Tuesday, February 26, 2013


China's Secret Foreign Policy


Klipping The Moscow Times

Everyone is afraid of China. One reason is an instinctive reflex to avoid anything enormous moving at great speed. But even more important is that China's true intent can't be gauged. Is China a threat to the world order, or at least to its region? Is it a rival to the U.S. or an enemy? Should it be balanced or contained? Or should China be envied and admired for its achievements in accruing wealth and power?
China is difficult to decipher because China itself has not yet made up its mind about its true direction and aspirations. China, however, most likely will have to make those decisions during the next decade under its new leader, Xi Jinping. External conditions — threats to China's energy sources, territorial disputes, the North Korean nuclear gnat — combined with internal tensions — restive populations in Tibet and Xinjiang, anti-corruption protests and social media, the budgetary issues caused by an aging population — will cause the country, or at least the regime, to show its true colors.
In some respects, China is a natural candidate for a vengeful nationalism because of its deep-seated feeling of humiliation, which New York Times columnist Thomas Friedman calls "the single most underrated factor in international relations." Just as European textbooks routinely refer to the Hundred Years' War, Chinese texts and maps routinely refer to the "Hundred Years of Humiliation," the foreign domination during the opium wars of the mid-19th century to the Japanese occupation in the mid-20th century.
One answer to the Chinese enigma lies in how the Chinese overcome that humiliation. Will China settle accounts with the West by building a society that is more productive and stronger than the deadlocked democracies of Europe and the U.S.? Or will China need to humiliate the West by turning it into a servile debtor while pilfering its economic secrets from its computers?
In that sense, the Russians are lucky. Except for some fighter jets and weapons systems that the Chinese haven't yet reverse-engineered, Russia has few R&D secrets worth stealing. Moscow's worries concern the population imbalances in the Far East: sparse on the Russian side of the border, burgeoning on the Chinese.
The recent revelations about the Chinese government-backed hacking of U.S. businesses and institutions are about more than saving money on research and development. They are part of a three-pronged foreign policy strategy in which China will combine cyberespionage with economic pressure to bring the West under its sway while projecting traditional military might in its own region. The third prong is nuclear. Currently, China is in the same league as England and France but is pushing ahead with intercontinental ballistic missiles and submarine-based missiles. You can't be a superpower without them.
China is also investing heavily in its navy, which is the only way to protect the flow of energy and raw materials into China, and the export of finished goods. Besides protecting its economic lifeline, naval power allows China to deny or delay U.S. access to the South China Sea and East China Sea in the event of a crisis over Taiwan. Beefed-up naval power will also help in negotiations over the various disputed islands.
For all the money Beijing is pouring into modernizing its armed forces, it still spends more on domestic security than on defense. According to official figures, since 2010 the budget for the police, the state security forces, the courts and prisons has exceeded the money spent on the military. Even China is afraid of China.
Richard Lourie is author of "The Autobiography of Joseph Stalin" and "Sakharov: A Biography."


Read more:http://www.themoscowtimes.com/opinion/article/chinas-secret-foreign-policy/475982.html#ixzz2M05fhXpA
The Moscow Times

Monday, February 25, 2013


Insight: RI’s active role in global affairs: An Indonesian to head the WTO?

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One of the hallmarks of President Susilo Bambang Yudhoyono’s second term has been Indonesia’s willingness to once again take a leadership role in international and regional affairs.

The Indonesian government’s decision to put Tourism and Creative Economy Minister (and former trade minister) Mari Elka Pangestu forward as a candidate for director general of the World Trade Organization (WTO) is further proof of an Indonesia that is confident about its role in global affairs.

If Mari is elected as the new WTO director general, she will not only break the glass ceiling of being the first woman to hold this job, but will also remove another important barrier. Historically, Indonesia has been unwilling to send the best and brightest to international institutions because they are needed at home. It is something we all can be proud of. Indonesians taking top positions in global organizations is a testament to the progress we have made as a nation.

As an internationally renowned economist and academic with a seven-year tenure as Indonesian trade minister, Mari is widely held as one of the most capable candidates in a nine-person field of contenders for the WTO position.

Mari’s term as trade minister gave her wide exposure to the complexities and sensitivities of trade policy. Out-of-the box thinking, building consensus and finding inclusive solutions have been her trademark, and they are qualities that would serve her well at the WTO.

She was in charge when Indonesia’s free trade agreements with China, Japan and Korea (ROK) were negotiated, pursuing them as a second-best measure at a time when negotiations under the multilateral trading system (WTO) were at a standstill. When China and Japan could not agree whether an ASEAN +3 or an ASEAN +6 should become the template for free trade in East Asia, she and other ASEAN colleagues took the initiative to establish the Regional Comprehensive Economic Partnership (RCEP), consisting of all ASEAN free trade agreements with the ASEAN +6 members and balanced commitments on measures of greater inclusion and sustainability.

That is why it is only appropriate that she will get support from East Asian governments. She has the experience, commitment, intellectual capacity and demeanor for the post she is being proposed to serve.

With stalled multilateral negotiations and the global trading system constantly under threat from narrow domestic agendas and beggar-thy-neighbor policies, it is more important than ever to look for the best candidate. And especially for a candidate from a region that is serving the world as the main source of economic growth and dynamism.

Mari can enrich the WTO process and the international community with valuable lessons from East Asian experiences of policy making. This is one of those opportunities where Indonesia’s achievements and leadership could be recognized, with a candidate who stands out as one of the best in her own right, and who will make a difference for
future free and fair trade globally.

Mari has the unique combination of being a scholar in trade economics, a “second track” activist with worldwide networking that has given ideas and input to governments and the public, as well as a practitioner in the form of trade minister.

Jusuf Wanandi is vice chair of the Board of Trustees at the Centre for Strategic and International Studies (CSIS) Foundation. Djisman Simandjuntak is chair of the Board of Directors, CSIS Foundation.

Monday, February 18, 2013


Indonesia: Moving forward, rectifying mistakes

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Our experience has taught us the wisdom of moderation: Optimism needs to be tempered by a sense of realism. We have become more aware of the weight of history.

We make history, but we cannot make it as we please; even revolutionary Karl Marx would have admitted this!

We therefore have to accept the fact that we have to work in an imperfect setting. And, of course, we always have our innate human failings.

The most we can hope for from democratic politics, with its checks and balances, is a process of continual and incremental improvement, not a perfect set of policies. The most we can hope for is a democratic idea of the future that is without the illusion and the impatience of utopianism.

We now understand that democracy is simply an ordered and deliberate system for getting rid of some of the blemishes in government. No longer do we need to resort to violent solutions for change or for resolving differences.

Have we made progress in making democracy work in this country?

I think we have, though still with some qualifications. Let us take the most fundamental element of democracy: Freedom of expression. The present Constitution has unambiguously reaffirmed our freedom of speech and the unimpeded flow of information.

Our press is now one of the freest in the world. Dissenting citizens need not fear reprisal from the state.

I think I am justified in saying that we have managed to undo many corrosive practices of the past. Government policies are now more open to examination.

Today, transparency is increasingly becoming a norm in public life, thanks to the growing public demand for accountability. Monopoly-granting power is no longer entrenched, nor is flagrant nepotism or blatant cronyism.

The rule of law has been improving, albeit gradually. True, corruption remains a malignant cell in Indonesian society. But our law enforcement agencies, including the powerful Corruption Eradication Commission, have been very active in uncovering and pursuing corruption cases.

One important, if underappreciated, achievement is that an increasingly uncongenial atmosphere to corrupt practices is now being created.

Our democracy is consolidating. It is a work in progress and much remains to be done. Let me mention a number of challenges.

Indonesia is known to be a highly diverse society — in terms of cultural traits, social history and religion. This diversity generates some fundamental problems not easily remedied or amenable to a quick fix.

The decision to devolve power to the district level of administration was a good corrective step to break away from the centralistic model of the past. But it does complicate the reaching of a consensus that is often needed to solve long-term national problems.

For instance, we have still to arrive at an appropriate balance in regional development — to what extent should new facilities be in the form of urban centers marked by modern buildings and cars, and how much should they be in the shape of living spaces where children can bike around safely and breathe fresh air.

We still have a long-running debate on how to best to protect human rights and promote religious tolerance. Existing social diversity, income disparities and educational inequalities complicate matters further.

Then there is the problem of developing social capital, a fundamental element in a stable society. We know that adequate social capital can only be generated by a relentless effort that seeks to build trust among members of society. But, again, the existence of corruption, bribery, and other abuses of power complicate that very effort.

But I am not pessimistic about the prospects of solving such problems. Our democracy is certainly not devoid of the possibilities of consensus. Consensus has been achieved at critical times in our history, and subsequently great things have been accomplished.

I would like to think that deep in the Indonesian psyche, there is something that is unexpectedly robust, even forceful — something that has ensured and will ensure the nation’s survival against impending, difficult odds.

That belief is the basis of my vision for the country.

My vision is for an Indonesia that continually moves forward and regularly rectifies its mistakes. An Indonesia that keeps the shared dream for liberty and justice alive, despite our human failings and the legacy of history. An Indonesia that continues to play constructive roles in this increasingly challenging world.

The writer is Vice President. This article is condensed version of his acceptance speech at the conferral of the honorary degree of Doctor of Law. The ceremony took place at the Vice Presidential Palace in Jakarta on Feb. 13, 2013.

Tuesday, February 12, 2013


Historical ambiguity swirls in isles dispute

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The solitary islands of the East China Sea used to be the fancy of poets and fishermen. But today, these rocky outposts are at the heart of a tug of war churning the waters between Asia’s two biggest economies. The cluster of islands, which Japan calls Senkaku and China, Diaoyu, have become the lightning rod for what is seen as the worst downslide in bilateral relations between the two Asian powers, in 40 years.

“What really matters right now is who is physically occupying these islets. It is a fact that China did not show any serious interest in the Senkakus until the late 1960s when it was speculated that they were rich in oil, gas and other mineral deposits in the seas around the islands”, says KV Kesavan, an East Asia specialist at the Observer Research Foundation in New Delhi.

The five uninhabited islands that stand 400 kilometers off Okinawa, are submerged in the conflicting historical legacies of China, Japan and Taiwan (also a claimant), thus complicating the sovereignty issue of the isles.

Japan pegs its ownership of the Senkaku to 1895, claiming the islands were terra nullius, or belonging to no one when it took control of them. Japan refutes Chinese claims that it seized the islands following its victory over China in 1895, under the treaty of Shimonoseki, which ended the Sino-Japanese war.

With Japan’s surrender in the World War II, these desolate islands acquired new owners. The Americans took military control of the Senkaku and Okinawa, transferring them back to Japan only in 1972. Experts say the US intentionally left the ownership issue ambiguous, not wishing to hurt a rapprochement with China under then US president Nixon.

Despite their close trade ties, the stormy exchange between China and Japan, the world’s second and third largest economies continues to escalate.

China squarely rejects Japan’s 19th century assertion of ownership. It traces its legitimacy over the Diaoyu back to the 14th century, to the Ming and Qing dynasties, claiming Chinese envoys and traders discovered the islands during their maritime voyages. The Chinese still harbor deep resentment toward Japan’s military past, accusing it of seizing the islands from China during its imperial expansion. Furnishing ancient maps to bolster its case, China states the islands undisputedly belong to them.

The current intransigence over these islands underscores the importance of historical interpretation, given that the sovereignty issue of the islands is inextricably linked to the chronological lineage of the sparring nations.

With each country pegging its claim to a historical precedent, it makes a resolution of the problem intractable. While every nation has a fundamental right to its own version of history, experts say, there is also an urgent need to accommodate solutions that are acceptable to all.

A similar saber-rattling is reverberating across the South China Sea, making these busy sea-lanes choppier than usual. The theme is familiar — a race for resources fueled by rising nationalism, with China as the common denominator. Vietnam and China are fighting over the Paracel islands that lie southeast of China’s Hainan Island. Further south, high tides are battering the Spratlys, contested by China, Taiwan, Vietnam, Malaysia and the Philippines.

To assert its ownership, China is using the controversial nine-dash line, a map that demarcates its control over more than 80 percent of the South China Sea, including the Paracel and Spratly islands. This line has riled Southeast Asian nations, who say it violates international law, including the United Nations Convention on the Law of the Sea, or UNCLOS. The Philippines, which is protesting Chinese assertions over the Scarborough Shoal, has taken the dispute to a UNCLOS tribunal. A move it says it was forced to take after peaceful negotiations failed.

While no one really knows the extent of oil and gas reserves in the South China Sea, estimates vary. The US Energy Information Administration (EIA) pegs it at around 30 billion barrels, while China estimates nearly 200 billion barrels exist, calling it the “new Persian Gulf”.

Hungry for resources, China is therefore not likely to steer clear from these waters anytime soon. “Resource nationalism”, explains professor Thayer, “has trumped international law and common sense”.

Meanwhile, China is keeping a watchful eye on the United States deepening interest in Southeast Asia, a region with which China shares a flourishing business and economic partnership, and is its top trading partner.

China is wary of US President Barack Obama’s “rebalance” or “pivot” to the Asia-Pacific region, a policy translated in Chinese as America’s “return to Asia”. China maintains it wants bilateral solutions with each of the claimants in the South China Sea, and is opposed to the so-called “internationalization” of the issue, involving the United States.

“The Obama administration’s ‘rebalancing’ moves portend a worrying trajectory for the Sino-American strategic relationship,” says Zhu Feng, deputy director of the school of international studies at Peking University. China, according to Zhu, is feeling insecure at what it perceives as America’s growing clout in Southeast Asia. ASEAN countries, he advises, should not alienate China by engaging deeper with the US.

In both the East and South China Seas, history and geography are inextricably linked. The region cannot escape the preponderance of the past, yet it cannot allow it to overshadow the future.

The monsoons lashing Southeast Asia will recede in the coming weeks, but the powerful currents ripping through one of the world’s most vital shipping arteries are unlikely to ease anytime soon. The potential bounty of undiscovered oil and gas reserves that lie deep underneath these waters will continue to test the peace and stability of the region, making it a potentially dangerous military flashpoint.

The writer is a freelance journalist based in Singapore and a former reporter for BBC Asia.

BRICS Profile : GDP in term of PPP ( Purchasing Power Parity


1.         Russia - US$ 15,806
2.         Brazil - US$ 11,289
3.         India - US$ 3,290
4.         China US$ 7,517
5.         South Africa US$ 10,505

Monday, February 4, 2013


ASEAN talk: A lot of room to grow

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ASEAN is set to be the region to be situated in in 2013. After an estimated growth of 5.2 percent purchasing power parity (PPP)-weighted basis, we project the region to grow by 5.3 percent in 2013, outpacing the International Monetary Fund’s (IMF) global growth estimate of 3.6 percent. The region is expected to see economies such as Indonesia, the Philippines and Malaysia matching or exceeding their 10-year average rates.

And more is expected from Myanmar in 2013, which has been making international headlines for the right reasons in 2012. Confidence is high, not just domestically but also among foreign investors, where the region attracted 7.6 percent of global foreign direct investment (FDI) in 2011 versus 4.3 percent in 2006. Indeed, since 2000, following the crippling financial crisis, the ASEAN region has outgrown the world by an average of 1.5 PPP. So, can the region keep running at this pace?

 Nothing runs in a straight line. Business cycles still exist. But there is certainly still a lot of room to grow. Despite the world-beating growth rates registered over the last decade or so, the region can still achieve more. The region is hardly at the stage where the factors for growth have become complicated. At a most basic level, the continued process of urbanization will help to drive “easy” growth.

This is the economics of agglomeration. Urbanization helps to improve the overall well-being of an individual by improving access to services and housing. This can boost productivity and consumption. Urbanization helps to increase efficiency as distances are shortened. This lowers costs of businesses or for government to provide infrastructure and necessities. Jobs and supply of labor are concentrated rather than dispersed.

The benefits of clustering together, for individuals and firms, are reflected in the growth activity being concentrated in cities, even if the size of the city is small relative to the whole country. For example, Jakarta accounts for about 17 percent of Indonesia’s gross domestic product (GDP) but only constitutes 0.04 percent of the country’s land mass and 4.2 percent of the population.

According to the World Bank, the world passed the 50 percent mark for urbanization in 2007. As of 2012, there are still six countries in ASEAN that have not passed the 50 percent point — Cambodia, Laos, Myanmar, the Philippines, Thailand and Vietnam. Indonesia just crossed the mid-point at 51.4 percent. Singapore, Malaysia and Brunei are largely urbanized. As a region on the whole, we still have some low hurdles that we can cross to keep growth sustained.

Urbanization is typically associated with growing wealth. Measuring this by GDP per capita and using the world’s experience with urbanization as an example, every percentage point increase in urbanization raises GDP per capita by about US$ 500. Granted, every country’s experience will be different. How well urbanization is planned and implemented could affect the benefits accrued to the process. Or the productivity levels of agriculture, for example, could play a part in determining how much GDP per capita can increase relative to urbanization.

In fact, improper urbanization can result in diseconomies. Indeed, nowadays, when we think of a city, negative connotations such as congestion and pollution come to mind. But the fault does not lie with urbanization, but rather the way it is being carried out. Urbanization facilitates economic growth. And, given the relatively low levels of urbanization across ASEAN, the law of diminishing returns is not likely to be in play yet in any significant manner.

The low hurdles to growth can also be seen in the GDP per capita of countries in ASEAN. Compared to the world’s GDP per capita of $10,000 in 2011, only two countries (Singapore and Brunei) exceed this level (using World Bank data). Malaysia is nearly on par (based on 2011 numbers) but the next nearest country, Thailand, is only about half of the world’s GDP per capita.

At this level of growth, simple improvements to factors of production should help to support growth. According to the World Economic Forum Global Competitiveness Report 2012-2013, Cambodia and Vietnam are still at the most basic stage of economic development — the factor-driven stage. Myanmar and Laos are not included in this report, but would likely be categorized as such, too. Brunei and the Philippines are in the transition stage to efficiency-driven and Thailand and Indonesia are in the efficiency-driven stage.

At the earlier stages of development, adoption of existing technology and practices, investing in infrastructure, provision of basic institutional framework, and health and education facilities, should help to drive growth. In the region, only Singapore is considered to be in the stage of economic development that is innovation-driven. Malaysia is in the transition stage from efficiency-driven to innovation-driven. Hence, the region still has a lot of room for “easy” growth.

While this article highlights the growth potential of the region, growth is not granted. A right mix of fundamentals, policies and confidence is needed. At the moment, there is certainly a nice mix of these ingredients. Confidence is high, and even more so if it is seen in the context of the current weak global environment. Fundamentals are good and policies have been supportive of growth. But nothing stays constant and policies will need to stay
relevant and forward looking.

The writer is the head of Standard Chartered’s Southeast Asia economic research team.