Monday, June 30, 2014

Aussie Foreign Mininster evokes the spectre of WWI in warning Asian territorial dispute could erupt

Foreign Minister Julie Bishop has evoked the spectre of the First World War in warning that tensions in Asia could erupt into catastrophic conflict unless the region heeds the lessons of history.

In a speech delivered on Monday night that darkens the tone considerably on Australia's public remarks about territorial disputes in Asia, Ms Bishop said the events of a century ago showed that things could "quickly spiral out of control".

Ms Bishop effectively compared the rising tensions in the South China and East China Seas, where Beijing is locked in increasingly combustible territorial disputes with neighbours such as Japan and Vietnam, to Europe in 1914.

Such a fraught environment could mean single events, mistakes and calculations are blown out of proportion and escalate into armed conflict, she told the Australian National University's Crawford Leadership conference.


While stressing she was "not drawing any direct parallels", Ms Bishop said it was "nevertheless useful to consider the consequences of a single event" - a reference to the assassination of the Archduke Franz Ferdinand in Sarajevo that sparked the First World War a century ago on Saturday.

"It is in this context that perhaps the most critical lesson from World War I is relevant – that isolated, single, random events can unleash forces that quickly spiral out of control," she said, according to speech notes her office distributed.

The First World War went on to kill 10 million people and last four years after leading nations failed to contain the fallout of the assassination.

While stressing the modern world was not doomed to repeat such mistakes, Ms Bishop warned: "It is those who forget history who are doomed to repeat it."

Vowing that Australia would be among nations that would "not sleepwalk into conflict" - another common historians' reference to the failings of leaders in 1914 - Ms Bishop said Australia would use "economic diplomacy" to reinforce globalisation and trade as a firewall against conflict.

Ms Bishop said that given the deep 21st Century economic integration of major countries along global supply chains, countries more than ever before stand to lose more than they gain through armed conflict. But she added that economies were closely enmeshed in the 20th Century as well, yet this did not "prevent irrational or mad decisions, and did not stop war".

 "We cannot take for granted that globalisation is, of itself, a bulwark against aggression and conflict."

She called on all countries in the region to show restraint and follow international law to avoid "miscalculation or a misjudgement".

She said that international forums such as the East Asia Summit could help reduce tensions.

She went on to say that economic inequality also had to be addressed. Most of the world's poor live in middle income countries, which exacerbates wealth differences, increasing tensions.

"There is an urgent need to ensure the benefits of global and national growth reach those poor people," she said. "Severe imbalances in wealth distribution have led to instability as those without rise up to demand a fair share of the economic spoils. The current conflicts in the Middle East are based on a myriad of complex issues, but inequality is a common feature."

This meant reducing tax avoidance and ending corruption.

Read more:

Graft-busting in Vietnam

GOOD luck to those who won’t bribe in Vietnam: cash-stuffed envelopes are a mainstay of the country’s economy. Some foreigners use them to kickstart business ventures. Many doctors, teachers and traffic policemen expect them. Online, speculation swirls among ordinary Vietnamese about corruption at the highest levels of government.

The ruling Communist Party knows how bad this looks. Since 2005 it has rolled out one anti-graft campaign after another. Few have hit their mark. Yet, in recent months, its anti-corruption drive seems to have stepped up a gear. Last December two former officials at Vinalines, a state-owned shipping firm, were sentenced to death for embezzlement. This spring Nguyen Duc Kien, a co-founder of Asia Commercial Bank, one of Vietnam’s largest, was sentenced to 30 years in prison for fraud and tax evasion. And officials at the state-run Vietnam Railways were detained on allegations of accepting $780,000 in bribes from a Japanese firm. (Japan, which is Vietnam’s largest donor, announced this month that it would suspend development aid until the government cleans up its act.)

A state-dominated economy can easily open the way for corruption. That is partly why the prime minister, Nguyen Tan Dung, is urging the privatisation of hundreds of state-owned enterprises (SOEs). The optimistic view is that asset sales by SOEs, along with more graft-busting, may prove a tonic for its sluggish economy.

But for all Mr Dung's talk of economic reform, business people expect foot-dragging. Banks are wobbly, burdened with huge quantities of bad loans. And SOEs may be reluctant to go public for fear of exposing how little they are actually worth.

The economy, meanwhile, is sluggish. An annual business survey, sponsored by USAID, declared that confidence among foreign and domestic businesses in Vietnam sank to “historic lows” last year—well before an unusual spasm of rioting ripped through some foreign-owned factories in May. The government reported on June 27th that the economy grew by 5.18% in the first half of 2014, a slight rise from the same period last year. But that is hardly good enough for a developing country of 90m with a young, restless workforce.

Busting graft should now be more of a priority than ever. Yet Jairo Acuña-Alfaro, policy advisor for public administration reform at the United Nations Development Programme, says that Vietnam's anti-graft campaigns over the past decade have been largely ineffective. The vast majority of corruption trials ended with slaps on wrists in the form of warnings or suspended sentences.

The recent tougher sentences are anomalies. But some spy political manoeuverings rather than a fresh burst of reform. Mr Kien, a flamboyant tycoon and football-club owner, is thought to be a close associate of Mr Dung, who may have his eye on another high-level party position after his prime ministerial term ends in 2016. Mr Kien’s arrest in 2012 triggered a run on deposits at his bank and rattled investors. A popular rumour in Hanoi has it that Mr Dung’s critics went after one of his right-hand men in order to shake his power base.

Even the party’s general secretary, Nguyen Phu Trong, admitted last month that the government was not fighting graft with as much gusto as many Vietnamese expect it to. Vietnamese elites are not in the habit of openly accusing party bigwigs of corruption. There was a hint of that in January when, after being sentenced to death, a former chairman of Vinalines blurted out to a court that he had paid more than $1.5m in bribes to a deputy minister who had been investigating him. The accused, Pham Quy Ngo, was a member of the party’s elite central committee. He died soon after denying the allegation, apparently of late-stage cancer. Authorities cancelled a planned investigation into his affairs, leaving yet more rumours to swirl.


Betting on a rearmed Japan

Forced into a humiliating surrender at the close of World War II after two of its cities were nuked, Japan vowed never again to engage in armed conflict. This pacifist principle is enshrined in the country’s Constitution, Article 9 of which states that “the Japanese people forever renounce war as a sovereign right of the nation and the threat or use of force as a means of settling international disputes.”

For decades the Japanese government saw no reason to revise this basic tenet, and its military was content with its role as a self-defense force. After all, even without an armed might, Japan had been unchallenged as Asia’s economic superpower.

But there has been a seismic shift in Asian geopolitics. China has displaced Japan as the world’s second biggest economy and has become aggressive in asserting its territorial designs in the region. Such expansionist moves have put it on a collision course with its neighbors who are desperately trying to hold off Chinese encroachment.

Japan is feeling the threat. The Senkakus, a sprinkle of islands in the East China Sea that are under Japanese control, are also being claimed by the Chinese.

Confronted by the dangerous flashpoint, Tokyo began to recalibrate its political strategy to make it more attuned to the realities at hand. Prime Minister Shinzo Abe is at the vanguard of a movement to repeal Article 9 and open the way to a military build-up to counter the Chinese threat.

Long considered to have militarist leanings, Mr. Abe has dramatically increased Japan’s defense spending and forged a closer security partnership with its staunchest ally, the United States.

The US was more than willing to let its former foe retool its armed forces. Washington sees a militarily robust Japan as an effective counterweight to China’s growing threat, as the US goes ahead with its pivot to Asia.

The rearming of Japan, however, will upset the power balance in the region. Already, Beijing has taken umbrage at the Abe agenda, warning that it only ratchets up the tension and heightens the possibility of armed conflict.

So why is our President applauding Mr. Abe’s initiative? Because Japan and the Philippines are forming a protective alliance against Beijing’s moves to take over islands, reefs and shoals it claims even if these are ours or Japan’s.

After a meeting with the Japanese leader in Tokyo last week, Benigno Aquino 3rd spoke in glowing terms of the efforts to rewrite Article 9.

“We believe that nations of goodwill can benefit only if the Japanese government is empowered to assist others and is allowed to come to the aid of those in need, especially in the area of collective self-defense,” President Aquino said.

“We therefore do not view with alarm any proposal to revisit the Japanese constitution if the Japanese people so desire, especially if this enhances Japan’s ability to address its international obligations and brings us closer to … our shared goals of peace, stability and mutual prosperity,” he continued.

What the President simply means is that the Philippines likes a military power like Japan to run to when China’s push becomes a shove.

Mr. Aquino even hinted about having a security alliance with Japan, similar to the recently inked Enhanced Defense Cooperation Agreement with the US.

His statements definitely will not endear us to the Chinese, who are right now busy cementing their claim on islands that are clearly in our waters.

We do not wish our government to refrain from developing alliances for our protection against Chinese or any other encroacher. But we wish President Aquino would be more diplomatically adept and less orally incompetent in dealing with our China problem.

We do not see a disconnect between the President’s embracing Mr. Abe’s rearm-Japan advocacy and the Philippine government’s efforts to settle its maritime row with China through legal, diplomatic and peaceful means. He just didn’t have to be Japan’s bullhorn. He could just have made noises about Japan’s and our new-found reliance on each other against external threats–without being an advocate of Japanese militarization.

For the fact is the world–including the Japanese people– must not forget that Japan’s militarist rulers inflicted great physical and moral damage on Asians — especially the Philippines and the Filipinos. Yes, Japan has tried to make up for that damage by its reparations and monetary aid. But it has yet to completely admit that it did something terribly and irreparably wrong. And Japanese militarists, as well as authors and publishers of textbooks, are still proud of what they did in World War II. They do not even want to admit their guilt against the Filipinas their soldiers used as sex objects.

Perhaps President Aquino is morally on the side of Japan on this issue of whether Japan was guilty or not because his own grandfather was alleged to be a leading collaborator with the Japanese military conquerors of the Philippines.

He should learn to curb these personal feelings. That way he could become a more astute diplomat and deal more effectively with ally Japan and bully China. Manila Times


Cutting up the Mekong

Laos has relented and agreed to consult its downstream neighbours over a proposed dam project, but it is under no obligation to act on their concerns

Laos should be applauded for the decision to consult its neighbours in the Mekong River basin over the controversial Don Sahong Dam project.

Laos Deputy Minister of Energy and Mines Viraphone Viravong said at a meeting of the Mekong River Commission (MRC) last week in Bangkok that Laos had decided to consult all stakeholders following concerns over the project.

Last September Laos informed the commission that it would build the Don Sahong hydropower project in Khong district in Champasak province to generate 260MW of electricity for domestic consumption. Vientiane gave the go-ahead for a Malaysian developer to conduct a feasibility study and invest in the project.

The proposed location is on the five-kilometre-long Hou Sahong, a channel of the Mekong approximately two kilometres upstream of the Laos-Cambodia border. The dam will span 100 metres and reach 30 metres in height.

However, Cambodia and Vietnam downstream have raised serious concerns about the dam's potential social and environmental impacts. It would likely block a channel used by migrating fish and also limit water flow. The Mekong River provides the lifeblood for agriculture and fisheries in those countries.

But, since the dam would be built within its own territory, Laos is not obliged to consult any of its neighbours over the project. There is neither a regional agreement nor any other international legal obligation for Laos to ask permission from other countries to construct the dam.

As a member of the MRC, Laos is required simply to "notify" the commission and its members - namely Cambodia, Thailand and Vietnam - of its proposal. The 1995 agreement that forged the four-country MRC does not require Laos to do any more.

The notification process is one of three prerequisites for the development of water-use projects in the Lower Mekong Basin. Notification is required for year-round intra-basin projects and inter-basin diversion projects on the Mekong's tributaries, and for wet-season water use on the mainstream. Information from this process helps MRC member countries plan other water-use projects.

The other two processes are prior consultation and agreement, but these only apply to proposed projects on the mainstream in the dry season, diversion of mainstream water to other basins during the wet season and diversion of surplus water to other basins in the dry season.

Lao minister Viraphone explained that Vientiane had voluntarily decided to allow region-wide consultation on the Don Sahong project to maintain a spirit of cooperation. By doing so, the Laos government has demonstrated its commitment to developing the dam in a responsible and sustainable manner, he said.

The MRC secretariat will now review studies of the project and allow member countries to voice any concerns that arise. Laos has pledged to take all concerns into account and adjust or even redesign the project accordingly, to minimise negative impact.

However, the story doesn't end there. The process of prior consultation has been given a meagre six-month timeframe, after which Laos still has full authority to do as it pleases with the Don Sahong project - including ignoring the concerns and advice of its neighbours. Thus, its fellow MRC members and civic activists have a strong obligation to continue closely monitoring the project.

The Mekong is the lifeblood of this region. If we allow any individual country to endanger its flow, we are inviting disaster downstream. The Nation, Bangkok


Myanmar: Revival of the Lost Kingdom

Myanmar still requires extensive reform before investors will jump in with both feet, but noticeable progress is underway.

Myanmar is one of Southeast Asia’s poorest economies, with a per capita GDP of $868. Despite its strategic location—sharing a border with India, Bangladesh, China, Laos and Thailand—Myanmar was isolated from the rest of the world until 2011, ruled by a military junta since 1962.

The general election of 2010, a landmark event for the country, was Myanmar’s first step toward the transition from military rule to a “civilian” democracy. But the opposition party led by Aung San Suu Kyi boycotted the elections, citing widespread electoral fraud. Moreover, a parliamentary committee in Myanmar recently rejected a proposal to amend a constitutional clause that prevents the pro-democracy leader from becoming president.

Still, the quasi civilian government, led by reformist leader President Thein Sein, has embarked on a slew of economic and policy reforms since coming to power in 2011. Sanctions by the EU, U.S., Canada and Australia were suspended as a response to the reform movement, after which international investor interest grew, resulting in a surge of foreign direct investment.

Myanmar is considered to be a resource rich country with huge economic potential, but with a narrow base of growth primarily concentrated in the agricultural and energy sectors. Industry, which accounts for 20 percent of the nation’s GDP, is dominated by the electricity, oil and natural gas sectors, which together account for 75 percent of total industry value.

On its face, reform efforts in Myanmar have paid off.

Key economic reforms in Myanmar concerning the easing and simplification of foreign investment restrictions and procedures have moved ahead under the new Myanmar Foreign Investment Law (MFIL) of 2012. The country moved toward a managed floating of its currency, the kyat, which was earlier pegged to the U.S. dollar. This has eased significant complexities faced by investors and traders related to the multiplicity of exchange rates before. The authorities have also shown commitment toward granting more autonomy to the central bank in monetary policy decisions. Budgeted social spending on health and education has also increased.

Apart from these key reforms, the current government has been responsive in inviting private sector participation in telecommunications, awarding two licenses: to Telenor from Norway and Ooredoo from Qatar. As a result, most macroeconomic indicators have shown improvement in the post-reform period. GDP growth has accelerated to an average of more than 7 percent year on year (8.25 percent in 2013/14). Private sector credit has accelerated at a double digit pace as the government allowed the licensing of new banks. Budget allocations for social sector spending were increased from 0.9 percent of GDP to 3.0 percent of GDP. The fiscal deficit has also remained below the authorities’ target of 5 percent of GDP (All indicators are IMF/World Bank estimates as official data in Myanmar is considered to be highly unreliable.)

Foreign direct investment (FDI) has been growing. Total cumulative FDI into Myanmar until 2013 stood at $44 billion, of which electricity, oil, and natural gas accounted for 75 percent. China, Hong Kong, Thailand, Singapore, Korea and the U.K. are the biggest investors. Post-reform inflows have surged, accounting for more than 5 percent of GDP per annum. This reflects the eagerness of foreign investors to develop Myanmar’s natural resources. However, core manufacturing investment has been very low. The IMF remains optimistic about Myanmar’s long-term growth, given broad based reforms continue. It expects real GDP growth to average around 8 percent over the long-term.

Three years of reforms have yielded mixed results. Even though the economy has made progress, implementation of these reforms and further clarity of the law at a broader level remains the government’s key focus before general elections in 2015. Foreign investors are still wary of political instability, policy reversals, corruption (which Transparency International’s Corruption Perception index ranked Myanmar 157 out of 177 in 2013), the problems of unskilled labor and the country’s huge infrastructure deficit.

Apart from large scale economic and policy reforms, Myanmar should work on three major reform areas in order for it to sustain its growth in the long-term.

First, it must address its internal ethnic conflict urgently, as this is a major deterrent for long-term foreign investors. Myanmar is a multicultural state, officially comprising 135 sub-groups in eight major ethnicities, namely Kachin, Kaya, Kayin, Chin, Bamar, Mon, Rakhine and Shan. These ethnic groups occupy the peripheral mountainous areas of Myanmar, which make up 60 percent of the land area, while the majority Bamar ethnic group, which represent two thirds of the population, inhabits the center. Many of Myanmar’s ethnic armed groups have signed individual ceasefire agreements with the government, but the government is aggressively pushing for a “single nationwide ceasefire agreement.” The government’s policy of laying down arms prior to political dialogue hasn’t worked well with ethnic insurgent leaders. Their demands for the federal government to increase its efforts are not getting an adequate response. Stabilizing the periphery remains of the utmost importance to the government.

Second, broad based business reforms are slow. The implementation of all laws, and more clarity on the foreign investment law, will be crucial. Recognizing Myanmar’s effort to reconnect with the global economy, the World Bank and World Economic Forum (WEF) included Myanmar in the Ease of Doing Business and Global Competitiveness Survey (respectively) for the first time. Even though Myanmar ranked 182nd out of 189 countries in the Ease of Doing Business survey, the report shows improvement in areas such as tax reforms. However, starting a business in Myanmar is more difficult than in any of the other countries surveyed. According to the WEF, access to finance, corruption, political instability, a low skilled workforce and insufficient innovation capacity are the major obstacles would-be entrepreneurs face in Myanmar. Business reforms would be the next most crucial area for the Thein Sein government.

Third, investment in education is critical in addressing the problem of unskilled labor in Myanmar. According to the Organisation for Economic Cooperation and Development (OECD), Myanmar’s education sector has been severely neglected under the military regime. Education spending is much lower compared to its regional peers. High primary school drop-out rates and low enrolment rates at secondary schools are the biggest challenges facing the government. Investment in education at this stage is necessary, as demand for skilled labor will rise with massive investment proposals in the pipeline. Sustaining an 8 percent GDP growth rate will thus need adequate investment in the education sector going forward. According to McKinsey, the average productivity of a worker in Myanmar is 70 percent below that of benchmark Asian countries, and the country will need to more than double its labor productivity by 2030 to achieve 8 percent annual GDP growth.

Three years of reform have brought visible change in the perception of the international community toward Myanmar. However, international investors remain cautiously optimistic about the country, and most of them prefer to “wait and watch” until further clarity on policies and the business environment is available.

Prachi Priya is an economist at a top corporate house.

The Death of Democracy in Indonesia?

There are two scenarios following the 9 July direct election for Indonesia’s next president. Both are frightening.

In the first Prabowo Subianto, a former Kopassus (Special Forces) commander with a questionable human rights record wins. He then takes the nation of 240 million people back to the authoritarian army-backed era of his former father-in-law, second president Soeharto, who ruled Indonesia for 32 years before being ousted by democratic reformers in 1998.

In the second Prabowo loses to his rival, Jakarta Governor Joko Widodo (Jokowi), but refuses to accept the result. Prabowo has already formed a powerful political coalition that includes Islamic parties and Golkar, Soeharto’s old party. He holds a clear majority in the Dewan Perwakilan Rakyat (DPR, the People’s Legislative Assembly, so has the numbers to get his way.

Most likely are appeals to the courts, which are notoriously corrupt. Finding irregularities in the poll to justify a legal challenge or recount, or seizing power in the interim would not be difficult. In the DPR election in April allegations of vote buying and other illegalities were widespread.

Although there’d be protests, the most popular media outlets are in the hands of moguls who openly side with Prabowo; the reformers are generally too respectful of democracy to promote mayhem.

The military are experts in creating chaos as they did in 1999 when the East Timor referendum resulted in massive support for independence. This could precipitate armed intervention and the suspension of democracy as in Fiji and Thailand “for community safety”. However an immediate collapse is discounted by observers, largely because the World Cup and the holy fasting month of Ramadhan are underway.

Once the election is over the 175 million potential voters in the world’s most populous Islamic nation will return to the real business of performing their religious rites leading to Idul Fitri at the end of July. The country won’t get back to work until the second week of August, so by then the urgency for action will have to be rekindled.

The son of an economist and minister in the Soeharto government, the fearsomely ambitious Prabowo was educated overseas and taught to be a soldier in the US. He was later stationed in East Timor. Although he now professes to be a true believer, democracy doesn’t feature in his record.

His campaigning has been simple – to project an image of tegas (being resolute) and exercising authority, using military props, mass rallies that smack of 1930s fascism and Soekarno era uniforms.

In a country where perception is reality the electorate appears to be swinging his way, convinced that the nation needs a soldier – even one discharged for exceeding his authority and then seeking exile in Jordan - to handle the sprawling archipelago’s complex problems.

Using the Big Lie propaganda technique, and backed by the enormous wealth of his brother Hashim Djojohadikusumo, Prabowo hammers the message that Indonesia’s problems are caused by bocor (leaking) of money and resources to undefined overseas interests. His opponent says change needs to come from within, calling for a Mental Revolution – but this idea is too amorphous to grasp easily.

Two months ago Jokowi, a furniture factory owner, appeared to have an unassailable lead. The mild-mannered former provincial mayor had become a media darling through his blusukan policy of listening to the ordinary folk on their turf. For Indonesians this was revolutionary stuff – they’d only ever known politicians to be arrogant and contemptuous.

But since then Jokowi’s lead has been eroded by his poor TV performances, a hesitant delivery and claims that he’s really Megawati’s puppet. Most telling is that his style of resolving problems through dialogue – the qualities that so endeared him to the Jakarta reformers - are, ironically, counting against him in the villages.

Presidents are supposed to strut and give orders, then roar away in limos flanked by armed police, not sip coffee at roadside cafes asking workers for their ideas. Ergo – Jokowi doesn’t look like the man for the job.

A relentless smear campaign also seems to be impacting. Like the Barack Obama birther movement it’s been claimed that Jokowi is the son of a Chinese, born in Singapore and (shock, horror) really a secret Christian. At first he ignored these charges, a tactical error. Instead of settling the mud has got more turbulent.

Should Prabowo become president the progressives have only themselves to blame. Instead of starting afresh with new faces and a genuine reform party after the 2009 election that reinforced SBY’s position, they clustered in a loose fashion around Megawati’s Partai Demokrasi Indonesia - Perjuangan (PDI-P – the Indonesian Democratic Party of Struggle).

Despite its grand title this is another fiefdom. It’s run by the daughter of founding president Soekarno to keep the family name alive, a throwback to the old dark days and far from clean.

Megawati selected Jokowi only when it became clear she’d lose if she stood again. Other names were touted, mainly academics like former anti-Soeharto student leader Professor Anies Baswedan, 46, who has been trying to reform Indonesian education. But he’s not a household name.

Jokowi was the only person outside the sleazy, incestuous corruption-ridden Jakarta military/political scene who was known from Aceh to Papua. He may not be the smartest card in the pack, but his face was familiar.

And in Indonesian politics, personalities trump policies. On Line Opinion by Duncan Graham


Thai Game Plan: Drive Shinawatras into Exile

In the wake of the coup, different agencies investigate former PM Yingluck

In November of last year, a Thai businessman with close connections to the leaders of the Bangkok protests that eventually drove the Pheu Thai government from power said the real reason for the protest wasn’t just to oust the government.

The real motivation, he said, was to drive every trace of former Prime Minister Thaksin Shinawatra not just from power but from the country and to eradicate any vestigial remnants of his influence. Now, with the coup that took place on May 22 and a military government installed, government agencies are going after Thaksin’s sister Yingluck, the former Pheu Thai prime minister, and political figures close to her.

Bangkok sources say the plan is to drive her into exile with her brother, put her in jail or give her a sentence that would prohibit her from entering politics again when the junta allows new elections, probably in October 2015.

“This has been the plan from the start. What they want to do is hang a criminal conviction on [Yingluck] and compel her to flee,” said a longtime observer of Thai politics. “I think they want to force the Shinawatras and other related clans out of the country.”

Getting rid of the family is a mantra for the business community and the elites in Bangkok, who view Thaksin’s social policies, put in place when he came into office in 2001, as ruining the country. They were rumored to have offered Thaksin a chance to liquidate his assets in Thailand when the conflict started last year.

However, sources say, Thaksin, who is in self-exile in Dubai evading a corruption sentence against him back home, turned down the chance and sought to maintain his political presence, a gamble that he appears to have lost, at least for the short term. The family owns a controlling stake in SC Asset, a real estate developer, as well as other assets, with a net worth in the country of US$1.7 billion, according to Forbes.

“The Red Shirt movement is a paid agency of Thaksin and once the funds dry out it will not be significant,” an officer with one of Thailand’s biggest banks told Asia Sentinel in an email. “In the last general election, which was declared void, the Pheu Thai Party received much less than half of the total votes and without a populist policy its influence will further decline. What I have been afraid of is Thailand going the same way Argentina did in the 1930s. The populist policy of Peron led the country from the fourth highest per capita income in the world to the bottom 50.”

Those populist policies included a comprehensive social welfare scheme for the long-ignored rural poor that featured scholarships, welfare housing, health plans, insurance, company incubators, a Bt1 million investment fund for individual villages and many others, something no politician in Bangkok had ever done. The programs have guaranteed the former prime minister and his three succeeding surrogate governments overwhelming success at the ballot box ever since despite charges of massive corruption, cronyism, threats against the press and pay-for-play bribe demands from corporations. The banking official estimates the departure of the Pheu Thai government will save Bt100 billion a year in corruption although that seems unrealistic, since Thai's political classes were singularly corrupt before Thaksin ever came on the scene in 2001. 

This time, there is a scorched-earth plan to make sure that Thaksin, his sisters, the rest of the family and their allies don’t return in any form, on charges that seem about as flimsy as those lodged against onetime Prime Minister Samak Sundaravej, a Thaksin ally who was ousted for violating a constitutional ban on private employment in 2008. Samak, who was certainly no angel, had US$2,350 in expenses for buying provisions for a cooking show he had hosted as a guest.

Supposedly independent agencies including the Election Commission and the National Anti-Corruption Commission are pursuing Yingluck, with the Election Commission investigating a charge that she misused her office by taking to national television after she had dissolved parliament to defend the government’s disastrous rice-pledging scheme, which paid rice farmers up to 50 percent more than global market rates.

Nine cabinet members are being investigated along with Yingluck and are likely to be convicted and barred from politics, if not jailed. Jakrapob Penkair, a major figure in the Red Shirt movement and a close associate of Thaksin’s, already having fled the country ahead of lese majeste charges, has now been charged with amassing weapons. He and other Thaksin allies have started a “government in exile” in Cambodia.

According to Bangkok media, Yingluck is also being investigated for inappropriately using her position as caretaker prime minister after parliament had been dissolved to visit supporters in the northern and northeastern regions of the country to campaign for the Pheu Thai Party in snap elections held Feb. 2. Pheu Thai won the election handily after the Democrat Party boycotted and actively sought to block voters from going to the polls.

The election commission has taken no action against Suthep Thaugsuban, the protest leader, or any of his followers for the unrest that shook the country for more than six months before Army chief Prayuth Chan-ocha took power in the coup.

Other reports indicated that the National Anti-Corruption Commission is still investigating Yingluck and the cabinet members over allegations of corruption in connection with the rice-pledging scheme. The commission released details of Yingluck’s assets indicating she was the second-richest person in the cabinet, with assets between her and her partner of Bt574 million (US$17.7 million) and said she had failed to disclose the existence of a watch worth Bt2.5 million. Asia Sentinel

Sunday, June 29, 2014

Chinese garden diplomacy

What the 11-year struggle to build a friendship garden reveals about soft power TO ASIAN culture buffs, a tranquil Japanese garden built two decades ago in Houston is in the Daimyo strolling style. Economic historians, an unromantic bunch, see a peace-offering to a rattled American superpower, presented at a moment when Japan’s rise inspired something like panic. Today the garden is a shady oasis, thronged at weekends by Hispanic families filming themselves by its carp-filled pond. But its origins were tangled up with a tense economic summit for G7 nations, held in Houston in 1990. Japan’s prime minister announced a gift of a precious teahouse during that meeting; work on the garden began the next year. Not long before, Japanese buyers had snapped up the Rockefeller Centre and Pebble Beach golf course. Both proved poor investments, but many people at the time saw them as evidence that Japan was overtaking America. (A 1993 film, “Rising Sun”, marked the peak of Japanophobia, mixing sex and murder with dollops of self-doubt: “catch-up” is our national game, mutters an American cop chasing Japanese villains.)

Houston was not Japan’s first go at garden diplomacy. As trade tensions built in the 1970s, Japanese authorities helped to build a fine garden in Missouri and—to mark America’s bicentenary in 1976—sent scores of priceless bonsai to the National Arboretum, a park and research station in Washington, DC. The gift deftly combined generosity, reminders of Japan’s long history and subtle jabs (the tiny trees included a four-centuries-old pine that had survived the atomic blast at Hiroshima). The bonsai won warm headlines. It was an early display of soft power: a term coined by Joseph Nye of Harvard for a country’s ability to inspire and sway others without using force.

Now it is China’s turn. In the past decade and a half, Chinese classical gardens have opened in Staten Island in New York, St Louis, Seattle, San Marino in California and Portland, Oregon—often with help from Chinese authorities. Yet the story of Chinese garden diplomacy is revealingly different. As China rises, its officials have promoted ever-grander projects, culminating in a 12-acre Qing-dynasty garden that China has offered to build in the National Arboretum. The “National China Garden” is to feature a lake, a two-storey teahouse, rockeries, pavilions, bamboo groves, art exhibits and a homage to the White Pagoda of Yangzhou.

America’s reaction has been official graciousness, followed by foot-dragging. A first letter of intent to build the Washington garden was signed in 2003, in a flurry of diplomacy led by Jiang Zehui, then-president of the Chinese Academy of Forestry (and, not irrelevantly in China, a cousin of ex-President Jiang Zemin). In China experts have already chosen artfully weathered boulders for the garden and built reproduction antiques for its pavilions. But at the site on the outskirts of Washington, 11 years after talks began, all that could be seen on a recent morning was an untouched meadow, some handsome stands of Asian trees and two grazing deer. American taxpayers’ money is not on offer: in 2008 the Senate passed a non-binding but chilling amendment barring the use of federal cash for the National China Garden, arguing that—next to research on soyabean rust and other agricultural threats—it was “clearly not” a priority.

Private fundraising has been painfully slow. China is to donate all structures above ground and will send workers to assemble them. But the Department of Agriculture, which runs the National Arboretum, must prepare the foundations and water features, a task expected to cost $35m. Under government rules, no ground may be broken until the whole construction budget is raised. A fundraising foundation must also find an endowment of $25m to cover maintenance and cultural projects. To mounting dismay on the Chinese side, the foundation’s only substantial funding to date is $1.7m, and that was spare cash left over from America’s pavilion at the 2010 Shanghai Expo. “The Chinese want to break ground yesterday. They want to know why we haven’t raised the money,” says an official. The reasons are many, but one stands out: the garden appears to matter more to China.

In part the slow fundraising reflects healthy changes, as China opens up. American firms wanting goodwill in China do not need to fund projects in Washington—they may now directly “build a school in Guizhou”, notes Robert Daly of the Kissinger Institute on China and the United States. In part, the delays say a lot about America’s worldview. Japan no longer causes much alarm. A century-old Cherry Blossom Festival, involving pink flowers and Japan-themed exhibits, is one of Washington’s cheeriest annual events. China’s shock-and-awe approach to friendship prompts pricklier reactions. There is talk of China sending $5m to complete the national garden’s design and construction plans, and of Chinese firms taking a lead on funding. American officials do want the garden built: it should be rather lovely, and the 21st century will be safer if the two countries’ publics like one another. But ground-breaking is two years away, at least.

Feared, not loved

It is not easy for an authoritarian regime to wield soft power. Foreign bosses may swoon about swift Chinese decision-making and foreign children may love the pandas China rents to zoos. But generally China is less loved than feared. On June 24th a congressional committee voted to name the street outside the Chinese embassy “Liu Xiaobo Plaza”, after an imprisoned Nobel-peace-prize winning dissident. Also in June the American Association of University Professors accused Chinese-funded “Confucius Institutes” that teach Chinese language and history inside many American and Canadian colleges of advancing “a state agenda” and restricting debate. (Chinese state media accused the AAUP of “fear” and “ignorance”.) America’s recent loss of confidence makes the relationship even trickier. Most Americans (prematurely) think China has the larger economy. Small wonder they are reluctant to underwrite Chinese offers of friendship. The Economist

JAPAN PM Abe’s defense policy initiative represents gross constitutional shenanigans

In a nutshell, Prime Minister Shinzo Abe’s security policy initiative for collective self-defense means allowing Japan to do something that successive governments have said the nation is banned by the Constitution from doing.

This is the essence of the policy change the ruling Liberal Democratic Party and its junior coalition partner, New Komeito, are currently discussing in their talks over Japan’s involvement in collective self-defense.

An initiative to amend the related constitutional provision to enable Japan to exercise the right to collective self-defense would be a straightforward move anybody could understand. But the Abe administration is not taking that aboveboard approach.

Instead, it is seeking to change the government’s interpretation of the Constitution with regard to the related provision to make it possible for Japan to engage in the right to collective self-defense.

Even though the government’s position on the issue will be changed to the exact opposite of the longstanding interpretation, the LDP and New Komeito, during their talks June 27, took the trouble of affirming that this is a “formal modification” that won’t change any of the norms set by the Constitution.

This incomprehensible claim can only be described as a self-serving attempt to justify the highly questionable policy initiative.

Are all the lawmakers in the ruling camp willing to agree to this argument and support the proposed Cabinet approval of the change in the interpretation? There is still time left for them to rethink their stances.

The revised draft of the Cabinet endorsement the government presented to the ruling parties June 27 is supposed to be based on the government’s official position on the issue announced in 1972.

In short, the 1972 government view states that given the basic principles stipulated in the preamble to the Constitution and Article 13, which demands respect of people’s “right to life, liberty and pursuit of happiness,” it can be said that Article 9 doesn’t prohibit the nation from taking “necessary measures for self-defense.”

But the 1972 statement also says that Japan is allowed to use armed force only to fight “urgent and unjust” armed aggression and concludes that the nation is “not permitted” to resort to the right to collective self-defense to resist armed attacks against other countries.

The Abe administration is trying to rewrite only the conclusion while maintaining the logical framework of the argument. Such an opportunistic attempt to change the government’s official position on this important constitutional issue is simply unacceptable.

Another key element of the proposed policy change that should not be overlooked concerns the issue of collective security based on United Nations resolutions.

Abe initially ruled out the possibility of Japan’s use of armed force under the framework of collective security.

Concerned that this position would make it impossible for the Self-Defense Forces to engage in minesweeping operations in areas like the Persian Gulf, the LDP proposed to give the green light to such SDF operations under the framework of U.N.-sanctioned collective security. But the issue was shelved after New Komeito expressed strong opposition to the LDP’s proposal.

That’s why the draft Cabinet endorsement doesn’t include any clear reference to this issue. But the set of possible questions and answers related to the policy shift that has been prepared by the government and revealed June 27 says minesweeping operations are permitted by the Constitution. This is a cheap trick to end-run this weighty issue.

The Abe administration is making a headlong rush into a Cabinet approval of the controversial policy shift by using totally unreasonable arguments and leaving many Japanese clueless as to what is really going on. The government claims Japan can actually engage in collective security operations even if the proposed Cabinet endorsement doesn’t say so.

There has been no honest, reality-based debate on what should be done to protect Japan’s national security.

This policy initiative, if it is pushed through, will leave the pacifist principles of the Constitution totally eviscerated and the nation’s public opinion bitter divided. It will also leave the Japanese voting public even more distrustful of politicians.--The Asahi Shimbun


A rush to judgment can easily sabotage the truth (Journalists – a lesson you may wish to appreciate)

When a residential neighborhood was targeted for indiscriminate terrorism in 1994, the headline that accompanied The Asahi Shimbun's initial report read, "Mysterious Poison Gas Kills Seven." The incident was shocking and deeply disturbing.

Around midnight on June 27 exactly 20 years ago, the deadly nerve gas sarin was sprayed in the city of Matsumoto, in Nagano Prefecture. It was not until months later that this heinous crime was tied to the doomsday cult Aum Shinrikyo.

We must never let the memory of this incident fall into oblivion. There are endless lessons to be learned from it. That is especially true for members of the media, of whom I am one. The most egregious and regrettable mistake was that we treated Yoshiyuki Kono, a victim and the first person to report the incident, as the prime suspect. The Asahi Shimbun did not print a formal apology until 1995.

Kono pointed out during a recent lecture, "It is the nature of the mass media to start losing their balance in the face of some sensational crime or unprecedented incident."

It pains me that we cannot completely refute Kono's claim even today. I can only keep reminding myself to double- and triple-check every bit of information and shun all presumptions.

In the immediate aftermath of the Matsumoto sarin attack, Kono's home phone rang off the hook with hate-filled calls. He also received loads of threatening letters. "I was made Public Enemy No. 1," he recalled in a piece he contributed to The Asahi Shimbun. It was a clear case of the media's mistake driving an innocent man into a corner.

"The paradigm of elimination" is what Kono calls the general public's overt demonstration of hatred for specific groups of people. He has become fully aware that there are people today who are being made to suffer the same torment he himself once endured--namely, Korean residents in Japan who are being subjected to hate speech.

When human rights advocates and others formed "Norikoenet" (The International Network to Overcome Hate Speech and Racism) last year, Kono became one of its co-directors. In a recent book published by Norikoenet, Kono denounced the absurdity of exclusionism.

What befell Kono after the Matsumoto sarin attack 20 years ago remains a mirror image of present-day Japan.

--The Asahi Shimbun,


The Rise of Wildlife Trafficking in the Pacific

Transnational criminal networks are wreaking havoc on the regional environment. Can they be stopped?

Transnational organized crime is a fluid network of illicit flows that continues to exploit the Pacific and its vulnerable location. With sharply rising in demand for endangered species, criminal networks are rushing to take advantage of porous maritime locations. Despite increased attention by the international community in more recent years, with bodies such as the United Nations Office on Drugs and Crime trying to heighten awareness and educate civil society to mitigate the networks’ effects and ability to recruit, wildlife trafficking remains a global phenomenon that exploits the poorly managed wealth often evident in the Asia-Pacific.

Connected by an ocean stretching from Australia, to Asia and the Americas, the Asia-Pacific region offers endless opportunities for organized transnational criminal networks. Maritime networks capitalize on environmentally fragile areas that are often tainted by corruption, poor governance, and lax law-enforcement regulations. This has created an urgent need for international support to prevent the further exploitation of corrupt officials, environmental vulnerabilities, and gaps in law enforcement.

The rising demand for illicit wildlife products is alarming, creating a proliferation of endangered species in the Pacific and a growing risk of extinctions. The process by which that demand is met entails a series of criminal activities: poaching, illegal transportation, smuggling, fraudulent documentation, sales, money laundering. These activities have quickly taken wildlife trafficking up the ranks of black market industries – according to the United Nations Office on Drugs and Crime it is now worth an estimated $2.5 billion.

Transnational organized crime, particularly maritime organized crime within the Pacific region, thrives on socioeconomic impoverishment and legal vulnerabilities, which create the conditions to exploit corruption and enhance illicit profits. The South Pacific in particular is home to a vast array of endangered corals, marine turtles, birds and reptiles that continue to be sourced, smuggled, and later sold to consumers in Asia, Europe, and the United States. (China is the largest market.) Demand for rare or endangered species offers a profit that can be too tempting to resist. Basic supply and demand theory dictates where the incentives lie.

A report by the World Bank meanwhile highlights the complexity surrounding the increased use of technology, particularly the internet and e-banking, which gives both smugglers and dealers unprecedented access to new markets, while providing buyers with virtual anonymity. This coupled with what are often lax domestic and international repercussions, gives criminal networks virtually free reign to exploit systemic deficiencies.

Even the region’s most developed countries face threats. With 96 critically endangered wildlife species, Australia needs to strengthen not only conservation efforts, but also the legal structures and penalties that can serve as deterrents.  Fail to do so, and the local environment will continue to pay a heavy price.

The significance of the broader Pacific region, aside from its native species, is in the transportation options available to smugglers (such as air and sea). Criminal networks monitor law-enforcement agencies, and then switch means and routes to avoid detection. The strategies appear endless, and overwhelm environmental and organized crime initiatives. In response, authorities are shifting focus to attempts to address structural deficiencies and enhance the capacity and transparency of regional governments.

Yet just as globalization has given criminal networks more tools, it also allows for cooperation among the agencies that track them. This cooperation can begin to tackle the “push and pull” factors that drive wildlife trafficking, such as economic mismanagement, corrupt officials, socio-economic impoverishment, inequality, and increasing demand. Although their focus is more on the rising challenges of migrant smuggling and human trafficking, international bodies such as the United Nations Office on Drugs and Crime have begun to take on the broader issue of maritime organized crime and its vast repercussions, particularly for the Asia-Pacific.

Eliminating wildlife trafficking is for now unrealistic, but progress could be made by bolstering legal capacities. The transnational nature of the networks involved in trafficking demand international efforts to combat them. Unfortunately, these efforts are often stymied by national interest. They must also contend with the reality of uneven development, particularly in the South Pacific, coupled with corruption, nepotism and socio-economic impoverishment.

Still, a number of steps could be taken, with a focus on three areas in particular. First, international cooperation remains vital to creating opportunities for information sharing and training opportunities for the adoption of “best practices.”

Second, creating frameworks for legal assistance agreements and extradition arrangements will bridge the gap between states, different judicial systems, and current deficiencies, while making transnational investigations, seizures and prosecutions more efficient. Associated with this is the need to harmonize laws.

Third, transnational organized crime can no longer be regarded as an issue relevant only to the most vulnerable regions. If wildlife trafficking is to be countered, it needs to be addressed in conjunction with all of the enabling factors that allow it to thrive. This will entail resources, regulations, and civic engagement.

Only by taking stock of the harsh reality of what has happened and rebuilding can we hope to stem the environmental depredations of the illicit trade in wildlife.

Bianca De Bortoli is currently an Intern at the United Nations Office on Drugs and Crime in Tehran. 


Philippines Biggest secret of all: Aquino’s P220 billion pork barrel

In my column on Friday, I explained that behind the pork barrel furor engulfing the nation are three cover-ups managed by the Aquino administration.

The first is the fact that with the utter demonization of “pork barrel queen” Janet Lim Napoles, the Aquino government has covered up the bigger operations of a mysterious person or gang that in fact siphoned off P4 billion of taxpayers’ money into legislators’ pockets. That is practically double the P2.2 billion Napoles allegedly handled.

The second cover-up involves the fact that out of 325 House of Representatives members and 17 senators, the Justice Department, the Ombudsman’s investigators, and their stable of whistle-blowers have singled out only three senators—Juan Ponce Enrile, Jinggoy Estrada, and Ramon Revilla—leaders of the opposition, with the latter two in fact having declared that they would be running either for president or vice president in 2016.

Isn’t that way too convenient, that the barrage of charges against the two, their arrest and incarceration have painted them as crooks, two years before elections in 2016? Isn’t that too convenient, with the ratings of Mar Roxas—Aquino’s bet for 2016—slipping from about 17 percent at the start of the year to single-digit levels in recent polls, with his rival Jejomar Binay, allies of Enrile and Estrada, moving from 53 to 57 percent?

The third cover-up is the Commission on Audit’s (COA) failure, refusal, or foot-dragging in undertaking an audit of the use of funds from the Priority Development Assistance Fund (PDAF) from 2010 to 2013, or during Aquino’s watch, as well as of his patently unconstitutional new form of pork, the Disbursement Acceleration Program (DAP) funds.

The PDAF releases from 2010-2013 (already the Aquino administration) totaled P62.5 billion, double the P26.1 billion from 2007 to 2009, which is the subject of the current pork-barrel cases at the Sandiganbayan.

But these are dwarfed by the DAP, which totaled P157 billion from 2011 to 2013 according to official data from the Budget department itself (

That is, Aquino’s pork barrel since he assumed office amounted to P220 billion –P62.5 billion PDAF released in his first three years, plus the P157 billion DAP. Yet so far, the COA has turned a blind eye to these suspicious siphoning off of public funds committed during the term of Aquino.

COA Chairman Grace Pulido-Tan—who provided the theatrics in Napoles’ demonization by calling the use of 2007-2009 pork barrel funds as “kahindik-hindik”—must answer four questions:

• Has she issued the office directive ordering the COA’s special audits unit to undertake an audit of the PDAF from 2010-2013, and of the DAP from 2011-2013, in the rigorous manner the agency audited the funds released from 2007 to 2009? It is not just me who’s asking for an audit of the PDAF funds from 2010-2012. It was the second highest official of land, Vice President Jejomar Binay, who as early as last year, and as reported in newspapers on August 31, 2013, demanded that the auditing should not only include the years 2007 to 2009, but also the years until 2012.

• Is the Department of Budget and Management cooperating fully in providing the COA all the documents it has been asking for? (For the 2007-2009 audit, it refused to surrender all documents the COA asked for, most probably those dealing with Aquino’s allies and Liberal Party stalwarts.)

• Given the fact that such an audit of Aquino’s PDAF and DAP would clear the COA and this administration of the accusations that they are not really on an anti-corruption drive but on a campaign to bury the political opposition, has Tan deployed more auditors so the audits can be accelerated, considering the amounts involved are eight times bigger than those for 2007-2009?

• Can she promise the nation that the audit of Aquino’s pork barrel will be finished this year, and not after the 2016 elections?

Would Tan stonewall the audit of Aquino’s pork barrel as a quid pro quo for her to be appointed soon as a Supreme Court justice? We hope not.

COA must immediately audit Aquino’s pork because it involves a much larger amount of P220 billion, which is eight times the P26 billion pork for 2007-2009.

More importantly, Aquino had blatantly used the PDAF and the DAP especially in 2011 and 2012 to bribe first members of the House in filing an impeachment complaint against Chief Justice Renato Corona, and then the senators to convict him.

This has been established not only by testimony of those receiving the funds (it was Jinggoy Estrada who exposed it in October 2013), but also by the timing of the funds’ releases. (See my columns: “P559 million released before Senate vote vs. Corona”, Sept. 29, 2013 and “DBM data confirms P100M ‘bribe’ to 16 senators each,” Oct 3. 2013.)

Another P4 billion was disbursed to congressmen in 2012, at P15 million each, for having filed the impeachment case against Corona.

Think about it. With Aquino bribing congressmen and senators by throwing at them millions of pesos worth of pork barrel funds, would he or his officials have tightened up procedures to make sure that the legislators don’t steal the proceeds, as they had done in 2007-2009?

Or, as rumors have circulated, was it Napoles herself and another still unidentified mastermind of the pork barrel scam who helped the legislators, with Aquino’s endorsement, to steal from the pork barrel bribe the president gave them so they’d remove Corona?

Was Napoles’ participation in the pork barrel bribes in 2011-2012 the reason for her inexplicable confidence that she would survive her current nightmare, for Aquino to personally see her in Malacañang when she surrendered in August and accompany her to the police headquarters?

Or was it an Abad-Napoles tandem in this bigger pork-barrel scam under Aquino? Note that Abad was a congressman for nine years, from 1995 to 2004, who religiously collected his pork barrel that was used for his 16,000 constituents in his tiny province of Batanes.

Especially since the COA had asked him for documents for its 2007-2009 audit, it is impossible that Abad did not know how people’s money was being stolen through the pork barrel system.

Did he advise Aquino that this is the easiest way to bribe Congress so it would remove Corona, and recommended Napoles to help out? Was it this that Napoles was really referring to when she wrote in her sworn statement that it was Abad who taught her how to use NGOs for the pork barrel scam?

For all of Aquino’s sickening blah-blahs about “walang mahirap kung walang corrupt,” did he ever talk against the pork barrel system before it was exposed in 2013?

Since he, and he alone, directed the use of the DAP, Aquino used these funds as his own personal treasury. Undeniably, Aquino’s hands are tainted with pork barrel money.

Note also COA’s wrong priorities to support Aquino’s fake anti-graft campaign.

In another move to persecute former President Arroyo as well as to pin down Napoles and the three senators, the COA undertook a special audit of P900 million of the Malampaya funds coursed in 1999 through the agrarian reform department starting in 2011.

But what may be compared to the Agrarian reform department’s Malampaya scam is the P8.6 billion—ten times the Malampaya money—Aquino gave to the ARMM from the DAP funds, purportedly to accelerate the region’s development.

And how were these distributed? Through Aquino’s hand-picked ARRM Governor Mujiv Hataman who even had a media-covered ceremony distributing P10 million in checks to officials of the region in January 2013. Aquino even complained at that event that Hataman wasn’t disbursing the funds quick enough!

For all its posturing as an anti-corruption body, the COA under Tan will be judged by history as another institution prostituted by Aquino, unless she orders the audit of this president’s P220 billion pork barrel, the biggest amount of government money ever put under a president’s sole whim in our history, and the biggest secret of all in this saga.

FB: Rigoberto Tiglao