China Launches a New High-Tech Spy Ship

Neptune, the newly unveiled Type 815 surveillance vessel, is the latest addition to Beijing’s growing fleet—which has been deployed far and wide in recent years.

The Chinese navy has just commissioned a new high-tech spy ship—at least its fourth since 1999. The Type 815 surveillance vessel Neptune, featuring sensitive electronic listening devices, could help Beijing further improve its already impressive ability to gather intelligence on its rivals, in particular the U.S. Navy.
China’s state media announced the Neptune’s Dec. 26 commissioning two days after the ceremony, which reportedly took place at an undisclosed naval base on the South China Sea. Neptune “is able to conduct continuous all-weather reconnaissance of various targets within a certain range,” explained PLA Daily, the official publication of the Chinese People’s Liberation Army.
Like her sister vessels—one older ship dating to 1999, two newer ones that entered service in 2009 and mid-2015, plus at least one more Type 815 still under construction—Neptune is roughly 400 feet long. The ship boasts several large domes arranged along the superstructure that apparently house antennae for intercepting radar and radio signals broadcast by the military forces of potential enemies. China’s intelligence analysts at sea and on land can then interpret the signals in order to determine the capabilities of other countries’ ships, planes, and military hardware.
It’s vital work for an aspiring global power. And China has deployed its growing fleet of spy ships far and wide in recent years, paying particular attention to its geographically closest rival, Japan, and its most powerful potential enemy, the United States.
In mid-November, a Japanese air force P-3 reconnaissance plane reportedly spotted a Type 815 vessel snooping near the Senkaku islands in the East China Sea, midway between Japan and China. Tokyo administers the Senkakus, but Beijing also claims them under a different name, the Diaoyus. In recent years, both countries have sent patrol ships into the mineral-rich waters surrounding the islands, resulting in some tense moments at sea.
Arguably more provocatively, in July 2014 Beijing sent a Type 815 to the waters off Hawaii, where more than 50 warships from the United States and other countries had assembled for the biennial RIMPAC exercise, the world’s biggest naval war game. The Pentagon had invited four Chinese vessels to play a small role in RIMPAC, but it had not invited the Type 815.
The U.S. Navy’s exercise planners took care to keep the invited Chinese ships on the periphery of the war game, where they couldn’t directly observe the tactics and equipment of American and allied vessels. It was the Americans’ way of playing nice with the Chinese without also giving up military secrets. But the uninvited Chinese spy ship was bound by no rules or sense of decorum and apparently got close enough to the exercise’s main events to gather useful intelligence.
Still, every country has the right to sail the open seas, even near other countries’ war games and within their “Exclusive Economic Zones,” which extend 200 miles from a country’s coast and delineate the territory where a government has the sole right to fish and drill for oil.

New Demands by China's Defense Ministry

China's Defense Ministry is demanding that the U.S. Navy end surveillance missions off China's southern coast following a weekend confrontation between an American vessel and Chinese ships. (March 12)

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New Demands by China's Defense Ministry

China's Defense Ministry is demanding that the U.S. Navy end surveillance missions off China's southern coast following a weekend confrontation between an American vessel and Chinese ships. (March 12)

AP Video

“The Chinese navy AGI ship’s presence is in accordance with international law regarding freedom of navigation,” U.S. Navy spokesman Capt. Darryn James told the U.S. Naval Institute Press’s news website, using the military’s three-letter code for a spy vessel. Barred from ejecting the Type 815, U.S. forces could only monitor the spy ship as she monitored them.
Unspecified Chinese ships—most likely Type 815s—also spied on the 2012 RIMPAC, the Pentagon reported in the 2013 edition (PDF) of its annual report on Beijing’s military. If U.S. planners had hoped that inviting the Chinese to the next edition of the biennial exercise in 2014 would dissuade Beijing from also sending a spy ship to the war game, the Americans would be sorely disappointed. The Chinese navy both accepted the 2014 invitation and deployed a Type 815 to Hawaii.
The Chinese spy ships’ activities wouldn’t be so offensive to Washington if Beijing weren’t itself so sensitive about the activities of America’s own spy ships—of which the United States has slightly more than China does—in waters near China. Military Sealift Command, the quasi-civilian branch of the U.S. Navy, operates five surveillance vessels that are roughly similar to the Type 815s in size and capability. In 2009, Chinese trawlers tailed the American surveillance ship Impeccable while she was sailing in China’s Exclusive Economic Zone in the South China Sea. The trawler crews, apparently acting on Beijing’s orders, repeatedly crossed in front of Impeccable at close range in order to block her path.
The U.S. Navy dispatched a heavily armed destroyer to escort Impeccable and prevent further harassment. Notably, Chinese Type 815s deployed into the U.S. and Japanese Exclusive Economic Zones in the years following the Impeccable incident, an act of hypocrisy that the Pentagon pointed out in its 2013 China report. “While the United States considers the PLA navy activities in its EEZ to be lawful, the activity undercuts China’s decades-old position that similar foreign military activities in China’s EEZ are unlawful.”
Now, with more Type 815s joining China’s fleet, Beijing’s naval spying missions could become more frequent, potentially more intrusive, and—more likely than not—even more irritating to the U.S. government.

 

Rethinking US Asia Policy: 3 Options Between Appeasement and War

There’s still time to pursue options that eschew both war posturing and unreciprocated conciliation.

The unifying theme of U.S. Asia policy has been the maintenance of a stable, liberal regional order. Yet a number of regional trends now militate against that goal: trust among regional neighbors is low; military modernization investments are rampant; territorial nationalism is growing in salience; and China continues to press its peripheral claims in ways that risk inadvertent conflict.

The current configuration of U.S. policy does nothing to arrest any of these problems, yet their continuation threatens longstanding U.S. interests in Asia. So what can be done? Today, there’s still time to pursue options that eschew either war posturing on the one hand or unreciprocated conciliation on the other.

Restoring Imbalances

The first option to shape better future conditions without either appeasement or war is to significantly enhance the military capabilities of China’s potential adversaries. The most likely conflict scenarios with China run through a U.S. ally or partner — Japan, Taiwan, Vietnam, or the Philippines, for example.

One of the background conditions that makes these conflicts plausible is an extreme capability asymmetry between China and its potential opponent. If the balance of local military capabilities favors China so strongly, U.S. allies and partners may be discouraged from contesting Chinese preferences when faced with the prospect of coercion. Improving the military strength of local allies and partners enhances general deterrence by simultaneously making the weaker states more capable of defending themselves while discouraging any coercive opportunism by Beijing.

The goal is not for these smaller states to achieve military parity with China — that would be impossible and probably undesirable — but rather to mount a reasonable self-defense effort sufficient to bolster their confidence and induce a modicum of caution in Beijing.

Increasing Transparency

Another option is to render the Asian security environment as operationally transparent as possible. Strategic transparency — that is, certainty about the intentions of others — is an almost insurmountable problem in international relations; there’s more to say on that subject another day. At the operational level though, a much greater degree of transparency in Asia is both possible and necessary. Having situational awareness of who is doing what and when provides a basis for responsible (and sometimes collective) decision-making.

China’s use of “gray zone” coercion in the South China Sea exploits ambiguities to maintain a “thin veil of deniability” about the fact of aggression, which undermines regional consensus-building against it. Enhancing regional transparency reduces opportunities for accidents and misunderstandings at sea, and makes it harder for China to present smaller states with coercive faits accompli (as in the 2012 Scarborough Shoal incident). Transparency also makes it easier for the region to distinguish aggressors from defenders when incidents do occur, which promotes stability by discouraging aggressive behavior (because the instigator will get caught) and improving the odds that smaller states band together to condemn (or balance) the aggressor.

The United States might therefore focus on building national maritime domain awareness capabilities for Asian partners, which it has already started doing in the Philippines and Indonesia. The announced deployment of a P-8 surveillance aircraft to Singapore was also a step in the right direction, but a drop in the bucket. As the United States brings greater ISR capability to the region — such as the future deployment of MQ-4C Triton reconnaissance UAVs in 2017 — it needs to find ways to push the information it collects out to a larger network of allies and partners; transparency’s value is limited if only the United States has it.

Exploiting Asymmetries

A third option is really a variant of the first: build select ally and partner capabilities to support anti-access strategies. Similar to but distinct from what some describe as a “hedgehog” strategy, this is not so much a way to change China’s calculus — a Sisyphean task if ever there was one — as it is a way to enable smaller powers to plausibly come out on top in a localized skirmish. China may retain escalation dominance in the abstract, but conflicts are not abstractions, and the ability of smaller powers to quickly secure their objectives in a localized operation flips China’s “gray zone” calculation on its head by presenting China with a fait accompli rather than the reverse.

Implementing an anti-access capacity-building strategy isn’t easy. The United States has proven it has the stomach for some of what’s necessary — extending maritime domain awareness capabilities, missile defense, and surface patrol/combatant ships to select allies and partners. But these are half-measures. Also essential are undersea mine inventories and deployment doctrine, submarines, cruise missiles, and unmanned systems with various range and payload capacities. These capabilities, in turn, require loosening some of the political-legal constraints on foreign military sales and financing cases to countries like Vietnam. Most importantly, it requires a reform of the Missile Technology Control Regime (MTCR), which currently constrains the transfer of the most capable types of missiles and UAVs.

Risks and Trade-offs

Some may see these strategies as too modest or inadequate, occupying some mealy-mouthed middle ground that won’t change the direction of the region. Perhaps, but that’s because it attempts to eschew serious risk-taking at the extremes of appeasement or conflict. Eliminate the riskiest options, and you’re probably going to be left with things that are sub-optimal but that allow you to avoid dramatic near-term trade-offs.

Others may see these strategies as too risky. Arming the region seems like a recipe for feeding undesirable security dilemmas. Technology and information transfers may compromise either the U.S. industrial base or the sources and methods of U.S. intelligence. And reforms to MTCR might undermine arms control as we know it.

But any decision involves risks and trade-offs, and if you’re presented with a strategy that involves neither, then you’re not getting an honest presentation. Moreover, the decision to do nothing different in U.S. policy will have pernicious consequences for regional stability, to say nothing of future U.S. standing in the region. Asian governments are arming with or without the United States. China is encroaching on the interests of others even if the United States maintains credible alliance commitments and an active military presence. And the prevailing U.S. approach to nonproliferation — by controlling the supply of a given technology — is a poor fit with modern trends in which technological advances derive less from secret government-funded facilities than from from commercial innovation.

All three strategies chart a middle (and indirect) way of dealing with competition and regional insecurity trends. They’re also compatible with one another. And any of the three offers the prospect of handing future presidents a more flexible hand in managing Asia policy. Achieving that requires policymakers to raise their gaze from the shortsighted present. But if they care about peace and not just politics, that must be the standard to which they aspire.By Van Jackson for The Diplomat

Saudi-Iran rift is a matter of embarrassment to Muslim world

The rift between Saudi Arabia and Iran appears to be touching a new threshold following the execution of a prominent Shi’ite cleric by Riyadh and the furious mob reaction in Tehran by burning down the Saudi mission, which in turn led to the move by Riyadh to break off diplomatic relations with Iran. But in reality, this is only the latest chapter of a chronicle of tensions waxing and waning, which the Muslim world has got used to over the decades.

It is useful to recall that the rupture in Saudi-Iran diplomatic relations itself is not unprecedented. Nor is this the first time that demonstrators in Tehran have stormed the Saudi embassy. In a 1988 incident, protesters also manhandled the Saudi diplomats and one official actually died of injuries, which led to a rupture in diplomatic relations that lasted till 1991.

Simply put, the western media projection of the latest Saudi-Iranian rift as potentially tearing the Muslim world apart is a bit of an exaggeration. The four countries with the biggest Muslim populations in the world – Indonesia, India, Pakistan and Bangladesh – are carrying on with the mundane issues of day-to-day life.

The Muslim countries the world over (with the exception of Bahrain, and Sudan, perhaps) seem to regard the latest events as primarily a diplomatic incident of gross impropriety on the part of Iran. The Pakistani Foreign Ministry reaction on Monday is typical. It expressed concern at the escalation of tensions between Saudi Arabia and Iran, and called for “the resolution of differences through peaceful means in the larger interest of Muslim unity in these challenging times” so that the “dark forces of extremism and terrorism” do not take advantage of “any disunity in the Muslim Ummah” – whilst also, inter alia, rebuking Iran for the “most unfortunate and deeply regrettable” incident of the attack on the Saudi embassy in Tehran.

The Shia-Sunni sectarian passions are hardly in evidence in the statement, although Pakistan is a predominantly Sunni country. Without doubt, Iran would have easily gained the high ground but for the act of vandalism of the burning down of the Saudi mission. Tehran’s focus ought to have been on highlighting the fact that the Saudis have executed political dissidents, thereby drawing attention to the oppressive regime in that country and the farcical nature of its self-projection as the charioteer of democracy in Syria.

The heart of the matter is that the sectarian identities in the Muslim world may be a fact of life – somewhat like the caste system in the Hindu society – which everyone knows about and is resigned to accept, but the topic nonetheless is also an embarrassment when it sails into view. Ironically, neither Iran nor Saudi Arabia will want to be known as Shia or Sunni countries – they would much rather prefer to be known as part of the Muslim Ummah.

Turkey’s reaction to the eruption of Saudi-Iranian rift also presents a case study. These are times when Turkey and Saudi Arabia are seen as comrades-in-arms in Syria’s killing fields. The Saudi-Iran tensions exploded even as the Turkish President Recep Tayyip Erdogan had hardly returned to his country after a visit to Riyadh last week during which the countries decided to form a ‘High Council of  Strategic Cooperation’ (which Russia promptly billed as directed against its and Iranian interests in the Middle East.)

Again, Turkey is an overwhelmingly Sunni Salafi country and to add to that, Turkish- Iranian relations are not exactly in good shape at the moment, and, furthermore, Turkey also shares with Saudi Arabia a sense of uneasiness over Iran’s rise as regional power as well as over the likely prospect of a broadening of the US-Iranian engagement that could tilt the regional balance more to Tehran’s advantage.

Yet, Erdogan has sprung a surprise. The political leadership has taken a correct, middle line and is counseling Saudi Arabia and Iran to mend their differences in the overarching interests of the unity of the Muslim world and the region. The really surprising part is that the government spokesman Numan Kurtulmus directly criticized the Saudi act of killing the Saudi cleric, calling it politically motivated.

He said, “We are against all instances of capital punishment especially when it is politically motivated… For us it is not possible to support capital punishment by any country… But Saudi Arabia and Iran are our friends and we don’t want them fighting because that’s the last thing this region needs.”

Most certainly, Saudis will be shell-shocked by the Turkish criticism, which touches a raw nerve in its reference as “politically motivated”. Coming at a time when Russian propaganda is in full cry over Turkey’s links with the Islamic State, this surge of ‘secular’ temper in the Turkish reaction no doubt burnishes Erdogan’s image. (Frankly, even Russia has not dared to criticize the Saudi act of executing political dissidents.)

More importantly, Turkey returns to the centre stage as the torch bearer of the ‘Arab Spring’. Erdogan has not forgotten that Sheikh Nimr al-Nimr, the Shi’ite cleric put to death by the Saudi regime, was a central figure in the Arab Spring-inspired popular movement in the eastern Shi’ite dominated regions of Saudi Arabia and that his real ‘crime’ was that he demanded empowerment of the people.

However, the Turkish stance needs to be properly understood. It stands to reason that Turkey does not want to alienate Iran at the present juncture of regional politics when Ankara has few friends, if at all, in the region. Despite their divergent interests in Syria, Turkey and Iran also happen to have a shared interest in containing the wave of Kurdish nationalism sweeping the region. Traditionally, Turkey and Iran cooperated in battling Kurdish separatism.

Interestingly, this is a template of the Syrian conflict where Iran is not standing on the same page as Russia or the United States (both of whom visualize the Syrian Kurds as allies in the war against the Islamic State.) This undercurrent of common interest between Iran and Turkey in preventing the appearance of yet another Kurdistan on the region’s chessboard in northern Syria also explains Tehran’s refusal to support Russia in its rift with Turkey. In fact, Tehran has offered to ‘mediate’ between Russia and Turkey. (Interestingly, Moscow too has now made a reciprocal gesture by offering its good offices to ‘mediate’ between Iran and Saudi Arabia.)

The bottom line is that it is not necessarily the case that the Saudi-Iranian rift is going to complicate the Syrian situation. The Saudi ambassador to the UN Abdullah al-Mouallimi might well have had a point when he signaled on Monday that the rift with Iran “should have no effect” on attempts to end the wars in Syria and Yemen.

By M.K. Bhadrakumar Asia Times

 

Democratic contraction in Southeast Asia

2015 was the year authoritarian governments struck back against democratic pressures.

The story of 2015 in Southeast Asia was Myanmar’s November election. In giving the National League for Democracy and its leader Aung San Suu Kyi a landslide, Myanmar citizens signaled their strong support for democratic change and better governance.

These calls have been loud in recent years — in Malaysia’s 2008 and 2013 elections, in Thailand’s repeated electoral victories for a non-military aligned government, in Cambodia’s 2013 and Singapore’s 2011 polls as well as strong electoral support for democracy in the Philippines and Indonesia. Democratic pressures on Southeast Asian governments have been increasing, and are not likely to recede in the near future.

2015 was the year authoritarian governments in the region struck back. Behind the Myanmar headlines there is a worrying trend of a significant democratic contraction taking place. The use of the authoritarian arsenal by Southeast Asian governments are not new, but in the course of the year regional governments expanded their use of incumbency and control of institutions to shore up their positions.

The most obvious trend has been the increased use of repression, especially targeted toward opposition politicians and critics. In Malaysia, opposition leader Anwar Ibrahim was jailed in February. In Thailand, a trial began against ousted PM Yingluck Shinawarta as she was denied the right to travel. In Cambodia, opposition politicians were physically attacked. The leader of the opposition Sam Rainsy has delayed his return to Cambodia from November as a result of jail threat. Malaysia has the highest number of opposition politicians facing various charges from sedition to violations of banking finance regulations.

The threats opposition members across the region face in calling for change extend from being physically attacked on the campaign trial (as occurred for Myanmar’s Naing Ngan Lin NLD candidate who was slashed by a machete) to potential bankruptcy.

The use of the law for political ends moves beyond opposition members. Journalists and bloggers remain targeted. Radio reporter Jose Bernardo was shot dead at a restaurant in Manila in November. He joins the other 77 journalists who have been killed in the Philippines since 1992, making this country one of the most dangerous places for media professionals in the world.

Myanmar tops the region’s list with the most number of journalists jailed, pipping Vietnam this year who released some of its bloggers. Notably, blogger Ta Phong Tan was released after 10 years in jail. The situation for bloggers in Vietnam remains serious, with a number of incidents where bloggers and associates were beaten up in mysterious circumstances rather than jailed. In Singapore, Prime Minister Lee Hsien Loong won his defamation case against a blogger critic Roy Ngerng, who was asked to pay PM Lee S $150,000. Lee joins Malaysia’s Prime Minister Najib Tun Razak as the second current leader in the region who filed charges for public criticism.

The crackdowns on freedom of expression extend to ordinary citizens, from artists and academics to taxi drivers.

Young Chaw Sandi Tun was sentenced to six months jail for insulting Myanmar’s army in her Facebook post noting the similarity in color between the Tatmadaw’s uniform and the opposition leader’s clothing. In Thailand, the cases involving lese majeste have extended the boundaries to include insults to the king’s dog. Thanakorn faces up to 15 years in jail for this reference, and joins a long list of cases that have involved jailing of university students for a play, taxi cab conversations, novelists and more.

A mother of two was sentenced to 28 years for her Facebook comments, while a hotel employee received 56 years for his posts in August as part of the lese majeste unending prosecutions. Cartoonist Zunar in Malaysia faces up to 43 years for his satirical art work. These developments have had chilling effects on public discourse. Even in more open Indonesia, discussion of the 1965 attacks on communists were shut down.

As power has been used to quiet alternative voices, the rule of law itself has faced erosion. In some cases the law is not being implemented. In July, the co-Investigating International judge Mark Harmon of the Khmer Rouge tribunal in Cambodia resigned his position after the tribunal declined to arrest two former Khmer Rouge leaders for whom the court had issued warrants.

Despite having the technology to find the daughter separated from her mother Indira Gandhi for seven years by a husband who is abusing religion in a personal vendetta against his ex-wife, the Malaysian police have proven to be unwilling to use its tools to follow the court order to return the daughter to the mother.

In other cases, constitutional frameworks protecting rights have been by-passed through the introduction of military courts – as has been the case in Thailand and called for in Malaysia – and new measures that empower leaders to declare ‘security areas’ without checks on their authority, as occurred with the hurried passage of the National Security Council law in Malaysia. This law is being seen as a measure that will allow unpopular Prime Minister Najib to stay in office if he loses an election. In Myanmar, there are potential laws being considered that may give military impunity for alleged past crimes.

The area where the laws are under real scrutiny continues to be corruption. 2015 showcased some shocking scandals.

In Malaysia the 1MDB $700 million ‘donation’ into Najib’s personal accounts remains inadequately explained, as the rule of law has not been properly applied to the premier and impunity appears to have allowed the premier to hold onto office even with his personal reputation in shatters. Efforts to undermine Indonesia’s Corruption Eradication Commission (KPK) and the recent demands for payments from Freeport to politicians to conduct business have showcased that persistent problem of bribery, lack of transparency and abuse of position.

From corruption concerns tied to the Aquino administration in the Philippines to persistent effects of corruption trails associated with Vietnam’s elite, there lacks effective leadership in tackling the region’s most serious governance problem. The end effect is that leaders at the top are seen to engage in graft, reinforcing a system where office is used for personal wealth rather than public service.

Control over resources and alliances with cronies remains a dominant feature of Southeast Asia’s political economy. Four countries in the region – Malaysia (3), Singapore (5), Philippines (6), Indonesia (10) – were in The Economist’s crony capitalist list, which measures the favoritism of wealth toward tycoons and politically-affiliated business interests.

Measures to enhance this favoritism expanded in 2015 through the introduction of consumption taxes in Malaysia and Myanmar, regulations that facilitated more burning rather than less in the haze-affected region in Indonesia and service fees in areas such as tolls to crony-companies. The region’s most vulnerable populations are feeling the economic pain, with depreciating currencies and a slowdown in growth in the region as a whole. These conditions have contributed to conditions where the use of state resources through populist policies have boosted incumbent governments, a factor that contributed to the People’s Action Party’s September 2015 electoral victory.

Those on the margins are being particularly impacted, with serious implications for rights. Southeast Asia was not immune from the global refugee crisis affecting over 60 million people worldwide. Conditions affecting the livelihoods of the Rohingyas in Myanmar remain severe, with conditions in camps across the region not much better. The shocking findings of death camps in Thailand and Malaysia involving torture, rape and human and organ trafficking in May have yet to be properly accounted for.

One reason for this lack of accountability lies with the upgrade the Obama administration gave Malaysia on its human trafficking assessment in the wake of the discovery of the gruesome murders. The Obama administration’s sell out of human rights principles was especially acute in 2015, where interests associated with the Trans-Pacific Partnership overrode other concerns.

From questions tied to the trial of Burmese migrant workers in killing British backpackers Thailand to the persistent practice of ‘sea slaves’ with citizens hauled onto fishing boats, those that are vulnerable remain so at the end of the year, which limited measures to point to strengthening protections.

Vulnerability in 2015 extended to religious and ethnic minorities as well. Bogor was labeled Indonesia’s most intolerant city when it declared a ban of the Shia faith in the city. Hate speech toward Muslims persists in Myanmar, in spite of the electoral victory signaling greater inclusiveness. Churches were burned in Aceh. Christmas celebrations were banned in Brunei. Rights of religious minorities were curbed in Malaysia in cases involving child custody and worship.

Measures to forge peace with minorities fell apart, as the Philippines’ Bansamoro Basic Law did not pass the legislatures. In other places such as Myanmar, Protection Race and Religion Bills denying rights to marriage and religious freedom were introduced, as protections for rights were in fact eroded.

There were nevertheless bright spots in greater freedom across the region – a gender rights bill in Thailand, the end of the persecution of a book seller and academic by religious authorities in Malaysia, the reinstatement of direct local elections in Indonesia and the subsequent peaceful elections in December, to name but a few.

Southeast Asians continue to fight for their freedoms valiantly, over cyberspace, in courtrooms and in communities. The climate however has not been conducive to greater freedoms as those in office continue to use their offices to hold on to power.

As we look ahead, with a slowing economy and persistent insecurities by incumbents, the prospects for expanding rights does not appear promising in 2016. Last year has shown us however that we can expect the unexpected, with the military’s acceptance of the Myanmar’s electoral results as an example.

As ASEAN formally announced its community on 31 December 2015, many hold only to potentially a different ‘imagined community,’ where the ideas of brilliant scholar Benedict Anderson of shared belonging, human dignity and decency live on.

Bridget Welsh is Professor of Political Science at Ipek University, Senior Research Associate at the Center for East Asian Democratic Studies of National Taiwan University, Senior Associate Fellow of The Habibie Center, and University Fellow of Charles Darwin University.

The roots of Indonesian inequality

Political and economic institutions, which are ultimately the choice of society, can be inclusive and encourage economic growth, or they can be extractive and become impediments to economic growth. A nation fails when it has extractive economic institutions, supported by extractive political institutions that impede and even block economic growth.

Extractive institutions are so common in Indonesian history because they have a powerful logic: They generate some limited prosperity while at the same time distributing it into the hands of a small elite.

There is strong synergy between economic and political institutions. Extractive political institutions concentrate power in the hands of a narrow elite.

Economic institutions are then often structured by this elite to extract resources from the rest of society. The extractive institutions from which this narrow elite rule create extensive inequality, and thus the potential for infighting between those who benefit from the wealth extracted from the people.

 

During the 32 years of the administration of president Soeharto, he applied the development concept of “Trilogi Pembangunan”, referring to the three pillars of economic development: high economic growth, political and economic stability and economic distribution. He believed that high economic growth would generate economic distribution through a trickle-down effect. Indonesia enjoyed high economic growth from the 1970s to 1990s before we were hit by the financial crash in 1997. The hypothetical trickle-down effect turned out to be illusory.

Inequality would lead to a crisis of under-consumption: There were too many goods, but too little income to buy them. The consequence would be mass unemployment. As stated by John Galbraith, a US economist, “bad income distribution” was a factor behind the Great Crash in the US in 1929, and is also relevant to the Indonesian financial crash of 1997.According to the latest World Bank quarterly report, launched here on Dec. 8, inequality in Indonesia has been climbing faster than in most of its East Asian neighbors.

Over the last 15 years, the Gini ratio — a measurement of inequality — has increased sharply, climbing from 30 in 2000 to 41 in 2013. Currently the richest 1 percent own 50.3 percent of all the country’s wealth and the richest 10 percent of Indonesians own an estimated 77 percent of all the country’s wealth. These figures have rocketed by 300 percent from 1920, when the richest 10 percent of Indonesians received only 15 percent of total income. The level of financial inclusion in Indonesia is at a critical level. Fifty-three percent of Indonesian people are excluded from banking deposit products and 83 percent are excluded from banking financing products. Micro, small- and medium-sized enterprises (MSMEs) dominate business units with up to 99.9 percent of total business units, and employ around 97.7 percent of the total labor force.

Unfortunately, the contribution of MSMEs to gross domestic product (GDP) is still relatively low, at only about 57.8 percent.

Meanwhile, large enterprises, which account for only 0.01 percent of the total number of enterprises, contribute 42.2 percent to GDP and receive loans of more than Rp 3.2 quadrillion (US$230 billion) or 82 percent of total bank loans. Moreover, MSMEs still get a small portion of bank financing. Based on data from Bank Indonesia, outstanding loans of MSMEs total Rp 716.37 billion or 18 percent of total outstanding bank financing. Medium-scale enterprise loans dominate MSME credit with a share of 49.51 percent of total MSME loans. Micro enterprises, with 98 percent of total business units, take a share of just 3.8 percent of total bank loans, equivalent to Rp 153 trillion.There are two levels of operating model execution that could be applied to stop Indonesia plunging further into inequality and its concomitant social problems. The first is the distinction between extractive and inclusive economic and political institutions. The second is the application and adoption of inclusive institutions.

According to Daron Acemoglu and James A. Robinson in The Origins of Power, Prosperity & Poverty, there is a strong link between inclusive economic and political institutions and prosperity.

Inclusive economic institutions that enforce property rights, create a level playing field and encourage investment in new technologies and skills are more conducive to economic growth than extractive economic institutions that are structured to extract resources from the many by the few and that fail to protect property rights or provide incentives for economic activity. Inclusive economic institutions are in turn supported by and support inclusive political institutions, that is, those that distribute political power widely in a pluralistic manner and are able to achieve some amount of political centralization so as to establish law and order, the foundations of secure property rights and an inclusive market economy.

Finally, in order to boost financial inclusion, the government should focus on how to create stronger support and schemes to boost financial access for micro business units, especially in the agriculture and fisheries industries, which account for 50 percent of micro business units, as well as those at the bottom of the pyramid in general.

 

The writer Muhammad Shodiq is vice president of CIMB Niaga’s Shariah & MSME Academy.

China’s Non-Kinetic 'Three Warfares' Against America

Just as the pen can be mightier than the sword, China’s non-kinetic “Three Warfares” may prove to be far more effective at expanding China’s maritime and territorial boundaries than any arsenal of missiles or fleet of Chinese aircraft carriers. 

The Three Warfares were first officially recognized as an important warfighting capability by China’s Central Military Commission and Communist Party in 2003. They include everything from psychological and legal to media warfare.

The goal of China’s psychological warfare is to deter, demoralize, or otherwise shock an opponent nation and its civilian population and thereby discourage the opponent from fighting back. As former White House advisor Stefan Halper starkly revealed in a watershed report to the Pentagon’s Office of Net Assessment in 2014: “It employs diplomatic pressure, rumor, false narratives, and harassment to express displeasure, assert hegemony and convey threats.”

Thus, for example, when China imposes an economic boycott or bans Chinese tourism, it hopes to coerce a Japanese populace struggling with economic stagnation and hungry for prosperity into acquiescing to China’s territorial demands regarding the Senkaku Islands.

As for China’s legal warfare, its goal is to effectively bend—or perhaps rewrite—the rules of the international order in China’s favor. A case in point is China’s campaign to restrict freedom of navigation within its 200-mile Exclusive Economic Zone as defined by the United Nations Law of the Sea Treaty. 

In fact, this claim has no legal basis within the context of the actual Law of the Sea Treaty language. Yet China repeatedly and falsely asserts the opposite—in the spirit of the oft-repeated Orwellian axiom “if you say it enough, they will believe it.”

China’s media warfare is, in many ways, the most pernicious. Its goal is to shape public opinion in a way that leads unwary viewers to accept China’s version of events. Heritage Foundation scholar Dean Cheng describes such warfare as a “constant, on-going activity aimed at long-term influence of perceptions and attitudes;” and its use follows Halper’s maxim that “it is not the best weapons that win today’s wars but rather the best narrative.”

The tip of China’s media warfare spear is the Chinese Central Television Network (CCTV)—with a major facility in Washington, D.C. This is a faux twenty-four-hour news channel shrink-wraps China’s propaganda around healthy doses of CNN-style pure news while reaching over 40 million Americans along with hundreds of millions more viewers in the rest of the world. 

As a case in point of the power of CCTV, when an incident breaks out between China and the Philippines over disputed reefs in the South China Sea, CCTV is there first to quickly advance China’s narrative—often before the Western media are even on to the story. In a similar vein, when tensions mount over the Senkaku Islands, CCTV will quickly launch a strong offensive blaming “right wing nationalists” in Japan for any incident or escalation.

The dark beauty of the Three Warfares in today’s modern age is that they offer China a new form of non-kinetic weaponry to achieve goals that in earlier times could only be realized through kinetic force. Moreover, the Three Warfares combine in a highly synergistic way.

For example, in many of its territorial disputes in the East and South China Seas, China first asserts false territorial claims based on vague history—that’s the legal warfare. It next projects non-kinetic force in the form of flotillas of white-hulled civilian fleets—that’s the psychological warfare. Finally, CCTV repeatedly portrays a “peaceful China” as a victim of foreign power domination only trying to right an historic wrong – that’s the media warfare.

To date, both the White House and Pentagon have largely ignored China’s Three Warfares and therefore failed to develop a countervailing strategy. However, aggression by non-kinetic means is still aggression—which raises this ultimate question: Why does America continue to trade with a country that is waging war against it and American allies? 

This is a very good question for the 2016 presidential debate—and the leading candidates on both sides of the aisle need to be thinking of an appropriate answer. So please, Donald Trump and Hillary Clinton, what are your views on the Three Warfares of China? Do you see them as acts of war against America and its allies in Asia; and if so, what do you intend to do in response? And please Senators Cruz, Rubio and Sanders, tell America’s voters what you intend to do to defend the United States and its allies in Asia like Japan and the Philippines against China’s Three Warfare doctrine.

Peter Navarro is a professor at the University of California-Irvine.  He is the author of Crouching Tiger: What China’s Militarism Means for the World (Prometheus Books), ranked by The Globalist as a Top Ten book of the year.

Terror strike in India underlines a frightful picture

Now that the terror strike at the large and important Pathankot’s air force base in the western Indian state of Punjab has ended — with seven men of the Indian security forces dead and five extremists from Pakistan’s militant group, Jaish-e-Mohammed, killed (the body of the sixth is yet to be found) — India needs to answer some awkward questions.

Much like the 1999 hijacking of an Indian Airlines plane to Kandahar in the then Taliban-controlled Afghanistan, when administrative bungling in New Delhi led to the aircraft taking off from Amritsar (Punjab) on Indian soil, India has paid heavily this time as well in Pathankot.

One of the three extremists freed from Indian jails in exchange for the hijacked plane’s passengers, Maulana Masood Azhar, founder of Jaish-e-Mohammed, is now in Pakistan, a free man, but listed as the most wanted terrorist by India — also responsible for the 2001 attack on the country’s parliament in New Delhi that brought the two nuclear armed neighbours to the brink of a major war.

Cut to Pathankot in 2016, valuable time appears to have been lost before Indian security forces got into the act — and this left seven of them dead. And, this despite a clear intelligence warning of the impending attack in Punjab.

The state should have been all the more prepared, having seen a terror strike as recently as last July in a police station at Dinanagar — barely 20 km from the India-Pakistan border. This ought to have kept the security antenna up.

Also, India knows only too well that every time a peace effort is made by New Delhi and Islamabad, there are forces ready to demolish it. Indian prime minister Narendra Modi’s statesman-like gesture in dropping in in Pakistan on December 25 to greet the nation’s prime minister, Nawaz Sharif, could not have but provoked two significant sections. Pakistan’s Inter-Services Intelligence (ISI) and some groups in the army are completely opposed to any peace overtures with New Delhi — although the civilian government in Islamabad and the people are extremely keen to see the two neighbours (sharing a similar culture, but who were divided by the 1947 partition) co-exist peacefully.

Given all this, the Indian administration should have been more than battle-ready to take on the Pakistani radicals at Pathankot.

What is more, the four terrorists first hijacked a car and killed its driver before seizing the vehicle of a superintendent of police and kidnapping the officer, his cook and jeweller friend. They were freed later, and the cop is said to have walked to a village and telephoned his bosses — who apparently did not pay much credence to what the superintendent said. To top it all, the cook was abused and tortured by policemen when he corroborated the superintendent’s version. How unprofessional!

Far more disturbing than all this is the massive problem of drug abuse in Punjab — which borders the none-too-friendly Pakistan — but the state government and different political parties have brushed aside this menace.

Everybody knows that most of the drugs come from Afghanistan, and are smuggled through Pakistan and India before they hit the shores of Europe and North America. It is also well known that drug addiction rises alarmingly along this smuggling route. This has happened throughout the world, and Punjab is no exception.

And here are some facts. One report has this: “Punjab accounted for almost half of all cases registered in India under the Narcotic Drugs and Psychotropic Substances Act (NDPS) in 2013; 67% of rural households in Punjab have one drug or alcohol addict. Punjab also topped the list of the highest drug seizures during the 2014 polls, according to the Indian Election Commission…Most worryingly, Shashi Kant, a retired Indian Police Service officer, has claimed in a petition before the Punjab and Haryana high court that major political parties are hand-in-glove with drug smugglers and that Punjab is currently witnessing the era of “Narco Politics”. Nay narco-terrorism!

It does not take any great analytical skill to conclude that terrorism is being facilitated — at least to some degree — by Punjab’s drug addiction. We all know that every addict is forced to play courier — a fact that makes a region like Punjab afflicted by a narcotics epidemic most vulnerable to Pakistan-bred terror.

It may not take much of an effort for a Pakistani extremist with drugs to sneak into India through the largely porous border to seduce an addict and convert him into a sleeper-cell. With Punjab’s once economic prosperity on a downward swing and growing unemployment, young men are inclined to stray.

But the Indian administration is so dismissive about all these dangers that it seems appalling. A mere couple of weeks ago, Punjab’s deputy chief minister, Sukhbir Singh Badal, reportedly said that his state was the most “peaceful” in the country and there was no “threat of terrorism”.

It is time, and high time, that India sheds its complacency and gets real.

Gautaman Bhaskaran is an author, commentator and movie critic, who has worked with The Statesman in Kolkata and The Hindu in Chennai for 35 years. He now writes for the Hindustan Times, the Gulf Times and The Seoul Times.