George P. Shultz on China and Bosnia

Tuesday, January 30, 1996

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George P. Shultz on China and Bosnia
Interview by Peter Robinson

Former Secretary of State Shultz recently spent a morning talking about the challenges posed to U.S. foreign policy by China, one of the biggest countries on earth, and Bosnia, one of the smallest. Shultz answered questions put to him by Hoover fellow Peter Robinson.

Robinson You visited China in March. What struck you most?

Shultz All the visible evidence of tremendous economic progress. You can see it just looking around--the appearance of the place, the quality of the hotel you stay in, the way people dress.

Robinson How have they produced this transformation?

Shultz They've done it by adopting more open markets, more market-based thinking, and more semiprivate property. Their economic system is in a sense still very primitive, but they're working on it. They realize that they have to have a reasonable inflation environment, and they've taken some disciplinary action on that. They're working hard on their financial system, their central banking functions, and their tax system--but they have a long way to go.

Robinson That's the good news about China--but there are many who believe there is some very bad news as well. The Beijing regime is still communist. China uses forced labor. To enforce its one-child-per-family policy, China engages in involuntary sterilization and abortion. China has been providing Pakistan with nuclear material. How do we deal with all of this?

Shultz There are a bundle of problems, no doubt about it. You have to address them. The question is, how? First you have to ask yourself, do you want to try to isolate China? Do you want to impose a trade and investment embargo? The first consequence of an embargo would be that nobody else would adopt it. We would be more isolated than China. It's not like the old Soviet situation--

Robinson --when the entire Western world joined in isolating the Soviets?

Shultz--right. Today China is taking on all the attributes of a great power. So you can't say to yourself that you're going to ignore China. What you want to do, I think, is take advantage of the opportunities that go with a U.S.-China relationship to address the problems.

Robinson Let me give you a test case. A year ago, according to The Economist, there were twenty-eight major operations in the People's Republic of China engaged in violating intellectual property rights by counterfeiting software and compact discs. We protested. One year later, there are thirty-two such operations. How would you handle that?

Shultz You have to be very tough. You also have to recognize that it's a hard issue. I can remember struggling on this issue with Taiwan, with Singapore, and with Hong Kong. It takes a while, and you must keep pushing hard. But once you've convinced them that they have to get hold of intellectual property rights, they do.

Now, one thing that needs to be said to the Chinese is this: "You, China, have a huge stake in getting the issue of intellectual property rights resolved worldwide. The people in China are gifted. You're smart. With your vast population, you're going to produce more than your share of intellectual property, and then you'll have a stake in seeing that it doesn't get counterfeited all over the world. So in your own interest, you'd better buy in."

It's when you get people to see what's in their own interests that you begin to get somewhere.

Robinson Let's turn to Taiwan. This past spring, as Taiwan was preparing for presidential elections, the People's Republic held extensive military maneuvers. They massed some 200,000 troops on the mainland across from Taiwan. They engaged in naval operations in the Strait of Taiwan. They fired missiles that landed within thirty miles of Taiwan. All this looked like a throwback to old-fashioned, loutish communist behavior. Why did the mainland stage these provocations?

Shultz The mainland view is that Taiwan has been putting itself on a path toward independence. When the president of Taiwan tells people that they should think about Moses and the Book of Exodus, the people on the mainland say, "Well, what is that supposed to mean?" In response they're saying, "If where you in Taiwan are heading--and if where the United States wants Taiwan to head--is toward independence, then that's very likely to produce a war."

Now, I think the military maneuvers show a misunderstanding of how democracies work. People in free countries react to intimidation like that very negatively and in exactly the opposite way that people in oppressed societies tend to.

Robinson And Lee Teng-hui, the candidate for president of Taiwan who the mainland wanted to see defeated, ended up winning by a big margin.

Shultz By a bigger margin than he would have otherwise, although he took his added votes entirely from the explicitly proindependence party.

Robinson Let me ask about the military situation. Imagine that one day the mainland Chinese simply declared all the ports on Taiwan closed, then, at random intervals, began lobbing missiles into the sea-lanes approaching those ports. What could the United States do about it?

Shultz It's a pathetic fact that the United States is not anywhere near taking advantage of what is possible in defending ourselves against ballistic missiles. It's a sin, and a crime, that we don't push harder to develop a defense against ballistic missiles.

We should be pushing to learn how to defend ourselves against a weapon that is increasingly common around the world. And if we learn how to do that well, then we'll have a capacity to help friends of ours.

But right now, we can't help Taiwan--or ourselves--anywhere near as much as is desirable and possible.As far as freedom of navigation and access to Taiwan's ports are concerned, we must stand up to that. If our attitude is clear, and if the Chinese actions are not a response to a move to independence by Taiwan, then such action by China would be much less likely.

Robinson On July 1 of next year, the British Crown Colony of Hong Kong will cease to exist, reverting to Chinese sovereignty. Some predict that the thriving economy of Hong Kong will be badly undermined. Others believe that China will let Hong Kong continue to flourish. What do you see?

Shultz It's not easy to predict. But when you ask the Chinese leaders what they want in Hong Kong, they all say continuity. And when you ask the leaders of Hong Kong what they want, they all say the same thing.

Robinson Would you hold part of your portfolio in the Hong Kong dollar right now?

Shultz You mean as a currency speculator? I'm not smart enough to be a currency speculator, anywhere.

Robinson The Chinese have Tibet already, they'll have Hong Kong next year, and Macao reverts to them in 1999. That makes Taiwan the last unfinished item on their agenda--

Shultz --they don't consider it unfinished. They consider Taiwan part of China already--and, for that matter, Taiwan, the United States, and all other major countries have all had the view that there is one China and Taiwan is part of China.

Robinson But as China strengthens its military, do we have reason for concern? Will China pose threats to Indonesia? Or Australia? Or attempt to project its power elsewhere in the Pacific?

Shultz The Chinese don't show any signs of that, and the old communist expansionist ideology doesn't seem to be there. Nobody in China talks about communism anymore, except for the record. It's just not a motivating force. The Spratly Islands are a problem--

Robinson --the Spratly Islands?

Shultz Small islands in the South China Sea. A number of countries claim them, including China, Vietnam, and the Philippines. They believe there's a lot of oil and gas underneath the Spratlys. But the Asians are working on that problem themselves, and they'll work out some reconciliation.

But I think when you're talking about security issues, you can't afford just to assess China's intentions. You have to assess China's capabilities and then base your policies on that.

Robinson And are you content with our security policies?

Shultz No, I'm not. I don't think we're paying enough attention to our national security needs by a long shot.

Robinson Mr. Secretary, China has the biggest population and the fourth-biggest land mass of any nation. In turning to Bosnia, we're turning to a country with a population of less than four and a half million--some two million of whom are refugees, both inside the country and out--with a land mass not quite as big as Vermont and New Hampshire combined.

My first question about Bosnia is this: Why should we care about such a tiny country, so far away?

Shultz From the standpoint of American interests, it seems to me we have the following things to think about.

One, if the Bosnia conflict spreads, and becomes Europeanized, then you have a major set of conflicts on your hands.

Two, we aspire to a world in which there are at least some rules that countries observe. The violation of somebody else's border, by force, is against the rules. Rightly or wrongly, the United Nations, the United States, and the European countries all recognize Bosnia as a nation. And its borders have been totally violated.

Three, there is the problem of genocide, of killing people because of their ethnicity or their religion. In this diverse world--for that matter, in this diverse country, the United States--if ethnic or religious hatred turns into violence or murder, then a very important norm has been violated.

That doesn't mean we should be putting a land army in Bosnia, but there are good reasons for us to pay attention.

Robinson One of the arguments against intervention in Bosnia is that the history of the region is so tangled. You have a group of Slavic peoples who have been fighting each other roughly since the collapse of the Roman Empire. Isn't it naive to suppose that we can end hatreds that date back more than a thousand years?

Shultz I don't pretend to be a student of the Balkans, but I would point out to you that other people have fought with each other throughout history, too. The Germans have fought with the French quite a few times. But today they live in peace.

And from what we've been able to understand about events in Bosnia, the violence did not erupt from the people. It was something brought on by leaders. Remember the 1984 Winter Olympics in Sarajevo? The city of Sarajevo was regarded as a model of what can happen when you get the tide of goodwill going.

People of different religions and ethnic groups were living together in peace. It was the leaders, particularly the Serb leaders, who started the violence. To my way of thinking, they are war criminals.

Robinson What is your view of the Dayton Accord?

Shultz The accord has a military and a political aspect.

The military aspect is the easier part. Using NATO [North Atlantic Treaty Organization] forces, corridors have been established between the different groups. So you solve the fighting by separating the people who are fighting. In other words, the accord in its immediate implementation tends to cement the ethnic cleansing that has taken place by violence and brutal displacement.

It's the political side that people are skeptical about. What you're trying to do is construct some sort of internal balance of power, so the warring parties will have to respect each other. Out of that, you're trying to construct a constitutional Bosnia, with a recognition that different parts of the country will be occupied by different ethnic groups but that there will somehow be a central government.

Robinson President Clinton has promised that our troops will be out by the end of this year. Can they meet that deadline?

Shultz It's always a mistake to put a known termination date on an intervention like this, because then everybody can play against that date. You need to have some uncertainty, just as a matter of technique. But do we want our forces out of there? Yes. Is it an uncertain situation that they will leave behind? Without a doubt.

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