The phenomenon of trading with and aiding foreign countries has been around for centuries. Trade is defined as the buying and selling of goods and services, and aid as a source of help or assistance. As of 2019, it can be seen that the countries that trade and provide the most aid are amongst some of the countries with high Gross Domestic Product (GDP) numbers, and Human Development Indexes (HDI). These include the US (with a trade value of $2.5 trillion), China (trade value of $1.65 trillion), and Germany (HDI of more than 0.9). The US and China also have the two highest GDP's in the world. This ultimately shows that it is desirable to engage a great deal in trade and aid. However, with such great benefits that come with trade and aid, could there be more sinister incentives, disguised as helping the less fortunate? I thought this topic was suitable to cover since I, as an Economics student, think that past events shown throughout history have shown that powerful countries often use weaker ones to their benefit. In this report, I will investigate if and why corruption, manipulation, and the act of gaslighting occurs to the less fortunate to submit to the demands of powerful countries. To begin with, research has been conducted to show that assets and money given to poorer countries pale in comparison to what richer countries have gained. This again shows the relevancy of the question as evidence shows that richer countries do use poorer countries. My research will be focused globally, and more contemporarily, on the relationship between China and Sri Lanka, the US and Ukraine and nationally, I look into Malaysia's relationship with China. To dive into history, I investigate the First Opium War between Britain and China.
Hambantota Port
China has a reputation for setting up debt traps to encase poorer countries such as Nigeria and Sri Lanka. This occurs when China loans money to them. When they fail to repay the debt, China imposes authority and forces them to submit to their wants, also known as the debt-trap diplomacy. In 2008, Sri Lanka's ex-president, Mahinda Rajapaksa ordered a new port to be built despite the port being impractical strategically, logically and financially (due to their pending debt to other countries). As Sri Lanka lacked the funds to finance the port, they sought financial assistance from China. China financed 85% of the total $436.5 million needed to build the port. The port was opened in November and turned out to be a flop as it only made a profit of $1.81 million in 2016. This resulted in Sri Lanka facing difficulties in repaying the loans China lent them, and as compensation, Sri Lanka lent the port to China for 99 years, in return receiving $1.1 billion to repay their pending debts to China only. However, The Diplomat published articles claiming that the money received was used to strengthen Sri Lanka's foreign currency with the foreign reserves the received, not to repay the debts, therefore there was no cancellation of debt. Initially, there were concerns raised on the security of the port, as China could have possibly used it for military purposes as they did with the military base in Djibouti, but Sri Lanka has dismissed these by revising of the deal by putting Sri Lanka in charge of security such as deciding which ships can dock at the port (be it a Chinese ship or not) and limiting China's role to the ownership of the port. reference
I think that this is an example where both countries stood to gain under the guise of trade and aid. Whilst China now owns a port for nearly a century that can be beneficial to their Belt-and-Road Initiative, Sri Lanka also could strengthen their foreign reserves, therefore making exports cheaper.
The US and Ukraine
Since 2014, the US has given more than $1.5 billion in military aid to Ukraine. The aid given is extremely vital to Ukraine as it helped decrease their casualty rates from the ongoing war between Russia and Ukraine by 60%. Ukraine also holds significance to the US, as it is now the fifth most country to outsource IT. furthermore, defending Ukraine against Russia maintains international law. However, in early July of 2019, Trump withheld the aid summing up to $391 million, from reaching Ukraine. He wanted Ukraine to launch investigations on Joe Biden and his son as Joe Biden is Trump's number one rival in the 2020 presidential election. Finding out information that could damage Biden's reputation is extremely beneficial to Trump, although using foreign help to affect the elections is illegal. When this was exposed, many thought that withholding the aid was a way of forcing Ukraine to submit to his bidding. Although Trump confirmed these rumors to his Senator, he denied them publicly. In the 2016 US elections where Trump and Hilary Clinton went head-to-head, Clinton had some help from Ukraine by supposedly “disseminating documenting a top Trump aide in corruption” and researching “damaging information on Trump and his advisors'', as U.S Attorney General William Barr claimed. this could show that since Ukraine was in favor of Trump's opponent, he could have even more initiative to spite them. Furthermore, he has a history of withdrawing aid when he's concerned, like when he withdrew aid from three South American countries after they didn't do enough to reduce illegal migration.
This to me is an obvious abuse of power. Ukraine heavily depends on the US for most of its military training and services, and President Trump used that to his advantage. Although his staff and he claim he has done nothing wrong, evidence from both witnesses and published information show that Trump used his leverage for his gain. Thankfully, after legal concerns arose, he continued the aid to Ukraine.
The First Opium War
This example is a war between Britain and China. It was the consequence of the British illegally exporting drugs from India to China, which lead to an increased number of opioid addictions in China. As any country would, China put a stop to the illegal trade, but Britain retaliated by destroying Chinese infrastructure, taking control of the city of Nanjing and refusing to send two British people who murdered while under the influence of alcohol for trial. To put a stop to these acts, the Nanjing treaty was signed in 1842. As a result of the treaty, Hong Kong was given to Britain for 156 years. China had to set limited taxes on British goods and allow the British to trade with five more ports whenever they wanted to. China also had to pay for the damages the war had caused.
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This treaty is known as the first unequal treaty between both countries. Though the treaty stopped the violence, it completely took advantage of China, who at the time, was less powerful and equipped than the British. It is an example of abusing one's power to acquire their wants. This could have been avoided had Britain acted fairly, and accepted that their citizens were in the wrong. Due to the unequal balance of power, Britain managed to make themselves the victims, and not only committed crimes in a foreign land, but they also made China pay for the mess they made, and more.
Malaysian 1MDb Scandal
Malaysia too has not been exempted from abusing power to fit personal needs. I'm referring to none other than the 1MDb scandal that brought a negative image to the country. The 1 Malaysia Development Berhad was a fund opened in 2009 to encourage Malaysian development through foreign partnerships and investments. It gained attention after the Wall Street Journal published an article in 2015 stating that $700 million of the fund was channeled into the then Prime Minister, Najib Razak's bank account, presumably to fund him and his wife's expensive lifestyles. It was revealed by Najib's, ex-special officer, that Najib sent him on a ‘secret mission’ to China in June 2016 to reconfirm economic investments and bonds between China and Malaysia. He was accompanied by the infamous Jho Low, who not only went as a translator but also as a middle man to discuss the usage of Chinese investments to pay off the accumulated debt from the 1MDb (and less popularly, SRC) fund, with China. As a result of the discussions, mutual agreements were made to give China the East Coast Rail Link, Trans- Sabah, and Kuala Lumpur – Bangkok high-speed rails, to in turn receive a paid debt.
This example shows how having a relationship that originated from trading can subsequently lead to an abuse of power, from both sides. Had the ex-prime minister not lost power, there is a strong possibility that China would have ended up owning many Malaysian railways.
Courses of Action
I think to combat this growing trend of corruption, change needs to happen from within. Firstly, corrupted should be voted out, and that isn't easy as oftentimes, they have the power to bribe and unfairly attract voters. Therefore, voters should be educated on the impacts of unfair governments so they can objectively judge who they vote for without biases or vested interests. Corruption is a sure indicator of a less developed country, and so exterminating it should be a main goal of leaders.
Powerful countries should also refrain from taking the resources of poorer countries, and work to better living standards, as eventually, it will benefit them too. This can be done by trading fairly and keeping trade surpluses and deficits at low values. Much like the U.S Marshall plan, aid can be given, however, it is unadvised to do so as it can lead to unfair and biased treatment. This also helps developed countries, as firstly, they gain a humanitarian image, encouraging more foreign investments and bonds. Richer countries are also less likely to go to war, and with better living standards, people from less developed countries can begin to afford more expensive imports, which also benefits the already developed countries.
Conclusion
In my opinion, I do think that trade and aid can lead to an abuse of power. Shown throughout past and current events, there is a prominent trend in stronger countries using weaker countries to their benefit, while disguising their intents as gracious acts of help. The Hambantota port and first opium war show that trade can lead to corruption, while the Marshall Plan shows that foreign aid can work to help countries while also doing so for personal gain. Trading and aiding out of pure generosity is very rare, as many countries want what benefits and will bring them the most revenue. Therefore, I do think that trade and aid lead to an abuse of power.
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