Harvard Asia Quarterly Autumn 2001 1 HAQ CONTENTS

HAQ Editorial Staff

Editor in Chief Wai-Yin Alice Yu 4 Asian Perspectives on September 11 Harvard Law School

Executive Editor China Ilya Garger Graduate School of Arts and Sciences 4 Jaime FlorCruz Managing Editor China’s Mixed Messages Cindy Zhou Is America’s Friend in Need a Friend Indeed? Graduate School of Arts and Sciences 6 Alastair Iain Johnston Production Editor The Pros and Cons of Cooperation Lisa Thomas Chung Harvard Graduate School of Design Beijing Weighs Its Options

Photography Editor South Asia Lisa Thomas Chung Harvard Graduate School of Design 9 Rahul Sagar Of Hydra-Headed Demons Web Editor Matthias Lind The Indo-US Relationship Takes Yet Another Turn Graduate School of Arts and Sciences Southeast Asia Area Editors Sharri Clark, Central Asia 13 Kim Beng Phar Graduate School of Arts and Sciences Militant Semantics Caroline Cooper, China Graduate School of Arts and Sciences The Need for a Common Charter on Jihad Rebecca Culley, China Graduate School of Arts and Sciences Japan James Lee, Korea Graduate School of Arts and Sciences 16 Kenichi Asano Emily Parker, Japan Japan and America’s War Graduate School of Arts and Sciences Rahul Sagar, South Asia The LDP’s Hawks See a Golden Opportunity Graduate School of Arts and Sciences 17 Kazuyuki Katayama Sujata Barai, South Asia Harvard Law School A View from the Japanese Embassy Jin Pao, Southeast Asia Harvard Law School Afghanistan Associate Editors 19 Mary MacMakin Harvard Law School Collateral Benefits Melody Chu Ben Wilkins Women and War in Afghanistan Wei Zhou Graduate School of Arts and Sciences Sharon Chen Jay Fann Holly Gayley Julianna Lee 21 Four Expert Opinions on Terrorism’s Aftermath Harvard Divinity School Seong Lee 21 Interview with Jessica Stern Harvard Asia Quarterly Publishing Jihad International, Inc. Board 24 Ziauddin Sardar Virginia Harper-Ho Harvard Law School Critical Muslims Victor Shih Islam Must Stand Up to Itself Graduate School of Arts and Sciences 27 Interview with Stephen Cohen Harvard Asia Quarterly Problem Solving Faculty Advisory Board 31 Waheguru Pal Singh Sidhu Professor W.P. Alford Harvard Law School New Paradigm, Old Tactics Dean David Smith Some Thoughts on Coalition Building Harvard Law School Professor Hue-Tam Ho Tai Faculty of Arts and Sciences Professor Ezra Vogel Faculty of Arts and Sciences Professor Shang-Jin Wei Kennedy School of Government

Harvard Asia Quarterly 2 Autumn 2001 Volume V, No. 4. Autumn 2001

HARVARD ASIA QUARTERLY is a student publication affiliated with the Harvard Asia Cen- ter. HAQ was established in 1997 by members of the Harvard Asia Law Society in con- junction with students from other graduate and professional programs at Harvard University as 34 Looking for God in the Streets of Seoul an interdisciplinary journal of Asian affairs. The Resurgence of Religion in 20th-Century Korea LETTERS Don Baker HAQ welcomes readers’ letters and comments. HAQ reserves the right to decline to print or to Although modernization and urbanization led to a decline in religious participation edit correspondence for length and format. in most developed nations, Don Baker argues that these forces had the opposite Letters should be addressed to the editor and effect in Korea. Based on strong statistical evidence, Baker posits that because submitted to the address below, or sent to: [email protected]. religious affiliation was associated with modernity, the ranks of the faithful swelled instead of declined as Korea become one of Asia’s industrial giants. SUBMISSIONS HAQ invites the submission of unsolicited articles and essays to be considered for publication. Submissions should address matters of contemporary concern to Asia in the following 40 Reunification in the Balance or related fields: political science; law; economics; business and finance; social criticism; Korea’s Need for A Continued US Alliance international relations; design; and the arts. Suk-woo Kim Submissions should be delivered in hard copy The former South Korean Vice-minister of Unification presents his vision of a unified and in electronic form via email. All submissions materials become the property of HAQ. Korea with a continued US military presence. In contrast to the nationalism commonly HAQ reserves the right to reject submissions evoked by the prospect of reunification, Kim insists that a pragmatic approach to and to edit materials for length, format and the issue is the key to national and regional stability. content. To receive HAQ Editorial Guidelines, submissions schedules, or additional information, please contact HAQ at the address below, or visit our website at www.haqonline.org. Electronic submissions or inquiries should be sent to the following email address: 43 All Systems Ready? [email protected] China’s Institutions and the WTO Countdown SUBSCRIPTIONS HAQ Editors Annual subscriptions to HAQ are available at a rate of $28.00 (individual subscribers) and $35.00 (institutional subscribers) for four issues delivered in the United States and $45.00 for deliveries elsewhere. For more information, 44 The Chinese Banking Sector: please contact HAQ or your academic peri- Current Conditions and Future Prospects odical subscription service. Subscriptions are available online at our website: Victor Shih www.haqonline.org China’s banking system, burdened by nonperforming loans and state intervention, faces many obstacles to genuine reform. Victor Shih examines the banking industry sector by sector, and argues that the government’s de- Please address all correspondence to: pendence on banks as political tools may result in a financial crisis. Harvard Asia Quarterly c/o Harvard Asia Center 1737 Cambridge Street Cambridge, MA 02138 54 Is China’s Judiciary Ready for WTO Entry? USA Fax: (617) 495-9976 Qingjiang Kong www.haqonline.org Qingjiang Kong identifies five main weaknesses in China’s judicial system email: [email protected] which may cause problems in its integration into the WTO. He evaluates steps taken by China so far in reforming its legal system to meet WTO require ments, but concludes that deeper structural changes need to occur before Credits: China can become a successful member of the WTO. Cover Design by Lisa Thomas Chung Photo credits: Edwin Chung (cover, p.12); PARSA website (p.19-20); Min-Chang Lee (p.35); www.lifeinkorea.com (p.38, 41). 60 Asian Studies Events at Harvard, Autumn 2001 No material appearing in this publication may be reproduced without the permission of the publisher. The opinions expressed in this publication are those of the contributors and are not necessarily shared by the editors or pub- lishers. All statements of fact and opinion represent the work of the author, who remains solely responsible for the content. All editorial rights reserved.

Harvard Asia Quarterly Autumn 2001 3 ASIAN PERSPECTIVES ON SEPTEMBER 11

CHINA

CHINA’S MIXED MESSAGES IS AMERICA’S FRIEND IN NEED A FRIEND INDEED?

BY JAIME FLORCRUZ n Beijing’s cyber-cafes, people click into websites and join chat- rooms where sympathy for America mixes with anti-US sentiment. Jaime FlorCruz has been CNN Beiing bureau chief IShrill anti-American postings stand out. “Heroes, brave men who since July 2001. Originally from the Philippines, liberated the world,” one posting hails the terrorists who attacked New he has lived, studied and worked in China since 1971. He joined the TIME magazine Beijing bureau York and Washington. “America under attack – it deserved it!” taunts in 1982 and served as Beijing bureau chief from another. 1990 to 2000. FlorCruz has also served two terms These are extremist voices of a small minority, but the love-hate as president of the Foreign Correspondents’ Club ambivalence reverberates in living rooms, restaurants and even on of China and is the co-author of Massacre at Beijing (1989), a book about the crackdown in Tiananmen Beijing’s campuses. “Terrorism is wrong but I personally think this was Square. a lesson for the United States,” says a Peking University student. “From now on, the US won’t be so arrogant and reckless.” Voices like these complicate China’s ability to actively join the US- led campaign against terrorism. When the US began its military attacks on terrorist groups in Afghanistan on October 7, Beijing’s response was equivocal, unlike the unqualified support that came from London, Paris and Moscow. A Foreign Ministry spokesman reiterated that China “opposes terrorism of any form” but hopes that “military strikes on terrorism should be targeted at specific objectives so as to avoid hurting innocent civilians.” To be sure, Beijing is keen to join the anti-terrorism chorus and earn international brownie points. Using diplomatic channels, the media, and even telephone hotlines, no less than President Jiang Zemin has conveyed sympathy to President George Bush and pledged to support the anti- terrorism campaign. Beijing hopes that by doing so, it can show itself to be a responsible member of the community of nations. Nevertheless, President Jiang is hard-pressed to match platitudes with concrete deeds. The US retaliatory strikes against Osama bin Laden and the Taliban government in Afghanistan put Beijing in an awkward position for two reasons. China has been a self-styled champion of the militant Arab cause; they do not wish to offend the Arabs for fear of losing their political and diplomatic support, or inciting them to stir up ethnic unrest in China’s backyard. Beijing is also averse to foreign intervention, since opposition to “interference in other countries’ internal affairs” is a hallowed foreign policy principle. It does not want to set a precedent that could haunt the CCP in its dealings with Taiwan, Tibet and Xinjiang. Put simply, China does not wish to see Western powers directly involved if and when a crisis arises in any of these trouble spots. Beijing also wants something in return for its support. Says Chinese Foreign Ministry spokesman Zhu Bangzao: “China, by the same token, has reasons to ask the United States to give its support and understanding in the fight against terrorism and separatists.” Here, Zhu refers to ethnic

Harvard Asia Quarterly 4 Autumn 2001 groups in western Xinjiang and Tibet who are agitating for yet again last April 1, when a Chinese-fighter pilot perished independence, some through violent means. after his plane collided with an American spy plane near On the surface, the situation in the border region of Hainan Island. Xinjiang has been fairly rosy. The large northwestern province Most Chinese commiserate with the American victims has been a beneficiary of Beijing’s “develop the West” of the recent attacks, but they invariably see the attacks as program, which boosts government spending on infrastructure the result of America’s “hegemonistic” foreign policy. Some projects to lure tourists and investors. In many ways, the relate the terrorist attacks to the Chinese embassy bombing. Marxist mantra on ethnic issues “Now they know how it feels to – economic development means be bombed,” says one college less ethnic conflict – seems to student. work. New roads and bridges Some relate the terrorist attacks to the Just the same, the fallout have been constructed. Tourism Chinese embassy bombing. “Now they from the September 11 terrorist and trade are booming. Foreign know how it feels to be bombed,” says attacks in the United States offers and local investments are one college student. China a rare political break. trickling in. Aside from demonstrating global Even so, Xinjiang in the statesmanship, President Jiang 1990s has experienced pockets of ethnic disturbances and Zemin was able to get a fresh start with President George even spates of fatal bombings, one of a Beijing bus, which Bush ahead of his trip to Shanghai to attend the APEC summit. were blamed on Islamic radicals. It is suspected that many He can now try to put the spy-plane episode behind him and ethnic Uighurs in Xinjiang, which shares a 40 km border with work for closer ties with Washington. Or he can pander to Afghanistan, have received military training, as well as moral the extremist views in Chinese chat-rooms. As Washington and financial support from terrorist groups based in strikes back against Osama bin Laden and his followers in Afghanistan and Pakistan, whose aim is to export Islamic Afghanistan through an ad hoc coalition against terrorism, militant violence. Beijing has two choices: join in or be left out. To deprive these groups of a breeding ground, Beijing has helped create the Shanghai Cooperation Organization, which groups China, Russia and the Central Asian republics of Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan near China’s borders. The group declared war against the three “isms” of terrorism, separatism and extremism last June. The Uighur separatists’ threat should not be over-stated. Most analysts agree that China is not vulnerable to the same ethnic separatism that has bedeviled the former Soviet Union. Nor does it have to fear Islamic fundamentalist attacks à la World Trade Center, which require a high level of planning, funding and coordination. The anti-Beijing Uighur groups are under-manned, under-funded and poorly organized. “These are a few hundred mostly young activists,” says Dru Gladney, an expert on Xinjiang ethnic issues at the University of Hawaii. “There are so few opportunities for these Uighur youths that they’d take up any chance to go out and do something else. They’d just as easily take a scholarship to Harvard as they would join training camps in Afghanistan or Pakistan.” However, few doubt that should China fall apart, it would split along ethnic and regional fault lines. That is why Beijing remains vigilant against any signs of ethnic unrest. The government is ready to do anything to nip problems in the bud, even at the risk of getting pilloried overseas for religious persecution and human rights violations. While Beijing has expressed its support for the coalition against terrorism, it will be difficult for the Chinese leadership to stand behind America unconditionally. President Jiang cannot appear too pro-American, lest he is attacked by the Communist Party’s conservative wing. There is a ground swell of anti-Americanism in China, popularly attributed to the “150 years of humiliation” suffered at the hands of Western imperialist invaders. This nationalistic passion was stoked in 1999 when NATO planes bombed the Chinese embassy in Belgrade and

Harvard Asia Quarterly Autumn 2001 5 THE PROS AND CONS OF COOPERATION BEIJING WEIGHS ITS OPTIONS

BY ALASTAIR IAIN JOHNSTON o far the Chinese government’s response has been about what one could hope for from the US Alastair Iain Johnston is Professor of Government at Harvard perspective. Like many other countries, including US University. His research focuses on East Asian international S allies, the PRC has stressed that the US military response relations and Chinese foreign policy. He is the author of Cultural Realism: Strategic Culture and Grand Strategy in Chinese needs to retain some kind of UN mandate, that it should History (1995), and the forthcoming Social States: China in avoid civilian casualties, and that it should proceed on the International Institutions, 1980-2000. basis of reasonably good evidence of the perpetrators of the 9/11 attack. But these haven’t been made firm conditions for Chinese cooperation as yet. Nor, according to public statements from US Secretary of State Colin Powell after his meeting with Chinese Foreign Minister Tang Jiaxuan on Septem- ber 21, is there at this moment any quid pro quo for Chinese cooperation on any of the issues of friction in US-PRC relations. Moreover, the Chinese government came out in restrained support of the initial waves of US and British strikes against Taliban targets. The PRC government faces a number of cross-pressures. What follows is a delineation of the possible calculations both for and against Chinese association with this US-led campaign.

THE PROS

The PRC obviously has an interest in suppressing any Islamic fundamentalist movements in Central Asia that might try to support independence movements in Xinjiang. To the extent that US and world attention is focused on the pursuit of Osama Bin Laden, this is an opportune moment to up the coercive pressure on such movements in Western China. Furthermore, the PRC would like to prevent the “Talibanization” of Pakistan, a country with nuclear weapons (thanks to Chinese assistance in the 1980s) right on China’s border. Chinese leaders believe China benefits from a degree of tension between Pakistan and India, to the extent that this diverts Indian military resources, but it is unlikely that they believe China benefits from the kind of instability that the “Talibanization” of Pakistan would bring to South Asia. The Chinese leadership has an interest in stabilizing the global economy, especially the American economy, as quickly as possible given China’s heavy dependence upon exports to the US market. The PRC also had an interest in improved political relations with the US, leading up to Bush’s trip to Shanghai for the APEC meetings in October. Improved relations with the US may help to improve Jiang Zemin’s somewhat questionable stature as a foreign policy thinker and leader. Better relations with Washington are consistent with a desire for a “peaceful international environment” that serves economic development. Economic development is, at this moment, probably more important for building up the legitimacy of the Chinese Communist Party than the promotion of a narrow anti-Americanism. China’s leaders may also calculate that improved Sino-US relations will place additional pressure on Taiwan, on top of the eco-

Harvard Asia Quarterly 6 Autumn 2001 nomic gravitational pull of the mainland, to accept the One is sensitive to “attentive” public opinion. Some observers have China principle in some fashion. Indeed, some Taiwanese argued, on the basis of popular reactions to the bombing of officials are worried that their leverage in any cross-strait China’s embassy in Belgrade and the EP-3 spy plane inci- interactions declines as Sino-US relations improve. Approval dent, that the leadership is constrained by popular anti-Ameri- of and cooperation with the current US response to 9/11 may canism and cannot be viewed as being too accommodating allow China to bank a certain amount of political capital in to US interests elsewhere in the world. It remains unclear, Washington that could be drawn on when the two sides re- however, what popular opinion is on the question of coop- turn to the standard conflicts in the relationship. eration with the US. Anecdotal evidence from US scholars Another factor in China’s approval of the current Ameri- and officials who have interacted recently with Chinese offi- can-led anti-terrorism campaign is that China has an interest cials and government analysts suggests a level of understand- in enhancing the status and role of institutions such as the ing of the US position at the policy and pundit level that is UN Security Council and the recently created Shanghai Co- inconsistent with Western journalist accounts of popular anti- operation Organization. These institutions require Chinese Americanism. cooperation to function, and they can play a role in restrain- Rigorous public opinion polling over the last few years ing US behavior that the PRC does not like as long as the US suggests somewhat higher levels of amity towards the US decides to play inside multilateral in- than the US press and pundit world stitutions. The stature of these insti- have us believe. The key question is: tutions will be enhanced to the extent what does the Chinese leadership they play a constructive role in the think its public opinion is, and how campaign against terrorism. The key question is: what does the much leeway does it believe it has to Chinese leadership think its public cooperate with the US? It may not, opinion is, and how much leeway THE CONS in fact, know — which in itself may does it believe it has to cooperate be a constraint on its willingness to There remain a number of rea- with the US? cooperate. sons why China may ultimately be less interested in involving itself in an extended American- THE CONTEXT led campaign. For one, the Chinese leadership does not have an interest in seeing a sustained and large-scale US military A final issue that ought to concern the Chinese leader- presence in Central Asia or in Pakistan. China has worked ship is that cooperation against terrorism will probably not hard to publicize closer ties with Russia and Central Asian put an end to the ongoing, long-term debate in Washington states as a means for managing the affairs of the region with- over the nature of Chinese power. This debate is basically out US involvement. That Japanese military forces (prima- over how much of a non-status quo power China is, and how rily naval) may be temporarily deployed to the region to as- much it will threaten US dominance of the Western Pacific if sist the US may be worrisome for those concerned about the it continues to grow economically and strengthen its military future of Japanese military power (though so far the Chinese power projection capabilities. response to Japan’s decision to assist the US has been muted, The form and substance of China’s cooperation with the and if the Bush administration is observant it should be US will be used as evidence on all sides of this debate. Those counted as a major Chinese cooperative gesture to the US, who support engagement more or less in its current form will not just to Japan). use evidence of cooperation – say the provision of intelli- Moreover, Chinese leaders do not necessarily have an gence about the Taliban or bin Laden, or the restrained sup- interest in seeing a war against terrorism expand to include port for the early US military strikes against the Taliban – as major operations against countries such as Iraq. This is for at evidence that US-Chinese interests are not necessarily headed least two reasons. One, such operations would challenge, in for a power transition-type clash in East Asia. the Chinese view, traditional norms of state sovereignty. A Those who believe that US power cannot accommodate central theme in Chinese foreign policy at the moment is the any potential rival in the region, especially a non-democratic defense of a rather strict definition of sovereignty. The cur- one, will not be convinced, and may try to set a higher thresh- rent anti-terrorism campaign is, at a very general level, a de- old for cooperation against terrorism. Seen through the 9/11 fense of sovereign states against violent non-state actors. An lens, the standard Chinese discourse on international rela- attack on Iraq shifts the campaign to an attack on sovereign tions that regularly criticized “hegemonism and power poli- states. Second, very concretely, the implications for Sino- tics”, US unilateralism and “neo-interventionism” will be seen US relations would be disastrous if it were discovered that as even more convincing evidence that US and Chinese long- assistance from Chinese companies in the construction of Iraqi term strategic interests are in conflict. communications helped Iraqi military power. It is hard to The PRC ought to be worried about precisely what kind imagine that the political capital the PRC had built up from of behavior the Bush administration will ultimately demand its cooperation against the Taliban and Al-Qaeda would last from its allies and potential allies in this war on terrorism as very long if US forces were endangered by Chinese-made a show of support. A wide definition of support or a wide dual-use military equipment in Iraq, let alone by any weap- menu of choices that allows China to choose among offering ons that had been shipped to Iraq at some point in the past. intelligence, air space, bases, actual military forces, or assis- There is also some evidence that the Chinese leadership tance in tracking the terrorists’ financial networks, will be a

Harvard Asia Quarterly Autumn 2001 7 less demanding test of China’s cooperation. A narrow defi- solved and what sort of trade-offs will be made is the key nition will be a tougher test, one that makes it more likely question. On most issues, Chinese foreign policy in the Jiang that China may “fail”. In light of the ongoing debate over the era can be characterized as an opportunistic, relatively short- nature of Chinese power, a failure may help tip the balance, term, limited status quo-oriented diplomacy. The key ques- and will contrast sharply with any tion being debated in the Polit- Taiwanese support for the US war buro is not likely to be “What on terrorism, however symbolic can we do to undermine terror- that support may be. The PRC ought to be worried about ism and its challenge to emerg- Jiang also ought to be wor- precisely what kind of behavior the Bush ing norms of global and domes- ried that in the longer term the US administration will ultimately demand tic governance and order?” The will be unable or unwilling to de- from its allies and potential allies in this question is likely to be “What liver anything substantive in return war on terrorism as a show of support. can we do that improves rela- for Chinese cooperation in the tions with the US, enhances our anti-terrorism campaign. Even though there does not appear bargaining leverage over Taiwan, reduces instability along to be any explicit short-term quid pro quo for this coopera- our borders, enhances our international image as a “respon- tion, the Chinese leadership has to have an expectation that sible major power”, and ensures continued access to global the US should become more sympathetic to China’s “legiti- markets and investment at minimal cost to our domestic le- mate” interests. gitimacy and foreign policy autonomy?” At the moment the The issues that matter to the Chinese leadership – arms answer appears to be: share intelligence about Pakistan and sales to Taiwan, closer US-Taiwan political and military re- the Taliban with the US, and avoid appearing obstructionist lations, National Missile Defense, the China-directed ele- as the US assembles its anti-terrorism coalition. ments of US bilateral alliances in Asia – are issues for which there is strong Congressional and Pentagon support. Chinese critics of Jiang’s current strategy of cooperation with the US will certainly be looking for, even while not expecting, US concessions on these issues. The absence of any substantial US overtures on these issues will be used as evidence of Jiang’s ineptitude as a foreign policy strategist. In sum, these are the main interests at stake for the Chi- nese leadership. How the conflicts among them will be re-

Harvard Asia Quarterly 8 Autumn 2001 SOUTH ASIA

OF HYDRA-HEADED DEMONS THE INDO-US RELATIONSHIP TAKES YET ANOTHER TURN

BY RAHUL SAGAR errorism is a topic that draws sharp reactions in India, typically divergent – as in the rest of the Rahul Sagar is the Michael von Clemm Fellow at the Graduate world – between those who seek to crush terrorism School of Arts and Sciences, Harvard University. He writes on T through force and those who encourage reflection upon the international relations issues for a number of publications including The Times of India. discontent that feeds terrorist activities. Not surprisingly, both these strands of thought were reflected in the Indian response to the terrorist attacks of September 11, though each holds different implications for India. Internally, Indian society has shared in the grief and shock of the tragedy, though this response has been tempered by Muslim sensitivities within the country. On the diplomatic front, the political class has grappled – somewhat unsuccessfully – to remain on top of the rapidly changing circumstances and gain moral and material advantage over regional rivals such as Pakistan. Nevertheless, underlying their response has been a tone of mild rebuke and maybe even a nagging desire to remind the world that the seeds of the current crisis did not sprout overnight. They have, in fact, grown out of the fertile soil provided by America’s decade-long silence vis-à-vis the fundamentalism that it helped to create in the form of the first international jihad.

REACTION TIME

Indian society reacted with great sympathy to the plight of New Yorkers, although the reaction was more than purely altruistic: the most recent count of 282 casualties shows In- dians to have constituted the second highest group national- ity to have perished in the twin towers. In what was a tragic, if symbolic, manifestation of the growing linkages between Indian and American firms, a majority of the Indians pre- sumed dead were software engineers working on-site at cli- ent locations. Reflecting a global surge of sympathy, Indians of all faiths and persuasions signed the register of condo- lence at the American Embassy in New Delhi and offered prayers in memory of the innocent. The outpouring of sympathy was soured, however, by widespread reports of Sikhs being mistakenly victimized in a series of brutal attacks in America, Canada and England. The impact of these outrages was only exacerbated by the US administration’s plodding attempt to remedy cases of mis- taken identity. Meanwhile, the glacial response from the In- dian Embassy in New York rather typically missed the point by asking Indian women to wear bindis on their foreheads so as to distinguish their ethnicity. It seemed not to have dawned on them that it was Sikhs and Muslim women in burkhas who were the target of racist taunts. An important factor complicating India’s domestic response to the terrorist attacks is the large domestic constitu- ency of Muslims – few people realize that India is home to

Harvard Asia Quarterly Autumn 2001 9 the world’s second largest Muslim population after Indone- especially through their covert operations in Kashmir (in- sia. In a typical case of over-reaction, the specter of Osama cluding their participation in the Kargil War of 1999). bin Laden is readily imagined in every dark corner of the Second, in a more global perspective, it is important to sub-continent and anything remotely suspicious is being at- recognize that India has consistently deemed Israel, America tributed or linked to Al-Qaeda. The ruling Hindu nationalist and itself as the targets of militant fundamentalists and has party, the Bharatiya Janata Party (BJP) has moved to ban a frequently lobbied for coordinated action – a painstaking small, though disagreeable, organization called the Students process that led to some patchy cooperation including the Islamic Movement of India (SIMI), which has been accused formation of an under-utilized joint working group on ter- of fomenting communal violence in parts of the country and rorism. Nevertheless, India’s desire to correlate terrorism in of circulating literature praising Osama bin Laden. Simulta- Kashmir with wider strains of militant fundamentalism has neously, the BJP has ignored calls to ban a larger and equally had limited success, in part because the substantial human distasteful Hindu organization called the Bajrang Dal, thus rights abuses committed in the region by the Indian Army breeding Muslim alienation through its policies of “selective have heightened alienation and allowed some Kashmiris to secularism”.1 portray the mujaheddin as freedom fighters. Nevertheless, it has been difficult for Indian Muslims to Third, in balance-of-power terms, the Indian desire to ignore pan-Muslim sentiment against America’s policies in influence events in Afghanistan corresponds to a long-stand- the Middle East. As one of India’s most respected commen- ing Indian Kautilyan dictum of constructing alliances with tators, Mushirul Hasan, put it in The Indian Express, “puni- states that neighbor India’s own neighbors.4 In fact, ever since tive action [while justified in the current environment] will the Pakistan-created Taliban displaced the pro-India only deepen anxieties and enlarge areas of tension in the Arab Najibullah regime in 1992, India has been a supporter (along world… global peace will always be an elusive goal without with Russia and the European Union) of the factious North- a Palestinian homeland free from Israel’s aggression.”2 While ern Alliance that has fought the Taliban for the past decade. these liberal Islamists in India have been very direct in their Consequently, India’s externally oriented political re- denunciation of the misuse of the concept of jihad and the sponse to the events of September 11 has been fairly consis- use of terror, some sections of the Muslim leadership have tent with its desire to participate in a global coalition against been less than vociferous in their condemnation of the events terrorism.5 The Ministry of External Affairs’ (MEA) open- of September 11. The articulation of this unapologetic posi- ing gambit made apparent India’s desire to equate Septem- tion by the Imam of India’s largest and most important mosque ber 11 with India’s own struggle to combat terrorism in Kash- led the US Ambassador to India mir. Indeed their initial press to call off a meeting that had been statement said that “Terrorism is planned to appease Muslim a crime against humanity and In- hardliners. Analysts quietly Despite repeated offers of assistance, dia is committed to fight it and noted the significance of the intelligence sharing and coordinated we shall continue to do so.”6 A Imam’s snub, coming as it did strikes, the Indian leadership has found few days later this point was reit- after a series of rejections by itself rebuffed by an American leadership erated: “This terrorist carnage Muslim clergy worldwide. that is well aware of the delicate balance against the United States calls for In sharp contrast to this re- of opinion in the Muslim world. a coordinated global response, buff, testimony was paid to particularly from countries like America’s influence in Kashmir India who have also been its vic- when the leading coalition of separatist groups, the All Par- tims.”7 The next day Prime Minister Atal Behari Vajpayee ties Hurriyat Conference (APHC), hurriedly joined their Pa- raised the pitch by asserting in a national broadcast that: “For kistani mentors in condemning the terrorist acts. Neverthe- years we in India have been alerting others to the fact that less, even their own extremist wing led by Sayyed Ali Shah terrorism is a scourge for all of humanity, that what happens Geelani avoided attending the press conference, while in Mumbai one day is bound to happen elsewhere tomor- mujaheddin groups such as the Lashkar-e-Toiba (LeT) con- row.”8 He also told President Bush in a telephone conversa- doned the attacks and signaled their support for Osama bin tion that “terrorism is a global problem... and that terrorism Laden. This was, as Indian commentators pointed out, a con- cannot be attributed to any religion or limited to one group.” firmation of the interconnected nature of the fundamentalist However, America has been less than enthused by India’s movements in the region – a fact later borne out by the death dedication to their cause, choosing to quietly distance itself of Pakistani terrorists in a US bombing raid in Afghanistan.3 from India’s eager overtures.9 This, as a leading strategic commentator notes, is not entirely unexpected since India is POLICY MATTERS receiving the same cold shoulder that Israel received from the Desert Shield coalition during the Gulf War.10 Despite India’s desire to be involved in the post-Taliban dispen- repeated offers of assistance, intelligence sharing and coor- sation is based on clearly articulated national interests. First, dinated strikes, the Indian leadership has found itself rebuffed in a regional security perspective, a Taliban-controlled Af- by an American leadership that is well aware of the delicate ghanistan is a constant threat to India’s security as it pro- balance of opinion in the Muslim world. India’s discomfort vides a fertile, lawless and stateless environment to breed on this front was only worsened when America looked on as anti-Hindu extremism. Moreover, the Taliban and its associ- Pakistan’s dictator, General Pervez Musharraf, instructed In- ates have proven their ability to destabilize the entire region, dia to “lay off”.

Harvard Asia Quarterly 10 Autumn 2001 Not unexpectedly, being outmaneuvered by Pakistan otal role in mentoring extremism in the region.12 Few can made India unhappy and skeptical about America’s ability to thus avoid restating the irony of the moment. As Shekhar live up to its grand principles. America’s indulgence of Paki- Gupta despondently notes: “America should realize that ter- stan – despite the short term gain – will be seen as another rorism will continue to thrive if politics is the criterion to signal that India must continue to develop its own strategies select the enemy.” The paradox is best illustrated by the to combat terrorism.11 This is especially the case given case of Omar Sheikh, a British national who is now suspected America’s continuing failure to hold either China or Paki- of having transferred $100,000 to Mohammad Atta (one of stan accountable for nuclear proliferation and cross-border the September 11 hijackers). Sheikh was freed by the Indian terrorism respectively, both of which have been predatory to government, along with Masood Azhar and another terror- India’s security interests. ist, in return for the freeing of 155 hostages aboard an Indian Meanwhile, the success of Pakistan’s Teflon diplomacy, Airlines flight hijacked to Kandahar in 1999. Two years later, including its ability to wring favorable loan packages in such the US – after having stood by mute while Sheikh and Azhar precarious circumstances, highlights the inadequacy of India’s repeatedly made public speeches in Pakistan during the past lobbying efforts in Washington. To be fair, diplomacy can two years – are now searching for the former and have banned only operate within the broader constraints of geo-politics – Jaish-e-Mohammed, a militant organization run by the lat- there is little that the Indian government could have done to ter.13 alter the strategic necessity of US-Pakistan relations in this The most honest admission of Indian distaste was voiced specific case. While India must not view its relations with by India’s best-loved dove, Kuldip Nayar, who sadly wrote the United States in terms of Pakistan alone, its nervousness in The Indian Express that “the international community did over a “deal” between America and Pakistan to the detri- little when fundamentalism reared its ugly head… now it has ment of India’s position in Kashmir has repeatedly made head- grown into a giant.”14 Extrapolating further, it would be fair lines in India. Escalating fears eventually led to the deputa- to say that the fear in India is that like the hydra-headed de- tion of two senior Indian officials to Washington so as to mon Ravana in the Ramayana, the demon of militant funda- ensure that India’s concerns were adequately represented on mentalism will continue to grow on the sheltered margins of Capitol Hill. the international system unless both the supporters and the underlying conditions of terrorism are addressed. In the case REBOOT of Kashmir, in particular, the former objective requires that America address Pakistan’s role in fomenting cross-border The after-effects of the September 11 terrorist attacks terrorism, while the latter requires that India re-examine some are still not clear, especially since the dominos will continue of its own domestic policies which, not unlike America’s to fall as the American response proceeds. India will remain Middle East policies, bring grief rather than glory upon its committed to supporting the United States and will seek to own peoples. further strengthen the growing Indo-American friendship. However, the matrix of Indian and American responses, especially in regard to Pakistan, also provides an opportunity ENDNOTES for introspection on the continuing weaknesses of Indo-US relations. The enduring state-to-state links that America and 1 Siddharth Varadarajan, “A political ban, cynical and dan- Pakistan have inherited from the Cold War period remain gerous”, The Times of India, September 30, 2001. out of India’s reach due, in part, to slow economic reforms 2 Mushirul Hasan, “Wrestling with Shadows”, The Indian and also to a persistence of distrust on both sides. Express, September 19, 2001. The Indo-American relationship thus continues to oscil- 3 Ian MacWilliam and Altaf Hussain, “Taliban’s Pakistani late between infatuation and caution – a relationship evidently volunteers”, BBC News Online, can be located at http:// susceptible to collapse in moments of crisis. Thankfully, news.bbc.co.uk/hi/english/world/south_asia/. National Security Advisor Brajesh Mishra and Foreign Min- 4 Kautilya was ancient India’s most famous strategist and his ister Jaswant Singh have both responded maturely and have magnum opus, the Arthashastra, written in 4th century B.C., lowered tension by writing off US-Pakistani cooperation as was among the first to explicitly outline an Indian version of instrumental, while simultaneously choosing to focus on the realpolitik. longer-term synergies in Indo-US interests and values. 5 Celia W. Dugger, “New Delhi Eager to Join U.S. in Fight- Nevertheless it is hard to deny that at the time of writing Terror”, The New York Times, September 15, 2001. ing, there is a pervasive sense of uneasiness (bordering on 6 Statement made by Shri Jaswant Singh, Ministry of Exter- aggravation) in Indian policy circles – it seems that India’s nal Affairs, September 11, 2001. interests in combating militant fundamentalism have once 7 Press Release, Ministry of External Affairs, September 14, again been sacrificed at the altar of global power politics. 2001. Despite the conflicting signals emanating from Washington 8 The Prime Minister was referring to India’s most devastat- and London – occasionally hot and mostly cold – on the topic ing terrorist attack in 1993, which led to 300 deaths in of a global coalition against terrorism, India probably real- Mumbai, India’s commercial capital. izes that failing any dramatic turn-around, the door to neu- 9 Rajiv Chandrasekaran, “India to Allow U.S. to Use Bases tralizing cross-border terrorism has already been shut in its for Staging Ground”, The Washington Post, September 17, face since any small-scale war against Osama bin Laden, 2001. while temporarily benefiting India, will ignore Pakistan’s piv- 10 Shekhar Gupta, “Beating Delhi about the Bush”, The In-

Harvard Asia Quarterly Autumn 2001 11 dian Express, September 22, 2001. 11 For a typical reaction, see J.N. Dixit, “The Self-Reliance Mantra”, The Indian Express, October 19, 2001. 12 It would be unfair to suggest that the Americans have been entirely blind to the Indian critique. At a recent Congres- sional hearing, for example, the US Secretary of State suggested that he did not make a distinction between Afghani terrorists in Afghan or in Kashmir (see Chidanand Rajghatta, “Pakistan Loses Traction”, The Times of India, October 25, 2001). Nevertheless, India continues to dislike the lack of unanimity in the American response while the Americans have their hands tied by their need to prop up the current Pakistani regime so as to retain geo-strategic dominance in the region. As is usually the case, the concerned parties in fact see what appears to Americans as a delicate balance, as open betrayal. 13 The coming to light of links between Sheikh and the Paki- stani Inter-Services Intelligence (ISI) is believed to have led to the forced resignation of the Director-General of the ISI, Lt. Gen. Mahmud Ahmed. See “Bin Laden’s ‘cash link’ to hijackers”, BBC News Online, can be located at http:// news.bbc.co.uk/hi/english/world/americas/. Also see The Times of India, October 8, 2001. 14 Kuldip Nayar, “Don’t feed fundamentalism”, The Indian Express, September 25, 2001.

Harvard Asia Quarterly 12 Autumn 2001 SOUTHEAST ASIA

MILITANT SEMANTICS THE NEED FOR A COMMON CHARTER ON JIHAD

BY KIM BENG PHAR he fear of Islamic militancy has taken on a new and urgent dimension in view of the September 11 Kim Beng Phar is an Asian Public Intellectual (API) research Tattacks. But the threat is hardly limited to the United fellow of The Nippon Foundation, currently based at the Center States, or even to Western countries. If Asia does not strive for Southeast Asian Studies at Kyoto University. He is also a to manage it, Islamic militancy could go on to become a source correspondent for the Straits Times, a Singapore-based daily newspaper. of regional instability. In particular, Southeast Asian countries must make an effort to define the legitimate boundaries of Islamic holy war, or jihad, in order to prevent its subver- sion by militant extremists.

MILITANCY AND JIHAD

In the weeks preceding the attacks, three prominent Asian leaders spoke publicly of the the potential threat of Islamic militancy to domestic regimes as well as to the region at large. Speaking at a conference in Hong Kong in early September, former Thai foreign minister Surin Pitsuwan warned of the rise of Islamic militancy in response to “globalization,” referring to the social dislocation and uncertainty that the in- tensification of market forces has caused. During a working visit to Malaysia two weeks prior to the attacks, Singapore Senior Minister Lee Kuan Yew like- wise spoke of the possible rise of Islamic militancy in Indo- nesia and the rural heartland of Malaysia: “You have to watch Islamic militancy carefully, because if it takes root in Indo- nesia and they go up to the islands south of Singapore, or if they take root in Malaysia and come down to Johor, then we are vulnerable,” Lee said. He also expressed the opinion that the recent rise of Islam in Indonesia started when then-president B.J. Habibie nullified a decree imposed by former president Suharto outlawing the use of Islam or Islamic emblems by political parties. As a result of Habibie’s action, more than 20 political parties made use of Islamic rhetoric and symbol- ism, some with impressive electoral results. In Malaysia, President Mahathir Mohammad has spoken of the threat posed by Malaysians who fought in Paki- stan and then trained in Afghanistan. In August, the government arrested 10 members of the “Kumpulan Mujaheddin Malaysia” (KMM), a militant group accused of a series of robberies and at least one murder. Malaysian authorities have affirmed that the group is part of a regional network of militants determined to form a union of Islamic states compris- ing Indonesia, Malaysia and the Philippines. If Islamic militancy is in fact on the rise in Southeast Asia, how can the region aim to contain it? Or at the very least, how should the region modulate or blunt its impact? The answer to this question lies in giving jihad, a powerful but dangerously vague term meaning “holy war” frequently used by Islamic militants, a fixed meaning once and for all. How the term “jihad” is prone to contradictory defini-

Harvard Asia Quarterly Autumn 2001 13 tions was clearly brought home by events prior to the start of gration to Medina in 622 A.D. It was also in Medina that Operation Desert Storm in Kuwait. In the midst of the jihad was elevated to the status of a religious obligation. But Operation’s early phase, both Saudi Arabia and Iraq sought Muhammad did not speak narrowly of jihad as a military international Islamic sanction for their policies. The Interna- obligation – it also referred to an internal struggle to conquer tional Congress of Ulama (religious scholars) convened by one’s spiritual weaknesses. Iraq in December 1990 issued a declaration supporting the Yet modern Muslim authors have not dealt with jihad Iraqi position, urging Muslims to undertake jihad and revo- extensively, and as a result its meaning remains mired in am- lution against the Arab Muslim leaders who had joined coa- biguity. This can be partialy attributed to a general stultifica- lition forces under American leadership. At about the same tion of Islamic legal discourse which dates back many centu- time, a countercongress of religious scholars met in Saudi ries. Ever since the twelfth-century division of Islamic legal Arabia calling for war against Saddam Hussein as the high- thought into four schools, discussion of Islamic law, or est form of jihad. In the end, the groups each issued two dif- shariah, has tended to rely on what four canonical jurists have ferent fatwas (Islamic judicial verdicts) declaring their side’s written. While they discussed a variety of issues in their writ- cause to be a “just war” – that is, jihad. Indeed, fatwas, dec- ings, their treatment of jihad was in fact quite limited. larations and proclamations originated not only in Islamic To the four jurists, jihad was a prophetic injunction that countries but also in communities of the Muslim diaspora, did not require further debate. The classical jurists believed including in Europe and the United States. that questions surrounding the legitimacy of jihad in various The Islamic Council of Europe, for example, called for situations were not as critical as how jihad ought to be con- an independent Islamic vision, absolutely rejecting the pres- ducted on the battle front. For example, the Hanafi legal ence of foreign troops on Saudi soil. It supported the conclu- school of thought, which was first promulgated by Al- sion that “those who provide a fatwa that legitimizes the seek- Shaybani (d.804 A.D.), adhered persistently to the partition ing of aid from the non-Muslims under current circumstances of the world into Darul Islam (Domain of Peace) and Darul have not an iota of support in either the Quran or the Sunnah Harb (Domain of War). Nations not under Islamic govern- [recorded deeds of the prophet Muhammad].” ment were considered to represent the latter. Hence, jihad These controversies amply demonstrate the internal con- could legitimately be declared on them if they refused to ac- fusion within Islam. Indeed, be- cept the sovereignty of Islam. sides a general consensus that Ibn Tammiyah (1263-1328 jihad should be defensive, Mus- Muslims widely disagree on the terms A.D.), an orthodox jurist of the lims widely disagree on the terms under which jihad can be initiated or Hanbali persuasion, whose inter- under which jihad can be initiated conducted. What results is a rhetorical pretation is often adopted by Is- or conducted. What results is a free-for-all in which any aggrieved lamic radicals, affirmed jihad as rhetorical free-for-all in which any Muslim group can latch on to their own pleasing and acceptable to God. aggrieved Muslim group can latch version of jihad in the name of God. Yet, like other jurists before him, on to their own version of jihad in he did not define or question the the name of God. Depending on nature of jihad. Ibn Rushd one’s political perspective, jihad (1126-1198 A.D.), a follower of can be flexibly used and abused. Moreover, the ease and speed the Maliki school of thought, who impartially compiled the with which different judgments are delivered in the most opinions of the four schools in his legal handbook “Al heated of moments invariably casts doubt upon the integrity Bidaya”, also expressed his full support for jihad while pro- of the Islamic exegetical process. viding little detail as to how it should be carried out. If regional organizations such as ASEAN wish to curtail Why did traditional jurists and authors all agree that jihad the rise of Islamic militancy, there needs to be a common is appealing in the eyes of God and its tenets should not be charter signed by every member state’s religious authorities questioned? Much of the consensus can be explained by the on the precise meaning of the term jihad. Barring such a col- ambition and power of the ancient Islamic empire. All the lective endeavor, Islam threatens to develop into a hydra- treatises were written during the ascendancy of Islam and headed monster, with every religiously inspired individual they bear the imprint of a strong, confident and unified reli- or group launching their personally defined jihad against en- gion. When there was internal dissent, subversive elements emies of their choosing. were classified as rebels and crushed. Moreover, the Islamic empire’s relations with non-Mus- THE ROLE OF SCHOLARS lim nations were often conceived in the form of peaceful co- existence, but never permanent acceptance. This meant, for If ASEAN authorities are to adopt a common charter on instance, that if non-Muslim nations should at some point the meaning of jihad, religious scholars will have to play a refuse to pay a tributary tax to the Islamic authorities, jihad prominent role. There is much that can be done by Muslim could still be launched. Indeed, if the traditional jurists dis- jurists to explain the tenets of Islam in relation to jihad. Con- agreed on any aspect of jihad, it was the issue of whether fining the fight against Islamic radicals to military operations enemies should be slain or captured. alone is insufficient. To this day, discussion of jihad is still constrained by the The Prophet Muhammad eschewed violence when he legal and political discourse that took place in the heyday of was propagating Islam in Mecca, and the doctrine of jihad Islamic expansion. The inability of modern Muslim jurists to did not take its incipient form until after the prophet’s emi- take jihad beyond these ambiguities has hampered a refor-

Harvard Asia Quarterly 14 Autumn 2001 mulation of jihad that is more appropriate to the present age, and prevented Islamic law from keeping up with the realities of contemporary international politics. The general understanding of jihad, both within the Muslim world and without, remains sketchy. One way in which the confusion can be dealt with is for Muslim jurists to clarify the terms and conditions in which jihad can be launched. Such terms would, among other things, have to conform to the humane objectives of Islamic law. Only when this ethical imperative is taken into consideration can jihad be seized from religious extremists. In tackling the problem of Islamic militancy in South- east Asia and the world at large, governments and religious scholars have to work hand-in-hand to prevent Islamic discourse from being subverted by extreme elements. For an interpretation of jihad to have any legitimacy, however, it must be made by a legitimate religious authority. In the case of the Catholic Church, which is highly centralized, theological interpretations can be made and enforced effectively. Since Islam is not centralized, the fifty-seven members of the Organization of the Islamic Conference (OIC) should move towards a reformulation of jihad, and regional organizations should attempt to do the same. If the reformulation is carried out under the auspices of the OIC, ASEAN and the ASEAN Regional Forum, and has the blessing of the countries’ Islamic authorities, then the legitimate parameters of jihad could be narrowed considerably. This will be only one step toward solving the problem of Islamic militarism, but it will help prevent militant groups – such as Al-Qaeda, Abu Sayaff in the Philippines and Laskar Jihad in Indonesia – from subverting Islamic discourse for their violent purposes.

Harvard Asia Quarterly Autumn 2001 15 JAPAN

JAPAN AND AMERICA’S WAR THE LDP’S HAWKS SEE A GOLDEN OPPORTUNITY

BY KENICHI ASANO s I watched the second airplane crash into the World Trade Center live on Japan’s NHK-TV, it Kenichi Asano is a former reporter and Jakarta Bureau Chief Aoccurred to me that Prime Minister Junichiro for the Kyodo News Service and founder of JIMPOREN (Japan’s Koizumi, together with his right-wing faction of the ruling Liaison Committee on Human Rights and Mass Media Liberal Democratic Party (LDP), would use the occasion to Conduct). A well-known advocate of news media reform, he was expelled from Indonesia in 1992 for his investigative transform Japan into a “normal” state, meaning one with a reports on shady deals between Jakarta businessmen and full-fledged military. Japanese politicians. Asano quit Kyodo in 1994 and now Koizumi wasted no time in announcing that Japan would teaches journalism at Doshisha University in Kyoto. He is the do everything possible to join America’s new war against author of many books, including the bestseller The Crime of Criminal Reporting (Hanzai Houdou no Hanzai) (1984). terrorism, and emphasized that Japan would send its Self- Defense Forces (SDF) to join America and its other allies. True to his promise, two Japanese Maritime Self- Defense Forces ships guarded a US aircraft carrier that left Japan for the Indian Ocean. It marked the first time the Japanese SDF had ever participated in an actual military operation. I am critical of Japan’s decision to offer military assistance to the US. Although more than twenty Japanese citizens were killed in the events of September 11, Japan itself was not attacked by the terrorists. This is America’s war, not Japan’s. Furthermore, if we continue to offer military assistance in the current war against terrorism, there is the possibility that Japan will become a target for terrorists in the future. While greatly saddened by the attacks, I was shocked when the United States and the United Kingdom proceeded to attack Afghanistan without any declaration of war. Many civilians in Afghanistan, including four United Nations-sponsored NGO workers, were killed in the first week of air strikes. These actions run counter to the definitions of human rights and democracy that the United States has been spreading throughout the world. A more just and plausible solution would be for the US government to begin by indicting those who ordered and organized the attacks. The FBI has already detained hundreds of suspects in connection with the Sep- tember 11 attacks. Yet US law enforcement officials have not even charged or indicted Osama bin Laden, despite their insistence that he is the criminal mastermind behind the attack. Bush’s tactic of dividing the world into allies and enemies – or the “civilized” and the “barbarians” – is simplis- tic. Despite the US government’s insistence on the attacks being an “act of war”, it is in fact difficult to categorize what happened on September 11. I believe it was not an act of war but a shocking and terrible crime. The criminals should therefore be investigated and made to stand open and fair trial in the US, with Interpol involved every step of the way.

THE ROOTS OF THE PROBLEM

I hope the people of the United States will rationally

Harvard Asia Quarterly 16 Autumn 2001 A VIEW FROM THE JAPANESE EMBASSY BY KAZUYUKI KATAYAMA

Kazuyuki Katayama is Counselor for Economic Affairs at the Japanese Embassy in Washington, D.C. A graduate of Kyoto University, he also holds an M.A. from Harvard and has studied in Beijing and Hong Kong. Before his appointment to Washington, he was stationed in Beijing. This article is not an official statement from the Japanese Embassy.

he people of Japan have been profoundly shocked by the hateful terrorist attacks in New York, and Washington, D.C. This attack was directed not only at the United States, but at all people in the world who love freedom, Tdemocracy and peace. Immediately following the attacks, Prime Minister Junichiro Koizumi expressed his deter- mination that Japan actively engage in the fight against terrorism. Japan strongly supports the United States, which it sees as its most important ally. This has been and will continue to be backed up by concrete and effective measures. Due to constitutional restrictions on the use of military force, Japan cannot deploy its troops on the front lines. However, Japan will take necessary measures to dispatch the Self-Defense Forces and provide support to the US forces, including medical services, transportation and supplies. On September 25, Prime Minister Koizumi rushed to the United States to speak directly with President Bush. This was his second visit to Washington D.C. in three months. Japan is working hard to cooperate with the United States and other friends in various capacities and has strengthened the protection of US military facilities in Japan. In addition, Japan has increased information sharing with the US, and frozen funds and other assets belonging to the Taliban. In order to further alleviate the crisis, Japan has extended a $40 million US dollar emergency package to Pakistan. This recent horror causes us to reflect upon a bitter lesson learned by Japan ten years ago in the Gulf War. Japan’s military cooperation was very limited because of its so-called “Peace Constitution”, which renounces the use of force as a means of settling international disputes. Alternatively, Japan provided $13 billion US dollars to help the multi-national forces. When broken down on a per capita basis, we can see the enormity of this economic package. Each Japanese citizen, including babies and the elderly, paid more than one hundred US dollars. This was not a small amount of money by any means. The Kuwaiti government took out an ad in the Washington Post to express its gratitude to thirty foreign countries for their support in reinstating the independence and sovereignty of Kuwait. Japan was not mentioned in this message. We realized that Japan’s contribution, which was by far the greatest in financial terms, was almost negligible in human terms. As a result, Japan was not treated a legitimate member of the international community. This was traumatic to many Japanese including myself. I do not want to see this particular issue resurface in the current role that Japan will play in fighting terrorism. We have various ways to contribute even under the current constitution. Japan should and will actively join the common task of fighting this hateful attack to the international community. Japan will strongly support the US and other friends regardless of how long it may take us to overcome our enemy.

look into the deeper reasons behind the attack on their coun- gas emissions. However, earlier this year, the Bush adminis- try. This is the only way to remove the roots of the problem, tration refused to sign the convention. Moreover, Secretary as well as properly punish those who committed the acts. of State Colin Powell boycotted the recent World Confer- It is difficult not to see America’s longstanding support ence Against Racism (WCAR) held in Durban, South Af- of Israel as a contributing factor rica. in the recent attacks. America It is time for the US to re- has long been considered an im- consider its unilateral position to- perial power in Middle Eastern [T]he idea of a national trauma is nothing ward international agreements, countries, and the attacks of Sep- but a big lie – except maybe to the LDP especially since some of these tember 11 may unfortunately not and the Foreign Ministry, who have long agreements may now prove es- be the last of their type. Not only aspired to make the SDF into a Japanese sential for resolving the current are billions of the world’s have- Army. crisis. A conference to establish nots envious of the US for its an international criminal court flamboyant wealth, many also was held in Rome in 1998. At that feel directly persecuted as a result of US foreign policy. time, 120 countries favored such an institution and the Rome American unilateralism in foreign affairs has also been Statute of the International Criminal Court was adopted after the cause of worldwide resentment. In December of 1997, five weeks of discussions. However, neither the US nor Ja- representatives from more than 160 nations met in Kyoto to pan has yet ratified the treaty, even though an international negotiate limitations on greenhouse gases. The outcome of criminal court can be effective in punishing the kind of the meeting was the Kyoto Protocol, in which developed borderless crime that has befallen America. nations, including the US, agreed to limit their greenhouse

Harvard Asia Quarterly Autumn 2001 17 POLITICS AND THE RULE OF LAW the LDP and the Foreign Ministry, who have long aspired to make the SDF into the Japanese Army. At the time there was After Koizumi returned to Tokyo following his Septem- little public discussion of sending the SDF to Persian Gulf, ber 25 meeting with Bush, the Koizumi cabinet prepared a and many Japanese in fact favored neutrality. special anti-terrorism bill and submitted it to the Diet. Among Japan should be independent from the US, but it has not other things, the bill makes it possible for the SDF to guard behaved like an independent country. More than 47,000 US US military bases. According to Japanese law, that is the duty soldiers remain in Japan to this day. Japan is the only East or of the police, not soldiers. In fact, the so-called “anti-terror- Southeast Asian country besides South Korea that still hosts ism” bill is totally unconstitutional. Referring to the relation- US military bases. Furthermore, its military alliance with the ship between the new bill and the Constitution, the prime US is blatantly against our Constitution. We need to make a minister told the Diet on Oct. 9, 2001: “I admit that it is cer- timetable for US forces to withdraw from Japan, and address tainly ambiguous. If I were required to show its legal consis- the issue of national defense as an independent country rather tency and clarity, I would be at a loss.” than as an agent of American foreign policy . Article 9 of our Constitution not only renounces the threat It is a matter of concern that the Japanese government of military force as a means of settling international disputes, and most Japanese people ignore Article 9 of our Constitu- but also prescribes that “land, sea and tion. Polls show that at least 80 per- air forces, as well as other potential cent of Japanese people still support war forces, will never be maintained.” Instead of trampling on its own the Koizumi government, while 60 per- Koizumi says that the Article 9 fails principles in order to join the cent support the new SDF bill. This to reflect reality, noting that the Self- American war on terrorism, shows that people do not understand Defense Forces have existed since Japan should act within the what is happening around them or how 1954. He also argues that Japan should bounds of its Constitution. Koizumi’s actions will influence their not be left defenseless. In doing so he lives in the future. The news media is is the first Japanese Prime Minister to also dangerously passive. Japanese officially advocate constitutional revision. NHK-TV reports from Washington, D.C. these days are more Koizumi has not concealed his militarist leanings. He pro-US than CNN itself. called for revising Japan’s war-renouncing Constitution – Instead of trampling on its own principles in order to given to Japan in 1947 by the US occupation forces – at his join the American war on terrorism, Japan should act within first press conference as Premier on April 27. In August, he the bounds of its Constitution. Due process in politics is nec- made an official visit to Yasukuni Shrine, the “spiritual cen- essary, even during times of crisis. At the moment, Koizumi ter” of Japan’s right wing where Class-A war criminals, in- is taking advantage of his popularity, media complacency and cluding Hideki Tojo, are worshipped. Koizumi has also spo- public ignorance to pursue his military agenda. He also knows ken admiringly of wartime suicide pilots. “When I face diffi- that he and his cabinet can hide their faults and help the eco- culties, I always try to think of the kamikaze pilots of the nomic recovery by focusing on the Japanese commitment to Japanese Imperial Army. It gives me courage and passion to America’s new war. In this environment, it is the responsibil- work for the state” he has said. ity of journalists to monitor what politicians are doing on It is true that the Japanese SDF branches have essen- behalf of the general public. Without responsible journalism tially become armed forces. Successive LDP governments and an informed public, there will never be an end to war. have strengthened the SDF without having to revise the Con- stitution. Furthermore, Japan’s Supreme Court has not made any rulings related to this matter. On October 12, Koizumi told Japan’s TBS “News 23” TV program that Japan needed to make its armed forces into a legitimate military power. Some politicians are calling for the dispatch of Maritime SDF warships to the Indian Ocean and elsewhere for intelligence gathering purposes. However, the law is quite clear: the SDF can be sent abroad only on UN peacekeeping operations or to rescue Japanese citizens.

THE BIG LIE

It is sometimes said that Japan’s inability to contribute militarily to the Gulf War, and the international community’s failure to appreciate Japan’s financial contribution of $13 billion, was a traumatic experience for the Japanese government and people. This sense of injury has even been referred to as the “Japanese Gulf War Syndrome.” While many people around the world did indeed criticize the nature of Japan’s contribution to the war against Saddam Hussein, the idea of a national trauma is nothing but a big lie – except maybe for

Harvard Asia Quarterly 18 Autumn 2001 AFGHANISTAN

COLLATERAL BENEFITS WOMEN AND WAR IN AFGHANISTAN

BY MARY MACMAKIN he invisible Afghan woman under her finely-pleated blue chadri is now the subject of intense interest for Mary MacMakin is the founder and director of PARSA Tthe Western media, who are finally opening their eyes (Physiotherapy and Rehabilitation Support for Afghanistan), to her horrible prison-like existence, her facelessness, and an organization dedicated to helping Afghan war widows and orphans. She has lived in Afghanistan three times: 1961-1967, her lack of human rights. Along with the shock and horror of 1971-1981, and 1992-2000. In July 2000, she was arrested by the September 11 terrorist attacks, the plight of Afghan women the Taliban on charges of spying and attempting to convert has also impacted the West. The connection between Afghan Muslims to Christianity, and was deported from Afghanistan. women’s suffering and America’s retaliatory attacks is Osama In September 2001, she visited non-Taliban-held northeastern Afghanistan, where she was on the day of the terrorist attacks bin Laden, the suspected planner, funder and instigator of in New York and Washington. the attacks who is being protected by his close friend, Taliban leader Mullah Omar. Donations to PARSA can be sent to: PARSA, c/o Bob MacMakin, Mullah Omar is the author of the draconian decrees that P.O.Box 255, Bisbee, Arizona 85603. have cut off women’s human rights in order to create a “pure” PARSA’s website can be found at: www.parsa-afghanistan.org Islamic state. In this experiment, he decreed that women cannot show their faces in public and must wear the all-en- veloping chadri (or burqa) when outside the home. If they show a bit of ankle or a brightly-colored pant leg, or lift the veil in front to see what they are buying more clearly, they risk a beating from the religious police, who see their jobs as ordained by God to ensure the purity of Islam. Women in Afghanistan are not allowed to work outside the home. However, when pressed by representatives of the International Commit- tee of the Red Cross in early 1997, Mullah Omar made his one conces- sion to humanitarian concerns by per- mitting female doctors and nurses to work in hospitals and clinics. Poor women who used to earn nut shells for fuel by shelling almonds and wal- nuts in the wholesale dried fruit and nut bazaar were sent home by the Taliban, since women and men cannot be in the same space. Another source of income for poor families was making bags from waste paper. This also was stopped by the religious police on the grounds that some words from the Koran might be written on the paper. Afghan women are born with endless patience. They have been patient for five years now under the Taliban’s rule. For educated women the strain is especially hard to bear. Stomach complaints, emotional or mental illness and even suicide are the major health concerns among women in Kabul today. Death is not a fearful thing to the Taliban, who wel-

Harvard Asia Quarterly Autumn 2001 19 come the idea of going to their God. It is another thing to the agencies have shut down communications and stored their women of Afghanistan who have lost children, husbands, equipment elsewhere. and brothers to the hungry maw of war, illness, and mines, Women’s human rights are among the big issues at stake and who worry constantly about the health and well-being in the airstrikes against what are hoped to be only military of living family members. Now that the targets. What freedoms Afghan women have United States has begun airstrikes to shake gained over the past 100 years have all been Osama bin Laden loose from his hide-away, granted to them by men. When they chose Afghan women are torn between relief at to do so, men have taken them away as the the possible end of the Taliban regime and Taliban did when they took over Kabul five terror of more deaths and injuries in their years ago. If the bombings succeed in flush- families. ing out Osama bin Laden and the Taliban, The women I have talked to about the the women of Afghanistan have a good bombing are not very stirred by it. “This chance of regaining their rights. To ensure isn’t the first time – we’ve been bombed that this happens, an Afghan woman named lots before when Gulbuddin (Hikmatyar) Nasrine Gross has written “An Essential was rocketing [Kabul]. And then Dostom Declaration of Afghan Women’s Human dropped some bombs, and the Taliban Rights” to be included in a new national killed lots of people when they were send- Constitution when it is written. The Decla- ing in rockets every day, before they took ration was approved and accepted by a 300- the city.” The son in a family recently ar- participant gathering of Afghan women in rived in Peshawar, Pakistan had this com- Dushanbe, Tajikistan in June, 2000. ment: “When I was in Kabul I wasn’t afraid, This pioneering work by Afghan but here in Peshawar where I can see it all women will help all their sisters in Afghani- happening on the TV, now I’m afraid.” stan. The crying need at present is to remove the Taliban so I heard from PARSA staff in Kabul in early October that women can throw off the chadri and take some free that Kabulis are willing to go along with the airstrikes as breaths of their precious mountain air. long as no one is killed besides the Taliban. However, there have already been many accidents. For example, one of the bombs went astray and landed on a house in Bibi Mahru, and a whole family was killed. Frightened women are now packing up necessary possessions in neat bundles and heading for the countryside or Peshawar. Getting to Peshawar is not a simple bus trip down the Kabul Gorge anymore. Claiming it cannot handle any more refugees, Pakistan has closed its border. Never at a loss for a solution, canny entrepreneurs are there ready to help refugees escape. Men, women and children, paying about US $20 per head, are driven cross-country through trackless rocky plains in ancient pick-ups to mountains where they have to scramble on hands and knees to get to the other side. There, another caravan of battered vehicles waits to take them to the next mountain. Hundreds of people fleeing Af- ghanistan are using this service daily. Humanitarian aid is continuing, bombs or no bombs. Traveling through Quetta and Chaman to Kandahar, the World Food Program’s trucks still bring flour and wheat to Kabul’s bakeries. Yet even the delivery of aid faces interference. Taliban guards recently demanded from one caravan’s leader a road tax of $25 per ton at the Afghan border. Fac- ing this harassment and violation of agreements, the caravan simply turned around to try another way. The NGOs and UN agencies had a general meeting in Kabul recently. All are now under Afghan staff management as the expatriates left a month ago. PARSA’s representative reports that the question faced by the agencies was what their organizations could do to help the people in case of severe emergency. Several groups have warehouses with large stockpiles of food, while some have already given out what they had. The Taliban have raided several offices and taken satellite phones and radio equipment. In response, other

Harvard Asia Quarterly 20 Autumn 2001 FOUR EXPERT OPINIONS ON TERRORISM’S AFTERMATH

JIHAD INTERNATIONAL, INC.

INTERVIEW WITH JESSICA STERN HAQ: In a recent essay you cite the late scholar Eqbal Ahmed who noted that the idea of jihad had really died out in the Jessica Stern attracted global attention last year when Foreign Muslim world until the United States instrumentally stoked Affairs published her path-breaking essay entitled ‘Pakistan’s the dying embers. So do we blame the US or is it more accu- Jihad Culture’. In it, Stern argued that Pakistan’s role in rate to say that the US could not have foreseen the strategic fomenting extremism outside Pakistan was inadvertently furthering sectarian violence within Pakistan and threatening consequences of its tactical actions? the stability of the country. In this interview with HAQ, she discusses the nature of, and potential solution to, militant JS: Well I think that both of those statements are true. What fundamentalism in the region. Stern is a Lecturer in Public the US did probably was the right thing to do at the time, but Policy at the John F. Kennedy School at Harvard University and has authored a critically acclaimed book, The Ultimate it is also true that the US did inadvertently create the first Terrorists (1999). From 1994-95, she served as Director for international jihad. So in a sense we created our worst en- Russian, Ukrainian, and Eurasian Affairs in the National emy. Security Council. HAQ: Yet, shouldn’t the US have done more to demobilize the Taliban? For example, there was the half-hearted effort to recover Stinger missiles from Afghani militia.

JS: I think that is correct. People now realize that we cannot afford to make that mistake again. By leaving Afghanistan in a civil war, by allowing it to become a failed state, we allowed it to become the “Jihad University” for the entire world. This was wrong – it was counter to our own national security interests. Moreover, there is now a new understanding that failed states are more than humanitarian issues – they are a threat to international security. People in my field never worried about something like this. For the first time it has become clear that humanitarian crises have international security implications. Another element that I see as being critically important is that my research shows there is an organizational dynamic to terrorist groups. That is to say, once an organization exists, it has an incentive to keep going. So you have these groups that don’t want to give up the fight – when there is no jihad for them to fight in Afghanistan, they look for a fight elsewhere. I have heard this over and over again from the jihadis whom I have interviewed in Pakistan and they keep repeating that they are “spiritually addicted” to jihad.

HAQ: What is your position on the competing arguments provided by some Western analysts that economic or psychological reasons drive the donation of children to jihadi movements?

JS: Remember that these families who donate their sons are very, very poor and undoubtedly their mothers are thinking that their sons might die of hunger, illness or some sort of disease anyway. So although some women say to me that they are proud of their sons, I do not think that this is entirely

Harvard Asia Quarterly Autumn 2001 21 true. I do not think that the benefit is entirely psychological – ordinary Muslims. It is possible that if America were to change rather, social approval is only one of the elements that enters its policies, these groups would have less legitimacy in the into their decision-making process. eyes of ordinary people. But I personally don’t think that this is the answer to stopping the groups themselves.

HAQ: Is it not in America’s long-term interest to pay atten- [O]nce an organization exists, it has an tion to groups across the South Asian region, including those incentive to keep going. So you have mujaheddin groups in Kashmir that have Afghani elements? these groups that don’t want to give up the fight – when there is no jihad for JS: Yes, I think that allowing “private armies” to continue is them to fight in Afghanistan, they look counter to international security – it’s not just a question of for a fight elsewhere. what is good for America. Sometimes these groups target militaries, which I do not consider to be terrorism, even though I know that the Indian government does not think the same HAQ: You estimate that 15% of Pakistan’s madrassahs pro- way. Nevertheless, what really troubles me about these groups vide fundamentalist education. More recently, Senator Sam is that they deliberately target non-combatants – that is a prob- Brownback and US Assistant Secretary of State for South lem for me regardless of the perpetrators, whether it be the Asia Christina Rocca have proposed investment in primary American military or the Kashmiri groups. Targeting civil- education in Pakistan. But is secular education either neces- ians is a violation of the western “just war” tradition, the sary or sufficient to combat fundamentalism? After all, it Islamic “just war” tradition and a violation of international failed to curb ethnic hatred in Eastern Europe. law.

JS: No, it is neither adequate nor sufficient – but it is criti- HAQ: The various jihadi groups based in Pakistan have deep cally important. To have generations of young men who have links and exchange both funds and members. So should no real world options means that they are susceptible to the America direct its response toward the entire spectrum in- teachings of radical destructive clerics. So yes, education will cluding groups such as Hizb-ul-Mujaheddin and Al-Badr that take a long time to take effect; and no, it is not the entire have Afghan links? solution. But it has to be part of the solution as there is no way that Pakistan will recover without educating its youth – JS: Those two groups would not be at the top of my list of education serves to pull people out of poverty. groups that the US government should be getting worried about. At the top of my list are Jaish-e-Mohammed and HAQ: Contrary to the view that investment in primary edu- Harkat-ul-Mujaheddin. These groups are quite involved in cation will solve the fundamentalism problem, fundamen- sectarian killings and a whole spectrum of similar groups talists such as Osama bin Laden would argue that their be- emerge from the Jamiat Ulema-e-Islam (JUI) and are closely havior is a direct response to specific American policies in affiliated to the Sipah-e-Sahiba. I hope that Pakistan itself the Middle East. Therefore won’t a change in America’s poli- will see the utility of cracking down on these groups. We cies be a more certain way to reduce fundamentalism? also need to remember that much of the funding for these jihadi groups is coming out of Saudi Arabia. JS: No, I don’t think it will. The extremists do have many grievances including US troops in Saudi Arabia and HAQ: This raises the familiar question of how much control America’s backing of Israel. However, we should also keep Pakistan has over these jihadi groups… in mind that Osama bin Laden said after the September 11 attacks that his mission is to end America’s anti-Islam agenda. But what is an anti-Islam agenda? To me this sounds like a branding device. I see organizations that persist as being very important in explaining the jihadi groups. James Wilson said [T]hese groups have access to young that the first and last thing you need to know about organiza- men who are willing to become tions is that they persist. cannon fodder. Now consider the tragic fact that you have a lot of people making money off jihad and that these groups have access to young men who are willing to become cannon fodder. We JS: This really is a very big question right now. It seems to need to keep in mind that these groups employ both unskilled me that a very real danger – and something that India should and highly skilled young men and they can offer them a lot of be extremely worried about – is the possibility that if the US money. So these professional jihadi groups are able to ap- makes a mistake then we will turn Pakistan into another Af- peal to a wide variety of people. ghanistan. This is something that must be avoided at all costs.

HAQ: Will a change in America’s Middle East policies un- HAQ: Do you foresee any serious attempt to choke off Saudi dermine the legitimacy of these groups and their actions? funding for the extremist groups?

JS: It is possible that it will reduce their ability to attract JS: There is always a trade-off between broader foreign policy

Harvard Asia Quarterly 22 Autumn 2001 objectives and counter-terrorism policy in terms of cutting HAQ: How satisfied have you been thus far with the nature off funding for fundamentalists. Until recently the former of the US government’s response to the events of September trumped concerns for the latter. It is, however, now apparent 11? that it is critically important to cut off such funding in order to end terrorism. Hopefully the current US administration JS: I think we started out pretty badly with talk about cru- will be more zealous. sades. I was getting emails from Pakistan, from jihadi groups that were jumping with joy because HAQ: Is there adequate will and they had been waiting for an Ameri- capability on the part of the Pa- can president to talk about a crusade. kistani state to shut down the [J]ihadi groups ... were jumping with There is nothing they would have madrassahs? joy because they had been waiting for liked better! But I am very much an American president to talk about a heartened by the Administration’s JS: This is a very complicated crusade. There is nothing they would further responses, which has focused question. There is a perception have liked better! on intelligence, drying up sources for that America is pressuring the funding, and humanitarian aid. This Pakistani Interior Ministry to shut down certain schools – is a newer way of looking at international security which is this was made quite apparent to me in my meetings with vari- not just bombs and bullets. ous chancellors. However, you have identified an important problem. My own experiences have made it very clear to me that the government itself is divided. It seems that thus far the forces against extremism in Pakistan are strong – they call themselves the silent majority. The Pakistani intellectual elite is also very happy that Pakistan is being forced to make a decision about whether it wants to proceed in the direction that the jihadis would like, or whether it would like to be a more legitimate part of the international community. However, I cannot predict how likely either outcome is.

Harvard Asia Quarterly Autumn 2001 23 CRITICAL MUSLIMS ISLAM MUST STAND UP TO ITSELF

BY ZIAUDDIN SARDAR he sheer magnitude of the terrorist attack on America has forced many Muslims to take a more Ziauddin Sardar is a writer, cultural critic and Visiting Professor Tcritical look at themselves. Beyond reacting to the of Post-colonial Studies at the City University, London. His news, there is a growing feeling that it is time to address a most recent books are Postmodernism and the Other, few of those knotty questions that we have conveniently swept Orientalism: Concepts in the Social Sciences (1999) and Introducing Islam (2001). Professor Sardar is also the editor under the carpet. As a Muslim woman asked me in a radio of Futures, the monthly journal of policy, planning and future program, why have we repeatedly turned a blind eye to the studies and a regular contributor to the British magazine, New evil within our own societies? As Anwar Ibrahim, the former Statesman. Deputy Prime Minister of Malaysia, asked in an article written from prison – how “in the 21st century, could the Muslim world have produced a bin Laden”? Equally, many supporters of Anwar - whose only crime was standing up to the corruption and despotism of Mahathir Muhamad, Malaysia’s incumbent Prime Minister for the last two decades - are asking: why is the Muslim world so crammed with despots, theocrats, autocrats and dictators? To put it another way: Why have Muslim societies failed so spectacularly to come to terms with modernity?

OLD QUESTIONS, NEW ANSWERS

These are not new questions. I have raised them many times in my books The Future of Muslim Civilisation (1979) and Islamic Futures: The Shape of Ideas to Come (1985). Other writers and scholars have asked the same questions. But after September 11, they have acquired a new poignancy and a much broader currency. Conventionally, Muslims have blamed the ills of their own societies on outsiders. “The Americans”, “The West”, “the CIA”, “the Indians”, “the Zionists”, are always hatching yet another conspiracy – it is the “anyone but us” syndrome. Conspiracy theories are always based on half-truths and there are some whole and half-truths in these assertions. On the whole, Muslims are quick to point out the double standards of America, both in its domestic rhetoric and foreign policy. They point to its support for despotic regimes, its partiality towards the Israelis, and a long series of covert operations that have undermined democratic movements in the Muslim world. The popular perception that Americans are “against us” is amplified by a host of Hollywood movies depicting Islam and terrorism as synonymous. The recently released film “Rules of Engagement” for example, depicts Muslims as mindless terrorists whose only function in life is to kill “the infidel” Americans and their allies, including civilians, and plunder their possessions. This message is repeated again and again in a string of films such as “True Lies”, “Executive Action” and “The Siege” – going right back to the Sixties and “Khartoum”. But all this finger-pointing does not address the internal malaise of Muslim societies. Now that reality has come to resemble Hollywood fiction, the anomalies and double standards of Muslim states have come to the fore with a vengeance. For example, Muslims are proud to state that Islam is the fastest growing religion in the West. Evangelical Mus- lims, from Saudi Arabia to Pakistan, run about happily spread-

Harvard Asia Quarterly 24 Autumn 2001 ing their constricted interpretations of Islam. But Christian point from which we judge the shortcomings of the rest of the missionaries in Muslim countries are another matter – they world and never ourselves. Our lack of humility is our fatal have to be outlawed or imprisoned. All those burning the flaw. We are less careful about judging ourselves by the stan- effigies of President Bush and Prime Minister Blair in Paki- dards set by Islam while being quick as a flash to denounce stan will fight to be at the front of the queues for American anything or anyone that is not of the ummah. and British visas. The psychotic young men, members of The events of September 11 have potentially freed con- such extremist organizations as Al-Muhajiroun and “Sup- cerned Muslims everywhere from any further obligation to porters of Shariah”, shouting fascist obscenities outside the this impossible contortion of conscience. It is a major shift. American Embassy in London, enjoy the fruits of a Western The speed and outright condemnation of the terrorist atrocity freedom of expression. Their declared aim is to establish by Muslims throughout the world, including some of the great- “Islamic states”. But in any self-proclaimed Islamic state, est contemporary Muslim theologians and scholars, is one they would literally get the chop. Indeed, as recent Islamic indication of this. The language of unequivocal condemna- history shows, when these individuals get into power, their tion used by such community organizations as Muslim Coun- first action is to denounce democracy and then proceed to cil of Britain and Islamic Center in Lisbon to denounce the ruthlessly silence all dissent. fanatics is another. The devotion with which so many Mus- The Muslim voices of dissent, such as my own, have lims, young and old alike, in Europe and America, are orga- also suffered from self-censorship. We have tended to ig- nizing meetings and conferences to discuss ways and means nore the internal strife in Muslim societies for two main rea- to unleash the best intentions, the essential values of Islam, sons. First, in a world where Muslims and Islam are fair game from the rhetoric of daft fatwas and jihad, hatred and insular- in open season for prejudice and discrimination, our main ity, is yet another. task, it is said, is to defend the integrity of Islam. How can However, Muslims have to go much further and assume one turn one’s gaze to internal evil, when the West insists on their position at the helm of the fight against terrorism. The talking of “Crusades”? Or when the only hyperpower, the main reason for this is the inescapable fact that the terrorists US, purports to be the dispenser of “Infinite Justice”, a name are amongst us, in the various Muslim communities of the we reserve exclusively for God, and when innocent civilians world. For sure, they are the malignant antithesis of us, fash- turn out to be victims of ioned out of circumstances all American bombs and mis- too painfully familiar. Neverthe- siles with mundane regular- less, they are part of our body ity? All good and concerned Muslims are politic. And, it is our duty, more The second reason for implicated in the unchecked rise of than anyone else, to stand up self-censorship has typically fanaticism in Muslim societies. We have ... against them. addressed the state of the failed to denounce the arrogance of Consider, for example, the ummah, the global Muslim extremists who distort the most sacred state of terrorism in Pakistan, community. We have to high- concepts of our faith. where sectarian and terrorist vio- light, the argument goes, the lence has become endemic. In despair and suffering of the Muslim people, the indignity particular, two fanatical groups have spread terror through- and dehumanization of monstrous poverty in an increasingly out the country. Sepa-e-Shaba (“Soldiers of the Companion affluent world, and their plight as refugees escaping the hor- of the Prophet”), a group of Sunni puritans, has declared war ror of war-torn societies. The fanatics who loudly proclaim on the Shia community of Pakistan. Killings of Shia Muslims and ardently wield the banner of Islam are just another hor- are avenged by Sepa-e-Muhammad (“Soldiers of rendous dimension of these problems. In any case, they are Muhammad”), a cluster of Shia militants. A favorite tactic of a minority and we should pay attention to the needs of the both groups is to roar up on a motorbike, unsling a majority. Kalashnikov and simply machine-gun a mosque full of wor- These arguments have gripped us in an intractable shippers. stranglehold for a long time. We, the concerned Muslims Then there is the warfare between the Deobandis and with heavy burdens to bear, have made a profession of de- Brelevis, two obscurantist schools of thought that have been fending the usually indefensible. The ideal of unity and soli- fighting each other for almost a century. Deobandis owe their darity of the ummah, and the rhetoric of the West, have con- allegiance to the academy established in Deoband, in the Uttar strained us all, and made apologists of us all. Pradesh (UP) province of India, in the 1860s under the influence of the great Sufi reformer Shah Walliullah. The Brelevis THE SILENT MAJORITY emerged in the 1920s when their academy was established in Berali, also in UP. They are influenced by Hindu mysticism. All good and concerned Muslims are implicated in the The Deobandis accuse the Brelevis of bida, or introducing unchecked rise of fanaticism in Muslim societies. We have innovation in religion. The Brelevis simply regard Deobandis given free reign to fascism within our midst, and failed to as kaffirs, outside the circumference of Islam. Recently, the denounce the arrogance of extremists who distort the most long-standing theological quarrel between the two groups has sacred concepts of our faith. We have been silent as they exploded into violence. proclaim themselves martyrs, mangling beyond recognition The Taliban have added to Pakistan’s woes. A large seg- the most sacred meaning of what it is to be a Muslim. The ment of the Afghan population, running away from the op- ummah is our identity and Islam is all: this is the vantage pression of the regime, is now living in Pakistan. This in- Harvard Asia Quarterly Autumn 2001 25 cludes not just the two million refugees in squalid camps near tive government in Afghanistan. Pakistan is not going to ac- Peshawar, northern Pakistan, but also millions of Afghans cept a government led by the Northern Alliance, whose mem- roaming the streets of Karachi, Lahore and Islamabad look- bers are just as notorious as the Taliban. Nevertheless a coa- ing for work. They have brought their ancient gun culture lition of all the diverse groups, under the ex-king Zahir Shah with them. The entire country is awash with weapons. An (or some sort of technocracy), could satisfy Pakistan and estimated one million take their jihad to the streets of Paki- produce a viable future for Afghanistan. Yet a stable gov- stan. ernment in Afghanistan would not mean an end to fanatics All of these groups claim to be fighting to establish an and terrorists unless the madrassahs (Islamic schools) in “Islamic state” in Pakistan. In every sense of the word, they northern Pakistan, including the Deobandi Madrassah have turned religion into a pathology. And while they are a Haqqania, are put out of commission. These madrassahs are minority, constituting less than six like the mother monster of Alien percent of the population, they en- movies: their only function is to nur- tire nation has become their hostage. ture and nourish generations of An exasperated President Musharraf The fight against terrorism is thus young boys with the rhetoric of Oth- recently told a gathering of Mullahs: more than simply about bin Laden erness. The students of these “What is so Islamic about our coun- and the Taliban. It is a struggle to madrassahs are indoctrinated into try when Sunnis and Shias, and now save Pakistan itself ... to discover a hating all non-fundamentalist Mus- Deobandis and Brelevis, are killing more rational and humane lims. For the sake of his own survival, each other so wantonly, when we are understanding of what it means to be as well as for the good of Pakistan, so devoid of a sense of brotherhood a Muslim in the 21st century. Musharraf should shut down these and tolerance, when there is no jus- madrassahs. tice for the poor and destitute, when Pakistan was the first state in the our women are relegated to second-class citizenship? Who modern world to be created “for” and “in the name of Is- can blame the international community for calling us an irre- lam”. Today, it has to be saved from those who, in the name sponsible or failed or terrorist state when our religious lead- of Islam, commit mass murder, spread mayhem and menace, ers are quick to hurl outlandish threats? Who will invest in and are hell-bent on dragging Pakistan into the barbarity of our country if it is constantly rocked by senseless religious a modern medievalism. To get from where we are to any- strife and violence? Since no nation is an island, how can where better we need a more broadly defined international Pakistan survive in hostility to the global community?” The coalition – a coalition in which the West makes space for fight against terrorism is thus more than simply about bin and demonstrates an informed understanding of the internal Laden and the Taliban. It is a struggle to save Pakistan itself. diversity of and debate within the Muslim World. This will And, in a broader sense, it is a struggle to discover a more allow moderate opinion to make itself heard and be recog- rational and humane understanding of what it means to be a nized as distinct from militant fundamentalism. A healthier Muslim in the 21st century. and more humane future for Pakistan and Islam now depend upon the silent majority’s loud declaration: never again! FUTURE TENSE

President Musharraf, who seized power in a bloodless coup in October 1998, has so far handled the crisis well. First, he tried to consult as many segments of Pakistani society he possibly could, while he tried to articulate the revulsion felt by the vast majority of Pakistanis at the terror attacks on America. Second, he is positioning Pakistan where the vast majority want it to be standing: foursquare for justice, leading the way to a new Muslim social compact purged of de- praved violence, brutality, hatred, intolerance and the sheer madness that parades itself in self-proclaimed “Islamic” garb. Third, he has neutralized, at least for the time being, the threat from the Pakistani army itself by sacking key Taliban supporters. Beyond that, the fate of Musharraf depends on the length of the war. If attacks against Afghanistan continue for too long, or the ground assault gets bogged down, or the pictures of wounded and dead civilians begin to saturate television screens, the hand of the extremists will be strengthened. Nev- ertheless, Musharraf can take comfort from the fact that the businessmen and the professional classes, disgusted by perpetual, mindless violence, are behind him. In tackling the extremists, Musharraf would be greatly helped by the establishment of a broad- ranging, representa-

Harvard Asia Quarterly 26 Autumn 2001 PROBLEM SOLVING

INTERVIEW WITH STEPHEN COHEN HAQ: The best place to start is by asking you whether you foresee any substantial reorientation of American policy vis- Stephen P. Cohen is a Senior Fellow at the Brookings à-vis the South Asian region after the events of September Institution. Cohen, a former professor at the University of 11. Illinois, is currently an adjunct professor at Georgetown University. A leading analyst of South Asia, Cohen has written, co-authored, or edited eight books, including The Pakistan SC: No. What has happened is that the policies that were Army (1999), The Indian Army: Its Contribution to the already in place are being accelerated. For example, efforts Development of a Nation (1991), Brasstacks and Beyond: are being made to restore more normal relations with Paki- Perception and Management of Crisis in South Asia (1995), and India: Emerging Power (2001). He has also been a member stan. The Indians, of course, feel left out but I don’t think of the Policy Planning Staff of the Department of State. In this that any of this will undercut the larger economic, political interview with HAQ, he discusses the complex political and strategic relationship that has been established with In- situation equations in South Asia that have arisen in the dia. aftermath of the recent terrorist attacks in New York. HAQ: One of the setbacks for India is that it has once again been equated with Pakistan, for example, with the simulta- neous lifting of the nuclear test sanctions. So India’s patient lobbying against sanctions has succeeded – but rather inadvertently.

SC: Well one of the problems faced by America in dealing with South Asia is that both India and Pakistan see their relations with the US as a zero sum game vis-à-vis the other. This is epitomized in the use of the word “tilt” – if we tilt toward one then we implicitly tilt away from the other. This has not been American policy for a long time, even though it is a widely-held South Asian view. All I have to say is that this is a misperception – there will be no zero sum game unless one or the other South Asian country insists that we see things in the region the way they do, or one or the other concludes that the US is an implacable enemy. Fortunately, the leadership in both states seems to have a more realistic grasp of America’s diverse regional interests and its priori- ties.

HAQ: Let’s consider the rapid changes in US-Pakistan relations. There have been conflicting signals: some Congress- men have argued for greater economic aid while others have criticized Pakistan’s role in supporting terrorism. So how do you categorize this new phase of US-Pakistani relations?

SC: We are still not sure what sort of cooperation we will get from Pakistan. There are some big issues that remain – one would be the degree of support that they offer the United States, another would be whether a wrapping up of their relationship with the Taliban will also extend to those jihadi groups that are oriented toward Kashmir. The latter, of course, is of great importance to the Indians. I also think that the Pakistanis will try to extract from us as good a deal as they can, but they are very suspicious of the United States – they are convinced that we have let them down in the past and might do so again.

HAQ: Would you like to elaborate on something that you have recently said: “Pakistan is part of the solution, just as it is part of the problem.”?

Harvard Asia Quarterly Autumn 2001 27 SC: Pakistan has pursued a quasi-imperial policy in Afghani- to be unwilling to even discuss any concessions themselves. stan, pushing toward Central Asia. They have been doing This is a formula for perpetual conflict, and it means that this that since the late 1980s. They thought that they beat the So- issue will drain both India and Pakistan for another five de- viets and that the Indians would cades. If that is India’s policy, also fall. Then they opened a new then I don’t think the US should front in Kashmir when the Indi- get involved in Kashmir. The In- ans made it possible through I don’t think that the question is one of dians will have to deal with the their mishandling of the situa- America pressuring the Pakistanis, but ebb and flow of such visitors in tion. For a weak country that has one of Pakistan making the right their own way, but so far I have had tremendous political insta- decisions about the future of their own not seen any coherent Indian po- bility and whose economy is in country. litical or military strategy that shambles, this is simply imperial does not run great risks. overreach. To the degree that Pakistan pursues such grandiose objectives employing vari- HAQ: On the contrary, I would argue that if anything, we ous jihadis in their service, they will remain part of the prob- have not seen any Pakistani political or military strategy that lem. To the degree that they work with us to cleanse Afghani- does not run great risks. Which country in the Cold War at- stan of these groups, they are part of the solution. Frankly, tempted anything like Kargil? Surely you are being one-sided because of their location, they have to be part of the solution. in your condemnation. Due to their domestic weakness, they don’t have much choice except to do the right thing. They will benefit in the long run. SC: No. I’ve written at length on the many strategic mis- takes committed by Pakistan. In my most recent book, India: HAQ: How do you think America will cope with the back- Emerging Power, I do provide an assessment of the overall lash that emerges from within the Pakistani state against success (or failure) of India’s use of military power – it is a American intervention? We have already seen, for example, mixed record. But this shouldn’t be seen as a competition as anti-American demonstrations throughout Pakistan. What’s to who is worse! more, we also know that certain retired Pakistani Army officers were instrumental in forming the Taliban. HAQ: Can India really deal with the problem itself – doesn’t the advantage of terrorism lie in the asymmetric benefits for SC: I think that this is Pakistan’s problem, but one that they Pakistan? During the Gulf War, Israel’s security was strength- can manage. Pakistanis, especially those in the military, have ened through American defenses in return for Israeli patience. to decide what sort of Pakistan they want to have in the fu- Will we see anything of this sort in South Asia? ture. Is it going to be a state that supports outlaws and be- comes identified with those outlaws, or does it want to be- SC: We couldn’t guarantee the Israelis’ security against Pal- come a state that moves to political openness and stops using estinian terrorists… jihadis as an instrument of their diplomacy? The problem is that the Pakistanis see the jihadis as the only way to get the HAQ: I was suggesting an analogy between Iraqi attacks Indians to the negotiating table by punishing India. and the mujaheddin trained in Afghanistan. I think that the Pakistanis will back off in Afghanistan as it is clearly very dangerous for them to support radical Mus- SC: I see your point, but I don’t think we can get that in- lim groups there. But will they find it in their interest to stop volved in South Asian politics to make that distinction and supporting jihadis and terrorist groups in Kashmir? Most enforce it. I think, at best, we can urge that Pakistanis cease modern westernized Pakistanis are worried about a backlash their support for Afghan “guest” militants in Kashmir. Indi- in Pakistan itself, and even some of the military are worried ans have told me that they would be able to know if this about this. So I don’t think that the question is one of America happens. But the problem is that the Pakistanis will ask: why pressuring the Pakistanis, but one of Pakistan making the right are we easing the pressure on India when their negotiating decisions about the future of their own country. policy is that all of Kashmir belongs to India? I think there are a lot of things that the Indians can do, but so far I haven’t HAQ: Does this argument suggest that the number of seen any willingness to address this argument. mujaheddin in Kashmir will increase as they are diverted from locations in Afghanistan? HAQ: I would like to propose a counterpoint to this com- partmentalized treatment of the Pakistani state. You are pro- SC: India can take care of itself. It is a major country and it is posing a black-and-white solution to Pakistan’s role in Af- five times the size of Pakistan. I do think that India will find ghanistan. But is this enough – won’t Pakistan’s actions in ways of defending itself against these threats. In any case, if Kashmir continue to breed Islamic extremism in the region? the camps are closed down in Afghanistan, this reduces the number of “guest terrorists” who can be funneled into Kash- SC: We can ask them to cease and desist entirely. That would mir. However, the situation does run a risk of an escalation to mean a substantial change in their policy on Kashmir – but a larger war. New Delhi does not want the US to be involved what inducement can we offer them to do this? We have just in the Kashmir issue. It rejects any American role although it lifted all the sanctions, so should we threaten to reintroduce insists that we should pressure the Pakistanis. Yet they seem them? It’s a practical policy question – what leverage do we

Harvard Asia Quarterly 28 Autumn 2001 have over Pakistan? We are also unable to get the Indians to ward the military but toward the economy and civil society. budge on their policy in Kashmir. Why would a Pakistani We need to support those groups that would allow Pakistan general be willing to cease and desist when this is an effec- to develop into a liberal Islamic state, putting emphasis on tive form of revenge for Pakistan’s defeat in 1971? More- the broken educational system. over, the kind of leverage we would have to put on Pakistan might transform Pakistan by bringing the state down. The HAQ: Do you see India and America working more closely question to ask then is what sort of Pakistan would we be left on terrorism hereafter? There has been much frustration in with? If we were to stop all economic aid and make Pakistan India over the conflicting signals emerging from America the focus of our anti-terrorist policy, then we could radicalize on the issue of joint action against terrorist groups such as Pakistan. I think that is the view of most moderate Pakistanis the Lashkar-e-Toiyba (LeT) that have close links with Al- who fear that the US will declare Pakistan a terrorist state. Qaeda. India would have on its border a state that was really run by the jihadis. Unfortunately for India, this is the advantage that SC: This is a big question. The Indians can’t really offer much Pakistan gains by virtue of being a weak state. to the US by way of their intelligence capabilities, which are focused primarily on groups that have attacked India. Fur- HAQ: Then again, why should India, or indeed the West, thermore, the FBI has (at last) been allowed to operate in continue to believe this doomsday scenario? If anything, the Delhi, and I assume that the two states are sharing intelli- West’s intransigence is breeding extremism in India, of the gence and doing other things. Nevertheless, I think we know same sort that we are also seeing in Israel. So is it not time what kind of groups these are and I personally think that they for the international community to come down on one side should be put on the banned list. While this would certainly of the fence? benefit the Indians, there is little that the Indians can do in return for us on the issue of terrorism. SC: Many countries use this argument. Now, because there are some radical Palestinians, or Israelis, should we only sup- HAQ: Few people remember, as you recently remarked at a port one or the other? In conference, that the United Pakistan’s case, there are plenty States welcomed the Taliban of sensible people who do not when it first appeared on the want to live in a permanent state Our real mistake was in pulling out of scene supported almost entirely of war with India, nor do they Afghanistan after the Soviets left, leaving by Pakistan. Isn’t it time for the want to be under military rule for- the Pakistanis as the dominant power. US to atone its own sins of com- ever. These are India’s (and Their imperial ambitions got them into mission and omission? America’s) “natural allies” in trouble, and we have all paid the price. building a Pakistan that is at peace SC: Well, we only welcomed the with itself and its neighbors. Taliban until they made it appar- However, many of these same people believe strongly that ent that they were demonstrably primitive in their outlook India is an overbearing and abusive neighbor that has acted and until they began to house Osama bin Laden and his group. unjustly in Kashmir. They are also angry with the United Our real mistake was in pulling out of Afghanistan after the States for having let Pakistan down many times. Soviets left, leaving the Pakistanis as the dominant power. My view is that the dangers of a war between the two Their imperial ambitions got them into trouble, and we have states, combined with the existence of reasonable people who all paid the price. are willing to compromise makes it imperative that the two states begin the dialogue begun at Shimla and most recently HAQ: What are the long-term solutions to the problems of picked up by Atal Behari Vajpayee on his historic trip to Afghanistan – should we support the replacement of the Lahore. The peace initiatives of Lahore and Agra should point Taliban by an Afghan king, by a straggly Northern Alliance the way forward, instead of events such as Kargil or nuclear or a UN mandate? threats and terrorist bombings. SC: Many of the American specialists on Afghanistan and HAQ: You have authored a book on the Pakistani Army. Do Central Asia have argued over the past ten years for an inter- you feel that the Pakistani Army has managed to remain in- national meeting, probably UN-sponsored, that would bring sulated from the politics of jihad? as many Afghan factions together as possible (including non- radical Taliban elements) to form a government that would SC: I do not think that the typical Pakistani Army officer is a be non-threatening to its neighbors and able to accept relief jihadi. The Army had that problem a while ago, when they and reconstruction assistance. I think that India can be of felt that the Officer Corps was becoming radicalized. Never- great help here if it supports such an international frame- theless, the Army has become more conservative and more work for the neutralization of Afghanistan and that it makes Muslim. There are now fewer generals who have links with clear that it would not seek to have an advantageous position America since our liberal fastidiousness has led us to cease in that neutral Afghanistan. This threat of Indian encircle- having military links with the Pakistani Army. ment is the primary fear of Pakistani strategists who have However, I should point out that for years I have argued dominated this policy for years. I believe this Pakistani fear that our major thrust in Pakistan should not be directed to- is overblown, though India could help by putting these fears

Harvard Asia Quarterly Autumn 2001 29 to rest. supported these groups in Pakistan (and in India) and use charitable organizations as a front for vicious propaganda. HAQ: A few US Congressmen have spoken of supporting Once again I would say that these states are part of the prob- the Afghan king’s attempt to summon a “loya jirga” or tribal lem and also part of the solution. council meeting. However can we really expect the warring factions to maintain any sort of stability within Afghanistan?

SC: Loya jirga is the traditional manner in which the Af- ghans have dealt with this problem of balancing the interests of Afghan tribes. You establish a weak government in the center and the tribal leaders are allowed to dominate their own regions. Such a pattern traditionally produced a weak Afghanistan that had some degree of internal conflict, but which was not a threat to its neighbors.

HAQ: Finally, let me ask you about what you think will happen to America’s relationship with Saudi Arabia and the United Arab Emirates. Will we see pressure brought upon those who are guilty of funding the Taliban?

SC: I would personally like to see that, but unfortunately those people who have done a lot of oil business with the Saudis and who see energy security as a very high priority dominate the current Administration. I hope that we will put a lot more pressure on the Saudis and the UAE, who lavishly

Harvard Asia Quarterly 30 Autumn 2001 NEW PARADIGM, OLD TACTICS SOME THOUGHTS ON COALITION BUILDING

BY WAHEGURU PAL SINGH SIDHU he events of September 11 have once and for all replaced Communism and the relative order of the Cold TWar with the “asymmetric threat” posed by global ter- Waheguru Pal Singh Sidhu is an Associate with the rorism in the New World Disorder. This marks a paradigm International Peace Academy, New York and writes extensively shift at least for liberal Western democracies which, led by on South Asian security issues. He has previously been a MacArthur Fellow at the University of Oxford, a Visiting Scholar the United States, now see global terrorism as their leading at Stanford University and the Warren Weaver Fellow for security concern – well ahead of either conventional or non- International Security at the Rockefeller Foundation. conventional military threats from “states of concern” or “rogue states”. To most Asian countries, which have experienced similar terrorist acts over the years in addition to traditional military threats, however, this is a belated recognition of the changed security paradigm in the post-Cold War era.

A PARADIGM SHIFT

In the US, three indicators were behind this shift in perception. First, since the end of the Cold War more Ameri- cans have been killed in terrorist attacks – both foreign and home-grown – than on the battlefield. Not surprisingly then, since the late-1990s public opinion has consistently regarded terrorist attacks as the primary threat to the US, placing it well ahead of the perceived threat posed by China, Iraq, Iran, Russia and even North Korea. According to one study, as many as three out of four voters saw a nuclear terrorist attack as most likely.1 This perception has also been endorsed by the Hart-Rudman “Commission on National Security in the 21st Century”, which forecasted the American homeland’s vulnerability to terrorist attacks of “mass destruction” or “mass disruption”.2 With the death toll in the attacks of Sep- tember 11 already in the thousands and an estimated economic and financial loss of at least US $120 billion, this grim prediction has come true. Second, President Bush described these horrific events as “acts of war” and attempted to make a distinction between these attacks and other “terrorist acts”. In doing so he also echoed the distinction that India has been making for a decade between “terrorist acts” and “proxy war” or, more recently, “cross-border terrorism” to describe transnational terrorism. Finally, the fact that a few determined individuals could effectively deploy even non-lethal civilian equipment in un- conventional ways to cause massive destruction also exploded Washington’s myth of absolute security. It starkly revealed that being the world’s only superpower is no protection against global terrorism. This vulnerability has led the Bush Administration to undertake at least two policy shifts: one domestic and the other international in nature. On the domestic front, the Ad- ministration has now accepted that the Federal government must play a greater role in ensuring airport security against terrorist acts and is also responsible for providing relief to recover from such attacks. On the international front, the multilateralism a la carte policy of the early days of this administration has been replaced, at least for the moment, by greater engagement with not only Washington’s allies and

Harvard Asia Quarterly Autumn 2001 31 the United Nations Security Council but also the international opportunistic alliance model with all its drawbacks in the community beyond the Western world. It remains to be seen short term. This unwieldy coalition is likely to include some whether this policy will be sustained. if not all NATO members; Israel (which, reluctant to be seen as a party in the conflict, may provide covert rather than overt OLD TACTICS support); some token Arab states; some new strategic partners, such as India; and some reluctant partners along the Afghan In its nearly five-decade war against Communism, border, such as Pakistan and Uzbekistan. As in 1991, both Washington had a clear strategic objective: the subjugation Russia and China can be expected to provide political support, of the Communist world. To this end, the US demonized the particularly in ensuring that the appropriate resolutions are Soviet Union as the “evil empire”, a cognomen that justified passed in the UN Security Council, although military support not only building an effective coalition of like-minded may not be forthcoming. The challenge, then, is not only to Western liberal democracies but also entering into sustain this coalition but also build a political and economic opportunistic alliances with authoritarian regimes at the assault on the terrorist networks over a long period of time. tactical level as long as they too opposed Moscow. Thus, at The support of coalition members is unlikely to be different times during the Cold War, Washington worked in unconditional. For instance, while offering their cooperation tandem with the less-than-democratic regimes of South to the US, both China and Pakistan sought US support on Vietnam, Pakistan, Iran, Chile, the People’s Republic of China Taiwan and Kashmir respectively. Similarly, the US and even Afghanistan to defeat Moscow. During this period preference for a close alliance with Tajikistan was thwarted Washington remaining suspicious of democratic countries, by Russia, which considers Central Asia in general and like India, simply because they were members of the Non- Tajikistan in particular under its sphere of influence. This is Aligned Movement (NAM), one reason why the US may which refused to openly support have sought an alliance with either crusade. This single Uzbekistan, which has not only objective “black-and-white” The primary objective of the US-Northern maintained some distance from model, which is reluctant to Alliance partnership is to build a strong Moscow but is also acknowledge let alone engage opposition to not only fight the Taliban on geographically closer to the shades of grey, is Washington’s the ground but also to create an alternative strategic Taliban stronghold of preferred choice of strategy. It once the Taliban is defeated. Mazar-e-Sharif, the site of was replicated during the 1991 many bitter battles between the war against Iraq and is the basis for the coalition now being Taliban and the opposition built against the Taliban. Northern Alliance. The US has also established a close link However, as recent events show, this model is with the Northern Alliance, despite concerns about the strategically flawed despite being tactically successful. While opposition group’s undemocratic nature and poor human Washington retained its like-minded allies following the rights record. The primary objective of the US-Northern collapse of the Soviet Union, it abandoned its opportunistic Alliance partnership is to build a strong opposition to not allies with embarrassing haste, which proved disastrous for only fight the Taliban on the ground but also to create an both these regimes and subsequently for Washington as well. alternative once the Taliban is defeated. This is epitomized in the case of Washington’s support for Among the opportunistic allies in the region, the most the anti-Soviet forces in Afghanistan, including the Taliban. troublesome for the US would be Saudi Arabia, the United Once the Soviets were driven out of the last battlefield of the Arab Emirates (UAE) and Pakistan. These three were the Cold War, Washington moved on to the next crisis, leaving only ones to recognize the Taliban regime. Thus, in one of the various opposition groups to fend for themselves. the cruelest ironies, as Washington contemplates action While there are several reasons for the anti-American against the Taliban for playing host to Osama bin Laden, it attitude of these groups, two in particular are noteworthy. will also have to contend with the divided loyalties of these First, there were always fundamental ideological differences three key allies in the region. While in the short term the between these largely undemocratic and authoritarian groups Bush administration has convinced Saudi Arabia and the UAE and their democratic western sponsors, which were to break ties with Kandahar and all three to join the anti-bin conveniently overlooked to achieve the short-term objective Laden coalition, in the long term the US will have to deal of fighting the Soviets. These differences resurfaced once with the fundamentals that underpin the relations between Afghanistan was rid of Soviet forces. Second, the lack of an them if it is serious about tackling terrorism at its very source. effective engagement policy on the part of the US – either In the world of global terrorism, Saudi Arabia, UAE and unilateral or multilateral – aimed at establishing an effective Pakistan are more part of the problem than the solution. Just democracy and civil society (an onerous task given the as the Taliban plays host to bin Laden, these states also have undemocratic character of these groups) meant that the their own infamous exiles: Saudi Arabia provides refuge to differences were exacerbated and made confrontation very former Ugandan dictator, Idi Amin; notorious Indian likely. Interestingly, this was also true of Pakistan, which went underworld don Dawood Ibrahim (allegedly responsible for from being Washington’s most trusted frontline state during a series of bomb blasts in Mumbai in 1993) operates out of the Afghan war to being on the terrorist watch list. UAE and, reportedly, Pakistan. Cleric Maulana Masood Despite this experience, Washington, under pressure Azhar, released as part of the deal to resolve the hijacking of from strong public opinion at home, is likely to replicate the Indian Airlines flight IC-184 in December 1999, resurfaced Harvard Asia Quarterly 32 Autumn 2001 in Karachi within days to threaten both the US and India Given the limited effectiveness of the existing strategy before a crowd 50,000 strong. According to The Observer in countering threats, Washington would do well to (London) Pakistan still plays host to at least three militant acknowledge the various shades of grey in this war against groups which have ties with the Taliban: Jaish-e-Mohamed, global terrorism and to embark on a sustained rethinking of Lashkar-e-Tayyaba, and Harkat-ul-Mujahideen. how best to deal with this new and lethal challenge. Crucial Although the Taliban is now recognized as a key element in this endeavor is a concerted multilateral engagement, in the global terrorist network, it would be impossible to ideally through the UN, which is still regarded as the most sustain this network without the support (or acquiescence) of representative organization of the community of nations. The these three states. For instance, most of the Taliban’s top UN, which has an enviable track record in establishing norms, leadership graduated from the Darul Uloom Haqqania could take the lead in first defining terrorism and then in madrassah in Pakistan. Jessica Stern, a leading expert on promoting a universally acceptable anti-terrorist convention. terrorism at Harvard University’s Kennedy School of By working through and with the UN, Washington is likely Government, estimates that there are 40,000 to 50,000 to be more successful in eliminating this threat in the long- madrassahs in Pakistan which “supply the labor for jihad” in term. countries ranging from Turkey to Mongolia.3 According to In addition to the military option, the international Stern, most of these schools are funded privately either by community will also have to embark on non-military options, “Pakistani industrialists at home and abroad, by private and such as economic and financial moves to starve the global government-funded non governmental organizations in the terrorists of funding. This too would require a concerted effort Persian Gulf states and Saudi Arabia, and by Iran.” These on the part of the international community not only in cracking activities, clearly, flourish under the very noses of otherwise down on the formal banking system but also on the informal strict and authoritarian regimes, indicating that perhaps these “hawala” system of money transfers and money laundering. organizations have the tacit approval if not support of the Here, the experience of India’s Directorate of Revenue states in which they are based. As a result, if Washington is Intelligence, which has been tracking the hawala network for serious about uprooting terrorism completely it will in the years, would prove invaluable. long run have to impress upon its allies to fight the enemy While the indications are that the new establishment in within. Washington is certainly willing to explore all these options, it remains to be seen whether the Bush team will sustain this engagement in the long-term or whether it will be tempted to THE WAY AHEAD revert to the unilateral mode once the short-term objectives During the 1991 Gulf War, Colin Powell, then Chairman have been achieved. It would do well to remember that while of the Joint Chiefs of Staff, famously said of Saddam the former approach may provide a lasting solution to the Hussein’s army in Kuwait: “First we’re going to cut it off, threat posed by global terrorism, the latter would only provide and then we are going to kill it”. The shadowy global terrorist a brief respite before the problem emerges in another part of network offers no such clear target. This poses a tactical the world. This should be the lesson of the past and present challenge to the US military and most of its allies, which experience in Afghanistan. until now were primarily geared to strike other armies, navies, airforces, as well as political, economic and civil infrastructure, using its own far superior conventional military firepower. This explains why the US was relatively successful in Iraq and Kosovo but floundered badly in both Somalia ENDNOTES and Vietnam. The latter experiences are likely to be revisited 1 in Afghanistan. Public Attitudes on Nuclear Weapons: An Opportunity for Even as the Bush administration works towards building Leadership (Washington D.C.: The Henry L. Stimson Center, a coalition for the short-term, it will also have to develop the 1998), a survey conducted by John Parachini of the Monterey tactics for this coalition to employ to take on the terrorist Institute’s Centre for Nonproliferation Studies and Frances networks. According to one assessment, the tactical model Bourne of the Henry L. Stimson Center, p. 15. 2 that might be appropriate in tackling the scourge of terrorism Road Map for National Security: Imperative for Change, is the one being used by paramilitary and Special Forces to The Phase III Report of the US Commission on National dismantle the drug trafficking networks in Latin America, Security/21st Century, February 15, 2001 co-chaired by Gary West Africa and Europe. This model relies primarily on high Hart and Warren Rudman, p. 27. This report is available at levels of intelligence, precise but limited strikes and covert, http://www.nssg.gov/. 3 behind-the-scene operations rather than on-camera overt Jessica Stern, ‘Pakistan’s Jihad Culture’, Foreign Affairs, actions. While the results of this approach have been mixed, November/December 2000. it is probably more effective than a frontal all-out military assault. In many ways this pattern is similar to the “military” confrontation of the Cold War which was primarily out of sight and public scrutiny. Perhaps this is why US Defense Secretary Donald Rumsfeld compares the impending war against global terrorism to the Cold War, whose battles were largely unseen and unheard. Harvard Asia Quarterly Autumn 2001 33 LOOKING FOR GOD IN THE STREETS OF SEOUL THE RESURGENCE OF RELIGION IN 20TH-CENTURY KOREA

BY DON BAKER ver the last few decades regular church attendance in much of the developed world has declined sharply. In nations such as Don Baker is a professor in the Department of Asian Sweden and Denmark, only around 5% of the population now Studies and Director of the Center for Korean O attends worship services on a weekly basis. The British tend to be more Research at the University of British Columbia. His research has focused on the cultural history of religious than most other Europeans, but even the most optimistic esti- Korea,with special attention paid to religion, mates say that three-quarters of the people in the United Kingdom do not philosophy, and traditional science. participate in organized religious activity on a weekly basis. Americans often brag that they are much more religious than Europeans, but even the United States has experienced a sharp decline in regular church attendance, with some scholars estimating that only about 30% of the US population participates in religious rituals every week, down from as high as 50% only a couple of decades ago. We can see a similar trend in Canada. In trying to explain this decline in organized religious activity in the developed world, some observers have suggested that secularization is the result of modernization. They suggest that modern science, technology and medicine have demystified the world, making life more predict- able and controllable and as a result reduced both the number and types of situations in which human beings feel the need for supernatural assistance. In addition, they say, industrialization has a similar effect, since factory workers are less threatened than farmers are by drought or other vicissitudes of nature beyond human control. Urbanization is another feature of the modern world which many argue has promoted secularization, since, by pulling individuals from villages in which they were subject to the close scrutiny of their neighbors into the anonymity of urban life, it has eased the pressure on individuals to participate in community religious rituals. Moreover, in Western Europe, modernization has been associated with the rise of the secular state, shrinking the realm over which religious authorities held sway and creating nation-states in which religious organizations became just some of the many voluntary organizations which operated under the umbrella of state authority. The combined effect of these various defining features of the modernization process has been, we are told, a decline in the power and autonomy of religious organizations and in the frequency and intensity of individual religious activity. However, this attempt to equate modernization with secularization fails to take into account contrary examples from recently developed societies. For example, in the twentieth century, particularly in the decades following the Korean War, South Korea has experienced rapid modernization of both its economy and its society. Yet, as it modern- ized, South Korea also experienced an explosion of organized religious activity. Koreans are much more likely to attend worship services regularly now than they were fifty years ago, and religious structures are much more visible on the streets of Seoul today than they have ever been in Korea’s long history.

MORE CLERICS, MORE WORSHIP HALLS, AND MORE BELIEVERS

This assertion that modernization in South Korea has meant increas-

Harvard Asia Quarterly 34 Autumn 2001 ing rather than decreasing religiosity is supported by a num- in 1997 (47% religious versus 53% with no religious affilia- ber of quantitative measures, courtesy of data compiled by tion). Nevertheless, it is clear that South Korea is a much Gallup of Korea and the South Korean government. For ex- more religious place today than it was fifty or a hundred years ample, according to figures Korean religious organizations ago, before Korea began to modernize. have submitted to the Korean government over the last few As recently as 1964, only a little over 3.5 million South decades, there were fewer than 34,000 religious profession- Koreans, out of a total population of almost 28.2 million, als (such as monks, nuns, priests, and ministers) in South noted a religious affiliation on government census forms. In Korea in 1962. By 1993, that figure had risen to almost other words, less than four decades ago, only a little more 180,000. Moreover, that figure does not include shamans of than 12% of the South Korean people declared themselves various types, from self-styled “bodhisattvas” and fortune- to be Buddhist, Catholic, Protestant, or a follower of one of tellers to those who perform rituals in which they become Korea’s many other organized religions. By 1983 more than possessed by spirits, who number at least 50,000 and prob- 15.5 million South Koreans, close to 40% of a population of ably a lot more. (There are at least a dozen such shamans over 39.6 million, responded in the affirmative when their with offices within a short walk of my home in a middle- government asked them if they professed faith in any par- class district of Seoul.) If we include shamans with other re- ticular religion. That was more than a four-fold increase over ligious specialists, then according to government figures, in the number of believers two decades earlier. By the 1990s, the last decade of the twentieth century at least one out of those willing to identify themselves as members of a specific every 200 South Koreans earned their living as a professional religious community had risen to between 47 (in 1997) to 54 religious practitioner. (in 1991) percent of the total population of South Korea. The The size of this increase in the number of clergy may be size of the self-proclaimed religious population had risen from somewhat exaggerated, since much of that increase came from less than 16 million to between 21 to 23 million in a little Korea’s new religions, which claimed a total of only 1,513 more than a decade. Moreover, according to the 1997 Gallup clergy in 1962 but reported a total of 37,135 in 1993. Many poll, almost half of those who said they had no religious af- of the clergy in those new reli- filiation at that time confessed gions are not true religious pro- that they had once considered fessionals, since they earn their themselves Buddhists, Catholics, living from full-time secular oc- or Protestants. In addition, many cupations and serve as clergy of those who say they are not now only part-time. Nevertheless, the nor have ever been members of fact that the number of Buddhist religious organizations neverthe- monks and nuns tripled from less less participate in religious ac- than 10,000 in 1962 to over tivities such as shamanistic ritu- 30,000 in 1993, the number of als or the activities of some of Catholic priests rose from 2,254 Korea’s new religions without in 1963 to 8,561 in 1993, and considering their participation a the number of Protestant minis- signal of religious orientation. ters quadrupled from a little Clearly, by the end of the twenti- more than 20,000 in 1963 to eth century, religious organiza- over 84,000 in 1993, indicate tions and religious activities had that the rise in the number of become important features of the people who consider religion Korean cultural landscape. their primary occupation is no However, it is difficult to illusion. Such a substantial in- determine precisely how many crease in the number of clergy more Koreans are religious today could not have occurred without a corresponding increase in than were religious before rapid modernization began in the the religiously active population. 1960s. Figures reported by religious organizations are dubi- When the Japanese colonial government surveyed Ko- ous. When religious organizations report that their total mem- reans about their religious affiliation, most Koreans told them bership rose from 2.5 million in 1962 to over 66 million in they had none. Out of a population of 23.5 million people at 1993, it is obvious that they are exaggerating, since there are the time, less than a million told their Japanese questioners only about 46 million people living in South Korea. Further- that they had any specific religious preference. However, more, the figures compiled in surveys conducted by the gov- when the government of the Republic of Korea in 1991, as ernment or by Gallup are not totally reliable either. For ex- part of a broader survey to obtain a statistical snapshot of its ample, such surveys usually find at most only 60,000 or 44 million citizens, asked the people of South Korea what 70,000 or so admitted members of Daesoon Jilli-hoe, a new their religious beliefs were, it obtained a dramatically differ- religion which has managed to build a modern university and ent result. In that 1991 survey, a majority of South Koreans two general hospitals with contributions from a membership proclaimed an allegiance to a specific religious tradition for which, judging from the size of the Daesoon Jilli-hoe bud- the first time in the history of the Republic of Korea. The get, must be substantially larger than that. (Daesoon Jilli-hoe percentage of the South Korean population professing a reli- claims that every month it receives financial contributions gious affiliation declined slightly when Gallup polled them from 1.5 million different households which include at least

Harvard Asia Quarterly Autumn 2001 35 one believer each.) churches. This downward bias in the reported size of the new reli- Over the last four decades, South Korea has urbanized gions of South Korea is probably more than offset by the fact at a rate almost unprecedented in world history. In 1960, only that a substantial percentage of people who tell Gallup or slightly more than one out of four South Koreans lived in their government that they are Buddhists rarely if ever en- towns and cities with 50,000 or more inhabitants. By 1966, gage in organized Buddhist religious activity. For example, that percentage had risen to 37%. The urbanization rate rose more than half of those who called themselves Buddhist con- to 41.1% in 1970, 48.4% in 1975, 57.3 % in 1980, 65.4% in fessed to Gallup pollsters that they had never read any Bud- 1985, 74.4% in 1990 , and reached 78.5% in 1995. Much of dhist sutras. Moreover, almost one out of every four self- that growth has been in and around Seoul. There were fewer proclaimed Buddhists admitted that they had not attended than 4 million people living in Seoul in 1966, compared to any Buddhist rituals in at least a year. And one out of three almost 11 million in the 1990s, plus another 4 million in the Buddhists told Gallup that they never prayed to Buddhas or surrounding area. Seoul embraced only 13% of South Korea’s Boddhisatvas. population in the mid-1960s. By 1975 almost one out of ev- Given the uncertainty in the figures we have for the per- ery five South Koreans was living in Seoul and by 1990 that centage of the South Korean population which is truly reli- rate had risen to one out of four. Moreover, that 25% of the gious, we need more substantial evidence that in 2001 Kore- entire South Korean population which lived within the city ans are participating in religious activities and identifying proper does not include the millions more who lived beyond with specific religious traditions more than they did before the city limits in the urban sprawl which now surrounds Seoul. the second half of the twentieth century. We find that evi- When we combine the population of Seoul with the popula- dence in architecture. tion of Kyeonggi province which surrounds it, we discover Excluding shaman shrines, the government counted that by 1995 over 45% of the entire population of South Korea 10,366 buildings used for religious rituals in 1962 and 58,896 lived in or around Seoul. That would be a remarkable con- in 1993. For example, the number of Buddhist temples in centration of population in any society, but it is even more South Korea rose from 2,306 in 1962 to 7,244 by 1980. By remarkable in a society such as South Korea which was still 1993 there were 10,632 registered Buddhist temples in South overwhelmingly rural only four decades ago. With the popu- Korea, a more than four-fold increase in three decades. The lation of Seoul growing 45.7% between 1966 and 1970, figures are even more remarkable for Protestant churches. 24.5% between 1970 and 1975, 21.4% between 1975 and There were 42,598 Protestant churches in South Korea in 1980, 15.3% between 1980 and 1985, and 10.1% between 1993, more than six times as many as the 6,785 which ex- 1985 and 1990, its houses and condominiums are filled with isted in 1962. Catholics are not able to establish new churches people who have fond memories of the less sophisticated, as quickly, primarily because of a shortage of priests. Never- less complicated, less impersonal rural atmosphere they only theless, there were 844 Catholic churches in Korea in 1990 recently left behind. compared to only 313 in 1965. Any time people are uprooted Even the small new indigenous re- and resettled in such vast numbers ligion of Won Buddhism expanded at such a dizzying rate, there will al- from 186 worship halls in 1972 to In South Korea, modernization, and ways be those who feel left out and 404 in 1993. Daesoon Jilli-hoe in particular urbanization, pushed left behind in the transformed envi- grew as well, doubling the number Koreans into temples and churches. ronment. The villages and small of its proselytizing centers over the towns those new urbanites immi- course of just one decade, from grated from were usually close-knit around 700 in 1983 to over 1,600 in 1994, indicating that the communities in which many shared the same surnames and boom in organized religion has not been confined to those many families had lived side by side for generations. When religious organizations with a long history and international the rush to the cities emptied those small towns and villages, connections. Supporting what we have inferred from the sharp community ties disintegrated, leaving millions of new urban rise in the number of clergy in Korea, such a substantial in- residents feeling alone in a sea of strangers. Religious orga- crease in the number of buildings serving a religiously-ac- nizations stepped in to embrace those newcomers. The mod- tive population could not have occurred without a correspond- ern religions of Korea have recreated the old sense of coming increase in the size of that population. munity, allowing residents of Seoul, Pusan, and other large How do we explain this increased religiosity? Have Ko- cities to escape the loneliness and anonymity of high-rise reans become more religious despite modernization, or might apartments and crowded subways. the modernization process itself be responsible for the rise in Evidence that the growth in the urban population is cor- organized self-conscious religious activity on the southern related with growth in church and temple membership is pro- half of the Korean peninsula? vided by surveys which contrast the rates of religious affiliation for the residents of cities and villages. According to gov- URBANIZATION AND RELIGIOUS AFFILIATION ernment figures, the percentage of the rural population which called itself religious rose from 36% in 1985 to 46.7% in There is statistical evidence to suggest that the correct 1991. Over that same six-year period, however, the percent- answer is the latter. In South Korea, modernization, and in age of the urban population which called itself religious grew particular urbanization, pushed Koreans into temples and from 46.1% to 56.5%. An urban Korean, therefore, is more likely to proclaim a specific religious affiliation and engage

Harvard Asia Quarterly 36 Autumn 2001 in regular formal religious activities than a villager who main- Until the second half of the twentieth century, most lay Ko- tains a more traditional lifestyle in one of Korea’s remaining reans did not identify themselves as Buddhists rather than villages or small towns. Confucians, or conceive of Buddhism and shamanism as Moreover, the more modern the urban neighborhood and mutually exclusive religions. Christianity introduced into Ko- the higher the average level of education and household in- rea the notion of separate and distinct communities of faith come for residents of that neighborhood, the higher the rate in which belief in one religion prohibits belief in another re- of regular participation in formal religious activities. For ligion or even participation in its rituals. When Koreans heard example, in the early 1990s a Seoul National University an- Christians proudly announcing that they are Christians, many thropologist examined a district in southern Seoul in which non-Christians began imitating them, declaring that they too almost every household was headed by a husband with a col- were proud followers of a specific religious tradition. What lege education and a professional occupation. He found that was once almost exclusively a Christian practice has spread almost 85% of the residents he surveyed said they had a reli- to become the badge of a modern Korean regardless of religious affiliation, compared to only around half of the na- gious orientation. tional population. Why would a Christian practice signify modernity? The In addition, although the percentage of the surveyed vast majority of the first modern institutions on the Korean population that was Buddhist (21%) is comparable to the fig- peninsula, including the first modern schools, medical clin- ures reported in nationwide surveys taken in the 1990s (which ics, and newspapers, were established at the end of the nine- range from 27.6% in a 1991 government census to 18% in a teenth century by Christian missionaries or by their Korean 1997 Gallup survey), a much higher percentage of this up- converts. Christians, though small in number in those early per-class community is Protestant or Catholic than is the gen- years, quickly became among the best educated on the pen- eral population. Over 30% of his respondents told him they insula and took the lead in fighting to modernize Korea and were Protestant, compared to around 20% of the national protect it from Japanese imperialism. When those efforts to population. In an even greater departure from the national preserve Korean independence failed and Korea was absorbed norm, almost 22% of the residents of this district in Seoul into the Japanese empire in 1910, Christians continued to said they were Catholic, compared to a national figure at that promote the modernization of education and medical care. time of only around 6%. Moreover, because Christians, more than other Koreans, re- This is quite a different situation from that which pre- sisted the pressure from the Japanese colonial government to vails in the rural areas of South Korea. A 1997 Gallup Poll honor the Japanese emperor through public ritual, Christian- found that almost 25% of the residents of Seoul, and 28% of ity became identified with nationalism, another defining char- those in Seoul’s suburbs, professed belief in one of Korea’s acteristic of modernity. many Protestant denominations. Another 9% of the people When Japan was forced out of Korea by its defeat in of Seoul, and almost 13% of those in its suburbs, said they World War II, Korean Christians reestablished their close were Catholics. Only around 16% of those living in rural ties with Christian organizations in North America, Europe, villages called themselves Protestants, below the national av- and Australia. Much of the rebuilding of Korea along mod- erage in 1997 of 20%. Catholics claimed only another 6% of ern lines, particularly after the devastation of the Korean War, those living in South Korea’s villages and small towns. That was done by Koreans working closely with Christian organi- means that the percentage of the population of Seoul metro- zations from overseas who supplied both funding and per- politan area which is Catholic or Protestant is over 20% higher sonnel. Thus, from the final decades of the Joseon dynasty than the national average, and well over 50% higher than the through the difficult years of Japanese colonial rule and re- percentage found in rural areas. These figures and others covery from fratricidal war, Christianity has been identified suggest that Korean city-dwellers, particularly those in the with modernization. more modern and affluent sections of Seoul, are not only Urbanization has also been identified with moderniza- more likely than other Koreans to be religious, but they are tion and it is among those expanding urban populations that more likely, when they are religious, to be Christian rather modern institutions and values have first taken root. There- than Buddhist. fore it seemed only natural to Koreans who moved to the burgeoning cities that, along with Western-style housing and CHRISTIANITY AND MODERNITY clothing, they would adopt Western-style religion. Besides, Christians were more accustomed than Buddhists or shamans Why is religion, particularly Christianity, both in its Prot- to operating in an urban environment, and were able to ad- estant and its Catholic varieties, so strong in Seoul and its dress the needs of urban residents for new forms of commu- suburbs? Seoul is the political, financial, cultural and educa- nity ties faster than the traditional religions were. It is this tional capital of South Korea and as such has led moderniza- identification of Christianity with modernization and urban- tion on the Korean peninsula. Since Christianity has been ization which has made Christianity such a powerful pres- linked with modernization in Korea for well over a century, ence in contemporary South Korea that even non-Christian Seoul has also been at the center of the resurgence in religi- religions have had to partially reshape themselves in its im- osity that was sparked, I argue, by the introduction of Chris- age in order to survive. tianity into Korean culture. This response of non-Christian religions to the identifi- One indicator of the rise in religiosity in Korea, as noted cation of Christianity with modernity, along with the pros- earlier, has been the dramatic increase in the percentage of elytizing of Christian churches, has been responsible for the the population that proclaims a specific religious affiliation. dramatic increase both in the percentage of the South Ko- Harvard Asia Quarterly Autumn 2001 37 rean population which claims a specific religious orienta- modernity as is baptism in a Christian church. In fact, in Pusan, tion, and in the percentage of the South Korean population South Korea’s second largest city and the only potential rival which participates regularly in activities which they recog- to Seoul for cultural domination of the southern half of the nize as religious. Korean peninsula, it appears that it is Buddhism rather than Christianity which is the mark of urban modernity. Accord- ing to the 1997 Gallup poll, almost 35% of the population in Pusan and the surrounding Kyeongnam province calls itself It is this identification of Christianity Buddhist, compared to less than 12% who say they are Prot- with modernization ... which has made estant and around 3% who say they are Catholic. Christianity such a powerful presence in contemporary South Korea, so powerful A MORE COMPETITIVE RELIGIOUS MARKETPLACE that even non-Christian religions have had to partially reshape themselves in The increase in the number of the self-consciously reli- its image in order to survive. gious is not the only contribution of Christianity to the increasing visibility of organized religion in South Korea. The increase in the number of the religious organizations to which THE BUDDHIST RESPONSE TO THE CHRISTIAN CHALLENGE people can affiliate and the fragmentation of religious communities into competing denominations can also be at least In the 1920s and the 1930s, when Korea was under Japa- partially attributed to Christian influence. nese rule, less that 200,000 Koreans on the entire peninsula After the turmoil which followed liberation from Japa- were willing to identify themselves publicly as Buddhists. In nese rule in 1945 and which intensified during the three years fact, Japanese statistics show more Christians than adher- of the Korean War, Protestant Christianity fragmented into a ents of Buddhism or any other religion in Korea during the number of sub-denominations. For example, there are now colonial period. After the Korean War, as the number of self- over 70 different Presbyterian denominations in South Ko- proclaimed Christians in the independent Republic of Korea rea, as well as seven Methodist denominations and six Bap- rose dramatically, the number of those who called themselves tist denominations. Koreans claim to have a proud tradition Buddhists rose dramatically as well. In 1962 Buddhist de- of religious inclusiveness, citing the fact that for most of the nominations claimed almost 700,000 followers in South Ko- Joseon dynasty (1392-1910) one Buddhist denomination em- rea, three times as many as were found on the entire penin- braced all of Korea’s Buddhists and coexisted with shaman- sula when it was ruled by the Japanese. Nevertheless, Korea’s ism, welcoming shrines to mountain gods within the grounds Buddhist population at that time was only a little more than of Buddhist temples. If such tolerance of religious differences half the size of the more than 1.3 million-strong Christian was once a significant characteristic of Korean religiosity, it population. clearly no longer is. Many of Korea’s Protestant sub-denomi- As the numbers of Christians in Korea grew, the num- nations insist on establishing their own seminaries so that their ber of self-identified Buddhists grew even faster, as Bud- clergy will not be contaminated by the theological and po- dhists adopted the Christian practice of identifying with a litico-religious views of other Presbyterians, Methodists, or specific religious community. By 1985, the percentage of Baptists. Moreover, it is not unusual in Korea to see a semi- the population calling itself Buddhist had reached rough par- nary professor, or a pastor, dismissed from his post and even ity with the percentage of the population calling itself Chris- condemned as a heretic for straying outside the boundaries tian. The census in 1995, for example, found 10.3 million of Christian doctrine as defined by the sub-denomination Buddhists in South Korea, compared to 8.7 million Protestants and slightly less than 3 million Roman Catholics. Although Christianity is identified with modernity, no one has to convert to Christianity to be seen as modern. As long as a Korean adopts the modern notion of a specific religious orientation, and the specific religion that he or she follows resembles in some aspects the modern concept of religion which Christianity brought to Korea, then that person can also claim to be a full participating member of modern society. For some, membership in one of the modern Buddhist temples in urban areas – temples which run kindergartens, pub- lish glossy magazines, and sing hymns at Sunday worship services, just as Christian churches do – is just as much a mark of

Harvard Asia Quarterly 38 Autumn 2001 which hired him. CONCLUSION Such doctrinal intolerance, though it may have roots in the Christian insistence that correct belief is essential to sal- Ironically, this fragmentation of religious denominations vation, is no longer confined to intramural Christian struggles. into competing sub-denominations may be one factor in the Some fundamentalist Christians have also turned their insis- rapid rise in the percentage of the South Korean population tence that everyone accept their vision of religious truth which professes a religious affiliation. Competition among against Buddhists. Buddhist sacred works of art have been various religious organizations has meant increased prosely- destroyed by Christian radicals, and some Christians have tizing, which means that more people are exposed to reli- even tried to set Buddhist temples on fire. Radical Christians gious messages and more people are invited to join worship have also attacked statues of Tan’gun, the legendary founder groups meeting in their neighborhoods. of the Korean nation whom some of Korea’s new religions Rapid urbanization since 1960 has fueled a dramatic rise worship as a god. A nationalist organization with roots in in the membership of South Korea’s religious organizations. Tan’gun worship has donated statues of the legendary father However, the shape that increased religiosity has taken - the of the Korean people to elementary schools throughout Ko- increase in sectarian affiliation and in religious conflict - may rea. Several of those statues, however, have been beheaded. be due to the important role Christianity has played in defin- When the police have been able to determine who is respon- ing religiosity in modern Korea. Before Korea encountered sible, in every case it has been a radical Christian. Christianity, there was already religious competition and con- When non-Christian Koreans began adopting the Chris- flict on the peninsula. Buddhists, Confucians, and shamans tian practice of identifying with a specific religious commu- all vied to have their beliefs and rituals deemed the most nity, some also adopted the common Christian belief that the efficacious. However, the intensity of inter-religious compe- road to salvation is a narrow one, tition today, both in terms of the num- and is doctrinally defined. This bers of combatants involved and in had led to fragmentation into sub- terms of the rigidity of the doctrinal denominations among Buddhists Adherents of various religious faiths in Korea today are much more likely walls dividing them, is unprecedented. and among some of Korea’s new Korea’s turbulent history over the last religions. For example the to assert that their way is the only path to salvation than they were century has forged a link between Chogye denomination, which has modernization and Christianity which its headquarters in downtown before Christianity introduced the notion of sectarian exclusiveness ... has forever altered religion in what Seoul, claims to represent the vast was once the Land of the Morning majority of Korean Buddhists, but Calm. that claim is challenged by at least 53 other Buddhist organizations, some of which report that they have hundreds of thousands of members. South Korea now has nine Pure Land sub- denominations, five Esoteric sub-denominations, and eight NOTES Maitreyan sub-denominations, as well as several other Bud- dhist organizations which insist that they offer a better path The statistics in this article are taken from statistical re- to salvation and enlightenment than that offered by Chogye. ports and census figures published by the Ministry of the Similar fragmentation can be found in the Jeungsan-kyo Interior of the Republic of Korea, as well as the report by family of new religions. There are close to fifty different re- Gallup Korea, Han’guk-in ui jonggyo wa jonggyo uisik: ’84 ligious organizations which worship Kang Jeungsan as the nyeon, ’89 nyeon, ’97 nyeon josa gyeolgwa wa bigyohan Supreme Ruler of the Universe. One of the larger of those jonggyo yeon’guseo [The religions and religious beliefs of Jeungsan religions, Jeungsan-do, has attacked another, the Korean people: A comparison of dates from surveys taken Daesoon Jilli-hoe, as a false and corrupt religion which dis- in 1984, 1989, and 1997] (Seoul: Gallup Korea, 1998). More torts the teachings of Kang Jeungsan and therefore leads information on membership in religious organizations over people away from the path to salvation. Some of the lan- the course of the twentieth century can be found in Han’guk guage Jeungsan-do hurls at Daesoon Jilli-hoe resembles the jonggyo sahoe yeon’guso, ed, Han’guk jonggyo yeon’gam, charges of heresy some Christian groups in Korea have used 1994 [Yearbook of Religion in Korea] (Seoul: Koryeo hallim against each other when arguing over doctrinal differences. weon, 1994) The study of the religious beliefs of upper-middle This fragmentation within both Buddhism and new reli- class Koreans can be found in Kim Kwang-ok, “The Reli- gions in Korea suggests that Koreans now are more sensitive gious Life of the Urban Middle Class,” Korea Journal, vol. to doctrinal and sectarian differences than they were in the 33, no. 4 (Winter 1993), p.5-33. past. Adherents of various religious faiths in Korea today are Information on religious activity outside of Korea comes much more likely to assert that their way is the only path to from a December 10, 1997 press release from the University salvation than they were before Christianity introduced the of Michigan Institute for Social Research, from Andre Walsh, notion of sectarian exclusiveness into Korean religious cul- “Church, Lies, and Polling Dates,” in Religion in the News ture. Vol. 1, No. 2 (Fall 1998), and Joe Couto, “Canadian Church Attendance Declines,” in Christian Week Online, vol. 14, no. 18 (January 9, 2001).

Harvard Asia Quarterly Autumn 2001 39 REUNIFICATION IN THE BALANCE KOREA’S NEED FOR A CONTINUED US ALLIANCE

BY SUK-WOO KIM alk of Korean unification was re-ignited in June 2000 after South Korean President Kim Dae-jung met with Suk-Woo Kim is a senior visiting fellow in the International This counterpart Chairman Kim Jong-il. It is difficult to Security Program at the Center for Strategic and International predict when and how reunification might occur, but three Studies, Washington, D.C. From 1996-1998, he served as possible scenarios are unification resulting from war, the in- South Korea’s Vice-Minister of Unification. ternal collapse of North Korea, and gradual integration through increased economic and social contact. Although the prospect of unification is clouded somewhat by South Korea’s economic difficulties, it remains clear that South Korea will likely lead the process. Before unification can be realized, many issues need to be resolved, the most pressing being the future of US forces stationed in South Korea. This is particularly salient because since the North- South rapprochement, anti-US sentiments have re-emerged in South Korea, with citizen groups demanding the withdrawal of American forces from the peninsula. In the wake of last year’s summit in Pyongyang, as many as fifty anti-American citizen’s activist groups demanded the withdrawal of US forces. The summit and subsequent developments have given new legitimacy to hopes for Korean reunification. However, it is important not to underestimate the difficulties and to remain mindful of historical lessons and geopolitical complexities. Given the history of mistrust among the major East Asian powers and the lack of a multilateral security mechanism to ensure stability, there will be a continued need for a US-Ko- rean security alliance even after unification. This is not to say that as circumstances change, the role, size and deployment of the US forces will not need to be modified. However, they will remain an important component of the region’s security configuration for some time to come.

KOREAN REUNIFICATION AND EAST ASIAN SECURITY

Korea is situated at a geopolitical crossroads where the interests of neighboring powers meet and often collide. While a unified Korea will not become a major regional power itself, it is too strategically valuable for any regional power to ignore. At the very least, a regional power contending for su- premacy in East Asia must keep Korea from falling under the influence of its rivals. Without Korea in its sphere of influence, no major power can consolidate its interests in the region, and therefore genuine neutrality is not feasible for Ko- rea in the foreseeable future. If Korea achieves reunification peacefully, a critical threat to the region’s security will be eliminated. Yet permanent peace and stability in the region will not come easily or automati- cally. For this to be attained, there must either be a regional multilateral security mechanism or a balance of power among the major countries in the region. Without a continued US presence, neither of these is likely. A regional security alliance like the OSCE (Organiza-

Harvard Asia Quarterly 40 Autumn 2001 tion for Security and Cooperation in Europe) or NATO is As a rising regional power, China is certain to have some only a remote possibility in Asia. The Clinton administration influence on the Korean reunification process. China has long modified the traditional stance of previous US administra- been the most important power supporting North Korea, with tions, which had strongly upheld bilateral alliances at the ex- which it shares a border as well as an ideology. In addition, pense of multilateral institutions. Although there are alterna- China seeks in the long run to check US hegemony, and is tive paths for the Asia-Pacific region to establish a regional already an important power in many respects. Therefore, it security mechanism, such an effort is unlikely to bear fruit in will not be easy to resolve the issues of Korean unification the near future. The ASEAN Regional Forum (ARF), for ex- and the status of US forces in Korea without Chinese coop- ample, is still an infant in- eration or acquiescence. stitution with limited power, While China may not desire whose existence depends on the creation of a power the goodwill of its partici- vacuum through the with- pants. Moreover, it does not drawal of US forces, it has make sense for an organiza- been reluctant to admit this. tion such as the ARF, based In part, this is because it sees in Southeast Asia, to ad- the stationing of US troops dress the problems of in East Asia as an attempt Northeast Asia. The most to contain its own growing effective plan in the long run power. However, as a safe- would be the formation of a guard against Japanese re- Northeast Asian forum to militarization, the US pres- deal with security matters. ence holds some appeal for Before this can be done, China. This grudging accep- however, it will be neces- tance indicates a more prag- sary to resolve Sino-Japa- matic side to Chinese for- nese tensions and soothe re- eign policy which might gional resentment stemming eventually lead it to accept from Japan’s history of colonialism and military aggression. American troops in a unified Korea. The primary obstacle to creating a regional security Japan’s behavior will also play a role in determining the mechanism lies in the heterogeneity of the Asia-Pacific coun- degree of conflict or cooperation in the region following Ko- tries and the geographic configuration of the region. Differ- rean reunification. Japan and South Korea normalized diplo- ences in history, culture, economy, and geo-strategy have pre- matic relations in 1965 and have developed a sound basis of vented the formulation of multilateral institutions similar to economic cooperation, with the United States as the alliance those in Europe. It will take a long time to establish a stable broker. Despite this, the Korea-Japan relationship is fraught regional security mechanism in Northeast Asia, even after with tension and resentment. Bilateral relations between the unification of the Korean peninsula removes the North China and Japan have also gradually developed since their Korean threat. A hasty withdrawal of US forces following normalization of relations in 1972. However, the relation- Korean reunification would create a power vacuum and con- ship is still weak, and antagonism remains between the two tribute to a resurgence of the historical rivalry between China countries as a result of their historical rivalry. Japanese deni- and Japan for regional hegemony, possibly resulting in a deals of its wartime aggression have further impeded a sincere stabilizing arms race. Until a legitimate multilateral security reconciliation with China. Judging from recent interactions mechanism is implemented, the only feasible option is to between the two countries, it appears that the tenuous Sino- maintain the current balance in the region, anchored by the Japanese relationship will continue to pose uncertainties for presence of US troops. regional stability. It is of great concern to neighboring countries whether UNIFICATION AND THE REGIONAL POWERS Japan will again seek to be an independent military power and reject the present US protection. With its wealth and It has been argued other countries in the region might advanced technology, Japan would not face any serious dif- prefer a weak and divided Korea to a strong and united one. ficulties in becoming a military giant within a short period of However, such an argument overlooks the fact that a unified time. Despite the current constitutional limitations on its mili- Korea will not pose a credible threat to its neighbors. Its popu- tary power, its true intentions remain uncertain. Japanese at- lation of 70 million will only be about one-twentieth that of titudes toward international affairs have changed over the China, and its estimated GDP of $400 billion roughly one- past two decades to allow a gradual build-up of the Self- eighth that of Japan. Militarily, a unified Korea also presents Defense Forces. Since the Nakasone administration in the little cause for concern. South Korea has continuously as- 1980s, Japan has increasingly sought an international role sured its neighbors that it will not pursue nuclear or missile commensurate with its economic power and removed con- nationalism after unification. As for the weapons of mass straints to military build-up. There has also been talk of re- destruction that North Korea has been developing, they should viewing Article 9 of the Japanese Constitution, which pro- be dismantled with the assistance and supervision of the in- hibits Japan from deploying its armed forces overseas. Ko- ternational community. rean unification may alter the regional balance of power in

Harvard Asia Quarterly Autumn 2001 41 such a way that Japan will find it difficult to maintain its the necessary funding. Korea must consider how to allocate passivity. If a power vacuum emerges as a result of US with- its wealth for unification. One such way is a reduction in drawal, Japan may not be willing to allow China to fill that defense spending, which now totals approximately 3% of the vacuum. The stability of the Korean peninsula in particular, South Korean GDP (North Korea, in contrast, spends a quarter and East Asia more generally, requires the continued pres- of its GDP on defense). ence of US forces even after unification. It is also extremely important for Korea to discourage competition between China and Japan. While maintaining MOVING TOWARDS UNIFICATION minimal defense spending, Korea must focus on diplomatic means of ensuring regional stability. This will serve not only Since Korea is surrounded by major powers, the unifi- Korean interests, but also foster lasting peace and prosperity cation process will be heavily influenced by the interests and in the region. Korea must promote a multilateral security actions of these powers. However, the intention of the Ko- mechanism as a secondary apparatus for regional security. rean people will be the ultimate deciding factor on the issue Beyond the scope of the ARF, a consultative institution for of reunification. Since the summit last year, Koreans have the security of the Northeast Asia region surrounding the exhibited high hopes of achieving unification, but the path to Korean peninsula should be studied intensively. unification is long and complicated. War and the partition have alienated the two sides from each other, and there is CONCLUSION still much animosity and suspicion between them. Under current circumstances, it is very difficult to imag- Koreans must avoid approaching the unification issue ine a clear path to unification. However, some basic predic- emotionally, and should instead maintain a pragmatic, long- tions can be made about the situation in the Korean penin- term perspective. Although nationalistic sentiment has sula. First, North Korea will most likely follow the historical emerged in the wake of the North-South rapprochement, it is pattern of other Communist regimes: either reform or col- important to remember that North Korean leader Kim Jong- lapse. Since a North Korean collapse would be very costly il is an unreliable figure, tainted with terrorist activities such for the South, South Korea will have to take the initiative in as the 1983 Rangoon bombing which killed South Korean the unification process. Second, the keen desire for unifica- cabinet ministers and the 1984 bombing of a Korean Air- tion will not fade away or be re- lines flight. nounced. Third, since South Ko- The main responsibility in pro- reans will try to preserve the con- moting a reunification conducive to tinuing prosperity of the country, Fundamentally, a unified Korea must both domestic and regional stability they will prefer a deferred, peace- seek peace and prosperity on the rests with political leaders. They must ful unification to a rapid one with peninsula as well as in the region ... caution Koreans to think rationally conflict and uncertainty. If unifi- it is unrealistic for Korea to compete and realistically about their future cation threatens the country’s eco- with its bigger neighbors for security, and should emphasize the nomic well-being, a majority of regional hegemony. significance of US troops stationed South Koreans will be reluctant to on the peninsula. Korea must also re- pursue it. build its economy. Just as economic Supposing that the two Koreas are finally unified, what success after the devastating Korean War contributed to the policy options will a united Korea face? Fundamentally, a democratization of South Korea and enhanced its standing unified Korea must seek peace and prosperity on the penin- in the world, economic revitalization is necessary for suc- sula as well as in the region. While unification will undoubt- cessful unification of the peninsula. An economically-weak edly bring about great euphoria and optimism, Koreans need Korea will be unable to utilize possible future opportunities to have a realistic and strategic perspective for their unified in the international arena. Unification without a strong eco- future. As a medium-sized country in the region, it is unreal- nomic basis will not serve, and may even undermine, regional istic for Korea to compete with its bigger neighbors for re- stability. gional hegemony. Even after existing for several thousand Finally, Korea must continue to develop its democracy. years in the shadow of the great Chinese empire, Korea has a Although South Korean democracy has been imperfect, po- unique history of preserving its national identity and pros- litical freedom and economic development are closely con- perity. The Korean people’s resistance to subjugation, as well nected. A South Korea with a strong economy and robust as its use of subtle diplomacy to preserve their independence, democracy will have the best chance of leading a successful have been constant throughout its history. While maintain- reunification process. Together with economic and political ing a special tributary relationship with China, Korea man- prerequisites, however, a realistic approach to regional secu- aged to keep its independence and identity. After unifica- rity – one which recognizes the importance of a continued tion, Korea will again need to apply these skills to maintain a American military presence – will serve as the basis for na- strategic balance among nations in the region. tional unification, and contribute to peace and prosperity in The paramount objective for a unified Korea will be eco- the region. nomic reconstruction of the peninsula. Unlike West Germany, South Korea does not have enough wealth to finance the cost of unification on its own, and therefore a unified Korea will have to rely in part on the international community to obtain

Harvard Asia Quarterly 42 Autumn 2001 ALL SYSTEMS READY? CHINA’S INSTITUTIONS AND THE WTO COUNTDOWN

s China moves through its many-tiered process of reform, nowhere are both progress and inertia more apparent than in the country’s banking and judicial Asystems. In this issue of the Harvard Asia Quarterly we present two articles which, in tandem, capture the difficulty and necessity of reforming China’s institutions. Victor Shih’s analysis of the banking system measures the steps being taken to diversify the financial sector against the sys- temic problems which threaten its viability. Qingjiang Kong’s article on judicial reform considers China’s legal system in the context of imminent WTO demands, gauging the changes that must occur in order for the nation’s legal system to satisfy international standards of fairness and competence. Both authors confront the dominant role of the Chinese Communist Party and the ways in which the present political environment continues to impede substantive change. However, Shih and Kong also assume that the Party, while deeply implicated in the problem, must also be part of the solution. The Party’s tried and true strategy of gradual reform has served to keep it in power through two decades of potentially destabilizing economic reform, and there is no sign that the leadership will now begin taking unprecedented political risks. Short of massive political change – which could itself undermine the institutions in question – reform of the banking and judicial systems is likely to be a long-term process. Changes emanating from within the existing structures are already visible in the growth of joint-stock banks and newly formalized legal training for judges. But the difficulty of persuading vested interests to forfeit their advantages is still the main impediment. Shih and Kong attempt to distinguish between tenable solutions and mere foot-dragging in the guise of reform, and both conclude that the government’s continued success at deferring political change is far from certain. Paying serious attention to the Chinese government’s reform from within should not preclude keeping an eye on the political horizon. – The Editors

Harvard Asia Quarterly Autumn 2001 43 THE CHINESE BANKING SECTOR: CURRENT CONDITIONS AND FUTURE PROSPECTS

BY VICTOR SHIH espite recent reforms in the banking sector, Chinese banks still operate under the shadow of the state. Of the more than Victor Shih is a Ph.D. candidate in Harvard Done hundred banks in China, only one has a board of directors University’s Department of Government. His that does not contain a state majority. This paper seeks to closely ex- dissertation concerns the political economy of loan amine the effect of state intervention on business operations, as well as distribution and the resulting inflationary cycles in post-reform China. For his dissertation research, the solvency and future prospects of various segments of the Chinese he spent the 2000-2001 academic year conducting banking sector. interviews in Beijing. The dual regulatory structure of the state and the Chinese Commu- nist Party (CCP) still has enormous influence over Chinese banks, from lending allocation to personnel appointments. Although state commercial banks are having a limited degree of success in diversifying their lending portfolios and in increasing efficiency, they continue to shoulder enormous policy burdens. Joint-stock banks and local banks con- stitute the most dynamic parts of the Chinese banking sector, but they are still under the sway of either the local or the central government. As a result of the layers of state intervention, banks, particularly state banks, are motivated equally by bureaucratic and commercial incentives, which bodes ill for their balance sheets. Ultimately, the successful commercialization of Chinese banks will require a fundamental shift of ownership structure in the banking sector away from state domination. The state, however, has shown little genuine commitment in this regard due to fear of financial instability and a fundamental unwilling- ness to give up control over the banks.

THE STRUCTURE OF THE BANKING SECTOR

During the past twenty years of reform, the Chinese banking sector has undergone a process of specialization in policy roles and diversification in ownership structure. Despite this, the banking sector in China remains dominated by government controlled banks of various sorts, with the Big Four banks still holding the largest slice of China’s 14.8 trillion RMB ($1.8 trillion US) in financial assets.1 Other types of banks, although still tied to the government, are more dynamic and gaining an increasing share of the market. Throughout much of the Mao era (1949-1976), the People’s Bank of China (PBOC) conducted most banking activities in China, which involved primarily short-term working capital loans to state-owned enterprises (SOEs). In 1977, the central government began to use banks more actively as a policy tool for economic growth. This generated two changes in the banking sector. First, rather than providing a small amount of working capital loans to SOEs, the central government now demanded that banks lend more and to support longer-term fixed asset investment for SOEs. With the central government’s blessing, local government officials, whose promotion largely depended on local economic growth, came to rely on bank lending to generate growth. With pressure from both the center and the localities, bank lending came to dominate financing for SOE investment and working capital such that by the end of 1996, over 80% of all outstanding loans in state banks went to SOEs.2 Second, rather than lending through just the PBOC, the government created specialized banks to handle different areas of policy de-

Harvard Asia Quarterly 44 Autumn 2001 mands. In 1979, the Agricultural Bank of China (ABC) was banks, especially joint-stock banks partially owned by pri- reconstituted to handle government financing of grain pur- vate businesses. Local banks and joint-stock banks have chasing and rural development. In the same year, the Bank enjoyed dynamic growth, although state banks, including the of China (BOC) broke apart from the PBOC and took on the newly formed policy banks, still command the lion’s share of mission of absorbing foreign currency deposits from Chi- total deposit and lending. nese exporters and lending to importers. In 1984, the Indus- After the Asian Financial Crisis, Chinese leaders began trial and Commercial Bank of China (ICBC) broke away from to take notice of the poor shape of their banks, which had a the PBOC and took with it the PBOC’s entire SOE portfolio. loan portfolio that was between one-fourth to one-half non- At the same time, the China Construction Bank (CCB), which performing.3 In 1998, Zhu Rongji launched a series of bold had been an arm of the Ministry of Finance, gained opera- initiatives to address the long-ignored non-performing loan tional independence and continued providing loans to long- problem in the banking system. First, the appointment of term investment projects in the state sector. By 1985, the local bank managers, which used to require the approval of “Big Four” banks had each taken on distinct policy dictated the local government, is now centralized in the headquarters responsibilities. In spite of the diversification of bank own- of the state banks and the Party. Second, the credit plan, ership and a push for further reform in 1998 by Finance Min- which required banks to lend a certain amount every year, ister Zhu Rongji, this four-bank system remains largely in was abandoned in favor of setting debt-asset ratio require- place today (graph 1). ments and reserve requirements. Along with the demise of Beginning in the late 1980s, other types of banks ap- the credit plan, the Big Four banks acquired even more au- peared on the scene and took an increasing share of the mar- tonomy to lend to projects outside their specialization, even ket. However, these banks on the whole still have strong ties though the government is still able to issue direct orders for with either the central or the local government, and their col- banks to lend from time to time.4 As a result, banks are now lective clout still does not come close to that of the state banks aggressively expanding their lending to consumers and pri- (graph 1). Much hope and optimism focuses on non-state vate enterprises. Third, the state banks themselves have hired

Graph 1: The Changing Share of Deposit and Loan by Types of Banks Note: all figures are from The Statistical Division of the PBOC. China Financial Statistics 1952-1996 and China Financial Statistics 1997-1999. Figures in the “other” category include loans and deposits at trust and investment companies and financial companies. Figures for state banks include state commercial banks and policy banks.

deposit (1 9 9 5 ) deposit (1999)

state banks 14% joint stock banks 6% 4% 4% state banks 20% joint stock banks 4% local banks local banks 0% credit cooperative s 71% credit 74% 3% other cooperative s other

loan (1995) loan (1999)

state banks state banks 14% 12% jo int stock banks joint stock banks 0% 6% 3% 4% 3% 2% local banks local banks

78% credit 78% credit cooperative s cooperative s other other

Harvard Asia Quarterly Autumn 2001 45 foreign consultants to revamp their lending system to create levels comply with the interest rate band. Beyond setting the independent evaluation of loans. Finally, the main branch of- reserve requirement and a minimum debt-asset ratio, which fices of the PBOC now oversee banking activities in regions are normal activities, the PBOC also requires that the Big comprised of three provinces, rather than in a single prov- Four state banks reduce their non-performing loans (NPL) ince, which presumably lessens local government’s influence by around 3% every year, as a part of the overall effort to on branch banks. reduce financial risk.7 Oversight of all these measures com- Despite the recent changes and reforms, the institutional bined seriously hinders the banks’ ability to make its own course that the Chinese banking sector took in the early 1980s decisions in portfolio and risk management. had several important effects on the In addition to monetary poli- current shape of the Chinese bank- cies, the PBOC also provides ing sector. First, because the gov- long-term loans to banks and the ernment decided to use the bank- As long as SOEs fail to reform and government, although this prac- ing sector to finance much of the banks continue to focus their lending tice is on the decline at least offi- cost of economic reform, banks portfolios on SOEs and other state cially. PBOC lending to the cen- came to dominate in the Chinese fi- projects, the Chinese banking sector tral government has stabilized at nancial market. Even at the end of will not be able to become truly 158.2 billion RMB since 1997, 1999, total value of traded shares profitable. while PBOC loans to the Big Four in China was equivalent to only ¼ banks have decreased from 571.7 of total banking deposits.5 Within billion in 1997 to 492.2 billion the banking sector, state banks still dominated. In fact, their RMB in 1999. PBOC loans to the Agricultural Development presence increased between 1995 and 1999 with a 3 percent Bank of China, a policy bank, declined from an astounding gain in the share of deposit to 74 percent (graph 1). At the 816 billion in 1997 to only 659 billion in 1999. 8 Despite the same time, the Big Four banks had to lend out to most of the decreasing scale of PBOC lending, it nevertheless sets a dan- projects in their respective policy areas, which meant that gerous precedent for banks and the government because both they bore a disproportionate burden in policy loans and loans would see the PBOC as a last resort in the case of failed to the state sector. This is a trend that continues today. More banking policy or a serious budget deficit.9 Furthermore, importantly, state banks’ provision of loans to SOEs inexo- large-scale loans to the government or to the banks in the rably tied the fate of state banks and hence most of China’s future would create serious inflationary pressure. financial assets with the fate of SOEs. As long as SOEs fail Finally, the PBOC is also one of the many government to reform and banks continue to focus their lending portfo- agencies that polices the banking sector for financial irregu- lios on SOEs and other state projects, the Chinese banking larities as defined by the government. Through monthly re- sector will not be able to become truly profitable. ports by each bank’s headquarters and their major branches, the PBOC ensures that bank interest rates do not fluctuate REGULATORY STRUCTURE beyond the sanctioned band and that banks have met the debt- asset ratio and the reserve requirements. Moreover, the PBOC Dominated by state banks, the banking sector’s regula- still routinely issues temporary regulations which the state tory framework resembles that of other government bureau- banks in particular must follow. Other government agencies, cracies with the dual leadership of the state and the Chinese such as the Ministry of Finance and the State Economic and Communist Party (CCP). On the state side, the People’s Bank Trade Commission, also issue regulations pertaining to the of China (PBOC) still has power far exceeding that of cen- balance sheet and write-off procedures of the state banks. In tral banks in advanced industrialized countries and takes com- this manner, the PBOC and other agencies highly constrain mands directly from the State Council, China’s cabinet. On the operational independence of all banks, but particularly the Party side, the newly formed Central Finance Work Com- the Big Four state banks. mission represents the Central Committee of the CCP and Government intervention in the banking sector also af- appoints all senior managers in the banking system. This regu- fects the appointment of top bank managers in most of the latory framework continues to give the central government banks. The Chinese Communist Party (CCP) central nomen- and the Party enormous leverage over the banking system in clature has always included senior managers in the PBOC China. and the state banks. Before Zhu’s 1998 reforms, the head- The PBOC sets the interest rate, monitors banks’ debt- quarters of a bank and the local CCP Committee jointly ap- asset and reserve ratios, lends to commercial banks, and po- pointed local branch managers. Since the reform, the head- lices the banks for illegal activities. Besides the PBOC headquarters of a bank can nominate senior managers, subject to quarters in Beijing, which monitors the headquarters of all approval by the PBOC, the newly established Central Finance the state banks, PBOC regional and provincial offices moni- Work Committee (CFWC), and ultimately the CCP Central tor the business activities of branch banks of bigger banks as Organization Department. The headquarters of each bank can well as local banks. now appoint local managers, subject to approval of the In monetary policy, the interest rate that the PBOC sets CFWC. The CFWC also has to approve appointment of man- is mandatory, meaning that the deposit and lending rate that agers in joint-stock banks and local banks, although they pre- any bank charges cannot deviate from a given band set by sumably have more leeway.10 the PBOC periodically.6 Therefore, an important function of Due to this system, senior managers, especially in the the PBOC and its branch offices is to ensure that banks at all Big Four banks and the policy banks, are politicians whose

Harvard Asia Quarterly 46 Autumn 2001 careers are tied to their ability to please the central leader- ICBC’s mortgage business more than doubled in 2000 to ship. Moreover, the newly established CFWC also has the reach over 90 billion RMB, although that remains less than power to send a monitoring committee (jianchahui) to the 4% of ICBC’s total loan portfolio.12 For CCB, the amount of headquarters and branch offices of any state-related finan- consumer loan reached 114 billion RMB by August of 2000, cial institution in China to examine their books. While the or around 9% of its loan portfolio. CCB also set the loan monitoring committee’s main responsibility is to investigate ceiling for an individual at an unprecedented level of 600,000 cases of corruption, their reports also have a bearing on the RMB (73,000 USD).13 To expand consumer loans, the Big promotion of managers.11 Although the 1998 reforms pro- Four banks have also accepted stocks as collateral for loans. vided banks with much more operational independence, the On a whole, lending to the private sector and to individuals CCP’s continual domination in senior appointments means has grown rapidly between 1992 and 1999 (graph 2). that Party and state policies will continue to have a large While diversifying its loan portfolio, the Big Four banks impact on banks’ business operations. also sought to cut costs and improve management. Between 1997 and 2000, the four banks closed more than 21,000 THE STATE BANKS branch offices and cut staff by 110,000.14 In addition, the Big Four banks have all hired foreign consulting companies to As a result of the economic decisions made in the early revamp their loan approval process. Essentially, they all now 1980s, state banks, including several newer members, con- have a multi-stage independent loan approval system that tinue to dominate the Chinese banking sector. In response to reduces the opportunity for corruption and nepotism in the the 1998 reform initiatives, state banks have aggressively ex- lending process. Moreover, state commercial banks also in- panded into consumer lending, reformed internal manage- stituted the harsh life-time responsibility system that held loan ment, and adopted advanced technologies, all in anticipation officers responsible for the default of a loan for life. Finally, of the entrance of foreign competition into the Chinese bank- there has been rapid professionalization in at least the heading market. On the whole these changes have been impres- quarters of the Big Four banks, with rapid adaptation of West- sive. However, the four specialized banks still hold enormous ern accounting standards, long-term risk assessment, and in- assets in their own policy areas, and all of the state banks are dependent auditing. still obliged by the central government to carry out various In addition to these changes, state banks have also rap- policy functions. As a result, all of idly upgraded their techno- the state banks, particularly the Big logical capabilities in the past Four banks, are strapped with a high few years to make B2B and [T]here has been rapid B2C services more efficient. percentage of non-performing loans professionalization in at least the (NPL). This makes it hard to predict CCB, for example, entered headquarters of the Big Four banks, with into a cooperative agreement whether or not state banks can be- rapid adaptation of Western accounting come true commercial entities able with Sinopec, an oil giant, to standards, long-term risk assessment, and allow drivers to pay for gaso- to compete with multinational banks. independent auditing. As mentioned before, the Big line at Sinopec gas stations Four state banks, including The In- electronically with CCB’s dustrial and Commercial Bank of China (ICBC), the Agri- Gold Card. Both CCB and BOC set up on-line banking for cultural Bank of China (ABC), Bank of China (BOC), and businesses, providing on-line access of financial information the China Construction Bank (CCB), still command the vast and electronic payments. Meanwhile, BOC and ICBC both majority of banking assets. Since the late 1980s, other state aggressively promoted their credit and debit cards to young, banks have been formed to take over more specialized port- urban customers. On the surface, at least, the Big Four banks folios and specific policy obligations. In 1986, the Bank of are working to improve their loan portfolio and become in- Communication (BOCO) was reconstituted to mainly carry ternationally competitive. out real commercial banking. The late 1980s also saw the Despite these encouraging changes, institutional inertia formation of CITIC Industrial Bank (CIB), which is wholly and political pressure mean that the Big Four banks have yet owned by the CITIC Corporation, a government owned trad- to change their business practices fundamentally. For ICBC, ing company. However, these two banks hold only a small working capital loans to SOEs as a percentage of total short- share of state bank assets. Finally, in 1994, the government term loans declined from 88% in 1997 to 86% in 1999. For tried to commercialize the Big Four banks by creating three ABC, the percentage of short-term lending that went to the policy banks, the State Development Bank (SDB), the Agri- traditional trio of agricultural loans, loans to township vil- cultural Development Bank of China (ADBC), and the China lage enterprises, and loans to grain purchasing companies Export-Import Bank (CEIB). Because Policy banks have a declined from 73% in 1997 to 70% in 1999. BOC similarly different mission and are financed differently from the state still focused on loans to export and import businesses, al- commercial banks, they will be discussed in the next section. though the exact figure is unavailable. Even in 1999, 38% of The 1998 reform initiatives not only gave banks more CCB’s loan portfolio resided in government sponsored in- leeway to conduct their business, but also sent a strong sig- vestment projects.15 What is worse, under government pres- nal to state banks that they should boldly experiment with sure to expand infrastructure investment as a strategy to jump- new business and new technology. As a result, all four banks start the economy, the Big Four banks have been hard-pressed have aggressively expanded their individual loan business, to increase their lending to infrastructure projects. ICBC, for especially in the areas of mortgages and credit card loans. one, has committed over 100 billion RMB, or over 20% of

Harvard Asia Quarterly Autumn 2001 47

State Banks' Financing of the Private Sector (1992-1999)

1000 14 12 800 State Bank 10 Lending to ions

ll 600 Private Sector 8 ng Bi and

in 400 6 Individuals (in State Bank Bank State 4 Lendi billions of 200 RMB) RMB 2 % of as 0 0 percentage of state bank loan 1992 1993 1994 1995 1996 1997 1998 1999 Year

Graph 2: State Banks’ Financing of the Private Sector (1992-1999) Note: Lending to private sector is the summation of “lending private and individual enterprises,” “lending to firms owned by investors from Hong Kong, Taiwan, or Macau,” and “other lending,” which includes lending to individuals and non-state enterprises. All figures came from The Statistical Division of the PBOC, China Financial Statistics 1952-1996 and China Financial Statistics 1997-1999. its long-term loan portfolio, between 1999 and July of 2000 China’s fledgling private sector has serious implications for to government sponsored infrastructure and technical upgrade China’s future growth prospects, since SOEs and state infra- projects.16 For BOC, 45% of new loans in 1999 went to gov- structure projects create net losses in the economy. With ad- ernment sponsored infrastructure projects.17 ABC and CCB equate finance, rapid expansion in the private sector could have similarly committed large amounts in an effort to com- create productivity gains that would offset losses in the state bat recession. ABC still has to provide large sums to finance sector. Thus far, however, the government has not directed the archaic practice of grain purchasing, which creates enor- state banks to follow this course of action. mous losses for the bank. All of the state banks are still required to provide “social settlement” loans —free money to THE POLICY BANKS unemployed workers in hard-pressed areas— from time to time. Formed in 1994, the three policy banks, SDB, ADBC, Continual policy obligations and state macro-economic and CEIB, now hold over 10% of bank financial assets. These policies that favor lending to the state sector jeopardize the policy banks have supposedly taken over the policy portfo- future health of the financial industry, as well as the growth lios of the Big Four banks. SDB took over infrastructure build- prospects of China in two ways. First, non-performing loans ing and long-term SOE investment lending from CCB and (NPL) are probably still being produced at a high rate, in- ICBC; ADBC took over the grain purchasing and rural decreasing the chance of a future financial crisis. Estimates of velopment portfolio from ABC; CEIB took over the export NPL among China’s state banks range from the official 25%, and import credit business from BOC. Because of their policy to 50% estimated by Western economists.18 Industry insid- role, their financing comes mostly from long-term bonds ers acknowledge that no one really knows the exact magni- backed by the government and PBOC lending, which allow tude of the NPL problem in China’s state banks, but it is them to minimize liquidity risk for long-term investment. De- certainly higher than the official figure.19 spite their common policy portfolio and liquidity structure, Second, despite attempts at portfolio diversification, the the three policy banks diverge sharply in terms of perfor- most dynamic sector in the economy, the private sector, is mance. While SDB and CEIB have implemented modern risk still being ignored by the state banks. Domestic private en- management systems and seem determined to keep losses at terprises only received 30 billion RMB in loans from all of a minimum, ADBC continues to be mired in losses that ne- the state banks up to 2000, in other words less than 0.5% of cessitate inflationary financing from the PBOC. all state banks’ total loan portfolio.20 Even taking into ac- Among the policy banks, SDB and ADBC hold over count rapid growth in consumer lending and loans that in 95% of the financial assets. In 1999, over 97% of SDB’s 551 fact ended up in the private sector (graph 2), the state still billion RMB in capital came from long-term bonds backed commands the vast majority of resources in the state banks, by the government, while 88% of ADBC’s 750 billion RMB “crowding out” the private sector. Neglecting finance to in capital came from PBOC “loans.” Like the SDB, the CEIB

Harvard Asia Quarterly 48 Autumn 2001 also financed most of its 50 billion in assets through bond have turned to this most dynamic segment of the Chinese issuance.21 Because SDB and CEIB bonds were floated among banking sector. Indeed the diverse ownership structure of the major financial institutions in China, they have to gener- these banks means that they do not have to shoulder a heavy ate enough interest income to meet annual interest payments. policy burden and that they have more operational autonomy Meanwhile, it is unclear whether ADBC is under any real compared to state banks. The joint-stock banks have taken obligations to pay the PBOC any interest. advantage of this autonomy to expand energetically into con- The enormous disparity between the method of finance sumer lending and lending to the private sector. However, between the SDB and the CEIB on the one hand and the with the exception of China Minsheng Bank (CMSB), gov- ADBC on the other hand might be a deliberate effort on the ernment subsidiaries and SOEs still own a majority share in part of the central government to hide the financial disaster joint-stock banks, and the CFWC of the CCP still appoints generated by the archaic grain purchasing policy. The cur- top managers. While the joint stock banks are all planning rent grain procurement system stems from the age-old ob- either domestic or foreign IPOs, the state will continue to session of Chinese rulers with ensuring that China be able to have great influence over most of these banks in the near feed all its people. Currently, state-owned wholesalers are future. required to purchase a certain amount of grain, oil, and cot- In China, joint-stock banks are defined as those banks ton from primary producers every year for sale in the cities that have privately held shares by government or private en- and for the state’s strategic reserve. Theoretically, these whole- tities. These banks include: China Everbright Bank (CEB), salers can use ADBC loans to buy grain, and sell the required Huaxia Bank (HXB), Guangdong Development Bank (GDB) amount at the official price, while selling the rest at market Shenzhen Development Bank (SZDB), China Merchant Bank price, thereby making a profit with which to pay interest and (CMB), Shanghai Pudong Development Bank (SPDB), principal. However, embezzlement abounds due to its state Fujian Industrial Bank (FIB), China Minsheng Bank (CMSB), ownership and enormous scale. Wholesalers, local govern- Yantai Housing and Saving Bank, and Bengbei Housing and ment, and even local branches of the ADBC all take large Savings Banks, although the last two entities hold only a tiny shares of the annual loan for local investment and private percentage of assets even among the joint-stock banks. In use. In 1998, the ADBC issued sixteen different emergency 1999, deposits among joint-stock banks amounted to only warnings against the misappropriation of funds, highlighting 4% of total deposits, while lending by joint-stock banks was the scale of the problem.22 only 3% of total lending (see graph 1). However, both figures Since SDB and CEIB have have grown rapidly in absolute policy portfolios that allow them Thanks to less policy baggage, [joint- terms for the past few years. reasonable chances for recover- stock] banks have had the operational Joint-stock banks were all ing loans, they have worked autonomy with which to upgrade their established either in the late harder to implement independent technological standards, implement 1980s or early 1990s as part of risk evaluation, modern manage- modern management, publicly list shares the government’s attempt to di- ment, and technological up- and form foreign cooperative versify ownership structure in the grades. ADBC, on the other relationships. banking sector. Many of them hand, has an inherently money- were formed as local develop- losing policy portfolio, which ment banks but have extended gives it much less incentive to modernize. SDB, for one, their network to major urban centers in China. Thanks to less hired Boston Consulting to revamp its credit evaluation and policy baggage, these banks have had the operational au- risk assessment system and also pay well-trained managers tonomy with which to upgrade their technological standards, competitive salaries. The ADBC, in contrast, could do little implement modern management, publicly list shares, and form to improve its situation, so it does not try. foreign cooperative relationships. The success of their ini- The successes and failures of the policy banks have im- tiatives is evidenced by their relatively high profit level com- portant implications for the central government’s future bud- pared with the state banks. Profit to asset ratio in 1999 and getary balance and in the economy’s inflationary rate. If SDB 2000 on a whole seems to be in the positive, which in all and CEIB manage to break even or turn a slight profit in the likelihood is much better than the state banks (table 1). long run, they will be able to pay interest and principal for All of the joint-stock banks, with the exception of the state backed bonds. However, if their current investments two housing and deposit banks, have established on-line and become non-performing, the central government will ulti- mobile banking services as well as credit card and debit card mately have to pay the interest on the bonds. In 1998, the services. China Merchant Bank in fact became the first bank central government already helped the SDB deal with 100 in China to offer full on-line services in 1997. In terms of billion in NPL.23 Moreover, ADBC’s current practice of bor- management structure, joint-stock banks took the lead in or- rowing heavily from the PBOC will contribute significantly ganizing their internal structure by business areas rather than to inflationary pressure at a time when the economy is re- by functions and/or geographical area. Moreover, all three bounding to a high growth trajectory. of China’s listed banks – Shenzhen Development Bank (1998), Shanghai Pudong Development Bank (1999), and THE JOINT-STOCK BANKS the China Minsheng Bank (2000) – are joint-stock banks. Huaxia Bank and China Merchant Bank are both trying ac- With the China Minsheng Bank IPO last year, all eyes tively to list either this year or next year. All of the joint- Harvard Asia Quarterly Autumn 2001 49 Table 1: Current Standing of Joint-Stock Banks! Bank Founding Year 2000 Assets 2000 Loans 2000 Net Profit (billions of RMB) (billions of RMB) (as a % of assets) CMB 1987 241.3 113.7 N/A CEB 1992 207.4 N/A 0.5 GDB 1988 134 63.1 N/A SPDB 1993 103.2* 54.7 0.9 CMSB 1995 67.9 37.4 0.6 HXB 1992 61.2* 30.1 0.8 SZDB 1987 45.9* 21.0 N/A FIB 1988 34.4* 16.2 0.9

! Figures from this table come from the websites of various joint stock banks as well as The Statistical Division of the PBOC. 2000. Pp. 26- 37. * Figures for this bank are for 1999.

stock banks are active in making domestic and foreign coop- point its own management and pursue its own growth strat- erative agreements to provide foreign currency loans, in shar- egy. ing customer databases with securities or insurance firms, Undoubtedly, joint stock banks make up the most excit- and in linking up with international clearing networks. ing segment of the Chinese banking sector. However, as with Despite this dynamism, joint-stock banks are under the almost everything in China, the semi-visible hand of the gov- close scrutiny of the PBOC, and the top managers of all joint- ernment still plays a significant role among these banks. stock banks, except for China Minsheng Bank, are appointed While these banks will outperform the state banks and gain a by the CCP. Because state share-holding companies such as growing share of the Chinese banking market before foreign the China Everbright Group and the Capital Steel Group or entry, it is unclear how well they will fare under intense for- local government subsidiaries such as the Guangdong Mer- eign competition. chant Bureau Group still hold majority shares in joint-stock banks, top personnel appointments still come under the pur- THE LOCAL BANKS view of either the CFWC or the local party committee. In the cases of the GDB, SZDB, CMB, SPDB, and FIB, the pro- Formed largely out of a bargain between local govern- vincial or city party committee still has a large influence on ments and the central government concerning the control of personnel appointments, while the central government still financial assets, the local banks, or city commercial banks, has significant influence on Huaxia and Everbright. As an have played an increasing role in local economies. Theoreti- example of the state’s continual power, the State Council, cally, their local characteristics should give them an infor- China’s cabinet, ordered China Everbright Bank to take over mation advantage over lending to small local enterprises, and both good and bad assets of the defunct China Investment their initial profits reflect this advantage. However, with man- Bank in 1998. Ultimately, the state’s appointment power agers all appointed by the local party secretary, local banks means that joint-stock banks have to take into account local have essentially become the policy arm of the local govern- and national developmental objectives when they conduct ment, which bodes ill for their future well being. their business. The 90 local banks which currently operate in cities The only “independent” bank in China today is the China around China all came into being between 1995 and 1999, Minsheng Bank, which is only subjected to PBOC regula- when the central government allowed local governments to tory oversight. Formed in 1995 by members of the newly consolidate urban credit cooperatives into banks. Their reg- reformed China Industry and Commerce Association, a gov- istered capital upon founding ranged between 1.8 billion ernment sponsored trade association, the China Minsheng RMB in Shenzhen to 100 million RMB is small cities.25 By Bank’s founding mission was to provide capital to the newly the end of 1999, their total financial assets had grown to 451 emerging private sector. Upon its founding, the then vice- billion RMB, or 3.6% of China’s total. Their $161 billion premier and governor of the PBOC Zhu Rongji gave his per- US loan portfolio in 1999 was 3% of total outstanding loans, sonal blessing to the bank’s mostly private board of direc- although this figure has increased somewhat since then.26 In tors.24 Right before its IPO, government entities owned a 1999, 80% of city banks’ customers were small and medium mere 10% of Minsheng’s shares. Because Minsheng Bank is enterprises (SMEs), both state owned and private.27 the newest of the joint-stock banks it is still unclear whether Although local bank lending still constitutes a small part or not it will outperform other joint-stock banks. However, of overall lending in China, their focus on small local enter- its independent ownership status certainly allows it to ap- prises means that they spend a considerable part of their fi-

Harvard Asia Quarterly 50 Autumn 2001 nancial assets on supporting the most dynamic part of the planting needs or for small-scale agricultural development. Chinese economy. Partially as a result, local bank profit as a Nevertheless, in 1999 over 45% of their 922 billion RMB percentage of total assets averaged 1.13% in 1998, while the loan portfolios went to township village enterprises (TVEs), same figure for state owned commercial banks averaged while only 33% went toward agricultural uses.30 Because of 0.12% in 1997. In places like Shenzhen and Shanghai, local a slump among the TVEs in the mid and late 1990s, RCCs banks earned a spectacular profit of upwards of 3% of as- are currently suffering from enormous losses, although the sets. The NPL ratio for the better local commercial banks exact amount of NPL among the RCCs is unknown. also tended to be less than 20% compared to the 25% plus figure for the state banks. 28 FUTURE OUTLOOK Despite these encouraging figures, there are strong reasons to think that local commercial banks are not and will Undoubtedly, the Chinese banking sector has made great not do well. First, the figures above are partially statistical strides toward commercialization in the 1990s. From a mere and accounting artifacts. Since local banks are all fairly new, fiscal arm of the government, the banking sector has gained their NPL level is bound to be lower than that of the state considerable autonomy and has diversified its ownership and banks. Typically, NPL for long-term loans does not become asset structure to a significant degree. Still, much remains to apparent until several years after the loan is extended be- be done. Three main questions seem important for the future cause borrowers tend to be able to pay interest with part of of the Chinese banking sector. First, can policies implemented the principal for the first few years. Moreover, since the as- after 1997 slow down the formation of new non-performing sets of local banks are heavily weighted in highly profitable loans? Second, will commercial banks be able to continue to urban centers like Shanghai, Beijing, and Tianjin, the overall diversify their portfolios, or will state policy force banks to profitability of local banks could merely be a result of the lend according to state objectives? Third, following the trend high profit ratio of the local banks in these cities and their set by the joint-stock banks, will shares of state banks be heavy statistical weight among the local banks. publicly traded? Ultimately, the answers to all three of these Besides these reasons, local governments still hold con- questions are contingent upon the degree of state interven- trolling shares in all local banks, making them a policy arm tion in the future. of the local government. Because of this ownership struc- At the end of 1997, Zhu Rongji chaired a special finance ture, managers in local banks are inevitably appointed by conference in which he exhorted the heads of the big state local party committees. At best, the local government en- banks to stop the creation of new NPL. In compliance, loan courages banks to lend recklessly in support of local growth. evaluation and approval in the Big Four banks have tight- At worst, local banks finance private projects for the local ened considerably in the past four years. Bank managers at party secretary. Particularly after the local and headquarters level the centralization of the big four must allow independent risk state banks, local banks have be- From a mere fiscal arm of the central or evaluation of loans and indepen- come the premier monetary tool local government, the banking sector has dent auditing of the borrowing for local government. In order to gained considerable autonomy and has company. Even with positive rec- bolster the amount of deposits in diversified its ownership and asset ommendations from risk evalu- local banks, local governments in structure to a significant degree. Yet, ators and auditors, a credit com- many places have required local much remains to be done. mittee at each level voted to ap- government units and enterprises prove or deny a loan. Institution- to deposit all of their money into ally at least, the days when the local banks. Apparently, the scale of this problem was such senior manager at each level approved all the loans seem that in 1999 the State Council was compelled to issue a spe- over. Nevertheless, whether large-scale creation of NPL has cial edict to forbid this practice.29 become a thing of the past remains an open question. The While the share of deposits held by local banks is be- primary reason for this uncertainty is that senior bank man- coming more significant, it is still uncertain whether they will agers are still bureaucrats whose careers depend on the ap- serve as a growth engine for SMEs or ultimately become proval of the state and the Party. When top bank managers another fiscal burden for the state, which will have to inject tightened the credit evaluation process, they did so as a re- capital into failing local banks. sponse to the stern directives of Zhu Rongji, not because they truly had a commercial incentive to maximize the banks’ prof- RURAL CREDIT COOPERATIVES its. In the future, if the political direction from the central leadership changes from one of careful lending to one of care- Formed during China’s commune period, rural credit co- free credit expansion, top bankers would comply similarly. operatives (RCCs) were at the center of rural finance through- As long as the ownership structure and appointment power out the Mao era. Even in 1999, the thousands of RCCs within the state banks and most of the joint-stock banks re- throughout China held over 1.3 RMB trillion in savings, or main the same, the minimization of NPL would largely de- 12% of total deposits. Until 1996, the Agricultural Bank of pend on the will of the political leadership. China managed both the balance sheets and personnel of The will of the political leadership, however, has already RCCs. Since then, RCCs have come under the supervision been breached in the past three years. In an attempt to jump- of the local branches of the PBOC. Their primary function start the economy through massive public works, the central today remains to provide small loans to farmers either to meet government has encouraged banks to provide hundreds of

Harvard Asia Quarterly Autumn 2001 51 billions in “supplementary capital” (peitao zijin) to public RMB (Renminbi Lilu Guanli Guiding). A Collection of Fi- work projects that are partially financed by central govern- nancial Regulations and Institutions: 1999- Vol. 1 (Jinrong ment bonds. Although the long-run profitability of these Guizhang Zhidu Xuanbian: 1999- Vol. 1). Beijing: China projects is doubtful, banks, including state banks, joint-stock Financial Publisher. Pp.138-142. banks, and local banks, are competing to provide finance to 7 Interview with an official, 3/19/01 in Beijing. these projects. Not only did this policy speed up lending among 8 The Statistical Division of the PBOC. 2000. Pp. 11, 17, banks once again, it also constituted direct state intervention 18-19. into banks’ lending portfolios. Continual state intervention 9 In the US, for example, the Federal Reserve provides only might set an upper limit on the extent to which banks can short-term loans in small amounts to a bank with liquidity diversify into more profitable areas, such as consumer loans. trouble. This occurs rarely because it indicates serious fi- Ultimately, only a fundamental shift in bank ownership nancial trouble on the part of the bank, and banks usually try structure from the current state dominated one to a mostly to solve their liquidity problems through the inter-bank mar- privately held one will allow banks to gain operational inde- ket. pendence from the government. However, government at all 10 Yan Haiwang. 1999. Concretely Strengthen Party Build- levels of the Chinese political system has enormous disincen- ing in the Financial System (xitong) to Create a Solid Orga- tive to let go of its control of the banking sector. For the cen- nizational Guarantee for the Reform and Development in tral government, banks have served as a powerful policy in- the Financial Sector (Qieshi Jiaqiang Jinrong Xitong Dangde strument to guard against its two biggest fears: inflation and Jianshe wei Jinrong Gaige he Fazhan Tigong Jianqiang de recession. Since the reform, the central government has used Zuzhi Baozheng). In the Organizational Department of the control over the banking sector to pump money into the Central Finance Working Group eds. A Practical Guide to economy to maintain high growth. If inflation reached an Party Organization Work (Dang de Zuzhi Gongzuo Shiyong alarming level, the central government could always apply Shouce). Beijing: Central Party School Publisher. pp. 1-9. the ax to cut down on money supply. Given the ineffective- 11 Interview with an official, 4/15/01 in Beijing. ness of normal monetary policy tools such as interest rate and 12 ICBC. 2000. ICBC’s Consumer Lending Grows Speedily open market activities, the central government is unlikely to (Gongshang Yinhang de Geren Xiaofei Daikuan Zengzhang give up its control over the banking sector in the near future. Xuncu). 8/7/00. Available at www.icbc.com.cn; interview For the local government, banks have served as a primary with banking official, 11/27/00. instrument for local economic growth, which determined the 13 CCB. 2000. New Loans Attuned to Consumers. 10/10/ promotion prospect of a local official. As such, local officials 00. Available on www.ccb.com.cn. have no incentive to privatize local or joint-stock banks; the 14 O’Niell, Mark. 2000. China’s Bad Loan Dive 10%. South center had to fight tooth and nail with the local government China Morning Post. 1/18/01. Available on www.scmp.com. for control over the big state banks. Privatizing and listing 15 The Statistical Division of the PBOC. 2000. Pp. 20-23. shares of the state banks and most of the local banks remain a 16 ICBC. 2000. In the First Half of This Year, ICBC Com- distant possibility. mits 54 Billion in Fixed Asset Loans (Gonghang Experts have also suggested splitting up the Big Four Shangbannian Toufang Guding Zichang Daikuan 540 yi). 7/ banks into many smaller banks and then privatizing them one 11/00. Available at www.icbc.com.cn by one, but the top leadership has shown little interest in this 17 BOC. 2000. BOC Actively Supports State Basic Installa- proposal. Without a fundamental change in bank ownership, tion Construction (Zhonghang Jiji Zhichi Guojia Jichu Sheshi however, China is only waiting for its own financial crisis. Jianshe). 1/12/00. Available at www.boc.com.cn 18 Lardy, 2001. 19 Interviews with officials, 10/10/00, 2/10/01 in Beijing. 20 The Statistical Division of the PBOC. 2000. p. 11. 21 Ibid. pp.14-17. 22 See The Head Office of ADBC eds. 1999. A Collection ENDNOTES of ADBC Regulations and Institutions (Zhongguo Nungye Fazhan Yinhang Guizhang Zhidu Huibian). Beijing: China 1 Figure from 2/2001; RMB-USD exchange rate set at 8.2. Financial Publisher. National Bureau of Statistics. 2000. China Monthly Economic 23 Interview with an official, 4/15/01 in Beijing. Indicators. Vol. 12 (3/2001), p. 54. 24 Li Qing. 2000. Understanding Minsheng Bank (Banshi 2 Zhan Xiangyang. 2000. Lun Zhongguo Buliang Zhaiquan Minsheng Yinhang). Finance and Economics (Caijing). #12, Zhaiwu de Huajie (On the Dissolution of Bad Debt and Bad 2000. Available at www.caijing.homeway.com.cn Debt Obligations in China). Beijing: Zhongguo Jinrong 25 Han, Wenliang. 2000. An Analysis of the Efficiency of Chubanshe, p. 39. Local Banks in China (Zhongguo Difangxing Yinhang Xiaolu 3 Lardy, Nicholas. 2001. China’s worsening debts. The Fi- Fenxi). Beijing: China Finance Publisher. Pp. 72-76. nancial Times. 6/21/2001. 26 The Statistical Division of the PBOC. 2000. Pp.11, 39. 4 Interview with officials, 9/25/00 and 10/8/00 in Beijing. 27 Han, p. 71. 5 The Statistical Division of the PBOC. 2000. Financial Sta- 28 Ibid. pp. 82-86 tistics of China: 1997-1999 (Zhongguo Jinrong Tongji: 1997- 29Bureau of Economic Prediction of the State Information 1999). Beijing: China Financial Publisher, p. 128. Center (Guojia Xinxi Zhongxin Jingji Yucebu) 1999. “Se- 6 PBOC. 1999. Regulations on Interest Rate Management for verely prohibit forcing enterprises to deposit money in speci-

Harvard Asia Quarterly 52 Autumn 2001 fied financial institutions (Yanjin qiangling qiye shiye danwei zai zhiding jinrong jigou cunkuan).” Chinese Macroeconomic Signals (Zhongguo Hongguan Jingji Xinxi) 1999(1). 30 The Statistical Division of the PBOC, 2000, p. 43.

Enjoyed reading this issue? Order the Harvard Asia Quarterly

Please return this section with your payment in US Dollars, payable to “Harvard Asia Quarterly”.

(Please PRINT clearly)

Name: ______Return this form with your payment to: Mailing Address:______HARVARD ASIA QUARTERLY ______C/O HARVARD ASIA CENTER ______1737 CAMBRIDGE STREET ______CAMBRIDGE, MA 02138 USA E-mail: ______

Rates (postage included): Domestic orders USD $28 (within the United States). International orders USD $45 (for all countries outside the United States)

Or subscribe online at: www.haqonline.org

Harvard Asia Quarterly Autumn 2001 53 IS CHINA’S JUDICIARY READY FOR WTO ENTRY?

BY QINGJIANG KONG ith China’s entry to the World Trade Organi- zation (WTO) expected before the end of the year, Qingjiang Kong is a visiting research fellow at the East Asian Wthere has been growing concern as to whether the Institute, National University of Singapore. The author would country’s judiciary is equal to the challenges ahead. Despite like to thank an anonymous reviewer and Dr. Elspeth Thomson recent efforts at reform, the Chinese judicial system – the for their valuable comments and assistance. strength of which will be crucial to the enforcement of the WTO agreements – is still lacking the fundamental safeguards generally considered necessary by international standards. Given the gap between the current reality and the requirements of the WTO agreements, China’s judicial system is set to encounter its biggest challenge ever. This article identifies five main areas of weakness in the judicial system, and provides an overview of China’s preparations for WTO entry. While the present efforts at reform will move China in the direction of conforming with the WTO agreements, further concerted measures will be necessary to address fundamental structural defects in the judicial system.

WTO REQUIREMENTS FOR MEMBER STATES

While the WTO agreements do not require the establishment of tribunals or procedures inconsistent with a member state’s constitution or with the nature of its legal system, it is unlikely that China can exploit this exception to encase its existing system in a protective bubble. In the cases of some member states, WTO provisions on judicial standards have been presented in such a detailed way as to amount to an obligation to substantially revise their judicial systems, particularly their systems of judicial review. The WTO agreements include the General Agreement on Tariffs and Trade (GATT)1 , the General Agreement on Trade in Services (GATS), and the Agreement on Trade Re- lated Aspects of Intellectual Property (TRIPS). These agreements lay down rules for instituting proper judicial procedures which ensure prompt review of administrative decisions and provide appropriate remedies where justified. For example, Article X (3)(b) of GATT provides that each contracting party shall maintain, or institute as soon as practicable, judicial, arbitral or administrative tribunals or procedures for the prompt review and correction of administrative action relating to customs matters. See also Article VI (2)(a) of GATS and Article 41(1) of TRIPS.2 The WTO requirements pose particular challenges to the Chinese judiciary. First of all, besides creating rights and obligations between member states, the WTO treaties require domestic mechanisms through which private parties can defend their rights. TRIPS is an example. It requires members to provide private entities with legal remedies under domestic law. There are two ways in which private enforcement of WTO agreements can occur: enforcement by a private party against its own state, and enforcement by a

Harvard Asia Quarterly 54 Autumn 2001 private party against another WTO member, either in the discretion in determining how the rules are to be applied. jurisdiction of that country or in an international forum. While Such interpretative leeway has special significance in a coun- the WTO dispute settlement mechanism should be able to try such as China whose judiciary is not well insulated from resolve trade disputes between the Chinese government and local political vicissitudes, and poses obstacles to the attain- other member states, the resolution of disputes between ment of legal uniformity. Chinese and foreign companies will rely largely on China’s legal system. Foreign companies in China will look to the THE STRUCTURE OF THE CHINESE JUDICIARY domestic courts to enforce their rights under the WTO agreements against the Chinese government. In these difficult situ- The structure of the court system is as follows: The Na- ations, Chinese judges will be forced to choose between their tional People’s Congress operates at the top, below which is government and the foreign companies. the Supreme People’s Court. This organ oversees the 30 Not only can private enforcement disrupt the Chinese higher level people’s courts, such as the centrally adminis- government’s control of its judiciary, conflicts between the tered city courts of Shanghai and Beijing, provincial courts, judiciary and the government can arise from the fact that and the courts of autonomous regions like Tibet and Xinjiang. WTO Panel and Appellate Body Reports are legally bind- Below this level are the 389 intermediate level people’s courts ing upon WTO member states. A foreign private party at- which operate at the prefectural level. The lowest level of tempting to defend its interests vis-à-vis a member state the court system is that of the “basic level people’s courts”, (found by the Panel have acted in violation of the WTO agree- of which there are over three thousand. Sparsely populated ments) can enforce its findings in regions are overseen not by a the member state’s judicial system. single court but by a mobile tribu- As a result, the Chinese judiciary nal. Whatever the level of the can be bound by WTO decisions [M]any shortcomings need to be court, however, the local govern- that declare actions of its own state addressed before China’s judiciary can ment is responsible for oversee- illegal. Such conflicts of interest be considered mature. Particular ing the judiciary’s performance. will only increase with time: the problems are the lack of judicial In keeping with the dual number of trade-related disputes – independence; low levels of structure of the Chinese govern- and the concomitant strain on the professionalism; rampant corruption; ment, every court is overseen by Chinese judiciary – will likely in- weak, inconsistent enforcement of the two governmental bodies, one rep- crease substantially after China be- law; and poor transparency. resenting the state and the other comes a member of the WTO. representing the Chinese Commu- Another significant require- nist Party (CCP). This parallel ment of the WTO agreements is that structure is manifested in the ju- all laws and judicial decisions be made available to the pub- diciary through the co-existence of the court president’s ad- lic. Article X(1) of GATT provides that “[l]aws and regula- ministration, known as the Adjudication Committee, and the tions, judicial decisions and administrative rulings of gen- local party committee, sometimes referred to as the “Politi- eral application, made effective by any contracting party… cal-Legal Committee.” The government– whether city, county, shall be published promptly in such a manner as to enable prefectural, provincial or national –appoints the court presi- governments and traders to become acquainted with them.”3 dent at the corresponding level, and it is the role of the presi- If adhered to, these provisions will require the Chinese judi- dent to review every decision of the court and to intervene in ciary to increase transparency to levels that threaten its link- the most important cases if necessary. In this regard, the presi- ages with the Party and other government organs. dent is also a judge and is subject to the same review process The WTO’s demand for uniformity in the application by the government as other judges. of its legal provisions will also present a challenge to the Chinese judiciary. Article XVI(4) of the Agreement Estab- FIVE WEAKNESSES IN THE CHINESE JUDICIAL SYSTEM lishing the World Trade Organization provides that “[e]ach Member shall ensure the conformity of its laws, regulations Although the Chinese government has often taken of- and administrative procedures with its obligations as pro- fense at foreign criticism of its judicial system, many short- vided in the annexed Agreements.” Article X(3)(a) of the comings need to be addressed before China’s judiciary can GATT further creates an obligation for the WTO Member be considered mature. Particular problems are the lack of States to “administer in a uniform, impartial and reasonable judicial independence; low levels of professionalism; ram- manner all its laws, regulations, decisions and rulings.”4 Such pant corruption; weak, inconsistent enforcement of the law; uniformity will be a tall order for the Chinese judiciary to and poor transparency. fulfill, due to its decentralized nature and oversight by vari- China is a vast, multi-ethnic country in which all local ous levels of government. powers theoretically stem from the central government. Even Besides explicit rules, the WTO places additional de- regions with large populations of ethnic minorities and a mands on its member states’ judiciaries and law enforcers in certain degree of self-government, such as Tibet and the form of standards not specific enough to be directly ap- Xinjiang, are limited in their political autonomy. Yet with plied.5 An example is Article XX of GATT, which requires the introduction of economic reforms whose implementa- further interpretation in order to be applicable.6 By implica- tion necessitated devolution of power, localities have been tion, the judiciaries of member states have to exercise their given more authority and thus more power to administer

Harvard Asia Quarterly Autumn 2001 55 their economies. Driven by regional and local interests, lead- in decision-making. Judicial independence will never be ers have become less obedient toward the central govern- fully realized without the clear-cut separation of powers be- ment. As a result, centrally-promulgated regulations are tween the executive, legislative and judicial branches of gov- unevenly implemented at local levels.7 Governments in ernment. many localities are not motivated to implement laws and It seems unlikely that the Chinese judiciary will throw regulations that fail to bring them direct benefits.8 The dis- off its yoke in the near future, given official hostility to nec- obedience of local authorities often takes the form of inter- essary reform measures. President Jiang Zemin delivered a ference with local judicial procedures, particularly in the blow to judicial independence in a recent speech denounc- unenforcement of judgments against local interests. The de- ing the principle of separation of powers. Speaking in July centralization of authority which has taken place over the 2001 to commemorate the 80th anniversary of the Chinese past two decades, while essential to China’s program of rapid Communist Party, Jiang stated that “[w]e must resolutely economic reform, has in many ways reinforced the flaws in resist the impact of Western political models such as the the country’s legal system. multi-party system or separation of powers among the executive, legislative and judicial branches.”12 JUDICIAL INDEPENDENCE PROFESSIONAL COMPETENCE The Chinese political environment is unfavorable to judicial independence. It is well known that the judiciary – Judges in China are not regarded as professionals re- like other crucial institutions including the banking system quiring rigorous training. Most are not university graduates, and the media – is still used by the Communist Party as an and many are former PLA officers. Moreover, court presi- instrument for the achievement of political ends. For ex- dents, vice presidents and other ranking court officials are ample, whenever the Party decides to launch a campaign, normally appointees from military, Party or government be it “strike hard at crime” or “fight the Falun Gong cult”, posts. Steps have been taken to help remedy this under-quali- the Supreme People’s Court responds by calling all the “ju- fication, chief among them being the 1995 Judges Law, which dicial cadres and policemen” (or “sifa gan jing”, which re- requires judges to be graduates of tertiary educational insti- fers to all staff within the court system) to carry out the tutions and possess specialized legal knowledge.13 Judges task. There is an intrinsic conflict between the judiciary’s appointed before the enactment of this law who do not meet assigned political function and its natural function as a neu- such standards must undergo extra training, which takes place tral arbitrator. Courts dedicated to impartiality should not through court-sponsored training programs such as “Spare be used by the Party to promote political goals. Time Universities” (yeyu daxue) affiliated with High or In- In China, judges are Commu- termediate People’s Courts. nist Party cadres, and are selected As a result of their lack of and appointed by either the Party formal training, Chinese judges The decentralization of authority which are not creative in their interpre- Committee within the court or by has taken place over the past two the local Party Committee.9 tation and application of laws, decades, while essential to China’s tending to rely on existing rules Culled from demobilized, program of rapid economic reform, has undereducated soldiers, judges when adjudicating cases. In- in many ways reinforced the flaws in the stead of taking initiative in ap- are selected, evaluated and sup- country’s legal system. ported by Party committees. Al- plying laws in novel situations, though the court system is orga- they rely heavily on superior nized according to a clear, hierarchical structure, designated courts for interpretations and directives. adjudication pathways are often interpreted in a way that allows for higher level courts to simply reach down and CORRUPTION interfere in the outcome of lower level decisions, causing undesirable political oversight and personal influence. In Corruption is widespread in China, and the judiciary is most cases judgments are rendered not by the judge ap- no exception. Xiao Yang, President of the Supreme People’s pointed to the case, but by a supervising bureaucracy. Court, admitted that 1,292 judges were punished in the year Although the Organizational Law of People’s Courts 2000 for “violation of Party and administrative rules and 46 and the Judges Law provide that court presidents, vice presi- for violation of law”.14 Han Zhubin, President of the Su- dents, chief judges of court divisions and local judges be preme People’s Procuratorate, raised the figure for indict- appointed by the standing committees of local People’s ment of “law enforcement officials” in 2000 to 4,626.15 A Congresses,10 these judicial officials are in practice recom- high-profile case is that of the ex-President of the Jiangxian mended by the local Party committee for the People’s Con- County People’s Court in Sanxi Province, who had served gress’ approval.11 In effect, this means that local political on that post for years before he was discovered to have been interests are usurping the judicial appointment system. extorting bribes and heading a local organized crime group. Moreover, courts are regarded as state organs, and judges Various reasons have been offered for the country’s well- may be former state officials. Collusion between judges and documented high levels of bribery.16 One study identified other officials is thus highly probable. Courts are also de- the following factors: inability of the legal system to keep pendent on political authorities for their budget, and their pace with economic change; underpaid officials; poor su- lack of financial self-sufficiency constrains their freedom pervision; no code of conduct for officials; ineffective law

Harvard Asia Quarterly 56 Autumn 2001 enforcement; close identification of the Party and govern- the authority to give courts at different levels directives, in ment; nepotism; and ambiguous, poorly drafted laws. the form of judicial interpretations, concerning the applica- In addition to these factors, the way trials are conducted tion of laws and regulations in relevant cases.22 In fact, its fosters corruption. For example, judges in China are involved directives are binding on courts across the country, thus as- in collecting evidence, a role left to other parties in common suming the same legal status as laws and regulations. law legal systems. This practice naturally creates opportunities and incentives for bribery and favoritism.17 Although PROGRESS IN CHINA’S JUDICIAL REFORM the Judges Law technically prohibits judges from meeting privately with litigants and their agents, this practice is still China’s judicial process has undergone massive reforms generally considered acceptable. To make matters worse, starting in 1996. They are best exemplified by the revised such meetings often occur over meals Criminal Procedure Law, promul- or in karaoke lounges where moni- gated that year. Since then, pres- toring is difficult. sure to reform China’s trial proce- [P]ressure to reform China’s trial dures has emerged from both in- ENFORCEMENT procedures has emerged from both side and outside the judiciary, and inside and outside the judiciary, and legal reform has been put on the Enforcement proceedings is an legal reform has been put on the national agenda. On February 20, area where both foreign and domes- national agenda. 1999, the Supreme People’s Court tic litigants often encounter difficul- formally unveiled its comprehen- ties. Backlogs of unenforced judgments stand as testimony sive and ambitious Outline of Five-year Reform of the to this fact. In many cases, local courts and government People’s Courts. The announced reforms include moves to- officials are coerced by local companies or placed under ward more independent exercise of judicial power, increased pressure by local government to delay or avoid the enforce- unity of the legal system and closer examination of foreign ment of court judgments.18 Xiao Yang, President of the Su- legal systems’ court and personnel management practices preme People’s Court, admitted this problem in his Work for lessons applicable to China’s specific conditions. Report of the Supreme People’s Court at the 4th Session of The Supreme People’s Court has already taken steps to the 9th National People’s Congress on March 10, 2001.19 eliminate inconsistent practices and local interference, The following bizarre case illustrates how difficult en- switching gradually from a two-fold leadership (shuangchong forcing a judgment in China can be. China Pencil Co. Ltd. lingdao) to vertical leadership (chuizhi lingdao). That means (Benbu Branch) lost in a lawsuit and was ordered by the that the supervising court will have more input into the se- Fengyang County People’s Court in Anhui Province to pay lection and appointment of ranking judicial staff of a lower 170,000 yuan. However, the company refused to pay. Upon court, an area which has hitherto been the exclusive domain request by the plaintiff, the court tried in vain to seize the of local Party Committees. property of the company. A local newspaper published an Also, as part of an effort to achieve greater judicial in- article using information provided by the court, arguing that dependence, reform is being carried out to give judges more China Pencil should honor the judgment. The company’s discretion in deciding cases. The principle of zhusheng director, annoyed by the report, sued the newspaper pub- faguan (“judge in charge”) is being implemented on a pilot lisher for defamation. Rather than dismissing the action as basis to allow selected judges greater autonomy in adjudi- groundless, the Intermediate People’s Court accepted the cation. However, conflicting campaigns continue to compli- defamation suit for hearing. cate this effort. The faguan cuoan jiuzezhi (“judges-be-responsible-for-wrongfully-adjudicated-cases”) movement, for TRANSPARENCY example, counteracts the efficacy of the former initiative. Since the development of the Outline of Five-year Re- Despite the provisions of procedural laws, judicial pro- form, Chinese courts, particularly those in major cities, have ceedings vary from case to case, which reduce their trans- been working hard to improve the professional standard of parency. Specific obstacles to transparency include advo- judges. Some courts have recruited law professors to assume cacy outside the courtroom and the interference by various judicial positions. For example, the Supreme People’s Court Party committees. Moreover, judgments are generally not has two former law professors serving as its vice-presidents. made public.20 Limited public access to the judgments of High People’s Courts or Intermediate People’s Courts in the Supreme People’s Court is of particular concern, since Shanghai, Beijing, Nanjing and Wuhan also have former law these judgments form the foundation of the system of legal faculty as ranking judges. precedents guiding lower courts. Other courts have sent their staff to study in universi- The judicial interpretations of the Supreme People’s ties. The Supreme People’s Court has formulated a plan for Court play a special role in the Chinese legal system., even systematically training presidents of Higher People’s Courts though the Constitution does not specify whether they have and of major Intermediate People’s Courts. The National legal force. However, for the uniform application of laws, Judges College, affiliated with the Supreme People’s Court, the National People’s Congress Standing Committee autho- has started to enroll selected judges in a series of training rizes the Supreme People’s Court to interpret laws and de- courses, including courses providing WTO-related training.23 crees relating to their specific application at trial.21 More- Some courts in major cities have also instituted their own over, the Supreme People’s Court has asserted that it has training programs for judges. These judicial reforms have

Harvard Asia Quarterly Autumn 2001 57 the potential to substantially improve the quality of the judi- tively enforce them. Since many of the WTO rules are not ciary over time.24 specific enough to be applied directly, Chinese judges also The Standing Committee of the National People’s Con- need to be trained to interpret the applicable rules in differ- gress and the State Council have also been identifying and ent contexts. Temporary training will not solve the prob- revising laws and regulations inconsistent with the WTO lem. One drastic way to reform the judiciary is to replace agreements.25 According to Chinese legislators, more than the incompetent judges with well-trained academic or prac- 1,300 national laws, administrative regulations and local ticing lawyers. regulations did not comply with the WTO agreements as of China’s impending WTO entry sets out demanding re- October 2000. However, it appears that substantive steps quirements for its judiciary and offers new incentives for are being taken to address this problem. The NPC and the institution-building in the judicial system. However, even State Council announced in 2001 that they will formulate 26 the government’s planned reforms will not necessarily cre- new administrative regulations, amend an estimated 140 na- ate a thoroughly independent judiciary. The judicial system’s tional laws and administrative regulations, and abolish an- inherent defects, coupled with China’s cumbrous political other 573. system, suggest that the Chinese judiciary may have diffi- Even with these changes, it is too soon to say that China’s culty implementing the WTO agreements. If the judiciary many judicial reforms have produced a workable system in is to fulfill its role in enforcing the WTO agreements, con- line with WTO requirements. The fundamental obstacle to certed efforts of structural reform on the part of the Party, judicial independence –interference legislature and administrative bod- by the Party – remains, even though ies must be carried out to address much has been done to shield the the judicial system’s vast structural judicial process. To achieve a truly The fundamental obstacle to judicial defects. independent judiciary, politically independence – interference by the sensitive reform must be instituted Party – remains, even though much to separate the judiciary from the has been done to shield the judicial Party and from other state authori- process. ENDNOTES ties. An intermediate solution would be to sever the financial and personnel links between the 1 GATT (General Agreement on Tariffs and Trade), the courts, the Party Committees and other authorities. In any precursor to the WTO, still forms the basis for the WTO. event, the effort of the judiciary must coincide with the en- 2 Article VI (2) (a) of GATS provides that “each member deavors of the legislature and administrative bodies to en- shall maintain or institute as soon as practicable judicial, sure that these changes on the books have meaning. arbitral or administrative tribunals or procedures which It will be impossible for China to immediately put into provide, at the request of an affected service supplier, for the place all the domestic laws and regulations required by the prompt review of, and where justified, appropriate remedies WTO agreements. Judges need to understand how to apply for, administrative decisions affecting trade in servicees.” WTO agreements and to give those agreements precedence Article 41(1) of TRIPS also sets out the obligations of member over domestic law when they conflict. If the priority of the governments to provide procedures and remedies under WTO agreements is established in judicial practice, the prob- domestic law to ensure that intellectual property rights can lems caused by domestic laws and regulations will be mini- be effectively enforced, by foreign right holders as well as mized. In addition to creating new laws, the laws already in by their own nationals. place need to be rigorously enforced. For example, although 3 Article 63 of TRIPS provides that “[l]aws and regulations, under the Administrative Procedure Law, a private party may and final judicial decisions and administrative rulings of take administrative action against the Chinese government general application, made effective by a Member pertaining for damages incurred as a result of non-compliance if it con- to the subject matter of this Agreement… shall be published, stitutes a “specific administrative act”, this right exists more or where such publication is not practicable made publicly 26 in theory than reality. Other regulations also have yet to be available, in a national language, in such a manner as to enable substantively enforced. Article VI of the GATS and Article governments and right holders to become acquainted with 41(4) of the TRIPS provide for judicial review of adminis- them.” trative decisions, but such review has so far failed to materi- 4 Article XXIV(12) provides that WTO Member States “shall alize. take such reasonable measures as may be available to it to In sum, China’s successful integration into the WTO ensure observance of the provisions of this Agreement by requires the following: a re-examination of judicial inter- the regional and local governments and authorities within its pretations; the removal of domestic rules limiting judicial territories.” powers; strengthening of judicial independence, profession- 5 Professor Zhao Weitian, a renowned Chinese expert on alism and training; and the establishment of the precedence WTO law, explains that “rules” refer to laws governing of WTO agreements over domestic laws. conditions foreseen extante and specifically laid down in the WTO agreements, while “standards” are laws requiring CONCLUSION judicial interpretation when being applied. See Zhao Weitian, WTO and International Law (WTO yu guojifa), available at Judges in China need to become better acquainted with . For example, a law making the rules of the WTO agreements before they can effec- driving over sixty miles an hour illegal is a rule, while a law Harvard Asia Quarterly 58 Autumn 2001 making reckless driving illegal is a standard. In the former, Standing Committee of the 5th National People’s Congress the court does not have to interpret the law in order to apply on June 10 1981. it; it merely has to determine as a question of fact whether 22 See the Supreme People’s Court, Several Provisions the accused was driving over sixty miles an hour or not. In concerning Judicial Interpretations (June 23 1997). The the latter example, however, the court will have to interpret Interpretations on Certain Questions regarding the the term “recklessness” before it can apply the law. Administrative Procedure Law (Supreme People’s Court, 6 The article provides, among other things, that “…nothing 2000) is an example. in this Agreement shall be construed to prevent the adoption 23 Cao Jianming, Vice-President of the Supreme People’s or enforcement by any contracting party of measures: (a) nec- Court released the information in a seminar in February 2001. essary to protect public morals; (b) necessary to protect hu- For a report of the seminar, see Shao Zongwei, Supreme court man, animal or plant life or health; …” gets ready for WTO entry, China Daily, February 22, 2001. 7 For an analysis of the decentralization process in China, 24 See Jianfu Chen, Judicial Reform in China, CCH’s China see Li Donglu, The Trend of Economic Decentralization and Law Update, May 2000, p.7. its Impact on Foreign Policies (in Chinese), Strategy and 25 See the US-China Business Council, Toward WTO: Management (Zhanlue yu guanli), vol. 6, 1996, pp. 44-49. Highlights of PRC Implementation Efforts to Date (June 8 According to a survey by the State Commission for 2001). Economic Reconstructuring (SCER), which was directed 26 Article 67 of the Administrative Procedure Law provides toward local officials throughout the country, two-thirds of that “[a] citizen, a legal person or any other organizations the official respondants stated that “for the sake of local who suffers from damages because of infringement upon his interests, even if there exist constraints by the [central] policy, or its lawful rights and interests by a specific administrative we will make it work for us”. See SCER, Comprehensive act of an administrative organ or the personnel of an Investigative Report of Local Officials in China, Management administrative organ, shall have the right to claim World (Guanli shijie), 1996, Issue 2, quoted from British compensation”. Foreign citizens share the same rights as Council (ed.), Special Volume for British Law Week in China- Chinese on the basis of reciprocity. Article 71 provides that Introduction to British and Chinese Law, Beijing: Law Press “(f)oreign nationals, stateless persons and foreign and Butterworths Asia, 1999, p. 375. See Voice of China organizations that are engaged in administrative suits in the Monthly (Huasheng yuebao), vol.5, 2000. People’s Republic of China shall have the same litigation 9 It is well known that cadre administration or personnel affairs rights and obligations as citizens and organizations of the are within the exclusive purview of the Party. A cadre is People’s Republic of China”. Note that the same law appointed, recommended for office, “administered” and commands courts to reject litigation against “specific removed by a corresponding Party committee according to administrative acts that shall, as provided by law, be finally his rank. decided by an administrative organ” and against 10 Article 35 of the Organizational Law of People’s Courts administrative orders with general binding nature. Private and Article 11 of the Judges Law. parties cannot challenge the non-conforming laws and 11 At each level (the central level and various local levels), regulations per se. See Article 12 (2) of the Administrative there is a nomenklatura, upon which the positions of court Procedure Law. presidents and vice-presidents are listed. The positions listed in the nomenklatura are controlled by the Party Organization Department at the corresponding level. 12 For the text of this speech, see . 13 Article 9 of the Judges Law. 14 See Gazette of the Supreme People’s Court, 2001 (2), p.43. 15 See Communique of Supreme People’s Procuratorate, 2001 (2), p.6. 16 See H. Chu “Perfecting China’s Legal System to Fight Crimes of Bribery”, in Guiguo Wang et al. (eds), Legal developments in China: Market Economy and Law, Sweet & Maxwell, 1996, pp. 325, 327-328. 17 See Article 64 of Civil Procedure Law. 18 For the case report, see the website of the People’s Court Daily: . 19 See Gazette of the Supreme People’s Court, 2001 (2), p. 44. 20 From time to time, the Supreme People’s Court publishes selected cases in print and on the website of the People’s Court Daily (). 21 Resolution regarding the Strengthening of Legal Interpretation Work, promulgated by the 19th Session of the

Harvard Asia Quarterly Autumn 2001 59 ASIAN STUDIES EVENTS AT HARVARD AUTUMN, 2001

SUGATA BOSE: “CRUCIBLE OF CONFLICT, CRADLE highlighted recent research that vindicates a long-standing OF PEACE: KASHMIR IN HISTORICAL PERSPECTIVE” political project whose aim is to encourage India, Pakistan September 28, 2001 and the Kashmiri people to share sovereignty over Jammu BY RAHUL SAGAR and Kashmir. Standing in distinct opposition to the “easy” (and bloody) solution of partition on any communal basis, In a lucid forty-five minute presentation Professor Sugata Professor Bose argued for a replacement of the notion of Bose presented an enlightening set of perspectives on his- sovereignty with one of “authority”. Dismissing other alter- torical factors that originally contributed to the rise of the native mechanism such as plebiscites as unfeasible and ‘Kashmir imbroglio’ and have since prevented a peaceful founded on risible communal grounds, he also made a case settlement of the dispute. Professor Bose began his talk on a for a “soft borders” approach combined, perhaps, with a “joint pointed note that ultimately provided the basis for his hu- working group” mechanism as currently being used by the manistic conclusion: that territorial gain rather than the British in Northern Ireland. Indeed it is not without some people’s pain has determined much of Kashmir’s fate. Not irony that Professor Bose noted how the British have moved surprisingly, this theme dominated much of the discussion ahead to engage with new ideas of sovereignty – through that followed the talk itself. proposals for devolution and autonomy – while India, Paki- Succinct in its historical sweep, Professor Bose’s talk stan and Kashmir remain trapped in the worst of traditional crisply outlined two issues of tremendous political signifi- modernism. cance in contemporary South Asia. First, he discussed the This was the first of a series of talks on South Asian disastrous consequences of the British response to the In- history by Professor Sugata Bose, the new Gardiner Profes- dian Mutiny of 1857. Whereas previously the British response sor at the History Department of the Faculty of Arts and Sci- to the politics of the sub-continent had reflected the domi- ences (FAS) at Harvard University. nant local tradition of layered and shared sovereignties between interconnected rulers, the post-1857 period saw the British impose a distinctly clientist relationship upon local DURBA GHOSH: “HOUSEHOLD CRIMES AND DO- rulers, guaranteeing them their kingship in return for subser- MESTIC ORDER: KEEPING THE PEACE IN COLONIAL vience. In the case of Kashmir, this guarantee allowed the INDIA, 1774-1833” Hindu rulers to withdraw from the intricate network of cross- September 28, 2001 cultural and religious patronage that had previously provided BY HOLLY GAYLEY popular legitimacy in favor of a one-dimensional pursuit of Hindu religiosity – in a state where the majority of the popu- In the South Asia Humanities Seminar’s first lecture this lace was Muslim. This began a process of religious-political fall, Dr. Durba Ghosh discussed the British “consolidation identities setting the tone for Kashmiri politics over the next of imperial patriarchy” between 1774-1833. During this pe- century with both ruler and ruled referring to religious sym- riod, the newly established courts began hearing cases from bols outside the state as legitimizing their temporal position. so-called “native” women against the rank and file of the The second issue that Professor Bose discussed reflected East India Company. In one of the more gruesome examples, a popular trend in Indian historiography, namely illustrating a ten year old girl surfaced in a Calcutta barracks, disheveled the perverse effects that prevailing modern notions of sover- with a “bloody petticoat,” but the British soldier who raped eignty had on the Indian sub-continent after the departure of her was acquitted. According to Ghosh, women’s bodies acted the British in 1947. This “intrusion of the modern” into the as a stage for cultural battles during the expanding British sub-continent created the basis for a bloody partition of the domination of the subcontinent. sub-continent into India and Pakistan – a violent process that In her presentation on September 28, titled “Household encountered schizophrenia in the symbolic case of Kashmir. Crimes and Domestic Order: Keeping the Peace in Colonial The Muslim majority population of Kashmir is now crucial Calcutta,” Ghosh described a series of legal cases involving to both nations: to the Pakistani idea of two-nation theory the burglary, rape and murder of “native” women perpetrated (that the Muslims and Hindus of the sub-continent must be by British men, often their conjugal partners. Through these awarded separate nation-states) and to the state-constructed cases, judges began to formulate legal standards that were notion of a secular Indian state. intended to regulate the conduct of British citizens during Looking beyond the fragmentation caused by modern the turbulent origins of empire, but in effect they initiated a Westphalian notions of exclusive sovereignty, Professor Bose process of defining the legal status of so-called “natives.”

Harvard Asia Quarterly 60 Autumn 2001 The occasional conviction resulted only from “extreme cru- figures, such as Rama and Sita of the Ramayana. Moreover, elty,” such as the six-month sentence for a soldier who mur- she suggested that the hero’s victory over mythic demons dered his drunken concubine by throwing her into a well. To may have been a way for the dominant Indo-Aryan culture to their disadvantage in the courts, “native” women derived le- legitimize their annihilation of more primitive tribal peoples gal status on the basis of being employees of British citizens on the sub-continent. or members of a British household. In one example, through Over time, the forest gradually was referered to as vanam. what Ghosh called “the plausible narrative” of the defendant, Thapar explained that this is a familiar forest, being more a merchant won an innocent verdict despite stealing his proximate and interwoven with settlements while it retained concubine’s jewelry, arguing that it is impossible to rob one’s a “perceived division.” During the Buddha’s time, itinerant own house. According to Ghosh, a hallmark of the colonial monks and nuns remained in proximity to settlements on government was an effort to create the “image of fair treat- which they relied for alms, yet they maintained a life of ment and suggest protection for women” while maintaining homelessness and wandering in the forest. “sexual and social privilege.” As empires grew and kinship-based rule gave way to What made Dr. Ghosh’s presentation so unique was her “an impersonal structure of coercive authority,” land use and depiction of the complex social network between “native” revenue became tied. Inscriptions from Ashoka’s rule pro- women and their conjugal white male “keepers.” Feminist vided Thapar with evidence to trace forest regulations in the scholars in the past have examined broader political issues, form of land grants and the banning of slash-and-burn agri- such as the British abolition in 1829 of suttee, or female self- culture. As trade routes expanded during the Gupta era, immolation on the funeral pyres of their husbands. Ghosh Thapar suggested that control over tribes became more im- chose instead to focus on the subaltern in a study for which portant in order to safeguard travel through forested areas. others warned her she would never find enough documenta- As a result, forest dwellers became integrated into the caste tion. With stubborn resolve, she searched through stacks of system through servitude and intermarriage. legal records in Calcutta. The result was a subtle analysis of In a room so packed that even professors had to sit on gender and racial issues in the development of the rule of the floor, Romila Thapar captivated the audience with her law in colonial Calcutta. Moreover, Ghosh deftly exposed depictions of the subtle dichotomies and complementarities the British preoccupation with competing impulses of white between village and forest as they shifted over time. As she male privilege and moral justification for colonial rule. deftly pointed out, the evolving perception of the forest acted Dr. Durba Ghosh is an Andrew Mellon Postdoctoral Fel- as a foil by which settled communities could define them- low in Women’s Studies at Wellesley College. She received selves. The result was a bifurcation of culture and nature along her Ph.D. in History from UC Berkeley and was a lecturer at patriarchal lines. In the colonial era, the British preoccupa- Harvard last year. Her current interests include gender and tion with revenue and exploitation of land exaggerated this colonialism, as well as women’s issues in contemporary In- separation and led them to view the forest dweller, in Thapar’s dia. words, as “wild Dravidians” and “anachronisms to be marginalized.” Romila Thapar is a Professor Emeritus of Ancient In- ROMILA THAPAR: “PERCEIVING THE FOREST: AN- dian History at J. L. Nehru University in New Delhi. Her CIENT INDIA” most famous works include A History of India, Asoka and October 5, 2001 the Decline of the Mauryas, From Lineage to State and the recently published History and Beyond. BY HOLLY GAYLEY

In ancient India, the forest was viewed in many facets: YASHENG HUANG: “SELLING CHINA: FOREIGN DI- at times as a fictive paradise, a place of isolation from social RECT INVESTMENT DURING THE REFORM ERA” responsibilities for wandering ascetics, but more often as October 15, 2001 home to an array of demons: raksasas, gandharvas, asuras, BY MELODY CHU and pretas. What do these perceptions of the forest tell us about the social history of ancient India? In a lecture hosted by the Sanskrit and Indian Studies Department on October 5, On October 15, Yasheng Huang, associate professor at renowned historian Romila Thapar described the nuances and the Harvard Business School, gave a talk as part of the New implications of evolving perceptions of the forest through England China Seminar. His talk introduced his forthcoming historical narratives, archeological evidence and mythic tales. book, tentatively titled Selling China: Foreign Direct Invest- According to Dr. Thapar, the ancient use of aranya con- ment during the Reform Era. Prof. Huang discussed foreign noted a wild and remote place, the unpredictable space of direct investment (FDI) in China from a demand perspec- the unknown, occupied by demons and thieves who lived tive, rather than the supply perspective dominant in the con- outside the law of dharma or righteousness. In the epic pe- ventional wisdom concerning FDI. riod, the forest served as a liminal zone for the “forging and Prof. Huang began by emphasizing the importance of testing of human values,” a place where social convention FDI in the Chinese economy. Foreign trade accounts for about could be questioned or even disregarded. In this context, forty percent of China’s GDP, and China received about $200 Thapar argued, the forest became a metaphor for change. It billion in FDI in the 1990s. Fifteen percent of worldwide was both a hermitage of rishis and a land of exile for heroic FDI, and forty-nine percent of developing country FDI, flows to China. While the United States receives twice as much Harvard Asia Quarterly Autumn 2001 61 FDI, the US economy is seven times as large as China’s is rooted in the dominance of SOEs (state-owned enterprises) economy, so China’s relative dependency on FDI is much in getting financial opportunities and resources. While pri- higher. In addition, while FDI in developing countries is usu- vate firms are profit-oriented, they do not get the resources ally concentrated in specific industries, it is present in all they need to grow. The government retains its ideological industries in China. belief in the SOEs even if they are failing, and as a result, Prof. Huang discussed the lack of large private domes- private firms suffer. tic-run Chinese enterprises. While Chinese products are wide- Prof. Huang emphasized that the reason behind the im- spread on the global market, they are exported through for- portance of FDI in China’s economy is not solely the avail- eign companies. The main reason for this lack of indigenous ability of cheap domestic labor. He explained that FDI is not control over large firms is the difficulty that domestic entre- the only way to take advantage of cheap labor. In most labor- preneurs face in financing their companies through Chinese intensive industries, contractual relationships are the norm, banks. As a result, Chinese entrepreneurs turn to foreign firms and in most countries it is less common to have foreign own- for capital liquidity and protection. Private firms are denied ership. In China, however, foreigners own the large compa- access to China’s large savings pool, and so they cede equity nies in labor-intensive industries, and they rely less on con- control to access the financial resources of foreign compa- tractual relationships. Once again, this is because private firms nies. The result is that foreign companies dominate, while would not find the capital necessary to fulfill those contracts, solely domestic firms remain uncompetitive, even if they even if they could contract with foreign companies. possess the know-how necessary to run their businesses well. In conclusion, Prof. Huang discussed the implications The impact of China’s economic fragmentation on the of the important role of FDI in the Chinese economy. While ability of domestic firms to compete was also addressed. FDI has a positive benefit on the Chinese economy, and may Domestic firms are limited to local markets, in part because result in efficiency improvements, there is still an inefficient of government restrictions on domestic investment. As a re- allocation of resources in China. In creating a market sult, even if a domestic firm would be a better fit for a spe- economy, the Chinese reform strategy has worked, but it still cific market, it is often easier for foreign companies to in- lacks the mechanism to use China’s resources efficiently. The vest. This economic fragmentation, Prof. Huang postulated, government suppresses domestic entrepreneurship at the same time it imports foreign entrepreneurship. While it stresses the importance of external reforms like WTO entry, Prof. Huang argued that the Chinese Immigration Issues? government should be focusing on internal reforms. If you need to know more about living or staying in the United States, Attorney Mark Avery can provide valuable information about US Immigration laws. Find out about extending your stay in the United States, obtaining work authorization and getting a Green card.

Call Attorney Mark H. Avery today for a free consultation.

Student Visas Green Cards Work Visas Work Authorization Visitor Visas US Citizenship Business Visas Sponsorship

Law Offices of Mark H. Avery Post Office Box 862 Pembroke, MA 02359 ______Telephone: (781) 294 - 7855 Facsimile: (781) 294 - 7436 E-Mail: [email protected] Website: www.averylaw.com

Harvard Asia Quarterly 62 Autumn 2001 HARVARD EAST ASIA SOCIETY Graduate Student Conference 2002

Call for Papers

The Harvard East Asia Society presents its fifth annual Graduate Student Conference, FEBRUARY 23, 2002 at Harvard University. The conference provides an interdisciplinary forum for the exchange of ideas and the discussion of ongoing research in the field of East Asian studies. We invite graduate students in all academic disciplines dealing with East Asia to submit papers for consideration.

DEADLINES ABSTRACTS due DECEMBER 1st PAPERS due JANUARY 7th Electronic submissions are strongly encouraged

For all inquiries please access the HEAS Conference webpage at http://www.hcs.harvard.edu/~heas/conference2002.htm or write to [email protected].

~ The HEAS conference committee reserves the right to edit and decline papers based upon ~ ~ quality and thematic unity ~

______COOLIDGE HALL 102 • 1737 CAMBRIDGE STREET • CAMBRIDGE, MA 02138 Phone: 617 493 4884 • Fax: 617 495 4306

Harvard Asia Quarterly Autumn 2001 63 Enjoyed reading this issue? Advertise with the Harvard Asia Quarterly

Please return this section with your payment in US Dollars, payable to “Harvard Asia Quarterly”.

(Please PRINT clearly)

Company: ______Contact Name:______Return this form with your Address:______payment to: ______HARVARD ASIA QUARTERLY ______C/O HARVARD ASIA CENTER ______1737 CAMBRIDGE STREET E-mail: ______CAMBRIDGE, MA 02138 Phone: ______USA

Specifications Please send your advertisement as either: (1) an Adobe PageMaker file; (2) a .jpeg, .gif or .pdf file; (3) a Microsoft Word file

For faster processing, please submit your order form and advertisement through email: [email protected] If ordering by email, please send the check to the address above. Please retain a copy of this form for your records. A copy of the issue(s) for which you purchase an advertisement will be sent to you at the address you list above.

Advertisement Options (Please check one) Back Cover ($650) ______Inside Front Cover ($500) ______Inside Back Cover ($350) ______Full Page ($200) ______Half Page ($150) ______Quarter Page ($75) ______

Issue Options and Deadlines Winter (December 30, 2001) ______Ad Price: ______Spring (February 28, 2002) ______Number of Issues: ______Summer (April 15, 2002) ______Four-Issue Discount: ______Fall (October 15, 2002) ______Total Cost: ______

NOTE: We offer a 20% discount for ads placed in four consecutive issues.

Harvard Asia Quarterly 64 Autumn 2001