Jean-François Di Meglio : Internationalization of the Yuan: Perspectives and Realities

Jean-François Di Meglio

President ASIA Centre, Paris.

Introduction:

Until recent years, the question on the Chinese economy that left most audiences, even the best informed, silent and petrified, was: “what is China massively borrowing from abroad?” Since China is the world’s largest exporting nation and plays a key role in world trade, the best answers generally concerned “raw materials” (which are not borrowed but bought), or “polluting rights”. The right answer was hardly ever given: “China borrows abroad its means of payment”.

1.

Indeed, in its decisive modernization drive of the past 35 years, China has “thought about everything”, but was not able to “take care of everything”. For a long time, China failed to achieve the most difficult part, in its process of economic recovery, which is monetary independence. However, lack of independence does not mean lack of autonomy. For reasons which I will develop here, China has acted in the monetary domain somewhat as an “autonomous satellite”, but very differently from the rest of the world, by isolating its financial system from the convulsions in the rest of the world. But the era in which this attitude can prevail is coming to an end.

The traumas of Chinese history have quite a simple “narrative” as the Americans say: “China was a major world power and lost that position because of the incompetence of its political system and the abuses imposed by foreigners.” These trauma were usually monetary, and they are a history lesson deeply ingrained in the minds of the people and their leaders. The last regime to be overthrown on the continent was that of Chiang Kai-shek, forced to step down for economic and monetary reasons (runaway inflation and unchecked currency devaluations), and the most recent shift in Chinese history (China’s loss of influence in the world), was due to the monometallic regime adopted in XIXth century. By basing its monetary system exclusively on the silver metal standard, China was hit very hard, just as the other countries which had made the same choice, by the loss of its value relative to gold, for reasons essentially foreign to the Chinese economy.

The other trauma deeply embedded in the Chinese mentality, even though only partially transposable, is the “official” Chinese interpretation of the 1985 Plaza agreements and the increased “internationalization” of the yen.

Chinese analysts believe that Japan, which had ferociously resisted using the yen and clung to its sovereignty, was partially stripped of it through subjugation to a system dominated by the United States, which forced Japan to open up its capital markets, to use its currency for trade, including for investment, and brought about a “pseudo” (or real) overvaluation of the Japanese currency, provoking a stunning revaluation of the yen whose value doubled in dollars in just over one year.

The Chinese reading of that crisis is that the Japanese recession was caused by this phenomenon, and that China today must preserve at all costs the hard-fought gains against the world system of the last 35 years, by resisting any foreign assault.

That being said, China’s dependency on the U.S. dollar until the past few years is directly counter to that fear, but was inevitable for a long time. To end that dependency means that China has to build a developed financial system, with access to an obstacle-free market and with no economic fragility vis-à-vis the banking system. However, strangely enough, China has not invented its own financial instruments so far. It is merely modernizing, “liberal style”, its stock markets and organizing unmediated financing systems (interest rate markets) by launching bond markets, etc., but the road remains long.

The efforts required to reform the economy, prices, international trade as well as, it should be said, the convenience of using of a liquid, acknowledged currency, i.e., the dollar, have long postponed the idea of reforming the global financial system.

However, as China acts in the long-term, it would have been wrong to think that the postponement meant that such a strong, ingrained idea had been dropped: that of the need to change the system.

The 2008-2009 financial crisis increased the awareness that something needed to be done to get the system to change. In effect, during the first waves of the crisis, in 2007-2008, and at the first G20 summit meetings, China believed the time had come to invest in foreign financial systems, such as taking a share in the Royal Bank of Scotland, which turned into a disaster for China. From this, China learned the lesson that it might be drawn into a game where it would have no choice but to become ever more involved in a sick system. The turning point came on September 15, 2008, when Fannie Mae and Freddie Mac were nearly declared insolvent, following the Lehmann Brothers the dollar. China indicated its support by committing itself to remain an investor of reference, but in practice started “pulling out its marbles”.

That shift is now playing out with a reduction of dollar-dominated Chinese assets, a diversification carried out when the best trade-offs could be made against currencies “good to buy” , because they were low against the dollar, and a halt to the increase in currency reserves held by the Chinese central bank. All this occurred finally in 2014.

2.

Chinese monetary policy remained unchanged between 1992 and 2005 in certain ways, at least as concerns the exchange rate, capped at 8.18 renminbi per US dollar until July 2005, when the daily fluctuation band was widened for the first time. This decision let the Chinese currency begin to revalue against the US dollar, as indicated here (Graphic, Source UBS Hong Kong).

Two other policy orientations have been activated:

— The first, based in part on the Summer 2010 decision to partially liberalize exchange of the yuan on the Honk Kong market, was the expansion of the use of the yuan for international trade agreements (bilateral and international, both for Chinese exports and imports, other than raw materials). Today, the yuan, which has swap agreements with some twenty countries including major powers, is the fifth most used currency in world trade, at some 5%, admittedly far behind the US dollar (40 % of all trade) and even the euro (10 %).

— Second, the attempt to bring together similar, close, friendly countries, for example the “BRICS”, to anticipate a system of assistance and of possible pooling of liabilities and risks in a “BRICS bank”, envisaged at the Durban summit in 2011, which would allow them to forecast, soften and avoid crises “among themselves”, or even to create a parallel monetary system.

Those two attempts have had a limited impact, but that does not draw into question Chinese theory and action.

3.

The main debate with the Western world concerns, in spite of the shadow play around the issue of “parity” (in reality a fake issue whose limits have been acknowledged, even by US financial players), the level of engagement and responsibility accepted by China. China’s position is understandable, even if it is not expressed objectively: the priority is development of its own economy, and no “global” responsibility could be raised against that constraint, because of the consequences it would have worldwide: a slowdown of the Chinese economy would mean an economic crisis for the rest of the world, which had anticipated its rising power.

Far from the apparent debate on the exchange rate and the inclusion of the Chinese currency into the IMF’s Special Drawing Rights, the real issue for China is the validation of the global financial (IMF) “system as it is”, including a possible repositioning of China as a major player, or eventually as a “sparring partner” within a G2 format relationship with the US.

The answer is deliberately ambiguous, as China insists on offering guarantees in view of a review of the SDR basket in 2015, and bases itself on the IMF’s recent opinion that the Chinese currency is actually not undervalued.

One of the in-depth debates is also domestic, and in phase with the debate ongoing with the West: is the Chinese financial and monetary system “credible”, “reliable” and can it generate a “trust” in the original sense of the term, that is, a framework based on mutual trust? Considering the potential capital flight, hardly compensated lately by the accumulation of ever greater export related currency reserves, the answer is naturally negative. Above all, China has to give regain the trust of its own citizens. Its economic strength is not sufficient, because spoliation has been too frequent in Chinese history not to scare the “new rich” today (a class which includes the leaders or that they at least know very well). Yet a new spoliation threatens, as the country’s debt is no longer compensated by the perspective of a temporary stagnation in growth. Bankruptcies are emerging, the banking system has to be protected, and all of this cannot be done in the total openness that the West would like.

4.

Chinese creativity was particularly in demand in 2014, to handle various contradictions and constraints:

— First of all, they had to control the financial bubbles created by a real estate market financed by black money or capital attracted for lack of other investment alternatives.

— Second, they had to steer a sensitive monetary policy so the control of the monetary supply would avoid a “hard landing”.

There were then increasing announcements of the partial opening of capital accounts, which was accelerated by the invention of sophisticated mechanisms allowing more rapid investments on the stock markets of Shanghai and Shenzhen.

However, the issue was less to comply with international standards on open capital accounts, as the American Index MSCI pretended to believe, than to create an alternative to the drying up of investments via banks of the Chinese economy (over 200 % of GDP, public debt excluded). The motor of this opening was in fact the repatriation of “evaded” capital by stressing the risks of a possible collapse of the Chinese banking system in the event of a slowdown.

5. Between shadow play and domestic debate

China is, of course, not very transparent and wishes to remain, so especially in sensitive matters such as monetary issues. However, it is probable at this stage that China is keeping both options open: either progressively integrate the post Bretton Woods system with the risks long since largely identified and tested during the 2008 crisis, or invent cooperation with the glacis of dependent, sympathetic countries that share the same ambitions, a new regional and intraregional system, in any case international, but not global. That system could come out of the new Asian Infrastructure Investment Bank (AIIB), centered on China. Or, around the gas deals concluded with China, the possible first steps towards disconnecting trade in raw materials from the dollar market.

In any case, the construction of a “renminbi zone” has begun. Does it aim at becoming at some point important enough to impose its rules (more or less fixed parity between currencies, indexations on underlying assets, or different standards than the dollar) or is it simply a means of protection against a parallel system that China distrusts, but uses its “liberal” mechanics (especially for its investments in Europe)? That remains an open question which the debate might help to answer.

In the meantime, the Asian Infrastructure Investment Bank (AIIB) has created very great interest in Europe. China is interested in technology transfers in exchange for financing such infrastructure projects, and “non-recourse credit facilities”. The West could use that as a means of entering the relatively closed Chinese and Asian markets. But the AIIB could also become active in the future in Europe, where public capital for infrastructure might be lacking because of the deficits.

And if such investments take the Chinese non convertible currency out of its relative isolation, the international monetary system might welcome the diversification of a game which has been dominated by the dollar until now.

Jayshree Sengupta

Observer Research Foundation, New Delhi, India

India occupies a strategic position in Asia. It is surrounded by China, Nepal, Pakistan and Bangladesh. To its north is Russia. As is well known—the Twentieth century was the American Century but the Twenty First century is going to be the Asian Century. But achieve it we have to eradicate geopolitical wars and rebuild the weak nations in Asia.

India and China were the two richest countries in ancient times and according to Angus Maddison, the two largest economies by GDP output till the Eighteenth century. India excelled in various fields and its golden age was the Gupta period in 6th century AD. The British who colonized India for 200 years sent back to Britain huge amounts of money from India and it became poor.

During the Bengal Renaissance in the Nineteenth Century, people like Rabindra Nath Tagore tried to rediscover India’s glorious past through literature, painting and music. He established contact with Chinese scholars. Reformist religious movements led by Sri Aurobindo and Vivakanada instilled a feeling of nationalism and pride and the seeds of revolt against the British were sown. 

The British left India in 1947 and divided the country into two and Pakistan was born. Acrimonious relations began between the two from the time of Partition.

India and China developed very cordial relations after Independence under Nehru. But there was a war in 1962 on the boundary question that had been drawn by the British. But since China and India have a long history of peace, harmony, sharing of culture and philosophy, they have rebuilt good relations.

Rapprochement with China

The BRICS brings China and India closer together as it gives them a platform to resolve their problems and take a common stand on various global issues.

Recently Indian Prime Minister Narendra Modi went to China and President Xi Jinping gave him the Tang Dynasty welcome in his hometown Xian. 24 inter-governmental agreements were signed worth $22 billion in investments involving cooperation in various fields. The need for peace and tranquility on the border was recognized as an important guarantor for development and continued growth of bilateral relations.

A huge ($70 billion) amount of bilateral trade takes place between the two countries and India has a trade deficit of $38 billion with China—a matter of concern for India.

A breakthrough was reached between the two countries on the cultural front. Modi visited the Wild Goose Pagoda which was built to commemorate Xuan Zang, an ancient Chinese monk who went to India for Buddhist scriptures. In Beijing, in the Temple of Heaven there was a Yoga-Taichi event. Three Indian monks taught and promoted Buddhism there 1400 years ago. A programme on Gandhian studies was introduced in Fudan University.

China can help India in building infrastructure and in skill development. MOUs were signed in diverse fields like railways, skill and vocational training, mining, establishment of India-China think tank forum, climate change and ocean science. The two governments established sister towns and states in both countries. India can help China in many ways especially in IT, software and pharmaceuticals.

Modi said in China: “The prospects of the 21st century becoming the Asian century will depend in large measure on what India and China achieve individually and what they can do together.”

India and China together can help in the reconstruction of one of the poorest countries in the region, Nepal.

Trilateral Cooperation among Nepal, India and China

India and Nepal have been closely bonded since 1950 and today there is virtually no border between the two countries. India and Nepal are members of (SAARC) South Asian Agreement for Regional Cooperation where China is an observer. Today Nepal is faced with extreme poverty and underdevelopment.

Nepali people are still mostly engaged in low productivity agriculture which generates low incomes. It has a small manufacturing sector but it has a fast growing service sector. Nepal scores higher than India in World bank’s ‘Ease of doing business’.

Nepal, a country squeezed between two giants has to be friendly with both. There is a big shortage of power, infrastructure and job opportunities. Nepal’s migrant population sends home remittances which form a big part of the GDP.

Nepal has unparalleled natural beauty, a big potential for tourism and mighty rivers for generating hydro power. It is a repository of rare and diverse biological species. It is mainly a mountainous region and has a shortage of arable land. But there are areas where three crops can be grown. On the whole it cannot be a big exporter of agricultural produce but natural honey, rice, vegetables, herbs and fruits grow in abundance.

Nepal’s northern neighbor China is facing problems of rapid growth and high rate of urbanization. After three decades of double digit growth, it is facing economic slowdown, ageing population and problems of food safety. Its manufacturing growth has slowed down due to slack global demand and high labour costs. The Chinese government is also deliberately turning away from export led growth and concentrating on increasing domestic consumption and raising people’s incomes.

China is facing excess capacity in its industrial units and infrastructure but is also looking for outsourcing some of its production to remain competitive. Nepal can fill that role and become a base for assembling machine parts and components which is becoming more expensive in China.

China is aiming at a more equitable distribution of income and balanced growth between towns and villages. Agricultural production has become a major concern and China needs to focus on the quality of produce. There have been many cases of adulterated and contaminated food due to the presence of heavy metals on account of environmental pollution. Nepal though it is also an importer of rice can help in supplying ‘safe’ horticultural products. There can be investment by China in Nepal’s agricultural production for it to become a major supplier to Chinese markets.

China can encourage migrant labour from Nepal to work in its agricultural sector as Chinese villages are facing a problem of shortage of agricultural labour. China will be faced with a severe food problem in the future if people keep moving away from agriculture to manufacturing. It has 20 percent of the world’s population but only 7 per cent of world’s arable land.

Nepal’s physical closeness to Tibet is a plus point. Transportation of food via Nepal to Tibet is easier for China and it can set up food processing and packaging industries on the border between Nepal and Tibet. China’s help in infrastructure development in Nepal’s northern region can help boost Nepal’s own exports to China. Nepal can also attract more FDI from China which can help in its development and growth.

Nepal’s southern neighbor India is its biggest partner in trade and investment. India’s manufacturing growth has recently picked up after a period of stagnation and the Index of Industrial production (IIP) was at 8.4 per cent in the last quarter (January-March 2015). Its service sector growth is at 10.1 percent. India’s trade surplus ($2 billion) with Nepal is of great concern to the Nepali government.

It can be reduced by increasing exports through a smooth land route to India. India’s trade deficit with China can be reduced if there is a good road to China via Nepal. Proper infrastructure will lower transport costs between all three countries.

India can outsource some of its production to Nepal which has lower labour costs. There is no language or financial transfer problem between the two and many Indian industries have invested in Nepal. India can set up SEZs [special entreprise zones] along Nepal-India border that would benefit both the countries.

In hydro power and tourism, the possibilities for joint ventures and cooperation are immense. Thus Nepal can leverage the rapid growth on both Indian and Chinese sides due to its strategic geopolitical location, and ask for infrastructural assistance. There can be joint enterprises on both borders.

For future collaboration between India, China and Nepal, the investment climate in all three countries, especially Nepal and India, has to change. Both need more investment friendly policies with long term vision and strategy. Nepal needs political stability, strengthening of legal institutions and bridging other policy related gaps.

Nepal can become a New Transit Point economy between India and China. To be able to do so, already 19 sectors with potential for good export performance have been identified. India has to give easier access to Nepali goods and help build its physical and social infrastructure which will help in poverty reduction.

The trilateral cooperation between India and Nepal and China can enhance the living standards of the region. With a total population of around 2.8 billion people, the trilateral cooperation can lead to the emergence of a huge trade and investment bloc in the world.

Pakistan and India

Pakistan is India’s most problematic neighbor. Both India and Pakistan have large numbers of people living below poverty. Yet the two countries have gone to war three times.

Pakistan is also a member of the SAARC, yet trade between India and Pakistan is small at $2.3 billion and fraught with many problems with the gains from trade being denied to the people on both sides. There is still hope that with Prime Minister Nawab Sharif, trade and investment relations between India and Pakistan will improve.

Prime Minister Modi invited Nawaz Sharif to his inaugural ceremony in May 2014. India has agreed to give free access to 300 of Pakistan’s export items and has made visa process easier and eased the norms of opening banks in India.

While the normal trade has suffered, informal trade has flourished. The informal trade is more than $1 billion and it has a smuggling component as well as a third party component in which trade from India travels via Dubai or Singapore to Pakistan. Smuggling means a loss to the exchequer for both countries and for third country trade, the consumers suffer because transportation costs lead to higher prices.

Both countries have low human development indicators, rise in terrorist activities and low per capita incomes.

India granted Pakistan Most Favoured Nation (MFN) status in 1998 but Pakistan is still dithering and though the likelihood of its agreeing to give India, Non Discriminatory Market Access (another name for MFN) status has increased, it has not yet happened. If Pakistan gives NDMA to India it will automatically lead to bringing down tariffs and giving Indian goods the same treatment that it gives to others.

Pakistan however has moved from the positive list of 2000 goods that could be imported to a negative list of about 1200 items that cannot be imported. With acrimonious political relations for decades, the hope that trade will bring about peace is a difficult goal.

India is sour with Pakistan on many counts –especially about the Mumbai blast of 2008 in which Pakistan has refused to charge the accused, and its escalating nuclear programme.

Though a train service was started between Lahore and New Delhi, it has not been successful. There are fears of Pakistan-sponsored terrorism in India and there is deep suspicion of any political move to grant concessions to Pakistan.

Although foreign direct investment from Pakistan has recently been allowed into India, not much has come. Indian investment in Pakistan is also insignificant. The cause for this slow movement of investible capital across the borders is the lack of investor guarantee. Also, the problem of transferring money across the border — especially from India to Pakistan remains.

There are many possibilities for joint ventures that would be beneficial to the people on both sides, like food processing industries and IT, but there is very little forthcoming because of the perceived risk to capital. Unless this problem is solved, more job creating investment cannot take place.

While business contacts between the two countries are increasing, the governments’ stand remains cautious and restrained. Though the current trade volume is lower than its potential at $2.7 billion, there is scope for increasing trade to $10 billion in the next few years. Pakistan’s exports remain small at $541 million.

There are few good roads that can be used for trade between India and Pakistan and there are problems in rail transport. In April 2012, the two capitals launched a new integrated checkpoint at Attari-Wagah land border crossing which could increase trade through this sector at least tenfold. Both sides have also concluded a landmark visa agreement that loosens travel restrictions.

India is no doubt the biggest economy in the region and the smaller neighbors have reasons to feel threatened. India can encourage its business communities to be at the front line of trade liberalization. More contact between the Chambers of Commerce from both sides could dispel fears and usher in more cooperation. There is no doubt that producers would be happy importing low cost materials from either side.

India has to be liberal in allowing Pakistan to access third countries like Nepal, Bangladesh and Bhutan via its territory and Pakistan should give transit rights to India to access export markets in Afghanistan. This is essential in furthering regional trade that will include China, Iran and Turkey in the future trade orbit. Better infrastructure at the border like more warehousing, X Ray machines and testing laboratories are needed.

Both sides should remember that security and political tensions should not spill over into economic relations because thousands of lives are dependent on it. Suspension of trade due to isolated terrorist attack can be counter-productive and will lead to more fractured bilateral economic relations between two immediate neighbors.

Like in Nepal, China has been helping Pakistan for a long time. China’s investment in Pakistan on infrastructure of $46 billion recently has caused alarm in India. China is trying to open new trade routes between China and Central and South Asia and to develop the Pakistani port of Gwadar. China’s move is both economic and strategic and is likely to benefit the entire region by opening routes of connectivity between Asia and Europe.

Thus. the Asian century will happen if the geopolitical conflicts are eliminated and developing countries like Nepal and Pakistan are helped out of poverty by their big neighbours India and China. India, China and Pakistan spend millions of dollars on defence, which can be redirected to development and making this an Asian century.

Alain Corvez

International Strategy Consultant. Former International Relations Consultant of the Defense and Interior Ministries, Paris.

In his speech before the United Nations General Assembly on 24 September 2013, Iranian President Hassan Rouhani had some crucial things to say on how to improve relations among the nations of the world. Calling for moderation in the demands made by states, he suggested to do away with the formula “the military option is on the table”, and to adopt the approach of “peace is always possible”. He proposed the formula: “The world against violence and extremism”.

The world, he said, is not the result of a balance between two blocs, nor is it dominated by one single power, it has become multipolar and all states whose power basis rests upon the ballot box, that is which express of the will of the people, are entitled to the same respect of their specific characteristics and their legitimate interests. No culture is superior to the others and none should seek to impose itself.

Such a program, rooted in common-sense and universal humanism, is apparently not applied today, since endless conflicts have broken out everywhere, especially in the Mideast, but also in the center of Europe with Ukraine, or in Asia, where tensions are mounting between the United States and its allies and China. Since a direct nuclear confrontation among those powers that possess the fatal weapon is impossible because of deterrence – which remains active in spite of what some may say – they are pursuing their strategic objectives by maintaining regional crises , using their subjects as proxies.

Russian President Putin delivered a remarkable speech in 2007 in Munich, at the OSCE meeting, in which he said that a new balance in the world was being created without hegemonies, that would have to be adapted to. He added that democracy should take hold everywhere but should respect differences in race, culture and opinions, and should not let an authoritarian, dominating majority oppress one or more minorities, but rather that majority should take into account the aspirations of all the population.

More recently, a UN resolution called on the international community to establish new relations among States, recognizing the differences and respecting them, and inviting nations to defend their justified interests with moderation, and to reject the extremisms that bring violence. This resolution, which took up President Rouhani’s proposals was adopted by the General Assembly on 18 December 2013. It urges nations to defend their interests through dialogue and the respect of differences so as to build “a world without violence and extremism” in which inevitable rivalries will be allayed through international consultations and not by war.

The Western media, it must be said, gave very little coverage to this important event.

The future of humanity is at stake, because men can now wield a power which would let them blow up our planet in a fit of madness. Deterrence has worked until now, and has saved us from a cataclysm. The balance of terror has so far stopped those who might have wanted to destroy their enemy by launching a nuclear salvo, because they knew they would be annihilated in automatic retaliatory strikes. Certain war-hawks, however, would clearly like to persuade us that the United States has an anti-missile shield to protect it from nuclear second strikes, which gives it total military supremacy and does away with the concept of deterrence. That is obviously not true, since no shield or “iron dome” is entirely impermeable and none will be in the middle-term. Moreover, the new space powers invent every day new weapons to wipe out the supremacy of any adversary.

The peoples of the world, whatever their economic and cultural wealth may be, must be equal before the law. No culture can claim to be preeminent, or consider itself the beacon of the world. The Liberty whose statute lights up the world at the entrance to the Hudson Bay belongs to all nations, and none may claim to be superior, even it momentarily enjoys economic and military superiority over the others.

France would do well to remember her intellectual heritage of the “Enlightenment”, and the level of worldwide prestige which General de Gaulle brought her to, by refusing to align France with any bloc – at a time when it was much more difficult to leave NATO than now; he defended the right of all peoples to decide their own destiny, and advocated understanding among all the nations of the globe that welcomed him during his many trips around the world, because he was familiar with the various cultures, and wherever he went – in Asia, in Africa, in Latin America, he proposed to respect all men and women with their differences. That is also what guided his wish to build a Europe of nations that would preserve their specific characteristics and their sovereignty. That Europe, in his view, was supposed to open up to wide-ranging cooperation with Russia and beyond.

For us in France, who have the second Exclusive Economic Zone thanks to our overseas territories on all five continents, everything should incite us to follow a policy of world citizens, by maintaining relations based on respect, confidence and cooperation with all nations.

In that respect, the diplomatic choice our country has made to base its actions on the Sunni Arab monarchies that deny human rights completely, and to attack those countries that are fighting against the same Islamic terrorism that those monarchies support, is totally absurd and contrary to our historical tradition. What’s more, all experts agree that those reactionary regimes will not last long, faced with the threats of internal disputes, of the rise of different oppositions, and the remoteness of their American protector.

When democratically elected leaders come to power in the Arab peninsula, how will they judge our connivance with their former oppressors? If Israel has become their objective ally today, it is because the Israelis also fear the gradual withdrawal of a United States willing to end the “fitna” (dispute between Shia and Sunnis), and they have benefitted from the terrorism of a DAESH (ISIS) which has never threatened Israel. The sale of planes, ships and weapons system does not justify such a misalliance. Indeed, the United States is changing their policy in the Middle East by moving closer to Iran, and could eventually decide to fight more usefully against DAESH, whose sponsors they know well. One can understand why Israel and the peninsula’s Wahhabis are worried about being in the same leaky boat.

The wish for a world of peace was expressed many times by General de Gaulle, who anchored his prophetic visions in a profound philosophical reflection, which led him to deliver messages to the entire world, which the powerful people did not always appreciate, but which were supported by the peoples. Speaking to Mexican academics during his trip to Mexico in March 1954, he gave a philosophical and political message of striking modernity still today, 50 years later. I will read one short excerpt from that:

“Indeed, beyond the distances that are shrinking, beyond the ideologies that are weakening, and the political systems that are losing steam, and unless humanity destroys itself some day in a monstrous self-destruction, the fact that will dominate the future is the unity of our universe; One cause, that of man; one necessity, that of world progress, and consequently of assistance to all those countries that desire it in order to develop; one duty, that of peace; these constitute the very basis of existence for our species.”

General de Gaulle was thus the first to defend a different organization of the world, at a time when the two rival blocs dominated the world and allowed no challenge to their hegemony. At a press conference at the Elysee on Sept. 9, 1965, he even proposed a new international monetary system :

“… Thus, considering it right that an international system should regulate monetary relations, we do not recognise that the money of any State in particular has an automatic, privileged value in relation to gold which is, which remains, and which must remain, the only real standard. Thus, as we, together with four other powers, were founding members of the UN, and as we wish the UN to remain the meeting place of delegations of all peoples and the open forum for their debates, we do not accept to be bound, including in the financial order, by armed interventions in contradiction with the Charter and to which we have not given our approval. It is by being this way that we can, in the final analysis, best serve the alliance of free peoples, the European Community, the monetary institutions of the United Nations Organization.

“Indeed, having regained her independence, France can become – for all the ideologies and hegemonies of the giants, for all the racial passions and prejudices, beyond the rivalries and ambitions of a champion of nations, failing which the troubles, interventions, conflicts, which lead to world war, would go on spreading.”

In the same press conference, he added his vision for the future of the world:

“Moreover, the same entente of the same powers that have the means for war and peace is, for the historic period in which we live, indispensable to the understanding and cooperation that the world must establish among all its races, all its forms of government and all its peoples, without which it will sooner or later head for its own destruction. It happens, actually, that the five States on which the destiny of South East Asia depends in the final analysis, and which are the ones that possess atomic weapons, together founded twenty years ago the United Nations Organization and are the permanent members of its Security Council. They could tomorrow — if they so desired and naturally once they came together — see to it that this institution, instead of being the theater of the vain rivalry of the two hegemonies, becomes the framework in which the development of the whole world would be considered and in which the conscience of the human community would thus grow stronger. It is obvious that such a project has no chance of coming into being at this time. But if the rapprochement and then the agreement of the leading nations responsible for the world, should ever appear possible toward this end, France for her part would be quite willing to cooperate on it.”

Imbued with these visions, we are of course watching with great interest and sympathy the efforts of the BRICS and beyond them, of the emerging countries, to work toward “win win” agreements. The great project of the New Silk Road and the multitude of infrastructure projects linked to it, China’s creation of the Asian Infrastructure Investment Bank (AIIB), which is open to all and gives no participant the right to veto, the creation by Russia of the Eurasian Economic Union, which could lead to a Eurasian monetary union, are concrete indications that the world has freed itself of American control.

The United States and its allies, commonly called the West, only represent some 800 million to 1 billion inhabitants, depending on who is included in this increasingly ill-defined group in terms of its values; the rest of the world is in line with international reality by organizing itself on the basis of demographic, economic and even military weight: the BRICS represent one fifth of the world economy but only have 11% of the votes at the IMF. It is quite normal for the world to adjust balances on more realistic, fair bases.

In this new world order, Europe would do well to reconsider where its interest lies : Europe should be involved in organizing the continent in cooperation with Russia, instead of supporting the confrontation course the United States is pushing. The European Union’s hostility runs against the interests of the member countries and only pushes Moscow toward Asia, and in particular toward Beijing. The new geopolitical order has apparently not been understood by the European Union, which is becoming increasingly irrelevant politically, and economically trapped in paralyzing structures. Only France and Germany have attempted to calm down the situation in Ukraine, but much more forceful initiatives will be needed to reach an agreement with guarantees for both sides. The Ukrainian crisis could catalyze a lasting shake-up of the supranational organization which subordinates the major founding countries to the small ones on any decision related to international relations.

Sanctions are counter-productive and several countries have strongly opposed extending them, including Italy, Hungary, Slovakia, Greece and Cyprus, sometimes very aggressively so. France and Germany, trapped into their position as motors of the EU, are reluctant to overly push for a reduction or the suspension of the sanctions, but, as we know, many economic groupings in these countries are exerting pressure for a change in policy toward Russia. More and more voices are heard denouncing the refusal to deliver the BPC Mistral as an unacceptable breach of contract and a stain on France’s word. The foreign relations of member states are subordinated to a policy decided in Brussels under American influence, an influence which is particularly strong in Poland and the Baltic states. For how long will the major founding countries accept this subjugation, which has them adopt positions contrary to their interests? I will not make any predictions, but clearly, the internal dissent in the EU require a restructuring based on a Europe of sovereign nations which will resume cooperation and dialogue with Russia, leading eventually to an economic and strategic partnership.

The future of humanity lies in a balanced cooperation among the countries of the world to develop their “win-win” projects, while respecting the specific characteristics and the cultures of all for the common good. War can no longer be a means to settle differences or rivalries among nations, which must be settled through diplomatic exchanges. A general, balanced disarmament should be undertaken, which France should join once the main owners of weapons of mass destruction begin to dismantle their fatal arsenals.

In conclusion, let me take up the words of President Rouhani: “peace is always possible”, in contrast to the warmongering threat “the military option is on the table”.

1. n° A/RES/68/127, ated by the General Assembly on 18 December 2013

Stélios Kouloglou

Journalist, Writer and Member of the European Parliament from Syriza

Since it was elected in January, the Greek government has had to face a coup d’état being carried out in silence. The intent is to overthrow the new government and replace it with one which is docile to the creditors, and at the same time to demoralize the “dreamers” in Spain and other countries, who still believe it is possible to have governments that oppose the German dogma of austerity. If you kill a government, you kill hope.

The situation is reminiscent of Chile in the early 1970s when U.S. President Richard Nixon decided to overthrow Salvador Allende to prevent spillover effects elsewhere in America’s backyard. “Make the economy scream,”was the order the U.S. President gave the CIA and other intelligence services, before the tanks of general Augusto Pinochet entered into action.

In 1970, the U.S. banks had suspended all credit to Chilean banks. One week after the January, 2015 elections [in Greece], Mr. [Mario] Draghi, the President of the European Central Bank (ECB), cut off without the slightest justification, the main source of financing for Greek banks, and replaced it with the Emergency Liquidity Assistance (ELA), a facility which is far more expensive and must be extended on a weekly basis. Like a sword of Damocles, suspended above the heads of the Greek leaders.

And after the sword of Damocles, there is also the drug.

Over 90% of the money paid by our creditors returns directly to them — sometimes on the very next day! — since it is used to reimburse the debt.

But, given the fact that the non-reimbursement of a debt is tantamount to a credit event, i.e., a kind of bankruptcy, the unblocking of the doses is a very powerful weapon in the hands of the creditors, an instrument of permanent political blackmail.

In this undeclared war, other economic weapons are also used, such as rating agencies. It is a modern coup d’état, as we say in English: “not with the tanks, but with the banks”.

The media have also been instrumental in attacking the government, to raise the scare of a GREXIT (Greece leaving the Eurozone) in order to provoke panic. Leading the offensive is the German tabloid Bild Zeitung, which began running sensational headlines back in 2010 to denounce the alleged “laziness” and “corruption” of the Greeks, who were advised to sell their islands in order to reduce the national debt. The same Bild published a pseudo-reportage on a bank run in Athens showing banal pictures of retired Greeks lining up in front of a bank to cash in their monthly pensions.

Added to this was the media theory about “rescuing” Greece, while in reality the loans extended to Greece in 2010 actually serve to save the French and German banks. These loans, with initial overly high interest rates, were presented to the German and international public opinion as a free assistance given to “lazy” and “corrupt” people.

Let’s see what really happened. According to the French daily Libération, since 2010, France may have made up to 2 billion euros of profits from interest alone. Even Austria, which only participated very modestly, has gained 100 million euros until now, according to its government.

However, German public opinion pretends it’s innocent. Except for a few TV comedy shows – which in where they dare to tell the truth.

New International Framework Needed

We are accused of not wanting to adopt reforms. But we are the ones, more than anybody else, who want reforms. Real reforms, not chaos.

What is demanded of Greece is application of the neo-liberal recipe. Each one with his obsession.

The ideologues of the IMF demand the deregulation of the labor market and the legalization of mass layoffs, a promise they made to the Greek oligarchs who own the banks.

The EU Commission, i.e., Berlin, calls for more privatizations which would interest German companies (at lower cost). Among the unending list of scandalous sales of State property, is the sale in 2013 by the Greek state of 28 buildings it continues to use. Over the coming 20 years, Athens will have to pay 600 million euros of rent, nearly three times as much as the money obtained from the sale (which was immediately returned to the creditors!).

The Greek government continues to remain highly popular despite some concessions: the non-suspension of the privatizations decided by the previous government (although promised); the postponement of an increase of the minimum wage, an increase in VAT.

At the end of the day, the big question is political. Do elections make any sense, if a country, while respecting its core commitments, has no right to change policy?

The ongoing Greek tragedy underlines the need for a new framework of international relations. A framework that respects the democracy, the national sovereignty and dignity of each country, and at the same time favors relations and economic agreements of a non-colonization nature. A framework advantageous to all players involved. Recently, the Greek government announced it would seek Greek participation in the new BRICS bank, a request received positively in Russia. In the loaded climate of threats and ultimatums, this came as a breath of relief and optimism for Greek public opinion.

The Athens government, in a position of inferiority, and abandoned by the forces which it hoped would lend support — such as the French government — cannot claim the solution of the major problem which the country has to overcome: an intolerable debt. The proposal [by Greece — ed.] to organize an international conference, such as the one organized in 1953 which relieved Germany of most of its war reparations, paving the way to the economic miracle, has been drowned in an ocean of threats and ultimatums.

Thinking to the Future

The creditors want to force the government of Mr. Tsipras to choose between only two options: financial strangulation if it continues to stick to its program, or betray its promises and be overthrown, for lack of support from the voters.

I can assure you that we will resist. We will not be subjugated.

I don’t know what is going to happen, but an excellent article by Serge Halimi recently published by Le Monde Diplomatique reminded us of the future and of the historic dimension of this fight. He wrote

“Thinking of the future reminds us what the philosopher Simone Weil wrote about the labor strikes of June 1936 in France: ‘Nobody knows how events will turn out…. But no fear annuls the joy of seeing those who, by definition, lower their head, raise it…. At last, they made it clear to their masters that they existed. Whatever happens from now on, we will have gained that. Finally, for the first time, and forever, memories other than silence, constraints and submission will float around these heavy machines.”

The fight of the Greeks is universal. It is no longer sufficient that our wishes are with them. The solidarity it deserves, must be expressed by deeds. Time is running out.

Jean-Pierre Gérard

Economist, Entrepreneur, former member of the Economic Council of the Bank of France,  Paris.

Since 1970, I have dealt with industry: first in the administration, as rapporteur general of the Commission of Industry of the 7th plan, then in major companies. In 1994, Philippe Séguin, then president of the National Assembly, named me to the Council of Monetary Policy.

My intervention will be centered on three simple ideas, unfortunately little or not all shared.

1. The State wastes the financial resources of the nation in its public interventions. This leads to a scarcity of financial resources for more productive activities, in industry in particular and in agriculture.

2. This should lead us to a new approach to infrastructure programs.

3. The aim is to improve the economic profitability of infrastructures and public interventions in the economy.

4. When I studied economics at the Institute of Political Studies, we read the manual of Samuelson, an American professor of economics who later received the Nobel price. There, he explained the Keynesian principles of multipliers and investment accelerators. But I was very surprised to learn that the nature of the work done was unimportant. In other words, one could make intelligent investments or dig holes and refill them, with the same consequences.

Today, after more than 40 years of experience, I totally mistrust this assertion. I find it unconscionable to promote infrastructure programs without measuring in depth their actual utility and economic profitability.

Why is profitability necessary?

In my opinion, Keynes’ analyses depended to a large extent on the monetary situation of his time. The peg to gold was still a reality, even though the link to the various currencies was going to become more loose. The world monetary supply was obviously halted. The idea of increasing public spending thus had the effect of injecting liquidity. In a time of monetary scarcity as was the case in the aftermath of the war, and given the dimension of investments to reconstruct the economy, that did have, without a doubt, a beneficial impact on economic activity. The monetary supply created by public spending acted as a loan to various economic activities, which needed just that to take off. That has been observed in all periods of history.

Our situation today is very different. There is a monetary surplus everywhere, as a result of the lax monetary approach of the United States over many years, more or less between 1990 and 2007. Then came the monetary crisis caused precisely by those excesses. But all the monetary authorities, American and European, continued to inject considerable sums of money in the programs called “quantitative easing”.

There is such a monetary excess today, that nobody knows where to invest. Uncontrolled public-sector spending is increasingly directed into non profitable activities, and financed solely by a systematic increase in indebtedness.

All public-sector spending that is carried out without profitability has a dramatic “crowding-out” effect: a fall of investment and of private consumption. In the graph, we see that the worldwide GDP is around 50 trillion dollars, and is covered by a stock market capitalization of about 100 trillion dollars. One can reasonably estimate, that 200 trillion dollars would be necessary to run the entire world economy without the risk of monetary scarcity. That leaves from 300 to 400 trillion dollars that are rotating around themselves, without the slightest contribution to the real economy.

Thus, we are in a situation which has never occurred before, on the one side a financial sphere rotating upon itself, and on the other a productive sphere whose nominal and real profitability is “taxed” by the financial sphere. This levy is organized in the greater part of the so called industrialized countries directly through taxes, but also through elimination of a good part of human resources (unemployment). The unemployment is generally attributed to competition from low-cost countries, but the difference in costs would not be so high, if the levy on the productive sector were less.

The money supply pumped by the Federal Reserve and the European Central Bank only aggravates the phenomenon. Almost all the “quantitative easing” goes into the financial sector, and is totally useless for the productive sector;

Micro-economic approach to the role of great infrastructure projects

The macro-economic and monetary approach in the present situation does not help us know what to do. However, it is possible to draw up a typology of infrastructure, defined in terms of their goal, their means and their success. The different plans we have had have nearly all failed systematically, when they applied to productive structures. However, we have noticed some exceptions when the State was a client, or when the financial masses needed exceeded the capacities of the economic players.

1. Horizontal interventions

• The first type of intervention involves subsidizing production prices. The typical example is the Common Agricultural Policy, which produced the “admirable” result that German agriculture today is more efficient than the French agriculture for which it was designed.

• The research tax credit (CIR) and the tax credit for competitiveness and employment “CICE) are simply indispensable tax exemption niches to compensate for a devouring taxation system.

2. Plans by sector

• Steel plan
• Machine tool plan
• Calculation plan
• Digital plan for all

They were all dramatic failures. They all led to the elimination of nearly all the companies, which had sometimes been spectacular successes (BULL), but were not sufficiently profitable to take on the risks inherent to all industrial activities.

3. Nationalizations

• To recapitulate, all the nationalizations of the industrial sector carried out in 1981 were all massive failures.

• The nationalization of banks were ot huge successes (see the Crédit Lyonnais) and led to the present situation of France’s monetary policies.

4. Clientèle policies

• To my knowledge, this is the only policy carried out by the State or by local governments which was somewhat successful. The sectors involved are essentially those which come under the state’s sovereign policy: aeronautics, space, ship building and military equipment.

• Other public entities allowed for an efficient industrial policy. The RATP (the Paris transportation network), and in some cases even the SNCF (national railway company) developed efficient industries. That was also the case of many companies belonging to the top exporting companies in the world. I will given just one example: Desgranges and Huot. For many years, this company which produced primary pressure standards had very strong ties to the National Laboratory of Tests (LNE), which tests all products going onto the market. Their collaboration, which spanned more than twenty years, led to that company becoming the world leader, and the Laboratory itself becoming world leader of pressure measurements.

5. The choice of leaders

• As soon as the capital of the companies belonged to the State, the leaders were chosen from among the administrative intelligentsia. These people knew very little about the reality of companies, but considered themselves empowered to promote changes that were more justified by a need for “communication”, than by industrial realities.

The flaws of public interventions and why they are inefficient

I would like to finish this expose by seeking to understand why State interventions are almost always wasteful.

1. Unquestionably, the most successful program of the past 50 years was the electro-nuclear program. Launched under the 7th plan of Valery Giscard d’Estaing, it was aimed at giving our country a large energy independence. That goal has been reached, but a less visible result is that it created pressure to lower the oil prices. The investment was extremely large, but the operating costs gave France a considerable advantage.

2. In contrast, all the other programs suffered three recurrent evils as concerns the French administration’s intervention.

• A late start because of political conservatism. Then Prime Minister Raymond Barre declared that the State had been forced to launch a telecommunications plan and that only the State could do it because the investments required were so great. That meant ignoring the fact that in all the countries in the world, the telephone systems and later the telecommunications were developed by the private sector. Telephone equipment was expensive, because it involved catch-up investments and the late start was due to the postal and telephone administration (PTT). The same remark holds for the highways.

Spreading too thinly and complexity

With the interventions by sector, two flaws co-exist.

Spreading too thinly:

Certain investments often had to be shared by several suppliers. That led to an increase in costs and especially a poor image of French industry.

Complexity

Technical specifications very often do not take into account aspects of marketing. An example from my personal experience: in 1988, the ONERA (French aerospace lab) and an American company were developing a lightning detection system. The ONERA had developed an excellent system, superior to the American one on all levels. The only problem: it cost twice as much as the American system, and the latter had completed production two years before. Therefore, the American system, although imperfect, was used to equip the meteorological stations of the French weather system, Meteo France. While that system was later improved upon, the French one was never built.

Every successful investment must be used as much as possible

One of the most frequent behaviors of the French political class is to want to copy what is successful elsewhere, or to acquire what is considered as a good window case on their action. One example is the TGV. The first TGVs were undeniably a success. The reasons for investing in the Paris-Mediterranean line are fully known, and are explained by the necessity to build new lines because of bottlenecks getting out of Paris, and especially because of the populations concerned. Paris, Lyon and Marseille represent one third of the French population. Because of the success, everyone wanted to have his own TGV: first in the West, where the population is much smaller, then in the East, where it even ran at a deficit. For more than ten years now, the technical and commercial success became a losing system.

To conclude, you will have noticed that I am not favorable to an ideological intrusion of the State in the economic domain, not because it cannot have an essential role. However, I think that the State must intervene when the sums required are out of the reach of private investors, or when the development of new products would call into question the survival of the company (ie, when an possible failure would be fatal). It was in such a situation that we had to develop French aeronautics, and successfully so.

The Tunnel under the Channel should have been financed, at least partially, by public investments. The risks were undeniably very high. It was also undeniable that the tunnel would transform Franco-British economic relations for more than 100 years, and that profitability had to be calculated not with an industrial vision of 10 to 20 years, but of 100 years. Paradoxically, and influenced by Mrs. Thatcher, it was the only large investment which would have needed public intervention, and which was financed by the private sector.

It is impossible for the public powers to define, a priori, the needs of a complex society. The first plan had defined the essential needs for the reconstruction of France. But as of the Sixth plan, and even more the Seventh, we had to to abandon authoritarian planning in favor of indicative planning. I think that we need greater economic freedom today. As long as the State and public entities engage in activities with zero, if not negative, profitability, the economic private sector as a whole will lack dynamism. In addition to taking responsibility for its own profitability, it will have to support the increasingly negative profitability of public sector activities.

Christine Bierre

journalist, Paris

Ladies and Gentlemen,

This session of the conference will deal with the great infrastructure projects which are at the heart of the BRICS strategy, and in that context I will speak about the “Grand Design” of Eurasian development proposed in the Seventeenth Century by the great German philosopher, scientist and political figure, Gottfried Wilhelm Leibniz, which is still a wonderful model for today.

Before coming to that, however, some remarks about the question of great infrastructure projects. These are indeed, the very basis for the industrial development of a nation. No progress is possible without modern transportation, energy, and water infrastructure.

But, it would be false to look at those projects in themselves, thus risking the danger of falling into the mistakes of Keynesian economists, for whom what is important is to generate economic activity, in whatever area that may be, even if it’s only digging holes in the ground to fill them back up again!

What is important in the BRICS strategy is that that infrastructure, and the pulleys, cranes, and excavators used in its construction, are only the concrete expression of human creative genius, and of human will to master the enormous challenges of nature for the transformation of human society.

Before those objects come into existence, there is the conception of man as a creator, opposite to that of man as a predator which predominates today as a result of the varieties of extreme liberalism that the Western financial centers, the City of London and Wall Street, have spread throughout the world.

The BRICS strategy is also nourished by a more noble vision of human civilization, by the will to build a world where all nations, whatever their size and wealth, will have the right to full development; a Westphalian world where all nations will be sovereign to make alliances with the partners of their choice, and not be forced to submit to this or that ideological bloc, or to become vassals of this or that Empire. M. Kadyshev reaffirmed that principle this morning; the Chinese president M. Xi Jinping negotiates win/win contracts every day with small and large nations alike.

This vision of man has unfortunately disappeared in the trans-Atlantic area, where it has been replaced by that of a predator, and by the return of Empires. The vultures are everywhere: in the financial domain, in governments where they loot public wealth and the weakest among us, in war where they unleash their savagery, as in the Middle East.

France once had the opportunity to have a President Charles de Gaulle, who represented in his time the spirit of the BRICS. But now it has fallen into disgraceful opportunistic alliances, where, for a handful of dollars, France goes from the decadent American empire, to the most backward oil monarchies, without entirely excluding the BRICS however,—because, you never know, they might win in the end!

For the real France, let us reflect upon that 30th of January 1964, when Charles de Gaulle, president of a France just turned sovereign again, broke ranks with the Anglo-American bloc, announcing the reopening of diplomatic relations with another sovereign nation, China. Because, while he didn’t approve of China’s regime then, he made the bet, as he said it, that “in the immense evolution of the world, by multiplying the relations between peoples, one can serve the cause of men, that is, of wisdom, of progress and of peace. . . and thus, all the souls, wherever they might be on earth, could meet sooner at the rendezvous given by France 175 years ago, that of liberty, equality and fraternity.” In the aftermath of that decision, France left the integrated NATO command in 1966 and opened relations with the Soviet Union as well.

And it is because I am fully convinced that France can recover its age-old sovereignty and break with a western bloc, which the financial crisis and drive for Empire is pushing to world war against Russia and China—and that other European countries can also find there the inspiration to do the same—that I will present to you the immense Eurasian project proposed by Leibniz in the Seventeenth Century.

It is also because this project sets a very high standard, and that in order to succeed in what we are doing, all those who are struggling today to bring about this new world that the BRICS are creating, must nurture in ourselves this beautiful ideal.

Leibniz’s Eurasian Grand Design

Leibniz’s Eurasian Grand Design It was in order to change a Europe devastated by irrational wars and hostage to the demons of religious fanaticism, that Leibniz, a contemporary and collaborator of Jean-Baptiste Colbert, fought to create the conditions for peace and development throughout the Eurasian continent.

His Grand Design? An alliance between Europe and China, the most developed areas at that time, and to let Russia, which is in between the two, progress through the increase of cultural and economic exchanges between them. The relations among nations are not the same today, but the principles remain.

It is that design that Leibniz presents poetically in the preface of his work “Novissima Sinica” (News from China), by saying that:

a particular disposition of providence has made things such that the highest cultures and ornaments of humanity find themselves concentrated at the two extremities of our continent, Europe and China. . . Perhaps supreme providence, by having the most advanced nations extend their hands to one another, has sought to elevate everything that is found in between, for a better rule of life.

And Leibniz adds that Tsar Peter the Great is favorable to the project and is supported in the endeavor by the Orthodox patriarch.

Leibniz was extremely lucky that both Tsar Peter the Great and the Chinese Emperor, Kangxi, were opening to Europe and showed “a great zeal to bring to their countries the knowledge of sciences and of European culture.” Having worked for years to build a privileged relation to both those heads of State, Leibniz, in his role of counselor to the Princes, attempted to change the course of history. He met three times with Peter the Great (1711, 1712, 1716), and became his advisor. The Tsar had asked him for help to “bring his people out of barbarism.”

Concerning Kangxi, the relation was not direct, but through a group of Jesuit missionaries who had been working in China for a century, and who, thanks to their scientific knowledge, had succeeded in gaining the Emperor’s trust, and in particular that of Kangxi, who was in power at that time. Leibniz was in epistolary contact with many of those Jesuits, and even inspired the mission of five Jesuit mathematicians who left for China in 1685 to work with Kangxi.

Bringing Progress to Russia

All the memoires of this impassioned dialogue between Leibniz and Peter the Great and his advisors are fully accessible today thanks to the collected works of Leibniz compiled by Fouchier de Careil.

At the heart of his proposals: “attract all active and capable men of all professions”; instruct his subjects, in particular the young ones; teach them how to “create,” by rediscovering the great discoveries of the past; translate into Russian the descriptions of all the arts and sciences; open up schools everywhere and create Science Academies in the main cities, Moscow, St Petersburg, Kiev and Astrakhan.

He called for founding libraries and observatories everywhere, and laboratories to build machines.

A century before the British, Leibniz, who collaborated with the efforts of the Academy of Sciences of Paris to develop heat-powered machines, advised the Russians to create a laboratory where the good chemists and pyro-technicians could study the uses of fire for work in the mines, foundries, glass factories and even for artillery. Like a modern day Prometheus, he said: “Fire must be regarded as the most powerful key to the bodies.”

Concerning infrastructure, he advised them to reflect on what could be done for rivers and for national planning. To think about the Volga (which could be united to the Don by canal) and to improve navigation especially on the Dnieper and the Irtysh. Make canals to transport goods, as well as to dry up the swamps, he said.

A ‘Trade of Light’ with China

Leibniz’s work in China is also a beautiful example of cooperation among nations, respectful of their best traditions, from which the sorcerer’s apprentices of color revolutions in the West could greatly profit.

In his Novissima Sinica, he compares the relative merits of Chinese and European cultures, which he finds almost equal. “The Chinese Empire,” he says “does not lose out in comparison to cultivated Europe when it comes to land area, and even surpasses it in terms of population.” Europe, says Leibniz, is victorious when it comes to knowledge of forms that separate mind from matter, such as metaphysics and geometry. The Jesuits worked to solve that by teaching geometry, astronomy and mechanics,—see the steam car invented by Father Verbiest, tutor of the young Kangxi,—and by assisting in great engineering projects.

But it was the level of daily wisdom of the Chinese that totally impressed Leibniz:

If we are equal in terms of techniques, if we are victorious in terms of contemplative sciences, it is certain that we are beaten in terms of practical philosophy (I’m almost embarrassed to acknowledge it); by that I mean the rules of ethics and of politics appropriate to life and to the usage of mortal beings. One does not even know what to say about the beautiful order, superior to the laws of other nations, that rules the Chinese in all things, for the sake of public tranquility and of relations among men

This culture of wisdom and of harmony between daily life, political life and the cosmos, was the heritage of the philosophy of Confucius (551-474 BC), enriched by other philosophical traditions. Let us reflect upon the fact that already in the Eleventh Century, China had discovered linear perspective, and that the great art historian Guo Ruoxu wrote in 1074:

If the spiritual value of a person is elevated, it follows that the internal resonance is necessarily elevated and that the painting will then be necessarily full of life and movement (shendong). One can say that in the most elevated heights of the spiritual, it can compete with the quintessence.

Against the majority of the religious orders and vicars of the Pope who were bent on trying to Christianize the Chinese by force, and who in the end provoked the failure of Leibniz’ project, Leibniz supported the ecumenical dialogue of the Jesuits and following an indepth study of Confucianism, he concluded that a dialog, of equal to equal, could be established between the natural theology of Confucius,—not with the revealed Christian faith,—but with Christian metaphysics.

The mission of the French Jesuit Mathematicians

Finally, to remind those who govern us, again and again, of the best traditions of our foreign policies, let us come back to the mission of the five Jesuit mathematicians to China in 1688 which contributed to found, more than 300 years ago, France’s special partnership with that country.

Those Jesuits were the emissaries of the working group constituted by Jean Baptiste Colbert, at the Academy of Sciences in Paris, around the director of the Observatory of Paris, Jean Dominique Cassini. The aim of the group? Use astronomy to correct geographical maps and solve the great scientific and practical endeavour of that time, the definition of longitudes for navigation in deep sea.

Those investigations required the sending of scientists to different parts of the globe in order to collect a maximum of data. The mission of the five French Jesuits in China, was the follow-up to the trips of Academicians Jean Picard to Uraniborg in Denmark, Jean Rich to Cayenne, Varin to the Gore Island and the Antilles, for the same objectives.

Leibniz and Colbert set up the mission around this issue which interested Leibniz at the highest level. In his correspondence on Russia, he described that scientific project in detail, and sets it up as one of his three priorities, calling for such experiments to be conducted in Russia, especially close to the North Pole. The leadership of the team was entrusted to Father Fontaney, who was already in collaboration with other prominent academicians, such as the Danish scientist Ole Römer and Christian Huyghens, who presided over the Academy.

When they set out for China in 1685, the Jesuits were carrying in their suitcases, the tables for the satellites of Jupiter established by Cassini, and some 30 instruments among the most sophisticated of their time. Among them were two machines from Ole Römer: a mechanical planetarium which could reproduce, for any given hour, all the movements of the planets and the stars; and an eclipsorium which indicated the year, month or part of the month where the solar and lunar eclipses would occur.

As a conclusion: If Leibniz was desperate about the corruption of Europe in his time, to the point of having proposed that a Chinese delegation come to Europe to help change things, what would he say about the present situation? Where compared to a China which has made tremendous progress, and a Russia which has recovered its world power status, Europe today is playing the role of the sick man.

I think, however, that the emergence of the New Silk Road, the BRICS and the Eurasian union, can provoke an upsurge in France and in Europe. On the verge of the abyss, on the verge of a new world war, France must quickly renew its dream of liberty, and use these new developments as leverage to rebuild a Europe of the fatherlands, for the greater progress of sciences, arts and its peoples.

Such a change will depend on our actions after this conference!

Acheikh Ibn-Oumar

former Foreign Minister of Chad, Reims.