The Great Reversal, Or the 'Second Begging' at the Temple of the Sovereign Wealth Fund

By Tracy Dove, Ph.D
Editor, The Russia News Service

January 19, 2008

George Bush recently returned from a peace-building mission to the Middle East that was popularly shrugged off as a pitch to "beg" for oil. The idea was shocking while it filled the editorial columns of the nation's newspapers, conjuring up images of an oil-soaked monkey perched on the President's back with a big "for sale" sign on air Force One in the backdrop. British Prime Minister Gordon Brown recently returned from China where he was doing much of the same thing, only the Chinese don't have any energy to spare. There is no confusion as to what this trip is all about: money. Mr. Brown's visit is openly about getting China to invest in Great Britain from its sovereign wealth fund. While the trip's mission is an unfortunate one, it is also an ironic reversal in the two country's historical relations.

The Prime Minister was determined to bring relations with China "to a higher level". Strangely enough, his plane's take off was delayed by an arriving BA flight from Beijing which crash landed in front of him; was that a bad omen? Luckily no one was seriously hurt in the crash- which isn't what we can say about Brown's political reputation after the trip. Why? It seems that Britain is indeed up for sale, and any cash influx from abroad would be arriving at just the right time. And once the real estate market damage is known on both sides of the Atlantic, it might turn out to be quite a fire sale of national proportion before the Anglo-Saxons know what hit them.

The Chinese, though, drive a hard bargain, and they learned this skill from the most advanced capitalist country in the world- their former colonial masters, the British. In order to understand the irony of Brown's pronouncements during his visit, we can turn to the 1858 Treaty of Tien-Tsin, which effectively forced China to open up its markets to British manufacturers and businessmen.

Take for example, Brown's sales pitch upon arriving in Beijing: "I want Britain to be the first location for Chinese investment, in Europe and in the rest of the world". Without revealing a poker face, Brown was essentially opening the national car boot to any and all commerce coming from China. The shoe was certainly on the other foot back in 1858, when the treaty under consideration spelled out how China would prostrate itself before the British Empire. "Her Majesty's Government may acquire at Peking a site for building, and that the Chinese Government will assist it in so doing. Her Majesty's Representative shall be at liberty to choose his own servants and attendants, who shall not be subjected to any kind of molestation whatever…(and) any person guilty of disrespect or violence to Her Majesty's Representative, or to any member of his family or establishment, in deed or word, shall be severely punished." The British government at that time did not trust the Chinese and made no secret of it in this treaty; will Gordon Brown give the Chinese the same rights the British once enjoyed? One could expect that the Chinese will have the freedom to invest, live and drink in the pubs of Great Britain as long as they are crating jobs in the country.

And what about democracy and human rights? America takes a lot of the hits these days for its zealous Christian minority, but it was actually Britain who had the whole missionary thing tied up in a bag back in the 19th century. So naturally in that oppressive treaty were anchored the necessary safeguards for Britain's proselytizing Christians: "The Christian religion…inculcates the practice of virtue. Persons teaching or professing it, therefore, shall alike be entitled to the protection of the Chinese authorities, nor shall any such, peaceably pursuing their calling, and not offending against the law, be persecuted or interfered with". Western contempt for Eastern religions was no secret either, and most of the missionary activity in China was designed to fundamentally change the country for the better. But is Gordon Brown so concerned about it now? Of course not; when asked about democracy, or the Falun Gong, or nuclear weapons in Iran, he simply answered that one that the People's Republic of China stood behind limiting Iran's offensive reach, but that was it.

In order to give his trip a hip twist, Brown took along with him Richard Branson to help show the Chinese that the British were able to offer the Chinese something cool. Clean energy came up once Branson got to the mike, and he told everyone present that he intended to start up "a number of companies" in this respect. Will these ventures be backed by the British government? It would seem that Branson wouldn't go it entirely alone if there was no file in the cake- if for no other reason than he wouldn't have flown in the Prime Minister's plane when he could have used one of his own Virgin 747's, which probably had better service. When the British were looking for partners in China in the 19th centuries, there were no such pleasantries in the negotiations; article XVI of the treaty gives the upper hand to "British subjects, whether at the ports or at other places, desiring to build or open houses, warehouses, churches, hospitals, or burial grounds, shall make their agreement for the land or buildings they require, as the rates prevailing among the people." Will the Chinese accept British capital into its hinterlands in the same fashion today? Unlikely, unless it comes with some very favorable reciprocals to take advantage of in Britain.

While the Germans and French have been making such trips around the world for years, it's the first time that both the Americans and British have been caught under the thumb of countries to which they had once dictated their terms of business. Sovereign wealth funds are the new players on the block, and they have more than enough cash to get in on the game. Only this money comes from the governments of these sometimes sinister countries, and both the British and the Americans will soon have to accept that many of the traditionally national industries might be taken over by parties with interested money. But the real estate bubble has burst, and now the bills have to be paid. Essentially, both countries have literally mortgaged their children's future to foreign capital- much the way the Chinese did with its colonial masters of the 19th century.

Tracy Dove, editor of The Russia News Service, is a Professor of History and Dean of Summer Programs for the Lessing Institute. He also teaches history at the Anglo-American College in Prague.

See all previous articles by Tracy Dove here.