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Weekend catch-up: Migration, missiles in the South China Sea, Fiji's democracy, border with East Timor and more

20 February 2016 8:00AM

This week Australia reached 24 million people, with migration the leading cause of the population boom. Jiyoung Song wrote on the benefits of migration on Australia's overall prosperity:

If Australia wants to advance as a nation, it needs more people. The average number of babies Australian women have is now less than two (last year the fertility rate hit a 10-year low of 1.8). With zero net migration, Australia's population would remain steady at around 25 million from 2045. However the composition of that population would include many more elderly people and not enough working age people to support them.

Sam Roggeveen did a quick take on China's placement of air-defence systems on Woody Island in the South China Sea:

It's also worth noting that the satellite imagery which Fox News has published shows that the vehicles which make up the two HQ-9 batteries are parked on a beach rather than in any purpose-built facility. The HQ-9 is a mobile system; its missiles, radars and command systems are all mounted on heavy vehicles which allow them to not only deploy away from bases but also off-road. But these batteries do have home bases where the missiles, radars and other systems are maintained, and where the crews are housed. The Chinese also build permanent launch sites for their HQ-9s, large concrete structures which are easy to spot on satellite.

Jenny Hayward-Jones and Alastair Davis say Fiji's democracy is in decline, with several opposition party members being excluded from parliament:

The Fiji First Government claims a mandate to embark on a significant legislative agenda and continue its northward strategic rebalance. Yet this mandate was won in a democratic election and is balanced by the 18 elected members of parliament who do not sit on the government benches. These 18 members also represent the people of Fiji and they must be allowed to have their voice both in and out of parliament for Fiji to be considered a democracy.

Former Australian Chief of Navy David Shackleton explained why a US combat system on Australia's future submarine is necessary:

Australia’s relationship and intelligence connections with the US mean Australia’s submarines have to be capable of meeting all the rules each country mutually applies to intelligence matters in general. This is by no means a trivial requirement, and it places non-negotiable security constraints on how the RAN’s combat system hardware and software are supported throughout their lifecycle.

Two pieces this week on Australia's boundary dispute with East Timor. The first, from Malcolm Jorgensen, argues that the issue is critical for Australia's contributions to building a rules-based order:

It is certainly legal for any country to establish reservations on ICJ or ITLOS jurisdiction, but Australia has itself set the objective of strengthening regional rules and architecture. That includes not only the UNCLOS regime, but also the Trans-Pacific Partnership and key multilateral economic forums. Demanding US and Chinese fidelity to a rules-based order rings hollow when Australia refuses to grant the same toward one of its least powerful neighbours. As emphasised by Plibersek, advancing order requires that Australia 'urge all parties to abide by both the terms and the spirit' of international law.

The second is from Michael Leach on the partisanship developing around the issue:

The shift in Labor’s stance casts a spotlight on the Australian government position, which no longer represents a bipartisan consensus. There is little question that a negotiated settlement of maritime boundaries, if it reflected median line principles, would remove the major irritant in the relationship for good. It's worth noting that in 1998, a dramatic shift in Labor’s position on East Timorese independence from opposition, led by Laurie Brereton, proved to be significant, ending bipartisan support for Indonesia’s forced integration of the territory.

Rodger Shanahan analysed the newly announced Syrian agreement to pause hostilities:

While some in the media trumpeted this deal as a Syrian ceasefire agreement, it is certainly not that. But whether you call this a cessation of hostilities, a ceasefire, or nothing much in particular, the recent agreement is possibly the first time external parties who have their fingers in the Syria pie have been able to agree on anything. That in itself is noteworthy. Perhaps excluding the combatants and focusing on their external supporters is the most appropriate way of establishing the confidence needed as a precursor to dealing with the mess in Syria.

The Secretary of the Department of Foreign Affairs and Trade, Peter Varghese, gave a significant speech last week on how he saw the future of Australian aid. Annmaree O’Keeffe was positive in her review:

But therein lies the challenge for the international development world, including DFAT. The face of poverty is changing. For a start, the poor are increasingly found not in poor countries but in middle-income countries where economic inequity is growing, leaving the poor behind within increasingly wealthy societies. And despite global progress in poverty reduction, the dilemma now is that poverty is concentrated in so-called fragile states vulnerable to conflict and instability. While only one-fifth of the world's poor lived in fragile states in 1990, the figure now is more than half.

Does THAAD's potential placement in South Korea have more to do with Beijing than Pyongyang? Raoul Heinrichs:

The other explanations relate to China. As Beijing suspects, Washington is most likely taking advantage of North Korean bellicosity to create a useful pretext to begin deploying sensors along China's periphery. While THAAD isn't likely to be much use in North Korean contingencies, it would be better suited to blunting limited Chinese missile attacks, which would necessarily be launched from further afield. Perhaps more importantly, its radar system could also be used to complicate Chinese plans elsewhere in East Asia.

Lesley Pruitt wrote a wonderful overview of Boutros Boutros-Ghali's contribution to UN thinking on peacekeeping:

The first person from Africa and the first Arab person to serve as UN Secretary-General, Boutros-Ghali held the office from 1992 to 1996. He took up the post aiming to enact a program of radical reform to re-launch the UN in 1995 on its 50th anniversary. To this end, he looked forward to the first ever security council summit, for which he was asked to draw up a plan for improving the UN's ability to provide preventive diplomacy for peacekeeping and peacemaking. This culminated in his authoring of the much cited and ambitious report, Agenda for Peace. Although member states appeared to appreciate the recommendations he made in it, they took few steps toward implementing them, as they were otherwise preoccupied with peacekeeping operations in Somalia, Cambodia and the former Yugoslavia.

Are school deradicalisation efforts worthwhile? Hussain Nadim:

In my consultations with the government, I have noticed that the major resistance to my stance against this policy doesn’t come from the government itself, but from my fellow academics and experts who are recipients of government deradicalisation program grants.

There is an obvious conflict of interest here: those advising the government on the development of such policies are also those who will receive millions of dollars in grants to run these programs.

The mantra to spend big on big program helps both parties; the academics — that collect exceptional amounts of money in consultancy fees — and the government, that can use its spending as evidence it is working hard to make Australia safe.

There is growing competition in the electric car industry in Northeast Asia, says Julian Snelder:

Chemistry is key. The ideal battery is safe, charges quickly, and packs enormous 'energy density' (though gasoline remains far ahead). Lithium-based batteries are the best prospect today. Most Chinese firms use lithium ferrophosphate (LFP) chemistry, whereas Korea pursued the durable lithium NMC variety, and Japan the potent NCA, both having higher energy density (but using cobalt). Given their national excellence in physical sciences, the Chinese must be confident. But for now, most in the industry see LFP as trailing behind the Koreans and Japanese.

Is science cooperation a key area of engagement for ASEAN partners? Allison Sonneveld:

Stephen Grenville warns that Australia should identify new avenues of interaction with ASEAN. With the first US-ASEAN summit being held in Sunnylands this week, it is possible Australia could miss out on the region’s progress. One option is to exploit Australia’s strengths in science and technology (S&T). Australia’s strong research base combined with ASEAN’s entrepreneurship could result in a multitude of mutually beneficial initiatives.

Peter Cai wrote on the importance of communication for central banks, particularly China:

Those looking to the central bank for reassurance and certainty in the market will be disappointed, says Zhou. 'The central bank is neither God nor magician that could just wipe the uncertainties out. Therefore, sometimes the central bank has to say: excuse us, but we have to wait for new data inputs.'

Finally, a great post from Susanne Schmeidl on the state of Afghanistan and the growing number of civilian casualties:

All in all, the situation in Afghanistan is not well, and perhaps what Iraq tells us is that things could get worse. There are too many similarities to count, but they include: a highly corrupt government that lacks capacity and legitimacy; a peace process that is going nowhere; a frustrated and disenfranchised population; a rise in irregular militias; and an increasingly fragmented insurgency with new splinter groups starting to pledge allegiance to ISIS. Perhaps the UN report is the wake-up call needed to spur action before the situation spins further out of control.

Photo courtesy of Flickr user Peter.

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Afghanistan is in bad shape, and it could get worse

19 February 2016 3:00PM

Those of us watching Afghanistan were not surprised at the findings of the most recent annual report by the UN Assistance Mission in Afghanistan (UNAMA) in cooperation with the UN Human Rights Office on the 'Protection of Civilians in Armed Conflict'.

Overshadowed by the violence in Syria, news from Afghanistan rarely makes headlines unless it is a reminder of the dire situation there.

The 11,002 documented civilian casualties (3545 deaths and 7457 injured) might be a record high for Afghanistan since 2009 (when the UN started its documentation), but the total is dwarfed by the 20,000 killed in the Syrian war. Then again, there is little bombing in Afghanistan, where air operations account for only 3% of all dead and wounded, meaning that nearly all civilian casualties are caused by up-close-and personal brute force.

Similarly, even if there is currently no Afghan mass exodus as there is from Syria, Afghans still rank second-highest among asylum seekers and refugees in the world, and the war is in its fourth decade.

Ignoring wars does not make them go away. Nor does simply drawing down international military forces. This is what NATO did in Afghanistan at the end of 2014, when the UN -mandated International Security Assistance Force (ISAF) closed its doors, and with that most international military forces left. Not all foreign soldiers left. Australia and the US are still contributing nations as NATO launched its Resolute Support Mission (RSM), which focuses on providing 'training, advice and assistance activities at the security ministries and national institutional levels and the higher levels of army and police command across the country.' Planned initially for a year, it was quietly extended after the Taliban insurgency managed to briefly conquer the Northern city of Kunduz late last year.

But lets return to the UN report. What does it tells us and, more importantly, what does it not?

Things in the UN report that should not surprise us

First, wars kill, and as a war intensifies (as it did in Afghanistan), the toll on civilians increases, especially when the rules of war mean little to the fighting parties. Though Afghan President Ashraf Ghani was quick to point a finger at the Taliban for violating international law, arguing that his security forces 'underwent regular training to ensure the protection of civilians and were liable to investigate if any breaches occurred', the UN report shows there are violations on both sides, even if the Taliban might be the biggest perpetrator.

What happened in the northern city of Kunduz was a stark reminder that at least some within the Afghan security forces and government do not mind collateral damage if it means defeating the Taliban.

Second, as it has numerous times before, the Taliban slammed the UN report as biased propaganda by foreign invaders and an Afghan puppet government. Of course the Taliban's rather narrow definition of 'civilians' makes it easy for them to claim the moral high ground on not killing the innocent. For the Taliban, anybody associated with or working for the Afghan Government in any form or fashion is a legitimate target, whether they carry weapons or not. Increasingly, however, the Afghan population no longer buys this convenient excuse and views the Taliban as what it is: a brutal insurgent force.

Third, ISAF/NATO clearly did not complete its mission, defined as creating 'the conditions whereby the Afghan government would be able to exercise its authority throughout the country, including the development of professional and capable Afghan security forces.' The UNAMA report — and of course what happened in Kunduz — shows clearly that the ANSF is outgunned and unable to halt an ever-expanding and ever-fragmenting insurgency. So perhaps withdrawal was premature and the international military should have heeded the lessons of Iraq.

Fourth, the departure of foreign military forces did not appease the Taliban (which had made this one of its conditions), but gave it greater ability to fight ANSF in ground engagements, which have accounted for 37% of all civilian casualties.

In the past, improvised explosive devises were the highest killer of civilians. Without international air power backing up ANSF, the Taliban is free to move in bigger groups, engage into close combat, and terrorise urban centres such as Kunduz and Kabul. Kate Clark from the Afghanistan Analysts Network points out the obvious: the war has flipped. It is now 'the Taliban driving the conflict, with the ANSF largely trying to defend territory'.

The increasing intensity of ground combat, combined with a further 38% civilian casualties attributed to IEDs and suicide attacks, also explains why the toll has been so high on women and children.

All these 'tactics' are more or less indiscriminate. And this is what we need to be afraid of with the Taliban pressing into cities, as it is urban centres where rural populations flee to in order to escape the Taliban. If there is no assistance or protection in cities, Afghans will seek security in neighbouring countries or abroad. If Europe is opening doors to Syrians, why not to Afghans?

Things the report leaves out

Here is what the report implies but does not clearly spell out. Although the increase in civilian casualties was largely attributed to intensified fighting in Afghanistan's north and centre, numbers elsewhere are down, especially in the south. That said, southern Afghanistan still witnessed the single largest number of civilian casualties.

A drop in civilian casualties does not necessarily mean that all is well, as it could also imply that people are fleeing from violence, leaving fewer people behind to be killed. Research conducted by an Afghan NGO for a report I am currently writing shows that the populations which remain in Afghanistan's south, east and southeast are begrudgingly acquiescing to Taliban forces and simply trying to stay alive. None feel protected by Afghan security forces.

Another thing the UN report does not tell us is that death and injury is not the only impact of the Afghan war. The number of people displaced internally in Afghanistan is close to one million (though this is the tip of a gigantic iceberg, with rural to urban migration largely uncounted). Access to health care is also suffering, with the erroneous targeting of the MSF hospital in Kunduz taking out a major medical facility in a war zone. Swathes of the country are affected by conflict and thus have become inaccessible or hard to reach by development and relief agencies, a situation expected to only get worse in 2016.

In its 2016 Humanitarian Response Plan, the UN Office for the Coordination of Humanitarian Affairs (UN OCHA) highlights the immense vulnerability of the Afghan population, with 70% affected by poverty and one-third considered in need of assistance. In 2016, OCHA expects that 'approximately one million children will need treatment for acute malnutrition.' The Afghan economy has been on a downward spiral since foreign troops left town. They were huge spenders and employers, and aid went where the foreign troops were.

All in all, the situation in Afghanistan is not well, and perhaps what Iraq tells us is that things could get worse. There are too many similarities to count, but they include: a highly corrupt government that lacks capacity and legitimacy; a peace process that is going nowhere; a frustrated and disenfranchised population; a rise in irregular militias; and an increasingly fragmented insurgency with new splinter groups starting to pledge allegiance to ISIS. Perhaps the UN report is the wake-up call needed to spur action before the situation spins further out of control.

Photo courtesy of Flickr user Balazs Gardi.

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Syria, a year from now (part 2): The diplomatic dimension

19 February 2016 2:00PM

The balance of diplomatic advantage between the foreign powers involved in the Syria conflict will inevitably reflect the momentum of the military situation. In that sense, as discussed in part 1 of this series, the Russians and Assad are in a far stronger position than their opponents.

Images of human suffering and refugee movements will continue to drive demand for diplomatic efforts to end the war. But unless, against the odds, the military situation changes to the marked disadvantage of Assad, the diplomatic process will remain focused primarily on securing humanitarian relief and supporting local cessations of hostilities. Some population transfers and negotiated surrenders are likely in regime-encircled areas.

This does not mean Damascus and Moscow will remain on the same page indefinitely. For Assad, meaningful power sharing with the Saudi and Turkish-backed opposition is unthinkable. But for wider geo-political reasons, the Russians (and possibly the Iranians) have an interest in seeing the conflict wound down in the medium term, on their conditions, of course.

Indeed, in terms of maintaining leverage over the regime, a negotiated settlement of the conflict, even if it were conceivable, may have less appeal in Moscow and Tehran than a series of de facto deals that leaves the Assad regime strengthened sufficiently to carry the main burden of its own defence but still requiring their assistance in facing an insurgency. With such leverage, Russia could continue to wage campaigns against potential threats to Russian security in Syria (notably the Chechen jihadists), and Iran could continue to use Syria as a base for its support of Hezbollah in Lebanon, which acts as a strategic counterweight to Israel.

In contrast to the Russians, the US has to build a negotiating process in conjunction with its military campaign against ISIS, one directed toward the haziest of political objectives for the future political character of Syria. It must do so while finding a workable balance between the competing demands of Turkey and the Kurds, the Syrian regime, as well as the Iranians and Saudis.

To avoid a further regional conflagration, at some stage Washington also needs to constrain, if not deny outright, the ambition for statehood of the Kurds, who will have contributed significantly to the military effort against ISIS. This will require Washington to deal constructively with Moscow, not least because the Kurds may threaten to draw closer to Russia to counter such policy thinking in Washington.

In the immediate future, the US won't be constrained by demands for a ceasefire as a precondition to negotiations. Far from representing an insurmountable bar to negotiations, the imbalance of the military situation makes it unlikely that the more vulnerable rebels, at least, can afford not to negotiate. If some progress is made at the bargaining table, the dynamics of the process may gradually bring others in.

Meanwhile, whether the US will countenance requests for additional military assistance to rebel groups depends on how the US sees the realities on the ground developing, as well as the dictates of diplomacy and coalition-building. But no US or Western interest would be served by jihadist groups such as Ahrar al-Sham, Jaish al-Islam and others spawned by al Qaida securing a role in Syria's future.

Unless a political earthquake rocks Washington, one thing will not change: US interests in Syria are not sufficiently important to warrant significantly deeper US military involvement.

US interests, including efforts to end the extraordinary suffering of ordinary Syrians, will be best served by seeking a regional political solution in conjunction with its military effort. The US will make the best of working with the Moscow and Tehran toward an outcome in western Syria. That outcome will be shaped militarily by the Russians and Iranians, but so far as the wider conflict and regional outlook is concerned, US diplomacy and military force will continue to play a vital part.

Photo courtesy of Getty/Andrew Reneissen.

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'Neither God nor magician': Why China's central bankers need more latitude

19 February 2016 12:50PM

Sir Norman Montagu, the Governor of the Bank of England between 1920 and 1942, said 'never explain and never excuse' what you do at the central bank. The Governor of the Chinese central bank, Zhou Xiaochuan, followed that prescription, until last weekend.

People's Bank of China Governor Zhou Xiaochuan with journalists, April 2012. (Getty.)

The global equity and foreign exchange markets have been badly rattled since August last year, when the Chinese central bank introduced a more flexible market exchange rate regime. The change has opened a Pandora's box of unprecedented pessimism on the Chinese currency.

An estimated US$637 billion left China in 2015, according to the Institute for International Finance, a Washington-based industry group that represents banks and insurers. During the first month of 2016, another US$110 billion left the country. Many hedge fund managers are lining up to short the currency.

The violent market reaction surprised technocrats at the central bank. Didn't the international community always demand that China adopt a more flexible exchange rate regime? Yet when it happened, the global market had a seizure.

China's woes are partly to do with its communication strategy. The People's Bank of China has a nasty reputation for weekend surprise announcements and one paragraph notices. So when it announced its landmark exchange rate reform back in August last year, many analysts and traders interpreted it as Beijing's decision to join the global currency war: boosting export through competitive devaluation.

The central bank hastily arranged for a press conference to explain the decision after the value of the Chinese currency crashed. It was a bit too little and too late. Despite the market gyration, the bank only managed to put up Zhou's deputy to answer questions from journalists.

It's worthwhile to recall some lessons that the US Federal Reserve has learned from its handling of the global financial crisis. The former Chairman of the Fed, Ben Bernanke said in his book, The Courage to Act that one of the most important things he learned was about the need to communicate clearly with markets and the public:

Financial panics have a substantial psychological element, projecting calm, rationality and reassurance is half the battle,' he said, ' In a financial crisis, the words of government officials carry extraordinary weight.

He explained how the open markets committee, which sets the interest rate, agonised over words such as 'substantive additional action' or 'meaningful additional action' in its policy statement.

Another senior former Fed official made a similar point about the importance of communicating policy to the market and the people. Professor Alan Blinder, the former Deputy-Chairman of the US Federal Reserve, criticised both Bush and Obama administrations for their inability to communicate financial rescue strategy. This is surprise given that President Obama is regarded as something of a modern Cicero. Blinder, who was also an economic adviser to President Clinton, says the dearth of effective communication under both administrations led to an absence of understanding, widespread confusion, and a popular backlash against sound rescue policies such as TARP, the Troubled Asset Relief Plan.

Back to Governor Zhou. In his lengthy interview with the Chinese financial magazine Caixin over the weekend, he specifically mentioned the need to communicate with the market better. 'First of all, the central bank definitely has a clear and strong willingness to improve communications with the public and the market,' he said, 'however, good communication is never an easy thing.'

Those looking to the central bank for reassurance and certainty in the market will be disappointed, says Zhou. 'The central bank is neither God nor magician that could just wipe the uncertainties out. Therefore, sometimes the central bank has to say: excuse us, but we have to wait for new data inputs.'

The weekend interview with Caixin is a good starting point for Zhou. Onshore Chinese currency value jumped on the back of his message of central bank support for the embattled currency. Hopefully he will do these interviews more frequently in future and also with foreign media, given the central importance of China to the global economy.

However, we must realise there is one important institutional obstacle to the Chinese central bank adopting a better communications strategy. It has to do with the central bank's embarrassingly low status within the Chinese bureaucracy. We often forget that the Chinese central bank is not independent like its Western counterparts.

In his excellent book, The Alchemists: inside the Secret World of Central Bankers, Neil Irwin says that Chinese central bankers enjoy relatively low positions in their country's power hierarchy compared to their US counterparts. 'The chairman of the Federal Reserve is easily among the half dozen most powerful US public officials, and arguably number two behind the president. The president of the European Central Bank at times seems like the most powerful person in all of Europe, ' he writes. 'But the governor of People's Bank of China is, by most accounts, not even among the couple dozen most powerful Chinese officials.'

At a time of great uncertainty, it is arguable that the ruling Chinese Communist Party needs to give its central bank more latitude in communicating to the market and having a greater say over foreign exchange and monetary policy.

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The view from Jakarta

This week in Jakarta: Ping-pong, censorship and emojis

19 February 2016 11:00AM

Indonesia's President Jokowi looked every bit the progressive leader on his visit to Silicon Valley in the US this week as he encouraged the use of social media to spread messages of peace and democracy, and even played a round of virtual ping-pong with Facebook founder Mark Zuckerberg. But back home in Jakarta, the usual arguments were being had over censorship, pornography, and LGBT issues.

The president stopped by the offices of Google, Twitter and Facebook this week to discuss ways in which the tech giants can help Indonesia implement government programs, support small and medium enterprises, and foster a digital start-up culture. Some of this is already happening: e-commerce is booming in Indonesia, and a healthy start-up culture has sprouted in Jakarta's Slipi district, earning it the nickname 'Slipicon Valley'. Google is a partner in Indonesia's fight against illegal, unregulated and unreported (IUU) fishing practices, and is planning to bring internet access to Indonesia's most remote areas via its Project Loon. Facebook last year brought free (but very limited) internet access to Indonesia via its Internet.org initiative. Twitter is now in discussions with Indonesia about assisting with early detection of terrorist or extremist content on its platform.

Jokowi sees the digital economy as key for growth in Indonesia and the ASEAN Economic Community. As a leader who very quickly rose to national prominence from regional obscurity, he also understands well the potential of digital media to spread political messages. From California this week, the president urged Twitter to spread messages of peace, tolerance, democracy and good governance. At Facebook headquarters, he left a handwritten note: 'together in peace and harmony'. Such messages, he said, could provide a counter-narrative to those spread online by terrorist groups like Islamic State, which claimed last month's deadly attack in central Jakarta.

But back in Jakarta, government figures this week appeared less concerned about digital media's potential for bringing peace and prosperity, and more concerned about its potential to spread content deemed inappropriate by national censors.

Following a review by the Communications and Information Technology Ministry's pornography panel (apparently such a thing exists), a decision was made this week to ban microblogging site Tumblr on the basis of alleged pornographic content and references to lesbian, gay, bisexual and transgender (LGBT) relationships. The move sparked public outrage and the Ministry quickly withdrew the decision, maintaining that it would still ask Tumblr to remove the offending material from its site.

Platforms for user-generated content like Tumblr pose tricky problems for Indonesia's censors. The suggestion to ban the site outright, as in the case of Reddit and Vimeo, has in this case been vocally rejected by the public, perhaps because Tumblr has already gained a popular following in Indonesia. Meanwhile, filtering out only the content deemed inappropriate is a near-impossible task that would require close cooperation with the host site. Tumblr has yet to comment on how it will respond to the government's censorship demands, including concerns about its LGBT content.

Online pornography has been a preoccupation of Indonesian censors since the introduction of the controversial Anti-Pornography Law in 2008. But the focus on LGBT relationships reflects a more recent moral panic over this minority community in Indonesia. A call to ban LGBT groups on university campuses last month has been followed by mounting public debate on the issue. Just last week, same-sex emojis and stickers were removed from offerings in Indonesia by instant messaging service Line under pressure from the Communications Ministry. This week, Security Affairs Minister Luhut Pandjaitan became one of the few government figures to speak up for LGBT rights, only to add that homosexuality was a disease that needed to be cured.

The more Indonesia engages with social media and develops its digital economy, the more these types of debates over censorship and values are likely to emerge. It will be interesting to see how all sides adapt in the interests of living 'together in peace and harmony'.

Photo by Flickr user Ignatius Win Tanuwidjaja.

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Syria, a year from now (part 1): The military dimension

19 February 2016 9:30AM

It takes reckless courage to make predictions about Syria. But compared to a year ago, when the survival of the Assad regime looked increasingly problematic, the factors shaping the military and diplomatic outlook in 2016 are somewhat clearer.

The Assad regime looks set to remain in place. Unless there is a change in Russian and Iranian conclusions about their strategic interests in the survival of that regime, or a sudden reversal of military fortunes, or some internal falling out as pressures on the regime ease, Damascus will probably hold on to the territory it controlled at the start of the year. It may even add to that territory, depending on the degree to which Russian air power continues to be concentrated on rebel forces in western Syria. The fact that the al Qaida-linked Jabhat al-Nusra is embedded in almost all rebel groups in northern Syria provides the pretext (if any were needed) for the Russians to continue targeting all combat-capable opposition forces.

The rebel groups remain chronically under-resourced, especially in terms of ammunition. They have lost momentum. Some minor elements will probably lose the will and capability to fight over the course of 2016. Others, lacking Western assistance, will integrate more closely with Ahrar al-Sham and Jabhat al-Nusra. They all face the prospect of increasingly effective use of Iranian and Russian forces, including Russian Special Forces, Iranian-backed militias, surveillance drones and the more adept use of artillery. Their leadership elements are being targeted more effectively by the Russians as well.

The war could be further escalated by the closer involvement of Saudi Arabia, which may be considering sending in ground forces via Turkey or from Jordan.

Without strong US backing, including close air support, a Saudi ground offensive in Syria directed against the Kurds or the Assad regime, rather than against ISIS in Raqqa, would risk outright military defeat. The personalities and perceptual predispositions of their leaderships clearly favour fighting on, but Turkey and Saudi Arabia have also to consider the uncertain political consequences of trying to prosecute a war, without clear and realistic political objectives or a viable exit strategy, that could well humiliate their governments.

For the US, the central strategic concern remains removing the threat posed by ISIS in Iraq and Syria, rather than seeking directly to determine the fate of the Assad regime. The strategic task, however, is considerably more complex than its military dimension. Whereas Russia would probably countenance a continuation of the insurgency against the Assad regime (part 2 of this series explains why), the US wants to craft a diplomatic process offering the prospect of a regionally-endorsed political resolution of the Syrian conflict.

Whereas global attention is focused on developments in Aleppo and the north-west of Syria, during 2016 the question of Raqqa will highlight the military and diplomatic challenges for the US.

If ISIS is forced out of its Raqqa stronghold, which may happen in the coming year as the campaign to liberate Mosul intensifies, the US will want to minimise the risk of another weak, insecure and vulnerable Sunni entity arising in its stead. Whether it can achieve such an outcome will depend to some extent on the nature of the ground campaign that will be launched against ISIS. Who will contribute forces? Who might be willing to stay on, under whose auspices, and for how long?

The damage inflicted on Sunni rebel groups in Aleppo and elsewhere, and the unacceptability of working with al Qaida-backed elements, leaves the US with few options for launching a ground assault on ISIS other than some form of external Arab-Turkish intervention, or tacitly supporting the Assad regime's recapture of the ISIS 'capital'. But any Saudi attempt to launch a military offensive in conjunction with Turkey to secure a Sunni statelet in eastern Syria would be a direct challenge to the Kurds and Iranians. The fall of Raqqa to anti-Assad forces would also be seen as a threat to Aleppo, and ultimately to the regime's control of western Syria.

Recognising that an air campaign alone will not defeat ISIS, the US appears to be keeping open the option of an Arab-Turkish intervention to secure Raqqa. The reported US development of an advanced operating air facility as Hassakah in north-east Syria may be linked to that objective, as well as to the campaign for Mosul. Moreover, unlike the situation in western Syria, where the Russians are dominant, the air space over Raqqa is open to the coalition.

The Russians would face awkward choices responding to demands to provide close air support to regime (or Iranian or Kurdish) resistance to such an Arab-Turkish incursion. But Russia's primary interest is less in supporting the restoration of the Assad regime's authority across the whole of Syria than in making sure the regime is viable but also vulnerable to Russian pressure and responsive to Russia's interests and priorities. Moscow is more likely to focus on preservation of the Assad regime in western Syria while bargaining with the US over Raqqa and managing the disappointment of their clients (who irrespective of such Russian perfidy, would still depend upon Russian support elsewhere).

Whatever the exact nature of arrangements in Raqqa if ISIS was pushed out, the US will not wish to see any vacuum filled by forces equally inimical to American interests and values than ISIS or al Qaida.

Photo by Reuters/Anadolu Agency.

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Digital Asia links: North Korean rockets, emoji censorship, Myanmar Facebook and more

19 February 2016 8:07AM

The Asia Pacific is the most dynamic digital landscape in the world, home to the fastest adopters of new technologies and the largest concentration of mobile and social media users. An escalation in online activism, changing cyber dynamics, developments in digital diplomacy and the exploitation of big data are shaping the region's engagement with the world.

In Myanmar, Facebook has become the digital outlet of choice. In fact, Facebook is the internet. Here's why that's both good and bad.
In the same vein, The Atlantic reports on Myanmar's Facebook-loving farmers who are benefiting from a drop in SIM card prices (from US$2000 to US$1.50).
The latest Chinese mobile app trends via the personal blog of a WeChat product manager.
Rigorous open-source analysis of last week's North Korean rocket launch.
Indonesia's online outbreak of anti-LGBT sentiment is worsening, with Japanese chat app LINE agreeing to block LGBT-friendly emojis at the request of Indonesian lawmakers who called them 'somewhat vulgar.' WhatsApp and Tumblr are also in the firing line.
Online censorship is also rearing its ugly head in Thailand and Malaysia.
Harvard Business Review offers lessons from Facebook's fumble in India.
The Pakistan-based startup Transparent Hands uses crowdfunding to collect donations for patients who are unable to pay for their medical care.
32 billion virtual red packets were sent out over WeChat last week for Chinese New Year.
Why is dating mobile app Tinder opening its first international office in India?
A Vietnamese TV station supplied a soldier based on the disputed Hoang Sa Islands in the South China Sea with a virtual reality headset so he could see his family over Chinese New Year holidays. Watch from 1.05 hrs (h/t Asia Digital Life project).

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Is there room for foreigner carmakers in China's electric future?

18 February 2016 4:48PM

China's car industry is the largest and most lucrative in the world. It is also an industrial policy failure.

Local brands have only 28% market share. By forcing the global giants to enter 50/50 joint ventures (JVs) with state owned enterprises (SOEs), central planners expected a transfer of skills and technologies from one to the other. They've been disappointed. The JVs, secure in their provincial bastions, relaxed on a tide of profits from foreign technology and brands.

A few private companies like Geely and GreatWall — scrapping it out in segments like budget SUVs, and exporting to Egypt, Brazil and Russia — have become the surprise successes. Although these independents also enjoy the state's largesse (via subsidies), their survival defied the mandarins, who naturally draw their conclusion: this important industry must be shaped even more forcefully. And the future of the global automobile, as everyone from Xi Jinping down knows, is electric. He wants his nation to go 'from big to strong'.

China has good reasons for its huge electric vehicle (EV) ambition. It has polluted cities. It has lots of electricity. Some have spotted a connection here, and suggest that burning coal to charge EVs may make emissions worse. But over time simpler, lighter vehicles will emerge, and renewable energy offers a smaller ecological footprint. EVs are ideally suited to autonomous driving and car-sharing. Tesla has shown the possibilities with its premium all-electric car but as one Chinese entrepreneur puts it: 'The guy who's making the $100,000 car is not changing the world; the guy who is making the $10,000 electric vehicle is changing the world'. New Chinese-backed startups are raising capital at home and abroad.

Whereas other major countries recognised the importance of hybrids (gasoline-electric combinations), Beijing exclusively prioritised 'pure' EVs (all battery powered) in its industrial policy. There is a good reason for this. Dominant global automakers collectively have built billions of internal combustion engines. This gives them, in the view of Chinese planners, under science minister Wan Gang (a former Audi engineer), an insurmountable lead. EVs, however, offer the possibility of leap-frogging the global giants. Furthermore China's dominance of rare earth metals — crucial for electric motor permanent magnets — emboldens its EV aspirations while making others very nervous, as a fascinating new book describes. Hybrids each use several kilograms of rare earths and pure EVs three to four times more. Beijing was notably unenthusiastic about promoting sophisticated hybrids which others (especially Toyota) have pioneered.

China has a lavish incentive program for EVs and wants five million on the road by 2020. Local brands get priority for scarce urban license plates. Financial subsidies (up to one-third of the car's value) were so generous that they were abused. China's EV sales mysteriously surged late last year to overtake America's, though still fell short of Beijing's 500,000 target for 2015. Patchy charging infrastructure deters buyers. The finance minister recently confirmed the phaseout of subsidies and a less dogmatic, 'market determined' approach to promoting 'new energy vehicles' of all types. Reportedly, California is seen as an exemplar. Other countries are exploring entirely different standards like hydrogen fuel cells. For now, the future of the automobile is wide open, a three-way battle between established carmakers, Silicon Valley, and Chinese industrial policy.

The global auto ecosystem has room for a variety of power plays. But in any case widespread electrification probably is essential to meet increasingly demanding fuel economy standards worldwide. And batteries remain the greatest barrier to solving safety and range challenges.

Chemistry is key. The ideal battery is safe, charges quickly, and packs enormous 'energy density' (though gasoline remains far ahead). Lithium-based batteries are the best prospect today. Most Chinese firms use lithium ferrophosphate (LFP) chemistry, whereas Korea pursued the durable lithium NMC variety, and Japan the potent NCA, both having higher energy density (but using cobalt). Given their national excellence in physical sciences, the Chinese must be confident. But for now, most in the industry see LFP as trailing behind the Koreans and Japanese.

They were outraged when Beijing last month announced a ban on NMC imports, supposedly over safety concerns. Actually all of China's reported 'malfunctions' involved local LFP products. As protectionist tricks go, the NMC ban is pretty rich. Yet Japan and Korea too are past masters of the 'nontariff barrier'. White-gloved quality inspectors at Yokohama's wharves once rejected Cadillacs for minor paint blemishes. An imported Mercedes would automatically trigger a tax audit of the 'unpatriotic' Korean customer.

This is about much more than lithium chemistry. The bigger issue is whether China will accept the continued dominance of foreign firms in its increasingly contested car market. Probably not. This industry is of paramount strategic importance to Beijing. Its steps towards 'local certification' are a clear warning of its intentions. Tesla, already worried about China's regulatory regime, will face rising local competition . Elon Musk, hedging delicately, may need a Chinese partner and advocate — fast. Compared to Japan and Korea, the Chinese car market was long quite open. Bureaucrats must regret this. It cannot be a surprise that, for the next electric generation, they will play a rougher game.

Photo: Zhang Peng/LightRocket via Getty Images

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When will the Lebanese Presidential merry-go-round stop spinning?

18 February 2016 2:29PM

And so the painfully slow process of agreeing on a new president for Lebanon continues. A breakthrough — of sorts — was reported last month when candidate Samir Geagea announced he was pulling out of the race and would endorse his rival, Michel Aoun, potentially arresting Christian indecision over which candidate to support. However in November last year, Sa’ad Hariri, Geagea’s longstanding ally in the Sunni-Christian political alliance — the March 14th bloc — announced he was nominating alternative Christian candidate Suleiman Franjieh. This has triggered another stand-off and there remain two candidates to choose from: Aoun or Franjieh.

Supporters of presidential candidate Michel Aoun at a rally in September (Photo: Ratib Al Safadi/Getty Images)

Under Lebanese constitutional law, the president of the country must be a Christian, the prime minister a Sunni Muslim and the speaker of the house a Shi’ite Muslim. The role of speaker has long been occupied by Amal leader Nabih Berri, and, owing to the strength of the Shi’a dominated ‘March 8th‘ alliance (Amal and Hizbullah). this has never been challenged. Currently Tamam Salam is acting as interim prime minister as a compromise candidate but he wields little influence. A parliamentary vote is necessary to elect the new president and that is scheduled for 2 March. The March 8th alliance has demanded agreement on a candidate from all sides before the vote and, in the absence of this, has boycotted earlier attempts to hold the vote that requires the presence of 86 lawmakers to be valid.

The battle to agree on a president has been hampered by the political weakness of and divisions within the March 14th Sunni-Christian alliance. The alliance was first fractured in 2006 when Michel Aoun announced he was joining the March 8th bloc. Since that time, despite the pressure of the Syrian war and Hizbullah’s involvement in it, this Christian/Shia alliance has remained firm. Thus divisions within the Christian community have continued over whether to support Aoun as part of March 8th, or Geagea as the March 14th candidate.

The Christian-Sunni alliance has also been under pressure because of weak Sunni leadership. This has been caused by Hariri’s self-imposed exile and the vast differences in socio-economic status within the Sunni community. The secular, Beiruti, Hariri-led political clan look and behave very differently to Sunni communities in northern Lebanon, particularly in the rural areas close to the border with Syria. Rafiq Hariri was reportedly adept at financially co-opting the lower socio-economic strata of the Sunni community as he recognised the importance of maintaining political cohesion. His son Sa’ad, perhaps in part due to his prolonged exile, has been less careful. It is possible therefore that his decision to back Franjieh is part of a deal whereby he would become prime minister and resuscitate his leadership in Lebanon.

The effect of this weak leadership has been a noted rise in Sunni support in the north of Lebanon for Da’esh (ISIS) and Jabhat al-Nusra. As neither group comes across as being particularly tolerant of religious pluralism, this must be concerning moderate Sunnis and Christian supporters of March 14th alike. In fact, the inherent tensions in the alliance have been increasingly exposed by the Syrian war. Da’esh aside, the closeness of the Hariri family with the Saudi government, which is believed to be funding militants that attack Christian communities in Syria,will no doubt have cast doubts in many people’s minds as to the long-term sustainability of a Sunni-Christian alliance. Read More

Ironically it is Hizbullah that stands to gain from Hariri’s decision to back Franjieh; as a friend of Syria, it is unlikely he would oppose Hizbullah’s support for Assad. Hariri’s nomination of Franjieh therefore has been criticised by some in the Sunni community as a tacit acknowledgement of the rising power of March 8th. There is little doubt that the Shi’ite/Christian alliance currently appears more stable and, despite the Syrian war, still wields more political power in Lebanon. This is in no small part due to the smart leadership provided by Hasan Nasrallah. Thus far, he has managed to avoid major political fallout despite both the high death toll from Syria within the Shi’a community, and the unpopularity of Hizbullah’s alliance with Assad across Lebanon. This is possibly due to the fact that, when all is said and done, ordinary Lebanese across the religio-political spectrum understand that it may be the presence of Hizbullah that will ultimately protect them from a Da’esh invasion.

With regards to the presidency, the Lebanese will not view Geagea’s latest decision with a great deal of excitement. For one thing, none of the Christian candidates have a blameless record from the civil war; they all remain part of the established political elite which to most appear more concerned with political manoeuvring and power plays than the wellbeing of ordinary Lebanese. Secondly, unless Hariri backs down over Franjieh, which currently he shows no sign of doing, the stalemate will persist.

And meanwhile, the power cuts continue, the potholes in the roads widen and the garbage piles up…

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Schools not the place for deradicalisation programs

18 February 2016 12:05PM

Sometimes no policy is better than a disastrous policy; especially one declared in name of 'national security' as such initiatives typically go unchallenged in the parliament or by the general public.

The Australian government’s recent announcement that it intended to make Australia safer by running deradicalisation programs in schools is one such disastrous national security policy, one that has been tried, tested, and found to have failed in other parts of the world.

Under the new arrangement, the Australian government will train teachers, staff and students to identify kids ‘at risk’ of radicalisation in schools. Those nominated will be sent to counselors for ‘deradicalisation’. It is an ill-conceived policy that will have serious repercussions for domestic stability.

The program will target kids between the ages of 6 to 14. One seriously wonders by what measure or mechanism the government is to distinguish a kid who is undergoing a teenage crisis from a kid that harbors radical ideology and is a potential threat to Australia. Identification of ‘at risk’ kids is likely going to be based on Muslim sounding names and ethnicity triggering discrimination right at the school level, as has been the case in the United Kingdom.

This securitisation of the school space is dangerous at many levels. Teachers, staff and students are not, and should not be expected to be, the right individuals to carry out the complex job of intelligence officers. This policy is likely to further radicalise the school space and make Australia unsafe.

Muslim youth already face challenges integrating into Australian society. Their parents' values are often in direct confrontation with the Australian way of living so the school space, really, is the only forum these kids have to make friends, integrate and develop an Australian identity.

Running deradicalisation programs at school level will take that opportunity away from Muslim kids who are therefore likely to get further marginalised and isolated in Australian society. Chances are that any kids who undergo the proposed corrective programs will become even more likely to fall for the militants' 'Islam vs West' narrative.

This policy is damaging for both the Muslim community and the broader Australian society.

Over $100 million of taxpayer funds is likely to be spent on such programs that will produce unwanted results and damage education and learning at schools; something Australian parents should be worried about.

Given the disastrous outcomes in other nations, one wonders why the government is keen to implement such programs worth millions of dollars.

In my consultations with the government, I have noticed that the major resistance to my stance against this policy doesn’t come from the government itself, but from my fellow academics and experts who are recipients of government deradicalisation program grants.

There is an obvious conflict of interest here: those advising the government on the development of such policies are also those who will receive millions of dollars in grants to run these programs.

The mantra to spend big on big program helps both parties; the academics — that collect exceptional amounts of money in consultancy fees — and the government, that can use its spending as evidence it is working hard to make Australia safe.

Despite the apparent fallacies and loopholes in the policy, few are willing to challenge it. Under the banner of national security, liberty and freedom are being held in check and so, it seems, is the common sense to question if Australia is really under threat from eight-year-old-school kids.

Photo: UniversalImagesGroup/Getty

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Vale Boutros Boutros-Ghali: Former UN chief and key thinker on peacekeeping

18 February 2016 9:40AM

Boutros Boutros-Ghali was born in 1922 into a prominent Coptic Christian family in Egypt. His grandfather, Boutros Ghali, served as Egypt's prime minister until his assassination in 1910. Following the assassination, the family officially changed their surname from 'Ghali' to 'Boutros-Ghali.' The late Secretary-General then additionally received Boutros as his first name, and his double name was famously remarked on in popular American TV shows during his time in power, including Seinfeld and Friends.

Boutros-Ghali studied political science, international law and economics in Egypt, France and the US. His surviving wife, Leia Maria Boutros-Ghali, is an Egyptian Jewish woman, who reportedly converted to Christianity. The multilingual couple regularly discussed issues with each other in Arabic, English and French – skills which no doubt enhanced Boutros-Ghali's skills in diplomacy. Moving from academia to politics beginning in 1977, he served many years as Egypt's Minister of State for Foreign Affairs and played a central part in Egypt-Israeli negotiations at Camp David.

The first person from Africa and the first Arab person to serve as UN Secretary-General, Boutros-Ghali held the office from 1992 to 1996. He took up the post aiming to enact a program of radical reform to re-launch the UN in 1995 on its 50th anniversary. To this end, he looked forward to the first ever security council summit, for which he was asked to draw up a plan for improving the UN's ability to provide preventive diplomacy for peacekeeping and peacemaking. This culminated in his authoring of the much cited and ambitious report, Agenda for Peace. Although member states appeared to appreciate the recommendations he made in it, they took few steps toward implementing them, as they were otherwise preoccupied with peacekeeping operations in Somalia, Cambodia and the former Yugoslavia.

His term of office faced much controversy in terms of peacekeeping, as the UN was heavily criticised for its failure to prevent Rwanda's 1994 genocide. Boutros-Ghali himself called it 'my worst failure at the United Nations.' At the same time, he chided powerful states for setting what he felt were impossible requirements for intervention.

He also opposed NATO bombings in Bosnia. This, along with his vocal statements around the US — which pays a quarter of UN dues — being US$1.4 billion in arrears, set off his detractors in America. He was the sixth Secretary-General and notably remains the only one who was not elected for a second term in the post, as the US wielded its veto power to block him from continuing in the role.

He reportedly felt personally attacked by the ousting. Shortly before the veto was used against him he stated, 'Like in Roman times, they have no diplomacy. You don't need diplomacy if you are so powerful…How can I fight Goliath?' Following the veto, Egypt and France both issued statements of support for Boutros-Ghali, highlighting that the US had acted alone in opposing his reelection, while he had retained support from the other 14 states on the security council. He was succeeded in the office of Secretary-General by Ghanaian Kofi Annan.

Notwithstanding the challenges he faced in office, many have also lauded the peacekeeping accomplishments he achieved in such a difficult political environment. His report, An Agenda for Peace, continues to significantly influence UN thinking today, and current Secretary-General Ban Ki-Moon has praised the expansion of blue helmet peacekeeping overseen by Boutros-Ghali.

In 1999 he published a memoir reflecting on his time at the UN. Following his tenure there, he took up the office of Secretary General of the Organisation Internationale de la Francophonie, a position he held from 1997-2002. From 2003-2012 he then served as director of the Egyptian National Council of Human Rights. On 16 February 2016, at 93 years of age, Boutros Boutros-Ghali, died at a hospital in Cairo. The UN Security Council observed a minute of silence in his honour.

Photo courtesy of Flickr user United Nations Photo.

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India: A late-bloomer, not a latecomer, in global economic leadership

18 February 2016 8:58AM

In the last few years, India has made rapid strides in deepening its commitment to the multilateral community: it has co-created new multilateral banks such as the Brazil, Russia, India, China and South Africa (BRICS) New Development Bank (NDB) and Asian Infrastructure Investment Bank (AIIB); elevated its involvement in geoeconomic forums, including the G20 and Financial Stability Board (FSB); and reconfigured its engagement with the three Bretton Woods institutions; the World Bank, the IMF and WTO. By doing all this, India has demonstrated a determined approach to shaping economic multilateralism.

But how fruitful has this energised relationship been for India? Has the country managed to negotiate a more powerful role for itself in these multilateral networks? Has it contributed to shaping the new economic multilateralism?

An examination of these questions shows that the results for India have, so far, been uneven.

BRICS NDB and AIIB

The BRICS NDB was an idea conceived by India. The bank’s shareholding is equally divided among the five founding members; this, technically, makes it the multilateral bank in which India has the greatest influence.

But support for the NDB within India has been mixed. While the government and the strategic community recognise the bank’s potential as an instrument of economic statecraft, the Indian business sector has been sceptical. In its view, the BRICS forum itself is an economic mismatch, vulnerable to Chinese domination and a Goldman Sachs marketing gimmick taken too far.

If the bank had been headquartered in Mumbai, its visible presence in the city would have quelled skeptics and spurred interest in India’s foreign economic policy among the business community. Losing the location to Shanghai was, therefore, more than a functional setback for India.

Although the media claimed that the opportunity for an Indian to head the bank as President was a fitting concession, this was a mis-perception. The President’s office is rotational, and every other founder gets a Vice President. A board of directors and governors, chaired by Brazil and Russia, respectively, oversees the executive management. India’s turn as President, thus, has mistakenly been celebrated as a chance to influence the institution asymmetrically and permanently.

As a founder, India will benefit only when the bank becomes an institution of global value, one that truly represents new economic perspectives in emerging markets and developing countries. For example, digital infrastructure, online education, efficient delivery of public services, social enterprises, and sustainable infrastructure are all growing areas that the bank could champion.

Following the NDB closely, but with more speed and scale, is the AIIB. When China first pitched the idea in 2013, the bank’s focus on infrastructure financing, and the prospect of India holding the second largest share in the bank, was compelling. India was one of the first public supporters of the initiative.

But by the time the AIIB was established in June 2015, there were 57 'prospective founding members,' including developed countries such as Germany, Britain, and Australia. This dampened India’s hopes of having the same, exclusive, coveted status of a founder as it has with the NDB. The excitement was further moderated by the disparity in the voting share between China (26.06%) and India (7.5%), the largest and the second largest shareholders. This is only slightly more than India’s share in the Asian Development Bank (ADB) (6.4%) and the World Bank (3.02%).

Still, China’s disproportionate control of the bank can be justified by its majority contribution to the AIIB’s funding, and AIIB remains a chance for both China and India to redefine development finance for the masses. No other country has the challenge of addressing the infrastructure needs of a billion-plus population, which has to be created without disrupting livelihoods and the environment.

G20, FSB, and B20

India has elevated its involvement with the G20 since the group was reconstituted as a heads-of-government forum in 2008. It is now recognised as the premier forum for developed and developing countries to collaboratively govern the global economy.

But India’s ability to negotiate long-term cross-border and cross-disciplinary issues remains weak. The Indian government lacks the intellectual capacity, think tanks lack funding, and businesses lack patience. As a result, India’s concerns are not articulated, reflected, or incorporated at the G20.

In part, India’s lack of full commitment emanates from a misconception that the G20’s decisions are not binding and are therefore inconsequential. But this is inaccurate. Regulations on banking and finance set by G20-supported international standard-setting bodies such as the Financial Stability Board and the Basel Committee on Banking Supervision, are binding, and may require legislative changes within India.

Even informal G20 sub-forums such as the business-focussed B20 are becoming powerful lobbying groups and will substantially influence global policies in the coming years. This is why the weak presence of Indian business leaders and chambers in the B20 process is a matter of concern.

Clearly, India has to do more to effectively engage with the global economic process. This requires all stakeholders to both prioritise global policy-making and allocate adequate resources for preparation and negotiations.

World Bank, IMF, and WTO

Meanwhile, India’s bittersweet relationship with the existing multilateral institutions continues. Its engagement with these bodies goes back to the 1944 Bretton Woods conference, where Chintaman Deshmukh, the first Indian governor of the Reserve Bank of India, was on the committee that designed the World Bank.

In subsequent years, India became a proponent of the multilateral negotiating system. We supported the rise of the WTO and developed internal processes to contribute to its functioning. India acknowledges the IMF’s bail-out during the 1990 balance-of-payment crisis, World Bank loans for infrastructure development, the International Finance Corporation’s equity investments in India’s corporate sector, and the WTO’s dispute resolution mechanisms.

Now, as its economic heft grows, India is incrementally reconfiguring its involvement. We gave $10 billion in 2012 to the IMF’s New Arrangements to Borrow programme to address the Eurozone financial crisis, but are displeased with the institution’s focus on western geopolitical priorities such as Ukraine.

At the WTO, India’s stance has become less submissive. We regret the concessions we made on Mode 3 (free movement of capital) for developed economies without commensurate promises for Mode 4 (free movement of natural persons) that would have benefited India. There is a similar regret about the methodology to compute food subsidies. And India is uncertain about how significant the WTO will remain in the wake of mega-trade agreements such as the Trans Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP), which India wants to join. On the World Bank front, Indian interest in aid and concessional loans from the Bank is waning because large Indian companies are able to raise foreign institutional funding.

Given these considerations, the future of these relationships will depend on how the three Bretton Woods institutions can reform to accommodate India’s concerns. But the five-year delay by the United States in ratifying the 2010 IMF reforms does not invoke hope for speedy reconfigurations.

Still, India has a decades-long familiarity with these institutions and retains trust in their downstream implementation processes. This cannot be easily discounted.

What now?

India is a late-bloomer, rather than a latecomer, in global economic leadership. It remained inward-looking while it tried to build its internal economic engine, but now the picture is changing. Given our energised foreign policy and global ambitions, India must deepen its global economic participation and play a leadership role, especially in other under-developed multilateral forums of strategic economic potential such as SAARC.

Although India’s relationship with multilaterals has brought uneven results so far, it has yielded necessary learning experiences. These can help India refine its approach towards the institutions in parallel with the evolution of economic multilateralism itself.

Photo courtesy of Flickr user Farrukh

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China's HQ-9 missile deployment: Reading between the lines

17 February 2016 5:23PM

I don't mean to downplay Fox News' exclusive that China has deployed advanced HQ-9 surface-to-air missiles to Woody Island in the South China Sea. It is another escalatory move by Beijing and does raise the stakes in the increasingly tense game being played around various disputed territories in the region.

But to add a bit of context, this is not the first time China has deployed advanced military equipment to Woody Island — last November it was J-11 fighter jets. So as Mira Rapp-Hooper from the Center for a New American Security says, this deployment is not totally unprecedented.

It's also worth noting that the satellite imagery which Fox News has published shows that the vehicles which make up the two HQ-9 batteries are parked on a beach rather than in any purpose-built facility. The HQ-9 is a mobile system; its missiles, radars and command systems are all mounted on heavy vehicles which allow them to not only deploy away from bases but also off-road. But these batteries do have home bases where the missiles, radars and other systems are maintained, and where the crews are housed. The Chinese also build permanent launch sites for their HQ-9s, large concrete structures which are easy to spot on satellite.

As far as I am aware, there are no indications that such permanent launch sites have been built on Woody Island. We would know it if they did. Perhaps slightly harder to identify from satellite imagery would be the maintenance buildings, which would look more generic from above. We do know that China has long had ambitions to expand its military presence on Woody Island, so it's possible such facilities exist.

The need for such facilities would likely be particularly acute given the local environment. When J-11 fighters deployed to Woody Island in November, experts noted that corrosion from sea air would be a major problem for these aircraft if they stayed for long on the tiny outpost. We could surmise that the same is true for the HQ-9.

The facts are far from clear, but for now it seems possible that this is a temporary deployment similar to the J-11 show of force from last November, and not a permanent basing measure.

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Pacific Island links: New Vanuatu PM, Zika in the Pacific, Solomons futsal and more

17 February 2016 5:10PM

By Alastair Davis, an intern in the Lowy Institute's Melanesia Program.

PNG's leaders in the political, business and public service spheres will meet in Port Moresby this week to discuss national priorities at the annual Leaders' Summit.
The Lowy Institute’s Jonathan Pryke explains the debt and cash flow problems facing the PNG Government in light of a new IMF analysis on public debt.
Pentacost MP Charlot Salwai is the new Prime Minister of Vanuatu. Salwai is seen as a consensus choice well suited to leading the governing coalition.
Following Vanuatu's successful election, this report on election support in Melanesia by ANU's Julien Barbara is worth reading.
Repairs to Port Vila's Bauerfield Airport in time for the start of the tourism season are a top priority for the new Prime Minister and have taken a step forward this week.
Global concerns about the Zika virus have reached the Pacific with Tongan health authorities now recommending that women delay pregnancy.
Russia's Ambassador to Fiji, Vladimir Morozov, has officially handed over Russian arms to the Fijian military. Negotiations for a second shipment are reportedly underway while a senior Russian defence official dismisses speculation that Moscow is seeking to establish a naval base in Fiji.
The Lowy Institute's Jenny Hayward Jones and I argue that democracy in Fiji was damaged by the suspension of the NFP political party from parliament.
Continuing in Fiji, civil society groups and Pacific watchers are expressing concern over changes to parliamentary procedures in Fiji.
Australian Ambassador for Women and Girls Natasha Stott Despoja reports on the encouraging work to improve the lot of women in PNG.
The Kurukuru, the Solomon Islands national futsal team, are off to the World Cup in Colombia later this year and will benefit from government investment in a new futsal centre. Here they are beating New Zealand:

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Why a prosperous nation needs migration

17 February 2016 2:22PM

Australia's population reached 24 million in the very early hours of Tuesday, 16 February, according to the Australian Bureau of Statistics. In response, former Foreign Minister Bob Carr has called for the government to cut its immigration intake by as much as 50%.

Mr Carr's response reflects frustration about the growing immigrant population and the subsequent pressure on housing, transportation and other element of daily life. Of course, he is hardly alone in such concerns. Public sentiment against immigration has increased worldwide. But, while it is true that many governments struggle to keep up with infrastructure challenges and subsequent socio-economic issues, public figures should resist the temptation to paint immigration as a threat to the Australian way of life. On the contrary, a well-managed immigration program is absolutely essential to safeguarding Australian prosperity in years to come.

If Australia wants to advance as a nation, it needs more people. The average number of babies Australian women have is now less than two (last year the fertility rate hit a 10-year low of 1.8). With zero net migration, Australia's population would remain steady at around 25 million from 2045. However the composition of that population would include many more elderly people and not enough working age people to support them.

As Table 1 shows, in the last two decades, our population has increased in line with migration. Last year, 53% of total population growth was the result of immigration and 47% by natural increase (births minus deaths).

Table 1: ABS Explanatory notes can be found here.

Of the various categories that make up the migration intake, for the last two decades, the bulk has come from skilled migration rather than family and humanitarian programs (see Table 2). This reflects policy priorities as expressed by the Department of Immigration and Border Protection, which says: 'The purpose of migration is to build the economy, shape society, support the labour market and reunite family.'

Table 2

Mr Carr said Australia has 'a third-world style population growth rate'. This is not exactly true. Yes, Australia's 1.42% growth rate in 2015 was higher than the world's average of 1.13%. However, it's nothing like the world's highest, which is Niger at 4.1%. It's also lower than Israel (1.59%) and Singapore's 1.66% (both developed countries), according to the UN Population Division.

Let's get some more international perspective. The world population reached 7.3 billion in 2015. China and India are the most populated countries, each with more than one billion people. In terms of population density, the world's megacities each have a larger population than Australia. Greater Tokyo has over 37 million, Delhi has approximately 26 million, and New York has around 24 million. The map below demonstrates the density of population in South and East Asia, Western Europe and East and West Coast of the US. To outsiders, Australia looks like an immense land blessed with natural resources and good weather, and with plenty of room for more cities built either by its own labour force or by temporarily borrowing overseas labour through immigration.

However, Mr Carr has chosen to make migration an argument about national identity, saying 'we (Australians) would lose "something of ourselves” by having to "live in a unit in a high-rise tower"'. It is not exactly clear what Carr means. It could be interpreted as a view that the many already living in high-rise tower units are somehow un-Australian.

Even more puzzling was Mr Carr's insistence that reducing overall immigration was 'compatible' with Labor's plans to increase Australia's refugee intake. Reducing immigration by up to half (around 100,000) and increasing refugee intake (currently fixed at around 13,750) means Australia would have less skilled and family migrants who are working, and more refugees who are more likely to rely on government services. This seems to be at odds with his view that Australia's economy should focus on export-led growth and stop relying on an expansion in its domestic market. Surely Australia would need more workers, managers and professionals to achieve this. If they are not coming from natural increases (due to our comparatively low fertility rate) or from immigration, where are these people going to come from?

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