Economy

China's Flexibility To IMF Rules, Different Meanings Of Debt

Money, money, money
Money, money, money
Mathieu Chabrant

PARIS — What if the very different Chinese approach on debt held the key to a solution for the crisis of public finances in the West. In Europe and North America, the notion of a contract holds a central role: Whoever borrows money has to pay back, no matters the circumstances. Chinese people instead tend to give more value to the word given, conferring to the debt a human and social perspective as they take note of such questions as: Who borrowed? In what context?

These two fundamentally different points of views are the fruit of history and culture. For many economic historians, the roots of capitalism lie in the explosion of excessive debt. After Christopher Columbus's first conquest in 1492, merchants and bankers started subsidizing subsequent expeditions, the first illustration of Public-Private partnerships. Because they were over-indebted, these European explorers turned to the widespread use of violence and slavery. Exploiting local craftsmanship without any cost was the best way for them to make sure their debts would be paid back.

Chinese also led expeditions to the West at the beginning of the 15th century. But as the conquests were financed by the Empire, explorers did not have to fall into debt and resort to violence to monopolize the resources of the new territories.

Debt is perceived through a human point of view.

Beyond these historical factors, we can add another cultural one related to the Asian perception of humankind and society. Indeed Chinese culture considers planning as a weakness. Flexibility, then, is the key for any successful exchange. The adaptability to circumstances leads Chinese people not to complete a contract if the context has changed.

For Westerners, not paying back debts is considered an objective flaw: Standard contracts grant the creditor some kind of law enforcement and moral superiority over the borrower. Renegotiating the debt contract usually includes a form of violence, as the creditor imposes its power and influence over the debtor. One example of this scheme can be seen in the behavior the European Union and International Monetary Fund adopted in relation to the Greek crisis. The country was put under trusteeship by powerful institutions, triggering heavy social consequences.

Chinese stock exchange Photo: Zhenyi Xie/ZUMA

To the contrary, Chinese practice sees the refusal to renegotiate in business relationships not only as an affront, but also as the negation of the cycle of nature and the essence of the world itself. This social conception of debt requires that we admit the contract can be modified, beyond usual clauses of "force majeure." The contract keeps a central position, but debt is perceived through a human point of view which favors discussion and adaptability.

Concretely speaking, a breach of loan covenant can have multiple causes that don't necessarily have anything to do with a risk of bankruptcy, and this kind of situation calls the two contracting parties for reconsidering the terms of the contract. It requires permanent talks and an important proximity between the creditor and the debtor that allows flexibility in the conditions of the arrangement. As Taoist philosopher Guo Xiang once said, "What wise men did belongs to the past and is thus not suitable for the current situation."

Keep up with the world. Break out of the bubble.
Sign up to our expressly international daily newsletter!
Society

What It Means When The Jews Of Germany No Longer Feel Safe

A neo-Nazi has been buried in the former grave of a Jewish musicologist Max Friedlaender – not an oversight, but a deliberate provocation. This is just one more example of antisemitism on the rise in Germany, and society's inability to respond.

At a protest against antisemitism in Berlin

Eva Marie Kogel

-Essay-

BERLIN — If you want to check the state of your society, there's a simple test: as the U.S. High Commissioner for Germany, John Jay McCloy, said in 1949, the touchstone for a democracy is the well-being of Jews. This litmus test is still relevant today. And it seems Germany would not pass.


Incidents are piling up. Most recently, groups of neo-Nazis from across the country traveled to a church near Berlin for the funeral of a well-known far-right figure. He was buried in the former grave of Jewish musicologist Max Friedlaender, a gravesite chosen deliberately by the right-wing extremists.

The incident at the cemetery

They intentionally chose a Jewish grave as an act of provocation, trying to gain maximum publicity for this act of desecration. And the cemetery authorities at the graveyard in Stahnsdorf fell for it. The church issued an immediate apology, calling it a "terrible mistake" and saying they "must immediately see whether and what we can undo."

There are so many incidents that get little to no media attention.

It's unfathomable that this burial was allowed to take place at all, but now the cemetery authorities need to make a decision quickly about how to put things right. Otherwise, the grave may well become a pilgrimage site for Holocaust deniers and antisemites.

The incident has garnered attention in the international press and it will live long in the memory. Like the case of singer-songwriter Gil Ofarim, who recently claimed he was subjected to antisemitic abuse at a hotel in Leipzig. Details of the crime are still being investigated. But there are so many other incidents that get little to no media attention.

Photo of the grave of Jewish musicologist Max Friedlaender

The grave of Jewish musicologist Max Friedlaender

Jens Kalaene/dpa/ZUMA

Crimes against Jews are rising

Across all parts of society, antisemitism is on the rise. Until a few years ago, Jewish life was seen as an accepted part of German society. Since the attack on the synagogue in Halle in 2019, the picture has changed: it was a bitter reminder that right-wing terror against Jewish people has a long, unbroken history in Germany.

Stories have abounded about the coronavirus crisis being a Jewish conspiracy; meanwhile, Muslim antisemitism is becoming louder and more forceful. The anti-Israel boycott movement BDS rears its head in every debate on antisemitism, just as left-wing or post-colonial thinking are part of every discussion.

Jewish life needs to be allowed to step out of the shadows.

Since 2015, the number of antisemitic crimes recorded has risen by about a third, to 2,350. But victims only report around 20% of cases. Some choose not to because they've had bad experiences with the police, others because they're afraid of the perpetrators, and still others because they just want to put it behind them. Victims clearly hold out little hope of useful reaction from the state – so crimes go unreported.

And the reality of Jewish life in Germany is a dark one. Sociologists say that Jewish children are living out their "identity under siege." What impact does it have on them when they can only go to nursery under police protection? Or when they hear Holocaust jokes at school?

Germany needs to take its antisemitism seriously

This shows that the country of commemorative services and "stumbling blocks" placed in sidewalks as a memorial to victims of the Nazis has lost its moral compass. To make it point true north again, antisemitism needs to be documented from the perspective of those affected, making it visible to the non-Jewish population. And Jewish life needs to be allowed to step out of the shadows.

That is the first thing. The second is that we need to talk about specifically German forms of antisemitism. For example, the fact that in no other EU country are Jewish people so often confronted about the Israeli government's policies (according to a survey, 41% of German Jews have experienced this, while the EU average is 28%). Projecting the old antisemitism onto the state of Israel offers people a more comfortable target for their arguments.

Our society needs to have more conversations about antisemitism. The test of German democracy, as McCloy called it, starts with taking these concerns seriously and talking about them. We need to have these conversations because it affects all of us. It's about saving our democracy. Before it's too late.

Keep up with the world. Break out of the bubble.
Sign up to our expressly international daily newsletter!
THE LATEST
FOCUS
TRENDING TOPICS
MOST READ