Leader Development & Education for Sustained Peace Program: Cross-Cultural, Geopolitical & Regional Education

LDESP USPACOM News Update – June 2012

The PACOM update includes news coverage from Pakistan to the Pacific Islands. As with all LDESP news briefs, the information contained within the PACOM update is to increase situational awareness. The PACOM update focuses on issues concerning South Asia, South East Asia, North East Asia, China, Australia, and the Pacific Islands, including articles central to transpacific security and stability, as well as political and economic issues that may impact the region and U.S national interests in the region.

Disclaimer: Articles are taken from established and diverse professional periodicals, news articles, and editorial commentaries from different countries, reflecting a range of political views/biases, that are intended to provide readers with a better understanding of various interests and perspectives regarding the situation in the region. External links may expire at any time depending on the archiving policy of the particular news agency. News summaries may highlight only a portion of an article that is relevant to the readers and may not necessarily be the focus of the entire article or the headline. Opinions expressed in the articles, commentaries, and featured topics do not constitute endorsement by the Department of Defense, the US Navy, or the LDESP staff.

Singapore Under Recession Threat If Greece Exits Euro

Singapore could fall into a recession if Greece were to exit the euro zone, being the most vulnerable Asian economy, together with Hong Kong, given its close trade and financial links with Europe. According to Credit Suisse and Standard Chartered, a disorderly Greece exit would lead to contagion across the currency bloc, triggering a recession in the city-state. Standard Chartered forecasts the economy will contract 0.3 percent in 2012 under this scenario. “(If) the region enters a full-blown crisis, then there is no doubt that Singapore would be amongst the worst impacted of all Asian economies,” Robert Prior-Wandesforde, Director of Asian Economics at Credit Suisse said in a note. With Singapore’s exports to Europe making up 12.2 percent of the country’s gross domestic product (GDP), Prior-Wandesforde says a “major trade shock” for Singapore would be inevitable. The country’s main shipments to the European bloc, its biggest export market, include electronics and petrochemicals. (…) Economists at Standard Chartered note that not only would exports to Europe be hurt, but a widespread crisis across the single currency bloc would also impact the Singapore’s trade with countries outside Europe. “Potential contagion via trade is likely to remain high, similar to 2008-09. The indirect impact of weakness in Europe via its effects on the U.S. and China should also be noted,” Tai Hui, Head of Regional Research for Asia at Standard Chartered, said in a report. (CNBC)

Singapore Leans on Oil Firms to Stop Iran Trade

Singapore is putting pressure on oil companies operating in the city-state to cut their dealings with Iran as it seeks to be exempted from U.S. sanctions on Iran’s oil trade, sources said on 12 June. U.S. ally Singapore was absent from a list of countries that Washington this second week of June declared exempt from sanctions after they reduced Iranian oil imports. The sanctions aim to cut the flow of petrodollars that fund Iran’s nuclear programme, which the West believes Tehran is using to develop weapons. Iran says it needs reactors to supply electricity. Singapore is one of the world’s biggest oil trading hubs and most of its imports from Iran are of oil products rather than crude. Fuel from Iran is blended, stored, traded and transported from one ship to another by private companies operating on the island and in surrounding waters. (…) Singapore’s foreign ministry said on 12 June the country did not import any Iranian crude last month and was in talks with the United States to obtain an exemption. Singapore’s crude imports from Iran are anyway small, as U.S. energy firms hold stakes in two of the island’s three refineries and so are banned under long-standing U.S. sanctions from importing Iranian crude. (…) “I don’t have much doubt that ultimately Singapore will abide by the embargo,” said James Dorsey, a senior fellow at the S. Rajaratnam School of International Studies. “Having said this, there’s a sense of a wait-and-see given the (nuclear) negotiations between Iran and the U.S., Europe and Russia.” (Reuters)

Global Trends and China’s Future

According to the EU-funded report, the world of 2030 will be polycentric. There will be a plurality of actors, and no single world power will play a hegemonic role. This will generate greater room for maneuver for all international actors and give so-called middle powers a more prominent role on the world stage. Polycentrism will be accompanied by an economic power shift toward Asia. China is projected to be the largest economic power with almost a fifth of world gross domestic product (GDP), and India will continue to rise. (…) Despite this projected shift in economic power to China and India from the US, Europe and Japan, economic power does not correlate automatically with political influence. Other dimensions, such as soft power and military modernization, also play a role. Moreover, the influence of the major powers will also depend crucially on their ability to act as models for economic, political and societal development, in particular in their immediate neighborhoods. The United States is likely to remain the world’s major military power. However, present trends seem to suggest that there will be no single hegemonic world power; that the US and China are likely to be the most influential actors; that India will continue to rise; that Russia and Japan may lose the great power status they enjoyed in the 20th century; and that the EU – if member states are able to further converge – is likely to play a major role in shaping the emerging international order. A constellation of rising middle powers, including Indonesia, Turkey and South Africa, will become ever more prominent. (…) The biggest unknown is how trends toward a polycentric world and the diffusion of power, including the rise of a global citizens’ agenda, will interact to create viable institutions for global governance. In this context, a major question is the use that China will make of its growing capabilities, including its role in fashioning the future contours of the international system and of its institutions. Given its size, trends within China will have profound implications for the future global order. According to the ESPAS report, it remains to be seen whether China will be able to continue its sustained pace of economic growth and implement political reforms. There are already signs that a rising China may be a positive force in world affairs. Beijing already plays an active role in international organizations and multilateral forums. (…) EU aspirations for a world order based on effective multilateralism will thus depend increasingly on the involvement of China in regional and global multilateral forums as well as its commitment to find cooperative solutions to regional and global problems. The EU looks forward to deepening collaboration with China on issues such as climate change, resources depletion, human security and R2P. In light of the ESPAS report, it remains in the long-term interest of the EU to build with China a future world order that meets the challenges of a single human community in a highly interconnected world. (China Daily)

Michael Raska: China on the Launch Pad

Behind a veil of secrecy, China’s development of strategic and tactical missiles is well into its third generation of modernisation. While the development of Chinese long-range missile and nuclear forces has traditionally been characterised as conservative, incremental, and slow, it has taken place against a backdrop of steadily growing official emphasis on the country’s defence-industrial complex, particularly its aerospace sector. This process has been accelerated by a confluence of defence-industry reforms, comprehensive military upgrading, and integration of innovative operational concepts. The net effect is a growing capability of China’s strategic missile forces and military space platforms.Various reports suggest that China is selectively enhancing its strategic and tactical missile capabilities by developing solid-fuel motors; diversifying its range of warheads and increasing their accuracy; deploying missiles with multiple warheads; and upgrading its ballistic-missile defence countermeasures, such as decoys, chaff, jamming, and thermal shielding, and possibly maneuverable reentry vehicles (MaRVs) and multiple independently targetable reentry vehicles (MIRVs). In particular, China is developing, testing, and deploying a new generation of solid-propellant, road-mobile intercontinental ballistic missiles (ICBMs). These include the DF-31 and DF-31A, which are equipped with nuclear payloads. It is also designing and developing new classes of conventional short-range ballistic missiles (SRBMs) and medium-range ballistic missiles (MRBMs), such as the DF-21 – mobile, solid-propellant, longer range, more accurate, and able to exploit vulnerabilities in ballistic missile-defense systems. As part of its missile and nuclear-force modernisation, China is also focusing on developing its sea-launched ballistic missiles (SLBMs) such as the JL-2, testing the DF21-D as an anti-ship ballistic missile (ASBM) for maritime strikes, and further developing its anti-satellite weapon capabilities (ASAT). (…) China is now an independent producer and technological innovator of selected missile systems and related aerospace technologies. Ultimately, China views its military, civil, and commercial space programs as being at the forefront of its national defence, economic development, and geostrategic influence. The rest of the world should regard China’s aerospace capabilities as an important part of its future power projection. (The Straits Times)

Sea Tensions Deepen With China’s Rise

Here among the azure waters of the South China Sea, China is learning how hard it is to win friends and allies to accompany its rise as a world economic power. For a decade, China has channeled billions in development aid to neighbors—transforming the skyline of Phnom Penh, Cambodia, and throwing a lifeline to Myanmar’s old military regime when the West imposed sanctions. (…) On 7 June, that pact is in shreds, with Beijing and Manila locked in a tense dispute over who owns what in the sea. At one place 119 nautical miles off the Philippine coast, Chinese and Philippine fishing vessels are engaged in a tense, on-and-off confrontation over fishing rights. At another spot, China is warning the Philippines to stop local energy firms from drilling. (…) It also underscores new risks for the U.S. in Asia, as countries around the region such as Vietnam and even Myanmar look to build stronger relationships with Washington to help them withstand the Chinese juggernaut, and as America ramps up its military and diplomatic presence among the region’s booming economies. (The Wall Street Journal)

China Weighs its Role in Afghanistan

China wants the Shanghai Co-operation Organisation, a regional bloc cofounded by Beijing, to play a larger role in Afghanistan, as western countries gradually reduce their military presence in the war-torn south Asian nation. “We will insist that regional powers call the shots in regional affairs, prevent turbulences from outside the region, and play a bigger role in the peaceful reconstruction of Afghanistan,” said Hu Jintao, president, in remarks carried by the People’s Daily, the Communist party’s mouthpiece, as the SCO’s latest summit kicked off in the Chinese capital on 6 June. China shares only a short border with Afghanistan, but fears the spread of Islamist extremism into other south and central Asian states that straddle its long western flank, including the restive region of Xinjiang. (…) Some analysts say that China’s economic approach may have to change as the US proceeds to pull most of its troops out of Afghanistan by the end of 2014. This year, Beijing signalled a possible increase in engagement when it hosted a trilateral dialogue with Afghan and Pakistani politicians. Hamid Karzai, the Afghan president, is in Beijing to sign an agreement to elevate ties with China to a “strategic partnership”, and the SCO, which includes Russia and a number of former Soviet republics, will make Afghanistan an “observer” during the summit, Mr Hu said (…) “It also means that, naturally, the Afghanistan question has become the SCO’s responsibility, and it provides a better basis for co-operation in security, traffic infrastructure and energy.” There are doubts as to what role the SCO can really play in Afghanistan, however. Bernt Berger, a senior researcher at the Stockholm International Peace Research Institute said the statements were “lip service” adding: “The SCO has no capacities and making it an actor inside Afghanistan is the last thing Beijing wants.” The most likely change in Beijing’s policy towards Afghanistan is, therefore, a stronger focus on reinforcing the stability of neighbouring countries. (…) “The economic and trade co-operation between China and Afghanistan is heavily impacted by the unclear security situation,” said Wang Lian, a south Asia expert at Peking University. (Financial Times)

China to Launch 3 Astronauts to Space Lab this Month

China will launch its first manned mission to an orbiting space laboratory in mid-June, according to state media reports and the country’s human spaceflight agency. A Long March 2F rocket will launch three astronauts aboard a Shenzhou 9 capsule for China’s first manned space docking at the mini-space station Tiangong-1. The space lab module has been circling Earth unmanned since its launch last year. (…) The mission, Zhou told Xinhua, will be a major milestone for China’s space exploration program. “It means China’s spacecraft will become a genuine manned shuttle tool between space and Earth. It can send human beings to space stations or space labs,” Zhou told Xinhua. (…) China is the third country to achieve human spaceflight after Russia and the United States. (…) Chinese space officials have said the country is developing a larger, 60-ton space station that will consist of several modules. That space station is slated to be launched in 2020. (Fox News, Space.com)

Much is at Stake in China’s Epic Power Struggle

As it awaits a major turnover in its senior civilian leadership, China appears at the crossroads. Its future is likely to be determined not by its hugely successful economy, which has turned the country into a world power in just one generation, but by its murky politics. A reminder of that is the vicious political struggle that has broken out in the run-up to the leadership changes, as well as official figures showing that rural protests have been increasing at the same rate as China’s GDP. Bo Xilai’s downfall is just one example of the noholds-barred power struggle. The Communist Party’s sudden vilification of Bo after lauding him for his Chongqing model has only promoted public cynicism over his orchestrated downfall and laid bare the leadership elite’s thin ideological marrow. If China is to preserve its rising strength, it must avoid a political hard landing. Although it is difficult to predict China’s political future, at least five different scenarios are conceivable. Scenario 1: The party protects its legitimacy, keeps the military subordinate to the party, and manages to put a lid on popular dissent. (…) Scenario 2: China implodes. This scenario is the opposite of the first scenario, yet its likelihood may be no better. (…) Scenario 3: A process to slowly reform the political system begins, in keeping with outgoing Premier Wen Jiabao’s warning that without “urgent” political structural reforms, China risks political turmoil and economic disruption. (…) Scenario 4: A new “Cultural Revolution” breaks out as the clique in power seeks to ruthlessly suppress dissent within and outside the establishment. (…) Scenario 5: The PLA increasingly calls the shots, with the civilians in office beholden to the military. In this scenario, the military rules with a civilian mask. It should not be forgotten that every succeeding leader since Mao Zedong has been weaker than his predecessor. While the party indeed has ceased to be a rigid monolith obedient to a single leader, the military has enjoyed soaring budgets since 1990 and greater autonomy. (Times of India)

China Argues Over How Much Corruption Is Best

The worst kept secret in contemporary China is the role that corruption plays in the function and disfunction of public life. Take, for example, Zhang Shuguang, the former deputy chief of engineering for China’s Railway Ministry. In 2011, at the time of his arrest, state media briefly reported that he had $2.8 billion stashed away in foreign bank accounts. The scale of Zhang’s avarice was grand, but it differed only in scale from the documented acts committed by thousands of other Chinese public officials every year. A few months after Zhang’s arrest, the People’s Bank of China (China’s Central Bank) posted a report –- subsequently deleted -– claiming that 16,000 to 18,000 public officials had fled China since the mid-1990s, taking with them $120 billion. (…) For a Chinese public all-but-conditioned to the idea that corruption lubricates economies and civil society, this wasn’t news, necessarily, except for the fact that the opinion was voiced by a major state-owned paper. (…) Its key argument is ‘corruption can’t be fundamentally solved and the key is to control the people to the extent permitted’ … Putting an irrelevant title to a subject and using it to cover the article’s real meaning, that’s what we call a Sensational Headline Writer.” (…) After all, it’s one thing to have a discussion that rationalizes China’s failure to control corruption, but it’s another thing entirely to have one of China’s most important old-line newspapers accusing an offshoot of People’s Daily of committing cynical propaganda in the course of that rationalization. (Bloomberg)

China Will Move on Human Rights Reform if Pushed

Scarcely a day goes by without the United Nations, or sovereign governments, or international non-government watchdog groups, using modern media to denounce corruption and abuses in some corner of the world. And this year in particular has brought a wave of condemnation upon China for mistreatment of minorities, abuse of local power and silencing of dissidents, among other concerns. Now someone who has earned the right to an opinion has offered new support for sustained outside pressure against the twin evils of corruption and human-rights abuse in China. Chen Guangcheng, a persistent campaigner against China’s forced-abortion policy, had been in jail or under house arrest since 2005 until, last month, he was allowed to leave China. In early June, speaking in New York, Mr Chen called on American groups and the US in general – and, by extension, the whole world – to put Chinese abuses at the core of relationships with that country. His homeland has laws against abuses, he noted, but these are routinely ignored: China’s real problem is disregard for the rule of law, and that must be challenged. Mr Chen expressed that view at some risk – relatives have reportedly been harassed and beaten since his departure – which makes it all the more striking. To be sure, the world has protested for years, to no avail, against China’s sustained repression of Tibetans and other subject nationalities, not to mention of ethnic Chinese dissidents and anyone who resists abuses such as unjust expropriation of valuable land. (The National)

How China Competes

It has long been widely accepted that the key to China’s global competitiveness is its ability to leverage wide swaths of low-priced labor and drive these new workers into labor-intensive manufacturing sectors of the global economy. While this is certainly true, China is proving that its ability to compete globally is also because its export strategy is built on a more aggressive and coordinated export assistance model than that of its United States or European competitors. (…) In February, immediately following meetings with Chinese Vice President Xi Jinping, US President Barack Obama announced a trade assistance plan designed to help American manufacturers that must compete globally against Chinese companies that benefit from China’s export assistance model.(…) For all those critical of China’s export model, it is important to keep in mind that much of what has made China successful in its export markets, in particular those within developing economies like those spread across Africa and Latin America, is that China has made it easy to do business with its businesses. (…) These advantages not withstanding, China’s export success does rely heavily on major subsidies that accrue to both state and privately owned companies across the country. The Congressional US-China Economic and Security Review Commission (USCC) recently published a staff research analysis of China’s export assistance model. The report focused on the main policy response that the American Congress has at its disposal: reinvigorating the role of the Export-Import Bank (Ex-Im Bank) as a means for assisting US manufacturing and service companies. (…)The USCC report states that “Even if a higher degree of Chinese transparency is achieved, US budget constraints would remain. Ex-Im’s $180 million budget for matching non-competitive financing is pocket change compared to estimated Chinese subsidies.” The report ends with the troubling observation, “Some in Congress argue that the United States should not engage in a competition that would have US taxpayers subsidizing foreign consumers in this manner.” (Asia Times)

Affirming Slowdown, China Reports Second Month of Scant Economic Growth

The Chinese economy, widely seen until the last few weeks of early June as the strongest remaining locomotive that could drag the global economy back from the brink of recession, showed a second month of anemic growth in May and performed even worse than the already lowered expectations of most economists. Growth in industrial production, retail sales and investment in fixed assets like factories and office buildings was little changed from April, according to data released on the afternoon of 9 June in Beijing by China’s National Bureau of Statistics. Some economists had considered the April figures to be a fluke and had predicted a rebound in May, when the Chinese government began measures to rekindle growth. (…) Industrial production grew at a slightly faster pace in May from a year earlier, 9.6 percent, than it had in April, when growth was 9.3 percent.And in an unexpected piece of good news released on the morning of 10 June, China’s exports and imports both grew twice as fast last month as economists had expected. Exports rose 15.3 percent, triple the pace in April, and imports grew 12.7 percent after stalling the month before. Some economists said that if demand for China’s exports held up long enough for the Chinese government to start the many infrastructure projects approved in recent weeks of June, the country’s economy could avoid a more serious downturn. (…) China’s increasingly apparent economic struggles come at an already difficult time for the global economy. Economies across Europe’s periphery have already stalled, and the Continent’s core has begun to struggle. Unemployment has started to inch back up in the United States, while growth has also faltered in the large emerging markets of Brazil and India. (The New York Times)

China Cuts Interest Rates

China’s central bank announced a rate cut on 7 June — its latest move to try and spur its slowing economy. In its first rate cut since 2008, the People’s Bank of China trimmed a quarter percentage point off its deposit and lending interest rates. China’s one-year lending rate is now 6.31%, which is much higher than interest rates in the United States, Europe and Japan. Economists and investors worldwide are concerned about China’s recent slowdown because it is an important driver of global growth. China is now the world’s second-largest economy behind the United States. The central bank had most recently sought to spur growth on 12 May by reducing the amount of cash banks must hold in reserve, an effort to free up funds for lending and investment. But China’s economy has continued to cool over the past month. A purchasing managers’ index compiled for banking company HSBC earlier this month showed that Chinese manufacturing declined in May for the seventh straight month. The index fell to 48.4 in May from 49.3 in April. A reading of above 50 indicates growth in the sector. Chinese exports have been hit by the European sovereign debt crisis, which has caused 11 countries on the continent to fall into recession and hurt demand from China’s largest market. China’s gross domestic product, the broadest measure of its economic health, grew at an 8.1% annual rate in the first quarter. But that was sharply lower than the 8.9% growth at the end of last year. (…) Given the higher interest rates already in place, China’s central bank has much more room to work with to stimulate its economy than its Western counterparts have. (…) Jay Bryson, international economist with Wells Fargo Securities, said Chinese leaders can tell bankers to what industries they want lending increased, far more directly than in Western economies. So the rate cut itself is somewhat less important in China than it is for other central banks’ monetary policy. (…) While investors had been hoping for some kind of action by the Chinese government to stimulate the economy, the timing of the rate cut announcement came as a surprise. Unlike the central banks in the United States and Europe, the People’s Bank of China does not have scheduled rate announcements. So the rate cut announcement at 7 a.m. ET on 7 June resulted in a sharp move higher for U.S. stocks in morning trading, as well as European stock markets. Asian markets had already closed for the day by the time the cut was announced. (CNN Money)

Will China’s Exports Drain Growth from Other Countries?

China’s exports grew 15 percent in May from a year earlier. That was double the pace analysts expected, according to Bloomberg News. That’s good news for China. It’s not necessarily good news for the rest of the world, though. Here’s why: What China’s trading partners want is vigorous domestic growth in China, so the country imports more. That’s not what’s happening, though. If instead China tries to keep its economy aloft through exports, it is actually subtracting from growth in other countries: Chinese production is displacing production that would be done by domestic workers in the U.S. and other countries. (…) Under pressure from the U.S., China had been allowing its currency to appreciate, which had been shrinking its trade surplus. But after gaining almost 8 percent since the summer of 2010, the yuan has drifted back downward, losing a little over 1 percent since early May. That will make Chinese goods more competitive in world markets. Expect more stress on U.S.-Chinese relations if this continues. Republican presidential candidate Mitt Romney has already expressed his intent, if elected, to label China a currency manipulator. President Barack Obama has created a group to investigate trade law violations, especially by China. (Bloomberg Businessweek)

China State Papers Warn U.S. Strategy Risks Rifts

China’s top newspapers warned on 5 June that the United States’ plans to bolster its naval presence in the Asia-Pacific region threaten to widen rifts between the two big powers. The warnings came in the People’s Daily – the main newspaper of China’s ruling Communist Party – and Liberation Army Daily – the main paper of the nation’s military, and amplified milder comments from the Foreign Ministry on 5 June. U.S. Defense Secretary Leon Panetta said on 2 June that the Pentagon will reposition its naval forces so that 60 percent of its battleships are in the Asia-Pacific region by the end of the decade, up from about 50 percent now. (…) But the People’s Daily did not buy that. “Opinion across the Asia-Pacific generally does not believe that the United States’ strategy of returning to the Asia-Pacific is not aimed at China; it’s there plain for all to see,” said a commentary in the paper, which reflects currents of official thinking in Beijing. “The United States verbally denies it is containing China’s rise, but while establishing a new security array across the Asia-Pacific, it has invariably made China its target,” it said. “This strategy is riven with contradictions and undoubtedly will magnify the complexities of Asia-Pacific security arrangements, and could even create schisms.” (…) China is focused on ensuring stable conditions for a Communist Party leadership transition later this year that will see the appointment of a new president to succeed Hu Jintao. Still, Beijing and Washington have repeatedly been in dispute over U.S. arms sales to Taiwan, which China sees as an illegitimate breakaway from its control; and the South China Sea, where China confronts a mosaic of disputes over islands and seas also claimed by southeast Asian nations. The U.S. has backed a multilateral approach to solving those territorial disputes, which Beijing has rejected as meddling. The United States’ approach to China was riven with contradictions, said the People’s Daily commentary. (Reuters)

Syria Could Unite Russia and China Against the U.S.

The massacre of more than 100 men, women and children at Houla has buried the peace plan for Syria promoted by former United Nations Secretary General Kofi Annan. Soon, the regime and its opponents will get to fight out their civil war unobstructed. When that happens, Syria will present the U.S. and Russia with choices that have implications far beyond the fate of a single Middle Eastern dictator, including stronger Russia-China cooperation to counter U.S. foreign policies. (…) A U.S.-backed military intervention would lead to a deep rupture with the leadership in Moscow. Russia wouldn’t try to stand in the way militarily, but it might well be driven to forge a stronger strategic partnership with China, which also opposes foreign military interventions in the Middle East and has joined Russia in vetoing UN Security Council resolutions on Syria. China has been ambivalent in the past about Russian overtures to ally against the U.S., but that’s changing due to concerns over the implications of Obama’s pivot to Asia. There have recently been calls from within the Chinese military for an alliance with Russia to stand up to the U.S. pressure. China’s political leadership, for the time being, remains skeptical, and so does Putin. (…) Putin has been in Beijing this first week of June to meet Chinese leaders, including at a summit of the Shanghai Cooperation Organization, a regional security and development arrangement focused on Central Asia. (…) Susan Rice, the U.S. ambassador to the UN, hinted after the Houla massacre that the U.S. might go outside the Security Council to take tougher action, thus circumventing the Russian and Chinese vetoes. (Bloomberg)

US-China Clean Energy Rift Deepens with Wind Tower Countervailing Duty Announcement

The US Commerce Department will begin imposing duties on wind tower imports from China, after finding that producers receive unfair government support. The move is expected to ratchet up tensions between the two trading partners, which have escalated quickly over the past few months over competing claims from both sides of illegal support and dumping of renewable energy products. The 30 May decision comes in response to a December petition filed by the Wind Tower Trade Coalition (WTTC) – a group of four US wind tower companies – which alleges that Chinese imports are being unfairly subsidised, thus hampering the competitiveness of the US wind power industry as a result. The US imported US$222 million in Chinese wind towers last year, according to US government data. The US government agency found that Chinese producers/exporters have received unfair government support ranging from 13.74 to 26 percent of the cost of the towers, meaning that the US can apply a countervailing – or anti-subsidy – duty equivalent to that same amount. (…) The announcement was quickly panned by Chinese officials, who argued that such conflicts should instead be resolved by negotiation and consultation. “Readily resorting to protectionist measures is not conducive to China and the US continuing to co-operate in the trade and economic fields,” Chinese foreign ministry spokesman Liu Weimin told reporters on 31 May. (…) Beijing, for its part, has also claimed that US government support for six renewable energy programmes is inconsistent with WTO rules, after having conducted an internal investigation into Washington’s policies regarding wind, solar, and hydro technology products. What action China will take following this determination, however, has yet to be made clear. (International Centre for Trade and Sustainable Development)

Exclusive: China Arrests Security Official on Suspicion of Spying for U.S.

A Chinese state security official has been arrested on suspicion of spying for the United States, sources said, a case both countries have kept quiet for several months as they strive to prevent a fresh crisis in relations. The official, an aide to a vice minister in China’s security ministry, was arrested and detained early this year on allegations that he had passed information to the United States for several years on China’s overseas espionage activities, said three sources, who all have direct knowledge of the matter. The aide had been recruited by the U.S. Central Intelligence Agency and provided “political, economic and strategic intelligence”, one source said, though it was unclear what level of information he had access to, or whether overseas Chinese spies were compromised by the intelligence he handed over. The case could represent China’s worst known breach of state intelligence in two decades and its revelation follows two other major public embarrassments for Chinese security, both involving U.S. diplomatic missions at a tense time for bilateral ties. (…) The exposure of the espionage case could put more pressure on the powerful Zhou Yongkang, who formally oversees the state security apparatus as a member of China’s top decision-making body, the Politburo Standing Committee. The Bo and Chen cases have already raised questions over the effectiveness of the security establishment which, under Zhou, has become more costly to maintain than the nation’s military. (Reuters)

Composite Dialogue: India, Pakistan to Review Peace Progress in July

The foreign ministers of Pakistan and India will meet in Islamabad in July next month to discuss the Kashmir dispute and review progress of the second round of the peace process between the nuclear-armed neighbours. Talks between Foreign Minister Hina Rabbani Khar and her Indian counterpart SM Krishna will be preceded by a meeting between the foreign secretaries of the two countries in July, said foreign ministry spokesperson Moazam Ali Khan. “We don’t have the exact dates at the moment,” he told reporters at his weekly briefing on 14 June. However, sources said that talks are expected to take place in the third week of July. Since April last year, officials from Pakistan and India have had a series of engagements on issues such as Siachen, Sir Creek, trade and commerce, counter-terrorism and the longstanding dispute over Kashmir. At their last meeting in New Delhi last year, the two foreign ministers announced several new Kashmir related Confidence Building Measures (CBMs). In their upcoming talks, the foreign ministers will review the progress on all issues but no major breakthrough is expected over the Kashmir dispute. While Pakistani officials insist that the composite dialogue must not be hostage to any single incident, India links the progress on Kashmir with Islamabad prosecuting suspects of the November 2008 Mumbai attacks. India says it wants “satisfactory closure” of the Mumbai trial in order to proceed with the process of normalising ties. In recent months, the peace process between the two neighbours has picked up momentum with increased exchanges at official and private levels. President Asif Ali Zardari had used his private trip to New Delhi in April this year to hold talks with Indian Prime Minister Manmohan Singh. Meanwhile, the Indian premier is expected to visit Pakistan some time later this year to give further impetus to the composite dialogue. (International Herald Tribune)

India, US Announce Trilateral Dialogue with Afghanistan

India signed on to a trilateral dialogue with the US and Afghanistan on 13 June to help Kabul assume greater responsibility for governance, development and security.
Both India and the US separately have strategic agreements with Afghanistan. They now seek a three-way consultation process to coordinate and cooperate to help Afghanistan. “They intend to explore opportunities to work together to promote Afghanistan’s development, including in areas such as agriculture, mining, energy, capacity building and infrastructure,” said a joint statement issued by India and the US at the conclusion of the third strategic dialogue on 13 June. (…) That was a curious contortion as India has already committed itself to Afghanistan’s security in the strategic agreement it signed with Kabul in October 2011. (…) India attended it in a minor victory after being forced out by Pakistan in 2010. India is hosting a conference — backed by the US, its officials have let it be known — later this month to attract investments into Afghanistan. New Delhi has a stake in Afghanistan and believes while the US is an “exiting power”, India is not. It’s seeking a larger role for itself there, irrespective of US plans for it. The two countries also referred to Pakistan’s role in Afghanistan but only to underscore its support for terrorists, a sore point with both New Delhi and Washington. (…) Defense secretary Panetta has said the US was running out of patience over Pakistan’s unwillingness to go after terrorists based on its soil, specially the Haqqani network. (Hindustan Times)

India, U.S. Forging New Phase of Ties, says Hillary

Focusing on five key areas including security cooperation and trade, U.S. Secretary of State Hillary Clinton on 13 June said India and the United States were moving to forge a new and more mature phase of ties, as the 3rd Indo-U.S. Strategic Dialogue kicked off here. “The strategic fundamentals of our relationship, shared democratic values, economic imperatives and diplomatic priorities, are moving us closer to an understanding and a trust that reflects the convergence of values and interests,” Ms. Clinton said in her remarks to the Dialogue. (…) “As a result, under President Obama’s and Prime Minister Singh’s leadership, we are forging a new and more mature phase in our critical bilateral relationship, one defined by near-constant consultation aimed at advancing the interests and values we share and working through the inevitable differences,” Ms. Clinton said. (…) As the India and the U.S. deepen and strengthen their bilateral relationship at an unprecedented pace, questions and doubts of this “new and unique” relationship are inevitable, Mr. Krishna has said. (…) Meanwhile, U.S. firm Westinghouse Electric and the Nuclear Power Company of India Limited (NPCIL) on 13 June signed a preliminary pact for an Early Works Agreement (EWA) for installation of the first 1,000 MW American nuclear reactor in India under the historic 2008 Indo-U.S. civil nuclear deal. (The Hindu)

Pakistan, US Trying to Deal With Complicated Issues: FO

Foreign Office has said Pakistan and the United States are trying to deal with difficult and complicated issues and that is why their resolution is taking time. Responding to questions at the weekly news briefing here in Islamabad on 14 June afternoon‚ Foreign Office spokesman Moazzam Ahmad Khan said there is desire on both sides to resolve these issues. He said Pakistan and United States knew that their relationship was important and critical for stability and prosperity of the region. The spokesman said there were several issues and those were being discussed in the light of the recommendations of the Parliament. He said these issues had become complicated particularly after Salala incident and both sides were trying to bring their relationship back on track. Asked about the issue of charges for the NATO supply routes‚ Mr. Moazzam said he would not go into specifics but there were other bigger issues as well besides supply routes that were being discussed. When his attention was drawn towards statement of the US Secretary of Defence about so-called safe-havens‚ the spokesman said Pakistan had repeatedly maintained that it was fighting terrorism and extremism in its own national interest. He said Pakistan had also made it clear that it would not allow any sanctuary or save havens and would also not allow its territory to be used for another country. Similarly‚ Pakistan expects that other countries will not allow their soil to be used against Pakistan. To a question about alleged delay in issuance of visas to US officials by Pakistan Embassy in Washington‚ the spokesman said all requests for visas go through a process‚ which takes some time. He said it is a normal practice. The spokesman said talks between Pakistan and India on Sir Creek would take place in New Delhi on 18th and 19th of the month. Foreign Secretary level talks between the two countries would be held in New Delhi next month‚ which would be followed by a meeting of the Foreign Ministers in Pakistan also next month, he said. (The Nation)

World Bank to help Nepal Boost Trade

Nepal’s trade with India and Bangladesh will get a boost soon after the World Bank facilitated multi-functional lab comes into operation. “The World Bank is facilitating the establishment of a joint multi-functional lab between Nepal, India and Bangladesh to increase intra-regional trade,” said senior operations officer at the World Bank South Asia region Diep Nguyen-Van Houtte here on 14 June. The bank is also helping Nepal in putting together the missing trade infrastructure, upgrading the roads as land transportation is key to intra-regional trade, and coordinating among trade related agencies to create a single window to remove bureaucratic hassles apart from supporting institutional and human resources capacity building, she said, adding that market integration will help generate more employment in the region that has to create 1.2 million new jobs per month over the next two decades as the number of new job seekers is increasing rapidly in the region. Trade can be a powerful solution for landlocked countries like Nepal, she added. (…) “The participation of LDCs in the South Asian Free Trade Agreement has been disappointing measured by their share in overall regional trade, in particular exports,” he added. LDCs in South Asia, along with Sri Lanka, are seeing a huge increase in their imports from the region, but the share of their exports is shrinking. Nepal’s intra-regional merchandise exports’ share stood at 3.23 per cent in 2010 from 10.7 per cent in 2000, according to him. (…) “Due to lack of connectivity, tariff structure and non-harmonisation of standards and natural resources, the regional trade pact that was supposed to boost intra regional trade has failed to deliver,” said former commerce secretary Purushottam Ojha. However, trade facilitation is key to integrate the region, he added. (The Himalayan Times)

Bangladesh Stands by Block on Myanmar Refugees

Bangladesh refused on 14 June to open its border to Rohingya Muslims fleeing communal violence in neighbouring Myanmar despite pressure from the United States and rights groups. The impoverished South Asian country, already home to a Rohingya refugee population estimated at 300,000, turned away more migrants on 14 June and has sealed its 200-kilometre (125-mile) border with Myanmar. At least 17 boats carrying nearly 700 Rohingya have been turned back on the Naf river that separates the countries since 11 June in the wake of violence between Buddhists and Rohingya that killed dozens in western Rakhine state. (Agence France Presse)

Violent Clashes at Bangladesh Garment Protests

Scores of protesters and police officers were injured on 13 June as at least 50,000 Bangladeshi garment workers staged violent demonstrations to demand a wage rise. Police chiefs said tear gas and rubber bullets were used to disperse workers who poured out of about 300 factories where clothes are made for global retailers such as Wal-Mart, Tesco and H&M. “There were more than 50,000 workers protesting at eight places. They blocked roads, disrupting traffic for two hours,” Dhaka police superintendent Mizanur Rahman told AFP. (…) The factories were hit by months of violent protests in 2010, which forced the government and the factory owners to raise minimum monthly salaries by 80 percent rise to $37. 13 June was the second day in a row that owners halted production due to unrest. The garment export sector accounted for a third of Bangladesh’s $19 billion exports last year. (India Daily News)

Don’t Count India Out Just Yet

News out of India as of late has been either bad or dreadful. Recently released statistics confirm that growth has been even lower than forecast. Most recently, poor jobs numbers confirm that the economy is in the doldrums and a report from the country’s Planning Commission shows that India is lagging in a range of social and economic indicators linked to the United Nations’ Millennium Development Goals. Here are the facts right now: in the fiscal year that just ended the economy grew at 6.5 percent, sharply down from 8.4 percent a year earlier. The investment bank Morgan Stanley has recently downgraded its forecast for 2013 to 5.7 percent, in line with other major institutions. So what do these numbers really mean, and how worried should we be about India’s long-term prospects? (…) So while the performance of two years ago at 8.4 percent is consistent with the economy being at or near its long-term trend, this past year’s growth rate of 6.5 percent, a full two percentage points lower, raises the crucial question: Can this be reckoned to be caused by transitory factors that could be expected to disappear, or, more ominously, has India settled into a new and lower long-term trend? As a recent roundup of economic articles in India Ink suggests, most commentators fall on the pessimistic, rather than the optimistic, side of the ledger. (…) Here’s the reason: the falloff in investment from a high of 35 to 36 percent a few years ago (which translates into 8.75 percent growth) toward 30 percent is a proximate cause of the growth slowdown, but it still suggests that India’s long term growth potential is around 7.5 percent. In a recent op-ed column, Ashutosh Varshney, a professor of political science at Brown, draws on this macroeconomic relationship between investment and growth in coming to a nuanced view of the current situation, although he notes the dropoff in the investment rate with alarm. The truth is that a neutral parsing of the data, shorn of a preconceived ideological view, cannot conclusively tell us whether the country is now headed for a new and lower growth path of 5 percent, or rather if the poor performance of the past year and a half is an aberration from a healthier long-term trend of 7 to 8 percent. A year or two of data is simply not enough to make a statistically definitive judgement on the matter. Anyone who claims otherwise is practising voodoo economics. (The New York Times)

India Says Pakistan Opens Fire Across Frontier in Kashmir, Killing 1 Indian Soldier

Pakistani forces killed one Indian soldier in firing across their disputed frontier in the Himalayan region of Kashmir, the Indian military said 15 June, while both sides accused the other of starting the skirmishes. Indian military spokesman Col. R.K. Palta said Pakistani forces opened fire first with rockets and automatic weapons on 14 June and continued into 15 June in what India considered a violation of a cease-fire, and that Indian forces returned fire. The Pakistani side continued firing even when Indian forces worked to evacuate an injured soldier who later died in a hospital, Palta said. He said India contacted Pakistan via a hotline to try to de-escalate the situation at the frontier, about 180 kilometers (115 miles) southwest of Srinagar. “However, Pakistani troops continued firing on Indian posts,” he said, adding that the situation remained tense. A military official in Pakistan, speaking on condition of anonymity because the Pakistani army has strict rules on who it allows to be named in the media, said the Indian side launched “unprovoked firing.” He did not respond to the report that an Indian soldier had been killed. (The Washington Post)

India Moves to Start Rupee Payments for Iran Oil

India removed a hefty tax and took other steps to ease payments in its rupee currency for some imports of Iranian oil as it seeks to continue purchases – albeit reduced — in face of Western sanctions that blocked an earlier payment method. India, Iran’s second-biggest oil client, won a waiver this month from tough new U.S. sanctions in return for significantly cutting purchases of Iranian oil. India on 14 June finally exempted payment in rupees for oil imports from Iran from the local tax and allowed advance payment for exports to the sanctions-hit nation, officials said. (…) The news is a relief to Indian exporters who had hoped to boost sales under the rupee scheme and create a new market for their goods in Iran, which has reduced imports from western countries under pressure from the sanctions. India wants more exports of food and other items allowed under sanctions such as engineering goods to strengthen its own economy and fix a trade imbalance tilted in favour of Iran. “No doubt, this could be of help but the trade under the rupee mechanism has to take off smoothly,” said M P Jindal, president of the All India Rice Exporters’ Association. (Reuters)

Pakistan Boasted of Nuclear Strike on India Within Eight Seconds

Pakistan could launch a nuclear strike on India within eight seconds, claimed an army general in Islamabad whose warning is described in the latest volume of Alastair Campbell’s diaries. The general asked Tony Blair’s former communications director to remind India of Pakistan’s nuclear capability amid fears in Islamabad that Delhi was “determined to take them out”. Britain became so concerned about Pakistan’s threat that Blair’s senior foreign policy adviser, Sir David Manning, later warned in a paper that Pakistan was prepared to “go nuclear”. The warnings are relayed by Campbell in a section in his latest diaries, The Burden of Power, which are being serialised in the Guardian on the 16th and 18th of June. The diaries start on the day of the 9/11 attacks and end with Campbell’s decision to stand down in August 2003 after the Iraq war. The nuclear warnings came during a visit by Blair to the Indian subcontinent after the 9/11 attacks in 2001. Campbell was told about the eight-second threat over a dinner in Islamabad on 5 October 2001 hosted by Pervez Musharraf, then Pakistan’s president. (…) Relations between Delhi and Islamabad have eased in recent years, though they still remain tense because Delhi believes that elements in the Pakistan state encourage Kashmiri terror groups. During his first visit to India in 2010 David Cameron famously accused Pakistan of exporting terrorism. (The Guardian)

Pakistan Urges Diplomatic Solution to Iran’s Nuclear Issue

Pakistan on 12 June urged the international community to look beyond sanctions and focus on dialogue as the best way to come to an agreement on the Iran nuclear issue. UN Security Council sanctions are but one means of resolving that matter, Ambassador Raza Bashir Tarar, Pakistan’s deputy permanent representative to the UN, told the 15-nation council. “We reiterate our view that Security Council sanctions should not be pursued as an end in themselves. These need to be harmonised with the larger goals set by the council – facilitating a negotiated resolution of outstanding issues,” he said after the council members were briefed by the head of the committee charged with monitoring sanctions imposed on Iran over its nuclear programme, the so-called 1737 Committee. The US and the European Union (EU) claim that Iran is trying to build nuclear weapons. But Tehran says the programme is strictly for peaceful purposes. Given the delicate and complex regional environment, the Pakistan envoy warned against any actions that could escalate tensions, and he reaffirmed the need for diplomacy and dialogue. He was obviously referring to the repeated Israeli threats to bomb Iran’s nuclear facilities. (Pakistan Daily News)

Pakistan Committed to Resolve All Issues With India: Zardari

President Asif Ali Zardari said on 13 June Pakistan wanted to have a constructive, sustained and result-oriented process of engagement with India and was committed to resolve all outstanding issues peacefully and in a just manner. The president also expressed hope that the resumed dialogue process would move forward in the spirit of Thimpu ad Mohali meetings of the prime ministers of Pakistan and India. He expressed these views during his meeting with Pakistan’s High Commissioner designate to India, the former foreign secretary Salman Bashir here at the Presidency. The president said it was time that the two countries work together for the betterment of their people. He said socio economic underdevelopment continued to haunt people for over sixty years and it was important to find peaceful solutions to the outstanding issues so as to divert resources to the improvement of socio economic conditions. The president said Pakistan wanted an uninterrupted and uninterruptible dialogue process and was committed to resolve all the outstanding issues in a peaceful and just manner. (…) He expressed the hope that signing of the Memorandum of Understanding (MoU) between Indian Trade Promotion Organisation and Trade Development Authority of Pakistan would help promote trade activities for the benefit of the people of the two countries. “We hope that the trade normalisation process would provide level playing field to the business communities of the two countries,” the president said. (Dawn)

Decades-old ethnic divisions that have spawned the bloodiest clashes in years in remote areas of Myanmar are threatening to take the shine off the country’s new image as Asia’s next big frontier market. At least 29 people have been killed in clashes between local Buddhists and stateless Rohingya Muslims since 8 June in Rakhine State along Myanmar’s western border with Bangladesh, officials said on 14 June. President Thein Sein declared a state of emergency in the area on 10 June and warned the country that further bloodshed could set back its continuing transformation, which has taken Myanmar, also known as Burma, from a reclusive military state to a quasi-democracy. (…) One risk now, analysts say, is that military leaders will put the brakes on further overhauls, even as democracy icon Aung San Suu Kyi tours Europe and Western investors study whether it is time to invest in the country. Some analysts warn that the more open political climate that has evolved in Myanmar over the past year has allowed people to use new freedoms to reopen old wounds. (…) Political leaders in the U.S. and Europe repeatedly have said that ending the country’s ethnic conflicts is an important step to permanently ending their sanctions. (…) Another group, the Karen, have threatened to block roads and otherwise disrupt a $50 billion industrial zone called Dawei that investors hope to develop now that Myanmar is opening up. In addition, periodic demonstrations against Muslim Rohingyas have spread to the main city Yangon, propelled in part by growing use of mobile phones and social-networking sites. That is driving concerns the localized clashes in Rakhine State could further poison relations between Buddhists and Muslims in more economically significant parts of the country. The clashes come at a time when many Western businesses are assessing when or how quickly to invest in Myanmar after sanctions were suspended. The country is a largely untapped market of over 50 million people and rich in natural resources—many of them in ethnic-minority areas. (The Wall Street Journal)
Heavy rain brought an uneasy calm in western Myanmar on 13 June after five days of sectarian strife, though residents were too fearful to sleep and faced food shortages. The conflict pitting ethnic Rakhine Buddhists against stateless Rohingya Muslims in coastal Rakhine state has caused at least 21 deaths and more than 1,600 homes have been torched in some of the worst sectarian unrest recorded in Myanmar in years. (…) Fears of renewed violence halted bus and ferry deliveries of food and other cargo from Yangon to Sittwe, limiting supplies and sending prices skyrocketing. Shops, banks, schools and markets were closed. (…) Ferry cargo companies that deliver to the area will resume once security is restored, said a manager at the Shwe Pyi Thit ferry service. He spoke on condition of anonymity due to sensitivities surrounding the sectarian violence. Road transport in and out of the cities stopped a few days ago. “Food is very scarce and prices are high,” said Sittwe resident Khin Thazin. She said the main market was closed and a handful of roadside vendors were out briefly in the morning but didn’t have stocks to meet the demand. “Everything sold out in an hour.” (…) The violence has prompted thousands of Muslim villagers to flee. About 1,500 Rohingyas were turned away from entering Bangladesh by boats since early June. (…) Human Rights Watch urged Bangladesh to open its border to Rohingyas seeking refuge, saying it was putting lives at grave risk. Bangladesh earlier defended its actions, saying the impoverished country’s resources already are strained. Myanmar considers Rohingyas to be illegal immigrants from Bangladesh and denies them citizenship. Bangladesh says Rohingyas have been living in Myanmar for centuries and should be recognized there as citizens. The United Nations’ refugee agency estimates 800,000 Rohingyas live in Rakhine state. Human rights groups say the face severe discrimination and abuse, and thousands attempt to flee every year. (Associated Press)

Although Nepal is no stranger to crises, the one currently seizing the country risks turning it into a failed state. On 27 May, the 601-member legislature, which had been directed to write a new constitution for what is now a democratic republic, missed its deadline for the fourth time since it was created in 2008. Hours before the deadline, after the Supreme Court refused to grant another extension, the Maoist prime minister, Baburam Bhattarai, dissolved the legislature, known as the Constituent Assembly, and scheduled nationwide elections for 22 Nov. Although averting imminent political disaster and violence, the call for elections is unlikely to bring consensus among the self-interested and fractious political leaders, and is quite likely to produce an even more divided legislature. The fitful struggle to develop a constitution both epitomizes and exacerbates the country’s ethnic, religious, geographical, caste and class divisions. (…) The protests have shut down commercial activity across a country that can ill afford such losses: with a per-capita gross domestic product of $490, Nepal is one of the poorest countries in the world; unemployment is at 45 percent. (…) Fearing a loss of power, the traditional economic and political elite, the Brahmin and Chhetri castes, who dominate the Nepali Congress Party, have begun to emulate the Maoists’ street tactics. (…) Nepal also needs a stronger judiciary selected on the basis of merit; rigorous training for prosecutors and justices; and a police force that can regain the trust of ordinary citizens, particularly in rural communities, where law enforcement is scarce. The global community can show its concern by threatening to withhold aid, which makes up 3.4 percent of Nepal’s economy. (…) Even after the November elections, political leaders will need to put stability and justice ahead of power and profit. If the culture of impunity is not uprooted, neither the elections nor a new constitution can deliver Nepal from slipping further into civil chaos, poverty and lawlessness. (The New York Times)

Sri Lanka’s former army chief-turned-opposition leader vowed on 14 June to topple the government in elections due by 2016, calling the administration corrupt and dictatorial in a speech three weeks after emerging from prison. Sarath Fonseka, once a close ally of President Mahinda Rajapaksa but now a bitter enemy, said he was in talks with other opposition lawmakers to come up with a common election strategy against Rajapaksa’s administration. “We must topple this corrupt government,” he said, in his first news conference since his 21 May release from prison. Elections, however, are not due for another four years, and the current government is unlikely to want to call early elections because it now controls two-thirds of the parliament’s seats. Also, Fonseka himself is barred from running for another seven years because of his prison term, although he said would spearhead the opposition in the interim. (The Washington Post)
Sri Lanka’s cabinet has decided to make changes to free trade deals where necessary with South Asian nations after having discussions with counterparty country or countries concerned, minister Keheliya Rambukwelle said. He said, whether a trade deal concerned India, Pakistan or Maldives, the cabinet had decided to make period reviews to see whether domestic producers were affected by such trade deals. (…) Minister Rambukwelle was responding to a media report on 14 June. The report on Sri Lanka’s Daily Mirror newspaper said some items on a sensitive list on regional trade agreements would be renewed. Trimming sensitive or negative lists increases the freedoms of citizens. Sri Lanka has seen a rise in trade protectionism in recent years with increasing restrictions placed on citizen’s ability to trade with others, in a effort to become ‘self-sufficient’ and discourage imports. (Lanka Business Online)
The U.S. Department of Defense on 13 June announced the United States, South Korea and Japan will conduct a two-day, trilateral naval exercise on 21-22 June in the waters south of the Korean peninsula. According to a Pentagon release, the exercise will focus on “improving interoperability and communications with the ROK Navy and the Japan Maritime Self Defense Force,” to facilitate cooperative disaster relief and maritime security activities in the future. The Pentagon said this exercise will be conducted “beyond the territorial waters of any coastal nation.” Immediately after the exercise, the United States will then conduct a “routine carrier operation” with the South Korean Navy in the Yellow Sea on 23-25 June, and the George Washington Carrier Strike Group will make a port call in Busan, South Korea, after completing the two exercises. Over the past year, the United States has refocused its resources to the Asia-Pacific region and boosted interactions with quite a few Asia-Pacific countries in various fields. On 4 June, Chinese Foreign Ministry spokesman Liu Weimin said seeking peace, pursuing cooperation and promoting development are the current trends and the predominant sentiment in the Asia-Pacific region. All parties should contribute to maintaining and promoting peace, stability and development in the region, he said. The spokesman said China hopes the United States plays a constructive role in the region and respects the interests and concerns of all parties there including China. (Xinhua News)
The leaders of Russia and China met 4 June to foster an evolving partnership that has counterbalanced U.S. influence and shielded Syria from international moves to halt its crackdown on a 15-month uprising. Russian President Vladimir Putin arrived in Beijing on his first visit to his country’s vast neighbor since resuming the Russian presidency earlier this month. He later sat down for talks with Chinese President Hu Jintao that are expected to touch on the crisis in Syria as well as on Iran, bilateral trade and energy cooperation, and will join a regional summit in early June. (…) Putin, meanwhile, has sought to use Russia’s burgeoning ties with Beijing as a counterweight to U.S. global predominance, and the sides have found common cause in rejecting Western calls for more open politics and respect for civil liberties. (…) Both countries also oppose further sanctions against Iran over its suspected drive to develop nuclear weapons. On the 6th and 7th of June, the Putin and Hu will be among leaders attending the annual summit of the six-member Shanghai Cooperation Organization, a grouping of Russia, China and four Central Asian states seeking to boost regional integration and curb Western influence. (…) Ties between the former Cold War rivals have grown steadily warmer over the course of Putin’s decade-long dominance of Russian political life. Along with close coordination in international affairs, they’ve sought to boost economic ties, particularly in the energy sector, setting a target of raising bilateral trade to $100 billion by 2015 from $83.5 billion last year. Despite that, disputes and mistrust linger. Moscow is unhappy with China’s copying of Russian fighter jets and other military hardware and the sides have wrangled for years about the price of gas to be delivered by two Siberian pipelines. (US News)
Although US defense officials welcome recent efforts to improve relations across the Taiwan Strait, some are starting to show a high degree of concern about possible cooperation between Taiwan and China on South China Sea disputes, Taiwanese academics say. (…) While Panetta strongly encouraged further development in that direction, in more quiet settings, US officials are reportedly expressing reservations about possible cooperation between Taiwan and China on military issues, including South China Sea disputes and an eventual mutual-trust mechanism. (…) Taiwan and China both claim several islands in the South China Sea, which has generated disputes with other regional claimants, including the Philippines and Vietnam. Alexander Huang, a professor at the Graduate Institute of International Affairs and Strategic Studies at Tamkang University, said the US was “very concerned” about Taiwan’s policy orientation in the South China Sea, adding that there was a “high degree of concern” about whether cross-strait cooperation would extend to the South China Sea. (…) National Security Bureau Director-General Tsai Der-sheng said last month the time was not right for Taiwan to implement a proposal by the NPF that both sides use the South China Sea as a “pioneer region” to implement a military mutual-trust mechanism and denied there were plans for Taiwan to cooperate with China on the issue. (Taipei Times)
New strains are emerging between China and its old ally, North Korea, six months after the death of reclusive North Korean leader Kim Jong Il. The recent North Korean hijacking of Chinese fishing boats has shaken those ties considerably, leading to public pressure on China to stand up to North Korea. Fishing boats returning to their home port in China don’t normally make the news. But they did last month, because three boats — and 28 fishermen — had been detained for almost two weeks in North Korea. “We were in Chinese waters, two nautical miles from the sea border, so we thought they couldn’t arrest us,” ship captain Han Qiang said in an interview with local TV. The fishermen thought wrong. (…) Beijing has tried to shrug this off as a “fisheries incident,” emphasizing the safe return of the fishermen. But the case has already caused an uproar online. (…) It marks a new low in ties. China and North Korea are traditionally supposed to be “as close as lips and teeth.” Beijing is Pyongyang’s biggest source of trade and aid. But relations have worsened since the death of Kim Jong Il last December. (…) “It’s hard to know what the alternative options are for Beijing. Possibly there are some economic lifelines [to North Korea] that Beijing could cut. If they did that, what are the outcomes?” he says. “All of those scenarios, not only are they uncertain, but they range from bad to worse to disastrous.” (…) Beijing has long ignored international condemnation to provide support for North Korea, but now its continued support for Pyongyang risks alienating its own people as well. (National Public Radio)
South Korea will soon become the fourth nation to join an India-China-Japan effort at coordinated anti-piracy patrols in the Gulf of Aden off Somalia, in a bid to effectively utilise their warships to escort cargo vessels in the brigand-affected waters. (…) India, Japan and China agreed on the mechanism for optimum utilisation of their warships’ patrolling of the Internationally Recommended Transit Corridor (IRTC) so that the movement of cargo vessels in convoys could be coordinated to ward off pirate attacks. Till February, the three nations were operating independently in Gulf of Aden to provide safe passage to merchant ships. The trilateral agreement was arrived at after a meeting of the Shared Awareness and De-confliction (SHADE) initiative held earlier this year. South Korea too was operating independently in the pirate-infested waters. While China has two warships and a fleet tanker in the Gulf of Aden, Japan has two warships and a maritime patrol plane operating off Djibouti close to Somalia. India has one of its warships patrolling the waters off Somalia continuously since October 2008. The coming together of the Indian, Chinese, Japanese and Korean warships in the anti-patrol effort will be the first such military joint effort by these nations. (India Daily News)

The defense and foreign ministers of South Korea and the US on 14 June agreed to seek measures to strengthen a comprehensive missile defense capability to deal with threats from North Korea’s long-range missiles. During the so-called “two-plus-two” meeting in Washington, they also agreed to establish a consultation channel on cyber security, recognizing the growing challenge posed by Pyongyang’s focus on enhancing electronic and cyber warfare tactics. (…) Dismissing speculation that the bilateral missile cooperation is part of a move to put South Korea into a wider missile defense program led by the US, Defense Minister Kim said the system fit for the terrain of the peninsula would be “low-tier” defense. “It is different from the US (missile defense system),” he said. (…) Calls for an enhanced missile defense program have mounted in recent years as Pyongyang has continued to develop longer-range ballistic missiles. Seoul is banned from developing missiles with a range of more than 300 km under a 2001 agreement with Washington. The longest-range North Korean missile under development is the Taepodong-2 missile, presumed to have a range of more than 6,700 km. It could hit parts of Alaska, but is still short of reaching the US mainland. The missile’s tests have so far failed. (…) Seoul has demanded that the range should be extended to longer than 800 kilometers to put all core military sites in the North within striking range. But Washington has apparently been reluctant over the extension as it could undermine its initiatives of nonproliferation and arms control. (…) The ministers also warned against North Korea’s provocations, stressing that the communist state with its nuclear and missile development poses a “serious threat” to the allies, the region and the international community. (The Jakarta Post)
Two South Korean shipping companies said on 15 June they had this month suspended importing crude from Iran due to a looming EU oil embargo that could effectively halt shipments of Iranian oil from July. (…) SK Energy and Hyundai Oilbank, the only refiners that were still importing Iranian oil, said the suspension was temporary as Seoul seeks an exemption from the EU embargo, being imposed over Iran’s disputed nuclear programme. Under the sanctions which come into effect on 1 July, the EU will ban European firms from insuring or reinsuring tankers transporting Iranian oil anywhere in the world. This could mean Korean refiners, who rely on European companies for insurance, are unable to import supplies. “Should things go well, (Hyundai) will likely import Iran’s crude again,” a Hyundai Oilbank official said. South Korea, which has no domestic oil resources, wants to cut shipments from Iran rather than completely halt them since they make up about 10 percent of its total crude imports. The United States has exempted South Korea and six other emerging economies from tough new sanctions after they cut back on oil purchases from Iran. The government plans to make a statement about EU sanctions on 26 June, after a meeting of EU ministers. (The Economic Times)
South Korea posted a record current account surplus with China in 2011 as exports to the world’s No. 2 economy hit an all-time high, the central bank said on 15 June. The country’s favorable current account with China hit US$56.84 billion last year, compared with the previous high of $53.53 billion in 2010, according to the Bank of Korea (BOK). It marked the largest surplus since 1998 when the BOK began to compile related data. The central bank said South Korea’s exports to China reached an unprecedented $134.20 billion in 2011, up 14.9 percent from $116.83 billion in the previous year. Outbound shipments were helped by strong demand for petroleum products and general machinery. Asia’s fourth-largest economy also expanded its current account surplus with the United States and the European Union (EU) thanks to a rise in shipments of autos and machinery products. The surplus with the United States reached $10.78 billion, up from $6.55 billion in 2010, while numbers for the EU rose from just $1.50 billion to $6.77 billion in the cited period.    The BOK also said the country’s current account surplus with Southeast Asia soared to a record high of $51.46 billion in 2011 from $33.75 billion a year earlier, helped by increased sales of steel products. (Yonhap News)

Japan is on the verge of returning to atomic power after a local mayor on 14 June gave his approval to restart a pair of reactors, idled in the wake of last year’s nuclear accident. The nuclear restart could come as soon as this weekend from 15-17 of June, Japanese media reported. It would mark a controversial victory for the central government, which has spent months arguing that Japan needs nuclear power to sustain its fragile economy. A year after the devastating earthquake and tsunami, recovery is slow on Japan’s coast, but residents endure trying conditions in the hope that, eventually, they’ll regain normal lives in functional towns. (…) But its 50 working reactors have steadily come offline because of safety concerns and routine maintenance tests, with authorities in host communities blocking efforts to bring them back online. That resistance, only now, is easing — largely because the government forecasts severe summer energy shortages for some regions if the country remains nuclear-free, as it’s been for the past six weeks. (…) Despite those forecasts, public wariness about nuclear power has continued to spread. Seventy percent of the Japanese think their country should reduce its reliance on nuclear energy, according to a recent poll from the Pew Research Center. That compares with 44 percent who believed as much in the weeks after the last year’s meltdowns. (The Washington Post)
Japan’s lower house is set to pass a bill on 15 June to provide government guarantees on insurance for Iranian crude cargoes, making it the first of Iran’s big Asian buyers to find a way to keep the oil flowing in the face of tough new EU sanctions. A European Union ban on member countries importing Iranian oil takes effect on 1 July and includes a ban on EU insurance firms from covering Iran’s exports. That is a headache for Japan, South Korea, China and India, who together buy two thirds of Iran’s oil exports and rely on EU companies to insure them. EU and U.S. sanctions aim to cut the oil revenues on which Tehran depends to force the Islamic Republic to curb its nuclear program. The West suspects Iran aims to develop weapons, while Tehran says it needs reactors for electricity supplies. Japan’s special insurance bill is expected to go through the upper house and become law before the parliamentary session ends on 21 June, the Yomiuri newspaper reported on 14 June. Iranian oil accounted for nearly 9 percent of Japan’s crude imports last year. Japan has reduced the flow already to comply with U.S. sanctions requiring buyers to make sizeable cuts to Iranian imports, but wants to avoid more drastic reductions that may drive up energy import costs and hurt the world’s third-largest economy. Japan won a waiver from U.S. sanctions for those cuts, which refiners enacted even as they dealt with an increase in overall oil demand after last year’s Fukushima disaster shut down the country’s nuclear power stations. (Reuters)

North Korea’s military threatened on 4 June to blow up the Seoul offices of South Korean media outlets following critical coverage of a mass children’s event in Pyongyang. (…) The statement named the Chosun Ilbo and JoongAng Ilbo newspapers, a TV channel operated by Dong-A Ilbo newspaper, and the KBS, CBS, MBC and SBS television stations. The North’s military accused conservative South Korean President Lee Myung-Bak of inciting the coverage and called on him to apologise to avert an attack. “In case dens of monstrous crimes are blown up one after another, the Lee group will be entirely held responsible for this,” it said in what it termed an “open ultimatum”. The military accused the media outlets of “monstrous mud-slinging” over their coverage of an event which brought 20,000 schoolchildren to Pyongyang to mark the 66th anniversary of the Korean Children’s Union. Pyongyang’s official Korea Central News Agency reported 2 June that the children pledged their loyalty to new leader Kim Jong-un. (…) Seoul’s unification ministry, which handles cross-border affairs, said Pyongyang’s latest threat was “completely out of line”. (…) Jong-un took over last December from his deceased father and longtime leader Kim Jong-il, the second power transfer within the Kim dynasty which has ruled the isolated communist state since its founding in 1948. The new regime has intensified hostile commentary against the South and threatened “sacred war” as it tries to bolster the young Kim’s leadership. (The Telegraph)
North Korea says it has no plans to conduct a third nuclear test “at present”, but has hit out at what it says is provocation from South Korea. Seoul was trying to “rattle the nerves of the DPRK in a bid to cause it to conduct a nuclear test” a foreign ministry spokesman said. The remarks were carried by Pyongyang’s official news agency, KCNA. They come weeks after satellite images suggested a “major upgrade” under way at North Korea’s rocket launch site. Work at the Musudan-ri site showed “rapid progress” since mid-2011, analysis by a US institute suggested. There has been speculation that the North will conduct a third nuclear test, after the UN Security Council tightened sanctions on Pyongyang in the wake of the North’s failed rocket launch in April. The North responded with atomic tests in 2006 and 2009 after UN imposed sanctions against its rocket launches. The US has warned that a nuclear test would lead to a “swift and sure response” from the region, saying any such move by Pyongyang would be “a serious miscalculation”. Pyongyang’s missile and nuclear ambitions have faced increased scrutiny in recent months, following the death of Kim Jong-il last December and installation of his son Kim Jong-un as leader. (BBC News)
North Korea’s abilities to wage a devastating cyber war are behind only those of the United States and Russia, after the isolated nation has devoted more than thirty years toward development and research, a South Korean expert has claimed. All that prep is finally paying off for the North Koreans. That declaration, by information security professor Lee Dong-hoon, comes in the wake of two weeks of devastating attacks on GPS signals which interfered with signals throughout the Korean peninsula. The GPS jamming, which was carried out unabated by North Korea’s Reconnaissance General Bureau, were carried out from 28 April to 13 May, Stars and Stripes reported. That agency is quickly becoming the bane of the world’s cyber-defense industry. (…) This isn’t the first time they’ve landed successful hits, not by a long shot. In 2009, South Korean military sites suffered a massive Distributed Denial of Service (DDoS) attack, an cyber strategy wherein a group of antagonists bombard a target website with such a volume of hits and requests that the site is knocked down, rendering it unusable for people who actually need it. That attack, likely carried out by Pyongyang Computer Technology University, knocked out 26 South Korean and foreign governmental websites. But this latest attack had sweeping, real-world impacts. The latest hit, against the GPS signal in South Korea, cause national disruption and confusion in air traffic control and maritime transit. Moreover, the North Korans have been devoted to hacking South Korean defense systems, and their dedication is still causing problems. (Business Insider)
Millions of North Korean children are not getting the food, medicine or health care they need to develop physically or mentally, leaving many stunted and malnourished, the United Nations said on 12 June. Nearly a third of children under age 5 show signs of stunting, particularly in rural areas where food is scarce, and chronic diarrhea due to a lack of clean water, sanitation and electricity has become the leading cause of death among children, the agency said. Hospitals are spotless but bare; few have running water or power, and drugs and medicine are in short supply, the agency said in a detailed update on the humanitarian situation in North Korea. (…) The report paints a horrific picture of deprivation in the countryside, not often seen by outsiders, who are usually not allowed to travel beyond the relatively prosperous Pyongyang, where cherubic children are hand-picked to attend government celebrations and a middle-class with a taste for good food have the means to eat out. (…) But many donor countries remain skeptical whether food aid would reach the hungry or be diverted to the nation’s powerful elite or million-man military. The World Food Program issued a global appeal for $218 million in emergency food aid in 2011, saying a quarter of North Korea’s population needed foreign food handouts to keep from going hungry. It received only $85 million. South Korea had been one of North Korea’s biggest benefactors until conservative President Lee Myung-bak took office in 2008, ending unconditional aid by linking it to progress on North Korea’s nuclear disarmament process. Seoul has no immediate plans to resume massive direct food and fertilizer aid to North Korea, South Korean Unification Ministry spokeswoman Park Soo-jin said on 12 June. A North Korean long-range rocket launch in April also scuttled a deal with the U.S. that would have sent 240,000 metric tons of food aid in exchange for a moratorium on nuclear and missile tests. (…) Despite the dire conditions, North Korea remains defiant. The state-run Korean Central News Agency recently accused the West of manipulating food prices as a form of imperialism, and urged North Koreans to become self-sufficient before turning to outside help. (CBS News)
Australia pledged on 14 June to provide troops and resources in Afghanistan beyond a 2014 deadline to withdraw combat forces, a commitment that came as NATO’s chief vowed the alliance would not leave a security vacuum in the country. The announcement followed news of a joint political declaration between Australia and NATO during a news conference in the Australian capital of Canberra. The agreement unites Australia and NATO in battling terrorism, piracy and cyber crimes, though the primary focus in the near term will be on Afghan security forces. “Afghanistan will be a central to our focus for our partnership for some time to come,” Prime Minister Julia Gillard said. Australia will provide troops to train Afghan security forces as well as resources to the country, she said without spelling out specifics. NATO plans to remove its final combat troops and hand over full security responsibility to Afghanistan at the end of 2014. The Afghan government is set to have about 350,000 of its own security forces in place then – with a yet undetermined number of international forces left behind to train them. Rasmussen has said some NATO members have agreed to contribute money for the $4 billion a year needed to help fund Afghan security forces. (CNN)
On 14 June Pakistan and Australia reviewed their defence cooperation and the general direction and scope of Australia’s development assistance programme for Pakistan. The 2nd session of Pakistan-Australia Bilateral Consultations was held in Canberra which was attended by Foreign Secretary Jalil Abbas Jilani. The Foreign Secretary also held meetings with Stephen Smith, Minister of Defence,Peter Baxter, Director General, AusAID and Dr. Margot McCarthy, National Security Adviser, said a statement issued by foreign office here 14 June. During his meeting with the Defence Minister, overall Pakistan-Australia Defence Cooperation, which has registered significant growth over the past five years, was reviewed. Australia has become the second largest capacity building provider for Pakistan Armed Forces. Pakistan’s role as front line state in war against terror was deeply appreciated by the Australian side. (Business Recorder)

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