Sri Lanka and the European Organization for Nuclear Research (CERN) have entered into an agreement to begin cooperation between CERN and the scientific community in Sri Lanka. Sri Lanka‘s Permanent Representative to the UN in Geneva Ambassador Ravinatha Aryasinha and the Director General of CERN, Mr. Rolf-Dieter Heurer, signed an “Expression of Interest’ (EOI) Agreement on Thursday, 25 June 2015 at the CERN Headquarters in Geneva to give effect to this process.

CERN is the most prominent particle physics research institute in the world and is best known for its flagship discovery of the ‘Higgs-Boson” in 2012, conferring the 2013 Nobel Prize for Physics to two theoretical physicists who had predicted this fundamental particle almost 50 years earlier. More than half of the world’s particle physicists – about 11,000 in number coming from over 600 universities in 80 countries – do research at CERN, and are engaged in complex scientific experiments.

The Agreement will facilitate engineers, scientists and researchers from Sri Lankan universities and research institutes to gain valuable first-hand experience and knowledge in both experimental and theoretical ‘particle physics’ and related aspects of technologies through the highly-demanded programmes conducted by CERN. Sri Lankan students, teachers, scientists, engineers and researchers may also apply on a competitive basis for the CERN’s annual ‘High-School teacher’, ‘Summer Student’ and other training programmes. The agreement will also pave the way for an ‘International Cooperation Agreement’, which will enable the development of a networked scientific community of Sri Lankan scholars, who could remain engaged with the research activity carried out by CERN in the field of high energy physics.

As part of an action plan to give effect to this EOI, in a discussion following the signing ceremony, Ambassador Aryasinha and DG/CERN Heuer agreed to consider the possibility of two programmes in the current year. First, for CERN to conduct a workshop in Colombo for Master Teachers of Physics in order to generate interest at the secondary school level throughout the country. Second, for a group of leading physicists, representing the different Universities in Sri Lanka, to visit CERN in order to be exposed to the research work currently underway.

Dr. Rüdiger Voss, Head of International Relations CERN, Mrs. Samantha Jayasuriya, Deputy Permanent Representative and Ms. Dilini Gunasekera, Second Secretary of the Sri Lanka Permanent Mission, were associated in the discussions.

In November 2014, the Permanent Mission in Geneva facilitated a visit to Sri Lanka by Dr Voss, through the Coordinating Secretariat for Science, Technology and Innovation (COSTI). During his visit, Dr. Voss had discussions with the then Senior Minister for Scientific Affairs, the Minister of Education and the Minister of Technology, Research and Atomic Energy. He also met officials from COSTI, the University Grants Commission, the Atomic Energy Authority, as well as senior scientists.

CERN, which was founded in 1954 through a convention signed by 12 European states, presently has 21 states as members, 3 Associate member states and 4 observer States. With the signing of the EOI, Sri Lanka became the latest non-member state of CERN to come into an agreement in terms of an Expression of Interest (EOI), and could progressively graduate to enter into an ‘International Co-operation Agreement’ with CERN, a status already reached by South Asian neighbors Bangladesh, India and Pakistan, who are among the more than 40 countries already collaborating with CERN through such a mechanism.

The post Sri Lanka Initiates Collaboration With CERN appeared first on Eurasia Review.

By Leonard Brecken

In the latest weekly production data from the EIA, on the back of recent March revisions, the U.S. managed to post a 76,000 barrel per day increase in the lower 48. Production from Alaska fell by 61,000 barrels per day, putting overall U.S. output 15,000 barrels per day higher for the week ending June 12 compared to the previous week.

This comes at a time when multimillion barrel draws have become the norm. It is important to note that lower 48 production is estimated based on an EIA black box model, while Alaska is virtually real time data. That suggests that the weekly supply estimates are hugely overestimated.

These weekly supply numbers are then used as a basis to jump to the conclusion that the markets are suffering from too much supply. As stated on OilPrice.com many times before, the amount of “over supply” vs. the averages in the U.S. according to the EIA amounts to tens of millions of barrels of oil.

I continue to maintain that the EIA revision to production came very suspiciously at exactly the same time inventory draws began, as did the “Miscellaneous to Balance” figure used in calculating inventory. The chart below clearly shows when this figure started to grow and by what amount. It totals more than 30 million barrels since April and has been rising, which is virtually all of the oversupply above the mean in the U.S! To reiterate that number is at discretion of the EIA and is not an actual data point but an “adjustment.”

Data Errors Have Real World Consequences

This figure, as created by the EIA, has (with the media’s help) created the impression of a huge oil glut in the U.S. market. No one, either within the media or the industry, has asked for clarification of this number and it is instead taken as gospel. This is now wreaking havoc in energy states such as Texas, as well as threatening most oil companies as well as tens of thousands employed within the oil and gas industry. With such importance placed on a number which has impacted not only billions of dollars in company revenue but many lives for the worse, how can it be largely unchallenged by all but a few in the media?

Whether this is tied to sheer incompetence or some other, more sinister reason, the number should be as accurate as possible. The consistent errors put the vast majority of small E&P companies at risk. The EIA, at its sole discretion, has had the power the dramatically affect the sentiment and prices of an entire industry and in some cases completely obliterate it. The magnitude of the errors is mounting by the day as are the consequences.

Natural Gas

On a separate note, one has to wonder about the goings on with natural gas prices given that they are holding at only 10 percent above their yearly lows. Stocks, as reported this morning, are still healthy at 1.4 percent above their 5 year average but this number may be a bit misleading.

Demand tied to coal switching is quite frankly soaring and is at record highs. To reiterate, this comes at a time when natural gas production is poised to decline. One of the largest natural gas producers in the U.S., Chesapeake Energy, is expected to start seeing 5 percent declines in 2016 production according to UBS, as Free Cash Flow (FCF) continues to be hugely negative at nearly $3 billion through 2016 as debt/EBITDAX (Earnings Before Interest, Taxes, Depreciation, Depletion, Amortization and Exploration Expenses) soars to over 5X.

This comes as hedges roll off in 2016. With FCF being negative throughout the group, the problem starts to look like a serious issue. There will come a day of reckoning when capital expenditures dry up as demand continues and the data distortions on estimates finally become clear to the markets.

It won’t be pretty for prices down the road and it will come as a result of capital budgets getting slashed based on artificially depressed prices. When this occurs everyone should re-read this article as I’m sure the cries from soaring prices will become very loud. The E&P space won’t be the cause but the victim in all this. Data distortion by government agencies has serious consequences on capital investments.

Source: Cornerstone Analytics

Source: http://oilprice.com/Energy/Energy-General/US-Oil-Glut-An-EIA-Invention.html

The post US Oil Glut An EIA Invention? – Analysis appeared first on Eurasia Review.

By Giriraj Bhattacharjee*

The Manipur State Government on June 9, 2015, agreed to extend the Suspension of Operations (SoO) with the United People’s Front (UPF), an umbrella organisation of eight Kuki / Zomi militant groups, for another year till June 8, 2016. The talks with the rebel conglomerate were also upgraded to “political” from the earlier ‘official’ level. Later, former Mizoram Chief Minister Zoramthanga, who was present in New Delhi and played a significant role during the whole process, stated on June 14, 2015, that delays in peace talks between the Centre and militant groups was harming mutual trust between the two sides. Zoramthanga argued, “Years have passed after signing SoO earlier, but without any formal parleys,” adding that the groups had refused to sign the SoO over the preceding nine months [the previous agreement lapsed on August 21, 2014] creating an explosive situation in the North East. Zoramthanga further announced that, “The government has agreed to a political settlement with the members of eight underground groups.” Zoramthanga has been facilitating contacts between the rebels and Government, and concedes, “I am neither an interlocutor nor an official mediator. My role was to build mutual trust between the Government and the groups. I just helped both the sides take part in the meeting.”

The eight underground groups under UPF are: Kuki National Front (KNF), Zomi Revolutionary Organisation (ZRO)/Zomi Revolutionary Army (ZRA), Kuki Revolutionary Army – United (KRA-United), Zomi Defence Force (ZDF), United Kuki Liberation Front (UKLF), Kuki Revolutionary Front (KRF), Zomi Defence Volunteers and Hmar People’s Convention-Democratic (HPC-D).

A second umbrella organization of 11 Kuki underground groups in Manipur, the Kuki National Organisation (KNO), had also signed a tripartite Suspension of Operations (SoO) agreement with the Government of India and Government of Manipur in 2008. The underground groups in KNO are: Kuki National Army (KNA), Kuki National Front – Military Council (KNF-MC), Kuki National Front – Zogam (KNF-Z), United Socialist Revolutionary Army (USRA), Hmar National Army (HNA), United Komrem Revolutionary Army (UKRA), United Minorities Liberation Front (UMLF), Zou Defence Volunteer, Kuki Liberation Army (KLA), and Pakan Reunification Army (PRA). There is confusion over the name of the 11th armed group, either called KRA or Kuki National Front – Samuel (KNF-S).

The tripartite SoO agreement with UPF and KNO was signed on August 22, 2008. Since then, these agreements were periodically extended till August 21, 2014. As per the provisions of the SoO agreements, the cadres of these 19 Kuki groups – 1,122 under KNO and 1,095 under UPF – are housed in12 [seven for KNO and five for UPF] designated camps in the Churachandpur, Sadar Hills (Senapati) and Chandel Districts.

While the Kuki militants remained in their designated camps, there was confusion regarding the extension of the SoO agreements after August 2014. An October 7, 2014, report claimed that the tripartite SoO agreements with UPF and KNO had been extended by another year. According to the report, following the Government’s failure to initiate necessary procedures for extension of the SoO pact, the convenor of the People’s Consultative Committee for Peace (PCCP), S.H. Seipu Sitlhou submitted a representation to the then Union Home Secretary Anil Goswami on September 6, urging the Union Government to extend the SoO pact. Subsequently, the Under Secretary, Union Ministry of Home Affairs (MHA), sent a letter to the Government of Manipur stating that the SoO pact had been extended by another year. The letter also suggested fixing a date for holding a tripartite political dialogue. A copy of the letter sent by the MHA Under Secretary was also reportedly received by the PCCP. Later, on February 25, 2015, Union Minister of State for Home Affairs Kiren Rijiju, while replying to a query on the groups under the ceasefire in the Northeast, mentioned both KNO and UPF. However, UPF and KNO were against holding tripartite talks in Imphal. The present renewal of the SoO suggests that the Agreements were in limbo over the past months.

Whatever the case, the present agreement to extend the SoO and initiate a political dialogue is with UPF alone, leaving KNO out.

Significantly, the period of the tripartite SoO (August 2008 to August 2014, regarding which there is no confusion) has witnessed 113 fatalities (including 10 civilians, three Security Force (SF) personnel and 100 militants) killed in incidents relating to Kuki militant outfits. The high proportion of militant fatalities in this period was primarily due to internecine clashes among various Kuki groups, which claimed 75 militant lives (75 per cent of total militant fatalities); the remaining 25 militants were killed by SFs.

There has also been a relative spike in fatalities linked to Kuki outfits since August 21, 2014, with 16 fatalities recorded till date in 2015, as compared to seven fatalities in 2014 till August 21, four fatalities in 2013, six in 2012, and two in 2011.

The major incidents of killing (each resulting in three or more fatalities) recorded during this period were:

May 23, 2015: A combined team of SFs in an encounter at Bongbal Khullen in Senapati District killed four militants. Bodies of three militants – two Manipur Naga Revolutionary Front (MNRF) and one KNF-Nehlun faction (KNF-N) – were recovered from the incident site on the same day. Four days later, the decomposed body of another unidentified militant belonging to United National Liberation Front (UNLF) was recovered from the same area.

February10, 2015: Three suspected Kuki militants, identified as Jongkholun, Manglensei and Sotinpai, were killed in Churachandpur District by suspected militants. The bodies were later recovered near Vaison Cemetery in the District.

Further, during the recent Autonomous District Councils (ADCs) polls [June 1, 2015], which was the second ADC election since its formation under the provisions of the Manipur (Hill Areas) District Council (Third Amendment) Act 2008 (the earlier one was in 2010), Rivl Kuki and Naga militants tried to influence election results. The Nationalist Socialist Council of Nagaland-Isak-Muivah (NSCN-IM), among the ethnic rivals of the Kukis, issued letters which were then distributed in the Naga dominated Ukhrul District, asking voters to cast their votes in favour of Naga People’s Front (NPF); a Nagaland based party. In the letter addressed to village chiefs, NSCN-IM ‘convenor’ Markson threatened: “With you as the head… your village authority/women’s society/students union all should ensure that the total votes in your village must be cast in favour of the NPF. In case there is anyone in your village who does not comply to this order, you are directed to make a list and submit to the undersigned without fail.” An Indian National Congress (INC) worker from Ukhrul District claimed, “A Congress supporter in Ukhrul town was picked up on Saturday [May 30] by the IM [NSCN-IM] at around 4 pm. He was then thrashed for hours and released by 7 pm in the evening’’.

On June 2, 2015, suspected Kuki militants badly beat up nine villagers of Lhungjang in the Sadar Hills area of Senapati District for not supporting the area’s INC candidate in ADC polls. M. Khongsai (45), a villager of the area, stated, “The cadres, suspected to be from a Kuki militant outfit which is a signatory of the SoO with the Government, then herded us to a nearby jungle. Later, they tied our hands and began thrashing us badly with sticks and rifle butts.” Further, suspected KRA militants had abducted four ADC contestants during the campaign phase. The Congress retained the Kuki-dominated Sadar Hills ADC in Senapati District, while the NPF won a majority in the Ukhrul ADC. No party got majority in the remaining four District Councils. [Manipur has five Hill Districts, but one of them – Senapati – has two District Councils (Senapati and Sadar Hills)].

Militants also engage in extortion and intimidation of villagers, with one incident on record in 2015, and six in 2014. The reported instances are likely a fraction of the actual incidence. In one prominent incident this year, on May 9, Kuki National Liberation Front (KNLF) cadres assaulted five villagers at Selhao and six labourers engaged in the construction work in Chandel District. Later, a contractor identified as L. Pati Singh clarified that he had been threatened and money was extorted from him by KNLF. The militant formation, which signed SoO Agreement with the Central and the State Government on September 9, 2013, had demanded INR 3 million from the contractor.

Apart from various Kuki militant formations, civil society organisations such as Kuki Inpi (the apex body of the Kuki tribe), Kuki State Demand Committee (KSDC) and Kuki (Khulmi) Development Council Demand Committee Manipur, have also been agitating for separate administrative arrangements for the Kuki tribe. Such periodic assertions have led to disruptions, as in the long-drawn road blockades in 2011, 2012 and 2013, causing further ethnic polarization and worsening the situation.

KNO and UNF have slightly different demands regarding a Kuki homeland, but both visions lie within Indian constitutional provisions. KNO demands a separate Kuki State, while UPF is asking for an autonomous tribal State within the present State. Such a status was previously enjoyed by Meghalaya between April 2, 1970, and January 20, 1972, under Article 244-A of the Constitution, as provided by the Assam Reorganization (Meghalaya) Act of 1969. Meghalaya subsequently became a full-fledged State on January 21, 1972. The proposed Kuki State includes the Districts of Churachandpur and Chandel; the Sadar Hills of Senapati District, and parts of Ukhrul and Tamenglong.

This Kuki demands are bitterly opposed by Naga groups. The Nagas and Kukis were involved in a bitter ethnic feud during the 1990’s, which had then claimed 905 lives, and displaced over 100,000, mostly Kukis. The Nagas claim that Kukis are immigrants settled in their land, and that a separate/autonomous Kuki State would affect their dream of a ‘greater Nagaland’ (Nagalim) or the ‘alternative arrangement’ they demand within Manipur. For the Manipur Government, granting an autonomous arrangement to either groups within the State of Manipur, or any other administrative division, remains a difficult proposition.

Chief Minister Okram Ibobi Singh has, on several occasions, reiterated that the State cannot be further divided. Most recently, on April 23, 2015, the Chief Minister reassured the people that there would be no compromise on the territorial integrity of Manipur.

The upgradation of talks with UPF to the “political level” may mollify Kuki rebels to an extent, but the ‘peace processes’ in the fractious Northeast have as often been sources of further strife as of the resolution of conflict. The state’s approach to the multiplicity of ethnic conflicts in the region has been consistently short sighted, and state policy has contributed directly to an exacerbation of ethnic polarization and tensions. Worse, the peace processes, constantly delayed and indefinitely protracted, have themselves become a source of frustration, even as the continuous violation of the ground rules of SoO Agreements by rebel formations causes enormous stress among civilian populations. A comprehensive review of the current and shoddy approach to conflict resolution in Manipur in particular, and the wider Northeast in general, has long been overdue.

* Giriraj Bhattacharjee
Research Assistant, Institute for Conflict Management

The post India: Kuki Negotiations Drag On In Manipur – Analysis appeared first on Eurasia Review.

By Tushar Ranjan Mohanty*

Two ‘commanders’ of the Balochistan Liberation Front (BLF) and Tanzeem Lashkar-e-Balochistan (TLB), along with a group of 57 insurgents, laid down their arms in the presence of Pakistan Muslim League-Nawaz (PML-N) leader Nawab Sanaullah Zehri in the Khuzdar District of Balochistan on June 13, 2015. According to reports, BLF commander Din Jan aka Meeran and TLB leader Ubaidullah aka Beebarg laid down their arms and vowed to join the ‘national mainstream’. The leaders also chanted ‘Pakistan Zindabad’ (Long Live Pakistan) and ‘Balochistan Paindabad’ (Balochistan Live Forever).

The next day, on June 14, another two ‘commanders’, along with 47 militants from banned Baloch insurgent groups, laid down their arms and renounced violence in the presence of Balochistan Home Minister Sarfraz Bugti at Quetta. The two commanders, Madina Marri and Shikari Marri, were affiliated with the Baloch Liberation Army (BLA) and United Baloch Army (UBA), respectively.

In the other parts of the country, where the Army Operation Khyber-1 had been going on since October 16, 2014, 39 militants belonging to Lashkar-e-Islam (LI) had surrendered to Security Forces (SFs) on November 14, 2014. The Amy launched the offensive with air strikes against LI hideouts in the areas of Tirah Valley and Bara tehsil (revenue unit) controlled by militant ‘commander’ Mangal Bagh.

On November 10, 2014, three key LI ‘commanders’ surrendered to authorities in the Khyber Agency. Official sources claimed that the newly appointed ‘spokesman’ of LI, Saifullah Saif, Commander Ilyas and Commander Wajid, announced that they were leaving LI and surrendered. Saifullah Saif belongs to the Qambar Khel tribe, Ilyas to the Sipah area, while Commander Wajid is from the Malik Din Khel tribe.

Further, 30 terrorists, including LI ‘commanders’, surrendered to the authorities in Bara tehsil of the Khyber Agency on November 5, 2014. Sources indicated that ‘commander’ Kandahar, the chief of his own militant group of Zakhakhel tribe, had surrendered along with dozens of his companions in the Agency. Kandahar and his companions laid down arms and vowed not to challenge the writ of the State.

In addition, 50 militants including important ‘commanders’ surrendered to the SFs under operation Khyber-I in the Bara tehsil of Khyber Agency in FATA on October 19, 2014. According to a December 6, 2014, statement by Inter-Services Public Relations (ISPR) spokesman Major General Asim Saleem Bajwa, more than 400 militants in Khyber Agency had surrendered to SFs during Operation Khyber-I.

These surrenders, however, are insignificant, and account for a very tiny proportion of active militants across the country. Moreover, the surrender process remains flawed, as was evident on January 17, 2015, when, hardly a week after renouncing violence (on January 10, 2015) and agreeing to cooperate with the political administration of Khyber Agency in the ongoing military operation, 50 hardcore terrorists of the Amr Bil Maroof wa Nahi anil Munkir (Suppression of Vice and the Promotion of Virtue), led by Commanders Haya Khan and Waheed Khan, revolted against the ceasefire and deal with the local political administration, and joined the Pakistan chapter of the Islamic State (IS).

Similarly, despite renouncing his activities against the Pakistani state, Asmatullah Muawiya, the head of the Tehrik-i-Taliban Pakistan (TTP) Punjab Chapter (also known as Punjabi Taliban), announced on September 13, 2014, that his faction would devote its resources to fighting NATO forces in Afghanistan. A TTP video explained elaborated that Muawiya would devote his resources to fighting NATO forces in Afghanistan, and would engage in ‘Da’wah and Tableeghi’ [preaching] in Pakistan.

On November 10, 2014, Khyber Agency Political Agent Shahab Ali Shah had stated that the security of militants who surrendered during Operation Khyber-I was the Government’s responsibility, and that the Government would provide security to militants and members of banned outfits who surrendered. This is significant in view of the fact that surrendered militants are under rising threat from active TTP and other terrorist/militant formations, who are pressuring them to rejoin their movements or face reprisals. For instance, on October 20, 2014, LI claimed to have established full control over the Tirah Valley and Bara tehsil of Khyber Agency, and declared that those who had surrendered to the Government would never be forgiven, and would have to face the consequences.

There is, moreover, currently no consistent policy or legal framework for rehabilitation of surrendered terrorists and militants, and no coherent ‘surrender package’ The Swat Initiative, one of at least two pilot programs that aimed to rehabilitate militants captured by security forces, sought to cater to three groups: juveniles, adults and family members. The Islamabad based Pakistan Institute for Peace Studies (PIPS) in its Security Report 2011, noted that the PKR 4.4 million allocated for the two programs had failed to adequately budget for the rehabilitation of detained militants.

Though a de-radicalization program is envisaged in the National Internal Security Policy of Pakistan (NISP) 2014-18, nearly seven months on since its unveiling, there has been no significant initiative for its implementation. Separately, however, the “Sabwoon Rehabilitation Center” was established by the Pakistan Army with the support of the Hum Pakistani Foundation and UNICEF in 2009, to rehabilitate militants, mostly juveniles, apprehended during the operation. Though no current information regarding the ‘success’ of this initiative is available, according to a May 20, 2012, report, some 107 of 177 surrendered militants had been rehabilitated under this programme.

Meanwhile, on June 26 2015, Balochistan authorities announced a general amnesty plan for all Baloch insurgents fighting locally, who were willing to renounce violence and lay down their arms. The amnesty plan was unveiled at the end of a meeting of the provincial apex committee, headed by Balochistan Chief Minister Dr. Abdul Malik Baloch. The meeting was convened to review progress on the implementation of the National Action Plan. It was agreed in the meeting that a “peaceful, conciliatory Balochistan policy will be implemented so that the youngsters who want to lay down arms and join the mainstream can be granted amnesty and be encouraged to rehabilitate themselves”. Under the scheme, small-time fighters will be paid PKR 500,000. Mid-level commanders will get PKR 1 million while top commanders will be paid PKR 1.5 million if they surrender.

Pakistan is now pursuing the ‘two pronged strategy’ of escalating counterterrorism and counterinsurgency operations, on the one hand, and incentives for militants to relinquish the path of violence, on the other. While the strategy will create some short term gains, these are likely to remain cosmetic, as long as the deeper dynamic of state backed radicalization and the instrumentalisation of Islamism for domestic political management and strategic projection abroad is not addressed. Further, the legitimate demands of ethnic minorities continue to be ignored, even as their marginalization and targeting by state agencies and proxies continues. Despite the trickle of surrenders and the transient ‘military victories’ that are periodically announced, consequently, it is unlikely that Pakistan is approaching any lasting era of peace.

*Tushar Ranjan Mohanty
Research Associate, Institute for Conflict Management

The post Pakistan: Sisyphean Gains – Analysis appeared first on Eurasia Review.

At a meeting in Skhirat (Morocco) the ambassadors and special envoys for Libya from Germany, the United Arab Emirates, Spain, the United States of America, France, Italy, Morocco, Portugal, the United Kingdom, Turkey and the European Union acknowledged that the people of Libya seek peace.

In this regard, they expressed their grave concern over the increase in terrorism in Libya and beyond its borders.

In an attempt to tackle these threats, they urged all Libyan parties to sign this definitive political agreement which has been presented by the United Nations, within the next few days.

In their opinion, this document represents a positive response to meet the urgent demands of the people of Libya to assure unity in the country.

They reiterated that there is no military solution to this crisis and stress that the humanitarian and financial situation is deteriorating as each day passes.

They called upon all Libyan groups to demonstrate a sense of responsibility, leadership and courage at this crucial time.

The post Declaration On Political Dialogue In Libya appeared first on Eurasia Review.

By Felix K. Chang*

Fifty-seven countries, led by China, will launch the Asian Infrastructure Investment Bank (AIIB) on June 29 in Beijing. As its name suggests, the bank will provide financing for infrastructure development across Asia. Two months ago, Chinese President Xi Jinping trumpeted China’s role in the creation of the AIIB as well as other development initiatives at the Asian-African Conference in Indonesia. There, he explained to the delegates from over a hundred developing countries how China’s development initiatives would benefit both China and their countries, a win-win proposition.

But those initiatives may also serve another purpose: to help China create a more Sino-centric international order. By providing loans for new infrastructure projects that tie developing countries more closely to it, China could reshape their economic interests and gain greater influence over how they see the world. As one Central Asian analyst once summed up: “China doesn’t only buy loyalty with documents, but with money given at a low percentage.”[1]

Economic Motivations

At the Asian-African Conference, many developing country representatives were keen to learn about the sorts of economic development assistance that they might expect from China. Xi did not disappoint. He promised that China would actively participate in many of their regional economic development forums. More specifically, Xi offered Chinese help “with the building of high-speed rail, expressway and regional aviation networks and facilitating the industrialization process in Asia and Africa.” Plus, “by the end of this year, China will extend zero-tariff treatment to 97 percent of tax items from all the least developed countries having diplomatic ties with China.” But his remarks on China’s major infrastructure-financing initiatives probably drew the most attention. He underlined China’s contribution of $50 billion to the AIIB and $40 billion to the Silk Road Fund. Both funding vehicles will play important roles in the development of China’s “Silk Road Economic Belt” and “21st Century Maritime Silk Road” (together known as the “One Belt, One Road” initiative) over the years ahead.[2]

No doubt China will profit too. Chinese construction firms will likely be hired to build many of the proposed infrastructure projects. Improving transportation links between China and developing countries (as well as inside them) will also reduce the friction to trade. That will benefit Chinese industry, which has long relied on natural resources from these countries. Ultimately such economic engagement would help China “realize the Chinese dream of great national rejuvenation.”[3]

Political Undertones

Xi’s speech also drew a sharp contrast between China’s approach to development assistance and that of the West. Whereas Western assistance often comes with conditions on recipient countries for political or economic change, “China would continue to provide assistance to developing countries without… conditions,” he said. That was part and parcel of China’s view of state-to-state relations, countries should deal with each other on the basis of “mutual respect and equality.” Twice, Xi referred to China’s “five principles of peaceful coexistence,” the most important of which is mutual non-interference in each other’s internal affairs.[4]

Most developing countries, including those in Southeast Asia, have long been sympathetic to the concept of non-interference. It was even enshrined as one of ASEAN’s founding principles in 1967. At the time, many Southeast Asian countries were concerned about the encroachment of Soviet or Chinese communism, not to mention each other. But after the Cold War, they faced new pressure from the West, which made much of its development assistance conditional on their adoption of its notions of good governance. That has kept the concept of non-interference fresh in the minds of the region’s countries. Exacerbating their frustration with the Western approach, the West has often pressured Southeast Asian countries precisely when they were at their most vulnerable. They well remember the harsh conditions that the International Monetary Fund foisted on them during the darkest days of the Asian Financial Crisis in 1997–1998.

China has a different approach. The AIIB and China’s Silk Road Fund are unlikely to attach many conditions to their investments. Such competition may serve to push Western-led organizations like the Asian Development Bank and World Bank to eventually loosen their investment criteria. In that respect, China could soon alter the landscape of international development assistance.

While developing countries might embrace some aspects of China’s approach, like non-interference, they are wary of others. Developing countries remain committed to the idea of equality in the international family of countries. But in a Sino-centric international order, there is a hierarchy. Chinese economic largesse comes with the expectation that smaller countries should defer to China’s interests. Chinese Foreign Minister Yang Jiechi made that clear at a meeting of ASEAN foreign ministers in 2011. Irritated by criticism of China’s pursuit of its interests in the South China Sea, he mocked his Vietnamese hosts and quipped, “China is a big country and other countries are small countries, and that’s just a fact.”[5]

Some smaller countries, like Cambodia, that have become reliant on Chinese developmental assistance have also become more compliant with China’s views. For example, Cambodia’s position on the South China Sea dispute has hewed closely to that of China. When Cambodia’s fellow ASEAN countries, the Philippines and Vietnam, sought to use their organization to put more pressure on China to negotiate multilaterally, Cambodia balked. Cambodia’s Foreign Affairs Secretary of State Soeung Rathchavy dismissed their effort as impractical. “ASEAN can’t settle this dispute,” he said and then downplayed China’s detractors as “countries which have made noises.”[6]

China has sought to repeat its success in Cambodia with other countries across Southeast Asia. By building more roads and railways and encouraging commerce over them, China can begin to bind the region’s interests more tightly to its own. Its latest effort has been in Thailand, whose relations with the United States worsened in the aftermath of Thailand’s 2014 military coup. China has pledged to help finance a new railway to link Kunming and Bangkok.[7] More development initiatives such as this may help to drive progress toward a more Sino-centric international order.

Will China’s Development Bargain Succeed?

Over the last decade, Chinese-funded economic development projects have proliferated. Most have been driven by high-level political calculation rather than rigorous due diligence. But just because China’s development assistance comes without strings does not mean it will succeed. Needless to say, history is littered with disappointing economic development schemes. One such project was the construction of Pakistan’s transshipment port at Gwadar. Underwritten by Chinese loans, the facility has stood largely idle since it opened in 2007, hardly a resounding success. Now China intends to pour $1.6 billion more into it. Beijing envisions the port as the southern outlet of its China-Pakistan Economic Corridor. But unless the new funds can make the region around the port safer, trade through it will likely remain a trickle.

On a larger scale, the China Development Bank (CDB) has lent Venezuela about $50 billion since 2007. The money has helped to support the regime of Hugo Chávez and his successor, Nicolás Maduro. In exchange for its infrastructure loans, China expected an ever increasing flow of Venezuelan oil. But that flow has not met expectations. In October 2014, the CDB agreed to allow Venezuela to deliver less than the minimum daily amount of oil that it originally promised China. Certainly, Chinese loans have garnered a lot of goodwill from the Venezuela’s Chavista government, but they have not delivered greater development for Venezuela or an economic return for the CDB. Still, in January 2015, Venezuela announced that China plans to provide it with $20 billion more in development loans.[8]

Ultimately China’s largesse is not limitless. China’s bargain will work only if it can demonstrate that stronger economic integration through its “One Belt, One Road” scheme can deliver prosperity to all. If China succeeds, that will have profound political effects. It may allow foreign governments to stay in power longer than they would have otherwise. It would enable China to capture even more of the world’s trade and thereby give China a greater say over its conduct. Increased economic integration means that more countries of the world many find their economic destinies intertwined with that of China, drawing them closer to China’s view of international order and further from those of the West.

For the moment, its record of economic growth gives China the benefit of the doubt that it can expand the economic pie for all. But those are risky laurels to rest on, judging by China’s worsening economic climate. Despite cutting its interest rates three times and its reserve requirement ratio for banks five times in the last half year, China has barely stabilized its economy. Some economists argue that “stimulus alone cannot solve China’s economic challenges and would be unlikely to have the desired effect on investment, given weak demand.”[9] Meanwhile, Chinese officials fear that “the mountain of debt from the rapid expansion of credit over the past few years is weighing on efforts to pick up [China’s] economy.”[10]

Either way, it is becoming harder for China to sustain growth even at a more modest pace. Already Chinese imports of natural resources from developing countries have slowed. If China cannot revive its own economy, its trade with them will slow further and perhaps make much of their newly built infrastructure redundant. That would end up saddling those countries with more debt and the AIIB with bad loans.

About the author:
*Felix K. Chang is a senior fellow at the Foreign Policy Research Institute. He is also the Chief Strategy Officer of DecisionQ, a predictive analytics company in the national security and healthcare industries. He has worked with a number of digital, consumer services, and renewable energy entrepreneurs for years. He was previously a consultant in Booz Allen Hamilton’s Strategy and Organization practice, has served as a senior planner and an intelligence officer in the U.S. Department of Defense, and was a business advisor at Mobil Oil Corporation.

Source:
This article was published by FPRI

Notes:
[1] “Riches in the near abroad,” Economist, Jan. 28, 2010.

[2] Xi Jinping, President of the People’s Republic of China, remarks, Asian-African Conference, Jakarta, Indonesia, Apr. 22, 2015.

[3] Ibid. As Xi defines, the Chinese dream of national rejuvenation entails “completing the building of a moderately prosperous society in all respects when the Communist Party of China celebrates its centenary in 2021 and having a prosperous, strong, democratic, culturally advanced and harmonious country when the People’s Republic celebrates its centenary in 2049.”

[4] Ibid.

[5] Joshua Kurlantzick, “The Belligerents,” New Republic, Jan. 27, 2011.

[6] Prak Chan Thul, “Cambodia says ASEAN should stay out of South China Sea fracas,” Reuters, May 7, 2015.

[7] Masaaki Kameda, “Abe, Thai junta leader agree to cooperate on railway development, special economic zone,” Japan Times, Feb. 9, 2015.

[8] Marianna Parraga and Daniel Bases, “Venezuela may have missed $24 billion in oil revenue in 2014,” Reuters, Apr. 24, 2015; Alexandra Ulmer, Corina Pons, and Eyanir Chinea, “Venezuela says China to invest over $20 billion, mum on loans,” Reuters, Jan. 7, 2015.

[9] Pete Sweeney, “China June factory activity shows signs of stabilization,” Reuters, Jun. 23, 2015.

[10] Lingling Wei, “China Cuts Interest Rates as Economic Growth Slows,” Wall Street Journal, May 12, 2015.

The post China’s ‘Win-Win’ Development Bargain: China, The Asian Infrastructure Investment Bank, And The International Order – Analysis appeared first on Eurasia Review.

By Linda S. Heard

Will they accept more austerity or will they refuse resulting in Greece defaulting on its upcoming IMF payment? That is the question being mulled by the Greek people expected to decisively answer in what’s billed as a yes/no referendum on yet more belt-tightening scheduled for July 5. Either way, there is prolonged pain ahead for the world’s oldest democracy.

Despite serial negotiations with the powers that be in Brussels and Greece’s creditors, hope for a compromise solution that all sides can live with is fast diminishing. A new bailout is on the table at least until June 30, but comes with harsh strings attached, including reduced pensions and added taxation.

And the word from various European finance ministers is that there’s no chance of extending the deadline for the next debt payment, due on Tuesday, until the Greek people have spoken, exemplifying democracy’s true spirit in action.

With Greece’s exit from the euro zone looking ever more likely, which could portend the country’s withdrawal from the EU, Greece’s Prime Minister Alexis Tsipras is riding a wave of popularity not just on the street but also in the Parliament where he’s receiving standing ovations.

At a time when people are hoarding their cash and panic has emptied ATM machines and is causing a run on banks which may be forced to close their doors unless they receive an emergency injection from the Central Bank, the PM’s burgeoning approval rating has many on the outside looking in scratching their heads.

In reality, there’s no mystery here. The Greeks have no stomach for further cuts, which is why they voted for Tsipras, a rank and inexperienced outsider, in the first place. And, secondly, they’re a proud people who resent being ordered around by suits in Brussels, not to mention the hard-nosed lady in Germany. The majority does want to stick with the euro no matter how unkind it’s been to their country’s economy that was booming before it dumped the drachma, but on their own terms.

An unnamed senior government official told the Daily Telegraph “If we have to choose between a default to the IMF or a default to our own people, it is a no-brainer. We will shut down the banks and nationalize them, and then issue IOUs if we have to, and we all know what this means. What we will not do is become a protectorate of the EU.”

Tsipras was in a bind. The victorious anti-austerity candidate could hardly do a U-turn without a severe public backlash. On the other hand, sticking to his principles will come at a heavy cost. The European Central Bank (ECB) debated whether or not to prop-up Greek banks amid unconfirmed reports that its board had decided to bin its program offering emergency assistance, but finally agreed to continue supplying the banks with liquidity…at least for now.

All sides have put on their poker faces so that’s it difficult to predict whether there is an element of bluff in their respective stances. German parliamentarian and member of Angela Merkel’s Christian Democrat Union, Christian von Stetten, does, however, represent the prevailing German view when he says, “The experiment with the Greeks in the euro zone who are unwilling to implement reforms, has failed and must be ended.” If the unthinkable happens, Mike Bird writing in the Business Insider predicts a gloomy scenario of “rampant inflation, political unrest, debt defaults and a possible ‘contagion’ with Europe’s financial sector.”

Greece’s short-medium future would look bleak, but as the Financial Times columnist, Wolfgang Munchau points out, “The creditors’ program was an economic version of Dante’s hell. It would have brought about the total economic destruction of Greece,” while arguing that Greece’s exit would have an eventual upside. The upside would be that Greece’s government would be in charge of its own currency, which would be devalued making the country more competitive in terms of tourism, exports and foreign investment. The initial downside would be unstable banks, high interest rates, and companies falling into bankruptcy like ninepins. Alan Greenspan, a former chairman of the US Federal Reserve, has warned that a Grexit could spell the euro zone’s end because the ECB would be left holding the baby — in other words, unpaid Greek debts to the tune of billions.

Moreover, if by some miracle, Greece comes out and succeeds in making a go of it, struggling countries such as Spain, Portugal and Italy will be edging toward the door. A UK referendum on Britain’s withdrawal from the EU could make the Union very fragile indeed. A less discussed component of this standoff is geopolitical. Moscow is waiting in the wings to see how this contretemps turns out. Earlier this month, Russia and Greece signed a gas pipeline deal and Russia has, in principle, extended a hand with a stated willingness to consider its own bailout deal in terms of loans. The EU and the IMF aren’t immune to geopolitical factors. On the contrary, Ukraine which isn’t a member state has been showered with aid and loans, while Greece comes in for humiliation.

Will they conform or will they take a leap into the unknown? That’s for the Greek people to decide. May they choose wisely and well!

The post Greece On The Edge – OpEd appeared first on Eurasia Review.

By Chandler Foust*

On June 12, the U.S. House of Representatives passed Trade Promotion Authority (TPA) while rejecting Trade Adjustment Assistance (TAA). The Senate version of the bill, with TAA and TPA adjoined, passed. Typically, a bill such as TAA would have strong Democratic support because it provides assistance to individuals who lose jobs due to trade deals. However, since the bills were separate in the House and adjoined in the Senate, House Democrats voted it down to prevent TPA from being signed into law. Many Democrats opposed TPA because if signed into law, President Obama would have fast track authority to ratify the Trans-Pacific Partnership (TPP), which many Democrats are against. By rejecting TAA, House Democrats forced the Senate to separate the TAA from the TPA and vote on it again.

President Obama was then left to rely on Republican Senate Majority Leader Mitch McConnell and Republican Speaker of the House John Boehner to deliver the legislation, and they came through. On June 25, the Senate voted to pass TPA, without TAA, which means that the bill will be sent to the President.[1] With TPA sent to the president and the House of Representatives passing TAA the second time around, the Obama Administration can chalk this round up as a victory.[2] Regardless of what happens next though, the fact that the President’s own party initially abandoned him leads to a much-needed discussion on the role trade agreements play in determining policy in a democratic society.

What is the TPP?

TPP, an acronym for the Trans-Pacific Partnership, is a free trade agreement that would create new rules and standards for trade and business investment. If successful it will include 11 other Pacific Rim nations, who are currently responsible for one third of global trade and 40 percent of global Gross Domestic Product (GDP).[3] The TPP’s supporters state that it will increase American exports, enforce labor rights, and establish strong environmental protections.[4] The Obama administration has also advertised the agreement in geopolitical terms. To the administration, the TPP is fundamental in fomenting the U.S.-Asian shift, as well as countering, and in the future hopefully including, China. On the other hand, TPP’s detractors are concerned over the secrecy of the negotiations. They are afraid TPP will offshore American jobs, increase the cost of medicine, roll back Wall Street reforms, and give multinational corporations increased power at the expense of the state.[5]

In a column for the Washington Post on June 14th, Larry Summers, former Secretary of Treasury and economic advisor to President Obama, wrote that failing to pass the TPA “would signal a lack of U.S. commitment to Asia at a time when China is flexing its muscles.” However, starting off with doom and gloom, he also went on to rebuff the importance and role of TPP. Stating that the “era of agreements that achieve freer trade in the classic sense are essentially over,” he labeled the agreement as less of a trade deal and more of a tool for regulatory harmonization between the United States and its partners.[6] This is where the role of trade agreements must be reexamined.

After almost 14 years of the DOHA trade talks reaching no agreement, the U.S. has been eager to establish bilateral and regional trade agreements to increase its influence and create international standards that it deems important. The problem is the secretive nature of the negotiations that determine the standards. These agreements do not hold negotiators accountable to public welfare and increase the influence of special interests. This can undermine a nation’s sovereignty and thus its ability to devise policy that benefits its citizens.

How Trade Agreements Undermine Sovereignty

As noted earlier, due to already low tariffs and quota barriers; the TPP is less about free trade and more about regulatory harmonization. This means reforming the domestic laws in the countries of the agreement so that they are in line with U.S. standards regarding areas such as intellectual property, environment and labor. As in many Free Trade Agreements, the TPP includes an Investor State Dispute Settlement (ISDS). Such settlement structures have protected investors at the expense of states since their infancy.[7] The combined increase in Foreign Direct Investment and increase of nationalization of foreign companies during decolonization in the 1960s led many international investors to advocate for a judicial body that would replace national courts in countries with an unfair rule of law.[8] In 1965, the International Center for Settlement of Investment Disputes (ICSID) was created as a part of the World Bank Group. This created an arbitration mechanism to resolve disputes. The mechanism allowed investors to bring claims against states for treaty violations, but gave the state no recourse. Initially, very few investors used ICSID. Only fifty cases were brought against states between 1965 and 2000. However, by the end of 2013, investors had brought 568 cases.[9]

Presiding over the cases are three arbitrators, one appointed by each party and the third mutually agreed upon. The private lawyers acting as arbitrators are held to loose ethical standards and motivated by the pay they receive for advising the opposing parties. Many arbitrators have held “several roles at the same time, such as counsel, government representative, expert witness, and academic.”[10] Currently the process is dominated by a handful of international law firms that have turned it into a gold mine. In fact, 55 percent of known disputes have been handled by a group of fifteen lawyers. Recently, for claimants, ISDS cases have cost on average around $8 million USD, with some costing over $30 million USD. In an OECD estimate, arbitration lawyers charge $1,000 USD an hour on average, which helps to explain the broad interpretation given to International Investment Agreements (IIAs).[11]

The two main clauses in IIAs that are invoked by investors are the Fair and Equitable Treatment (FET) Clause and the Indirect Expropriation Clause. The FET Clause has been interpreted so broadly that new laws or taxes can be seen as violating the investment agreement if they deride an investor’s “legitimate expectations.”[12] The Indirect Expropriation Clause, on the other hand, refers to an action that would affect an investor’s ability to profit from any asset they own in the country.[13] Arbitration is so secretive that domestic groups are not able to hold arbitrators accountable, and the open-ended nature of IIAs allows for considerable leeway in the arbitrator’s decision. Essentially, the arbitrators are interpreting very broad investment rules through the lens of private commercial actors and in effect creating rules on how governments treat foreign investors without the consideration or input of the public. On top of this, the arbitrator’s decision is binding and put into effect immediately. In response, some countries have resorted to ignoring the arbitrator’s decision due to the perceived unfairness of judgments made by those with considerable interest in interpreting IIAs in a way that increases their future caseload.

Current Cases

Even though the U.S. has never lost a case in ISDS that does not mean it cannot happen. For instance, Germany, who many consider the “grandfather of investor-state arbitration,” has numerous businesses that have sued foreign governments from the 1980’s onward.[14] However, in 2009, this was turned around on them. After establishing strict environmental controls on a coal-fired power plant, Swedish company Vattenfall sued the German government. A local court found that the environmental regulations were too strict and Germany agreed to a settlement.[15] There are many other examples of ISDS being used as a tool to force states’ from acting in the public interest as well.

In 1999, Occidental Petroleum signed a contract with the Ecuadorian Government to explore a rainforest for hydrocarbons.[16] A year later, in order to better fund the operation, the company sold 40 percent of the share to the Canadian Alberta Energy Corporation, which is now ENCANA.[17] Occidental Petroleum failed to inform the Ecuadorian government of the deal and, when news of the deal reached Ecuadorians, they launched protests against the corporation. Responding in kind, Ecuador ended the contract and seized Occidental’s property in Quito along with its oil fields. In response, Occidental filed a complaint under the U.S.-Ecuadorian Bilateral Investment Treaty (BIT) and entered into arbitration.[18] After six years, the arbitrator ordered Ecuador to pay $1.8 billion USD, an amount almost equal to Ecuador’s yearly health budget.[19] They argued that while Occidental did violate the law by entering into a side deal without informing the Ecuadorian Government, Ecuador’s response was too harsh. Ecuador, however, has requested for the case to be annulled and currently refuses to pay.[20]

Another example of ISDS’s potential to undermine state sovereignty is the case between El Salvador and Pacific Rim. In the early 2000s, the Canadian mining company Pacific Rim began exploring for gold in the Central American nation.[21] Pacific Rim was given exploratory permits, but right before the company was to receive the necessary extraction permits, in 2008, a “clean water crisis” began in San Sebastian due to mining operations polluting the local water supply. In turn, the Salvadorian Government chose to end mining in the country, due to concerns that further mining would cause permanent damage and pollution of the water supply.[22] The government wanted time to figure out the environmental impact of the operation. Pacific Rim, however, said it already completed its review of the environmental impact and wanted to move ahead with extraction.[23] The Salvadorian Government stuck by its ban and Pacific Rim sued. At first, Pacific Rim’s claim was that El Salvador’s actions violated the Central American Free Trade Treaty (CAFTA), but in 2012 the arbitrator found that, since the company is Canadian, CAFTA does not apply to them.[24] Switching gears, Pacific Rim sued again, but this time claiming that by refusing to grant a permit to dig for gold El Salvador violated its own investment law.[25] Pacific Rim is suing for $284 million USD in damages, around 2 percent of El Salvador’s GDP and larger than the amount of foreign aid the nation received last year.[26] The case is ongoing and will be decided in the coming months.[27]

Argentina has also been in frequent disputes with investors, having more cases brought against it than any other country.[28] In October 2013, the country agreed to pay $677 million USD to five different companies. In its most recent case, French water company Suez sued Argentina for revoking the company’s water and sewage treatment contract in Buenos Aires in 2006.[29] Initially, the company sought $1.2 billion USD in damages, but this figure was brought down to $405 million USD, which an arbitrator found Argentina must pay. The state still has 20 pending cases in ICSID.[30]

Lastly, Uruguay’s legal battle with tobacco giant Philip Morris, which has higher profits than Uruguay’s GDP, is a prescient example of possible future cases for partners of TPP, especially considering Senator McConnell’s avid work to include tobacco companies on the ISDS provision of the TPP.[31] To combat smoking, Uruguay implemented a massive anti-smoking campaign that includes a requirement that all cigarette packages have health warnings and pictures illustrating the effects of smoking that cover 80 percent of the package.[32] Phillip Morris is seeking damages of $25 million USD under the BIT between Switzerland and Uruguay, stating that Uruguay’s regulations disregard its past commitments.[33]

What these cases all have in common is the use of ISDS to stop government regulations or a policy that investors feel harms their business, and establishes rules for how governments treat foreign investors. While nations have resorted to ignoring the rulings, they still have to pay for the high legal costs involved in defending themselves. In the ongoing case in El Salvador, the government banned mining in order to protect the environment and to prevent water pollution. It is a ban that is in the interest of its citizens and by all means within the powers granted to it as a sovereign state, but since Pacific Rim views it as reneging on previous commitments made to the company, the nation could suffer an enormous financial penalty for simply governing. This is the same in Ecuador and Uruguay. In Ecuador, the government responded to the demands of its citizens and ended a deal with a company that broke the law, while in Uruguay the government has attacked a massive public health concern and is being sued for it as well. Multinational Corporations use ISDS to extract compensation from states and ensure that domestic policies do not interfere with their bottom line.

Conclusion

In addition to containing ISDS provisions that undermine a nation’s ability to make policy, the TPP will bring minimal economic benefits to the U.S. The Peterson Institute stated that U.S. incomes would increase $78 billion USD by 2025 or by 0.38 percent.[34] In fact, Vietnam will be the main beneficiary because its two principal exports, apparel and footwear, face high protection barriers in partner markets.[35] On top of mainly benefiting other nations, the U.S. would, according to the Peterson Institute, lose 40,000 to 50,000 jobs a year from 2014 until 2017 and on average 100,000 jobs a year in 2018 and 2019. This would necessitate the creation of 900,000 jobs a year to sustain full employment.[36] While it is undeniable that a nation such as Vietnam’s economic improvement is a plus for the U.S. and the world, it remains to be seen whether increased exports of cheaply made goods will actually benefit the average Vietnamese, which leads to a larger point.

Trade deals such as the TPP are negotiated in secret and are susceptible to capture by special interest. Other controversial aspects of the TPP are its inclusion of stringent intellectual property rights and patents on pharmaceuticals. Dean Baker, co-founder of the Centre for Economic Policy and Research (CEPR), makes a strong point when he states that the proponents of TPP have it all wrong. Tariffs and quota barriers are already extremely low and at worst, raise the cost of goods 20 to 30 percent. Strict copyright protections and patent laws, on the other hand, could raise the price of protected items from 2,000 percent to 20,000 percent in some cases. He then adds that every dollar spent on artificially expensive drugs or computers is one less dollar that could be spent to increase the demand on products Americans export.[37]

Lastly, the U.S. needs to play a leading role in the world, but it must reconsider using trade agreements as a means to set up its standards. Not only do these secretive standards hold little accountability to the public welfare, but also they are broad and open to interpretation. ISDS mechanisms in the majority of U.S. trade agreements, not only ensures that non-elected, highly paid arbitrators– with an incentive to interpret cases so as to increase future caseloads– set the rules governing how states treat investors, it has opened itself up for a counterattack, as shown in the German example. Instead of reflexively supporting free trade agreements, the countries involved must reexamine and engage in intelligent discussions about the implications and repercussions involved.

*Chandler Foust, Research Associate at the Council on Hemispheric Affairs

Notes:
[1] http://www.vox.com/2015/6/19/8811883/obama-republicans-tpp

[2] http://www.cnn.com/2015/06/25/politics/trade-bill-barack-obama-taa/

[3] http://www.nytimes.com/2015/05/12/business/unpacking-the-trans-pacific-partnership-trade-deal.html

[4] https://ustr.gov/tpp

[5] http://www.citizen.org/TPP

[6] http://www.washingtonpost.com/opinions/rescuing-the-free-trade-deals/2015/06/14/f10d82c2-1119-11e5-9726-49d6fa26a8c6_story.html

[7] http://www.economist.com/news/finance-and-economics/21623756-governments-are-souring-treaties-protect-foreign-investors-arbitration

[8] “Trade and Development Report.” United Nations Conference on Trade and Development, 2014, 136-41. Accessed June 22, 2015. http://unctad.org/en/PublicationsLibrary/tdr2014_en.pdf.

[9] IBID

[10] IBID

[11] http://www.tni.org/sites/www.tni.org/files/download/iias_report_feb_2015.pdf

[12] IBID

[13] IBID

[14] http://www.theguardian.com/business/2015/jun/10/obscure-legal-system-lets-corportations-sue-states-ttip-icsid

[15] IBID

[16] http://www.americanlawyer.com/id=1202616473638/Global-Dispute-of-the-Year-Investment-Arbitration-Occidental-v-Ecuador

[17] IBID

[18] IBID

[19] http://www.theguardian.com/business/2015/jun/10/obscure-legal-system-lets-corportations-sue-states-ttip-icsid

[20] IBID

[21] http://www.theguardian.com/sustainable-business/2015/may/27/pacific-rim-lawsuit-el-salvador-mine-gold-free-trade

[22]IBID

[23]IBID

[24]IBID

[25] http://www.theguardian.com/global-development/2014/apr/10/el-salvador-pacific-rim-assault-democratic-governance

[26] http://www.theguardian.com/business/2015/jun/10/obscure-legal-system-lets-corportations-sue-states-ttip-icsid

[27] IBID

[28] http://unctad.org/en/PublicationsLibrary/webdiaepcb2014d3_en.pdf

[29] http://www.telesurtv.net/english/news/Argentina-Government-to-Appeal-World-Bank-Court-Ruling–20150411-0008.html

[30] IBID

[31] http://thehill.com/policy/finance/221197-mcconnell-seeks-to-protect-tobacco-industry-in-trade-deal

[32] http://www.triplepundit.com/2015/04/philip-morris-vs-uruguay-lawsuit-a-threat-to-smoking-restrictions-worldwide/

[33] IBID

[34] http://www.iie.com/publications/pb/pb12-16.pdf

[35] http://marginalrevolution.com/marginalrevolution/2015/04/why-the-tpp-is-a-better-trade-agreement-than-you-think.html

[36] http://www.piie.com/publications/chapters_preview/6642/06iie6642.pdf

[37]http://www.aljazeera.com/indepth/opinion/2013/04/201342954234869993.html

The post TPP: Free Trade Or Corporate Interests? – Analysis appeared first on Eurasia Review.

European officials, describing recruitment efforts by the Islamic State in Bosnia Herzegovina, mired in a toxic mix of economic malaise and ethnic tension, reportedly fear they may regret having failed to tackle the country’s structural problems in the two decades since the end of the Yugoslav wars.

The regret could apply to any number of failures to tackle root problems that have prompted lone wolves to strike fear in major European cities, at tourist attractions in North Africa, and in Shiite mosques in the Gulf. They also persuaded thousands of Europeans, Arabs and others to join the Islamic State as foreign fighters; and tens of thousands to seek refuge in Europe from civil war, brutal repression, and economic despair.

Band-aid solutions, knee jerk responses

Across the board, democracies and autocracies alike are experiencing the blowback of decades of Band-Aid solutions, policies that failed to give youth prospects for a future with a stake in society, and repression largely unchallenged by Western governments that pay lip service to adherence to political pluralism, inclusiveness, and human and minority rights in various parts of the world, particularly the Middle East and North Africa.

In the latest examples of kneejerk responses, Tunisia is deploying 1,000 armed policemen to tourist sites even as tourists leave the country en masse, and closing 80 mosques suspected of hosting radical clerics that is likely to push militants further underground. Kuwait, which displayed a remarkable degree of inclusivity with Sunnis and Shias joining hands in their condemnation of the bombing of a Shiite mosque that left 27 people dead and more than 200 others wounded, is mulling adoption of a stringent anti-terrorism law while France is passing legislation that would authorise sweeping surveillance.

None of these measure address the sense of hopelessness that pervades predominantly Muslim minorities in Europe and is reinforced by increased prejudice sparked by violence and brutality perpetrated by Muslim extremists. That hopelessness is matched by despair and existential fears among youth, minorities, and alienated sects in the Middle East and North Africa.

In an article in the London Review of Books, Patrick Cockburn quoted a 29-year old Syrian who fights for the Islamic State as saying: “We are fighting because both the regime and the opposition failed us, so we need an armed organisation to fight for our rights.” His words could just as well have been spoken by a European or a fighter from anywhere else in the Arab world.

A display of cynicism

Rather than reducing political violence, more than a decade of war on terrorism has produced ever more virulent forms of extremism and flows of refugees. The WOT had framed efforts to counter radicalization and persuaded Western governments to revert to support of Middle Eastern and North African autocrats in the name of ensuring stability.

In a display of cynicism, Western governments have exploited their support of autocracy to secure lucrative arms deals while failing to ensure levels of aid that would credibly address social and economic malaise in a country like Tunisia that is struggling with the transition from autocracy to democracy.

The result of exclusively security-focussed approaches coupled with the exploitation of economic opportunity, is an increasingly insecure world in which Western and regional powers have proven incapable of defeating non-state actors like the Islamic State in Iraq and Syria (ISIS), multiple militant militias in Libya, Islamist insurgents in Egypt’s Sinai, and rebel Houthis in Yemen.

Said an Egyptian militant whose non-violent anti-government activism is as much aimed at opposing the regime of general-turned-president Abdel Fattah Al Sisi as it is designed to persuade increasingly frustrated youth that there are alternatives to nihilistic violence: “The strategy of brutality, repression and restricting freedom has failed to impose subservience. It hasn’t produced solutions. Governments need to give people space. They need to prove that they are capable of addressing the problems of a youth that has lost hope. We have nothing to lose if they don’t”.

Shouldering responsibility

Meanwhile, European nations are struggling to cope with an onslaught of refugees forced in part to flee their homelands by the policies of the very autocracies the West supports. At the same time, those autocracies refused to absorb some of those fleeing conflicts in for example Syria, Yemen and Iraq that they have helped fuel.

Obviously, Western governments have a responsibility to put their own homes in order by matching lofty words of inclusiveness with actions that address high youth unemployment in migrant communities, lack of equal opportunity, and ensure that minorities are embraced as full-fledged members of society rather than perceived as a fifth column.

At the same time, Western governments would have to take a lead in pushing Middle Eastern and North African autocrats to change or drop policies that fuel radicalization and take measures that would address widespread grievances. Such measures would include:

• A halt to the global propagation of intolerant ideologies by some Middle Eastern governments and state-sponsored groups such as Saudi Arabia’s interpretation of Wahhabism that contrasts starkly with that of Qatar, the world’s only other Wahhabi state;
• Abolition of sectarianism in state rhetoric;
• Recognition of minority rights;
• Reform of brutal police and security forces that are widely feared and despised;
• Granting of greater freedoms to ensure the existence of release valves for pent-up anger and frustration and the unfettered voicing of grievances;
• A crackdown on corruption;
• Reform of education systems that produce a mismatch between market demand and graduates’ skills.

To be sure, there is no magic wand that will overnight turn the tide or definitively eradicate extremism. But there are a host of steps that governments could take that go beyond desperately needed social and economic policies that would create jobs and give youth a prospect for the future. Such measures would start addressing root causes of extremism in a bid to persuade those segments of society susceptible to radicalisation that they have a stake in working within the system.

This article was published at RSIS

The post Countering Political Violence: Tackle The Root Causes – Analysis appeared first on Eurasia Review.

The Dalit Christian Liberation Movement (DCLM) accuses the Vatican and the Indian Catholic Church leadership of caste-based discrimination “by way of allowing it directly and indirectly in their spiritual, educational and administrative places”.

“We have submitted seven copies of the complaint to Rajeev Chandran, assistant director of the UN Center in New Delhi addressed to UN Secretary General Ban Ki-Moon and different human rights organizations”, Mary John, president of the DCLM, told ucanews.com.

A DCLM delegation asked the UN and other organizations to urge the Holy See to eradicate the caste discriminatory practices and to withdraw the Permanent Observer position of the Holy See in the UN if the Vatican does not take the necessary steps. Dalits, or untouchables, are the lowest caste within Hindu society. Huge numbers of Dalits have converted to Christianity and Islam over the decades, though in reality the religions offer limited protection from societal prejudice.

“The discrimination against Dalit Christians in the Catholic Church is a human rights issue and it would be right if we approach the UN to find a solution to it”, Mary John said.

“There are separate cemeteries for Dalit Christians. Even in the church there are separate seating arrangements for those from the Dalit community and others. The festival choir processions do not enter the streets where Dalit Christians live”, said Kudanthai Arasan, president of the Viduthalai Tamil Puligal Katchi, adding that in some churches even the dead body of a Dalit Christian is not allowed inside for funeral Mass. While Dalit Christians form 70 percent of the total Catholic population in India, said John, their representation in the Church leadership is only 4-5 percent. Out of about 200 active bishops in India, only nine are from the Dalit community.

“We have raised our voice time and again to end this practice in the Indian Church, but our pleas have been falling on deaf ears (…) They do not take our case seriously to the Vatican”, John said.

Father Joseph Chinnayyan, deputy secretary general of the Catholic Bishops’ Conference of India (CBCI), said that as far as the Dalit Christians’ complaint about the issue to the UN is concerned, “we are not aware of any such complaint and will only respond once we receive any communication about it”.

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Pope Francis will meet with homeless people, immigrants and prisoners during his upcoming trip to Cuba and the United States and become the first pope to address the U.S. Congress. He’ll also preside over a meeting about religious liberty – a major issue for U.S. bishops in the wake of the Supreme Court’s gay marriage decision.

The Vatican published the itinerary Tuesday for the eagerly awaited Sept. 19-28 visit. Francis added the Cuba leg onto the start of his U.S. trip after helping contribute to the historic thaw in U.S.-Cuba relations.

In Cuba, he’ll celebrate Mass in Revolution Square in Havana – as both of his immediate predecessors did during their trips to the Caribbean island nation. He’ll travel to Holguin and pray before the Virgin of Charity of Cobre, the patron of Cuba, and meet with Cuban families in the eastern city of Santiago.

Francis arrives in Washington, D.C., on Sept. 22 and the next day will be welcomed at the White House by President Barack Obama.
He will address Congress on Sept. 24, and will meet with homeless people later in the day at a local parish, St. Patrick’s.

On Sept. 25, Francis will speak on sustainable development at the United Nations, where he’ll have another opportunity to voice his concerns about the environment.

Republicans in the U.S. Congress, and even some Republican U.S. presidential candidates, have largely shrugged off Francis’ denunciation of the current global economic system in which he says wealthy countries exploit the poor and pollute the Earth in the process.

Nevertheless, U.S. House Speaker John Boehner said lawmakers were welcoming the unprecedented papal address to Congress “with open ears and hearts.” Francis will host an interfaith gathering at Ground Zero in New York and meet with children and immigrant families in Harlem.

Unlike his predecessors, Francis has no meeting planned with the Jewish community, though U.S. church officials said Jewish representatives would participate in the interfaith event. An unannounced encounter with victims of priestly sexual abuse is also a possibility.

While Pope Paul VI in 1965, St. John Paul II in 1979 and Benedict XVI in 2008 celebrated Mass in Yankee Stadium, Francis will celebrate Mass for a smaller crowd in Madison Square Garden. He’ll also preside over a vespers service at the newly spruced-up St. Patrick’s Cathedral.

On Sept. 26, he will join the church’s World Meeting of Families in Philadelphia, a big rally for the Catholic Church’s traditional teaching on families. He will host a “meeting for religious liberty” on Independence Mall with immigrants and the Hispanic community, the Vatican itinerary said.

The post Pope In US To Meet With Homeless, Prisoners, Immigrants appeared first on Eurasia Review.

Prof. Anis H. Bajrektarevic recently launched a book titled, “Europe of Sarajevo 100 Years Later: From WWI to www.” Only Prof. Anis, I think, can write a book of that title, just as he’s the only intellectual I know who argues passionately that Google is the Gulag of our time, the prison of the free mind.

His editor tells us that in the book, Prof. Anis makes the case that the history of Europe, perhaps of the world, since World War I has been a history of geopolitical imperative. And that, in the face of climate change, the crisis that grips all of us is not really ecological, as it never was financial, but moral.

Prof. Anis is chairperson for international law and global political studies at the University IMC-Krems, Austria. I’ve been reading some of his recent writings. A native Sarajevan who now lives in Vienna, he doesn’t see one seamless Europe but several.

There’s Atlantic Europe, a political powerhouse that boasts two nuclear states. There’s Central Europe, an economic powerhouse. Scandinavian Europe is a little of both. And Eastern Europe that’s none of either. And beyond Eastern Europe, is a Europe-stalking Russia.

“Although seemingly unified,” he writes, “Europe is essentially composed of several segments, each of them with its own dynamics, legacies and political culture… Atlantic and Central Europe are confident and secure at one end, while Eastern Europe as well as Russia on the other end, (are) insecure and neuralgic, therefore in a permanent quest for additional security guarantees.”

The underachiever of the lot is Eastern Europe, and often the victim of Europe’s turmoil. It bore the brunt of World War II in the 1940s, suffered even more during the Yugoslav implosion of the 1990s, and again today in the Ukrainian civil war.
A fascinating part of Eastern Europe is its southern flank, the Balkans, where the US-led West and Russia are today engaged in a tug of war for influence. In here is the cradle of Western civilization, Greece, which is now in deep financial and economic trouble. If it’s not bailed out of its misery, it just might leave the euro-zone.

I haven’t come across Prof. Anis’s views on the consequences of a Grexit, or a Greek exit from the euro-zone and possibly also from the European Union, but many other thoughtful people have said a lot on this topic. Their views range from, “Oh, nothing much,” to, “This will be Armageddon.”

I side with those who say that if Europe doesn’t save Greece, it will itself be in need of saving. A Greek fall from the euro-zone will have a domino effect, which can happen in slow motion, over the years, but in the end will leave the EU a mere ghost of what it is today. Meanwhile, in its agony Greece could become Russia’s Orthodox altar boy, which would be anathema to the West.

And then there’s the Asian connection: China is already heavily invested in the port of Piraeus in Athens, the hub of Greek shipping and the gateway to Europe for China’s ambitious Maritime Silk Road project. Asean nations are stakeholders in that endeavor.

Meanwhile negotiations between Greece and its European creditors for a 7.2-billion-euro ($8-billion) bailout hang in the balance. Creditors and financial institutions demand fiscal reform measures that are bitter to Greece. We’ll know within days if there’s a deal or not.

Indonesia went through a similar ordeal in 1998 and has since recovered very nicely. So it’s too early to write off the Greek drama as unmitigated tragedy. And, in spite of Pope Francis, Europe isn’t an old woman who has fallen and cannot rise.
It’s a grand old man walking a tightrope between “cosmos” and “chaos,” two favorite Greek words of Prof. Anis.
Jamil Maidan Flores is a Jakarta-based literary writer whose interests include philosophy and foreign policy. The views expressed here are his own.

First published by Jakarta Post June 29, 2015

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By Seyyedeh Motahhareh Hosseini*

There has been a live streak of relations between the old land of the Levant (including the present-day Turkey, Syria and part of Iraq) and the Caucasus region. Sufism was the central focus of those relations, but they were also marked with a set of political, social, cultural, scientific and economic events. This region has, therefore, continued its cultural and religious life through expansion of the religious culture in the form of Sufism, which traveled from Iran to Iraq and therefrom to Syria, Turkey and then South Caucasus. The other supplementary half of this current was the cultural and religious current that was initiated in the greater Khorasan region and moved to Central Asia and from there to North Caucasus. This cultural crescent was formed by Muslims in the neighborhood of Christianity.

Today, both halves of this crescent have turned into a breeding ground for the growth of Salafi current, as well as extremist and violent Islamism, which excommunicates other people. On the one hand, through the path that crosses Pakistan, Afghanistan and Fergana valley, reformist ideas of Sunni Muslims find their way into Uzbekistan and are propagated across Central Asia before reaching Caucasus along with a stream of narcotics, and then continue their way toward Europe. On the other hand, Middle Eastern crises have spread to this region through Iraq, Syria, Turkey, and South Caucasus and have generated a great wave of extremist and violent emotions and approaches in such critical regions as Chechnya and Dagestan before gradually creeping into Abkhazia, Ossetia, and Balkaria.

Arabs in Caucasus form a new active group, which has been created on the basis of Sufist and Muslim Brotherhood currents, but the ideas that they carry are not moderate ideas of Sufis, but the radical ideas of Salafi school of thought. Some recent studies have reached the conclusion that emergence of international fighters in the Levant has deep historical roots and dates back to the time when Ottomans were fighting tsarist Russia.

The factor that has made this disorderly historical situation more acute is the continuation of score settling of the tsarist era under the new Russian President Vladimir Putin and in the course of Chechnya wars. The presence of people like Chechen leader, Ramzan Kadyrov, and his military and security apparatus in North Caucasus, has kept war and bloodletting going on. Therefore, extremism and fundamentalism in Caucasus and transfer of violence from the Middle East to Caucasus and vice versa are not founded on the basis of Islamic thought, but have their roots in ethnic, geopolitical and political tensions. Even international order serves to set the direction of this regional current or has serious impact on it. Today, control of extremist Islamist currents has turned into a tool in the hands of the United States and the NATO against Russia (in Caucasus), a tool in the hands of Russia against China (in Xinjiang), a tool in the hands of the West and the United States against Shia Iran (through its Sunni neighbors) and so forth. In fact, no serious, coordinated and resilient determination has been observed on the part of Islamic or Western countries to control it, and basically speaking, nobody thinks that they are capable of controlling Islamist extremism.

On the one hand and as a result of unfavorable economic conditions, Russia’s security grasp, and local ethnic tensions, Muslims in Caucasus are looking for a channel to express their protests. On the other hand, a combination of the Communist legacy in Caucasus and anti-West fundamentalist ideas imported from Iraq and Syria has caused people in Caucasus, who are inclined toward Islamic ideas, to opt for very extremist approaches. Judging from recent developments, and given the forecast by a group of international relations scholars who believe that parts of North Caucasus will be separated from Russia in coming decades, and given the tense atmosphere in Caucasus as a result of incongruous local policies, the influence of Islamist fundamentalism in this region is expected to be on the rise throughout the next decade.

The Republic of Azerbaijan has attuned its policies to those of the United States and is a Muslim and Shia country, while Georgia, which has attuned its policies with the European Union, is a Christian country at odds with Russian orthodox faith. Armenians are opposed to Russia, have an undeveloped economy, and are incapable of close cooperation with the European Union and the United States. This heterogeneous mix has been combined with the tense geographical conditions in North Caucasus and has made the region prone to acceptance of all kinds of extremist and reformist ideas. The crisis in Ukraine, which has securitized relations between Russia and the West and has weakened Russian economy, has further added to this tension. In this way, since Caucasus is surrounded by Muslim countries where fundamentalist ideas are getting stronger than any time before, there is no doubt that fertile grounds for geopolitical tension in Caucasus will continue to increase in number and intensity.

*Seyyedeh Motahhareh Hosseini
Assistant Professor of Political Science & Expert on Central Asia and Caucasus Affairs

The post Fundamentalism Shifting From Levant To Caucasus – Analysis appeared first on Eurasia Review.

Amid intense competition and quantitative easing, countries that innovate and reduce bureaucracy will be more influential.

By Will Hickey*

The past few years have seen nations use their central banks monetary policies to mask the deep institutional structural reforms required to improve domestic productivity, efficiency, and employment.

A world of 7 billion people is increasingly in cutthroat competition over jobs due to industrial overcapacity and devalued currencies eroding real wages. Countries pump more money into their economies, taking on growing debt, to reduce the value of their currencies and make exports more attractive.

But this is a short-term fix. The status quo is not sustainable. Without deeper structural reforms that encourage consumption, innovation and a secure safety net ensuring certainty, the democratic governments will eventually flounder and citizens will vote leaders out of power.

Greece is currently the world’s poster child for unfulfilled structural reforms, yet lacks a central bank to print its way out of problems. Instead of changing pension schemes, minimum wages or labor laws, Greeks are tempted by a Grexit scenario – to return to the drachma and “print” their way out of economic malaise.

Greece is not alone. Many other countries, including the United States, must embark on painful changes to stabilize their economies for future generations.

Despite a plethora of economic woes and questionable bookkeeping, in 2000, Greece was allowed to join the eurozone. An inflow of cheap euros soon commenced in 2002 and allowed Greeks to live well beyond their means. The government failed to confront problems of productivity that reduced its ability to compete including low retirement ages, generous welfare benefits, overbearing bureaucracy and protected trade unions for all sorts of occupations from taxi drivers to dentists.

At their core, structural reforms are about changing old ways that protect vested interests, mostly labor, change that’s resisted by societies and power structures. Most countries have significant structural deficiencies in one or more of the following institutional areas:

Bloated bureaucracy: Multilayers of public officials and servants, many redundant, can lead to wasted productivity. Overlapping regulations, permissions and procedures create opportunities for rent seeking and corruption among incompetent officials in nations like India, Turkey and Indonesia. For example, Indonesia has 34 government ministries; India, if including state ministers,” has more than 70, though some ministers wear several ministerial hats. By contrast, Switzerland has seven.

Education: Education can promote innovation or mask incompetence by promoting the status quo. Though the Soviet Union was disbanded in 1991, educational institutions were left largely unchanged with many educators relying on the same methods used under Communism. Malaysia and Kazakhstan have used education to reinforce state religion and mandate the study of obscure languages, as opposed to teaching advanced skills needed for competing in the 21st century.

Entitlements: Europe is renowned for promoting a comfortable lifestyle with generous payments for education, health and pensions. The continent now serves as a magnet for illegal immigration from wartorn areas in the Middle East and sub-Saharan Africa. Social expenditures also weigh heavily on the US as well as Norway, Australia and Canada magnified with slumps in oil and mining commodity prices. Countries must take on the politically unpopular task of reforming entitlements to reflect changing economies and competitiveness due largely in part to immigration and aging demographics.

Infrastructure development: Development is hampered by ownership and land-acquisition issues particularly in India, Mexico and Indonesia. Many countries prohibit foreigners from owning land. Modern infrastructure projects cannot proceed if land ownership issues are left unchanged in centuries-old familial or cultural practices. Few want to pay for new roads, bridges, ports and railways, especially in developing countries subject to political risks. It is a chicken-and-egg scenario – governments want privatization, but investors want political certainty, namely, guarantees that their projects will be finished without later government interference.

Subsidies: Energy and agricultural payouts, like consumer subsidies for rice in Thailand, electricity in Indonesia or fuel in Iran distort competitive economic activity. Additionally, hidden producer subsidies can shield certain classes of local industry from macroeconomic competitive risks at the expense of consumers. Producer subsidies can also take many forms from tax breaks for steel production, China, to reimbursements for oil production, as in Malaysia.

Export-oriented growth: Countries increasingly rely on exporting commodities or providing cheap, uneducated labor for manufacturing low value-added export products. The tactic provides quick money and jobs for governments that resist change. Yet low-quality export activity does little to increase value-added activity internally and foster a market for domestic products such as Indonesia with coal and China with plastic extrusions. This creates the so called middle-income trap whereby a country obtains a certain income level due to its low-cost exports or cheap labor. Development stagnates.

The post Central Banks: Printing Money Delays Domestic Structural Reforms – Analysis appeared first on Eurasia Review.

(EurActiv) — Assuming that there is no last-minute deal between Athens and its creditors, Greece will lose €16.3 billion of financing at midnight Washington time today (30 June), EU officials told the press in Brussels.

As the chance of a last-minute deal to save Greece from default becomes ever more elusive, EU officials provided ample details about the stakes.

Greece, which has received nearly €240 billion in two bailouts from the EU and International Monetary Fund since 2010, is set to miss a €1.6 billion euro debt repayment to the IMF which falls due tonight.

Officials explained that as a consequence, funding will disappear tonight.

“Once it’s gone, it’s gone […] What disappears is 16.3 billion euros. What disappears is the EFSF tranche, €1.8 billion, the SMP profits, and the remaining amount that had remained from the HFSF buffer, that’s just over €16 billion.”

To translate this jargon, the official explained that Greece has three sources of financing. The first is the European Financial Stability Facility (EFSF) itself, which is available for reform programme support and helps cover the fiscal and budget means of the government. That amounts to €1.8 billion. The availability of this facility expires tonight.

Second, there is a fund that remains in the Hellenic Financial Stability Fund (HFSF) buffer, which will be transferred back to the EFSF in Luxembourg. That amounts to €10.9 billion, and its availability also expires tonight.

Third, are the equivalents of profits of loans to the ECB (the ECB’s Securities Markets Programme (SMP). These are profits which the ECB has been learning on loans provided to the Greek government. There is a complicated system of transferring those profits back to Greece. They do not go directly from ECB, but are transferred from national treasuries to Greece.

There are two sets of SMP profits, from 2014, which amount to €1.85 billion. Those are currently sitting with EFSF, ready to be disbursed. They were not disbursed because the sides did not go through the review which would authorise the disbursement. The 2015 profits would have normally been transferred to the EFSF in the first week of July.

The release of each disbursement to Greece must be approved by both the Eurogroup and the IMF’s Executive Board. Prior to this decision, the European Commission, the ECB and the IMF staff conduct joint review missions to Greece in order to monitor compliance with the terms and conditions of the Programme.

The official did not specify the amount of the profits from 2015, but it can easily be calculated that they are also to the amount of €18 billion.

In addition, there are €16 billion remaining under the IMF program program which, under normal conditions, should continue to exist up until Q1 in 2016 when it is due to expire. The IMF had been indicating that considerations were given to the disbursement of €3.5 billion, subject to the completion of the review.

Greek finance minister Yannis Varoufakis had requested that the 2014 SMP profits be frontloaded, so that Greece would pay its due to the IMF tonight. But the officials explained that in case of default, Greece won’t be given its SMP profits, as they would remain in the ECB and transferred to national treasuries in due course. For the 2014 SMP profits, which have already been transferred to the EFSF, an additional decision would be needed to transfer them back to the ECB.

When is default taking place?

Non-payment to the IMF means that this institution cannot lend any money to a country until arrears are cleared. There would be implications for the Hellenic Financial Stability Fund and for the EFSF, because in the loan documentation, it is stipulated that if there were to be a non-payment, this would constitute a default.

The Commission will have to notify HFSF that this non-payment has occurred and then it would have to make a recommendation about what to do. There are three possibilities: either the recommendation is to do nothing, meaning that the institutions only “take note” that the non-payment has taken place; accelerate the payments, which means that Greece would be requested to repay the entire amount it owes in one go; or decide to postpone a decision, and monitor the situation.

For the EFSF, the procedure is very similar, the only difference being that this fund makes the recommendation to the creditors directly.

The official explained that the Commission had looked into what this means for credit rating agencies, and that all had said that in itself, the non-payment to the IMF would not be a reason to declare Greece in default. Similarly, the Commission apparently doesn’t fear declaring Greece in default on behalf of privately-held debt.

It is difficult to say if the statements by EU officials to the press are meant to provoke Greece into making a last-minute move. Margaritis Shinas, the spokesperson of Commission President Jean-Claude Juncker, said that contacts were “still ongoing” between the EU executive and Athens. But he made it clear that there was no intention to buy time by using the diplomatic procedure of “stopping the clock” at midnight.

The post Greece To Lose €16.3 Billion At Midnight appeared first on Eurasia Review.

Eighteen years after a painstakingly negotiated peace treaty brought an end to Tajikistan’s devastating civil war, a wave of intimidation by the authorities against the opposition is reopening old wounds.

Tired of tolerating even marginal expressions of dissent, President Emomali Rahmon’s government is liberally jailing opponents and hounding those it has not yet arrested into exile. Others have been killed in murky circumstances.

Against that backdrop, this year’s celebrations for National Unity Day, which commemorates the signing of the UN-brokered peace agreement on June 27, 1997, felt especially hollow.

Under that treaty, the loose coalition of Islamists, nationalists and Pamiri separatists that formed the United Tajik Opposition (UTO) was promised 30 percent of government positions.

Rahmon began reneging on that and other commitments in the peace accord even before the ink was dry.

Ulfatkhonim Mamadshoeva of Lali Badakhshan – a party that sided with the UTO during the civil war – says she fears Rahmon’s administration is making the same kind of mistakes that lead to the outbreak of conflict in 1992.

“I don’t like to think of the civil war. It is a terrible milestone in the history of our country, but I have a feeling that we did not learn anything from this bitter and painful lesson,” she told EurasiaNet.org.

This spring, the main political successor to the UTO, the Islamic Renaissance Party (IRPT), was shut out of parliament for the first time in a vote marred by fraud and government intimidation. IRPT leader Muhiddin Kabiri has since gone into self-imposed exile, fearing prosecution on bogus charges.

With the opposition neutered, official media are now busy rewriting history. Days before National Unity Day, state television aired a documentary about the civil war that focused almost entirely on how Rahmon – who is in his 24th year in power – singlehandedly ended the conflict.

That account entirely ignores Rahmon’s hawkish stance at the outbreak of the conflict and writes out the joint architect of the peace deal, then IRPT leader Said Abdullo Nuri, who died of cancer in 2006. It also fails to make any mention of Rahmon’s failure, after the 1997 deal was signed, to live up to promises to release political prisoners, allow UTO exiles in Iran and Afghanistan to return home and integrate opposition fighters into the regular army. Addressing the opposition’s indignation, some concessions were eventually hammered out, but then swiftly dropped amid the clamor of the U.S.-led military operation against neighboring Afghanistan in 2001.

In his speech marking the National Unity Day holiday, Rahmon struck a harsh and hostile note.

“The glorious Tajik nation will never forget the treacherous deeds of some groups and people who in the early 1990s pulled our ancestors’ motherland into bloodshed and our newly independent country into the flames of war,” he said.

He mentioned nothing about the role of the opposition in ending the war or building peace.

Dushanbe’s Asia-Plus news agency published an opinion piece in response, noting that while National Unity Day used to be about unity, it has now become about “victory.”

The government signaled that celebrations this year would be markedly different when, less than two weeks before the holiday, state-run newspaper Jumhuriyat published a tirade accusing Kabiri, the IRPT leader, who was out of the country at the time, of breaking the law during a property transaction 16 years ago.

Kabiri and his friends took the publication as a clear warning. Other that have dared to go against Rahmon are paying a heavy price. Opposition-minded politician Zaid Saidov, a former regime insider who turned against his former allies, was arrested on his return to Tajikistan in 2013 and later sentenced to 26 years in jail.

Kabiri told EurasiaNet.org in Moscow on June 18 that he fears returning home. He did not go to Tajikistan and IRPT leaders boycotted the holiday, although they were not in fact even invited to any government celebrations in the first place.

“We will not celebrate National Unity Day until real peace is restored, until pressure on our party members stops,” IRPT first deputy leader Mahmadali Hayit told EurasiaNet.org.

In the days before the holiday, 20 videos appeared online of IRPT members saying they were abandoning the party.

Mulloabbas Radzhabzoda, the head of the IRPT branch in Sughd Province, announced in a video posted on YouTube that he was resigning his position and closing the party’s Sughd office, which stopped working on June 20. Others quickly followed.

Hayit says the members were acting under pressure from regional officials.

Some officials have also tried to link the IRPT, the only legal Islamic party in Central Asia, to Islamic terrorism. Kabiri believes Rahmon’s administration feels emboldened by the West’s preoccupation with radical Islam.

“Islamophobia is rising [internationally]. Some people in government feel that now is a good chance to take revenge on our party. This is a big mistake because they are creating a new conflict. They did this 20 years ago and it started a civil war,” Kabiri said.

It is not only the IRPT facing unprecedented pressure. The few remaining independent media outlets are gutted by self-censorship, non-governmental organizations are facing new legislation aimed at limiting their activities, and critics of Rahmon face all sorts of pressures, including sometimes violence. One prominent opposition leader was assassinated in Istanbul in March.

“We need […] national reconciliation. We need to sit down at the negotiating table,” said Mamadshoeva of Lali Badakhshan. “Instead we have an escalating situation.”

The post Tajikistan: Targeting Of Opposition Rekindles Civil War Fears appeared first on Eurasia Review.

By K. P. Fabian

The imbroglio of the Greek debt, the confused signals sent out by the creditors, and the sad plight of Greece which is the cradle of the Western civilization remind one of Polonius’s advice to his son Laertes (who wanted money for higher studies in Paris) in Shakespeare’s Hamlet:

Neither a borrower nor a lender be,
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.

As a matter of fact, there is a common error about the EU-Greece crisis that it is all about money or rather economics. The reality, however, is that flawed assessments, political and psychological, and even more, the difficulties of inter-generational communication, have begotten this crisis.

Let us look at the communication gap. Christine Legarde, the Managing Director of the International Monetary Fund, said that she needed ‘some adults’ in the room to talk to. Obviously, she meant that the 40 year young Greek Prime Minister Alexis Tsirpas, with his sartorial choice of ‘no tie’, is not an adult. Legarde is 19 years older to Tsirpas. The most important interlocutor, German Chancellor Angela Merkel, is 20 years older than Tsirpas. As for the other protagonists, Mario Draghi, the chief of the European Central Bank, is 67; and the President of the European Union, Jean Claude Juncker, is 61.

What is intriguing is that both Merkel and Legarde seem to fail to understand that Tsirpas has to carry his people with him when he signs a deal in Brussels. They believe that the medicine they have administered to Greece under the previous government, which was humiliatingly defeated in the general election in January 2015, has worked so far and that the patient, with no say in the matter, requires a further dose of that medicine.

The medicine prescribed by the confident physicians who want to treat Greece as a patient is austerity: cutting down of government spending irrespective of its disastrous impact on the lives of the people. This is an instance of absolute dogmatism, deaf and blind to realities. In fact, the Greek economy has shrunk under the treatment of Dr. Merkel’s team of doctors; unemployment soared up from 7.2 per cent in 2008 to 26.4 per cent now. What is even more worrying is that youth unemployment is at a phenomenal 60 per cent. These cold statistics, obviously, do not bring out the enormous human pain and suffering. That can only be understood by those who have a sense of empathy with the people of Greece. It is absurd and un-Christian to see Greece as a debtor to be punished severely.

It does not take rocket science to understand what has happened. When government spending is cut, real human beings, not the mythical homo economicus, lose their income; when income shrinks, demand shrinks; when demand shrinks production shrinks; and when production shrinks demand shrinks further, with the economy entering into a vicious cycle, ultimately generating an economic black hole. It passeth one’s understanding that the leaders of the Western establishment find it difficult to understand all this. Or, is it that they understand, but couldn’t care less as Merkel does not have to stand for election in Greece. She has to worry only about her electorate in Germany who have a profoundly erroneous idea of the imbroglio. They seem to believe that Greece, having benefitted from Germany’s ‘largesse’, should appear in sack cloth and ashes and accept with contrition the punishment administered and indeed should be grateful to the munificent donor. Here a question of enduring importance in political science arises: When the electorate is wrong, should not a good leader try to point out the error and convince the electorate of its error? Or should the leader mechanically follow the crowd and cease to lead?

Coming to the financial part of the imbroglio, the creditors have been withholding an amount of USD 7.2 billion which they had earlier agreed to release, insisting that Greece should agree to more austerity measures before the money is made available. The creditors want the cutting down of the pension of those who are getting the lowest amount, extension of VAT to electricity and medicines, and so on. Basically, Tsirpas offered to tax the rich more and to leave out any measures hitting the poorest. The IMF says that his proposal is not good economics. Good economics is when the poor are hit and the rich spared. While rejecting that offer, described by Merkel as “extraordinarily generous”, Tsirpas said: “The founding principles of the European Union were democracy, solidarity and mutual respect. These principles are not based on blackmail and ultimatum.” (Emphasis added.)

The Greek Parliament has called for a referendum on July 5. The exact text of the referendum is not known. Basically, it will ask the people to say yes or no to ‘austerity’ as dictated by the creditors. Tsirpas has made it clear that, though he is opposed to austerity, he would go by the verdict of the people and accept austerity if that is what the majority wants.

Reacting to the call for referendum that took the creditors by surprise, Legarde said that it was meaningless to hold one as there is no proposal from the creditors on the table. While her Cartesian logic is perfect, it was difficult not to notice her malicious pleasure as she argued her case. But she fell from logical perfection when she added that the IMF was always there to help work out a settlement.

After the run on the banks in Greece last week, the European Central Bank decided not to pump money into Greek banks in quantities sufficient to take care of the run. This is unprecedented and is a clear violation of the rules of the game. Perhaps, the Bank did it to influence the referendum. Greek banks will remain closed for some days.

While the referendum is ostensibly about austerity, in reality it is about Greece’s continuance in the European Union. The Greeks want to remain within the EU, but the question is whether they are prepared to pay the painful price thereof. If the verdict is no to austerity, there will be no more money from the creditors. Even though Greece might be technically in the EU thereafter, as there is no provision for throwing out a member state, it will be out de facto.

We do not dare to predict the result of the referendum. If the people accept austerity, the creditors will impose such a Draconian variety of austerity, and the same people will reject it later in another referendum. If the people reject austerity, Greece will not pay the creditors and they can do nothing more to punish it. A prudent government in Athens might be secretly printing the old currency drachma. States have defaulted in the past and survived to recover solvency. Let us watch the markets. The argument that Greece accounts only for two per cent of the EU economy and can be pushed out without any collateral damage might prove to be naive. If the market punishes them, the creditors might be less unreasonable, if and when negotiations resume.

I was in Rome when the Euro was introduced in 1999. I remember the Representative of the German Central Bank telling me that it was a political decision to include Italy and Greece, a decision essentially flawed economically. I asked him whether there could be a single currency for a certain number of countries without a single treasury. He had no answer. Unless there is a miracle, we are witnessing the beginning of the end of the ‘ever closer’ union as mandated by the Maastricht Treaty of 1992. Meanwhile, the ‘perfidious Albion’ has asked for a revision of the treaty that might end up in a messy divorce.

It was the vision of Jean Monnet and others of an earlier generation that begat the European Coal and Steel Community when Europe was lying prostrate after World War II. Now, Europe is rich and industrially strong. The question is whether the successors of Monnet have the moral strength to move in the right direction rather than act like petty minded accountants who want to balance the books at any cost.

Views expressed are of the author and do not necessarily reflect the views of the IDSA or of the Government of India

Originally published by Institute for Defence Studies and Analyses (www.idsa.in) at http://idsa.in/idsacomments/IsitaGreekTragedyoraEuropeanOne_kpfabian_290615.html

The post Is It A Greek Tragedy Or A European One? – Analysis appeared first on Eurasia Review.

Local election result in Moldova show that Moldovans are disappointed in the Customs Union and do not want Russia as “a big brother,” according to Svetlana Gamova of “Nezavisimaya gazeta.” Instead, they highlight the continuing importance of geopolitics in Moldova and the fact that that country “has left Russia’s sphere of influence.”

In today’s paper, reporting on the Moldovan election results announced yesterday, Gamova, who head the Moscow paper’s “department on countries of the near abroad” said that the results showed that earlier public opinion polls had been wrong producing many unexpected results (ng.ru/cis/2015-06-30/1_moldavia.html).

In Chisinau, where a third of Moldovans live, a representative of the pro-European Liberal Party was elected mayor rather than the candidate of the pro-Russian Party of Socialists, a pattern that was repeated in smaller cities and towns across the country, according to the Moscow journalist.

“All Moldovan voters see Moscow as being behind the socialists,” she writes. “Last fall, when the leaders of the Socialist Party appeared on television meeting with Vladimir Putin in Moscow that helped them get into parliament and become the largest fraction.” But Russia’s failure to provide a market for Moldovan products has led to massive disappointment.

That disappointment in Moscow is so profound, local political analyst Andrey Andriyevsky says, that while some in Moldova may call for closer ties with Russia even in the future, “one can say with a great degree of certainty that these parties and politicians will no longer guide Moldova either at the local or the national level.”

According to him, “the Socialists made a mistake by constructing their program in parallel with the Soviet past and this played against them. Just as did their constant counterposing of Russian to the European Union. Moldovans were disappointed in the EU earlier,” but now they are disappointed in Russia.

Being disappointed in both, Viktor Stepaniuk of the Popular Socialist Party says, “Moldovans today want to remain between the unions (east and west) and at the same time work with the one and the other.” That reflects the fact that “in every Moldovan family there is someone working in Italy or Spain and someone else working in Russia.”

To the extent he is right, that would suggest that while Moldova indeed has left Russia’s sphere of influence, it has not yet joined the EU’s, largely because the latter has not reached out to it and helped integrate its economy with the Western one.

The post ‘Moldova Has Left Russia’s Sphere Of Influence,’ Nezavisimaya Gazeta Says – OpEd appeared first on Eurasia Review.

Cambodia and the “Belt and Road”

In a conference on Sino-Cambodian cooperation held in June 2015, Bu Jianguo, China’s ambassador to Cambodia, identified Cambodia as being located on China’s 21st Century Maritime Silk Road development plan, and affirmed China’s readiness to bring Sino-Cambodian economic cooperation under the “Belt and Road” development framework. In response, Cambodian Deputy Prime Minister Sok An confirmed the economic opportunities to Cambodia offered by participation in the “Belt and Road,” especially those opportunities arising from the development of infrastructure for trade and investment.1 As we shall see, China already has a significant presence in Cambodia’s recent economic development, and with China bringing Cambodia into its “Belt and Road” development framework, not only will China’s existing projects in Cambodia also be brought under the “Belt and Road,” further megaprojects in transportation and energy infrastructure development can also be expected.

The Deep History of the Chinese in Cambodia

Cambodia’s relations with China long predate this recent phase of active Chinese engagement in the country’s economic development. Indeed, Chinese influence can be seen as far back as the Cambodian empire of Angkor, whose monarchs and people Cambodians today identify as their powerful ancestors.2 Archeologists and historians have learned that the culture of Angkor was hybrid and cosmopolitan, echoing the hybrid and cosmopolitan culture of today’s Phnom Penh. Apart from the indigenous culture of the ancient Khmer people, Angkor’s culture was also strongly influenced by the culture and traditions of the powerful empires of India and China.3 Chinese influence continued to be present in the post-Angkorean Khmer kingdoms, as the Khmer monarchs, recognizing that multiculturalism reflected their realm’s strength, allowed settlers from China and elsewhere to maintain their culture.4 The Chinese community in Cambodia has since grown to a population of over 300,000.5

Cambodia and the People’s Republic of China officially established diplomatic relations in 1958.6 In the late 1960s Sino-Cambodian relations declined following the Cultural Revolution in China, with Cambodian leader Norodom Sihanouk suspecting Chinese schools in Cambodia of seditiously spreading Mao Zedong Thought.7 During the genocidal Democratic Kampuchea period, despite the presence of Chinese experts sent by Beijing to support the Khmer Rouge revolution, many Chinese families were murdered due to their pre-revolutionary capitalist activities, and the survivors quickly learned they had to pretend to be Khmer in order to survive.8 It was only in the 1990s, following the transition of Cambodia from socialism to capitalism that Cambodia’s Chinese dared to reassert their cultural identity.9 This reassertion of identity has blossomed into confident displays of Chinese ethnic pride following the influx of Chinese investment into Cambodia.10 Echoing this increased economic engagement, Sino-Cambodian diplomatic relations were upgraded to a comprehensive strategic partnership in 2010.11 While the increased visibility of Chinese cultural and economic activity in Cambodia has triggered Sinophobic sentiment among some Khmer, other Khmer, especially entrepreneurs seeking to do business with their Chinese counterparts, have sought to learn Mandarin, prompting the emergence of Chinese language schools in Phnom Penh.12

For its part, China’s expanded engagement in Cambodia reflects changes in its economic development. After over three decades of double-digit growth, China has entered a “new normal” of single-digit growth.13 The “Belt and Road” development framework is intended to stimulate economic growth in China and its partner economies in regions like South and Southeast Asia, Eurasia and Central Asia, Africa, and Latin America, through the economic multiplier effects arising from the construction and subsequent use of infrastructure megaprojects in sectors like energy and transportation.14

Military Cooperation

In a meeting in May 2012 between Cambodian Deputy Prime Minister and Defense Minister Tea Banh and his Chinese counterpart, Defense Minister Liang Guanglie, China reaffirmed its commitment to military cooperation with Cambodia by providing military capacity building valued at 17 million USD to Cambodia’s armed forces, including the construction of military schools and hospitals. In turn, Cambodia reaffirmed its adherence to Beijing’s One-China Policy as well as Cambodia’s support for China in international affairs including the South China Sea dispute.15 This relationship of mutual benefit was reaffirmed two years later in May 2014 when Tea Banh met with Xu Qiliang, the vice chairman of the Chinese Central Military Commission. At this meeting, China’s military capacity building for Cambodia was expanded to include over 400 scholarships for Cambodian military officers to further their studies in China.16 As part of China’s military assistance, China has also provided Cambodia with equipment like military trucks and Harbin Z-9 helicopters.17

China’s military support for Cambodia is best reflected in the development of the Army Institute. In 1999 the Army Institute at Thlok Tasek was established with Chinese financial assistance, and since then China has continued to improve and expand the institute’s training facilities. In January 2013, for example, the Chinese-Cambodian Friendship Infantry Institution, an extension of the Army Institute, was established to provide training for Cambodian infantry personnel from Chinese military advisors. In 2009 the Army Institute began a 4-year training program for officer cadets identified for key leadership positions in the military hierarchy. The curriculum was designed by the Chinese defence ministry and Chinese military advisors guide the Cambodian instructors. The curriculum also includes semesters overseas in Chinese military academies. The Army Institute has now trained about half of Cambodia’s officer corps.18

China’s military assistance to Cambodia does not exclude Cambodia from receiving military assistance from other donor countries. The US had traditionally been the largest provider of military aid to Cambodia, and such military aid from the US amounted to 18.2 million USD in 2012. Indeed, in the 1990s General Hun Manet, Cambodian Prime Minister Hun Sen’s eldest son, received military training at the prestigious US military academy at West Point. US-Cambodian military cooperation has occasionally been affected by political controversies. Cambodia’s 2009 deportation of Uighur asylum seekers to China, for example, led the US to cancel a donation of 200 military vehicles. In 2013, US criticism of the Cambodian general elections led Cambodia to suspend military cooperation. Chinese military and economic assistance has allowed Cambodia to weather such downturns in US-Cambodia relations.19

Economic Cooperation

China is currently Cambodia’s largest aid donor. Between 1992 and 2014 China granted Cambodia 2.85 billion USD in concessional loans and other development aid, and in November 2014, Chinese President Xi Jinping pledged that China would supply Cambodia with annual development assistance worth 500-700 million USD per annum.20 The rehabilitation of old and the construction of new transportation infrastructure is a good example of Chinese development assistance in Cambodia. By 2011 China had constructed over 1,500 km of roads and bridges in the country, and the expansion of Cambodia’s transportation network hasn’t stopped.21 National Road No. 41, which was opened in June 2015, is a good example. The two-lane road, which connects four of Cambodia’s southern provinces—Kampong Speu, Kandal, Takeo and Kampot—was constructed by China Road and Bridge Corporation at a cost of 46 million USD, which was paid for with a concessional loan from the Chinese government.22

Bilateral trade between China and Cambodia has also increased over the years, reaching 3.75 billion USD in 2014. The Cambodian government expects trade to increase to 4.21 billion USD in 2015 and 5 billion USD by 2017. China has also become Cambodia’s largest investor, with over 10 billion USD in cumulative investments. The bulk of the investments are in the agriculture, infrastructure, garments, and mining sectors. In May 2015, Hun Sen called on the Chinese government to further encourage Chinese firms to explore investment opportunities in Cambodia, especially in the Sihanoukville special economic zone.23

The increase in Chinese economic engagement in Cambodia has led to criticism of the Cambodian government. Cambodia’s Minister for Commerce Sun Chanthol has offered the following illustration to explain the Cambodian government’s willingness to accept Chinese aid and investment:

“Let me put it this way. Let’s say, you have been starving, you’ve had nothing to eat for 30 days, or 30 years in the case of Cambodia, then comes this Chinese guy with a bowl of fried rice for you and says, ‘You are hungry; here is fried rice for you.’ And then, you hear another guy who says, ‘Don’t eat. Why do you eat fried rice from the Chinese?’ I would say to this guy, ‘You give me a Big Mac. If you give me an alternative—Big Mac versus fried rice—then I have a choice. But if you don’t provide me with the Big Mac when I’m starving and you tell me not to eat the rice, then I’m sorry, [I can’t do that].’ And that is why we go to China for funding. We want funding. That’s why we borrow from China, from Korea, from Japan, from ADB, from the World Bank. Money doesn’t have any color for us, as long as we can borrow and build our infrastructure and improve our country.”24

Fair Exchange?

Some of the criticisms arise from the perception that Cambodia is willing to override its international obligations in exchange for Chinese largesse. A good example is the aforementioned deportation back to China in 2009 of twenty Uighurs who had arrived in Cambodia to seek asylum from China, as this deportation violated Cambodia’s international obligations on non-refoulement under the UN Convention on Refugees, the UN Convention on Torture, and other international agreements that Cambodia is signatory to. The perception that this was a quid pro quo stems from the timing of China’s grant to Cambodia—just a day after the Uighurs were repatriated—of 1.2 billion USD in aid, an amount which exceeded the cumulative aid from China over the previous 17 years.25

Cambodia has offered support for China in other areas as well. In the South China Sea dispute, Cambodia has backed China’s call for bilateral negotiations over competing claims in the South China Sea, setting itself against Vietnam’s and the Philippines’ calls for negotiations in multilateral frameworks like ASEAN. In July 2012, Cambodia, using its position as chair of the 21st ASEAN summit, controversially blocked ASEAN from issuing a joint communiqué on the South China Sea dispute. Most recently, in May 2015 Cambodia held a meeting with diplomats from 28 countries where it reiterated its position that ASEAN should not intervene in the South China Sea dispute.26 Cambodia has also acted in support of Beijing’s One-China policy. In 1997 Cambodia shut down the Taipei Economic and Cultural Office in Phnom Penh, and China reciprocated by donating 2.8 million USD worth of military vehicles to Cambodia. In 2003 Hun Sen reaffirmed that Taiwan would not be allowed to reopen its representative office in Cambodia.27 Most recently in June 2015, Cambodia acted in support of China’s anticorruption “Sky Net” campaign when it arrested and repatriated to China an economic fugitive who had been taken up residence in Kampong Speu province.28

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Notes:
1. “China’s Belt and Road initiative to provide new opportunities to further enhance Sino-Cambodian ties,” Xinhua, June 27, 2015, accessed June 28, 2015, http://www.khmertimeskh.com/news/12642/china-s-belt-and-road-initiative-to-provide-new-opportunities-to-further-enhance-sino-cambodian-ties/.

2. Alvin Cheng-Hin Lim, Cambodia and the Politics of Aesthetics (New York: Routledge, 2013), 57.

3. Steve Heder, “Cambodia,” in Language and National Identity in Asia, ed. Andrew Simpson (Oxford: Oxford University Press, 2007), 290. Ian Mabbett and David Chandler, The Khmers (Oxford: Blackwell, 1995), 114-116. Alvin Cheng-Hin Lim, “Hybridity as Heterochrony,” World Futures: The Journal of New Paradigm Research 70 (2014): 491-492.

4. Heder, “Cambodia,” 292.

5. Penny Edwards, “Ethnic Chinese in Cambodia,” in Ethnic Groups in Cambodia, ed. Hean Sokhom (Phnom Penh: Center for Advanced Study, 2009), 174.

6. “Chinese, Cambodian senior officials meet to further enhance bilateral ties,” Xinhua, June 26, 2015, accessed June 28, 2015, http://www.ecns.cn/2015/06-26/170791.shtml.

7. Heder, “Cambodia,” 300.

8. Penny Edwards, “Sojourns Across Sources: Unbraiding Sino-Cambodian Histories,” Cross-Currents: East Asian History and Culture Review 4 (2012): 127-130. Andrew Mertha, Brothers in Arms: Chinese Aid to the Khmer Rouge, 1975–1979 (Ithaca: Cornell University Press), 4-9.

9. Edwards, “Ethnic Chinese,” 175. Alvin Cheng-Hin Lim, “Cambodia Rising: Neoliberal Violence and Development,” JATI: Journal of Southeast Asian Studies 18 (2013): 62-63, accessed June 28, 2015, http://www.myjurnal.my/public/article-view.php?id=75075.

10. Heder, “Cambodia,” 309. Pál Nyíri, “Investors, Managers, Brokers, and Culture Workers: How the ‘New’ Chinese Are Changing the Meaning of Chineseness in Cambodia,” Cross-Currents: East Asian History and Culture Review 4 (2012): 94.

11. “Chinese, Cambodian senior.”

12. Heder, “Cambodia,” 309. Michiel Verver, “Templates of ‘Chineseness’ and Trajectories of Cambodian Chinese Entrepreneurship in Phnom Penh,” Cross-Currents: East Asian History and Culture Review 4 (2012): 31-32. Neou Vannarin and Colin Lovett, “In Cambodia, English Classes More Popular Than Chinese,” VOA, June 9, 2015, accessed June 28, 2015, http://www.voanews.com/content/in-cambodia-english-classes-more-popular-than-chinese/2813254.html.

13. Alvin Cheng-Hin Lim, “China’s Transition to the ‘New Normal’: Challenges and Opportunities,” Eurasia Review, April 2, 2015, accessed June 28, 2015, http://www.eurasiareview.com/02042015-chinas-transition-to-the-new-normal-challenges-and-opportunities-analysis/.

14. Alvin Cheng-Hin Lim, “‘Iron Brothers’: Sino-Pakistani Relations and the China-Pakistan Economic Corridor,” Eurasia Review, May 7, 2015, accessed June 28, 2015, http://www.eurasiareview.com/07052015-iron-brothers-sino-pakistani-relations-and-the-china-pakistan-economic-corridor-analysis/. Alvin Cheng-Hin Lim, “China and the Eurasian Economic Union: Prospects for Silk Road Economic Belt,” Eurasia Review, May 14, 2015, accessed June 28, 2015, http://www.eurasiareview.com/14052015-china-and-the-eurasian-economic-union-prospects-for-silk-road-economic-belt-analysis/. Alvin Cheng-Hin Lim, “Latin America And China’s ‘New Normal,’” Eurasia Review, May 28, 2015, accessed June 28, 2015, http://www.eurasiareview.com/28052015-latin-america-and-chinas-new-normal-analysis/. Alvin Cheng-Hin Lim, “Africa and China’s 21st Century Maritime Silk Road,” The Asia-Pacific Journal 13 (2015), accessed June 28, 2015, http://japanfocus.org/-Alvin_Cheng_Hin-Lim/4296.

15. “Cambodian, Chinese defense ministers ink military cooperation pact,” Xinhua, May 28, 2012, accessed June 28, 2015, http://news.xinhuanet.com/english/china/2012-05/28/c_131615180.htm. Sok Serey and Joshua Lipes, “China Provides Military Aid to Cambodia,” RFA, May 29, 2012, accessed June 28, 2015, http://www.rfa.org/english/news/cambodia/aid-05292012165100.html.

16. “Cambodia, China pledge to boost military ties,” Xinhua, May 9, 2014, accessed June 28, 2015, http://news.xinhuanet.com/english/china/2014-05/09/c_133321370.htm. Vong Sokheng and Daniel Pye, “Chinese training for Cambodian soldiers,” Phnom Penh Post, May 12, 2014, accessed June 28, 2015, http://www.phnompenhpost.com/national/chinese-training-cambodian-soldiers.

17. Vong and Pye, “Chinese training.” Vong Sokheng, “China steps up military aid,” Phnom Penh Post, January 24, 2013, accessed June 28, 2015, http://www.phnompenhpost.com/national/china-steps-military-aid.

18. Vong, “China steps up.” Vong Sokheng, “PM Hun Sen chastises RCAF for unprofessionalism,” Phnom Penh Post, January 25, 2013, accessed June 28, 2015, http://www.phnompenhpost.com/national/pm-hun-sen-chastises-rcaf-unprofessionalism. Aubrey Belford and Prak Chan Thul, “Chinese influence in Cambodia grows with army school, aid,” Reuters, April 2, 2015, accessed June 28, 2015, http://www.reuters.com/article/2015/04/02/us-cambodia-china-military-idUSKBN0MT0SW20150402.

19. Belford and Prak, “Chinese influence.” Vong, “China steps up.”

20. Vann Vichar and Roseanne Gerin, “China Pledges Multimillion-Dollar Development Aid to Cambodia,” RFA, November 10, 2014, accessed June 28, 2015, http://www.rfa.org/english/news/cambodia/chinese-development-aid-11102014171429.html.

21. Julio A. Jeldres, “Cambodia’s Relations with China: A Steadfast Friendship,” in Cambodia: Progress and Challenges Since 1991, ed. Pou Sothirak, Geoff Wade, and Mark Hong (Singapore: Institute of Southeast Asian Studies, 2012), 91.

22. “Cambodia inaugurates China-funded road running through 4 provinces,” Xinhua, June 2, 2015, accessed June 28, 2015, http://www.globaltimes.cn/content/924916.shtml.

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The two subcontinent nuclear powers, Pakistan and India, have been recently involved in a war of words and words of war which has reopened the debate on South Asia’s nuclear and strategic stability. Predominantly, three official statements from India in a scorching ‘June’ have further inflamed the traditional tensions between the two nuclear neighbors. Pragmatically, beyond the strained relations, statements also advocate few confines of military threats, limited war and conventional deterrence posture in the South Asia region.

Back in the first weeks of June, Indian Defense Minister Manohar Parrikar, shared his strayed thought to “neutralize terrorists through terrorists only” as a retort to another attack on India by Pakistan-based non-state actors. Notwithstanding the well-known verbal diarrhea of Parrikar for making controversial statements, it proved a shocking development. His remarks were later followed by ndian PM Narendra Modi’s acknowledging statement in Dhaka about India’s intervention in the breakup of East Pakistan in 1971. He applauded the Indian military involvement in the events of 1971 and admired India’s triumph in the conception of Bangladesh.

These blatant official statements from India establish two distinct and cogent understandings. First, and widely discussed, it affirms Pakistan’s accusation that India is infiltrating terrorism on its land and intensifying its fight to counter terrorism. Evidently, it was not the first time that someone from India explicitly advocated the use of terrorism in the neighboring state for the alleged reason of averting terrorism from that state. Before Parrikar and Modi, in the middle of April, former Indian Army Chief VK Singh and former Delhi Police commissioner Neeraj Kumar shared a few ‘considerations’ while discussing 26/11 at a book release event. Kumar said that at one time a ‘plan was conceived to get a certain gentleman in Pakistan, which also included the use of non-state actors for the mission and all preparation were done for it but plan was not avenged because of political leadership ’. Singh supported the Kumar statement by adding “given a task it (India) will execute it in a much better manner than the Americans did (referring to US operations to kill Osama Bin Laden)”. Such blunt disclosures from India settle a stern impression that India does not want stability in Pakistan and the deteriorated law and order situation, especially in Balochistan and Karachi, is a reflection of the Indian mindset.

Second, and a subtle understanding, is that most likely India has diverted to exercise sub-conventional techniques because it inadvertently recognizes the inefficacy of its conventional deterrence posture to frighten Pakistan. Although in the last year referring to the Kashmir scuffle, the Indian defense minister warned Pakistan, “our conventional strength is far more than theirs and therefore if they persist with this, the cost to them would be unaffordable”, yet the effectiveness of India’s conventional deterrence is questionable. Viewing back in the aftermath of the terrorist attack on the Indian Parliament in 2001, India unveiled the Sundarji doctrine. Operation Parakram was launched with offensive and defensive formations of the Army being mobilized along the Pakistan-India border, with endeavors to coerce Islamabad to start an operation against jihadi outfits and react aggressively against any emergency on the border. However, the Sundarji doctrine faltered due to dawdling Indian mobilization that permitted Pakistan to mount its own reaction and beat Indian strategic designs. After the failure of the operation Parakram, India announced a new limited war ‘Cold Start’ doctrine in 2004. The new Cold Start doctrine was resultantly aimed to mobilize quickly the eight division-sized armed battle groups towards Pakistan and to exterminate Pakistani armed forces before they could accumulate a response. Conversely, with Pakistan’s retort to use tactical weapons against such advancements and a wide critique on the Cold Start in India as critically escalatory, question marks were raised as to the Cold Start’s capability to deter Pakistan.

In the second week of June, following the surgical attacks inside Myanmar conducted by Indian forces as a reaction to a militant attack on an Indian military convoy, India termed it “a message for all countries, including Pakistan.” Indian Minister for Information and Broadcasting Rajyavardhan Singh asserted to “carry out surgical strikes at the place and time of our own choosing”. Pakistan’s Interior Minister retorted, “India should not mistake Pakistan for Myanmar, our armed forces are fully capable of responding to any foreign aggression”.

Apparently, Modi’s establishment boasts the aggressive posture towards Pakistan and seeking a strategic space to start a limited war with Pakistan, yet realistically, Indian military capacity to conduct a major attack against Pakistan is debatable. Any raid by Indian forces inside Pakistan would risk a nuclear war in South Asia as Pakistan nuclear policies are crafted exclusively to counter any aggression from one neighboring state, unlike India who has to balance its conventional and nuclear capabilities for two nuclear neighbors. Over the past, in the aftermath of the Mumbai Attack, India’s inclination to launch a quick strike against Pakistan was called off viewing the “poor state of armory, both ammunition and artillery”. Yet again in 2012, the Indian Army Chief painted a “grim and indeed alarming” picture of their operational capabilities in his letter to PM. The critical shortfall in ammunition reserves repetitively revealed in 2014 that India does not have enough ammunition to launch a full-blown war for even 20 days. Lately, the Comptroller and Auditor General (CAG) of India reported that country continues to face the severe ammunition shortage which is adversely impacting the operational readiness.

In the wake of all these realities, India’s belligerent statements serve more the purpose of verbal strokes than a valid schema. The stern response by Pakistani establishment to each statement substantiates the lack or true Indian conventional and nuclear threats to deter Pakistan. Nonetheless, by avoiding such futile confrontational statements in the future, India should recognize the danger of nuclear escalation in a limited conflict between the two nuclear armed states, which will take the lifes of more than 20 million people and make the South Asian land barren for years to come.

*The writer is a member of an Islamabad based think-tank, Strategic Vision Institute (SVI) and can be reached at maimuna.svi@gmail.com

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