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

LDESP PACOM News Update – September 2012

LDESP USPACOM NEWS UPDATE: 17 September 2012

This edition’s featured topic: a discussion on “China’s Territory Disputes: a Nexus between Economy, Military, and Leadership.” See the blog post here to be part of the discussion.

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.

China’s Claim Over Sea ‘Indisputable’

China on 13 September said the Philippines’ move renaming South China Sea to West Philippine Sea would not make a difference to its “indisputable sovereignty claims” over the area. “The action of the Philippine side will not change the fact that China enjoys indisputable sovereignty over the islands in the South China Sea including Nansha Islands and Huangyan Island, and their adjacent waters,” Hong Lei, spokesman of China’s Ministry of Foreign Affairs, said in a statement. In his statement, Lei argued that the name South China Sea had long been a geographic name universally recognized by the international community, and that the name was widely accepted by countries all over the world and by international organizations such as the United Nations. China issued the statement a day after President Aquino announced that he had signed an administrative order (AO) renaming the South China Sea waters within the country’s exclusive economic zone (EEZ) West Philippine Sea.(…) In a press briefing on 13 September, Raul Hernandez, spokesman for the Department of Foreign Affairs (DFA), said that at an appropriate time, it would submit to the United Nations and other relevant organizations copies of the administrative order and maps showing the West Philippine Sea for purposes of being internationally recognized. (Inquirer Global Nation)
The strange disappearance from public view of China’s presumptive new leader is turning a year that was supposed to showcase the Communist Party’s stability into something of an annus horribilis. (…) The new leader, Xi Jinping, has missed at least three scheduled meetings with foreign dignitaries, including Secretary of State Hillary Rodham Clinton on 5 September and the prime minister of Denmark on 3 September. So far officials have declined to provide an explanation for his absences. Whatever the actual reason, Mr. Xi’s unexplained absences are conspicuous on the eve of what is supposed to be China’s once-in-a-decade transfer of power. It also adds to a litany of woes that have disrupted the Communist Party’s hopes that a seamless political transition would send a signal of stability to the Chinese people and the world at large. Two unusual political scandals have sidelined people considered contenders for seats on the all-powerful Politburo Standing Committee, most recently including a close ally of President Hu Jintao’s. China’s economy has fallen into an unexpectedly deep slump, confounding government forecasts for a measured slowdown. Party leaders have also yet to announce a date for the 18th Party Congress, the event to mark the retirement of this generation of leaders and the accession of the next, though it is supposed to take place as soon as October. (New York Times)
China’s imports unexpectedly fell and industrial output rose the least in three years, signaling more stimulus may be needed after the government in early September said it approved subway and road projects across the nation. Inbound shipments slid 2.6 percent in August from a year earlier as exports rose 2.7 percent, the customs bureau said in Beijing on 9 September. Production increased 8.9 percent, the National Bureau of Statistics said on 9 September. Inflation accelerated for the first time in five months. The data underscore risks that full-year growth in the world’s second-biggest economy will slide to the lowest in more than two decades, undermining support for the ruling Communist Party before a once-in-a-decade leadership transition due later this year. The rebound in inflation, excess capacity in some industries and banks’ bad debt risks from past monetary easing highlight the potential cost of ramping up stimulus efforts. (Businessweek)
August export growth is forecast by analysts in a Reuters poll to have been just 3 percent year on year, which would make it the weakest August since 2009 – near the depths of the global financial crisis and underlining President Hu Jintao’s warning of the “grave challenges” posed by the world economy. (…) Such weak growth would be grim news in a country where exports generate 25 percent of gross domestic product, support an estimated 200 million jobs and where analysts already expect the economy to have its weakest year of expansion since 1999. Some economists fear the outlook is so poor that China may miss its official 7.5 percent growth target for 2012 without a fresh round of swift policy stimulus on top of the monetary and fiscal easing undertaken since last year and the $150 billion-worth of infrastructure projects announced in early September. Those fears were amplified by data on 9 September showing industrial output growth hit its weakest annual pace in August in more than three years. (…) China’s biggest customers are the debt-ridden, recession-bound European Union and the still struggling United States. Without a big boost in demand from those two economies, Beijing policymakers face an uphill battle. (Reuters)
The South China Sea and coastal passages from Malaysia to Russia are of vital economic interest to all who ply the shipping lanes used to ferry more than $1.2 trillion in goods annually between the United States and its Far East trading partners. But for the past decade the U.S. has been distracted with wars in faraway Iraq and Afghanistan, leaving allies like Japan, South Korea and the Philippines on their own to face an increasingly assertive China staking claims to the islands and the natural resources around them. (…) As the United States recalibrates its foreign policy to recover its standing in East Asia, analysts say Washington must execute a delicate balancing act to nurture relations with China while preventing it from bullying weaker countries. In the South China Sea, Beijing in August deployed a military garrison and administrative staff to bolster its claim to Scarborough Reef, a triangular atoll framed by China, Vietnam and the Philippines. Vietnamese officials complain that China last year sabotaged its oil exploration by cutting undersea cables. In April, Manila accused Beijing of blockading a key fishing ground to prevent the arrest of Chinese poachers. Taiwan, Malaysia and Brunei also assert sovereignty over some islets. (Los Angeles Times)
U.S. Defense Secretary Leon Panetta will look for ways to deepen military relations with China during a visit to Asia in September, even as he works to bolster U.S. alliances in the region as part of a strategic shift that Beijing views with concern. Panetta, who arrived in Tokyo on 16 September, is making his third trip to Asia as defense secretary at a time when China is embroiled in testy territorial disputes with Japan and the Philippines, two key U.S. allies in the region. Scores of cities across China erupted in anti-Japan protests at the weekend in which demonstrators looted shops and attacked Japanese cars and restaurants. They were angered by Japan’s decision on 11 September to buy a tiny group of disputed islands which Tokyo calls the Senkaku and Beijing calls the Diaoyu from a private Japanese owner. Panetta will discuss with Japanese officials the realignment of U.S. military basing in Japan and expanding ballistic missile defense cooperation before heading to Beijing to try to deepen and broaden military-to-military ties. (…) Senior U.S. and Chinese defense officials have made an effort to push their military relationship forward since it resumed a year and a half ago after a bitter break over U.S. arms sales to self-ruled Taiwan, which Beijing views as a breakaway province. (…) U.S. defense officials pressed for a restoration of military-to-military ties with China due to concerns about the direction of Beijing’s military modernization efforts, including development of anti-ship missiles, stealth aircraft and its first aircraft carrier. Many of the weapons worry U.S. military leaders because they appear to be aimed at countering U.S. strengths and denying U.S. access to waterways in the region. U.S. defense officials believe that by engaging in cooperative efforts with the Chinese military, the two sides will gain greater familiarity with each other’s operations and develop transparency and communications channels that can help avoid misunderstandings that could lead to conflict. (…) The United States is officially neutral on the territorial disputes and has urged the parties involved to settle their disputes peacefully, a point Panetta said he would raise in Beijing. (Reuters)
China on 4 September pressed the United States to keep out of its dispute with Asian neighbors over who controls the vast South China Sea, as Secretary of State Hillary Rodham Clinton arrived here as part of a tour of the region. She urged the states — including allies Thailand and the Philippines — to present a united front to the Chinese to “calm the waters.” She reiterated that President Obama has taken no position on China’s claims but said the matter should be resolved “without coercion, without intimidation and certainly without the use of force.” The Chinese foreign ministry said it hoped that the United States would maintain that position.”We hope the U.S. side will keep its commitment and make efforts that help, rather than harm, regional peace,” Foreign Ministry official Hong Lei said. “China, like all other countries in the world, has an obligation to safeguard its sovereignty and territorial integrity.” (…) The Obama administration supports the promotion of a regionally endorsed code of conduct that all claimants should observe regarding territorial claims. China, however, wants any territorial disputes to be resolved between it and individual countries. Yan Xuetong, a scholar at Qinghua University in Beijing, said both sides seek conciliation but any reduction in tensions will be temporary in China and the United States’ “superficial friendship.” (USA Today)

China is moving ahead with the development of a new and more capable generation of intercontinental ballistic missiles and submarine-launched missiles, increasing its existing ability to deliver nuclear warheads to the United States and to overwhelm missile defense systems, military analysts said in late August. (…) The Global Times, a newspaper directly controlled by the Chinese Communist Party, reported on 22 August that China was developing the capability to put multiple warheads on intercontinental ballistic missiles, or ICBMs. But the newspaper disputed a report in Jane’s Defense Weekly that the latest Chinese ICBM, the Dongfeng-41, had been tested in July. (…) Larry M. Wortzel, of the United States-China Economic and Security Review Commission, a panel created by Congress, said that China was developing the capability to put as many as 10 nuclear warheads on an ICBM, although dummy warheads could be substituted for some of the nuclear warheads. The dummy warheads would have heat and electromagnetic devices designed to trick missile defense systems, he said. “The bigger implication of this is that as they begin to field a force of missiles with multiple warheads, it means everything we assume about the size of their nuclear arsenal becomes wrong,” said Mr. Wortzel, who is a former military intelligence officer and retired Army colonel. (…) “I have no doubt that one of the goals of the missile defenses is to contain threats from North Korea, but objectively speaking, a high-tech expansion of U.S. military biceps impacts China, too,” said Shi Yinhong, a professor of international relations at Renmin University in Beijing. He added that discussions had taken place in China on whether to develop missile defense systems as well. (New York Times)
Japan says it will mobilize its coast guard when Chinese government ships reach a disputed archipelago in the East China Sea, raising the possibility of a confrontation between the two powerful Asian nations. (…) Japan’s coast guard has confronted Chinese fisherman and nationalists in the waters of the archipelago several times in recent years. Tokyo refers to the disputed islands as Senkaku, while Beijing calls them Diaoyu. The waters around the islands contain rich fishing grounds and potential oil reserves. Tokyo annexed the archipelago in 1895. Beijing claimed sovereignty over the islands in 1971 and called them part of Chinese territory since ancient times. China said it sent the government ships to the archipelago in response to the Japanese government’s decision to buy some of the islands from a Japanese family that has owned them for decades. Japanese officials said the deal was aimed at keeping the islands under “peaceful and stable maintenance.” (Voice of America)
A house in has become an unlikely setting for South Korea’s festering grievances against Japan and a reminder of an old rift between the two staunch U.S. allies. More than a century ago, the building housed the first Korean diplomatic mission in the U.S. But shortly before annexing Korea in 1910, imperial Japan bought it for a nominal fee then sold it off. Now South Korea has reacquired it and plans to use the building to showcase its history — a jab at modern-day Japan. (…) The Japanese occupation of Korea ended with the fascist defeat in World War II. (…) Japan issued a formal apology in 1993 but has failed to convince South Korea it is truly contrite about its wartime record. (…) Nowadays the two nations have many reasons to get along. Both are well-established and prosperous democracies that share U.S.-supported interests in countering the nuclear threat of North Korea and managing China’s rise as the region’s superpower. The U.S is keen to promote Japan-South Korea ties to help sustain American influence in the region. (…) Also, Japan claims tiny islands that are occupied by South Korea. That dispute escalated last month when South Korean President Lee Myung-bak made an unprecedented visit to the rocky Dokdo islands — called Takeshima by Japan — in the Sea of Japan. That drew unusually stern criticism from Japan, whose Prime Minister Yoshihiko Noda sent a letter of protest, only for South Korea to reject it and send it back — by registered post. (Washington Post, Associated Press)
North Korea is willing to accept aid from South Korea after devastating floods left scores dead and tens of thousands homeless, South Korean officials said on 10 September. But what the country will get and how has yet to be decided. If the two countries can reach agreement on an aid package, this would be the first time that North Korea has accepted aid from its southern neighbor since Kim Jong Un became leader of the isolated country -– a possible breakthrough after years of chilly relations between the two countries. South Korea halted aid to North Korea nearly two years ago after North Korea shelled a southern island, killing four people; it later provided $5.7 million for malnourished children through UNICEF. Past talk of aid for North Korea has been hampered by disagreements over what will be provided and how it will be monitored, a reflection of fears that aid meant for the needy will be funneled instead to the elite. (Los Angeles Times)
Japan and North Korea kicked off their first direct talks in four years, in a move analysts see as reflecting Pyongyang’s desire to stabilize its new regime through diplomacy and economic reform. The two countries have never had formal diplomatic ties, and relations have been severely strained over the years by North Korea’s abductions of Japanese citizens in the 1970s and 1980s, as well as the North’s firing of ballistic missiles over Japan and its nuclear program.
While the primary topic of the meeting on 29 August in Beijing will be repatriating the remains of Japanese who died in Korea at the end of World War II, the focus will be on whether the two nations can make progress on the abduction issue. The meeting is also the first between the two nations since North Korean leader Kim Jong-un took power after his father Kim Jong Il died in December, and will be closely watched for clues as to the new leader’s foreign policy. (The Wall Street Journal)
China, Russia, Mongolia and the Republic of Korea agreed on 9 September to boost tourism in Northeast Asia. The agreement, a memo signed at a forum involving the United Nations Development Program and Jilin province authorities, aims to promote cross-border tourism. (…) Cross-border tourism provided the best opportunity to enhance the region’s prosperity and security. The Greater Tumen Initiative is an intergovernmental cooperation mechanism in Northeast Asia. It is supported by the UNDP, and has four member countries, China, the ROK, Mongolia and Russia. It functions as a platform for economic cooperation in Northeast Asia and serves as a catalyst for policy dialogue in areas of transportation, energy, tourism, investment and environment. Tourism is booming in Northeast Asia. The Tumen River area is home to a wide variety of tourist attractions, ranging from spectacular natural beauty to heritage. The China National Tourism Administration said that the Asia-Pacific region attracted 170 million international tourists annually and over half of them traveled to Northeast Asia. The region’s annual average tourism growth rate reached 7.7 percent from 2000 to 2010. (Global Travel Industry News)
In its first comprehensive energy review since the Fukushima disaster, Japan said on 14 September that it would seek to phase out nuclear power by the end of the 2030s — but only after a longer-than-expected transition that would give power companies decades to recoup their investments and brace for a nonnuclear future. The energy strategy, which would call for a 40-year life span for reactors and limit the construction of nuclear plants, reflects a historic shift away from nuclear power since the accident last year. In announcing the plan, Motohisa Furukawa, the minister of state for national policy, seemed to suggest that the measures were loose guidelines open to revision and discussion. For example, he said the government would leave to future discussion whether five reactors that would be younger than 40 years by the end of the 2030s would be forced to close — leaving open the possibility that some reactors will remain running into the 2040s and beyond. (…) The government also has little legal recourse to force a nuclear plant to close. And he said there was no change to the government’s quest to restart reactors for now, most of which remain idle following the Fukushima accident, despite nationwide rallies protesting those restarts. (…) On top of the vagueness of its terms, the new policy is fraught with uncertainties. The unpopular prime minister, Yoshihiko Noda, and his governing Democratic Party are likely to lose the next national election, calling into question whether any long-term policy he sets will stick. (The New York Times)
Japan lowered the assessment for its economy, the first consecutive downgrade since the waning of the global credit crunch in 2009, fueling concern the world’s third-largest economy will contract this quarter. Japan’s “recovery appears to be pausing due to deceleration of the world economy,” the Cabinet Office said in a monthly report released in Tokyo on 14 September. “Private consumption is almost flat,” while industrial production and exports are weakening, it said. With the nation’s rebound from last year’s tsunami-induced contraction waning, Finance Minister Jun Azumi on 14 September signaled Japan is prepared to counter gains in the yen that would further curtail exports, and is open to fiscal stimulus. The downgrade may also escalate pressure on the Bank of Japan in late September to follow its U.S. counterpart and expand quantitative easing. (…)While maintaining its appraisal of the global economy, the government said on 14 September that the “further slowing down of overseas economies” is a downside risk to Japan. The euro area’s economy contracted in the second quarter as consumers cut spending and corporate investment slumped. China’s industrial output in August grew at the slowest pace in three years, and imports to the world’s second-biggest economy unexpectedly fell last month. (Bloomberg Businessweek)
The U.S. and South Korea began annual military exercises on 19 August, two days after North Korean leader Kim Jong Un praised the army unit responsible for killing four South Koreans in 2010. (…) A total of 33,000 U.S. troops stationed in South Korea and other bases will participate in the Ulchi Freedom Guardian drills that run until Aug. 31, the United Nations Combined Forces Command said in an e-mailed statement. North Korea was informed of the training’s “non-provocative nature,” according to the statement, which didn’t give South Korean troop numbers. (…) North Korea routinely vows retaliation against the drills, saying they provoke conflict in the region. North Korean leader Kim Jong Un toured military units on western border islands and told them to prepare for “sacred war” should “even a single shell” hit the country’s territory, the official Korean Central News Agency said 18 August. (…) The islands Kim toured included the one closest to South Korea’s Yeonpyeong Island, which North Korea shelled in November 2010, killing two South Korean soldiers and two civilians. (…) South Korea will simultaneously hold an annual four-day exercise starting on 20 August to rehearse government contingency plans for national emergencies. About 410,000 bureaucrats in 3,500 public offices will participate, according to the Ministry of Public Administration and Security. (Bloomberg)
A powerful typhoon pounded South Korea with strong winds and heavy rain 28 August, killing nine and churning up rough seas that smashed two Chinese fishing ships into rocks and forced the coast guard to perform a daring rescue of survivors. Rescuers saved 12 fishermen and searched for 10 still missing from the ships that hit rocks off South Korea’s southern Jeju island. Five fishermen were killed, officials said. Separately, at least four other people died as Typhoon Bolaven knocked out power to hundreds of thousands of South Koreans, canceled flights and temporarily halted joint war games by U.S. and South Korean military forces. (…)Weather officials had warned that Bolaven would be the strongest typhoon to hit the region in several years, but its gusts weren’t as powerful as predicted. (Boston.com, Associate Press)
Standard & Poor’s raised South Korea’s sovereign credit rating by one notch to A-plus from A on 14 September, joining the other two global credit rating firms in upgrading Asia’s fourth-largest economy. It was the first time in seven years that S&P upgraded South Korea’s rating. S&P assigned a stable outlook to the A-plus rating. The upgrade followed similar moves by Moody’s Investors Service on 27 August and by Fitch Ratings on 6 September. Korea’s Ministry of Strategy and Finance said it welcomed S&P’s decision as encouraging as all three major international ratings companies have raised South Korea’s sovereign credit rating by one notch. S&P’s rating for South Korea is now one notch below those of Fitch and Moody’s. The ministry said it expects the move to help the country’s businesses and financial institutions lower their borrowing costs overseas. The S&P move helped bolster the Korean won, which rose to a six-month high. (…) The local currency was strengthening earlier in the 13 September session on quantitative easing announcement by the U.S. Federal Reserve. (Wall Street Journal)
While the region’s attention has remained focused on whether the new North Korean leader, Kim Jong-un, can consolidate his power, his country has been making significant progress in the construction of a new reactor widely seen as a cover for making more fuel for nuclear weapons, analysts say, citing satellite imagery of the building site. The experimental light-water reactor under construction — and North Korea’s efforts to enrich uranium — could eventually provide the country with a means to increase its nuclear stockpile significantly, experts have warned. After its negotiations with the United States collapsed in 2009, North Korea announced that it would build an indigenously designed light-water reactor as a pilot project for a nuclear power industry, and that it would also enrich uranium to fuel that reactor. The government unveiled in 2010 a centrifuge plant for enrichment in Yongbyon, its main nuclear complex. But experts say North Korea may also use the plant to produce highly enriched uranium, a type of fuel for nuclear bombs. The reactor under construction in Yongbyon could be designed to allow engineers to turn its spent fuel into plutonium, another fuel for nuclear arms. (The New York Times)
Deep in the North Korean countryside, in remote villages that outsiders seldom reach, farmers are now said to be given nearly one-third of their harvests to sell at market prices. Collective farms are reportedly being reorganized into something closer to family farms. State propagandists are expounding the glories of change under the country’s new young leader. In the rigidly planned economy of this Stalinist state, could this be the first flicker of reform? A string of long-doubtful observers have become increasingly convinced that economic change is afoot, akin to China’s first flirtations with market reforms 30 years ago. But, they also warn, exactly what is happening remains a mystery. No outsiders are known to have been to the villages, in Ryanggang province, since the new policies reportedly went into effect. No outsiders have seen the details of the June 28 government order — “On the Establishing of a New Economic Management System in Our Own Style” — that supposedly launched the program. Other reported reforms, from shifts in investment laws to new industrial profit-sharing regulations, are even more opaque. Still, there are undeniable signs that the world’s most closed-off society may be toying with change, from a carefully scripted campaign to soften the image of the country’s young leader, Kim Jong Un, to the apparent purging of a hardline general and a series of often-cryptic official statements hinting that Pyongyang is serious about liberalizing its economy. (U.S. News & World Report, Associated Press)
Iran and North Korea signed a scientific and technological cooperation agreement on 1 September, bringing the two nations deeply at odds with the U.S. closer together. Iranian state TV did not provide further details on the document but said it will include setting up joint scientific and technological laboratories, exchange of scientific teams between the two countries and transfer of technology in the fields of information technology, energy, environment, agriculture and food. Any technical accord between Pyongyang and Tehran is likely to raise suspicions in the West. The U.S. has repeatedly accused North Korea of providing Iran with advanced missiles capable of targeting Western European capitals. Last year, Iran denied a U.N. panel report saying that North Korea and Iran appear to have been regularly exchanging ballistic missiles, components and technology in violation of U.N. sanctions. Iran’s state TV said the agreement was signed in Tehran in the presence of Iranian President Mahmoud Ahmadinejad and North Korea’s nominal head of state, Kim Yong Nam, by Iran’s Minister of Science, Research and Technology Kamran Daneshjoo and North Korea’s Foreign Minister Pak Ui Chun. (The Washington Post, Associated Press)
It is not clear whether China will be prepared to host him, as requested, in September when Beijing will be preoccupied with its own leadership change. The leadership may also have its doubts about the unproven Kim Jong-un, who after only four months in office, defied his giant neighbor by conducting a long-range rocket test. A source with ties to both Pyongyang and Beijing told Reuters on 24 August that Kim’s uncle, Jang Song-thaek, effectively the second most powerful figure in Pyongyang, had asked for the visit when he met Chinese leaders on a visit to Beijing in August. (Reuters)
Pakistan and India signed a new visa agreement on 8 September that makes cross-border travel easier, the latest sign of thawing relations between two nuclear-armed countries that have long seen each other as enemies. Pakistani Foreign Minister Hina Rabbani Khar announced the agreement during a press conference in Islamabad with her Indian counterpart, S.M. Krishna. Both spoke positively about the momentum in reducing tension between the countries. (…) “Today there is a deep commitment from both political leaderships to ensure that the narrative that we build for our future generations is that of looking at this relationship with a different lens,” said Khar. But Krishna’s three-day visit to Pakistan, which ended on 9 September, did not produced any breakthroughs on the major conflicts between the two neighbors, including Islamist militancy and the disputed territory of Kashmir. (…) Despite the disagreement over the Mumbai attack, relations between the countries have improved somewhat over the last two years, especially with respect to trade. Pakistan announced late last year that it would grant India “Most Favored Nation” trade status, which would reduce tariffs. New Delhi gave that status to Pakistan in 1996. The announcement was seen as significant because it indicated Pakistan’s powerful army supported greater trade with India to improve the nation’s flagging economy. The army had always been seen as a barrier to a better relationship with India. The new visa agreement signed on 8 September should also increase goodwill between the two countries. The agreement makes travel easier for businesspeople, tourists, religious pilgrims, children and the elderly. (Washington Post, Associated Press)
A group of 171 Pakistani Hindus, who arrived in India on 9 September on pilgrim visas, say they will not return. The group arrived in Jodhpur city in the western state of Rajasthan on the Thar Express train which travels between India and Pakistan. The arrivals are the latest in a series of minority Hindus fleeing to India alleging persecution in Pakistan. Islamabad has repeatedly said its Hindu minority community is safe and reports of their leaving are exaggerated. (…) The Pakistani Hindus narrated their ordeal as relatives gathered at the Jodhpur railway station to receive them. “I lost my father recently and did not get a place to perform his last rites, we were denied wherever we went. You cannot even imagine our pain,” said the leader of group who did not wish be identified. “We will not return to Pakistan, you can kill us here, but we do not want to go back. Every day we face persecution and our troubles have doubled with the rise of Islamic extremism,” he added. (BBC)
At the bottom of the Indian subcontinent, a fishing war is straining relations between India and Sri Lanka as Indian fishermen, often poor and desperate, regularly cross into Sri Lankan waters and run afoul of the Sri Lankan Navy. Figures differ, but according to one report at least 100 Indian fishermen have been killed and 350 seriously injured in recent years — another example of the volatility of maritime issues in Asia. The dispute is rooted in a complicated blend of local factors: the steady depletion of fish stocks, partly because of overfishing by Indian trawlers; the aftermath of the 2004 tsunami, which saw relief funds partly used to expand the Indian fishing fleet even as fish populations declined; and the end of the long Sri Lankan civil war in 2009, which has meant the return of the nation’s fishing boats to waters once plied almost exclusively by Indians. The dispute is intensified by history and proximity. At the closest point, the two countries are separated by barely 10 nautical miles, even as both sides are bound by ethnicity. Tamils dominate India’s southern state of Tamil Nadu and have close cultural ties to Tamils in Sri Lanka, even providing support to Tamil rebels or accepting refugees during the fighting that ended with a government victory. (…) During the Sri Lankan civil war, Indian fishing boats faced risks and, occasionally, live fire from Sri Lankan gunboats. More often, though, the Sri Lankan Navy was distracted by the war, allowing Indian boats to operate freely and with little competition, since Sri Lanka’s fishing fleet was often grounded by the conflict. Now, though, Sri Lankan fishermen are returning to the sea and have complained of poaching and overfishing by Indians — especially the extensive Indian use of bottom trawlers and monofilament nylon nets, each banned in Sri Lanka. In February 2011, Sri Lankan fishermen formed a flotilla and captured 18 Indian trawlers and 112 fishermen before releasing the boats under government pressure. (…) V. Vivekanandan, a longtime advocate for Indian fishermen who has closely studied the dispute, said that diplomatic efforts had mostly stalled and that regional fishing management guidelines were needed. He said the number of Indian fishing boats and trawlers had jumped significantly, partly because of relief funds made available after the tsunami. He called for a regional commission, with representatives from both countries, to manage the dwindling fishing resources and to adjudicate disputes. “There’s not enough fish,” Mr. Vivekanandan said. “There has been a huge increase in the fishing capacity, which contributes to a lower catch per boat.” (New York Times)
The same tensions coursing through the fishing dispute between India and Sri Lanka are now contributing to an ugly spectacle in Tamil Nadu as Indian protesters on 4 September stoned busses carrying Sri Lankan pilgrims. The Sri Lankan government issued a travel advisory and arranged for a special plane to transport pilgrims home. The attack followed earlier protests and prompted India’s Ministry of External Affairs to offer reassurances that Sri Lankans are safe in India. (…) From New Delhi, where foreign policy attention is usually focused on Pakistan and China, it is easy to forget that Sri Lanka remains a potent, explosive issue in Tamil Nadu, roughly three years after the Sri Lankan government defeated Tamil rebels to end of the bloody Sri Lankan civil war. Since then, officials in New Delhi have worked to maintain relations with Sri Lanka, even as state leaders in Tamil Nadu want India to pressure Sri Lankan leaders on the post-war treatment of Tamils and to ensure that their rights are equal to the island nation’s Sinhalese majority. (New York Times)
The India-Nepal border will soon have symbolic ornamental iron gates at 10 security check posts-manned by the Sashastra Seema Bal. These gates will be crafted by a professional designer and come up at places where maximum transit of passengers are reported. Speaking to The Indian Express, Pranay Sahay, DG, SSB said, “The international border along Nepal is non-fenced and there are no security gates either. While the Nepal side has nice-looking gates, we only have security check-posts. We have decided to put proper decorative gates designed by a professional to give it the look of an international border. We have already identified the places and the work will begin soon. As Nepal is a friendly country we will have colourful border ceremonies with no aggressive postures by the security officials.” The SSB, which manages the security along the 1,761 km-long border with Nepal has decided to move the location of its border outposts at least 15 km ahead of where they are presently located. (Indian Express)
The United States on 13 September urged Bangladesh to keep its border open to Rohingya refugees fleeing Myanmar in the wake of June violence but advocated their safe repatriation as a long-term solution. A delegation of the U.S. State Department recently visited the troubled region in Myanmar where violence between Rakhaine Buddhists and Rohingya Muslims in June left at least 80 people dead. The team later visited refugee camps of Rohingya in Bangladesh’s southern Cox’s Bazar district. U.S. officials said at a news conference in Dhaka that the situation in Myanmar was still grave for the Rohingya people. They urged both Myanmar and Bangladesh to work out a long-term solution while stressed the need for providing food and basic healthcare to stateless Rohingya. Dan W. Mozena praised Bangladesh for its years of support to the Rohingya people but urged the country to do more for tens of thousands of undocumented Rohingya in Bangladesh. (…) The government of Prime Minister Sheikh Hasina earlier this year asked three international organizations to stop providing services to undocumented Rohingya to discourage fresh refugees from Myanmar. The government says it needs to take precautions because it has intelligence reports that some Islamic militant groups have targeted the Rohingya refugees for recruitment. The U.S. officials were concerned about the situation of Rohingya people in Myanmar, said one of the delegation who visited there, Kelly Clements, deputy assistant secretary for Bureau of Population, Refugees and Migration. (…) Myanmar considers the Rohingya to be illegal immigrants from Bangladesh and denies them citizenship. Bangladesh says Rohingya have been living in Myanmar for centuries and should be recognized there as citizens. In the 1990s, about 250,000 Rohingya Muslims fled to Bangladesh in the face of alleged persecution by the military junta. (Washington Post, Associated Press)
India ushered in the biggest economic reforms in two decades on 14 September, allowing big foreign retailers like Walmart, foreign broadcasters and foreign airlines to invest in the country, among other reforms. The central government, led by the Congress Party, is under heavy pressure to kick-start India’s slowing economy, boost employment and improve the country’s shambolic infrastructure. Bringing in big foreign brands, like Walmart which can now open stores in India in partnership with a local company, is expected to help. “The objective of the policy was to attract investment, create local manufacturing and employment,” said Anand Sharma, the minister for commerce and industry, during a press conference in New Delhi on 14 September evening, explaining the changes. Mr. Sharma noted that the implementation of the new policy has been left entirely to the “decision and discretion” of the state governments. The government has allowed single-brand foreign retailers, like Gap or Ikea, to open stores in India that they will own 100 percent. So-called “multi-brand” retailers, or stores like Walmart or Tesco, will be allowed to open stores in India and own 51 percent of these (Walmart already has a wholesale store in India.) The government also allowed foreign airlines to purchase 49 percent of an Indian airline, and investment in broadcasting companies. (New York Times)
India raised the price of heavily subsidised diesel on 13 September to rein in its fiscal deficit and counter the threat of becoming the first of the big emerging economies to be downgraded to junk. The long-awaited decision follows intense pressure on Prime Minister Manmohan Singh to plug one of the biggest drains on the treasury. It was greeted with elation by investors and raised expectations of more reforms to reverse an investment slump and revive a sluggish economy. But the fuel price increase caused an instant political backlash. A leading partner in the ruling coalition announced a protest march at the weekend and the main opposition party called the move “financial terror”. Protests earlier this year over petrol price and railway fare hikes prompted Singh to partially roll them back. “Nobody wants to put pressure on people but the subsidy bill had risen so high that this became inevitable,” Pawan Kumar Bansal, minister for parliamentary affairs, told Reuters. “This is an essential step to revive the economy and the investors’ confidence.” (…) After months of policy drift that critics derided as dithering, Singh’s government suddenly shifted gear in mid-September, by looking afresh at a number of policies stalled by a lack of consensus within the Congress party and among its allies. (…) Diesel accounts for more than 40 percent of India’s refined fuel consumption. It is subsidised mainly to benefit farmers but the wide gap with petrol prices has caused the ‘dieselisation’ of the economy, with car companies launching diesel versions of popular models aimed at price-conscious middle class consumers. Even after the price hike diesel is considerably cheaper than petrol, meaning demand is unlikely to drop off. (Reuters)
Indian Prime Minister Manmohan Singh warned that a prolonged policy logjam could slow economic growth to 5 percent, a day after India unexpectedly unveiled long-delayed reforms aimed at reviving growth and preventing a credit-rating downgrade. Political opponents and a key coalition ally took to the streets on 15 September to protest the move to allow foreign players into the supermarket industry and the 13 September decision to increase heavily subsidized diesel prices. “We demand a rollback of diesel prices and no FDI (foreign direct investment) in retail should be allowed. Do not attack the livelihood of small traders,” Mamata Banerjee, chief minister of West Bengal state, told a rally attended by thousands in Kolkata. (Reuters)
The defense ministers of India and China agreed on 4 September to resume joint military exercises, which were frozen two years ago, signaling a thaw in relations. The two ministers, Liang Guanglie of China and A. K. Antony of India, announced the agreement after talks in New Delhi. The two countries also decided to hold high-level official exchanges, conduct joint maritime search-and-rescue exercises and strengthen antipiracy operations off the coast of Somalia, where pirate attacks pose a threat to shipping. No dates were set for the exercises. The ministers said in a statement that closer military ties would help deepen trust and friendship between the two countries. The exercises were frozen after Beijing denied a visa to an Indian general who worked in Indian-controlled Kashmir, the Himalayan region also claimed by Pakistan. (New York Times, Associated Press)
Indian economic growth languished near its slowest in three years in the quarter that ended in June but was slightly better than expected, signaling the worst may be over for Asia’s third largest economy and dashing investor hopes of an early rate cut. India’s quarterly GDP grew 5.5 percent, driven by a rebound in construction and financial services, provisional government data showed on 31 August, just above the 5.3 percent posted in the three months ended in March and slightly higher than economists had forecast in a Reuters poll. The number offered little respite for Prime Minister Manmohan Singh as he struggles to escape a series of political scandals that have paralyzed his economic agenda. Economists do not foresee a rapid return to boom times in India. While failing to signal a decisive rebound, the read-out was viewed by analysts as not weak enough to prod the central bank to make a near-term cut in interest rates, which have been on hold since April as it tries to force the government to push through reforms that would help tame inflation. (…) Weak demand in the West has hit Indian exports, but the heaviest toll on the economy is from government overspending and a lack of reforms, a point made by both the central bank and ratings agencies Fitch and Standard & Poor’s, who threatened to downgrade India’s sovereign ratings to junk. (Reuters)
Burmese pro-democracy leader Aung San Suu Kyi is travelling to the United States, her first visit to the country in two decades. During her 18-day trip she will be presented with the Congressional Gold Medal, the highest civilian honour in the US, among other awards. She will also meet President Barack Obama and various Burmese groups. Aung San Suu Kyi spent years under house arrest in Burma, but was elected to parliament in April. The new civilian-led, but military-backed, government has enacted a series of political and social reforms, including the relaxing of media laws, the legalisation of protests and the releasing of hundreds of political prisoners. In response, Western nations including the US have lifted sanctions imposed during the military rule. The Nobel laureate is likely to face questions over deadly ethnic conflict in western Rakhine state earlier this year. The violence, which pitted Burma’s majority Buddhists against minority Muslims, was sparked by the rape and murder of a young Buddhist woman. Dozens of people died and thousands were displaced. (…) Aung San Suu Kyi has remained relatively quiet on the issue, although has called in parliament for laws to protect the rights of ethnic minorities. (BBC)
Myanmar announced on 17 September that it is releasing 514 prisoners under an amnesty, including political detainees and some foreigners. The Information Ministry did not name the prisoners, so it was unclear how many political detainees were among them, although almost 50 were identified by fellow activists who had been in touch with them. (…) The announcement came the same day that Human Rights Watch urged Myanmar’s government to immediately release all remaining political prisoners and lift travel and other restrictions on those who have already been freed. At least 300-500 political detainees are believed to remain behind bars. The New York-based group also asked that independent international monitors be allowed access to prisons to allow a full accounting of all remaining political prisoners. The government of President Thein Sein has made freedom for political prisoners a centerpiece of its reform policies, seeking international favor after almost five decades of repressive army rule. Earlier amnesties helped convince Western nations to ease sanctions they had imposed against the previous military-led regime. (Washington Post, Associated Press)
Myanmar’s parliament on 7 September adopted a much anticipated foreign direct investment law that is crucial to the government’s ambitious plans for economic expansion in one of Asia’s poorest countries. The law drops several provisions in the original draft that had raised fears it could deter investors. The law was seen as one of parliament’s most urgent tasks and was passed on the last day of its current session. One proposal dropped from the law would have required a $5 million minimum initial investment outlay. The final version also allows foreign parties to hold a 50 percent stake in joint ventures rather than limiting them to a proposed 49 percent. Elected President Thein Sein launched economic and political reforms when he took office last year after almost five decades of military rule, foreign sanctions and restrictive laws that kept the economy stagnant. Myanmar has an inefficient agricultural sector and small industrial base, and most of its export earnings come from extractive industries, especially natural gas. (Washington Post, Associated Press)

The United States is declaring the Pakistan-based Haqqani network a terrorist organization, a move that paves the way for tough financial sanctions against the militant group. Secretary of State Hillary Clinton announced on 7 September that she had signed a report to Congress that says the network meets the criteria for a terrorist designation. The Obama administration will also urge other countries to freeze any Haqqani assets. The Haqqani network has been blamed for a series of high-profile attacks on U.S. and NATO forces in Afghanistan, including an attack at the U.S. Embassy in Kabul last year. The group, which has ties to the Taliban and al-Qaida, operates from Pakistan’s North Waziristan tribal area. It is also believed to have close ties with key elements of Pakistani intelligence — a charge Pakistani officials have rejected. Senior Haqqani commanders said the terror designation shows the U.S. is not sincere about peace efforts in Afghanistan. They told Reuters news agency the move would result in “hardship” for U.S. soldier Bowe Bergdahl, held captive since disappearing in 2009 from his base in Paktika province. The Pentagon declined on 7 September to discuss details of efforts to gain the soldier’s return. But a spokesman (George Little) welcomed the announcement, saying U.S. forces will continue with “aggressive military action against this threat” to U.S. security in the region. The Pakistani embassy in Washington called the U.S. move to blacklist the Haqqani network a U.S. “internal matter.” It said Pakistan would continue to work with all international partners, including the United States, in combating terrorism. (Voice of America)
Pakistan and the United States on 15 September called for a clearly defined strategic partnership to act jointly against terrorism and for regional peace. The call was made during a series of talks between visiting U.S. Special Representative for Afghanistan and Pakistan Ambassador Marc Grossman and top Pakistani leaders over the past two days. Ambassador Grossman met President Asif Zardari, Prime Minister Raja Pervez Ashraf, Foreign Minister Khar, Foreign Secretary Jilani, Chief of Army Staff Kayani, members of parliament, and other government officials, statements issued by U.S. embassy and Pakistani official said. The Prime Minister’s Office said that Pervez Ashraf and the U.S. envoy discussed matters concerning bilateral relations. The Prime Minister said that Pakistan-U.S. relations are very important and his country values the United States as a major development partner, a PM office statement said. (…) Ambassador Grossman said that the United States believes that its relationship with Pakistan should be enduring, strategic and clearly defined. (Xinhua)
The Pakistani government and politicians across the political spectrum have condemned a controversial anti-Islam video that exploded into international awareness in mid-September and sparked protests across Pakistan. The National Assembly passed a resolution on 13 August unanimously condemning the movie, made in the U.S., and the Foreign Office released a statement saying that the “government of Pakistan strongly condemns the airing of a defamatory video clip in the US, maligning the revered and pious personality of Prophet Muhammad.” Authorities also ordered the Pakistan Telecom Authority to block all Internet links to the video, although some links continued to function. But while protests broke out, demonstrators stopped short of storming the US embassy in Islamabad and US consulates elsewhere in the country. The security establishment’s interest in maintaining cordial ties with the US and early political condemnations played a key role in preventing protests from getting out of hand. (…) “Right-wing Islamist parties are known for their deep links to the security establishment. Up until recently, we were not even on talking terms with the US. That relationship has finally been restored. The security establishment has a lot of influence on street demonstrations, and they are not interested in rocking the boat,” says Muhammad Ziauddin, the executive editor of the Express Tribune newspaper. (…) Islamist parties could easily have whipped up more rage against the video, Mr. Ziauddin says. While condemnations from the political elite played some role, the security establishment’s interest in stable relations with the US was probably much more important. One of the largest alliances of Islamist parties in Pakistan, Difa-e-Pakistan or the Defence of Pakistan Council – which includes 36 Islamist parties, many of them fronts for banned militant outfits – is often seen as having deep links to Pakistan’s shadowy intelligence. (Christian Science Monitor)
Pakistan has given foreigners working for Save the Children a week to leave the country after becoming convinced that the aid organisation was used as cover by US spies hunting Osama bin Laden. The aid group had been under suspicion from authorities ever since a doctor accused of assisting the CIA in its search for the al-Qaida leader claimed that Save the Children had introduced him to US intelligence officers. But now Pakistani officials claim they have “concrete proof” backing up the story of Shakil Afridi, the doctor from the tribal areas bordering Afghanistan who confessed to the ISI, the country’s military spy agency, after being arrested last year. Although Save the Children and the US government have always denied any relationship between the CIA and the aid organisation, Pakistani officials say they are fully justified in expelling the few foreign staff still working in the country. According to a foreign diplomat the six foreigners will have to leave by late September. (Guardian)
Pakistan on 17 September conducted a successful test fire of the indigenously developed multi tube Cruise Missile Hatf-VII (Babur), having a range of 700 kilometers. Babur Crusie Missile is a low flying, terrain hugging missile, which can strike targets both at Land and Sea with pin point accuracy. It carries stealth features. Equipped with modern cruise missile technology of Terrain Contour Matching (TERCOM) and Digital Scene Matching and Area Co-relation (DSMAC), it can carry both nuclear and conventional warheads. The missile was launched from a state of the art Multi Tube Missile Launch Vehicle (MLV), which significantly enhances the targeting and deployment options of Babur Weapon system. (…) The successful test has also been warmly appreciated by the President, Prime Minister of Pakistan and Chairman Joint Chiefs of Staff Committee, who have congratulated the scientists and engineers on their outstanding success. (The Nation)
Fire ravaged a textile factory complex in the commercial hub of Karachi early 12 September, killing almost 300 workers trapped behind locked doors and raising questions about the woeful lack of regulation in a vital sector of Pakistan’s faltering economy. It was Pakistan’s worst industrial accident, officials said, and it came just hours after another fire, at a shoe factory in the eastern city of Lahore, had killed at least 25. Flames and smoke swept the cramped textile factory in Baldia Town, a northwestern industrial suburb, creating panic among the hundreds of poorly paid workers who had been making undergarments and plastic tools. They had few options of escape — every exit but one had been locked, officials said, and the windows were mostly barred. In desperation, some flung themselves from the top floors of the four-story building, sustaining serious injuries or worse, witnesses said. But many others failed to make it that far, trapped by an inferno that advanced mercilessly through a building that officials later described as a death trap. Rescue workers said most of the victims died of smoke inhalation, and many of the survivors sustained third-degree burns. As firefighters advanced into the wreckage during the day, battling back flames, they found dozens of bodies clumped together on the lower floors. (New York Times)

Sri Lanka’s ruling party has defeated the country’s main ethnic Tamil party in a provincial election seen as a test of whether Tamils still want self-rule or are satisfied with government-led development programs in a region devastated by decades of civil war. President Mahinda Rajapaksa’s United People’s Freedom Alliance won 14 seats in the Eastern Provincial Council, while the Tamil National Alliance secured 11, the Department of Elections said on 9 September. Though it did not win enough seats in the 8 September election to form a single-party government, the UPFA may get the support of the Sri Lanka Muslim Congress, a centrist alliance partner that won seven seats, to muster a majority in the 37-member council. The defeat will be seen as a setback for the TNA, which was hoping that a victory would be seen as a mandate for more power-sharing in Tamil-majority areas. The TNA has sought a form of federalism, but talks with the central government have been stalled since January. The ethnic Sinhalese-controlled government, meanwhile, was looking to use an election victory to show that Tamils are content with postwar development. (…) Tamil politicians have long claimed that Eastern Province is part of a Tamil homeland, along with Northern Province. However, unlike northern Sri Lanka, where Tamils are an overwhelming majority, the east has near-equal numbers of the country’s main ethnic groups — Sinhalese, Tamils and Muslims. Tamils complain that successive governments since independence from Britain in 1948 have sponsored Sinhalese settlements with the aim of changing Eastern Province’s demography and weakening the Tamils’ claim to it. Tamil Tiger rebels fought a quarter-century civil war to create an independent Tamil state in a merged north and east. The war ended in May 2009 when government forces defeated the rebels. Since then, the government has rebuilt a number of roads and bridges in Eastern Province, connecting it better with the rest of the country. It also has started a domestic airport project and promotes tourism in the province’s long stretches of beaches. The ruling party also swept two more provinces in predominantly Sinhalese areas, winning a total of 49 out of 77 seats. (Washington Post, Associated Press)
Sri Lanka’s exports declined the most in three years in July as a faltering global recovery sapped demand for the island’s garments, textiles, tea and rubber products. (…) Sri Lankan economic growth probably slowed to a more than two-year low of 6.8 percent last quarter, according to the median estimate in a Bloomberg News survey ahead of a report due in September. (Bloomberg)
Sri Lanka’s government has closed down almost all universities for an indefinite period amid a row about the future of education in the island. Academics have been on strike for nearly two months, accusing the government of interference and demanding more be spent on the sector. The authorities say teachers are putting students in a position of “darkness, without any hope”. For decades, university campuses have been a source of turmoil in Sri Lanka. Students’ problems helped trigger the Tamil insurgency as well as equally bloody Sinhalese insurrections in the 1970s and 80s. (…) Since early July academics have been on strike in Sri Lanka. They denounce government plans to partially privatise a tertiary education system that has always been state-funded and free. They want an end to what they say is political meddling in campus life. They want much more spent on education overall and they are demanding a salary increase. The government has now responded by closing down 13 of Sri Lanka’s 15 state-funded universities, apart from their medical faculties, with no indication of when they might reopen. They have also accused academics of trying to topple the government. (…) The government says it has already agreed to five of the academics’ six main demands. But the spokesman for the academics’ main union, Mahim Mendis, told the BBC this simply wasn’t true. He said that the “politicisation and militarisation” of universities must end. At the moment, he said, ministers were appointing their own loyalists to top university posts. (BBC)
China’s top legislator Wu Bangguo met with Sri Lankan President Mahinda Rajapakse on 17 September, vowing to insert new energy into relations between the two countries. “China-Sri Lanka relations are now at the best period of development in history,” said Wu, chairman of the Standing Committee of China’s National People’s Congress, who is on a four-day official goodwill visit to the South Asian nation. Wu extended congratulations to Sri Lanka over its post-war achievements, saying China respects Sri Lanka’s choice of development path in line with its own national conditions, and will support,as always, its efforts to maintain stability, economic growth and improve people’s lives. China will continue to provide aid within its capacity for Sri Lanka’s development, Wu said. On the economic front, Wu said China and Sri Lanka have in recent years witnessed sustained growth in bilateral trade volume, and have made smooth progress on such infrastructure projects as the second phase of the Hambantota port, a container terminal in Sri Lanka port and a coal-fired power plant in Puttalam. As they continue to push ahead major cooperative projects, China and Sri Lanka should sum up their experience and tap potentials for new areas of cooperation, said Wu. (Xinhua)
Chinese Defence Minister Liang Guanglie arrived in Colombo on 29 August on a five-day visit aimed at solidifying military ties that have grown increasingly close following the end of the war in Sri Lanka. General Liang’s trip comes amid reports that China will pledge US$ 100 million to help take forward Sri Lankan Army projects in the war-ravaged north and northeast. During his five-day visit, General Liang and his 25-member delegation visited a number of military facilities in the north. (…) In June, Sri Lanka and China pledged to deepen defence ties when Lieutenant General Jayasuriya visited Beijing. China’s substantial military assistance to the Sri Lankan government during the closing stages of the war in 2009 has been seen by Sri Lankan officials as crucial to their victory over the LTTE – a point stressed by every visiting Sri Lankan official to Beijing in recent months. General Liang said then that China was “willing to make joint efforts with Sri Lanka to boost bilateral relations”. China has also reiterated its support to Sri Lanka against persistent international pressure over its reconciliation process, with Chinese officials stressing that it was their view that Sri Lanka should address its internal issues without international interference. China has assured Sri Lanka, as a permanent member of the UN Security Council, of its continued support against any international pressure. (The Hindu)
After three months of bitter polarisation, Nepal’s political forces have once again resumed negotiations to find a way out of the current political deadlock. On 29 August morning, three major parties – the Unified Communist Party of Nepal (Maoist), Nepali Congress (NC), and Communist Party of Nepal (Unified Marxist Leninist) – met and agreed to intensify their dialogue to find an agreement. Since the Constituent Assembly (CA)’s term expired on May 27, and the Maoist-led government announced elections for a new CA, the opposition parties have been demanding Prime Minister Baburam Bhattarai’s immediate resignation as a precondition to talks. The ruling Maoist-Madhesi alliance has insisted that resignation can only happen as a part of a broader package deal, which includes determining a future political roadmap. While the stalemate on substantive issues remains, inter-party dialogue has resumed in a bid to find an agreement. The three-party meeting decided to delegate the responsibility of arriving at a deal to the top leaders. NC negotiator Minendra Rijal, who attended the talks, told The Hindu, “We decided that for the next five to seven days, talks will focus on finding a settlement on constitutional issues. If that happens, we can reinstate the CA and promulgate the statute. If we are convinced that there can be no agreement on constitution, then we will reach a deal on fresh elections.” He added that his party was open to both options. (The Hindu)
Nepal’s prime minister deflected criticism when the nation’s interim parliament collapsed in May by promising to hold new elections in November. But less than three months from the announced poll date, even Baburam Bhattarai’s own advisers acknowledge there won’t be elections this year. The delay is certain to increase the already high levels of political turmoil in a country struggling to recover from a bloody civil war and trying to transform itself into a republic after the overthrow of its monarchy. For now, the poor Himalayan nation is left with no legislature, a prime minister who opponents say has illegally taken power and an uncooperative president who, while largely ceremonial, is crucial to holding new elections. Opposition parties say they won’t even participate in new polls unless Bhattarai resigns in favor of a national coalition. “The present government has lost the trust of all the parties, and we will not allow this government to conduct the elections,” said Dilendra Badu, a spokesman for the Nepali Congress party. (…) But before polls can be held, the government needs to amend the interim constitution to allow for the election of another Constituent Assembly and to change a faulty voting age clause. There is no parliament to do that. The only way laws can be amended is by ordinances issued by the president. President Ram Baran Yadav, who is from the opposition Nepali Congress Party, could issue ordinances to help, but he has refused. (Washington Post, Associated Press)
In the six years since the end of the 1996-2006 civil war, Nepal has witnessed five governments. But the constitution that was to usher a New Nepal is yet to see the light of day. Political instability due to continuous power struggle among the major parties has caused immense economic loss to the country listed among the least developed nations. The latest macroeconomic report by Nepal Rastra Bank, the country’s central bank, says inflation reached a three-year high of 11.5% in mid-July. Not good news for most citizens. And with the government hiking prices of petroleum products on 2 September, inflation is set to climb further. Lack of adequate domestic production due to various factors including political instability and power crisis has made Nepal heavily reliant on imports of almost all kinds of goods to meet the demand. Depreciation of the Nepali rupee, which is permanently pegged with its Indian counterpart, against US dollar in past months is one reason why imports have become more expensive and led to high inflation. Prime Minister Baburam Bhattarai knows the importance of foreign investment and stresses signing of the Bilateral Investment Protection and Promotion Agreement with India as one of the important achievements of his one year in office. However, confidence of investors in Nepal hasn’t yet been restored. In the past year several businesses, both set up with foreign investment and those by domestic investors, have shut shop. (…) But instead of learning lessons, political parties have again started engaging in another round of removing governments and installing new ones. (Hindustan Times)
Bangladesh’s $19 billion garments industry attracts some of the world’s biggest clothing brands because of low costs, but many retailers say unrest over pay and delayed shipping schedules are eroding that advantage. The killing of a labor activist and increasing publicity of unsanitary and unsafe working conditions at the country’s 4,500 garment factories is also making some retailers worried about their reputation. Bangladeshi factories make clothes for brands including Tesco, Wal-Mart, JC Penney, H&M, Marks & Spencer, Kohl’s and Carrefour. Wages are as low as $37 a month for some workers. In June, more than 300 factories near the capital Dhaka were shut for almost a week until the government and factory owners promised to consider pay demands and persuaded them to return to work. “Unrest in the readymade garment sector is a major concern for us,” said a country manager of a large international wholesale customer, primarily located in the United States. (…) Readymade garments make up 80 percent of the country’s $24 billion in annual exports. Consultancy firm McKinsey & Company has said Bangladesh can double its garments exports in the next 10 years. But conditions in the industry are below standard. Besides scanty pay, working conditions and safety standards are poor, employees and some analysts say. (…) Some factory owners employ thugs to put down protests. In April, labor activist Aminul Islam was found murdered and his body bore signs of torture. No one has been arrested. Human Rights Watch said the killing raised the possibility of government involvement because Islam had been detained and tortured by security officials in the past. Officials dismissed the suggestion. (…) “We don’t like violence, we want peace to carry out our business here,” said Nam Ho Cho, managing director of Bangladesh-Korea joint venture company, Hyun Apparel Limited, which sells its products to the United States. “Every time there is violence, buyers phone me and I have to cool them down by saying ‘Don’t worry, we will manage. Shipment schedules will be met.'” A country manager for an international brand added: “If we shift our order elsewhere, like China or Sri Lanka, then we have to pay 25 cents more for per unit of bottom denim (pants). (Reuters)
Bangladesh hopes to increase tenfold its apparel exports to China in the next three years, taking advantage of soaring production and wage costs in Asia’s biggest economy, a top business leader said on 2 September. “We hope to raise our garments export to China by 10 times to $1.0 billion by the year 2015,” Mohammad Shafiul Islam, President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), told a news conference. Islam was speaking after meeting a delegation from the China National Garment Association (CNGA), which said it wanted to significantly increase clothing imports from Bangladesh. Feng Dehu, vice President of CNGA, said the clothing factories his delegation visited in Bangladesh, which has earned a reputation for restive labour relations and production disruption, were impressive and up to international standards. Buyers of some major global brands have warned Bangladesh it could lose its key garment business unless peace at factories is guaranteed, labour rights granted and pay demands are met. (…) Islam said increases in wages and overall production costs in China was rapidly eroding its competitiveness in the apparel industry. (…) Commerce Minister Ghulam Muhammad Quader said Chinese investment would be welcome in areas where Bangladesh lacked capacity, such as suits and blazers for which there was huge demand. China’s domestic garments market is worth more than $300 billion, Feng said. (Reuters)
Following talks with Indonesian Foreign Minister Marty Natalegawa, Secretary of State Clinton said the United States, like all countries, has a national interest in maintaining peace and stability, freedom of navigation, and unimpeded lawful commerce in the South China Sea. “We believe the nations of the region should work collaboratively together to resolve disputes without coercion, without intimidation, without threats, and certainly without the use of force,” said Clinton in early September. China, Vietnam, Malaysia, Taiwan, Brunei, and the Philippines have competing territorial claims to parts of the South China Sea.  The United States is working to encourage agreement on a code of conduct to establish clear procedures for resolving those disputes. Indonesia has played a key role in making progress toward that goal, especially when regional foreign ministers failed to reach agreement in July.  So too has Singapore, which is more actively mediating South China Sea disputes as part of growing ties with the United States. (Voice of America)
Indonesia tried to rally Southeast Asian nations meeting at the United Nations in mid-September behind a new attempt at talks with China to manage territorial disputes in the South China Sea. The meeting among members of the Association of Southeast Asian Nations was held on the sidelines of the U.N. General Assembly, several weeks after the group’s annual summit fractured over host Cambodia’s refusal to endorse a communiqué calling for a resolution it said would embarrass ally China. Indonesia’s latest effort appeared aimed primarily at restoring a semblance of Asean unity at a time that the Philippines, in particular, is seeking stronger backing from its partners against China, which has increased patrols near the Scarborough Shoal islets off the Philippines’ northwest coast. Tensions in the region are rising as rival countries seek to enforce claims to areas believed rich in oil and gas. Foreign Minister Marty Natalegawa said in an interview on 14 September that Asean couldn’t impose a solution over the various South China Sea disputes, which have festered for years and also include members Malaysia, Brunei and Vietnam. China has insisted that it wants to resolve territorial conflicts—which extend farther north and include Taiwan and Japan—on a bilateral basis. The Philippines and others have sought to increase bargaining strength in the South China Sea disputes by negotiating en bloc. Indonesia has sought to revive long-stalled negotiations over a code of conduct to act as a framework for disputes pending a negotiated resolution. The sprawling archipelago nation doesn’t claim any of the contested areas and Mr. Natalegawa presented Jakarta as an honest broker to get an agreement “finalized quickly.” (Wall Street Journal)
The Philippines, Indonesia and Malaysia are considering joint patrols of their sea borders to combat piracy, smuggling and the movement of al-Qaida-linked militants, a top defense official said on 30 August. The proposal was discussed when Philippine Defense Secretary Voltaire Gazmin met in late August with his Indonesian and Malaysian counterparts, who traveled to the Philippines to visit their troops involved in efforts to strengthen a cease-fire between Filipino forces and Muslim guerrillas in the south. The Philippines has considered joint naval patrols with either Indonesia or Malaysia in the past but a three-way effort would vastly improve security in the volatile region, Gazmin said. (Asian Defence, Associated Press)
Indonesia’s anti-terrorism forces have been busy over the past few months stopping militants plotting not against Westerners, but instead preparing to wage “holy war” against police and a government seen as barriers to creating an Islamic state. The latest case involved alleged bomb maker Muhammad Toriq, who surrendered late on 9 September while carrying a gun and ammunition and wearing a suicide bomber belt that did not contain any explosives. (…) Since March, police have arrested nearly two dozen suspected Islamic militants and killed seven in a series of raids. All of them were plotting domestic attacks against Indonesians instead of foreigners who have been the main target here in the past, said Ansyaad Mbai, who heads the country’s anti-terror agency. In 2002, Islamist militants with links to al-Qaida bombed two nightclubs on Bali island killing 202 people, most of them Westerners. Most attacks since then have been smaller and local. The change signals Indonesia’s success in suppressing its main underground terror networks, but also shows how radical groups still operating in the open remain potent breeding grounds where angry young men can become attackers. (Washington Post, Associated Press)
A suspected militant was critically injured when a bomb apparently being prepared for a terrorist attack exploded in a house near Indonesia’s capital, police said on 9 September. At least three other people living nearby were injured along with two suspects who fled. An elite anti-terror squad was searching for the two men who escaped after the strong blast late on 8 September in Depok, a town on the outskirts of Jakarta, said National Police spokesman Maj. Gen. Anang Iskandar. The explosion came just days after police raided another home in Jakarta where similar bomb-making materials were found in connection with a terrorist group that allegedly plotted to kill police and bomb the country’s Parliament. (…) The incident came amid a security crackdown in recent days in which two militants were killed and three others arrested. In early September, police found bomb-making materials at another home in Jakarta where suspected bomb maker Muhammad Toriq lived, but he managed to escape when police raided the house. (…) Toriq is believed to be linked to a militant group that planned to shoot police and bomb the Parliament building to wage “holy war” and establish an Islamic state. (Huffington Post)
Indonesians enraged over an anti-Islam film hurled rocks and Molotov cocktails at the U.S. Embassy in Jakarta on 17 September, in the first violence in the world’s most populous Muslim country since outrage exploded in mid-September in the Middle East and beyond. Eleven police officers were hospitalized after being pelted with rocks and attacked with bamboo sticks, said Jakarta police chief Maj. Gen. Untung Rajab. Four protesters were arrested and at least one hospitalized. Protesters burned a picture of President Barack Obama, who spent part of his childhood living here. They also tried to torch a fire engine parked outside the embassy, ripping a hose from the vehicle and igniting it, which sent plumes of black smoke billowing skyward. Molotov cocktails exploded against a fence surrounding the compound as police used a bullhorn to call for calm and deployed water cannons and tear gas to try to disperse the crowd. (…) The demonstration started peacefully as several hundred protesters from the Islamic People’s Forum and the Front of Islamic Defenders, many dressed in white, marched toward the diplomatic mission. The protesters paused to observe afternoon prayers about 100 meters (yards) outside the embassy, then resumed the rally. They threw rocks at riot police, who used shields to push the crowd back. (Boston.com, Associated Press)
Every few months, the head of counterterrorism in the world’s most populous Muslim nation pays a visit to a Koranic academy south of the capital to address an assembly of clerics. His message, he says, is blunt: Stopping would-be bombers “is your job, not mine.” Ansyaad Mbai’s plea for help is also surprising, given the string of successes against Islamist militants that Indonesian security services have notched in recent years. After a blaze of attacks inspired in part by al-Qaeda’s Sept. 11, 2001, strikes in the United States, the militants in Indonesia are now a battered and diminished force. In just over two years, 33 terrorism suspects have been killed, mostly in shootouts with police, and nearly 200 have been arrested. (…) In a huge, ethnically diverse country that champions of global jihad once regarded as fertile ground for expansion, the recent calm testifies to the success of a relentless drive by security forces to track, infiltrate and confront violent Islamist groups intent on driving Indonesia from its traditionally moderate moorings. (…) Deploying Islam to fight violent, deviant offshoots is not a new idea. Saudi Arabia, sensitive to criticism that its own zealously puritanical strain of Islam, Wahhabism, promotes militancy, has had religion-based programs against radicalization for years. And, at the opposite end of the spectrum, Turkey and Malaysia have long kept a tight grip on what clerics can and cannot preach. (Washington Post)
Indonesia kept its benchmark interest rate unchanged for a seventh straight meeting as accelerating economic growth and inflation reduced the scope for monetary easing to counter an export slump. Bank Indonesia Governor Darmin Nasution and his board held the reference rate at a record-low 5.75 percent, the central bank said in a statement in Jakarta on 13 September. The decision was predicted by all 22 economists surveyed by Bloomberg News. Indonesia joins South Korea and Malaysia in preserving firepower this month as the European Central Bank backs unlimited purchases of government debt to resolve the region’s crisis and economists predict the U.S. will announce a third round of quantitative easing. A declining rupiah and rising food costs are adding to price pressures in Southeast Asia’s largest economy, where growth has exceeded 6 percent since 2010. (…) Indonesia’s gross domestic product rose 6.37 percent in the three months through June from a year earlier, after climbing 6.32 percent in the first quarter. The country’s growth is among the fastest in the Group of 20 nations, as President Susilo Bambang Yudhoyono boosts investment more than a decade after the Asian financial crisis that forced the nation to seek an International Monetary Fund bailout. (…) The economy is performing in line with its capacity, and growth in the second quarter was supported by consumption and investment, the central bank said. Exports may improve as some major trading partners recover amid the risk of a global economic slowdown, it said. Bank lending rose 25.2 percent in July from a year earlier. (Bloomberg Businessweek)
Tensions over the disputed South China Sea have escalated after China hit back at the Philippines for renaming waters off its coast the West Philippine Sea. “South China Sea is a name that has all along been accepted by countries across the world as well as by the United Nations and other international organisations,” Chinese Foreign Ministry spokesman Gong Lei told journalists. A commentary by China’s state-run newsagency also Xinhua hit out at the Philippines, accusing Manila of trying to “seek illegal gains by fishing in troubled waters.” China claims nearly all the South China Sea, including waters approaching the coasts of other countries. Earlier, Philippine president Benigno Aquino said he had approved the name change “to clarify which of the areas we are claiming.” The Philippines and China have been locked in an increasingly bitter row over the waters that led to a stand-off of rival ships at the disputed Scarborough Reef in April. Philippine officials say several Chinese vessels have remained in the area despite bad weather and have cordoned off one part to prevent Philippine vessels entering. Though the Philippine government and media has been referring to the West Philippine Sea since last year, it is only now that it has been made official with plans to notify the United Nations. (Sydney Morning Herald)
Four years ago, Le Van Tho borrowed $200,000 to build a new ceramic factory on rice fields bordering Hanoi. But with the economy slowing, orders have slumped this year and she recently laid off almost half her workers. It’s also a grim picture down the road: bowls, statues and flower vases gather dust in export showrooms as shoppers in a recession-hit Europe and sluggish United States stop spending. Once seen as an emerging Asian dynamo racing to catch up with its neighbors, Vietnam’s economy is mired in malaise, dragged down by debt-hobbled banks, inefficient and corrupt state-owned enterprises and bouts of inflation. Vietnam’s one-party Communist government has promised reforms, but it appears unwilling to give up the reins of an economy that has delivered fortunes to top officials and their business partners. House prices have crashed by up to 50 percent in some places from the boom years and jobs are reportedly drying up for school leavers. Foreign investment has dropped 34 percent this year over the same period last year, according to government figures, put off by the economic instability, poor infrastructure and rising wages. Small and medium-sized enterprises like those in Bat Trang are struggling to stay in business, their stock piling up and unable to get credit. (Bloomberg Businessweek)
Laotian President Choummaly Sayasone and Liang Guanglie, the Chinese defense minister and state councilor, agreed on 7 September to promote the development of relations between their two countries. Sayasone, also the general secretary of Laos’ ruling Lao People’s Revolutionary Party, said during a meeting with Liang that China is his nation’s close, trusted friend and strategic partner. Laos and China have seen remarkable achievements in their defense and security cooperation, the president said. He also said Laos appreciates Beijing’s long-term support and assistance, adding that his country would like to advance bilateral military ties with China. Liang said China and Laos have seen continuous development in political, economic, military and cultural exchanges and cooperation since the establishment of diplomatic ties 51 years ago. (Xinhua)

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LDESP Staff
ldesp_staff@nps.edu

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