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Great expectations for Modi’s new term


Author: Uma Lele, Institute of Economic Growth and International Association of Agricultural Economists

Indian Prime Minister Narendra Modi’s resounding victory in the world’s largest democracy in the May 2019 election was expected, but not with the large margin he received.

A farmer removes weeds from his wheat field in Upleta town, Gujarat, India (Photo: Reuters/Amit Dave).

Opposition parties were in disarray with no vision or program for India other than wanting to defeat Modi. The Indian National Congress party leader Rahul Gandhi lost his seat in the state of Uttar Pradesh, the seat of his great grandfather, grandmother and father. He only kept a seat in parliament and position as leader of the weakened opposition by contesting a second seat in the state of Kerala and now has announced his resignation as leader of the party. While he and his mother will maintain their seats in the parliament, this will be an opportunity for the Congress party to elect a new generation of democratically elected party leaders.

The Nehru–Gandhi dynasty, revered for its role in bringing hope and stability to India’s independence and post-independence periods, had lost its way. By contrast, even among those who do not agree with Modi’s ‘Hindutva’ (Hindu Nationalism) approach, voters have seen him as an honest man of humble origins with a large ambition for India. Unlike his predecessors, the Modi government has been less prone to scandals. Modi is seen to bring the stability needed to pursue an active development program in a country of 1.2 billion people.

Expectations to deliver are high, but so are the challenges. Between 8 to 12 million new productive jobs need to be created annually for a third of the population below the age of 30.

Modi’s former economic advisor Arvind Subramanian has raised doubts since leaving office about whether Indian growth is as high as reported. He argues that a slower growth rate has straddled both the Modi and previous Congress party governments. The IMF and other Indian experts have also acknowledged that Indian GDP numbers have issues.

Even before the elections, farmers throughout India had been protesting low incomes and slow growth. Recognising that agriculture growth has stalled, Modi launched an initiative to double farmers’ incomes by 2022. But the government has dithered on genetically modified crops and other policies in response to domestic opposition.

India needs to accelerate its structural transformation. It has fallen behind its Asian neighbours such as China, Indonesia and Vietnam. The manufacturing sector is yet to respond to the ‘Make in India’ campaign or focus on the substance of improving the ‘Ease of Doing Business in India’ index. The lagging agricultural total factor productivity growth needs to be accelerated and agricultural production diversified more rapidly and stabilised in the face of climate change. Regional disparities need to be narrowed — per capita income in Goa is nearly 15 times that of the poorest state of Bihar.

Half of the population depends on agriculture for a third to half of their income as farm size has declined and rural areas are urbanising rapidly. Despite the ‘Green Revolution’, India remains food insecure by many measures — a fifth of the population still lives in poverty earning US$1.90 per day; 15 per cent (196 million people) are under-nourished; and infant (32 per cent) and under-five (40 per cent) malnourishment rates remain high.

The impacts of climate change are already evident through more frequent and severe floods and droughts, leading to loss of yields. Addressing soil degradation and water scarcity are urgent challenges to increasing the resilience of Indian agriculture. Only 2 per cent of the cropped area is under sustainable agriculture and the Indo–Gangetic Plain is experiencing rapid resource degradation. Australia is collaborating with India to address conservation agriculture issues.

Yet India is a country full of paradoxes, with a promising future. It has an admirable space program, it manages the largest democratic elections fairly, and has the largest universal digital ID system in the world that allows inclusive and cost-effective service delivery.

The Goods and Services Tax (GST) passed unanimously in parliament. Bringing the entire country under a unified indirect taxation system, effective 1 July 2017, has improved tax collection and boosted the development of the Indian economy by removing indirect tax barriers between states. The GST is giving the central government more resources to allocate to states, and tax collection will improve over time.

It is yet to be seen how the new Modi government will respond to achieve its ambitious US$5 trillion economic target by 2024. So far the Modi vision has focused more on giveaways and less on economic growth.

Subsidies to agriculture, which constitute 4 per cent of GDP, need to be replaced by productivity-enhancing investments in research and development. India has historically subsidised agriculture to keep urban food prices low and stable. One of the first acts of Modi’s first administration was a bill to increase clarity on land rights to boost both agricultural and industrial investments, but the reform failed because of vested interests.

The government left states to address the problem but there has been little progress, although it has also embarked on an overdue consolidation of the ministries of agriculture, panchayati raj (local governments) and rural development.

Under India’s constitution, agriculture, forests and water are state domains and, barring a few exceptions, state governments have not responded to the challenges of agricultural and industrial development well.

The central government has new tools, but there is currently debate about whether replacing the Planning Commission with the National Institution for Transforming India has weakened the role of the central government in allocating resources for development planning and monitoring the effectiveness of centrally allocated resources.

The government needs to come up with a considered position on whether another form of development planning and an independent monitoring and evaluation office to routinely assess development effectiveness of expenditures are needed. The agenda on Modi’s plate is large, and his responsibility larger still with a weakened opposition, if he wishes to meet voters’ high expectations.

Dr Uma Lele is a Visiting Researcher at the Institute of Economic Growth and President-Elect of the International Association of Agricultural Economists, Delhi.

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Indonesia’s ‘hoaxes’ go deeper than just disinformation


Author: Thomas Paterson, ANU

The 2019 Indonesian election period was marred by violent protests and incessant widespread disinformation — commonly referred to as ‘hoaxes’ in Indonesia. The incumbent President Joko ‘Jokowi’ Widodo was the target of numerous hoaxes including an assertion that he wants to ‘sell’ Java and Sumatra to China in exchange for writing off Indonesia’s state debt of US$21 billion.

Riot police officers in formation during a riot near the Election Supervisory Agency headquarters in Jakarta, Indonesia, 22 May 2019 (Photo: Reuters/Willy Kurniawan).

Disinformation had previously plagued both the 2014 presidential election and 2017 Jakarta gubernatorial elections. But during the 2019 election, the General Elections Commission of Indonesia (KPU) itself became a target for the first time. One hoax involved a video that showed the seizure of millions of pre-marked ballot papers sent from China at a port in northern Jakarta. The story was quickly debunked but the hoax was estimated to have been featured in approximately 17,000 tweets.

Since the fall of Indonesian president Suharto and his authoritarian New Order regime in 1998, the KPU — while not infallible — has been one of Indonesia’s more reliable and incorruptible institutions. Although opposition candidate Prabowo Subianto alleged systematic cheating and questioned the KPU’s integrity, independent observers have confirmed that the election was indeed free and fair. The targeting of the KPU is a serious problem as public trust in the election commission is crucial to proper democratic functioning in Indonesia.

Cekfakta is a fact checking and verification project launched by 22 media companies to combat the spread of disinformation. The Indonesian Anti-Slander Society, Mafindo, also has hundreds of volunteers scouring the Internet to find and debunk hoaxes before they gain traction.

But their efforts have been frustrated by ‘buzzers’— cyber trolls who are paid to share and amplify hoaxes using fake social media accounts. There is even evidence of buzzers working for different campaign teams, who solicit their services to help shape the online discourse and political messaging.

The Indonesian government has also exerted pressure on Facebook to be more proactive in countering disinformation. Facebook has deactivated accounts including those associated with the Saracen group — a group that accepts payment for targeting people online. But Facebook has not publicly outlined the policy framework that it uses to decide which accounts to deactivate. Administrators of these groups reportedly earn up to US$7500 per social media post, as they are widely utilised for their nefarious online skills.

Free speech suppression is also a big problem in Indonesia. In 2017 celebrity Ahmad Dhani called then Jakarta governor Basuki ‘Ahok’ Tjahaja Purnama a blasphemer and ‘insulted’ Ahok’s supporters through multiple Twitter posts. Dhani was found guilty under the Electronic Information and Transactions Law (ITE) law of ‘hate speech’. None of the tweets explicitly mention Ahok’s ethnicity, religion or race as specifically required under Article 28(2). Convicting Dhani based on these tweets is highly problematic.

Similarly, State Jakarta University academic Robertus Robet was arrested for protesting against the proposed revision of a 2004 law that prevents active Indonesian military (TNI) officers from serving in ministries and public institutions. As part of his protest Robet sang a spoof song about the TNI, reminiscent of the ‘Ahok’ affair, and an edited video was shared widely online.

The song’s context was altered in this edited version, prompting a harsh backlash from those who felt it was insulting to the TNI. According to a police warrant, Robet was accused of ‘spreading hatred and hostility’ and ‘offending an authority or legal body’. These charges were brought under the ITE and the Criminal Code (KUHP).

Robet’s arrest highlights how criminal provisions are being used to silence free speech in Indonesia. At the heart of the problem is the overly vague phrase from Article 28(2) of the ITE Law — ‘knowingly and without authority disseminates information aimed at inflicting hatred’.

According to the Southeast Asia Freedom of Expression Network, 260 cases have been prosecuted under the ITE law. These elastic laws can be used as political tools to suppress free speech and target political opponents.

Indonesia scored 6.38 out of 10 in The Economist’s Democracy Index for 2018. This implies that Indonesia is on the verge of retreating from the ‘flawed democracy’ category into the ‘hybrid regime’ category. And according to Freedom House’s ‘Freedom in the World’ survey, Indonesia has lost rank, from 64 out of 100 in 2018 to 62 out of 100 in 2019. While a ‘retreat from democracy’ is unlikely due to the strength of local level politics, this downgrading represents a worryingly negative trend.

The chaos that beset Jakarta after the release of election results is indicative of deeper issues. This includes the allegation that ex-members of Kopassus — the Indonesian Army’s special forces — were involved in mobilising rioters. It is alleged by police that one ex-Kopassus commander obtained weapons to be used during the post-election unrest.

The conspiracy theory that ‘Chinese police’ had been bought in to shoot protesters during the Jakarta riots is the result of a concoction of disinformation and disillusionment. Comprehensively addressing these issues will be challenging for a second-term Jokowi government, but more must be done to address these issues that are holding Indonesia and its citizens back.

Thomas Paterson is a postgraduate research student of the Strategic and Defence Studies Centre at the Australian National University.

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EduTraC Oman 2019


Oct 27, 2019Oct 29, 2019

Opening hours: 
10am to 8pm

Oman Convention and Exhibition Centre

Location address: 
Airport Heights, Seeb, Muscat


Al Nimr International Exhibition Organizers

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Number of exhibitors: 

Major exhibits: 

Higher Education, Training, Human Resources, Career Development

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To highlight the surge in the Sultanate’s education, training and human resources sector, EduTraC Oman 2019 will take place at the Oman Convention & Exhibition Centre. Held under the patronage of the Ministry of Higher Education, Ministry of Manpower and Ministry of Education – National Career Guidance Center, EduTraC Oman will provide an excellent opportunity for students, graduates and human resource professionals to meet with admission officers, career counselors and HR personnel for academic opportunities and career guidance.

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Project Director

Jenitha Martin



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World Conference on Multidisciplinary Research Innovation WCMRI 19


Oct 24, 2019Oct 25, 2019

Holiday Inn Singapore Atrium

Location address: 
317 Outram Rd, singapore



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Number of exhibitors: 

Major exhibits: 

Art & Design
Banking & Finance
Law & justice
Information science
Religious Studies
Language, Linguistics & Literature
Local Government
Museums and heritage
Music & Fine arts
Business Management
Occupational Science
Communication & Media
Human Rights
Women’s studies
Regional studies
Popular Culture
Social Sciences
Fashion & Design

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IFERP heartily welcomes research scholars, delegates and students from academia as well as industries to interact and share their experience and knowledge at the 02nd World Conference on Multidisciplinary Research & Innovation (WCMRI-19). The conference will be held in Singapore on 24th – 25th October 2019.

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Conference coordinator

Conference coordinator


(805) 6040722


Mailing address: 

317 Outram Rd, Singapore

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IEEVChina China International New Energy and Intelligent Connected Vehicles Exhibition


Oct 22, 2019Oct 25, 2019

New China International Exhibition Center

Location address: 
No. 88 Yuxiang Road, Tianzhu Airport Industrial Zone, Shunyi District, Beijing


The Government of Beijing Municipality and Ministry of Industry and Information Technology of China

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Number of exhibitors: 

Major exhibits: 

1. Automobiles Intelligent Connected Vehicles: Concept vehicles, smart vehicles, intelligent connected vehicles, autonomous vehicles, driverless vehicles, flying cars, etc.

2. New Energy Automobiles: Plug-in hybrid electric vehicles; Electric vehicles (BEV, including solar cars) ; Fuel cell vehicles (FCEV), hydrogen engine vehicles, air vehicles, magnetic electric vehicles and other new energy vehicles, etc.

3.Intelligent connected products and technologies ;In-vehicle intelligent hardware: processors, intelligent chips, sensors, controllers, actuators, connectors, automotive electrical appliance and wiring harnesses, etc.

4. Big data and cloud computing, test platforms and related technologies and products.

5. Battery, motor, electric control and other core components and advanced technology applications.

6. Energy-saving technologies and products such as advanced internal combustion engines, high-efficiency transmissions, lightweight materials, and vehicle optimization design

7. Charging facilities, Charging piles, chargers, power distribution cabinets, rechargeable batteries and battery management systems, parking charging facilities, intelligent monitors, charging station powered solutions, charging station-smart grid solutions, etc.

8. Upstream and downstream companies and institutions about new generation information communication, intelligent transportation, micro-electronics, AI and new energy and new materials

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As the Asia’s leading new energy and driverless automobile show, IEEVChina offers an effective business and networking platform for Chinese and international professionals in the auto sector and is accompanied by first-class technical-scientific conference program as same as the characteristic test-driving zone for driverless vehicles . It is the ideal platform for the professionals in the new energy automobile industry to develop business, exchange idea and do networking.

Last year, IEEVChina, held in the China national convention center, Beijing, held its position as the number one auto technology show especially in new energy and driverless domain for China and Asia. 205 exhibitors and 86,570 visitors from 54 countries came to China national convention center, Beijing over the four days event.This equals to a 21 percent increase compared to the previous year.

The show is expected to continue to grow for 2019. It will cover all the important topics of automotive industry such as automotive electronics, connected car, EV&HEV, lightweight (auto materials), automotive parts, Charging facilities, autonomous driving etc. If you are in automotive industry, you can’t miss this exciting show. Expect to see you in IEEVChina!

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zhang yan


(0086) 18610809142



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Hong Kong protests enter a new phase


Author: Ray Yep, City University of Hong Kong

There is little sign of weariness among Hong Kong’s protesters after consecutive marches of millions against a controversial extradition law on 6 and 15 June. Instead, the crowd is becoming more creative and spontaneous with a wide array of tactics being used to pile pressure on the government — and further escalation is inevitable unless its demands are met.

People stand behind a barricade during a demonstration near a flag raising ceremony for the anniversary of Hong Kong handover to China in Hong Kong, China, 1 July 2019. (Photo: Reuters/Tyrone Siu).

Waves of wildcat strikes are disrupting the operation of public services. Mass petitions are being delivered to foreign consulates in Hong Kong. The publishing of protest statements in major international newspapers around the world during the G20 summit was a masterstroke in maintaining global attention on the fight.

While most of the protesters are highly disciplined and conscientious, some actions have been extremely dangerous. The standoff outside Police Headquarters on 21 June was one such precarious encounter. The city held its breath and prayed for restraint from both sides as thousands of police officers were barricaded in and abused by countless agitated youngsters until the early morning of the next day. The protesters are evidently in no mood to retreat unless there are further concessions from the government.

The government has turned itself into something resembling an absentee administration after announcing its decision to withhold the extradition bill indefinitely on 15 June. Hong Kong Chief Executive Carrie Lam has made few public appearances since then and events hosted by senior officials — including the meetings of the Executive Council, the key advisory body for the Chief Executive — were cancelled. Even the celebration of Reunification Day on 1 July was relocated to a more secure venue.

The government’s game plan is simple — make no further provocation and wait for the protesters to make a mistake.

The pro-Beijing establishment camp was probably excited to see protesters storming into the Legislative Council Building on 1 July. Protesters had been saddened by the news of a young woman who had decided to end her life, leaving a note supporting the protest a night before — the third such case in two weeks. A confrontation with police started in the early morning and eventually escalated into a forced intrusion into the building of the legislature. Conservative politicians lost no time in condemning the violence and felt empowered to call the intruders ‘rioters’.

Public responses have been mixed. While some segments of society feel angry about the naked challenge to law and order and there has been a general call for restraint from all corners, there remains solid support for the protesters’ cause. The Hong Kong people are fully aware of the root of the youngsters’ frustration and rage. For the majority of the local community, the fundamental question of why Carrie Lam cannot announce a formal retraction of the bill still needs to be answered.

The fate of Carrie Lam — who has claimed full responsibility for the mistake of historic proportions — is preordained. Her political career is effectively over. Not only did she trigger the most serious political crisis in Hong Kong since the 1997 handover, she also put the central government and Chinese President Xi Jinping in a hugely embarrassing situation at a time when China is already under severe pressure due to the trade war with the United States and the Huawei saga. Her lack of political judgement has been fully exposed and the damage to Beijing’s confidence in her ability to govern Hong Kong is irreversible.

Yet history says it may take some time before Beijing decides to wield the axe. In 2003, then chief executive Tung Chee-hwa suffered a similar defeat when he tried to push through legislation on sedition and treason against China. He only ‘resigned’ for ‘health reasons’ after almost 20 months. For Beijing, the succession issue is the first agenda of post-crisis management. It is likely to be followed by a major personnel reshuffle in departments and agencies involved in the administration of Hong Kong.

The results of the District Council election in Hong Kong in November 2019 will be crucial. Although District Councils are advisory bodies on community affairs with no executive power, they are important platforms for rewarding political loyalty. Most importantly, these elected local councillors are entitled to choose more than 100 members of the 1200-strong Election Committee that in turn elects the chief executive for Beijing’s appointment every five years. The result will be highly indicative of the actual damage caused by Carrie Lam’s mistake.

In the meantime, it would be a serious error for Carrie Lam to believe the storming of the Legislative Council has turned the political tide — public opinion has not been fully swayed by the violent scenes of 1 July. Unless further concessions from the government are unveiled soon, a new wave of protests is inevitable.

Dr Ray Yep is Professor of Politics and Associate Head of the Department of Public Policy at the City University of Hong Kong.

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What neighbours can expect from Modi’s second term


Authors: Arun Upadhyaya and Carter Chapwanya, Shandong University

After inviting heads of BIMSTEC governments to his swearing in ceremony, Indian Prime Minister Narendra Modi visited both the Maldives and Sri Lanka within the following 10 days — suggesting that his ‘Neighbourhood First’ policy will be the anchor of his foreign policy for his second term.

While he was in the Maldives, Modi’s external affairs minister travelled to Bhutan, perhaps in a bid to reaffirm Bhutan’s ‘special’ place in India’s neighbourhood relationships. Modi’s Sri Lanka trip, although touted as merely a solidarity visit, still made him the first head of state to visit the island nation after the Easter attacks.

Although the neighbourhood first policy was the brainchild of Modi’s first term, it was marred by some controversies that led many to question its authenticity. Still, Modi was quick to recover from the false starts towards the end of his first term. Coupled with the early activities of his second term, it is possible to divine what India’s regional foreign policy will look like for the next five years.

First, Modi’s frequent foreign visits around the subcontinent with high-level engagements are likely to continue unabated. This will continue to strengthen India’s neighbourhood ties as such confidence-building visits serve to demonstrate Modi’s commitment to rectifying communication deficiencies. Modi is credited with breaking the ‘tributary tradition’ where heads of other neighbouring states would make India their maiden destination for official visits while their counterpart in New Delhi always seemed above returning the favour.

Second, the Modi administration is more open to developmental partnerships — ostensibly in a bid to balance growing Chinese influence in the region. This is expected to increase as China’s Belt and Road Initiative continues to gain traction. Modi is already transforming India’s traditionally lethargic approach to neighbourhood commitments into one based on speedy delivery.

China’s expanding engagements and developmental lustre has inadvertently — perhaps serendipitously for South Asian states — resulted in the Indian age-old backyard edifice crumbling. Consequently, Modi is breaking Indian bureaucratic habits and correcting delivery deficits — observers say there are convincing indications that his second term will see India addressing the capability deficit that has seen it fail to live up to its economic potential. Chinese investments have clearly altered the economic balance of power, prompting Modi to forge ahead in the quest to preserve India’s position pre-eminence in South Asia by making it a truly worthwhile developmental partner.

Third, economic hegemony in South Asia remains vital not only for India’s strategic survival but for Modi’s legacy as well. India has never before had to compete with a great power to secure its primacy in its immediate neighbourhood, let alone with a power that also shares its borders with five South Asian countries and is equally concerned with a peaceful, stable and secure neighbourhood. China already dwarfs India in all indices of material capability and is adopting proactive diplomacy in the region.

Some see this as a driver for India’s manipulation of electoral processes in the region by using multilateral institutions, the United States and its allies to create an atmosphere of external pressure to shape domestic political outcomes and usher in pro-Indian leaderships in Sri Lanka and the Maldives. India’s partnerships with Japan and other states on joint South Asian infrastructural development projects were conceived for similar reasons.

Last, regional security will continue to shape Indian foreign policy in the mightiest of terms. On his recent trip to the Maldives, Modi managed to consolidate India’s influence in the Indian Ocean by signing six more agreements — two concerning Maritime security. In Sri Lanka, Modi reiterated his abhorrence of ‘state sponsored’ terrorism, suggesting that his administration will not be warming up to Islamabad anytime soon. Analysts have already started to talk about India’s shift from SAARC to BIMSTEC as entrenched in the India–Pakistan security dynamic. This relationship ‘oscillates’ in cycles of dialogues whose resolutions constantly fall apart after a major terrorist attack. There are no indications that this trend could abate in the near future and the omission of Pakistani Prime Minister Imran Khan from Modi’s inauguration invitees list indicates that Modi is not in a hurry to resume the dialogue.

Modi’s second term will — like any other administration — be faced with new challenges, but some old challenges are likely to endure. Although Modi is now better placed to deal with India’s major challenges in his second term, it will still be interesting to see how he will deal with some more imminent challenges.

These include an agreement on Teesta River water sharing that is long overdue and the illegal immigrants issue that are major irritants between India and Bangladesh. With Nepal, Modi is yet to address the issue of the outdated 1950 peace and friendship treaty. The issue of Modi’s preferential treatment of Tamils in Sri Lanka and Terai–Madhesh people in Nepal will be a constant source of distrust for his administration. Conflicting interests of multiple domestic stakeholders are also likely to unsettle the execution of his foreign policy preferences.

Arun Upadhyaya and Carter Chapwanya are International Politics PhD candidates at Shandong University.

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Washington’s fragile economic plans for the Indo-Pacific


Author: Kaewkamol Pitakdumrongkit, RSIS

In November 2017, US President Donald Trump unveiled the Free and Open Indo-Pacific Strategy (FOIP) as the country’s policy towards Asia. FOIP differs from the policy approach of previous administrations as it rests on an assumption that the United States and China are locked in strategic competition. This approach means that FOIP also contains economic elements as manifested in 5G technology rivalry and trade wars.

U.S. President Donald Trump attends an event with business leaders at a hotel in Seoul, South Korea, 30 June 2019. REUTERS/Kevin Lamarque

Although sometimes obscured by security issues, the economic elements of FOIP have been discussed in Australia–India–Japan–United States consultations on the Indo-Pacific. This includes Washington’s plans to collaborate with regional countries on trade, investment and infrastructure. On trade, the Trump administration aims to foster ‘free, fair, and reciprocal’ trade, as stated. Concerning investment, it wants to boost the investment climate, enhance private sector participation and ensure that investment in the region encourages entrepreneurship and innovation. And on infrastructure it seeks to promote good governance, especially in the facilitation of high-quality infrastructure, cost-effective connectivity projects and sustainable development.

But how does this US agenda gel with the policies of other states on regional economic governance? The prospects for advancing cooperation on investment and infrastructure appears to be favourable when compared with trade issues. But the jury is still out on how collaboration will unfold as the agenda of each country varies across each issue.

The Trump administration’s insistence on bilateralism, as seen in its withdrawal from the Trans-Pacific Partnership (TPP), contrasts with the preference of regional states for multilateralism. This is reflected in their support for the WTO, the TPP and the Regional Comprehensive and Economic Partnership (RCEP). Asia Pacific nations see multilateralism as a way to effectively address fragmenting trade governance and multiple overlapping rules and regulations.

US tariffs, including a 25 per cent tariff on Chinese goods, disrupt transnational production networks and increase uncertainties. This negatively affects regional economies, especially those where China is part of their supply chains. The US emphasis on defining trade ‘fairness’ in terms of trade balances leaves little room for governments around the region, especially those running trade surpluses with the United States, to negotiate deals that satisfy everyone.

Having watched the North American Free Trade Agreement and the US–Korea Free Trade Agreement re-negotiations, states around the Asia Pacific are increasingly concerned that they will be forced to accept contract terms favouring Washington. The Trump administration’s blocking of appointments to the WTO Appellate Body has heightened uncertainties about the future of the global trade governance regime.

These trends may tempt Asia Pacific nations to integrate among themselves — the ongoing RCEP negotiations are case in point. Critics claim that RCEP is less ambitious than the TPP. But its quality could be improved if the members agree to add a ‘consulting mechanism’ which would allow for a regulatory framework upgrade.

The Trump administration’s approach to foster international collaboration in the realm of investment has been welcomed by the region. But there are still concerns about the future of regional investment governance.

The Committee on Foreign Investment in the United States (CFIUS) is mandated to review transactions that result in the foreign acquisition of US companies to determine their impacts on national security. The body has recently been empowered by the Foreign Investment Risk Review Modernization Act of 2018, enabling it to become more vigilant in preventing the foreign acquisition of US innovations.

Under a pilot program launched in November 2018, CFIUS is able to review investments that either result in foreign investors’ access to non-public information or contribute to a foreigner entity’s ability to make substantial business decisions in 27 technological and innovative sectors. The strengthening of CFIUS has paved the way for Washington to implement stricter regulations on international investment. Asia Pacific economies are worrying about the implications of these changes on the future of investment governance.

The Trump administration also created the United States International Development Finance Corporation (USIDFC) via the Better Utilization of Investments Leading to Development Act of 2018 (BUILD Act). The USIDFC consolidates the work of several former development finance institutions while the BUILD Act allocates US$60 billion to the USIDFC to help implement programs.

This has been well-received by the regional due to large gaps in infrastructure financing and the desire to diversify away from China’s Belt and Road Initiative (BRI) which presents debt trap risks. The Vientiane–Kunming high-speed railway project, for example, is costing Laos US$6 billion or around 50 per cent of the state’s GDP. The Institute of Southeast Asian Studies (ISEAS) 2019 survey reveals that 70 per cent of respondents believe that their governments should be cautious when striking BRI deals with Beijing.

Asia Pacific countries are uncertain how the United States will implement its infrastructure policies. Despite the establishment of the USIDFC and promising words from senior figures in the Trump administration, regional stakeholders want to see more concrete action.

The prospects for collaboration on investment and infrastructure between the United States and the Asia Pacific are brighter than those for cooperation on trade. An empowered CFIUS may end up jeopardising international investment flows and governance. In the same way, if words are not followed up by action, Washington’s formation of the USIDFC may result in less development of regional infrastructure.

Kaewkamol Pitakdumrongkit is Deputy Head and Assistant Professor at the Centre for Multilateralism Studies (CMS), S Rajaratnam School of International Studies (RSIS), Nanyang Technological University (NTU), Singapore.

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The true impact of North Korean sanctions


Author: Benjamin Katzeff Silberstein, University of Pennsylvania

Bad, but not catastrophic — the most concise summary of the impact of international sanctions on North Korea’s economy. Understanding the reasons behind this assessment will explain why things are likely to remain this way for the foreseeable future.

North Korean leader Kim Jong Un visits a factory in this undated photo released by North Korea's Korean Central News Agency, Pyongyang, 7 August 2018 (Photo: Reuters/KCNA)

The question of how North Korea is faring under sanctions is often asked without defining what is being measured. Some of these discussions seem more about making a judgment on US President Donald Trump than the North Korean economy.

Analysing the economic impacts of sanctions on North Korea will not prove if Trump’s ‘maximum pressure’ policy is good or bad. There are two issues that need consideration — how sanctions are impacting the economy and where the economy figures in the regime’s cost–benefit calculations regarding its nuclear and missile programs. The latter is ultimately what the sanctions are seeking to undermine or force North Korea to abolish entirely.

As with everything related to North Korea’s domestic workings, the first question is difficult to answer with full certainty. But a few indications do paint a somewhat solid picture of the state of the North Korean economy under sanctions. These suggest that while the economy is hurting badly from sanctions, it is not in a state of catastrophe. At least not yet.

In the longer run, things could become more dire if current difficulties persist for the country’s industry. For example, it is hard to see how any meaningful level of production of the most essential goods can continue. Still, catastrophe is a strong word. The resiliency of a regime that survived a devastating economic collapse and famine in the 1990s and early 2000s should not be underestimated.

Under the sanctions, North Korea is unable to sell its most crucial export goods. In 2018, Chinese imports from North Korea plummeted by 88 per cent. UN numbers show that Chinese imports of North Korean coal, iron ore and other natural resources increased dramatically from 2010 onwards. But China imported no coal from North Korea between January and March 2018. Chinese trade data might not be fully reliable, particularly on politically sensitive topics like imports of sanctioned goods from North Korea. It certainly doesn’t cover smuggling, for example. All the same, it’s unlikely that Beijing would have imported any significantly large quantities of coal from North Korea and simply left them entirely off the books.

These exports have likely been a crucial source of funding for North Korean leader Kim Jong-un’s prestige projects in infrastructure and other spheres. With such exports plunging, the North Korean economy is clearly taking a major hit — some coal mines and factories ceased operations following sanctions.

In the short run, the lower coal prices may ironically be contributing to a boost in some industrial production as electricity costs have sunk dramatically due to lower foreign demand. In the longer run, it means one of the regime’s main sources of foreign currency earnings are gone.

Some say that smuggling renders the sanctions regime ‘invalid’. But this is a contradiction — had sanctions not had an impact, smuggling would not have been necessary in the first place. Smuggling is expensive. Whatever goods North Korea imports through smuggling have an added risk premium, and it likely gets paid much less than it normally would for whatever it exports through illicit channels. The quantities it can import and export under the radar cannot be anywhere near pre-sanction levels.

Even with these difficulties, no disaster seems to be looming in the immediate future. While market prices and exchange rates have held remarkably stable throughout the ‘maximum pressure’ period, they do not tell the full story on the country’s economic situation. There are ways to explain price stability in the face of mounting difficulties. Even so, market prices should show signs of stress if the country was truly plunged into an abrupt disaster. North Korea is clearly muddling through for now.

But as long as sanctions remain in place, it will not be possible for Kim to meaningfully improve North Korea’s poor, underdeveloped economy. North Korea can survive under sanctions, but it cannot do much more.

How sanctions figure in the regime’s strategic calculations is a much more difficult question. It is unlikely that the sanctions will result in social instability that truly threatens the regime’s hold on power. The regime is no stranger to brute force, a resource that it has in abundance.

Should things get truly catastrophic, China — and perhaps Russia — would likely intervene in order to keep the risk of social instability at bay with donations of food, fuel, and maybe even foreign currency. It is likely that China is already shoring up North Korea to some degree by providing key resources that may be difficult to acquire due to sanctions. The government clearly prioritises nuclear weapons over economic development.

We still do not know if the sanctions are ‘working’. To understand their full effect and potential on their primary target groups, the sanctions would need to be in place for several more years.

It remains to be seen if there is sufficient political patience in the United States to keep the sanctions pressure up for long enough, and whether China is prepared to continue implementing the sanctions. History suggests that both are unlikely, but perhaps this time is different.

Benjamin Katzeff Silberstein is an Associate Scholar at the Foreign Policy Research Institute (FPRI), Editor of North Korean Economy Watch and a Doctoral Candidate of the Department of History, the University of Pennsylvania, Philadelphia.

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The unwinnable contest for Himalayan water resources


Author: Ruth Gamble, La Trobe University

For millions of years, monsoonal winds have cycled between Asia’s tropical seas and the Tibetan Plateau, delivering snow to its high-altitude mountains and rains to the plains below them. The melting snow and summer rains combine to create a system of rivers that fan out from the mountains, delivering water and fertile soil to East, Southeast and South Asia.

Workers fixing railway tracks on a bridge over the Yarlung Tsangpo river as part of the construction of the railway linking Lhasa and Nyingchi, Tibet (Photo: Reuters).

Known as the Great Himalayan Watershed (GHW), this hydrological phenomenon has created richly diverse ecosystems and the right conditions for some of the world’s earliest agricultural and urban centres. The GHW encompasses most of Asia’s rivers — today around 45 per cent of the world’s population depends on the watershed and it is home to many significant manufacturing centres and trade networks. Despite this, the GHW has received little public or political attention.

Increasing attention is now being paid to the watershed’s degraded state. Scientists, environmentalists and locals are particularly concerned about its glaciated headwaters and its deltas. Both are experiencing accelerated climate change and biodiversity loss.

The best-case scenario for the GHW would be a pervasive management plan, focused on its interconnected headwaters and threatened deltas. But the complex mix of the ‘geo’ and ‘political’ within the GHW makes a management solution unlikely.

China controls the uppermost reaches of all these rivers, but only the Yellow and Yangtze Rivers flow within its boundaries. Even then, their upper reaches lie in Tibetan ethnic regions — environments foreign to most Chinese citizens. The Mekong, Salween, Brahmaputra, Ganges and Indus Rivers are transboundary river systems and most of them transverse more than two countries.

In the GHW’s southeast, intergovernmental organisations have only made tentative steps towards the transnational management of the Mekong. On its southern side, cooperation is proving even more elusive. The Indus, Brahmaputra and many of the Ganges’ tributaries flow through areas contested by China, India, Bhutan, Nepal and Pakistan. These river systems are not only un-managed, a heavy military presence within them is also further straining their fragile ecologies.

All Himalayan nation-states are now concerned about water security, but their competitive efforts to secure the GHW’s water are depleting rather than reviving its rivers.

Border standoffs are at least partially a result of the region’s topographical imbalance. China’s control of the rivers’ sources is a powerful strategic advantage that feeds paranoia in downstream countries. New development and technologies have allowed China to increase its presence on the Plateau, and it has also demonstrated a willingness to manipulate the region’s water flows and water flow data.

After the Doklam standoff between India, Bhutan and China in 2017, China refused to adhere to its data sharing agreement with India on flow levels. India depends on this data to prepare for monsoon floods — a lack of information about river flows puts lives at risk. While the Indian government’s reaction was mute, perhaps given its ability to monitor the river through military satellites, the media stoked local fears. Many people living along India’s north-eastern rivers now fear that China will use flash-floods or even river-delivered poison against them.

The rivers are being mined for gold, metals, sand and boutique water, and are being dammed for large hydropower projects. The size of these hydropower projects reveals their builders’ state-making intent — large projects allow governments to solidify their control in ethnic minority regions, make ‘first use’ water usage claims against international competitors and connect the periphery to the centre through the electricity grid.

One country’s hydropower projects would put environmental strains on this river system. Mirrored projects on either side of international borders are a result of intensifying competition for resources between states. On the upper Indus River, for example, China, India and Pakistan have all built hydropower dams within a few hundred kilometres of each other. One well-managed hydro-project could have provided sufficient energy for the entire region.

Like many other minoritised areas, the Himalayas’ resources are being extracted for the benefit of urban majorities. Any local resistance to the hydropower projects have been curtailed by heavy state presences across the Himalayas.

China, India and Pakistan have approached the mountains as distant, impenetrable and effectively empty. India and China took effective control of the region in the 1960s, marginalised its peoples and dissected their homelands with international borders.

Despite promoting themselves as the world’s premier post-colonial states, they have behaved like colonists in these mountains — importing lowland populations and armies and extracting their resources.

The rivers that flow from the Himalayan ice-pack are notorious border flouters and continuously work to erode state infrastructure. The states’ intensely nationalistic approach to these rivers is not only environmentally disastrous but also fundamentally impractical.

The environmental strains that militarisation and resource extraction place on the region will eventually force change. The degradation of the upper GHW will make it unliveable for soldiers and locals. Intensifying upstream decline will impact the billions of people who live downstream.

The GHW needs an international management council that would balance the needs of its fragile glacial heights, large downstream populations and biodiverse deltas.

It would need to combine ice-pack and river management. The ‘third pole’ could be managed by an organisation like the Arctic Council, which operates between the governments and indigenous peoples of the Arctic. This body could then liaise with a series of river management authorities that could be modelled on the existing Mekong River Commission.

But what would it take to create such a council? Forward thinking or a catastrophe?

Dr Ruth Gamble is a David Myers Research Fellow at La Trobe University, Melbourne.

This article appeared in the most recent edition of East Asia Forum QuarterlyChinese realities Vol. 11, No. 2.

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