Behind the Australia–Thailand Strategic Partnership


Author: John Blaxland, ANU

The Australia–Thailand Strategic Partnership was signed on 13 November 2020. Why did it take place and how did this happen? The joint declaration covers enhanced cooperation in defence and security, cyber affairs, anti-money laundering and transnational crime. But it is best understood in the context of shared history, common geography, overlapping interests and mutual strategic concerns.

Soldiers stand during the annual Military Parade to celebrate the Coronation of King Rama X at the Royal Thai Army Cavalry Center in Saraburi province, Thailand 18 January, 2020 (Reuters/Soe Zeya Tun).

During the Second World War, over 13,000 Australian prisoners of war were press-ganged by Japan into building a railway from Thailand to Myanmar. With the onset of the Cold War, Thailand and Australia’s significance to each other changed. For different but complementary reasons, both chose to be aligned with the United States. They established diplomatic relations in 1952 and both were founding members of the Southeast Asian Treaty Organization (SEATO) in 1954. Australia also deployed a squadron of F-86 Sabre aircraft to Ubon Ratchathani Province in Northeast Thailand for much of the 1960s.

During the Vietnam War, Australian soldiers fought alongside Thai soldiers in neighbouring provinces in South Vietnam. Australia and Thailand supported each other and worked collaboratively, including tipping off emergent threats to each other. Since then, both have established good relations with Vietnam, thanks in large part to the constructive role of ASEAN. Throughout, the connection between Australia and Thailand has endured.

Many Thais have studied in Australia, including the King of Thailand, Maha Vajiralongkorn, who studied at the Royal Military College, Duntroon, alongside Governor-General David Hurley. Today, exchanges include a range of institutions and disciplines.

Something that speaks to the reliability of a friendship is when in a crisis a true friend lends a helping hand. In the East Timor crisis of 1999, Thailand was the first country in Southeast Asia to volunteer to assist Australia in resolving the crisis.

Others in Southeast Asia followed, including the Philippines, Malaysia and Singapore, but it was Thailand that took the risky first step, setting the precedent for others to follow. Thailand recognised that Australia was a trusted partner in the region — as was the case during the Cambodian peace process a few years earlier — and volunteered to take the lead, as well as providing the deputy force commander for the international coalition known as International Force East Timor (INTERFET). Thailand then deployed a substantial task force into East Timor before others did so.

Given the shared geography, it’s not surprising that Australia has been actively engaged in Southeast Asia since the Second World War, being widely recognised as the first partner of ASEAN.

By way of demonstration of its ongoing importance, Australia is actively involved in a range of regional initiatives that include Thailand. These range from the ASEAN Defence Ministers’ Meeting Plus (ADMM+) arrangements, including their various expert working groups, to the ASEAN Regional Forum and East Asia Summit. Australia is also a close partner on a range of regional counterterrorism initiatives that involve defence, police and security agencies. That common shared space — the geography they both inhabit — links to their shared interests.

These interests revolve around the key requirements for security and stability.

Thailand’s economic development and prosperity, for example, stands in contrast with the status of fellow predominantly Theravada Buddhist neighbouring countries: Myanmar, Laos and Cambodia. For Australia, Thailand’s Western security links have facilitated a closeness between their armed forces that few realise. These security ties are matched by strong bilateral trade and education links.

Both Thailand and Australia are founding members of APEC. In 2005, both Thailand and Australia signed the Thailand–Australia Free Trade Agreement (TAFTA) and the ASEAN–Australia–New Zealand Free Trade Agreement (AANZFTA) in 2010. Both also cooperated on the recent Regional Comprehensive Economic Partnership (RCEP). This shows Thailand and Australia’s interests overlap — pointing to areas of shared concern.

Like Australia (and despite contrary reporting) Thailand remains a US treaty ally. Also like Thailand, Australia is invested in the great Asian project of regional cooperation and mutual benefit. As middle powers, both have cause to share ideas and work collaboratively — as they have previously done in East Timor in 1999 and Cambodia in the early 1990s. That sharing of perspectives has become particularly important in light of the apparent American transactional retreat from ideational leadership witnessed in recent years.

Reflecting on Australia’s geostrategic strengths, weaknesses, opportunities and threats, Thailand and Australia face similar challenges linked to a combination of great power contestation, looming environmental catastrophe and a spectrum of governance challenges. That confluence of factors and shared interests is driving the desire for a strategic partnership between these two nations.

In thinking about Thailand’s domestic politics, some may wonder why Australia signed a comprehensive strategic partnership with Thailand at this juncture?

A recent collaborative Centre of Gravity paper between the ANU and Thammassat University showed that Australia has an interest in political reform in Thailand, but that interest is moderated by a strategic calculus. In essence, Australian leaders seek to remain on good terms with their Thai counterparts as successive Thai governments have been on good terms with their Australian counterparts.

In a cool-headed calculation, the Australian government recognises an alignment of interests which motivates a desire to maintain as close ties as close as possible with Thailand, despite sporadic domestic political turbulence and difference of views. In turn, after nearly 70 years of formal diplomatic ties, the Thai government appreciates this calculated position. There is more in common to warrant the strategic partnership than many realise.

John Blaxland is Professor of International Security and Intelligence Studies in the Strategic and Defence Studies Centre at the Australian National University.

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Drawing the curtain on China–Israel cooperation?


Authors: Carice Witte and Dale Aluf, SIGNAL

As the longest-serving prime minister in Israeli history, Benjamin Netanyahu has had a profound influence on China–Israel relations. Diplomatic relations between the two countries are the widest-reaching since normalisation in 1992, with China having emerged as Israel’s second-largest trading partner.

A researcher plants a semiconductor on an interface board, Beijing, China, 29 February 2016 (Photo: Reuters/Kim Kyung-Hoon).

But China’s swift ascent to global economic and military might has led to a growing unease among Israel’s Western allies, especially the United States. Has Netanyahu’s administration done enough to adapt to the rapidly shifting realities?

After China emerged as the world’s second-largest economy in 2010, it identified advanced technology as a national priority in its 12th Five Year Plan and began looking to the ‘Start-up Nation’ for innovative solutions to its domestic challenges. Netanyahu had just launched Israel’s pivot to Asia to diversify its economy beyond the United States and Europe.

Israel’s embassy and the four consulates in China were all instructed to promote business ties with Beijing. Israel saw China as a ‘good news story’, promising a stream of investment money. China identified Israel as a key source of innovation after a 2012 visit to Israel by the Central Party School’s International Institute of Strategic Studies.

Hundreds of millions of dollars subsequently flowed from China into innovative tech companies and R&D centres in Israel. Toga Networks became an R&D centre for Chinese telecommunications giant Huawei. Now Alibaba, ChemChina, Kung-Chi, Legend, Lenovo and Xiaomi have all set up shop in Israel. Many of these investments and acquisitions have been in firms focussed on cloud computing, artificial intelligence, semiconductors and communications networks — areas that have great strategic and economic importance.

The Netanyahu government also looked to China for Israel’s infrastructure needs, especially in cases when US companies were invited to compete for tenders and refused. This is what occurred when Israel sought foreign companies to operate the newly privatised section of Haifa Port in 2015.

China’s expanding footprint in Israel began to alarm officials in 2014, when the former head of Israel’s intelligence agency, Efraim Halevy, criticised Israeli dairy corporation Tnuva’s acquisition by Chinese state-owned enterprise, Bright Food, arguing that food security is a vital national interest and should not be in the hands of foreign governments.

Israel has not been entirely naive regarding the risks associated with foreign entities investing in critical sectors. While serving as Commissioner of Capital Markets, Dorit Salinger blocked multiple attempts by Chinese companies to acquire Israeli insurers Phoenix and Clal. Yet, outside the financial realm, Israel continued to welcome Chinese capital with no indication that there was a need for scrutiny.

After all, Israel and China cut defence ties in the early 2000s, when Washington compelled Israel to cancel a series of defence contracts with Beijing. From 2004 onward, so long as cooperation remained strictly in the civilian realm, all was deemed kosher.

The geopolitical landscape began to change in 2017 when Jerusalem’s most important ally labelled China a strategic rival. The United States has since raised concerns about Chinese companies conducting espionage and views China’s infrastructure development projects and acquisition of advanced technologies as a threat to its global primacy.

The United States imposed export restrictions on Chinese multinationals wishing to acquire US tech and launched a pressure campaign on its allies to curb ties with China. At a maritime conference held at Haifa University in 2018, members of the US think tank community lambasted their Israeli counterparts over approving the 2015 Haifa port deal with the Shanghai International Port Group.

Meanwhile, the Netanyahu government continued awarding tenders to Chinese companies for infrastructure projects and cultivating Chinese investment into its high-tech industries. Facing mounting US pressure, Israel still sought to maintain trade and investment relations with China.

The US-China trade war has, in some ways, brought Israel and China closer together. Israel’s semiconductor industry saw exports to China increase by 80 per cent in 2018. As the United States closed the door to Chinese tech companies, they began looking to Silicon Wadi. As China–Israel technology cooperation continued unabated, Washington ramped up pressure on Israel regarding Chinese infrastructure projects, as it ‘puts the capacity for the United States to work alongside Israel on important projects at risk’. More recently, the United States has warned Israel publicly from increasing Chinese involvement in Israel’s high-tech sector.

Israel has not entirely ignored American concerns. Following an independent review by Israel’s Ministry of Defense, and in close consultation with the United States, Jerusalem is expected to exclude Chinese companies from tendering to build Israel’s 5G infrastructure. Israel also established a CFIUS-style foreign investment oversight committee in 2019.

Since 2010, bilateral trade between Israel and China has doubled, with US$11.53 billion in Chinese capital flowing into Israeli tech firms and infrastructure contracts. But for China, this is less than 3 per cent of its total outbound investment.

The Netanyahu government has never issued a formal, clearly articulated China strategy. While this provides flexibility in terms of tactical adjustment, it also limits the benefits Israel can reap from the relationship.

As tensions between the United States and China continue to flare, it remains to be seen whether Israel will be able to maintain its delicate balancing act or if Washington will ultimately pull down the iron curtain — just as it did in the early 2000s.

Carice Witte is Founder and Executive Director of Sino-Israel Global Network & Academic Leadership (SIGNAL), Tel Aviv.

Dale Aluf is Director of Research and Strategy at SIGNAL.

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Will Indonesia’s new Religious Affairs minister protect religious minorities?


Author: Alexander R Arifianto, RSIS

On 22 December 2020, Indonesian President Joko Widodo reshuffled his cabinet to replace six ministers. One of the more important changes was for the Ministry of Religious Affairs. Retired General Fachrul Razi, who occupied the portfolio since the start of Widodo’s second term commenced in October 2019, was replaced by Yaqut Cholil Qoumas. Quomas is a member of parliament from the National Awakening Party, affiliated with the Nahdlatul Ulama (NU), Indonesia’s largest Muslim organisation.

Indonesian Muslim women offer Eid al-Adha prayers on the street in Jakarta, during the outbreak of the coronavirus disease (COVID-19) in Indonesia, 31 July, 2020 (Photo: Reuters/Willy Kurniawan).

Qoumas’ appointment is a sign that Widodo is making amends with NU, one of Widodo’s key supportersduring his 2019 re-election campaign. Widodo’s appointment of Razi had alienated leaders of the organisationsince, by political tradition, the position is usually occupied by a cleric or politician affiliated with NU.

NU leaders expressed their disappointment through subtle criticisms in media statements and, more importantly, lukewarm support for his policies. For instance, they argued that Razi’s proposal to institute a certification program for Islamic preachers should be implemented by Islamic organisations themselves instead of the state. The lack of NU support for Razi’s policy initiatives weakened his ministerial authority and led to the perception that his brief tenure was controversial and largely ineffective.

Widodo likely reached out to NU to appease his most important Islamic ally and to work closely with the organisation on two main priorities: combating Islamic radicalism and protecting the rights of religious minorities.

Qoumas is chairman of the Ansor Youth movement, NU’s wing for young activists aged 40 years and under. Ansor was widely considered a leading ally of the President during last year’s general election. It has also long been known for its efforts to protect the rights of religious minorities, as seen in its initiatives to guard Christmas Eve services in Christian churches across Indonesia for the past two decades.

The organisation’s one-sided actions against Islamist groups have often created controversy. For instance, it engaged in violent altercations with the Islamic Defenders Front (FPI) and Hizb ut-Tahrir Indonesia (HTI)during the heavily polarised 2019 general election campaigns. Ansor and NU leaders were thought to have lobbied the Widodo administration to legally ban HTI, a prohibition which was enacted in July 2017. Incidents like these have led some observers to question Ansor’s — and broadly NU’s — commitment to genuine tolerance and pluralism.

Some analysts assert that Qoumas’ appointment indicates a continuation of the Widodo administration’s harsh measures against Islamist groups, given the tough rhetoric he issued against FPI and other hard-line groups as Ansor chairman. The Indonesian government finally prohibited FPI on 30 December 2020.

But it is unclear whether Qoumas will enact some of the controversial proposals of his predecessor, such as the preachers certification scheme and mandatory registration of Islamic community preaching groups (majelis taklim).

Addressing discrimination against religious minorities seems to be another new policy initiative for Qoumas. In an impromptu statement issued on 24 December 2020, he announced that Ministry of Religious Affairs will review the status of the Ahmadi Muslim minority to ‘reaffirm their religious rights as well as their rights as Indonesian citizens’.

Ahmadi Muslims have been victims of religious persecution for more than a decade. The Indonesian Ulama Council (MUI) issued a religious ruling (fatwa) declaring Ahmadi Muslims a ‘deviant’ sect in 2005. This fatwawas followed up by a joint ministerial decree issued by the Religious Affairs, Home Affairs, and Justice and Human Rights ministries that severely restricted the religious activities of Ahmadis outside of their mosques.

Qoumas’ statement immediately invoked a strong pushback from conservative Islamists. A senior MUI official urged Qoumas to consult all Islamic organisations and senior clerics before issuing a decision, since this is considered ‘a sensitive theological matter’. Qoumas was forced to clarify his initiative, stating that he only intends to restore the rights of Ahmadi minorities as Indonesian citizens.

This clarification meant that, if implemented, Qoumas’ initiative is unlikely to reverse the MUI fatwa or the joint ministerial decree. But it would restore the civil rights of Ahmadi minorities as citizens, including their ability to access public services such as education and health care. Human rights groups have criticised Quomas’ initiative as inadequate and called on him to cancel the joint ministerial decree, since it is the root of the persecution of Ahmadis.

Qoumas’ new initiatives as Religious Affairs Minister are a welcome move to counter the influence of radical Islamists and address long-standing injustices against religious minorities. He now has to prove these are not empty slogans, but an earnest attempt at promoting equal citizenship for all Indonesians irrespective of their religious beliefs.

Alexander R Arifianto is a Research Fellow in the Indonesia Programme at the S Rajaratnam School of International Studies, Nanyang Technological University, Singapore.

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Prospects for an Australia–India trade deal


Author: Melissa Conley Tyler, University of Melbourne

Negotiations on the Australia–India Comprehensive Economic Cooperation Agreement (CECA) are set to restart after being suspended in 2015. Australia’s new Minister for Trade Dan Tehan has flagged that a trade deal with India will be one of his top priorities.

A worker watches as a loader unloads coal at a yard on the outskirts of Ahmedabad, India, 12 February 2016. India is asking the country's big steelmakers to consider converting local medium-quality coal into premium coking coal to slash an annual import bill of more than $4 billion for buying that grade from countries such as Australia (Photo: Reuters/Amit Dave).

Why were the original negotiations abandoned? And has anything changed to make a deal more likely now?

There are potential gains for both countries. The original joint feasibility study found significant tariff and non-tariff barriers to goods and services trade. It assessed the potential welfare gains of an agreement as between 0.15–1.1 per cent of GDP for India and 0.23–1.17 per cent of GDP for Australia.

Australia’s India Economic Strategy identifies 10 priority areas to grow trade with India: a flagship sector (education), three lead sectors (agribusiness, resources and tourism) and six promising sectors (energy, health, financial services, infrastructure, sport and science). India’s recently-released Australia Economic Strategy identifies significant room for growth in exports and investment in 12 focus sectors and eight emerging sectors.

But after nine rounds between 2011–2015 covering many proposed chapters, negotiations were suspended.

For India, Australia’s agricultural exports were a sticking point. With half of India’s employment tied to agriculture, anything that threatens producers is political dynamite. Australia’s argument that many of its agriculture exports are aimed at the premium end of the market and would not displace the production of India’s smallholder farmers fell on deaf ears. Similar dynamics are at play in other sectors where India’s largest corporations feel threatened by the prospect of increased market competition and will lobby hard to defend their privileged status. Proposed trade agreements are generally judged by the benefits to domestic producers, not to consumers.

India’s suspicion toward trade has deep roots, stretching back to the United Kingdom’s colonial theft of India’s wealth, which was (wrongly) justified as ‘free trade’. Trade is often framed in terms of winning or losing, so India’s trade deficit of around AU$15 billion (US$12 billion) means that trade is seen as heavily skewed in Australia’s favour, with different levels of development preventing a level playing field. Trade agreements with ASEAN, South Korea and Japan have worsened India’s trade deficit.

For Australia, one of the most politically-sensitive sticking points was India’s desire for a more relaxed visa regime for Indian workers. Other reported concerns include threats from parasites on imported mangoes and the impact on steel and food processing. Overall, the sense was that India wasn’t offering enough to make a deal worthwhile. The diplomatic description in 2018 was that ‘negotiating positions are too far apart to make the conclusion of a CECA a realistic objective in the near term’.

After talks were suspended, Australia focussed on keeping India in negotiations for the multi-country Regional Comprehensive Economic Partnership (RCEP) as a way to achieve a trade pact, with CECA to follow.

What’s different today?

The biggest change is in the wider context of the Australia–India relationship. Motivated partly by concerns about China, India and Australia elevated their relationship to a Comprehensive Strategic Partnership at the Leaders’ Virtual Summit in June 2020.

While India may want to prise Australia away from what it would see as an unhealthy dependence on China, it’s unlikely to make trade concessions for wider security benefits. India’s room for movement given domestic politics is narrow, as recent farm demonstrations show, and it’s unlikely to spend political capital on an agreement seen as anything other than highly advantageous to Indian industry.

The fact that India is also looking at reviving trade talks with the United States and with the European Union, suspended in 2013, suggests there may be some change in its orientation on trade. Reforms to reduce red tape have improved its ease of doing business ranking and it has introduced policies that seek to encourage foreign investment.

But India’s decision to pull out of RCEP suggests that concerns remain about trade deficits and unemployment, with industry and traders’ bodies playing a blocking role. While there are voices arguing for a different approach to trade agreements, this remains a minority view. Only 5–25 per cent of India’s international trade is covered by agreements compared to 70 per cent for Australia.

On the Australian side, the government is under pressure to promote diversification of exports markets because of China’s restrictions on exports worth at least AU$20 billion (US$15.4 billion). Of the agreements under negotiation, the Australia–EU Free Trade Agreement is the only one close to conclusion after nine rounds. Negotiations for a UK–Australia agreement have just begun, while Israel, Switzerland and others are at feasibility study stage.

With both governments wanting to show that they are doing something for economies that are hurting badly, even just restarting negotiations might have political benefit. There may be no rush to put in the hard yards to reach agreement, with no talks yet taking place despite being announced in June.

What’s on the negotiating table might not be much better than in 2015, but both Australia and India might be more willing to accept it. The most attractive option might be a relatively slim agreement of mainly symbolic value, though this would pain Australia’s trade negotiators. Those who want to nurture the economic relationship might look for other avenues beyond a formal agreement.

Melissa Conley Tyler is a Research Fellow at the Asia Institute, University of Melbourne.

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Biden needs balance and engagement in Asia with China


Author: Editorial Board, ANU

Responsible adults are back in the White House. President Joe Biden sent a clear message in his inauguration that his priority is to heal a divided United States of America. He went on to immediately sign a series of executive orders including one that has the United States rejoin the Paris climate agreement.

A TV screen shows news of US President Joe Biden after his inauguration, in Hong Kong, China, 21 January 2021 (Photo: Reuters/Tyrone Siu).

So begins the hard yards of repairing America’s international standing and undoing the damage from four years of Donald Trump’s America First agenda. The United States didn’t just vacate global leadership for four years but was itself a source of uncertainty and instability. The domestic sources of America First persist with inequality and division magnified by failure to manage the response to the COVID-19 pandemic.

Whether Mr Biden and his administration can reclaim global leadership while attending to America’s great domestic fractures is still a question.

The biggest challenge on the international stage will be managing the China relationship. The United States has never faced a big power rival like China that already has a larger economy by some measures and is deeply integrated into the global economy.

China policy under President Trump — to be tough on China, frame it as a strategic rival and start to decouple the economies — had a large measure of bipartisan support. Secretary of State-designate Antony Blinken emphasised continuity on China policy in his senate confirmation hearings. But there will be differences. Where a Biden administration will differ most is on how it engages allies and partners in its strategy.

The Biden administration is starting to reveal its thinking on China and Asia policy. Kurt Campbell, Mr Biden’s ‘Asia tsar’ and the architect of President Obama’s Asia pivot (later rebranded the Asia rebalance), has outlined a strategy of working with allies to curb China’s assertive behaviour and restore balance and legitimacy to the Asian order. This is a welcome departure from the Trump administration that undermined alliances.

Mr Campbell’s strategy reveals two important gaps that are difficult to address yet. How will the United States engage China directly, and how will the coalition of allies and partners work with both the United States and China?

Any engagement between China and the United States involves spillovers for the rest of the world. Mr Trump’s transactional, bilateral, divide and conquer approach to foreign policy led to the phase one trade deal with China that eschewed multilateral trade rules and norms. The deal involved significant negative spillovers for the rest of the world as it diverted Chinese trade away from others like Australia towards US goods and gave special access to US companies in China that unilateral US sanctions had cut out for competitors from other countries.

The United States will need to find a way to engage China to pursue its global interests — from climate change to global economic governance — that avoids damage to the rest of the world. The global community needs to push China and the United States towards settlements in multilateral settings.

Mr Campbell suggests using an alliance of democracies or coalitions of the willing to counter Chinese assertiveness and curb Chinese behaviour. He will find many willing partners. But if those coalitions do not include engagement with China on win-win or positive sum issues like trade and investment, the willing partners will be fewer.

Few countries will have much appetite for being forced into a choice between China and the United States, a strategy that Mr Trump’s secretary of state Mike Pompeo pursued overtly. China is much too important to many countries around the world for their economic and political security. It will become more important as a source of recovery from the pandemic and to East Asia in particular after the conclusion of the Regional Comprehensive Economic Partnership (RCEP) agreement.

Mr Biden’s advisors are already finding the balance a challenge, letting it be known they are unhappy with the European Union for concluding an investment deal with China before the Biden administration was in place. National Security Advisor Jake Sullivan tweeted: ‘The Biden-Harris administration would welcome early consultations with our European partners on our common concerns about China’s economic practices’.

Asia tsar Campbell went further in his Foreign Affairs article suggesting that Europe is out of step with the Indo-Pacific approach because ‘distant European leaders are inevitably less concerned about China’s assertiveness than the Indo-Pacific states next door’ and ‘China used last-minute concessions to successfully pull the EU into a major bilateral investment agreement despite concerns that the deal would complicate a unified transatlantic approach under the Biden administration’.

In this week’s lead article, Shiro Armstrong and Evgeniia Shannon argue that the Comprehensive Agreement on Investment (CAI) between China and the European Union is ‘a positive development’ and ‘makes clear that Europe will not sit quietly on the sidelines without pursuing its own strategic interests’ in the tussle between China and the United States.

It’s not just Campbell and Sullivan. ‘The CAI is being portrayed in Western media as a strategic victory for China over a naive, desperate Europe’, Armstrong and Shannon point out. ‘Europe’s leaders, critics argue, are limiting options for the Biden administration and giving too many concessions to China with little hope it will honour its commitments’.

China will be locked into more rules and markets through RCEP and the CAI, and, Armstrong and Shannon explain, that ‘significantly raises the costs of Chinese unilateral behaviour that contravenes those agreements’. That is something the United States should welcome.

If the CAI comes into force, the European Union will succeed in locking in major Chinese reforms and concessions, some of which extend beyond those that European investors will enjoy. Chinese investors in Europe will gain certainty while European hosts can still screen investments for security purposes.

Chinese President Xi Jinping has also signalled interest in joining the Trans-Pacific Partnership, which would require fundamental reform to state-owned enterprises for any chance at Chinese membership. Chinese reforms and opening up are unequivocally good for China and also for the global community.

America under Biden will take on the China challenge with other countries but unless it finds ways to engage China that don’t damage the interests of allies and finds a way to give allies and partners space to engage with China on reasonable terms, it may find America First will become America Alone.

The EAF Editorial Board is located in the Crawford School of Public Policy, College of Asia and the Pacific, The Australian National University.

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Europe’s investment initiative with China


Authors: Shiro Armstrong and Evgeniia Shannon, ANU

On 30 December 2020, all 27 EU member states agreed to the Comprehensive Agreement on Investment (CAI) with China after seven years of negotiation. The deal should bring new market opportunities and protections to European investors in China and boost China’s reforms. Both China and Europe should benefit from better access to capital, while technology, market links and competition bring impetus to growth. Chinese investors are likely to find more certainty in Europe as much of the industrial world is becoming more restrictive towards Chinese investment.

The President of the European Council, Charles Michel, attends the 22nd videoconference meeting of leaders of China and the European Union (EU) in Brussels, Belgium, on 22 June 2020 (Photo: Reuters).

This agreement shows that commitment to investment and services liberalisation and protection for Western companies in China is possible beyond China’s WTO obligations. It also shows that China can commit to disciplines on state-owned enterprises, transparency in subsidies and labour and environmental standards that many previously thought were negotiating non-starters.

Under the CAI, European investors will no longer be required to form joint ventures to invest in some Chinese industries, although they may still choose to do so. China agreed to open investment access to European manufacturing in electric cars, chemicals, telecoms equipment and health equipment with most favoured nation treatment and national treatment obligations. For investment in services, China removed some equity caps and minimum capital requirements and lifted previous investment bans. China also bound its current market access across various sectors, including cloud, financial and environmental services, private healthcare, international maritime transport and air transport-related services. European businesses also gain access to China’s standard setting bodies.

This agreement follows China’s reform and liberalisation commitments in the Regional Comprehensive Economic Partnership (RCEP) that brings ASEAN, China, Japan, South Korea, Australia and New Zealand into the world’s largest trade agreement. Chinese President Xi Jinping has also signalled interest in joining the Trans-Pacific Partnership, which would require fundamental reform to state-owned enterprises for any chance at membership.

The CAI is being portrayed in Western media as a strategic victory for China over a naive, desperate Europe in the lead up to US President-elect Joe Biden’s inauguration. Europe’s leaders, critics argue, are limiting options for the Biden administration and giving too many concessions to China with little hope it will honour its commitments.

Trust in China is at a low ebb in many Western countries after its recent trade sanctions against Australia. China’s scale combined with its economic governance structures put pressure on the global trading system.

China’s economy is already larger than the United States’ in purchasing power terms and closing in rapidly in market exchange rate terms. The new Chinese growth momentum is a testament to how China handled COVID-19 domestically.

Major powers have a tendency to act outside of their treaty commitments in defiance of international rules when it suits them. All of East Asia and Europe locking China into rules and enmeshing it into international markets through RCEP and the CAI significantly raises the costs of Chinese unilateral behaviour that contravenes those agreements. China’s record in observing commitments is on par with that of other major powers, even in the face of unilateral sanctions from the United States.

International markets and rules are blind to domestic political and economic systems. What matters are tangible commitments and their enforcement, which brings real consequences to rule breakers, whether through agreed penalties or suboptimal market outcomes. The CAI includes state-to-state dispute resolution and a monitoring mechanism to raise ongoing issues before any litigation. Both parties will look to elevate the current dispute resolution to dispute settlement and further investment protections within two years.

The CAI is a positive development that would risk serious reputational damage if China did not honour it. It is not an economic agreement that is blind to geopolitics. Size matters, but no one country is large enough in a multipolar world to unilaterally set global terms and impose its will.

US unilateral sanctions on Chinese commerce affected suppliers and consumers globally. Suddenly many companies and countries had to extract Chinese-branded parts, components and software from their telecommunications systems, manufactures and supply chains or face US sanctions themselves. But alongside those unilateral sanctions, American companies secured special access and protections in the Chinese market through a managed trade arrangement and access for their investors, putting European, Japanese and other major competitors at a disadvantage. The CAI levels the playing field for European businesses competing with US companies in China.

The European Union commonly includes labour and environmental standards and human rights obligations in its agreements, with the aim of improving standards through negotiation. Sometimes, these provisions erode the comparative advantage of developing countries. One issue in CAI negotiations was political pressure around China’s forced labour and treatment of Uyghurs. European leaders would be naive to think an investment treaty would resolve a sensitive domestic issue of this magnitude. Instead, EU members should find a way to present a united front and keep realistic pressure on China separately from the investment agreement which can help drive post-COVID-19 economic recovery in Europe.

More will become known of the CAI, as it makes its way through the European Parliament for ratification, and as all the details of the agreement become clear.

A jaded United Kingdom dealing with its messy divorce from Europe joins the United States and some of its allies wanting a united front against China with terms of global engagement set by the United States. Countries are having to navigate the US–China strategic rivalry and the CAI makes clear that Europe will not sit quietly on the sidelines without pursuing its own strategic interests in this tussle.

Shiro Armstrong is Director of the East Asian Bureau of Economic Research at the Crawford School of Public Policy, The Australian National University.

Evgeniia Shannon is a graduate student at the Australian National University and formerly a staff member at the WTO Secretariat in Geneva.

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COVID-19 exacerbates women’s time poverty


Author: Nikhila Menon, Yokohama

The burdens of unpaid domestic and care work fall disproportionately on women in both developed and developing countries. According to a 2018 UN Women report, women perform 2.6 times more unpaid care and domestic work than men. The resulting ‘time poverty’ is a critical factor that reinforces gender inequality, and the COVID-19 crisis has further exacerbated its impact on women around the world.

Women walk with children in a street following the outbreak of the coronavirus disease (COVID-19) in Wuhan, Hubei province, China, 15 January, 2021 (Reuters/Thomas Peter).

On average, women perform 4 hours and 25 minutes of unpaid care work every day, compared to 1 hour and 23 minutes for men. The ‘triple burden’ of paid work, unpaid domestic work and care work exerts enormous physical and emotional stress on women, and deprives them of opportunities to pursue education and skill development. The deprivation of leisure time takes a toll on women’s emotional wellbeing, leaving them more vulnerable to mental health problems. In developing countries, women’s work remains invisible in the informal economy, further complicating attempts to measure time poverty.

Recognising the critical role that time poverty plays in reinforcing gender inequality, the 1995 Beijing Platform for Action advocated for conducting regular time use surveys (TUS) to understand the amount of unpaid care and domestic work performed by women. But few countries conduct a TUS regularly — only about 40 countries out of 193 have conducted a national-level TUS.

It was only in September 2020 that India — a major power with a large informal economy that predominantly employs women — first released the findings of a nationwide TUS. The results showed that a vast majority of women in India face a trade-off between paid and unpaid work. The average time spent daily on unpaid domestic work is 299 minutes for females and 97 minutes for males. Even improvements in women’s education have not lessened the ‘double burden’ of paid and unpaid work for women in India.

COVID-19 has worsened these problems. There is growing evidence in both developed and developing countries that indicates a disproportionate increase in the work burden, time poverty and emotional stress on women during lockdowns and remote working. For example, the closure of childcare centres and schools in Australia have disproportionately affected women by forcing them to perform more unpaid work at home

Employers have ignored increased caregiver burdens, demanding that employees maintain the same levels of performance as before the pandemic. A UK study found that women are 43 per cent more likely than men to have increased their hours beyond a standard working week, and women with children have been particularly vulnerable to related mental health problems. Meanwhile, women in developing countries — predominantly engaged in the informal sector — have experienced increased time and income poverty.

Gender-based violence has reportedly increased exponentially in the United Kingdom, with lockdowns confining women to their homes and restricting access to support services. In India, reported incidents of domestic violence sharply increased in districts with the strictest lockdown measures. COVID-19 has also halted the gradual progress made towards gender equality in Japan, which has the largest gender gap in unpaid work among developed countries.

With COVID-19 highlighting the gendered impacts of global crises and the disproportionate work burden of women, there is an opportunity for governments to consider implementing policies that promote a fair distribution of unpaid work. The pandemic has exposed fault lines in societies that have been overlooking the issue of women’s time poverty, and it is time to recognise, reduce and redistribute women’s unpaid work. Reducing gender inequality in the post-COVID-19 world will require institutional support in both the public and private sectors.

First, in developing countries, recognising the value of unpaid domestic and care work is critical to designing policies that reduce the triple burden faced by women. The conducting of regular TUSs should be mandatory, as it is a critical tool for measuring gender inequality and driving inclusive growth.

Second, in both developed and developing countries, companies should implement shorter and more flexible work hours to accommodate women’s unpaid domestic work, and incentivise men to share the domestic workload by providing similar benefits.

Third, care work can be distributed through welfare systems like the Fureai Kippu (caring relationship ticket) in Japan, where people can earn credits for caring for the elderly, which can then be exchanged for services. The system helped free up women’s time and strengthened intergenerational solidarity.

Fourth, in developing countries, the development and improvement of public infrastructure, including access to drinking water, electricity, sanitation and childcare centres, are vital to reducing women’s time poverty.

Finally, all countries should promote gender equality training and implement appropriate social policies to challenge entrenched social norms and gender stereotypes. Collective change is needed to ensure the equitable distribution of unpaid work and reduce women’s time poverty in the post-COVID-19 world.

Nikhila Menon is an independent development economist and consultant based in Yokohama, Japan.

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Much to change and remain the same in Vietnam’s leadership


Author: Le Hong Hiep, ISEAS-Yusof Ishak Institute

‘Politics is the art of the possible’. Attributed to Prussian Otto Von Bismarck, this famous dictum implies that politicians sometimes must compromise with one another to reach solutions acceptable to all parties involved. Such compromises render possible political solutions that are seemingly impossible. This time-tested wisdom is well demonstrated in the outcome of the 15th Plenum of the Central Committee of the Communist Party of Vietnam (CPV).

A man cycles on a traditional three-wheeled cyclo around Hoan Kiem lake as security forces patrol ahead of the upcoming 13th national congress of the Communist Party of Vietnam in Hanoi, Vietnam, 20 January 2021 (Photo: Reuters/Kham).

The 15th Plenum of CPV Central Committee, which took place on 16–17 January 2021, made decisions on Vietnam’s top political positions to be adopted at the Party’s forthcoming 13th National Congress. Informal but credible information from the plenum indicates that General Secretary Nguyen Phu Trong will stay on as the party head and Prime Minister Nguyen Xuan Phuc will be promoted to state president.

Meanwhile, the prime minister position will be taken over by Pham Minh Chinh, current head of the CPV Central Commission of Personnel and Organization, and Vuong Dinh Hue, a former deputy prime minister and current party secretary of Hanoi, will become the new chair of the National Assembly.

The Party’s endorsement for General Secretary Trong, now 77, to stay despite his advanced age, frail health and term limit is a surprise to most Vietnam watchers.

There were suggestions in September 2020 that there might be a possibility for Mr Trong to stay on after the 13th Congress, but as the state president rather than as general secretary. This is because while the Party may treat him once again as a ‘special case’ to exempt him from the age limit, the Party’s constitution provides that ‘the general secretary position cannot be held by a person for more than two consecutive terms’.

As Mr Trong is serving his second term as general secretary and the party has not announced any intention to revise its constitution, the term limit will be the biggest hurdle for him to stay as the party head. But the decision made at the 15th Plenum means that the revision to the Party’s constitution will be made right at the congress to pave the way for him to retain the top job.

Prime Minister Nguyen Xuan Phuc was also widely expected to retire if he could not secure the general secretary position. This is because Mr Phuc, now 67, has exceeded the age limit of 65, and the norm is that only one age exemption is reserved for the general secretary position. But the 15th plenum has decided that this time around, Mr Phuc will also be treated as a special case to take over the state president position.

The arrangements for Mr Chinh to take over the prime minister position and Mr Hue the National Assembly chair position are less surprising. However, Mr Chinh’s promotion to the prime minister position is also a break from tradition as, since 1986, this position has always been reserved for one of the deputy prime ministers of the previous term, a position Mr Chinh has never held.

The fact that none of the top four positions will be held by a Southern politician means that the Party has also decided to brush aside another important norm, that is to maintain a balanced regional representation among the top four positions of the country. To make up for this, one of the Southern politicians in the next Politburo is tipped to become the Standing Member of the Party’s Secretariat, the number five political position in the CPV’s hierarchy.

All of these changes are unprecedented. The Party leaders’ decision to go as far to contravene established norms to make these changes shows that they have made significant compromises with one another to make the seemingly impossible solutions possible. Political convenience aside, their political manoeuvres to negotiate limited options and navigate circumstantial and institutional constraints should be recognised. The ultimate goal for them is to come up with a new leadership structure acceptable to all factions. During this process, the institutionalisation of the Party’s succession politics may temporarily take a back seat.

The leadership decisions and institutional changes made at the CPV’s 15th Plenum will have important implications for the CPV and Vietnamese politics in the years to come. Developments following the CPV’s 13th National Congress will be important indications of how the Party will handle the possible consequences of its departure from established norms, especially the increasing unpredictability and instability in its succession politics.

For now, an immediate question is whether the decisions adopted at the 15th Plenum will be endorsed by the 1587 delegates attending the Party’s 13th National Congress, which will meet from 25 January to 2 February 2021. Although the probability that some of these decisions will be reversed at the congress is very low, nothing should be taken for granted. After all, Vietnamese politicians have proven that they have mastered ‘the art of the possible’. Last-minute surprises, however unlikely, might happen again.

Le Hong Hiep is a fellow at the ISEAS-Yusof Ishak Institute.

An earlier version of this article appeared here on Fulcrum.

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Is post-election Myanmar moving closer to China?


Author: Enze Han, HKU

Amid the worsening domestic COVID-19 situation, Myanmar’s election in November 2020 brought a landslide victory for the National League for Democracy (NLD) under the leadership of Aung San Suu Kyi. Despite voting restrictions in parts of Rakhine and Shan states, the election was overall a step in the right direction, and the NLD increased its majority in the Pyithu Hluttaw (lower house) and Amyotha Hluttaw (upper house).


Myanmar's State Counsellor Aung San Suu Kyi shakes hands with Chinese Premier Li Keqiang as they pose for media before their meeting on 25 April 2019 at the Diaoyutai State Guesthouse in Beijing, China (Photo: Reuters/Parker Song).


The show of support at the ballot box for the NLD indicates the domestic popularity of Aung San Suu Kyi. Her defence of Myanmar’s handling of the Rohingya crisis at the International Court of Justice — and in many other international venues — was dubbed a betrayal of democracy and human rights by Western media, but it boosted her domestic aura as a defender of Myanmar.

The priorities for the NLD government are no doubt domestic. The COVID-19 pandemic ransacked Myanmar’s economy and the domestic poverty rate skyrocketed. High on the government’s agenda is creating employment for millions of Myanmar workers who lost their jobs during the pandemic.

The country still faces one of the worst humanitarian crises with the Rohingya issue which battered its international image and led to economic sanctions. Myanmar’s domestic peace process has also stalled and militarised conflicts in the north of the country have no end in sight.

To deal with these issues, China is the most indispensable country for Aung San Suu Kyi and her government. As one of the manufacturers of COVID-19 vaccines and with a promise to contribute to the accessibility and affordability of vaccines in developing countries, Myanmar needs to work with China to vaccinate its population. Vaccine diplomacy was high on the agenda during a visit by Chinese Foreign Minister Wang Yi to Myanmar in early January 2021, despite Naypyidaw making the first order of 30 million doses from India.

As the largest trading partner and second largest FDI source for Myanmar, the continued economic growth and opening up of the Chinese market will also have positive reverberations. Although Myanmar society overall holds anti-Chinese sentiments, Aung San Suu Kyi’s government still sees the benefits of engaging in close economic cooperation with China. Initiatives such as the China–Myanmar Economic Corridor aim to further connect the two economies.

With the recent signing of the Regional Comprehensive Economic Partnership (RCEP), Myanmar is also set to benefit from further relaxing of trade restrictions among its major trading partners. The government is optimistic that participating in RCEP will help Myanmar gain access to a large market for its exports, and that there will also be opportunities for responsible, high-quality investment inflows.

While Myanmar faces tremendous pressure from the West on the Rohingya issue, Myanmar’s Asian neighbours are hesitant to jump on the bandwagon. Only Malaysia and Indonesia — as the two Muslim-majority countries in ASEAN — have been more vocal.

China is Myanmar’s strongest supporter on the Rohingya issue and is actively involved in facilitating negotiations between the governments of Myanmar and Bangladesh. The protection China offers to Myanmar at international institutions is crucial. A quid pro quo is evident between the two countries with Myanmar offering support for China at the United Nations on Xinjiang and Hong Kong. This cooperative relationship will likely continue as both face similar pressure from the West.

More importantly, Myanmar’s domestic peace negotiations with a number of ethnic armed organisations (EAOs) has also stalled. At the Fourth Union Peace Conference in August 2020, six prominent EAOs did not attend the meeting, partly due to a lack of pressure from China. Given China’s close historical ties with these EAOs, Myanmar needs to make sure China sees the value in facilitating dialogue between them and the central government.

Beijing needs to be aware of a possible public opinion backlash within Myanmar towards China’s close relations with these EAOs and ultimately push for a peaceful settlement. At the same time, by participating in China’s Belt and Road Initiative, Myanmar intends to convince China that peace along the bilateral borderland area will bring benefits for China as well.

Myanmar’s relationship with the West — particularly the United States — might not improve any time soon. The Rohingya issue significantly soured Naypyidaw’s relationship with Washington and tarnished domestic goodwill within Myanmar towards the United States. A nationalist backlash towards the West on the Rohingya issue is palpable.

The COVID-19 pandemic has also exposed the weakness of Western governments. Like other governments in Southeast Asia, Myanmar may use the COVID-19 pandemic to strengthen its domestic control while ignoring much of the pressure from the West about its handling of domestic affairs.

Of course there are other Asian states Myanmar can turn to balance China’s influence. Some would suggest India but given its own current COVID-19 situation and historical issues Myanmar has with South Asia, there is perhaps little India can offer long term. On the other hand, given the souring of the relationship between India and China, it may be in India’s interest to offer support to Myanmar to balance out China’s influence in the country.

The other option is Japan, which can offer a genuine alternative for Myanmar, given its technological prowess, financial largess and positive public image. For the NLD’s second term, Myanmar’s foreign policy could deepen relations with China while also keeping other Asian neighbours such as Japan on side for balance.

Enze Han is Associate Professor at the Department of Politics and Public Administration, the University of Hong Kong.

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How Mr Biden might deal with the North Korea problem


Author: Editorial Board, ANU

From 5 to 12 January 2021, North Korea held its 8th Congress of the Workers’ Party of Korea, the second time such a meeting has been held under Kim Jong-un’s leadership and only the third time since 1980. As the highest ruling organ of the Workers’ Party, the Congress provides a window into the thinking of the North Korean elite about the future policy direction of this isolated country.

North Korean leader Kim Jong-un gestures during a parade in Pyongyang, 15 January 2021 (Photo: KCNA via Reuters).

Kim Jong-un admitted with unusual frankness that the country had failed to realise the economic objectives it set itself five years ago: to bolster economic growth; diversify economic partners; decrease dependence on China; and improve the lives of the North Korean people. The failures were blamed on natural disasters, the COVID-19 pandemic, the hostile policy of the United States and international sanctions.

Kim has in the past cautiously emphasised the economy as a pillar of his political legitimacy. In 2012 he declared that the North Korean people should never have to tighten their belts again; in 2013 he announced the byungjin line of parallel development of the economy and nuclear weapons; and in 2018 he declared that nuclear development was complete and all efforts should be devoted to economic development.

With the economy now under stress this was no longer tenable. Sanctions have been hurting since 2017 after the United Nations Security Council moved to impose tougher restrictions on the country in response to increased missile testing and North Korea’s fifth and sixth nuclear tests. The border with China, North Korea’s only significant trading partner, has been closed since early 2020 to stop COVID-19 given that the North Korean healthcare system doesn’t have the resources to deal with the virus. As Benjamin Katzeff Silberstein notes, North Korea’s trade, already cut by sanctions pressure, is estimated to have dropped by 80 per cent in 2020 on 2019 levels.

To remedy the situation, Kim has identified increasing state control over the economy, improving economic management, and improving self-sufficiency as top priorities. In practice this likely means a crack-down on private economic activity, which though nominally illegal has been allowed to flourish and play a more important role in the economy as the state sector has struggled. Cracking down may be designed more to help secure funds for the regime over the short term by squeezing businesses for the privilege of staying open, but will likely stifle longer term growth and snuffle reform.

In blaming hostile external forces for the country’s current predicament, a tried-and-true formula from the family playbook, Kim Jong-un labelled the United States North Korea’s ‘biggest enemy’. To protect North Korean security, he pledged to make improvements to the country’s nuclear arsenal including tactical nuclear weapons and multiple warhead capable missiles.

This puts incoming US president Joe Biden on alert in the lead up to his inauguration on 20 January.

South Korea was also targeted for vitriol despite the efforts of the Moon Jae-in administration in prioritising engagement. This included Moon’s recent reach-out to Pyongyang through banning the distribution of propaganda leaflets across the border by South Korean NGOs. Kim Jong-un’s younger sister, Kim Yong-jo, released a statement criticising the South Korean military joint chiefs of staff for comments on intelligence related to a military parade in the North. At the same time, Kim Jong-un has rejected Moon’s offers of cooperation on fighting COVID-19, humanitarian aid and tourism, and used the Congress to blast him for increasing the South’s defence budget and importing US military hardware. Kim demanded South Korea stop conducting joint military exercises with the United States, even though these exercises have been suspended or downsized since Kim’s first meeting with US President Donald Trump in Singapore in 2018. The dilemma for Moon, as his government seeks to continue engagement with the North, is how to realise the transfer of wartime operational control (OPCON) from Washington to Seoul that requires a large-scale drill to demonstrate its preparedness to the United States.

In our lead article this week, Naoko Aoki explains that if the Biden administration is to have any hope of progressing the denuclearisation of North Korea, it will need to ‘seek better coordination with [its] allies South Korea and Japan’, as well as cooperation with China, despite their currently chilly relations. Trump’s unilateral approach, deciding to meet with Kim and announcing the suspension of US–ROK joint military drills without consultations, caused South Korea and Japan considerable angst given its impact on their security. If North Korea believes it’s able to divide and conquer a united approach among the region’s major players to rein in its nuclear program, it will be hard to bring it to the table for credible negotiations.

Given North Korea’s tough economic situation, the failure of negotiations with Trump since the Hanoi summit in February 2019, and Biden’s pledge that he will follow ‘principled diplomacy’ and only meet Kim if he commits to denuclearise, there is an increased chance that North Korea will seek to confect a crisis through missile or nuclear tests or other military provocations. On past performance, it would then try to negotiate a return to the status quo ante in exchange for a relaxation of sanctions or economic aid.

The challenge for the Biden administration is to avoid falling into the traps that befell his predecessors. The Obama administration’s ‘strategic patience’ essentially equated to doing nothing and gave North Korea space to develop its weapons. Trump’s reality-TV summitry got the ball rolling but lacked the groundwork for a meaningful agreement that could progress denuclearisation.

Biden needs to find a balance between not rewarding confected crises and sending North Korea a clear message that progress on denuclearisation will be reciprocated with step-for-step progress on security guarantees and a permanent peace treaty to guarantee its post-denuclearisation survival. If the Biden administration can thread this needle and find a way to engage North Korea in meaningful negotiations, it might just stitch a deal.

The EAF Editorial Board is located in the Crawford School of Public Policy, College of Asia and the Pacific, The Australian National University.

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