Friday, June 13, 2008

Politics and the Irish Vote on the Treaty of Lisbon: A Silly Politics to Bad Effect

So, the Irish have voted to reject approval of the Lisbon Treaty. EU Grapples With Irish No Vote, BBC News Online, June 14, 2008. The Treaty of Lisbon would have imposed the terms of the failed Constitutional Treaty of 2004 (modified a little) in the form of an intergovernmental agreement striped of the word "constitution." The vote was required by the Irish constitution, and necessary for the effectiveness of Treaty of Lisbon, which required approval by all Member States. "The Lisbon Treaty seeks to reshape EU institutions and powers to cope with the bloc's near-doubling in size over the past four years from 15 to 27 nations with 495 million people. It contains many of the same reform plans as the EU's previous master plan — a constitution that French and Dutch voters rejected in 2005." Ireland Holds Key Vote on EU Treaty, International Herald Tribune, June 13, 2008. Yet there is little that has not been said about that, one way or another. See Larry Catá Backer, The Treaty of Lisbon and the EU, Law at the End of the Day, October 30, 2007, and Larry Catá Backer, A Step Forward for EU Treaty Constitutionalism, Law at the End of the Day, June 24, 2007 and Larry Catá Backer, Constitutional Doublespeak and the EU Constitution,Law at the End of the Day, June 15, 2007.

What is interesting, though, is the way in which ratification campaigns have sharpened and dangerously simplified the issues over adoption of a complex instrument. "The government, major opposition parties and business leaders all campaigned for a "Yes" vote during a monthlong campaign that emphasized how much Ireland has benefited from 35 years of EU membership." Ireland Holds Key Vote on EU Treaty, supra. So, that is what the EU has been reduced to -- an organization that owes irs survival to its ability to pay its members off. Charming. But more charming still is the almost insufferable arrogance, an arrogance that might be translated into something like this: listen little and simple people, you were poor once and now you vacation on the Mediterranean and whimper about undocumented workers flooding the countryside while you gain weight from overeating. This is a good thing. And who do you have to thank for this bounty? The EU. It is your mother, Church, protector, and guide. It knows best. And its leaders have been working hard to continue that bounty and protective environment for you. Trust them. Unless you vote for the adoption of this instrument, the EU will fail. Or, in their own words:
Many voters said they did not understand the treaty's implications well enough, and essentially were voting on whether they felt happy with Ireland's place in Europe. "Ireland would still be the economic basket case of Europe without the EU. We should be doing everything we can to help EU institutions function better, because all the evidence shows they function in our interest," said a pro-treaty voter, accountant Padraig Walsh. But many complained that the EU's expansion brought unwelcome change to Ireland, particularly more than 200,000 jobseekers from Poland and Baltic nations.
Id.

There is a bit of the extraordinary to this. Sure, Europeans have been trained for centuries to do what they are told--though at the risk of violent explosions from time to time. But it is not clear that today's European is as docile as his fore bearers. But the linkage between the Treaty of Lisbon and the survival of the EU (or at least its ability to progress, whatever that means) is both foolish and dangerous. Foolish because that might well have played a role in the rejection of the Treaty of Lisbon when it had masqueraded as some sort of international constitutionalist instrument. Dangerous because people might begin to believe that this is actually the case.

The EU will not fail or even fall apart in the event of the rejection of the Treaty of Lisbon. Though one might never know this from the usual reactions: "France and Germany have described the No vote in the referendum as a serious blow but have urged the EU to press ahead with the project. European Commission head Jose Manuel Barroso said the treaty was not dead. But Czech President Vaclav Klaus said the treaty was finished, since any further ratification was impossible. " EU Grapples With Irish No Vote, supra. The European Union will continue to function, the integration process will proceed unimpeded, and the consequences--for law, economic, and cultural identity will not be derailed. But what may be finished is this pattern of Treaty modification. The European Union has reached a stage in its development where the patterns of modification grounded in an understanding of political realities of the period 1955-1990 no longer hold. The entity is too big, the nature of treaty constitutional modifications are complex, and most importantly, there has been little discussion of what the people of Europe expect from their supra national governance institutions (rather than what Europe's elites expect from it).

As such, a failure of the Treaty of Lisbon might prove useful. It might force elites in the Member States to more carefully listen to their constituents and to try again. A vigorous debate about the character of the EU is called for just now. ""How many times do people have to vote 'No' before Brussels respects the outcome?" he said, noting that Ireland rejected a previous EU treaty in a 2001 referendum, only to be asked to vote again two years later. "Somehow we have to create an EU where 'No' really means no."" Id. It is, as its elites have rightly suggested, at a crucial point in its development. Will it continue to develop sui generis, creating a system of federalism much more dynamic than that which has essentially failed in the United States? Or will it seek to become a larger standard issue federation of the German, American or even Indian style? See Larry Catá Backer, The Extra-National State: American Confederate Federalism and the European Union, 7 Columbia Journal of European Law 173 (2001); Larry Catá Backer, The Euro and the European Demos, 21 Year Book of European Law 13 (2002). It may be time for the great, even revolutionary, changes of the last two decades to be absorbed by the Member States, and natiuralised within the political and social cultures of the people. The European Union might have to embark on a cultural project now before it continues with its institutional consolidation and realignments.

On the other hand, the institutional structure of the European Union must be sorted out, and the nature and extent of its powers (and the relation of those powers to that of the Member States) must be elaborated. The EU is well past the point where the European Union is well past the point where the European Court of Justiuce can carry the ball for the rest of the institutions (and the Member States). Political and economic asymmetries have to be confronted; some Member States are better off exporting their working age populations, others require substantial help with their agricultural or infra structure sectors. What is clear is that a Treaty of Rome arrangement designed for a post war Europe in which France sought revenge and control and in which the Germans were willing to be docile in expiation of their (great) sins of 1933-45 no longer works. Thus, for example, the French may have to reconcile themselves to the fact that an agricultural system in place since its anti-monarchical revolution in the 18th century might not be the center of attention of European agricultural policy. The English and Irish will eventually have to come off the fence--are they in it or out of it. On the other hand, the evolution of a European structure of governance need not inevitably lead to the creation of the usual hierarchical structure of government. For a region once burdened almost uniformly with "princes", the Europeans have been doing a better job of cooperative republicanism form of governance than their American progenitors. All this to say, the EU will survive the Treaty of Lisbon--whether or not it is adopted. What it cannot survive is a framework in which the populace is meant to be kept docile, governance power is protected by resort to increasingly byzantine governance devices meant to limit access to knowledge (and power) to small groups of elites, and a brinkmanship politics that appears to embrace democratic participation and then dares the populace to use its power. See Larry Catá Backer, Democracy Part II:Voting Among the Unruly Masses, Law at the End of the Day, November 16, 2007.

Tuesday, June 10, 2008

Blogging and Voluntary Codes: A View From the E.U.

There has been a certain uneasiness with blogs for a long time. Especially among governments increasingly used to asserting control over every facet of life, blogs appear a disorderly and there a potentially dangerous area of unregulated life. And the answer has to be regulation of some sort. Not direct regulation, to be sure; that might require too directly a confrontation with traditions of free speech that states are not yet about to overcome. More likely no direct regulation yet because states have not yet discovered an efficient means to achieve that other than in a ham handed fashion that might produce too great a negative political reaction. And so states invert values, and substitute case for effect to condition their populations to the notion of the need for regulation. At the top of the list, states and their shills argue orderliness, consumer protection. Thus it was in Britain a few years ago, when the state tepidly suggested. Internet Lacks Forms of Redress, BBC On Line, November 28, 2006 (http://news.bbc.co.uk/2/hi/uk_news/politics/6191988.stm).

And the preferred means of achieving this result is “self regulation”—good manners within the blogger communities require the embrace of communal values that at some level must be compatible with the desires of states. There is something to the embrace of a code of conduct—that is at least as a common acknowledgement of generally embraced values that lend legitimacy to blogging, however silly the posting in any particular case. As a means of helping people judge the merits of postings, and as a means of suggesting the level of confidence that a reader might have with such postings, such codes are useful. The key value is to situate blogs in general and postings, in particular, within the continuum of the blogger community. Any aid to judgement about the value and worthiness of either ought to be applauded—when those values and behavior norms emerge from the values and understandings of the blogger community. But when a state seeks to intervene, there is always a suspicion that its values—and its agendas—will take precedence over those of the community on whose behalf it might seek to help self regulate. Thus, for example, states might be more likely than bloggers to bend the form of voluntary codes to privilege the established media sources of news over outsiders. That seemed to be the underlying message of the British effort--create and enforce a voluntary code or worse is coming; and what is coming will be grounded in state notions of consumer protection of some sort.

The European Commission approved on June 3, 2008 a resolution in which it proposed regulation of weblogs. La Unión Europea quiere regular los ‘blogs,’ Universal (Un Diario Exclusivo para los cliente de Iberia) Ano 4 N. 822, June 16, 2008, at 6. The article quotes María Badía Cutchet, a European Parilament member (Spain Partit dels Socialistes de Catalunya) as arguing that the regulatory project would aid in the resolution of the problem of an excess of information available on the Internet (paraphrasing Ms. Badía: “este proyecto ayudaría a resolver el ‘problema’ del exceso de información que circula por la red.” Id.). I am NOT making this up, and she appears to have maintained this with a straight face, though there is no record of her facial expression or mannerisms as she delivered this suggestion to the readers of this magazine. She noted that “un censo voluntario de bloggers podría generar un efecto de confianza en el lector.” Id. (quoting Ms. Badía) a voluntary census among bloggers could produce of greater sense of trust among readers of blogs). This greater sense of trust, she continues, would be possible because readers would be able who are the sources of the materials that are posted. (Id.) (paraphrasing Ms. Badía: “que de esta manera sabría quiénes sin las Fuentes de aquello que leen en internet.”). The article notes thatr, according to Technorati, there are now about 112 million blogs on the Internet.

So. . . a voluntary code of conduct and a census. An assertion of control in appearance of the blandest sort, but which would move the locus of control from the community of bloggers and readers to the state. This is hardly good news. In typical fashion, the state reacts to that which it finds distasteful, sometimes dangerous and oftentimes in opposition to its plans for a well ordered Republic of docile citizens willing to listen and believe those things which are approved for auditory insertion into the heads of the citizenry. But the voluntary code is little more than a ruse ot effect a control of the internet itself in general, and discourse on it in particular. Clearly much of what is the subject of the regulation is silly, or forgettable. But some of it is not. Some of it exposes failings and foibles that the powerful and well connected prefer to keep hidden. Some of it seeks to present an alternative to the pablum and manipulative dribble that sometimes passes for speech within the ambit of the organized and “legitimate” media and their running dogs. And let us not forget the power of state speech as well. Not that I like much of what passes for discourse in the blogsphere. But I am free to avoid it or confront it. Still, there is some cause to worry. For an interesting set of discusisons about the way blogs them,selves, like speech in general, can also tend to viel aggregations of voices or power or manipulate and distort, see Blogs: Filling in The EU’s Communications Gap? (June 19, 2007). What the Commission ultimately means to do is to acquire for itself the power to suppress it. There is a great irony here, of course. This is precisely the sort of action that the sanctimonious among the leaders of the E.U. tend to condemn from time to time when done (in a more ham handed fashion to be sure) by the Chinese o the Russians. Apparently when it is done by the Europeans (and after by the Americans) it is meant to be more appetizing. I am not sure how. At least the Chinese are very clear about what they are doing and why. We may disagree but we cannot suggest that they dissemble.

Not all is lost, though. The resolution is to be debated in the European Parliament in July 2008. There is much to debate. Beyond the temptation to control this form of political space, it is not clear that the European Union is not about to embark on a bit of extraterritorial imperialism. To the extent that it means to control blogs originating outside the European Union, it is hard to imagine either their authority de jure, their power, defacto, or the opposition of other states whose blog writers may be affected. To the extent that they mean to put teeth in these voluntary codes, or make a census somehow mandatory, it is not clear how the E.U. would mete out sanctions—but suppressing blogs so that citizens in the E.U. could not read them? Shades of Cuba! And it is hard to believe they would be able to actually suppress blogs originating outside the European Union without putting pressure on blogger hosts. And that would ratchet the stakes up tremendously, especially should host sites complain to their respective governments. Moreover it is unlikely that such a move would go over well in many Member States. Would they seek to fine or arrest violators? That would present a set of very interesting questions under both the European Charter of Human Rights and the European Convention. Another pretty picture. Do they mean to shame the recalcitrant? That would be worth watching! The “banned in Boston effect has been the royal road to recognition for a long time in the United States: being put on an E.U. blogger interdict list might have the same effect.

Sunday, June 08, 2008

Ainu to be Granted Indigenous Status in Japan

The recently passed United Nations Declaration on the Rights of Indigenous Peoples has contributed to a variety of activity since its passage in September. For some states, the Declaration has proven to be a means to reaffirm the indigenous character of the naitonla population,. See Larry Cat'a Backer, From Hatuey to Che: Indigenous Cuba Without Indians and the U.N. Declaration on the Rights of Indigenous Peoples, Law at the End of the Day, Octiber 21, 2007. For others, it suggests an affirmation of political nationhood, which conrinues to be built "under the radar." See Larry Catá Backer, Hard Soft International Law: Indigenous People and their Treaties, Multinational Corporations and their Contracts Law at the End of the Day, October 24, 2007.

The Yomiuri Shinbum reported that the Japanese Diet has unanimously adopted a resolution urging the government to recognize the Ainu people as indigenous to Hokkaido. Diet Rules Ainu Are Indigenous. Yomiuri Shinbum, June 7, 2008. "In the Meiji Period (1868-1912), the Ainu received the status of "former aboriginals", but suffered under official discrimination for some years. In 1997, a new law was passed which provides funds for the research and promotion of Ainu culture." Ainu, Japan-Guide.com.
Chief Cabinet Secretary Nobutaka Machimura indicated that the government would positively respond to the resolution. "The government will strive to work out comprehensive measures [for the Ainu] with the understanding that the Ainu are indigenous people," Machimura said. Machimura's remarks represent a step forward for Ainu people. The government has not clearly previously recognized them as native inhabitants. The government plans to set up a panel of experts tasked with discussing what rights ethnic Ainu people should have. According to the resolution, "Many Ainu were discriminated against and driven into poverty during Japan's modernization process." The resolution urged the government to recognize the Ainu as indigenous people with their own language, religion and culture. In addition, it asks top government officials to compile comprehensive measures after hearing expert opinions.

Diet Rules Ainu Are Indigenous. supra. In a sense, this is easier for the Japanese than for nations in the Western Hemisphere. The Ainu population has decreased substantially in recent years and is unlikely to rebound. "The Ainu are one of Japan's most marginalised groups. Government estimates put the number of people with half or more Ainu ancestry at around 50,000." Julian Ryall, Bear Worshiping Ainu to Flourish Again, Telegraph, July 7, 2008. There is an increasing sense of nostalgia in Japan that is easily satisfied with a focus on the Ainu. And the issue is the Ainu in Hokkaido, not on all of the home islands. In this sense the issue is a relatively easy one for the Japanese, who can be gracuious without a tremendous amount of social reordering. Not so places like the United States, Australia, Canada, and New Zealand (the states voting against the Declaration) or even Bolivia (encountering its own problems as a consequence of such movements. See Larry Catá Backer,An Apartheid for All Seasons: Bolivia and its Autonomy Movements Law At the End of the Day, May 3, 2008. But there is more than convenience at work here.

Part of the reaction of the Diet might reflect frustration. As late as 2000, the "Ainu, Japan's indigenous people, are complaining of growing discrimination despite a landmark law enacted in 1997 that for the first time recognizes their culture as unique and officially promotes their rights." Suvendrini Kakuchi, Ainu Discrimination Defies the Law, Asia Times On Line, May 19, 2000 ("While they are physically similar to the largely homogenous Japanese, their thick beards and hairyness mark them apart and have made them targets for ridicule. Marriage with other Japanese is a problem and access to jobs are often difficult.").
Nonetheless, a genuine and perhaps growing sentiment for inclusion, in light of changes in attitude, may account for some of the move in the Diet, in addition to the reaction to the difficulty of changing attitudes further. And that move is to be applauded.

"We will take seriously the historical fact that during our country's modernization process, many Ainu people were discriminated against and were forced to live in poverty," Mr Machimura's statement said. "Today's resolution will turn a new page in Japanese history," Tadashi Kato, director of the Hokkaido Utari Association, told a meeting of a group of politicians. "I sincerely hope you will continue to support the creation of a society with ethnic harmony."

Julian Ryall, Bear Worshiping Ainu to Flourish Again, supra. Still, from the majority's perspective, the emphasis is on redressing the consequences of discrimination--poverty. From the perspective of the Ainu it will be on the creation of a society of several parts with "ethnic harmony." The two sides are still using similar words to say very different things,and the emphasis of the two groups are far apart. One side sees discrimination in terms of poverty; the other in terms of an opening of social acceptance within an otherwise strongly homogeneous society that tends to view difference sceptically. Both groups speak of harmony to different effect. It will be interesting to see how these two views harmonize as the consequences of the recent action of the Diet plays out.


Friday, June 06, 2008

Sovereign Wealth Funds And Hungry States: Adjusting the Borders of Public and Sovereign Activity Across Borders

It is always refreshing to see what hunger, or the fear of hunger, does. Not only to people--the effect is well enough explained in thousands of years of literature; much more interesting is the consequences of a fear of recession within the company of rich, bloated developed states. Christopher Rugaber reports that after pilgrimage to the investor sovereigns Middle East, influential Congress members will encourage a regulatory climate that does not restruct the investment of activities of sovereign wealth funds.

Rep. Jim Moran, D-Va., along with other members of the task force, will speak at a Capitol Hill briefing sponsored by the National Council on U.S.-Arab Relations. Moran and Rep. Tom Davis, R-Va., visited several Middle Eastern countries last week, including the United Arab Emirates, which hosts the largest sovereign fund.

"They need to know that this is a positive climate for investment," Moran said in an interview. Some Middle Eastern investors are concerned about a political backlash, he added, but one of the goals of the task force is to avoid "any unforeseen political reactions to their investments."

Christopher Rugaber, Ahead of the Bell: Congress and Foreign Government Funds, Forbes.com, June 5, 2008. The American administration's spokesman was equally effusive in the search for funds to feed home state investment appetites. "Meanwhile, U.S. Treasury Secretary Henry Paulson emphasized U.S. openness to foreign investment and sovereign wealth funds during a visit to the UAE Monday." Id.

In response to earlier criticism that such funds would not operate in the same way as private investor, but rather use their wealth for "political" rather than "financial" gain (though in either case the investors would be seeking to maximize their own wealth and thus be acting rationally) the Congress members offered only what is likely to become the global slogan of SWF governance (as well as the proxy for an approach in developed states): sovereigns may invest in the economies of other sovereigns as long as their funds and activities are transparent. "Moran said he urged government officials in the region to be more transparent about the funds' operations, which some analysts have said could help alleviate such concerns." Id.

Transparency is a good thing, of course. Disclosure is a foundation of the securities laws of many states. Markets work best with reduced information costs and states work well when they seek to reduce the costs of transactions. Yet, it is hard to understand why there ought to be greater requirements for disclosure by one class of shareholders than others. I am as interested in the investment activities of a large private investor who may be taking positions in a host of entities for purposes that may affect me as an investor, citizen, or member of another community, as I would be if that activity was being carried out by a political state acting in its non-sovereign capacity. Perhaps all large investment funds ought to be subject to greater disclosure. On the other hand, efforts at transparency for private funds suggest some of the deficiencies that carry over to issues of sovereign wealth fund transparency. Perhaps a unified approach would be useful since the problem may be the control or regulatory effects of large funds rather then the character of the specific fund investing. For a useful effort, see the work of the Sovereign Wealth Fund Institute.

In addition, some have also urged limits of investment in sensitive industries. The later point, of course makes no sense. If such sensitive industries are open to investment by foreign individuals and entities, then it is hard to understand why they would not engage in the same "politically motivated" conduct (when it is to their benefit as they see it) to which states might be tempted. Or that such conduct, which is controlled and disciplined by a state when the act of a private investor, is somehow beyond regulatory control when the investor is a state. My suggestion, of course, goes to the increasingly understood notion that wealth maximization may be more complex than a narrow vision of short term monetary wealth maximization, and that states are somehow special when they participate in markets they cannot directly control. Thus, Senator Jim Webb (D-VA) expressed in all seriousness his fears:

Other fears could be raised, he writes, if SWFs begin flexing the power they would wield as shareholders in foreign corporations—for instance, what if Middle Eastern or East Asian SWFs banded together to oust the CEO of a U.S. corporation? In corporate governance terms, this would be seen as positive shareholder activism, but when governments are involved, experts are left to guess at whether such clout would be used for financial gain or for political purposes. “The logic of the capitalist system depends on shareholders causing companies to act so as to maximize the value of their shares,” writes Summers. “It is far from obvious that this will over time be the only motivation of governments as shareholders.”

Council on Foreign Relations, Sovereign Wealth Funds, Jan. 18, 2008. Yet it is far from obvious why this constitutes a special fear. Senator Webb would have little problem, were he a shareholder, to use his shareholder power to oust a CEO merely because he was detested, or liked labor unions, as long as it could be properly clothed in the appropriate language of commerce--that the ousted CEO's relationships with shareholders was detrimental to the long term growth of the company. Yet a sovereign shareholder might also have strong feelings about the value of a particular CEO, or of labor unions and other corporate activities, and seek to act on them.

Still, the difference is also painfully obvious. Senator Webb, as an individual investor, cannot act other than as a private shareholder; all Senator Webb can do is control himself. A sovereign shareholder, on the other hand, can legislate. But sovereign shareholders do not legislate effectively outside the territory under their control. Likewise sovereign shareholders directly in their role as shareholders. Their actions, though can be viewed as regulatory in a sense. They mean to translate the political will of the state through its activist activities as a shareholder (either by the way in chooses to buy and sell shares or the way it seeks to actively participate in the governance of the company. Yet, in that role, sovereign shareholders are in the same position as Senator Webb the individual. In these roles both would seek to act through rather than on the entity. The former requires investment, the latter requires sovereign power.

Of course, Senator Webb would arrive at his value maximizing policy determinations by debating with himself; the sovereign shareholder, like the corporate shareholder, would arrive at its value maximizing decision by application of either fiduciary duty (corporate shareholder) or democratic accountability or its functional equivalent (sovereign shareholders). To hold sovereign wealth funds to some form of commercial folio investment rules would hard wire those standards and move control of the meaning of such terms from investors to the state (and for what purposes in addition to the regulation of sovereign funds). This is the sort of market intervention that is almost designed to create rather than to minimize negative consequences on its functioning.

But to get to this point Senator Webb would have to embrace a fundamental assumption--that states can act as private market participants. For that assumption to work, of course, the sovereign investors would have to be treated like a private investor as well--no sovereign immunity, for example. But would they also have to forego their own wealth maximizing behavior in favor of some mythological construct--the reasonable private investor? For that purpose, commentators have sought ways to force sovereigns to benchmark sovereign conduct--and to that extent severely limit what is essentially ungovernable--their motivations or investing and for shareholder activism. See, e.g., Edwin B. Truman, Sovereign Wealth Funds: The Need for Greater Transparency and Accountability, Peterson Institute for International Economics, Policy Brief No. PB07-6 (August 2007) 7-8. The problem with these proposals is that they are at war with themselves. They tend to hunger for the investment, but wish to treat the investor differently from others. Prior consultations with affected states (whatever that means in a private market for shares of publicly traded companies), severe control of investment strategies and trade volume and the like all suggest that the sovereign is not a private investor.

But all the same, such a sovereign would be treated as private with respect to the funds invested and public with respect to the investment decision. But that tends to distort markets, and impede the very investment that has been made necessary by the aggregate wealth transfers at the heart of the current global financial imbalances. Still, sovereigns do wear two hats. But as long as all shareholders are required, under national legal systems, to avoid activity that breaches their duties--for example to loot the company or to defraud the company--and as long as national legal systems liberally permit shareholders and others to sue the sovereign like any other private party, then everyone should be content. If not, then it seems that more than the character of sovereign wealth funds are at issue. And we should be talking about reforming shareholder rights and obligations vis a vis the corporation for all security holders (but principally equity holders).

Indeed, the United States has long treated investment on an equal footing, whatever the character of the investor. See Scott G. Alvarez (General Counsel Board of Governors Federal Reserve System), Sovereign Wealth Funds, Testimony Before the Committee on Banking, Housing and Urban Affairs, U.S. Senate, April 24, 2008 ("As a general matter, the same statutory and regulatory thresholds for review by the federal banking agencies apply to investments by sovereign wealth funds as apply to investments by other domestic and foreign investors in U.S. banks and bank holding companies."). But, mirroring the formula for foreign sovereign immunity, the American statutory structure distinguishes between states and the corporations through which states may operate. With respect to the Bank Holding Company Act (BHC) for example, Alvarez noted:
The BHC Act specifically excludes from its coverage a corporation controlled by the United States or by a state government. Thus, investment companies controlled by the states of Alaska and New Jersey, for example, are specifically excluded from the requirements of the BHC Act. The exclusion does not, on its face, apply to companies controlled by foreign governments and, as I will discuss in more detail below, the Board has not extended this exclusion to companies controlled by foreign governments that make investments in U.S. banks and bank holding companies. Foreign governments to date have primarily invested through sovereign wealth funds that are companies controlled by the foreign government. The effect of the Board's long-standing interpretation is that a sovereign wealth fund that seeks to make an investment in a U.S. bank or bank holding company that exceeds the thresholds in the BHC Act would be required to obtain Board approval prior to making the investment and would become subject to the other provisions of the BHC Act, but its parent foreign government would not.
Id. This clearly is something that ought to be reviewed. Here is a suggestion: If sovereigns are to be treated as participants in the market (and not regulators) when they invest in companies on an equal footing with individuals, then it seems that whether or not they operate directly or indirectly (through a corporation or other entity), they ought ot be treated, not as a public sovereign entity, but as a private sovereign entity. For that purpose, the law should make no distinction between private sovereign entities and other juridical persons. The distinction between public and private sovereign entities would not be hard to figure out--the guidelines are already fairly well established in the Foreign Sovereign Immunities Act and the jurisprudence it has generated. The Federal Reserve Board has essentially taken this position, though in a more roundabout and formalist way: "The Board has long taken the position that while foreign governments themselves are not companies subject to the BHC Act, foreign government-owned corporations such as sovereign wealth funds are companies. Thus any proposed controlling investment in a U.S. bank or bank holding company by a sovereign wealth fund would be subject to Federal Reserve approval." Id.

The American approach might find its mirror reverse image in the European Union, that other great shopping centre for sovereign funds in search of investment vehicles. The Europeans are much more suspicious of governments investing outside their home territories and less likely to accept that states can ever act in non sovereign capacities.
Joaquin Almunia, the EU's economic commissioner, said Brussels would soon submit proposals to EU governments and Euro-MPs, a use of wording that hints at a legally-binding directive. Germany has led the campaign to clamp down on state-funds wielding $3 trillion, afraid that "giant locusts" may buy stakes in strategic industries to gain technology secrets. German Chancellor Angela Merkel stopped Russia's Mischkonzerns Sistema from taking a bite of Deutsche Telekom last year, and put her foot down when Russia's VTB bank began nibbling at EADS, the Airbus and defence group. Berlin is now drafting a law enabling it to vet non-EU takeovers, and to create a superfund to defend German crown jewels. Both Austria and Hungary have erected barriers.
EC to Rule on Sovereign Wealth Funds, Telegraph, Nov. 29, 2007. The Commission rightly would be leery of permitting EU Member States much of a margin of appreciation on the regulation of sovereign investors. After the golden share cases (see Larry Catá Backer,The End of Golden Shares in the EU: The EU Commission Takes a Step in its Abolition, It Ought to Harmonize the Rules of Sovereign Investments Instead Law at the End of the Day, March 9, 2008), it is clear that the regulation of state investment, even as private parties, implicates the internal market (and particularly the free movement of capital Art. 56 EC) as well as competition regulation (and particularly state aids under Article 87 EC). On the latter see Larry Catá Backer,State Subsidies and the Character of the Market Transactions of Sovereigns: The Case of EADS, Law at the End of the Day, May 29, 2008. At the time, "EU sources say Brussels is examining options stretching from an IMF-style code to a full directive giving Brussels the power to dictate policy." EC to Rule on Sovereign Wealth Funds, Telegraph, supra. This is a particulary sensitive topic for Britain. "London is a clearing house for the mammoth funds rapidly changing the investment universe." Id.

By February, it was reported that "The European Commission will consider a code of conduct asking sovereign wealth funds run by countries to stress commercial goals rather than strategic considerations when making investments, an EU official said." EU To Consider Sovereign Wealth Voluntary Code, Reuters, Feb, 23, 2008. These were to mirror the code being prepared by the International Monetary Fund. Id. "Mr. McCreey added that the EU had no plans to limit investment by such funds, only that all business 'should follow some common principles on transparency and governance.'" EU in Sovereign Wealth Fund Call, BBCNews On Line, Feb,. 27, 2008.

A common policy is likely coming. And that makes sense. Yet, the outline of the common policy has been outlined by the Commission evidences the confusion still evident at the European level. Or better put, the continued failure to resilve the fundamental issue--can states be treated as wholly private entities when they invest or are they always special and require a special public-private rule? One has a sense of the contradiction by looking at the foundations of the common policy.
•Commitment to an open investment environment: in line with the Lisbon Strategy for growth and jobs, the EU should reaffirm its commitment to open markets for foreign capital and to an investor-friendly investment climate. Any protectionist move or any move perceived as such may inspire third countries to follow suit and trigger a negative spiral of protectionism. The EU prospers from its openness to the rest of the world – and from its investments abroad – and hence would be among the first to suffer from a trend towards protectionism. At the same time, the EU should endeavour to open SWFs owners' countries to EU investors and secure a fair and equitable treatment for them, notably through FTA negotiations.
• Support of multilateral work: the EU should actively drive forward work carried out by international organisations, in particular the IMF and the OECD. The EU welcomes an open dialogue with SWFs owners and recognises the benefits of a global approach to a common framework for SWF investment.
• Use of existing instruments: the EU and the Member States already have specific instruments that enable them to formulate appropriate responses to risks or challenges raised by cross-border investments, including investments by SWFs, for reasons of public policy and public security.
• Respect of EC Treaty obligations and international commitments: the EU and its Member States will continue to act in a way fully compatible with the principles laid down in the Treaty establishing the EC and with international obligations of the EU.
• Proportionality and transparency: measures taken for public interest reasons on investment should not go beyond what is necessary to achieve the justified goal, in line with the principle of proportionality, and the legal framework should be predictable and transparent.

Commission of the European Communities, Communication From the Commission to the European Parliament, the Council, the European Economic and Social Committee, and the Committee of the Regions, A Common European Approach to Sovereign Wealth Funds, Brussels, xxx COM(2008) 115 provisional, at 9. It may be impossible for the EU to get the money they desire and preserve their public law applies approach to the governance to sovereign investment. Indeed, the EU, at its base, continues to view sovereign investing as essentially sovereign--and acceptable only when the sovereign is eliminated from the equation. This requires preventing the sovereign from controlling (effectuvely) the policy of the investment of its funds. "Clarity about the degree of possible political interference in the operation of a SWF is a prerequisite for addressing concerns about the existence of political and other non-commercial considerations in the operation of a fund." Id., at 10. Indeed, the EU makes no bones of the equation of sovereign wealth funds with old socialist state run enterprises. Id., at 10 (Text box). This conforms to the EU Court of Justice Golden Share rules but perhaps less well with the realities of sovereign activities sin markets which they cannot control.

On June 6, 2008, the EU revealed a little more of the direction in which some hope it might be headed. In an article published to the Wall Street Journal, Peter Mandelson declared "A state acting like a business--throwing the resources of government behind a company that competes with others--is a different proposition from a state looking to invest its surplus capital in the most commercially advantageous way. " Peter Mandelson, Sovereign Wealth and Politics, Wall Street Journal, June 6, 2008. For the Europeans, gesture is everything. Mandelson faulted the sovereign wealth funds for "getting the facts right and the politics wrong." Id. And then he raised the usual fear--states cannot resist acting like sovereigns even when they (pretend) to act as private actors in the market. "The possibility that a state might seek to use its investments for political leverage is very slim, but because recipients are not quite sure of the rules of the game, they can’t exclude it entirely." Id.

Well. Mandelson, sounding more like Caesar (addressing his wife) than like Mandelson, suggests the mechanism by which such finds might remain above suspicion. This, mechanism, he offers, provides the formula to enhance the likelihood that the problem will go away before states feel compelled to intervene:
The smart move from the funds would be to confound the suspicions. If sovereign wealth funds want to manage the politics of their dramatic rise, they should study the experience of the hedge-fund and private-equity industries in Britain. When rising public anxiety about their intentions and business models put them on the defensive, hedge funds and private equity moved quickly to reassure with voluntary codes of conduct. Sovereign wealth funds should do the same.
Id. He noted that Norway, Singapore and Abu Dhabi, having read the tea leaves correctly, has all decided to have a hand in the construction of such a transparency code. Id. One expects them to help produce something to their collective liking. And, of course, if the funds play nice, then they will be rewarded--
"The OECD will this week adopt a declaration welcoming SWF investments and recommitting members to principles of openness and nondiscrimination. The funds should see this as a gesture of good faith, and OECD politicians should stand by it. It is the essential quid pro quo that could seal this code and allow governments to turn down the heat under this issue. "

Id. But critically, Mandelson appeared willing to accept the proposition that sovereigns might act like, and be treated as, private investors under certain circumstances (those involving conformity to OECD or IMF transparency rules). "So long as its capital is invested for no other goal than a good commercial return, a sovereign wealth fund is not different from a pension fund, and its investments are likely to be much longer-term. " Id.

But the limitations are clear--the reward will be available only where state investors can establish (perhaps according to a formula or a set of standards of actions) that they are not investing for the purpose of maximizing their own aggregate best interests (a luxury not denied other shareholders). The EU thus appears suspicious but perhaps ready to deal. Yet, for all the happy talk, I am less certain that such a standard can be imposed. On its face it seems inconsistent with a decade long development of a jurisprudence of state participation in companies under Article 56 EC (free movement of goods in the context of golden shares) and Article 87 EC (state aids). If the EU remains true to the implications of that jurisprudence, I am not sure that the "so long as" requirements will be broadly applied. And so what appears to be an open hand may, in the end, be more closed than that of the United States. The Commission, however, continues its work. The realization of that work, though, remains clouded in inconsistency and desire. See A Common European Approach to Sovereign Wealth Funds, supra. It may not be possible to have an open policy in light of the construction of the internal market limitation in EU jurisprudence.

Moreover the Organization for Economic Development and Cooperation (OEDC) has declared its adherence to a policy of transparency as well. OECD Countries Commit to Open Climate for Sovereign Wealth Funds, June 5, 2008 ("The EU has welcomed a joint commitment by OECD Ministers at their annual meeting in Paris on 5 June to an open investment environment for Sovereign Wealth Funds. OECD Ministers adopted a declaration that committed them to a transparent and predicable investment environment that does not discriminate against Sovereign Wealth Fund investors."). See also OECD, Chair's summary of the OECD Council at Ministerial Level, Paris, 4-5 June 2008 - Outreach, Reform and the Economics of Climate Change, June 5, 2008. Transparency is also at the top of the agenda of the IMF. See IMF Intensifies Work on Sovereign Wealth Funds, March 4, 2008. It is not clear that these entities are talking about the same thing, though.

Thursday, June 05, 2008

Constitutional Crisis in Turkey

The Turkish Constitutional Court has held that the law, passed by the governing religious party--the AK Party (the darling of the United States and the EU)--that would ease the ban on the wearing by women of Muslim head scarves violated the secular principles built into the Turkish constitution. See Court Annuls Turkish Head Scarf Reform, BBC News On Line, June 5, 2008. Article 2 of the Turkish Constitution provides: "The Republic of Turkey is a democratic, secular and social state governed by the rule of law; bearing in mind the concepts of public peace, national solidarity and justice; respecting human rights; loyal to the nationalism of Atatürk, and based on the fundamental tenets set forth in the Preamble." Constitution of the Republic of Turkey, Art. 2. The intent of the Preamble (adopted in 2001) also appears clear, though its interpretive extent might be less so.
The recognition that no protection shall be accorded to an activity contrary to Turkish national interests, the principle of the indivisibility of the existence of Turkey with its state and territory, Turkish historical and moral values or the nationalism, principles, reforms and modernism of Atatürk and that, as required by the principle of secularism, there shall be no interference whatsoever by sacred religious feelings in state affairs and politics.
Constitution of the Republic of Turkey, Preamble. The provisions of Article 2 are made irrevocable Turkish Constitution, Art. 4). Religious freedom rights are guaranteed. "Everyone has the right to freedom of conscience, religious belief and conviction." (Turkish Constitution, Art. 24). In addition, "no one may be compelled to reveal his or her religion, conscience, thought or opinion, nor be accused on account of them." Turkish Constitution, Art. 15. However, the expression of that right is bounded in the service of the secular and democratic purpose of state organization.
None of the rights and freedoms embodied in the Constitution shall be exercised with the aim of violating the indivisible integrity of the state with its territory and nation, and endangering the existence of the democratic and secular order of the Turkish Republic based upon human rights.
Turkish Constitution, Art. 14. And Article 24, both references the limitation on religious freedom rights in Article 14 and reaffirms that limitations in the body of that provision:
No one shall be allowed to exploit or abuse religion or religious feelings, or things held sacred by religion, in any manner whatsoever, for the purpose of personal or political influence, or for even partially basing the fundamental, social, economic, political, and legal order of the state on religious tenets.
Turkish Constitution, Art. 14. Moreover, despite (or because of ) the separation of religion and the state, all religious instruction is vested in the state, which retains the power to supervise and control it. Id. It appears clear that the Turkish Constitution meant to creat a hierarchy of principles within its constitutional framework. And within that hierarchy of values, those of the secular and democratic character of the state appears to hold a higher place than the protection of religious expression. This sort of constitutional principle hierarchy, and their application to void legislative acts is well known and respected in the German constitutional system, for example in the famous SouthWest State case. See Gerhard Liebholz, The Federal Constitutional Court on Germany and the 'Southwest' Case, 46(3) The American Political Science Review 723-731 (Sept., 1952) (the author was an associate justice of the Bundesverfassungsgericht). As such, the AK Party makes a political rather than a lawyer's argument (and one pitched toward its electorate rather than to those charged with safeguarding the institutions of the state) when it declared "The AK Party, which was re-elected last year with a convincing 47% of the vote, says it is a matter of personal and religious freedom." Court Annuls Turkish Head Scarf Reform, supra. This may be true but is subordinate to the overarching Constitutionally mandated obligation of fidelity to secularism and democracy. The solution, of course, is a difficult one for the AK--change the constitution. But is certainly a lawful and legitimate route for change.

Thus, whatever one thinks of the Turkish Constitution, it appears that the Turkish decision is arguably well within the usual bounds of constitutional interpretation. If the AK Party might be unhappy with the result, the unhappiness ought to be directed to the Constitution rather than to the Court whose principle duty is to interpret and apply the instrument as written and reasonably understood. "But a senior party member of the AKP, Bekir Bozdag, said the court had overstepped its jurisdiction." Court Annuls Turkish Head Scarf Reform, supra. That is unlikely true. "Judicial power shall be exercised by independent courts on behalf of the Turkish Nation." Turkish Constitution, Art. 9. Moreover, "The Constitutional Court shall examine the constitutionality, in respect of both form and substance, of laws, decrees having the force of law, and the Rules of Procedure of the Turkish Grand National Assembly. " Turkish Constitution, Art. 148. It is also clear that "The decisions of the Constitutional Court are final. Decisions of annulment cannot be made public without a written statement of reasons." Id., at Art. 153. These decisions "shall be binding on the legislative, executive, and judicial organs, on the administrative authorities, and on persons and corporate bodies." Id.

All the same, the case is much more important as symbol and signal than as practice. The practical realities for Muslim women who have embraced the wearing of certain clothing as an outward expression of faith will continue to be observed. Even if that observance is disguised under elaborate wigs covering head scarves covering hair. And individuals in individual cases will tend to be more or less tolerant of deviation depending on where in Turkey the studying is taking place. For all that symbol matters. The very act of putting a wig on over a head scarf is a tangible reminder of the subordination of religious values to the superior values of secularism enshrined in the Turkish constitution, at least as currently written.

Nonetheless, it is also clear that the ruling on the head scarf law was really a proxy for a much more important constitutional moment in Turkey. "Thursday's court ruling is the latest episode in a power struggle between the establishment and the AK Party, which has its roots in Islamism." Id. Indeed, the importance of the head scarf case might be best understood as a reading of the likely actions of the Turkish Supreme Court in an even more sensitive case. See Turkish Leaders Face Court Case, BBC News On Line, March 31, 2008.
The ruling, by a panel of 11 judges, could foreshadow the outcome of a separate court case in which the ruling AK Party (AKP) could be banned for anti-secular activities. Some 71 members of the party, including the prime minister and the president, could also be banned from belonging to a political party for five years.
Court Annuls Turkish Head Scarf Reform, supra. And both sides know what they are doing as they move toward a climax by pushing the institutions of state organization to their limit. And that is a shame. The sort of gambles being made by both sides are more likely to injure the state than advance wither position. See Sara Rainsford, Turks Fear Turmoil, BBC News On Line, April 3, 2008. Sadly, the Europeans are showing both a bit of cravenness and a deliberate obtuseness to constitutional niceties that they appear to reserve to themselves. "EU Enlargement Commissioner Olli Rehn warned the case could jeopardise Turkey's accession bid - arguing such disputes should be resolved through the ballot box, not the courts." Turks Fear Turmoil, supra. That was certainly not the case when, for example the German Federal Constitutional Court was asked to apply its Basic Law to the issue of the legitimacy of a number of political parties. There were no calls for Germany's ouster from the EU then, nor a suggestion that the German Basic Law ought to be subordinated to a sense of constitutional revision by ballot. Yet the same rules to not appear to apply to Turkey. And to boot, such activity serves to provide an excuse for another postponement of Turkish accession. But that may reflected more the European support of the AK Party than it has to do with constitutionalism in Turkey. In any case, this case suggests that the future character of the Turkish Constitution is certainly in play. The outcome is unclear.

Sunday, June 01, 2008

Theocratic Constitutionalism: Buddhist Constitutionalism in Sri Lanka

The 20th century has seen a fundamental shift in the ways in which constitutions are understood. Moving away from the idea that constitutions were merely internal expressions of social choices, however odious, by the middle of the 20th century there emerged the notion, articulated first successfully in the German and Japanese post War constitutions, that not all constitutions were legitimate, and that legitimate constitutions shared a number of common characteristics. These common characteristics were both procedural (against arbitrary use of state power) and substantive (limiting the sorts of policy choices states could make in constituting its government and exercising governance power). These process and substantive norms were, in turn an articulation of a “higher law” of the community of nations, reflecting a global communal consensus evidenced in common practice or international agreements.

The authority and legitimacy of this global secular transnational constitutionalism has not gone unchallenged. On the one hand, state power traditionalists reject the notion of extra-national normative constraints on constitution making. On the other, a number of groups have accepted the legitimacy of transnational constitutionalism as a disciplining force but have rejected the notion that such restraints can be the product of global political consensus. Among the most potent of these groups have been religious transnational constitutionalists who have argued that one or another of the current crop of universalist religions ought to serve as the foundation of normative disciplining of constitution making.

But do these movements represent constitutionalism? If it does, then what are its characteristics? I have begun to explore these ideas with a particular focus on the construction of constitutionalist theory within states constituted along theorcratic lines. Larry Catá Backer, God(s) Over Constitutions: International and Religious Transnational Constitutionalism in the 21st Century, 27 Mississippi College Law Review 11 (2008). I have suggested the development of a conceptual basis for legitimating theocratic constitutional orders based on the precepts of the religion embraced, rather than on the secular universalist principles that have come to serve as the legitimating basis for many national constitutions since the Second World War.

While my initial focus has been in the construction of an Islamic theoretics of constitutionalism, Islam by no means is the only religious system seeking to legitimate government through religion. In an excellent article worth a careful read, Roshan de Silva Wijeyeratne provides a valuable analysis from the perspective of Sri Lankan Buddhism. Roshan de Silva Wijeyeratne, Buddhism, the Asokan Persona, and the Galactic Polity: Rethinking Sri Lanka’s Constitutional Present, 51(1) Social Analysis 156-78 (2007). de Silva Wijeyeratne looks to the religious foundations of the construction of the modern Sri Lankan republic to consider the current state of the Sri Lankan civil war and its potential resolution. He adopts an approach meant to harness “both historical and anthropological arguments in order to claim that Sri Lanka must resort to indigenous Buddhist resources if it is to break the cycle of post-colonial constitutional failure.” Id., at 157. The problem for de Silva Wijeyeratne is founded on the 1948 Soulbury Constitution of 1948 that institutionalized a unitary state within which it was possible for the dominant ethnic group to universalize its values in the construction of the state—and those values were religious. It was thus a short step form the 1948 constitution to the 1972 constitutional revisions that “elevated Buddhism to a ‘foremost place’ within the state, placing a burden on the state to foster Buddhism.” Id. These abstract constructions produced real consequences.

“The symbolic and real alienation of a majority of the Tamil minority from the benefits of economic and political power in the administrative center of the unitary state has been reinforced by the systematic denial of development aid to the northeast of the island, where a majority of the Tamil people live.”
Id. But the 1948 constitutional settlement overlays a deeper understanding by the majority of the intimate connection between religion and the constitution of the state, one which is “driven by an ontological potentiality, which has come to be associated with the hierarchical logic of the Asokan persona.” Id. That is, the Sri Lankan state represents a replication of Buddhist cosmology in the form of “a set of cultural practices that originated in the reign of Emperor Asoka (in the third century BCE), but which further evolved in the Buddhist politics that emerged in Sri Lanka and Southeast Asia.” Id. X, though, argues that t6he Asokan persona might have been misused, and that the “Asokan Empire utilized cosmological principles to legitimate a radically decentralized imperial state structure.” Id., at 158. It is thus possible to use the Asokan settlement to new effect, one that might permit a space for the Tamil minority within a state of autonomous by loyal subordinate units. For that purpose Z carefully parses the Pali Chronicles (which are read as supporting a “univocal narrative of Sri Lanka’s past” Id.) against the realities of the pre-colonial Kandyan Kingdom “which suggest devolved forms of administration that were anything but unitary in practice.” Id.

The discussion of the Asokan Persona (id., 159-164) is revealing. Like other religions, Sinhalese Buddhism has constructed from out of its holy texts, a structure of the state apparatus based on a kingship model. Id., at 159-160. Of course, Buddhists are not alone in this model. See Larry Catá Backer, "The Fuhrer Principle of International Law: Individual Responsibility and Collective Punishment," Penn State International Law Review, Vol. 21, No. 3, pp. 509-567, 2003. Two suttas are advanced for the construction of Sri Lankan Buddhist kingship (and ultimately governance along more democratic lines). These include the Aganna Sutta and (perhaps more critically) the Cakkavatti Sihanada Sutta. Roshan de Silva Wijeyeratne, Buddhism, the Asokan Persona, supra, at 159-160. The object, as in other universalist religions, is attainment of Truth and the elaboration of individual and communal life in accordance with Truth—Dhamma, the truth taught by Buddha. Legitimate kingship, as a part of this Dhammic project replicates the elaboration of the universal order. “The socio-political is hence given form through the conduct of the righteous ruler, with Dhamma suffusing the entire social order. . . It is a hierarchical symbiotic relationship in which the Dhamma of the Buddha encompasses the king and informs the practices of kingship.” Roshan de Silva Wijeyeratne, Buddhism, the Asokan Persona, supra at 160.

De Silva Wijeyeratne cannot overemphasize the importance of this religious grounding in the legitimacy of governance. For a sense of its utility beyond academic discourse, see, e.g., Sita Arunthavanathan, Buddhist Political Thinking. It’s political implications, in rough parallel with those of Islam, are clear. “The raison d’être of territorial conquest is for the greater glory of the Dhamma, and its effect is the acquisition of karma (merit) by the king.” Roshan de Silva Wijeyeratne, Buddhism, the Asokan Persona, supra, at 161. But here de Silva Wijeyeratne carefully excavates ambiguity, especially with the construction of a unitary state under a Buddhist king. “So it is that the Cakkavatti Sihanda Sutta tells us that ‘enemy kings become client kings.’” Id. (quoting in part Steven Collins, “The Lion’s Roar on the Wheel Turning King: A Response to Andrew Huxley’s ‘The Buddha and the Social Contract,’” 24 Journal of Indian Philosophy 421, 429 (1996)). Thus X’s main point with respect to the Asokan model—the Asokan empire was centralizing but not absorbing. “Buddhism functioned as a form of conceptual glue that at the most elemental level unified the empire.” Id. But de Silva Wijeyeratne notes, that unifying character was replicated within a cosmic system in flux, a flux that might be mirrored in human social and political ordering. “This cosmic order is in a continuous state of flux as it moves between its hierarchical unifying aspect (associated with the Buddha), fragmentation and reordering, with the ordering power of the Buddha ultimately encompassing the fragmenting logic of the demonic.” Id., at 162

Like Catholic universalist cosmology, Sri Lankan Buddhist understanding linked faith and reason. “The Buddhadhamma (religion of the Buddha) stands in a relation of opposition to non-reason, which is associated with the daemonic.” Id. Contrast Benedict XVI, Faith, Reason and the University: Memories and Reflections, September 12, 2006. This is an important wedge for de Silva Wijeyeratne, in his effort to show the possibilities within Buddhist political cosmology, of the possibility of alternative religious ordering protocols, among those the current dominant legitimate view of the of a “highly centralized state structure that leaves little room for regional autonomy.” Roshan de Silva Wijeyeratne, Buddhism, the Asokan Persona, supra, at 163. Yet it also contained the possibility of its opposite conclusion. On the one hand, unitary religious nationalists emphasize the encompassing principle of the Buddha that “ensure that the gods always triumph, as the demonic is ultimately encompassed but never excluded.” Id. On the other, in the “everyday world of Singhalese Buddhism” (Id.) the flux inherent in the cosmic order is emphasized. And here the cakkavatti sihanada sutta can be appreciated in a different context, one which both a cosmology and a geography that are replicated in the political order—the spokes of a wheel radiating outward from the center but moving constantly around tat center. “In his sacred journey, the cakkavatti draws on the ontological potentiality of the cosmic order, which was actualized in the ‘architectural symbolism’ of the Buddhist politics of Sri Lanka (and Southeast Asia). While these politics were centralizing in intent, in practice they were in a continual state of flux between unitary and devolutionary movements.” Id., at 163-164. “The ontological status of the cosmic order was such that the ‘city as a whole. . . was as a heaven to the kingdom as a whole.’” Id., at 171 (quoting, in part, James Duncan, The City as Text: The Politics of Landscape Interpretation in the Kandyan Kingdom 117 (Cambridge: Cambridge University press, 1990)).

The uses and abuses of that persona (id., at 164-166), mythologized and massaged for a particular political purpose, is telling. There is much irony here. De Silva Wijeyeratne nicely points to the context in which the centralizers within the sangha won the ‘hearts and minds2 of the Sinhalese Buddhist community—in the aftermath of a political struggle against Tamil Buddhist rule in Anuradhapur from 419-455 CE. Id., at 164. The anti-Tamil trope acquired first a political and then a religious dimension from that time. Its foundation is a 6th century product of the monk Mahanama, now known as the Mahavamsa (the Great Chronicle). Id.

The chronicle states that in his last will to Sakra (Indra), the king of the gods on Mount Meru, the Buddha said: ‘In Lanka, O Lord of the gods, will my religion be established, therefore carefully protect him with his followers and Lanka.’ The ‘him’ that is referred to is Vijaya, the mytho-historical founder of the Sinhalese polity in the fifth century BCE. . . . . Thus begins the dominant-legitimating trope in the Mahavamsa in which association between Buddha kingship, the Buddhasasana (Buddhist teaching), and social order is oft repeated. The idea that Lank is both Dhammadipa and Sihadipa, dividnely ordained by the Buddha in his last will and testament to Sakra. . . takes shape.

Id. De Silva Wijeyeratne critics these manifestations for the very reason they draw their power as both history and divine command—its polemical and literary nature “that reinforced the sense of the Singhalese as a chosen Buddhist people, whose mission was to ensure that the Theravada would be sustained on the island.” Id., at 164-165. Moreover, as de Silva Wijeyeratne notes, the Mahavasmsa represented an important milestone in the struggle, among a number of Buddhist sects “for the soul of Buddhism on the island.” Id., at 165. This point is worth significantly more emphasis. Going hand in hand with the legitimation of a centralizing kingship model was a struggle for the legitimation of Theravada Buddhism as the principle source of Buddhist interpretation on the island. The struggle for control of religious orthodoxy and for the legitimation of an ideology of state construction thus went hand in hand. Lost in this triumph of a particular view of Buddhism and kingship, were alternative readings of the Asokan model on which the kingship model relied. Thus, the fact that the “claims that Mahanama makes for the Asoka are highly tenuous” (id., at 165) make little difference for the embracing of the centralizing model as divinely ordained.

And hiding underneath the religious discourse is an ethnic one. “The Mahavamsa is replete with stories of Sinhalese kings restoring the centrality of Buddhism to the polity in the perennial contestation of power with Tamil interests, both local and from South India.” Id., at 166. The defeat of the Tamil princes is central to the restoration of order from fragmentation and of the triumph of Buddhism in the land Buddha had specifically identified as a site for it. “The hierarchy of the Buddhist cosmos is reconstituted through the reinstitution of the unifying principles of Sinhalese Buddhist kingship, the fragmenting possibility of the Tamil other having been subordinated in a hierarchical relation.” Id., at 166. The result—one people, one king, one god (“Buddhism, the Sinhalese people, and the Buddhist state ‘were a unity, and their welfare synonymous’” (Id., at 166 (citing in part Michael Roberts, Exploring Confrontation: Sri Lanka, Politics, Culture and History 68 (Chur, Switzerland: Harwood Academic Publishers, 1994)). The parallels to other theocratic rhetoric are unmistakable. The only thing lacking is a developed constitutionalism to go along with the theology and political theory.

From mythic construction to the realities of state construction (id., at 166-172) evidence for de Silva Wijeyeratne the disjunctions of religious theory and state construction and provides a model for an alternative reading of religious text in the cause of an inclusive state that might still retain its religious basis. De Silva Wijeyeratne notes the importance of ritual as a way of inscribing the complex cosmology of Buddhist hegemony in simple but symbolic language. The tooth relic festival was a powerful method of reaffirmation and legitimating royal power. Id., at 167. “In the Theravada world of Sri Lanka, Burma, Cambodia, and Thailand, the cosmic axis of the polity was usually centered on a ‘relic of the Buddha, or in the palace of the king, the representative of the Sakra, the king of the gods.’” Id., at 168 (quoting in part James Duncan, The City as Text: The Politics of Landscape Interpretation in the Kandyan Kingdom 50 (Cambridge: Cambridge University press, 1990)). But the nature of that power by the time of the Kandyan kingdom was quite something else. And it is in that something else that de Silva Wijeyeratne draws for an alternative and more pluralistic construction of a Sri Lankan polity “within a Buddhist cosmological frame.” Id. At 167. The idea is inherent in the physical expression of Kandyan kingship as an application of truer Asokan principles. “Far from being a centralized monarchy, this vast empires was more likely to have been a ‘galaxy type structure with lesser political replicas revolving around the central entity and in perpetual motion of fission or incorporation.’” Id., at 169 (quoting in part Stanley J. Tambiah, World Conqueror and World Renouncer: A Study of Buddhism and Polity Against a Historical Background 70 (Cambridge: Cambridge University Press, 1976)).

The circle is complete and a different view of the implications of Buddhist kingship through the cakkavatti monarch is possible. The monarch sits at the center of a non federal empire in which each subordinate unit owes allegiance to the superior unit which it mimics in organization but from which it is not necessarily minutely controlled. Id., at 169. The king presided over rather than controlled the empire. Id. Within this system, space was available for others, like the Tamil, subject only to obedience and conformity to the overall principles of Buddhist rule. Autonomy rather than control was the rule of a kingdom in which the “periphery refused to succumb to the center.” Id., at 170. De Silva Wijeyeratne argues that in its last pre-colonial adaptation, “the last of the Buddhist polities exhibited devolutionary processes with a variety of checks and balances.” Id. But this devolutionary politics was not the product of a pragmatism at odds with the religious foundations of the state, de Silva Wijeyeratne argues. Instead, it drew on the very religious sources which provided a vision substantially different from that of the Mahavamsa.

These devolutionary dynamics received validation by drawing on the ontological potential of a cosmic order that refused an absolutely determining hierarchical moment. The cosmic order fluctuated between moments of unity, fragmentation, and reordering, and this was refracted in the dynamic relation between the center, the semi-periphery, and the periphery of the Kandyan kingdom.

Id., at 171. Even the rituals of power legitimated by its devolution from the divine could be understood to reinforce this interpretation. Rituals such as the perahara reinforced the centrality of the capital of the center by diffusing sacral power from the center top the provinces. Id., at 171.

Thus, for de Silva Wijeyeratne, the possibilities, even within a religious construct, are great. De Silva Wijeyeratne astutely reconstructs a theological basis for a Buddhist state that is both tolerant and operation and effect. He has sought to do this by engaging the religious foundation of the state on its own terms. Yet that very act is profound. It marks an acceptance of a basis for discussion of constitutional form and elaboration far removed from the discourse of western international constitutionalism. It pays scant attention to the legitimating sources of such constitutionalism in the common consensus among states. De Silva Wijeyeratne effectively respects the foundational choice of the Singhalese Buddhist majority—to construct a state on the basis of religious norms, the Asokan persona. But that choice has significant effects. By moving the discourse away from the internationalist model to the universalist model of Buddhist state construction, de Silva Wijeyeratne leaves no room for contestation of normative choices except on religious grounds—and not just any religious grounds, but those of Buddhist principles embraced by the Sinhalese. That choice effectively cuts non-Buddhist Tamils out of the conversation, except as observers. It leaves Sri Lanka in the place where it found itself in 1972—a divided community in which, for good or ill, the majority would decide the basis of its relationship with the minority grounded in its own normative cosmology and not any that might be shared with the Tamils.

There is little doubt about the strength of de Silva Wijeyeratne’s argument or the trajectory of his project. But to follow him is to accept certain fundamental limitations on the nature of legitimate discourse among Sri Lankans. The greatest is tied to the religious basis of state formation. As persuasive as de Silva Wijeyeratne is, its strength is grounded in an acceptance of the assumption that the construction of the state and its apparatus is a Sinhalese and Buddhist project. And more importantly, within this Sinhalese and Buddhist conversation, the sangha remains the legitimating center of the conversation. This is a religious conversation internal to the legitimate fonts of Sri Lankan Buddhism. Within this discourse, outsiders, like the Tamils, may participate, but only within the discursive traditions and under the assumptions that animate Buddhist and Sinhalese conceptions of the state. Ironically, of course, this is the very project, broadly and tolerantly conceived, that has recently been put forward as one version of Hindu theocratic state building in India. See Larry Catá Backer, Nehru Inverted: Building a Model for Theocratic Constitutionalism in India, Law at the End of the Day, December 23, 2007. For all that, de Silva Wijeyertne's effort is critically important.

Still, its importance remains a function of the willingness of insiders to engage in the conversation. Outsiders have little legitimacy in the construction of a common understanding of the religious foundation of the state, and people who are members of the dominant faith community have even less standing. In a way de Silva Wijeyeratne attempts here a Buddhist version of the search for a less threatening and more congenial Islam—a subject on which I have suggested some pessimism. See Larry Catá Backer, Of Political States and "Soft" Religion as the Basis for State Organization, Law at the End of the Day, July 16, 2007.

Yet, without even a first step, there is no basis for further dialog. For Tamils to even hope to begin a conversation with their majority Sinhalese brothers there must be a means by which the Tamils can be accepted within the governance cosmology of the state—and that can only be effectively if it is based on the normative framework of the majority. Whether they would be willing to accept the subordinating terms of that engagement, like for example their Coptic brothers in Egypt, remains to be seen. But that, effectively is the fundamental nature of power in theocratic states, however well ordered and solicitous of its non-conforming minorities.

And this gets us back to the original question: is the dialog thus described in Sri Lanka constitutionalism? For that purpose one need to look to determine whether religion provides a foundation for the constitution of the state, an institutionalized system of process protections and a system of substantive values against which actions by the state (administrative/police, legislative/regulatory, and judicial) can be measured and under which constitutional interpretation is grounded. Under the current Sri Lanka Constitution of 1978, Sri Lanka is established as a “free, Sovereign, Independent and Democratic Socialist Republic and shall be known as the Democratic Socialist Republic of Sri Lanka.” 1978 Constitution, Ch. 1 Art. 1. State policy constitutionally binding on the government apparatus, as a consequence includes the positive obligation to “establish in Sri Lanka a democratic socialist society” (1978 Constitution, Ch. 6 Art. 27(2) ) the objectives of which are set forth in the constitution, none of which reference a religious character to the state. Id. Indeed, a careful reading of Article 27 suggests just the opposite—that the state has been established as supremely secular and bound by the limits of post 1945 secular transnational constitutionalism based on the protection of fundamental rights and the assurance of human dignity and progressive economic policies. See Id. The appendage and contestable position of Article 9 in that context is magnified. Indeed, the “State shall ensure equality of opportunity to citizens, so that no citizen shall suffer any disability on the ground of race, religion, language, caste, sex, political opinion or occupation.” 1978 Constitution, Cgh. 6 Art. 27(6).

In the absence of a king, “sovereignty is in the people and is inalienable. Sovereignty includes the powers of government, fundamental rights and the franchise.” 1978 Constitution Ch. 1 Art. 3. Within this plausibly secular context, Buddhism is given a special place. “the Republic of Sri Lanka shall give to Buddhism the foremost place and accordingly it shall be the duty of the State to protect and foster the Buddha Sasana, while assuring to all religions the rights granted by Articles 10 and 14(1)(e).” 1978 Constitution, Ch. 2 Art. 9. Those assurances in Article 9 first protect freedom of conscience. “Every person is entitled to freedom of thought, conscience and religion, including the freedom to have or to adopt a religion or belief of his choice.” 1978 Constitution, Ch. 3 Art. 10. In addition, every citizen is entitled to “the freedom, either by himself or in association with others, and either in public or in private, to manifest his religion or belief in worship, observance, practice or teaching” 1978 Constitution, Ch. 3 Art. 14(1)(e). Such rights can only be defeated on potentially narrow grounds—
“The exercise and operation of all the fundamental rights declared and recognized by Articles 12, 13(1), 13(2) and 14 shall be subject to such restrictions as may be prescribed by law in the interests of national security, public order and the protection of public health or morality, or for the purpose of securing due recognition and respect for the rights and freedoms of others, or of meeting the just requirements of the general welfare of a democratic society.”

1978 Constitution, Ch. 3 Art 15(7). No one is compelled to be a Buddhist—just to live in a Buddhist state. And in the interests of such a state, but with due regard to the sensitivities of others, that state must protect and foster the Buddha Sassana, even where such fostering might otherwise impede the rights of others other than the right to believe and to manifest that religious belief in worship, observance, practice or teaching. In a Buddhist state in which the state itself must start from the assumption that the Buddhist view must prevail, the best protection afforded others is essentially the right to continue unmolested. But the price is that unmolested they are cut off from the practices and understanding of the rest of society—for whose benefit the state must act under Article 9. However, the State also is obligated to “strengthen national unity by promoting co-operation and mutual confidence among all sections of the People of Sri Lanka, including the racial, religious, linguistic and other groups, and shall, take effective steps in the fields of teaching, education and information in order to eliminate discrimination and prejudice.” 1978 Constitution, Ch. 6 Art. 27(5). Within these provisions, then, are elements of both substantive allocations of constitutional value to Buddhism and a positive obligation on the part of the state to foster those principles. That fostering is done through law, institutionalized in a Constitution that also protects the individual rights of people even as it shapes the foundations of social organization around them in a way that might be inconsistent with their individual beliefs.

It is thus possible to conceive of the 1978 Constitution as theocratic, though it is a close call. The Constitution, as it has evolved, is at war with itself. The question revolves around the power of Article 9 in the context of other constitutional provisions. If Article 9 assumes a position of superiority in a hierarchy of constitutional values to be advanced, then Sri Lanka can move more confidently toward theocratic constitutionalization grounded in Buddhism. If it does not, then the 1978 is of a different order and the import of Article 9 becomes highly contestable, especially by the Tamil minority.

The provision is itself ambiguous. Even so, evidence of the intent might be found in the way the power of the judiciary to interpret the 1978 Constitution is framed. If the Judiciary must interpret the 1978 Constitution in light of the principles of Buddhism, that would certainly push the characterization much closer to not only theocracy, but constitutional theocracy of a kind similar to that imposed in Iraq and Afghanistan. The judicial power is set forth in Chapters 15 and 16 of the 1978 Constitution.

But now a curious result. First, the broad principles of state policy in which the state is founded articulated in Article 27 are not justiciable. “The provisions of this Chapter do not confer or impose legal rights or obligations, and are not enforceable in any court or tribunal. No question of inconsistency with such provisions shall be raised in any court or tribunal.” 1978 Constitution Ch. 6 Article 29. The Supreme Court “shall have sole and exclusive jurisdiction to hear and determine any question relating to the interpretation of the Constitution” 1978 Constitution Ch., 16 Art. 125. It is granted broad constitutional review powers other than with respect to matters related to popular revisions of the constitution itself. 1978 Constitution Ch., 16 Arts. 120-123, 126-131. But the Constitution itself does not bind the court to a particular form of constitution interpretation. On the one hand that might suggest that the 1978 Constitution is not theocratic. But there is that Article 9 to deal with. It would be possible, consistent with the other provisions of the Constitution to create a hierarchy of Constitutional values in which Article 9 serves as the Supreme principle of Constitutional jurisprudence—the animating force of substantive values inherent in the Constitution. That, certainly would be consistent with the socio-cultural religious views of the majority Sinhalese as so well described by de Silva Wijeyeratne. It would, as well, comport with the form of a reading of Constitutional norms as suggesting a hierarchy of norms developed well by the German Constitutional Court since the 19560s. See Larry Catá Backer, Cosmopolitan Ideals, the European Union and Its Judiciary, Law at the End of the Day, September 22, 2006. Thus reconstructed, Article 9 could serve as the foundation through which all fundamental rights are read, and all protections to non-Buddhist others are understood. This would be consistent with both a rule of law state and one based on universal principles of religion. But it would produce results that might be substantially different from those that might be produced through an interpretative framework grounded in secular transnational norms identified through customary and conventional international law that would structure the interpretation of international constitutional normative and process traditions.

There is a sense of the way in which the current legislature seems to be going. In 2005, for example, “Sri Lanka's parliament [discussed] the "Bill on the Prohibition of Forcible Conversions", which had been proposed last July by the Buddhist Jathika Hela Urumaya (JHU) party.” Sri Lanka’s Anti Conversion Bill a Worry for Everybody, Asia News, May 5, 2005. But both government and Supreme Court did little to further the effeort. See U.S. Deptment of State, Bureau of Democracy, Human Rights, and Labor, Sri Lanka: International Religious Freedom Report 2005. Sri Lanka has put itself in a position of what may be termed soft theocratic constitutionalism. Theocracy remains a potent but contested substantive basis of constitutional values. Until there is a bit more clarity, Sri Lanka will continue to reap the worst of both worlds--as a failed theocratic and a failed secular transnational constitution.

Saturday, May 31, 2008

The KMT Returns to China

Kuomintang (KMT) Chairman Wu Poh-hsiung has been visiting from Taiwan. The Chinese Communist Party has ensured that such a gesture be rewarded. Hu Jintao met with the KMT Chairman in a lavishly staged photo-op session. The CCP organ reported "Hu Jintao (R), General Secretary of the Communist Party of China Central Committee, shakes hands with Kuomintang (KMT) Chairman Wu Poh-hsiung at the Great Hall of the People in Beijing, capital of China, on May 28, 2008. Hu Jintao met with Wu Poh-hsiung and all the members of the visiting KMT group here on Wednesday." Hu Jintao Meets With KMT Chairman Wu Poh-hsiung, People's Daily On Line, May 29, 2008. The commonalities across party lines were emphasized in ways that were meant to send signals across all intellectual class lines. Much was made, for example, of Wu's visit to the mausoleum of Sun Yat-Sen. KMT chairman Pays Homage to Dr. Sun Yat´Sen's Mausoleum, People's Daily Online, May 28, 2008. These signals, though, werre not without their ambiguities. Wu produced a couplet for the visit to the Mausoleum capable of a variety of interpretations: "'tian xia wei gong, ren min zui da', which means 'The State belongs to the people. The people are all the important.'" KMT chairman Pays Homage to Dr. Sun Yat´Sen's Mausoleum, supra.

But there were more tangible benefits as well--to both sides. The Chinese were able to exploit an event that took Western media activity away from Tibet and its search for independence,. Indeed, a great value of this gesture was to oppose the "stubbornness" of the Tibetan priestly aristocracy against the forward thinking actions of what had once been the most intimately connected and greatest poltiical enemy of the CCP and its plans for China. Of course, whether this strategy works or not remains to be seen, But certainly, from the CCP perpsective, it is something worth attempting. . .and the Western press might be understood as both fickle and to some extent gullable (but self aware). See, e.g., Rafael Poch, Primera Visita a China, en 60 Años, del Líder del Kuomintang taiwanés, La Vanguardia, May 29, 2008 ("Todo lo negativo que Pekín encajó a nivel de imagen con la crisis de Tibet, viene más que compensado por los progresos realizados en el muy sensible ámbito taiwanés," Id., at p. 6).

More importantly, for both sides, there was agreement on resumption of talks and resumption of some more extensive contacts. Hu Jintao
called for resuming exchanges and talks, based on the "1992 Consensus", between the mainland's Association for Relations Across the Taiwan Straits (ARATS) and Taiwan's Strait Exchange Foundation (SEF), as early as possible, and practically solving problems concerning the two sides through talks on equal footing. Once the ARATS-SEF dialogue is resumed, priority should be given to issues including cross-Strait weekend chartered flights and approval for mainland residents traveling to Taiwan, which are of the biggest concern to people on both sides of the Strait, said Hu.

Hu says opportunity for cross-Strait relations should be cherished, People's Daily Online, May 29, 2008. Hu's statements produced quick action of the usual sort. "The mainland-based Association for Relations Across the Taiwan Strait (ARATS) Thursday sent a letter to the Taiwan-based Strait Exchange Foundation (SEF), inviting them for talks. The letter invites SEF Chairman Chiang Pin-kun and Vice Chairman and Secretary-General Kao Koong-lian to lead a SEF delegation to visit Beijing from June 11 to 14 for talks on the cross-Strait weekend chartered flights and mainland tourists' traveling to Taiwan." Mainland Based Association Invites Taiwan counterparts for Talks, People's Daily On Lin, May 29, 2008. And thus the reward. As the Mainland press noted: " The two topics have been discussed by related trade organizations many times and some consensus had been reached." Taiwan Foundation Accepts Invitation From Mainland Counterpart for Talks, People's Daily On Line, May 29, 2008. So it comes as no surprise that, now, "Ten airlines from the mainland and Taiwan will make 19 round-trip flights for the traditional Duanwu, or Dragon Boat Festival, from June 3-15, the Civil Aviation Administration of China said Thursday." Cross Strait Charter Flights Set for Dragon Boat Festival, People's Daily On Line, May 29, 2008. This serves the Chinese as well. "People in mainland celebrate their first "official" Dragon Boat holiday this year. The State Council (cabinet) revised the official holiday schedule late last year to add three traditional festivals -- Qingming, Duanwu and Zhongqiu -- in response to public demand." Id.

But there was talk of political ties as well, between the KMT and the CCP. In the grand vision, of course, the ideal would be to heal the rupture of 1927. But that is impossible. Still, time and experience--along with desire--sometimes heals even the greatest wounds (especially when the original protagonists are both dead and reinterpreted). And thus another potentially interesting palpable benefit of the trip, talks between the KMT and CCP. " Exchanges between the Kuomintang (KMT) and the Communist Party of China (CPC) will play an important role in the relations across the Taiwan Strait, according to visiting KMT Chairman Wu Poh-hsiung." KMT Chairman: Party exchanges across Taiwan Strait to play important role, People's Daily On Line, May 29, 2008. This is meant to supplement the the talks between the mainland-based Association for Relations Across the Taiwan Strait (ARATS) and the Taiwan-based Strait Exchange Foundation (SEF). Id. The importance of inter-Party ties on political relationships was not lost of the principals.
"Yang Yi said the summit between General Secretary of the CPC Central Committee Hu Jintao and KMT Chairman Wu Poh-hsiung was an important event for the two parties to achieve extensive consensus. Yang said both the CPC and the KMT, or the Nationalist Party of China, cherished the good momentum in the relationship across the Taiwan Strait. The two parties agreed to seize the opportunity to build mutual trust, lay aside disputes, seek consensus and shelve differences, and jointly create a win-win situation, Yang said."
CPC-KMT Summit Significant for Cross-Strait Relations, People's Daily On Line, May 30, 2008. Of course, there was a long history of such meetings in the old days. For the moment, the talks will be kept to safe subjects--the concurrent economic and exchanges negotiations. Id. Their future success, now that the progenitors of both parties are long dead, remains to be seen.

There were internal benefits for the Taiwanese as well. Wu needs to present some tangible benefits to a policy of less provocation. And because of the extent of Taiwanese investment in China, something with economic impact would likely serve him best. At the same time, he must be careful to avoid reminding his CCP benefactors of his suggestion, during the campaign that the Taiwanese ought to be able to choose their own destiny.
See, e.g., Rafael Poch, Primera Visita a China, en 60 Años, del Líder del Kuomintang taiwanés, La Vanguardia, May 29, 2008. Indeed, for this visit, Wu has been careful to emphasize the "correct" vision. "The KMT has won two important elections in Taiwan recently, Wu said, which showed that the mainstream opinion of the Taiwan people identified with what the KMT stood for, and most of the Taiwan people agree that the two sides on the strait can achieve peaceful development and a win-win situation." KMT Chairman Eyes Better Cross-Strait Relations, People's Daily On Line, May 31, 2008.

But Wu will have to tread carefully with his electorate in Taiwan. The KMT forgets its own history on Taiwan at its peril. In a sense, that history suggests that the KMT's own journey to Taiwan in the 1940s was a bit irregular, as was its imposition of government. It's relationship with the CCP, ancient, retains a certain ideological closeness that can be discerned even after nearly a century of bitter competition. For the CCP, the greatest victory, as well as a great irony, will be to have the KMT serve as its instrument in effecting reunification--both of territory and Party.