powerful incentives for an arms race, leading to further conflicts. It is little wonder that this is also called the Spiral Model, for in the very process of striving for security, one gives birth to escalating conflict.
How does this relate to the Persian Gulf Crisis?
The US has long followed the Realist model, believing that in a state of fundamental anarchy, it is justifiable to have nuclear capabilities and have intense militarization, as a means of gaining absolute security (justified by ‘offense is the best defence’). However, the US is also known for disallowing Weapons of Mass Destruction and nuclear capabilities in other countries, despite having such resources by itself. Here we see the Security Dilemma: to maintain absolute security, the US cannot allow others to be similarly armed. This is seen clearly in the signing of the JCPOA.
Consider the case from Iran’s point of view. As a result of the US war against Al Qaeda and Taliban in Afghanistan and overthrow of Saddam Hussain in Iraq, there has been constant American presence in both the countries bordering Iran since almost two decades. That this poses a threat to Iran is obvious: the US caused fundamental regime changes in Iraq after the war; with its manpower and firepower, alongside its strategic placement on both sides of the Iranian border, the US is at a vantage point to attack Iran – placements that are, paradoxically, intended to guarantee American security.
The American show of strength and the impending danger of conflict leave Iran with two choices: Forge alliances with US adversaries, such as China or Russia, to deter Iran-US conflict, or be nuclear-armed. Iran managed both, causing, in effect, a nuclear arms race that culminated in the JCPOA. In retrospect, the JCPOA seems like the perfect solution to the Security Dilemma in US-Iran conflicts: not only does it allow Iran to benefit from its suspensions of nuclear capabilities, it also ceases the arms race and de-escalates the conflict. In short, it is the Diplomat’s way out of the Security Dilemma, guaranteeing security without arms.
The Trump administration’s call to reimpose sanctions on Iran only serves to re-ignite security concerns for both countries. With Iran having ousted its JCPOA commitments as of January 2020, we can only hope that de-escalations will soon follow to prevent the otherwise inevitable spiralling into arms race and false absolute security.
