The Foreign Service Journal, October 2016

74 OCTOBER 2016 | THE FOREIGN SERVICE JOURNAL to lead to state control of politics and loss of freedoms. Argentina under the Kirchners, for example, represented both greater state interven- tion and an attempt to shift political power to a smaller cadre, often through economic intimidation, as those in opposition-tied media lost revenue from government-controlled businesses. In Thailand, the military regime has taken advantage of its current political power to place military men in leading state companies. With many developing nations embracing it, state capitalism poses a potential threat to the greater world economy. Malaysia has been an eco- nomic success with a state-capitalist strategy historically, but recent stagna- tion can be tied to burdens placed on state businesses by the government, such as ensuring ethnic Malay owner- ship. Economic weakness in Malaysia has carryover effects on regional and global economic trends. The corruption uncovered at Petrobras in Brazil has had a devastating impact there, with an eco- nomic recovery nowhere in sight. The greatest threat comes from Russia and China, where state-owned busi- nesses become tools of warfare employed against neighboring nations and entire regions. In Russia’s case, the use of state-controlled Gazprom as a weapon of intimidation is well known. Cutting off gas supplies to Ukraine at critical times in the mid-2000s and 2010s sent a clear message of Russia’s interests. Gazprom has done the same with Georgia, as well. Both Ukraine and Georgia have dealt just as much with military pressure; all tools have been blended together in Russia’s hybrid warfare model. Kurlantzick does not question state capitalism’s success in China, or China’s concomitant building of strategic power. He cites the example of Chinese state oil and gas companies sending rigs into parts of the South China Sea claimed by Vietnam as part of a larger Chinese strategy to extend influence in the area, including with the building of airstrips and patrolling by naval vessels. Do we combat state capitalism, or just talk about it? Should one model prevail? These are questions for the thoughtful reader. Kurlantzick makes his views clear: “State companies are not going away. Western multinationals should under- stand the areas where they still retain advantages over most state firms and ignore the idea of trying to beat state capitalists at their own games.” He reminds observers to focus on the people of these countries, because over the long term their governments require public legitimacy and won’t get away with mismanagement. He then asks the rest of the world to keep an eye on a list of key countries where political freedom is under threat: Thailand, South Africa, Ukraine and others. We in the United States can play a role in fostering democratic change, but only by recognizing and understanding the challenges significant state interventions pose. n Josh Glazeroff is a Foreign Service officer who has served in Santo Domingo, Durban, New Delhi and Washington, D.C. He previ- ously served on the FSJ Editorial Board and is a current member of the AFSA Governing Board.