Geopolitics

Iraqi Lessons For China: Beijing Must Invest In Diplomacy

Taking notes? Chinese Middle East envoy Wu Sike (left) and Iraqi PM Nouri al-Maliki (right) in Baghdad on July 7, 2014
Taking notes? Chinese Middle East envoy Wu Sike (left) and Iraqi PM Nouri al-Maliki (right) in Baghdad on July 7, 2014
Wang Yidan and Zhou Dongxu

BEIJING — On June 27, after days of uncertainty and rumors, 1,260 Chinese workers who had been trapped in northern Iraq's war-torn Saladin province were finally evacuated and transferred to Baghdad.

Just like the 2011 emergency pullout of Chinese nationals from Libya and the recent evacuation of others in the anti-Chinese protests in Vietnam, this incident has once again shown how China's growing integration with the rest of the world will inevitably lead to more and more conflicts.

While just two decades ago very few Chinese traveled abroad, more than 100 million now go abroad each year. The Iraq evacuation reflects the serious challenges China will face in the coming decade to improve procedures for protecting both personal safety and property.

Except for high-risk countries such as Iraq, diplomatic efforts typically consist in dealing with incidents that fall within the purview of the general public's consular protection services, including assistance to tourists in legal disputes in popular destinations as Singapore, Malaysia and Thailand.

China's current approach to international diplomacy can be described as "a small horse drawing a big cart," as Beijing neither invests enough resources nor possesses enough professional capability to cope with the mass of Chinese people traveling abroad.

What comes with power

In comparison to the world's major powers, China only invests a tiny portion of its GDP on foreign affairs. For instance, in 2012, China's diplomatic budget accounted for 0.0672% of its GDP whereas it is 0.3514% in the United States, 0.133% in the UK, and 0.128% in Germany.

In relative terms, China also possesses relatively few embassies and consulates. China's Ministry of Foreign Affairs employs just more than 6,000 staff while America has 15,000.

In addition to the shortage at the diplomatic level, China's military development doesn't match the increasing foreign travel and investment. For example, even as China's marine industry has been developing rapidly, the Chinese government deploys very few military escorts. Chinese ships are thus left to rely on other countries' warships for protection, a situation befitting of a regional, not global, economic power.

It is essential that China puts more public resources into foreign affairs. Cooperation with regional and international organizations should deepen, and relevant agreements with local military and police forces will help protect its citizens and business interests overseas.

China should also provide more public goods to the world, such as contributing more annual dues to the United Nations or participating in more UN joint actions, to obtain more foreign assistance. Until now, neither Chinese leaders nor the public are even aware that the country is contributing too little to global efforts. China cannot expect the benefits of becoming a great power without taking on more responsibility.

In brief, compared with advanced countries, China still lags a long way behind in its diplomatic affairs. This is not simply a matter of foreign or military policy, nor just state business, but is inextricably linked to the future well-being of every citizen.

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Economy

Air Next: How A Crypto Scam Collapsed On A Single Spelling Mistake

It is today a proven fraud, nailed by the French stock market watchdog: Air Next resorted to a full range of dubious practices to raise money for a blockchain-powered e-commerce app. But the simplest of errors exposed the scam and limited the damage to investors. A cautionary tale for the crypto economy.

Sky is the crypto limit

Laurence Boisseau

PARIS — Air Next promised to use blockchain technology to revolutionize passenger transport. Should we have read something into its name? In fact, the company was talking a lot of hot air from the start. Air Next turned out to be a scam, with a fake website, false identities, fake criminal records, counterfeited bank certificates, aggressive marketing … real crooks. Thirty-five employees recruited over the summer ranked among its victims, not to mention the few investors who put money in the business.

Maud (not her real name) had always dreamed of working in a start-up. In July, she spotted an ad on Linkedin and was interviewed by videoconference — hardly unusual in the era of COVID and teleworking. She was hired very quickly and signed a permanent work contract. She resigned from her old job, happy to get started on a new adventure.


Others like Maud fell for the bait. At least ten senior managers, coming from major airlines, airports, large French and American corporations, a former police officer … all firmly believed in this project. Some quit their jobs to join; some French expats even made their way back to France.

Share capital of one billion 

The story began last February, when Air Next registered with the Paris Commercial Court. The new company stated it was developing an application that would allow the purchase of airline tickets by using cryptocurrency, at unbeatable prices and with an automatic guarantee in case of cancellation or delay, via a "smart contract" system (a computer protocol that facilitates, verifies and oversees the handling of a contract).

The firm declared a share capital of one billion euros, with offices under construction at 50, Avenue des Champs Elysées, and a president, Philippe Vincent ... which was probably a usurped identity.

Last summer, Air Next started recruiting. The company also wanted to raise money to have the assets on hand to allow passenger compensation. It organized a fundraiser using an ICO, or "Initial Coin Offering", via the issuance of digital tokens, transacted in cryptocurrencies through the blockchain.

While nothing obliged him to do so, the company owner went as far as setting up a file with the AMF, France's stock market regulator which oversees this type of transaction. Seeking the market regulator stamp is optional, but when issued, it gives guarantees to those buying tokens.

screenshot of the typo that revealed the Air Next scam

The infamous typo that brought the Air Next scam down

compta online

Raising Initial Coin Offering 

Then, on Sept. 30, the AMF issued an alert, by way of a press release, on the risks of fraud associated with the ICO, as it suspected some documents to be forgeries. A few hours before that, Air Next had just brought forward by several days the date of its tokens pre-sale.

For employees of the new company, it was a brutal wake-up call. They quickly understood that they had been duped, that they'd bet on the proverbial house of cards. On the investor side, the CEO didn't get beyond an initial fundraising of 150,000 euros. He was hoping to raise millions, but despite his failure, he didn't lose confidence. Challenged by one of his employees on Telegram, he admitted that "many documents provided were false", that "an error cost the life of this project."

What was the "error" he was referring to? A typo in the name of the would-be bank backing the startup. A very small one, at the bottom of the page of the false bank certificate, where the name "Edmond de Rothschild" is misspelled "Edemond".

Finding culprits 

Before the AMF's public alert, websites specializing in crypto-assets had already noted certain inconsistencies. The company had declared a share capital of 1 billion euros, which is an enormous amount. Air Next's CEO also boasted about having discovered bitcoin at a time when only a few geeks knew about cryptocurrency.

Employees and investors filed a complaint. Failing to find the general manager, Julien Leclerc — which might also be a fake name — they started looking for other culprits. They believe that if the Paris Commercial Court hadn't registered the company, no one would have been defrauded.

Beyond the handful of victims, this case is a plea for the implementation of more secure procedures, in an increasingly digital world, particularly following the pandemic. The much touted ICO market is itself a victim, and may find it hard to recover.

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