Lowy Institute

There isn't much detail on the public record about the agreements that govern the presence of US forces in Australia, but it seems that under the Force Posture Agreement, the presence of these forces is subject to bilateral consultation conducted 'in accordance with Australia's policy of Full Knowledge and Concurrence'.

This policy was conceived to ensure that Australia knows everything happening at places like Pine Gap. Former Defence Minister Stephen Smith described Full Knowledge and Concurrence as 'an expression of sovereignty, of Australia's fundamental right to know what activities foreign Governments conduct in, through or from Australian territory'. Interestingly, Smith stated that 'Concurrence means Australia approves the presence of a capability or function in Australia in support of its mutually agreed goals. Concurrence does not mean that Australia approves every activity or tasking undertaken'.

Now that this policy is being used to cover not just intelligence-gathering but military operations that might be launched from Australian territory, this careful definition of 'concurrence' will become problematic. The recent controversy over Pentagon official David Shear's comments (quickly retracted) that the US was about to place B-1 strategic bombers on Australian soil, and that the US might use these aircraft in shows of force in the disputed South China Sea, illustrates the potency of the issue.

Much of Australia's future usefulness as an American ally will depend on what real estate we provide and what conditions are attached. It will be impossible to claim that Canberra's concurrence to a US operation does not constitute approval.

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In the future, if B-1 bombers are stationed in Australia, and if they conduct freedom of navigation exercises over the South China Sea, then this will occur only because Australia has concurred in US forces using Australian bases for that purpose. It could be said, just as accurately, that the operation occurred only because Australia chose to not veto it.

In such circumstances, it will be harder to say that the alliance is 'not directed at any one country'.  Because US forces could only operate from Australian soil with our concurrence, we would essentially be enabling the operation. Our alliance is not 'directed against China', as some have claimed, but if such an operation were to occur it would definitely be directed against Chinese activities. Would the finer points of this distinction matter to the leadership in Beijing? 

It is not clear where the real point of decision lies — whether it is in allowing the US to station B-1 bombers in Australia, or whether an additional green light (ie. specific approval for US aircraft to conduct freedom of navigation operations over the South China Sea) would be required. One agreement could cover both the deployment and operation of USAF aircraft, or separate agreements could be negotiated. As this recent report suggests, when David Shear misspoke earlier this month, it's possible he was talking about some form of agreement nearing completion.

Given that Australian politicians have explained how Full Knowledge and Concurrence works for the intelligence facilities, perhaps they could also explain how this policy applies to the military forces that are already here, and those yet to arrive.

None of this is to argue for or against Australia supporting American actions in the South China Sea. But the factors assessed above are critically important to how the alliance will operate in the future. It's hard to be sure with so little information publicly available, but it seems that whether B-1s are 'based', 'stationed' or 'deployed' to Australia is less important than what missions Canberra chooses to approve (or veto).

If America ever wants to use Australian bases in an effort to enforce red lines in the South China Sea, they'll expect a green light from Canberra. No matter what traffic signal we choose, there will be consequences.

Photo by Flickr user AereiMilitari.org.

  • As the boat crisis in Southeast Asia appears to be coming to a resolution, hundreds of bodies were found in 30 mass graves in Malaysia
  • The Philippines has the fastest-growing HIV epidemic in the world, according to the WHO. (Thanks, Malcolm.)
  • US Deputy Secretary of State Danny Russel had a 'full plate' during his Southeast Asia visit last week. His discussions included 'very direct and very candid conversations about the root causes of the migration' and talks on the South China Sea. He also 'dug deeply into TPP issues' (see statement here).
  • Ernest Bower wrote on Ash Carter and the US Economic Strategy in Asia. And a Scene Setter for Carter on this week's Shangri-La Dialogue.
  • As part of IMDEX, RSIS's Richard Bitzinger looked at proxy naval forces in the South China Sea, the role of coast guards, and explored Southeast Asia's naval buildup.
  • A population control bill, which many commentators have rightly noted is aimed to restrict birth control of Myanmar Muslims, was passed in Myanmar's parliament. The US Government noted that the bill, tabled to 'protect race and religion', could provide a legal basis for discrimination. Firebrand Buddhist extremist monk Wirathu said last week the bill could 'stop the Bengalis' (referring to the Rohingya Muslims).
  • ISIS in Malaysia is readying to step up its operations in the country through  kidnapping and robbery, said the Kuala Lumpur police chief this week. 
  • The General Secretary of the Communist Party of Vietnam will visit Washington later this month or early June, a first in the relations between the former adversaries.
  •  The New Yorker looked at why the popular musical The King and I was banned in Thailand. (Thanks, Sam.)
  • This installation is part of Australia's gift to Singapore to celebrate the island nation's 50th anniversary.


Courtesy of Marginal Revolution, a short video on the results of an experiment in India in which schoolgirls under 14 were given bikes. Did it lead to higher enrollments?

Another big factor in girls' school attendance in India is sanitation. This Mahatma Gandhi Centre booklet claims 24% of girls drop out of school each year due to lack of toilets. It's hard to see the data backing up this specific claim, though clearly a lack of school toilets is a big problem in India, and it affects girls disproportionately.


Thomas Piketty's Capital in the Twenty-first Century put inequality centre-stage in the economic debate. But the topic has been around for a long while. Brookings has recently republished Arthur Okun's 40 year-old Equality and Efficiency: The Big Trade-off, The launch was an opportunity to bring it up to date.

Okun set out the arguments which became the mainstream among economists for the next three decades, up until the global financial crisis of 2008. The key idea was that there was an trade-off between growth and equity. If you imposed high marginal tax rates on entrepreneurs, or set the minimum wage too high, or tried to fix inequality using the 'leaky bucket' of government tax-and-redistribute policies, you would pay a substantial price in terms of lower growth. In poorer countries, some would get rich while others lagged behind, but too much concern about how the national-income pie was sliced up would result in a smaller pie.

The failure of socialism, notably the collapse of the USSR, lent support to these views.

What's changed in four decades? First and foremost, the equal distribution of income in many economies, notably America, has become much worse. 40 years ago the consensus opinion was that income distribution was fairly constant, and rises in living standards had to come from growth rather than redistribution.

That's not how it has turned out.

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In America, the share of income received by the top 1% has gone from 8% in the 1970s to 20% today. It gets worse right at the top of the pyramid: the top 0.01% got 1% of the income while today they get 6%. As one analyst has said:

Okun pondered a trade-off between equality and efficiency just when those at the top of the wealth and income ladder began hauling off all the gains of economic growth.... When Okun was writing, the typical CEO earned about 25 times the typical worker. How could he know that today, they earn nearly 300 times the typical worker?

The wealth distribution has shifted even more than the income distribution:

Okun writes that the richest one percent of American families have about a third of all the wealth, and the bottom half hold about five percent.... [Today] the richest one percent have over 40 percent of the wealth, and the bottom half have only one percent.

This unpalatable reality is not all that's changed since Okun wrote. We have taken a more comprehensive view about what drives growth. There is now greater recognition that if substantial sections of the population are poorly equipped for the modern economy – either through poor education or constraints on social mobility – then the outcome will be low growth. It's all very well to make sure the top entrepreneurs have incentives, but when those lower in the distribution have no clear path for advancement, their incentives are damaged and growth suffers.

Others have been more pointed – and more political – in their criticism of how the rich got to be at the top of the pile. The free-market, regulation-reducing, tax-lowering policies begun in the Thatcher/Reagan period have boosted inequality more than growth. The economic elite have turned rent-seeking into an art form, exploiting the many distortions and monopolies in the economy. They have buttressed their favoured position by manipulating the political process. Their share of national income reflects their power rather than their productivity.

As if on cue, the OECD has produced another fascinating study contributing to the inequality debate: Why Less Inequality Benefits All (try the OECD's online survey to see how well you know the equality position in your own country). This focuses on the growth-constraining effects of leaving the poorest 40% of the population without adequate opportunities to realise their potential. Greater participation in the workforce by women has substantially helped income distribution, but there is a long way to go. Freeing up the labour market through more 'non-standard' jobs (ie. not a full-time permanent job) has created opportunities but also inequalities. 

The power of the OECD report is its international comparisons. When senior officials say we need to lower tax rates to foster growth, the refutation is in the counter-examples overseas.

What to do? We should accept that Okun identified issues which are still relevant today: 

  • Confiscatory rates of tax will dampen entrepreneurship and encourage capital and skills to move to lower-taxed jurisdictions. But the Scandinavian countries have demonstrated that it is possible to have high taxes and good growth. As a result, they lead all the indices of equality set out by the OECD.
  • It is possible to seriously damage an economy with excessive minimum wages, as we did in Australia in the 1970s. But Australia's current minimum wage is around twice America's, and so far this has been consistent with good growth and greater equality. Larry Summers notes that the US minimum wage in real terms is lower now than when Okun wrote his book.
  • While entrepreneurship needs to be fostered, it's hard to argue that the rewards needs to be as big (or as widely spread) as they have become. Salaries for top business people and financiers are more a reflection of relative pecking-order rather than necessary to reward talent. Again, Scandinavia shows the way.
  • The leaky bucket of government redistribution can be addressed intelligently, through focusing on social mobility (especially through education) and encouraging labour-market participation.

As well, there are clearly many opportunities to help both growth and equality at the same time. Better public transport is one example. While Piketty (and also Anthony B Atkinson) sound unworldly in their advocacy of 'tax-and-redistribute' policies, addressing tax evasion should not remain forever in the policy-makers' 'too hard' basket.

So much for the gloomy story of income distribution within countries. In the emerging economies, where income distribution is typically bad, the overall rate of growth has lifted a billion people out of abject poverty, with the process of convergence still leaving room for much more reduction in income inequalities between countries.


What should we make of last week's CNN report from on board a US Navy Poseidon P-8 surveillance aircraft, verbally challenged by the Chinese navy ('Leave immediately...you go') as it monitored China's reclamation activities in the Spratly Islands?

CNN's video footage of China's reclamation activities in the Spratlys underscores the game-changing potential of these artificial islands. The scale and speed of construction — a panning shot reveals a runway control tower and other structures already looming above Fiery Cross Reef — is daunting. A flotilla of naval and civilian ships criss-crosses busily as the dredgers operate around the clock. For sheer effect, static imagery falls short by comparison.

More dramatically, the report revealed that eight separate radio challenges were delivered by the Chinese Navy over the course of the flight, warning the crew that they were entering a 'military alert zone' and ordering the aircraft to leave. It seems clear from the P-8 crew's reaction that this was not the first time that approaching aircraft have received such warnings. Despite China's official claims that the reclamation projects are for search and rescue and hosting other civil infrastructure, this footage will strengthen the impression that the PLA is behind the reclamation projects – and effectively calling the shots in the South China Sea.

This was also a case of the US Government delivering its messages via CNN.

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Granting media unprecedented access to operational imagery and audio transcripts from the P-8 points to an intensified policy effort to wrest control over a public narrative in the South China Sea that Washington increasingly fears is slipping out of its grasp as China seizes the initiative and foreign policy attention is distracted by crises elsewhere.

More immediately, it suggests US officials are preparing the American public for a tougher line in the South China Sea. Indeed, the CNN report predicted that US warships as well as aircraft may soon be involved in asserting freedom of navigation in the South China Sea, a course of action that reflects the uncompromising mood in Washington towards China.

Putting America's surveillance of China's land reclamation in the South China Sea into the public realm chimes with a broader US emphasis on promoting transparency in the South China Sea, a concept that plays to US advantages in intelligence, surveillance and reconnaissance. Surveillance platforms are generally considered less provocative to deploy, although the P-8 is primarily a submarine hunter and close-in US intelligence-gathering missions by unarmed US vessels and aircraft have long been a bone of contention between Washington and Beijing, reflected in their polar opposite interpretations of international law on this point. (Longer term, the prospect remains for China's navy to adopt a more congruent position on freedom of navigation as it acquires global interests.)

Past US-China confrontations on this narrowly defined issue of freedom of navigation and overflight have mostly occurred close to Hainan island, the site of China's primary naval base in the South China Sea. Last year the US and China agreed an MoU on military encounters in the wake of what US officials described as a 'dangerous, unsafe and unprofessional' intercept by a Chinese fighter jet of a US Navy P-8.

China doesn't yet have the capability to perform aerial intercepts over the Spratlys, much less to enforce a South China Sea-wide ADIZ. Yet if Beijing continues to build up its military facilities in the Spratlys, including possibly with one or more operational airstrips by 2016, the inevitable consequence will be the spread of Sino-US military competition across the South China Sea at large. US Navy ships are already regularly shadowed there by PLA Navy counterparts.

While in the final analysis small islands have inherent defensive weaknesses, US concerns that China's reclamation projects will tilt the psychological balance vis-à-vis rival claimants decisively in Beijing's favour have led US policymakers to reconsider their options. This appears likely to play out in a more muscular and assertive US approach on freedom of navigation and overflight in the weeks and months ahead.


ISIS fighters are one step closer to realising their prophecy, with two major conquests in a week: the strategic centres of Ramadi in Iraq's west and Palmyra in Syria's centre.

The sudden advance of ISIS militants in Palmyra saw the army there quickly routed and international concern for the safety of the precious Roman ruins mounted. The militants have previously destroyed sites in Iraq's Mosul and Tikrit they believe to be heretical. UNESCO and Syrian cultural officials issued an alarm over the protection of the ancient ruins as ISIS advanced in Palmyra. On Thursday, ISIS began posting pictures from among the ruins.

Meanwhile, civilians in the city bemoaned the lack of international attention on their plight. Once again, the Syrian people have been left to fend for themselves, caught between bloodthirsty militants of ISIS and the murderous regime of Bashar Assad.

The Free Syrian Army was nowhere to be seen, and the Syrian army – in what has become an increasingly familiar strategy – didn't put up much of a fight. After ISIS militants first moved into the city on 12 May, they quickly progressed from the north and the east, moving to the centre of town bythe 14th. The Homs governor, Talal Barazi, said reinforcements were on the way and that the situation was 'under control'. Regime planes responded with air strikes on parts of the city, terrifying civilian residents, but by last Wednesday ISIS had taken full control.

Residents told me via Skype and phone that senior army officials fled the city, leaving younger, mostly Sunni recruits from the city to the fate of ISIS. Many young men have been drafted in to the Syrian army against their will, and as forces have depleted after years of war, the recruitment age has expanded, while exemptions to service have decreased.

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ISIS militants have a well established pattern of exacting revenge on those local populations they see as sympathetic to apostate regimes. In Palmyra, activist groups reported that dozens of soldiers were beheaded. One resident told me ISIS issued a statement over the loudspeaker from the mosque, instructing residents to give up any army soldiers. 'We are afraid of revenge from both sides,' said the resident, who asked not be named. He said residents were terrified of government airstrikes, barrel bombs and chlorine attacks favoured by the regime against opposition rebels.

It's not hard to see the attraction of Palmyra for ISIS. The central oasis operates as a strategic gateway to the west of the country, and links areas under ISIS control to the east with the Iraqi border. It's also a region full of gas fields, which have proved an important source of funding for the group. Assad has used Palmyra and the surrounding Tadmur region as military base, servicing the armed forces to the north and east. Among the military prizes to be claimed by ISIS are a number of munitions stores and two minor airports.

But Palmyra,  the site of the country's most treasured antiquities, also holds a sinister and important place in the county's national identity, as the site of the notorious Tadmur Prison. Thousands who were locked up in the early uprising against Bashar Assad's rule are known to have languished there for years without trial. Palmyra, therefore, has become an important symbol of the opposition movement. ISIS seized the prison on Thursday and while there is still no word on the fate of the inmates, freeing them could serve as valuable propaganda for the group.

It is difficult to understand why the Government appeared to give Palmyra up so easily. One analysis suggested by residents is that the regime, now stretched thin across all provinces in the country, is only willing to battle for territory across the strategic corridor linking Assad's Alawite heartland of Lattakia and Tartous, to Homs, and the capital Damascus, along the Lebanese border, in a sign of the further de facto partitioning of the country.

Another analysis suggested by residents says Assad stands to gain from allowing the site to fall to ISIS; the threat of the loss of the symbolic ruins could prompt many in the West to embrace Assad as 'the devil we know'.

The US is unlikely to be drawn in to air strikes against ISIS positions in Palmyra. The US strategy has proven woefully ineffective in stemming ISIS expansion in areas where there is no viable partner force on the ground.

For all the international handwringing over the fate of the ruins in Palmyra, the up to 200,000 residents there can hope for little help from the international community. Abandoned and massacred by their government, we should not be surprised when they embrace ISIS as a Sunni resistance force, the only one capable of providing any administration.

Photo by Flickr user Ed Brambley.


Some see recent trips by US officials to Russia — including a meeting between Secretary of State John Kerry and Russian President Vladimir Putin at Russia's Black Sea resort of Sochi — as signs of a budding détente. Yet the north-western corner of the Black Sea remains the scene of a three-sided struggle  between Russia, the US and EU.

With a party of other analysts, last week I spent a day in meetings with representatives from Romania's Foreign Ministry and Senate Foreign Affairs Committee. That Crimea is only 300km from the Romanian coast is a refrain. They see Romania as a front-line state.

A rendering of the US Aegis Ashore Missile Complex in Deveselu, Romania (Flickr/US Army Engineers)

'Russia is a European reality. Ukraine is only a piece in a bigger puzzle', declared one official. 'But we have our guarantee', another concluded, a matter-of-fact reference to NATO's Article Five. 'It is our right as a sovereign state to defend our territory. Every state has the right to choose its way of life.'

Yet Romanians seem to have given up trying to defend that way of life themselves.

According to a defence analyst, of the Romanian navy's three frigates, only one is sea-worthy. The other two, retired Royal Navy vessels, lack guns. Its single, Soviet-era submarine is inoperable because Russia no longer produces the batteries needed to run it. Sixty percent of its defence budget goes to salaries and pensions.

Bucharest pins its security on NATO and the $US400 million US missile base at Desevelu that is an integral component of its anti-ballistic missile shield. Russia sees it as a provocation.

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A country of 20 million people, Romania has been a NATO ally since 2004 and a member of the EU since 2007. Still a poor country by European standards (average public sector incomes are between €6,000 and €12,000 a year), Romania's GDP has nonetheless increased almost five-fold since the end of Ceausescu's dictatorship.

Historically and geographically, Romania is poised between East and West. Culturally, the country is more conservative than its Western neighbours. 'Though we are Latins in a Slav sea', one young woman from Bucharest insisted, 'we are Orthodox. This is very important to us.'

Four times in the nineteenth century — in 1806-12, 1828-9, 1853-6 and 1877-8 — Russian armies rolled back Turkish power in the name of aiding the Sultan's Orthodox subjects. When Tsar Alexander II visited Bucharest in 1877, crowds cheered the Orthodox emperor. To counter Russian influence, Romanian liberals cultivated a Latin identity and fostered relations with liberal France. Even today, in meetings officials regularly recall the country's (distant) Roman origins and its membership of the Francophonie.

Today, NATO and EU membership seems to have encouraged a classic case of freeloading — and a bolder foreign policy than the country's own defences would warrant. 'On Ukrainian, Georgian and Moldovan membership (of NATO), we must not accept a veto right by Russia', declared one official. 'If we have on our borders a country with different values, different conduct, we are all the losers.'

In neighbouring Moldova, however, we found politics divided on relations with the EU. Unlike Romania (with which it shares a language), Moldova (historically 'Bessarabia') was part of the Russian Empire from 1812. A Soviet republic until 1991, it's the object of open rivalry between Russia and the West. Elections last November left power with a Liberal Democratic Party coalition favouring European integration. But, off the record, the Western representatives we spoke to admitted that only dubious election practices prevented victory by the pro-Russian opposition.

Since Brussels launched its 'Eastern Neighbourhood Policy' (ENP) in 2009, public support has steadily fallen. Local EU activists lament that only 36% of Moldovans favour EU integration; 42-44% are pro-Russian. Brussels nonetheless signed an Association Agreement with Moldova last June. Owing to a recent banking scandal involving the theft of €1 billion (some 15% of GDP) and a shady businessman with links to the Europe-leaning government, for many Moldovans the EU has itself become synonymous with corruption.

Controversial too is an anti-discrimination law adopted as part of a visa liberalisation agreement with Brussels. With 80% of the population identifying with the Russian Orthodox Church, this is seen as the Trojan horse of the Western gay rights movement. The message is reinforced by the Russian television some 55% of Moldovans watch.

Discussions with Moldova's pro-EU liberals quickly reveal the gap between them and public opinion. Like their nineteenth-century Romanian counterparts, they are less representative of society than far ahead of it. To promote Moldova's 'European future', pro-Brussels NGOs have launched an information campaign. It's being funded by the US Embassy.

Remittances from half a million Moldovans working in Russia account for 20% of GDP. But the EU's main problem is that, for the moment at least, Russian conservativism rather than Western liberalism seems closer to the sympathies of a largely apathetic public. In Gagauzia, a poor autonomous region home to a Turkish-speaking but Russian Orthodox minority, a lonely Western-leaning analyst despaired: 'Everybody wants somebody to come in and fix their problems — it's just that in Gagauzia, they want Vladimir Putin to do it.'

'People are very nostalgic about Soviet times', he went on. 'That was the last time there was any public investment. I don't like it but it's true. In twenty-four years of independence, the government (in Chisinau) has done nothing.'


This week, Rohingya fleeing persecution on Myanmar were denied entry by several countries in South East Asia, leaving them stateless and stranded at sea. Indonesia and Malaysia have now announced they will take in a limited number of refugees, but there are still many at sea after being abandoned by people smugglers. There is a history refugee migration by boat in South East Asia, said Elliot Brennan:

The present problem in Myanmar, and the economic migration from Bangladesh, will not be the last irregular migration we see in the Southeast Asia or Europe or anywhere for that matter...We need to set up frameworks and regional responses for the irregular flows of people. If done correctly, this can be a boon and not a burden. That is what history has taught us about boat crises in Southeast Asia. But first, and of greatest and simplest urgency is to rescue the thousands of souls stuck at sea. 

That is also what Marie McAuliffe argued for. The region needs a long-term response to this humanitarian crisis, she writes:

Few regional actors are keen to see the displacement continue or escalate, but in the past, equally few have been prepared to help. The Philippines' willingness to provide humanitarian assistance is heartening, not just for the Rohingya stranded at sea but for the region as a whole. As a signatory to the Refugee Convention and a member of ASEAN, the Philippines is well placed to lead on this issue, notwithstanding its own human security, economic, social and political challenges. Its leadership offers other governments a way forward, and creates the possibility for burden sharing.

Two posts this week from from former Australian diplomat Bob Bowker on Syria. First, Bowker wrote on the state of the military conflict itself, and warned that ethnic cleansing is a possibility:

For the first time in the conflict, one side may feel it could lose. For most Alawites, this is an existential conflict for a long-persecuted, mostly illiterate minority. Alawites fought their way to the top of the political system after the chaos of the post-independence period and reversed their historical exploitation at the hands of the northern Syrian Sunni and Christian elite. Alawites led in crushing the resistance of the Sunnis who had lost that contest – culminating in the massacre in Hama in 1982. But their success was always at the risk of dire retribution should their political grip weaken. That prospect now looms large.

Second, Bowker argued that the international community needs to start preparing for a humanitarian disaster in Syria:

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The primary and immediate aim of the international response should be to minimise the risk of an additional outflow. In that regard, the UN and Western countries should encourage and influence Turkey, Saudi Arabia, Qatar and others to urge their client rebel groups to refrain from victimising Alawite populations. They should insist that their partners avoid the use of the imagery of retribution as a weapon to weaken the Assad regime. They should highlight their responsibilities, both religious and under international humanitarian law, to protect civilian lives and property. The rebel forces should be encouraged to see the value of creating a clear distinction between their standards of behaviour and those of the Assad regime.

Phelim Kine from Human Rights Watch pointed out the hypocrisy of the abusive 'virginity tests' that the Indonesian military forces on its female recruits:

Moeldoko and Basry's junk-science validations of a form of gender-based violence reflects entrenched attitudes that extend to other parts of the Indonesian security forces, which are proving stubbornly resistant to change. In November 2014, Human Rights Watch reported on the Indonesian National Police's imposition of 'virginity tests' on thousands of female applicants since 1965, in contravention of National Police principles that recruitment must be both 'nondiscriminatory' and 'humane.'

Hugh White continued a debate this week between him and Michael Cole over deterrence and Taiwan:

Some might hope that China can be convinced that the US is willing to fight, even if it isn't. This is called bluffing, and it's a dangerous and unreliable tactic. And this is precisely why America cannot reliably deter China from attacking Taiwan. As Michael himself acknowledges, there are real doubts that America would be willing to go to war with China. It seems likely that those doubts are shared in Beijing, and they cannot be dispelled simply by rhetorical reaffirmations of the Taiwan Relations Act, because they arise from a quite reasonable assessment of the balance between costs to America of reunification on the one hand, and the costs of war with China on the other.

Morris Jones wrote on the state of the Russian space industry:

Leasing Baikonur is expensive as well as strategically perilous. Relations between Kazakhstan and their former Soviet partners are sometimes difficult. The deterioration of Kazakhstan's economy opens the possibility that they could raise the rent for Baikonur in the future.

So Russia is building a new launch site in south-east Russia as a replacement. The project must have Kazakh officials quietly laughing. The Vostochny Cosmodrome is well behind schedule, and some construction workers have apparently not received pay for months. Nobody knows when this project will finally be completed, but it seems certain that Russia will not be able to withdraw from Baikonur for years.

How did the global financial crisis begin? Leon Berkelmans thinks new research might offer some clues:

I always thought that claim was odd, but I had not seen proof that he was wrong. I certainly lack the accounting expertise to find out myself. That is why a recent paper in the Journal of Economic Perspectives by Robert McDonald and Anna Paulson is really helpful (I've confessed my love for the journal before). These researchers (and others) have done the hard work so you and I don't have to. And the findings are grim. So far, those securities that the CDSs were written against have lost at least $10 billion.

Robert Kelly wrote on the internal dynamics of South Korea's relationship with Japan:

But even there, one can see the 'enemy image' at work: Abe's trip to the US, which is fairly traditional diplomatic activity that had little to do with Korea, is described as an 'icy blast from Japan.' The US-Japan summit, by two democracies whose assistance in managing the North Korea threat is crucial, is described as a 'shock,' that sent Korea 'reeling.' That South Korean diplomats could somehow not stop the Abe-Obama bonhomie means they are 'inept,' 'silent,' 'cowardly,' and so on. There have even been calls for the foreign minister to resign over the successful Abe summit with Obama.

This zero-sum, if-Japan-is-up-we-must-be-down mentality is deeply ingrained.

News broke this week that several foreign fighters want to return to Australia. Rodger Shanahan questioned some of their accounts and said that any returning fighters must be held responsible for their actions:

The Guardian has written an unquestioning account of Brookman's time in Syria. There are many holes left unexplored in his story. We're told he met an unnamed Australian 'humanitarian worker' in Turkey who somehow had the expertise to infiltrate him into Syria; that he had his passport stolen; that he only drove ambulances in Aleppo and treated injured people; that his wounds were caused by a Syrian regime bombing of the medical clinic where he was working, and that he was transported unconscious to an ISIS-controlled area. The only cliché missing is that he worked in an orphanage with sick children. Readers would be well advised to treat such accounts sceptically, as should the journalists who question such people.

What does the fall of Ramadi last week mean for Iraq? Lauren Williams:

Less than two weeks ago, media reports cited Sunni tribesmen pledging to unite in the fight against 'ISIS rats' and calling for swifter support from the Government to do so. They say their calls fell on deaf ears. When Iraq's undersupplied and poorly managed security forces collapsed on Sunday, Abadi called for the Shiite militias to join the battle. Videos surfaced (see above) of the army making a hasty withdrawal from the city on Sunday from a battle that left an estimated 500 people dead and forced some 25,00 people to flee the city of roughly 1 million.

Jenny Hayward-Jones reported from PNG on the diplimatic row over the Australian consulate on Bougainville:

The Australia-Papua New Guinea relationship has depth and is bolstered by strong business links. The fact that the Papua New Guinea Government's retaliatory measures were aimed only at restricting the travel of Australians to Bougainville suggests there is no desire to harm the wider relationship. Indeed, Prime Minister O'Neill declared in his speech to the Lowy Institute last week that the relationship was in better shape than at any time since independence. On Monday this week I watched the Prime Minister give another positive speech about the bilateral trade and investment relationship alongside the visiting Australian Trade Minister Andrew Robb at the Australia-PNG Business Forum in Lae, and the two had a friendly meeting afterwards.

Catriona Croft-Cusworth wrote on a new monument unveiled last week in Jakarta dedicated to the memory of those who died in the violence that erupted across Indonesia in 1998:

Yet victims and their families are far from seeing justice for the perpetrators. President Jokowi made a campaign pledge last year to reopen investigations into the riots and push for legal resolution of the human rights violations that occurred. A bill on forming a Truth and Reconciliation Commission is due to be deliberated by the Government this year, though relatives of victims have demanded an ad hoc tribunal.

The unveiling of the May '98 Memorial is a small step towards facing the events of the past, but it is a significant one.


The view from Jakarta

Indonesia this week opened its doors to thousands of migrants stranded at sea, with the expectation that regional neighbours such as Australia could help with resettlement. Meanwhile in Jakarta, President Jokowi announced the first all-female selection committee for the country's anti-corruption body, and social media lit up over reports of toxic plastic rice entering the market from China.

After a meeting with Malaysia, Thailand and the UN refugee agency (UNHCR) on Wednesday, Indonesia agreed to take in some of the thousands of migrants from Myanmar and Bangladesh now stranded at sea after being turned away by the navies of three neighbouring countries. Recognising the humanitarian crisis at hand, Indonesia's foreign minister Retno Marsudi has agreed to take in a share of the migrants, provided they can be resettled within a year. Indonesia has already taken in more than a thousand of the latest wave of migrants, many of whom were welcomed by ordinary Acehnese even after they were rejected by the navy.

There is strong public compassion in Indonesia towards the stranded migrants, in part because of their shared religion. The newly arrived migrants will join almost 12,000 asylum seekers and refugees already in Indonesia who are either awaiting verification of their refugee status or resettlement. Indonesia, which is not a signatory to the 1951 Refugee Convention, is currently able to resettle about 500 refugees a year. This means other countries in the region that are signatories to the convention, such as Australia and the Philippines, may be expected to take some of the load in resettlement.

Australia has already responded to this idea with a big 'nope', which means the issue will likely become another source of tension between Australia and Indonesia in the months to come.

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President Jokowi has yet to make a statement on the boat crisis, but has spoken to media to announce the new all-female line-up of the Corruption Eradication Commission (KPK) selection committee. The nine women selected by the president to appoint anti-corruption commissioners have been hailed as 'heroines' by the local press, with the expectation that they can help save the KPK from a year of controversy and tension with the National Police.

Though the move to appoint an all-female committee has been labeled 'sensationalist' by some, none have questioned the suitability of the members and their varied backgrounds in law, psychology, sociology, management, governance and more. Observers have suggested that the appointment of economist Destry Damayanti as head of the committee signals an intention for the KPK to focus more on corruption in business, rather than political graft.

Meanwhile, the police this week dropped investigations into allegations of graft by Budi Gunawan, whose slated appointment as police chief sparked controversy with the KPK earlier this year. Budi was made deputy police chief last month in a closed-door inauguration. The new police chief, Badrodin Haiti, welcomed news of the all-female KPK selection committee, saying that women are usually 'more thorough' in their work.

A woman from Bekasi, Greater Jakarta, was the first to report the presence of synthetic rice in Indonesia this week, sparking panic on social media. The food seller claimed to have bought rice from her usual supplier at a Bekasi market, only to find that the rice turned to mush after it was cooked. She posted photos of the cooked and uncooked rice on social media and sent a complaint to the Indonesian Consumers' Board (YLKI). Similar reports had previously come from India and Vietnam of 'plastic' rice made of potato and sweet potato starch mixed with resin. The Bekasi mayor has confirmed that a lab result showed rice laced with a polyvinyl materials had been found in a local market. The Trade Ministry is investigating the source of the tainted rice, and one lawmaker has called its circulation an act of 'food terror', saying those responsible should be persecuted as terrorists.

Photo by Flickr user basibanget.


Greg Sheridan writes today that, despite last week's controversy when Pentagon official David Shear 'misspoke' about US Air Force's B-1 bombers being placed in Australia, the bombers are probably coming to Australia anyway.

I think that's right. As James Brown wrote at the time, the US–Australia Force Posture Agreement hammered out in 2014 ensured that:

...US Air Force rotations through northern Australia should increase, assuming the force posture agreement clears the way for the expansion of runways and ramp space at RAAF Learmonth and RAAF Tindal. Australians should expect to see more USAF long-range bombers, transport aircraft, and air-to-air refuelers operating from those locations.

Sheridan criticises Shear for giving the impression that the B-1s would be based in Australia. But, says Sheridan, 'There are no American forces based in Australia. A range of American forces rotate in and out of northern Australia, which is not the same as being based there.'

We're in the realm of wordplay here. The US-Australia Joint Defence Facility at Pine Gap is not really a 'base', but it is a permanent facility run by Australia and various US spy agencies. And while the US Marine presence in Darwin is described as a 'rotation', with Marines cycling through on short training deployments, it is a permanent arrangement between the two governments. As James Curran explains, this is in fact the culmination of a long-standing desire by Australian governments to entrench the US military presence in Australia.

Sheridan then writes:

The Abbott government has no in-principle objection to the presence of B-1 bombers, and many well-informed observers regard their eventual presence in Australia as all but inevitable. The problems the government had with the Shear testimony were about the implication of basing planes in Australia, and connecting the rotations explicitly to China.

Again, I think that's right. The reason the PM came out within hours of the story breaking to deny Shear's testimony was because of the damage it might do to the China relationship.

But this is revealing of our national dilemma, which Tom Switzer describes aptly on the same opinion page today: we have a major trading partner (China) whose strategic interests are increasingly at odds with those of our major ally. And increasingly, we're being forced to choose between them. Yet if Sheridan's account is right, the Government seems to believe that we can get around this dilemma by simply not acknowledging it publicly. We can host US strategic bombers, Sheridan seems to be saying, just as long as we don't say publicly that it's China-related.

Does that sound at all convincing to you? No, me neither.

Photo by Flickr user US Air Force.


Deterrence is a beguiling concept. It offers the hope that we can prevail over our opponents without actually fighting them because our mere possession of military power will be sufficient to compel them to our will.

This seductive idea seems to be the basis of Michael Cole's view that deterrence will allow America and its allies to defend Taiwan from China with incurring the costs and risks of conflict, and that they should therefore commit themselves to doing so. This view is set out in Michael's most recent contribution to an exchange between us about this issue, and I'd like to thank him for his thoughtful part in our exchange on this sensitive topic.

Alas, I think this view of deterrence is mistaken. Deterrence can work, of course, but only where the deterred power believes that the deterring power is willing to incur the costs and risks of conflict. So Washington can only deter Beijing from using force against Taiwan if Beijing is reasonably sure that Washington is willing to actually fight to do so.

Moreover, because the stakes are so high and the nuclear threshold is so unclear, Washington must convince Beijing that it is willing to fight a nuclear war over Taiwan if it is to deter China from starting a conventional one. Simply possessing armed forces, including nuclear forces, is not enough to do this. You also have to convince the other side that you are willing to use them, and are willing to incur the costs and risks of the resulting conflict.

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There is, as Michael acknowledges, a parallel here with the Ukraine. Many in the West believed Russia could be deterred from any military intervention in the Ukraine. But deterrence did not work because Moscow did not believe that Washington cared enough about Ukraine to accept the costs and risks of a military conflict with Russia.

Some might hope that China can be convinced that the US is willing to fight, even if it isn't. This is called bluffing, and it's a dangerous and unreliable tactic. And this is precisely why America cannot reliably deter China from attacking Taiwan. As Michael himself acknowledges, there are real doubts that America would be willing to go to war with China. It seems likely that those doubts are shared in Beijing, and they cannot be dispelled simply by rhetorical reaffirmations of the Taiwan Relations Act, because they arise from a quite reasonable assessment of the balance between costs to America of reunification on the one hand, and the costs of war with China on the other.

This assessment does not minimise the costs of unification, both to America and to the Taiwanese themselves. It simply sets them realistically against the costs and risks of war with China, which Michael seems to agree are exceptionally grave. And if Americans are not convinced of US resolve, why should we expect China's leaders to be? And if they are not reasonably sure that the US would be willing to actually commit its formidable forces to fight for Taiwan, how can they deter China from attacking it?

The conclusion seems clear: America cannot defend Taiwan unless it is really willing to fight China to do so, and unless it is plainly willing to do that, Washington should not mislead the Taiwanese into thinking that they can rely on American support if the worst happens.

Photo by Flickr user See-ming Lee.


Today marks one year since the Thai junta came to power in a coup d'état.

The move was ostensibly made to save the country from deadly street violence that had crippled Thai politics and left dozens dead and hundreds injured during more than six months of clashes. The junta, attempting to placate international concern, promised speedy elections (initially, within five months) and a roadmap for reforms to break years of political deadlock. The promised elections have been continually pushed back. This week the junta said they would again be postponed by a further six months, to August 2016. 

The elusive elections are just one of the junta's failed promises. After a year at the helm, the junta is going nowhere fast. Thailand, the region's second biggest economy and a relative bastion of stability in Southeast Asia's tumultuous political landscape, is stumbling into a long period of dubious dictatorship. 

The junta's promise to break the political deadlock was cautiously welcomed by foreign governments and many Thais. Yet it has, in the past year, monopolised the political space and silenced dissent. In August it stuffed the legislature full of military officers (70 active, 36 retired). It was only last month that it lifted martial law, which had been in place since just before the coup — its lifting was likely only to avoid an odious one-year anniversary. In place of martial law is the draconian Article 44, which all but ensures military dominance over the political process. The Article rightfully earned the title of a 'Dictator Law' among commentators.

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The junta has continued the 'lawfare' strategy of the Yellow Shirts in retroactively impeaching former Prime Minister Yingluck Shinawatra for dereliction of duty in her government's failed rice subsidy scheme. It was indeed bad policy, but the process seems more of a witch-hunt to appease powerful Yellow Shirt supporters than it does due process. The symbolism is heightened by the reprieve given to Suthep Thaugsuban, the protest leader who had an equal hand in entrenching political deadlock and deepening street violence. He has spent the last year in the monkhood, until this week when he said he would drop the cloth and return to 'people's politics'. A divisive figure, his return to the political stage would be an agitation and a harbinger of trouble.

The past year has also been marked by renewed battle against insurgents in the country's deep south. In November, the junta, seeking a military solution to a political problem, gave 2700 HK33 semi-automatic assault rifles to civilian militias in the deep south. That approach has likely contributed to the uptick in unrest this year. In April, violence reached its highest level since the coup. In the past week alone there were 36 bomb attacks in Yala township. That follows a car bomb in April in the popular tourist destination of Samui. The junta has been keen to suggest violence in the south is linked to Red Shirt opposition linked to former PM Thaksin Shinawatra. That's unlikely, though there are many among the increasingly disenfranchised Red Shirts who are waiting in the wings to recommit to street protests. 

Of recent note has been the entrenchment of trafficking and people smuggling rackets along Thailand's south and south-western borders. Earlier this year the US dropped Thailand to the lowest tier on its Trafficking in Persons Report 2014; it is now in the company of Syria and North Korea. This is significant given the reported collusion and bribe-taking between trafficking and smuggling rings and Thai law enforcement. This kind of high-profile corruption doesn't help investor confidence in Thailand's spluttering economy. 

Bangkok's foreign policy has also taken a hit. After coming to power as prime minister, General Prayuth Chan-ocha's initial visits abroad were made up of an unglamorous list of non-democratic states: China, Laos, Vietnam and transitioning Myanmar. The chilly diplomatic welcome to office from the US and EU countries saw a shift closer to China and Russia. As political analyst Thitinan Pongsudhirak noted this week, 'Thai foreign policy will remain hostage to domestic politics.'

These problems have all been amplified by Prayuth's bizarre sense of humour and governing style. His press conferences are often headline grabbing (short list here; longer list here). In December he flung a banana peel at a journalist. In another conference he said that he would 'probably execute' troublesome journalists. The junta has arrested youths for displaying the Hunger Games-inspired three-finger salute – army officials said they had been detained for 'attitude adjustment'. Others have been detained for 'eating sandwiches with political intent' and reading Orwell's banned novel 1984.

Despite the record, many Thais still think the junta is the best of a set of bad options (though it must be noted, reliable polling of Thai views on the junta is not available). The vacuum of criticism has emboldened the junta, which is drafting a new and dubious constitution. The draft document hands immunity to the generals that led the coup and guarantees the military's place in politics.

In August, Prayuth's appointment as PM received the official blessing of the King. These may be the last blessings the ageing monarch gives to anyone. The King's passing will be followed by a period of mourning where political manoeuvring is restricted, if not altogether banned. The junta's hold on power during this period will be welcomed by many, but the junta has fashioned itself as the successors to the powers held by the revered peacemaker, King Bhumipol. That will cause problems in the real succession for the throne.

One year on, the junta has strengthened its grip on politics. There are few signs of a return to democracy; the junta is going nowhere fast.

Photo courtesy of Flickr user Global Panorama.


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.

  • Chinese authorities allegedly shut down the internet in Linshui after mass demonstrations demanding a high-speed rail line through the county turned violent. Read about how the protests — from censorship to anti-communist party hacking — are playing out online.
  • Tech startups in Pakistan want to disrupt the country's inefficient and dangerously unregulated labour market.
  • The most important market for Chinese smartphone makers may actually be India.
  • This podcast, on Japan's unique Twitter culture, looks at why it is common for Japanese users to have multiple accounts and maintain a different identity on each.
  • Internet company Baidu has built a Beijing-based artificial-intelligence supercomputer that allegedly has Google beat on image recognition. (H/t @niubi).
  • Chinese President Xi Jinping has asked officials to befriend and recruit non-Communist Party intellectuals from new media organisations and to encourage them to make contributions to 'purifying cyberspace'. (H/t @fryan.)
  • Vietnamese mobile messenger app Zalo now has 30 million users, making it the only Southeast Asian-founded chat app that has conquered its home market.
  • The media outlet for China's People's Liberation Army (PLA) has published a series of feisty articles on defending cyber sovereignty and battling for online terrain. English translations here and here.
  • While hosing down alarmist interpretations of the above articles, the University of Hong Kong's China Media Project steers readers towards the revelation that an elusive 'All-Military Internet Security and Information Expert Consultation Commission' had its first sitting in Beijing.
  • A new report highlights fears Cambodia's new cyber laws will be used to further curb online free speech.
  • Hong Kong's Umbrella Movement has spawned a unique brand of digital protest art.
  • Apple CEO Tim Cook was in China last week


The US has taken its concerns with China's island reclamation efforts public by giving a CNN crew access to one of its brand-new P-8 surveillance aircraft as it monitors the South China Sea. You really do get a sense of how delicate the situation is, and how easily things could escalate from a misunderstanding or an accident.


The view from Beirut

Spring is almost over and as summer fast approaches, Lebanon once again prepares for the massive influx of visiting diaspora that clogs the roads, snaps up all the holiday rentals, and fills the beaches by day and the rooftop clubs by night. The other great summer tradition in Lebanon is local speculation on whether this is the summer the unfinished war with Israel will be resumed.

The Lebanese resort town of Jounieh, north of Beirut. (Tumblr/Paul Saad.)

The last few years I have been in Lebanon there is always at least one prophecy that suggests this is the year it's all going to kick off. These warnings, combined with various security threats (summer of the ISIS bombs in 2014; summer of the Shi'ite area bombings in 2013; summer of the tyre burning protests in 2012), have seen the lucrative Gulf and Western tourist markets shrink dramatically, increasing economic pressures on this already fragile state.

So is this year going to be the 'summer of war'? The problem is that this prediction can no longer be formulated by a simple calculation of Israeli and Hizbullah strategic positions. As well as an Israel-Hizbullah conflict, we have the potential for an invasion by ISIS from Syria, and the potential for the return of that old faithful, civil war, which this time would pit Shi'a against Sunni.

Let's consider the evidence.

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Earlier this year there were reports of increased threats from ISIS that, this summer, the group plans to establish a Caliphate in Lebanon (or what would be left of it once the 17 out of the 18 official resident religions had been eradicated). While these can be dismissed as emanations from the ISIS propaganda machine, Lebanon remains alert to the threat of isolated bomb attacks from ISIS sympathisers.

However, the recent battle in the Qalamoun Mountains of Syria between Hizbullah and the Syrian army on one side, and various Sunni militias on the other, has been deemed largely a success for Hizbullah and Assad. The victors claim to have located and destroyed a number of armed cars waiting to be sent across the border to detonate. To the east of Lebanon in Arsal, the disunity between Jabhat al-Nusra and ISIS has disintegrated into armed conflict. The Lebanese Armed Forces have been pounding the area in an effort to destroy militant groups based there.

Within Lebanon, tensions between Sunni and Shi'a are rising at the political level as the major parties accuse each other's sponsors of behaving irresponsibly in Yemen. As I noted in a previous post, the rise of extremism in Palestinian camps has coincided with a spate of sectarian killings between Sunni and Shi'a which could spill over into the Lebanese street. The recent army attacks on Sunni militants in the north of the country help drive the perception among some Lebanese Sunnis that the Lebanese Armed Forces are a Shi'a-backed institution. All these incidents add up to increased tensions, but a resumption of civil war remains unlikely, for two main reasons: first, the shared belief that no one side is strong enough to win outright; and second, the risk of stalemate and descent into further chaos, which would open up the country to more ISIS attacks.

The threat of another Hizbullah-Israel war remains real, with a recent resumption of activity after a reasonably quiet year in 2014. On 19 January, Israel launched an attack on a Hizbullah convoy driving on the Syrian side of the Golan Heights, killing seven members (some senior) and an Iranian General. This triggered a response from Hizbullah on 28 January, which the group launched from the Shebaa Farms area on the Lebanese side, killing two Israeli soldiers traveling in a convoy on the Israeli side of the border.

It was initially suggested that Hizbullah was in the Golan to investigate the possibility of opening up a new front against Israel, the somewhat shaky theory being that Hizbullah could attack Israel from Syria without suffering blowback in Lebanon. It is more likely that Hizbullah was monitoring the area because of concerns about a takeover by Jabhat al-Nusra and other al Qaeda groups, threatening Hizbullah weapons supply routes. Despite recent Syrian army and Hizbullah campaigns to retake the Syrian side of the Golan region, Quneitra is estimated to be still largely under the control of Jabhat al-Nusra and other Islamist groups.

Many of the players on the Lebanese stage are feeling pressure as myriad hot and cold wars are fought across the region.

Saudi Arabia is trying desperately to get on top of the Houthi movement in Yemen and reassure itself that the Iran nuclear deal does not mean Tehran has become Washington's new BFF. Netanyahu has cobbled together a right-wing cabinet, some members of which may not object to a showdown with either the Palestinians or Hizbullah. And of late Hizbullah has ratcheted up the action and rhetoric, possibly because it feels increasingly stretched militarily and therefore under threat. It's also hard to tell how much veracity lies in reports that the Assad regime is starting to crumble, but Saudi, Turkish and Qatari funding of the opposition forces appears to be having some effect. Overlaying all of this is the presence of ISIS, which threatens states across the Middle East both from within and without.

But the biggest threat to Lebanon, as always, is the potential for miscalculation by Israel or Hizbullah leading to the resumption of war. Judging by their recent spat, neither side appears to have taken on board the old adage that the definition of insanity is doing the same thing over and over again and expecting different results. As the snow melts and the ground dries out, Israel and Hizbullah appear still to be playing the same game, though nowadays the stakes are higher and the political terrain far trickier.