Wednesday, February 29, 2012

APT Versus EAS: Indonesia’s Perspective – Analysis

Indonesia, as the biggest nation among members of the Association of Southeast Asian Nations (ASEAN), is crucial in forging regional cooperation in East Asia. In the Chairman’s statement of the Sixth East Asia Summit (EAS) held on 19 November 2011 in Bali, the Indonesian President Susilo Bambang Yudhoyono emphasized the fundamental need of promoting peace, stability and economic prosperity in the East Asian region.

He stressed the importance of the EAS in the region’s cooperation. In this context, this article asks why Indonesia prefers the EAS over the ASEAN Plus Three (APT).
Why is Indonesia skeptical of the APT?

Indonesia has always played a leadership role within the ASEAN framework, but since the establishment of the APT as a formal regional forum, bigger powers, particularly China and Japan, have begun greater involvement in the forum with various economic and political agendas. Both the powers have different interests which is diluting the ASEAN’s interests. Policymakers in Indonesia believe that the ASEAN has transformed into a battle ground for the big powers, which has undermined and sidelined Indonesia’s importance. Indonesia also feels that in the current APT forum, it is losing in inter-regional trade to its competitors such as Thailand and Malaysia.

Another major reason of the skepticism is the rise of China and its constant pressure in the region; to accommodate this pressure is hardly possible for ASEAN members. Most countries in East Asia have historical animosities with Japan; they are unwilling to cooperate with Japan in political and strategic matters thereby favouring China despite its assertiveness in the region. China harvests these animosities as well. For instance, in the APT forum, South Korea is an important country with a huge economic capacity and an unwillingness to cooperate with Japan.

Therefore, it often goes in favor of China in various matters.

After the Asian Financial Crisis of 1997 in particular, Malaysia, South Korea and others have also harboured strong suspicions of the presence of Western countries and their financial institutions in the region. This also helps China to play a more pro-active role in the region. Indonesia therefore believes that it is losing heavily in the current APT structure and wants an alternative framework beyond the APT; willing to cooperate with countries such as India, Australia and the US in the EAS forum.

What does Indonesia expect from the EAS?

The EAS was established in 2005, aiming to promote peace, stability and economic prosperity in the region. Besides economic integration in the region, this forum also aims to cooperate in security and strategic matters. Indonesia expects more space for itself and for ASEAN as well, together with an inclusive East Asian regional framework. The participation of India, Australia, New Zealand, Russia and the US in the forum would fundamentally alter the overall power configuration in East Asia. The participation of big powers in a regional structure also empowers ASEAN members to increase their bargaining power in dealing with China and other big powers, where they can use one card against another.

The economic presence of major EAS countries in Southeast Asia is huge. These countries also have roles to play in regional political and security affairs. So even though China may be unwilling to include countries like India, Australia and the US in the regional scene it would be difficult to keep them out.

What is the way forward?

In the current political economy of East Asia, the APT has a specific remit to mitigate the financial crisis and strengthen economic integration in the region. Both China and Japan have major stakes in it. The EAS, on the other hand, is a loose framework of cooperation based on ‘open regionalism’. Its focus includes political, economic, security and a wide range of issues, which are not yet properly structured.
APT has had some concrete achievements like the Chiang Mai Initiatives, and it is now playing a role in regional economic integration. But the formalization of integration through the APT framework is contested, and is still viewed with different perspectives among its members. This contesting perspective persists in the EAS as well.

Summing up, one can conclude that the participation of major countries in the EAS would enable the creation of a multi-polar space in the region which would be free from one country’s dominance. Besides, the opportunities that East Asia would be presented with in the long-run are also likely to strengthen the EAS. This forum has the possibility to represent the region inclusively, where inter-regional trading relations are already closely linked.

By Chongtham Gunnamani
Research Intern, IPCS

Time to Pull the Plug On Indonesia’s Ailing SOEs

Indonesia’s state-owned enterprises have long been considered vital to the country’s economy. They provide millions of jobs, including many in strategic fields, and they can help develop local industries.

However, many of the nation’s SOEs are poorly managed and continue to lose money. Some of them have suffered financial losses for years, and have been sustained only by large injections of public funds. As a result, the Indonesian public has rightly questioned the viability of these companies and their continued existence.

The government has recognized a need to restructure the SOEs that still have the potential to turn around — and to shut down those that are clearly no longer salvageable.

Hatta Rajasa , the coordinating minister for the economy, said last year that 10 of 141 state enterprises were suffering losses and would probably need to be closed .

Earlier this year, the government said 17 SOEs would be restructured in 2012 to help improve their performance. That number has now been cut to just seven, with debt-ridden Merpati Nusantara Airlines and aircraft maker Dirgantara Indonesia topping the list.

Also on the list are shipbuilder PAL Indonesia, financial services group Bahana Pembinaan Usaha Indonesia, textile firm Industri Sandang and construction firms Waskita Karya and Nindya Karya.

The government expects some established state-owned firms to take over several of these financially troubled enterprises. However, it is questionable whether that strategy makes commercial sense, because it would mean forcing profitable companies to subsidize struggling companies.

The critical point is not the number of SOEs to be restructured, but whether the end result will ultimately benefit the economy.

The government must ask itself some hard questions and be prepared to make tough decisions on these perennial loss-making companies. While SOEs have a strategic role to play in the economy, they must also run on commercially viable principles, just as companies in the private sector do.

Only then can SOEs compete on a level playing field with their private sector counterparts. SOEs must add economic value, rather than destroy economic value, if they are to play a constructive role in nation-building. Jakarta Globe

Indonesia: Averting Election Violence in Aceh


Jakarta/Brussels, 29 February 2012: Election monitors should begin deployment to Aceh long before the 9 April election to deter intimidation.

Indonesia: Averting Election Violence in Aceh, the latest International Crisis Group briefing, says the potential for isolated acts of violence between now and voting day is high and may be higher after the results are announced if it is a close election.

“Whether violence materialises will depend on several factors, including the speed with which local election monitors can take up position in some of the most contested districts, like Bireuen and Aceh Timur”, says Sidney Jones, Crisis Group Senior Adviser. “It is also important that the police move quickly to pursue those responsible for a series of killings in December and January so that rumours of political motivation can either be laid to rest or conclusively proven”.

The briefing examines the political and legal manoeuvres used by Partai Aceh, the political party created by the leadership of the Free Aceh Movement (Gerakan Aceh Merdeka, GAM), the former rebel group, to delay the elections so that its main rival for the governorship, the incumbent Irwandi Yusuf, also a GAM member, could be forced from office after the expiration of his five-year term on 8 February 2012. If the election were to take place after that date, the government would have to appoint a caretaker, and Irwandi would be denied the opportunity to use the perks of office to campaign. The elections were originally scheduled for October 2011, but they were delayed first to 14 November, then to 24 December, then to 16 February and finally to 9 April.

When it seemed as though the postponement until 16 February would be the last, a series of killings targeting Javanese workers took place, beginning in early December. Most of these crimes remain unsolved, but they seemed to some to be aimed at showing that security conditions were such as to prevent the elections from going forward. There may be no connection, but once officials in Jakarta agreed to push for a further delay, the murders stopped, although other forms of violence continued. The briefing looks at these attacks and notes that the burden is now on the police to pursue investigations vigorously so that the perpetrators can be identified and punished.

The election could be close. Partai Aceh has the advantage of a strong political machine but has fielded a weak candidate for governor in Zaini Abdullah, GAM’s former “foreign minister”. Former Governor Irwandi, now replaced by a caretaker, is personally popular, especially because of a universal health insurance program he championed and commands the loyalty of many former guerrilla commanders, but he is standing as an independent and lacks any party organisational structure. Partai Aceh has shown a willingness to use fear tactics in a way that could persuade some voters that it is dangerous not to choose it.

“Getting election monitors to Aceh quickly should be seen as an investment in peace”, says Jim Della-Giacoma, Crisis Group’s South East Asia Project Director. “This election is critical to Aceh’s future”.

Tuesday, February 28, 2012

President Prabowo Looks Pretty Good To Voters Tired of Corrupt Political Elite

On Saturday, the violence-wracked Mesuji district in Lampung again grabbed the headlines as a riot took place, with hundreds of villagers burning down buildings belonging to Barat Selatan Makmur Investindo, a Malaysian palm oil company.

A day before, in Jakarta, disgraced tax official Dhana Wiyatmika earned the dubious honor of being called the “new Gayus,” for allegedly having more than Rp 100 billion rupiah ($11 million) squirreled away in various bank accounts.

These disturbing developments form the backdrop for continuing revelations about politicians under investigation for fraud on a monumental scale and show that almost 14 years after the fall of Suharto, not much has changed in Indonesian politics. It is in this light that we should view the apparent rise of Prabowo Subianto on the political scene.

With the public asking serious questions about the country’s future, the so-called reformist government remains in paralysis. The Economist wrote last week that “barely half-way through his second term,” President Susilo Bambang Yudhoyono “already looks like a lame duck.” More than 50 percent of his orders go unheeded, the magazine said.

Then, in a press release that shocked many, the Indonesian Survey Institute (LSI) announced that Prabowo, a former general who has been accused of serious human rights abuses, came in a strong second in a survey of the electability of potential presidential candidates. He beat out the likes of former Vice President Jusuf Kalla, Golkar Party chairman Aburizal Bakrie and Hatta Rajasa, the coordinating minister of the economy and the National Mandate Party (PAN) head.

While Prabowo still finished behind former President Megawati Sukarnoputri, the chairwoman of the Indonesian Democratic Party of Struggle (PDI-P), many analysts believe that Megawati’s support base has reached its limits, with few people impressed with her record as president.

But Prabowo’s hasn’t.

Not surprisingly, a human rights group immediately blasted the survey as flawed because it didn’t consider the records of the potential candidates. Yet, the results might not be that far off, and indicate that the Indonesian political mentality is still wedded to the past. Politicians, rather than behaving as servants of the people doing their best to provide solutions to the nation’s problems, behave like petty autocrats, whose whims and demands need to be satisfied.

In Indonesia today, the country has lots of small autocrats doing whatever they like with impunity. Suharto back during his rule got away with his strong fist and strong economic growth. Carrot and stick, many loved it. He provided order and prosperity, and a certainty that “bapak” knew what was best for the country. Sure, there was a lot of corruption and utter disregard for human rights, but many felt that was a fair price for good economic policy.

The blame for the rising acceptance of the new authoritarianism can be placed squarely on successive governments that monumentally failed to grasp that politicians are public servants and responsible to the people they govern.

As with any authoritarian ruler, most Indonesian politicians appear fiercely resistant to being questioned, having their performance examined, their results evaluated and their bank accounts scrutinized. And as often as not, when they are asked to explain themselves, they are suspected of lying. Two politicians were pointedly reminded in court last week that they were under oath and required to tell the truth and warned of the seriously consequences of perjury. A public campaign briefly urged them likewise. Clearly there is a perception out there that some politicians are ethically immature and devoid of integrity.

Politicians could avoid this by being transparent, showing to the public that they have nothing to hide. And yet, since the fall of Suharto, Indonesian politicians have been unable to decide whether politics is an exercise in public and open governance or a matter of private and hidden commercial business transactions.

‘The day-by-day revelations of tainted government would indicate the dominant mentality veers toward the latter view. Nothing is sacred. Even hajj funds entrusted by the devout to the Ministry of Religious Affairs are suspected of being misappropriated. With everything being swept under the rug, hidden from the plain view, abuses and corruption grow unchecked.

We can all imagine politicians sitting around in a coffee shop in the foyer of the House of Representatives, plotting deals and corruption. Some politicians apparently think the country is best governed when they behave as if there are no people in the country — only themselves and the treasury.

There is a sense that the ruling political elite does not have a clue how to govern, as Yudhoyono’s government seems to be running from one scandal to another. Seeing little leadership at top and being fed a daily diet of scandals, people feel our politicians are taking their wages unfairly. They reap where they do not sow. As a result, even though the economy is growing, disappointment in the government keeps increasing.

Thus, in these times of crisis people look for stability. That may well explain the increasing wave of nostalgia, as people recall the “good” old days when life was so simple and at the same time prosperous. Even if it wasn’t. This, in turn, leads to the rise of Prabowo. Regardless of his human rights record, at least to some it seems that finally here is someone with the guts and charisma to get things done.

The big question is: if elected, what will he get done and how will he do it? In reality, there are no indications that any of the current potential candidates are capable of offering anything new.

What they all have in common is the collective mind-set that says government is best done on the basis of a network of relationships of elected and non-elected elites and their cronies. Only this results in deals getting done, money being made and power being consolidated and handed on in a dynastic fashion, with the public placated or too intimidated to complain.

To be sure, this is a variation of authoritarianism. They may have different names, but the tactics indicate that Indonesia is politically dominated by a one-party system of government — because all parties seem to be doing things the same way.

This is ultimately unworkable. Until someone steps up and has the courage, wisdom and will to break with the authoritarian past, Indonesia will continue to evolve as a booming economy that does not provide economic and social benefits to the nation but only to a few. It will be a limping democracy, hamstrung by material success that is not accompanied by political reform.

That would leave the country ripe for the continuous picking and plundering of the various mobs that keep it in line, both within the House and on the streets.

By Yohanes Sulaiman lecturer at the Indonesian Defense University (Unhan). Phillip Turnbull is a theology teacher based in Jakarta.(Jakarta Globe)

Monday, February 27, 2012

US May Be Betting on India in Asia Pivot, But Both Better Put Own House in Order

Like some modern-day Columbus, America has discovered Asia. What took so long, many Indians might reply, citing their own 2,000-year history. The reaction of others might be: So what?

In January, US President Barack Obama journeyed to the Pentagon to unveil a new strategic plan designed to articulate US defense priorities for the coming decade. While American military forces will continue to contribute to security around the world, this document asserted, “we will of necessity rebalance toward the Asia-Pacific region.” This doctrine and its underlying premises have been widely described as a US “pivot” toward Asia.

But as India’s ambassador in Washington has recently reminded us, the idea of a “pivot” is hardly new. Jawaharlal Nehru, India’s first prime minister, used this term to characterize India even before there was an India, saying of his not-yet-independent country: “We are of Asia. … [India] is the pivot of Western, Southern and Southeast Asia.”

In truth, there is little new in the Pentagon’s “new” strategic posture. The January strategy document simply codified the shift in American thinking that has been under way for some years. Well before the president’s visit to the Pentagon, and independent of any pivot, the United States ended military operations in Iraq and pledged to withdraw all combat troops from Afghanistan by December 2014. At a more basic level, US diplomats have been talking about the growing significance of Asia since the end of the cold war.

New or not, what does the US pivot to Asia mean for India? Indeed, is India even on Washington’s Asia-Pacific map? On the latter point, there can be no question. The January strategy document refers specifically to “the arc extending from the Western Pacific and East Asia into the Indian Ocean region and South Asia.”

In a speech last fall, Secretary of State Hillary Clinton defined Asia Pacific as reaching “from the Indian subcontinent to the western shores of the Americas.” Not to be outdone, Indian diplomats have taken to referring to the “Indo-Pacific” region.

Equally tellingly, the January document observes that the United States intends to invest in a “long-term strategic partnership” with India in order that New Delhi might serve as a “regional economic anchor and provider of security in the broader Indian Ocean region.” This is not mere rhetoric, not when one considers that none of Washington’s other major Asian partners are even mentioned in this document — nary a sentence for Japan, Korea, Australia or Indonesia. As Clinton recently wrote: “the United States is making a strategic bet on India’s future.”

The pivot is sometimes portrayed as reflecting growing anxieties in Washington about a rising China. This is a vast oversimplification, but also holds more than a kernel of truth. And to the extent that the pivot does reveal US uneasiness about China’s future course, many in India, where the People’s Republic is widely viewed as the country’s greatest long-term threat, will applaud Washington’s new emphasis on Asia.

Nonetheless, New Delhi will not wish to be drawn into the middle of heightened Sino-American rivalry, should this occur, nor permit India to be cast as a junior partner to the United States in a cold war with China.

This Indian ambiguity reflects different views in Washington and New Delhi on both the nature and the locus of the Chinese challenge. Indian strategists worry that Washington seeks to draw New Delhi into more active opposition to Chinese ambitions in the South China Sea or elsewhere in East Asia and accuse the United States of willful blindness toward Chinese intrigues in South Asia more directly threatening Indian interests.

Think of Beijing’s activities in Pakistan, like Chinese construction on the port of Gwadar and most especially Chinese support for Pakistan’s nuclear activities, but also alleged Chinese inroads in Burma, Bangladesh, Nepal and Sri Lanka.

For other reasons as well, not all Indians welcome the American pivot toward Asia. Most immediately, New Delhi, unconvinced that the Afghans will be ready to assume full responsibility for their security, is not happy about US plans to terminate combat operations in Afghanistan no later than 2014.

The United States should stay the course in Afghanistan, many Indians say, and not leave India holding the bag. Some American analysts retort that India is perfectly willing to see the United States fight in Afghanistan to the last American.

This is unfair, Indians reply, and vastly underestimates the importance to India of stability in Afghanistan. New Delhi has been a significant non-military actor in Afghanistan in recent years. The $2 billion of aid it has provided makes it one of Afghanistan’s largest bilateral donors.

Last autumn, New Delhi signed a strategic partnership agreement that commits India to an enhanced role in guaranteeing stability in Afghanistan once NATO departs. The US drawdown, Indians warn, should facilitate rather than undermine that stability. Chaos in Southwest Asia, they add, will inevitably limit the attention New Delhi can give to Asia farther east.

Indian defense hawks fear the US shift to Asia for a different reason. This influential group worries about India remaining a security free-rider — ie, relying on other powers for basic security rather than committing the resources to guarantee Indian security and project power far from Indian shores. To the extent that a greater US role in the region encourages such shortsightedness in New Delhi, it is argued, the US emphasis on Asia simply reinforces dangerous tendencies already present in India.

Ultimately, of course, Indians must decide for themselves whether they are prepared to become an Asia-Pacific power or remain only a subregional actor. Clinton clearly expressed US preferences on this matter when, during a visit to Chennai last year, she forcefully stated that Washington supported India’s “look East” policy — and “we encourage India not just to look East, but to engage East and act East as well.”

In any event, for all the new US focus on Asia, declarations of intent and enunciations of strategic doctrines are not by themselves sufficient either to reorient global realities or to safeguard US interests. While it is not explicitly part of the administration’s pivot toward Asia, any serious US strategy for the 21st century must begin with domestic renewal: repairing a badly broken political system that appears incapable of making tough decisions; more closely aligning government revenues and expenditures; investing in economic infrastructure and human capital; and containing health care costs that, if left unchecked, will eventually bankrupt the country.

The American pivot is intended to reassure friends and warn competitors that the United States retains both the resolve and the capacity to exercise strong leadership in the Asia Pacific. But at the end of the day, American success or failure in the 21st century will be determined less by any pivot toward Asia than by how skillfully the United States addresses its domestic challenges. This requires both political will and significant economic resources. The same can be said for India: Success abroad will flow from, not substitute for, achievement at home.


Robert M. Hathaway directs the Asia Program at the Woodrow Wilson International Center for Scholars in Washington, DC.

China and India: moving beyond the boundary dispute?

In the 50 years since the 1962 Sino–Indian conflict over their disputed boundary, relations between the two countries have been radically transformed.

Bilateral trade is booming, while China and India are equally concerned over regional and global issues such as energy security, climate change, the reform of international organisations, and the situation in Afghanistan and Pakistan.

Yet these new interactions and common interests have created their own set of problems, including a mounting Indian trade deficit and competition for energy resources. Meanwhile, the persistence of the Sino–Indian boundary dispute ensures that relations remain beset by mistrust and a sense of rivalry.

Against this background of expanding engagement and growing suspicion at both regional and global levels, the 15th round of Sino-Indian Special Representatives (SR) Talks was held in New Delhi this January. These talks were the latest in a process of bilateral boundary negotiations that have been taking place for the last three decades. This round of talks was especially noteworthy because it was originally scheduled for November 2011 but had to be postponed because the Dalai Lama was addressing a Buddhist conclave in New Delhi at the same time. Later, in early January, the Chinese denied a visa to an Indian Air Force officer from Arunachal Pradesh who was part of an official Indian military delegation to China.

This kind of interaction would have previously resulted in prolonged acrimony between the two sides. But in a sign of growing maturity in bilateral ties, the fourth India-China Annual Defence Dialogue took place as scheduled in New Delhi in early December. The SR talks were also rescheduled without further ado, amid efforts to set a positive tone for the talks.

What explains this willingness on both sides to stick with the talks despite various problems or provocations? For India, the ruling government coalition cannot afford any foreign policy fiascos, as this would only feed severe domestic challenges to its legitimacy. Meanwhile, China has its own reasons to support the SR talks, such as problems with its neighbours over the South China Sea, the so-called return of the US to the Asia-Pacific and the upcoming Chinese leadership transition. China and India also perhaps realise they cannot afford mutual hostility at a time of global economic uncertainty. Instability around Afghanistan and Pakistan will also require at least some degree of coordination between the two sides, especially after the planned 2014 drawdown. So the global and regional context could be pushing China and India toward cooperation, given that, at present, neither side can make decisive moves by itself.

The boundary talks are now officially in the second stage of a three-step process involving agreements on principles, a framework and, finally, a boundary line. The latest SR talks resulted in a new Working Mechanism for Consultation and Coordination on India-China Border Affairs. This mechanism aims to ensure real-time contact between the two foreign ministries should either side trespass the Line of Actual Control (LAC). According to a recent Indian media report, over 500 Chinese intrusions were recorded in the last two years in all three sectors of the disputed boundary, with over 300 incursions in 2011 alone. But given the two sides disagree on the exact location of the LAC, such figures are not surprising, and incursions can be expected to continue.

Indian analysts have also raised doubts as to the usefulness of the proposed mechanism, questioning whether officials sitting in the two capitals will be able to react to a developing situation on the LAC promptly enough, and whether the new mechanism simply constitutes another layer of bureaucracy. But a leadership transition on the Chinese side slated for late 2012 means the next SR-level talks are unlikely to be held for well over a year, and with LAC incursions showing an upward trend, the new mechanism is perhaps a necessary one.

There is yet another possible interpretation: could the new mechanism signal that the SR-level talks have reached a dead end? Despite declarations that boundary talks will continue to be held, it is possible that it is this new border mechanism that will be used instead to deal with the consequences of the current boundary situation.
Meanwhile, official statements have shown the SRs already discuss a range of issues besides the boundary dispute, suggesting that China and India could use the SR-level talks to ensure greater coordination on issues of global concern — an important political goal for both sides. During the two-day talks, both countries also agreed to prepare a joint record on the progress made so far on the boundary issue. Beijing and New Delhi should ensure that any such record is freely available to the public.

This would be a significant step, indicating the two countries realise the importance of preparing their respective populations for the inevitable compromises any resolution of the boundary dispute will entail — including possible territorial concessions.

By Jabin T. Jacob Assistant Director at the Institute of Chinese Studies, New Delhi, and Assistant Editor at the China Report. He is currently a Visiting Research Fellow at the South Asia Programme, S. Rajaratnam School of International Studies, Nanyang Technological University.
This article was first published here as RSIS Commentary No. 29/2012.

Sunday, February 26, 2012

What the euro means for Asia

The euro should not exist. In a perfect world (run by economists) the euro would never have been created. Sadly, however, the world is not perfect — and it is run by politicians. The result is an entirely dysfunctional monetary union.

The Spanish economy has youth unemployment approaching 50 percent. The Greek economy is in its fourth consecutive year of negative GDP growth and is likely to embark on a fifth year of negative growth later in 2012. Euro area countries have to share a common interest rate and a common exchange rate with Germany — where unemployment is at a 20-year low and growth is positive if unspectacular around 2.5 percent. This is an unworkable situation — what Greece needs is very different from what Germany needs.

Will the euro break up? We must hope not. The consequences would be devastating (a weak country could see its economy halve in size on exit). The social unrest we have today is minor compared to what could take place if the euro were to fragment. As the euro was essentially a political creation, it must be political will that keeps it together — and it would be wrong to underestimate that political will.

So what will happen? Because so much rests on political decision making, the path for the euro area is hard to determine. But it seems highly likely that there will be a recession this year. How bad that recession is depends on what happens to the banking sector.

Euro area banks are increasingly reluctant to lend money — and with all the risks that they have been through over the last six months, this is hardly a surprise. Slower bank lending growth will hit some economies particularly hard.

Fiscal austerity is being urged by Germany. In the wake of France’s downgrade (and with the UK outside the euro and unlikely to ever join) it is Germany’s voice that is loudest in setting the euro policy agenda. When the slowing credit creation is combined with further fiscal austerity, the consequence is likely to be negative GDP growth. Not all countries will be negative, of course, but Italy, France and Spain all seem likely to see a drop in economic activity.

So why do the convulsions of the euro area matter to Asia? There are three reasons why Asian companies and investors need to follow the Euro drama.

1. The euro area is big

The euro bloc is the second-largest economy in the world. Over a third of APEC’s exports go to the euro bloc, making it the second-most important market for Asia after the United States. If the euro area is to have a recession — falling demand — followed by poor growth — slow demand — then Asia needs to adjust its growth model accordingly. Of course, Asian dependence on export led growth has faded in the wake of the global financial crisis, but there can be no complacency about exports to the euro area.

2. The euro area is globally integrated

Euro financial institutions have been involved in the global economy for decades. Global trade, in particular Asian trade, has been financed by euro area banks. As euro banks retrench and the importance of the home market is emphasized, Asia will have to look elsewhere for funding. That is not to say that alternative sources are impossible to find — clearly they are not. But it means that Asia must change.

Similarly, the euro area as a globally integrated market will have an impact on other economies in the world. The euro bloc is over 20 percent of US exports outside of the NAFTA trade bloc. The US may not be an export led economy, but there is potentially an impact from a euro area slowdown on US growth, which in turn has implications for Asia. In a globalized world economy with a complex web of trade and financial links, what happens in Athens can clearly have global ramifications.

3. The euro area is rich

The wealth of the euro area can be discovered in surprising places (Italy, for instance, is a wealthier country than Germany). Overall, the Euro area is wealthy. Thus the euro area has a role as an investor in the rest of the world. The political pressure on euro area banks and financial institutions to concentrate their investment efforts in their home markets is increasing. Popular hostility to overseas investment by multinational companies has also increased. Investment from the euro area into Asian stock markets, bonds and companies may well slow in the years ahead.

The euro area is an economic mess — but it is a mess that the rest of the world must pay attention to. The slow growth that will accompany euro area reform and the changing relationship between the euro area and the rest of the world will be critical to global economics. Now might be a good time to start taking an interest in euro politics.

By Paul Donovan, London managing director and deputy head for global economics at the UBS Investment Bank.

Saturday, February 25, 2012

Premature Applause for Burma

The Burmese government recently pardoned 651 prisoners, an act the international media greeted with fanfare and applause. It may appear absurd for a government to conduct such a mass amnesty, and the reaction of the media may seem even more out of place. But for Burma, absurdity has long been a staple. In 2008, for example, its fear of Western incursion saw it refuse much-needed aid in the aftermath of Cyclone Nargis, which killed tens of thousands of people.

In 2008, the government’s release of 9,002 prisoners included fewer than 10 political prisoners — a marginal concession unworthy of applause. This time around, the release of 299 political prisoners has finally tempered international criticism. The United States will review its sanctions following by-elections in Burma in April and the European Union has said it will ease its sanctions.

But the pressure from these sanctions and international criticism has already thrust Burma into the arms of Asia’s two emerging economic powerhouses: China and India. So with relative economic stability already secured, what might be President Thein Sein’s agenda behind this sudden mass pardon? Many point to a hunger for credibility.

The government lost its modicum of credibility during the 2007 Saffron Revolution when it violently responded to protesters and imprisoned thousands of activists, resulting in criticism and international sanctions across the board. But even though the government’s current game plan remains hazy, it definitely seems to be changing course. The moves to liberalize Burmese society have reinvigorated the opposition party, the National League for Democracy, and signaled a new willingness to open up and bargain with Europe and the United States.

But the desire for respect as a liberal reformer seems to conflict with the government’s self-preserving conservatism. NLD leader Aung San Suu Kyi, who enjoys free press coverage under the new reforms, has run into government red tape during her by-election campaign. In a recent example, she was denied the use of a football stadium in central Burma to hold a political rally. And while many of the monks who led the 2007 protests have since been released in the government’s effort to pursue liberalization, 48 are still imprisoned.

The government has also prevented a reordination ceremony for the released monks in Rangoon, accusing the monks of harboring a political agenda. Tellingly, the 2007 religious boycott of government officials is still active.

Another challenge is that the military continues to maintain the same power structures, making it difficult to enact reforms. Troops in the borderlands continue to attack civilians, deaf to President Thein Sein’s orders and peace talks, and do not exist within the same absolutist chain of command.

At this rate, will Burma be a fitting Asean chair in 2014? Suu Kyi is hopeful, stating: “We have to take risks. We have to take the courage to face a future that is really not known to us.” Foreign investors are also hopeful. Singapore has already signed a memorandum of understanding with Burma to deliver training for reforms in its financial and trade sectors, while Japan has promised economic support and has locked down trade agreements.

The atmosphere in Burma is optimistic and the media’s role is expanding, an important development for a liberalizing country. And while the number of Burmese who know how to use the Internet is still extremely small, the growing prevalence of cheap Internet cafes may change this.

Although it is important to applaud Burma’s progress, we must remember that in the midst of recent reforms, the Burmese government has managed to evade accountability for its past crimes against humanity. Countries such as the United States, which has vocally supported a United Nations inquiry into crimes against humanity in Burma, are now giving the government “a chance to demonstrate they have their own approach toward achieving [accountability].”

Conflict continues in the borderlands and released dissidents still have a criminal record. Pardoned journalist Sithu Zeya said he had been “released with a rope around [his] neck.” Whether the Burmese government seizes this opportunity to face up to its past misdeeds and begin the process toward national reconciliation remains to be seen.

East Asia Forum

By Sigourney Irvine graduate student in Japanese studies at the Australian National University. She has previously conducted research in Burma and along the Thai-Burmese border.

The Pacific Partnership for Peace

Keeping the peace in Asia means working together, even with those you would rather not

Economic security and national security are two sides of the same coin. The strength and well-being of a nation’s economy has a direct impact on the nation’s security.

We often talk about one without including the other, if only because discussions on the economy are typically restricted to banks, corporations, and international trade, and national security restricted to military force and foreign policy. Reality, of course, is less distinct.

As Asia, specifically East and Southeast Asia, rise in wealth and status, economic interests will undoubtedly set neighbor against neighbor. Forums such as the Asia-Pacific Economic Cooperation, Association of Southeast Asian Nations (ASEAN), and the East Asian Summit (EAS) will increasingly become important. But as these multilateral forums and summits primarily address economic concerns, only half of the issues will ever be discussed.

Voluntary organization

The Pacific Partnership for Peace, as I have called it, would act as a multinational security alliance. What the Trans-Pacific Partnership hopes to achieve in trade among member nations, the PPP would hope to achieve for security. The China’s rise in not only economic strength but military presence would alter the security and defense landscape in Asia. Of course China has always had a formidable military or at least one worth taking into consideration; but with its increased wealth and defense spending, China’s military capabilities will undoubtedly grow in the near future.

This scenario has been cause of great concern for many of its neighbors, many of whom who are wary of China’s rise and expanding influence. Countries like Vietnam and the Philippines are hesitant to accept China as a trusted friend, especially when one brings the South China Sea maritime and territorial disputes into the picture. The long and sometimes contentious history between Asian nations will certainly make any security alliance like PPP difficult to implement. However, circumstances and shared interests may make such an alliance necessary to maintain peace.

Hopes and aspirations

The goal of the PPP is not to ostracize any one party but to include all relevant parties in the discussion for peace and security. Working together, while potentially slow and messy, is a much better alternative than working against another. Confrontation via diplomacy is preferable to confrontation via force. What can be solved peacefully is beneficial to all parties involved, as opposed to the threat of military conflict. Idealistic? Maybe. But the failures of international organizations have not been due to overreach but the unwillingness of member states to act.

What the PPP aims to achieve is a security alliance where member states maintain an open dialogue. It is a forum where concerns can be shared and resolutions more easily reached than bringing matters to the UN or other large, less region specific and sensitive forums. But the PPP is not simply a forum for member states to air issues, otherwise the UN would suffice.

Practically, the PPP would work towards strengthening military and law enforcement ties between participant nations through improving logistics, standardizing training and equipment. This familiarization will hopefully bring member states closer together, improving military cooperation. You are less likely to fight your friends than your enemies, so it’s better to have friends than enemies.

The PPP would require member states to voluntarily submit some of their sovereignty in the hopes of preserving order and stability within the group. Where the UN fails in offering much and demanding little, the PPP will require its members to enter into agreement with each other—a social contract if you will—in the same way citizens voluntarily submit some of their rights to the government so as to live in an orderly society.

A social contract

Wars are typically seen as being fought over territory or on ideological grounds, but there is always an undercurrent of economic opportunism. Land conquered was not left idle. Instead it was populated and farmed, generating income for the people and the state. Even the Crusades evolved to become more than a war between Christians and Muslims, but the establishment and protection of trade routes and colonies.

It goes without saying that we would be better off solving our economic disputes at the tip of a pen than at the barrel of a rifle. War may appear to provide more absolute resolutions to disputes—the loser cannot argue when he or she is dead or severely marginalized—but such resolutions are hardly permanent. If wars permanently solved problems, then our planet would have been at peace long ago. The subject of war, however, is for another discussion.

If, however, the incentive to go to war is removed or drastically reduced, and the benefits of resolving economic disputes via diplomacy outweigh the financial and human cost of military engagements, countries would find themselves less willing to go to war. This is where I hope the PPP will shine. The Partnership will act as a social contract between members, acting to prohibit violent engagements without suffering swift and immediate consequences. Such consequences can be anything from fines and sanctions to military intervention.


Of course I can already hear arguments against the PPP. The most obvious being, “Why would any country surrender some of its sovereignty, and share its military strategies and technologies with neighbors who may, in the future, do it harm?”

Peace at what cost, indeed.

What I have proposed is merely an idea. Whether the PPP or anything similar will ever take off remains to be seen. However, peace is not an effortless endeavor requiring little sacrifice. But would it not be better if the sacrifices paid for peace was not in blood? The Asian continent has seen some of the bloodiest conflicts and wars in the 20th century—Imperial Japan and the Second World War, the Korean War, the Indochina Wars, China’s Cultural Revolution, Pol Pot and the Khmer Rouge, and a spate of border skirmishes and conflicts in between. Today, the fiery rhetoric and military display in the South China Sea doesn’t leave much to the imagination.

Perhaps the Pacific Partnership for Peace is necessary. Maybe it will not be called “PPP” but something else entirely. Peace demands sacrifice, but that sacrifice needn’t be in human lives. The easiest mistake we can make is to pretend we will not repeat history. History itself has shown us that people do not learn from their mistakes, but humanity has survived this long by at least adapting and overcoming obstacles. It is time we learn to adapt and overcome, and not be simply repeating what has been done before.

(Khanh Vu Duc is a Vietnamese Canadian lawyer in Ottawa, focusing on various areas of law. He researches on International Relations and International Law.)

Rafale deal reveals India’s political and strategic priorities

In August 2007, India began a tender process to acquire 126 medium-range, multi-role jet fighters to replace its ageing Mirage fleet.

In late January, the Indian government announced it had chosen the French consortium-led Dassault Rafale over the UK–German consortium-led Eurofighter Typhoon as the preferred bidder in the tender process. India’s decision to select the Rafale over the Typhoon was met with disbelief in the UK and Germany — and triumphalism in France. Beyond dividing European neighbours, the Indian government’s decision also provides a sharp insight into the country’s current political situation and its strategic priorities.

The contract for the fighters is estimated to be worth US$10.6 billion. Given the economic conditions across Europe, and particularly in the UK, securing the contract was seen as a national priority. The UK’s economy remains largely stagnant with growth of only 0.9 per cent in 2011, while unemployment increased to 8.4 per cent.

And in the final quarter of 2011, national GDP contracted by 0.2 per cent and manufacturing declined by 0.9 per cent. Moreover, the Conservative government has pledged to dramatically reduce defence spending, with severe impacts on the local defence industry. In 2011, the government ended development and production of the Nimrod reconnaissance aircraft and retired the Harrier fleet. Final assembly of the Typhoon takes place in the UK and over a third of the parts are sourced within the UK. So obtaining a contract to export the Typhoon to India would have provided a significant boost to the national economy, particularly in the hard-hit manufacturing and defence sectors.

The deal to produce the fighters also has significant political ramifications. In 2010, David Cameron led a highly publicised government and business delegation to India, and has often cited increased trade with India as a means of reinvigorating the national economy. In France, current polls predict defeat for President Sarkozy in the April presidential election after a downgrade in the country’s credit ratings, sluggish economic growth and persistently high unemployment. And in India, the national government — led by Manmohan Singh — has been embroiled in significant corruption scandals, including the sale of government telecommunications licences and procurement contracts related to the hosting of the 2010 Commonwealth Games.
It was this final consideration which appears to have determined the tender in favour of the Rafale. Throughout the bidding process, India’s Ministry of Defence emphasised that price would be the most important factor in its decision.

Immediately after the January announcement, it was widely reported that Dassault was preferred because it was the lowest bidder for the contract. Jane’s reported that the Rafale was quoted to be 15–17 per cent cheaper than the Typhoon, with the individual unit cost US$5 million less for the Rafale. While the Eurofighter consortium believes the Typhoon is the superior aircraft, the two fighters’ combat performance was deemed to be equivalent, with the Rafale having performed particularly well in the ground-attack role during NATO’s offensive in Libya.

Additionally, the Rafale would include complete and advanced radar and avionics capability. On balance, the decision appears to be on the merits of the tenders rather than any corrupt interference.

The decision to purchase the Rafale also provides insight into India’s strategic priorities. In April 2011, the Ministry of Defence rejected bids from US firms Lockheed and Boeing, which offered the F-16 Fighting Falcon and F/A-18 Hornet, respectively. The rejection was consistent with the Indian government’s refusal to sign arms-transfer agreements with the US, which meant recent aircraft sales have been made without avionics equipment, vital to fighter jet operations. The decision to choose the Rafale also follows a 2011 agreement with France to upgrade its remaining Mirage fighters and purchase French manufactured air-to-air missiles, and a 2005 order of six French-built Scorpene submarines. Together, these agreements have made France the second-largest supplier of defence materiel to India. Outside of military relations, the deal furthers the increasing bilateral ties between India and France. In 2008 the two countries agreed to a major nuclear deal whereby France accepted to enter into nuclear-energy collaboration with India and provide access to technologies and fuel. In the same year, the two leaders held bilateral visits, with a goal to double bilateral trade between 2010 and 2012.

India’s decision to choose the Rafale over the Typhoon surprised and disappointed many in the UK, but appears to have been made on the merits of each tender. Moreover, the decision to preference a French bid is consistent with India’s history of non-alignment and a strengthening bilateral relationship between the two countries.

By James Boyers completed an Honours degree, majoring in political science, at the Australian National University in 2011. He is currently interning with a public-affairs organisation in London. East Asia Forum

Friday, February 24, 2012

Hong Kong and the Value of a Free Press

The territory’s chief executive election goes off the rails as China watches in dismay

Only four months ago Hong Kong’s chief executive election looked a neat circus act. Two dancing bears, Henry Tang and CY Leung, enter the ring and begin their routines.

The two check regularly with the ringmaster for approval. A third bear, Albert Ho, untrained but securely chained, is allowed in to add drama. The audience knows the story. The act is predictable but vaguely entertaining, like familiar Cantonese opera. The hero known by all beforehand, will emerge victorious from the noise and distraction.

If not for Hong Kong’s raucous, unruly press, the circus would have played to script. It was not to be. The editors took a keen interest in the candidates who wished to rule Hong Kong. They searched their past and present for clues to who they really are, what drives them to seek such power, who is behind them and why.

That obviously has posed several problems for China’s leaders, who thought they had set up an elaborate “election” process that would ensure that their 1,200 electors would deliver the leader that Beijing wanted. But a free press, which China abhors, has put paid to the scheme.

Tang: women and wine cellars

The Chinese-language daily Ming Pao first disclosed the illegal construction beneath candidate Tang’s twin mansions in Kowloon Tong. Tang was the administration’s second-most senior officer when the government initiated a long-overdue clampdown on unauthorized structures to property. Chief executive Donald Tsang asked his team to make sure they were clean on this. Henry apparently decided not to reveal his underground secret.

It now appears Tang may have submitted false building plans for approval, omitting the grand basement complex below his swimming pool. He would have required an architect to sign off on the planning submissions. There is a trail of professional breach of code and trust. It was fraud.

Tang’s pattern of response to misdemeanors has been to deny wrongdoing, then fudge the issue and when caught, find a scapegoat, even his wife. Then become contrite, ask for a second chance and promise good behavior, but vote for him please.

Even more serious than his extramarital affairs and illegal construction work was his clumsy attempt to pin the 2003 Harbour Fest fiasco on civil servant Mike Rowse. Tang asked for minutes of meetings to be deleted which were material to any inquiry. The government’s internal inquiry in 2004 pinned the blame on Rowse and docked a month of his salary following its disciplinary process. That backfired when Rowse sought a judicial review which found for him in 2008.

Tang chaired the Economic Relaunch Strategy Group set up to revive the economy after the SARS scare in 2003. The Hong Kong government had underwritten HK$100 million for the Harbor Fest program whose main organizer was the American Chamber of Commerce. That had to be paid out in full when the program overran its HK$1 billion budget by HK$13.3 million.

The “Accountability System” which Tung Chee-hwa, the first chief executive, put into place to justify political appointments, was nowhere to be seen as Tang and his boss, Chief Executive Donald Tsang, evaded responsibility.

Tsang junkets with oligarchs

Then, over the weekend, The Sun, a free tabloid of the Oriental Daily Group, caught Tsang wining, dining and luxury yachting with tycoons and mobster bosses in Macau. Tsang staged a homely interview with RTHK for prime-time news channels, portraying himself as a humble civil servant on a much-needed break with friends. He denied being a luxury private plane and yacht junketeer, enjoying the high life with tycoons and gambling godfathers, as the territory’s press would have him.

The South China Morning Post front paged drawings of the three floors of Donald’s luxury complex in Shenzen across the border where he says he will retire when his term ends in June. A local architect commenting on the plans in the report, observed that a 300sq ft garden seems to have been added after the building plans were approved by the authorities - which in HK would be regarded an illegal structure.

Independent press a nuisance

Both Tang and Tsang would have dearly loved a situation where media know their place and are afraid of political strongmen, where editors would self-censor or can be fired. Where publishers can be instructed to suppress information. Where newspapers can be licensed and their right to publish cancelled on edict.

There is little else to check the abuse of the oligarchs, their collaborators in government and ideologues eager to turf out class enemies and establish a people’s dictatorship.

Hong Kong needs to be wary of the next chief executive resurrecting the discarded Article 23 Security legislation which seeks to curb the freedoms of press, assembly, protest and distribution of information. And of legislators who will rubber stamp it. Once such a bad law is allowed onto the Statutes, it will be near impossible to get rid of it.

More CE hopefuls muddy the waters

Regina Ip, chairwoman of the New People’s Party and Tsang Yok-sing, president of the Legislative Council, are now in play for the chief executive’s job as well. It is obvious to everybody but himself that Henry Tang is a non-starter. The oligarchs are terrified of CY Leung. Beijing is ambivalent.

Regina Ip was promoter of the Article 23 Security Bill which 500,000 Hong Kong residents marched against in 2003, forcing her resignation as security head. Tsang Yok-sing reacted badly after the June 1989 Tienanmen massacre of students by PLA troops. He temporarily lost faith in Beijing.

The Hong-Macau Affairs Office, ringmaster of the circus, is stumped. Nominations close Feb. 29 and the 1,200 ‘small circle’ electors have to cast their votes on Mar. 25. Hong Kong may by default get a chief executive not even the power-brokers want. Asia Sentinel

An assertive China rattles the region

Since the mid 1990s China has pursued a predominantly cautious approach to East Asia: it normalised relations with virtually all its neighbours, joined the region’s multilateral institutions and generally got on with being an ordinary member of Asia’s international society.

During this time, China’s approach largely conformed with Deng Xiaoping’s dictum to calmly bide one’s time and carefully hide one’s power and ambition. But since late 2009 China’s approach to its regional relations has undoubtedly become more assertive.

In particular, Beijing unleashed an unusually fiery denunciation of American arms sales to Taiwan in early 2010 and displayed a distinctly ambivalent attitude to the sinking of South Korea’s Cheonan warship (suspected to have been perpetrated by North Korea) around the same time. Equally indicative of China’s new approach to regional relations was the much higher strategic priority it placed on the South China Sea. But this new assertiveness was nowhere more evident than in China’s reaction to North Korea’s shelling of Yeonpyeong Island — which resulted in the deaths of four South Koreans including two civilians.

Where in the past the premium was on building good relations with its neighbours, avoiding confrontation and investing in regional trust, in the last two years China has acted in accordance with its key strategic interests. As such, some analysts feel it has made a strategic blunder. They argue that the country has overplayed its hand and undone years of careful diplomatic work, and that Asian powers, which had hitherto been uncertain about China, have had their worst fears confirmed. Perhaps most importantly, this line of commentary suggests that in light of the Obama administration’s emphasis on Asia, China seems inadvertently to have enhanced America’s position. This interpretation sees Chinese assertiveness as a reflection of the broader shortcomings of China’s strategic policy infrastructure.

Consequently, East Asia — and in particular America’s strategic partners — should be reassured by recent events because they imply that American primacy will continue to deliver regional stability for many years to come.

This is the wrong conclusion to draw from China’s recent assertiveness. It is clear that China’s ability to provide regional leadership has been dented by these recent events, and that its capacity to present itself as an honest broker on the Korean Peninsula is similarly damaged. But it does not follow either that China will revert to the cautious policies of the past, or that American primacy is the key to regional stability in the future. Even as allies recognise the ongoing need for American presence in the region, they are concerned that the US appears unable to prevent future destabilising actions.

These developments are not simply a blip in China’s East Asian strategy — they are an indicator of what the region’s future will look like if it continues on its current path. Points of strategic difference are increasingly being militarised and this is creating a feedback loop whereby further militarisation is regarded as necessary precisely because of these frictions. Equally, existing multilateral mechanisms are plainly not up to the task of managing the overlapping interests of the region’s states. Recent events also show that the major powers increasingly see strategic interaction in zero-sum terms. In key areas of interest there seems little prospect of China’s much touted ‘win-win approach’ actually winning the day. Many in the region feel that US strategic influence has been reduced and that non-allied states can resist American preferences more easily than in the past.

The events of the past 18–24 months thus mark the beginning of a period that is likely to be characterised by frictions and conflict borne from intersecting lines of interest, growing military capabilities and a regional tendency to conduct strategic policy in a militarised fashion.

So what can be done in the face of this emerging order? First, Asian states — particularly China and the US — need to develop crisis-management procedures similar to those used in the Cold War in order to ensure points of strategic friction do not spiral out of control. Second, Asian powers need to work to develop the foundations of a new regional order in which the many shared interests of Asian states can be realised. Both the existing institutions and dominant attitudes of key powers are currently preventing this from occurring. Third, the US and its allies need to recognise that China cannot possibly be content with its regional lot if American predominance remains in its current form. This does not necessarily imply a strategic retreat by the US, nor does it require caving in to every Chinese demand.

But it does mean coming to terms with the fact that America will not be able to pursue an Asian policy in which it is forever the dominant player
China’s recent behaviour could turn out to be beneficial to all if strategic policy makers on both sides of the Pacific can learn the right lessons and take steps toward a more stable regional order. But if both China and the US continue on their current paths, then East Asia is likely to be manifestly worse off.

By Nick Bisley Professor of International Relations at La Trobe University and a Visiting Fellow at the East-West Center, Washington, DC.
A version of this article was first published here in Global Asia.

Singapore's Lee Family and Nepotism

A blogger feels the wrath of the ruling family

Singapore’s ruling Lee family, apparently angered by a comment made on a Singapore-based blog Temasek Review Emeritus, has come down hard, with Prime Minister Lee Hsien Loong, his wife, Ho Ching, his brother Lee Hsien Yang, all demanding apologies for intimating that they have filled top government positions with family members.

Lee Kuan Yew became prime minister of Singapore in 1959 and ran the place until 1990, when he stepped down to become a senior minister and then was appointed minister mentor by his son, with many of his critics alleging he has continued to run the island republic from behind the scenes. After an interregnum from 1990 to 2004 when Goh Chok Tong held the premiership, Lee Hsien Loong took over as prime minister and has led the People’s Action Party government since.

Among other Lee family members who have held high positions in government are the elder Lee’s daughter, Lee Wee Ling, who is director of the National Neurological Institute. His other son, Lee Hsien Yang, was chief executive officer of Singapore Telecommunications from May 1995 until April 2007. He was appointed the chairman of the Civil Aviation Authority of Singapore in 2009.

Ho Ching, Hsien Loong’s wife, has run Temasek Holdings, the sovereign wealth fund controlled by the Singapore Ministry of Finance, since 2002 after serving as president and chief executive officer of the government-owned Singapore Technologies. Although she has been criticized for some disastrous investments, including one in former Thai Prime Minister Thaksin Shinawatra’s Shin Corp that Fortune Magazine called a "spectacular misjudgment" as well as several others in flagging western investment banks, she has never been asked to step down.

TR Emeritus, as the blog is known, hastily took down the article, which is no longer available. Apparently written by a contributor or in response to another article, it has been described as pointing out that the elder Lee’s appointing Hsien Loong prime minister and Hsien Loong appointing his wife to head Temasek Holdings “was nothing short of ‘cronyism’ and nepotism.”

The blog has posted a full apology, saying, among other things, that “we recognize that the article meant or was understood to mean that Prime Minister Lee Hsien Loong had secured, or was instrumental in securing, the appointment of his wife, Mdm Ho Ching, as the Chief Executive Officer of Temasek Holdings (Private) Limited for nepotistic motives. We admit and acknowledge that this allegation is false and completely without foundation. We unreservedly apologize to Prime Minister Lee Hsien Loong for the distress and embarrassment caused to him by this allegation.”

Richard Wan, representing TR Emeritus, was unreachable. He posted a statement on the website saying he would no longer respond to questions from the press. He also asked TRE readers to “refrain from making such comments about Mdm Ho Ching with regard to her appointment in Temasek Holdings (Private) Limited. Any such allegations put up by anyone on TRE will be deleted.”

That may not have been enough. On Feb. 17, the government-controlled New Paper reported the parliament had pushed through an amendment to the Evidence Act that gives the courts the discretion to admit deleted online posts as evidence. The amendment, according to the paper, gives the courts “the discretion to consider relevant evidence by widening the admissibility of several categories. Among them are changes to the computer output evidence - which means computer printouts and sound and video recordings can be treated just like other evidence in Singapore courts.”

The paper quoted attorney Suppiah Thangaveloo of the law firm Thanga & Co, as saying the amendment would "make it easier" for the law to go after cyber felons.

Challenging on the Lee family in Singapore is a formidable undertaking. By calculation of the US-based attorney and former Singaporean dissident Gopalan Nair – who was jailed for it on a visit to Singapore -- the Lees have set a world record in filing defamation suits and a second one by never losing one, although in Singapore’s notoriously pliable courts when it comes to government or Lee family actions. The family has filed charges against virtually every major publication in Asia, including the Economist, Time Magazine, the Financial Times, the International Herald Tribune, the Wall Street Journal (Asia) and its predecessor, the Asian Wall Street Journal, the now-defunct Far Eastern Economic Review and AsiaWeek, among many others. As near as can be determined, the family has never attempted to sue outside of Singapore.

In the only case on record where the family ventured out to other courts, Lee Wei Ling, the head of the Neurological Institute, attempted to bring charges in London against Simon Shorvon, the former principal investigator of a medical research project in Singapore, on allegations of professional misconduct. The London charges followed a long series of actions against Shorvon in Singapore. Witnesses told the British High Court in England that the alleged offenses by Shorvon by the Singaporeans were so minor that they weren’t worth bothering with.
Asia Sentinel

Thursday, February 23, 2012

Uncle Sam No Imam

Two years ago, John O. Brennan, US President Barack Obama’s top adviser on counterterrorism, spoke to members of a Muslim student group in a packed auditorium at the law school where I teach, offering his audience the White House’s position about what jihad does and does not mean.

Later that year, a commentator, Haroon Moghul, drew attention to efforts by American officials to build global networks of “acceptable” Muslim leaders.

In each of these cases, counterterrorism has put officials on a collision course with Islamic thought and practice, and, perhaps more dangerously, with the Constitution. The First Amendment prohibits government action “respecting an establishment of religion.”

From a national security point of view, challenging the ideas that underpin radical Islam makes sense. Counterterrorism is ultimately about ideas; why shouldn’t officials try to marginalize the theological teachings cited by violent terrorists?

The problem is that when American officials intervene in Islamic teachings, they create tensions, both legal and strategic.

The strategic problem is easier to see: Is the government a credible authority on Islamic interpretation? Based on the results of comparable efforts in Britain, the answer is a resounding no. Young Muslim men in the thrall of radical teachings will not embrace a more pacific theology because the FBI tells them to, any more than Catholic bishops would have yielded to Obama’s plan to mandate coverage of contraceptives at Catholic hospitals if he had invoked canon law to defend his position.

Then there’s the legal problem. Constitutionally speaking, a government official who sets out to determine what a contested concept within Islam means, or which imams have the right to speak for a particular community, would be in danger of transgressing one of the cardinal tenets of the Establishment Clause: the secular state shall not become an arbiter of religious content.

The framers of the First Amendment, who were intimately aware of the complex relationships among the British monarchy, the Church of England and dissenting churches within that realm, understood that a government might seek to control or co-opt a church.

If that concern seems hypothetical, it is because for a generation cases on the Establishment Clause that have reached the Supreme Court have focused not on state encroachments on religion but on religious encroachments on the state. (Think of prayer in classrooms.)

But whether the state might try to dominate religion itself was an important concern for Jefferson and Madison. And the Supreme Court reaffirmed this core dimension of the Establishment Clause last month when it unanimously recognized the validity of the so-called ministerial exception to federal anti-discrimination laws. The court held that denying a church the ability to fire a Lutheran minister, even on grounds that would have been deemed illegal in a lay workplace, amounted to allowing the state to control the church.

Beyond playing the role of theologian through official pronouncements on contested concepts like jihad, the government inappropriately serves as a missionary when it looks to convert would-be radicals and backs up its efforts with taxpayer-financed outreach.

If the government is increasingly in danger of establishing an “official Islam,” are there any good alternatives? Fortunately, yes.

Countering radical religious ideology is on much more solid constitutional and strategic footing if the heavy lifting is done not by the government but by grass-roots organizations that are grounded in civil society or in religious communities. The government must not be heavily and directly involved.

The relationship between the national security imperative and a great religious civilization is inevitably fraught. Reconciling the two won’t be achieved by allowing officials to become more active in espousing theological alternatives to radical Islam, or in training law-enforcement and intelligence professionals with hateful caricatures of Islam. The government’s efforts ought to be guided by the wisdom of the First Amendment and the values that it enshrines.

The New York Times

By Samuel J. Rascoff, director of intelligence analysis at the New York Police Department from 2006 to 2008, is an associate professor of law at New York University.

Wednesday, February 22, 2012

Starvation Deaths Shock Japan

A once-wealthy country's safety net crumbles

Japan may be one of the largest economies in the world but it is quickly becoming a country divided into rich and poor. Police believe three people found in their Saitama apartment, yesterday, died of starvation- a sad fate that highlights the worsening state of Japan’s economy.

Extreme poverty and starvation is becoming a frighteningly common occurrence in Japan despite the perception of a tidy country that takes care of its own elderly. In the last 10 years, more than 700 people have died from starvation, many of them elderly individuals, disconnected from their families. In July, the Welfare Ministry released figures showing that the country’s poverty rate had hit a record high of 16 percent in 2009, up 0.3 percent from 2006.

The Foreign Policy Association reported that national disposable income in 2009 was 2.24 million yen ($28,000), meaning 16 percent of the Japanese population earned less than 1.12 million yen ($14,000) a year. Purchasing power in Japan is 25.43 percent lower than in the US, so in relative dollars, the relative poverty level is $10,493.80, the FPA reported. The government estimates that over 1.5 million people are living below the poverty line, however this number is expected to have increased since the Great East Japan Earthquake, last year.

Although the country has a comparatively high percentage of its GDP dedicated to public welfare spending (16.9 per cent compared to 14.8 per cent in the US), only 0.2 per cent of the GDP goes towards public assistance to the poor. That’s less than half of the US at 0.5 per cent. The number of young without steady employment, is expected to reach 10 million by 2014, up from 800,000 in 1987, and 2 million in 2002.

“The life-time employment practices that Japan was once famous for have all but disappeared, and there are fewer and fewer entry-level positions,” the FPA report continued. This makes it harder for young people to afford homes or start families, which pushes down Japan’s birth rate even lower. Added to this is Japan’s seniors get the best social welfare benefits in the world. Given that the Japanese workforce is expected to shrink to 51.8 percent by 2050, this top-heavy welfare system will crush the economy and push many more into poverty unless Japan makes desperately needed economic reforms.”

The three adults, believed to be a family of two parents in their 60s and son in his 30s, appear to have died more than two months ago. The building’s landlord discovered them when he came to collect the rent. The family was in fact 6 months behind in their rent and had the gas and electricity cut off to their small, first floor apartment.

Inside, police found the bodies lying on futons without any external injuries. The apartment had been locked and was described by police as “tidy” suggesting there had been no struggle or fowl play. A handful of one yen coins were found inside but there was no food apart from some boiled sweets. NHK interviewed a neighbor who said she hadn’t seen the family since November last year. “If we had known sooner [that the family were in trouble] maybe we could have done something to help,” the neighbor said. Another neighbor claimed the wife of the family asked if she could borrow some money to cover their rent. When the neighbor advised her to speak to welfare officials she reportedly refused.

Saitama Municipal Government said the family did not register for any welfare benefits. If they had the family would have been eligible for assistance and nursing services.

Traditionally, aging parents lived with their children but a survey of Japanese high school students last year showed that only 15.7 per cent planning on caring for the parents in their old age.

Single, older men in their mid to late 50s who are unemployed or have been made redundant also make up a high proportion of those who die of starvation.

In many of these cases, the individuals have applied for welfare benefits but have been refused by the government. Without wanting to shame themselves by asking for money from family or friends, they suffer quietly in tumbledown shacks.

In 2007, the New York Times reported the story of three men who died of starvation in Kitakyushu – a city who described their welfare system as a “model”. One kept a diary of his final days with his final entry reading: “My belly’s empty … I want to eat a rice ball. I haven’t eaten rice in 25 days.’

(Anna Watanabe blogs at Rakugoka ( for Asian Correspondent ( ).)

The Rape of Sarawak

Environmental organization says Malaysia is destroying its rainforest, particularly in Sarawak, at a frantic pace

A Netherlands-based environmental organization, Wetlands International, is charging in a new report that Malaysia is destroying its tropical rainforest at a rate three times faster than the rest of Asia combined, particularly in the East Malaysian state of Sarawak, with the expectation that “expansion of oil palm plantations may lead to the complete loss of these vast, unique forests by the end of this decade.”

Sarawak’s chief minister, Abdul Taib Mahmud, has come in for international criticism on charges that he has sold off vast tracts of the state to international loggers to enrich his family. The Taib family has interests believed to be in the billions in Canada, the United States, Australia and the United Kingdom as well as in scores of companies in Malaysia, according to The Sarawak Report, a UK-based NGO.

Malaysia has been largely shielded from criticism by the world’s environmental organizations, who have concentrated their firepower on Indonesia. However according to the report, “Official government figures state that only 8 to -13 percent of Malaysia’s palm oil plantations were situated on carbon rich peat soils; 20 percent for Sarawak. Two studies; one conducted by global environmental organization Wetlands International and one by the remote sensing institute Sarvision show that a rapidly increasing proportion of Malaysian palm oil is produced on peat lands, leading to deforestation and degradation of organic soils. Wetlands International and Sarvision used satellite images combined with existing data and field surveys to complete the picture.

The new studies conclude that 20 percent of all Malaysian palm oil is produced on drained peat lands, with 44 percent produced on drained peat lands in Sarawak. “For recently established plantations, the percentage on forested peat swamps is even higher. “

According to the Wetlands International report, Malaysia is responsible for 45 percent of global palm oil production. The new plantations in Malaysia are almost all established in the State of Sarawak, the report indicated. Two thirds of the state’s peat lands were until recently covered by thick, biodiversity-rich rainforest.

“Between 2005-2010 almost 353,000 hectares of the 1 million hectare peat swamp forests were opened up at high speed; largely for palm oil production,” the report notes. “In just five years’ time, almost 10 percent of all Sarawak’s forests and 33 percent of the peat swamp forests have been cleared. Of this, 65 percent was for conversion to palm oil production.”

Marcel Silvius, the program head of Wetlands International, said that as the rainforest has fallen to the axe for timber extraction, the timber companies are replanting the area with oil palm, “completing the annihilation of Sarawak’s peat swamp forests.”

Malaysia has never provided verifiable information on land use in relation to soil type or deforestation, the report notes.

Niels Wielaard of Sarvision said the new report “is the first time that detailed and verified figures on deforestation and peat swamp conversion have come available for Sarawak. Free availability of satellite imagery and tools such as Google Earth are revolutionizing forest monitoring.”

Loss of unique species

Malaysia’s peat swamp forests, the report notes, are home to many endangered and endemic species and subspecies including enigmatic species such as the Borneo Pygmy elephant, the Sumatran Rhino, the Bornean Clouded Leopard, the Malayan Tapir and the Proboscis Monkey as well as lesser known endangered species such as the Storm’s Stork, False Gharial and the Painted terrapin

“The peat swamp forests of north Borneo represent a unique vegetation type characterized by the Alan tree as well as the valuable but endangered timber species,” the report notes. “This forest type has been wiped out in Sarawak and the only remaining examples now remain in Brunei. The peat swamp forests have not been intensively studied, and many undiscovered species are feared to have been lost.

Malaysia’s original peat land forests totaled some 2.5 million ha. Conversion and drainage of these natural carbon stores has causes rapid decomposition and subsidence of the organic soil leading to huge carbon dioxide emissions, lasting for decades, the report notes.

“Very cautious and conservative estimates put greenhouse gas emissions from palm oil plantations on peat at 40 metric tons of CO2 per hectare per year, the report says. “Using this very conservative estimation, the 510,000 ha of peat lands in Malaysia drained for palm oil production thus cause the release of some 20 million tons of/CO2 annually. However, twice this amount is more likely.

The rapid expansion of oil palm plantations is a result of the global increase in demand for vegetable oil for food and for a large part also for biofuels.

“European targets to increase the use of biodiesel are causing a rapid increase of the global demands for vegetable oil crops. This growth in demand leads to a massive (indirect) land use change; especially in Southeast Asia, including in carbon rich peat swamp forests. The conversion of these areas increases greenhouse gas emissions and thus fuels climate change. Biodiesel use that does not prevent these indirect land use impacts is far from sustainable and may cause much larger emissions than the use of fossil fuel diesels.”

Call for action

“The production of palm oil is welcome only if expansion can be done in a sustainable way. Wetlands International calls for a complete ban of palm oil production on peat lands and for a halt on further conversion of natural areas for this crop. Instead development should focus on the millions of hectares of degraded (non-peat) areas in South-east Asia. Companies that use palm oil should demand for this. In addition, Wetlands International calls for an end to incentives for biofuels in the EU that result in direct and indirect land use change like we now see in Malaysia.” Asia Sentinel

Tuesday, February 21, 2012

INTERNATIONAL CRISIS GROUP - NEW BRIEFING Timor-Leste’s Elections: Leaving Behind a Violent Past?

Dili/Jakarta/Brussels, 21 February 2012: Timor-Leste’s upcoming presidential and parliamentary elections will be an important step in consolidating the relative stability the country has enjoyed since recovering from the 2006 crisis, but a number of security risks deserve continued attention.

Timor-Leste’s Elections: Leaving Behind a Violent Past?, the latest briefing from the International Crisis Group, provides a snapshot political briefing in advance of presidential polls to be held on 17 March and parliamentary elections due in late June, and examines potential security risks.

The breadth of the competition and the lack of any reliable polling mean predicting the outcome of either poll is difficult, but the real contest is between a handful of familiar names. In the parliamentary elections, the prime minister’s party CNRT and the opposition Fretilin are expected to out-poll the smaller parties by a large margin. Each of them is hoping to win a majority, but a coalition government led by one of them is more likely.

The country is markedly more peaceful than when general elections were last conducted in 2007, and relations among the small circle of political leaders are friendlier, keeping political tensions largely tempered. But many of the root causes of fragility persist: weak law enforcement, gang and martial arts group violence, and a growing number of unemployed youth. No one is sure how closely these issues will feed into political rivalry, but any deliberate manipulation of these frustrations has the potential to be incendiary. The unrealistic expectations of many of the 24 parties competing and the high stakes of the political competition may also stoke tensions.

“The greatest risk is the near-complete impunity for political violence”, says Cillian Nolan, Crisis Group’s South East Asia Analyst. “The candidates should make it clear now that such crimes will no longer be forgiven”.

A number of security risks deserve enhanced attention. While relations within the crowded security sector have improved, smooth cooperation is not assured. Public relations should be a key focus of the planned joint operations centre for election security response: rumours have stoked violence in the past and a quick-footed response by police in combating misinformation could help keep the peace. Careful policing will be required to respond to fears that martial arts group violence could escalate during polls, but civil society has a role to play in monitoring any use of such groups for intimidation.

The UN also has a role to play. Beyond supporting national authorities in the logistical administration of the second national polls since independence, the UN mission should be ready to take both private and public steps in response to any serious violations of electoral regulations and codes of conduct.

In the long term, several steps could be taken to reduce the pressures that build up around polls. These include staggering presidential and parliamentary polls in different years, and introducing effective pre-election opinion polling to counter the unrealistic expectations that many parties encourage, and quick counts to bolster faith in the results.

“Whatever government is inaugurated in the second half of the year, it will face difficult work trying to deliver on ambitious plans and expectations for economic development in what remains an impoverished country with a very large bank account”, says Jim Della-Giacoma, Crisis Group’s South East Asia Project Director. “Without significant progress in areas such as job creation and strengthening of the rule of law, the prospects for elections in 2017 may not look as bright”.

Monday, February 20, 2012

In Need of Oil and Facing State Elections, India Walks a Delicate Tightrope on Iran

As Iran’s global isolation grows amid reports that it’s begun operating a new generation of centrifuges at its main uranium-enrichment facility at Natanz, India is the last major power adamantly maintaining close ties with Tehran.

The West wants India to join Western trade sanctions against Iran and accept its global responsibilities. But India’s resistance to the pressure underlines how deeply intertwined the country’s foreign policy is with its domestic concerns. Loss of Iranian oil and the ability to provide subsidized fuel could affect the electoral outcome for the ruling coalition. The bomb blast in New Delhi last week targeting an Israeli diplomat, which Tel Aviv was quick to blame on Tehran and its proxies, has posed a further challenge to India’s policy makers.

Meanwhile, Iran has pre-empted the West before the latest round of sanctions, due to start this summer, by threatening to block shipments of crude oil to six European nations. And on Wednesday, Iran’s president announced intentions to share nuclear technology abroad.

Publicly, India maintains a brave face. Yet there are growing concerns about Iranian actions making India a battleground for the proxy war between Iran on the one hand and Israel and the West on the other. India too is eager to maintain ties with Iran, as both share concern about preventing a Taliban takeover of Afghanistan after the forthcoming US withdrawal.

The Indian commerce minister was quick to underline that trade between New Delhi and Tehran was unlikely to be affected by recent events. A huge trade delegation is slated to go to Tehran in March to explore export opportunities, which according to some estimates are worth more than $10 billion annually.

So far, India’s response has been low key, but New Delhi is readying itself to tackle the challenge of growing Iranian isolation. Saudi Arabia has offered to make up for the Iranian oil shortfall. But India opposes the US and EU unilateral sanctions, particularly if Turkey blocks India’s use of an intermediary bank to make payments for $12 billion worth of Iranian annual crude exports. US policy makers have warned New Delhi that it would be subject to American sanctions if New Delhi is seen in any way trying to bail out Iran from its tough economic situation.

India imports 12 percent of its oil from Iran, its second-largest supplier after Saudi Arabia. India’s finance minister was merely reflecting on the intersection between domestic and foreign policy when he suggested that it’s impossible for India to “reduce the imports from Iran drastically” in light of a growing budget deficit and need to continue oil subsidies so as not to enrage citizens during a state election year.

India and the United States have begun to transform their ties, with the 2005 framework for the Indian-US civilian nuclear agreement, which accommodated India into the global nuclear order. Given the US obsession, Iran has become a litmus test that India is occasionally asked to pass to satisfy US policy makers: India has been asked to prove its loyalty to the United States by lining up behind Washington at the International Atomic Energy Agency on the question of Iran’s nuclear program.

The Bush administration stated that if India voted against the February 2006 US motion on Iran at the IAEA, Congress would likely not approve the Indian-US nuclear agreement. India finally voted with 26 other nations to refer Iran to the UN Security Council.

Still, many members of Congress continued to demand that Washington make the nuclear deal conditional on New Delhi’s ending all military relations with Tehran, a demand rejected by the Bush administration as it would have led the collapse of the nuclear deal.

At the same time, the Indian Left parties also developed a parallel obsession, making Iran an issue emblematic of India’s “strategic autonomy,” an attempt to coerce New Delhi into following an ideological, anti-American foreign policy.

These trends persist in New Delhi and Washington. Navigating the crosscurrents, India’s official position on the Iranian nuclear question has remained largely consistent. Although India maintains that Iran has the right to pursue civilian nuclear energy, it has insisted that Iran should clarify doubts raised by the IAEA regarding Iran’s compliance with the Nuclear Non-Proliferation Treaty.

India shares with the West the belief that Iranian nuclear ambitions would destabilize the Middle East. The Indian prime minister is on record suggesting that a nuclear Iran is not in India’s national interest. But New Delhi does not have the luxury of viewing Iranian nuclear ambitions only through the prism of Iran-Israel rivalry, a norm in the West. India, a country with sizable Sunni and Shia Muslim populations, must consider this issue from a wider perspective where the Iranian nuclear drive instigates Arab-Iran and Sunni-Shia rivalry.

For Tehran, its nuclear ambitions are as much a counter to a two-front encirclement of Shiites by Sunni Pakistan and Sunni Saudi Arabia as it is about ending Israel’s nuclear monopoly in the region.

The 2010 Saudi-Indian Riyadh Declaration asked Iran to “remove regional and international doubts about its nuclear weapons program.” India even endorsed the Arab call for a nuclear-weapons free Middle East — a proposal traditionally targeting Israel, but increasingly focused on Iran.

India has its own energy interests and would like to increase its presence in the Iranian energy sector. Given rapidly rising energy needs, New Delhi feels restless about its own marginalization in Iran.

Western sanctions over the years have led to an entrenchment of Chinese companies in the Iranian oil and gas sector with contracts worth up to $40 billion in recent years. Chinese companies bring much-needed foreign capital to Iran, and its oil trading companies are likely to be main beneficiaries of the Western embargo on Iranian oil exports.

Where Beijing’s economic engagement with Iran is growing, India’s presence is shrinking, as firms like Reliance Industries have, partially under Western pressure, withdrawn from Iran and others shelve investment plans.

India has enforced UN measures against Iran, often to the detriment of its energy investments. Yet China, as a permanent Security Council member, helps shape UN policy toward Iran and has been able to sustain its own energy business in the country with little trouble.

The strategic reality confronting New Delhi in the Middle East today is that India has significant interests to preserve in the Gulf. As tensions rise between Sunni Arab regimes and Iran, India’s larger stakes in the Arab world will continue to inhibit Indian–Iranian ties. At the same time, New Delhi’s outreach to Tehran remains circumscribed by the internal power struggle within Iran, growing tensions between Iran and Arab neighbors and Iran’s defiance of the global nuclear order.

Tehran’s purported role in a bomb attack on an Israeli Embassy vehicle in New Delhi and the use of India as a platform for such an attack would further intensify pressure on India to curtail its trade relationship with Iran.

Yet given the domestic political situation shaped by the coming elections and growing energy needs, and a looming void in Afghanistan after the US leaves, New Delhi isn’t in a position to jettison Tehran completely in the near future.


Harsh V. Pant teaches at King’s College London.