Volume 2 | Spring 2011

PENNASIANREVIEW

a university of pennsylvania undergraduate publication

Penn AsiAn Review

Cover photo by Lucy Shi, CAS ‘13

2 |

volume 2

editor’s noteThe Penn Asian Review

editorial board consists of:

Editors in ChiefMinh Joo Yi

Vice Editor in ChiefMengyuan Sun

Managing EditorsRosie Li (EIC)

Anne Huang (Editing)Noelle Tay (Design)

Ronnie Wang (Business)Rennie Whang (Editing)Vivian Zhang (Editing)

Editing ManagerStephanie Ho

Business ManagersEmma KaufmanMichelle Whang

Design ManagerLucy Shi

Editorial AssistantsTadashi ShidaFlorence Sit

Secretary/ WebmasterFrancis Miller

Questions and comments may be addressed to

penn.asian.review@gmail.com.

Dear Penn Asian Review readers,

Welcome! It is our pleasure to present you with our second issue of the Penn Asian Review. As Penn’s only undergraduate publication that specializes in the Asia-Pacific region, we provide a forum for intellectual discussions on cultural, political, and social, and economic issues related to Asia. We also have an open-forum blog at http://pennasianreviewonline.blogspot.com that waits for your contribution.

Asia is a place where many different ethnicities and traditions interact to produce an array of vibrant, multifaceted cultures. However, through our studies of Asia and interactions with other students, we realized that people’s views toward Asia tend to be focused on a few limited aspects, often exhibiting stereotypes that do not capture what Asia truly is. By publishing these articles that touch upon various aspects and regions of Asia, we hope to facilitate a broader and more thorough understanding of the Asian so-cieties and their people. We hope our journal can spark your interests in Asia and widen your perspectives on Asia.

We are grateful for the Center for East Asian Studies for its continuous spon-soring and support, which have been critical in the launching of this new issue. We also express our deepest gratitude for our student contributors who inspired us with their nu-merous high-quality works. Lastly, I would like to thank our graduating seniors, who not only founded our organization but also have shown their greatest commitment to us for the last two years. We would not have been here without your dedication, and wish you our best luck for the upcoming years.

Minh Joo YiEditor in Chief, on behalf of Penn Asian Review Editorial Board

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Penn AsiAn Review

4 | Contents

table of contents

Unique Phenomenon of Suicide in Modern Rural ChinaBarbara Wei

American Born Chinese-Vietnamese: The Historical Influences on Second-Generation Chinese-Vietnamese-American Lan-guage Learning and Identity ConstructionAnthony Tran

A Few Broken Eggs on the Purification Hunt: India’s Self-Defeating Response to the Maoist Insurgency Sasha Riser-Kositsky

The Effects of Reservations on Disadvantaged Groups in IndiaAnne Huang

The Return of Zheng He? An Assessment of Chinese Sovereign Wealth Fund from a Law & Development Perspective Federico Lasconi

east asia

southeast asia

east asia

south asia

east asia

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The Unique Phenomenon of Suicide in Modern Rural China

By Barbara WeiCAS ‘11

INTRODUCTION

The definition of suicide used in Western biomedical culture is the “conscious act of self-induced annihilation, best understood as a multidimensional malaise in a needful individual who defines an issue for which the act is perceived as the best solution”.[1] In Western coun-tries, suicide is commonly associated with feelings of hopelessness, helplessness, unbearable stress, narrowing of perceived options and a need for escape. Statistics show that 90-93% of all individuals who commit or attempt suicide in these countries also satisfy the criteria for one or more mental disorders (commonly depression or schizophrenia). This Western biomedical model of suicide and suicide victim does not fit with the demographic and societal suicide pat-terns in China. China, reportedly the only country in the world in which the suicide rates of women are higher than men, deals with a very distinct pattern of suicide within its borders.[2] Furthermore, although statistics have been difficult to verify, there seems to be a definite spike in suicides of young female rural women (between 15-35 years of age) not seen in Western cul-tures. One study claims that suicides among young females in rural areas accounted for about 50% of the total suicide deaths in China, even though they made up only 18% of the popula-tion.[3] Another article has argued that suicide is the leading cause of death for the 15-34 age group and the fifth leading cause of death for the general population.[4] Again, reports of such high suicide rates among young females are especially rare and alarming. This increased incidence of young rural female suicides has generated much research and questioning of China’s cultural beliefs and mental health systems. Official political report-ing has been unreliable on this subject, and statistics involving suicide rates have only recently been formally released for the early 1990s by the Chinese Ministry of Public Health.[5] Further-more, mental health problems carry extensive stigma in Chinese society, which makes accurate reporting very difficult and often unreliable. Therefore, suicide among other mental health issues remains unresolved and unattended to as a public health problem. More extensive and accurate research into the causes, means and reasons for this unique pattern of suicide in young rural women is necessary to help governments, NGOs, local communities and families address the issue and prevent more unnecessary deaths.

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Source: Rosie Li, CAS ‘11

EAST ASIA

PURPOSE

The purpose of this paper is to elucidate the social patterns of suicide in modern rural China, specifically to try to understand what types of social, political, economical and cultural factors contribute to the high rates of female suicide in young women in modern rural China. Although there are studies addressing the distinction between attempted suicide and successful suicide, those differences are beyond the scope of this paper and will not be addressed. STATISTICS AND RATES OF CHINESE FEMALE SUICIDE

In order to understand the distinctive social pattern of suicide in modern rural Chinese females, one must first grasp the magnitude of the problem. The Global Burden of Disease study in conjunction with the World Health Organization estimates that in 1990, there were 343,000 suicides and 1.8 million attempted suicides in China. This means that the estimated rate of completed suicides at the time was 30.03 out of 100,000 making suicide “success” rates in China three times higher than in the rest of the world which averages around 10.7 out of 100,000.[6] Based on the figures from the 1990 Global Burden of Disease Study, China account-ed for “21% of the world’s population, but 44% of its suicides and 56% of the world’s female suicides. 93% of all completed suicides occur in the countryside…women at the greatest risk live in rural areas where rates peak in the 20-24 age group and again in the 75+ group”.[7] The results from the study demonstrate the extensiveness of the high rate of young female suicide in rural China. The results of Yip’s study “Urban/Rural and Gender Differentials in Suicide Rates: East and West” published in 2000 concurs with the statistics found by the Global Burden of Disease study in that it shows “suicide rates in the rural areas of Beijing to be nearly three times higher than those in urban areas, increasing to almost five fold for women aged 25-34”.[8] MAJOR CONTRIBUTING FACTORS TO THE HIGH RATES OF YOUNG FEMALE RU-RAL SUICIDE Psychological/Psychiatric: Mixed evidence exists about the psychological and/or psychiatric causes of young fe-male rural suicide in China. Support for the importance of psychological and psychiatric factors lies in Western biomedical psychiatric and psychological theory and statistics. Psychiatric re-search has shown that psychiatric patient’s risk for suicide is three to twelve times as high as that of non-patients. Similarly, psychologists have noted that among persons suffering from major depression, as many as 15% commit suicide.[9]Psychiatric and psychological statistics in China are not as conclusive. The Global Burden of Disease study estimates that only 5% of persons with psychological disorders receive treatment in China, compared to almost 35% in Western countries. If these statistics are accurate, then the lack of treatment in rural areas for psychologi-cal disorders could contribute greatly to China’s higher suicide rate.[10] Lastly, psychological and psychiatric factors contribute to the high rates of suicide in mainland China, because Chinese communities outside of mainland China do not exhibit the same high rates of suicide. This means that “culture” per se does not produce high rates of suicide, but instead the rural female Chinese suicide rates are uniquely high because of psychological or other factors. Although psychological and psychiatric problems are blamed for the majority of sui-cides in Western nations and have some support in Chinese studies, the evidence against a psy-chological approach is much stronger. Although China has an unusually high prevalence of sui-cide, the prevalence of depression is relatively low by international standards.[11] Therefore, in contrast to the strong association of suicide with mental illness in the West, Chinese traditional culture considered suicide a social or moral act, not one resulting from mental illness. Thus, Chi-nese textbooks of medicine or psychiatry did not originally include suicide. Suicide was always seen as an act of freedom, and not pathological in nature.[12] As a result, neither mental health professionals nor lay people today understand suicide as a problem needing to be addressed by the mental health systems. Instead, they comprehend it as a response to social or cultural stress-ors.

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6 | Unique Phenomenon of Suicide

Socio-Cultural: Academics have cited many socio-cultural reasons for the unique characteristics of Chi-nese suicide demographics including gender inequality, family conflict/interpersonal problems, financial woes, social distress, cultural beliefs and access to mental health facilities. Although no data exists on suicide before the 1980s, many academics believe that some of these problems and the subsequent increase in suicide rates have been exacerbated by the recent economic reforms enacted in 1978. Pearson argues in her article “Ling’s Death: An Ethnography of a Chinese Woman’s Suicide” that the high levels of suicide must reflect the social, cultural and economic changes that Chinese society currently faces. In addition, she believes that these is-sues tend to magnify in rural areas, and young women are especially vulnerable.[13] Phillips agrees with Pearson’s argument in his article “Suicide and Social Change in China”. His article shows that the prevalence of socio-cultural triggers for suicide have risen dramatically with the rise of economic reform. This has resulted in the increased number of individuals at risk for taking their own lives.[14] The following sections of this paper will describe in detail the socio-economic issues which exacerbate suicide in young rural females in modern times.

Gender Inequality: Quantitative and qualitative data suggests that the extreme gender inequality faced by women in China account for part of the increased suicide rates of young rural females. The most commonly cited reasons for gender inequality that contribute to suicide are: the relatively low status of women in a still heavily patriarchal family, the deeply frustrating constraints on their opportunities, and the cruelty displayed toward them. Zhao and colleagues proposed in their 1994 article that the higher suicide rates among females might reflect women’s lower so-cial, economic and educational positions throughout China, especially in rural areas. Women’s lower status also impacts their ability to access treatment. Although the Chinese Communist Party focused extensive campaigns on bridging the inequality between men and women, fewer public resources were dedicated to treating women than men (and with the extreme lack of resources for mental health in general this discrepancy is accentuated even more).[15] Zhang’s study “Characteristics of Chinese Suicide Attempters: An Emergency Room Study” is especially powerful in elucidating the extreme low status of women in family and society in China. The study asked female patients in ERs who had attempted suicide what gender they would like to be in their next life. Overwhelmingly, women preferred to become men in their next lives, demon-strating the importance of their perceived and/or experienced gender inequality, discrimination and loss of control in their current life.[16] Lastly, young women in rural towns and villages still continue to be bought and sold into unhappy marriages for financial reasons. These marriages also do not offer the protective benefits of mental health as evidence in female populations in Western countries. Therefore, these young women are often faced with extremely difficult situa-tions where they feel that committing suicide would be an appropriate exit from their continuous pain and suffering.[17] Women’s poverty, unemployment, and limited education opportunities in rural China have lead them to have low self esteem and social status. This gender inequality has contributed greatly to family conflict, economic problems, and social distress, all major propo-nents of driving rural women to suicide.

Family Conflict and Interpersonal Problems: Almost two-thirds of young rural female suicides were reportedly precipitated by fam-ily disputes and/or broken love relationships.[18] Pearson’s article “Attempted Suicide Among Young Rural Women in the People’s Republic of China: Possibilities for Prevention” which draws its information from interviews of 147 surviving female suicide attempters under the age of 35 notes that family difficulties accounted for four out of the top five most common life events that preceded a suicide attempt.[19] These included such issues as unhappy marriages, spouse abuse, conflict with mother-in-law and other family problems. Other family and inter-personal issues that precipitated suicide in young women included actions such as premarital sex or extramarital affairs which carry extensive and serious stigma. Therefore, due to the lack of “a way out” for women who have committed such highly stigmatized acts, they might choose

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suicide as the only means to manage their actions.[20] Suicide in this context is often attributable to the Chinese phenomenon of “losing face” or the social experience of intensive shame.[21] Case studies and individual ethnographic research has confirmed the impact of family conflict and the desire to “save face” in precipitating female suicide in rural communities. The women interviewed noted dealing with the physical/mental abuses of their mother-in-law and husband, the shame from having an extra-marital affair or gambling away their money as major causes of their suicidal actions.[22][23] Although the issues of interpersonal conflict are not unique to Chinese culture, the extremity of the conflict coupled with the suppression of young women compounds the problem enough to make it a major concern for public health officials dealing with excessively high rates of suicide in rural China.

Extreme Social Distress:

Chinese culture, like other societies with high levels of female suicide, has cultural ide-ologies that support the legitimacy of death by suicide under certain circumstances for women.[24] Therefore, most of the suicidal acts in China are not individual or psychologically based, but instead follow a certain degree of cultural patterning and script. Firstly, Chinese children are traditionally taught to show greater concern for their honor and reputation than for their lives. So, if a young woman experiences certain life events that tarnish her reputation, she will feel that suicide is the only way for her to resolve the conflict while still retaining as much honor as pos-sible for herself, her family and her community.[25] Lastly, traditional Chinese cultural values and norms put women at a serious disadvantage; the woman is typically blamed when family disputes occur.[26] These cultural values and norms make women more vulnerable than men to suicidal behaviors under social distress. Social distress comes in many forms, most commonly family conflicts and interpersonal issues outlined earlier, and causes young rural women to use suicide as a way of expressing anger, moral outrage, revenge and a deeply felt sense of having been wronged. In contrast, in West-ern societies, suicide is most commonly used as gesture of despair. These young rural Chinese women feel that suicide is the only means for them to affect the behavior of the more powerful, or take revenge on those who have made their lives intolerable. Therefore suicide becomes the “ultimate strategy available to powerless people for influencing the behavior of others”.[27] The women believe that although the price of suicide is high, it at least allows them to inflict damage on their persecutors and become infinitely more powerful in death than they ever were in life.[28] The ethnographies and case studies presented by Pearson and Philipps also concur with these theories and depict women who use suicide to take revenge or make powerful statements of anger. Therefore, the distinctive cultural ways women view suicide may partially account for the uniquely high rate of suicide among young females in rural Chinese areas.

Access to Mental Health Facilities Although the Chinese often do not associate suicide with mental health or psychologi-cal illnesses, mental health facilities are still necessary to provide support, counseling and emer-gency care to those who are suffering from suicidal thoughts because of intense psycho-social stressors or depression. Rural areas of China have relatively poor access to mental health care. The ratio of mental health professionals to the population is 1:31,000. The ratio of psychiatrists to the population is even lower at 1:126,000 (for comparison the U.S. has a ratio of 1:7670 for psychiatrist to population). In rural areas, these ratios diminish even more, because hospitals and mental health professionals are usually located in cities or towns. Therefore, little public mental health service reaches women sufferers in the countryside. Lastly, the market socialism reforms in the 1980s have broken down much of the public health care system. Most rural residents have no health insurance and must now pay for their health services out of pocket. This makes it ex-tremely difficult for low-status rural women to access mental health services, even if they were available, after experiencing a significant life stressor. As a result, extreme psycho-social stressors and mental health illnesses are left untreated and unrecognized. The women feel that they have no place to seek professional help or understanding, and thus resort to suicide.

Penn AsiAn Review

8 | Unique Phenomenon of Suicide

Lethality and Easy Access to Powerful Insecticides: Several studies conducted in rural and suburban areas of China have shown that the most common method used for suicide is pesticide ingestion. Accounting for 34-66% of com-pleted suicides each year, suicide by poisoning still remains the method of choice among young rural females.[29] The easy availability and the intrinsic high lethality of insecticides and organic chemicals in rural farming homes accounts for the high death rate from suicide. Interestingly, studies have also shown that suicide in China is mostly an impulsive act in response to an acute life stressor.[30] Therefore, the easy access and availability of such lethal pesticides, makes it very convenient for these young women to commit suicide on impulse without much prior planning. Other studies believe that suicide attempts by young women represent a call for help and are unintentionally lethal. They believe that the lack of emergency medical care in the area accounts for the high rate of suicide success.[31] POSSIBLE PREVENTION AND INTERVENTION STRATEGIES No national suicide prevention plan exists in China despite the magnitude of female sui-cide in rural areas. Because of the public health nature of the phenomenon, prevention and edu-cation programs would be the most cost effective, implementable and feasible way of addressing this issue. Prevention methods should take a twofold approach to stopping suicide attempts. The first step of the program should include a mental/social approach and monitor at risk women, improve public education programs about suicide and start training for lay people in the basic principles of suicide prevention.[32] The monitoring programs will develop specific prevention plans that incorporate local social beliefs in their outreach campaigns in rural areas. The public education programs will try to obtain community support for suicide prevention, convince the public of the importance of stopping suicide, and try to change the prevailing attitudes of the community surrounding the acceptability of suicide as a form of conflict resolution. Training for the lay people in basic suicide prevention should highlight the importance of increased social and economic support for at-risk groups including those who have been identified as having experienced family conflict, economic troubles or serious illness. These trained lay individuals will have the resources to help young rural women resolve their personal conflicts in other ways through creating social support systems outside the family. For example, these trained individu-als can direct women towards education or micro financing projects within the community. Fo-cusing on building social support outside the family is essential, because women often feel that they have nowhere to turn when their normal support systems (family and husbands) become the sources for their suicidal thoughts in the first place.[33] The second approach to decreasing the instance of young female suicide in rural China focuses on controlling access to agricultural chemicals, dangerous medications and improving access to emergency health systems. Because of the spontaneity and impulsiveness of suicide in China, controlling access to organophosphate poisoning will significantly decrease the number of attempted suicides. Studies have also shown that due to the very short term planning of sui-cides by rural women, a reduction in access to organophosphate chemicals will not lead to an increase in suicide by other means.[34] Reduction in access to dangerous medications will serve a similar purpose. Lastly, improving access to emergency health systems will reduce the success rates of suicide attempts, because women will be able to receive anti-poisons to reverse the ef-fect of the insecticides.

METHODOLOGY AND IDEAS FOR FUTURE RESEARCH Further research is necessary into the topic of the unique young female suicide patterns in rural China. Firstly, quantitative research should be done to establish an accurate national rate of suicide and attempted suicide in rural and urban areas using statistical sampling and demographic analysis independent from the national government if possible. This demographic analysis will determine and highlight the changes in rates of successful suicide and suicide attempts of the Chinese population at that moment and can be compared to other statistics in history. This is nec-essary to assess what types of changes are occurring in suicide rates and how they are correlated to economic, social and political developments in China. Much more extensive qualitative research must be done in order to thoroughly understand

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the precipitants and impulsivity of female suicide in rural areas. Semi-structured interviews with patients (those who have attempted suicide but failed), their family, companions and community members are necessary to completely grasp why they have decided to take their lives, what drove them to that decision, and what is the public opinion about suicide. Analysis of the narratives given by these people will allow researchers to bring out the deepest cultural ideas embedded in rural young women, and the communities that surround them about the social, economic, cultural and politics issues surrounding young rural female suicide.

CONCLUSION The public health problem of the high rates of young female suicide in rural China remains important for China as it moves forward as a leader on the international field. This paper elucidates the major psychological, socio-cultural and physical factors which contribute to the uniquely high rates of suicide found in modern rural China. The psychological factors include the prevalence of untreated mental illness, and its subsequent impact on suicide rates. The socio-cultural factors comprise the unique characteristics surrounding the narratives of suicide in traditional Chinese history and culture. These narratives allow rural women to believe that suicide is an acceptable and honorable way to resolve conflict. The physical factors strongly impact the success rate of suicide attempters. Easy access and availability of lethal pesticides in rural homes facilitate women who impulsively commit suicide due to an acute socio-cultural stressor. Also, lack of emergency health resources to treat suicide attempters also contributes to their high rates of death. Finally, this paper presents a possible structure for a thorough intervention and prevention strategy to reverse the rates of young female rural suicide in the future. Two hypotheses currently exist for suicide trends in China for the future. One hypothesis argues that China’s suicide rates will being to mirror those of the Western nations as the urban population overtakes those of the rural communities. Supporters of this hypothesis believe that capitalistic developments in China’s booming economy will increase the suicide rates of men, due to the stress from a hyper competitive working environment. Therefore, the suicide rates for urban men will soon overcome those of rural women. The other hypothesis argues that China’s unique suicide rates will remain the same, because little will be done to address the mental health problems in the rural countryside and/or ameliorate the socio-cultural stressors that trigger these suicide events.[35] As China moves forward as an important member of the international community, it must not only focus on improving its industrial power, but it also must address its internal social problems, such as the high suicide rates in young rural women.

Penn AsiAn Review

NOTES[1] Jianlin Ji & Arthur Kleinmen, “Suicide in Contemporary China: A Review of China’s Distinctive Suicide Demographics in Their Socio-cultural Context” Harvard Review of Psychiatry, (2001): 1.[2] Paul Yip & Kay Liu, “The ecological fallacy and the gender ratio of suicide in China” British Journal of Psychiatry, 189 (2006): 465.[3] Ji, “Suicide”, 4.[4] Yip, “Ecological Fallacy”, 792.[5] Ji, “Suicide”, 2.[6] Veronica Pearson & Meng Liu, “Ling’s Death: An Ethnography of a Chinese Woman’s Suicide” Suicide and Life-Threatening Behavior, 32, no.4 (2002): 347.[7] Ibid, 348.[8] Paul Yip & Chris Callanan, “Urban/rural and gender differentials in suicide rates: East and West” Journal of Affective Disorders, 57, (2000):100.[9] Ji, “Suicide”, 1.[10] Michael R. Phillips, Huaqing Liu et al, “Suicide and Social Change in China”, Culture, Medicine and Psychiatry, 23, no. 1, (1999): 25.[11] Ji, “Suicide”, 2.[12] Ibid, 3.[13] Pearson, “Ling’s Death”, 360.[14] Phillips, “Suicide and Social Change”, 50.[15] Ji, “Suicide”, 8.[16] Jie Zhang, Shuhua Jia , et al, “Characteristics of Chinese Suicide At-tempters: An Emergency Room Study”, Death Studies, 30, no. 3 (2006): 265.

[17] Yip, “Urban/Rural”, 100.[18] Ji, “Suicide”, 5.[19] Veronica Pearson & Michael R Phillips, “Attempted Suicide Among Young Rural Women in the People’s Republic of China: Pos-sibilities for Prevention”, Suicide and Life Threatening Behavior, 32, no. 4, (2002): 363.[20] Ji, “Suicide”, 10.[21] Ibid, 12.[22] Phillips, “Suicide”, 38-40.[23] Pearson, “Ling’s Death”, 350.[24] Silvia S Canetto, “Women and Suicidal Behavior: A Cultural Analysis”, American Journal of Orthopsychiatry, 78, no. 2 (2008): 261.[25] Ji, “Suicide”, 10.[26] Zhang, “Characteristics”, 264.[27] Canetto, “Women”, 255.[28] Pearson, “Attempted Suicide”, 350.[29] Ji, “Suicide”, 8.[30] Pearson, “Attempted Suicide”, 352.[31] Ji, “Suicide”, 10.[32] Pearson, “Attempted Suicide”, 366.[33] Ibid, 364.[34] Ibid, 365.[35] C Pritchard, “Suicide in the People’s Republic of China categorized by Age and Gender: Evidence of the influence of culture on suicide”, Acta Pyschiatrica Scandinavia, 93 (1996): 365.

10 | Unique Phenomenon of Suicide

The term “Hoa” refers to the ethnic Chinese in Vietnam. During their time in Vietnam, the Hoa built a strong ethnic network and played an important role in commerce. Their time in Vietnam, however, ended with the fall of Saigon in 1975, when the communist government expelled most of them. As part of the second wave of “boat people” to leave Vietnam, the Hoa became one of the largest groups of refugees in history. A large fraction of the Hoa ended up in the United States. This study examines the second generation of Chinese-Vietnamese-Americans. The Hoa is a unique group because they possess an intra-national, or sub-ethnic, iden-tity. Although they are ethnically Chinese, they have an intra-national identity connected with Vietnam, their birthplace and the place where they were raised.[1] Their children, second-gener-ation Chinese-Vietnamese-Americans, possess an even more complex label. Because they were either born or raised in the US, a new connection with America has been laid upon their already multifaceted ethnic label inherited from their parents. In researching this topic, I discovered a lack of information on the Chinese-Vietnamese (either generation) and more specifically their linguistic patterns. The subject of language inter-ested me because of the large role language plays in identity construction and because of my own personal history with the topic. As a second-generation Chinese-Vietnamese-American, I found it confusing that my parents chose to teach me Chinese (specifically, Cantonese) over Vietnamese, despite the overwhelming Vietnamese cultural influence (such as food we ate and what television shows we watched) on our lives. This personal motivation, in addition to the absence of general discussion on this unique community, is the foundation for this paper. My preliminary research suggested that historical tensions might have played a role in language and identity construction. This paper seeks to explore how past historical conflicts between the ethnic Chinese and Vietnamese influence the language skills of the second-generation Chinese-Vietnamese-Americans and how these skills subsequently affect identity construction.

HISTORICAL INFLUENCE

Before the Fall of Saigon

Chinese migration to Vietnam occurred in three stages: pre-French occupation, French occupation, and post-French occupation (a.k.a Two Vietnams era). These three eras represent different attitudes and policies carried out by the current ruling government towards Chinese migrants. The Chinese have a long and tumultuous relationship with their neighbors to the South. Immigration from China to Vietnam started as early as 111 B.C when China began direct rule over Vietnam. According to Chang, “population movements of considerable scale across

American Born Chinese-Vietnamese:

By Anthony TranCAS ‘13

The Historical Influences on Second-Generation Chinese-Vietnamese-American Language Learning and Identity Construction

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Source: Anthony Tran, CAS ‘11

SOUTHEAST ASIA

the land border and by well-established waterways have been a familiar and recurrent phenom-enon for centuries”.[2] Chinese rule in Vietnam lasted only until 939 A.D, but an eternal relation-ship had been forged between the two nations. The ancient tie set the stage for a rather easy and open migration between the two nation states. The pre-French stage encompasses the time frame from 111 B.C to 1883 A.D. Dur-ing this stage, Chinese migrants belonged to primarily two groups: administrators, farmers, and landlords looking to achieve economic prosperity or people fleeing China due to political crises. The influx of a Chinese ruling class created a group of Chinese elite in Vietnam, leading to Chinese control of economic and agricultural sectors. Despite Vietnam’s independence from Chinese rule in 939 A.D (after a series of rebellions against the ruling Chinese power), Chinese influence in Vietnam remained strong. Immigrants continued to flow across the border after Chinese political upheavals and Chinese culture continued to influence Vietnam in the form of Confucian ideals, literature, and art. Although Vietnam was never once again placed under China’s political domain, the two remained allies in the government sphere. The leaders of China and Vietnam exchanged blessings of alliance and the two states arranged for Chinese migration into the southern Vietnam region during the late 17th and 18th centuries. This decision resulted in the direct establishment of a Chinese community, the Hoa, in Vietnam. This time period was the best for the Hoa; Chinese and Vietnamese relations were stable and cordial. Vietnam saw the Hoa as an asset that helped Vietnam expand economically and become a larger commercial player in the Southeast Asian marketplace. In the seventeenth and eighteenth centuries, Hoa traders expanded Vietnamese control over the Mekong river delta region in Southeast Asia, and the commercial and agricultural sectors. As a result, the Hoa reached equal status with the Vietnamese. The Hoa living in the northern region of Vietnam were considered Vietnamese by nationality after having lived there for many centuries. After 1829, children of mixed marriages between Chinese and Vietnamese were considered Vietnam-ese and granted political rights. During the French occupation of Vietnam, which extended from 1883 to 1954, the Hoa were at first openly discriminated against by anti-Chinese legislation. This rising anti-Chinese sentiment was spurred on by French concerns that the growing Chinese population would lead to social unrest and the subsequent downfall of their Vietnamese domination. As a result, regu-lations such as poll taxes and immigrant restrictions downgraded the status of the Hoa. How-ever, sentiment changed when these policies hurt Vietnam and the French economically. The French, by the beginning of the 20th century, established a more liberal policy towards the Hoa. The French set up “congregations,” a system in which the Hoa run their own communities by taking control of economic and safety matters in addition to setting up private hospitals, Chinese language schools, and temples. Despite the feelings of some Hoa and the Chinese government, which regarded such a system as race-based discrimination, the congregations, as a whole, led to more freedom for the Hoa and economic growth. Although the global economic depression from 1929-1933 hampered the Hoa’s economic development, the French and the Hoa built a substantial commercial relationship. The Hoa became the principal controllers of the rice indus-try and served as the principal moneylenders.[3] The Hoa also acted as the middlemen between the native Vietnamese and the French elite class of colonists, further shoring up their economic status. These economic factors, combined with the isolation of Hoa through the congregation system and the influx of Chinese immigrants, led to a distinct divide between the Hoa and the native Vietnamese.[4] Unlike the pre-French occupation era, the two groups now seemed differ-ent from one another. From a cultural point of view, the Hoa built up stronger connections with their Chinese heritage with the establishment of their own schools, etc. under the congregation system. From an economic standpoint, the Hoa held considerable power in Vietnam and over the native Vietnamese; the Vietnamese were well founded with their concerns over their sover-eignty. So because of these factors, after the Vietnamese gained independence from the French in 1954, the Vietnamese began to reverse the ongoing trend of increasing Hoa domination. The end of the French rule in Vietnam saw the establishment of two Vietnamese halves: the Democratic Republic of Vietnam in the North and the Republic of Vietnam in the South. The Northern government worked to dissolve existing social structures in order to integrate the Hoa with the rest of the Vietnamese community.[5] The government started to reduce Chinese language in schools and, as a socialist state, started to dissolve the private sector, which effec-tively cleared away Hoa dominance over economy. The North also implemented plans to make all Hoa into Vietnamese citizens and the government took over previously Hoa-administered duties. Because the North had fewer ethnic Chinese than the South (0.3 million, compared with 1.4 million), the government encountered less resistance in their plans.[6] The North continued their integration plans until the fall of Saigon in 1975 .

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12 | American Born Chinese Vietnamese

The South saw much more turmoil with regard to Hoa integration. The South Vietnamese gov-ernment took on a strict naturalization stance, requiring all Hoa to integrate by adopting Viet-namese citizenship, changing their names, giving up their trades/business, pledging able-bodied men to the military, and integrating their schools.[7] The South’s naturalization measures led to widespread resentment; the Hoa did not want to comply with rules that compromised their economic livelihoods and their culture. However, the South continued to press onward with their integration desires, eliciting further protest and even Taiwanese intervention. Hoa protests during the summer of 1957 brought the country to an economic standstill as Hoa departures caused Hoa-owned businesses and schools to close, and banks. The result of the protests led to a change in the terms of Vietnamese citizenship, reducing the effect on businesses considerably. Some Hoa, therefore, chose to become citizens, as it was a pragmatic decision, allowing them to expand their businesses and further develop economically. There was no consensus on how to deal with the Hoa between the North and the South. However, the Hoa were becoming increasingly unwelcome. The Vietnamese came to see the Hoa as dangerous foreigners and exploitative capitalists. Naturalization measures, which further divided the Hoa and the Vietnamese, reflected this sentiment. Although some Hoa chose to naturalize because of the economic advantages, they only chose to become citizens to gain these privileges, not because they identified with the Vietnamese. This social and cultural divide led to the exodus of Chinese from Vietnam after the fall of Saigon in 1975.

Post-Fall of Saigon

The end of the Vietnam War conflict coincided with the fall of Saigon, formerly the South Vietnamese capital, to North Vietnamese forces. With the installation of a socialist regime, the old capitalist economic structures in the South dissolved. These efforts affected the Hoa in a substantial matter. In an attempt to rid the bourgeoisie class, the government seized the properties of well-off businessmen and other individuals, who were, for the most part, Hoa. In addition, the government continued their naturalization efforts, requiring all Hoa to convert to Vietnamese citizenship. These methods, combined with an increasing display of loyalty to China professed by the Hoa, created further tension and even garnered the attention of the Chinese government. Political tension between China and Vietnam further exacerbated the plight of the Hoa. The absence of aid from China and the possibility of a Chinese spy ring angered Vietnam, while Vietnam’s closeness with Russia irritated China. Both states continued to argue about border and resource disputes. These diplomatic tussles influenced Vietnamese policy towards the Hoa. In an attempt to control pro-Chinese sentiment and the still-strong Hoa influence of the economic market, the government installed sweeping reforms that seized Hoa-owned businesses and cre-ated a new currency that transformed the holdings of the Hoa to worthless paper. The attempts to break up Hoa capitalist economy led to more strained relationships and an increasing anti-Vietnam sentiment among the Hoa.[8] The diplomatic tensions finally came to head in the years of 1978 and 1979. Relations between China and Vietnam continued to sour over the treatment of the Hoa, leading to China’s deployment of ships to Vietnam to bring back persecuted citizens. However, China could not handle the influx of migrants. By the end of 1978, there was a refugee crisis. There was already one major wave of refugees (largely former South Vietnamese elites, politicians, and military leaders) after the fall of Saigon in 1975. This second wave, however, saw the exodus of the Hoa; nearly 85% of all emigrants from Vietnam were Hoa.[9] Spurred on by the possibility of a Sino-Vietnamese War, the devolution of the private sector, and increasingly harsh treatment by the Vietnamese government, the Hoa left Vietnam in huge numbers using small fishing ves-sels, originating the term “boat people.” Some Vietnamese exploited the situation by setting up a system for leaving the country that involved high fees paid in gold. Although the Vietnamese government and officials were never implicated in any forced expulsion of the Hoa, the treat-ment of the Hoa and the nonchalant attitude towards their emigration shows some level of complicity.[10] Close to 250,000 Hoa left Vietnam in the aftermath of the Vietnam War.[11] They dis-persed throughout Southeast Asia. Some went back to China, Hong Kong, or Taiwan while oth-ers settled in Indonesia, Malaysia, and the Philippines.[12] Some were forced back to Vietnam as there were too many refugees for other nations to handle. A large fraction of the Hoa, 170,000, settled in the United States, mostly on the west coast.[13] The Hoa became the first generation of Chinese-Vietnamese-Americans. According to the 2000 US Census data, the majority of Chinese-Vietnamese-Americans live in California with the remainder spread rather evenly across the other states. And despite any initial complications due to their refugee status, the Chinese-Vietnamese-Americans have created new lives for them-

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selves and have achieved socioeconomically. Trieu cites a study conducted by Gold, which indi-cates that Chinese-Vietnamese-Americans have been able to succeed due to their entrepreneurial background, and the establishment of ethnic networks and organizations. Fong also attributes their success to their language skills. In his case study on Chinese-Vietnamese-Americans in San Francisco, knowing a variety of Chinese dialects and Vietnamese allowed them to create busi-ness contacts more easily. The economic stability of the Chinese-Vietnamese-Americans and their overall middle-class status led to the creation of a new generation, the unique group of second-generation Chinese-Vietnamese-Americans. Past conflict between the Hoa and the Vietnamese led to the expulsion of the Hoa. Though the Hoa had contributed significantly to Vietnam’s economy, the Vietnamese resented Hoa dominance over the commercial sector and were suspicious about their loyalties and per-sonal motivations. Conflicts came to an end when the Vietnamese strongly persuaded the Hoa to leave Vietnam and to seek new lives elsewhere. Despite the efforts of the Vietnamese to naturalize and economically regulate the Hoa, the Hoa felt singled out and discriminated against by the Vietnamese government. Instead of identifying with Vietnam they rekindled their loy-alty to Chinese ancestry. In addition to this interesting intra-national ethnicity, first-generation Chinese-Vietnamese-Americans have an additional dimension of experience from living in the United States. These first-generation parents influenced their second-generation children’s iden-tity through choices concerning language instruction. The next section will address the issues surrounding these choices.

LANGUAGE AND ETHNIC IDENTITY CONSTRUCTION

The Language Connection and Segmented Assimilation

Many individuals tie the ability to speak their native language with their ethnic identity. The development of this new identity is related to the group’s assimilation and acculturation. First, one must consider the theory of segmented assimilation, which derives from classical straight-line assimilation.[14] This theory has been highly explored by Zhou, who connects its implications and postulates with a wide variety of ethnic groups.[15] This approach dictates that assimilation of the second generation occurs in stages and will vary according to outside, struc-tural factors, such as settlement, government assistance, and community ethnic makeup. In ad-dition, the theory dictates that assimilation will generally follow one of three paths: straight-line assimilation in which the individual adopts a white cultural identity and previous ethnic culture is discarded; downward assimilation in which settlement and adoption of the urban culture leads to a downgrade of economic status; selective assimilation in which individuals maintain some as-pects of their ethnic identity, while adopting some aspects of their new culture and experiencing an upgrade in economic class. The important thing to note, however, is that unlike classical theo-ries of assimilation, the segmented theory deemphasizes the time dependence of assimilation; the theory stresses assimilation comes at “diverging paces” contingent on the specific group or individual’s circumstances. In addition, segmented assimilation theory stresses the addition and subtraction of certain factors that lead to the so-called selective assimilation. For example, one can gain American citizenship, but retain ethnic identity by maintaining their knowledge of na-tive language.[16] This type of example is exactly how language fits in with this broader assimilation theory of the second-generation. According to Trieu, segmented assimilation theory places lan-guage assimilation under the cultural/social assimilation umbrella.[17] The theory states that cultural assimilation can be one of the first ways individuals can adapt to a new culture because the attainment of cultural traits is a personal endeavor, rather than governmental or communal endeavors in the form of gaining citizenship or belonging to a community group. For language assimilation in America, there is plenty of motivation to acquire English-speaking abilities. To be both socially and economically successful in America, one must arguably be fairly proficient in English.[18] Knowing how to speak English provides the individual with cultural capital that they can use to further their business, their education, and their personal socioeconomic status. The possible consequence of English language learning is the deletion of ethnic identity. Eng-lish learning can erase the learning of native language and sever an important tie with native culture and ethnic identity. This loss of ethnic identity and fluency in native tongue causes a loss of social capital associated with ethnic identity and bilingualism.[19] However, bilingualism is common among the second generation. Most of the segmented assimilation maintains language as a cultural aspect; in today’s globalizing society, knowledge of a second language provides ad-ditional cultural capital. Accordingly, the second uses the knowledge of native language as an ethnic identifier.[20] The case of second-generation Chinese-Vietnamese-Americans mirrors that of most

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14 | American Born Chinese Vietnamese

other second-generation Americans. Individuals belonging from this group have been able to considerably assimilate with white American culture, learning English and adopting other cus-toms, while retaining aspects, most notably native language, of their ethnic identity. The larger question is which language (Chinese or Vietnamese) did the second-generation Chinese-Vietnam-ese-Americans learn and how this choice fits in with their ethnic identity.

Second-Generation Chinese-Vietnamese Language Patterns and Ethnic Identity Construction

According to Trieu, most Hoa immigrants chose to teach their children to speak their specific dialect of Chinese by speaking to their children exclusively in this language.[21] In addi-tion to just language, the Hoa emphasized a connection with their Chinese culture. In an article written by Tara Shioya in the San Francisco Chronicle on a Chinese-Vietnamese-American fam-ily, the parents of the family stressed the importance of maintaining their ancestral connection with China. The article notes how the parents wanted to emphasize that, despite being born in Vietnam, they were inherently and distinctly Chinese and they wanted their children to learn Chinese customs and traditions; they didn’t consider themselves Vietnamese: “While both sides of the family lived in Vietnam for at least two generations, the Lys have constantly reminded their children that they are culturally Chinese.” The parents of the family spoke to their children exclusively in Cantonese (a Chinese dialect) and this choice led to confusion: “That has made it challenging for the children as they try to find their identities, not only as Asians but also as Asian Americans.” Their initial language instruction told the children that they were ethnically Chinese, but failed to acknowledge the other side to their intra-national identity. As the second generation grew up, they came to question this absence of “Vietnamese” in their identity and who they really were. In addition, the article notes how the first generation felt bitter towards the Vietnaese government, establishing a possible link between historical tension and language learning. The article states that the family was forced to work in a government factory, instead of their own store, and that the family was subjected to food rations.[22] In this quote, the article provides an instance of how the historical tension led to the first generation connecting more with their Chinese ancestry, leading to the choice of teaching Chinese to their children. Additionally, in the study carried out by Trieu, her interviews with second-generation Chinese-Vietnamese individu-als reflected this overall “Chinese” sentiment among the first generation. In one instance, the interviewee told Trieu that their parents only wanted to teach them Chinese when asked why they did not learn Vietnamese. The interviewees noted a sense of bitterness in terms of their parents’ feelings towards Vietnam. From this, it is clear that the tie to China was stronger than the tie to Vietnam as a result of historical tensions.[23] It can be argued that this strong connection is influenced by the historical conflict be-tween the two cultures. In the documentary video, “Ngo Hai Zung Gwok Yun (I am Chinese)” produced by Tina Quach, an undergraduate at UC Berkeley, an explanation of the connection be-tween language learning, ethnic identity, and historical conflict was given. For example, the video demonstrated how discrimination towards the Hoa and the series of measures that tried to reduce Hoa domination in Vietnam led to bitterness among the Hoa. In an interview with her family members, Quach illuminates how the Hoa were treated like foreigners and were denied certain economic and social privileges given to the Vietnamese such as factory jobs and admission to institutions for higher learning. The Hoa also felt that the Vietnamese took everything away from them: their businesses, their homes, and their previous lives. Quach’s grandmother stated, “Every-thing became nothing,” once the communist government arrived. The Hoa reacted by reinforcing their Chinese heritage, their Chinese roots. Although most came to the United States, instead of returning to China, the Hoa maintained their Chinese heritage by practicing the Chinese customs and teaching their children Chinese. Despite eating Vietnamese foods and embracing Vietnamese culture, the Hoa never considered themselves ethnically Vietnamese because they were treated as different in their home nation and expelled for being foreign.[24] For the second generation, the historical influence on ethnic identity resulted in some confusion. According to Trieu, ethnic identity was initially tied in with language. Her study illumi-nated through her interviews that most second-generation Chinese-Vietnamese-Americans used language as an ethnic determinant; because they learned to speak Chinese at a young age, they were Chinese. In Shioya’s article, the documentary video, and Trieu’s study, however, instances of participants having difficulty in forming their ethnic identity became more prevalent as the participants became older. Forcing the second generation to choose only the Chinese part of their identity gave way to questions that inquired the Vietnamese connection to their identity: Why do we celebrate certain customs if we aren’t Vietnamese? My Chinese parents were born in Vietnam, so what does that make me? Straddling this cultural barrier is the main identity problem encoun-tered by second-generation Chinese-Vietnamese-Americans. Even though they have a bridge to

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their Chinese heritage via language, they want to know how this Vietnamese background fits into the big picture of their identity. According to Trieu, this is the point in time in which one turns to other factors. Despite language being a strong, ethnic determinant, many second-generation Chinese-Vietnamese began to rely on other contextual factors to help build their identity. For example, Trieu cites location/community of origin as an example in addition to programs of higher education and participation in school cultural groups. Language became less of a deter-minant and other social structures became more important in terms of identity construction. They began to build new identities for themselves, form-fitted to their specific interpretations of their ethnicities.[25] For second-generation Chinese-Vietnamese-Americans, it is clear that language played a great role in ethnic identity construction. A language choice influenced by history and societal tensions between two groups, native language became an early determinant for ethnic iden-tity. As a result, second-generation Chinese-Vietnamese-Americans assimilated segmentally into American society with this identity. However, this overarching label, which disregarded their Vietnamese connection, led to widespread confusion and questioning. At this moment in many second-generation individuals’ lives, however, they could now rely on other factors to form their identity. By using other social structures, the second generation expanded what determined their ethnic identity, allowing for a more diversified assimilation pattern that grabbed onto more as-pects of ethnic heritage.

CONCLUSION This paper has established the link between history, language, and identity construction in second-generation Chinese-Vietnamese-Americans. A history of Chinese and Vietnamese conflict and present tensions in Vietnam caused Chinese ancestral roots to be stressed, manifest-ing in the native language taught to the second generation. The second generation took the lan-guage as an ethnic determinant, the key to their ethnic identity. However, as time went on, they asked questions about how Vietnam fit into their identity. Other social structures and contexts allowed more fitting identities to be developed in relation to their one-dimensional language determinant. These factors contribute to a greater sense of ethnic identity, without loss through cultural assimilation and adaptation.

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NOTES[1] Monica M. Trieu, Identity Construction among Chinese-Vietnamese-Americans (El Paso, TX: LFB Scholarly Publishing LLC, 2009), 47.[2] Pao-min Chang, Beijing, Hanoi, and the Overseas Chinese (Berkeley, CA: China Research Monograph, 1982), 1.[3] Ramses Amer, The Ethnic Chinese in Vietnam and Sino-Vietnamese Relations (Kuala Lumpur, Cambodia: Forum, 1991), 5-11.[4] Chang, Beijing, 7-9.[5] Amer, The Ethnic Chinese, 14.[6] Joe Chung Fong, “The Development of the Chinese-Viet-namese Community in San Francisco” (MA Thesis, University of California, Los Angeles, 1998), 34. [7] Chang, Beijing, 11-2.[8] Amer, The Ethnic Chinese, 22-56.[9] Chang, Beijing, 30-35.[10] Amer, The Ethnic Chinese, 85-104.[11] Fong, “Development in SF,” 35.[12] Judith Strauch, The Chinese Exodus from Vietnam: Implications for the Southeast Asian Chinese (Cambridge, MA: Cultural Survival, Inc., 1980), 6.[13] Trieu, Identity Construction, 21-25.[14] Ibid., 51-74.

[15] Min Zhou, “Segmented Assimilation: Issues, Controversies, and Recent Research on the New Second Generation,” Immi-grant Adaptation and Native-Born Responses in the Making of Americans. Spec. issue of International Migration Review 31, no. 4 (1997): 979.[16] Min Zhou & Yang S. Xiong, “The Multifaceted American Experiences of the Children of Asian Immigrants: Lessons for Segmented Assimilation,” Ethnic and Racial Studies 28:6 (2005): 1139.[17] Trieu, Identity Construction, 34-35.[18] Zhou, “Segmented,” 977.[19] Min Zhou, “Coming of Age: The Current Situation of Asian American Children,” Amerasia Journal 25:1 (1999): 18.[20] Min Zhou, “Growing Up American: The Challenge Con-fronting Immigrant Children and Children of Immigrants.” Annual Review of Sociology 23, (1997): 76.[21] Trieu, Identity Construction, 127-128.[22] Tara Shioya, “For the Lys, America is an Ongoing Journey – 16 Years after Fleeing Vietnam, Children are Chinese American – Parents Remain Chinese,” San Francisco Chronicle, December 19, 1994, sec. A.[23] Trieu, Identity Construction, 127-128.[24] “Ngo Hai Zung Gwok Yun,” Youtube, April 10, 2010.[25] Trieu, Identity Construction, 105-151.

16 | American Born Chinese Vietnamese

The violent Indian Maoist movement began in the sleepy West Bengal town of Naxalbari back in 1967, when destitute peasants rose up against their oppressive landlords. Today India’s communist insurgents are universally referred to as Naxals or Naxalites.[1] The modern Maoist movement haunting India today crystallized in 2004 when the two largest Maoist groups in the country merged to form the Communist Party of India (Maoist). The party and its associated groups are estimated to control anywhere between 20,000 and 55,000 fighters[2] spread across some 87 districts of 13 states-[3] 20% of India’s total territory.[4] In recent years, the coordina-tion of the Maoists has increased to the point that they were able to successfully organize two day ‘economic blockades’ in six states simultaneously in 2006 and again in 2007.[5] The growing reach of the Maoists caused Prime Minister Manmohan Singh to declare on 17 April 2006 that Naxalism was the “single biggest security challenge ever faced” by India.[6] The government’s security drive, however, has yet to accomplish much of anything. India today risks falling into the classic counterinsurgency protracted stalemate, as “in a fight between a fly and a lion, the fly cannot deliver a knockout blow and the lion cannot fly”.[9] The Maoists are clearly unable to take over the Indian state and the state is unable to crush the Maoists. To break this deadlock, India needs to launch a closely coordinated, centrally directed military and socio-economic of-fensive against the Naxals. The Maoists have thrived in India’s most underdeveloped areas. Indeed, you can “take a map of India, mark off underdeveloped areas and insurgency flashpoints and you will find an amazing degree of congruence”.[10] Of the states bearing the brunt of the insurgency, Bihar and Jharkhand are among the poorest in the country, with literacy rates (47% and 54% respectively).[11] In the Dantewada District, the most violent district in the central state of Chhattisgarh, the 2001 census showed that 95% of villages had no medical buildings of any kind.[12] These areas have been left behind, forgotten and undeveloped while the rest of India has boomed. The government or lack thereof in these districts is mostly to blame for the underde-velopment. Local government is virtually non-existent. Describing the Bastar District of Chhat-tisgarh in late 2006, the Economist painted a grim picture: In one [village] there is a hand-pump installed by the local government, but the well is dry. There are no roads, waterpipes, electricity or telephone lines. In another village a teacher does come, but, in the absence of a school, holds classes outdoors. Policemen, health workers and officials are never seen. The vacuum is filled by Naxalite committees, running village affairs

A Few Broken Eggs on the Purification Hunt:

By Sasha Riser-KositskyCAS ‘11

India’s Self-Defeating Response to the Maoist Insurgency

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Source: blogspot.com

EAST ASIA

and providing logistic support to the fighters camping in the forest.[14] Bastar is not an isolated case. In 2006 the head of the Dantewada district admitted to the New York Times that 60% of his district was a “no man’s land for civil servants”.[15] Maoist violence alone cannot account for the systematic mis-governance of these areas. Even in areas far from conflict zones, and flush with plenty of funds from the central government in Delhi, Indian state governments have proved incapable of carrying out basic administrative tasks. Despite a Supreme Court order, the Chhattisgarh government has yet to take steps to distribute compensation packages to those displaced by the fighting. Where people have returned to their villages from the camps to which they fled, “schools and ration shops do not function”. Across the border in Andra Pradesh, camp dwellers are “suffering Grade III malnutrition”.[16] Even when money does find its way into actual development projects on the ground, administrative incompetence ensures it is funneled into the coffers the Maoists. Chhattisgarh Director General of Police Vishwa Ranjan maintains that the Maoists rake in 2,000 crore rupees (Rs 2 billion) through extortion and protection rackets with contractors anxious to protect their operations.[17] A different report found that a full “30-40 percent of the funds meant for devel-opment” reach the Maoists.[18] If state governments had really prioritized fighting the Maoists, they would have done more to protect projects deemed crucial to the campaign. Graft and general ineffectiveness have hampered even the most innovative and promis-ing anti-Maoist schemes. The Maharashtran government has sponsored a Gaon Bandh (village ban) programme in which village councils are given Rs 2 lakh (Rs 200,000) for development projects if the village agrees not to shelter Maoists. In reality, however, the lack of security on the ground forces villagers to continue giving armed Naxals what they want. Even worse, in some cases, villages never received any money from the government in the first place.[19] Even at a time when every commentator carefully notes that the vast majority of Maoist recruits are some of the most dispossessed people in the country, state governments have done little to address the problem. The responsible government bodies have not only stopped land reform initiatives but have also failed to implement the central government’s flagship National Rural Employment Guarantee (NREG) food-for-work program and other anti-poverty pro-grammes in Maoist affected areas.[20] Indeed these state-led development efforts have been so feeble that some skeptical observers have questioned whether those in the highest levels of the Indian government really want to tackle the Maoist problem at all. Instead of addressing systemic governance issues, it is simply easier for the government to strengthen its coercive capability. Recently an unnamed ‘senior government official’ was widely quoted in the Indian press equating civilians caught in the crossfire between Maoists and security forces to “broken eggs”. As long as the ‘ordinary CRPF Jawans’ [the Central Reserve Police Force] bear the brunt of the fighting, senior leaders are content to leave things largely as they are.[21] The pernicious economic conditions in the states affected play straight into the hands of Maoists, who vow to annihilate oppressor landlords and bring development. In 1964, in his au-thoritative work on counterinsurgency, Galula emphasized the importance of an enduring cause for any successful insurgent movement. Rebels use this powerful cause or vision to “attract the largest numbers of supporters and repel the minimum opponents”.[22] A strong cause, coupled with “administrative weakness” in the government are “musts” for successful insurgencies.[23] Thus far, Indian state governments have willfully ensured the optimal conditions for a successful insurgency in their states. A government’s best response to an insurgency is to cut out its legs by addressing its cause. While a ‘good insurgent’ will pick a cause that “his opponent cannot adopt without los-ing his power in the process,” the state should always try to address as much of the cause as possible.[24] The Naxal-affected state governments lack the will to address the pitiful economic conditions of their remote districts. Instead, they have concentrated on crushing the Maoists with force. The lack of administrative capability and the corruption of the Indian states have under-mined efforts to raise citizens militias to target the Maoists. In 2005, a movement calling itself the Salwa Judum arose in the Maoist affected districts of Chhattisgarh. While the government to this day claims the movement was the citizens’ spontaneous initiative, the organization clearly enjoys widespread government support. In 2006, the Chhattisgarh government began training ‘Special Police Officers (SPO’s) in order to ‘assist’ the militias. [25]

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18 | India’s Self Defeating Response to Maoist Insurgency

That no author can seem to agree on the exact meaning of the name ‘Salwa Judum’ itself is emblematic of the group’s shadowy origin. Robinson and Singh write that it means “peace mission” or “collective hunt”,[26] while the Economist says the term means “something like ‘peace hunt’”.[27] Other writers have defined it as “peace initiative”[28] and most ominously as “purification hunt”.[29] The only concensus on the Salwa Judum is that it employs brutal tactics. While Ra-man Singh, Chhattisgarh’s Chief Minister, calls the militia “a success story” and a “non-violent movement against exploitation”,[30] the National Human Rights Commission has determined that Salwa Judum forces “have been responsible for widespread arson, rape, forced disappear-ances, suspect encounters and extra-judicial killings”.[31] “If villagers show reluctance, they are attacked, their belongings looted, houses burnt and some people either lynched or killed”.[32] This “scorched village” policy is apparently aimed at “starv[ing] [Maoists] of local support”.[33] Insurgencies, however, are rarely beaten by naked brutality. Galula views insurgencies and counterinsurgencies as fundamentally political “battles for the population”[34]—not battles against them. Echoing Galula, the latest U.S. Military counterinsurgency manual states that the “primary objective of any COIN operation is to foster development of effective governance by a legitimate government”. As such, “the presence of the rule of law is a major factor in assuring voluntary acceptance of a government’s authority and therefore its legitimacy”.[35] These con-siderations are not merely theoretical. The illegitimate use of force by state officials has driven whole areas into the arms of the Maoists. The extremely well publicized events in the small West Bengal town of Lalgarh this sum-mer are a prime example of government repression contributing to the insurgent cause. In No-vember of 2008 the West Bengal Chief Minister’s convoy was hit with an IED near Lalgarh. As the police indiscriminately arrested and interrogated townspeople in the hunt for those responsi-ble, local anger built. Mutual hatred and suspicion between citizens and police boiled for months. When Maoist forces moved into the town to declare it a liberated zone on 16 June, 2009, locals were quite welcoming. In response, the government of West Bengal mounted a massive military operation to take back the area.[36] As Galula writes, “a soldier fired upon in conventional war who does not fire back with every available weapon would be guilty of dereliction of... duty; the reverse would be the case in counterinsurgency warfare, where the rule is to apply the minimum of fire”.[37] Mao himself noted that violent crackdowns can play into the hands of insurgents, writing that “it was the enemy’s gunfire and the bombs... that brought news of the war to the... people. That was... a kind of mobilization, but it was done for us by the enemy”.[38] Successful counterinsurgents must be seen as backing a legitimate government through legitimate means. A government which claims to be democratic cannot go about arbitrarily brutalizing its citizens without sparking some kind of violent counter-movement. There is a clear double stan-dard in expectations for the behaviour of combatants in an insurgency. The rebels are expected to exercise violent means to achieve their ends; citizens expect their governments to follow the law. Unfortunately, problems of police brutality are not limited to West Bengal. Roy points out that the responses of all state governments to the Maoist problem have been tinged with corruption and indiscriminate violence. Where mining interests in forest areas are concerned, she alleges that police are using the Maoists as cover to arrest any who protest land seizures for business.[39] Villagers are caught in the crossfire between corrupt policemen seeking bribes and armed Maoists demanding food and shelter. One villager plaintively told media that, “life is very difficult... The Naxalites think we are helping the police. The police think we are helping the Naxalites. We are living in fear over who will kill us first”.[41] As the pitiable condition of the ordinary people enhanced the appeal of Maoist groups in the first place, security forces terror-izing locals only exacerbates the problem. Police corruption and dragnet tactics are extremely effective Maoist-recruiting tools. A local resident notes that “once there is... a minor case against you, the police arrest you every time there is a violent incident. Many Adivasis [tribal people] have had to sell their land or cattle to pay for the court cases...When they run out of money, they join the Naxalites...”.[42] While the Maoists themselves rarely shy away from terrorizing local populations, the actions of the po-lice are a critical contribution to the rebel cause. If the locals refuse to feed Maoist bands, “they will get angry and attack the local police station, and run away. And the villagers would have to suffer the consequences, face police arrests”.[43]

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Eastern Maharashtra was originally radicalized by Maoist band appealing to people unfairly targeted by the authorities. The Maoists “sang songs and gave eloquent speeches against the exploiters - the Forest Department, the police, the government, the contractors...”.[44] The Naxals built their base in the tribal areas by targeting hated officials and money lenders. They also took measures to dramatically increase the amount tribals were paid for their produce, especially tendu patta leaves used throughout India for wrapping everything from cigarettes to take-away food.[45] While state governments sat on their hands, Maoist groups began meeting the population’s needs with their own organizations. Indeed, the Maoists have made great strides in providing good government for those under their sway. The Maoist Communist Centre initially gained popularity in Bihar by launch-ing an effort to do away with dowry, end caste discrimination, punish rape and crack down on prostitution. Locals prefer the movement’s Jan Adalat courts and their “swiftly delivered and ruthlessly enforced” judgments to the official government courts which cost “a fortune and un-told delays”.[46] In central Bihar, “Maoists are helping people to tide over acute water scarcity... While the administration slept, the cadres were digging wells, paying for repairs of hand pumps, installing new ones, getting well-to-do farmers to use diesel pumps to create water reservoir for village use, as well as ensuring equitable distribution of water”.[48] By providing good govern-ment, the Maoists have gained recruits. The Naxals’ development strategy is a main part of their long term plan to seize power. Maoist leaders are “taking a 20- to 25-year view of their struggle” in which they slowly expand their liberated zones in order to threaten major Indian cities.[49] Mao wrote that the job of Mao-ists is not “to recite [their] political programme to the people, for nobody will listen... [they] must link the political mobilization... with developments in the war and with the life of the... people”.[50] The Naxals have taken Mao’s precept to heart. The Maoists themselves make no bones of their intention to overthrow the “semi-colo-nial, semi-feudal system under the neo-colonial form of indirect rule, exploitation and control”. The press release issued after the main Maoist groups unified in 2004 added that the revolution against “imperialism, feudalism and comprador bureaucratic capitalism” will be one of “armed agrarian revolutionary war... with the... seizure of power remaining as its central and principal task, encircling the cities from the countryside and thereby finally capturing them”.[51] The Indian central government has only woken up to growing Maoist threat very recently and has committed itself to addressing the Maoist threat militarily. Guerrilla bands, however, move too easily to be enveloped with traditional military tacticst—the best way to fight them is through good intelligence. On the other hand, citizens will not feel safe enough to pass along information to the government “until the insurgent’s power has been broken”.[52] Therein lies the paradox of counterinsurgency warfare. Unsurprisingly, these theoretical limitations on counter-insurgency warfare are born out on the ground. Articles on the much awaited launch of ‘Operation Green Hunt’ at the begin-ning of December, 2009 quote police officials pleased at the lack of Maoist resistance. In Maoist heartlands of Chhattisgarh, the “police are not facing any resistance in the interior areas”.[53] Similarly, the Times of India ran an article on December 7 entitled, “Operation Green Hunt Launched. But Where are the Naxals?”. The article notes that Maoists have discarded their uni-forms and tried to blend in with the local population in order to avoid capture by the security forces.[54] The pattern has been seen before. In the wake of the massive operation this summer to take back the West Bengal town of Lalgarh from the Maoists, security forces didn’t manage to capture a single Maoist leader. As anyone but the government could have predicted, Mao-ist forces withdrew to the forests to threaten the area another day.[55] Similarly, in the wake of a well publicized attack on Maharashtran police, the state Home Minister organized a heavily armed force and sent them off into the forest, vowing to “wipe out Maoist terror” and to send the Maoists “a fitting reply in the language they understand”.[56] Needless to say, ‘Maoist ter-ror’ continued unabated. Most foolhardy of all, in 2006, Swaranjit Sen, the Chief of Police in Andhra Pradesh argued that the government had “gained the upper hand” as “more Naxals [were] shot down than police officers and civilians”.[57] The latest operation is meant to venture beyond such fallacies to combat Maoist violence holistically. The New York Times reports that the current operation is comprised of over 70,000 police and paramilitary officers operating “in some of the country’s most rugged, isolated ter-rain”. Indian officials are fully aware that the effort must be a prolonged one—the Chhattisgarh

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chief of police admitted that the operation could take up to four years and include infrastructure and development projects.[58] The sequencing of these operations will prove difficult. As Mack argues, “coupling ‘reformist’ pacification programmes with military repression means that the impact of the latter tends to negate the desired effect of the former”.[59] The use of force must be finely targeted, and the security forces have to obey the law. While operations in Chhattisgarh have so far met with relatively little success, the gov-ernment’s proactive approach is a welcome change from the lack of response in earlier years. Previously police were so cowed that they rarely left their fortified outposts “even for social outings.”[60] Remaining buttoned up in compounds is widely recognized as counterproductive. Forces “lose touch with the people, appear to be running scared, and cede the initiative”. In-stead, police forces should take initiative, aggressively patrolling and above all sharing risk with the people they are supposed to be protecting.[61] Many in the Indian political establish have questioned this new, aggressive approach. Hitting back at critics, Home Minister P. Chidambaram seems of two minds. He argued before the Rajya Sabha [upper house] on December 2 that “we are not at war with them, they are citi-zens of this country” but then justified his operation on the grounds that the Maoists “call the parliamentary system rotten, they call it a pigsty. You must now tell us what we should do”.[62] The government has yet to find the correct balance between making war on the Maoists and protecting its citizens. While necessary in some form, the military effort now underway does not address the whole spectrum of the Maoist threat. Galula outlines a concise eight point program, to be ap-plied area by area by committed counterinsurgency forces which blends military and political elements:[64] 1. Use force to destroy main body of insurgents 2. Garrison the area to provide local security for the population 3. Establish contacts with the population, control its movements in order to cut off its links with the guerrillas 4. Destroy insurgent political organizations 5. New local authorities by election 6. Make sure these new local organizations are concretely effective on the ground. Organize self-defense units 7. Group and educate the leaders in a national political movement 8. Win over or suppress the last insurgent remnants Military action, then, must always be subordinate to the overarching political goal of preserving the state. The “primary purpose” of military action is to “afford the political power enough freedom to work safely with the population”.[65] Counterinsurgencies are won by the slow construction of non-violent, democratic “political machine[s] from the population up-ward”.[66] The Maoists have a clear understanding of the political aspect of the conflict- the government does not. In the face of increasingly bellicose rhetoric from the Home Ministry following the re-election of the ruling Congress Party, the Maoists remain defiant. In a 12 June press release, they warned that “the unfolding state terror... under Sonia-Manmohan-Chidambaram combine will be far more brutal, deadly and savage than under any other regime” and profess their intention to counter it. Most crucially, the press release recognizes the critical importance of disciplined conduct in the Maoist ranks. Maoists should “take extra precautions... not to cause damage to people’s property... and to apologize for our mistakes promptly assuring the people that such mistakes will not be repeated in future”.[67] Thus far, Chidambaram is in no mood for making any apologies, but, at the same time, has little power over day to day anti-Naxal activities. Due the particularities of Indian federalism, the central government in Delhi has very little direct authority over operations against Maoists in the field. While the Home Ministry reports that it has “advised” the concerned state governments to adopt a whole laundry list of anti-Naxal measures including increasing their police forces, training new special forces, step-ping up intelligence gathering, and developing infrastructure and promoting growth in affected areas, there are very limited mechanisms to hold the states accountable.[69] Beyond public scold-ing and backroom urging, the central government can only impose President’s Rule—taking over the day to day operations of that state government under Article 356 of the Constitution. The government, however, hasn’t been totally blind to the need for cooperation and coordination in the war against the Maoists. Unfortunately, instead of a single command or

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coordinating body, the central government has set up a plethora of committees to address the issue. These include the Empowered Group of Ministers under the Union Home Minister, the Standing Committee of Chief Ministers of Concerned States, a Coordination Centre chaired by the Union Home Secretary, a Task Force of police officials under the direction of the Special Secretary (Internal Security), and an Inter Ministerial Group of economic officials to oversee de-velopment measures. [70] As if these weren’t enough, the governments of West Bengal, Orissa and Jharkhand formed their own ‘joint coordination committee’ in August 2007.[71] The very proliferation of such committees is evidence that the proceeding ones failed to fulfill their in-tended purposes. No number of committees can substitute for a single counterinsurgency command. Metz and Millen emphasize the importance of quality, unified leadership in combating a pernicious insurgency. “The history of counterinsurgency shows that the full integration of all government agencies under unified control... is the only way to synchronize the elements of national power effectively”.[72] They further recommend that a senior civilian leader be placed in charge to underscore the fundamentally political nature of the conflict.[73] The lack of a single direction has undoubtedly hurt the fight against the Maoists. In 2004, the Andhra Pradesh government entered into fruitless peace negotiations with the Naxals while its neighboring states stepped up their military operations. The lack of direction is also il-lustrated by the unclear legal status of the Communist Party of India (Maoist). While the various Maoist groups have been officially banned by the states for many years, the Communist Party of India (Maoists) was only made illegal on 22 June 2009. Zee news reported that this move was seen as a means to prod the Communist government in West Bengal to take more active anti-Maoist measures. On its part, the state government said it was studying the decision to see if it was legally bound to ban the Maoists as well.[75] Until state governments clean up their acts, the Maoists will always find fertile ground from which to base their liberation struggles. As Sundar writes, “even if the government wrests back Maoist territory, the fact that it will work through the same corrupt, authoritarian police force and the same exploitative traders... will mean that discontent is bound to revive”.[77] While the government currently has little chance of beating the Maoists, the chances of an eventual Maoist victory are slim to none. Mack points out that guerrillas cannot generally hope to triumph in the field but must “drive a wedge... between the war-makers in the metropolis and their supporters”.[78] Mao held that the key to victory had little to do with holding land and everything to do with with space and time. Maoist “protracted struggle” is not designed to de-cisively defeat an enemy but to “exhaust” them.[79] The response in New Delhi, while flawed, has been anything but lethargic. The government is clearly committed to fighting the Maoists for as long as it takes. Joseph and Srivastava predict increasing violence until around 2012, but conclude that the Maoists have “lost their ideological moorings”. Most of their victims are those whose in-terests the Maoists are ostensibly championing.[80] While the ballot box will in the end triumph over violence, “levels of development and governance are so abysmal in many pockets in India that the Naxalite movement, sustaining itself only through armed conflict, continues to get sup-port from the public”.[81] Galula indeed points out that most insurgencies, once they’ve reached a certain maturity of years, lose their focus on the cause, shifting to the day to day conflict. As the conflict worsens and widens, the population is forced to pick sides.[82] The Maoists are not as of yet anywhere near a grave enough threat to justify funda-mentally restructuring Indian political life,[83] but their successes have shown that the current Indian political structures are not able to prevail over them. Even the Home Ministry admits that Maoist violence reveals “state, and governance structures at field levels, as being ineffective”.[84] The problem, however, runs deeper than that. The national government itself should be deemed ineffective. It cannot carry out its proposed “holistic approach” to combating Naxalism on the four pillars of “security, development, administration and public perception management”[85] as long as individual states are in charge of their own counterinsurgency operations. As for the states themselves, governments which cannot provide basic services and infrastructure to their citizens, even under peaceful conditions, aren’t valued by their citizens. The government in Chhat-tisgarh is sponsoring the murderous Salwa Judum, the government of Andhra Pradesh is sitting by while internally displaced persons slowly starve, and the government of West Bengal is hesitant to ban the Maoists in the first place (but quick to terrorize innocent townspeople after bomb at-tacks). As long as these states continue to stumble around alone in the dark, the Maoist will slowly

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bleed them. State governments fighting Naxalism should enact land reforms to address the worst rural inequalities, expand trained and accountable rural police forces to protect villagers, rebuild faith in government by prosecuting vigilantism, and curtailcorruption. Most crucially, states should voluntarily cede power over their anti-Naxal efforts to a national command authority or be forced to do so by the central government. The Maoist movement in India has surivived for the last forty years. Without addressing the fundamental governance problems which have allowed the Maoists to flourish, Indian governments are, in effect, giving the Maoist movement another twenty-year lease on life.

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NOTES[1] Joseph, Mallika & Devyani Srivastava. “Left Extremism: The Naxal Conflict in India.” In Armed Conflicts in South Asia 2008: Growing Violence, edited by D. Suba Chandran, and P.R. Chari, 118-152. New Delhi: Routledge, 2008. [2] Gupta, Dipak K. “The Naxalites and the Maoist Movement in India: Birth, Demise and Reincarnation.”Democracy and Security, Vol 3, Issue 2 (2007). pp. 157-188. [3] Union Ministry of Home Affairs. “Annual Report 2008-09 of the Union Ministry of Home Affairs, Government of India.” <http://www.satp.org/satporgtp/countries/india/document/papers /annualreport_2008-09.htm>[4]Gupta, “Democracy and Security”, 158. [5]Joseph & Srivastava, “Left Extremism: The Naxal Conflict in India”, 131. [6] Bowring, Philip. “Maoists who menace India.” New York Times, April 17, 2006. <http://www.nytimes.com/2006/04/17/opinion/17iht-edbowring> [7] Outlook India-MRDA. “49% Say The Fight Against Maoists Will Never End.” Outlook India, Oct 26, 2009. <http://www.outlookindia.com/article.aspx?262356> [8] BBC. “India is ‘losing Maoist battle’.” BBC News, September 15, 2009. <http://news.bbc.co.uk/2/hi/8256692.stm>[9]Galula, Counterinsurgency Warfare: Theory and Practice, xi. [10] Kanjilal, Pratik. “Who will police the state?” Hindustan Times, June 19, 2009. <http://www.hindustantimes.com/News-Feed/columnsothers/Who-will-police-the-state/Article1-423259.aspx>[11]Bowring. [12]Economist, “A Spectre Haunting India”. [13] Bunsha, Dionne. “Guerilla Zone.” Frontline. Vol 22, Issue 22 (October 8-21 2005). <http://www.flonnet.com/fl2221/stories/20051021008701600.htm>[14]Economist, “A Spectre Haunting India”. [15] Sengupta, Somini. “In India, Maoist Guerrillas Widen ‘People’s War’.” New York Times, April 13, 2006. <http://www.nytimes.com/2006/04/13/world/asia/13maoists.html?ei=5088&en=b397a84735c2f9cb&ex=1302580800&partner=rssnyt&emc=rss&pagewanted=all>[16] Sundar, Nandini. “Why Everyone Speaks The Flowing Language Of Blood.” Outlook India, Oct 26, 2009. <http://www.outlookindia.com/article.aspx?262355> [17]IANS, “Maoists Annually Extort”. [18]Gupta, “Naxalites and Private Armies”, 523. [19]Bunsha. [20]Gupta, “Democracy and Security”, 178. [21]Sundar. [22]Galula, Counterinsurgency Warfare: Theory and Practice, 19. [23]Ibid, 42. [24]Ibid, 67. [25]Sengupta, “Democracy and Security”. [26] Robinson, Simon and Madhur Singh. “India’s Secret War.” Time South Pacific, Issue 22, June 9, 2008[27]Economist, “A Spectre Haunting India”. [28]Gupta, “Democracy and Security”, 176. [29]Joseph & Srivastava, “Left Extremism: The Naxal Conflict in India”, 126. [30]Quotd in Economist, “A Spectre Haunting India”. [31]Sundar. [32]Navlakha, 2189. [33] Economist. “A spectre haunting India.” The Economist, Aug 17, 2006. <http://www.economist.com/world/asia/displaystory.cfm?story_id=7799247> [34] Galula, David. Counterinsurgency Warfare: Theory and Practice. New York: Praeger, 1964. [35] Department of the Army, “Field Manual 3-24 Counterinsurgency.” Washington DC: Department of the Army, 15 December 2006. [36] Jhunjhunwala, Jhunjhunwala. “India’s Maoist dilemma: the case of Lalgarh.” Open Democracy, July 8, 2009. <http://www.opendemocracy.net/article/email/india-s-maoist-dilemma-the-case-of-lalgarh>[37]Galula, Counterinsurgency Warfare: Theory and Practice, 95. [38]Mao, On Protracted War, 228. [39] Roy, Arundhati. “Mr Chidambaram’s War.” Outlook India, Nov 09, 2009. <http://www.outlookindia.com/article.aspx?26251>[40]Sengupta, “Democracy and Security”. [41] Yardley, Jim. “Maoist Rebels Widen Deadly Reach Across India.” New York Times, Oct 31, 2009. <http://www.nytimes.com/2009/11/01/world/asia/01maoist> [42]Quotd in Bunsha.

[43]Quotd in Bunsha. [44]Bunsha. [45]Navlakha, 2188. [46] Gupta, Alok Kumar. “Naxalites and Private Armies: Caste Conflict in Bihar.” In Terrorism and Low Instensity Conflict in South Asian Region, edited by Om-prakash Mishra and Sucheta Ghosh, 508-534. New Delhi: Manak Publications Pvt Ltd, 2003. [47]Navlakha, 2188. [48]Ibid, 2188. [49]Economist, “A Spectre Haunting India”. [50] Mao, Tse-tung. “On Protracted War.” In Selected Military Writings of Mao Tse-tung, 208-244. Peking: Foreign Language Press, 1967. [51] Communist Party of India (Maoist). “14 October 2004 Press Statement”. Mass Line Info. <http://massline.info/India/Indian_Groups.htm#CPI%28Maoist%29>[52]Galula, Counterinsurgency Warfare: Theory and Practice, 72. [53] ANI. “India launches ‘Operation Green Hunt’ against Maoists.” Yahoo News, Dec 4, 2009.<http://in.news.yahoo.com/139/20091204/808/tnl-india-launches-operation-green-hunt.html>[54] TNN. “Operation Green Hunt launched. But where are the Naxals?” Times of India, Nov 7, 2009. <http://timesofindia.indiatimes.com/city/nagpur/Operation-Green-Hunt-launched-But-where-are-the-Naxals/articleshow/5205499.cms>[55]Jhunjhunwala. [56] IANS. “Massive hunt on for Maoists who massacred 17 cops.” Times of India, Oct 9, 2009. <http://timesofindia.indiatimes.com/india/Massive-hunt-on-for-Maoists-who-massacred-17-cops/articleshow/5105469.cms>[57]Quotd in Pasricha. [58]Yardley. [59] Mack, Andrew. “Counterinsurgency in the Third World: Theory and Practice.” British Journal of International Studies, Vol 1, No 3 (Oct 1975). pp. 226-253. [60]Yardley. [61]Department of the Army, “Field Manual 3-24 Counterinsurgency”, Ch 1, 27. [62] Thakur, Sankarshan. “Minister prod on rebel fight.” The Telegraph, Dec 2, 2009. <http://www.telegraphindia.com/1091203/jsp/nation/story_11816246.jsp>[63] IANS. “Talks with Maoists if they abjure violence: Chidambaram.” Yahoo News, Dec 2, 2009. <http://in.news.yahoo.com/43/20091202/818/tnl-talks-with-maoists-if-they-abjure-vi.html> [64]Galula, Counterinsurgency Warfare: Theory and Practice, 80. [65]Ibid, 89. [66]Ibid, 156. [67] Communist Party of India (Maoist), “Post-Election Situation-Our Tasks.” South Asia Terrorism Portal, June 12, 2009. <http://www.satp.org/satporgtp/coun-tries/india/maoist/documents/papers/postelection_situation.htm>[68] PTI. “No Central operation against Maoists, asserts Chidambaram.”The Hin-du, November 6, 2009. <http://beta.thehindu.com/news/national/article44153.>[69]Ministry of Home Affairs, 18-9. [70]Ministry of Home Affairs, 17. [71]Joseph & Srivastava, “Left Extremism: The Naxal Conflict in India”, 147. [72] Metz, Steven and Raymond Millen. “Insurgency and Counterinsurgency in the 21st Century: Reconceptualizing Threat and Response.” Strategic Studies Institute, US Army War College. November, 2004. [73]Ibid, 29. [74]Galula, Counterinsurgency Warfare: Theory and Practice, 87. [75] Zee News. “Centre declares Maoists as terrorists, CPM differs.” Zee News, June 22, 2009. <http://www.zeenews.com/news541260.html#>[76]Metz & Millen, “Insurgency and Counterinsurgency in the 21st Century”, 19. [77]Sundar. [78]Mack, “Counterinsurgency in the Third World”, 245. [79] Shy, John and Thomas W. Collier. “Revolutionary War.” In Makers of Modern Strategy, edited by Peter Peret, 815–862. Princeton: Princeton University Press, 1987. [80]Joseph & Srivastava, “Left Extremism: The Naxal Conflict in India”, 149-50. [81]Ibid, 151-2. [82]Galula, Counterinsurgency Warfare: Theory and Practice, 25. [83]Mack, “Counterinsurgency in the Third World”, 242. [84]Ministry of Home Affairs, 16. [85]Ibid, 16. Photo from: “Dragon China and the World.” < http://2.bp.blogspot.com/-DItKme0BpT4/TWKuk7BatiI/AAAAAAAASFc/b3K-Q31pMBU/s1600/Dragon+China+and+the+world.jpg> Accessed, April 2011.

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India’s system of improving the conditions of disadvantaged groups has led to the regular use of words like “backward” and “creamy layer” as official terminology. Due to the contentiousness of affirmative action policies, we must evaluate whether the methods applied to empower disadvantaged groups are productive towards the intended outcomes. I investi-gate whether the right to reservations has improved the integration and status of marginalized groups within Indian society. I first explore the problems of defining and solidifying differen-tiated identities through special rights. I next discuss how the extension of quotas may serve competitive electoral politics instead of long-term structural empowerment of disadvantaged groups. I then account for the inequality of outcomes within groups. Lastly, I examine changes and continuities in the social and political circumstances of disadvantaged groups. While reser-vations should not be eliminated altogether, the inequalities embedded in their application make them an insufficient instrument for overcoming group barriers.

The Problem of Classifying Differentiated Identities

Multicultural states must consider their appropriate role with respect to recognizing or accommodating its separate cultures. Accommodations for minorities in some countries have taken expression in special rights for particular groups. A salient obstacle to nation-building in India has been the heterogeneity of divisions across language, class, religion, ethnicity, and caste. In reaction, a central task for India has been the quest for unity and integration amidst that diversity, through the alleviation of barriers between groups. Disadvantaged groups there have demanded a form of redistributive welfare, through rights to social goods. The Indian state has sought legitimacy by honoring welfare demands.[1] Access to these social goods take place in the form of reservations, which are available for education, white-collar fields, and government positions, all of which have been traditionally dominated by the upper castes. The allocation of special rights to particular groups seems to violate a theoretical con-ception of universal identity and equal citizenship rights. The active protection of disadvantaged groups creates a tension with the Indian constitution’s prohibition of discrimination. Bayley notes that “since independence… jati and varna categories have been given concrete meaning in law, development policy, and academic debate.”[2] The differentiated treatment of special

Penn AsiAn Review

The Effects of Reservations on Disadvantaged Groups in India

By Anne HuangCAS ‘11

SOUTH ASIA

Source: altiusdirectory.com

interest groups works against the constitution’s original intent to deny the validity of special interests. However, special treatment for minorities within a representative democracy has been justified by the argument that, where there is a dominant majority, equal citizenship can-not exist without extra protection of the minority. Since institutions would otherwise inher-ently favor the rights of the dominant group, affirmative measures to protect special minority rights must counteract these embedded institutional biases. The goals of such policies may include upward social, economic, and political mobility in disadvantaged groups and reduc-tion in the stigmatization of caste. While special rights may in principle be desirable for protecting disadvantaged groups, they are only as effective as the process of verifying that those who receive them are the ones who need them. The designation of “backward” has gone so far in some areas as to include everyone except for the most elite caste, the Brahmins. I emphasize that this des-ignation reverses the logic of special protections discussed above. In such cases, protections extend to what is instead a numerical majority of the population. In 1921, nearly every group in Mysore was considered backward and received educational reservations. In addition, about half of Andhra Pradesh is considered backward. Over time, groups who originally objected to reservations for Otherwise Backward Classes (OBC) have been subsumed into OBC, fur-ther diluting the potential effect of reservations. The more people the designation of back-wardness encompasses, the less each subset benefits from it. When different marginalized groups are treated similarly in policy, such legislation neglects to provide for the variations in needs. What is more, once more categories have been officially included among the disad-vantaged, it is unlikely that policies would change their status back. What began as a strategy to help the neediest groups overcome their condition has produced a problematic fixity of categorization. Implementing these policies requires a system of classifying identities, which oppo-nents believe marks receivers of special rights as inferior in unconstructive ways. Jenkins pos-its that such definitions in policies have a real impact on social perceptions of identities. Caste certificates and labels have strengthened the notion that group identities are more fixed than they actually are. Being evaluated for qualification for those policies has required Scheduled Castes, Scheduled Tribes (ST-SC), and OBC to undergo close personal examination. As much as labeling someone as “backward” is already embarrassing, Jenkins suggests that the process of evaluating their degree of backwardness may reinforce the humiliation. Fearing that quo-tas essentialize dependence on a crutch to succeed, women have resisted the extension of quotas to themselves. They believe that special treatment inhibits a group’s integration within society by emphasizing the distinction between them and others. The idea that they, SC-ST, and OBC require protection provided by the state positions them as categorically inferior and childlike. These policies reinforce a hierarchy in which the dominant system knows and is better able to provide what other groups need. A further problem with identity-based reservations is that overlapping identities ren-der some individuals difficult to classify. The fluidity of identity presents obstacles to mea-suring the legitimacy of one’s entitlement to reservations. Migration, for one, complicates the precision of caste certification. Qualifying for a scheduled group depends on an indi-vidual’s location. However, when that individual migrates elsewhere, where his group is not scheduled, he maintains scheduled status. The policy for receiving scheduled status bases this reception on the classification for the individual’s original state. In addition to migration, bu-reaucrats and judges continue to classify individuals who convert to another religion by their original caste. I emphasize that such cases privilege a primordial identity over a more fluid one. By accounting inadequately for liminal identities, these policies indirectly punish crossing boundaries. A democracy ought not to require a citizen to conform to one exclusive identity at the expense of his or her other community identities,[3] for the right to assert one’s identity is central to one’s autonomy and self-dignity. [4] Nonetheless, Jenkins warns against altogether rejecting policies on the basis of their category-reinforcement potential. To do so would halt the progress of changing the state’s power structure when the reality of disadvantage remains. While the category of “backward” itself become more fixed, the question over who deserves to belong to that category becomes more contentious. Baxi, quoting Panch, says of Gujarat in the 1980s, that “the ‘very castes which were at one time… showing progressive trends’ were now aggressively competing for recognition as ‘backward’ castes’.”[5] While the end goal of reservations ought to be the

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transcendence of group disadvantage, such groups instead use political activism to insist on the recognition of their own backwardness. Though the incentives for demonstrating backwardness impede the motivation for material improvement, activism over quotas for oneself and against quotas for others at least indicates debate over what it means to be disadvantaged. This enables groups to challenge the rigidity of the state’s designations. Disagreements about membership in groups may indicate some success on the part of reservation policies in making group identities more malleable and less classifiable.

Electoral Politics

Article 334 of the Indian Constitution states, “Reservation of seats and special represen-tation to cease after,” as originally designated, a decade. This supposes that the implementation of reservations will over time eliminate the structural inequalities that require the intervention of reservations to begin with. However, reservations of seats in the legislature have been con-tinuously extended since then. Galanter points out that the beneficiaries of such reservations are likely to want to preserve such benefits once they are in the legislature. The practical reality of electoral politics also favors the sustainment of caste-based benefits over time. Bayley notes, “Given the apparently unstoppable trend towards ever-larger quotas, it would be electoral suicide for any party to propose the outright abolition of caste-based reservations.”[6]As long as voters believe their own interest profits from reservations, they may not vote against increased quotas, regardless of whether this benefits the population at large. Promises of reser-vations have been used as a short-term instrument for electoral competition, rather than an ef-fective means of long-term structural change. The complacency with reservations as the default solution to social inequalities becomes problematic when government officials absolve them-selves of further efforts to improve a group’s conditions.[7] In such cases, reservations become an electoral strategy that distracts from underlying issues. Moreover, the policy of reserving government seats assumes incorrectly that the person-al representation of a group in government corresponds with representation of issues affecting that group. For example, advocates of quotas for female representation in government claim that greater female representation in government will correlate with reduced violence against women and fewer abortions of girls. However, the continuous need to re-extend reserved government seats indicates the existence of barriers that prevent reservations from realizing the promised egalitarianism. Many SC-ST leaders who obtain government positions are still not in enough of a position of advantage to make a significant change on behalf of their group. Among different SC candidates, political parties are more likely to support those whose views are more consistent with the mainstream, rather than those with radical ambitions to alter the social condition of dalits. Instead of focusing on long-term issues for dalits, such as land, education, or violence directed against them, dalits in government have focused on more short-term ones. Even when issues relating to the backward groups come up in legislative debates, SC-ST officials have not spoken up at the opportunity to do so. They have not been able to champion better salaries for or reduced atrocities against SC-STs. Thus, the presence of SC-ST leaders in the legislature, as enabled through reservations, has not necessarily corresponded to a propor-tionate representation of SC-ST rights and interests in reality. In Shahpur, the peasants elected in 1995 to the panchayats merely served to further the positions of the dominant figures. If the increased mobility of dalits folds them into the upper-caste political viewpoints, then their posi-tions of authority become nominal and do little for structural improvement for their communi-ties. This has limited the emergence of policies directed at these groups, in spite of the presence of individuals from these communities through reservations. In such cases, the values of their communities remain absent. Since nominal backward-caste representatives have become instruments for elite posi-tions, there are similar fears that women who fill reserved government seats will simply serve as surrogates for their elite husbands.[8] If under-privilege is the basis for conferring reserved seats, I caution against disqualifying upper-caste women on the presumption that marriage to a high-status husband precludes her from being under-privileged in other ways. To do so would presume the greater salience of caste over gender, once again expecting an individual to subordinate alli-ance within one identity community to membership within another.

Inequalities of Application

The design of the policies for uplifting lower castes in India limits their ability to impact

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the population on a wide scale. Even though there exists a commission to react to complaints about violence towards dalits, the lack of some dalits’ knowledge about such institutional fea-tures prevents them from utilizing them.[9] Similarly, in order to benefit from reservations poli-cies, disadvantaged groups must already be organized to some degree and have data about them-selves that they can provide. To use such opportunities, a lower caste household must have some existing financial capital. Since reservations by nature cannot uniformly benefit all members of a group, they have come short in benefiting workers without land. They make a significant dif-ference only in fields with more limited opportunities, such as the technical and professional sectors.[10] A creamy layer of educated individuals, politically active citizens, and government work-ers has emerged. Among the lower castes, the formation of this creamy layer indicates that reservations have had some success in enabling social mobility. Governmental and educational reservations have enabled a middle class to exist within the dalit community. There is now more economic diversity within the backward castes, with greater interaction between now middle-class backward-caste members and upper castes. The reduced cohesiveness within a caste indi-cates that reservations have lessened the rigidity of caste structure. However, this also introduces the problem of inequality within caste. Reservations allow only a small percentage within a caste to move upward economically. [11]While the elites within the community may influence their peers to develop higher career aspirations, such aspirations are not necessarily productive, since the government positions to which they aspire are available to very few. Just as opponents of quotas for women believe that those who are elected will tend to be from upper castes, forward groups express frustration about the creamy layer because they resent losing appointments to OBCs over whom they do not truly have an advantage. This is especially the case for less wealthy forward-caste members.[12] Challenging the notion that the creamy layer is too advantaged to deserve reservations, Pandian writes however that, without reservations, fewer than the deserving number of the creamy layer receives appointments to the Illinois Institute of Technology in supposedly open competition. He regards the anxiety about the creamy layer siphoning opportunity from more backward OBCs as a distraction. Instead, he suggests that such complaints are the privileged group’s strategy to protect themselves against the threat of the so-called creamy layer to their own dominance.[13] Instead of debating about whether the structure of open competition is as open as it claims, privileged groups turn the conversation into one that overstates the creaminess of the creamy layer. Just as upper castes who protest the conference of benefits to the creamy layer act partly out of self-interest, some of the creamy layer does so as well when they neglect to campaign for the greater distribution of benefits across lower castes. The capitalist mentality makes them more inclined to horde the benefits for themselves, rather than increase the base of their com-petition. To correct for the restricted concentration of benefits within groups, the 1992 Supreme Court ruled in Indra Sawhney v. Union of India to disqualify the creamy layer of OBCs from re-ceiving reservations. This is similar in intention to demands that quotas for women be restricted to non-upper-caste women. Just as reserving only the lower castes within the category of women presents a convoluted quota within a quota, so does removing the creamy layers from eligibility in backward classes. On top of the existing Backward distinction, Uttar Pradesh has gone so far as to designate, recursively, Most Backward and More Backward. However, the process of evaluating one’s inclusiveness in the creamy layer requires tedious administrative procedures and associated problems. The Creamy Layer Committee must evaluate the attributes of applicants and their families, requiring some trespass of privacy. The occurrence of bribes for certification limits the reliability of this procedure. Imposing a sunset clause on individual beneficiaries of affirmative action may prevent the fruits of such policies from accruing to a restricted set of individuals. However, given the existing competition among groups for recognition as backward, a sunset clause may inhibit the incentive for a household to move upward. If becoming part of the creamy layer means being held to higher and more prohibitive standards for educational admission, I suggest that a sunset clause may appear to penalize, not reward, upward mobility. Moreover, even if a person moves up economically, he may face other barriers. Since others will still treat him as a minority figure if he hangs on to caste sentiments, the imposition of a sunset clause may fail to account for the range of barriers someone may face. An individual that has taken advantage of reservations for education early on will not necessarily continue to succeed in the work arena, which presents a separate set of obstacles. I

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contend that encouraging more dalits to enter formal education presumes an existing demand for them as educated workers. It also assumes that they will tap into that demand. Nonetheless, even with education, dalits from households without experience in the market may not know how to succeed within it. Thus, reservations for education are in themselves insufficient to increase social mobility. While education puts dalits in a position where they can be politically vocal about their group’s interests, the effort that they put into their education makes them resentful if they are unable to find a job that corresponds with their skill level afterwards.[14] While flaws in the strategy for uplifting backward classes impacts the unevenness of results, reservations cannot take all the blame for the emergence of a more elite subset within a marginalized group. Disqualifying the creamy layer from reservations may prevent the up-permost reserved seats from becoming occupied. This removes from contention some of the individuals with the greatest aptitude for the position. As a solution, Shah recommends that de-reservation not take place if there are not enough people within a caste to fill the number of seats designated by a quota.[15] It may be argued that, with or without reservations, the more opportunistic members of any group are likely to reap the most benefits anyway. The Mandal Commission, which caused reservations for the civil service to more than double,[16] present-ed this as inevitable. However, it is important not to understate the structural inequalities that would prevent otherwise opportunistic individuals from maximizing their potential. Neither economic conditions nor caste should alone be used to determine eligibility for reservations. The desire for greater emphasis on economic status over group identity assumes incor-rectly that the salience of caste-based prejudice relative to economic disadvantage has decreased significantly over time. Kahlenberg’s preference of class over race as the basis for affirmative action in America similarly assumes that economic status is the overriding source of discrimi-nation and disadvantage.[17] However, providing dalits with welfare and work are insufficient means of removing structural inequalities,[18] for backwardness is not a mere function of economic status. As group identity in India cannot altogether be extricated from an individual’s identity, [19] casteism continues to persist in India. Purely economic criteria would not account for the real historic inequalities integral to caste categories.[20] In addition to economic back-wardness, the dalits have been subjected to violence. Article 15 of the Indian Constitution, which protects special provisions, does not de-fine backwardness in terms of economics. Instead, it refers specifically to “socially and educa-tionally backward classes.” Suggesting that membership in those groups presents more deeply entrenched disadvantages than differences in income, this sets precedence for the exclusion of poor individuals who do not happen to belong to a historically stigmatized group. To determine eligibility for Other Backward Class designation, the Mandal Commission calculated backward-ness in terms of educational level, property, average marital age, form of work, geographi-cal proximity to potable water, and other factors. In such calculations, social group standing was weighted over economic standing. However, in both cases, defining eligibility in terms of groups rather than individuals as the measured unit fails to provide for other individuals who need assistance.[21]Even so, the advantages of affirmative action are awarded to individuals, making it unrealistic to expect reservations alone to improve the material circumstances of the entire group.[22] Indeed, the 1980 Mandal Commission acknowledged that When a backward class candidate becomes a collector or superintender of police, the material benefits accruing from his position are limited to the members of his family only. But the psychological spin-off of this phenomenon is tremendous, the entire community of that backward class candidate feels socially elevated.[23] I infer that their primary goal was not to improve the economic prospects of the group as a whole. Despite the restricted material benefits, the greater social benefit of reservations was to change the aspirations of a community at large. The Mandal Commission’s recommenda-tions emphasized cognitive, rather than material, disadvantages:We must recognize that an essential part of the battle against social backwardness is to be fought in the minds of the backward people. In India government service has always been looked upon as a symbol of prestige and power… Even when no tangible benefits flow to the community at large, the feeling that now it has its ‘own man’ in the ‘corridors of power’ acts as a morale booster.[24] This cultural self-esteem is important because culture forms a foundational basis for a community’s stability by providing the framework for the individuals’ sense of belonging and

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negotiation of the world around them.[25] However, because it is more difficult to hold the gov-ernment accountable to improving a community’s feeling of social standing, it becomes prob-lematic if the effect of reservation policies is primarily symbolic. While the cognitive impact of humiliation is a real barrier that ought not to be understated, the government ought to pursue a population’s psychological healing in addition to, rather than in place of, its economic mobility. Recommendations that emphasize the nebulous quality of community self-esteem over material improvement seem to understate government responsibility of changing the economic struc-ture. As a result, significant social problems remain.

Changes and Continuities

The mainstream reorientation of ideology about the legitimacy of social inequality has been an essential precondition for uplifting the dalits’ condition in any extent. Even though so-cial practice still falls behind current ideology, there is now public agreement, in principle, that untouchability is undesirable. Other groups, such as the Gandhi Caste Society, have established as their objective the elimination of class and caste altogether. They proposed that this begin with a de-emphasis of caste-based questions and surnames on children’s forms. Just as they aver that this practice perpetuates an ideology of inequality through the socialization of the younger generation, the Bahujan Samaj Party indicates the same of the practice of education as well. There remains a tension between these principles and the reality of the country’s limited resources. On top of underlying prejudice that makes upper castes reluctant to yield higher posi-tions to lower castes, constraints on the total number of available positions—and consequently wealth and power—have produced upper-caste resistance to reservations.[26] Programs that selectively benefit particular group incur the resentment of excluded groups, who believe that their own portion of the pie has diminished. Upper-caste discontent over quotas has had a social cost for India. In 1978, there was a bloody conflict between the upper and lower castes over the ceiling on representation of OBCs in Bihar.[27] Reservations were also a source of violence in Gujarat in 1985.[28] Perceiving quo-tas as infringing upon their own opportunities, upper-caste north Indian students from cities vis-ibly protested against the Mandal Commission. Skeptical about the real capacity for reservations to benefit the backward classes, they instead called for improved infrastructure and better educa-tion systems. They expressed frustration against the group-based, rather than individual-based, system of granting reservations. As an alternative strategy for assisting disadvantaged groups in America, William Wilson has suggested helping disadvantaged groups through policies from which the population as a whole can stand to gain.[29] The more important solution to emphasize is to improve educational quality and school attendance, which has the potential to affect the population more universally, even if not uni-formly. After all, Article 46 of the Indian constitution states:The state shall promote with special care the educational and economic interests of the weaker sections of the people, and, in particular, of the Scheduled Castes and the Scheduled Tribes. Measuring the state’s accountability to promoting such interests with a degree of “spe-cial care” is a nebulous task. In 1997 Srinivas wrote about the persistence of illiteracy, inac-cessible education, inadequate medical amenities, female inequality, absence of potable water, poverty, inadequate sanitation. While reservations have come to be treated as the default solu-tion to all social problems, they cannot be an effective means of reconfiguring social structures. Regardless of what the distribution of quotas is, reservations alone cannot eliminate prejudice against lower-caste women. A disproportionately high percentage of dalits drops out of school. In addition, much of India, and disproportionately the dalits, continues to be illiterate. Illiteracy among women and dalits is problematic because effective education is neces-sary for them to use their economic, political, and social rights effectively.[30] If there had been universal reforms to the quality of primary and secondary education across India, there would in principle be less inequality of preparation among different groups for higher-education ad-missions. This would reduce the necessity for group-specific higher-education reservations in the first place. However, the drastic situation that primary and secondary education is in now indicates that such reforms would not be immediately effective. Since other variables besides school reform affect student performance, it is also unlikely that the outcome of universal poli-cies would be homogeneous. For now, any one type of policies cannot provide an immediate solution to the entire problem. Just as Wilson does not dismiss the use of group-based policies

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altogether, Jenkins recommends a combination of the two types of policies for now.[31] In addition to poor human development indicators, efforts to engage the Scheduled Castes politically have had mixed results. In the 1950s and 1960s the political structure in Ut-tar Pradesh did not facilitate direct political participation on the part of the Scheduled Castes. Lower castes merely served as the clientele for the vote banks of upper-caste politicians, in exchange for patronage. In the 1980s, most SCs in UP felt that the government neglected to improve their status. Instead, they felt that Congress was dominated by upper-caste members who did not represent their interests. Militancy on the part of dalits, led by the elites, indicates a frustration with their continued marginalization and oppression in society.[32] While unrest and dissatisfaction exposes the government’s shortcomings in realizing social justice, the fact that such protests occur indicates some change in society, for dalits have at least become more aware of what should be their rights and politically engaged enough to act on that awareness and dissatisfaction. Benefiting from educational reservations, the dalits who became privileged campaigned for greater equality for other caste-members and vigorously op-posed the caste system. These elite leaders have benefited from educational and welfare reforms targeted at uplifting the Scheduled Castes. This indicates some success on the part of reserva-tions in promoting political participation and improving social welfare on the part of elite dalits, who in turn use their position of privilege to promote the interest of other caste-members. Even so, protests have not been large enough to effect a significant structural change in society. Despite legal prohibitions of untouchability, increased formal education, and a greater variety of careers available in the larger society, most dalits suffer from a continued legacy of discrimination. Oppression and egalitarianism are not measured merely in economic terms but also in cultural and cognitive ones. A person who has become economically mobile but must repress his principles and lifestyle is still oppressed. It is telling that dalits have mobilized around demands for dignity and protection of identity as much as issues of material improvement. Even with these barriers, it is important to recognize that conditions have not remained static since Independence. While recognizing the drawbacks to rights-based legislation as a form of achieving social equality, we must be careful not to overemphasize these shortcomings rela-tive to an assumed normative ideal. Keeping in mind the difficulty of changing structures that have been deeply ingrained for significant periods of history, we must acknowledge the changes that have occurred so far for what they are, instead of developing unrealistic expectations for the rate at which social change can occur. Formal categorizations of SC-ST and OBC may solidify the distinction between disadvantaged groups and others, but these groups have also developed a greater unity with each other to champion greater social justice. Although this may not demon-strate a transcendence of disadvantage, such cooperation at least indicates a willingness to work together across different linguistic, ethnic, and regional boundaries. While capitalism will by no means be the agent of socioeconomic equality, it has also altered the occupational structure previously determined by caste. Public discrimination of dalits still exists, but it is now less ostensible. Being from a lower caste still presents an obstacle to be overcome, but it is no longer as absolutely prohibitive of a barrier. There is greater attainment of university education and diversification of labor among dalits than there was before. Even if it is a small number, some of the dalits with an appropriate aptitude have indeed been able to step into positions where they could utilize their assets. Shah predicts that to be a starting point through which the dalits in these higher occupations will bring in some more dalits.[33] Affirmative efforts to counteract entrenched marginalization have produced a continu-ous tension between universal and differentiated citizen rights. The impact of reservations may have implications for predicting the effectiveness of affirmative action to uplift and integrate marginalized groups in other countries. Whereas the empowerment of marginalized groups through reservations ought to decrease the need for these differentiated rights over time, com-petitive electoral politics create incentives for their perpetuation in India. While reservations disproportionately benefit a privileged few within a group, this economic mobility does not necessarily mean that the elite within an otherwise marginalized group has achieved all forms of social mobility. Meanwhile, the widespread persistence of poor performance along human development indicators suggests that more emphasis needs to be placed on improving the edu-cation system, sanitation, health care, etc. Nonetheless, since significant changes ultimately re-quire patience from us, the mobility and improved lifestyle of some individuals gives us some optimism about the erosion of group determinism.

30 | Effects of Reservations on Disadvantaged Groups in India

NOTES[1] Ghanshyam Shah, “Social Backwardness and the Politics of Res-ervations,” in Caste and Democratic Politics in India, ed. Ghanshyam Shah (London: Anthem Press, 2004), 303.[2] Susan Bayley, Caste Society and Politics in India from the Eighteenth Century to the Modern Age (Cambridge: Cambridge University Press, 1999), 303.[3] Niraja Gopal Jayal, Democracy and the State. Welfare, Secularism and Development in Contemporary India (Delhi: Oxford University Press, 1999), 3-4, 99. 144-5.[4] Bhiku Parekh, Rethinking Multiculturalism. Cultural Diversity and Political Theory, 2nd ed (Houndmills: Palgrave, 2006), 9, 100.[5] Upenda Baxi, “Reflections on the Reservations Crisis,” in Mirrors of Violence: Communities, Riots and Survivors in South Asia, ed. Veena Das (Delhi: Oxford University Press, 1990), 220.[6] Bayley, Caste, Society and Politics, 303.[7] M.N. Srinivas, “The Pangs of Change,” Frontline 14:16, August 9-22, 1997, accessed April 29, 2010, http://www.hinduonnet.com/fline/fl1416/14160670.htm.[8] “Indian Women on the March,” The Economist, http://www.economist.com/world/asia/PrinterFriendly.cfm?story_id=15663562, accessed March 11, 2010.[9] Jayal, Representing India. Ethnic Diversity and the Governance of Public Institutions (Houndmills: Palgrave, 2006), 59, 80, 85-6, 114-5.[10] Marc Galanter, Competing Equalities. Law and the Backward Classes in India (Berkeley: University of California Press, 1984), 46, 54, 63.[11] Ghanshyam Shah, “Dalit Politics: Has It Reached an Impasse?” Democratic Governance in India, 224-5, 314.[12] G. Ram Reddy, “Caste, Class and Dominance in Andhra Pradesh,” Dominance and State Power, ed. Francine R. Frankel and M.S.A. Rao (Delhi: Oxford University Press, 1989), 1: 299.[13] M.S.S. Pandian, “Myth of Creamy Layer,” Economic and Politi-cal Weekly, April 22, 2000, 1417.[14] Shah, “Dalit Politics,” 227, 229.[15] Shah, “Social Backwardness,” 307, 314-5.[16] K.P. Krishnan and T.V. Somanathan, “Civil Service: An Institu-tional Perspective,” in Public Institutions in India: Performance and

Design, ed. Devesh Kapur and Pratap Bhanu Mehta (Oxford: Oxford University Press, 2005): 284.[17] Richard D. Kahlenberg, The Remedy: Class, Race, and Affirmative Action (New York: Basic Books, 1996), ix.[28] Sudha Pai, “The State, Social Justice, and the Dalit Movement: The BSP in Uttar Pradesh,” in Democratic Governance in India, ed. Niraja Gopal Jayal and Sudha Pai, (New Delhi: Sage, 2001), 218.[19] Shah, “Social Backwardness,” 296, 306.[20] Reddy, “Caste, Class and Dominance,” 299.[21] Niraja Jayal, “A False Dichotomy? The Unresolved Tension between Universal and Differentiated Citizenship in India,” University of Pennsyl-vania, Philadelphia, PA, April 9, 2010.[22] Laura Dudley Jenkins, Identity and Identification in India. Defining the Disadvantaged (London: Routledge, 2003), 23, 66-9, 75-7, 102, 112, 142, 146, 149-55, 175-7, 184-6, 231.[23] Government of India, Report of the Backward Classes Commission, Delhi: Government of India Press, 1980, p. 57, as quoted in Shah, “Social Backwardness and the Politics of Reservation,” 306.[24] Government of India, Report of the Backward Classes Commission, 1980, p. 57, as quoted in Shah, “Social Backwardness and the Politics of Reservations,” 306.[25] Parekh, Rethinking Multiculturalism, 100.[26] Shah, “Social Backwardness,” 312.[27] Francine R. Frankel, “Caste, Land and Dominance in Bihar,” in Dominance and State Power, 110.[28] Baxi, “Reflections on the Reservations Crisis,” 214.[29] William Julius Wilson, The Truly Disadvantaged: The Inner City, the Underclass, and Public Policy (Chicago: U of Chicago Press, 1987), 120.[30] Bob Currie, “Political Authority, Public Deliberation, and the Politics of Poverty Reduction,” in Democratic Governance in India, Chal-lenges of Poverty, Development, and Identity, ed. Niraja Gopal Jayal and Sudha Pai (New Delhi: Sage Publications, 2001), 73.[31] Wilson, Truly Disadvantaged, 120; Jenkins, Identity and Identifica-tion, 147-8, 184.[32] Pai, “State, Social Justice, and the Dalit Movement,” 205-8, 210.[33] Shah, “Dalit Politics,” 221-3, 227-8.Photo from: Altius Directory. “India Political Map.” < http://www.altius-directory.com/Travel/india-maps-pictures.html> Accessed, April 2011.

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In her account of the rise and fall of China as a naval power in the fifteenth century, Louise Levathes recalls the figure of Zheng He, the eunuch admiral who led the Chinese junk fleets to the four corners of the world then known to China.

We have traversed more than...[30,000 miles] of immense water spaces and have beheld in the ocean huge waves like mountains rising in the sky, and we have set eyes on barbarian regions far away hidden in a blue transparency of light vapors, while our sails, loftily unfurled like clouds day and night, continued their course [as rapidly] as a star, traversing those savage waves as if we were treading a public thor-oughfare… — Tablet erected by Zheng He, Changle, Fujian, AD 1432.[2]

In the early fifteenth century, Zheng He’s fleet was a virtual floating city, the naval em-bodiment of the imperial Forbidden City in Beijing, He embarked on seven phantasmagoric ex-peditions on the high seas. In less than three short decades, from 1405 to 1433, he sailed across the China Seas and the Indian Ocean, from Taiwan to Malaccan Islands and the Malabar Coast of India, to the port cities of Persian Gulf, reaching even Eastern African coasts. Although dip-lomatic missions over land and west had been sent since the Han period and Chinese merchants had been engaging in private overseas trade leading all the way to East Africa for centuries, no government-sponsored tributary mission of this size had ever been organized before. Like Cristoforo Colombo, Vasco da Gama, and James Cook, Zheng He’s missions were solemnly approved, accurately planned, and conspicuously financed by an enlightened and pow-er-thirsty ruler. Zhu Di, the Tongle Emperor from the Ming dynasty, sought to establish and secure the Chinese influence on ‘what lied under the sky’ – well beyond the boundaries of the Chinese tributary system of the time. Carrying the finest porcelains, lacquerware, and silk as signs of the superior refinement of Chinese civilization, Zheng He’s fleet was successful in the diplomatic mission the Tongle Emperor entrusted him: at Zheng He’s death, in 1433, half of the world was under Chinese sphere of political power and influence, the largest extension ever of what has been called Pax Sinica. This period of openness did not last for long. Indeed, it was abruptly terminated as rap-idly as it had begun. It faced a first serious crisis with the advent to the throne of a new emperor in 1424, and it did not withstand Zheng He’s death in 1433. Therefore, just like the early Ming period was marked by openness, exploration, conquest, and mutual cultural influences between the Celestial Empire and its large sphere of influence, so towards the mid-fifteen century China

The Return of Zheng He? An Assessment of Chinese Sovereign Wealth Fund from a Law & Development Perspective

By Frederico LasconiPenn Law

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Source: csmonitor.com

EAST ASIA

entrenched itself, with the following Ming emperors focusing on domestic issues, forbidding overseas explorations, stopping all building and repairing of its once legendary ocean-going fleet.[3] Quite ironically, what might be well defined as the period of greatest openness China ever knew until then was rapidly superseded by the strictest isolation the country ever faced in its entire history. As the Chinese retrenchment began, so did the rise of European powers. The first European explorations in East Asia in the modern era were inspired by religious zeal and more pragmatic commercial interests alike. The common feature of the European accounts from this period is the stereotype of a China isolated from the rest of the world, marked by distrust towards foreigners and intolerant to any form of unwanted contact. Although China was definitely still more open than other Asian countries of the time and the southeastern harbors were reopened under the Qing emperors at the end of the seventeenth century, the latter not only were totally uninterested in European culture but also rebuffed every attempt made by European diplomats to coax them to buy a liberalist policy and open the Chinese economy. Indeed, for the entire eighteenth century China engaged in a fruitful, heavily regu-lated trade with European powers, and the latter were able to reverse the situation at their own advantage only in the mid-nineteenth century with the Opium Wars. Quite ironically again, the successful attempts of the European powers to open up the Chinese economy had as side-effect a further isolation of the once mighty Celestial Empire.Although full colonial rule did not follow this military and cultural defeat, the ‘unequal trea-ties’ signified the definitive downfall of Qing rule. As bloody rebellions threatened internal stability and Qing legitimacy, the sinocentric tributary system fell apart. Tributary states cut off their centuries-old ties, providing further ‘proof ’ of a lonely China. That stereotype has endured until recently. The implosion of the empire in 1911; the proclamation of the Republic by Sun-Yat Sen; the division of the country in ‘two Chinas’; the civil war between the Kuomintang and the Communists; the proclamation of the Soviet-inspired PRC in 1949 with the subsequent non-recognition by Western, capitalistic countries; the break-up with the Soviet Russian Bear in the early 1960s and the Cultural Revolution (1966-1976) confirmed the idea of China as a entrenched country, uninterested in foreign contact and proud of its loneliness.As a corollary to this stereotype, many defined the Open Door policy adopted by Deng Xiaoping in late 1970s as an exceptional, groundbreaking decision, unparalleled in Chinese history. While that decision definitely was historical in putting an end to the isolation under the Mao era, the idea of a permanent Chinese isolation from ‘the rest of the world’ is im-possible to support as it is historically unacceptable, as easily shown by the intense relations developed in the early Ming era.[4] In the past forty years, People’s Republic of China has reclaimed its former place in the international community. The People’s Republic of China is now a member of the most important international organizations in charge of global governance, such as the United Na-tions (1971), the World Bank and the International Monetary Fund (1980), the World Trade Organization (2001), participates in several regional organizations and discussion forums such as Asian-Pacific Economic Cooperation, and is engaged in an informal partnership with the prominent emerging economies known as BRICs.One of the most striking features of this renewed Chinese involvement in international af-fairs is the relevance of actions taken as far economic relations and international economic order are concerned – as money is one of the main embodiments of powers. Indeed, al-though the relations with Taiwan and the touchy Tibet issue still play a huge role in and for Chinese foreign policy, one of the main concerns of PRC leaders seems to be China’s peace-ful rise – that is, China’s pursuit of socio-economic development of its own people before any other international commitment or interference in world affairs.[5] The goal of economic development is closely related to international legal order, as one of the keys to China’s outstanding growth in the past thirty years has been the abil-ity to attract foreign direct investments and implement an outward-oriented growth strategy largely modeled after the Four Asian Tigers successful experience. Moreover, as part of its economic reforms, PRC has been promoting outward investment flows through its Go Out policy launched in the late 1990s.[6] While the Chinese government supports and encourages its private enterprises to invest overseas, it also engages in overseas investments through its own investment vehicle – China Investment Corporation, a sovereign wealth fund established

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in 2007. Therefore, just as the Ming dynasty did with Zheng He almost six centuries ago, con-temporary Chinese leaders also seek to secure their domestic rule through PRC involvement in international economic relations. Indeed, Zheng He has returned – its fleet rebuilt, reshaped as a sovereign wealth fund, trusted with the delicate and pivotal task to further ensure and secure Chinese economic growth. While rebuilding the former tributary system seems to be an unlikely, unrealistic task, many in the Western countries, namely US and EU, question China’s rise to be really peaceful. The involvement of a non-democratic country like PRC in the economic sys-tem of other countries may in fact be an exercise of soft power seeking to influence the latter’s political decisions through their economic constituencies. These worries are exacerbated by the PRC’s international activism not only on a multilateral level but also on a bilateral basis and not only with Western countries: Chinese economic diplomacy is actively engaging in Africa, Asia, and Latin America. These concerns cannot be overlooked: if unaddressed properly, they could generate dangerous backlashes that would jeopardize China’s growth and development and as repercussion the global economic outlook as a whole. This paper addresses PRC involvement in international economic relations by focusing on China Investment Corporation (CIC) and the main issues arising therefrom to provide an insight of such involvement from a law and development perspective. The bottom line is that, like it did with its domestic law, PRC approach to international law is heavily skewed towards the final goal of its economic growth and this feature must be duly considered in any policy response to Chinese outward investment policy, and particularly sovereign investments. The paper is organized as follows. In part II, I provide an overview of the phenom-enon of sovereign wealth funds as a whole with the most relevant data about these institutional investors, the taxonomy proposed for them by recent legal and economic scholarship, and the policy responses so far elaborated by recipient countries of their investments. In part III, I offer a perspective of short-circuits within international law inherent to sovereign investments as they have been suggested by recent legal scholarship. In part IV, I shift the focus to China Investment Corporation analyzing the reasons for its creation, its governance structure, and its investment strategies in order to assess its sovereign-like status from an international law standpoint. In part V, I consider the Chinese approach towards international law in the context of the economic and legal reforms PRC has been carrying out in the past thirty years to stress the relevance of the mission CIC has been entrusted and the possible Chinese attitude towards the international legal tools available to it. In part VI, I conclude with some policy suggestions as to regulation of SWFs in the current negotiations of a bilateral investment agreement between PRC and the U.S. II. Sovereign Wealth Funds: A View from the Shoulders of Giants Despite the recent intensive coverage given to them, sovereign wealth funds are all but a new phenomenon. Dating back to the 1950s, they are nothing more than a consequence of a surplus by a rational economic actor.[7] In fact, like any other rational economic actor, states wish to invest any surplus they may have in a fruitful manner. While this can be done directly by the state itself at a national level, these surpluses can also be transferred into a government fund, investing the on the behalf of the government. Reflecting on Sovereigns and the Economy: Nihil Novi Sub Sole? The reasons underlying the intensive coverage SWFs have been receiving in the past few years are closely related to the financial turmoil starting in 2007, as the SWFs activities and status have been repeatedly addressed in the hearings of the Congress and the Senate of the United States as they massively intervened in the recapitalization of the suffering world banking system. In November 2007, Abu Dhabi Investment Authority (ADIA) from Abu Dhabi acquired 4.9% of Citigroup and Government of Singapore Investment Corporation (GIC) injected $10 billion in UBS, while one month later China Investment Authority (CIC) acquired 9.9% of Morgan Stanley. Merrill Lynch was given $11 billion by Temasek Holding from Singapore and the SWFs from Kuwait and South Korea in early 2008, and Citigroup’s capital was filled with $12.5 billion. Therefore, by early 2008 SWFs had stakes in the US financial system for more than $60 billion.[8]

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Before the financial turmoil triggered by the subprime crisis, these SWFs were more than welcomed and their investments were not for at least for two reasons.[9] First, corpora-tions were easily able to sort out the investments pursued by SWFs. For example, Dubai Ports World – a company controlled by Dubai government – dropped its offer to acquire control of terminals in six US harbors as soon as the proposal was publicly announced.[10] Second, all countries provide for some form of regulation of foreign direct investments (FDI), acting as a filter against ‘unwanted’ investments by providing for some restrictions in delicate sectors such as energy or transportation. With the credit crunch subsequent to the subprime crisis, however, the combined effectiveness of these two factors – the national public opinion and the legal restrictions on FDI – were seriously reduced, as Western countries were more willing than ever to accept the liquidity offered by SWFs. On the other hand, however, they had no choice because, as Jim Cramer said, “Do we want the communists to own the banks, or the terrorists? I’ll take any of it, I guess, because we’re so desperate.”[11] Thus, if on one hand the global financial system was eternally grateful to SWFs for bailing it out, on the other there are serious concerns that no benefit from SWFs investments comes without dangers, includ-ing financial volatility, geopolitical implications, and undisclosed spillover policies.[12][13] As a result of this renewed activism by SWFs, legal and economic scholarships on them have been thriving in the past couple of years in order to assess such benefits and dan-gers and provide some policy responses. Nonetheless, the resulting literature still lacks a com-mon, agreed definition of what a sovereign wealth fund really is.[14] However, according to the International Monetary Fund, SWFs can be qualified as government investment vehicles funded by foreign exchange assets managed separately from official reserves.[15] From a legal and institutional standpoint, instead, sovereign wealth funds can be defined as institutional actors owned and/or controlled by governments or governmental authorities that invest in a broad range of activities. While the management of the fund can be performed by the gov-ernment staff or outsourced, in fact, the distinguishing feature of a SWF is that the govern-ment always keeps control over the activities as it makes use of government reserves.[16] Even so defined, a variety of sovereign investors falls within this broad, very general definition. In order to understand the SWFs phenomenon both from a legal and economic standpoint, it is worth drawing a very rough categorization of SWFs by distinguishing them according to two prominent features – that is, their source of financing and the main goal(s) they pursue.[17] As to the first feature, the focus should be not on the long-standing existence of substantial account surpluses that allow piling up huge amount of reserves – feature common to all the SWFs, indeed – but rather on the source of these surpluses. As result of the cur-rent international economic equilibriums, SWFs can be distinguished between (i) commodity SWFs and (ii) non-commodity SWFs. Commodity SWFs are financed by the surpluses accumulated by exporting com-modities. Of course, these surpluses are positively correlated to the price of the commodity traded. Commodity SWFs have experienced a dramatic growth as oil and gas prices were soaring in the 2000s, but seem to have suffered from the drop of these prices as a side effect of the 2007-2008 credit crunch. Within the category of non-commodity SWFs we can dis-tinguish between forex SWFs and fiscal SWFs.

a) Forex SWFs. In the past decades, some economies have been experiencing a sustainedgrowth in non-commodity exports, which is reflected on the balance of payments by large current account surpluses. If in a situation like this the country is struggling to maintain a fixed exchange rate regime, the central bank needs to intervene to neu-tralize the possible appreciation of domestic currency and therefore it buys foreign currencies, thus ending up accumulating huge amounts of official foreign reserves;

b) Fiscal SWFs. Due to the proceeds of huge privatization processes or from structural public budget surpluses, some other countries, like Singapore and Malaysia, have been experiencing sensible surpluses assigned to a sovereign-owned investment entity.

As to the second of the criteria, i.e. the goal pursued by SWFs, a five-cluster classifi-cation has been proposed.[18] As it will be highlighted, a particular goal is best pursued by a certain type of fund, while some types of fund allow some policies better than others. i) Stabilization Funds. Their main goal is to reduce the sensitivity of the eco

nomic system to the volatility of prices of commodities exported. In provid-ing a cushion of liquidity in the event of a drop in the price of a commodity the

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country relies on for economic growth, they act as automatic macroeconomic stabilizers as they keep the government from increasing the public spending during a recession due to a drop in commodity prices. As it should be clear, com-modity funds are usually conceived as stabilization funds;[19]

ii) Savings Funds. Stemming from the awareness of the eventual depletion of a country’s natural resources like oil and gas, these funds’ main purpose is the transfer of wealth across generations by investing the proceeds from such non-renewable assets in a long-term perspective. Of course, saving funds are mostly, even though not necessarily, commodity funds;

iii) Reserve Investment Corporations. They aim to invest the official reserves in diversi-fied portfolios of securities on a long-term investment strategy. This need for investing arises basically from the sterilization interventions central banks carry on to avoid an appreciation of domestic currencies. As central banks pile up reserves they need to sterilize their own intervention on the money supply in or-der to avoid excessive inflation, but doing so they increase the returns offered on securities, included those issued by the government. This cost tends to be higher than the returns obtained by investing the reserves in low-yield instruments such as foreign Treasury bills, providing then the basis for such SWFs, usually created by non-commodity export-led economies with a fixed exchange rate regime.

Currently there are more than forty SWFs, but this number is likely to grow since many countries consider establishing their own.[20] All their assets considered, SWFs manage almost $3.6 trillion, and it has been estimated that these assets will account for $10 trillion by 2015.[21] Compared to other institutional investors, such as hedge funds, private equity funds and pension funds, their assets are relatively small, but what strikes the most is that such assets are concentrated in a ‘little’ club rather than being widely dispersed like for other institutional investors. They Do Not Like Us, but They Want Our Money: the Policy Responses to SWFs As the credit crunch prompted sovereign wealth funds into injecting, the recipient countries reacted with gratitude and relief mixed to hostility and suspicion, because, as high-lighted by Kristin Halvorsen, Minister of Finances of Norway, which holds the second largest SWF, “[the recipient countries of our investments] do not like us, but they want our mon-ey.”[22] As the SWF investments fall within the broader phenomenon of foreign direct invest-ment (FDI), recipient countries may well be said to already have the legal tools needed in order to regulate them. Most of these countries provide for some form of control mechanisms for foreign investments that could threaten sectors a country consider being particularly ‘delicate’, such as national defense or technology development.However, as in late 2007 the SWF phenomenon started to gain more and more attention by media and policy-makers, some recipient countries started to revise these regulations in order to address the specific issues of sovereign investments, while on the other hand some call for a multilateral approach in order to avoid the risk of recourse to protectionist measures and the of the free international trade system created by GATT and GATS and enforced by WTO.[23] Therefore, the responses to the SWFs investments available to recipient countries range from a domestic hard law option to an international soft law option, with some intermediate, hybrid forms in-between like the bilateral investment treaties (BITs) which provide for an agreed binding regulation of FDI between the two countries particularly involved. A survey and an assessment of these legal responses are necessary as some see the domestic the international options as competing set of rules which may be detrimental to SWF investments.[24] Indeed, while the plethora of responses is definitely a proxy for the signifi-cance of SWFs and the increasing interest for them, it could well be said that the lack of a common response not only gives rise to regulatory competition but also prospects the danger of a fragmentation that could threaten the legal certainty SWFs, and governments managing them, need to make their investment choices.As for domestic responses, they consist in reinforcing the already existing rules on FDI. In October 2007, the US Congress enacted the Foreign Investment and National Security Act (FINSA), which basically strengthen the powers of the Council on Foreign Investment in the

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United States (CFIUS) to review the national security implications of foreign investments in U.S. companies or operations. The Council reports directly to the President of the United States, who can suspend or prohibit any covered transaction potentially impairing U.S. national security. Quite similarly, European countries such as Germany, France and Great Britain have enacted provisions addressing the regulation of sovereign FDI. As a result of the different at-titude toward SWFs investments, however, their responses appear to be quite heterogeneous. While Germany and France amended their laws on FDI in order to establish a stronger filter against ‘unwanted’ investments, Great Britain seems to be more benevolent towards SWF invest-ments, inasmuch as such the latter comply with existing FDI rules and restrictions.[25] In an attempt to reduce this heterogeneity, the European Union has also addressed the issue, also to ensure the compliance with European treaties pursuing the creation of a single European market. A communication from the European Commission (EC) issued in February 2008 proposes the guidelines for a common European approach to SWFs, based on the require-ments of proportionality, non-discrimination, regulatory certainty and responsibility in invest-ments.[26] Basically, the EC expects SWFs to commit to certain standards as to transparency and governance in order to reassure recipient countries and, therefore, provide a predictable and stable investment framework for SWFs in the EU member states. Trying to deal with heterogeneity and the risk of protectionist measures, international organizations have issued codes of conduct drafted at a multilateral level, involving recipients and sponsors of SWF investments. The International Monetary Fund set up in mid-2008 a working group involving SWF representatives from 23 countries and issued in October a volun-tary code of conduct , known as ‘Santiago Principles’ “that the members of the IWG support and either have implemented or aspire to implement.”[27] Although these principles can really help facilitate a better financial market global supervision and assure a positive influence of these SWFs, they are unlikely to defuse the concerns of recipient countries, as “their effectiveness to minimize the concerns relating to SWF investments will depend in large part by individual implementation.”[28]

III. SWFs Investments: An Unspoken Short-Circuit Within International Law? After surveying the SWFs phenomenon, I consider the international legal framework that any response to SWFs, whether unilateral, bilateral or multilateral, shall take into consider-ation and deal with. The international system provides for at least two sets of legal rules which apply to sovereign wealth funds, that is, (i) the international investment law whose highest expressions are the bilateral investment treaties (BITs) and the General Agreement on Trade in Services (GATS) and (ii) the immunities that sovereign entities enjoy as a matter of international customary law.[29] As to investment law, however, the definition of SWFs as foreign investors may be disputed by some recipient countries, in order to deprive them from their legal status granted by interna-tional law.[30] As to State immunities, moreover, a conflict between them and investment law embodied by GATS may arise and generate a short-circuit that makes these investments even more disliked and feared.[31] The Penumbras of International Investment Law International investment law is a multi-layered subject-matter. While customary law provides only for a basic standard of protection of foreign investments in recipient countries, treaties regulating investments between States on a bilateral basis (bilateral investment treaties or BITs) constitute the bulk of contemporary investment law and the “driving force of… [this] evolution,” while GATS is the general multilateral framework with WTO being its jealous custo-dian.[32] BITs provide for fair and equitable treatment for foreign investments, usually contain-ing a ‘national treatment’ clause and a ‘most favored nation’ clause, and a clause against expro-priation measures in the host state.[33] It is noteworthy that these agreements are enforced through an increasing recourse to arbitration proceedings between foreign investors and host states, most of which are brought to ICSID (International Center for Settlement of Investment Disputes). While at the beginning ICSID jurisdiction was recognized by parties of an interna-tional investment only on a case by case basis, nowadays there is a tendency for States to give a

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general consent to ICSID jurisdiction in a BIT. As a result, a SWF can bring an ICSID proceed-ing against a host state that has challenged one of its investments. But are SWFs granted the status of foreign investors? The question is pivotal as ICSID “has no jurisdiction to arbitrate disputes between States” and investors which are identified with their sponsor state cannot then invoke such jurisdiction if they act in a governmental rather than commercial capacity.[34] Therefore, even though a SWF is controlled by a sovereign state, it is likely that the ICSID panel would recognize its jurisdiction on any case arising between it and the host state as long as the SWF is deemed acting as a private actor. The framework laid down by bilateral investment treaties is enhanced and completed by GATS, the only binding multilateral agreement providing for rules on investment. Specifically, foreign investments fall within GATS framework as the latter disciplines service provisions “by a service supplier of one Member, through commercial presence in the territory of another Member.”[35] In regulating inward investments, recipient States must comply with national treatment, most favored nation and market access requirements set forth by GATS. However, GATS applies in this case only if a foreign investor acquires “control” over an existing corpora-tion.[36] Within this general framework, though, some exceptions are provided. GATS contain general exceptions for measures taken by host States relating to national security (particularly relevant as to the defense industry) and public order (giving some leeway as to the energy sec-tor). As to the financial sector, moreover, GATS provides exception for ‘prudential’ measures. Any foreign investor, and therefore also SWFs, can challenge the legality of any measures taken by the host countries before the Dispute Settlement Body (DSB) of WTO. However, the WTO jurisprudence is consistent in affirming that any relevant international standard considered in such scrutiny must be accepted by all WTO members.[37] Therefore, international investment law, both through BITs and GATS, seems to defuse most of the concerns about SWFs. While GATS recognizes the possibility of an ex ante scru-tiny by host states, BITs and possible subsequent ICSID proceedings seem to deter host States from violating the rules agreed with the foreign investors – thus reaching a balance between the right of States to regulate economic activities within their territory and the value of openness to trade in services by means of investments.[38] A Short-Circuit between Investment Law and State Immunities? However, even when a careful ex ante scrutiny has been made, and the investment by SWF is accepted and finalized, it is still possible that such investment turn out to be problematic in some sort. While with private investors it is always possible to apply ex post remediating mea-sures before national courts, this could not be the case when sovereign investors are involved. Indeed, one of the main legal problems as SWFs is that their sovereign status would prevent any plaintiff from suing them. While international customary law guarantees territorial jurisdiction under the territoriality principle, at the same time it grants sovereign entities with immunity from adjudicative and enforcement jurisdictions alike absent any consent of the State involved.[39][40] Therefore, a short-circuit in international law may arise as to sovereign investments because once they are accepted into a national jurisdiction they seem to be protected against any ex post measures the recipient country may want to implement. As to the immunity against adjudicative jurisdiction, a survey of the current status of international customary law makes it evident that it is really rarely claimed and granted, as it arises only when States are acting in the exercise of public powers (acta jure imperii) and not as private persons (acta jure gestionis).[41] A distinction here is needed, as the SWF could enjoy a legal personality formally distinguished from the sponsor State or, on the contrary, lack totally such personality. In the first case, international customary law mandates that a State does not enjoy any adjudicative immunity as to its acts of commercial nature. International law considers both the nature and the purpose of the transaction in order to define it ‘commercial’, although it has been suggested that the purpose should not be relied on as the only criterion, as States could invoke the immunity rules under the umbrella of purposes ‘other’ than the maximization of its wealth.[42] The UN Convention, however, seems to prevent this by providing that a State cannot invoke any immunity against a proceeding involving its participation in a company.[43] When instead investments are made by a SWF with a legal personality formally distinguished from the sponsor State, it is clear that the former does not enjoy any adjudicative immunity,

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while the latter does as its personality is not affected. However, an Understanding to the Con-vention seems to suggest that it is possible to ‘pierce the corporate veil’ and therefore sue the State if it “has deliberately misrepresented its financial position or subsequently reduced its as-sets to avoid satisfy a claim.” In either case, thus, the State managing or owing the fund would not enjoy adjudicative immunity, as its investments would be considered acta jure gestionis – and a fortiori this is true as these States keep reassuring recipient countries that their investments are made for mere eco-nomic reasons. However, the lack of immunity from adjudication does not prevent States from invok-ing their immunity from enforcement which is, unlike adjudicative jurisdiction, almost absolute. Even if this is the case, though, there is some leeway for executing a court ruling against a SWF. First, a State could have consented to this or identified specific property for satisfying the claim. Second, even if there is no such consent, some measures could be executed on State property if property of such State is located in the State of the forum. However, some requirements must be met: (i) there must be a connection between such property and the entity sued, and (ii) such property must be “specifically in use…by the State for other than government non-commercial purposes.” While this last prong seems to leave the door open to judicial interpretation, a prop-erty ascribable to a SWF seem to be very unlike to be classified as “governmental” and “non-commercial.” This general framework, where international investment issues and sovereign immuni-ties may conflict, seemed to be just a doctrinal speculation. On the contrary, as the financial turmoil turned out to have affected also sovereign investors, the possibility of such a short-circuit appeared as a bolt from the blue. Indeed, as in late November 2009 the emirate of Dubai announced a standstill on its payments of the debts of Dubai World, a government-owned conglomerate, a debate focused on the arising legal and economic issues as to sovereign bank-ruptcy started to heat the media and public opinion.[44] Fortunately for Dubai and its foreign creditors, at the end of the day Dubai’s richer neighbor, Abu Dhabi, bailed out Dubai World (and Dubai) by means of its own wealthy sovereign fund, Abu Dhabi Investment Authority.[45] However, while markets were panicking the debate about the standstill on payments highlighted some features of the framework just outlined above. Indeed, some legal experts suggested that if a solution could not be found to the payment standstill, Dubai could have invoked the States immunities granted under international law, while others stressed the limits of rules of immunity as to SWFs, in particular as to the enforcement dimension.[46][47] The bailout by ADIA prevented not only an economic downfall but also a dangerous legal precedent – whatever the outcome. As a result, nobody can tell exactly what is the potential of the short-circuit – for now at least. But are we sure that host countries want to push the limits of international law as to SWFs in order to discover it?

IV. China Investment Corporation: Much Ado about What? Here the focus shifts to China Investment Corporation, the Chinese sovereign wealth fund, in order to put it in the SWF context just outlined and single out CIC features that are pivotal in order to understand its international legal status and the issues therefrom. On September 29, 2007, RPC joined the ‘club’ of countries engaged in sovereign in-vestment activities by setting up its own sovereign wealth fund, China Investment Corporation (CIC).[48] The creation of a Chinese sovereign fund revitalized the debate on SWFs, at least for two reasons. The first is the timing of the creation of CIC, as it occurred when the global fi-nancial system was displaying the first signs of the tragedy that would happen less than one year later and that, in hindsight, would provide the liquidity necessary to rescue the suffering financial system. In addition to this, the creation of a Chinese SWF – which was soon followed by the creation of Russian Welfare Fund – evidenced that the SWF phenomenon was spreading in the emerging markets and was not anymore a prerogative of Middle Eastern oil-exporting countries (like the UAE) to which the US and Europe were already used to nor of reassuring Western, democratic countries (such as Norway).[49] Thus, it was evident that SWFs were emerging as investment arms of a new category of states, namely non democratic countries which had been long-time rivals of Western countries (e.g. Russia) or were deemed to be for the future (e.g. China). As already highlighted above, the natural corollary of this acknowledgment was

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an increase in the concern that SWFs could carry out goals different from the maximization of their investments. Against this background, common to the Chinese and Russian SWFs, China Investment Corporation displays some particular, noteworthy features, explored below. China Investment Corporation: Main Features CIC is wholly state-owned by the government of China, incorporated under the Com-pany Law of PRC.[50] Even though structured as a corporation formally independent of the government in order to separate economic and political functions within the state apparatus, it seems to be a political entity.[51] Its operational structure fosters a strong cooperation and consultation between the CIC main bodies – the board of directors and its executive committee, and the board of supervisors – as they are accountable to the State Council, China’s cabinet.[52] Moreover CIC, like any other Chinese corporation, has a committee representing the Chinese Communist Party.[53] As a result, there is a close connection between State, Communist Party and the SWF: on one hand, this qualifies CIC as a SWF with a legal personality distinguished by Chinese State, but on the other hand, suspicions about a political influence on CIC investment strategies are absolutely legitimate. The stated purpose of CIC is to seek long-term investments maximizing the returns, maintain a rigorous approach to managing risk and to improve the corporate governance of key state-owned financial institutions.[54] As far as investment strategies are concerned, there is not much information publicly available. CIC tends to use external money managers and participate in indirect equity holdings through various investment funds. As of June 2008, China Invest-ment Corporation holds a 68% stake in Bank of China, a 35% stake in Industrial and Commer-cial Bank of China, a 65% stake in China Construction Bank, a 71% stake in China Everbright Bank, and a 50% stake in Agricultural Bank of China. As for outward investments, it has a 12.5% stake in Blackstone Group and a 9.9% stake in Morgan Stanley.[55] Some of the fund money is being used for helping out certain State Owned Enterprises. The exact geographical distribution of its portfolio and a breakdown by sector and asset classes are not available. As a partial result of this, its transparency level is very low: according to the Truman indicators, it has a score of 29 out of 100. While Chinese leaders claim SWFs like CIC have suffered many losses as consequence of the financial crisis, many Chinese companies have in fact expanded globally, especially State-owned enterprises (SOEs) in natural resources sector, and China Investment Corporation seems to have adjusted its role as financer and facilitator in order to assist them in the process – a role as “piggy bank for global expansion of China Inc.”[56][57] China Investment Corporation: Origins and Mission However, the most prominent feature of CIC relies in its source of funding – i.e. the outstanding level of currency reserves which have being piled up in the past thirty years and that reached $2.4 trillion at the end of 2009, accounting for almost half of Chinese gross domestic product.[58] Indeed, in the categorization of SWFs we have provided above China Investment Corporation can be defined as a forex sovereign wealth fund, that is, an institutional investor whose sources of funding come from both current and capital account surpluses of the spon-sor State. In the Chinese experience these surpluses are, respectively, the ultimate result of the export-led growth strategy and the promotion of inward FDI carried out since the late 1970s, coupled with the managed exchange rate system. What is most striking is that, for the PRC, the currency reserves are not only the source of funding of CIC, but also the main reason for setting up the latter. The accumulation of cur-rency reserves China is experiencing gives rise to some concerns for its own economic growth. Indeed, in order to keep the exchange rate fixed and therefore prevent an appreciation of the renminbi, People’s Bank of China (PBOC), the Chinese central bank, has to buy foreign cur-rencies by injecting domestic currency in Chinese economy – a situation aggravated by the high saving rate and the low consumption level. In order to cope with this excessive liquidity that would overheat the economy with the risk of a sudden crash, Chinese monetary authorities have some measures aimed at reducing the accumulation of foreign reserves.[59] Starting in 1992, the State Administration of Foreign Exchange (SAFE), dependent on the PBOC, was held responsible for managing foreign currency reserves. In 2003, Central Hui-

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jin Investment Ltd., a public investment company wholly owned by SAFE, was created in order to use the reserves for a recapitalization of the Chinese banking system with the ultimate goal of listing these banks abroad. However, as the listing of banks abroad turned out to exacerbate the excess of liquidity, new strategies were envisaged. Reconsidering the strategy of was necessary also because starting in 2005 the US dollar had been dramatically depreciating towards the renminbi, causing a drop in value of China’s dol-lar-denominated reserves – more than 50% consisting in US Treasury bills. In order to diversify its investments, then, Chinese authorities decided to “explore and expand the use of [its] foreign exchange reserves.”[60] In May 2007, China Jianyin Investment Securities Co., Ltd, a subsidiary of China Central Huijin, invested $3 billion in purchasing preferred stock in Blackstone, a US private equity firm. In September, China Investment Corporation creation was announced and trusted the delicate task to invest China foreign reserves for the good of Chinese economic growth. V. China Investment Corporation: A Law and Development Perspective As China is moving its pieces on the chessboard of international economic order, many countries like the US are frantically following its moves as well as considering possible responses to long arms of Chinese power, such as the China Investment Corporation. As already outlined, on one hand the responses to SWFs like CIC have been unilaterally fragmented or based on vol-untary codes of conduct; on the other, while such responses supposedly fit in the international legal framework, the latter displays implicit shortfalls that suggest a failure of multilateralism as the best approach, as its ultimate result is often either a frustrating impasse that leads nowhere or the enactment of rules so generic that leave room to national interpretation often bordering with manipulation. As already recalled, moreover, “SWFs” do not have a widely accepted definition but is rather an umbrella term grouping together very different investment vehicles for purposes and sources of funding. In considering any possible response to sovereign wealth funds, then, a case by case approach then seems sensible and the particular context where the SWF has arisen and the broader context of policy pursued by the sponsor State should not be overlooked. As to China Investment Corporation, two profiles deserve attention. First, the context of the sweeping domestic economic and legal reforms carried out by PRC in the past thirty years; second, the attitude that PRC, in getting involved in the international legal system, has towards international law in general and investment law in particular. While the first provides an insight of the role that the legal system had for Chinese economic growth, the second helps understand how China is likely to use international legal rules as to SWFs in order to achieve that goal. Indeed, these two issues could be considered just as faces of the same coin, as while it is clear that domestic law has played and is playing a pivotal role for Chinese economic growth the same assessment could be made also for international legal rules.[61] Chinese Economic Growth from A Legal Perspective As already discussed, China Investment Corporation owes its origins to the huge amount of reserves PRC has been amassing in the past decades as a side effect of its current ac-count surpluses. Therefore, the CIC could be well considered as the international extension and complement of Chinese domestic economic reforms, since the “Go Global” policy, corollary of Deng’s Open Door Policy, is indeed a two-prong economic strategy, consisting in a “Bring In” and “Go Out.”[62] In this perspective, CIC and its investments should be seen as part of the economic reforms China has been carrying out rather than considered and evaluated alone. Since Deng Xiaoping became the paramount leader in 1978 and launched the Open Door Policy, these reforms have been sweeping. No economic sector has been spared: banking, securities markets, price system, taxation rules, corporate structure.[63] In carrying out these re-forms, the main goal of Deng leadership was to make China appealing for foreign direct invest-ments, in order to bring in the country the capital necessary to promote an export-led growth. In carrying out that strategy, law played a huge role, recognized and pursued by the Chinese leadership since the beginning. In deciding to shift the focus from class struggle that marked the Maoist era to socio-economic development, indeed, Deng made clear that legal certainty was one of the fundamental means to achieve this goal.[64]

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As legal nihilism in Maoist years had led to the collapse of the legal system; however, such system did not need to be appealing. It had to be rebuilt ex novo. Then, in order to attract any FDI, the Chinese legal system decided to segregate them from the rest of the country from a legal point of view by creating the Special Economic Zones (SEZs), zones on the southeastern coast characterized by commercial and tax legal rules totally different from the rest of the coun-try.[65] These enclaves were real golden cages as foreigners enjoyed the protection provided for by statutes that discriminated among nationals and foreigners: the Law on Foreign Economic Contracts, the Law on Wholly Foreign-owned Enterprises, the Law on Cooperative Joint Ven-tures, among others.[66] Even though at the end of the 1990s this segregation started to fall apart as foreign and national investors were considered alike, and it could be said that China was successful in building ex novo a legal system similar to those of most developed countries and in making it a driving force for its economic growth, such system displays some structural weaknesses that are appalling and suggest that China is not a governed by the rule of law but just by the rule by law.[67] The two paramount weaknesses relate to the system of sources of law and the ques-tion of judicial power. While the former has been lacking a clear hierarchy among sources until very recently, the latter is still without the independence necessary in order to carry out its task effectively and credibly. With Chinese GDP skyrocketing in the past three decades and the legal system being affected by such weaknesses preventing the full accomplishment of rule of law, it is possible to envisage a dissociation between the economic performance and legal system – a further confirmation of the ancillary role played by law. The future of international law is (really) domestic Recent scholarship has stressed that the future of international law is domestic as the international legal system could play a substantial role in influencing domestic political outcomes in accordance with international legal rules.[68] The future of international law can be domestic also in another sense, however – that is, the role that international law has for economic growth. Indeed, in reform-era China, international law could be “suspected” as playing the same role do-mestic law did – i.e., promoting the sole goal of economic development. Therefore, an ancillary role could also be envisaged for the legal system for international law. In assessing whether this is the case, Chinese history should be considered. Its attitude towards international law is greatly affected by the distrust towards the Western countries that established the international system itself with Westphalia treaties in mid-seventeenth century, as such legal system was the tool used to force China to give up substantial parts of its sovereignty by the means of the Unequal Trea-ties. Within this general picture, some features of contemporary involvement of China in the international legal system can be useful. Among these, two are particularly meaningful: the legal consequences of China’s accession to WTO and the PRC views on the reception of inter-national law into domestic law.As to the WTO accession, it is noteworthy that China “used” it as a means in order to secure its domestic reforms program. Indeed, while some see the accession to WTO as a means to promote further reforms, this could not be the case, as the Chinese leadership anticipated the reforms that WTO accession would require by overhauling its legal system well before Decem-ber 2001, when such accession became effective. At the end of 2000, thousands of legal acts of various nature had already been amended in order to be compatible with the commitment that WTO would require.[69] Therefore, even international law seems to play ancillary role for economic growth, as the WTO was the “excuse” Chinese leadership had to overhaul many rules. As to the reception of international law into its domestic law, the PRC’s view seems to confirm such finding. Despite any provision of law saying the contrary, China displays a strong, absolute, exacerbated dualist approach both in the reception of international law and in the position granted to it in the system of sources of law.[70] Domestic law, in fact, looks like to be considered by PRC as a filter toward international legal rules, as treaty obligations are transformed through national legislation, by adopting a special legislation or amending existing domestic rules, rather than being directly applied.[71] Indeed, the direct application of a treaty provision is carried out through a specific national law and not through a general mechanism of adaptation.[72] This feature is further complicated and exasperated by the fact that Chinese views of reception vary by subject matter, as such provisions exist for some subject matters,

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such as some rules of conflicts concerning international business transactions, but not for oth-ers. Given the PRC’s attitude towards international law generally considered, what about the attitude with specific reference to SWFs and China Investment Corporation? So far, China has not pronounced itself about the possible short-circuit, but some assessment is still possible. Whereas China, through its accession to WTO, accepted the obligations pursuant to GATS, its view on State immunities deserves some attention. Chinese position as to State immunities has shifted in the past twenty years.[73] Its ap-proach was pretty rigid: in recognizing the traditional principle of the jurisdictional immunity of States PRC rejected the restrictive theory based on the distinction between acta jure imperii and acta jure gestionis, as such distinction was considered to be hardly predictable in practice.[74] However, such assertions were made in a time when no one – China included – could even imagine that sovereign states would played an important role as private actors in the international economic order. Nowadays, there is a rationale for a shift towards accepting a restrictive theory of sovereign immunity. Chinese legal scholarship has been considering the growth of private interests for China as a result of the adoption of a market-oriented economy and the “futility of trying to cling to the [absolute] approach to protect national interests” as the state of the art of international customary law provides for such restrictive immunityonly.[75] VI. Looking for Conclusions: Do Not Kill the Dragon, Just Tame Its Flames In European folklore, the clash between Good and Evil is epically represented by the battle between Saint George, soldier of God, and the Dragon, embodiment of Satan. In that battle, Saint George kills the Dragon and saves a princess in peril. Chinese culture instead has always considered the Dragon as a creature of potent and auspicious powers, and the symbol of imperial authority, and as legacy of this illustrious past today China is often represented with the metaphor of a Dragon. But what attributes does the Chinese Dragon have today? Is it the embodiment of all evil and must feared and killed like Saint George did, or is it on the contrary a symbol of great power and authority which must be respected and ingratiated with? As the worst of the financial crisis becomes just a memory, many countries tend to show more willingness in accepting SWF investments, especially after the Santiago Principles were issued.[76] However, some scholars warn against overreaction towards SWFs investment, as they assert that “security concerns, certainly overplayed in the past, are being sidelined…” [but] [just like] previous calls for protectionism…current appeals to open markets completely…lack the support of empirical evidence.”[77] The question about China Investment Corporations arises strong and delicate especially for the U.S., since the two countries, forming the so-called Group of Two, seem to be involved in a frenemy affecting all aspects of their relation – economic relations included.[78][79] As already argued above, while unilateralism is absolutely to be rebuffed, sometimes multilateralism is not the best option to tackle with international issues. A bilateral approach permits, unlike a unilateral approach, addressing the issue without excluding the counterparty and, unlikea multi-lateral appraoch, avoiding the shortfalls of a one-size-fits-all, non-binding solution. Considering this and the particular relation that the People’s Republic of China and the United States have been developing in the past thirty years, a bilateral approach is maybe the best option available to the U.S. in order to tackle China’s SWFs investments and, by this means, the entire touchy issue of Sino-American economic relations.[80] What Is the Point with Chimerica? Chimerica is not a Chimera. While it is true that China’s outstanding saving rates and America’s staggering overspending led to an incredible period of wealth creation that contrib-uted to the financial crisis of 2007–2009, it also true that Chimerica “accounts for around 13 percent of the world’s land surface, a quarter of its population, about a third of its gross domes-tic product, and somewhere over half of the global economic growth of the past six years.”[81] Maybe never as today a bilateral investment treaty between the US and China is possible, sen-sible, and advisable. In negotiating a BIT with a sponsor state of a SWF, any country should tackle the is-sues arising from sovereign investments. Once the features of China Investment Corporation

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are considered and the possible short-circuit within international law and the specific attitude PRC has towards international legal order are recalled, maybe host States’ fears are legitimate. However, once also the relevance of CIC for Chinese economic growth is recalled, these fear should be balanced by the awareness of the role that CIC plays for Chinese economic growth. Instead of overreacting by prohibiting unilaterally SWF investments or waiting for a new Dubai-like crisis, states should deal with these issues in the bilateral investment treaty with a sponsor state of a SWF – and this is valid especially for the BIT the U.S. has been negotiating with PRC in these months as part of the Strategic Economic Dialogue between the two coun-tries.[82] The prospective Sino-American BIT should explicitly address the possibility of re-course to State immunities by States sponsoring SWFs, and regulate it by providing for a specific regime addressing the possibility of problems as to SWFs investments once the ex ante scrutiny has been passed. In defusing this bomb, such structured bilateral investment treaty promotes legal certainty host states and sponsor states alike need in order to make their investment deci-sions, fostering efficient allocation of financial resources among countries. This is particularly necessary for Chimerica. The U.S. may be complaining about the lack of transparency in CIC operations, but it needs the PRCe to not drop its huge amount of U.S. Treasury bills, while China needs to promote its investment abroad as a way to stabilize its economic growth by avoiding an overheating followed by a hard landing that would jeopardize not only Chinese growth potential or the U.S. debt position, but also the global economic outlook as a whole – a risk that the cur-rent financial crisis does not allow anybody to take.

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NOTES [1] Louise Levathes, When China Ruled the Seas. The Treasure Fleet of the Dragon Throne, 1405-1433 (Oxford University Press, 1996).[2] Louise Levathes, supra note 1.[3] Levathes, supra note 1.[4] H. Patrick Glenn, Legal Traditions Of The World: Sustainable Diversity In Law(Oxford University Press, 2004), 327. [5] Esther Pan, “The Promise and Pitfalls of China’s ‘Peaceful Rise,’” April 2006, http://www.cfr.org/publication/10446/.[6] Lee Branstetter & Nicholas Lardy, China’s embrace of globaliza-tion, NBER Working Paper 12373, National Bureau of Economic Research, July 2006.[7] Bart De Meester, International Legal Aspects of Sovereign Wealth Funds: Reconciling International Economic Law and The Law of State Immunities with A New Role of The State, Institute for Inter-national Law, November 2008, available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1308542. See generally also Cristina Giorgiantonio, Sovereign Wealth Funds: Investment Strategies and Governance, Bank of Italy working paper, June 2009.[8] Bob Davis, “Wanted: SWFs’ money sans politics,” The Wall Street Journal, December 2007.[9] Ibrahim Warde, “Des «fonds souverains» au chevet des multina-tionales,” Le Monde Diplomatique, May 2008, http://www.monde-diplomatique.fr/2008/05/WARDE/15858.[10] Neil King Jr. & Greg Hitt, “Dubai Ports World Sells U.S. Assets,” Wall Street Journal, December 12, 2006, http://online.wsj.com/ar-ticle/SB116584567567746444.html.[11] Peter S. Goodman & Louise Story, “Foreigners buy stakes in the US at a record pace,” N.Y. Times, January 2008, http://www.nytimes.com/2008/01/20/business/worldbusiness/20iht-foreign.1.9348910.html.[12] De Meester, supra note 33 at 5-11.[13] Giorgiantonio, supra note 33 at 23-25; see also De Meester, supra note 33 at 7-10 and Charles Kovacs, “Sovereign Wealth Funds: Much Ado about Some Money,” Columbia FDI Perspectives, No.14, Octo-ber 2009,http://www.vcc.columbia.edu/content/sovereign-wealth-funds-much-ado-about-some-money.[14] Giorgiantonio, supra note 33 at 4. See also Meester supra note 33 at 3.[15] IMF, Sovereign Wealth Funds – A Work Agenda, 2008.[16] De Meester, supra note 33 at 4.

[17] Giorgiantonio, supra note 33 at 4-6.[18] IMF, supra note 42 at. Here only the three main types of SWFs are fully accounted; for the other two, see infra note 50.[19] Aizenman & Glick, Sovereign Wealth Funds: Stumbling Blocks or Stepping Stones to Financial Globalization?, Federal Reserve Bank of San Francisco Economic Letter, n. 38, December 2007.[20] Giorgiantonio, supra note 33 at 8-9.[21] Anna Paulson, Raising Capital: the Role of Sovereign Wealth Funds, Chicago Fed Letter n.258, January 2008, http://www.chicagofed.org/digi-tal_assets/publications/chicago_fed_letter/2009/cfljanuary2009_258.pdf.[22] Ashley Seager, “Sovereign funds defend themselves against calls for regulation,” The Guardian, January 2008.[23] Mathias Audit, “Is the Erecting of Barriers against Foreign Sovereign Wealth Funds Compatible with International Investment Law?,” Society of International Economic Law, Working Paper 29/08, July 2008, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1154601.[24] Ibid. at 3.[25] Giorgiantonio, supra note 33 at 31.[26] European Commission, A Common European Approach to Sover-eign Wealth Funds, February 2008, http://europa.eu/legislation_summa-ries/internal_market/single_market_capital/mi0003_en.htm. [27] Formally known as Generally Accepted Principles and Practices (GAPP), http://www.iwg-swf.org/pubs/gapplist.htm.[28] Giorgiantonio, supra note 33 at 34. The same assessment could be made for the Guidance issued by OECD in October 2008. See Giorgi-antonio, supra note 33 at 33-34.[29] De Meester, supra note 33 at 21.[30] Audit, supra note 59 at 7-10.[31] De Meester, supra note 33 at 22-36.[32] Blakesley, The International Legal System, Foundation Press . 2001, at 1006.[33] Unctad, Bilateral Investment Treaty 1995-2006: Trends in Invest-ment Rulemaking, available at http://www.unctad.org/en/docs/ite-iia20065_en.pdf.[34] Maffezini v. Spain, Decision on Jurisdiction, 25 January 2000, 5 ICSID Rep. 396 at 434.[35] Art. I:2 (c) juncto Art. XXVIII (d) (i) GATS.[36] Art. XVIII (m) (ii) GATS.[37] De Meester, supra note 33 at 27.

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NOTES[38] Ibid. at 21.[39] Blakesley, supra note 72 at 134-36.[40] Ibid. at 32.[41] Blakesley, supra note 72 at 505-54. [42] De Meester, supra note 33 at 34-35.[43] Art. 15(1). UN Convention on Jurisdictional Immunities of States and Their Property.[44] Simeon Kerr & Jennifer Hughes, “Dubai stuns debt markets,” Financial Times, November 26, 2009, http://www.ft.com/cms/s/0/ad2d37ee-da2b-11de-b2d5-00144feabdc0.html.[45] Simeon Kerr & Andrew England & Robin Wigglesworth, “Abu Dhabi in $10bn bail-out of Dubai,” Financial Times, December 15, 2009, http://www.ft.com/cms/s/0/209a888a-e918-11de-a756-00144feab49a.html.[46] Andrew England & Robin Wigglesworth, “Hard times test legal system to its limits,” Financial Times, December 3, 2009, http://www.ft.com/cms/s/0/215c0502-e038-11de-8494-00144feab49a.html.[47] Ibid.[48] Jamil Anderlini, “China investment arm emerges from shadows,” Financial Times, Jan. 5, 2008, http://www.ft.com/cms/s/0/fd0b7e6e-bb2f-11dc-9fbc-0000779fd2ac.html. [49] Andrew E. Kramer, “Russia Creates a $32 Billion Sovereign Wealth Fund,” N.Y. Times, February 1, 2008, http://www.nytimes.com/2008/02/01/business/worldbusiness/01fund.html?scp=5&sq=russia+sovereign+wealth+fund&st=nyt.[50] Larry Catá Backer, “Sovereign Investing in Times of Crisis: Global Regulation of Sovereign Wealth Funds, State Owned Enter-prises and the Chinese Experience,” Transnational Law & Contempo-rary Problems 243, August 2009, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1444190. [51] Ibid. at 250.[52] Ibid. at 243.[53] Ibid. at 252.[54] Giorgiantonio, supra note 33.[55] Giorgiantonio, supra note 33.[56] Catá Backer, supra note 101 at 259.[57] Jamil Anderlini, “CIC Accepts Role as Piggy Bank for China Inc.,” Financial Times, March 4, 2009, http://www.ft.com/cms/s/0/47cc33ea-08e5-11de-b8b0-0000779fd2ac.html.[58] Editorial, “China’s currency is not worth a battle,” Financial Times, April 5, 2010, http://www.ft.com/cms/s/0/5a367c3c-40d6-11df-94c2-00144feabdc0.html.[59] “Central Bank to Further Check Excess of Liquidity, Inflation,” Xinhuanet, November 2007 http://www.china-embassy.org/eng/gyzg/t379621.htm.[60] “China To ‘Actively Explore and Expand’ the Use of For-eign Reserves,” Hong Kong Trade Development Council, Janu-

ary 2007, http://aden2.mofcom.gov.cn/aarticle/aboutchina/econo-my/200701/20070104296035.html.[61] Donald Clarke & Peter Murrell & Susan H. Whiting, “The Role of Law in China’s Economic Development,” GWU Law School Public Law Research Paper No. 187, January 2006, http://papers.ssrn.com/sol3/pa-pers.cfm?abstract_id=878672.[62] Catá Backer, supra note 101 at 236. [63] Clarke, supra note 122.[64] Werner Menski, Comparative Law In A Global Context: The Legal Systems Of Asia And Africa, Cambridge University Press, 2006.[65] Clarke, supra note 122 at 10.[66] Clarke, supra note 122 at.[67] Clarke, supra note 122.[68] Anne-Marie Slaughter & William Burke-White, “The Future of International Law Is Domestic (or, The European Way of Law),” Harvard Journal of International Law 47 (2006): 327.[69] Clarke, supra note 122 at 15.[70] Xue Hanqin & Jin Qian, “International Treaties in the Chinese Do-mestic Legal System,” Chinese Journal of International Law 8 (July 2009): 299.[71] Ibid.[72] Ibid.[73] Dahai Qi, “State Immunity, China and Its Shifting Position,” Chinese Journal of International Law, (July 2008).[74] Wang Houli, “Sovereign Immunity: Chinese Views and Practices,” Journal of Chinese Law, (Spring 1987).[75] Qi, supra note 139.[76] Veljko Fotak & William Megginson, “Are SWFs Welcome Now?,” Columbia FDI Perspectives, No.9, July 2009, http://www.vcc.columbia.edu/content/are-swfs-welcome-now.[77] Ibid.[78] Fred Bergsten, “Two’s Company,” http://www.foreignaffairs.com/articles/65232/c-fred-bergsten/twos-company.[79] “Does China Pose An Economic Threat To The United States?,” December 2003, http://knowledge.wharton.upenn.edu/article.cfm?articleid=895.[80] “Attached at The Wallet: The Delicate Financial Relationship between the U.S. and China,” April 2009, http://knowledge.wharton.upenn.edu/article.cfm?articleid=2230.[81] Niall Ferguson, “What “Chimerica” Hath Wrought,” http://www.the-american-interest.com/article.cfm?piece=533.[82] Krishna Guha, “US-China Investment Treaty Plan,” Financial Times, June 19, 2008, http://www.ft.com/cms/s/0/1eb4a1a4-3d98-11dd-bbb5-0000779fd2ac.html. Photo from: The Christian Science Monitor. “Economic Clout Rising.” < http://www.csmonitor.com/Business/2010/0426/Economic-clout-rising-China-takes-No.-3-seat-on-World-Bank.> Accessed, April 2011

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Printed April 2011. A University of Pennsylvania publication.