Category Archives: USA

On the Rocks: China’s expected response to tribunal decision threatens to undo soft power gains

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The Permanent Court of Arbitration is set to rule tomorrow on a case brought by the Philippine government over China’s attempts to claim almost the entire South China Sea as sovereign territory. Beijing has boycotted the tribunal and betting the odds are that the verdict will not be in China’s favor.

Whatever happens tomorrow at the tribunal, Chinese state media is going to claim victory. But within the walls of Zhongnanhai, there ought to be some soul searching. This assumes of course that anyone who works in Zhongnanhai still has something approaching a soul.

Should the tribunal rules against the PRC — as it is expected to — and if the Chinese government chooses to use the tribunal’s ruling to, for example, wipe the ass of the nearest stray dog — as they will almost certainly want to do — the repercussions will ripple far past the rocks and reefs of the South China Sea.

Internationally, China has worked hard over the previous two decades to present itself as a good global citizen. As the US and their allies engaging in what many around the world see as reckless military adventurism, China positioned itself as a semi-sane alternative to the failed — and sometimes disastrous — policies of the West.

Choosing to ignore the tribunal’s ruling jeopardizes this concerted effort at image building. China can point all it wants to the way the US especially routinely ignores these sorts of hearings and decisions, but if the Chinese government is serious about being the voice of reason in a world gone mad they have to better than the US. Caesar’s wife must be above reproach. “You did it first” isn’t going to fly.

The second issue is domestic. Chinese media routinely demonizes the United States and the West for their actions around the world. Implicit in this coverage is the idea that most of the world — those countries who don’t burn summer palaces and invade Middle Eastern nations for sport — see China as the good guy in world affairs.

The Chinese government wants to present every issue as China (and by extension, the rest of the world) versus the West. It’s the US and their allies who are the odd ones out in the world. In some ways, that might be true. But it doesn’t mean that China’s neighbors see China as any less of the threat.

In the case of the South China Sea, Beijing is opposed by countries, like the Philippines, Malaysia, and Vietnam, who ought, by virtue of geography and a shared history as victims of colonialism, have common cause with China.

One reason the Chinese government has been so insistent on the US being the real impetus behind the decision to take the South China Sea case before the tribunal is that it helps soften an awkward truth: China isn’t as beloved around the world — and particularly in asia — as the Chinese state media wants people to believe.

Talking with folks in Beijing, there is the persistent belief that the Philippines and the other countries opposed to China’s territorial grab in the South China Sea are being hoodwinked into becoming the pawns of the usual suspects: The United States and Japan.

The Chinese government has made the South China Sea a core strategic interest. But one wonders if Chinese leaders have thought through the downfield implications of digging in on this issues. Maybe they have and have decided that they are fresh out of fucks to give about what Vietnam thinks of them.

The callous cynic in me might suggest that while China’s actions in the South China Sea represent a challenge to America’s leadership and strategic position in the Western Pacific, Beijing’s refusal to accept the tribunal’s decision could be seen as an opportunity to undermine some of the gains China has made in global public opinion over the past two decades.

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Filed under China, FEATURES, SLIDER, South China Seas, USA

Looking ahead to Obama’s September visit to Laos

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As the Obama Administration looks to add the finishing touches to its five year Rebalance to Asia, it is likely to continue to capitalizing on building ties to the 10-member Association of Southeast Asian Nations (ASEAN).  The Obama Administration has worked tirelessly, particularly over the last four years, towards improving bilateral and multilateral ties with ASEAN.  It has sent more high-level visits to ASEAN member states than its predecessors, had a visible presence in improving security relations with most ASEAN countries, and held the first U.S.-hosted ASEAN summit in Sunnylands last February.  And as a final feather in Obama’s cap, he’ll be the first president to visit to Laos this coming September

The visit to the small Southeast Asian country may seem minor in the current geopolitical climate; however, it is far more important in the long run.  Laos is tiny with only 6 million people earning on average just over $1000 per year, but the premise of the U.S. Rebalance has always been to re-engage with Asian countries wholesale in an effort to bolster the region.  Through Laos, the Obama Administration can solidify its objectives and spur a more holistic relationship with ASEAN.  In other words, the President’s upcoming visit to Laos represents the essence of the U.S. Rebalance to Asia as a whole.

On the surface, improving relations with Laos seems daunting.  Laos is beset by many problems in addition to economic development challenges, ranging from a lack of infrastructure to being a central thoroughfare for the region’s illicit trade network.  Historically, the U.S.-Lao bilateral relationship has been rather rocky.  Traditionally, policymakers have worked to curb relations with Laos’s Communist government that was deigned partially responsible for the U.S.’s defeat in Vietnam.  US Congress protested Laos’s entry to the WTO and criticized the Lao government’s lack of good policies to protect the Hmong minority, whose diaspora forms key constituencies in congressional districts in states like California and Minnesota.

Yet, it is because of these hurdles in the U.S. bilateral relationship that make Laos an ideal candidate for furthering the regional pivot.  The U.S. Rebalance is concerned with building bridges and opening channels to promote greater collusion between the U.S. and the whole region.  This entails reaching out to all of Asia and finding chains that can potentially help the U.S. and intra-Asian growth.  Properly mending relationships to promote a greater relationship promotes a sustainable future.  Furthering U.S. engagement with Laos will ensure the legacy of the Rebalance beyond the current administration.  To do so, the President should confront two significant regional issues: food security and UXO.

First, in conjunction with the President’s September visit, the Administration should establish new policies to improve Laos’ food security.  Laos experiences some of the highest nutritional deficiencies, child mortality, and maternal mortality in Southeast Asia. To assist with Laos’s food security problem, the Administration could build on successful frameworks for cooperation already in place.  Thus, USAID provides programs to supplement good nutrition and improve regional capacity building through the Lower Mekong Initiative (LMI).  A joint effort from the Department of Defense, the Oregon Health Science University, and the Lao University of Health Sciences created the Lao American Nutrition Institute (LANI).  LANI hopes to revitalize agricultural growth knowledge and practices in Laos.  In spurring this effort, the Obama Administration can establish sustainable development policies and build capacity within the Lao government on programs that benefit the whole of Laos’ population.

Second, it is paramount for the Obama Administration to resolve the long debilitating unexploded ordnances (UXOs) in Laos.  The small munitions left over from the U.S.’ Secret Bombing Campaign over Laos (1964-1973) still saturate much of the countryside and pose a threat to the country’s agriculture and young, vulnerable population.  UXOs have been a front row issue in the prior visits by high profile Cabinet members.  Ben Rhodes, Obama’s Deputy National Security Advisor for Strategic Communications, highlighted the UXO issue during his visit in November 2015.  As a Vietnam veteran, Secretary John Kerry expressed his sincerest wishes towards properly handling the issue and bringing closure to the UXO issue during his visit to Laos in January 2016.  Obama would benefit from boosting UXO removal efforts as prescribed by lawmakers.  Sen. Patrick Leahy (D-Vermont), has promoted responsible and effective strategies in removing UXOs as well as a deep concern that the U.S. owns up to the Secret Bombing Campaign over Laos by seeing that the country becomes completely UXO free.  Regardless of the approach, Obama should set a definite tone over UXOs in the upcoming visit.  Taking responsibility to end the UXO threat for good improves the U.S.’ standing in the region and will move the agenda of the Rebalance forward.

In his final months, President Obama will be setting the finishing touches on what has been a major foreign policy effort.  Above all, Obama would like to set the tone of being invested in improving the whole of Asia, exemplified through a serious responsibility to improving Laos’ development and correcting past US foreign policy decisions that proved detrimental to the region.  Laos will be Obama’s chance to set the record straight and cement a sturdy framework for constructive engagement with the region.  With this framework, future presidents will be encouraged to do the same: embrace Asia as a whole and continue an approach toward capacity building that ensures a brighter future.

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Filed under ASEAN, Cold War, Food, Laos, Regional Relations, SLIDER, US Rebalance, USA

Improving the US-Laos relationship through UXO cleanup

UXO Lao clearance operators use a loop detector to scan for sub-surface munitions. Photo: Cluster Munition Coalition

UXO Lao clearance operators use a loop detector to scan for sub-surface munitions. Photo: Cluster Munition Coalition

The recent leadership change in Laos and the country’s tenure as chair of ASEAN mean that now is an ideal time for the U.S. to step up engagement.  This dynamic situation gives U.S. policymakers room to pursue important goals in sustainable development and hydropower on the Mekong.  To do so, the U.S. must overcome significant hurdles.  Historically, Washington has seen little need to engage with the small, landlocked, and communist country that reminds the U.S. of struggles during the Vietnam War.  In 1997, Congress opposed Laos’ entrance to the WTO over marginalization of the Hmong minority.  Above all, the U.S.’s wartime legacy issues have been detrimental.

During the Vietnam War, the U.S. saturated Laos with cluster bombs, leaving dangerous remnants throughout the countryside.  Unexploded ordnances (UXOs) continue to injure and kill, hindering Laos’ development.  Yet, even with these obstacles, the political climate is ideal.  The U.S. government should aim for better engagement with Laos by committing to economic development and accountability in UXO removal.

Laos, as Southeast Asia’s fastest growing country, has shown positive movement in its own economic development, but major improvements are lacking. Timber and copper exports have generated a steady source of revenue.  USAID development projects in the agricultural and sustainable livelihood sectors are bringing Laos within reach of middle income status by 2020.  Newly designated Prime Minister, Thongloun Sisoulith, has expressed a desire to capitalize on emerging opportunities and open Laos to more intra-ASEAN trade and tourism.  Smart investment efforts ensure a brighter future for Laos, yet the country is still very poor and hindered by more complex issues.

Laos lies at the intersection of the Golden Triangle, an illicit drug trading center that undermines good economies.  Nutrition is a major problem.  44% of children in Laos are malnourished and 27% are underweight.  Moreover, an estimated 70% of Laos’ population is under the age of 30.  At best, present day Laos is in a state of transition.  Laos requires capacity building initiatives to improve continuing development strategies.  However, economic development in Laos is not a quick fix as issues literally under the surface threaten Laos’ human security.

The toll of unexploded ordnance on Laos’s security and development is significant.  From 1964 to 1973, according to Lao’s National Regulatory Authority for UXO, over 50,000 Lao citizens were injured by UXO from 1969 to 2008.  The most prominent casualties ranged farmers and children doing everyday essential activities, everything from building a fire to playing in a field.  Travel through rural areas is noticeably dangerous, as casualties during cross-country travel are frequent.  UXOs have dangerously outlived their purpose.  At the start of the secret bombings over Laos, soldiers were the predominant UXO victims. Now agricultural workers and children comprise over 80% of quantifiable post-conflict victims up to 2008.  Their injuries increasingly lead to amputation or death.

Pile of defused ordnance used for scrap metal in Laos. Photo: MAG

Pile of defused ordnance used for scrap metal in Laos. Photo: MAG

UXOs are an inherent threat to Laos’ human security and economic development.  UXO contamination can render lands unusable, much to the detriment of the Lao economy.  The care and treatment for UXO victims adversely affects Laos’ public health and labor resources.  Simply put, Laos’ continued growth cannot happen with UXOs strewn across the country.  Development strategies that fail to address the UXO issue may cause Laos’ future prospects may flounder.  UXOs are an impediment to the comprehensive growth strategy that Laos requires.  A vulnerable population is less likely to improve its capacity for development.  The UXO problem is a chronic barrier plaguing a country looking to take a major step in its development.  Continuing UXO contamination weakens Lao citizens’ prospects for a sustainable future.

Yet, the UXO threat may be gone in the future, as ongoing diplomatic engagement is paving the way for enhanced U.S.-Laos engagement.  High profile visits have improved amity between the two nations.  Laos has hosted more senior members of the U.S. government in a recent five year span than in the last twenty years put together.

President Obama is set to be the first U.S. president to visit Laos in September.  In addition to the high profile visits, the U.S. government has pledged enriched development output to Laos in the form of improving nationwide nutrition and education.  During his recent visit to Laos, Secretary Kerry announced that the U.S. would provide $6 million for school meals to supplement children’s daily nutrition and even pledged $19.5 million for weapons removal and abatement.

FSD deminer Mr Dasone Sitthipone working with a detector at a UXO clearance area, begins excavating an unidentified object. Photo: Australia DFAT

FSD deminer Mr Dasone Sitthipone working with a detector at a UXO clearance area, begins excavating an unidentified object. Photo: Australia DFAT

Moving forward, the U.S. should build on the framework set by these visits.  Fundamentally, working towards development goals in Laos improves U.S.-Laos bilateral relations, which in turn improve the U.S.’s access to the Mekong and the prospect for sustainable livelihoods on the Mekong.  Fostering a renewed relationship with Laos is a core value of the U.S.-Rebalance.  If the U.S. is to truly gain access to Asia’s dynamism, it must engage with all members of ASEAN.  Bolstering Laos is a smaller but important step toward improving ASEAN’s resiliency.

In any case, cleaning up war legacy issues must be high on the U.S.’s policy goals.  Above all, UXO removal is a moral imperative, and the U.S. is uniquely equipped towards removing the UXO.  As the responsible party for saturating Laos with cluster bombs, the U.S. is accountable in cleaning its remains.  In the waning months of the Obama Administration, the U.S. government has the potential to properly re-engage in Southeast Asia.  By taking a vested interest in Laos’ development through and with UXO removal, the U.S. is laying the path back to Southeast Asia.  Interestingly enough, the contentious issue that separated these countries for so long can become the key issue that brings the closer together.

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Filed under Cold War, Current Events, Laos, Regional Relations, SLIDER, Uncategorized, USA

Clouds Gathering as Obama Hosts Southeast Asian Leaders at Sunnylands

ASEAN leaders gather for a family photo with U.S. President Barack Obama (5th L) after a US-ASEAN meeting at the ASEAN Summit in Kuala Lumpur, Malaysia November 21, 2015. REUTERS/Jonathan Ernst TPX IMAGES OF THE DAY

Photo courtesy aseanmp.org

On Monday and Tuesday, February 15-16, President Obama will host eight leaders and two senior alternates from the 10-country Association of Southeast Asian (ASEAN) at Sunnylands, the former estate of Walter and Leonore Annenberg in Rancho Mirage, CA.

The Sunnylands summit will be an historic development in US-ASEAN relations and a significant testament to the positive impact of the Obama administration’s Rebalance to the Asia-Pacific and its broad all-of-government reengagement with ASEAN. But amidst the bonhomie many if not most of the leaders are likely to have more questions than answers about future US initiatives towards the region.

Obama and most Presidents since Dwight Eisenhower have used the Sunnylands conference center for retreats and to host high-level foreign visitors.  Obama hosted Chinese president Xi Jinping at Sunnylands in 2013.

But even as relations with ASEAN have never been stronger, clouds are gathering over arguably the world’s most successful developing region. The most serious are blowing from China, which has followed an erratic course almost since Xi Jinping became Asia’s “man-in-a-hurry” since he took office in March 2013.

Since 2000 the ASEAN countries have averaged GDP growth of more than 5 percent, though per capita income and living standards still vary widely.   McKinsey & Company judged ASEAN collectively to rank the lowest among the world’s largest economies in GDP growth volatility from 2000-2013.

Still, economic cooperation has generally not lived up to the hopes and aspirations of most member countries.  Over nearly five decades the rhetorical bar regarding intra-ASEAN trade and investment has always been set significantly higher than actual performance.

At the time of the initiation of the ASEAN Economic Community in 2015, the ten countries were still trading much more with the rest of the world than with one other, especially if trade figures are adjusted to separate intraregional trade among Japanese and Chinese corporate shipments of parts and components for their regional supply chains.

Relations with the US have been warm throughout ASEAN’s expansion and evolution, though US preoccupation with the Middle East after 9/11 and the invasion of Iraq created significant anxiety in some capitals about the strength of American interest and staying power.   Relations have been on the upswing since the beginning of the Obama administration, though some important moves such as the Rebalance to Southeast Asia and closer engagement with Vietnam had bureaucratic if not high level political roots in the last year or so of the George W. Bush administration.

To date, nervousness about China’s increasingly assertive efforts to solidify its claim to nearly 90 percent of the South China Sea—including parts of the 200 nautical mile Exclusive Economic Zones (EEZs) of five ASEAN countries—has been the single most important reason for the positive reception in the region to the US military rebalancing to East Asia and the US’s its broader political and economic reengagement with Southeast Asia.

China’s effort to create a modern mare nostrum in the South China Sea through bullying and the deployment of overwhelming numbers of maritime police vessels, Coast Guard and PLA warships remain a continuing threat to regional peace and stability and drive other claimants closer to the US, but in recent months China’s fast slowing economy and unsettling blunders by the Central Bank have created even more imminent dangers to both to ASEAN economies  and regional stability.

The main reason has been China’s emergence little more than five years ago as the single largest market for ASEAN exports of commodities and manufactured goods. Chinese imports and fast growing American investment were twin engines of growth that supported ASEAN throughout the global recession.

Now China’s rapidly slowing growth and questions about its financial stability are imposing a serious and unexpected drag on ASEAN’s largest economies, where massive Chinese investment in mines as well as deforestation in order to create rubber and oil palm plantations and transportation infrastructure have left communities adrift in a wasteland of environmental devastation.

The falling Yuan and the Xi administration’s surprisingly clumsy handling of its financial turmoil have shaken investor confidence throughout the world.  China’s economic slowdown is likely to continue until policymakers finally make well recognized but politically difficult reforms and the economy purges itself of excess capacity and non-performing debt.  Meanwhile, the rapid fall in imports of commodities coupled with a weak and still tenuous recovery of the global economy pose a serious short and medium threat to the wellbeing of most of the ASEAN countries.

Several non-military moves of the Obama administration, including the 2009 Lower Mekong Initiative (LMI) and the Trans-Pacific Partnership (TPP), have been strongly welcomed by the relevant countries—Cambodia, Laos, Myanmar, Thailand and Vietnam in the case of the LMI and Brunei, Singapore, Malaysia, and Vietnam in the case of the TPP talks. But Thailand and one or more other countries have reason for concern that their own exports and attractiveness to multi-national investors will suffer as a consequence.

How Washington responds to the situation in the South China Sea and its overall policy towards Beijing are certain to be high on the list of talking points for the ASEAN leaders, as will a range of multilateral and bilateral development and capacity building programs under the framework of the new US-ASEAN Strategic Partnership and the LMI.

Equally if not more important will be the TPP agreement and its uncertain fate in Congress. If approved by Congress, the far-reaching agreement  will almost certainly have significant economic, financial and even domestic political impacts on both the four ASEAN signatories, as well as the six who are not. Non-signatory ASEAN countries as well as China will be disadvantaged by restrictions on third party content.  The most likely short-term disadvantage will fall on Thailand, the largest ASEAN economy after Indonesia, because of its deep integration in regional supply chains and geographic centrality astride major regional transportation networks.

In addition TPP discussions and the South China Sea tensions, concern that ISIS is establishing a foothold in the region and the best means to counter its recruitment efforts and the establishment of terrorist cells will be high on the Sunnylands agenda.  Economic and security concerns, particularly those where the root cause emanates from China, continue to drive several ASEAN states closer to the US, openly in the case of Vietnam and the Philippines and quietly in the case of Malaysia and Indonesia. It is unsurprising that these issues will drive the conversation at Sunnylands. The Obama administration and ASEAN would also be wise to begin give equal weight to conversations on climate change resilience and energy governance, two areas which ASEAN countries are lagging but are beginning to articulate the need for external partnerships.

 

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Filed under ASEAN, China, Current Events, SLIDER, South China Seas, USA

Laos’s leadership transition raises questions over regional alliances

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Bounnhang will be the leader of Laos’ ruling Lao People’s Revolutionary Party.

Laos’ Communist Party elected vice-president Bounnhang Vorachit to be its next leader last week, after a vote by the newly formed 10th Party Central Committee.

State media announced on Friday that the congress of the Lao People’s Revolutionary Party, which is held every five years, had selected a new central committee and politburo to lead the country. The 78-year-old Bounnhang is replacing Choummaly Sayasone, 79, as secretary-general and president, who is stepping down after almost a decade in power.

Some observers believe that the change in leadership signifies a tilt away from China and closer to longtime ally Vietnam, as Laos takes on the chairmanship of the Association of Southeast Asian Nations (ASEAN) regional bloc.

The secretive nature of Lao People’s Revolutionary Party, which has ruled the country since 1975, makes its internal politics difficult to understand, but the changes in the politburo offer some indications of a slight shift in the ruling elite.

The choice of Bounnhang, a senior figure of the regime who was a prominent member of the Pathet Lao armed independence movement and has previously acted as prime minister, is an unsurprising one for the single-party state.

However, few expected the departure from the party of Prime Minister Thongsing Thammavong, 71, who had been in the politburo since 1991. Speculation in Laos is rife that his exit from power is linked to the recent arrests for corruption of Central Bank Governor Somphao Sayasith and former Finance Minister Phouphet Khamphounvong.

The 70-year-old Deputy Prime Minister Somsavat Lengsavad was also reported as not having sought re-election to the central committee, where he had been been a politburo member since 2006. Though less highly ranked in the cabinet, he was notable for being the principal pro-Beijing voice within the government.

A fluent Mandarin speaker, Somsavat has shepherded many joint ventures with China and is currently overseeing the controversial Laos-China high-speed rail project, whose ground-breaking ceremony took place in early December 2015.

The 427 km railway would connect the Lao capital to the Chinese border and is expected to cost  US$6.04 billion. A Radio Free Asia (RFA) report from January 4 mentions some government officials as criticizing Somsavat for having accepted a deal unfavorable to Laos, noting that it was not the first “high-cost investment where he gave too much away as collateral for project loans with little or no payoffs for ordinary Lao citizens.

The railroad has been mired in controversy ever since it was announced in 2010. The project was alleged to have created tensions between Laos and Vietnam, whose “own relations with China were then at a standstill,” explains Ian Baird, a Laos expert and a professor at the University of Wisconsin-Madison.

Bouasone Bouphavanh, the then-prime minister, is believed to have been removed from power and replaced by Thongsing in 2010, due to perceptions that he was favoring Beijing over Hanoi. Soon after, plans were started for a Laos-Vietnam railway, but never formalized.

In recent years, Beijing has vied aggressively for influence in Laos through aid, loans and infrastructure investment.

“China is using its economic interests to get political power” says Baird. “Politically, though, Laos remains much closer to Vietnam. Most of the country’s leaders studied or trained in Vietnam, including Bounnhang. They were already in governmental positions in the 1980s when there were strong enmities between Laos and China, who were then almost at war, with no trade or real relations.”

“What the Lao are doing now is trying to balance between the Vietnamese and Chinese. They want political support from Vietnam and financial support from China…The United States is also getting closer to Laos, but has relatively low investments in the country.”

“Ultimately”, Baird concludes, “I believe that Vietnam has more power than China in Laos.

Such diplomatic balancing was already visible this week. The Associated Press reported on Monday that Thongsing had assured US. Secretary of State John Kerry that “Laos would help counter China’s assertiveness in the South China Sea.

Xinhua, meanwhile, detailed a meeting on Tuesday between Bounnhang and Song Tao, a special envoy mandated by Xi Jinping, where the former announced “he was ready to join hands with China to further develop the relations between the two parties and two countries.” Unmentioned publicly by either government was the death of two Chinese nationals in a suspected bomb attack on Sunday in central Laos, though it remains unknown whether they were individually targeted.

As this year’s ASEAN chairman and co-convenor of the upcoming Sunnylands Summit, it is likely that Laos will be trying to strengthen its own position in the regional balance, particularly in light of mounting tensions in the South China Sea.

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What’s Old is New Again: Predictions for Southeast Asia 2016

Will there be more skirmishes in the South China Sea in 2016? Photo: Getty Images

Will there be more skirmishes in the South China Sea in 2016? Photo: Getty Images

Much can change in a year’s time. In January 2015, Singapore’s Lee Kuan Yew was still alive, Aung San Suu Kyi’s future as leader of Myanmar was quite uncertain and East by Southeast was not making any predictions about international affairs in Southeast Asia. But again, much can change in a year’s time.

2016 will be a critical period for geopolitics in the region, as new strategic relationships are formed and existing ones strengthened. Many experts talk of a growing polarization of the region as countries position themselves between the US and China, a trend due in large part to rising tensions in the South China Sea. The conflict will take center stage in 2016. Look for the the Netherlands-based Permanent Court of Arbitration to publish its initial findings on the Philippines’ case against China in the first half of 2016. Despite not ruling on sovereignty issues, the outcome of this case will likely anger China and lead to a more aggressive stance towards the Philippines and other claimants. As the Philippines and Vietnam rely more heavily on the US for security guarantees in the South China Sea, more US flyovers and naval patrols in the contested waters are to be expected. Look for the US Navy to begin to use Vietnam’s Cam Ranh Bay for “maintenance” purposes and to park its ships on a somewhat permanent basis  in the Philippines’ Subic Bay after joint military exercises finish in April 2016.

Conversely, look for the emerging Sino-Thai regional axis to be solidified in 2016. This relationship, despite not bringing much to the languishing Thai economy, will tighten the ruling junta’s grip on power. Thailand’s long drift towards authoritarianism will add further strains on ties with the US, its long-term external security power. Of course, the permanent white elephant in the room in Thailand is the king’s health. With his majesty in poor health, lese majeste cases will continue to multiply as the junta’s concern grows.  His death and the subsequent succession struggle would likely send the country into chaos, even with the army in control. Such a collapse of the Thai political structure would have major repercussions for the region’s stability.

Laos is also in for a tough year ahead. Its chairing of ASEAN will do more to highlight its shortcomings than celebrate its successes. With the opening of Xayaburi Dam, Don Sahong Dam scheduled to break ground in 2016 and preliminary studies beginning on a third Mekong dam at Pak Beng, there will be renewed calls from the international community for Laos to reconsider its hydropower plans for the Mekong River. The landlocked country’s lack of finesse in dealing with the South China Sea conflict will also draw criticism, all punctuated by continuing questions about the kidnapping of Lao activist Sombath Somphone.

In Cambodia, the political impasse between the ruling Cambodia People’s Party and the Cambodia National Rescue Party will continue through the first half of 2016. Expect strongman Hun Sen to find an 11th hour solution paving the way for opposition leader Sam Rainsy to return from self-imposed exile to begin preparing for the 2017 parliamentary elections.

Barring another major fracture in Thai politics, Vietnam’s National Party Congress will mark the region’s most significant political transition in 2016. Nguyen Tan Dung is likely to be selected as Vietnamese Communist Party chairman, with Truong Tan Sang staying on as president or similar role to balance Dung’s reformist tendencies. Dung’s leadership will be key as Vietnam implements the Trans-Pacific Partnership, a painful process that will force Vietnam to learn to run and walk at the same time. Dung’s princeling son, Nguyen Thanh Nhgi, will also be elevated to the Central Committee and has a bright path ahead if his father can lead the country into a new era of high economic growth and balanced relations between the US, China and Russia.

Corruption scandals will continue to keep a stranglehold on Indonesian and Malaysian politics. In Indonesia, President Joko Widodo’s efforts to prop up a sagging economy will be hampered by an unstable cabinet and nagging questions relating to 2015’s Freeport corruption scandal. In Malaysia, Prime Minister Najib Razak will continue to face intense public scrutiny over the 1MDB scandal. It is possible that Najib will use a new national security law to muffle Malaysian civil society’s calls for his resignation.

After refreshingly open elections in 2015, 2016 will be a year of political posturing for Myanmar. As Aung San Suu Kyi and her victorious National League for Democracy take power in early 2016, the military will position itself to retain many of its past privileges. Look for Than Shwe and the other generals to create a formal post in the government for Aung San Suu Kyi, who is legally barred from the presidency, in a bid to define and contain her power as head of the NLD. Those expecting radical change from the NLD government will be disappointed – there will be little structural political reform, the NLD’s foreign policy will be largely similar to Thein Sein’s, and the ethnic reconciliation process will still muddle along. However, look for the new ruling party to permanently shut down the Myitsone hydropower project and consider suspending the Salween river’s cascade of dams in order to push along the ethnic peace process.

Like 2015, this year will see a further intensification of the Rohingya refugee crisis. However, with the world’s eyes adjusted to seeing the plight of refugees, there will be more attention paid to the issue and Aung San Suu Kyi will receive pressure from both Western and Muslim-majority countries to solve the problem of Rohingya persecution in Myanmar. Another ethnic group that came to the forefront last year, China’s Uighur population will also stay in the news in 2016. Increased crackdowns in their home Xinjiang province will force more refugees into Southeast Asia, and lead to a handful of Uighur-related terrorist attacks, both foiled and executed, in Thailand and Indonesia.

The regional economy will see decreased growth in 2016 as a result of slowing growth and structural issues in the Chinese economy. Chinese money will still flow south as the One Belt One Road strategy is rolled out and the Asian Infrastructure Investment Bank officially opens for business. Contrary to some expectations, the AIIB’s first loan recipient will not be Myanmar, but either Laos or Cambodia.

On the other side of the coin, the US-led Trans-Pacific Partnership will begin the ratification process in a number of regional countries this year. Our bets on order of approval are Singapore first, followed by Brunei, Malaysia and Vietnam. Indonesia will likely commit to the TPP by the end of the year while Thailand’s economic struggles under the military junta will push it closer to joining. Much of the US-ASEAN Sunnylands conference in February will be centered on TPP ratification, along with South China Sea issues and counter-terrorism cooperation, and will serve to solidify relations between the US and the bloc. ASEAN leaders will be looking for assurances of American commitment to the region during the next administration and they will likely receive them. Of course the future of the TPP and the US Rebalance to Asia lies in the fate of the US Presidential elections and our prediction is that America’s first woman president will keep the Rebalance at the forefront of her foreign policy – after all it was her idea.

Last but not least, the Asian Economic Community will be the same on January 1, 2017 as it was at the head of this year – a half-baked dream with little hope of success.

To all of the East by Southeast readers and their families, we wish a you happy new year and much joy and success in 2016!

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A More Comprehensive Partnership: What the US should seek from Jokowi’s visit

This is Indonesian President Joko Widodo's first visit to the US since taking office more than a year ago. Photo used under Wikimedia commons license.

This is Indonesian President Joko Widodo’s first visit to the US since taking office more than a year ago. Photo used under Wikimedia commons license.

For leaders of large Asian countries, the United States is the focus for fall 2016. After India’s Narendra Modi and China’s Xi Jinping both visited the US in September, Indonesian President Joko (Jokowi) Widodo landed on US soil this week, for the first time since he took office a little more than a year ago. Today, Indonesia sits at an important crossroads as it engages with the US and China, all while forging its own identity in Southeast Asia. During Jokowi’s visit, the US should build on its existing comprehensive partnership with Indonesia by strengthening bilateral security and defense ties and continuing to court Indonesia economically, specifically in light of the newly-agreed Trans-Pacific Partnership (TPP). Washington should also push Jakarta to use its perennial leadership role in the Association of Southeast Asian Nations (ASEAN) to advocate for democratic and human rights norms in the region.
Since the Suharto era, the US and Indonesia have maintained close security ties. This facet of the bilateral relationship should be augmented during this month’s visit. Jokowi aims to make Indonesia a maritime power that serves as a strategic and economic link between the Indian and Pacific oceans. The US should help Jokowi realize this goal by providing assistance as Indonesia plans to create a coast guard independent of its navy. This assistance could come in the form of the US Coast Guard training its Indonesian counterpart and possible joint exercises in 2016. Moreover, as the world’s maritime superpower, the US has much to offer Indonesia as it looks to upgrade its own capabilities. A new strategic dialogue focused on maritime security would serve to strengthen bilateral ties and help Jakarta attain its maritime goals.
Additionally, Indonesia has struggled with piracy throughout the archipelago and is host to a low-level insurgency in its western islands. Recently, more than 500 Indonesians have traveled to the Middle East to join the Islamic State (IS). The US should offer to assist Indonesia in combating both off-shore piracy and terrorism through an agreement for enhanced cooperation on terrorism and intelligence sharing.
In Jokowi’s visit, the US also has an opportunity to enhance economic ties with Indonesia. The country of 250 million has great economic potential; however the first year of the Jokowi presidency has been marked by low growth rates and disappointing economic stimulus packages. Jokowi desires to attract investment from US businesses, however regulatory red-tape and a penchant for economic nationalism has scared away foreign enterprises in the past. To solve this issue and benefit both sides, Washington and Jakarta should lay the groundwork for a new bilateral investment agreement.
In addition, the US should continue to court Indonesia to join the TPP. With negotiations recently concluding in Atlanta, now is the perfect time to remind Indonesia of the economic benefits of joining the trade pact. In the past, the Indonesian response to the TPP has been lukewarm, though fears of falling behind its neighbors in attracting foreign direct investment could spur Jakarta to reconsider the treaty.
Lastly, Washington should not miss this chance to encourage Indonesia to continue its leadership role in ASEAN. As the regional bloc’s largest country and strongest democracy, Indonesia holds a special place among the member states and its past efforts have shaped political transitions in places like Cambodia and Myanmar. The US should push Jokowi to continue to advocate for democratic and human rights norms in the region, especially at a time when these institutions are under renewed peril in Thailand and Myanmar. Additionally, ASEAN member states face a threat from Chinese
expansion in the South China Sea. A strong Indonesia is necessary if ASEAN is able to stand-up to its northern neighbor’s provocations.

 

After more than five years, the US-Indonesia Comprehensive Partnership could use a refresher and Jokowi’s visit to the US provides the perfect opportunity. By enhancing military-to-military ties, pushing for a new bilateral investment treaty and encouraging Indonesia to continue its leadership in ASEAN, the US can develop Indonesia into a robust regional partner capable of supporting the United States’ interests in Southeast Asia.

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John Kerry’s 2015 ASEAN Summit Speech 8.6.15

Transcript of US Secretary of State John Kerry’s speech and Q&A at 2015 ASEAN summit in Kuala Lumpur, Malaysia.  August 6.2015

SECRETARY KERRY: Good afternoon, everybody. So let me begin, if I may, by thanking our Malaysian hosts for their very warm welcome and for having really put together an exemplary ASEAN and regional forum as well as the entertainment and gathering us. We really appreciate the generous hospitality and quality of their chairmanship for the past year.

I think all of you know that ASEAN has really long been the centerpiece of the Asia Pacific’s multilateral architecture and it’s really also a key of the United States’ ongoing focus on the initiative to rebalance our resources, our time, our energy, our effort with respect to the region.

In my remarks at Singapore Management University earlier this week, I spoke about how we seek a region in which countries come to each other’s aid when natural disasters strike or human emergencies occur. In that spirit, I want to express my personal and my country’s condolences to all those affected by the flooding and the very heavy rains in Myanmar. The United States – I said there would be additional assistance. The United States will provide $600,000 of immediate relief through USAID’s Office of U.S. Foreign Disaster Assistance. And we have a team on the ground now working with local officials in order to meet the most urgent needs. We will continue to follow the situation and we’re going to work with our partners in order to help those in the most affected areas.

I also want to express my condolences to the folks who have experienced an extraordinary tragic loss of life on Malaysia Airlines Flight MH370. While we were here during the course of this journey with the discovery of the flap on Reunion Island, all the wounds have been opened again, all of the sorrow is felt even more intensely, and there are no words to express adequately our sense of loss and our sense of heartbreak to the families of the victims. Obviously, we hope very much that the debris that was discovered on the Reunion Island, if it is found to be conclusively from the aircraft, that this will help to bring some sense of closure about what happened and perhaps even more reliable information that can be tracked from the currents that may even narrow the area of search, which we would hope for.

I want to commend the French authorities and other international experts for their diligence both in the analysis of this wing but also in their overall investigation as well as in the ongoing search.

Over the last two days here, we reviewed a number of challenges that are related to the security and quality of life of this region that require the kind of cooperative thought and action that ASEAN was specifically designed to achieve. We are, for example, all of us – all of us at this meeting – united in our desire to counter and mitigate the harmful impacts of climate change, one of the most acute and potentially devastating threats to our shared future. And those countries that have not yet announced their independent – nationally designed contributions – defined contributions, all stepped up and said they intend to do so, some of them very shortly. Australia, for instance, has a big meeting in the next couple of days.

So people are pushing towards the target date of the Paris negotiations, and we welcome that. I was able to report to our colleagues that the United States has reduced its greenhouse gas emissions to the lowest levels in two decades and that we have set a goal for even more ambitious reductions by the year 2025. At the ASEAN-U.S. ministerial meeting, we discussed the importance of every single country going into this effort, each of them putting forward their own targets for the post-2020 period. And I would remind everybody that was actually agreed to at the ASEAN-U.S. summit last fall.

Following the Lower Mekong Initiative meeting – the ministerial meeting – we issued a statement on building a sustainable future for the Mekong. I think it’s an important document because it lays out a plan of action for the next five years and the statement reiterates our goal of supporting a smart and responsible development along the Mekong River. And the Mekong River, as everybody in this part of the world knows, is one of the great rivers of the world and millions of people rely on that river as their source of livelihood, their source – protein, of food. It is critical.

At the ASEAN regional forum, ministers endorsed a statement committing everyone to tackle illegal, unregulated, and unreported fishing. And I was proud to announce a new multiyear Oceans and Fisheries Partnership with the Southeast Asian Fisheries Development Center in order to develop a system for documenting and tracing illegal fishing with an initial commitment by the United States of 4.3 million for the first year as it gets going.

On the security side, I expressed our serious concerns over the developments in the South China Sea, including a massive land reclamation and the potential militarization of land features. I reiterated America’s strong support of freedom of navigation, overflight, and other lawful uses of the sea. These rights, I would remind everybody, are universal rights and they must be respected by every nation, large and small. To that end, I made clear our belief that the claimants to some of these reefs, islands, to some of these areas, should – all of them, every one of them – take concrete steps in order to try to lower the tensions by refraining from further land reclamation, militarization, and construction projects. A number of the claimants today made clear their willingness to refrain from those very actions.

So this is an important step forward, but obviously there’s work left to be done since no claimant is going to be expected to stop if others are disregarding this call and continuing to proceed with their work. So a policy of restraint will create the diplomatic space that is required for a meaningful code of conduct to emerge. And we will work very hard with all of our partners in order to try to help that code of conduct come into being. It is vital that claimants refrain from provocative unilateral actions, that they pursue their claims according to international law, and that they settle their differences peacefully through rule of law.

I also reaffirm that the United States has very strong interests itself in the South China Sea and we have a strong interest in the way that disputes are addressed. The United States will continue to take steps to support peace and stability in this region, to uphold international law, and protect our interests throughout this arena as we have, in fact, for decades.

In the East Asia Summit ministerial, we tackled a wide array of pressing political and security challenges from maritime security to cyber security to countering violent extremism. And I’m very pleased to report that the – excuse me – that the East Asia Summit foreign ministers endorsed the Vienna P5+1 plan for the reduction of Iran’s – the reduction – the elimination of Iran’s pathways to a nuclear weapon and I think that the endorsement that came from all of the countries there today this morning really underscores the interest that people on a global basis have in the success of this agreement.

I also had an opportunity to meet with the prime minister and the foreign minister in bilateral meetings. In addition to global and regional issues, we discussed our shared interest in wrapping up successfully the Trans-Pacific Partnership, and especially, cooperating to combat violent extremism. I also raised concerns about freedom of expression and I spoke with the prime minister about Anwar Ibrahim’s situation.

We also talked about accelerating progress in the fight against human trafficking. This was a very significant part of my message at a number of the meetings that we had publicly with all of my colleagues as well as privately with each of my bilaterals. Human trafficking is too prevalent in places where people who are migrants or who are simply poor and without and recourse or refugees are preyed on. And it is intolerable that in the year 2015 anyone should be content to live with what amounts to modern day slavery – people who are pressed into any number of types of work from sexual exploitation to the labor market exploitation and put into positions they can’t escape from, and some of them, even literally, very much imprisoned in those positions.

The Government of Malaysia, I’m pleased to say, has made significant efforts to comply with the minimum standards of the elimination of trafficking. And in my conversation with the prime minister, we talked about the ways in which we can cooperate to do more, and the prime minister welcomed that opportunity, particularly in the field of law enforcement. I made it clear in my meetings with both the prime minister and the foreign minister that this is a priority for the United States and that they need to continue to show leadership, as they did in the passing with their laws, now with the full implementation of those laws.

And let me just say – I’m sure all of you feel this inherently, viscerally – that there is perhaps no greater threat to human dignity and no greater assault on basic freedom and no greater detraction from the values that we are espousing and trying to lift people up with, no greater evil alive today in many ways than human trafficking. We all need to be true to the principle that although money may be used for many things, we must never, ever allow a price tag to be attached to the heart and soul and the mind and freedom of a fellow human being. That is the standard that we need to set for all nations, and this will remain a main priority of both the State Department and the Obama Administration for the remainder his time in office.

So as always, when representatives of the United States of America and ASEAN nations get together, we really had a very full plate of challenges to discuss. And I can assure you, as I made it clear to my colleagues, the United States will remain deeply committed to the security of this region, deeply committed to the prosperity of Southeast Asia, and of the Asia Pacific more generally.

I was thrilled to meet with young students and recent graduates, all members of the Young Southeast Asian Leaders effort that President Obama has started – YSEALI, as it’s called. The energy and excitement that they feel about the possibilities of the future is really what defines not just Malaysia but this entire region. And we’re fully engaged and confident because we believe in those young people and in the possibilities that they believe in. And we will do everything in our power to work with the governments of this region to help deliver to their people.

So on that note, I’d be delighted to try to take a few questions.

 

MR KIRBY: First question will come from Matt Lee, Associated Press.

SECRETARY KERRY: Yes, Matt.

QUESTION: Ready?

SECRETARY KERRY: Yes, sir.

 

QUESTION: Okay. I want to take you a little bit further afield and ask you about your meeting last night with Foreign Minister Lavrov (inaudible), because the word is that you two signed off on or made some significant progress on the new UN Security Council resolution that would, in fact, create a mechanism to investigate the use or alleged use of chemical weapons in Syria, and that that resolution could be presented for a vote as early as tomorrow, I guess. So I’m wondering if you could tell us what the details are of this mechanism and if you’re at all concerned that Russia’s apparent willingness to do this while still holding to its friendship to Assad will string out or delay actual bringing to justice of any perpetrators that are found or whether you’re convinced that this is actually going to do the trick. Thank you.

 

SECRETARY KERRY: Thanks, Matt. Let me comment on the meeting with Foreign Minister Lavrov. We discussed a number of issues. We talked about Ukraine and the need to fully implement Minsk and what seems to be the difference of opinion with respect to what Minsk means relative to the elections and the modalities for the elections and the constitutional reform. There is a meeting tomorrow that will take place by video and we will both instruct our teams to try to dig in and make some suggestions for each of them as to how we might be able to try to move forward, because we both agree that these working groups are the best mechanism for the full implementation of the Minsk agreement and the defusing of the crisis in Ukraine.

We’re not far away now from having an agreement for the flow of (inaudible), for some rail – resumption of rail track, for the OSCE to be able to have greater oversight and understanding of what weapons will be pulled back from the line of contact. All of these issues are very much on the table and part of the discussion at this point. And I think that Foreign Minister Lavrov is anxious, as I am, to try to see as much progress be made as rapidly as possible as we come to the end of summer and beginning of fall and obviously other kinds of challenges that may come forward.

But yes, we also talked about the UN resolution, and indeed, I believe, reached an agreement that should try to see that resolution voted on shortly, which will create a process of accountability which has been missing. What happens is the inspection process produces evidence of use of some kind of weapon. By the way, so we’re clear, all declared chemical weapons – mustard and sarin and other declared that are illegal – were removed. The allegations that exist today are almost exclusively – not – not exclusively, there’s one – maybe one instance of some or two instances of something else – about chlorine. And chlorine by itself is not one of the required declaration items that has to be removed. But when mixed in a certain way, chlorine can be become a toxic agent and a illegal chemical.

So what we are trying to do is get beyond the mere finding of the fact that it may have been used and actually find out who used it and designate accountability for its use. And what we will achieve, we believe, with this resolution is the creation of a mechanism which will actually enable us to do that. That’s our hope. So I think it was a worthwhile meeting and hopefully the UN will be able to proceed forward with an agreement unless there is some last-minute glitch, which I hope there will not be.

MR KIRBY: Next question. (Inaudible).

 

QUESTION: Mr. Secretary, the U.S. Government’s decision to upgrade Malaysia to Tier 2 in the human trafficking watch list has been criticized by those who feel that Malaysia has not done enough to merit such a rating. Do you think Malaysia has done enough? And what do you have to say about accusations that the rating has just been given to pave the way for the Trans-Pacific Partnership Agreement with Malaysia?

 

SECRETARY KERRY: Not – let me just be crystal clear, because I am the person who approved this. I personally signed off on it. And I had zero conversation with anybody in the Administration about the Trans-Pacific Partnership relative to this decision – zero. The reason I made this decision was based on the recommendation of my team, because Malaysia has passed additional legislation in 2014, they’ve consulted with civil society, they drafted amendments to Malaysia’s anti-trafficking law in order to allow the country’s flawed victim protection regime to change.

Now, let me make this clear: Tier 2 Watch List ranking actually indicates there’s still a lot of room for improvement. It’s not a gold seal of approval by any means. It is a sign of movement in the right direction, but it also means there’s a lot of way to go. And that’s the discussion that I had yesterday with the foreign minister and with the prime minister. In the last year, Malaysian authorities increased the number of trafficking investigations, they increased the number of prosecutions relative to 2013, and they adopted a pilot project in order to allow a limited number of trafficking victims to leave government facilities in order to go work.

Now, we still are concerned about the comparison of the number of investigations and prosecutions to the number of the convictions. It’s not good enough yet. But we felt that because the law just passed, because it’s being implemented, that this gives us an opportunity to work with the government, which is exactly what I got commitments to do yesterday and now we will do in order to up the number of convictions. And one of the reasons for that disparity is the difficultly of getting evidence. It’s very complicated. It’s very hard to do. We believe that we can be very helpful through Federal Bureau of Investigation and through other entities that work at this to help Malaysian authorities be able to develop greater capacity to gather the evidence that will produce the convictions that we want to see so we can end impunity for this crime.

So our – my judgment was I want a country that we can work with and improve that has already indicated its willingness to start down that road in a significant way. Malaysia has done that, and this year will be a very important year of truth. If they don’t advance, if there isn’t sufficient cooperation, if there isn’t a genuine effort to improve the gathering of evidence and to have better prosecutions, and if the pilot project isn’t built on and so forth, then next year, obviously, I have the distinct ability to be able to make a different decision. But I’m confident it was the right decision and I can guarantee you it was made without regard to any other issue.

MR KIRBY: Last question from Pam Dockins, Voice of America.

 

QUESTION: Thank you. As you mentioned, the South China Sea has been a focal point here. First of all, what is the U.S. view on China’s statement that it has stopped reclamation work in the South China Sea?

And then secondly, a follow-up on the last question regarding human trafficking, the Senate Foreign Relations Committee today has a hearing on the State Department’s human trafficking report. How do you feel about the hearing to look into how the final report was compiled? Do you feel that the hearing is justified?

 

SECRETARY KERRY: Well, I think any hearing on a report of the – of any agency of the government is justified. I mean, obviously, the Congress has a right to – I mean, the Congress are the ones who mandate these reports and they have every right in the world to take a look to see whether or not it’s being implemented in the way that Congress intended. So I don’t have any problem with that at all, and I’m absolutely confident about the work that our TIP team does which literally takes an entire year to do; it is extremely thorough. There’s an enormous amount of input from our embassies, from our consulates, from people in the field, and I think that that will come out in the course of the hearing.

So frankly, I look forward to the members of Congress learning more about exactly how in depth our efforts are, how professional they are, and how exhausting the effort is that they have joined with us in engaging.

Now, with respect to the South China Sea, first of all, let me remind everybody that the United States doesn’t take a position on the competing claims. We’re not choosing between claimants, and that’s for the legal process or the diplomatic process to do. What we do urge is all the claimants to refrain from unilateral actions that create tension or the potential of conflict, or frankly, the potential of a mistake that could then become an international incident. And it’s our sense that the Chinese have indicated that they have stopped. I hope it’s true. I don’t know yet. What’s really needed, though, is an agreement to stop not just the reclamation but the large-scale construction and militarization. So it’s not just an issue of reclamation. And our hope is we put forward a proposal that people stop all three and that they step back and work the process of the code of conduct and whatever other legal process to try to resolve these issues.

I did find, and I will say this openly, that in my meeting with Foreign Minister Wang Yi, he indicated a – I think a different readiness of China to try to resolve some of this, though I think it still was not as fulsome as many of us would like to see, but it’s a beginning. And it may open up some opportunity for conversation on this in the months ahead; we’ll have to wait and see. But the easiest thing of all would be for everybody to adopt a position of we’re not going to do anything except routine maintenance – no new buildings, no new facilities, no militarization, no more reclamation – while the legal process is resolved in order to give certainty to everybody, which is what is required here.

MR KIRBY: Thank you, sir.

SECRETARY KERRY: Thank you all very much.

MR KIRBY: Thank you.

SECRETARY KERRY: Appreciate it.

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The Illicit Drug Industry & Counter-Narcotics in Southeast Asia

drug picture 1

Drug enforcement officials in Burma. Image: The Irrawaddy

On 5 October 2011, when Thai river police investigated reported gunshots on the middle reaches of the Mekong River, they discovered two cargo vessels and their 12 Chinese crew members, all of whom had been executed and their bodies dumped in the river. The ships were determined to have been hijacked to transport illicit cargo, and they contained over 920,000 amphetamine tablets, locally referred to as yaba, which were subsequently confiscated by Thai authorities.

Over the past 70 years stories like this have become commonplace in the notorious Golden Triangle, a delta area at the confluence of the Mekong and Ruak Rivers that takes up approximately 150,000 square kilometers of land in the tri-state Thai, Lao and Burmese (Myanmar) border region. Drug production and trafficking has brought this locality to international infamy, and it remains the world’s second largest cultivator of opium poppy, second only to Afghanistan. Faced with rising heroin and amphetamine-type stimulant (ATS) addiction levels, drug-related violence, and an expanding HIV epidemic, Southeast Asian governments have recently begun to intensify their efforts to combat this endemic problem. Using bilateral agreements and the frameworks of the Association of South-East Asian Nations (ASEAN), the Greater Mekong Subregion (GMS), and the Asian Regional Forum (ARF), actions by these governments have met varying levels of success.

 

Colonial Roots of the Southeast Asian Drug Trade

Opium poppy is native to the lush and remote Yunnan and Sichuan Provinces of China’s southwest. For hundreds of years small-scale cultivation by hill tribes in the region met the modest needs of Chinese opium-smokers, but in the early 19th century a powerful competitor arrived in Southeast Asia: the British Empire and its waves of merchants and imperialists, all trying to find new markets for seemingly unlimited supplies of India-grown opium. At the humiliating conclusion of the 1842 Opium War the British forced the Chinese emperor to accept opium imports, thereby unleashing one of the most devastating drug epidemics in history: a mere thirty years later, British opium imports were supplying an estimated 15 million Chinese opium addicts.

Social upheaval in China during the 19th and 20th century caused massive emigration of Chinese refugees to all parts of the world, and where they went, their opium habits followed. The large Chinese immigrant populations in Thailand, Burma, and Vietnam provided lucrative opportunities for the opium industry, and despite the protests of indigenous rulers, one by one state-mandated opium franchises were forced into being by British and French imperialists. It was also in this time that fleeing Chinese merchants and hill tribe people arrived in the Golden Triangle area and introduced poppy cultivation to the local populations.

In British Burma, the imperialist government lacked the ability to administer the western Shan States and so instead provided them with autonomy in exchange for loyalty. This autonomy provided a foundation for a thriving opium economy and a fiercely independent political consciousness, both of which would have strong legacies long after the British withdrawal. In French Indochina, the government-run Opium Monopoly worked industriously to incorporate Laotian poppy-growing hill tribes, and helped to sponsor the Yunnan-Tonkin railway, which provided a valuable link to the well-established opium cultivators of southwest China.

 

Colonial Events Timeline

In the years following World War II, almost all of the world’s major opium producers, the largest being Turkey, Iran, and India, brought an end to their legal opium exports to Southeast Asia, which created an enormous vacuum in the opium industry. Newly Communist China, independent Burma, and restored French Indochina all cracked down on local production, further choking supply. Eradication of the drug industry was not achieved however, primarily thanks to the actions of Chinese Nationalist Kuomintang (KMT) remnants in northern Burma, the corrupt Thai National Police Force, and the French and American covert intelligence agencies.

About 1,500 battered KMT troops entered Burma in 1949, fleeing the advance of the People’s Liberation Army into Yunnan Province. This weak force was nearly crushed by the Burmese army, but in 1950 they began receiving airdrops of weapons from the CIA, which was frantic to arm groups on the southern borders of the People’s Republic of China in case Mao Zedong had expansionist ambitions. Reinforced by additional troops flown in from Taiwan, the empowered KMT army executed several failed invasions to retake Yunnan, but afterward decided to remain in northern Burma and hold the line against the Communist threat. This well-armed army proceeded to force the local tribes-people into opium cultivation, and with the help of the corrupt Thai police force, created one of the most robust drug production and trafficking systems in history.

Opium produced in northern and eastern Burma was transported across the Thai border and down to Bangkok, where it was exported out of the rest of Southeast Asia. In 1961, provoked by aggressive expansionism on the part of the KMT, the Burmese Army and the PLA jointly ousted the Nationalists from Burma and forced them into Thailand and Laos, where their communities remain today. Although the KMT forces no longer directly controlled the opium cultivation, the system was in place and ethnic Chinese, then later various Burmese insurgent traffickers, maintained the lucrative trafficking network into Thailand.

 

Drug enforcement officials in Burma. Image: Business Week

Drug enforcement officials in Burma. Image: Business Week

In French Indochina, the under-financed French intelligence community covertly took over management of the formally illegal opium trade in order to continue their efforts in suppressing Ho Chi Minh’s Viet Minh. The Laotian opium industry that they nourished would later find its greatest successes during the American GI heroin epidemic of the Second Indochina Conflict, and following that, in its international spread into the continental US and Europe.

Currently, the vast majority of Southeast Asian illicit narcotics are produced in the semi-autonomous, rebel-administered eastern states of Burma, while smaller amounts also come from the remote areas of western Laos and northern Thailand. It is trafficked in two main routes: the southern route goes through Thailand to Bangkok for distribution, and the northern route enters China’s Yunnan Province, headed for Kunming and then all of East Asia. Recently, Golden Triangle supply has been unable to keep up with skyrocketing Asian demand for heroin and ATS, and approximately one third of East and Southeast Asia’s narcotics now originate in Afghanistan.

map

Source: UNODC Southeast Asia Opium Survey 2013: Lao PDR, Myanmar

 

Temporarily successful eradication programs and sustained crackdowns brought Southeast Asian drug production to a historical low in 2006, but since then there has been a consistent increase in cultivation, production, trafficking, and consumption, with levels returning to those of the 1970s and 1980s. This steady expansion of the drug trade is occurring despite a 2005 self-imposed opium cultivating ban in the territories of the United Wa State Army (UWSA) in Burma, a rebel group that previously accounted for the lion’s share of Burma’s opium production. This worrying trend has many consequences for Southeast Asian society.

 

Threats Posed by the Illicit Drug Industry

The streaming supply of narcotics from the Golden Triangle into China and Thailand has negative impacts on myriad areas of Southeast Asian life. Mass drug addiction and drug trafficking causes the breakup of families and increases in crime rates, spreads diseases like HIV, burdens the economy through lost productivity, imposes financial costs on the state, spreads law enforcement thin, overwhelms justice systems, encourages corruption, and funds violent groups. As production continues to increase, these problems are becoming more pronounced and demand strong preventative action.

The United Nations Office on Drugs and Crime estimates that an average of 13% of injected-drug users are HIV positive, and more than half have hepatitis C. Coupled with China’s annually growing number of registered opioid users (official figures reported 1.3 million users in 2012, with actual rates likely almost double that), this situation makes the threat of a massive HIV epidemic in the world’s largest country ever more likely. Recent trends in China suggest that methamphetamine use is slowly overtaking heroin use as China’s most problematic drug, and just in China 228 meth labs were dismantled in 2012. Widespread amphetamine use continues to be a regional dilemma, as more than 8,980,000 people in East and Southeast Asian used ATS tablets in 2013. The Greater Mekong Subregion has the highest rate of crystal meth use in the world, and this drug use is exacting large tolls on society, as addiction-fueled crime expands and as families and communities spend time and resources helping addicts.

Number of Heroin Users 2010

Source: UNODC Transnational Organized Crime in East Asia and the Pacific: a Threat Assessment, April 2013

The criminals and insurgents that operate the drug trade are making enormous windfalls from their work: the value of all consumed East and Southeast Asian heroin was estimated at $16.3 billion USD in 2011, with methamphetamine and amphetamine consumption valued at an additional $15 billion USD. The traffickers and their associates encompass a wide variety of individuals: ethnic Chinese syndicates, Nigerian and Iranian criminal groups, high-ranking Southeast Asian officials and military personnel, and Burmese insurgent and paramilitary forces. Although on average 50,000 people are arrested each year for trafficking illicit narcotics in Southeast Asia, the high profits of the drug trade continue to lure thousands more into the business. In the case of Burmese fighters, drug earnings are usually spent on weapons, helping to intensify violence in those areas.

drug market value

Source: UNODC Transnational Organized Crime in East Asia and the Pacific: a Threat Assessment, April 2013

Some of the drug trade’s worst victims are the poverty-stricken opium cultivators in the Golden Triangle. Lacking other economic opportunities and desperate for income, many rural farmers are forced into dealings with violent traffickers and become trapped in a cycle of drug cultivation, slowly becoming more and more dependent on poppy income. They are prevented from growing crops that can benefit society, and oftentimes their communities are hit hard by addiction. Unfortunately, these rural villagers only make up a small portion of the people whose lives are destroyed by the drug trade.

 

International Cooperation and Efforts to Eliminate the Drug Industry

The governments of Southeast Asia have been working to combat the narcotics trade ever since their post-colonial independence, but unfortunately the vast majority of these efforts have been restricted to unilateral measures. Law enforcement is usually by definition national in character, but the drug trade is a transnational and regional problem, and increased cooperation on the part of Southeast Asian governments is critical for its sustainable reduction.

Thanks in large part to the prodding of the US government, which had recently declared its own War on Drugs, the 1976 ASEAN Bali Summit saw the adoption of the “ASEAN Declaration of Principles to Combat the Abuses of Narcotics Drugs.” Although mainly filled with rhetoric and containing few concrete measures, this declaration showed consensus among the ASEAN governments and kicked off the modern wave of counter-narcotics policies in Southeast Asia.

Thailand can be considered one of the more successful cases of sustainable reduction in illicit cultivation. Starting in 1984, the Thai government embarked on a 30-year intensive program of crop replacement, which has resulted in bringing opium cultivation in northern Thailand to negligible levels.

In contrast, the efforts of Burma’s Central Committee for Drug Abuse Control have been snared in the frequently contradicting objectives of the government’s anti-insurgent policy. Despite the ambitious 1999 declaration by the ruling regime to eliminate all illicit drug production by 2014, the Burmese government often turns a blind eye towards the narcotics industry in its efforts to co-opt various rebel groups. In the 1980s and 1990s the weak central government began signing ceasefire agreements with the numerous insurgent armies that control the Burmese borderlands, and many of those autonomy-granting agreements contained clauses permitting (and even encouraging) drug cultivation and production by the groups in exchange for their loyalty to the regime. Subsequently, drug enforcement policy became a tool of the state, and it was used both as a carrot and a stick to bring insurgent groups into the legal fold. When a United States grand jury indicted several leaders of the United Wa State Army, which had signed a ceasefire agreement and was the largest Burmese opium producer in the early 2000s, the government refused to arrest them or crack down on their illegal businesses. This lack of enforcement can be seen as a way of repayment for loyalty, and is in direct contrast to the government’s actions towards the Myanmar National Democratic Alliance Army (MNDAA). The MNDAA, another major opium producer, had refused to make peace with the government, and when the government attacked them in 2009, drug enforcement was the justification given. These two examples show how the central regime manipulates drug policy to its advantage in its state-building efforts, and explains the lack of sustained progress in eliminating the narcotics industry.

 

ASEAN response timeline            In addition to the unilateral efforts of individual states, regional organizations and agreements have been crucial to the evolution of drug enforcement in the Golden Triangle. In the late 1990s, ASEAN began examining anti-narcotics and other issues such as human trafficking and smuggling in the context of transnational crime, and started putting greater emphasis on regional cooperation. The expansion of ASEAN in 1997 to include the Lao People’s Democratic Republic and the Union of Myanmar allowed the other ASEAN governments to exert more diplomatic pressure on the newcomers to clean up their drug exporting regions, demonstrated in the ASEAN Declaration on Transnational Crime. Although the declaration contained no binding measures, it set up several communication and monitoring bodies, including the ASEAN Ministerial Meeting on Transnational Crime (AMMTC), the ASEAN Chiefs of National Police (ASEANAPOL) and the ASEAN Senior Officials on Drug Matters (ASOD). These bodies mainly monitor the progress of the 2000 Bangkok Political Declaration in Pursuit of a Drug-Free ASEAN 2015, but they also work to encourage development of bilateral extradition treaties, international criminal justice institutions, and cooperative border control, legal assistance, and data sharing.

 

The Future: Regional Integration and the Effectiveness of Anti-Narcotics Policy

2015 is marked to be the year in which the ASEAN Economic Community is brought into being, and many hope that it will bring with it great advances in regional trade, infrastructure, and cooperation. Already projects such as the North-South Economic Corridor, running from Kunming to Bangkok, and the building of ports and bridges along the Mekong River are generating enormous economic benefits. However, advances in regional integration also provide opportunities for those who would exploit them for illegal purposes. The increasing ease of transporting illicit narcotics and the improving communication technologies of criminal groups present a strong challenge to the national law enforcement agencies of ASEAN countries. Equally innovative and efficient use of new capabilities and technologies, as well as increased intelligence sharing and coordination must be implemented for Southeast Asian governments to effectively meet these new threats.

In November 2011, just a month after the “Mekong Massacre,” China, Laos, Burma, and Thailand agreed to cooperate on river patrols and law enforcement along the Mekong River. Their Joint Statement detailed numerous confidence building measures between the various national police forces, but mainly focused on the responsibility of each individual nation to properly patrol its own sovereign waters. This aspect reveals the major weakness of all ASEAN counter-narcotics efforts to date: ASEAN nations are caught in a paradoxical situation where despite the damaging effects of the drug industry and transnational crime on national sovereignty, the only way to effectively counter those threats is by each nation giving up some measure of their treasured sovereignty. Sovereignty and non-intervention are the two defining pillars of the “ASEAN Way,” and yet those two concepts desperately need to be reevaluated if transnational crime is to be confronted.

Confidence building measures and increased regional communication is a critical first step, but in order to make real progress in fighting the rising threat of transnational crime ASEAN nations need to accept the reduction of their sovereignty. A hopeful example is provided by the official conclusion of the Mekong Massacre: Naw Kham, the Burmese drug lord who supposedly masterminded the murders, was captured by Burmese counter-narcotics forces and extradited to China, where he and three of his subordinates were tried and executed in March 2013. Extradition treaties like these form the basis of effective cooperation, and similarly collaborative measures must be actively pursued by ASEAN governments if they are to successfully tackle the deeply-entrenched and continually evolving menace of the drug industry in Southeast Asia.

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A Different Global Power: Understanding China’s Rise in the Developing World

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By Xiangming Chen and Ivan Su

China is now the largest trading nation in the world with strong ties to Africa, Latin and America and the Middle East. This once impoverished and isolated nation has lifted several hundred millions of its own people out of poverty and is now reshaping the developing world. This article looks at China’s involvement in four developing regions to assess China’s influence as a rising global power.

The China where the first author grew up through college in the early 1980s was the largest and one of the poorest developing countries. The China where the second author left to attend high school in the United States was about to pass Japan to become the world’s second largest economy, in 2010. Over the past three decades, China has lifted over 500 million of its people out of poverty. Globally, China has just surpassed the United States to become the largest trading nation in the world and is expected to soon overtake the latter as the world’s largest economy (in terms of purchasing power parity or PPP). More importantly regarding the focus of this essay, China is now the largest trader and investor in Africa, with its footprints spreading and seeping into all corners of the developing world.

How did the once impoverished and isolated “Third World” country become a powerful force in shaping a new developing world in the 21st century? What are the positive vs. negative consequences of China’s inroads into developing countries by exporting its urbanism to Africa, for example? These questions highlight China’s global impact that matters a great deal to the everyday life of millions of poor people in developing countries. In this essay, following China’s global footprints in four developing regions, we offer a broad comparison of both the different and consistent economic impacts of China within and across these regions.1 Figure 1 shows China’s investment in energy and infrastructure in the four regions, while Figure 2 breaks China’s investment into four specific sectors of one major country in each of the four regions. Guided by these comparative data and focusing on four developing regions, we present a broad picture of China’s widespread but mixed role in developing countries, thus offering a preliminary assessment of whether China’s influence as a rising global power may differ from the traditional or established Western powers in how they approach the developing world.

 

China in Asia: Exerting Neighboring Influences

Back in the last decades of the 20th century, the drivers and role models for development in Asia and beyond were the “Four Tigers”: Hong Kong, Singapore, South Korea, and Taiwan. The onset of the 21st century began to position China toward the epicentre of the Asian economy, with its influence spreading across the continent through more trade, outward investment, and other outgoing initiatives such as cross-border infrastructure development.

In Southeast Asia, China has been trying to integrate with the Greater Mekong Subregion (GMS), which consists of China’s Yunnan Province, Guangxi Autonomous Region, Cambodia, Laos, Myanmar, Thailand and Vietnam. “China’s trade with each of the GMS countries has grown since 1990, most rapidly since 2000.”2 In addition to increasing trade, China exerts strong influence on the GMS through various development projects. In Myanmar, China has reached a $20 billion agreement to construct an 800-kilometre rail link between Myanmar’s Chinese border and its western coast.3 In addition to investing in infrastructure, China is also helping its neighbors to generate energy. Since 2005, China has invested over $87 billion in the energy sector across Asia, and about one quarter of these investments went to Malaysia. In 2010, an $11 billion energy deal signed between China’s State Grid Corporation and Malaysia Development Company included four hydroelectric mega-dams that are capable of generating up to 28,000 megawatts of power, an aluminum-smelting plant, exploitation of coal mines containing 1.5 billion metric tons of coal, and a 40 billion-cubic-feet natural gas development project. “With Malaysia reeling from an exodus of capital over the past two years, the projects have strong support at the state and federal levels. Officials hope the plan will attract foreign investment to the region.”4

China’s investment in Asia is not limited to Southeast Asia, as countries in South and Central Asia have also been affected by China’s direct investment. In 2013, China established a strong foothold in South Asia when it took over the upgrading and operation of Pakistan’s Gwadar Port from Singapore. The Gwadar project serves China’s “Go West” policy while allowing Pakistan to “look east.” China is building a road from Gwadar all the way north to Kashgar, the westernmost large city in Xinjiang. At the same time, Pakistan and China have also planned to connect the port via the Indus Highway, which will provide China with a land-based supply of oil from Central Asia. Given Gwadar’s geographical location, Gwadar cuts China’s distance from the Persian Gulf, from which China gets 60% of its oil, by thousands of kilometres.5

Compared to the other energy projects sponsored by China, the Central Asian vector of China’s energy policy has become more important due to the region’s abundance of oil and natural gas. While China sees Kazakhstan’s energy supply a key to its “Go West” program, Kazakhstan has used Sino-Kazakh cooperation to balance against Russia’s influence in its energy sector. China is also constructing a 1,800-kilometre natural gas pipeline from one of the world’s largest natural gas exporter, Turkmenistan, which benefits from doubling its energy supply to China and circumventing its biggest competitor – Russia. Beijing wins by securing new gas supplies and thus enlarging its already hefty investment in energy projects in Asia (see Figure 1).

 

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China in Africa: Reaching Maximum Impact

Through increasing trade and investment, China’s growing presence has reshaped the landscape in Africa. While negligible two decades ago, China-Africa trade reached $200 billion in 2013, which makes China Africa’s largest trading partner today. With only limited investment in Africa before the 2000s, China’s cumulative investment in Africa exceeded $150 billion by the beginning of 2014. Of these investments, close to $100 billion has gone into energy and infrastructure projects.6

China’s unprecedented economic growth requires an increasing amount of oil to sustain it. In 2012, close to one-third of China’s total oil imports came from Africa, and China is looking to expand its energy presence in Africa. Nigeria has received the most Chinese direct investment over the past decade. While many Western energy firms are reluctant, China reached a $10 billion hydrocarbon deal with Nigeria at the beginning of 2014 (see Photo 1). In addition to exploiting crude oil and natural gas, China has been involved in constructing an additional refinery in Baro, Nigeria.7 Although critics have attributed China’s heavy footprint in Africa’s energy sector to its energy and resource demand back home, evidence suggests otherwise. China Africa Sunlight Energy Ltd. recently invested $2.1 billion in developing a 2,100-megawatt plant to help ease electricity shortages in Zimbabwe, which is only capable of generating 1,320 megawatts against a demand of 2,200 megawatts of electricity. “China Africa Sunlight Energy is looking at the possibility of pumping gas to the port city of Beira in neighbouring Mozambique, using an idle pipeline that the National Oil Co. of Zimbabwe once used to bring fuel into the country.”8 This power plant is expected to produce 300 megawatts by mid-2015, and the number is looking to double by the end of the year. While much of the media attention has focused on China’s investment in Africa’s energy sector, China is reshaping Africa’s landscape through large-scale infrastructure development.

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Photo 1: Drilling Oil in Nigeria

Since 2005, China has invested more in Africa’s infrastructure than in any other part of the developing world. More than $44 billion has been spent to build roads, airports, and housing that are essential to the continent’s economic development. In Angola, China is helping the country’s reconstruction effort after the devastating civil war. One of China’s major investments in Angola is the rebuilding of the Benguela Railway, “an 840-mile transcontinental railway that links the Atlantic port of Lobito in Angola with rail networks in the Democratic Republic of Congo and Zambia. The project is expected to cost $300 million, and it will provide a much-needed cheap outlet for Congolese and Zambia copper, tin and coltan.”9 In Nigeria, China is helping to build Africa’s largest free trade zone in its commercial capital, Lagos. “A total of 16,500 hectares of land bordered by the Atlantic Ocean and the Lagos and Lekki lagoons has been earmarked for the whole free zone, which will include a deep-water sea port and a new international airport in close proximity.”10 The Lekki Free Trade Zone is aiming to cut down the country’s reliance on imports, and it will cost $5 billion to complete the first phrase of the project, which will cover 3,000 hectares of land. The construction will also include roads, power plants, and water plants. This evidence reinforces China’s substantial investment in building Africa’s infrastructure relative to the energy sector in comparison with the other developing regions (see Figure 2)

 

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However, concerns arise on whether Africa is too dependent on China as results of “high commodity prices and investment inflows.”11 With China-Africa trade looking to hit $280 billion by 2015, some worry that African economies depend too much on China. Some urge African countries to diversify their economies and decrease their dependence on China. There are also calls for China to focus more on human rights and community engagement. As such a dominant investor in some African countries including those with an authoritarian government like Zimbabwe, China struggles to balance between the return on its huge investment, helping local development and living up to international norms of engagement.

 

China in Latin America: Extending the Reach

Ever since the 1960s, China has been providing limited development assistance to a small number of Latin American countries such as Chile. Fast-forward to the 21st century, China has considerably expanded its economic ties with Latin America through greater trade and more diverse investment.

“Trade between China and Latin American countries has grown exponentially over the past decade. Although Sino-Latin American trade continues to remain a relatively small share of their respective global trade, growth has exceeded many expectations. From 2000 to 2009, annual trade between China and Latin American countries grew more than 1,200%, from $10 billion to $130 billion, according to the United Nations statistics.”12 In 2012, Latin America accounted for 13% of China’s total outbound investment – about $11.4 billion, a significant increase from the $120 million of 2004.

Like in Asia and Africa, China has favored the energy sector in Latin America (see Figure 1), targeting Venezuela for its oil and Brazil for its hydropower. Of China’s $100 billion investment in Latin America since 2005, more than half has been energy and infrastructure related. In 2010, China’s State Grid announced a $1 billion buyout of seven Brazilian power transmission companies. Two years later, in 2012, China’s State Grid was chosen by the Brazilian government to build a $440 million power-transmission project. And at the end of 2013, China’s State Grid led a group to win the rights building a $21 billion hydropower plant in Brazil. Set to become the world’s third-largest hydropower plant and take around 46 months to complete, it will also create a 2,092 km hydropower transmission line and two energy converter stations that will be able to take energy from the State of Pará, along the Xingu River in the Amazon Basin, to Brazil’s Southeast region, with a planned capacity of 11,233 megawatts. Brazil’s economic acceleration in the past decade led to a surge in the country’s energy demand. Given Brazil’s geographical endowment, as much as 80% of its total energy comes from hydropower generation.13 With power generation operating close to the limit, Brazil is urgently constructing more power plants using the Amazon’s abundant hydro resources and transmitting it to its Southeast region, especially Rio de Janeiro where much more energy is needed in light of the upcoming World Cup and Summer Olympics in 2016. To do so, Brazil has turned to China for its expertise and experience in building long-distance power transmission towers or the so-called electricity pylons (see Photo 2).

 

Photo 2: High on an Electricity Pylon in Eastern China  Source: China Daily/Reuters

Photo 2: High on an Electricity Pylon in Eastern China Source: China Daily/Reuters

Besides its growing economic presence in Latin America, China has made some cultural inroads as well. Since 2012, China has opened 32 new Confucius Institutes all over Latin America, a Chinese foreign ministry deputy announced. Hotels in the region have begun to prepare for the increasing number of Chinese tourists by making the menus available in Mandarin.14 This confirms the larger trend of more Chinese tourists going to developing countries beyond Asia and advanced economies in North America and Western Europe, making China the world’s number one tourist-sending nation in 2013 with approximately 100 million overseas trips.

 

China in the Middle East: Reviving the Silk Road

Tracing what China is doing in the conventionally defined developing world has taken us to Asia, Africa and Latin America. Yet given China’s huge demand for external energy, we are not surprised at all to see China’s growing presence in the Middle East, whose energy sector ranks second behind Asia in absorbing Chinese investment (see Figure 1).

Despite China’s massive efforts to secure energy from Asia and Africa, as well as from Venezuela in Latin America, its dependency on Middle Eastern oil has risen over time. The Middle East is currently the largest exporter of crude oil to China. The share of oil imported by China from the Middle East was 48% in 1990, 49% in 2005, and 51% in 2011. It is expected that China’s crude oil imports from the Middle East will reach 70% by 2020 and continue to grow until 2035, according to the International Energy Agency. Saudi Arabia is China’s largest energy supplier with about one million barrels per day, accounting for 20% of China’s crude oil imports. Iran, another big oil supplier, contributes about 10% to China’s overall oil imports as well (see Figure 2). China has maintained a friendly relationship with both Saudi Arabia and Iran. A number of top Chinese leaders including Hu Jintao and the current president Xi Jinping have visited Saudi Arabia. And China has been dragging its feet on the UN sanctions against Iran.15 These diplomatic postures toward the Middle East conform to China’s pragmatic economic policies and interests in other energy- and commodity-rich regions such as Africa and Latin America.

But China’s interest in the Middle East does not stop with oil. “As with other regions, China has rapidly expanded its economic ties with the Middle East through trade. From 2005 to 2009, China’s total trade volume with the Middle East rose 87%, to $100 billion and reached approximately $222 billion in 2012, according to China’s official statistics. This surge pushed China to surpass the United States as the top destination for the Middle East’s exports in 2010. China’s exports to the Middle East are primarily low-cost household goods that benefit the average Middle East consumer. An example is growing numbers of Egyptians being able to afford inexpensive Chinese cars. Also, residents in the Gaza Strip suffering from the Israeli blockade depend on cheap Chinese goods in their daily lives.”16

As many African countries have done, some Middle Eastern governments have brought Chinese contractors in to work on major infrastructure projects. Egypt has also partnered with China to develop its Suez special economic zone, a development strategy that China had used itself and promoted in Africa and the least developed parts of Southeast Asia like Laos. While China has diversified its investment in the Middle East, it is much more concentrated in the energy sector than in infrastructure (Figure 1). This further establishes China’s significant dependency on the Middle East for energy resources, namely oil. However, once we factor in the non-oil related Chinese economic activities, China’s footprint in the Middle East becomes somewhat similar to the large scope of China’s economic influence in the other three developing regions, especially in several major countries where China has moved beyond energy into infrastructure and commodities (see Figures 1 and 2). In this sense, the Middle East still marks the old destination for China’s new effort to revive the ancient Silk Road through Central Asia.

 

China’s Ambitious and Uncertain Role

Judging by a sampling of evidence across the four developing regions, we characterize China’s role as very ambitious and yet uncertain. The ambitious aspect is increasingly fueled by China’s abundant surplus capital in both private and public hands that may have a stronger effect on the urban landscape and transport infrastructure of developing countries than on its quest for the latter’s energy and commodities.

On the bank of the Mekong River in Cambodia’s capital city Phnom Penh, the $700 million Diamond Island Riviera, a joint venture mixed-used development project involving a Chinese company, includes three 33-story condominium towers, a shopping mall, a hospital, an international school and two pedestrian shopping streets with signs in Mandarin. Before its scheduled completion in 2017, Chinese buyers, especially Shanghainese, are already buying the condos in cash as investment properties.17

It is again in Africa where the transport infrastructure is the poorest in the developing world that China is scaling up its investment most aggressively. On his recent four-country tour of Africa, Chinese Premier Li Keqiang committed to set aside $2 billion for an African Development Fund and promised his support for a high-speed rail network connecting African capitals. As a start, China Railway Construction Corporation made a $13.1 billion deal to build an 860-mile high-speed railway in Nigeria that would employ more than 4,000 workers during construction, and 5,000 more afterward.18 Claiming no-strings-attached, China’s ambitious effort can deviate from the precedent of Western colonial powers who had built highly limited transport infrastructure for shipping out their craved commodities from Africa. Yes it is uncertain that the Chinese will succeed where the earlier powers largely failed.

As further evidence on its ambition to build the developing world’s urban and transport infrastructure, China is funding and building Nicaragua’s lifelong dream in having its own canal since the 19th century, when it rivaled Panama for control of the waterway. In August 2013, President Daniel Ortega announced that a $40 billion contract had been signed with a Hong Kong-based Chinese company that would design a route and start construction in December 2014 and manage the canal for 50 years. Estimated to cost as much as $60 billion, an infrastructure project of this massive scale is very uncertain in terms of returning investment to China. Yet China might not be looking for a quick return on investment, but to control a trade route independent from U.S.-managed Panama.19

The uncertain aspect of China’s strong role has also run into trouble in the Middle East. Despite China’s political advantage in taking a somewhat neutral position regarding Iran under West-imposed sanctions in order to continue buying its oil, Iran’s Ministry of Oil has recently removed China from the project to develop the South Azadegan oilfield because of long delays. This puts China’s non-political or no-strings-attached approach to dealing with developing countries, especially those with an authoritarian domestic system and a precarious international status, to test or at risk.

While ambitious and already far-reaching and powerful, China’s role in reshaping the developing world will only grow and remain uncertain over time. It highlights the ongoing debate about whether China merely exploits commodity and energy resources in developing countries as the old West or truly promotes national and local development through its overseas infrastructure construction and other positive means as a new global power. This debate will not be settled for a long time as we continue to scrutinize China’s powerful role in shaping the developing world during the 21st century.

 

About the Authors

Xiangming Chen is the founding Dean and Director of the Center for Urban and Global Studies and Paul E. Raether Distinguished Professor of Global Urban Studies and Sociology at Trinity College, Connecticut, and a distinguished guest professor at Fudan University, Shanghai. He has published extensively on urbanization and globalization with a focus on China and Asia. His several books include Shanghai Rising: State Power and Local Transformations in a Global Megacity (University of Minnesota Press, 2009; Chinese Edition, 2009).

Ivan Su is currently a third-year student at Trinity College, Connecticut, majoring in Public Policy and Law and Urban Studies. His interests are situated at the intersection of city planning, city economic development, and legal studies. He speaks fluent Mandarin and Cantonese, and  carried out a field research project in the southern Chinese city of Guangzhou in summer 2014. He has been a student researcher at the Center for Urban and Global Studies at Trinity College since 2012.

References

  1. For this culminating article, we have drawn heavily from the series of articles on China and the developing world that has appeared in this magazine since the February 2013 issue. See Kayla Chen and Xiangming Chen, “China and Latin America: Connected and Competing”,The European Financial Review(February 2013): 56-58; Fakhmiddin Fazilov and Xiangming Chen, “China and Central Asia: A Significant New Energy Nexus”, The European Financial Review (April 2013): 38-43; Xiangming Chen and Curtis Stone, “China and Southeast Asia: Unbalanced Development in the Greater Mekong Subregion”, The European Financial Review (August 2013): 7-11; Xiangming Chen and Garth Myers, “China and Africa: The Crucial Urban Connection”, The European Financial Review(December 2013): 89-93; Abbᾱs Varij Kᾱzemi and Xiangming Chen, “China and the Middle East: More Than Oil”, The European Financial Review(February 2014): 40-44; and Xiangming Chen, Pallavi Banerjee, Gaurav Toor, and Ned Downie, “China and South Asia: Contention and Cooperation Between Giant Neighbours”, The European Financial Review(April 2014): 10-16.
  2. Xiangming Chen and Curtis Stone, ‘China and Southeast Asia: Unbalanced Development in the Greater Mekong Subregion’,The European Financial Review(August 2013): 7-11.
  3. Ibid.
  4. ‘Malaysia and China agree to $11 billion deal to build mines, dams in Borneo’; accessed from http://news.mongabay.com/2010/0112-sarawak.html.
  5. Xiangming Chen, Pallavi Banerjee, Gaurav Toor and Ned Downie, ‘China and South Asia: Contention and Cooperation Between Giant Neighbours’,The European Financial Review(April 2014): 10-16.
  6. Xiangming Chen and Garth Myers, ‘China and Africa: The Crucial Urban Connection’,The European Financial Review(December 2013): 89-93.
  7. John C.K. Daly, ‘China’s bold $10 Billion investment in Nigerian hydrocarbons’; accessed from http://thediplomat.com/2014/01/chinas-bold-10-billion-investment-in-nigerian-hydrocarbons.
  8. Godfrey Marawanyika, ‘China Africa Sunlight to invest $2.1 Billion in Zimbabwe Power’; accessed from http://www.bloomberg.com/news/2013-09-03/china-africa-sunlight-to-invest-2-1-billion-in-zimbabwe-power.html.
  9. Michail Vafeiadis, ‘China buying out Africa: Top five destinations of Chinese money’; accessed from http://www.csmonitor.com/World/2012/0301/China-buying-out-Africa-Top-5-destinations-of-Chinese-money.
  10. ‘Nigeria embarks on vast free trade zone with China’; accessed from http://www.reuters.com/article/2010/09/01/nigeria-china-idUSLDE67U24K20100901.
  11. Accessed from http://www.ibtimes.com/imf-worries-chinese-slowdown-could-damage-sub-saharan-economies-1576706?ft=3aj78&utm_content=xiangming.chen@trincoll.edu&utm_medium=Apr_27_2014_0401_194973&utm_source=TailoredMail&utm_term=China+Economic+Slowdown+Impacts+Reach+To+Africa&utm_campaign=Apr_27_2014_0401.
  12. Kayla Chen and Xiangming Chen, ‘China and Latin America: Connected and Competing’,The European Financial Review(February 2013): 56-58.
  13. Ze Jin, ‘China’s 21 billion investment in Brazil’s hydropower’; accessed from http://wallstreetcn.com/node/75689.
  14. ‘China’s influence in Latin America is increasing’; accessed from http://www.dw.de/chinas-influence-in-latin-america-is-increasing/a-17156409.
  15. Ibid.
  16. Ibid.
  17. Chris Horton, ‘Giant development in Cambodia hinges on Chinese buyers’,The New York Times,May 6, 2014; accessed from http://www.nytimes.com/2014/05/07/realestate/commercial/giant-development-in-cambodia-hinges-on-chinese-buyers.html?_r=1.
  18. Kathleen Caulderwood, ‘Chinese Premier Li Keqiang vows to help build a railway through Africa ‘with no strings attached’,International Business Times,May 6, 2014; accessed from http://www.ibtimes.com/chinese-premier-li-keqiang-vows-help-build-railway-through-africa-no-strings-attached-al+African+Railway+No+Longer+A+Pipe+Dream&utm_campaign=May_09_2014_0700.
  19. Patricia Rey Mallén, ‘Is the partnership between China and Latin America paying off’?International Business Times, May 8, 2014; accessed from http://www.ibtimes.com/partnership-between-china-latin-america-paying-off?

 

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