Lowy Institute

Remember Kevin Rudd? The former prime minister might no longer be foremost in Australian minds — particularly in a week in which a more historically significant Labor leader passed — but his presence continues to grow in the US.

The New York-based Asia Society today announced that Rudd would serve as the first permanent president of its nascent policy institute, which is focused on the rise of Asia. The appointment will begin in January 2015 and follow the conclusion of Rudd's term as a non-resident Fellow with the Belfer Center at Harvard University's John F Kennedy School of Government, where he has been leading a program looking at 'alternative futures' for US-China relations.

The attainment of that position of course followed a fairly hasty retreat from the Australian political scene after that ill-fated 2013 return to the national leadership.

Freed from experiencing the nastiness of those domestic matters, US political thinkers seem to hold Rudd in the highest regard, particularly where Asia is concerned.

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When he appeared alongside former US Treasury Secretary Hank Paulson at a well-received talk on China at the Asia Society in September (see video above) he was heralded as one of the 'West's best-informed thinkers' on the region, and roundly praised for achievements such as steering Australia through the Global Financial Crisis.

Rudd naturally did himself many favours by regularly breaking into Mandarin and revealing his intimate knowledge of China's internal politics and society during that appearance, and he will look to employ these hard-won advantages to good effect in the new role.

As an ardent foreign policy wonk, he will no doubt be thrilled to be replacing former US Secretary of State Henry Kissinger, who was the institute's temporary first president. Kissinger described Rudd as a 'rare global thinker and a sophisticated practitioner of global policy making' in an Asia Society statement on the announcement.

As well as a personal victory, the appointment could also be seen as a win for Australia and its prominence in studies of Asia's rise.

The Asia Society nominally includes Australia as part of its purview, and maintains a Sydney office, but the majority of its members and audience still seem somewhat ignorant of the level of Australian interactions in the region. There was, for example, audible surprise at that September talk when Rudd mentioned that about as many Chinese students were studying at Australian universities as at American equivalents.

It could also have implications for Rudd's supposed ambitions for the UN Secretary-General's role, which becomes available at the end of 2016. Might two years in the new role increase his chances of replacing Ban Ki-Moon?

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The passing of Gough Whitlam was always going to be a seismic moment in Australian national life. As Paul Kelly writes in today's Australian, the former Labor leader lived 'long enough to see his life mythologised in the national story'. Debate has and will continue to rage about his legacy, both domestically and in Australia's relations with the world.

But in an age of remarkable and unprecedented bipartisan consensus on the US-Australia alliance, it is timely to reflect a little further on Whitlam's handling of the nation's relationship with America. 

In the period from December 1972 until November 1975, the US-Australia alliance faced its greatest ever crisis. In the hands of President Richard Nixon and Australian Prime Minister Gough Whitlam, a relationship that had endured the heights of the Cold War veered dangerously off course and seemed headed for destruction.

For Whitlam, the world emerging from the ashes of Vietnam offered an exciting opportunity to recast Australia's image in the eyes of the world and redefine the alliance. For Nixon, the ongoing difficulties in securing an end to the war and the mounting pressures of the Watergate scandal produced a visceral reaction to any criticism – but especially that from a once close and trusted ally. In his rage he threatened to rip apart the very fabric of the alliance, asking that options be explored for pulling out top secret US intelligence installations in Australia and ending all intelligence sharing. In Australia, although some saw Whitlam as the great moderniser of Australian foreign relations, others feared he was recklessly endangering the protective umbrella provided by the US.

In my forthcoming book, Unholy Fury: Whitlam and Nixon's Alliance Crisis (MUP, May 2015) I show for the first time just how close Australia came to losing the US alliance.

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Drawing on new evidence from archives in both the US and Australia, the book will show that across a broad range of issues, all of which were central to how both nations saw their future role in the region, it became apparent that the harmony of aims and interests that characterised the alliance during the Cold War had come to an abrupt and acrimonious end.

Perhaps the most pungent manifestation of this crisis came when several senior ministers in Whitlam's government harshly and openly criticised Nixon's decision to carry out the so called 'Christmas bombings' of December 1972 on the major population centres of North Vietnam, Hanoi and Haiphong.

The Australians did not mince words. The President's move had come only days after the Labor Party, out of office for twenty-three years, had come to power. Having opposed the Vietnam War since the first Australian troops were committed to the conflict in 1965, some Labor spokesmen shed any pretence to diplomatic moderation, and went for the jugular. The White House was full of 'maniacs', said Clyde Cameron, Minister for Labour and Immigration, while the spokesman for Urban Affairs, Tom Uren, accused Nixon of committing 'mass murder' and 'acting with the mentality of thuggery'. Dr Jim Cairns, in the more senior portfolio of Trade, called it 'the most brutal, indiscriminate slaughter of women and children in living memory'.

Prime Minister Whitlam himself wrote to Nixon to express his grave concern at the resumption of the bombing, questioning whether it would achieve the objective of bringing the North Vietnamese back to the bargaining table and advising that he would seek the cooperation of other political leaders in Asia, especially those of Indonesia and Japan, to join him in 'addressing a public appeal to both the United States and North Vietnam to return to serious negotiations'. 

Australian maritime unions placed a ban on all American shipping in Australian ports, a move reciprocated by the US International Longshoremen's Association. Australian beef rotted off the coast of Florida and American passengers arriving on cruise ships in Sydney Harbour had to be privately ferried ashore. The Australian censure was one of the most strident of any of America's friends. 

Nixon refused to reply to Whitlam's letter, and when Kissinger telephoned Australia's embassy in Washington to complain, his blunt words of warning sent shockwaves all the way back to Canberra. It was not, the national security adviser stressed to the Australian Charge D'Affaires, 'the way to start a relationship with us'. Speaking for the Administration, he said that 'we are not particularly amused (at) being put by an ally on the same level as our enemy'.

In a discussion with the President at Camp David a few days later, Kissinger unloaded, dismissing Whitlam's letter as an 'absolute outrage' and a 'cheap little manoeuvre'. From 'the minute the Vietnam war ends' he quipped, the Australians 'will need us one hell of a lot more than we need them'. Nixon could only concur: for Whitlam to 'imperil' his country's relations with the US, he replied, was 'one hell of a thing' to do.

The White House Tapes show that Nixon and Kissinger agreed to 'freeze' Whitlam 'for a few months' so that he would 'get the message'. Speaking to Nixon, Kissinger labelled Whitlam's proposed joint appeal to the US and North Vietnam a 'grandstand play', dismissing it as 'very stupid too'. It prompted a policy that amounted to unofficial – but pointed – diplomatic isolation. Whitlam, Nixon thundered, was 'one of the peaceniks...he is certainly putting the Australians on a very, very dangerous path'. The President only reluctantly agreed to give Whitlam a one-hour meeting in the Oval Office in late July 1973. No toasts, no speeches, no state dinner and no welcome on the White House lawn. But Whitlam was not seeking a coronation.

Over the life of the Whitlam Government, the two countries continued to disagree over regional architecture, the idea of a zone of peace in South East Asia, and Indian Ocean neutrality. Australia had become a thorn in America's Asian side. But the Americans had to adjust to these Australian winds of change.

For the first time in nearly a decade the US realised that it could not take the interests of its junior ally for granted. The great irony, as Whitlam freely conceded, is that the changes in American foreign policy — the Nixon Doctrine, Soviet détente, the '72 China visit — had made it possible for Australia to pursue a more independent line in world affairs. As Whitlam himself told an audience in Washington, his country was 'moving on the wave of great events, not swimming against the tide'.

But it was the speed and direction of the Australian moves which put Whitlam on a collision course with the Nixon Administration. At a time when Washington was trying to rebalance its regional policy following the subordination of other concerns to the fighting in Vietnam, Labor's policy prescription in Asia was bound to throw relations into a tailspin. Against Whitlam's impatience for Australia to be accepted in Asia in a new way and his eagerness to embrace a world less constrained by rigid bipolarity, American officials maintained the need for incremental change, with one eye on the fragility of détente and the other on the persistence of great-power politics.

But as American Ambassador Marshall Green observed around this time, the era of the Cold War in East Asia had passed, and with it the need for Australia and the US to 'march together, against the forces of darkness'.

Whitlam, then, essentially redefined the relationship with Washington to give the nation greater self-reliance both within and without the Alliance. It stands as one of the most significant aspects of his legacy in Australian foreign affairs. 

Photo courtesy of the Nixon Library.

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On Monday, the four-day Fourth Plenum of the 18th Party Congress began in Beijing. Chinese state media says this year's meeting will deliberate on 'major issues concerning comprehensively advancing rule of law.' This is the first time the Central Committee has made this topic the focal point of discussions at a plenum, and there is great anticipation about how it might be addressed.

No. 1 Intermediate People's Court, Shanghai, China (Reuters/Aly Song)

However, outside observers should be careful not to get too carried away with what this might mean for changes to Chinese governance.

Every Chinese Party Congress lasts for five years, during which there are seven major plenums at which the Party's Central Committee meets. The Fourth Plenum is generally where implementation of policies decided at the previous year's plenum are discussed. The Third Plenum of the 18th Party Congress was held in November 2013, at which a raft of political and economic reform policies were announced.

These policies exceeded many expectations – both in China and internationally – in their depth and breadth, including reforms to state-owned enterprises and the one-child policy. It was also announced that markets will play a much greater role in allocating resources, an important shift away from the 'basic' role they had before. The communique at the close of the Third Plenum included few details around timelines or benchmarks, and these are what are being addressed currently at the Fourth Plenum, in addition to the tantalising topic of advancing the rule of law.

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Many China watchers are asking what this focus on rule of law actually means in the Chinese political system. The concept needs to be understood for what it means in the Chinese context. As explained very well in the Wall Street Journal, semantics matter. In Chinese, the term 法治 (fazhi) is composed of characters meaning 'law' and 'to govern.' This is generally translated to 'rule of law' in English, but this creates (perhaps deliberately) a misperception about what can be expected. Some argue that 'rule by law' is a more accurate translation – that is, that the Party uses the law as it sees fit to govern and maintain its control.

Xi Jinping has emphasised the importance of respecting the law and the constitution. However, the Communist Party is not governed by the constitution. Rather, the constitution serves the Party.

Indeed, Nobel laureate Liu Xiaobo was jailed for 11 years for his role in Charter 08 (2008), in which he and others suggested the Party should come under the constitution. The Chinese Government sees 'constitutionalism' (that is, the primacy of a constitution over all else) as a Western phenomenon inappropriate for China. Over the past year or so, constitutionalism as a concept has come under increasing attack. For example, articles have been published arguing that constitutionalism is a product of capitalism unsuited to a socialist system, and against the idea of 'the constitution and the law taking precedence' (宪法和法律至上).

So 'rule of law' in China always means rule of law under the leadership of the Party, and that will not change in this Plenum.

When thinking about China, even when the language may sound familiar (and in the case of 'rule of law', reassuring), the underlying concepts are often completely different. The ultimate implications are not going to be what we expect if we take the terminology at face value. While there will very likely be some important and positive developments at this Fourth Plenum, we should not expect to see Chinese judges' decision-making suddenly de-linked from Party considerations. 'Comprehensively advancing the rule of law' does not equate to a separation of powers and a rollback of the Party-state's role in legal affairs. Rather, it should be understood as a sophisticated development in how the Party manages governance and control.

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As Catriona Croft-Cusworth’s commentary and photos showed, there is a celebratory mood in Jakarta this week with the inauguration of Jokowi as Indonesia’s new president. In the spirit of reconciliation, Jokowi’s defeated opponent Prabowo Subianto even showed up for the ceremony.

For this week’s Quick Comment, I spoke with the Lowy Institute’s Indonesia expert Aaron Connelly about how long this mood is likely to last in Indonesia’s halls of power. 

Not long, is the answer. As you will hear, Jokowi faces a hostile opposition (Aaron makes comparisons with American politics) that is unlikely to give an inch on Jokowi’s domestic agenda. Listen too for Aaron’s thoughts on Jokowi’s inaugural address, which, as Rory Medcalf noted yesterday, had a strikingly nautical theme.

Photo courtesy of Flickr user Steven Fitzgerald Sipahutar.

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It’s a grim part of a think tankers life (or at least this think tanker’s life): you write your papers and they disappear into the ether. You often receive little or no feedback, nor even much indication of whether anybody has read your paper at all.

But occasionally there are moments that lift your morale. I had one such moment in 2007 when I got a phone call from Gough Whitlam.

I had a written a long Policy Brief entitled ‘Reinventing West Asia’ which was an effort to explain how the Middle East should be viewed as part of Asia, at least in strategic terms, and what this meant for Australia. Our then Executive Director, Allan Gyngell, mentioned that Gough had a habit of calling the Middle East ‘West Asia’ so I should send him a copy of the paper. 

I did and then forgot about it until my phone rang one day. It was our receptionist and she said she had Gough Whitlam on the line for me. Any sense that this was a practical joke was soon dispelled by his distinctive voice.

My memory is not great, but there were three parts of the phone call, which went on for about half an hour, that I will never forget.

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The first thing was that he complimented the receptionist. ‘You have an outstanding receptionist’, he boomed.

Second, he complimented the paper, which is not, however, the point of this post.

Third, and the reason why I am recalling this story, was his probing of my heritage, which underlined both his curiosity and his rich historical knowledge. It went something like this:

‘Bubalo, what kind of a name is that?’

‘Croatian.’

‘Jee-sus Christ!’

‘What part of the Croatia are you from, Venetian or Ottoman?’

‘I was born here. But one parent is from the Venetian part, one from the Ottoman.’

‘Jee-sus Christ! Well it’s a fine paper anyway.’

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I don’t care what they talk about; I don’t expect anything. For the past two years they’ve arrested more than three-hundred human rights defenders and intellectuals, such as Pu Zhiqiang, Tang Jingling, and Ilham Tohti. And they have destroyed many Christian churches, they cracked down on the Internet, and they published a series of articles against universal values...

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In The China Fantasy (2007), James Mann debunked the hopeful delusion of Western liberals: that a Chinese 'middle class' would emerge to countervail centralised state power. Mann instead argued that China's development model had co-opted this tribe through inducement and suasion.

The Government Next Door by Luigi Tomba explains exquisitely how Beijing's policies have been instrumentalised at the local and neighbourhood level.

The Chinese state has built a compartmentalised and highly controlled system of local bodies which manage housing privileges, welfare and livelihoods. As Tomba says, 'The liberalization of housing markets has resulted, somewhat counter-intuitively, in the use of residential space as a tool to facilitate a wide range of governmental interventions.'

An observant visitor to a Chinese city notices two things: high walls and security guards. Tomba saw that 'Chinese planners, real estate tycoons, and citizens alike appear to share a passion for gated communities.' For the rich they provide relative autonomy and security, and promote powerful conservative ideals. The omnipresent guards reinforce cellular segregation, in what Tomba calls the 'forting-up' of Chinese cities.

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His fieldwork shows the chasm between large rich cities, especially Beijing, and the many poorer ones. The reason is simple: property. 'Early access to privatization of housing has become a major discriminant' of wealth and status. The current and retired professionals of the state-owned enterprises (SOEs) see themselves as the deserving vanguard because of their professional skills and loyalty. This model middle class has been rewarded financially as well as with perquisites in education, welfare and healthcare. The 1990s privatization of danwei housing, often at knockdown prices, was the greatest windfall. Home ownership in pricey Beijing is 80%, more than two-thirds gifted to SOE employees. Almost 70% of SOE employees own one (and often multiple) homes. Tomba argues that 'The middle-class strategy of the Chinese government has employed a redistribution of public assets...in a way that has greatly favored sectors of urban society with strong ties to the state.'

To this trusted elite, the state's hand is benign, and light.

By contrast, in deprived regions like the northeast rustbelt, 'visibility, rather than invisibility, remains crucial to the governing strategy.' Community officers, volunteers and patrols sloganeer about 'saving the working class.' Public townships are a world apart from Beijing's enclaves, but they 'share two characteristics: they are enclosed within walls and behind gates, and both require exclusive membership, in the form of registration or property rights or both.' He notices that 'while the burden of governing in middle-class neighbourhoods is becoming lighter', in less affluent cities 'social distress is attracting more resources, heavier governing practices, micro-governing.' A retired worker summarises: 'the poorer a place, the more numerous the cadres.'

Everyone acts for collective and self interest. As Tomba points out, 'The grannies in Shenyang have mobilized to protect...what is left of their once generous industrial working class benefits. The Beijing homeowners watch over their right to see a contract honored and more autonomous lifestyle fulfilled, at least in their backyard.' The alleyway aunties tyrannising Shenyang parallel Beijing's imperious home-owner committees. A manager there trumpets 'the 3-in-1 system: management company, developer and community, all under the supervision of the Party.' True, there are 450,000 civil representative bodies in China, but most are GONGOs, sinews of state power which strictly circumscribe real popular rights of dissent.

Officialspeak is harnessed by all: 'community activists use the language of patriotism to justify their grievances against real estate developers; disgruntled ex-workers invoke the socialist spirit of central policies to frame their dissatisfaction with local leaders; the same discourses of 'harmony', 'quality' and 'security' are equally used by the state to justify intrusive policing...and by real estate developers to sell prestigious properties to status-hungry families.' Wrapping up in the flag 'shields limited social action from repression.' There are protests but they are highly localized, strictly controlled and often mediated positively by officials: 'When limited conflicts erupt...their effect might well be to reinforce the overall legitimacy of the state rather than to undermine it.' The daily concerns of Chinese – real estate, pollution, healthcare – may be debated; the Party's authority may not.

Above all, Chinese urbanisation is a civilizing project: 'Morality, nation building, patriotism, human quality (suzhi), and modernization' transcend 'the societal autonomy (normally) associated with the emergence of a civil society.' The concept of suzhi recurs repeatedly in social discourse. 'The educated and affluent groups inhabiting the new compounds become exemplars of a self-responsible, well-behaved, high-suzhi citizenry', and thus a strong nation. Importantly, though, 'high suzhi citizens enjoy a significant (albeit spatially limited) autonomy to govern themselves and successfully avoid the direct control of public neighbourhoods.'

Now we understand Mann's puzzle of the illiberal masterclass, 'the most responsible citizens who, by virtue of their higher suzhi, will secure the reproduction and strengthening of Chinese civilization.' In Tomba's words, this 'justifies the deficit of citizenship rights imposed on less accomplished social actors' such as migrant workers, who might otherwise resort to violence. 'China's educated, increasingly wealthy, conflict-prone, but reliably nationalistic middle-class has become an agent for the development of a harmonious nation.' The homeowner class, and particularly the SOE families, 'reproduce and amplify the dominant discourses of the state: order, suzhi, patriotism.' As Tomba concludes: 'my middle class neighbors appeared more as staunch supporters of than as challengers to the Chinese regime, particularly with regard to social stability.'

Photo courtesy of Flickr user Emile B.

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The inauguration speech of Indonesia's 7th President, Joko 'Jokowi' Widodo, was powerful despite its brevity, or perhaps because of it. It contained a striking blend of personal humility, national pride and an ethos of unremitting work. But as an analyst of Asian geopolitics, I was most struck by its message about Indonesia's rightful aspirations as a seagoing Indo-Pacific power; an archipelagic country connecting two oceans.

Midway through the speech, these few sentences stand out as a vision of Indonesia's potential as a maritime power: 

We have to work really hard to return Indonesia's status as a maritime nation. Oceans, seas, straits, and gulfs are the future of our civilization. We have been showing our backs too long to these seas, to these oceans, to these straits, and gulfs.

...

This is the time for us to return them all, therefore Jalesveva Jayamahe, it is at the sea we are glorious, as the motto of our ancestors, may ring once more.

The nautical theme continues throughout. Towards the end of his remarks, the President also invokes the words of Sukarno: that to build a great Indonesia 'we have to possess the soul of cakrawati samudera, the soul of a brave sailor going through the rough and rolling waves'. The sea also lends him his concluding metaphor of leadership, teamwork and success in the face of hardship: 'As a captain, trusted by the people, I invite all people of this nation to get on board this Ship of the Republic of Indonesia and sail together to the Great Indonesia. We will be in full sail. We will face all storms and waves with our own strength.'

This is not just evocative rhetoric. There is a practical policy edge.

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For instance, as others have observed, the high-sounding words Jalesveva Jayamahe (also translated as 'at the sea we will triumph') happen to be the motto of the Indonesian Navy. The speech suggests Jokowi is serious about wanting to advance and deepen the efforts of his predecessor to make Indonesia a more active and capable maritime player in the region. This will require not only building up the Indonesian Navy – which has recently begun to modernise after long having little ocean-going capability to speak of – but also making Indonesia more effective at managing its archipelagic waters which include critical international sea lanes. This in turn will require better surveillance, patrolling, cooperation with partners on transnational and interstate maritime security challenges, and active diplomacy on contentious issues, notably the situation in the South China Sea.

It may very well be, as my colleague and Indonesia specialist Aaron Connelly has recently argued, that Jokowi leaves foreign (and defence) policy largely to his advisers. But on maritime issues at least – which in Indonesia connect external and domestic policy — he seems to be getting good advice.

Of course it is premature to assume that these aspirations will translate into sustained, effective action. Still, the initial signal is good news for Australia and the diverse other countries that want to engage Indonesia as a pragmatic, capable maritime security partner in this Indo-Pacific era.

Note: The author is grateful to Matthew Hanzel for an elegant and timely English translation of the speech, as quoted here. Another unofficial English-language translation can be found here. The original Indonesian-language text can be found here.

Photo courtesy of Flickr user Yulian Hendriyana.

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Gough Whitlam with Hu Jintao in September 2007. (REUTERS/Will Burgess.)

Lowy Institute Non-Resident Fellow Murray McLean began his association with Asia in the early 1970s when he was a language student in Hong Kong, from where he played a small part in then-Opposition Leader Gough Whitlam's groundbreaking 1971 visit to China. In 1973 he was posted to Beijing with the Department of Foreign Affairs, and he also served in Shanghai as well as heading DFAT's North Asia Division.

So there's no one better qualified to discuss the legacy of former Prime Minister Whitlam, who passed away this morning.

I talked with Murray McLean this morning, and as you will hear, he argues that Whitlam established the basis for a fully independent Australian foreign policy, setting relations with Asia on a truly equal basis while also tenaciously defending the ANZUS alliance. McLean provides some wonderful historical detail from the early 1970s, when not only Australia but the US, Canada and others were re-thinking their relations with China. When we chatted after the interview, he recommended this 2012 essay by Stephen FitzGerald, Australia's first ambassador to Beijing, on Whitlam's historic 1971 visit.

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  • The Myanmar Government announced a much needed funding boost of US$5 million  to deal with the country's HIV epidemic. In 2013 there were 190,000 people living with HIV; only a third were receiving treatment. The Ministry of Health  also received US$11.5 million to fight drug-resistant tuberculosis.  Concerns remain for a dramatic rise in  drug-resistant malaria.
  • What will Southeast Asia look like in 2035? Wikistrat, a crowdsourced analytical community, ran a 60-analyst simulation and found these potential futures.
  • Vietnamese and Chinese minsters of defence (and a healthy entourage) meet; Carl Thayer explains its immense significance.
  • The UK summoned  a Thai diplomat this week (see summons here),  but Thai PM Prayuth Chan-Ocha says his diplomat wasn't summoned and that the UK was just  'confused'.
  • Prayuth's approval rating came in this week at an unbelievably high 93%.
  • Myanmar is on a non-proliferation roll, writes David Santoro. And why not, when the rewards are so big: Myanmar will hit its full year FDI target in first six months of 2014-15.
  • A top ten list of must-reads on ‪Cambodia. (H/t Milton.)
  • Former Australian Ambassador to Indonesia Bill Farmer  writes on bilateral relations under Jokowi.
  • An Indonesian suicide bomber, 26-year-old Ridwan from Solo, was the latest Southeast Asian ISIS fighter killed in Syria. In better news,  Abu Sayyaf released its two German hostages amid claims of a ransom payment.
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The hashtag  #presidenjokowi was a worldwide trending topic on social media yesterday as Indonesia welcomed its new president, Joko Widodo, who is better known as Jokowi. Driving this trend were the enthusiastic netizens of Jakarta, one of the world's most active Twitter cities. Crowds filled the main street, Jalan Sudirman, hoping to catch a glimpse of the newly inaugurated president or, even better, a selfie with his motorcade.

Jokowi was sworn in as Indonesia's seventh president at the House of Representatives before midday. After making an inaugural speech that pushed the limits of maritime metaphors, President Jokowi and his Vice President Jusuf Kalla set sail through a sea of supporters crowding Jalan Sudirman, the Presidential Palace and the grounds of the National Monument, where a public concert was scheduled for the evening. The event was billed as a 'people's parade', with catering provided by an association of street food vendors handing out free snacks.

With sizable crowds joining celebrations in the midday heat, it would appear that many Jakartans have forgiven Jokowi for cutting short his term as governor of the city to run for president. Attendees ranged from office workers to bus drivers and street cleaners, as well as volunteers for Jokowi's presidential campaign who had waited more than three months to publicly celebrate the victory. The motorcade travelled past kilometers of construction work, where the city's long-awaited mass transportation system is moving ahead under the new governor, Jokowi's former deputy Basuki Tjahaja Purnama.

The peaceful celebrations are a sign of acceptance by supporters of losing presidential candidate Prabowo Subianto, and, hopefully, a sign of a peaceful and constructive term ahead for Jokowi as president. However, with only a minority in the House of Representatives against Prabowo's bulky coalition, Jokowi will have to do more than win the hearts of the people to succeed in making significant changes as president.

Below are some shots from the people's parade and celebrations at the National Monument on Monday.

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The Director-General of the World Trade Organisation (WTO), Roberto Azevedo, says the institution has descended into 'paralysis'. 

Director-General of the World Trade Organisation, Roberto Azevedo, Bali, 2013.

Following the failure to get India to remove its objection to advancing the deal on trade facilitation that was struck at the Bali WTO meeting in December 2013, Azevedo recently told the WTO membership:

This could be the most serious situation that this organisation has ever faced. I am not warning you today about a potentially dangerous situation – I am saying that we are in it right now.

The Bali agreement, which was the first of its kind achieved by the WTO in its history, was seen as breathing life into the organisation and its ability to advance multilateral trade negotiations. At the heart of the Bali deal was trade facilitation; reducing red tape and streamlining customs procedures. The Bali agreement went down to the wire, with India opposed until its concerns over food stockpiling were resolved. A deal was eventually struck on the basis that India's concerns would be resolved by 2017.

Multilateralism seemed to be alive.

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However, India indicated in July that it would not support the trade facilitation deal because insufficient attention had been given to resolving its concerns over food stockpiling. India now says there has to be a permanent solution to food stockpiling before trade facilitation progresses. The WTO's General Council, its executive branch, meets on 21 October to again consider the issue. One Geneva-based diplomat has said that the WTO will enter into an 'existential crisis' if there is no resolution to this impasse, with the consequences 'too heavy' to contemplate. The EU ambassador to the WTO said:

What is at stake is not only our ability to reach agreements, but also to implement what has been agreed. There should be no mistake, the current stalemate will have consequences on the WTO and the multilateral system.

The deadlock over the trade facilitation package is paralysing the WTO. The Bali agreement included measures to benefit less developed countries, and these are also being held up. Importantly, the future work of the WTO is in limbo. Immediately following the Bali deal, when there was a renewed sense of confidence, WTO trade ministers agreed to develop a work program by the end of 2014 with the aim of concluding the long-stalled Doha Round negotiations. This work program will now most likely not be completed by December.

The failure to advance multilateral trade liberalisation has seen countries increasingly turn to preferential bilateral and regional trade agreements. As noted by the WTO Director-General, however, there are many big trade issues that can only be tackled in an efficient manner in a multilateral context. Trade facilitation is an example. It makes no sense to cut red tape for just one or two countries. Also, financial and telecommunication liberalisation are best negotiated on a multilateral rather than on a bilateral basis. And issues such as farming subsidies cannot be resolved through bilateral arrangements.

Bilateral trade deals are inconsistent with a trading system dominated by global value chains. The growing fragmentation of production across national borders emphasises the importance of open trade and investment regimes. The proliferation of bilateral arrangements has resulted in a noodle bowl of agreements, each with complex country-of-origin provisions. Determining the country of origin is particularly difficult when goods are increasingly made 'in the world', with components sourced from many countries. This accounts for the fact that, according to surveys, few Australian companies take advantage of concessions offered under bilateral agreements because of their complexity.

The world should be concerned that the WTO, and the multilateral trading system, is paralysed. The global economy has prospered through a rules-based global trading system administered by the WTO. However, in the past three years global trade growth has been disappointing, growing less than global GDP. During most of the 1990s and early 2000s, global trade outpaced real GDP growth by a factor of two. If global economic growth is to strengthen, trade needs to make a bigger contribution, and this can come from a new wave of multilateral trade liberalisation.

The WTO needs a major shake-up. But this will only come if the crisis confronting the global trading system is acknowledged. On reflection, it is probably unfortunate that the Bali deal was reached. The WTO trade ministers meeting last December was widely seen as make-or-break for the WTO. If there had been no agreement, there would have been a crisis, and the need for changes to the way the WTO operates would probably have been confronted. Now the WTO is in a crisis, but this is not getting sufficient recognition.

The hope is that this issue will be high on the agenda for the Brisbane G20 Summit. The G20 is a global forum and its focus cannot be on bilateral or regional trade deals that discriminate against other countries; it has to be on the future of the global trading system. Multilateral trade liberalisation and the WTO badly need leadership. Let's hope it comes in Brisbane.

Photo courtesy of Flickr user World Trade Organisation.

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  • A new report from UNDP on how cash transfers in developing countries are helping win the fight against HIV.
  • In 2013, international migrants sent US$413 billion home to families and friends — three times more than the global total of foreign aid (about US$135 billion). Watch this recent TED talk with economist Dilip Ratha.
  • How text messaging is being used to combat Ebola.
  • The Guardian explains how infectious diseases and poverty are linked.
  • 'Smart cities' may be the way forward for India's megalopolises.
  • Last Friday was World Food Day. How well do you understand global hunger?  View the top 10 myths about hunger, take The Guardian's hunger test, and see how diets vary around the word. 
  • Around 1.2 billion people across the world have no access to modern energy. The World Bank has a new video on ending energy poverty:

Comments

Sometimes a picture is worth a thousand words.

With the G20 focused on increasing economic growth, it's worth remembering where the global action is. The above graph from the IMF Multilateral Policy Issues Report, published in July, shows that the emerging economies have been doing the heavy lifting, at least as measured in purchasing power parity terms. There is a reminder here, as well, of how they carried global growth during the 2008-09 downturn following the financial crisis.

The October IMF World Economic Outlook is forecasting that the emerging economies will grow as fast in 2015 as they did in 2012 and 2013, so the red bars will be a bit bigger (their rapid growth makes them bulk larger in the global growth calculation). And our region ('emerging and developing Asia') is forecast to continue its steady 6 .5% growth.

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