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Artillery Systems ‘Boom’ In Asia – Analysis

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While defense budgets continue to shrink in other parts of the world, the demand for new weapon systems continues to grow across much of the Asia-Pacific region. Today, Gordon Arthur looks at the regional market for artillery systems and assesses who is locally able to build what.

By Gordon Arthur

Local Production

We shall begin our regional survey by looking at indigenous capabilities. There are currently four countries self-sufficient in artillery system production – China, Japan, Singapore and South Korea, and we shall look at their offerings in turn.

As the world’s largest armed force, and one that continues to rise at a stunning rate – for the coming year China announced a 12.2% hike in its defence budget to US $132 billion – the People’s Liberation Army (PLA) is enamoured with SPH systems. In total, China owns 6,000+ towed artillery pieces and 1,700 SPHs. The PLA has traditionally operated Soviet 122mm, 130mm and 152mm artillery calibres, although its newest SPH is notable for being of 155mm calibre. This signals that China is switching over to 155mm for future designs. The system in question is the 35-tonne PLZ05 (Type 05) from NORINCO, which features an U52 gun. It can fire laser-guided munitions based on the Russian Krasnopol design, with the WS-35 round reputedly having a 1OOkm range.

Also new for the PLA is the 22.5-ton PLZ07 (Type 07) 122mm SPH introduced by NORINCO in 2007. China has also brought the PLL05 120mm mortar­ howitzer into service, this being based on a WZ551 6×6 chassis; it was first noticed deployed in 2008. China also has systems available for export, primarily through the state-owned firm NORINCO. China has sold PLZ45 155mm SPHs to Algeria, Kuwait and Saudi Arabia, this type being a forerunner to the PLA’s own PLZ05.

As part of its post-Cold War reorganisation, Japan is drastically reducing the number of main battle tanks (MBD and artillery pieces in the Japan Ground Self-Defence Force (JGSDF) inventory. The National Defence Program Guidelines (NDPG) released in 2010 reduced the number of MBTs and artillery pieces from 600 units to 400 each (drastically down from mandated levels of 900 in 2004). However, according to the latest NDPG of late 2013, MBT and artillery numbers will be pruned even further to 300 respectively. The JGSDF’s artillery force current y relies on the Type g9 155mm SPH (54 units built from 1999- 2005), M11OA2 203mm SPH (91 units licence­built) and FH-70 155mm towed howitzer (479 licence-built from 1983-2001). The Type 99 from Mitsubishi Heavy Industries boasts an U52 gun offering a 40km range. The JGSDF also possesses 45 examples of the American-designed M270 Multiple Launch Rocket System (MLRS), these having been assembled locally by IHI Aerospace.

Singapore has inducted two artillery systems built by ST Kinetics (STK) and developed in conjunction with the Defence Science and Technology Agency (DSTA) – the Pegasus 155mm towed howitzer and Primus 155mm SPH, though neither has achieved exports. Both feature an U39 gun. The compact SSPH 1 Primus weighs 28 tonnes and it entered service in 2004. The 5,500kg Pegasus, meanwhile, can be airlifted by CH-47 helicopter and about 18 units are in service. The Pegasus has a limited self-propelled capacity via a Lombardini 9LD625-2 engine. STK is developing a new 28-tonne 155mm Advanced Mobile Gun System (AMGS) based on an 8×8 chassis, which would provide improved strategic mobility.

Artillery is essential for South Korea, which is confronted by the threat of massed North Korean artillery strikes capable of raining down 500,000 rounds per hour on the capital Seoul. Samsung Techwin is well known for its 46.3-tonne K9 155mm SPH, which is also being built under license in Turkey as the T-155 Firtina according to a 2001 contract. The Republic of Korea Army (ROKA) will eventually require 1,000+ Kgs, and several hundred are already in service. Armed with an 155mm/52 calibre gun, the first K9 deliveries occurred in 1999; and matched with K10 Ammunition Resupply Vehicles, the K9 supplements about 1,040 in-service Samsung Techwin K55 SPHs, a licence-built version of the M1ogA2.

Truck-Mounted Systems

Truck-mounted systems hold an understandable attraction to Asian militaries since they are cheaper to operate than tracked systems, plus their on-road mobility is greater. Modern systems can conduct shoot-and-scoot missions as easily as heavier tracked vehicles. South Korea is pursuing truck­ mounted systems in a major way as it seeks to enhance hundreds of older towed artillery pieces in a cost-effective way. Samsung Techwin generated the EV0-105, and the ROKA expects to induct 800 examples. The EV0-150 mounts an M101A1/ KH178 howitzer upon a KM500 6×6 truck chassis, while the fire control system is adapted from that of the K9. The weapon can fire less than one minute after the truck comes to a halt, and it can move off within 30 seconds of its final round. First deliveries are expected in 2017, and Samsung Techwin is promoting EV0-105 around the region.

Thailand was Asia’s first customer for Nexter’s CAESAR 155mm truck-based howitzer after it ordered six examples in 2006. However, the CASEAR’s electronic systems are proving problematic in Thailand’s tropical climate, so the Royal Thai Amiy (RTA) is also pursuing cheaper and hopefully more robust alternatives. Colonel Teera Nakmalee from the Weapon Production Centre (WPC) spoke to Defence Review Asia at the Defense & Security show in Bangkok last November. The WPC is developing a 155mm SPH based on a Volvo 6×6 chassis as a cheaper alternative to the CAESAR. Six vehicles have been ordered, and Autonomous Truck-Mounted System (ATMOS) technology from Elbit Systems will automate the guns. Elbit will supply the ATMOS autonomous artillery system for $30 million within three years, with the first completed vehicle due this year. Col Nakmalee said the WPC has a second artillery project under way too. In the past few years, the WPC has integrated nine 105mm M101 howitzers onto Kia 5-ton trucks as part of an 18-unit RTA requirement. Furthermore, the RTA purchased 54 surplus M198 155mm towed howitzers from the US Army in 2012 to replace M114A1s. Indonesia followed in Thailand’s footsteps when it too ordered the French CAESAR based on a Renault Sherpa 6×6 chassis. This 2012 order was for 37 CAESARs, and Sagem recently announced in March it will be supplying an identical number of Sigma 30 navigation and pointing systems for them.

NORINCO has moved into truck-mounted howitzers in a serious way too. China is supplying an estimated 150 SH1 truck-mounted 155mm systems to Myanmar. NORINCO also offers for export 122mm SH2 and 105mm SH5 truck-based weapons. Taiwan has an old artillery inventory, still employing older M101A1and M114A 1 towed systems, as well as Ml09 and M11OA2 SPHs.

Most M109s are of M109A2 configuration, although 28 newer Ml09A5s were obtained after the 1996 Taiwan Strait Crisis. Taiwan exhibited a 6×6 155mm L/45 truck-mounted howitzer at the TADTE 2011 exhibition, but nothing has been heard of it since then.

Japan continues to develop a new 6×6 155mm system called the Lightweight Combat Vehicle (LCV). Utilising an innovative dual recoil gun system, it is destined to incrementally replace FH-70 towed howitzers.

Other Conventional Artillery Developments

The Armed Forces of the Philippines (AFP) possess no artillery piece over 105mm in calibre. To rectify this capability gap, the country’s Bids and Awards Committee issued a PHP438.6 million tender for ten 155mm towed howitzer units (plus 240 rounds) for the Philippine Army last November. The K9 SPH and BAE Systems M777 155mm towed howitzer are considered leading contenders. Elsewhere in Southeast Asia, the Royal Brunei Land Forces (RBLF) is thought to require 105mm light guns since its heaviest indirect-fire weapon at the moment is 81mm mortars.

Australia shortlisted the German PzH2000 and South Korean AS9 (a K9 derivative) for an SPH requirement, but the government inexplicably cancelled this LAND 17 Phase 1C programme and instead opted, in October 2012, to add 19 M777A2s to the 35 it purchased in 2010.This provided enough M777s to equip each artillery regiment in the Australian Army’s three combat brigades, and the M777′s full operational capability was achieved last year. Associated with the deal was the introduction of Raytheon’s Advanced Field Artillery Tactical Data System (AFATDS), as used by the US Army and US Marine Corps. An important feature of the M777 and its U39 barrel is its light weight of 4,200kg since it uses much aluminium and titanium. Last year, Australia ordered 4,002 Ml156 Precision Guidance Kits (PGK) from ATK, this being a lower-cost alternative to the M982 Excal bur round. While highly accurate, the Excalibur is very expensive at $100,000 a pop. The PGK screws onto existing rounds, and it was first fired by the US Army in Afghanistan in April 2013.

The New Zealand Army upgraded 24 L119 Light Guns of the 16th Field Regiment via a $16 million contract with Selex ES. This project fitted them with the Laser Inertial Artillery Pointing System (LINAPS) and will keep the guns in service until 2030.

India’s artillery situation is farcical, with the army not receiving any new howitzers since the 1987 Bofors scandal. There is a cumulative requirement for 3,000 artillery pieces by 2027 under the Field Artillery Rationalisation Plan. However, a Gordian knot of blacklisting, legal wrangling and bureaucratic ineptitude has created a logjam. The Indian Army wants 155mm U39 lightweight howitzers and a mix of 155mm L/52 towed, mounted, self-propelled (tracked and wheeled) howitzers acquired through imports and licensed manufacture. A mainstay of Indian artillery regiments is the 105mm Indian Field Gun (IFG) built by the Ordnance Factory Board (OFB). The limited 17km range of the IFG makes it largely irrelevant on today’s battlefield.

A requirement issued in 2011 called for new 155mm U52 towed howitzers, comprising 400 off-the-shelf systems plus 1,180 more to be manufactured locally by the OFB. Some vendors opted out as fatigue settled in because of India’s tortuous procurement process. Furthermore, at least four foreign companies are blacklisted for non­transparent reasons, including STK. Nevertheless, after earlier conducting summer trials last August, two rival towed systems completed winter trials in January. The two are Nexter’s modified Trajan and Elbit’s ATHOS 2052. For this tender, Nexter teamed up with Larsen & Toubro (L&T), while Elbit is working with the Kalyani Group. The systems must now await maintainability acceptance trials and clearance from the Directorate General of Quality Assurance.

Requests for proposals were previously issued for 100 155mm U52 tracked and 180 wheeled SPHs. The latter are suitable for use on the western plains. There are currently two contenders for the tracked requirement, including South Korea’s K9 (in partnership with L&T) and a modified MSTA-S from Russia (based on a T-72 chassis). Trials for both concluded late in 2013. For both these towed and tracked competitions, the Artillery Directorate will shortlist a preferred bidder so that purchase negotiations can edge forward. In the meantime, the OFB also has a programme to build FH-77B U45 Dhanush guns using technology transfer gained from Bofors in 1987. Plans were temporarily set back by a barrel explosion last August, but the OFB hopes to start producing an initial 114 guns in 2015. The Defence Research and Development Organisation (DRDO) is also spearheading the Advanced Towed Artillery Gun (ATAG) project to create a 12-tonne 155mm U52 gun with a range of 60km.

The project likely to reach fruition first (touch wood!) is for 145 lightweight 155mm U39 towed howitzers suitable for mountain operations and rapid helicopter transport. In 2010, the Indian government requested a possible Foreign Miltary Sale (FMS) of 145 M777s equipped with LINAPS. After this notification lapsed, India lodged it again in August 2013 but this time the price had risen 37% to $885 million. BAE Systems subsequently announced its UK plant would be temporarily decommissioned, and the Indian Ministry of Defence again deferred the deal in February.

Rocket Artillery Systems

Rocket artillery is a specialist subset that offers armies the ability to rapidly saturate areas with high explosive. Thailand was the first Southeast Asian country to possess multiple rocket launchers (MRL), and it is seriously upgrading its capability. The state-owned Defence Technology Institute (DTi) acquired a single WS-1 302mm MRL from China about five years ago. This was a first step in Thailand’s pursuit of its indigenous DTi-1 system, for which development is now complete. Now DTi is focused on developing the 180km-range guided DTi-1G, which it is trying to do with technical input from other countries. Thailand also acquired several SR4 122mm-calibre truck-mounted rocket systems from China last year, perhaps as an interim step while it produces an indigenous DTi-2 solution. Malaysia procured 18 Brazilian-made Avibras Artillery SaTuration ROcket System (ASTROS) II MRLs in 2000, followed by the delivery of another 18 for a second artillery battalion in 2oog-10. Malaysia does not possess any conventional SPHs, so this remains a requirement on the Malaysian Army’s wish list. A future purchase could entail 155mm SPHs, and a mixed fleet of tracked and wheeled systems may prove the best combination for Malaysia’s geographic realities. The ASTROS 11 is believed to have found an additional customer in Indonesia, which is set to acquire 36 examples.

Following Malaysia’s lead, Singapore requested from the USA via FMS a proposed $330 million sale of 18 M142 High-Mobility Artillery Rocket Systems (HIMARS) in September 2007.The first HIMARS launcher was delivered in July 2010, and the following year the 23rd Battalion of the Singapore Army became fully operational with its 18systems. The HIMARS utilises the same rocket pod as the M270A1 MLRS but it has the advantage of being transportable within a C-130 Hercules aircraft. Last October, Singapore requested another 88 GMLRS pods for $g6 million. Thailand has ordered three HIMARS too, and these are due for delivery next year.

South Korea operates 29 M270A1 MLRS vehicles, plus it will induct the Chunmoo 230mm MRL, of which Hanwha will complete its development this year. Based on a Doosan 8×8 truck platform, Chunmoo rockets will have an 80km range. Elsewhere, Taiwan is currently inducting the Ray Ting 2000 (RT-2000) developed by the state-run Chung-Shan Institute of Science and Technology (CSISD. The RT-2000 is based on an MAN 8×8 commercial truck chassis, and some 43 systems are being procured. It features twelve launch tubes that can fire Mk.15 (117mm), Mk.30 (182mm) or Mk.45 (230mm) rockets. Across the Taiwan Strait,the PLA boasts an estimated 1,770 MRLs. The most capable system is the PHL03 that entered service in 2004. The twelve-tube, 300mm-calibre PHL03 is a copy of the Russian 9K58 Smerch, and it offers a 150km range. The Indian Army relies on the 9A52-2T Smerch, of which it received 62 systems after two separate orders in 2005 and 2007. India also produces indigenous Pinaka MRLs mounted on a Tara 8×8 truck chassis. The Pinaka can fire twelve rockets a distance of 40km, and systems are fitted with Sagem’s Sigma 30 positioning system. The DRDO successfully tested the Pinaka Mk II with longer 60km range last December.


Kerry Cancels Meeting With Palestinians After Abbas Seeks UN Recognition

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U.S. Secretary of State John Kerry has cancelled plans to meet Palestinian President Mahmoud Abbas in the West Bank city of Ramallah on Wednesday.

Kerry cancelled his planned trip after Abbas said Palestinians are immediately resuming their bid to win further United Nations recognition and that he had signed a request to join 15 U.N. agencies and conventions.

There was no immediate comment from Israel, but officials there reissued tenders for more than 700 settler homes in East Jerusalem on Tuesday.

The moves by both sides looked set to derail U.S.-negotiated peace talks.

But Kerry, speaking in Brussels, said it is “completely premature” to write off the Israeli-Palestinian peace process now. He said both parties have indicated they want to move forward with negotiations.

Earlier, officials close to the discussions said an agreement had been emerging that would extend negotiations through 2015 in exchange for the release of a convicted American spying for Israel.

The deal would also include the release of hundreds of Palestinian prisoners and a partial freeze on construction of Jewish settlements in the West Bank.

Kerry and Israeli Prime Minister Benjamin Netanyahu hammered out details of the plan Tuesday, during their second set of talks in as many days.

Under the proposed deal, Jonathan Pollard, a civilian intelligence analyst for the U.S. Navy, would be released from prison before the Jewish holiday of Passover, which begins in mid-April.

A Jewish American who was granted Israeli citizenship while he was in prison in 1995, Pollard gave thousands of classified documents to his Israeli handlers. He was arrested in 1985 after unsuccessfully seeking refuge at the Israeli embassy in Washington.

Pollard pleaded guilty to leaking classified documents to Israel and received a life sentence. President Obama and his predecessors have previously refused to release him, despite pleas from Israeli leaders.

The White House said Tuesday that Obama has not yet decided to set Pollard free.

In exchange for his release, Israel would free a fourth group of long-serving Palestinian prisoners, including 14 Arab Israelis whose release is deeply controversial in Israel, as well as 400 other Palestinians who have not been convicted of killing Israelis.

Israel would also agree to “adopt a policy of restraint” in building West Bank settlements. Sources say the limited freeze would not include East Jerusalem, private construction or the building of public institutions.

Palestinian leaders were cool to the emerging proposal, saying it fell far short of their demands for a complete halt to settlement construction and freedom for 1,000 prisoners of their choosing.

The prisoner releases are part of the pact that brought Israelis and Palestinians back to the negotiating table for a nine-month period beginning last July.

The parties involved in the peace effort have not publicly discussed the details of the negotiations, but there has been little visible progress on narrowing gaps on major issues. These include the status of Jerusalem, the fate of Palestinian refugees, borders and security.

NATO Suspends Civilian And Military Cooperation With Russia

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NATO has announced that it is suspending all military and civilian cooperation with Russia over the Ukrainian crisis, the bloc said in a joint statement.

“We have decided to suspend all practical civilian and military cooperation between NATO and Russia. Our political dialogue in the NATO-Russia Council can continue, as necessary, at the Ambassadorial level and above, to allow us to exchange views, first and foremost on this crisis,” the statement reads. The alliance plans to review its relations with Russia at a meeting in June.

The decision could affect cooperation on Afghanistan in areas such as training counter-narcotics personnel, maintenance of Afghan air force helicopters and a transit route out of the war-torn country.

NATO foreign ministers also urged Moscow in “to take immediate steps … to return to compliance with international law.”

The bloc said that it was stepping up its cooperation with Ukraine, promoting defense reforms and increasing the activity of a liaison office in Kiev.

NATO and Ukraine issued a joint statement after a meeting of their ministers in Brussels. They said that they would “implement immediate and longer term measures to strengthen Ukraine’s ability to provide for its own security.”

A series of meetings in Brussels was called on Tuesday in response to what the bloc sees as Russia’s aggression in Ukraine and its annexation of Crimea. The bloc called on Moscow to reduce its troop number in Crimea to pre-crisis levels, withdraw them to their bases and taper military activities along its border with Ukraine.

Ministers ordered military planners to “develop as a matter of urgency a series of additional measures to reinforce NATO’s collective defenses”, a NATO official told Reuters. This might include sending troops and equipment to NATO allies in Eastern Europe, holding more exercises, taking steps to ensure NATO’s rapid reaction force could deploy more quickly, and a review of NATO’s military plans.

Military planners will come back with detailed proposals within weeks, the alliance official said.

The Republic of Crimea declared its independence from Ukraine following the March-16 referendum, in which 96.77 percent of the voters chose to rejoin Russia. Despite calls to boycott the vote and provocation attempts, 83.1 percent of Crimeans took part in the poll.

Crimea became part of Russia in 1783, but was transferred to the Ukrainian SSR in 1954 by Nikita Khrushchev – a move that ex-Soviet leader and Nobel Peace Prize laureate, Mikhail Gorbachev, has called a “mistake.” Following the fall of the USSR in 1991, Crimeans were forbidden to hold a referendum on independence from Ukraine, and a procedure for making such a referendum possible has never been clearly defined in Ukrainian law.

Many people in the predominantly Russian-speaking region also rejected the coup-appointed Kiev authorities, and some feared that nationalist radicals aligned with the opposition might launch a persecution of Russians living in Crimea.

However, a closer look shows that the neo-Nazi scare was not the only thing that concerned Crimeans about the coup-appointed authorities. One of the first moves of the post-coup Ukrainian parliament was an attempt to strip the status of regional minority languages, including Russian. The political program of the nationalist Svoboda party, which currently occupies four seats in the cabinet of ministers in Kiev, also clearly stated that it seeks to deprive the region of its autonomy and to make it an oblast (administrative division) instead of an Autonomous Republic. According to a common belief among the Russians living in Crimea, some of the Tatars, members of the Mejlis organization, also counted on the ex-opposition Batkivshchyna (Fatherland) party to support them in declaring the region a Tatar national autonomy, despite Russians and Ukrainians making up over 70 percent of the population and Tatars accounting for only about 12 percent of it.

Cybered Conflict, Not Cyber War – Analysis

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We have entered a period of cybered conflict. For militaries, governments and private firms mastering the demands of cybered conflict, it will be a long and painful process requiring strong cyber defences and organisational resilience.

By Peter Dombrowski

CYBER WAR is not coming, but cybered conflict is. For decades we have been warned of the possibility of digital Pearl Harbours where network attacks lead to cascading failures of critical military, public and private systems. Recently, there has been a backlash; contrarians now argue that cyber war not only hasn’t occurred but is highly unlikely. They point to the absence of cyber “battle deaths” to date and the immense difficulty of using cyber weapons for political and military purposes.

Botnets and malware can disrupt service and lead to lost data, but these are expensive nuisances rather than acts of war. Truly dangerous attacks, targeting, for example, the supervisory control and data acquisition (SCADA) systems of military facilities or public utilities, while potentially destructive, require exquisite intelligence and dedicated teams of hackers. These are capacities beyond the means of most nation-states, much less terrorists or common criminals.

What’s going on?

Yet worrying about cyber war and arguing about whether it can occur or not misses something important about the contemporary security environment much less the future. Communications and computer networks remain vulnerable. If we are not at war, therefore, what is going on?

We have entered a period of cybered conflict. Cybered conflict means simply that all adversarial and competitive relationships will have a cyberised dimension. Insofar as all modern systems from finance to transport require telecommunications and computers connected to the Internet or proprietary networks, adversaries of all sorts will seek to influence outcomes by accessing and altering both the systems themselves and the data that resides within.

For militaries, boots on the ground and ordinance on targets may be the ultimate determinants of victory but to deploying soldiers in the field or launching missiles on now requires the secure, accurate, and timely flow of information.

For most institutions, including nation-states, developing cyber defences and resiliency are key. With all the attention paid to high profile attacks like Stuxnet, it is sometimes difficult to remember that the most effort – in terms of time, manpower, technology and money – is put into developing defensive systems. Firewalls, anti-virus programs, cryptographic techniques and the like play important roles in maintaining functionality. Even more important, governments and firms are developing the training, tactics, and procedures necessary to protect data, software, and hardware. More needs to done and investments to date are inadequate, but progress is being made.

Defences of course are not enough. Given the stakes involved and motivations of hackers, it is inevitable that new malware will be developed, and internal threats from formerly trusted agents will emerge. But when telecommunications and computing systems are inevitably damaged they must be able to recover quickly; this might mean building in redundancy and avoiding single points of failure, but it also means having talented, well-trained personnel capable of responding quickly to repair, restore and rebuild.

The big picture

Beyond the importance of cyber defence and resilience, two big trends are emerging from this era of cybered conflict. Firstly, we are experiencing what Chris Demchak and I call the “Cyber Westphalia,” that is, the reassertion of the nation-state into the ungoverned domain of cyberspace. States are slowly but surely dividing up cyberspace into national jurisdictions while establishing enforcement capabilities, such as the emergence of cyber commands, national and subnational computer emergency response teams (CERTS), domestic legislation codifying organisational responsibilities, and interstate bargaining over the future of global cyber governance.

Secondly, there are signs that the aerospace and defence sector is evolving into what might be called a cyber-military complex. When we think about war and preparations for war, we often think about the industrial giants that have traditionally supplied everything from tanks to ships to fighter aircraft: Lockheed Martin, Boeing, BAE Systems, and Airbus Group. Increasingly, these firms are tailoring themselves to meet the demands of defensive – and in some cases, offensive – cyber operations.

Yet, preparing for cybered conflicts demands a different set of industrial capabilities than preparing for traditional warfare. Of course, the old giants will play a role. Too much money is at stake and the old ways of doing business are too hard to break. Indeed, many companies in the aerospace and defence sector have created cyber divisions, advertise specialised cyber services, and have added the prefix “cyber” to many existing programs and products. But other, more non-traditional suppliers will also provide many of the technologies for militaries, government agencies, and private firms to cope with cybered conflicts.

In particular, firms in the information technology and communications sector are paying attention to government customers in ways not seen since the beginning of the information age. While at one time, many Silicon Valley firms were loathe to work closely with the government, more recently this is not the case. Of course, this attention is not an unalloyed good. Abuses have and will occur and the long-term implications for international competitiveness of firms closely associated with governments are uncertain.

But again Google, Huawei, and other telecommunications and computing conglomerates are working with government to provide the hardware, software, and services necessary to assert greater control over cyberspace. Further, highly specialised cyber security firms have become critical – not just for protecting home computers but also for providing network intelligence, digital forensics, and many other professional services.

Turbulent future

While in most countries defence and intelligence budgets are declining or stabilising, spending on cyber security remains a growth area. In the United States, for example, President Obama’s 2015 budget includes roughly US$13 billion to improve cyber security and to mitigate network threats. Defence spending on cyber operations is projected to increase 21 percent over 2013 to $4.7 billion.

Even in a period of global austerity, other governments are increasing spending on cyber capabilities as well. If we add in spending on cyber security by private firms from banks to airlines and public utilities, investment analysts are positively bullish on any firms connected with the sector.

Mastering cybered conflict will be a long and likely painful process. Technologies evolve rapidly; developing defensive and resilient institutions remains a game of catch up. States will try to regulate and govern but will often fail or get things wrong. Gains to be made from cyber exploits – whether stealing intellectual property or disabling military equipment used for in a shooting war or deceiving publics with misinformation transmitted over social media – are simply too great for ambitious generals, corporate buccaneers, and criminals to resist.

Peter Dombrowski, a professor in Strategic Research at the US Naval War College, was until recently a Visiting Research Fellow with the Military Transformations Programme, S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University. This commentary draws from an earlier article he co-authored with Chris Demchak in the Naval War College Review.

Yemen: At Least Four Killed From Al Qaeda Attacks

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Clashes in Yemen left at least four dead Tuesday, according to Agence France Presse.

Al Qaeda militants allegedly attacked a government checkpoint in Yemen’s western province of Hudayah, according to the country’s interior ministry.

Security officials stationed at the checkpoint exchanged fire with the attackers, leaving two policemen and two of the militants dead at the scene.

Two other policemen and another militant were also wounded at the scene. After the clashes subsided, all of the other militant fled the scene.

Authorities also allegedly successfully dismantled unexploded bombs that the attackers brought to the checkpoint via their cars.

Al Qaeda’s chapter in Yemen, AQAP, is considered the most dangerous branch of the global jihad network by the United States.

Original article

Stock Buybacks And Margin Debt – OpEd

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Are you looking for signs of froth in the stock market? Then you might want to take a look at stock buybacks.

According to the Wall Street Journal, almost 20 percent of the total value of stocks today are stock buybacks, that is, corporations that purchase their own shares to push up prices. Here’s the scoop from Jason Zweig at the WSJ:

“Last year, the corporations in the Russell 3000, a broad U.S. stock index, repurchased $567.6 billion worth of their own shares—a 21% increase over 2012, calculates Rob Leiphart, an analyst at Birinyi Associates, a research firm in Westport, Conn. That brings total buybacks since the beginning of 2005 to $4.21 trillion—or nearly one-fifth of the total value of all U.S. stocks today.” (Will Stock Buybacks Bite Back?, Wall Street Journal)

“$4.21 trillion” is a heckuva lot of froth. It means that the market is overpriced by at least 20 percent. Corporate bosses have been aggressively pumping up prices to reward shareholders even though earnings and revenues are looking increasingly shaky. The reason buybacks have caught fire is because– up to now– they’ve been considered a reasonably safe bet. With interest rates locked at zero, and the Central Bank flooding the financial system with $55 billion every month, stocks have been following the path of least resistance which is up, up, and away. (As of Friday, the S and P was up 176 percent from its March 2009 lows.)

The point is, stock buybacks are a natural reaction to the Fed’s easy money policies. Corporations are just following the Fed’s lead. If the Fed didn’t want companies to engage in this kind of reckless behavior, it could either turn off the liquidity or raise rates. Either way, the buybacks would stop. The fact that the Fed keeps juicing the system just shows that the it’s real objective is to buoy stock prices regardless of the risks involved. And there are risks too. Keep in mind, that most of the money corporations use for buybacks is borrowed, which leaves them vulnerable to fluctuations in prices. If the market suddenly goes South, then over extended investors have to sell other assets to cover their bets. That leads to firesales, plunging prices and deflation.

Surging margin debt is another sign of froth. Margin debt is money that investors borrow to finance the purchase of stocks. Margin debt has been trending higher since the recession ended in 2009, but it’s really skyrocketed in the last year as eager investors have piled into equities confident that the Fed has their back. The problem is that large amounts of margin debt usually indicate a peak in the market. Here’s a little background from an article in USA Today:

“The amount of money investors borrowed from Wall Street brokers to buy stocks rose for a seventh straight month in January to a record $451.3 billion, a potential warning sign that in the past has coincided with irrational exuberance and stock market tops…

“One characteristic of getting closer to a market top is a major expansion in margin debt,” says Gary Kaltbaum, president of Kaltbaum Capital Management. “Expanding market debt fuels the bull market and is an investors’ best friend when stocks are rising. The problem is when the market turns (lower), it is the market’s worst enemy.”…

“Forced liquidations can occur,” says Price Headley, CEO of BigTrends.com. “If the decline in the market is dramatic, it can cause a true flush-out, when everyone is getting forced out by margin calls.” (Record margin debt poses risk for bull market, USA Today)

Investors seem to think that the Fed has superhuman powers and can stop the market from correcting. But that’s a bad bet. Stocks will tumble, and when they do these same speculators will get a call from their broker telling them they need more cash to meet the required minimum. That “margin call” will lead to the dumping of stocks and other assets in a mad scramble for cash. If the margin call is broad-based enough, then debt deflation dynamics will kick in pushing down prices across the board paving the way for another spectacular stock market crash. That’s what happened in 2008 when a run on the shadow banking system (repo) sparked a panic that sent global shares plunging. Here’s a chart that shows how closely stock prices follow the build up of margin debt.

Like stock buybacks, margin debt is a natural reaction to Fed policy. Zero rates provide a subsidy for speculation while QE reduces the aggregate supply of financial assets thus pushing up prices. This is why there’s so much froth in the markets, because the Fed creates incentives for risk taking. Remove the incentives, and the bubbles quickly vanish. Poof.

There are other areas where bubbles are emerging too, but it may be more worthwhile to consider “valuation metrics” which give us a better idea of where stock prices would be without the Fed’s liquidity injections. Here’s a brief excerpt from a post by John Hussman who’s done extensive research on the topic and who believes that the S&P 500 is currently more over-valued than the housing market in 2006:

“Based on valuation metrics that have demonstrated a near-90% correlation with subsequent 10-year S&P 500 total returns, not only historically but also in recent decades, we estimate that U.S. equities are more than 100% above the level that would be associated with historically normal future returns…

It is the series of extreme instances over the past year that give investors the hope and delusion that historically reckless market conditions will lead only to further gains and greater highs. This is a mistake born of complacency in the face of a nearly uninterrupted, Fed-enabled 5-year market advance, and is the same mistake that was made in 2000 and again in 2007. By the time the present market cycle is completed, we expect the S&P 500 to be at least 40% lower than present levels.” (Hussman Warns S&P 500 Over-Valuation Now Higher Than Housing In 2006, Zero Hedge)

Okay, so what does that mean in plain English?

It means that stocks are ridiculously overpriced, and the reason they’re overpriced is because the Fed has been juicing the market with easy money and monthly liquidity injections. Chief US Equity Strategist for Goldman Sachs, David J. Kostin, was even more blunt than Hussman. He said, “The current valuation of the S&P 500 is lofty by almost any measure, both for the aggregate market as well as the median stock.”

So by any measure, the market is overvalued. That means that investors can expect either lower returns in the future or big losses. It’s going to be one or the other.

So what are the chances that stocks will fall sharply in the next few months putting another dent in the pensions and life savings of the many of the Mom and Pop investors who just got back into the market in the last 12 months?

I don’t have the foggiest idea. But the outlook is pretty bleak. Take a look at this from Mark Hulbert at Marketwatch:

“Nejat Seyhun, a finance professor at the University of Michigan, has found from his research…that only some (corporate) insiders have a consistently accurate view of their companies’ prospects.

The insiders worth paying attention to are a company’s officers and directors…

Prof. Seyhun — who is one of the leading experts on interpreting the behavior of corporate insiders — has found that … insiders do have impressive forecasting abilities. In the summer of 2007, for example, his adjusted insider sell-to-buy ratio was more bearish than at any time since 1990, which is how far back his analyses extended.

Ominously, that degree of bearish sentiment is where the insider ratio stands today, Prof. Seyhun said in an interview.” (Corporate insider bearishness at pre-2008 crash levels; Opinion: Don’t ignore the behavior of executives in the know, Mark Hulbert, Marketwatch)

Then there’s this brief summary from Baupost Group founder and billionaire Seth Klarman who advises his clients to be prepared for a “trend reversal”. Here’s the quote from Business Insider:

“Six years ago, many investors were way out over their skis. Giant financial institutions were brought to their knees…The survivors pledged to themselves that they would forever be more careful, less greedy, less short-term oriented.

But here we are again, mired in a euphoric environment in which some securities have risen in price beyond all reason, where leverage is returning to rainy markets and asset classes, and where caution seems radical and risk-taking the prudent course. Not surprisingly, lessons learned in 2008 were only learned temporarily. These are the inevitable cycles of greed and fear, of peaks and troughs.

Can we say when it will end? No. Can we say that it will end? Yes. And when it ends and the trend reverses, here is what we can say for sure. Few will be ready. Few will be prepared.” (If You’re Bullish About Stocks, You Should Ponder This Warning From One Of The Smartest Investors Ever, Business Insider)

So the Fed has done what the Fed always does; set us up for another crash. Stocks are over-priced, insiders are selling and QE is winding down. It’s only a matter of time before the roof caves in and all hell breaks loose.

But why? Why does the Fed keep steering the economy from one financial catastrophe to the next?

That’s easy. Just take a look at this chart by economists Atif Mian and Amir Sufi and you’ll see for yourself who’s getting rich on this deal. This is the class of people who actually benefit from the Fed’s serial bubblemaking. Take a look:

“Here is the distribution of financial asset holdings across the wealth distribution. This is from the 2010 Survey of Consumer Finances:

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The top 20% of the wealth distribution holds over 85% of the financial assets in the economy. So it is clear that the direct income from capital goes to the wealthiest American households.” (Capital Ownership and Inequality, House of Debt)

Who benefits from QE?

Now you know.

Demand To Disinvite Romania President Basescu From European Roma Summit

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European Commission (EC) should rescind the invitation extended to Romania President Traian Basescu to speak at Third European Roma Summit, being organized by EC on April four at Brussels, because of his discriminatory Roma remarks; distinguished religious statesman Rajan Zed, stated in Nevada (USA) today.

Basescu is listed as third speaker in the “Opening” part of the Summit after Summit Chair EC Director General for Justice Francoise Le Bail and EC President Jose Manuel Barroso.

Zed, who is President of Universal Society of Hinduism, noted that Basescu was reportedly found guilty and fined in February of discriminatory remarks about Roma population by Romania’s official National Council for Combating Discrimination.

Rajan Zed argued that Basescu had no moral standing to attend Roma Summit after making such disparaging remarks about Roma, who formed a major group of the population in Romania. The Council reportedly fined Basescu for saying “very few of them (Roma) want to work” and “traditionally many of them live off stealing”, in a news conference in Slovenia in 2010.

It seemed like an attempt by Basescu to demonize the already most prejudiced against community in Europe and eternalizing negative stereotyping of them, instead of showing strong political will to integrate them, Zed said.

Rajan Zed further said that EC also had no moral ground to invite Basescu who had such a prejudiced opinion about a large ethnic group of his population. If EC continued with its agenda to let Basescu speak at the Summit, this would clearly exhibit that EC was not “wholeheartedly and honestly” interested in Roma integration and inclusion. Basescu should not have been invited at the first place if EC was “seriously committed” for Roma upliftment, Zed added.

According to reports, in Berlin in January, Basescu again reportedly made derogatory remarks against Roma, besides calling a journalist “dirty Gypsy” in 2007 and blaming Roma of stealing in buses in 2011.

Zed pointed out that this Summit appeared to be just a “sweet talk” like the previous two Summits (2008, 2010), with no concrete outcome to end Roma apartheid. A big change of heart and firm political commitment was needed for Roma social and economic integration, which European Union (EU) clearly lacked.

Rajan Zed indicated that the alarming condition of Roma people was a social blight for Europe and the rest of the world as they reportedly regularly faced social exclusion, racism, substandard education, hostility, joblessness, rampant illness, inadequate housing, lower life expectancy, unrest, living on desperate margins, language barriers, stereotypes, mistrust, rights violations, discrimination, marginalization, appalling living conditions, prejudice, human rights abuse, racist slogans on Internet, etc.

It was simply immoral to let this around 15 million population of Europe, whose references reportedly went as far back as ninth century CE, continually suffer and face human rights violations. It was moral obligation of Europe to take care of its frequently persecuted Roma community, Zed stressed.

Talks With The Taliban: Pakistani Military’s Endgame? – Analysis

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By Rana Banerji

The March 1 ceasefire announced by the Tehrik-e–Taliban Pakistan (TTP) holds somewhat tenuously in the Federally Administered Tribal Areas (FATA) and Khyber Pakhtunkhwa (KP) even as the Nawaz Sharif government shows extraordinary patience in continuing to engage with them.

The TTP was badly hit by the pinpointed air-strikes undertaken by the Pakistani army in February. The ceasefire resulted due to the TTPs weak position, as their current hide-outs stood revealed and they could not escape to higher mountain reaches immediately due to winter weather.

Though patience of the army leadership appeared to be wearing thin with the TTP’s dilatory tactics, on March 12, a meeting chaired by Chairman, Joint Chiefs of Staff Committee, General Rashad Mahmood, reaffirmed “full preparedness and resolve of the armed forces to fight the menace of terrorism under a comprehensive strategy, within the policy parameters set by the political leadership.”

The TTP Shura demanded direct talks with authorised government functionaries, including representatives of the army and the Inter-Services Intelligence (ISI). The army is against any such direct involvement. Interior Minister Chaudhry Nisar Ali has increasingly emerged in a frontal or nodal role. He presided over the March 25 meeting attended by the Director General of the ISI, Lieutenant General Zaheerul Islam, which authorised a committee of civilian bureaucrats, comprising Federal Ports & Shipping Secretary Habibullah Khattak, Additional Secretary of the FATA, Arbab Arif, former bureaucrat Rustam Shah Mohmand, sole member of the Government’s previous team of interlocutors which broke the ice, all three Pashtuns, and Fawad Hussan Fawad, Additional Secretary, Prime Minister’s Office, to talk to the TTP at a secret venue in North Waziristan.

The success of the talks would depend on whether the civilian politicians can take the army along while tackling the main demands of TTP vis-à-vis the imposition of Sharia law, the withdrawal of the army from FATA, and the release of prisoners.

The ceasefire would need to be extended after March 30. Any further extension could tactically redound to the army’s disadvantage, helping the TTP militants regroup, and escape to the hills in better climatic conditions. However, a key risk in this regard would be the possibility of maverick actions by smaller militant groups perpetrating localised violence against security forces. Each such act of violence makes further negotiations with the TTP more difficult as it cannot cohesively control militants loosely adhering to its fold. The army has threatened firm retaliation against such incidents.
Demands have come from civil society that ceasefire extension be accompanied by release of kidnapped or arrested `non-combatants’, especially the long incarcerated sons of PPP politicians, Haider Gilani and Shahbaz Taseer and the Vice Chancellor of Peshawar University, Dr Ajmal Khan.

Release of prisoners remains a vexing issue. A list of 300 women and children `prisoners’ was given to a pro-TTP mediator, Professor Ibrahim, but the army denied holding any women or children. In the recent past, the execution of Dr Usman, the Punjabi Taliban mastermind of the 2010 attack on Army Headquarters was stayed by the Punjab government after the Taliban issued a threat.

Shahbaz Sharif too has been reluctant to act firmly against militants for fear of retaliation and collateral damage in Punjab. The army would baulk at release of prisoners at this stage, especially those arrested or detained for specific terrorist incidents. Phased release of those who may not have committed heinous crimes could be considered later, provided binding progress for peace can be achieved through a longer term ceasefire accompanied by a surrender of weapons. Currently, agreement on this seems a far cry.

A withdrawal of army` regulars’ from FATA too seems unacceptable, even if the TTP couches this request with the proposal of restoring jurisdiction of Frontier Corps para-military personnel. Persistent infighting within the TTP would also need to be assessed. Mullah Fazlullah, the current TTP leader hails from Swat, and is disliked by the army leadership. Though his ascension may have been endorsed by the Afghan Taliban leadership (Mullah Omar), it is unclear if powerful local leaders like the Haqqanis, Mehsuds and the Wazirs fully accept him. The army/ISI could exploit these differences.

Whenever there is a military operation in FATA and KP or anticipation thereof, a large outflow of internally displaced persons (IDPs), mostly civilians, especially women and children occurs. IDPs from the 2009 Swat operation continue to live in abysmal conditions in the Jalozai relief camp and other less organised temporary settlements in Tank, Dera Ismail Khan. There is also a burgeoning Pashtun settlement in greater Karachi urban agglomeration. Any new military operation would require the civilian administration to gear up their preparedness to cope for a fresh influx of IDPs. This can be an emotive issue.

Though a 7 Infantry Division garrison is present in Miranshah, the writ of the State does not run in many areas of FATA. These areas can be used as `launch pads’ by insurgents supporting the Afghan Taliban (AT) in Afghanistan, as also against Pakistan’s own security forces. The army’s responses would have to be carefully calibrated, giving the TTP a sufficient ` bloody nose’ yet not jeopardising the capacity of the Afghan Taliban to hold ground on the other side of the Af-Pak border.

While the civilian political leadership seems keen to continue the peaceful dialogue, the army sees this as ineffectual appeasement.

This dilemma is likely to intensify as Pakistan’s politicians muddle through the current confusion on finding the right answers to curb the growing domestic threat of Islamic terrorism.

Rana Banerji
Distinguished Fellow, IPCS


Carter’s Baggage With Women’s Rights – OpEd

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Former President Jimmy Carter made the rounds on CNN over the weekend, championing women’s rights and criticizing the Catholic Church. Perhaps some gutsy reporter will ask him about his own record (click here for the sources we used).

Carter has been a volunteer and supporter for Habitat for Humanity since 1984. Habitat was founded by Millard Fuller in 1976. In April 1991, Fuller was forced to resign as president. Why? He was accused of sexually harassing five female employees. He was accused of hugging, kissing them on the mouth, touching their buttocks, and making inappropriate comments. He ultimately apologized to them.

When Carter learned of the accusations in 1990, he wrote a letter to the Habitat board arguing that a “national scandal” would ensue if Fuller was fired. “Without minimizing in any way the significance of what has happened at Habitat, let me say quite frankly that I have had some similar kinds of relationships with some of my own female employees and associates. If one ever complained officially, there could be an avalanche of similar charges.”

After Fuller was forced out, Carter issued a statement expressing his “disappointment” with his resignation; he wasn’t happy with the board’s decision. Indeed, he branded the ruling “disturbing.” Carter admitted that Fuller had “made some mistakes,” but he encouraged the board to find a role for him. In June 1991, only two months after the board canned Fuller, it voted to reinstate him as president.

In January 2005, Fuller was fired by the board for touching a female employee while in a car, and for making suggestive comments to her. Carter twice tried to broker an agreement that would keep the accusation quiet and allow Fuller to retire honorably.

In short, Carter has his own baggage when it comes to women’s rights. He is therefore not in a position to lecture the Catholic Church about its Scripture-based teaching on ordination. If he needs to mend his reputation as a failed president, he ought to choose another subject, and another target, for discussion.

MH370 Spotlight: Andaman And Nicobar Islands – Analysis

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By Darshana M. Baruah

The search for Malaysia’s ill fated flight MH370 has put considerable spotlight on India’s strategically important Andaman and the Nicobar Islands — the latest being refusing Chinese naval ships entry to Indian waters to look for plane debris in the area. As the search for the missing plane intensified with the area expanding into the Indian Ocean, the strategic importance of the Andaman and the Nicobar Islands is clearly emerging.

On March 8, 2014, MH370 enroute to Beijing from Malaysia disappeared over the South China Sea after losing contact with Air Traffic Controllers (ATC) within an hour of take off. It was then indicated that the plane turned back from its scheduled route and flew for several hours after losing contact with the ATC. India joined international efforts to locate the missing plane as the search area widened over the Malacca Strait and the southern Indian Ocean. On March 14, 2014, forces from the Indian Navy, Indian Coast Guards and the Indian Air Force were deployed to search the area in the South Andaman Sea, with the Indian Navy leading the search efforts.

The union territory of the Andaman and Nicobar lies at the junction of the Bay of Bengal and the Andaman Sea and is at a distance of 1200 km from India’s mainland — while being located at a short distance of 140 km from the busy shipping lanes of the Malacca Strait. Strategically, these islands are important to India’s security and the Look East Policy, given its location and the proximity to Southeast Asia.

The Indian Navy regularly engages with the navies of the region by carrying out exercises and drills off the islands. MILAN 2014, a multinational naval exercise which saw the highest number of participants since its inception in 1995, was also held in the Andaman Sea, off the Andaman Nicobar Islands. The islands also host the country’s first unified command of the three forces (Navy, Army and the Air Force), called the Andaman and the Nicobar Command (ANC), which was set up in 2001.

India has played an active role in the search for MH370 with the search operations being carried out from the ANC. As the search intensified, India deployed additional naval and air assets to locate the missing plane. The Indian Navy by March 15, 2014 had deployed “two recently acquired P8I Long Range Maritime Patrol aircraft of the Indian Navy and one C 130 J aircraft of the Indian Air Force in the Bay of Bengal and Andaman Sea. The Short Range Maritime Reconnaissance Dornier aircraft of the Indian Navy and the Coast Guard have also been extensively deployed for the ongoing search operations”. Additionally, six ships, three each from the Indian Navy and the Coast Guard have been deployed with the larger international group in the Andaman Sea as well as in the Malacca Strait. While the Indian search efforts were suspended on March 16, 2014 as per Malaysian requests and a new search strategy, they were resumed on March 20 with further deployment. As of March 25, 2014 the airline has been declared ‘lost’ in the southern Indian Ocean. The airline sent out a message to the families of those aboard with the heartbreaking news that ‘”Malaysia Airlines deeply regrets that we have to assume beyond any reasonable doubt that MH370 has been lost and that none of those on board survived… we must now accept all evidence suggests the plane went down in the Southern Indian Ocean.”

As most of the passengers on the missing flight are Chinese nationals, Beijing has been anxious to locate MH370. In this light, Beijing sent a request to New Delhi to allow its four warships enter the Andaman Sea and conduct search operations there- which was declined. The Times of India quoted an unnamed official reflecting Indian concerns that “The A&N command is our military outpost in the region, which overlooks the Malacca Strait and dominates the Six-Degree Channel. We don’t want Chinese warships sniffing around in the area on the pretext of hunting for the missing jetliner or anti-piracy patrols”. Moreover, Indian forces have already deployed assets to locate the missing plane and are coordinating with the international group.

India has been wary about Beijing’s outreach into the Indian Ocean and concerns have particularly increased after the Chinese navy’s combat exercises in January 2014, near Indonesia. The exercises comprising the amphibious warship Changbaishan and two destroyers reflect China’s ability to project power far from its shores into the Indian Ocean.

India’s engagement with the search efforts to locate the missing plane is commendable. Due to the strategic location of the Andaman Nicobar Islands, Indian forces have been able to play an active role in humanitarian assistance even in the past. During the 2004 tsunami set off by a massive earthquake off the coast of Indonesia in the Indian Ocean, 11 Indian Ocean countries were affected leading to massive destruction and immeasurable loss of life. India was at the forefront of the relief and assistance operations in the region while at the same time helping its own people in the affected areas. India’s assistance to Sri Lanka, the Maldives and Indonesia was particularly noteworthy, with India being the first country to respond to the disaster in Sri Lanka. According to a report by the Indian Ministry of External Affairs, “[r]ecognising the key role that India can play in the region, it was invited to be a part of the Tsunami Core Group put together by the United States in order to facilitate a coordinated effort to deal with this disaster”. India also played a constructive role when cyclone “Nargis” hit Myanmar in 2008, causing the worst natural disaster in the history of Myanmar. The Indian Armed Forces launched “Operation Sahayata” from the Andaman and Nicobar Islands wherein the Air Force and the Navy took the lead in delivering supplies and assisting Mynamar in the hour of crisis.

India’s ability to respond to natural calamities has been applauded and places the Indian Navy and Air Force at a credible position amongst the countries of the region. The Andaman and Nicobar Islands have aided India in its naval diplomacy and goodwill adding to its strategic importance for the country.

The search efforts to locate the missing flight put the otherwise scenic holiday destination of the Andaman and the Nicobar Islands in a vital position. While the islands place India at an advantageous position in the Indian Ocean, there is a need for a certain amount of development in the Union Territory to help realise its potential. With the Chinese navy’s increasing ability to project power into the Indian Ocean, it is important for New Delhi to strengthen its strategic outpost in the Andaman and Nicobar territory and remain a security provider to the region.

(The writer is an Associate Editor of ORF South China Sea Monitor)

Crimean Tatar Leader Calls For UN Peacekeeping Troops

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(RFE/RL) — The veteran leader of the Crimean Tatars has called on the UN Security Council to send peacekeeping forces to Crimea.

Mustafa Dzhemilev told VOA correspondents after an informal Security Council meeting on Crimea on March 31 that the insufficient pressure on Moscow over the annexation of Crimea might lead to bloodshed on the peninsula.

“We have serious fears about what can happen there, and that’s why I asked for UN peacekeeping forces. But since this is something that’s decided by the UN Security Council, where Russia has the right to veto, this is quite unlikely,” Dzhemilev said.

“The second option was for sending NATO troops, as was done in Kosovo. But the problem with that is that NATO only comes once a sea of blood is shed.”

According to Dzhemilev, the sanctions imposed on Russia by the United States and the European Union are not sufficient to make Russia leave Crimea.

“My fears are these: first, we think that the sanctions taken now against the aggressor are kind of like a tiny pinprick in an elephant’s skin. If this is the case, it’s unlikely that Russia will leave the occupied territory,” he said.

“And if such an approach prevails, then Ukrainians rightfully will consider themselves deceived, and there is already this opinion: ‘We were deceived, so we should return to our nuclear status.’”

The veteran leader of the Crimean Tatars reiterated his people’s stance on the situation, saying that Tatars had always stood for Crimea’s being a part of Ukraine.

“We find it outrageous that Russia thinks in 19th-century terms: ‘We once conquered this territory, and that’s why it has to be Russian.’ This is a very unhealthy approach and it could have deplorable consequences, if implemented,” Dzhemilev said.

“In this case there is no respect for people’s right to self-determination. What’s more, the fact that they came up with the idea that Crimean people have a right to self-determination — this is absurd. There is no ‘Crimean people,’ as such.”

Kremlin: ‘Propaganda Show’

The UN Security Council’s informal session on Crimea was organized by Lithuania. Lithuania’s deputy UN ambassador, Rita Kazragiene, said the meeting gave members their first opportunity to hear the Crimean Tatars’ concerns about media impartiality and minority rights.

Russia, which sent troops into the Crimea and ultimately annexed the Black Sea peninsula through a controversial referendum organized by the peninsula’s pro-Russian authorities, boycotted the council session.

In a statement, Russia’s UN mission said the March 31 meeting was designed not to give an objective account of events in the region, “but to stage a biased propaganda show.”

Kazragiene countered that many Security Council members consider the referendum on Crimea’s status illegal and don’t recognize its annexation.

“According to the majority of the Security Council members and the UN General Assembly, that is not the case — the Autonomous Republic of Crimea is still a part of Ukraine and the referendum was illegal and there is support for Ukraine’s territorial integrity,” she said.

Dzhemilev, 70, who is a member of the Ukrainian parliament, is a well-known Soviet-era human rights activist who served six sentences in Soviet prison camps from 1966 to 1986. He is also known for going on a 303-day hunger strike — the longest in the history of the Soviet human rights movement. he survived due to force feeding.

Mejlis Agrees Work With New Government

In related news, the Crimean Tatar self-government body has agreed to be a part of the territory’s new government.

However, the resolution adopted by the Mejlis today said the Tatars still do not recognize Russia’s annexation of the peninsula.

The resolution said Lenur Islyamov will serve as deputy prime minister in the government, and Zaur Smirnov will be chairman of the Committee on Nationalities and Deported Citizens.

The resolution emphasizes, however, that the Mejlis does not recognize “political, legislative, economic and other changes taking place in Crimea without the consent and approval” of Crimean Tatars.

According to the document, the Mejlis will in two weeks again consider whether to cooperate with the government.

The Mejlis said most Crimean Tatars boycotted the March 16 referendum in which Crimeans were asked whether the territory should join Russia.

Two Proud But Reasonable Mediterranean Countries: Egypt And Turkey – Analysis

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By O. Bahadir Dincer

The main developments in the Arab world of interest to Turkey are not only taking place in Syria and Iraq, or in a broader sense, the Mesopotamian basin. Egypt, whose army plays a central role in its politics and economy, also suffers from instability… The anti-democratic practices witnessed both before and after the coup continue to mortgage the future of Egypt. Previously, in the August 2013 issue of Analist, we argued that Turkey should “act as an inclusive and stabilizing actor in order to help Egypt in its transition to sustainable democracy, to alleviate the victimization of the Muslim Brotherhood, and to safeguard its own interests.” Nevertheless, today we are faced with a more dramatic situation in which the Turkish-Egyptian relationships has been severely damaged and the Muslim Brotherhood has been declared a terrorist organization.

Negative perception of Turkey

The negative approach towards Turkey can be regarded as a reflection of Egypt’s domestic political debates. In other words, this negative approach does not necessarily stem from Ankara. Yet, it is likely to argue that Ankara failed to accurately interpret the domestic dynamics that led to the overthrow of Mubarak and the following events. This failure by Ankara may be the main reason why many Egyptian actors view Turkey as a Muslim Brotherhood supporter.

The 25 January Revolution did not occur just due to social dynamics—there were also other accompanying dynamics. For that reason, as it developed policies Turkey should have adopted a comprehensive approach that would consider all the sides with active roles both during and after the revolution, along with state institutions. Turkey’s failure to perceive the depth of the ongoing interactions in Egypt caused it to miss many opportunities offered by the Arab Spring. Just because political Islam and a non-regime opposition arose did not necessarily mean that they had ability to govern the state. In spite of this, Turkey’s image in both Egypt and the region was damaged by the popular perception that it cares “only about political Islamist circles”.

I am not claiming that these negative perceptions towards Turkey reflect realities. However, it should be stated that if these negative perceptions are based on facts, then there is a situation that contradicts Turkish foreign policy’s macro perceptive. If not, that is, if these perception are being built on groundless arguments, then there is no option but to conclude that Turkey is failing at perception management.

In that regard, it may be useful to detect the main dynamics of this process in order to amend bilateral relations and figure out prospective policies. At this point, it is essential to strip ourselves of the influence of daily discussions and strive to see the reality—even if it is painful. For this is the only way to comprehensively analyze the process.

First, the assessments

Firstly, the Brotherhood administration’s tense relations with the Gulf countries formed one dimension of the relative regional loneliness of Morsi’s Egypt. We should see that this situation significantly motivated Egypt to pursue close relations with Turkey after Morsi became president.

Secondly, we see that a discrepancy has emerged between Turkey’s rhetoric and its capability to sustain the favor it has gained by supporting the peoples of the Middle East. This raises a question: “has the development of relations been based on ideological similarities more than firm strategic grounds?” It seems that Turkey suffered from a capacity problem and thus was unable to grasp Egypt’s political and social domestic structures. Also, it seems that Turkey’s failure to even be aware of its own capacity limitations has led it to adopt a “pro–Brotherhood jargon”—that is, reduced Egypt to the Brotherhood.

Thirdly, Ankara has internalized the happenings in Egypt so much that has started to regard them as its own problems. Instead of acting as a mediator and contributing to resolving the crisis in Egypt, it has rather overinvolved itself in the issues as a partisan actor with the “cosmic conspiracy” discourse. To be sure, the conspiracy discourse produces a strident tone that is difficult to walk back and incompatible with the nature of diplomacy. At this point, Egyptians mostly consider Turkey’s posturing to be interfering in their domestic affairs; Turkey would do well to recall that Egypt does not just consist of Muslim Brothers.

Finally, Turkey has firmly criticized the Egyptian military, which is the symbol of the Egyptian nation’s honor, and Al-Azhar, which occupies a place of prestige in Egypt. This has further brought Turkey and the Egyptians against each other. On the other hand, we can say that Turkey has been alienated because it has failed to interpret the positions of third parties. At the end of the day, the perception of Turkey has changed in Egypt. Particularly, the liberal and secular groups have started to approach Turkey with hesitation, and a feeling of “estrangement” toward Turkey has emerged in Egyptian society. Discourses feeding on Arab nationalism and Nasserism have become more visible as they are increasingly voiced by the media.

Quiet diplomacy

Before all, it is vital to assess the following questions with a common sense devoid of hysteria: “how should Turkey approach Egypt from now on?” and “how can Turkey change the perception in Egypt?” It would be productive for Turkey to assess Egypt within the context of its own dynamics rather than Turkey’s own political experience. Moreover, the problems experienced should make it crystal-clear that bilateral relations should not be established only through governments and leaders.

In the first stage, it is probably the wisest to run bilateral relations through quiet diplomacy. Lowering the pitch of political discourses is a plausible option. In other words, adopting strategic silence and simplifying objectives is a preferable course of action. It is also evident that Turkey should definitely take the approaches of third parties into consideration. Turkey has a number of constraints in terms of its power and capabilities when it acts unilaterally. Turkey should avoid actions and discourses that may marginalize and sideline it as much as possible, so that it can overcome these handicaps in the subject of Egypt and many other problems.

Turkey cannot afford to disregard Egypt in any way. However, Turkey is not powerful enough to intervene there and alter the dynamics in its favor. In such a situation, if the problems between these two proud Mediterranean actors deepen, it could accelerate the rupture in the (bilateral) relations. This is not in the interest of neither Turkey nor Egypt. Only if Turkey and Egypt establish a friendly relationship will they have a positive effect on the region. Strife and dissension are harmful to both sides. The tension between Turkey and Egypt can tilt the regional balance against the interests of both countries. In fact, the region needs more moderate and reasonable actors like Turkey and Egypt as opposed to Iran and Saudi Arabia—which represent the extremist wings of the region. In that sense, the Turkey-Egypt alliance represents what is reasonable and acceptable in the region. Yet, it’s improbable that this alliance would materialize without comprehending the realities of the region. Seeing the opposition and other factions in Egypt as not worthwhile, or not thinking about Egypt holistically in terms of state and society, may lead to more breaks in relations. A softening is required if bridges are not to be burned completely.

This article was first published in Analist Monthly Journal on March, 2013.

South Korea Energy Profile: Relies On Imports To Meet About 97% Of Energy Demand – Analysis

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The U.S. Energy Information Administration (EIA) estimates that South Korea was the world’s ninth-largest energy consumer in 2011. Korea is one of the top energy importers in the world and relies on fuel imports for about 97% of its primary energy demand because the country lacks domestic energy reserves.

In 2013, the country was the second-largest importer of liquefied natural gas (LNG), the fourth-largest importer of coal, and the fifth-largest net importer of total petroleum and other liquids. South Korea has no international oil or natural gas pipelines and relies exclusively on tanker shipments of LNG and crude oil. Despite its lack of domestic energy resources, South Korea is home to some of the largest and most advanced oil refineries in the world. In an effort to improve the nation’s energy security, oil and gas companies are aggressively seeking overseas exploration and production opportunities.

South Korea’s highly developed economy drives its energy consumption, and economic growth is fueled by exports, most notably exports of electronics and semiconductors. The country also contains one of the world’s top shipbuilding industries. Gross domestic product (GDP) grew by 2.8% in 2013, up from 2% in 2012. The government anticipates even higher GDP growth in 2014 of 3.8% on the back of rising exports and recovering economic growth in other developed countries. South Korea’s economic growth following the 2008 global financial crisis remained relatively resilient compared to other developed country economies.

Although petroleum and other liquids accounted for the largest portion (41%) of South Korea’s primary energy consumption in 2012, its share has been declining since the mid-1990s, when it reached a peak of 66%. This trend is attributed to the steady increase in natural gas, coal, and nuclear energy consumption. The government originally planned to increase the nuclear share of total energy consumption in the next 20 years as planned reactors come online, although the most recent energy policy, unveiled at the end of 2013, limits the country’s reliance of nuclear energy in the power sector over the long term. South Korea is attempting to diversify its fuel portfolio to meet higher energy consumption and to moderate its nuclear power generation targets following Japan’s Fukushima disaster and South Korea’s problems with false safety certifications of nuclear parts in late 2012. To help balance a more moderate nuclear generation growth goal and offset some fossil fuel imports, the government is also promoting greater demand-side management, energy efficiency tactics, and renewable energy supplies.

South Korea has a large oil refining sector, but the country relies almost entirely on crude oil imports to fuel its refineries.

Overview

South Korea consumed more than 2.3 million barrels per day (bbl/d) of petroleum and other liquids in 2013, making it the ninth-largest consumer in the world. According to the Korea National Oil Company (KNOC), Korea has a small amount of domestic oil reserves, but the country relies significantly on crude oil imports to meet its demand. A majority of South Korea’s total oil production of 60,000 bbl/d is based on refinery processing gains and a small portion of biofuel production.

According to the Oil & Gas Journal (OGJ), South Korea maintains 3 of the 10 largest crude oil refineries in the world, allowing South Korea to be one of Asia’s largest petroleum product exporters. According to Global Trade Atlas and Facts Global Energy (FGE), South Korea exported about 1.2 million bbl/d of refined oil products in 2013, mostly in the form of middle distillates such as gasoil and jet fuel. Because of increasing demand from Asia during the past decade, South Korea’s exports of refined products have grown at a rapid rate.

South Korea’s oil consumption rates have fluctuated alongside its economy. Oil consumption grew at a rapid pace with economic growth in the 1990s, fell following the Asian Financial Crisis of 1997, rose steadily until 2007, but dipped during the global economic downturn in 2008. Oil demand gradually rose from 2008 to 2013. Naphtha, which is used for the country’s sizeable petrochemical and industrial sectors, accounts for about 44% of total oil product demand and is the primary driver of domestic demand growth, according to FGE. South Korea’s oil demand growth outside of the petrochemical sector is limited in the long term because of its declining population growth, greater energy efficiency measures, and competition from other fuels such as natural gas, nuclear, renewable sources.

In 2013, South Korea imported nearly 2.5 million bbl/d of crude oil, making it the fifth-largest importer in the world. South Korea is highly dependent on the Middle East for its oil supply, and the region accounted for more than 87% of South Korea’s 2013 crude oil imports, according to Global Trade Atlas. Saudi Arabia was the leading supplier and the source of over a third of South Korea’s imports, followed by Kuwait at 16% of total crude oil imports. South Korea reduced its crude oil purchases from Iran, from 10% in 2011 to 5% in 2013. South Korea halted shipments from Iran for two months in 2012 to comply with sanctions imposed by the United States that impeded Iran’s ability to sell crude oil. After showing a good faith effort to reduce their volumes, South Korea was granted a waiver in mid-2012 and resumed imports from Iran, but at a lower level than before the sanctions. Negotiations between Iran and six global powers at the end of 2013 allowed South Korea and other buyers to maintain current import levels. Other Middle Eastern suppliers have made up for the lost imports from Iran.

Sector organization

The Korea National Oil Corporation (KNOC) is a state-owned oil company and the largest entity in South Korea’s upstream sector, with 3.2 million barrels of ultra-light crude (condensates) domestic reserves. In addition, KNOC, through both acquisitions of overseas companies and investments with major international and national oil companies, produced 231,000 bbl/d and held 1.3 billion barrels of oil equivalent of oil and gas reserves from overseas assets in 2012.

Korea’s downstream sector is home to several large international oil companies including SK Energy, the nation’s largest international oil company (IOC). SK Energy holds approximately 34% of the petroleum product market (excluding LPGs), followed by GS Caltex, S-Oil, and Hyundai Oilbank. These corporations have historically focused on refining, but some have put increasing emphasis on crude extraction projects in other countries. SK Energy also owns the largest stake in the Daehan Oil Pipeline Corporation (DOPCO), which exclusively owns and manages Korea’s oil pipelines, although most of the country’s oil is distributed by tankers or tank trucks.

To compensate for the lack of domestic oil reserves and to secure more crude oil, both South Korea’s state-owned and private oil companies engage in many overseas exploration and production (E&P) projects. The Korea Petroleum Association (KPA) started the Korea-Oil Producing Nations Exchange (KOPEX) in 2006 to maintain good relations with oil producing countries and to offer technology training to producing countries in the downstream sector. In addition, the South Korean government provides financial support for the country’s upstream companies to win bids overseas through the Special Accounts for Energy and Resources (SAER), administered by KNOC, for support on E&P projects. To be less dependent on foreign oil imports, the Ministry of Knowledge Economy (MKE) has established oil self-sufficiency targets based on domestic and overseas production levels each year since 2008 for South Korean companies, although almost none of South Korea’s overseas production has been shipped back to South Korea. South Korea received its first crude oil delivery from overseas production at the end of 2013.

Exploration and production

After beginning exploration in the 1970s, South Korea has discovered one commercially producing field among its Ulleung, Yellow, and Jeju Basins so far. Discovered in 1998, Donghae-1, Block 6-1 in the Ulleung Basin, has total proven reserves of 203 billion cubic feet (Bcf) of natural gas (see Natural Gas section for further discussion) and 3.2 million barrels of ultra-light crude (condensates). While natural gas production from Donghae-1 began in November 2004, oil production did not begin until 2010 after further exploration and discovery. In 2012, KNOC produced 1,000 bbl/d of ultra-light crude (condensates), representing a negligible portion of its 2.3 million bbl/d total petroleum consumption, nearly all of which was imported. South Korea, which has been exploring at depths of less than 500 feet, plans to explore its domestic basins at depths greater than 1,000 feet.

Although new discoveries might improve domestic oil prospects, overseas E&P plays a more essential role in Korea’s oil industry. The Korean government has encouraged private E&P overseas through tax benefits and the extension of credit lines to IOCs by the Korea Export-Import bank, and also provided diplomatic aid in overseas negotiations. As of February 2013, KNOC was invested in 226 projects, 94 of which are in the production stage, in 24 countries.

By purchasing stakes in North American oil sands and shale formations, KNOC has diversified its market to include shale and tight formations of oil and gas. Through the company’s oil acquisition of Harvest Energy in Canada, KNOC obtained the lease for BlackGold oil sands, a site with an estimated 259 million barrels of recoverable bitumen reserves. KNOC also acquired two other overseas oil companies in 2009—SAVIA from Peru and Sumbe from Kazakhstan—and obtained a majority share in UK-based oil company Dana Petroleum in September 2010.

In the United States, KNOC has an interest in producing projects in Ankor and Northstar in the Gulf of Mexico, Old Home field in Alabama, and Parallel project in Texas and New Mexico. In 2011, KNOC acquired a 23.7% interest in the Eagle Ford shale gas formation, producing 25 million barrels of oil equivalent per day of oil, gas, and natural gas liquids (NGL). The NOC’s purchases in the past decade have created a debt accumulation, and the government is keen to reduce overall debt ratios (total debt to total assets) for 38 state-owned companies from a current 220% to 197% by 2017. KNOC has discussed offloading some of its recently purchased global oil assets.

Downstream and refining

According to OGJ, South Korea had over 2.9 million bbl/d of crude oil refining capacity at six facilities as of late 2013. South Korea has the sixth-largest refining capacity in the world. The country’s three largest refineries are owned by SK Innovation, GS Caltex, and S-Oil, the latter of which is partially owned by Saudi Aramco.

Korean refineries are increasingly producing light, clean products as a result of refinery upgrades that have taken place in recent years. The increased sophistication of the Korean refining market is likely to increase capacity utilization, which is already high for some refineries. As a result, South Korea is expected to remain a leading refiner in Asia, with significant exports to China, Singapore, and Indonesia. Korean refiners are using their expertise in capacity expansion and teaming up with other oil companies to construct plants in other regions of the world, especially in the Middle East. Upcoming Korean refinery projects include additional units at the Inchon and Daesan refineries, which will increase capacity by another 245,000 bbl/d in 2014, according to FGE. These units are designed to handle refining of petroleum condensates, primarily from the Middle Eastern oil liquids supply.

South Korea is also a major producer of petrochemicals, with 7.3 million tons per year of ethylene capacity, according to the Korea Petrochemical Industry Association. Most of the country’s petrochemical plants are integrated into larger refineries such as Inchon, Ulsan, and Daesan. South Korea is home to the single largest aromatics (includes petrochemicals such as benzene and its derivatives) production site in the world, owned by GS Caltex. Toyo Engineering, a Korean company, is constructing an ethylene plant in Ulsan with a capacity of nearly 300,000 tons per year that will come online at the end of 2014. Also, S-Oil announced plans to spend over $7 billion from 2014 through 2017 to construct heavy oil upgrading and petrochemical units at its current plants in Ulsan.

Petroleum and other liquids dependence and outlook

According to the Korea Energy Economics Institute (KEEI), petroleum and other liquids will account for about 34% of total primary energy consumption by 2017, down from EIA’s estimate of 41% in 2012, because of an expected increase in the use of coal, natural gas, and nuclear power. Other factors affecting long-term demand include more stringent energy efficiency standards and an aging and shrinking population. In response to South Korea’s new energy demands, oil companies have not only upgraded refining facilities and increased upstream investment, but they have also begun investing in alternative energy projects.

KNOC held state crude oil and petroleum products inventories, including international joint stockpiles, of 135 million barrels at nine facilities with 146 million barrels of capacity in December 2013. KNOC has leased out about 44.3 million barrels of storage to other countries through joint stockpiles. As part of South Korea’s efforts to create a major liquids storage and trading hub in Asia, KNOC, through joint ventures with other firms, is in the process of building the country’s first three commercial oil storage facilities holding a total capacity of 36.6 million barrels. The first facility, located in Yeosu in the southwestern region, came online in 2013 with 8.2 million barrels of capacity. The other two facilities will be built in Ulsan in the southeastern region by 2017.

Natural gas

South Korea is the second-largest importer of liquefied natural gas in the world behind Japan.

South Korea relies on imports to satisfy nearly all of its natural gas consumption, which has nearly doubled over the previous decade. While the country possessed discovered proven reserves of 203 billion cubic feet (Bcf) as of January 2014, according to OGJ, domestic gas production is negligible and accounts for less than 2% of total consumption. South Korea does not have any international gas pipeline connections and must therefore import all gas via LNG tankers. As a result, although South Korea is not among the group of top gas-consuming nations, it is the second-largest importer of LNG in the world after Japan.

Consumption

South Korea consumed 1.8 Trillion cubic feet (Tcf) of natural gas in 2012, which was an increase of more than 163% from 2000. The city gas network, serving residential, commercial, and industrial consumers, accounted for slightly more than half of the natural gas sales, while power generation companies made up nearly all the remaining share. For the past decade, power generation has increasingly required a larger share of Korea’s natural gas supply. The Korean government predicts overall natural gas demand to grow about 1.7% annually until 2035 according to its proposed long-term energy plan, as the fuel remains a significant source of cleaner energy for the country.

Sector organization

Korea Gas Corporation (KOGAS) dominates South Korea’s gas sector, and the company is the largest single LNG importer in the world. In spite of recent efforts by the government to liberalize the LNG import market and allow other local importers to resell their LNG cargoes, KOGAS maintains an effective monopoly over the purchase, import, and wholesale distribution of natural gas. In addition to operating three of Korea’s four LNG receiving terminals, KOGAS owns and operates the 2,213-mile national pipeline network as of 2013, and sells regasified LNG to power generation companies and private gas distribution companies. The company intends to add another 469 miles of pipeline by 2016.

The Korean central government is the largest KOGAS shareholder with 26.9% direct equity, and an additional indirect 24.5% share via the Korean Electric Power Company (KEPCO). Korea has more than 30 private distribution companies, but each company has exclusive sales rights within a particular region. These local companies purchase wholesale gas from KOGAS at a government-approved price, and sell gas to end-users.

In the upstream, KOGAS has historically focused primarily on overseas LNG liquefaction projects, while the KNOC has handled most exploration and production-related activities. However, as KOGAS seeks new opportunities for growth, its focus on overseas upstream activities is increasing.

Exploration and production

South Korea produced about 37 Bcf of natural gas (about 2% of consumption) in 2012 from the domestic gas field Donghae-1 in the Ulleung Basin. KNOC will continue production operations until 2018, when the project will be converted to an offshore storage facility. KNOC and Woodside Energy (Australia) are jointly exploring deepwater blocks of the Ulleung Basin and began drilling in 2012. State-owned Gas Hydrate Research & Development is conducting studies of deposits of methane hydrates (methane trapped in high-pressure ice deposits on the sea floor) in the Sea of Japan, and the government is currently spending about $30 million per year on research and development. Although extracting this resource is technically challenging and requires high investment levels, Japan’s successful extraction of gas from methane hydrates in early 2013 marks a breakthrough in the resource’s viability.

As part of the effort to develop into a global integrated energy company, KOGAS has participated in 28 projects, 15 of which were either solely E&P projects in 17 countries as of 2013. South Korea holds equity shares in four production-stage projects, namely 50% in Canada’s Encana project, 3% in Qatar’s RasGas project, 8.9% in Yemen’s YLNG project, and 1.2% in Oman’s LNG project. It is KOGAS’ mid-term goal to secure 25% of gas imports from equity production sources by 2017. Meanwhile, both KNOC and KOGAS have recently announced intentions to divest certain assets as a result of mounting debt levels, cost overruns at certain overseas projects, and pressure from the Korean government to reduce expenditures. These debt levels may slow future overseas purchases.

Liquefied natural gas

South Korea has four LNG regasification facilities, with a total capacity of 4.5 Tcf per year, according to IHS Global Insight. KOGAS operates three of these facilities (Pyongtaek, Incheon, and Tong-Yeong), accounting for about 95% of current capacity. Pohang Iron and Steel Corporation (POSCO) and Mitsubishi Japan jointly own the only private regasification facility in Korea, located on the Southern Coast in Gwangyang. In 2013, South Korea imported nearly 2 Tcf of LNG, which was about 17% of the global LNG trade, according to PFC Energy.

KOGAS purchases most of its LNG through long-term supply contracts, and the company uses spot cargos primarily to correct small market imbalances. More than two-thirds of 2013 LNG imports came from Qatar, Indonesia, Malaysia, and Oman. Indonesia was South Korea’s first source of LNG and supplied more than half of South Korea’s LNG imports before 2000. As South Korea diversified its LNG imports in the past 15 years to secure more gas to meet its growing demand, Indonesia lost some market share to countries like Qatar, Oman, and Nigeria. South Korea continues to diversify its sources and to take advantage of new gas developments in Australia, the United States, and the Middle East. KOGAS has signed several short-term gas import agreements for LNG supply from various sources. Also, the company is taking advantage of the shale gas developments in North America and new gas plays in Australia. KOGAS plans to import gas from the Sabine Pass liquefaction terminal in the Gulf Coast of the United States for 20 years starting in 2017 and import gas from new liquefaction projects such as Prelude LNG and Gladstone LNG coming online in Australia in the next few years.

South Korea has added nearly an additional 1 Tcf of regasification capacity since 2010. In addition to recent expansion of existing facilities, KOGAS is planning a new 145 Bcf per year regasification facility at Boryeong, which is under construction and slated to become operational in 2016. KOGAS is currently constructing a new LNG receiving facility at Samcheok, on the Northwest coast. The terminal, with a capacity of 400 Bcf per year, is slated for completion in 2015, and supplies will likely be met primarily through gas imported from Vladivostok, Russia. Although the associated 2008 KOGAS-Gazprom Memorandum of Understanding indicated that the gas could be imported either as LNG or pipeline gas from Vladivostok, Russian and Korean leaders have continued to discuss the economic and political viability of a pipeline that would traverse North Korea.

Coal

Rising coal consumption in South Korea and a negligible production level have caused the country to rely heavily on imports over the past several years.

South Korea held only 139 million short tons (MMst) of recoverable coal reserves in 2010, according to the World Energy Council estimates. The country’s coal production of 2.3 MMst was a fraction of its 136 MMst consumption in 2012. As a result, South Korea is the fourth-largest importer of coal in the world, following China, Japan, and India. Australia and Indonesia account for the majority of South Korea’s coal imports, with Russia being a significant source as well. Coal consumption in South Korea increased by 55% between 2005 and 2012, driven primarily by growing demand from the electric power sector. The electric power sector accounts for 62% of the country’s coal consumption, while the industrial sector accounts for most of the remaining amount, according to KEEI.

Electricity

Fossil fuel sources account for more than two-thirds of South Korea’s electricity generation.

South Korea generated about 495 billion kilowatthours (kWh) of net electricity in 2012. South Korea’s power generation has increased by an average of 5% annually over the past decade, and KEEI expects demand to grow 3.7% annually through 2017, primarily driven by industrial use. Fossil fuels accounted for 70% of total 2012 generation, while 29% came from nuclear power, and nearly 2% came from renewable sources, including hydroelectricity. Coal generation makes up the bulk of fossil fuel generation. Although fossil fuel-fired capacity is dominant in South Korea at present, nuclear power is set to expand over the next decade, along with significant investment in offshore wind farms and other renewable sources such as solar and tidal power. In 2012, about 53% of electricity consumption came from industries, 25% from commercial and service enterprises, 14% from the residential sector, and 8% from other sectors like transportation and agriculture, according to KEEI.

Sector organization

The state-owned Korea Electric Power Corporation (KEPCO) controls all aspects of electricity generation, retail, transmission, and distribution. In 2001, KEPCO’s generation assets were spun off into six separate subsidiary power generation companies. Although the initial restructuring included plans to subsequently divest KEPCO of these generation companies (excluding the Korea Hydro & Nuclear Power Company), KEPCO still owns each of the subsidiaries. KEPCO also owns majority shares of KEPCO Engineering and Construction, Korea Nuclear Fuel, Korea Plant Service and Engineering, and Korea Electric Power Data Network.

The Korea Electric Power Exchange (KPX), also established in 2001 as part of the electricity sector reform efforts, serves as the system operator and coordinates the wholesale electric power market. KEPCO continues to act as the electricity retailer, and it controls transmission and distribution.

KPX regulates the cost-based bidding-pool market and determines prices sold between generators and the KEPCO grid. An electricity tariff pricing system, designed to protect low-income residents and industrial consumers, historically has not reflected the true costs of generation and distribution, and has not provided incentives to conserve electricity. MKE must approve all changes in end-use electricity prices. End-user consumer prices remain far below the levels of other economically developed countries, which has contributed to high overall electricity demand and power shortages during peak seasons over the past five years.

MKE announced plans in 2010 to raise electricity tariffs and link them more closely with the rising costs of fuel inputs, although rate hikes have been infrequent. The government is attempting to address power shortages, curb high electricity demand, and encourage energy efficiency by raising South Korea’s electricity prices which are low compared to rates in other developed countries. However, there is public opposition from industries and other end-users that are affected by higher prices. MKE last raised prices in November 2013 by an average 5.4%, following a 4% increase in January 2013.

According to KEEI, reserve ratios, or the ratio of peak capacity to peak electricity demand, have fallen below 10% on an annual basis since 2006 and have been as low as 3.8% in peak demand months and 5% overall in 2012. These low margins are a result of delays in installed capacity additions, high peak demand during certain years as a result of weather, and insufficient investment in renewable energy and energy efficiency projects until recently.

Generation structure

A majority of South Korea’s installed generation capacity is fossil fuel-based, although nuclear power has played a significant role in the past decade. Baseload generation stems mainly from coal and nuclear power, while peak demand is generally met by the country’s LNG imports. According to KEPCO, Korea’s capacity at the end of 2012 was 81.9 gigawatts (GW) with coal, natural gas, and nuclear generation making up about 30%, 25%, and 25%, respectively, of the total capacity, with oil, hydroelectricity, and other renewables consisting of smaller shares. South Korea intends to address its issues of chronic power shortages and low reserve margins primarily by installing power plants over the next several years. The government’s proposed long-term electricity plan (2013-27) intends to expand capacity to raise reserve margins to 22% by 2027.

Fossil fuel-fired plants make up a significant portion of the country’s installed capacity, of which coal plants consisted of about 24.5 GW, or about 30% of the total capacity. According to the proposed new electricity plan, the country plans to raise coal capacity to 44.9 GW by 2027. By the end of 2017, the government plans to install 15 more coal-fired facilities with 12.5 GW of capacity. For the first time in 30 years, the government approved private companies to construct coal-fired power plants to help facilitate expansion. Natural gas-fired power plants are also set to contribute more to electricity generation, and the government has approved 6 additional gas-fired facilities with over 5 GW of capacity by 2027. Currently, natural gas competes with less expensive coal and nuclear sources of power, and the future power generation portfolio depends on fuel costs, the government’s nuclear capacity designs, and the level of investment in power capacity.

South Korea has the fifth-highest nuclear generation capacity in the world. Its first nuclear plant was completed in 1978, and over the following three decades, South Korea directed significant resources towards developing its nuclear power industry. South Korea imports all of the uranium needed to fuel its nuclear power plants and does not reprocess or enrich uranium as a result of a 30-year nuclear cooperation agreement with the United States.

Nuclear generation utilization rates in South Korea are typically over 95%, and the fuel serves as a baseload source for power generation. Korea Hydro & Nuclear Power Co. currently operates South Korea’s four nuclear power stations containing 23 individual reactors with a power generation capacity of 20.7 GW. Eleven additional reactors are scheduled for completion by 2024, and five reactors with 6.8 GW of capacity are already under construction. Three of these reactors are scheduled to come online in 2014, followed by two more before 2020.

The government’s goal in its Fifth Basic Plan for Long-Term Electricity Supply and Demand (2011-24), finalized at the end of 2010, is to generate nearly half of the power supply from nuclear sources by 2024. This target could shift in the upcoming Sixth Basic Power Plan in light of the recent events that shut down some nuclear facilities and public sentiment against relying heavily on nuclear power generation in South Korea.

In late 2012, South Korea experienced several incidents of falsified certificates for components of some of its existing nuclear power plants, adding to the industry’s distress following neighboring Japan’s Fukushima nuclear disaster in 2011. The Korean government shut down four reactors temporarily, and another six were offline for maintenance, removing up to 40% of the nuclear capacity from service until the government inspected all reactors. The current draft proposal of the country’s long-term energy plan, submitted to the Korean parliament at the end of 2013, revised down the share of nuclear capacity to 29% of total generating capacity by 2035 from the prior 41% by 2030, specified in the previous plan.

South Korea is emerging as an international leader in nuclear technology and is pursuing opportunities to export its technologies. In December 2009, KEPCO won a $20 billion contract to build four 1.4 GW nuclear reactors in the United Arab Emirates, the first of which is expected to become operational by 2017.

South Korea plans to promote renewable energy to try reducing its carbon dioxide emissions by 30% from business-as-usual projected levels (projections of emission levels absent any carbon price scheme) in 2020. A renewable portfolio standard for South Korea became effective in 2012 with a beginning renewable electricity quota of 2% of total generation for larger generators, rising to 10% in 2022. Renewable sources remain a small share of South Korea’s electricity generation, with hydropower limited to small dams on the Han River, and a 1 GW pumped-storage facility at Yangyang, 120 miles from the capital of Seoul. The Korean government plans to invest $8.2 billion into offshore wind farms to reach a wind capacity of 2.5 GW by 2019, from only 0.4 GW in 2012. The country is also promoting solar and tidal projects as part of the country’s green growth strategy to reduce reliance on fossil fuel imports. Overall, the government plans to increase generation from renewable energy sources from the current 2% to 12% of total consumption by 2027.

Notes

Data presented in the text are the most recent available as of April 1, 2014.
Data are EIA estimates unless otherwise noted.

Egypt’s New President: Nasser Or Sadat? – OpEd

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The Egyptian Army’s Department of Morale Affairs (morale, please note, not moral, which it probably isn’t), has been doing a great job since the overthrow of the last administration.

The Department is responsible for managing the public image of the Army. Ever since the coup, led by then-General Abdul-Fattah al-Sisi, it has been assiduously encouraging a cult of personality around him. His recent promotion to Field Marshal provided it with a field day. Its media campaigns have resulted in his face appearing frequently on Egyptian state television and in state-run newspapers, on posters and billboards, and even on memorabilia ranging from chocolates to underpants.

The skilful propaganda projection of him as an upbeat officer who is at the same time a devout Muslim, harbouring traditional respect for women and Christians, goes some way to explaining the high regard in which he is held. His popularity rating is also due, in no small measure, to the popularity of the military, which continues to be the most trusted institution in the country. Around 90 per cent of Egyptians support it.

Until Wednesday, March 26, 2014 al-Sisi was Egypt’s deputy prime minister, the minister of defense and the commander-in-chief of Egypt’s armed forces. On that day he resigned all three offices, and announced that he would be standing for election as Egypt’s new president. After three years of upheaval Egypt yearns for a strong leader. Even though al-Sisi remains something of an enigma within the country, his public idolization is so great that he is virtually certain to emerge, some time during the summer, as Egypt’s new president.

What sort of president will he make? He often appears alongside images of the late presidents Gamal Abdel Nasser and Anwar Sadat. Some commentators suggest that he will take one or other of these predecessors as his model. He certainly followed both by pursuing the “political track” within the Egyptian military, and in particular the infantry – the corps which produced both Nasser and Sadat.

Although very different in temperament and outlook, the two late presidents had one thing at least in common – both took Egypt into direct combat with Israel. In this, at least, it is highly unlikely that al-Sisi will emulate his predecessors. Nor are we likely to see him follow Sadat in popping into Jerusalem to address Israel’s parliamentarians – his predecessor’s untimely end would no doubt inhibit any such whim. But he has already indicated considerable pragmatism by cooperating with Israel in combating the jihadist terrorism current rampant in Sinai, fostered by the Muslim Brotherhood and Hamas, and threatening both Egypt’s nascent régime and Israel’s security.

And it is on counter-terrorism, according to Professor Robert Springborg, an expert on the Egyptian political scene, that al-Sisi’s pre-presidential campaign has concentrated so far – both in Sinai, and much closer to home. In pursuit of this policy, he has outlawed the Muslim Brotherhood within Egypt and maintains a ruthless crackdown on its activists and supporters.

As for al-Sisi’s economic policy, it is shrouded in ambiguity. Negotiations with the IMF have been suspended, since the conditions they would impose for a loan would be political suicide. He continues to rely on huge subsidies from Saudi Arabia and other Gulf states, while he attempts to persuade capitalists in exile to return to Egypt with their money.

Meanwhile the economic crisis intensifies, reflected in government debt, rising unemployment, poverty, inflation, power outages, and an absence of tourists. “For all of this,” writes Professor Springborg, “Field Marshal Sisi has avoided any direct blame, skilfully shuffling that off onto Prime Minister Hazem Beblawi and his hapless cabinet, which resigned on 24 February.”

Springborg believes al-Sisi wants to project a presidential image of a new, “believing” Nasser (Nasser was somewhat of a secularist), although the profound changes since the 1950s within and beyond Egypt make his aim a near impossibility. The concept of Pan-Arabism, for example, is dead. There are, however, one or two areas in which he might make a Nasser-like mark – rekindling nationalist pride is one. Turning towards Russia for support is another. Al-Sisi’s trip to Moscow in mid-February 2014 to complete an arms deal, in reaction to the US’s lack of enthusiasm for the coup he engineered against Mohammed Morsi, evoked memories of Nasser’s rejection of the West in favour of the Soviets.

Al-Sisi would seem to be emulating Nasser in one further respect. He is already identifying his forthcoming presidential era as one of grand projects, just as Nasser had done with the Aswan Dam. Al-Sisi’s project is the proposed development of the Suez Canal area, being heavily promoted as the key to Egypt’s future.

Anwar Sadat followed Nasser into power, shoe-treed into the presidency by Nasser’s supporters, who regarded Sadat as a transitional figure that they believed could be manipulated easily. He was to prove them wrong. Sadat did not agree with Nasser’s distrust of Islamic influence on government and opposed his socialist inclinations. He succeeded in instituting a “corrective revolution” which purged the government, political and security establishments of the most ardent Nasserists. In addition Sadat actually encouraged the emergence of the Muslim Brotherhood, which had been suppressed by Nasser. He gave them “considerable cultural and ideological autonomy” (as author Gilles Keppel has it) in exchange for political support, little realizing the viper he was clutching to his bosom. In this, at least, al-Sisi utterly rejects the Sadat approach.

In 2006, Abdul Fattah al-Sisi was sent to the US Army War College to study for a master’s degree. In a research paper he warned that democracy in the Middle East was “not necessarily going to evolve upon a Western template”. He argued that “democracy, as a secular entity, is unlikely to be favourably received by the vast majority of Middle Easterners, who are devout followers of the Islamic faith”. However, he did not talk about implementing Islamic law.

So President al-Sisi is likely to rule Egypt as an up-to-date version of the strong, near-authoritarian, leader, firmly grounded in his military background, but paying something more than lip-service to democracy – although a democracy strongly flavoured with more moderate aspects of Islam. With Egypt’s national interests in mind, he is likely to adopt a pragmatic approach to cooperation with Russia – President Putin is anxious to counter US influence in the Middle East – and with Israel, where collaboration in overcoming extremist terrorism in Gaza and Sinai is in both countries’ best interests.

And the 1979 peace treaty with Israel, brokered by Egypt’s President Sadat and Israel’s prime minister, Menachim Begin, will – short of some totally unforeseen catastrophe – be in safe hands.

Rama Lobbies Merkel On Albania’s EU Hopes

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By Besar Likmeta

Prime Minister Edi Rama on Tuesday visited to Germany, where he is lobbying for a positive decision on Albania’s EU candidate status in June.

Rama will hold talks with German Chancellor Merkel in Berlin, the speaker of the German parliament and the head of the Christian Democratic Union’s parliamentary group.

Rama is also expected to meet the Deputy Chancellor and Economy Minister, Sigmar Garbiel.

Tuesday’s meeting is of key importance for Albania’s aspirations about becoming an EU candidate country in June, after the meeting of the EU Council of Minister in Brussels.

Despite an unconditional recommendation by the European Commission, the EU Council of Ministers in December postponed a decision on granting Albania candidate status, seeking a longer track record in the fight against organized crime and corruption.

EU ministers said they would await a new report from the Commission this June, covering implementation of anti-corruption and judicial reforms, before deciding on Albania’s application.

During a visit to Tirana on March 6, the EU Enlargement Commissioner, Stefan Fule, urged Albania’s political parties to work together to meet the accession reform criteria.

“Albania’s future is in the EU… but the political parties need to work together and efficiently,” Fule said.

Refering to the country’s deep political divisions, he added: “The culture of confrontation does not help Albania’s EU integration process.”


What Do Local Election Results Whisper About Future Of Turkish Democracy – Analysis

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Local election results confirmed that Turkey is going through a belated, yet organic democratic transition. In absence of Turkish military’s looming shadow, the liberals and social democrats are learning to own the process rather than merely follow.

By Dr. Ulas Doga Eralp

According to the unofficial results, the pro-Islamist AKP in Turkey has scored around 44% at the local elections that took place over the weekend. This could easily be interpreted as the beginning of a long decline after 12 years in government. Many among Turkey’s democratic opposition hoped for a clear defeat for the AKP. However the election results indicate that the decline will be much slower and painful. There are a number of reasons for the slow pace of political change in Turkey.

Lack of a viable alternative

Over the years, the AKP has managed to build a functioning social security infrastructure along with an efficient and mostly free healthcare system. The lower middle class Turks who try to make ends meet, naturally are scared of a change that they fear could threaten their meager benefits. Many find employment opportunities through patron-client networks in the city governments. In the possibility of a change of government, those who maintain such positions are scared of losing their jobs. Similarly the recent tape leaks about a corruption scandal including his son, Bilal Erdogan and Reza Sarrap, an Iranian businessman did not make any significant impact on the choices of the lower middle class masses in Turkey. Many either chose to ignore or simply not believe the graft allegations.

Promises of Stability and Pro-Sunni stance in Syria

Erdogan is a great manipulator; over the years he mastered the technique of public polarization to his benefit. In the wake of the Gezi protests Erdogan has managed to portray the Gezi protestors as vagabonds and consolidated his base with the promise of keeping the public order. Furthermore, the developments in Arab Spring countries – especially the instability in Syria and Erdogan’s tough pro-Sunni stance in the conflict – allowed him to receive support from the conservative voters in central Anatolia. Risk averse voters chose to gather around Erdogan against any looming uncertainty.

Future direction of Turkish Democracy

Local elections’ results are the start of a steady and long decline for the AKP.  Compared to an earlier vote in 2011 where AKP received 50% of the general vote, there is a 6-7% drop in the overall votes. This is a considerable decline considering that Erdogan banned Twitter and Youtube and introduced strict control over the mass media. Still 56% of the general electorate voted against the AKP. This itself indicates the limits of authoritarianism in Turkey. Another outcome is that polarization politics are not a winner in Turkey. Risk averse voters prefer stability, but do not buy into polarization politics.

There is a growing disenchantment towards government institutions including the judiciary and official news agency. There was a great discrepancy between the results announced by the government controlled official Anadolu News Agency and Cihan News Agency, that is close to the Gulen movement. There was a lot of noise among twitter users on election results throughout the night, especially in the very tight race in Ankara and Istanbul. The activists protected the ballot boxes from police and other government officials in order to prevent election rigging.  56% of the population have lost their trust in state institutions. This is a clear crisis of political legitimacy. Next two years will be very critical for Turkish politics as Erdogan will prepare to run for presidency. AKP without Erdogan is bound to lose even more votes as the coalition of conservatives under the party banner will continue to crumble. It would, therefore, not be wrong to expect further turmoil in Turkey.

Consolidation of the Kurdish Vote

Kurds also consolidated their votes in the eastern and southeastern provinces.  This region has developed into a powerhouse for a pro-autonomy Kurdish political movement. The southeast provinces of Turkey operate in their own political reality. It should not be surprise to anyone if the Kurdish political movement pushes for autonomy more vocally in the coming two years.  This of course will very much depend on the continuation of the peace talks.

Overall, local election results confirmed that Turkey is going through a belated, yet organic democratic transition. The AKP government will continue to step up its authoritarianism while the civic opposition will continue organizing across different urban areas. In absence of Turkish military’s looming shadow, the liberals and social democrats are learning to own the process rather than merely follow.

Dr. Ulas Doga Eralp is a scholar and practitioner of international conflict, human rights, development and democratization. He has a PhD from the School for Conflict Analysis and Resolution from George Mason University, and currently works as a Professorial Lecturer at the International Peace and Conflict Resolution Program of the School of International Service (SIS) at American University in Washington, DC.

Iran Says Allegations Of Interference In Yemen ‘Baseless’

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Iran has dismissed as “baseless” the allegations about its interference in Yemen’s internal affairs.

Iran’s Foreign Ministry Spokeswoman Marzieh Afkham said that such groundless accusations are occasionally raised but the “falsity of these claims is quite clear.”

“It is noteworthy that such remarks are made despite the ongoing meddling and moves by some regional countries in Yemen contrary to the country’s interests and security,” Afkham added.

The Iranian spokesperson pointed to relations between the two countries and said the Islamic Republic has always supported unity, stability and integrity in Yemen.

“We believe that the issues in Yemen can only be resolved through dialog and a political process in line with meeting the legitimate demands of the country’s people and with the cooperation and participation of all the country’s political groups, parties and currents without foreign interference,” she said.

Elsewhere, Afkham called for serious measure and efforts by the Yemeni government to investigate the assassination of an Iranian diplomat in Sana’a and to secure the release of another diplomat who was kidnapped in the country last July.

She said Iran is following up the cases of terrorist acts against its diplomats through political channels and added that it is very important for Tehran that the Yemeni government take effective measures in this regard.

Iran has also slammed the adoption of the recent UN human rights resolution against the country as an “unconstructive, politically motivated and double-standard” move that “undermines international human rights mechanisms.”

The counties that drafted the resolution have turned a blind eye to the positive steps taken by Iran in fulfilling its obligations as well as Tehran’s constructive cooperation with international organizations, Iranian Foreign Ministry Spokeswoman Marzieh Afkham said in a statement.

Afkham’s remarks came in reaction to a resolution adopted against Iran in the 25th session of the UN Human Rights Council in Geneva.

The anti-Iran resolution was passed by the UN council 21-9 with 16 abstentions while one country was absent in the voting session.

She added that the resolution is based on “political interests” of certain countries and lacks “legitimacy.”

“It is regrettable that the sponsors of the resolution are silent and indifferent toward the gross violation of the most basic rights of the Palestinian people, and the fate of innocent people taken hostage by terrorist groups as well as citizens of different countries who lose their lives every day under the pretext of fight against terrorism,” Afkham said.

She added that Iran aims to continue its “positive interaction” with international human rights bodies “in a realistic way.”

Iran’s ambassador to the United Nations Headquarters in Geneva also blasted the resolution as sign of a “dangerous and concerning” course of action.

Ambassador Mohsen Naziri-Asl emphasized that the effort of a few countries that drafted the resolution is effectively intended to “impose their own standards on others and further widen the gap between countries.”

Former Leader Of Jews In Iran Dies At 100

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Rabbi Yousef Hamedani Cohan, a former leader of the Iranian Jewry, passed away on March 29 at the age of 100.

IRNA reports that Siamak Mareh Sedgh, the representative in Parliament for Iranian Jews, announced the passing of the senior religious leader, saying: “Rabbi Yousef Hamedani Cohan was a veteran member of the Jewish clergy who retired about eight years ago due to complications from Alzheimer’s.”

Rabbi Hamedani Cohan, who led Iranian Jews from 1994 to 2007, was laid to rest yesterday.

According to AFP, prior to the 1979 Iranian Revolution, between 80,000 and 100,000 Jews lived in Iran, but in 2011 only 8,756 Jews were said to remain, based mostly in Tehran, Isfahan and Shiraz. Iranian Jews are officially regarded as a minority religion in Iran and have one representative in the Iranian Parliament.

Bangladesh’s Foreign Secretary In New Delhi: Why Now? – Analysis

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By Harun ur Rashid

On the invitation of his Indian counterpart Sujatha Singh, Foreign Secretary of Bangladesh, Shahidul Haque, visited New Delhi for three days from March 19. His meetings reportedly included Indian External Affairs Minister Salman Khurshid, Indian National Security Advisor Shivshankar Menon, and secretaries of various ministries. It may be recalled that the purpose of Singh’s one-day visit to Dhaka on December 4 – that India would prefer an Awami League (AL)-led government in power – was somehow made public.

The Bangladeshi foreign secretary’s visit came at a time when Indian Prime Minister Manmohan Singh’s government is in a caretaker mode – prior to the Indian general elections scheduled for April and May – and therefore no agreement or Memorandum of Understanding could be signed. Moreover, decisions on all pending issues can only be taken by the incoming government.

Meanwhile, if there were urgent concerns for Bangladesh such as a drastic fall in the levels of water in the Teesta river water in Bangladesh; or border killings of Bangladeshis; or difficulties for Bangladeshis in booking hotels in India, Dhaka can hardly expect concrete decisions by meeting with top bureaucrats in New Delhi because they perform only routine jobs during this period.

At the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation meeting in Myanmar in February, Indian Prime Minister Manmohan Singh reportedly conveyed to Bangladeshi Prime Minister Sheikh Hasina that the signing of the Teesta Water Sharing agreement would be “difficult.”

Today, Bangladesh has become peaceful but the undercurrents of political unrest still exist in the country. Although the current government is conducting its business in a normal manner, it cannot be denied that the government is on a weaker turf vis-à-vis democratic principles as enshrined in the constitution. Furthermore, several AL stalwarts including ministers are of the opinion that the current situation is not politically normal.

Everyone in the country and outside knows that the January 5 general elections were non-inclusive, and that it was billed as a constitutional necessity. The Western countries have reservations on the non-inclusive election and want another inclusive election with participation of all parties so as to reflect the will of the people. However, India, Russia, China, and Japan have conducted business as usual with the current Sheikh Hasina government for their own interests.

The Western countries appear to maintain routine links with the government but their views on certain issues, such as GSP make evident their tough stance, and the recent statements by US Senator Robert Menendez, Chair, Foreign Relations Committee, and Jean Lambert, Leader, Visiting EU team,, make it evident that the West remains unsatisfied on progress on the safety and security of garment industry workers. Bangladeshi Commerce Minister Faruk Khan sensed their opinions and termed it as “disappointing.”

Interestingly, some observers believe that in reality, the West is signaling the government to hold an inclusive parliamentary election is, maybe within a year, following a constructive dialogue with opposition parties.

The London-based Business Monitor International in its latest report has downgraded Bangladesh’s short term political risk rating as well as economic outlook due to persistent political unrest. It further stated that investors are adopting a “wait and see” approach.

The Bangladesh Nationalist Party, the country’s main oppostion party, which boycotted the parliamentary elections in January, participated in the local elections in February and March; and by winning a large number of seats for the position of Chairperson in the local elections, it has demonstrated that it has not lost popular support among the citizens.

As for Bangladesh-India relations, ordinarily, foreign policy does not dramatically change with a change of the government because geopolitical and economic realities remain as they are; and especially with neighbouring countries. Also, since 2009 India has gained more vis-à-vis public perception in Bangladesh than vice versa. It is natural that India wants to ensure that the gains made in various areas in Bangladesh are not reversed.

In the coming months, three factors in India will be important for Bangladesh. First, the strengthening or weakening of the position of Mamata Banerjee, Leaderm Trinamool Congress party and Chief Minister, West Bengal, after the election. Second, if a coalition government consisting of third parties is formed in New Delhi. Third, if a BJP-led coalition can form a government at the centre. In an event of the aforementioned political scenarios, India-Bangladesh bilateral relations would be different from what exists today.

Given the situation, the questions in the mind of the Bangladeshi people are: why did the Indian foreign secretary invite her counterpart in New Delhi when it is evident that no progress can be made on unresolved bilateral issues with the caretaker government? Is there something else for which the invitation was extended?

Harun ur Rashid
Former Ambassador of Bangladesh to the UN, Geneva

Statement By NATO Foreign Ministers On Relations With Russia

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By NATO

1. We, the Foreign Ministers of NATO, are united in our condemnation of Russia’s illegal military intervention in Ukraine and Russia’s violation of Ukraine’s sovereignty and territorial integrity. We do not recognize Russia’s illegal and illegitimate attempt to annex Crimea.  We urge Russia to take immediate steps, as set out in the statement by the NATO-Ukraine Commission, to return to compliance with international law and its international obligations and responsibilities, and to engage immediately in a genuine dialogue towards a political and diplomatic solution that respects international law and Ukraine’s internationally recognized borders. We support the deployment of an OSCE monitoring mission to Ukraine.

2. Our goal of a Euro-Atlantic region whole, free, and at peace has not changed, but has been fundamentally challenged by Russia.  We support the sovereignty, political independence, and territorial integrity of all states within their internationally recognised borders.  An independent, sovereign, and stable Ukraine, firmly committed to democracy and respect for human rights, minorities, and the rule of law, is key to Euro-Atlantic security.

3. In order to demonstrate our commitment to Ukraine, we will intensify our cooperation in the framework of our Distinctive Partnership. Today NATO and Ukraine have agreed, as set out in the statement by the NATO-Ukraine Commission, to implement immediate and longer-term measures in order to strengthen Ukraine’s ability to provide for its own security.

4. We have also today agreed a package of measures aimed at deepening our cooperation with other NATO partners in Eastern Europe, in consultation with them and within our existing bilateral programmes.

5. Over the past twenty years, NATO has consistently worked for closer cooperation and trust with Russia. However, Russia has violated international law and has acted in contradiction with the principles and commitments in the Euro-Atlantic Partnership Council Basic Document, the NATO-Russia Founding Act, and the Rome Declaration. It has gravely breached the trust upon which our cooperation must be based.

6. We have decided to suspend all practical civilian and military cooperation between NATO and Russia. Our political dialogue in the NATO-Russia Council can continue, as necessary, at the Ambassadorial level and above, to allow us to exchange views, first and foremost on this crisis. We will review NATO’s relations with Russia at our next meeting in June.

7. As stated by our Heads of State and Government at the Chicago Summit in 2012, NATO is based on solidarity, Alliance cohesion, and the indivisibility of our security. In the current situation, the Alliance has already taken steps to demonstrate solidarity and strengthen its ability to anticipate and respond quickly to any challenges to Alliance security. We will continue to provide appropriate reinforcement and visible assurance of NATO’s cohesion and commitment to deterrence and collective defence against any threat of aggression to the Alliance.

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