Burma's new election laws

by Guest Blogger - 19 March 2010 2:41PM

Andrew Selth is a Research Fellow at the Griffith Asia Institute and author of the forthcoming 'Civil-Military Relations in Burma: Portents, Predictions and Possibilities'.

The international outcry over Burma's new election laws was inevitable, and justified. More surprising was the apparent expectation on the part of some commentators that these laws would be anything other than repressive and unjust. This raises an intriguing question: was some of the public outrage expressed last week designed to put pressure on governments other than the military regime in Naypyidaw?

Given the regime's behaviour since 1988, not to mention the provisions of the 2008 constitution, it has long been clear that the proposed transition to a 'genuine multi-party discipline-flourishing democracy' in Burma is simply a legalistic device to disguise continuing military rule, behind the façade of an 'elected' parliament. This being the case, few observers seriously expected the new laws to be other than — in the words of one US official — 'a mockery of the electoral process'.

There is still some uncertainty over what the laws actually mean, but it appears that political parties cannot list any members who have criminal convictions. This means that the National League for Democracy, which won the 1990 elections by a landslide, must expel opposition leader Aung San Suu Kyi — and other political prisoners — or be declared illegal. The laws also require allegiance to the new constitution which, among other provisions, sets aside 25% of all parliamentary seats for members of the armed forces.

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Reader riposte: Raising awareness

by Sam Roggeveen - 19 March 2010 12:23PM

Jo Gilbert, a PhD candidate at the Griffith Asia Institute, responds to my post expressing scepticism about building public awareness of various foreign policy issues. I feared that my piece might be interpreted this way; more thoughts from me below Jo's email:

I read with interest your discomfort of raising public awareness when it comes to foreign policy issues. I would like to address two assumptions you make in this piece. 

The first plays into the issue of accountability. The question, 'Do we really want or need the great mass of Australians to worry about issue X?' replicates the discourse and hubris of foreign policy elites that foreign affairs are far too complicated for the public to understand and bother with. 

This assertion discounts the fact that the Australian public have a right to know what the government is doing and how it is doing it. The question undermines the obligation of the government to provide that transparency, and justifies and allows the kind of manipulation and opacity in foreign policy that we saw in the decision to go to war in Iraq.  

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The Myer Foundation Melanesia Program

LNG for PNG: Only the beginning

by Jenny Hayward-Jones - 19 March 2010 11:18AM

Papua New Guinea has been obsessed for the last year with the promise of unprecedented revenues from Exxon Mobil's US$15 billion investment in a liquefied natural gas project.

Exxon Mobil announced financial closure of the project last week, meaning the project will now proceed in full.

PNG is hardly new to the resources business but the size and scale of the LNG project dwarfs any previous investment in the country. The announcement was welcome news for Prime Minister Somare, who celebrated his 42 years in Parliament this week with some chocolate cake.

The PNG Government has been so focused on finalising the deal with Exxon Mobil over the last year that little high-level thinking has gone into how the Government will meet the expectations of population to turn windfall revenues into better services and higher living standards. The early signals of the challenges ahead are certainly rather daunting.

Serious incidences of tribal violence in early 2010 in the Southern Highlands and in villages near Port Moresby have been linked to disputes over land ownership related to the LNG project. Port Moresby residents are reporting a significant rise in the cost of living since the arrival of Exxon Mobil in PNG. Inflation is forecast to rise to 9.5 per cent in 2010. 

It is also unclear whether the up to 7,500 promised construction jobs will be available to PNG citizens or mostly taken up by skilled foreign labourers. Previous influxes of foreign labour, particularly from China, have provoked violent reactions in PNG, so the Government will need to manage the employment expectations of its people carefully.

As Paul Barker, the Director of PNG's Institute of National Affairs has pointed out, PNG does not have a good track record with converting resources wealth into better services and infrastructure.

The PNG Government has plenty of experience and advice to draw on this time – maybe this is the one opportunity that it can use to transform the country.

Photo by Flickr user cackhanded, used under a Creative Commons license.

Friday linkage

by Sam Roggeveen - 19 March 2010 10:50AM

  • Dan Drezner says that, on China's currency, Paul Krugman is talking just like a neoconservative: 'He evinces complete disregard for existing multilateral structures, makes casual assumptions about how allies will line up behind the United States and adversaries will simply fold, and underappreciates the policy externalities...'
  • Flag of convenience?: Ousted Thai Prime Minister Thaksin Shinawatra has taken Montenegrin citizenship.
  • The mockery of Kim Jong Il that I indulged in yesterday needs to be balanced with an appreciation of the brutality of his regime. Now they've apparently executed the official in charge of their botched currency 'reform'. NK Leadership Watch says reports of an execution are being denied by some sources.
  • China Defense Blog notes that the People's Liberation Army is quietly dropping the 'People' from its name.
  • Growing Indian influence in Afghanistan alarms Pakistan.

Smartening up military writing

by James Brown - 19 March 2010 10:01AM

James Brown is a Lowy Institute intern. He has worked as an ADF officer and completed his Masters in Strategic Studies in 2009. These are his personal views.

Military officers are easily typecast as unthinking and uncritical. In Australia we have done little to bust that stereotype, having few warrior-academics in the league of General David Petraeus. Serving military officers are notably absent from public discourse on defence and national security strategy.

But recent articles in the Australian Army Journal suggest that a quiet revolution in Australia's military thinking may be underway.

The Australian Army Journal itself has been something of a revolution for the ADF. Ten years ago Australia's professional military journal seemed like little more than a clearing house for articles begrudgingly written by senior officers as part of their checklist for promotion. Coinciding with both the appointment of Peter Leahy as Chief of Army and with the increase in operational tempo of the Australian Army, the Australian Army Journal was revived in 2003 with a mandate to develop professional military debate.

Writing in the most recent edition, Lieutenant Colonel Richard King looks at critical underlying factors in the way Army officers think, speak, and more importantly write. He concludes that problems in Army's thinking culture 'result in officers expressing forceful, persuasive, but dull opinions and ideas that are given greater credibility than they deserve'.

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China, Pakistan's all-weather friend

by Dipanjan Roy Chaudhury - 19 March 2010 9:26AM

Dipanjan Roy Chaudhury, Special Correspondent for India's Mail Today, is the author of two books on India's Northeast and Kazakhstan.

China is Pakistan's all-weather friend. Despite mounting terror attacks and the presence of terror outfits in Pakistan, Beijing has immense faith in Islamabad's capabilities.

This was reiterated on 7 March by none other than Chinese Foreign Minister Yang Jiechi at a press conference in Beijing. 'China and Pakistan will continue to expand practical cooperation in various fields on the basis of equality and mutual benefit, and China will continue to support the stability, development and prosperity in Pakistan,' were Yang's exact words.

A closer look at Sino-Pak ties will underline that Yang's remarks are rooted in history. Beginning from their border settlement pact of 1963, China has emerged as Pakistan's single most trusted and enduring military ally.

China provided support in the construction of several crucial infrastructure projects including Karakoram Highway (pictured; the highest paved international road in the world, connecting China and Pakistan), ports such as Gwadar, and the nuclear programme. In 1986, Pakistan and China signed a civilian nuclear technology agreement. According to a 2001 US Department of Defence report, China has supplied Pakistan with nuclear materials and provided critical technical assistance in the construction of Pakistan's nuclear facilities.

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Why the President isn't coming

by Sam Roggeveen - 19 March 2010 8:47AM

1. Because his health care bill is in the balance:

"Obviously if the president is staying in the United States to keep lobbying, it means they're down to needing a handful more votes," he said. "So it's not a done deal."

2. Because his health care bill is a done deal:

The decision to cancel his trip may look like a sign of urgency but it's also, in the language of Washington, a sign of tremendous confidence: You don't set the President of the United States up to experience humiliation in person. It's being taken right now by people on both sides of the fight as the clearest sign yet that Nancy Pelosi has the votes.

More on China's exchange rate

by Mark Thirlwell - 18 March 2010 4:34PM

If Clinton Dines is right that a revaluation of the RMB will only benefit China, why is Beijing maintaining its undervalued exchange rate? 

After all, as Clinton rightly points out, one obvious consequence of the current policy is that China has to effectively overpay both for imports and for purchases of foreign assets. Perhaps Beijing is just being dumb. Or perhaps there are some significant economic benefits arising from its current exchange rate policy. I know which of these my money is on.

Clinton also draws attention to the high level of foreign value added in China's exports to argue that a revaluation would actually increase China's export competitiveness. Well, no, it wouldn't. What it does mean is that the impact of any given revaluation will be muted.

For example, this study by the US CBO suggests that the average domestic value added of Chinese exports to the US is probably between 35% and 55%. That means a 20% revaluation of the RMB (roughly the mid-point of the estimates of current RMB undervaluation) would only cause the average price of US imports from China to rise by roughly 7%-11%, assuming that Chinese exporters fully passed through all their costs and previous profit rates. 

Since in practice those exporters may well decide to reduce their margins to maintain market share, the increase in prices would probably be even lower, and the impact on trade flows even more subdued.

A couple of caveats. First, the studies cited by the CBO report are based on fairly old data, and it's quite possible that the domestic content of Chinese exports is now higher than these estimates suggest. Second, it's often argued that China's reluctance to revalue its exchange rate means that other Asian economies are also unwilling to allow their currencies to appreciate as much as they otherwise would. If that's right, then a RMB revaluation might also occur in conjunction with an appreciation in other regional currencies. This could increase the price of inputs to Chinese producers.

Photo by Flickr user jimmiehomeschoolmom, used under a Creative Commons license.

So you want to create awareness...

by Sam Roggeveen - 18 March 2010 3:56PM

When I read a call for 'greater public awareness', I tend to shift uncomfortably in my seat.

In different ways and on different subjects, both Hugh White and James Brown have recently called for greater public awareness of issues (in order: our relationship with Indonesia, and our defence policy) that are critical to Australia's future. And more generally, the debate thread about the Australian media's coverage of Southeast Asia has been concerned with improving public awareness.

But what specifically can be done to improve awareness of, say, Indonesia's development and what it means for Australia's place in the world? It seems to me the scope for this is quite narrow.

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Indonesia-Australia: Who's courting?

by Fergus Hanson - 18 March 2010 1:19PM

I liked this extract from Rowan Callick's piece in Monday's Australian:

Because of past prejudices, Australians have become used to viewing ourselves as the courted party in this relationship. But we must begin getting used to the reality that as the smaller nation, we have to make the running.

It struck me as a pretty good point to make about the relationship. I attended a business forum that the Indonesian President addressed last week. Australia's Trade Minister Simon Crean gave the introduction.

It was well meaning enough, but it seemed a little odd to hear him point out to the President — who has a PhD in agricultural economics — that micro economic reform was important. He attributed these reforms to Australia's success surviving the GFC (0.7% year on year GDP growth in 2009). Indonesia managed to get by with 4.0%.

The Canberra column

Deciphering presidential touchdowns

by Graeme Dobell - 18 March 2010 12:09PM

Indonesia and Australia stand equal in the number of US presidential touchdowns on their soil over the last 50 years — each has six. More on those mixed half dozens in a moment.

Popes kiss the ground when their plane lands. US Presidents lay their hands on the shoulder of the leader they meet. The Pope offers a blessing. The President sends political and diplomatic messages.

The coming Obama visit to Guam, Indonesia and Australia is somewhat curtailed but the intended messages are coming into view. Stopping in Guam is, plain and simple, a nod to the Defence Department. Going to Indonesia is an expression of Obama's own life. Mark it as a White House personal-and-policy must, building on a lot of other compelling reasons for giving Indonesia more prominence.

And Australia? Perhaps Kevin Rudd's magnetism has captured Obama during their various interactions over Afghanistan, climate change and the G20. Or, more likely, the State Department and Hillary Clinton won with an argument that was part geography and part politeness. You're going all the way to Indonesia, why snub the Australians when they are virtually next door?

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Thursday linkage

by Sam Roggeveen - 18 March 2010 11:20AM

  • Apropos of earlier posts on China's currency, here's a US Congressional Research Service report summarising the economic issues.
  • The US State Department has set up Opinion Space, a 'discussion forum designed to engage participants from around the world.' (Thanks to Jane for the link.)
  • Is China hiding its debt? (Thanks to Thomas for the link.)
  • Brookings researcher and Interpreter contributor Laurence Chandy has a new paper out on how the G-20 can help the world's poor.
  • American public broadcaster C-SPAN is putting its entire video archive — Congressional sessions, White House press briefing, committee hearings, the lot — online. Here's the 'Australia' collection.
  • Via Sullivan, a site devoted to captioning pictures of Kim-Jong-Il-looking-at-stuff:

RMB revaluation: Careful what you wish for

by Guest Blogger - 18 March 2010 9:19AM

Clinton Dines is an Australian businessman who has lived and worked in China for 31 years, until recently for 21 years as BHP Billiton’s senior in-country executive.

I'm hearing some alarming noises coming out of the US on the topic of the RMB. This goes to some of the themes I alluded to in my Changing China lecture but needs some elaboration.

Consider this: if the Chinese currency was to appreciate rapidly and materially, China's ability to compete for resources, commodities, technology and in global mergers and acquisitions would be substantially enhanced. Everything they want to buy becomes relatively cheaper for them.

On the other side of this everything-they-buy-becomes-cheaper story is that a very high proportion of the goods that China exports are processed or assembled. In other words, much of what China exports has recently been imported (by some estimates, in excess of 50% by value). The imported components which go into Chinese exports will also become cheaper by virtue of a revaluation of the RMB, thus enhancing China's export competitiveness rather than diminishing it.

There is more to add to the fact base, but against this background alone, the Western world needs to be careful what it wishes for. An RMB appreciation could well make China more export competitive and enhance its capacity to compete for commodities and assets globally. Wouldn't that be a great strategic outcome!

The tone of the global conversation regarding the RMB seems to be devoid of discussion of these facts and has few connections with reality – it's almost delusional and totally for domestic political consumption — and could be quite dangerous as a result. Is it any wonder that the pragmatic Chinese are beginning to a little snitchy about being constantly nagged about the RMB on the basis of either a lack of comprehension of the facts or a deliberate misrepresentation of them?

Either way, it must be hard for the Chinese leadership to have much respect for their Western counterparts in this debate, which is precisely the position of weakness we don’t want to be in if we aspire to have any hope of influencing the outcome.

Photo by Flickr user andreasnilsson1976, used under a Creative Commons license. 

The Myer Foundation Melanesia Program

Fiji: From disaster, an opportunity

by Jenny Hayward-Jones - 18 March 2010 8:58AM

I've written previously on the diplomatic opportunities provided by natural disasters to reduce political tensions. Fiji is again suffering from the impact of a natural disaster. Tropical Cyclone Tomas, which struck Fiji this week, was one of the worst cyclones to ever to hit the country.

Both Australia and New Zealand (as well as France) have committed military aircraft to assist with surveying damage and providing support to affected communities. Humanitarian and reconstruction assistance will follow, in response to a formal request from Suva.

While this is not the first time since the December 2006 coup that Australia and New Zealand have assisted Fiji after a natural disaster, the agreement of Fiji's Government to accept help from Australian and New Zealand military assets is a new development. Perhaps all three governments could harness this spirit of cooperation to further their trilateral engagement

A joint visit by Ministers Smith and McCully to Fiji in the next few weeks could be timed to take a look at the delivery of Australian and New Zealand cyclone relief and carry on their dialogue with Fiji's Foreign Minister Ratu Inoke Kubuabola. 

A visit to affected communities and meetings with disaster management authorities and humanitarian agencies would send a tangible signal to the people of Fiji that its neighbours are committed to the country, despite political differences. It would also be an appropriate gesture from Australia in its role as chair of the Pacific Islands Forum.

Photo courtesy of the Department of Defence.

A wind change in the global economy

by Mark Thirlwell - 17 March 2010 1:47PM

I've posted a few times about how the world economy is changing in response to the rise of new economic powers and in the aftermath of the GFC. 

One nice bit of evidence for these shifts is the radical rethinking that appears to have been underway at the IMF over recent months. In quick succession, the Fund has shown signs of changing its position on capital controls, on exchange rates, and on the appropriate target rate of inflation. Steve Grenville has had fun tracking these changes here on The Interpreter.

Now, one obvious interpretation of what's going on is that the Fund has simply learned new lessons from the GFC and other recent economic developments and is responding accordingly. And that's surely most of the story. 

But (and call me cynical if you like), I suspect there might be just a bit more to it than that. I think the IMF is also implicitly recognising the changing balance of economic and hence political power in the world. With new and important players such as China holding very different views on exchange rate policy and capital controls than the previous Fund orthodoxy, it makes sense for the Fund to trim its sails to the new prevailing winds. 

After all, the Fund has repeatedly failed to convince Beijing on exchange rate policy, for example. So perhaps there's an element of 'if you can't beat them, join them' here as well.

What about the mooted increase in inflation targets? Again, this is basically a response to problems faced by policymakers in the US and UK, where monetary policy has run into the zero bound. Raising the inflation target would reduce the frequency with which that happens. 

Put my cynical hat back on for a moment, however, and I can easily come up with an argument as to why this too could be seen as an indication of changing political as well as economic realities. The big increase in government debt stocks in the developed world make a somewhat higher level of inflation look quite attractive to several governments (see for example this piece by John Lanchester on the British economy). 

But a major obstacle to higher inflation in some of these countries is those formal inflation targets. So from the point of view of the politicians, it might be handy if someone could come up with a credible reason for a higher inflation target that didn't spook the bond markets...

Photo by Flickr user batintherain, used under a Creative Commons license.

South Pacific: Votes in them thar atolls

by Rodger Shanahan - 17 March 2010 11:59AM

If it's not the Iranians seeking friends in the Pacific then it's the Israelis, and if it's not the Israelis it's the...Emiratis. The UAE's recently announced 'Partnership in the Pacific' is a US$50 million aid program administered by the Abu Dhabi Fund for Development, for use solely in the region.

In common with the motives of its regional neighbours, this Emirati largesse is in pursuit of the UAE's own foreign policy goals. But at least it's about something other than UN votes. In the UAE's case, the Partnership in the Pacific program was all about getting the headquarters of the International Renewable Energy Agency to be housed in Abu Dhabi. Indeed, the Pacific states formed a critical element of the lobbying, as this breathless account from Dubai's own Khaleej Times shows. 

At the current rate of outside interest in the region, the University of the South Pacific may be well advised to add Arabic, Farsi and Hebrew classes to its Linguistics and Language Division

The stories we're missing in Southeast Asia

by Geraldine Doogue - 17 March 2010 11:27AM

This post is part of a debate - click here to see how this debate started and developed.

Geraldine Doogue is host of ABC Radio National's Saturday Extra program.

In the debate over how to boost comprehensive coverage of modern Southeast Asia, including Indonesia, I favour a new journalistic emphasis: seeking out shared dilemmas.

Instead of the tried-and-true policy of highlighting key differences, why not encourage more curiosity around common middle-class vexations? There's plenty to work with and fresh angles are going begging.

Of course we would need to lose our sentimental attachment to the 'exotic East' stereotype, hardly something to grieve over. Anyway, it could linger in the background to be legitimately mined, given the significant differences in the scale of challenge facing the two different communities. 

But concentrating on similar problems, especially among urban dwellers, would surely lead to a much truer representation of contemporary lives. This could assist a better national conversation that would ultimately buttress sensible inter-country dialogue.

In a wide range of areas — the rising incidence of type 2 diabetes, decreasing physical exercise, dramatically rising rates of obesity, poor work-life balance, quality of parliamentarians — citizens in Australia and the region can easily swap notes. The modern middle-class predicament of encouraging optimal development of children amid an ICT revolution and of a broad search for meaning amid brittle traditions is very much a shared dilemma, as any cursory conversation will reveal.

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Thomas Cromwell vs UFOs

by Mark Thirlwell - 17 March 2010 10:35AM

A bit of very long aircraft travel recently gave me the chance, like Sam, to try out the much-recommended Wolf Hall. Not surprisingly, given the recommendations, I did quite enjoy it, as lengthy historical novels go. 

It is a bloody long lengthy historical novel, though. And I have to confess that I'm sort of with Kim Stanley Robinson here: I had much more fun with Yellow Blue Tibia. The latter has interesting things to say about politics, including some musings on late Soviet-era stagnation and paranoia, the uses of manufactured external threats, and the links between communism, UFOs and science fiction.

Photo by Flickr user yhancik, used under a Creative Commons license.

Japan-Australia: Signs of damage

by Malcolm Cook - 17 March 2010 9:41AM

Since the beginning of the 2007 election campaign in Australia, I have been worried about Japan-Australia relations.

I thought long-standing differences between Tokyo and Canberra over Japanese whaling in the Southern Ocean could come to dominate the public face of the relationship. I also worried that the actions of the new Rudd Government, and particularly the Prime Minister himself, would deepen Japanese concerns that Canberra would focus less on Japan and more on its neighbour and rival, the People's Republic of China.

The coming to power of the Hatoyama Government added to these concerns. It seems clear to me that under Koizumi, Abe and Aso, Australia's strategic importance to Japan increased due to these leaders' world views, world views that the senior people in the Hatoyama Government clearly do not share.

It is boilerplate for governments of countries with a history of strong relations to dismiss such worries and claim that disputes over peripheral issues like whaling do not harm the basis of the bilateral relationship regardless of how much they are played up for retail political gain by one side or the other. Such issues are presented as the proverbial storm in a tea cup (handle or no handle).

Four developments in the bilateral relationship since late 2007, affecting four important and different bases of relations, suggest the boilerplate in this case is wrong:

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Fraser and the Falklands

by Margaret Simons - 17 March 2010 9:10AM

Margaret Simons is co-author of Malcolm Fraser: The Political Memoirs. Below, she responds to my post from 3 March, which questioned an anecdote Mr Fraser related in an interview, about the influence he had on the Reagan Administration's policy on the Falklands War. 

Fraser claimed that, during a pre-dinner meeting in Canberra, he convinced Vice-President Bush that the US should back Britain. According to Fraser, Bush then excused himself so that he could phone Washington, to address a meeting of the National Security Council (NSC). He got NSC's agreement to back the UK, despite one faction, led by UN Ambassador Jeane Kirkpatrick, wanting to invoke the Monroe Doctrine. Bush then returned to dinner to tell Fraser that 'if you hadn’t keyed yourself into that meeting, Jeane would have won that argument in ten minutes.'

When Fraser first told me about his conversation with Bush Snr, I was sceptical, not least because the timing seemed wrong. When I told Fraser that his story would mean that the NSC would have met in the early hours of the morning, he held firm to his memory, but we agreed I should do all possible checking before we used the anecdote in the book.

First, I checked that Bush was indeed in Canberra on the day in question. He was. He addressed the National Press Club on 30 April. Fraser's diary reveals that he did have dinner with him that night; 30 April was also the day US Secretary of State Alexander Haig held a media conference after an 'emergency meeting' (The Age) of the NSC. This very basic confluence of dates was itself some corroboration of Fraser's memory.

Now, I know that in his interview with Mark Colvin, Fraser said that the conversation with Bush took place at around 7pm – which would make it 5am in Washington. When he first mentioned it to me, he did not put a precise hour on the conversation, but recalled that Bush's making the call to the NSC disrupted the dinner, and also that Bush was out of the room making the phone call for about an hour and a half.

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Swamped by data

by Sam Roggeveen - 16 March 2010 2:40PM

From The Economist:

The amount of digital information increases tenfold every five years...A vast amount of that information is shared. By 2013 the amount of traffic flowing over the internet annually will reach 667 exabytes, according to Cisco, a maker of communications gear. And the quantity of data continues to grow faster than the ability of the network to carry it all.

New media analyst Clay Shirky has pointed out that 'information overload' has been a problem almost since the invention of the printing press, and clearly the internet has made the problem massively worse. But there's really no solving this problem, since we probably wouldn't like the measures necessary to stop the flow of information anyway. The best we can do is to develop new tools to cope with the amount of data we're blasted with. 

As Shirky says: 'It's not information overload. It's filter failure'.

Photo by Flickr user kmevans, used under a Creative Commons license.

The Myer Foundation Melanesia Program

SBY in PNG: Making up for lost time

by Jenny Hayward-Jones - 16 March 2010 2:05PM

Indonesian President Susilo Bambang Yudhoyono was busy improving bilateral relations with more than one neighbour last week. Incredibly, for two countries that share an island and a difficult border, President Yudhoyono was the first Indonesian President to visit PNG since President Soeharto in 1979. 

Making up for lost time, the two governments signed a Defence Cooperation Agreement, a Double Taxation Agreement and letters of exchange on agriculture cooperation. They also agreed to open an official border crossing at Sokau-Wutung. And, according to media reports in PNG, Indonesia has agreed to train PNG police to prevent transnational terrorism, money laundering and people smuggling.

PNG's Post Courier newspaper has suggested that Indonesia's improved relations with Australia paves the way for new forms of trilateral cooperation between PNG, Australia and Indonesia. Whether or not this eventuates, PNG stands to benefit from a more mature bilateral relationship with Indonesia. The focus on economic as well as security cooperation evident in President Yudhoyono's visit is a positive development for the Pacific Islands region's most populous country.

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Reader ripostes: SBY and JSF

by Sam Roggeveen - 16 March 2010 1:04PM

Alison Broinowski writes:

It is a welcome sign of how things have changed, as Hugh White says, that a President of Indonesia even visits Australia, as well as delivering a frank and finely honed speech to the Parliament.

Dr Susilo Bambang Yudhoyono surveyed the history of the relationship and remarked on the deaths of Australians in the Marriott bombing and the Garuda crash, yet he didn't mention the murders either of six Australian journalists in 1975 or of 88 Australians in the Bali bombing in 2002.

Instead, he observed that many Indonesians believe Australia 'harbours ill intention toward Indonesia', and at the same time expressed surprise that many Australians are reciprocally suspicious about Indonesia. I have always wondered what Indonesians' response would have been if comparable numbers of their proud people had been killed in Australia. I doubt that Australian leaders would have been allowed to forget it.

And Christopher Skinner mediates on the Roggeveen-Gottliebsen imbroglio:

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China's currency: The limits of patience

by Mark Thirlwell - 16 March 2010 11:48AM

As predicted, the argument over the future of China's exchange rate policy is heating up. The US Congress has told the Obama Administration that it wants the US Treasury to designate China a 'currency manipulator'. Leading voices in the US are calling for a turn to 'policy hardball' and for Washington to increase the pressure on Beijing. For its part, Beijing argues that US protests over the RMB amount to little more than protectionism. A few thoughts:

1. It is blindingly obvious that China is indeed manipulating its currency. China has been indulging in massive, one-way intervention in the foreign exchange market, and has been doing so for some time. Indeed, with foreign exchange reserves of more than US$2.4 trillion, it's pretty certain that this is the single biggest FX intervention in history.

2. The level of China's exchange rate matters. Economists rightly point out that it's the real exchange rate rather than the nominal exchange rate that is more important. But changes in the nominal exchange rate are a good way to get changes in the real rate. More generally, arguments that suggest that the level of China's exchange rate doesn't really matter are bizarre: they are effectively saying that one of the most important prices in the economy is irrelevant – something which of course Beijing itself does not believe for one second.

3. While we know that China's exchange rate is undervalued, we don't know by how much. There are a wide range of estimates available, and depending on which one you pick, you get very different estimates of the degree of undervaluation, ranging from approaching 40% undervaluation to almost no undervaluation at all. 

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Security theatre at the Harbour Bridge

by Sam Roggeveen - 16 March 2010 11:28AM

Top Gear host Jeremy Clarkson has mocked the anti-terrorist security measures he observed while walking along the Sydney Harbour Bridge, which took the form of one weedy-looking security guard:

Bypassing security guards was as simple as putting on a broad smile, (Clarkson) said. "Frighteningly, though, I suspect that this super-nice approach would also work for terrorists in Sydney. If they just walk past the weedy-looking chap with a smile and a couple of pleasantries, he'll still be smiling right back when the entire bridge comes crashing down on his head."

It's not an original observation. The Chaser team proved Clarkson right in 2007:

Tuesday linkage

by Sam Roggeveen - 16 March 2010 10:42AM

  • China wants to build a high-speed rail network throughout Asia and to Europe.
  • The International Crisis Group proposes a roadmap to end the separatist conflict in West Papua.
  • Capital idea: 'In countries where the largest city is also the capital, it’s easier for mass movements to bring about populist reforms.'
  • Denmark bailing on the JSF in favour of the Super Hornet?
  • Computing is becoming a tradable commodity, much like electricity. (H/t Global Dashboard.)
  • Crowdsourcing in aid and development: the NY Times reports on Ushahidi, a web platform that allows people to report anonymously via their mobile phone when they witness violence, corruption or a disaster.
  • I liked this comment on the rhetoric of resilience:

Resilience implies action, as in “building resilience”. To be resilient suggests an inner toughness: the strength, as its etymology tells us, to “jump back” to a previous state. Sustainability, by contrast, suggests a defensive posture: a desire to stay the same, to resist change, without the attractive ability to push back against change and win out. Resilience also connotes a measure of risk, while sustainability suggests that systems are set: they simply need to be cared for and so carried forward.

I hereby unendorse Robert Gottliebsen

by Sam Roggeveen - 15 March 2010 6:16PM

Readers, I have failed.

My job is to communicate ideas and arguments, yet my attempt to question Robert Gottliebsen's argument that Australia faces a crisis in its air defence capability has led Gottliebsen to believe that I actually 'endorsed' his views.

Perhaps my choice of words was poor. My headline, for instance ('Relax, our air defences are fine'), fails to state clearly and unambiguously that I believe we can relax because our air defences are fine. I see that now. 

I also said Gottliebsen's argument about Indonesian air power ignored important facts, that his concern about protecting Australian cities from air attack was a red herring, and that his proposed solution to our so-called crisis — to lobby Washington for the F-22 — was high risk.

But just to clear up any lingering ambiguity, let me state for the record that I do not endorse Mr Gottliebsen's views about about Australia's air defences.

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US must make equal time for Asia

by Geoff Miller - 15 March 2010 3:50PM

Geoff Miller is the former Director-General of the Office of National Assessments.

Hugh White's thoughtful response to my questions about US policies in Asia raises many intriguing issues.

He sees the choice, or dichotomy, as between US primacy and a new regional order, saying that the US should start to treat Asia's major powers, including China, as equals. But that assumes the US doesn't do that now. Whether that is true or not depends in part on what issues are being looked at. For example, China is certainly treated as an equal, or more, by the US in financial matters. And the Obama Administration has taken pains to show, including by visits at the highest level, that it takes its relationships with the major Asian powers very seriously.

'Equality', of course, can have differing connotations. It is one thing for a state to treat another state properly as its sovereign equal. But of course all states are not equal. Militarily the US is a superpower. Japan, on the other hand, while the second or third largest economy in the world, is limited in its security role, and in that regard is certainly not the US's equal.

Hugh says 'an Asian Concert could only work if Japan sat at the table not as a US client but as an independent major power in its own right'. Japan does sit at various tables as an independent major power. The reasons for Japan's limited security role are essentially self-imposed, partly because much of its electorate has become so attached to its post-World War II constitution, partly because Japanese ministers and officials have become used to looking to the US for a steer on security matters, and partly, of course, because of Japan's nuclear allergy. 

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SBY's speech to parliament

by Hugh White - 15 March 2010 1:20PM

This post is part of a debate - click here to see how this debate started and developed.

President Yudhoyono's speech to Parliament (p.29) last week is a remarkable document that makes uneasy reading. 

Rudd welcomed SBY with a routine speech of mutual self-congratulation for having such a splendid relationship (p.27 of the above document). SBY responded with a sophisticated, frank and at times stern analysis of a relationship which is still very vulnerable to mutual mistrust, and still falls far short of its potential. The contrast was stark. 'We should not be complacent', SBY said. 'The worst step we can take is to take this partnership for granted.' It almost sounded as if he was reprimanding the Prime Minister.

The heart of SBY's speech was a warning about the dangers posed by the perceptions that Indonesians and Australians have of one another. He could not have been more blunt:

I was taken aback when I learned that in a recent Lowy Institute survey 54 per cent of Australian respondents doubted that Indonesia would act responsibly in its international relations...there are Australians who still see Indonesia as an authoritarian country, as a military dictatorship, as a hotbed of Islamic extremism or even as an expansionist power.

He acknowledged that Indonesians had distorted views of Australia too:

...in Indonesia there are people who remain afflicted with Australiaphobia—those who believe that the notion of White Australia still persists, that Australia harbours ill intention toward Indonesia and is either sympathetic to or supports separatist elements in our country.

But tellingly, the way his speech developed suggested he was not sure Indonesian suspicions of Australia's attitudes towards separatism were entirely unfounded. Why else would he have thought it necessary to say this?:

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Monday security linkage

by Rory Medcalf - 15 March 2010 10:46AM

 

  • The recent US Quadrennial Defense Review (QDR) emphasised the need for a new 'AirSea Battle' strategy to deal with growing Chinese and Iranian maritime anti-access capabilities. Andrew Krepinevich explains the why in this new paper. As for the how, you'll need to wait for the sequel.
  • Still on the QDR (which went largely unreported in the Australian media) here is one aspect that drew surprisingly little public attention: a fairly blunt commitment to developing capabilities and plans for intervening in failing states in possession of weapons of mass destruction. As it says on page 35, the US military will need to be able to 'locate and secure WMD and WMD components' in situations where 'responsible state control' is at risk.  Names are diplomatically avoided, but this basically means potential intervention in Pakistan and North Korea. The good news is that the US military recognises the need to prepare for such scenarios, and is training for them. The bad news is that such scenarios are not fanciful.
  • Australia and other US partners rightly worry about the growing per-unit cost of the F-35 Joint Strike Fighter. But what if India became an additional — and presumably big — buyer? It is certainly not being ruled out.
  • Also on India, the recent Bangalore Air Show (pictured) was the venue for arms manufacturers to show off their wares to the Indian military. And Russian Prime Minister Putin's visit has also led to new arms deals.
  • Still in India: in the lead-up to the October 2010 Commonwealth Games in New Delhi, the mass mobilization of paramilitaries and police to guard the Hockey World Cup and cricket's Indian Premier League suggests that India really can protect major sporting events. Whether tourists as well as terrorists will be deterred by this crude style of security — with everything from cameras to coins to water bottles being confiscated at the door — is another matter.

Photo by Flickr user kshgarg, used under a Creative Commons license.

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