Saturday, December 31, 2011

Happy New Year

Wishing you all a prosperous and happy 2012
Kerry (my 1971 photo at Senayan with Pak Suharto)

Friday, December 30, 2011

China's Shaky Economic Foundation

Two weeks ago peasants in Wukan, a fishing village in the prosperous southern Chinese province of Guangdong, took over their village, throwing out local leaders.

Because of long unanswered grievances, they risked their lives, barricading roads into the village and facing down the police. Their central concern was the sale of collectively owned village land to property developers, which has impoverished most residents while enriching their leaders.

Residents of Wukan, China, at a village meeting on Dec. 21. The poster is of Xue Jinbo, who died in police custody after he was chosen to negotiate land deals with authorities.

As the Wukan protests evolved into an international media event, a provincial party official, under pressure from Beijing, stepped in and swiftly negotiated a truce acceptable to the villagers. This week Prime Minister Wen Jiabao asserted that “China can no longer sacrifice farmers’ land rights for the sake of reducing the cost of urbanization and industrialization.”

Once again China’s leadership has succeeded in the complex task of managing social unrest. The eye of the world is now shifting away.

This is a serious mistake. Like China’s leadership, the world should continue to play close attention to Wukan and to the tens of thousands of incidents of rural unrest that occur each year in China, the vast majority resulting from land grabs. Why? Because what happens to China’s peasants is crucial to our collective future.

China’s rural population is at the bottom of the global commodity chains of both Chinese and transnational corporations. Unhindered by regulations, these companies utilize China’s land and rural labor for the environmentally and socially unsustainable production of goods consumed the world over. While consumers everywhere benefit from inexpensive products and corporate profits, the real costs are borne by China’s most vulnerable.

The Wukan incident reveals the shaky foundation of China’s rise to economic super power: it is built upon an unresolved land struggle with hundreds of millions of lives in the balance. Anything that negatively alters the quality of life of China’s rural majority has the potential to impact the already fragile global economy, sending ripples across the world.

As I have seen first-hand during nearly 30 years of research in rural China, land grabs have been central to China’s economic “miracle.” Local governments take over land for real estate development, industrial expansion, roads, dams and power plants.

Having government and party connections to get a hold of prime real estate in urban cores and suburban fringes has enabled massive fortunes in property development.

Eight out of China’s top 10 billionaires made their fortunes through land grabs.
Similar land grabs have occurred in China’s rural hinterlands where there is little oversight by the central government. Of the 1.1 million hectares taken away in 2011, according to China’s State Council, 700,000 were transferred illegally. The result is the complete loss of land for approximately 75 million peasants, who join the over 200 million rural residents migrating around China daily in search of work.

Land loss leaves many rural families — still the majority of China’s population — without access to enough land to produce their food. Wukan’s villagers not only saw 400 hectares of shared land sold to a property developer, but their common fishing grounds were sold off as well to a large seafood company. This severely reduced many villagers’ basic subsistence. Their rising anger and desperation is seen in other rural areas nationwide.

Land grabs are part and parcel of growing social inequality in China. Despite increasingly strong populist rhetoric from the government, along with significant rural investment to counter rising discontent, China today rivals the most unequal countries in the world. The 400 million Chinese at the bottom face continual threats to their livelihoods through land loss.

Beijing’s success in quelling daily unrest around the country, mainly through the use of local officials as scapegoats, fails to address the fundamental problem: a development path built on an eroding foundation of unjust land grabs, environmental destruction, social polarization and the resulting vulnerability of the country’s poorest and most marginal people. Until these structural issues are addressed, the Wukan incident will only be a harbinger of things to come.

By Joshua Muldavin professor of human geography at Sarah Lawrence College. International Herald Tribune

Thursday, December 29, 2011

Forced democracy will not work in the Islamic world

This year witnessed unexpected political changes in the Middle East; the sand storm raised by the "Arab Spring" has not yet settled as it still continues to move through Yemen and Syria with peoples' sustained strength, while Bahrain and other regimes are trying hard to curb its resurgence.

The general notion of democratic exception in the case of the Muslim world does not seem to hold water anymore. The Muslim masses have been engaging in the struggle for democracy since the end of the colonial era but have not succeeded in attaining it due to obstruction from internal authoritarian political actors, be it armies, monarchies or self-made leaders like Gadhafi, Saddam Hussain, the Assads of Syria or Suharto in indonesia. The struggle for democracy in the Muslim world is also subject to the state of sectarian relations, as witnessed in power conflicts in Iraq, Syria, Iran, Bahrain and Pakistan.

There are two types of democracies in the Muslim world - one is of imposed democracy such as in Iraq and Afghanistan; the second is emerging democracy based on grassroots movements that began in Tunisia and are threatening to sweep all of the Middle East. Both of these models are facing considerable challenges that come in various forms - such as the sectarian character of Muslim societies, the massive power of the Arab monarchies, authoritarian states, military institutions, remnants of the toppled regimes, and the destruction in the aftermath of war and sectarian conflict. The recent deadly sectarian attacks in Pakistan, Afghanistan and Iraq, where the sectarian conflict is being played at the top level in Shia and Sunni political factions, shows that, as the United States withdraws its troops, Iraq continues to be unstable.

In Iraq there is a contest for power between the pro-Iran Shia government vis-a-vis the secular Sunni and ethnic Kurdish minority political factions. In Pakistan there is a contest for power between the military, the mullahs and the democratic forces, which has intensified since the time of the Ziaul Haque regime and the related Afghan war; this competition continues to menace the securing of democracy there. Pakistani Prime Minister Yousuf Raza Gilani fears a coup.

Exceptions are Indonesia, Tunisia and Turkey, where the army has returned to the barracks, while Afghanistan is still politically unstable.

Between these two models of democracy, those that emerged from grassroots movements such as in Tunisia, Egypt, Bahrain, Libya, Yemen and Syria, will be more successful than those in countries with an imposed democratic model.

The fact is that the imposed democracies have not outgrown factors that lie at the cause of internal conflict, such as sectarianism. Sectarian conflict in the Middle East will expand to Muslim South Asia, Southeast Asia and Africa for the simple fact that the root cause of sectarian division in Islam is political rather than religious.

The potential for deadly sectarian conflict in Syria, Bahrain, Saudi Arabia, Lebanon and Iran in the face of the suppression grassroots movements for democracy is enormous. History shows that peoples' political movements offer more space for reconciliation and unity than imposed political arrangements.

Since the religious resurgence after the Islamic revolution of Iran in 1979, impartial scholars and policy advisors on the Muslim world have opined that the best response to religious resurgence is to allow the growth of democracy through peaceful change, through supporting Muslim democrats. But this advice is opposed by both local authoritarian rulers whose legitimacy is challenged and by external supporters whose interests are at stake.

The non-growth of democracy native to the Muslim worldview led to the emergence of violent political Islam, a la Bin Laden, which is now sidelined with the emergence the Arab Spring, which has no external support except in the case of Libya. As a multi-faceted movement, the Arab Spring regards Islam as a mark of identity and political morality. Hence, both the secular and religious parties will compete for office through the polls. The availability of space for political competition is a positive option for socio-economic development. In power, the success or failure of the Muslim parties now depends on meeting the demands of the masses; that result will determine their future role in the politics of the Muslim world.

Furthermore, the ongoing movement for political change will not result in a monolithic model of Muslim democracy but a variety of models befitting local environments and situations. This is evidenced in the cases of Turkey, Indonesia, Bangladesh, Malaysia and struggling Pakistan.

Meanwhile, as a new democratic government takes power in Tunisia, the economic factor behind the Arab Spring uprising deserves most attention. The new Tunisian Prime Minister Hamadi Jebali of the Ennahdah Party has promised to solve the severe economic crisis in Tunisia, where the unemployment rate is 20 per cent, combined with poor economic growth.

In spite of ongoing Constituent Assembly elections, the continuing battle between the army and activists, along with reports of sexual harassment of women by the army, tell us that the Egyptian revolution is far from settled.

The role played by women in the Arab revolutions should put to rest the Western notion that Muslim women are oppressed - which is an Orientalist invention. When it comes to the issue of women in the Muslim world, there is a need to distinguish between the forces of tribalism and Islam. Tribalism is still a dominant force in some Muslim countries, where women are subject to the horrors of honour killings and female circumcision. Such practices continue to survive under the guise of religion.

Millions of educated Muslim women are engaged in the struggle for liberation from tribalism disguised as Islam.

All emerging democracies in the Muslim world will have a reference to Islam in their constitutions; this is no different from the spirit of the recent statement by British Prime Minister David Cameron that Britain is a Christian country and there is a need to return to Christian values in order to overcome the state of moral collapse. In fact, all democratic political cultures have a religious reference in some way or another. The challenge before all countries today is to accept religious pluralism amidst diversity, and this may serve as an antidote to sectarianism and sectarian conflicts.

Countries that have an active democratic process, no matter their worldview, are better than those where democracy is an imposed product or is subject to intra-institutional political competition. Democracy based on grassroots movements combined with the aspiration for religious pluralism substantially reduces the danger of inter-sectarian and interreligious conflicts and tragedies.

By Dr Imtiyaz Yusuf professor of Islamics and religion at theGraduate School of Philosophy and Religion, Assumption University, Bangkok. “The Nation”

Fear, Rebellion, Intrigue and Debt Ahead For Asia in 2012, Not the End of the World

The Mayans were wrong. The world won’t end in 2012, but at times it may feel as if it’s about to. Such is Asia’s lot as Europe’s debt debacle and America’s political paralysis fuse, presenting challenges for leaders from Beijing to Jakarta.

In a less chaotic time, this might have been Asia’s big moment. An eastward shift of power and capital would seem to be a given as Brussels and Washington turn inward. Yet a worsening global environment will interrupt Asia’s path to economic dominance. Here are eight risks that may get in Asia’s way:


Asia steered around the US meltdown in 2008 with remarkable agility. Doing that will be harder in the 12 months ahead as all of the world’s major growth engines stall or go into reverse. Default risks in Europe will increase, America’s funk will persist in an election year, Japan’s malaise will deepen and China will hit a soft patch. With deft fiscal and monetary maneuvering, Asia grew impressively in the three-plus years since Lehman Brothers Holdings imploded. A repeat performance is unlikely.

Pocketbook worries

Consumers will become more dissatisfied with the toxic mix of inflation and widening income inequality. Leaders aren’t doing enough to make sure benefits of growth are shared equitably. As the Gini coefficient — a statistical measure of wealth inequality — rises across Asia, increasing tensions will play out unpredictably in markets and politics.

Occupy Wukan

It’s getting harder for China to keep its 1.3 billion people from hearing about events in a coastal village in Guangdong province. There, thousands of people fed up with land seizures took to the streets and forced out Communist Party officials. This Occupy Wall Street dynamic is a startling contrast to the usual success China has in quashing any hint of public discord. As the New York Times points out, there are at least 625,000 potential Wukans in China. The 12 months ahead will be busy for China’s thought police.

Political intrigue

China, Hong Kong, South Korea and Taiwan will pick new leaders. State elections in India will help determine if Rahul Gandhi will soon replace his mother, Sonia Gandhi, as president of the ruling Congress Party. Taiwan’s contest could be a standout — a verdict on President Ma Ying-jeou’s economic policies and drive for better relations with China.

Territorial disputes in the South China Sea could bubble over. Violence might break out in Thailand if ousted Prime Minister Thaksin Shinawatra is allowed to return. In Burma, Aung San Suu Kyi’s move to register her party for elections will test the government’s recent steps toward democracy.

The Kim follies

A we get used to Kim Jong-un, not Kim Jong-il as North Korean leader, there’s no telling how things will unfold in Pyongyang. Will young Kim feel obliged to show he means business with missile launches into the South and nuclear tests? Might military generals coveting the top job rebel? The questions hover over all of Asia.

Internet clampdown

Beijing’s great wall of censorship is raising cyber clampdowns to an art form, the latest on Twitter-like services. Yet the Internet is under attack throughout Asia. India is stepping up efforts to require Facebook, Google and other portals to remove content that may be deemed offensive. South Korea and Thailand have been suppressing information. Balancing transparency and state control of information will become harder.

Japan’s debt trap

The conventional take is that Japan is in a liquidity trap, which makes it impossible for zero interest rates to stimulate the economy. The real problem is a debt trap, and the yen is part of it. On the one hand, a strong currency is prompting companies to go shopping overseas to hedge against the country’s aging population, lack of growth and a vulnerability to disasters. On the other, it is further hollowing out Japanese industry. That will lead Japan to add to its debt, the world’s largest, risking further credit downgrades.

China’s bust

It’s a make-or-break year for China’s efforts to defy the economic laws of gravity. A bad-debt hangover from the huge stimulus of recent years is a distinct possibility. Markedly slower growth would be a nightmare for a Communist Party obsessed with social stability.

Should the second-biggest economy join the United States, Europe and Japan in the slow-growth club, Asia would find itself in treacherous territory. It wouldn’t be the end of the world as the Mayans anticipated, but it would be different than the one we’ve come to know.

By William Pesek Bloomberg View columnist

Bearing the consequences of population policy in Thailand

Thailand went through its fertility transition more quickly than almost any other country, with the average number of children born to the average woman declining from about six to two in little more than two decades, between about 1970 and 1990.

Fertility rates have since gone still lower, now standing at around 30 per cent below replacement level (the level that would lead to long-run population stability). This does not mean that Thailand’s population has stopped increasing.

Population momentum — resulting from a continued relatively high concentration of people in the childbearing ages – may result in slow population increases for up to 10 more years. But after this Thailand’s population will begin to decline unless fertility rates increase substantially from their current level, or there is net immigration.

What are the issues, then, that Thailand faces in relation to population change? One is rapid population ageing, and another is urbanisation. The latter is concentrated on Bangkok and its surrounds, but increasingly also on regional cities such as Chiang Mai, Korat and Hat Yai. Equally, the international migration balance appears to be lowering the labour force’s average education and skill levels, as Thais moving abroad tend to be better-educated than migrants coming to Thailand from neighbouring Myanmar, Laos and Cambodia.

Still, Thailand has profited in recent decades from a demographic dividend, where its earlier decline in fertility has subsequently led to a population age structure in which the proportion of working-age people is very high. Such an age structure is favourable to rapid economic growth, something which Thailand has certainly achieved over recent decades. This demographic dividend is now drawing to a close, and the proportion of working-age people is beginning to decline, albeit slowly.

Thailand is fairly well placed to deal with the additional challenges this transition will pose for economic growth in coming years. Its education system has (rather belatedly) managed to achieve a much higher proportion of students completing their upper-secondary education. But the situation is not yet satisfactory. Thailand’s National Economic and Social Development Board reported that in 2008 the retention rate in primary education, from entry to the highest grade, and in upper secondary from entry to the highest grade, was 88 per cent and 53 per cent, respectively. A further problem will be Thailand’s ageing labour force, with a declining number and proportion of workers under the age of 29.

Considerable publicity has been given to the ageing issue in Thailand. The proportion of those aged 60 and above will increase from about 13 per cent at present to about 24 per cent in 2030. Most of Thailand’s elderly are healthy and able to look after themselves. Though the proportion living with children is declining, the proportion living with children or in close proximity to children remains quite high — 71 per cent in 2007. Therefore, despite a substantial flow of younger adults to the cities, the proportion of the elderly living alone is not high, and close contact can be maintained with absent children through the ubiquitous cell phone. Material support from children has declined only modestly, some workers are insured under the social security system, and the new National Saving Scheme is designed to provide a government contribution if fund members save until they reach retirement age. The greatest challenge is the provision of long-term care for severely disabled people and those suffering from serious chronic illness, especially in view of the increasing share of never-married Thais in the elderly population — a group that will become more apparent over the next two decades — who will have no children to rely on.

Thailand’s population policy focused on reducing fertility from high levels for almost three decades. Now Thailand must consider following the example of its low-fertility East Asian neighbours — Japan, South Korea, Taiwan and Singapore — in introducing policies designed to encourage marriage and childbearing. Though the policies elsewhere in East Asia do not appear to have been particularly successful, some have been in place for too short a time to make much impact. At a minimum, Thailand should be considering more generous maternity-leave provisions than are provided at present, more flexible working hours and improved subsidised childcare. Merely copying other countries’ policies is unlikely to serve Thailand well, as its circumstances differ considerably from its neighbours.

Population projections for Thailand suggest that fewer than five million people, and very likely only one million (less than 2 per cent), will be added to the population before growth ceases. Bearing in mind continued population movements from rural to urban areas, this means that some regions will witness a drop in population because the growth of towns and cities in these areas will not fully compensate for rural depopulation. Planning for population decline is important to any country’s future, and Thailand can profit from the experience of European and East Asian countries that have had to manage population decline in rural and regional areas.

By Gavin Jones Head of the Division of Demography and Sociology, Research School of Social Sciences of the ANU and was the Coordinator of the Demography Program of the ANU’s College of Arts and Social Sciences from 1990 to 1996.This article appeared in the most recent edition of the East Asia Forum Quarterly, ‘Where is Thailand Headed’

Rethinking the ‘China model’

The idea that there is a coherent and distinct ‘Chinese model’ of political economy has gained attention in recent years — especially as financial crisis elsewhere has undermined confidence in the (neo)liberal models often associated with Western interests and objectives.

To be sure, there are many in China and elsewhere who argue the crisis has actually highlighted key defects in China’s development model.

The argument that there is an unsustainable reliance on exports — and investment — to generate growth seems widely accepted, even if it is less clear how a ‘rebalancing’ can be achieved. Still, the possibility that an identifiable Chinese model exists is not just the source of considerable interest, but also a degree of national pride.

But rather than highlighting a contradiction in thinking, these apparently divergent responses point to what most observers suggest is a key component of the model; it is flexible, pragmatic and responsive, as it is built around experimentation and doing what works, rather than basing itself on rigid ideological and/or policy prescriptions. This not only means doing different things as conditions change at home and abroad, but also having different models for different parts of the country. While it might not be possible for other developing countries to do what China has done, the essence of this understanding is that they should not search for blueprints, but should instead do whatever works for them.

In this respect, the Chinese model is less important for what it is as what it is not. It is not big-bang reform and shock therapy; it is not a process where economic liberalisation necessarily leads to democratisation; it is not jettisoning state control over key sectors or full (neo)liberalisation (particularly in financial sectors); it is not the Western way of doing things; and it is not following a model or a prescription, or being told what to do by others. And unlike other communist-party states, all this has taken place under regime continuity. While the successes of China’s economic experience are clearly important in promoting this idea, so too are the failings of the neoliberal ‘other’ against which China is being compared.

Within this ‘no-model model’ approach, we have the seeds of other ways of thinking. In defining the model, different people tend to focus on different aspects that reinforce their pre-existing thinking. For example, for those who focus on regime continuity, the model is sometimes reduced to rapid economic growth combined with strong state authoritarian politics. For at least some within China, such understandings focus only on the positives of what has happened, and ignore the myriad social and economic challenges that exist alongside the ‘miracles’.

Similarly, for those who focus on the lack of liberalisation and the state’s dominance, the importance of early stages of marketisation and the relative retreat of the state are often under-emphasised. Many also focus on the managed process of integration with the global economy and globalisation that China is carrying out on its own terms — understandings which do not sit easily with earlier studies of how the process of opening up had much to do with acceding to the interests of global finance and production.

This is partly explained by the dualistic nature of China’s international economic relations. While liberalisation has been promoted to encourage investment to produce exports, key domestic actors and sectors have remained relatively protected and supported by the state. And here there seem to be commonalities between what is happening in China today and what has happened in developmental states previously — not just in terms of trade, but in the state’s organisation of capitalism more generally. Of course there are many country- and context-specific differences, but there are at least some characteristics that link China, not just with the East Asian developmental states of the post-World War II era, but with the renaissance of the post-Meiji Japanese economy and Germany’s Bismarkian development in the 19th century.

In some respects, it does not matter if the Chinese model is indeed a new and discrete entity; if people think there is a China model and act accordingly, the model exists. But debating the genealogy of models is more important than just an exercise in semantics. If the China model is thought of as new and different, this suggests it represents a distinctive deviation from the ‘norm’. But rather than being abnormal, China seems to provide the latest example in a relatively long line of cases of strong state developmentalism that have been ‘successful’ in generating GDP growth (in early stages of industrialisation and national infrastructure construction at least). In this respect, rather than thinking in terms of a China model, it is perhaps more correct to talk of 有中国特色的新李斯特式发展型国家 — a strong state developmentalism developmental state with Chinese characteristics — and to rethink what is normal and what is a deviation.

By Professor Shaun Breslin Director at the Centre for the Study of Globalisation and Regionalisation, Department of Politics and International Studies, University of Warwick, and Associate Fellow at the Chatham House Asia Programme, Royal Institute of International Affairs. East Asia Forum

Wednesday, December 28, 2011

America’s Uzbekistan Problem

There is perhaps no country on earth surrounded by more difficult neighbors than Afghanistan. When the U.S. wants to ship matériel to its troops there, it can’t go through Tajikistan because the roads are so poor; it can’t go through Turkmenistan because that country maintains an isolationist neutrality; and, for obvious reasons, it can’t go through Iran.

Until Nov. 26, the U.S. military shipped about a third of its supplies through Pakistan, but after an American attack killed 24 Pakistani soldiers, the country cut off NATO’s access to the border, and there is little indication that officials in Islamabad intend to change their minds. The U.S. military ships another third of its cargo to Afghanistan by air, but that costs so much more than shipping by land that to expand those operations would be prohibitively expensive. That leaves Uzbekistan.

Anticipating problems with Pakistan, Pentagon planners began putting together the Northern Distribution Network, a series of transit routes from Europe through the former Soviet Union. Nearly all of those routes converge at Termez, Uzbekistan, whose sleepy, dusty streets belie its strategic location: 75 percent of the network’s traffic passes through the town and across the Soviet-built “Friendship Bridge” into Afghanistan. Now, the U.S. will have to ship even more military cargo through Uzbekistan, one of Washington’s least likeable allies.

Ruled since the Soviet era by President Islam Karimov, it is the fifth-most corrupt country in the world, according to Transparency International, and in Freedom House’s rankings of political and civil freedoms it is tied for last.

“The challenge for the United States is to strike a balance between its short-term, war-fighting needs and long-term interests in promoting a stable, prosperous and democratic Central Asia,” John Kerry wrote in the introduction to a report released on Dec. 19 by the Senate Committee on Foreign Relations entitled “Central Asia and the Transition in Afghanistan.”

This is a difficult needle to thread, but Washington has so far largely succeeded.

The U.S. has kept the supply lines running while compromising little on its principles. The yearly State Department human rights reports have remained consistently critical, even as military cooperation has blossomed. Human rights advocates in Uzbekistan — a small, beleaguered community — still say that, for the most part, they feel like the U.S. Embassy is an ally.

But this balance is difficult to maintain, and lately there have been signs that America may be wavering. The defense budget authorization act passed on Dec. 15 by Congress removed restrictions on military aid to Uzbekistan that had been in place since 2004 because of the country’s odious human rights record. Asked about that decision, Secretary of State Hillary Clinton said there had been “progress” on human rights and political freedoms, which, while not a realistic assessment of the situation, technically speaking is true.

The Kerry report makes the same claim and as evidence reaches back nearly four years to note only one such bit of progress: that the government began allowing the Red Cross to visit prisoners in 2008. But the overall picture is grim, and, if anything, getting worse.

When Clinton visited Tashkent in October, a State Department official told the reporters accompanying her that “President Karimov commented that he wants to make progress on liberalization and democratization, and he said that he wants to leave a legacy of that for his — both his kids and his grandchildren.” Pressed by an incredulous reporter, the official added, “Yeah. I do believe him.”

This new, more accommodating rhetoric is embarrassing. If Clinton were to say: “No, we don’t agree with how Uzbekistan’s government runs its country. But we need their help in Afghanistan, and so we’re temporarily putting our differences aside,” would anyone object? That is obviously the bargain being struck, and one that few in the U.S. or Uzbekistan would take issue with.

Wikileaked cables reporting on U.S. negotiations with Karimov over the past few years reveal a president who doesn’t seem to care much about how the U.S. sees his government, but just doesn’t want what he calls American “pressure and diktats” to reform.

Though the U.S. has consistently hectored Uzbekistan on human rights over the past two decades, the country has become more oppressive. The U.S.-Uzbekistan military relationship has had its ups and downs — the U.S. operated an air base there from 2001 to 2005 — and through it all, Karimov hasn’t changed.

There is no question that as long as the U.S. is in Afghanistan, it will need to engage with Uzbekistan. But how it chooses to engage can make all the difference. “Achieving our security goals and promoting good governance and human rights are not mutually exclusive,” the Kerry report says. “In fact, security and political engagement are complementary strategies that are more likely to be effective when pursued together.”

The report doesn’t back up that assertion, and in the case of Uzbekistan it plainly isn’t true. No sort of political engagement will work, and the irony is that the more U.S. officials believe it, the more likely they are to compromise their principles. In this case, saying nothing may be the best way for the U.S. to stay true to what it believes.

By Joshua Kucera freelance reporter based in Washington who writes frequently on Central Asia.

Tuesday, December 27, 2011

Indonesia’s recent plan on live cattle and beef import from Australia

The Indonesia-Australia trade relationship is once again being put to the test. There have been strong rumors circulating about Indonesia’s plan to cut its live cattle and beef import quota from Australia to an amount that is only slightly over half of the 2011 quota.

Export permits may be issued for a total of only 283,000 head of live cattle for 2012. Interestingly, the news has attracted attention from Australian media more than Indonesian media. The plan for the quota cut is said to be related to the 2011 live cattle census.

How reliable is Indonesia’s census data? To the author’s knowledge, there has not been an official release regarding results from the 2011 live cattle census issued by the Indonesian government or Agriculture Ministry. However, according to various Australian news portals, the census concludes that Indonesia has 14.8 million head of cattle.

The results suggest a relatively significant jump from the usual historical trend. According to the Food and Agriculture Organization (FAO) statistics, Indonesia’s live cattle stocks amounted to 12.8 million in 2009.
Between 2005 and 2009, annual stock growth had been about 4 percent.

This implies that to have 14.8 million head of live cattle in 2011 as determined by the census, between 2009 and 2011 Indonesia must have increased its annual stock growth by nearly twice as much as during the 2005-2009 period, namely by about 7.5 percent.

It is true that the Indonesian government through the Agriculture Ministry has implemented various programs in order to achieve self-sufficiency in livestock; a target which has been announced and, yet, delayed, since 2005. The programs have included lowering productive female cattle slaughtering rates, an artificial insemination program and many others.

However, doubling growth rates over the last two years requires new or far more effective programs than the ones Indonesia has already had since 2005. It is not clear whether such a program exists. The artificial insemination program, for example, has been challenged by poor environmental conditions, resulting in high calf-mortality rates.

Despite the effectiveness of the Indonesian government’s programs, it could also be the case that data on live cattle stocks prior to the 2011 census were underestimated. This is a worry, if we think about the quality of policy recommendations derived from inaccurate data.

In addition to the necessity of data, there are some other important aspects that should be considered. First, what is the proportion of home-produced livestock? Domestic stocks that are heavily reliant on imported seeds would question the sustainability and the meaning of being self-sufficient. Indonesia’s plan to cut its import quota can be perceived as “a payback” by Australian industries following a month’s export ban earlier this year.

Worsening trade links between the two countries could limit a number of initiatives that could transfer knowledge and technology from Australia, one of the biggest livestock exporters in the world, to
Indonesia, a country that desperately needs to improve its livestock industry’s efficiency and productivity.

Second, trade barriers would reduce consumers’ welfare. It is not clear whether the import quota cut has taken into account the increase of middle-income families in Indonesia.

These middle- to upper-income groups normally prefer imported beef. Limiting their choice of consumption goods may impact on other sectors, such as the hospitality industry.

Third, an import quota cut may increase the price of poultry due to substitution effects, on which Indonesians spend more. Increased poultry prices could, in turn, have a more substantial effect on inflation rates.

Nevertheless, self-sufficiency in livestock, as well as in other agricultural commodities, has always been and always will be the Indonesian government’s target. Such a policy normally receives strong political support; however, Indonesians are resilient and the government recognizes this characteristic.

Indonesians normally learn something well during periods of economic hardship. So while cutting the imports of live cattle and beef might increase domestic prices, the government knows that Indonesians will make some necessary adjustments at an individual level. However, this may not be the best policy ever employed by a government.

For Australia, there are a number of strategies available to it. Obviously, market diversification is on Australia’s agenda. According to the Federal Agricultural Minister, Senator Joe Ludwig, Australia considers new markets and expanding existing markets including Korea, Japan, Vietnam, Egypt and Turkey.

With regard to Australia’s trade links with Indonesia, there are several investment options. Australia can invest in breeding units. In 2007, according to the Central Statistics Agency, there were only 10 breeding units in Indonesia. Australia can also assist Indonesia to meet its increased demand for effective irrigation and pen systems.

Indonesia’s land limitations increase the demands for better pen systems. In West Nusa Tenggara, a team from the Agriculture Ministry reported that 100 percent of farmers surveyed kept their cattle in confinement (i.e. cages).

This issue is important, given the fact that it is often argued that a free range life for any kind of animal means it lives closer to its natural environment doing what it does best and, therefore, produces better quality meat.

Australia can also assist Indonesia in improving live cattle welfare and health control, an area with which Indonesia still seems to be struggling. It can also assist the Indonesian government in the provision of credit and investment in infrastructure. The high slaughter rate of female cattle is said to be due to farmers’ limited capital.

Most of the above investment options may not provide Australia with the same profits as exporting live cattle. But Australia’s continued goodwill could also indirectly strengthen its trade partnership on other trade commodities and, potentially, offer a wider scope of socioeconomic-political partnership with Indonesia.

As for Indonesia, its protectionist trade policy may be able to help Indonesia achieve self-sufficiency in livestock, but at a high cost. According to Vanzetti et al (2010), improved research and development would provide greater gains but it is a long-term investment.

Greater integration between northern Australia’s live cattle trade and Indonesia’s cattle industry offers the potential of not only meeting Indonesia’s food security objectives but also increasing processed meat export opportunities in rich neighboring ASEAN member states, which could benefit both countries.

Risti Permani, Adelaide, Australia university postdoctoral fellow at the University of Adelaide’s School of Economics in Australia.

Monday, December 26, 2011

Kabul's Stealth Attack on Human Rights

Watershed moments in Afghanistan happen by stealth. Last weekend — the anniversary of the Soviet invasion 32 years ago — President Hamid Karzai rid himself of his most outspoken critic, a prominent official with one of the few government institutions in Afghanistan that actually performs well — the Afghanistan Independent Human Rights Commission. The move, announced Thursday, seems intended not only to silence a critic but bury the truth about the crimes of the past.

Why now? Ahmad Nader Nadery had anticipated losing his job — he, together with his colleague Ahmad Fahim Hakim, also dismissed, has been a thorn in Karzai’s side for many years. Both had campaigned tirelessly against human rights abuses and electoral fraud. But this sudden move, scheduled while most of the West is on holiday, has a more ominous intent.

For the past several years, Nadery has been heading an effort to document war crimes going back to the time of the Soviet invasion. That effort is nearly done, and the long-anticipated report was scheduled to be released soon. Karzai’s move seems designed to smother the report before it sees the light of day.

Talking about the past has never been popular with the Afghan government or its U.S. ally. Karzai’s cabinet includes Vice Presidents Marshal Muhammad Qasim Fahim and Karim Khalili. Both men have been accused of war crimes in international human rights reports. U.S. State Department officials also have been nervous about the coming report, concerned that the release of details of Taliban atrocities in the late 1990s could upset delicate negotiations to get peace talks underway. “Now is not the right time,” one U.S. official recently told me. The Americans fear rocking the boat just at the moment they are trying to hammer down a deal — and leave.

Sadly, not rocking the boat has been the American mantra for the past decade, and has only worsened insecurity. From the outset, the military campaign in Afghanistan reflected the narrow U.S. objective of defeating the Taliban and Al Qaeda and creating a government able to maintain stability following a troop withdrawal.

Washington chose its allies among anti-Taliban forces, mostly comprising Northern Alliance warlords and their militias. The Pentagon consistently rebuffed concerns that these commanders, most with long records of war crimes, might prove to be a destabilizing factor. Ten years later, stability in Afghanistan is still an elusive goal.

But the past is not just the past in Afghanistan. In October, the United Nations published a report on rampant torture in Afghan government detention facilities. As a Western official who investigated torture under the Communist regime told me, just “replace 2011 with 1979 and guess what?” Things have barely changed. It is no surprise that the National Directorate of Security is known today by it’s acronym from Soviet times, Khad. The practice of torture is the same, though it is not yet as pervasive.

That the past is repeating itself is no surprise to Afghans: When I was in Kabul in the late 1990s, people told me time and again that the only thing they feared more than the Taliban was that the warlords of the Northern Alliance might return to power.

The U.S. promise to build a democratic Afghanistan with respect for human rights seems all but forgotten, but it is still possible to salvage some measure of human rights protection. To start, the Obama administration and its European allies should raise concerns immediately with the Karzai government about the termination of the Human Rights Commissioners’ appointments, and express strong support for the work Nadery and his colleagues have done.

Washington should urge that their replacements be people with strong track records in human rights. And the U.S. should encourage and welcome human rights documentation that seeks to bring to light the truth about the past, including via the commission’s yet-to- be-published report. To paraphrase Martin Luther King, the great tragedy of this period in Afghanistan is the appalling silence of those who do not speak out for what is right.

By Patricia Gossmanwho is working with the Afghan Human Rights Commission on its forthcoming report.

Sunday, December 25, 2011

West Papua Media Alerts - Press Release – Act For Peace

Time To Change Australia’s Involvement In West Papua

Reports are emerging this week that the helicopters from which 17 West Papuans were recently shot are those of an Australian-owned mining company, Paniai Gold. Further, this ongoing Indonesian offensive involves counter-terrorism unit Detachment 88, which has been trained by Australia.

This Indonesian joint military-police offensive reportedly also burned down the villages of Toko, Badawo, Dogouto, Obayoweta, Dey, and Wamanik, with 20,000 people now displaced. Images reported in Australian and international media show more troops being deployed to West Papua.

Act for Peace is calling on the Australian Government to urgently request that the Indonesian authorities cease any attacks impacting civilians, and that Indonesia and Paniai Gold account for their alleged actions relating to the civilian deaths and forced displacement. Media is strictly controlled in the region, making the need to pursue a full account more important. The large-scale offensive is in retaliation to the killing of two Indonesian police by Papuan guerrillas in Paniai. Prior to this operation, in October six unarmed protesters were reportedly killed and many more injured at the Third Papuan People’s Congress.

Act for Peace, the international aid agency of the National Council of Churches in Australia, is also concerned at the targeting of church leaders and communities and the occupation of church buildings, in particular the Kingmi Theological College in Paniai, harassment of Kingmi Church of Papua Moderator the Rev. Benny Giay, and the attack on staff, students and destruction of property at the Catholic Church’s Fajar Timur Theological College in Abepura by the Indonesian police and military on October 19.

We also call on the international community to ensure the Indonesian authorities allow church and Congress leaders in West Papua freedom of expression of their views and rights without fear of persecution. Act for Peace has supported programs in West Papua including training young community leaders, raising awareness of and helping to prevent the spread of HIV/AIDS and growing small businesses to help strengthen the West Papuan economy.

West Papua is the western half of the island of New Guinea, with an indigenous Melanesian population. December 1, 2011 marks the 50th anniversary of the declaration of West Papuan independence from Holland. It was forcibly taken over by Indonesia a year later.

Reports show more than 100,000 Papuans are estimated to have died from military operations since Indonesia took control. State-sponsored migration from other parts of Indonesia has now left the indigenous Melanesians a minority in West Papua.

It is time Australia, as a good international citizen concerned about the protection of civilians, did more to ensure the safety of our neighbours.

Alistair Gee
Executive Director, Act for Peace

The Tragedy of Nepal's Badi Women

Nepal's lowest caste say prostitution is all they know

Four years ago, Taruna Badi, 38, a member of the Badi community, one of the most marginalized groups in Nepal, thought her days of prostitution were over.

In 2007, she and dozens of other Badi women travelled from Kailali, a district in the far west of Nepal, to the capital Kathmandu, located across the country, to join in protests by Badi activists seeking government help to lower longstanding economic and social barriers. For many women, this meant coming up with alternatives to prostitution.

The government agreed to study the Badis' situation and to provide aid in the form of land grants, employment training, free education for Badi children, health services, citizenship with the caste of their choice, and a declaration of the end of prostitution within the community.

That was then. Today, many of the Badi women say they've barely received any support and have gone back to the only work available to them.

"What else to do?" Taruna asked in desperation. "Prostitution is the only means of earning so far for us." Badi women say they earn between 70 cents and $2.75 for a sexual encounter.

To assess the situation, Binod Pahadi, who has travelled across the region as the member of a government group, concurs with Taruna's account of the administration's failure to uphold its agreement with the Badi community. "We roamed across [the] nation," Pahadi said. "Nowhere is it implemented."

Taruna says Badi women need government help because of their lack of education and inferior social status. A government study estimates the Badi population at just more than 8,000, almost all of whom live in the western part of the country. Nepal's 1853 civil code categorized the Badi community as the lowest among the socially and economically disadvantaged Dalit caste.

"We haven't had education and hence can't get any work," Taruna explains. "If we try to start a business with the help of loans, customers ostracize our establishments on the grounds that they are run by 'untouchable' Dalits. What is an alternative then for means of survival?"

Food is a necessity, she adds. "Children need to be fed," she says. "There is [not] another source of income. This is the only source of income for us."

Few Badi people own land. They live instead in rented cottages by the roadside, on riverbanks and on the forest edges. Maya Badi, 32, from Doti, another western district, says she left prostitution after the 2007 protests but has since returned to it.

"We have no wealth or property and a family of eight to feed," she says. "It was all right when government and non-governmental organizations had provided aid [in the form of stipends]. [But once that ceased] we have to see to our own survival."

Now men have once again started queuing outside the houses of Taruna, Maya and their female neighbors. Mina Badi, 24, Maya's neighbor, says she has returned to the work and has stopped finding prostitution difficult or uncomfortable. "What is the use of shame?" she asks.

She says that since her parents live with her, she goes out into the village to look for customers. "My parents are old," she says. "Therefore, I roam in the village the entire day, eat out and return in the evening."

Various local governmental and non-governmental organizations in the Badi-inhabited regions have banned prostitution, which nonetheless has been openly practiced for the past five decades. Nirmala Nepali, a member of both the National Badi Rights Struggle Committee and a government committee formed after the 2007 protest to assess Badi rights, says women get around this by going to other villages without such restrictions.

In the absence of other employment opportunities, Maya says the ban worsens women's lives by making it harder to earn any living. "The state had agreed to rehabilitate the Badi community and provide employment, but these assurances have been limited to paper alone, and the flesh trade flourishes once more in almost all the Badi-inhabited areas," says CB Rana, another member of the National Badi Rights Struggle Committee.

A number of NGO groups have been advocating for Badi rights. One such group, Save the Children Norway, a child's rights advocacy and development assistance organization, has been working to carry out the government's free education initiative for Badi children.

Some say that although tuition may be waived, some institutions are still making it hard for Badi children to attend school because they charge fees for integral programs such as sports and using the library.

Non-Badi women's rights activists have also spoken up. Both Mira Dhungana, a lawyer, and Mina Sharma, a women's rights activist, urge the government to fulfill its 2007 promise. Sharma says that if there is no action soon, women's rights activists will get more actively involved.

"No woman joins the flesh trade out of mere choice alone," Sharma says. "If the government does not provide the opportunity for Badi women to lead honorable lives like any other Nepali citizen and make necessary employment arrangements for them, we, all women['s] rights activists, are ready to actively engage in a renewed protest movement for them."

By arrangement with Women's eNews Asia Sentinel

Saturday, December 24, 2011

Our Economic Time tells us Europe and the US sink, China will recover

Asian Markets: Watch the Second Half of 2012

What do we see as the major market events of 2012? First, we expect China’s economy to improve during the second half of the year. This will shock many, who perhaps have forgotten that Asia is in a cyclical slump while the industrialized democracies of Japan, the United States and the European Union are in structural slumps.

In a cyclical slump, the government always creates an excess supply of money in an effort to rekindle the flames of growth. Indeed this cyclical succession is the basis of our Economic Clock framework, in which we take key economic indicators and filter them down to concise, commercially applicable information for investors of all sizes.

In a structural slump, only structural measures will help to re-kindle failing economies. The major investment implication of this is that Hong Kong's stock market will shine as of June: we are, after all, the water skier behind the Chinese speed boat

On the other side of the earth, Europe's problems cannot be solved. It appears to be that many non-Continental people expect the European problem to be solved "suddenly", i.e. in one fell swoop.

My many years living in Germany suggest that there is no instant, one and for all "solution" to the European problem. This is because Europe's problems are of structural nature. Trying to solve this problem with a cyclical bazooka is really like chasing an elephant with a pop gun

Besides, even one-nation America (as in: Capitol Hill) cannot solve her fiscal problems. How, then, can one expect 17 - 27 EU nations to all agree on the same "solution"?

The major investment implication of this has to be that European stocks will underperform Asia strongly, especially as of the second half of next year.

A steepening US dollar yield curve thwarts a solid recovery in US housing. In America, short-term rates stay low, courtesy of the US Federal Reserve's easing policy continuing. However, long bond corporate yields will rise because there will be increased supply of bonds being issued. When supply rises, the price goes down so the yield goes up, as we all know.

This rise in corporate yields, in turn, thwarts a recovery in the US mortgage market, so housing will continue stuck in a soggy marsh.

The major investment implication of this has to be that American stocks will underperform Asian markets especially as of the second half of 2012. Asia Sentinel

Justice denied for Cambodia

The trial of three senior leaders of the Khmer Rouge — Ieng Sary, Nuon Chea and Khieu Samphan (known as Case 002) — began in November in Phnom Penh before the Extraordinary Chambers in the Courts of Cambodia (ECCC).

Each is charged with genocide, crimes against humanity and grave breaches of the Geneva Conventions. The ECCC has the jurisdiction to try the ‘senior leaders of Democratic Kampuchea’ and ‘those who were most responsible’ for the atrocities committed between 17 April 1975 and 6 January 1979.

But Cambodian Prime Minister Hun Sen wants to stop further trials of Khmer Rouge military and political leaders who were among the most responsible for one of the 20th century’s bloodiest genocides. The Cambodian government’s obstructive approach to justice for the 2.2 million victims of Cambodia’s Killing Fields goes back to the tense and often acrimonious negotiations surrounding the court’s establishment.

The Cambodian government requested UN assistance in bringing the Khmer Rouge to justice in 1997. In 1999, a UN-mandated Group of Experts called for the establishment of an international tribunal to investigate and prosecute those responsible for serious violations of international law.

However, Hun Sen then argued that any international criminal prosecutions could threaten Cambodia’s national reconciliation and therefore insisted that any tribunal should be entirely Cambodian. Many observers believe Hun Sen was concerned about the possibility that such trials could expose the responsibility of current Cambodian political leaders for atrocities committed during the Khmer Rouge period.
A compromise was ultimately found in 2005 with the establishment of a ‘hybrid tribunal’, staffed by both Cambodian and foreign nationals, and jurisdictionally located within the Cambodian court system. In every chamber there is a majority of Cambodian jurists, but any decision not to proceed with a case requires a super-majority, requiring the support of at least one international judge. Many court watchers and NGOs believe this system has enabled the Cambodian executive to wield enormous influence within the tribunal.

Case 002 concerns the prosecution of the Khmer Rouge’s senior leadership; Cases 003 and 004 are focused on ‘those most responsible’ for atrocities but who are not part of the regime’s senior leadership. The suspects in these cases are well known. In Case 003, Meas Muth, the Khmer Rouge navy commander, and Sou Met, the air force commander, are accused of crimes against humanity and war crimes. In Case 004, three regional officials, Aom An, Yim Tith and Im Chem, are alleged to have committed genocide and crimes against humanity.

Hun Sen has consistently stated that no more than four or five individuals will be charged, and Cases 003 and 004 ‘will not be allowed’. In May this year, Information Minister Khieu Kanharith reaffirmed this, warning international staff that ‘if they want to go into Case 003 and 004, they should just pack their bags and leave’. The Cambodian and international co-investigating judges closed the investigation of Case 003 in April 2011, without questioning the suspects, or even examining the alleged crime sites.

Criminal prosecutions are a crucial element in restoring and rebuilding societies which have suffered from mass-atrocity crimes. They provide victims with cathartic relief and a sense of justice, promote individual recovery, psychological healing and collective relief. As an international criminal court, the ECCC promises the global community’s support for the victims of Cambodia’s genocide, and it must be allowed to operate independently.

Ending the court before the trial of all those most culpable for the Khmer Rouge’s crimes would also contradict emergent norms in international criminal law, regarding the culpability of individual perpetrators of crimes against humanity. Moreover, the statute of the International Criminal Court (ICC) provides that cases will be inadmissible only under exceptional circumstances. The ICC’s Appeals Chamber decided in July 2006 in its Decision on the Prosecutor’s Application for Warrants of Arrest that arrest warrants for crimes committed in the Democratic Republic of the Congo should not be limited to the most senior leaders. The Appeals Chamber said that excluding all but the most senior leaders from prosecution ‘could severely hamper the preventive, or deterrent, role of the Court by announcing that any perpetrators other than those at the very top are automatically excluded from the exercise of jurisdiction by the Court’.

Prevention is the most important objective of international criminal law, and is not served by token prosecutions of the best-known and most-senior violators of crimes against humanity. The Cambodian government should be pressured to ensure all three trials are held, thus avoiding a very bad precedent.

Authors: Kevin Boreham is a lecturer at the ANU College of Law, Australian National University. Harry Hobbs is an LLB Honours student at the College of Law, Australian National University and has just completed a three-month internship at the Extraordinary Chambers in the Courts of Cambodia working in the Pre-Trial Chamber.East Asia Forum

Friday, December 23, 2011

A Year of Dubious Performances in Asia

If Asians named a person of the year, someone who brought surprise, intrigue and economic impact to the region, the choice would be Mother Nature.

From earthquakes in Japan and New Zealand to floods in the Philippines and Thailand to Chinese droughts to volcanic eruptions in Indonesia, this was a year overrun by nature’s fury. Food shortages and the effects of climate change challenged governments and inflation rates as rarely before.

Other forces of nature, meanwhile, ran out of steam. The most surprising thing about Kim Jong-il’s death is that we were so surprised. Time was never on the side of the hard-living North Korean leader after a 2008 stroke. Yet, the world seemed to think the laws of science no longer applied to Kim. Unstoppable China also showed signs of being subject to a set of laws — those of economics, which guarantee that rapid growth inevitably slows.

As 2011 draws to a close, 10 awards are in order for the countries, people and companies that shaped Asia’s tumultuous year — natural disasters aside.

H omer Simpson Award: T o the hapless crowd at Tokyo Electric Power Co., whose corruption and negligence turned Japan’s March 11 earthquake and tsunami into the worst crisis since Chernobyl. Japan’s nuclear industry was proved to be no sounder than that of the fictional Springfield Nuclear Power Plant, where, th e bumbling Homer heads safety. Only for Japan’s 126 million people, there’s nothing to laugh about.

Ready or Not Award: To Kim Jong-un, the 20-something son expected to replace Kim Jong-il. Grandfather Kim Il-sung spent decades preparing his son to take over in 1994. Kim Jong-il had far less time to show his successor the ropes. Get him a copy of “Dictatorships for Dummies.”

Reality TV Award: To Philippine President Benigno Aquino, for offering nary a dull moment. First, he stood up to the Catholic Church’s stance against contraception and family planning. Then he went after the billions of dollars watchdog groups say Ferdinand Marcos looted during his 21 years in power. Next, he arrested predecessor Gloria Arroyo on corruption charges. And you think things are tense in Washington?

Overwhelmed Freshman Award: To Yingluck Shinawatra, the fresh-faced prime minister of Thailand. With her unsteady handling of massive floods that breached Bangkok’s defenses, Yingluck confirmed concerns that she is both unqualified for the job and a proxy for her brother Thaksin Shinawatra, who was ousted from the premiership in 2006 amid huge street protests.

Coming Out Party Award: To Burma, for shocking the globe by taking steps toward democracy. If you told Hillary Clinton a year ago that she would be in Rangoon and embracing Aung Sang Suu Kyi, the secretary of state might have laughed. It makes you wonder whether Pope Benedict XVI will soon get an invite.

Underdog Award: To Anna Hazare, whose hunger strike shook India. Only history will tell if the anti-corruption movement touched off by the Gandhian social activist will drive the change India’s inefficient economy needs. It’s a dialog that India must have if it’s going to keep up with China.

Grrl Power Award: To Julia Gillard, the Australian prime minister who is thriving in a man’s world. After toppling predecessor Kevin Rudd in a June 2010 party coup, word was that Gillard wouldn’t last. Today, she’s running an economy that’s the envy of the developed world and planning to lead the Labor Party to the next election in 2013. Gillard is also working to increase female participation in Australia’s executive suites. Good on you, mate.

Clueless Executive Award: Although it’s hard to top Japan’s Tepco for dismal leadership, Olympus deserves honorable mention for a scandal that left a $1.3 billion hole in its balance sheet and President Shuichi Takayama struggling to save the company’s board. And the next recall by Sony, which is on course for a fourth straight annual loss, should be chairman Howard Stringer.

Contrarian Indicator Award: To Standard & Poor’s, which might as well have flashed a “buy” signal on American debt when it cut the United States’ AAA rating in August. Far from fleeing the dollar, investors — many of them from Asia — loaded up anew on US Treasuries. Does that signify complete distrust of our credit-rating system, or what?

Meredith Whitney Award: To Muddy Waters, the Hong Kong-based short-seller that claimed to have found financial shenanigans at timberland owner Sino-Forest. Whitney’s 2007 prediction that Citigroup’s dividend was i n danger — it was later cut — drew denials and rebukes. Muddy Waters’s report, initially disputed, is looking more accurate by the day. Among the investors tripped up was John Paulson, he of the colossally profitable bet on subprime mortgages.

It’s fitting that the final award concerns China, because Asia’s prospects are so dependent on the region’s dominant economic power. Maybe next year is when we will find out if Sino-Forest was an anomaly or a microcosm of the Chinese growth miracle. If it’s the latter, then what Mother Nature served up this year might seem tame by comparison.

By William Pesek Bloomberg View columnist.

Thursday, December 22, 2011

Will Modern Indonesians Put an End To the Myth of the Javanese President?

An enduring myth exists in Indonesia that all of our presidents must come from Java, or at least have Javanese blood. Even in the democratic, free and liberal political landscape of today, this myth persists. Is it a manipulation of our collective consciousness, or is it indeed a reality?

Our strong belief in the “Javanese president” is deeply rooted in a social demographic that sees the majority of voters located in Java. Racial and primordial sentiments can become crucial considerations when people cast their votes, which tends to explain the political prevalence of emotional voters.

This trend still exists today, but it’s not as strong as it once was. A national survey conducted in October by my organization, the Developing Countries Studies Center, showed that only 19.4 percent of respondents believed the nation’s president should be of Javanese descent. The majority, 73.3 percent of respondents, believed hereditary origins were not very important.

This survey indicates that there has been a fundamental shift in voter attitudes. Most likely this shift began in 1999 as a result of political modernization, but it accelerated in 2004.

That year, the victory of President Susilo Bambang Yudhoyono in the presidential election was largely determined not by his Javanese roots, but by his charisma and effective communication style, which the public saw as a departure from most politicians at the time.

Yudhoyono’s countrywide popularity was evident in the fact that he received a relatively even distribution of votes from around the country, indicating that he was not seen as just representing Java.

Based on this evidence, we should be skeptical of people who claim that a Javanese president is truly a popular aspiration. It is possible that certain political elites invented this notion, or at least are trying to keep it alive, to serve their strategic interests. But the fact is, the public seems to consider the political issue of Javanese roots as antiquated — a relevant issue in the past, perhaps, but not any longer.

And yet at the elite level, each time there is a discussion of national leadership, it seems there is always an emphasis on the Javanese/non-Javanese issue. This emphasis either indicates an inability among the elite to accurately read the public’s changing perceptions, or a tendency to preserve the myth for their political interests.

So does a non-Javanese presidential candidate have a chance in 2014?

Based on the political dynamics we see today, the competition for the presidency is already under way. Numerous analysts have come out and predicted that the next presidential election will be rigorous and particularly interesting, especially because Yudhoyono cannot run for re-election.

Many of the perceived leading candidates at this early date are not Javanese, including Aburizal Bakrie, Hatta Rajasa and Surya Paloh. Of course, Javanese figures such as Megawati Sukarnoputri and Prabowo Subianto are also in the running.

There is no potential candidate that could be considered dominant at this point. Megawati has the most experience, while the others are fairly even in that regard. With the right platform and an effective campaign, the door is wide open for a non-Javanese leader to gain the nation’s highest office.

This kind of optimism, for those of us who would like to see the myth exposed, is not just wishful thinking. The three non-Javanese politicians mentioned above are not newcomers to Indonesian politics. Their experience, strategic positions, mass support and political capital are enormous.

Aburizal Bakrie, for example, is chairman of the Golkar Party and the successful leader of a far-reaching conglomerate. He also owns media that are ready to aid his campaign machine.

With these advantages, Aburizal can do much in the field. The only thing that will hurt him is perhaps the Sidoarjo mudflow in East Java, where he can expect less support.

Next is Hatta Rajasa, chairman of the National Mandate Party (PAN) and a leader from South Sumatra. He is known widely as a loyal politician, both within his party and in the greater government. In his party, Hatta is close to Amien Rais, and in the cabinet he is known to be loyal to Yudhoyono.

The president has rewarded him for this loyalty with a number of strategic ministerial posts, including state secretary and coordinating minister for economic affairs. Recently, Hatta’s daughter married the president’s son, and Hatta said Yudhoyono would support him in the 2014 presidential election. With his status as a technocrat and a professional, he could garner public attention.

Another potential non-Javanese candidate is Surya Paloh, a media entrepreneur and chairman of the National Democrat Party (Nasdem). His media company has been a major force in sustaining his political mission, and it will be strategic asset for the former Golkar politician.

At the same time, however, Surya’s media strategy could backfire. The public could become extra critical if the political use of the media for campaigns, either directly or indirectly, exceeds the limits of accepted norms.

The presence of non-Javanese leaders is not a new phenomenon in the political history of Indonesia, which has already seen some non-Javanese “presidents.” In 1949, Assaat, a West Sumatran-born national leader, became the acting president of the Republic of Indonesia in Yogyakarta, which was part of the United Republic of Indonesia (RIS).

Half a century later, in 1998, B.J. Habibie, a technocrat who hails from South Sulawesi, took control after former President Suharto resigned under popular demand by the people.

Obviously, it is no longer far-fetched to imagine a non-Javanese president in Indonesia. Trends in other countries also show that non-majority groups are beginning to gain a top place on the political stage. In the United States, President Barack Obama was able to compete and win as an African-American candidate, rising to become the first black president in US history.

A similar phenomenon occurred in Australia when Julia Gillard became the first Australian woman to reach the position of prime minister. Angela Merkel in Germany is another example, as the first female chancellor of the country.

These realities, backed by historical support and global trends, seem to suggest that a non-Javanese president in modern Indonesia might just be a matter of time.

By Zaenal A. Budiyono executive director of the Developing Countries Studies Center in Jakarta.
Jakarta Globe

Statement on the Report of Sri Lanka's Lessons Learnt and Reconciliation Commission


The International Crisis Group welcomes the public release of the report of Sri Lanka’s “Lessons Learnt and Reconciliation Commission” (LLRC), presented to the Sri Lankan parliament on 16 December 2011. The report acknowledges important events and grievances that have contributed to decades of political violence and civil war in Sri Lanka and makes sensible recommendations on governance, land issues and the need for a political solution. But it fails in a crucial task – providing the thorough and independent investigation of alleged violations of international humanitarian and human rights law that the UN and other partners of Sri Lanka have been asking for. It is now incumbent on the international community, through the UN Human Rights Council, to establish an independent international investigation in 2012. Without such an investigation, accountability for the crimes committed at the end of the civil war is highly unlikely; without accountability, and a full understanding of the nature of the violations which took place on all sides, the seeds of future conflict will grow.

Appointed by President Rajapaksa in May 2010, the LLRC has been the government’s primary means of deflecting pressure for an international investigation into credible allegations of grave violations of international humanitarian and human rights law by both government forces and fighters of the Liberation Tigers of Tamil Eelam (LTTE) in the final stages of the long civil war. The government has pledged that the commission’s report would fully address the international community’s demands for accountability, as President Rajapaksa promised UN Secretary-General Ban Ki-moon after the government’s declaration of victory over the LTTE in May 2009.
Despite the Sri Lankan government’s two and half years of propaganda that their brutal campaign against the LLTE was conducted with little or no damage to civilians, the evidence of shelling of civilians and mass deaths was too much for the commission to ignore. Breaking with years of government claims to the contrary, the LLRC has accepted that “considerable civilian casualties had in fact occurred during the final phase of the conflict” and “that shells had in fact fallen on hospitals causing damage and resulting in casualties”. It also recognised the “possible implication of the Security Forces for the resulting death or injury to civilians” but in only three incidents “brought to the attention of the Commission”. It calls on the government “to ascertain more fully, the circumstances under which such incidents could have occurred, and if such investigations disclose wrongful conduct, to prosecute and punish the wrongdoers”.

Yet the report works to exonerate the government and undermine its own limited calls for further inquiry – mostly by accepting at face value the largely unexamined claims of the senior government and military officials who planned and executed the war, and by rolling back well-established principles of international law. It “concludes”, for example, “that the military strategy that was adopted to secure the LTTE-held areas was one that was carefully conceived, in which the protection of the civilian population was given the highest priority”; “that the Security Forces had not deliberately targeted the civilians in the [no-fire zones] NFZs”; and that their actions did not violate the principle of proportionality because they “were confronted with an unprecedented situation when no other choice was possible and all ‘feasible precautions’ that were practicable in the circumstances had been taken”. At the same time, it claims that it is unable to determine which side was responsible for many of the reported incidents and chooses, with little explanation, to blame most deaths on the LTTE and unexplained “cross-fire”.

The LLRC’s conclusions are untenable for several reasons. First, it is obvious throughout the report that it considered only the materials the government chose to place before it. There was no independent assessment of the full scope of information in the government’s possession – including all communications with the UN, ICRC and sources in the conflict zone, as well as other evidence from government and international sources, such as uncensored satellite images and footage from the military’s unmanned drones. Similarly, the record before the LLRC is inadequate to draw conclusions ruling out unlawful attacks when there are thousands of witnesses who did not come forward, partly because of the lack of witness protection, and when there is no indication that the LLRC had physical access to the final war zone where most of the civilian casualties occurred. Those areas have been off limits to everyone but the military since the end of hostilities.

An equally worrying deficiency in the LLRC’s conclusions is the fundamental misstatement or misapplication of principles of international law. This is most evident in its failure to present a fair exposition of the principle of distinction under international humanitarian law. Indeed, even though the LLRC claimed to have considered the April 2011 report of the UN Secretary-General’s panel of experts, it did not engage the panel’s legal or factual analysis in any meaningful way. Allowing the LLRC’s regressive statement of international law to stand could have consequences beyond Sri Lanka.

The LLRC’s exculpation of government and military leaders also depends on accepting without question testimony from Tamil government administrators and doctors who had served in the war zone. The report makes no mention of the fact that the doctors were detained under anti-terrorism laws at the end of the war and forced to recant publicly their earlier claims that thousands of civilians died from government shelling. To accept at face value their statements to a government-appointed body requires ignoring the evidence of physical attacks and threats to government critics that the LLRC discusses at length elsewhere in its report. Indeed, as predicted by many in advance of the LLRC’s hearings, numerous witnesses who testified to the commission about government violations have since been questioned and harassed by the military and the police.

In the most compelling sections of its report, the LLRC recognises what Crisis Group, human rights organisations and civil society activists have argued for years: that Sri Lanka is suffering from a crisis of institutionalised impunity for human rights violations by state forces and those working in collaboration with the state. Unfortunately, the commission makes no effort to apply these facts to its analysis of alleged violations of international humanitarian law or to analyse how they would likely distort much of the testimony it received.

The LLRC’s own accounts of large-scale civilian deaths, repeated shelling by the government of “no-fire zones” packed with civilians, attacks on medical centres, and disappearances and possible executions of captured combatants and civilians – actions long denied by the Sri Lankan government – demand an impartial and thorough investigation. The LLRC’s request that the government conduct a series of further, limited inquiries into some of these issues is far from an adequate response. The Sri Lankan government’s past three years of denial, dissimulation and intimidation of critics has proven it is neither willing nor able to carry out impartial and effective investigations.

The responsibility now falls on the international community to take up the task of ensuring post-war accountability, beginning with a formal discussion of the LLRC report and the UN Secretary-General’s panel report at the March 2012 session of the UN Human Rights Council, leading to an independent international mechanism to investigate all credible allegations and to monitor domestic efforts at accountability.

The Human Rights Council should also take note of the LLRC’s recommendations that the government investigate and hold to account those responsible for abductions, disappearances and attacks on journalists – including those committed by armed pro-government Tamil parties. These issues should be addressed on an urgent basis by the Sri Lankan government and its implementation of the commission’s recommendations should be monitored on an ongoing basis by the HRC. As the LLRC itself points out, such recommendations have been made many times by previous domestic commissions of inquiry and almost always ignored, as has been the case with most of the LLRC’s own interim recommendations. There is little chance that the LLRC’s final recommendations will fare any better, unless there is sustained international attention and pressure from the UN Secretary-General, the Human Rights Council, and influential governments, most importantly China, India, Japan, the United States, Canada, Britain, France and the European Union. Sri Lanka’s friends in the non-aligned movement, especially South Africa, Brazil, Indonesia and Mexico, have a particularly important role in reminding Sri Lanka of the importance of accountability and demilitarisation to lasting peace and reconciliation.

In other respects, too, there is much of value in the LLRC report that the international community should pay attention to and can learn from. This includes the commission’s criticisms of the overly centralised and militarised way in which the government is ruling the Tamil-majority northern province and the top-down, non-participatory approach to reconstruction and development of the former war zones. Also worth noting are the commission’s suggestions for better managing the sensitive issue of land and its support for the prompt and effective devolution of power to the north and east. Many of these issues have been covered in Crisis Group reports, including its most recent Sri Lanka: Women’s Insecurity in the North and East, released on 20 December 2011.

Without accepting the flaws of the LLRC’s approach to allegations of war crimes and of its analysis of the government’s conduct of the war, Sri Lanka’s international partners should nonetheless attempt to support the openings that the LLRC makes possible in public discussions about human rights and reconciliation within Sri Lanka. The inadequacies in the LLRC’s treatment of violations of international humanitarian and human rights law as well as its more useful and critical arguments about the need for serious reforms in how Sri Lanka is governed – all deserve additional analysis. Crisis Group will be pursuing this in a series of further commentaries in the coming weeks.

Wednesday, December 21, 2011

In a New Era, the Problem of Economic Inequality Takes a Philosophical Turn

Inequality is a subject of passionate debate. Mere mention of it brings out the best and the worst in most people. It is not a subject for relaxed gatherings at the local pub or your favorite restaurant. And despite the fascination with the subject, there seems to be no tangible action to come from it.

However you choose to look at it, the inequality predicament has a long and celebrated philosophical and political history. As we come to the end of another year in which millions struggle for survival side by side with the aspiring middle class or the decadent plutocracy, it might be a good idea to understand the modern history of inequality and how, like a virulent virus, it has adapted itself to changing political and economic circumstances.

During the last decade the subject of economic inequality has enjoyed something of a renaissance. But then interest in and concern with economic distribution has always had a checkered history. First it enjoyed center stage in the classical economics of Ricardo and Marx, then was moved to the sidelines with the emergence of neo-classicism, which emphasized the efficiency of resource allocation. Later it was brought out of the shadows, although in a very different form, by Keynes and the politics of the New Deal in the United States.

The emergence of communist states like the USSR and later China lent considerations of economic inequality a new paradoxical character. In democratic regimes, the welfare state recognized the popular appeal of universal entitlement to basic public goods and services. Its politics carefully contained the more radical elements of socialist thinking by resisting wholesale nationalization of key industries and banks, which had become the opening song of new socialist revolutions worldwide.

The utopian appeal of Marx was increasingly replaced by the language of equality of opportunity, social inclusion and human rights. In developing countries, fascinated by the political weight and early successes of the USSR, the distribution of income carried a continuing fascination. Again there were some interesting paradoxes.

Many, if not most, postcolonial governments were inherently attracted to the idea of a “fair distribution” of income, not only among different segments of the population within their borders but also in the global economy as a whole. Equality of opportunity seemed to be an appealing concept not only for their own citizens as they struggled to build nation states and create the technical expertise needed to replace departing colonial administrations and businesses. It was just as relevant at the world stage as developing countries struggled to find a place in the economic sun which shone brightly for the rich industrialized countries and so dimly for the majority of less-affluent nations.

Early models of development emphasized the “big push” and the capital accumulation that only a modern industrial sector could provide. Inequality was just a step in the scheme of things. The engine of growth in the much-quoted Lewis model turned on the transfer of labor from the low productivity subsistence sector to the high productivity modern one. Here was an early justification for the statistical generalizations of economic inequality during the process of development captured in the much revered Kuznets curve, which reflects the belief that inequality rises while a country is developing and then falls once a particular level of average income is attained.

The Kuznets curve generated more than its fair share of academic and policy-related controversy. The policy message, as with so much of the work on the distribution of income, was also two-sided. First, there was the comforting conclusion that economic inequality was just a passing phase. Indeed, an acceleration of economic growth can even shorten the length of the shift from widening to narrowing economic inequality. Too much preoccupation with radical programs of asset redistribution and nationalizations would be, on this view, redundant and socially risky.

But all that was before the remarkable economic performance of the Asian “Miracle” countries. Their emergence as serious economic players in the global market in the late 1970s onwards seemed to provide living proof that growth does not always imply a worsening distribution of income. Here were economies that seemed to have achieved in a short span of some three decades record rates of growth with low and stable levels of economic inequality.

The success of the East Asian economies from the 1970s to the advent of the Asian Financial Crisis of 1997-98 carried another political message not ignored by policymakers of the advanced industrial countries and the international financial institutions they funded. This was the conclusion that economic growth may not only be income-distribution neutral but also neutral with respect to political regimes.

This was a comfortable assessment at the time of the Cold War, since it allowed developed countries of the West to support Asian dictatorships as long as they were anticommunist. The logic was simple enough. If growth was distribution neutral and distribution could be managed by a mixture of macroeconomic and social service-oriented policies, there was little to choose between dictatorships and authoritarian regimes in terms of their ability to raise the absolute poor above the poverty line.

Capital market liberalizations of the early 1990s and the globalization of financial markets combined with the rapid growth of world trade, the collapse of the USSR and the botched privatization of Russian public enterprises, and the instability of international capital markets signalled by the 1994 Mexican Financial Crisis and the Asian Financial Crisis only four years later, all began to illustrate the complexity of the new increasingly globalized world.

Anti-globalization protests in Seattle and in WTO meetings later, the collapse of many a third-world dictatorship in favor of multiparty democracy, the emergence of radical Islam, the rise of China and India, and the current global financial crisis emanating from sub-prime mortgage defaults in the United States and culminating with the largest bailout in economic history have all begun to illustrate that mechanical modelling of growth and distribution linkages is of little use in defining practical policy choices.

The result is that traditional economic modelling has to a large extent given way to philosophical discourse. In this new fast-changing and less-ideologically certain world, economic injustice and the need to arrive at a “fairer,” more “equitable” division of resources has moved to near the center of policy making. This concern is present in the “hearts and minds” campaigns of an Iraq or an Afghanistan, it is there in the fears of social instability in India and China as income disparities noticeably worsen, and it is there in the politics of climate change and the collapsed negotiations of the Doha round. It is no longer the simple analytics of a Kuznets curve that is driving this newfound concern with an age-old political economy theme.

It is the jockeying for political space, a larger share of the global economic pie and the creation of a physically safe world friendly to open commerce and labor movements that lie at the heart of this renewed fascination with the fairness and social acceptability of a given pattern of income distribution. The advent of a democracy has merely added new domestic pressures to search for a better sharing of economic growth. That search is likely to go on for years if not decades ahead.

By Satish Mishra managing director at Strategic Asia Indonesia, a Jakarta-based consultancy promoting cooperation among Asian nations.