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Competing Pacific narratives


Author: Joanne Wallis, ANU

Two narratives dominated geopolitical discussions of the Pacific islands in 2018 — that of the Blue Pacific and the Indo-Pacific.

The former was first articulated at the 2017 Pacific Islands Forum Leaders Meeting. It seeks to strengthen the assertion of Pacific island states’ autonomy and agency so that they can better harness the region’s strategic value on their own terms and chart their own development paths.

Australia's Prime Minister Scott Morrison is hugged by a woman as he greets locals at the opening of a new building at the University of Papua New Guinea after the Asia Pacific Economic Cooperation forum in Port Moresby, Papua New Guinea, 18 November 2018 (Reuters/Mick Tsikas).

The latter is used by Australia, the United States, Japan and Indonesia to link the Pacific and Indian Oceans as their region of strategic interest. Pacific island states are wary that this approach poses the ‘risk of privileging Indo over the “Pacific”’ and of characterising Pacific island states as pawns in a geopolitical power struggle with China.

Driven by perceptions of mounting geopolitical competition in the Indo-Pacific, New Zealand sought to bolster its role in the Pacific islands by announcing its principles-based ‘Pacific reset’ in March 2018. This was followed by a more muscular approach in its July Strategic Defence Policy Statement. Australia also built on its ‘step up’ that it announced in 2017.

Although both Australia and New Zealand have tried to avoid explicitly linking their stepped-up engagement with China’s increased presence in the region, a report in April 2018 that China was in talks to build a military base in Vanuatu generated ‘great concern’ in Australia. Vanuatu’s Foreign Minister Ralph Regenvanu denied and criticised the report and the Chinese government described it as ‘ridiculous’.

That China’s spending in the Pacific islands has significantly increased is undeniable. There are claims that China will overtake Australia as the region’s largest donor. China committed US$4 billion for the 2017 calendar year compared to Australia’s US$815 million for the 2017–18 financial year.

Sixty-seven per cent of China’s aid comes as loans, rather than direct grants. In August 2018, Tongan Prime Minister Akilisi Pohiva called on China to write off the region’s debts due to the difficulty Pacific island states will have servicing them. There are concerns that Pacific island states may succumb to ‘debtbook diplomacy’ and be forced to give China land or resources if they are unable to service these loans. But while debt distress is a problem, most debt is held domestically with only Tonga under debt distress from significant Chinese loans.

Despite being disproven, the narrative of ‘debt-trap diplomacy’ continues to be repeated in commentary on the region, exemplifying how traditional partners such as Australia, New Zealand and the United States look at the Pacific islands through the lens of geopolitical competition in the Indo-Pacific. But Pacific island states are acting in increasingly assertive and creative ways to pursue the interests of the Blue Pacific. The debt-trap diplomacy narrative also incorrectly assumes that Pacific island states will share the geopolitical perspective of these traditional partners. Much of the region views Chinese finance as a positive development.

The Pacific Islands Forum Leaders Meeting in Nauru in September 2018 exemplified efforts by Pacific leaders to foreground the interests of the Blue Pacific. The Boe Declaration on Regional Security affirmed that climate change ‘remains the single greatest threat’ to the region and articulated an expanded concept of security that includes human security, humanitarian assistance and environmental security.

Chinese diplomatic assertiveness was evident at the APEC summit in Port Moresby in November 2018. President Xi Jinping visited the leaders of the eight Pacific island states that recognise China. Several signed renewed strategic partnership agreements with China, and Tonga and Vanuatu joined Papua New Guinea (PNG), Fiji and Samoa as signatories to China’s Belt and Road Initiative.

But two major announcements stole China’s thunder at APEC. Australia, New Zealand, the United States and Japan agreed to bring electrification to 70 per cent of the PNG population. Australia and the United States will also partner with PNG to develop a joint naval base on Manus Island.

Sitting behind these geopolitical machinations were significant domestic developments. The first was the referendum on New Caledonia’s political future on 4 November 2018. The result (56.4 per cent rejected independence) was much closer than most commentators had predicted. The outcome has encouraged independence activists from the Kanak and Socialist National Liberation Front, with leader Jean-Raymond Postic describing it as a ‘semi-victory’. It also suggests that the next two referenda, scheduled for 2020 and 2022, may be close — particularly as demographic change could increase the size of the Kanak population eligible to vote.

The second major development was the Fiji general election held on 14 November 2018. This also delivered a closer result than predicted. In 2014 Frank Bainimarama’s Fiji First party won by a landslide, securing nearly 60 per cent of the vote. In 2018 Fiji First won again, but with only 50.02 per cent of the vote.

2019 is likely to be an equally busy year for the Pacific islands. Another referendum is scheduled, this time on the political future of PNG’s Bougainville region. There is another key general election too, this time in the Solomon Islands. The Solomon Islands recognises Taiwan and competition with China for influence over local politicians is said to be affecting election preparations.

Competition for influence across the region among external powers is unlikely to abate. The challenge for 2019 is to ensure that the narratives of the Blue Pacific and the Indo-Pacific do not talk past each other. The Pacific islands must be brought into conversations about the geopolitics of their own region.

Joanne Wallis is Senior Lecturer in the Strategic and Defence Studies Centre, The Australian National University.

This article is part of an EAF special feature series on 2018 in review and the year ahead.

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Hong Kong escapes the eye of the trade war storm


Author: Edward K Y Chen, The University of Hong Kong

The coming year will be a challenging one for developed and emerging economies alike. Negotiating geopolitics is proving difficult for economies across the world, with the impacts of the US–China trade war reaching far beyond the two countries concerned.

A panel outside a bank displays the Hang Seng Index during morning trading in Hong Kong, 12 October 2018 (Reuters/Bobby Yip).

The direct impact of the trade war on Hong Kong is small. US–China entrepot trade via Hong Kong in 2017 was just 9 per cent of Hong Kong’s total export and import trade. The majority of the items included in the trade war also do not pass via Hong Kong. But Hong Kong is feeling the conflict’s indirect effects, with a deteriorating business environment discouraging investment and disrupting business planning and development.

More importantly, any slowdown of the Chinese economy would reduce demand for Hong Kong’s banking and finance, professional and logistics services. If the trade war escalates, Chinese demand for raw materials and semi-manufactured goods will also fall, affecting Hong Kong’s re-exports to China from countries other than the United States.

The world economy will grow at a lower rate than expected in 2019. In addition to the US–China trade war, issues related to Brexit, currency crises in some emerging economies and a change in monetary policy in the United States are impacting global growth figures. The International Monetary Fund’s most recent forecast for global economic growth is 3.5 per cent, lower than the 3.7 per cent predicted earlier this year.

Some economists are also warning of a possible financial crisis or at least increased financial risks as a decade of quantitative easing comes to an end. Interest rates are on the rise, and emerging economies are experiencing the consequential capital outflows.

Some doubt whether the world is more prepared to cushion financial risks than in 1997–98 or 2007–08. Even under the linked exchange rate, the Hong Kong government was forced to intervene to defend its dollar in 2018. Though Hong Kong’s robust monetary system and prudent supervision should be able to keep the country out of financial crisis, the hiking of interest rates and a deteriorating business environment have triggered adjustments in the stock and property markets. Irrespective of whether such adjustments should be made for market corrections, domestic consumption will likely decrease due to the adverse wealth effect.

The silver lining for Hong Kong is favourable geo-economics in the region. The Hong Kong–ASEAN free trade agreement that was concluded in November 2017 is proving particularly significant. Despite the fact that the agreement will not be enforced until early 2019, Hong Kong–ASEAN economic interactions are already on the rise. In the first three quarters of 2018, Hong Kong’s domestic exports to ASEAN (its second largest trading partner after mainland China) increased by 7.3 per cent and imports by 20.1 per cent year-on-year. Hong Kong also serves as ASEAN’s stepping stone to China, with 599 ASEAN companies established in Hong Kong as of June 2018.

Another favourable development is the formation of the Greater Bay Area, which includes nine Guangdong cities plus Hong Kong and Macau. The Bay Bridge linking Zhuhai, Macau and Hong Kong was opened in October 2018, bringing Hong Kong more Chinese tourists and businesses. In the long run, the bridge will play a key role in facilitating the development of the Greater Bay Area.

The Greater Bay Area reflects a push towards a common market with free flows of human and capital resources, goods and services and information. The major opportunity for Hong Kong is synergy with Guangdong cities such as Shenzhen, Zhuhai and Guangzhou in innovation and technology. Hong Kong may also see an opportunity to establish bridgeheads in Guangdong cities in health care and educational services.

Domestic investment and consumption remained strong in Hong Kong in 2018, a trend that is expected to continue into 2019. The government has significantly increased expenditure on education and is committed to investing an additional HK$20 billion (US$2.6 billion) in research and development. Another HK$20 billion has been put aside for the longer term development of the Lok Ma Chau Technology Loop adjacent to Shenzhen.

Private consumption is supported by near full employment (the unemployment rate was 2.8 per cent in the third quarter of 2018). The demand for professional, business and financial services from mainland China and elsewhere has been strong, which will continue unless US­–China relations further deteriorate or global financial risks increase.

Assuming that a short-term solution to the US–China trade war will be achieved following the 90-day truce, and that Federal Reserve interest rate increases will be milder than expected, Hong Kong should be able to attain 3 per cent GDP growth in 2019 — slightly higher than the past 10-year trend of 2.9 per cent. This would be still lower than the 3.8 per cent achieved in 2017 and the estimated 3.2 per cent expected for 2018. But given the current state of play, 3 per cent may be a figure to cheer about.

Edward K Y Chen is Chairman of the Board of Directors at the School of Professional and Continuing Education, The University of Hong Kong.

This article is part of an EAF special feature series on 2018 in review and the year ahead.

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Can investor engagement revive Japanese corporations?


Authors: Steven Vogel, University of California, Berkeley and Takashi Asano, Tokyo Metropolitan University

Japanese corporate governance is back in the news — and not in a good way — with the dramatic arrest of Nissan CEO Carlos Ghosn for financial misconduct. But this singular case should not be taken as an indictment of Japanese corporate governance more broadly. New York Times coverage of the unfolding CBS scandal offers a portrait of executive entrenchment eerily similar to that reported at Nissan: ‘A culture where this behavior could have gone unchecked for so long with so much knowledge is really troubling’, noted one source. ‘This is a disaster for CBS shareholders’.

Japanese Prime Minister Shinzo Abe toasts with Japanese business group leaders Yoshimitsu Kobayashi of Japan Association of Corporate Executives, Akio Mimura of Japan Chamber of Commerce and Industry and Hiroaki Nakanishi of Keidanren (Japan Federation of Economic Organization) at a business leaders' New Year party at a Tokyo hotel. Some 1800 business leaders attended the New Year party, 7 January 2019 (Photo: Reuters/Yoshio Tsunoda).

Japanese corporations have been actively reforming their governance over the past few years, appointing multiple outside directors and establishing nomination and compensation committees.

Most recently, the Tokyo Stock Exchange revised the Corporate Governance Code and the Financial Services Agency announced guidelines for investor–company engagement in 2018. Japanese companies are responding with further reorganisation of their boards.

But are these reforms changing corporate governance in practice?

Japanese corporations are targeting something between the traditional Japanese model and the US model. The former relied on long-term relationships with employees, banks and business partners. The main bank would monitor company performance and intervene if performance deteriorated. This allowed executives to manage for the long-term without being distracted by short-term results, but it also meant that they were under less pressure to improve financial performance.

The US model favours shareholder capitalism, whereby corporations seek to maximise returns for investors. With dynamic labour and mergers and acquisitions (M&A) markets, managers risk replacement or hostile takeover if corporate returns falter. Institutional investors can deploy exit (selling off shares) or voice (demanding reforms) to discipline companies. The US model puts more pressure on managers, but it can also foster short-termism.

The corporate governance reforms in Japan aim to promote constructive dialogue between investors and companies. But will investor engagement really discipline management? Prospects are dim, for two reasons.

First, passive fund engagement cannot be counted on. Passive asset management, which seeks to give investors stable returns by investing in funds linked to stock market indexes, has been booming. Article 4-2 of the revised Stewardship Code urges passive fund managers to engage with companies. But it is not realistic to expect passive investment funds to engage with companies since they invest based on stock indexes. They would serve their clients better by forgoing engagement and lowering management fees than by engaging with companies to improve the long-term performance of particular stocks.

Some reformers propose collective engagement by multiple institutional investors, but it seems unlikely that such arrangements will take off. Japan’s Government Pension Investment Fund calls for new business models from passive funds, including investor engagement, but this has not produced any specific proposals to date.

Second, active investor engagement cannot be counted on either. Active investment managers strive to achieve returns higher than the stock indexes by investing in particular stocks based on their own research, so they have a stronger incentive to engage with companies. But many still forego engagement and just rely on short-term trading to achieve returns that will justify their management fees. And when active investment managers do engage with companies, they often press for higher dividends or share buybacks to boost share prices in the short term rather than for long-term growth.

Foreign investment can contribute to the dynamism of Japanese equity markets and the growth of the economy. If foreign institutional investors feel that Japanese companies are not transparent and do not value shareholders, then Japanese companies need to address those concerns.

But they should not do so by adopting the US model. Scholarly research demonstrates that the core features of the US model — such as stock options, share buybacks and outside directors — do not necessarily contribute to corporate value in the long term. Too much emphasis on shareholder returns can come at the expense of the broader range of stakeholders.

Instead, Japanese companies should update and improve the Japanese model of corporate governance. They should promote investor engagement aimed at raising corporate value rather than short-term returns. They should strengthen accounting and auditing functions, and improve procedures for the selection, replacement and training of top managers. And they should reinforce relations with stakeholders, including employees and business partners.

Steven K Vogel is Professor of Political Science at the University of California, Berkeley. You can follow him on Twitter at @StevenKVogel.

Takashi Asano is Professor of Accounting and Finance at Tokyo Metropolitan University. You can follow him on Twitter at @takasano128.

An earlier version of this article appeared in Japanese in Kigyou Kaikei.


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Can Cambodian foreign policy find its feet?


Author: Chheang Vannarith, Cambodian Institute for Cooperation and Peace

Amid shifting global power dynamics and intense pressure from the West, Cambodia’s foreign policy strategy in the coming years will aim to diversify its external relations, with a focus on South and East Asian countries. But in practice Cambodia still struggles to implement an effective foreign policy, stymied by institutional weaknesses. Without much-needed reform, Cambodia’s weak international presence may persist.

Cambodia's Prime Minister Hun Sen arrives at the ASEM leaders summit in Brussels, Belgium 18 October 2018 (Photo: Reuters/Piroschka van de Wouw).

The rumour that China is eyeing a naval base in Cambodia’s Koh Kong province is stirring public debate both inside and outside the country. US Vice President Mike Pence has raised concerns directly with Prime Minister Hun Sen on the issue.

The Cambodian government has repeatedly stressed that it does not intend to align with any major power, nor will it ever allow any foreign military base on its soil, because it adheres to a foreign policy stance of permanent neutrality and non-alignment. Despite these assurances, international media and observers still tend to portray Cambodia as a client state of China.

Such perceptions, which do not reflect the entirety of Cambodia’s foreign policy dynamics, damage the country’s international image and role. The tough measures taken by the European Union and the United States on Cambodia’s perceived ‘democratic backsliding’ partly reflect their own strategic interest in ensuring that Cambodia does not align itself too closely with China.

Facing unprecedented pressure from the West, Cambodia’s foreign policy options are constrained. There is a shared belief among Cambodia’s ruling elites that the European Union and the United States have double standards and treat Cambodia unfairly. They question why the European Union and the United States target Cambodia while Vietnam and Thailand still enjoy good relations with the West. And they question why Cambodia is attacked for forging close ties with China when other Southeast Asian countries are doing the same.

Such external circumstances force Cambodia to invest heavily in foreign policy. During the 41st Party Congress of the long-ruling Cambodian People’s Party in December 2018, foreign policy was highlighted as an area requiring more attention.

Cambodia’s foreign policy outlook is shaped by the unfolding power shifts in the Asia Pacific region and the implications of major power rivalry. As the world becomes a multipolar one, Cambodia is adjusting its foreign policy objectives and strategies accordingly. In this new world order, Cambodia’s ruling elites believe that the country’s foreign policy direction cannot be detached from that of the Asian powers.

Phnom Penh has signed only two strategic partnerships so far: one with China in 2010 and another with Japan in 2013. Cambodia views China and Japan as among its most important strategic partners, and ones that can be relied on to help Cambodia realise its vision of becoming a higher middle-income country by 2030 and high-income country by 2050.

Cambodia also gives strategic importance to ASEAN as crucial to furthering regional integration and helping Southeast Asian countries cushion against foreign intervention.

Diversifying strategic and economic partners has occupied Cambodian foreign policymakers for years. A lack of coordination among the relevant ministries — such as the Ministry of Foreign and International Cooperation (MOFAIC), Ministry of Commerce, Ministry of Economy and Finance, Ministry of National Defence and Council for the Development of Cambodia — remains a significant issue preventing Cambodia from achieving its diversification strategy. These ministries need to work together to implement a more robust foreign policy.

There is strong political will on the part of MOFAIC to develop and implement a more robust foreign economic policy but other government agencies do not seem prepared to come onboard. MOFAIC has taken a leadership role in negotiating the ‘Everything But Arms’ (EBA) initiative with the European Union, for instance, but this should ideally be done by the Ministry of Commerce.

Cambodia’s ruling elites are aware of the risks emanating from overreliance on a single or few countries for their survival. Hedging and diversification are recognised as important strategies, but implementation remains an issue. It will take a few more years for Cambodia to develop a concrete action plan, build institutional and leadership capacity, and strengthen institutional coordination and synergies between ministries.

The United States and the European Union should demonstrate more flexibility towards Cambodia to avoid the perception of unfair treatment. They should provide Cambodia with more options instead of forcing it to compromise its sovereignty. Multi-layered, multi-sectoral and multi-stakeholder engagement should be encouraged. As a small country, Cambodia needs expanded strategic space to manoeuvre.

Chheang Vannarith is Senior Fellow and Member of the Board at Cambodian Institute for Cooperation and Peace.

This article is part of an EAF special feature series on 2018 in review and the year ahead.

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The uncertainties of the average Indian voter


Author: Deepanshu Mohan, OP Jindal Global University

The results from the November 2018 Indian state elections in Chhattisgarh, Rajasthan, Madhya Pradesh and Mizoram have made the 2019 general elections a wide open race between the two national political parties, the Indian National Congress (INC) and the Bharatiya Janata Party (BJP).

A woman holds her child as she casts her vote at a polling station during state assembly elections in Mizoram, India, 28 November 2018 (Photo: Reuters/Jayanta Dey).

A year ago, it was difficult to imagine any credible political opposition rising to the incessant march of the BJP, which was winning one state after another under the Narendra Modi–Amit Shah duopoly. Today the situation is markedly different. The INC emerged victorious in the November elections, winning in three out of the four states — two of which were BJP governed states. Regional parties too formed pre-poll alliances to pose a credible threat to the BJP in states like Uttar Pradesh and Karnataka.

Such trends shed light on the mindset of the average Indian voter and the factors that may influence their decision in the upcoming national elections.

The state election results speak to the instinctive and democratic nature of the average Indian voter. They suggest that voters today would not hesitate to vote the ruling regime out if they felt it had done little over its four-year term to improve opportunities for economic mobility, lower inflation, increase social protection measures or boost economic security.

As a result of greater political awareness and discourse (thanks to social media and India’s mobile data revolution), more people are now voting and even the gender gap in voter turnouts has significantly reduced.

The average voter also seems less influenced by the wave of identity-based politics that was earlier (and is still) used to mobilise votes across groups. Parties may no longer see polarisation of political measures along religious, caste-based identity lines as a sustainable strategy to influence voter preferences.

At the same time, and more importantly, these trends indicate that the main political opposition must offer something that sets it apart from the BJP in its 2019 campaign. State election results, while indicative of the general mood of the public, may only partially shape voting behaviour in the upcoming general elections.

National elections require parties to present a long-term national vision and a coherent economic and political agenda. An alternative economic vision is critical to resolve the current state of the Indian economy, shaped by the catastrophic impact of centralised economic policymaking.

The draconian monetary experiment of demonetisation, followed by the centralised, ad-hoc implementation of the goods and services tax punctured the racing wheels of the Indian economy under the BJP. Poor handling of the public sector banking crisis (with rising non-performing assets and bad debt), a persistent decline in domestic investment levels and a protracted conflict with the central bank are only making matters worse.

In designing an alternative economic vision, there are at least four areas that India’s political parties need to work on to gain voters’ support.

The first involves improving the economic conditions of the agricultural class, which comprises more than 40 per cent of the workforce. Farmers need to be seen as micro-entrepreneurs who require better market access for their products and not higher minimum support prices or loan waivers. Promising a package of reforms that address the 5Ps (price, product, position, protection and profitability) and involve greater participation of the farming community in the drafting process could be one step in this direction.

The second major area in need of reform is access to basic social services, including education, healthcare, drinking water and sanitation, financial credit and legal aid. Regional parties in states with better performance in this regard can contribute to the design of national level strategies and advise on what steps may allow more affordable access to social services, particularly in semi-urban and rural areas.

The third aspect entails working towards gender empowerment across occupational classes while increasing social, political and economic opportunities for women. Evidence from previous and recent elections suggest that in times of stiff electoral competition, political parties in India tend to field fewer female than male candidates, citing women as ‘weaker’ options. The 2019 general elections must see greater party support for female candidates and more work towards addressing pervasive gender inequality.

The fourth is concerned with ensuring maximum social protection to minority groups across the country. In 2018 India saw the highest reported rate of religious hate crime in over a decade. A cohesive vision for social protection is needed that allows religious, ethnic or tribal minority groups greater representation and participatory autonomy in decisions that affect their social and economic well-being. Police and labour law reform are also key to this context, ensuring better social protection among minorities and other vulnerable groups.

As of now, an alternative vision for the Indian welfare state remains in contention. The political opposition (including regional parties) is yet to present a plan of action to address the above areas or a prescriptive set of long-run economic policy measures. With the INC calling for unconditional farm loan waivers, it would not be surprising if the BJP offers a huge incentive package for farmers (including a universal basic income-style cash transfer scheme) before its last budget to woo more votes from dissenting farmers.

Entering 2019 with elections around the corner, the average Indian voter appears to be uncertain about who they should lend their trust.

Deepanshu Mohan is Assistant Professor of Economics and the Director of the Centre for New Economics Studies at the Jindal School of International Affairs, OP Jindal Global University.

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Abe’s make-or-break year


Author: Aurelia George Mulgan, UNSW

Japan’s Prime Minister Shinzo Abe has an ambitious agenda for 2019, his seventh year in office. It includes a number of make-or-break issues that are fundamental to his political legacy. But the question remains: how much of his agenda is realistically achievable?

Britain's Prime Minister Theresa May walks with Japanese Prime Minister Shinzo Abe as he receives a military Guard of Honour at the Foreign and Commonwealth Office ahead of bilateral talks in London, Britain, 10 January 2019 (Photo: Reuters/Dan Kitwood).

Diplomacy is particularly important to Abe because of its utility in promoting his domestic political standing. The Prime Minister has reiterated his ambition to promote ‘the final settlement of Japan’s post-war diplomacy’. Topping the ‘settlement’ list is resolving the so-called ‘Northern Territories’ (Southern Kurils) issue with Russia and signing a peace treaty.

But serious obstacles remain. If Russia behaves true to form, Abe’s vision will remain based more on wishful thinking than on realistic prospects for regaining what Japan regards as its lost territory. So far, rebuilding the bilateral relationship through economic cooperation in the Northern Territories has mostly involved ‘give’ on Japan’s part and ‘take’ on Russia’s part.

Abe is also breaking with Japan’s long-standing position on the return of the Northern Territories by revealing that he would be happy with a return of just the Shikotan and Habomai islands (the so-called ‘1956 model’). Japan claims these islands are not part of the Southern Kurils but part of Hokkaido Prefecture, unlike the other two islands Etorofu and Kunashiri.

But in advance of direct Abe–Putin talks on the issue that will begin on 21 January 2018 with Abe’s trip to Moscow, Russian actions suggest Putin’s plan is to sabotage the talks even before they have begun. Moscow is asking Japan first to recognise Russian sovereignty over all the islands, objecting to Japan calling them the Northern Territories, mobilising domestic opposition to any handover and criticising Japan’s deployment of an on-shore missile defence system on its own territory.

Russia is also expressing concern about possible basing of US troops on the islands despite an explicit US military denial of any such plan. Meanwhile Russia itself is increasingly militarising the islands by stationing even greater numbers of troops on Kunashiri and Etorofu and encouraging Russian settlers to take up residence there.

The other important issue to be settled is the abduction of Japanese nationals by North Korea. This is even less likely to be resolved than in previous years given the breakdown in official negotiations and agreements between the two countries. Recent North Korean denials of the existence of abduction victims, Kim Jong-un’s lack of interest in pursuing the matter or meeting directly with Abe and North Korea’s bandwagoning on South Korea in relation to the requisitioned worker dispute do not bode well for Abe’s diplomatic agenda.

Despite acknowledging the imperative of North Korean denuclearisation, the Abe administration and its preoccupation with the abduction issue are also being completely sidelined by the theatrics of the Trump–Kim summits.

Still, Abe is hoping that diplomatic achievements will ease his domestic political path through 2019. This makes the continuing ‘history war’ and current diplomatic stoush with South Korea an unwelcome distraction. As former South Korean ambassador for international security affairs Chung Min Lee and others rightly argue, the deterioration in South Korea–Japan ties is undermining the potential for broader trilateral security relations between Japan, South Korea and the United States.

When combined with increasing North–South rapprochement, growing anti-Japanese sentiment in South Korea and the prospect of another over-hyped Trump–Kim agreement on North Korean denuclearisation, the descent into ‘tension-fuelled dysfunctionality’ in Japan’s relations with South Korea only exposes Japan to an even greater threat from North Korean nuclear and ballistic missiles.

Highest on Abe’s domestic policy agenda is constitutional reform, an issue hostage to domestic politics and ruling Liberal Democratic Party (LDP)–Komeito coalition numbers in both houses of the National Diet. Proposing a constitutional amendment requires two-thirds majorities in both houses, numbers that the coalition currently has.

But the fate of constitutional reform is difficult to call in 2019 because of scheduled elections. This includes nationwide local government elections in April and the expected Upper House election in July — a dual political showdown that only happens once every dozen years.

Key to the latter will be the ability of opposition parties to coordinate with each other to field joint candidates in the 32 constituencies where only a single seat is up for grabs, a strategy that they recognise as an absolute imperative. The main opposition parties believe doing so not only holds the key to the election outcome but also to their ability to thwart Abe’s agenda. Given Komeito’s predilection to prioritise power over principle, it will only serve as a weak brake on this agenda.

As in the past, Abe may resort to his familiar tactic of creating momentum for an LDP victory and a resounding endorsement of his government — as well as raising the bar for opposition party collaboration — by calling a double election.

In contrast to previous elections when Abe has remained quiet on the topic of constitutional reform in the campaign for fear of a negative impact on the LDP’s performance, this time it will be a prominent election issue whether he actively promotes it or not. This is a direct consequence of his constitutional reform timetable and the importance of the government’s seat numbers in the Upper House to achieving constitutional reform. This is yet another reason for the Prime Minister to generate greater momentum for his agenda by dissolving the Lower House and holding simultaneous elections, particularly if he is successful on the diplomatic front.

Aurelia George Mulgan is Professor in the School of Humanities and Social Sciences at the University of New South Wales, Canberra.

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Delays in Malaysian democratisation


Author: William Case, University of Nottingham

Malaysia’s most important political event last year was also the most important of the past 50 years. To the astonishment of practitioners and observers alike, the ruling United Malays National Organisation (UMNO) and the Barisan Nasional coalition that it led were defeated in a general election in May 2018 and replaced by Mahathir Mohamad’s Pakatan Harapan coalition.

Malaysia's Prime Minister Mahathir Mohamad arrives at APEC Haus, during the APEC Summit in Port Moresby, Papua New Guinea, 18 November 2018 (Photo: Reuters/David Gray).

For 44 years, Malaysia had operated under a hybrid regime — democratic in appearance but authoritarian in substance. A transfer of power through peaceful elections seemed to present Malaysia as a late and unexpected arrival to the flagging community of democratic nations.

But by year’s end, the likes of Lim Kit Siang, a long-time leader of the Democratic Action Party, were cautioning that the country would need another decade or two to complete its democratisation. In their exuberance over Pakatan’s victory, foreign pundits and local middle-class urbanites seem to have been misled about the potential for institutional reform under the new government.

Citizens who voted for Pakatan often did so more out of contempt for Barisan’s corruption — crystallising in former prime minister and UMNO president Najib Razak’s abuse of the 1Malaysia Development Berhad (1MDB) fund — than out of regard for Pakatan’s vision of an inclusive society. Precisely because of this vision, most Malays remained unconvinced that Pakatan would defend their ‘special rights’ as Barisan had. Nearly three-quarters of Malay voters either cast their ballots for Barisan despite the 1MDB scandal, or for the Islamic Party of Malaysia (PAS) whose leader intoned that the scandal was overblown. UMNO and PAS might have taken power together had they coalesced into a formal coalition.

So Pakatan’s new government was from the start on shaky ground. Its seats in parliament and state assemblies increased throughout 2018 as legislators flocked to it from UMNO and sundry regional vehicles, but this hardly amounted to democratic progress. Rather it involved defection and hopping in search of fresh patronage — reminiscent of the shiftless party systems that operate elsewhere in Southeast Asia during democratic hiatuses.

In this context, Pakatan struggled during its first months in power to make good on the dozens of pledges that featured in its election manifesto. Intended to bolster democratic procedures and governance, Pakatan’s reforms were either blocked outright, better exploited by UMNO and PAS politicians, or thwarted by communal insistence on Malay and Islamic supremacy.

Pakatan pledged to impose term limits on top executive positions, including the prime ministership. But lacking a two-thirds majority in parliament, parliamentary procedures prevented the government from passing the necessary constitutional amendment. UMNO and PAS parliamentarians are less interested in imposing accountability than in showing defiance by grandstanding, heckling ministers and obstructing reforms.

Pakatan also sought to institute a system of select committees to further check the executive and strengthen parliament. This would transfer powers of appointment over parts of the Attorney General’s Chambers, the Judicial Appointments Commission, the Malaysian Anti-Corruption Commission and the Election Commission from the Prime Minister’s Office to relevant committees in parliament. But in its urgency to be seen delivering justice over 1MDB, Pakatan left in place the legal framework that it inherited, paving the way for it to lay it first charges against Najib and his allies in July.

Even if select committees are eventually formed, it is difficult to see how they might gain significantly more autonomy and better impose accountability in the current milieu. With the cascading defections anticipated from UMNO, conduits between executive and legal institutions would hardly be interrupted when committees swell with old Pakatan MPs and newcomers, many of whom are keen to trade off their loyalties for patronage.

As for democratic development, perhaps the only thing worse than an opposition geared to knee-jerk obstruction is its vanishing altogether. The prospect of the opposition shrinking down to a bare rump of UMNO holdouts and PAS hardliners looms.

Pakatan also pledged to strengthen civil liberties. In pursuit of media freedom, it sought to abolish the Anti-Fake News Act, a law passed by the Barisan government in its waning days to ward off criticism over 1MDB. Although Barisan is now in opposition in the lower house, its appointees retain a majority in the Senate. For the first time in Malaysia’s political record, the Senate rejected a sitting government’s legislative preference, leaving the Anti-Fake News Act in effect.

Finally, Pakatan sought to strengthen freedom of assembly. To this end, it pledged to revise the Security Ordinances (Special Measures) Act (SOSMA) instituted by the Barisan government as a successor to the country’s colonial-era Internal Security Act. At the same time, Pakatan pledged to sign the International Convention against All Forms of Ethnic and Religious Discrimination (ICERD). This prompted UMNO and PAS to inflame Malay fears over a loss of communal status, metastasising in mass protests in Kuala Lumpur in December. Pakatan duly recoiled from signing the ICERD. But with some irony: while striving to respect civil liberties, Pakatan initially tried to contain the protest by invoking SOSMA.

Malaysia’s democratisation is not helped by the lack of financial surpluses. Like many developing countries, capital in-flows have retreated from Malaysia to the United States. The exports of palm oil upon which Malaysia has come to depend face a ban in European markets. Investment and lending from China have been dampened by the Pakatan government’s cancellation of large Belt Road Initiative projects. And, of course, Malaysia faces a decade or more of payments to creditors and litigants under 1MDB.

None of this will help to assuage the disillusion and resentment that simmers in Malaysia today.

William Case is Professor and Head of the School of Politics, History and International Relations at the University of Nottingham Malaysia Campus.

This article is part of an EAF special feature series on 2018 in review and the year ahead.

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The beginning of the end for Duterte?


Author: David Camroux, Sciences Po

A third of the way through his presidency, is Philippine President Rodrigo Duterte already a spent force? He would seem to think so himself. Duterte mused in August and December 2018 of resigning if he could be assured that he would be replaced by Ferdinand ‘Bongbong’ Marcos Jr. — the son of former presidential strongman, Ferdinand Marcos.

President Rodrigo Duterte rings a Balangiga bell during a ceremony marking the return of three Balangiga bells taken by the US military as war booty 117 years ago, at Balangiga, Eastern Samar in central Philippines 15 December 2018 (Photo: Reuters/Erik De Castro).

In the Philippines the vice president is elected separately, rather than as part of a presidential ticket, and often becomes the central figure in opposition to the incumbent president. This is the case for Vice President Leni Robredo today and why Duterte is hoping that the legal challenge of the 2016 vice presidential runner-up Marcos Jr. will succeed in invalidating Robredo’s election.

While according to the opinion polls Duterte remains overwhelmingly popular (with 80 per cent approval in the latest Social Weather Stations survey), this support seems shallow. On social media it is difficult to distinguish between the genuine ‘diehard Duterte supporters’ and his ‘militia’ of paid trollers. At the elite level, Duterte has helped resuscitate previously discredited political clans, such as that of Gloria Arroyo, Joseph Estrada and Ferdinand Marcos. But their support is transactional, rather than demonstrating ideological commitment or even personal loyalty.

Unlike most autocrats, Duterte has failed to create a mass-based organisation to perpetuate his regime. Both the Kilusang Pagbabago (Coalition for Change) and the Masa Masid failed to gain any traction. The latter movement’s funding was largely cut off by the Senate with the support of some of Duterte’s allies.

Only one paramilitary organisation of concern has been created since Duterte’s inauguration: the National Citizen Militia, which claimed in September 2017 to have some 25,000 members. Since then it has kept a low profile. Given that it is largely comprised of former military personnel, its principal role may well be to maintain the Armed Forces of the Philippines’ behind-the-scenes centrality in the political system — especially as Duterte’s anti-Americanism goes against the grain of the officer class.

By ending any attempts at negotiation with the New People’s Army (the armed branch of the Communist Party of the Philippines) and through his pro-capitalist economic policies, Duterte has also alienated what existed of his elite left-wing power base. Above all, Duterte’s so-called war on drugs — resulting in some 20,000 extra-judicial killings with over 5,000 directly acknowledged by a distrusted police force — overwhelmingly targeted the poorest of the poor in the slums of Manila, a central pillar of Duterte’s electoral constituency. Their continued support for his presidency seems acquiescent at best given large-scale disenchantment with a dysfunctional democratic system, as a whole, and the lack of ideologically structured political parties to propose an alternative.

The Philippines’ mid-term elections in May 2019 could very possibly announce the beginning of the end for Duterte. There were 152 candidates enrolled at the Electoral Commission’s 17 October 2018 deadline for the 12 seats in the Senate to be contested. Given there is no primary system, their election or re-election is not dependent on their degree of allegiance to the incumbent President. In short, the solidity and local rootedness of Filipino political dynasties are formidable obstacles to Duterte’s continued survival.

This situation may well be exacerbated by Duterte’s proposed constitutional changes to create a federal system after 2022. The House of Representatives, led by Duterte’s ally Gloria Arroyo, voted measures to eliminate term limits in early December 2018 and prohibited Duterte from running again under a new constitution.

Duterte’s assertive ‘bi-aligned’ foreign policy has also had a boomerang effect. His pro-Chinese pivot has brought few tangible investment results outside of Duterte’s own bulwarks in the Visayas and Davao. It allowed the disparate opposition led by Vice President Robredo to take on the mantle of being the true nationalists by appealing to the underlying anti-Chinese sentiment of a proud Filipino people. Meanwhile the United States, both through the indispensable support provided in the recapturing of Marawi and through the return of the Balangiga bells, has neutered Duterte’s capacity to use an anti-United States mantra as a mobilising trope.

Will the putative end of Duterte’s autocratic regime mean an end to the slide into authoritarian rule that he has engendered? Duterte’s daughter, Sara Duterte Carpio, is attempting to set up a coalition of minor regional parties to support her run for the Senate. With a 39.5 per cent approval rating in a September 2018 Pulse Asia poll, she is somewhat of a shoo-in. She has also reached out to Marcos Jr., whose sister Imee seems also virtually assured of re-election, to make sure that her father can leave office without fear of future punishment.

After inveighing against the elite of Imperial Manila, the irony would be that Duterte leaves office having re-established dynastic Filipino politics. But this return to dynastic politics is fraught with difficulties. Duterte was elected on the grounds that the People Power Revolution of 1986 — carried out in the name of the people, but not by the people — had failed to deliver the public goods to the aspiring lower middle class and the poor who voted for him. In the most inegalitarian society in Asia, there is a need for democracy to be accompanied by a degree of economic equality by strengthening the role of an impartial, just and redistributive state. Otherwise another strongman saviour may well re-emerge in the future.

David Camroux is Honorary Senior Research Fellow at Sciences Po (CERI) in Paris and Visiting Professor at the Vietnam National University (USSH) in Hanoi. He is the Dissemination Coordinator for a major EU-funded project, Competing Regional Integrations in Southeast Asia (CRISEA).

This article is part of an EAF special feature series on 2018 in review and the year ahead.­­­

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5th World Congress on Controversies in Breast Cancer


Sep 04, 2019Sep 06, 2019


Location address: 
5 Embarcadero Center, San Francisco, CA 94111



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Building on successful meetings in Melbourne, Barcelona and Tokyo, the 5th CoBrCa Congress will directly address controversial topics in breast cancer management with key issues explored and audience participation encouraged. Through debates, discussions and presentations, the congress will focus on issues faced by clinicians in daily practice.

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Local elections strike a heavy blow for Taiwan’s DPP


Author: Jean Yu-Chen Tseng, Fo-Guang University

Taiwan’s ruling Democratic Progressive Party (DPP) suffered a significant defeat in the country’s November 2018 ‘nine-in-one’ local elections. The opposition Kuomintang (KMT) party won 15 of the 22 local chief elections, including in three of Taiwan’s six special municipalities — New Taipei, Taichung and Kaohsiung.

Taiwan President Tsai Ing-wen announces her resignation as chairwoman of the Democratic Progressive Party (DPP) after local elections in Taipei, Taiwan, 24 November 2018 (Photo: Reuters/Ann Wang).

The results of the 2018 local elections reflect growing public dissatisfaction with the DPP administration’s performance over the past two years. They foretell a challenging future for Taiwanese President Tsai Ing-wen, whose approval rating has remained low at around 30 per cent for years, as she readies for her 2020 re-election campaign.

There are three major reasons that explain the DPP’s local election debacle.

First, although Tsai Ing-wen claims that she has made significant reforms — to labour laws, to the implementation of transitional justice and to pension systems for civil servants, teachers and military personnel — voters are yet to recognise these reforms as a success. Those affected by the pension cuts have become one of the strongest protest groups against the Tsai administration.

Second, the KMT’s Kaohsiung mayoral candidate Han Kuo-yu, ran a very successful campaign. Kaohsiung is a port city in southern Taiwan that has been ruled by the DPP for more than two decades. In this election, Han not only turned Kaohsiung from a green (DPP) to a blue (KMT) column, but also exerted a strong coattail effect on other races. His nationwide popularity, the so-called ‘Han tide’, mobilised KMT supporters while his ‘economy first’ platform persuaded non-partisan voters to vote for the KMT.

Relatedly, while the KMT focussed on economic growth and livelihood issues such as energy security and pollution to attract non-partisan voters, the DPP appealed to voters to preserve democratic values and fight against a possible ‘China threat’. The KMT tended to attract ‘practical’ or economic voters while the DPP launched a value-based, ideological campaign to consolidate its base. The final verdict was that the majority of voters sought a strong economy and quality of life.

President Tsai needs to bounce back quickly in 2019. Otherwise, her prospects for re-election will be soured. The major challenges of the Tsai administration moving forward are twofold: how to respond to the need for economic growth and how to deal with a divergence of interests between central and local governments.

The two issues are connected. Shortly after the 2018 elections, the newly elected KMT local chiefs began to emphasise the importance of the 1992 Consensus that paved the way for the creation of city-to-city channels with mainland China to boost local economies. As the Tsai administration refuses to accept the 1992 Consensus, central and local governments are likely to take different approaches towards cross-Strait relations.

The 1992 Consensus is a product of and closely associated with KMT rule. After former KMT chairman Lien Chen met with Chinese president Hu Jintao in 2005, the Chinese government increased the number of categories of fruit permitted to be imported from Taiwan with zero tariff treatment under the premises of the 1992 Constitution. And during KMT president Ma Ying-jeou’s era between 2008 and 2016, cross-Strait economic exchanges were facilitated by the import of various Taiwanese products to mainland China.

The election of the DPP and President Tsai in 2016 changed the dynamics of cross-Strait relations. The DPP administration kicked off its New South Bound Policy and put more emphasis on its relations with the United States and Japan to balance against the pro-China policy of the preceding Ma era.

Faced with a less amenable Taiwanese government, the Chinese government is offering preferential policies to attract more Taiwanese to China, for instance by granting them equal treatment alongside their Chinese ‘compatriots’. Through economic benefits and preferential policies, the Chinese government hopes to influence Taiwan’s policy on cross-Strait relations by nurturing friendly attitudes towards mainland China among the general public.

Today, it is foreseeable that the new KMT local governments will pursue enhanced city-to-city exchanges across the Strait, such as increased numbers of Chinese tourists. At the same time, the Tsai administration will continue its firm line on Beijing, including by offering incentives to Taiwanese businesses in mainland China to encourage them to return to invest in Taiwan.

More cross-Strait exchanges may help Taiwan boost its economy in the short term. But in the long run, the political and security impact of Taiwan’s economic dependence on mainland China remains a tough challenge for not only the government but also for the people of Taiwan.

The Taiwanese economy is still heavily entwined with China, making local political and social development inevitably connected to cross-Strait relations. And the results of November’s local elections have only made the intermingling of politics and economics ever more complex for the ruling DPP government.

Jean Yu-Chen Tseng is Assistant Professor in the Department of Public Affairs, Fo-Guang University, Taiwan.

This article is part of an EAF special feature series on 2018 in review and the year ahead.

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