Far Eastern Economic Review | Getting China Right
September 2008
Getting China Right
by Nina Hachigian and Michael Schiffer
Posted September 12, 2008
With the Olympics behind us, and the U.S. elections ahead, we are entering a potentially challenging time for U.S.-China relations. Given the numerous serious policy differences between the United States and China—on human rights, trade and currency, and Sudan, to name a few—getting China right from day one will be a key challenge for the next U.S. administration.
Presidents George H.W. Bush, Bill Clinton and George W. Bush all promised during their campaigns to be “tougher” on China than their predecessor was. But once in office, when the realities of the relationship sunk in—and after initial difficulties in managing relations at the outset of their administrations—they all reverted to a more pragmatic approach. And they lost valuable time, political capital and leverage in the process.
John McCain and Barack Obama face similar temptations. Rapid changes to the global economy, off-shoring of U.S. jobs to China, high gas prices and China’s military modernization and its abysmal record on human rights at home and abroad—all combine to give unique momentum to the case that they too should adopt a “tougher” stance. And no doubt the serious issues to be resolved between the U.S. and China will require toughness and a clear-eyed approach. But the urgency of global warming and other shared challenges with China requires that the next administration forge a progressive, results-oriented strategy toward China from the start.
For 30 years, America’s approach to China has been guided by the twin poles of either engagement or hedging—or some combination of the two. Today Washington has to move beyond that construct. The “on-off” engage-hedge construct does not adequately consider the complexity of China’s growing role, for good and for ill, in global affairs and the simple fact that U.S.-China relations in the decades ahead will likely be characterized not by either competition or cooperation, but by elements of both competition and cooperation. A pragmatic, forward-looking and multifaceted “risk management” strategy can open a new phase in U.S.-China relations. Such an approach has six elements:
• Embed China. So long as China continues to show incremental progress toward accepting growing responsibilities, the U.S. should move beyond engagement to embedding China in the international system as a responsible, engaged, and respected stakeholder so it can address urgent global problems such as climate change. China’s role in the Six Party talks is encouraging, but the U.S. must also work with China to both include it in international organizations, like the International Energy Agency and the G-8 that it is not currently in, as well as adopt an approach in the international community that is more oriented towards functional and cooperative problem solving in those organizations, like the U.N. and IMF, of which it is already a member.
• Manage both potential downside and upside risk. The U.S. must always ensure that it retains adequate capacity, military and otherwise, for handling a variety of scenarios that flow from both China’s strengths and its weaknesses. This includes maintaining peace and stability in the Taiwan Straits, naturally, but also, given the uncertainties about China’s future trajectory includes situations that may arise from economic and political instability and even natural disasters.
• Collaborate with China. Common challenges, such as sustaining and broadening global economic growth, curbing climate change, staunching the proliferation of weapons of mass destruction, and combating infectious diseases, will require the U.S. and China and the international community to cooperate on large-scale, long-term policies.
• Cooperate with other nations to influence China. While progress has hardly been linear, working with our allies and through multilateral channels and building international pressure has effectively induced China to modify its stance, at times, on certain controversial issues like nonproliferation and North Korea.
• Re-establish U.S. moral authority. Key to effective bilateral relations with China, and to getting others to cooperate with us vis-a-vis China is re-establishing U.S. moral authority and leadership around the globe. Closing Guantanamo and renouncing torture are two obvious steps a new administration can take to signal a new orientation in world affairs, but it also means, more fundamentally, a willingness to re-engage in multilateral problem solving alongside our friends and partners in the international community.
• Prepare to compete globally. The United States will not be able to engage China from a position of strength, nor guarantee success in a globalized world, unless we better educate our kids, empower our workers and repair our fiscal position and our infrastructure
Importantly, the next administration has an unparalleled opportunity to engage China in a constructive partnership on climate change and energy security—an extraordinary and urgent challenge the U.S. national security in this new century. The Bush administration's shortsighted energy policies and refusal to commit to reductions in greenhouse gases prevented us from capitalizing on our two nations' shared objectives.
As the two largest emitters of greenhouse gases in the world, the United States and China must work together to find solutions that will stave off the most severe consequences of climate change. No international effort to address global warming will be successful without the full engagement of both countries. Convincing China to commit to binding targets for reducing its greenhouse gas emissions will be a difficult and long-term challenge. But the U.S., in concert with its partners, can start to lay the foundation for these critical negotiations by taking a leadership position itself, and by bringing China into global environmental institutions now.
Because China's future remains deeply uncertain, we can assume neither that the stability nor the prosperity that have generally characterized U.S.-China relations for the past several decades will continue. But nor should we assume that conflict is inevitable.
The United States cannot determine China's future; that task belongs to the Chinese people. Rather, by facing our own challenges and working with China to tackle both China's own problems as well as our shared global challenges the next administration has a once in a generation opportunity to help shape the environment in which China makes its choices and peacefully integrate China into the international order, and, in the process, embed it in the web of norms and responsibilities that come with being an active player on the world stage.
Nina Hachigian is a senior vice president at the Center for American Progress. Michael Schiffer is a program officer at the Stanley Foundation. They are co-authors, along with Winny Chen, of a new report from the Center for American Progress “A Global Imperative: U.S.-China Relations in the 21st Century” http://www.americanprogress.org/issues/2008/08/china_report.html
Sunday, September 14, 2008
Far Eastern Economic Review | Getting China Right
Asia Times Online :: Southeast Asia news and business from Indonesia, Philippines, Thailand, Malaysia and Vietnam
Asia Times Online :: Southeast Asia news and business from Indonesia, Philippines, Thailand, Malaysia and Vietnam
Southeast Asia
Jun 5, 2008
Vietnam sets nuclear pace in Southeast Asia
By Andrew Symon
HANOI - General Electric of the United States and Asian rivals in the nuclear power sector such as Daewoo and Toshiba are among companies looking to win big contracts in Southeast Asia as the region's countries turn to the once-shunned energy source to fuel future economic growth.
GE and companies from France, Russia, Canada, Japan, South Korea and China turned out in numbers at a nuclear industry exhibition in Hanoi last month, bidding to help Vietnam develop its first nuclear power facilities.
Southeast Asia
Jun 5, 2008
Vietnam sets nuclear pace in Southeast Asia
By Andrew Symon
HANOI - General Electric of the United States and Asian rivals in the nuclear power sector such as Daewoo and Toshiba are among companies looking to win big contracts in Southeast Asia as the region's countries turn to the once-shunned energy source to fuel future economic growth.
GE and companies from France, Russia, Canada, Japan, South Korea and China turned out in numbers at a nuclear industry exhibition in Hanoi last month, bidding to help Vietnam develop its first nuclear power facilities.
High global fuel prices in the 1970s resulted in a raft of plants being built in Europe and North America. After a retreat in the 1980s over safety issues, interest in the nuclear option is reviving
as Asia's surging power demands help spur global fossil fuel prices and pressure mounts to reduce growth in greenhouse gas emissions.
Vietnam is on track to become Southeast Asia's first country to take the nuclear plunge, with the government and its main energy-related agencies, the Vietnamese Atomic Energy Agency and Electricity Vietnam (EVN), advancing plans for huge expansion in power generation.
Vietnam plans to have four nuclear generation plants with a total of 8,000 megawatts (MW) capacity in operation by 2025. Two of those plants, each with two 1,000 MW units, are to be up and running by 2020 in Ninh Thuan province on the country's central coast. Construction is set to begin in 2015 and the government has earmarked US$6 billion for each plant.
So far, there is little if any public opposition to the development in the authoritarian country, increasing Vietnam's commercial attractiveness to the global nuclear industry.
In Indonesia, the government aims to have its first nuclear plant in operation some time after 2015 on the Central Java north coast. The outlook here is less certain, as public opposition is strengthening nationally and locally, to the extent that at least one Islamic religious leader has issued an edict against the plan. With national, regional and presidential elections scheduled for next year, Indonesia's nuclear plans could be derailed, some industry executives fear.
Thailand is also carrying out a feasibility study for a nuclear plant to be built in the country by 2020, although again public opposition might hinder progress. Community and non-governmental organizations in recent years managed to derail construction of two large coal-fired power plants in southern Prachuap Kirikhan province.
Elsewhere in the region, nuclear feasibility studies are underway by relevant government agencies in the Philippines and Malaysia.
The nuclear momentum appears to be strongest in Vietnam, where the government last August doubled its previous generation target of 4,000 MW to 8,000 MW goal by 2025. A law providing the framework for development of nuclear power plants and foreign investment in the industry, wider civilian applications for nuclear science, and safety and non-proliferation standards and controls is expected to be passed this month by the National Assembly. This will enable the government to get on with project planning and establish a tendering process for power plant construction, fueling and operation.
Before those laws were in place, the recent Hanoi exhibition attracted a who's who of global energy firms. Executives from France's Areva and Electricite de France (EDF) rubbed shoulders with their counterparts from Japan's Toshiba and Federation of Electric Power Companies, South Korea's Daewoo and the Korea Hydro and Nuclear Power Company. Representatives of General Electric, Russia's Rosatom and Atomostroi and China's Guangdong Nuclear Power Company were also present, as were officials of the United Nations' Vienna-based International Atomic Energy Agency.
The four-day exhibition from May 13-17 was the third in the country since 2004. Foreign companies are expected to play critical roles in supplying technology, education and training for Vietnamese scientists, engineers and technicians. The government also clearly hopes to finance the plants' construction through export-import credit schemes of the respective companies' governments.
The exhibition served a dual purpose of providing information to the Vietnamese public about the government's plans. In late May, more than 400 local representatives of the coastal Ninh Thuan province were invited by the government to voice opinions about proposed plants at a seminar co-organized by local power company EVN and Electricite de France. The state-controlled press reported that the response to the plant by the two districts' representatives at the meeting was largely positive.
Powerful diplomacy
The Vietnam exhibition also underlined the close links between business and government in the international nuclear industry.
The French consortium was strongly supported by the French Embassy in media statements and interviews at the Vietnam event. At a press conference, French nuclear power industry representatives pointed to a new government agency, the French International Nuclear Energy Agency, which had been established to provide experts to collaborate with foreign governments on feasibility studies, safety concerns and other issues.
The China Guangdong Nuclear Power Company's presentation signaled China's new goal of entering the global nuclear business as an investor and supplier rather than as a recipient of foreign expertise, equipment and investment. China's nuclear power expansion plans are the most ambitious in the world in terms of scale and speed of development. Established nuclear power players, including from Japan and South Korea, said they see Chinese rivals as a fast-rising, low-cost competitive threat.
Japan's Toshiba, Hitachi and Mitsubishi are also in the nuclear hunt and seem well placed to benefit from Tokyo's strong commercial diplomacy in the region. Coinciding with the Vietnam exhibition, the governments of Japan and Vietnam signed a bilateral assistance agreement. As part of that pact, Japan is scheduled to help Vietnam prepare and plan for the introduction of nuclear energy, educate experts in nuclear power and help the country formulate nuclear safety regulations.
Vietnam has also signed nuclear cooperation agreements with the governments of Russia, France, South Korea and the US. One potential commercial ace up the sleeve of Japanese companies is their government's push for new incentives to invest in nuclear power development in Southeast Asia and elsewhere.
Tokyo is lobbying for new nuclear facilities to be eligible, after the Kyoto climate change accord expires in 2012, for clean development mechanism (CDM) credits for carbon dioxide reduction achieved by not building new coal- and gas-fueled power plants.
Given the scale of nuclear power plants and the fact that plants emit nearly no greenhouse gases, CDM credits that could be sold on global carbon markets and used by companies and governments to meet mandatory carbon emissions targets elsewhere could have huge value. The Japanese government put its case forward at a UN climate change meeting in early April.
The proposal was left on the table, due mainly to developed countries' still strong concerns over safety and weapons proliferation. The Tokyo proposal is expected to resurface at another UN meeting on climate issues in Copenhagen in late 2009. The CDM scheme for nuclear power is expected to get a wider hearing as governments grapple with putting in place a successor agreement to Kyoto.
If adopted, the CDM proposal could have enormous implications for Southeast Asia's nuclear power development. The high capital costs associated with building nuclear power plants are at this point still expected to constrain the region's nuclear future, but those start-up costs would be mitigated significantly if new plants were entitled to CDM credits.
Andrew Symon is a Singapore-based analyst and writer specializing in energy and natural resources. He completed a study in April on nuclear power in Southeast Asia for the Lowy Institute for International Policy in Sydney, Australia. He may be contacted at andrew.symon@yahoo.com.sg
(Copyright 2008 Asia Times Online (Holdings) Ltd. All rights reserved. Please contact us about sales, syndication and republishing.)
They fight economy, we fight politics « The Wayang Party Club of Singapore
They fight economy, we fight politics « The Wayang Party Club of Singapore
Posted on September 13, 2008 by wayangparty
While we still get hooked on political in-fighting and our economy continues to go downhill, leaders of neighbouring Singapore are throwing in all their effort to boost their economy. While maintaining good relationship with economically powerful nations, Singapore’s leaders also make frequent trips overseas–to Middle East, Russia, and even places as far away as South America–to exploit new markets in a bid to strengthen the city-state’s long term competitiveness.
Singapore’s success has always been touted as an astonishing and highly commendable miracle in Southeast Asia that has also invited much envy. Those praising her will resort to all the best descriptions they can think of, such as competent, squeaky clean, prosperous, and progressive; while those critical of the island republic just dismiss it as a tiny country living under the heavy-handed rule of a paternalistic party without much freedom of speech, which is easy to manage as everyone is made to abide by the laws; and its economic achievement is, therefore, nothing to shout about.
With a population of 4.48 million (ranked 117 in the world) and a land area of 707 sq km (ranked 178), Singapore is indeed tiny. Nevertheless, influences of this tiny country are not inferior to countries many times larger.
Taiwan’s Common Wealth magazine recently published an exclusive interview with Singapore prime minister Lee Hsien Loong, in which it said, “A typical tiny city-state, Singapore has evolved into a giant pool of talents in this world. It is not just an important financial hub, but also the world’s second busiest seaport. More than 7,000 multinational companies have set up offices here, about 60% or more than 4,000 being regional headquarters for Asia Pacific.”
This little country with outstanding achievements was once a part of Malaysia. It became a British colony in 1824, joined Malaysia in 1963, and was forced to withdraw from the federation two years later on 9 August 1965 to become a sovereign country. Many Singaporeans still take its independence to heart until this day.
The older generation on both sides of the Causeway may still remember how a tearful Lee Kuan Yew announced Singapore’s separation from Malaysia on the television: “The world is like a massive ocean, which allows big fish and small shrimp to survive. We are like a small shrimp that will survive in this ocean.”
Frankly speaking, not many people back then viewed this tiny nation lacking in both human and natural resources favourably. But in less than two decades, this “tiny little red dot” in the eyes of some politicians was transformed into the wealthiest and most progressive country in Southeast Asia.
Our land area is 466 times that of Singapore’s, population 6 times larger. But comparing the economic strengths of both countries after 43 years of separation, we can but lament our deficiencies. Today, Singapore’s per capita income stands at US$30,228 (about RM102,775), six times higher than ours at US$5,040 (about 17,136).
Putting historical burdens aside, Singapore does have its merits. For instance, her highly efficient and incorruptible bureaucracy, open and dynamic economic policies as well as practices of meritocracy should all be emulated by us.
According to Common Wealth, Singapore is like a powerful magnet that draws the talents from all over the world to its shores. Among the republic’s workforce of nearly three million, almost one million or 33% are foreigners.
Without a question, Malaysians make up a sizeable portion of these one million foreign workers in Singapore. The checkpoint at Woodlands is packed with tens of thousands of motorcyclists waiting to cross the border every morning and evening.
To this massive army of workers, Singapore is the place to make big money, while Johor Bahru is more like a place to tumpang for the night.
Each year, Singapore grants permanent resident status to about 30,000 foreign citizens, many of whom are top Malaysian students, who were rejected by our universities, or were unable to get the courses they wanted here, or were denied scholarships owing to a host of unfair policies, but were subsequently admitted into Singapore’s universities. Many of them have chosen to work in Singapore after graduation, and end up becoming Singapore’s citizens.
Take A look at how hard Singapore is trying to boost its economy and how hard we are trying to consume ourselves in political battles.
Vision 2020 seems to be getting more and more obscure… (By LIM MUN FAH/Translated by DOMINIC LOH/Sin Chew Daily)
Source: Sin Chew.com
CommScope unit lands Singapore rail contract
http://www.bizjournals.com/charlotte/stories/2008/09/08/daily50.html
Friday, September 12, 2008 - 9:00 AM EDT
Charlotte Business Journal
Andrew Corp. has been awarded a contract to upgrade the communications infrastructure on one of Singapore’s Mass Rapid Transit rail lines.
Financial terms weren’t disclsosed.
The upgrade is designed to provide commuters with better overall wireless coverage and reception, as well as greater bandwidth and download speeds. It is intended to enable commuters to make full use of mobile applications such as video calls, video and music downloads and Internet services.
Illinois-based Andrew designs and makes communications equipment and systems at facilities in 35 countries. It operates as a subsidiary of Hickory-based CommScope Inc. (NYSE:CTV), which produces cabling systems for business-enterprise applications
Brazil mobilizes military might
Eduardo Simoes, Reuters
Published: Saturday, September 13, 2008
Brazil deployed warships, fighter jets and thousands of troops off its southern coast Friday, starting two weeks of military manoeuvres aimed at showing the world it can defend vast new oil reserves.
The exercise, dubbed Operation Atlantic, will simulate an attack by a fictitious enemy on oil platforms and pipelines both on and off shore along the coastline of the states of Rio de Janeiro, Sao Paulo and Espirito Santo.
The maneuvers are the latest in a national debate over how to manage a slew of recent deep-sea oil finds that could thrust Brazil, which still occasionally imports crude to meet domestic demand, into the top 10 of the world's oil producers.
Brazilian marines prepare for war games designed to show the world Brazil can defend its oil riches.
Sergio Moraes, Reuters
This is an exercise that is intended to dissuade, a show of force," said Admiral Edlander Santos, the commander of the operation.
Over the next two weeks, 10,000 troops, as many as 50 fighter jets, 17 ships and at least one submarine will be mobilized for the exercise, which will cost about $11.2 million to stage.
The operation is also intended to take stock of the growing list of military hardware that Brazil covets to defend its offshore resources, which are becoming one of its top defense priorities along with a porous border in the Amazon jungle.
Brazil began imagining itself as an oil superpower when state-run energy giant Petrobras announced in November it had found five to eight billion barrels of light crude deep beneath the ocean floor in the Santos basin, the world's second-biggest oil find in the last 20 years.
Just this week, Petrobras estimated that another nearby deep-sea field holds between three and four billion barrels of oil and natural gas. Together, the two finds could lift Brazil's proven reserves by 85 per cent, and that may be just the tip of the iceberg.
Some analysts estimate that 50 to 80 billion barrels of oil may lie deep below a thick layer of salt under the seabed along an 800 kilometre stretch off Brazil's southern coast.
As part of the strategic defense plan, Brazil is negotiating a military alliance with France that would include the construction of a nuclear-powered submarine. It is also seeking closer military ties with Russia.
© The Calgary Herald 2008
Brazil plans to build 50 more nuclear power plants
www.chinaview.cn 2008-09-13 13:19:45 Print
RIO DE JANEIRO, Sept. 12 (Xinhua) -- Mines and Energy Minister Edison Lobao announced Friday Brazil plans to build 50 to 60 nuclear power plants in half a century, with each having capacity of 1,000 megawatts.
"The general idea is to build one plant per year," he said during a visit to the construction site of Brazil's third nuclear power plant, Angra 3.
The ambitious plan, a priority for the administration of President Luiz Inacio Lula da Silva, has yet to be approved by Brazil's National Council of Energy Policy, he added.
The construction of Angra 3 started in 1984, but was halted for21 years. The decision to resume the project and expand the nuclear program was welcomed by Brazil's industrial sector as a way to prevent an energy crisis in future decades, but environmentalists warned of the problem of the residues storage.
Angra 1 and Angra 2, both located in the southeastern state of Rio De Janeiro, currently have a combined installed capacity of 2,000 megawatts.
Besides the three plants, four others, two in northeastern Brazil and two in the southeastern part, are due to start operation by 2020.
It is said Brazil's environment ministry will not allow Angra 3to start operation until the residues problem is resolved.
According to Lobao, the construction of Angra 3 is due to be resumed in April 2009 and will take almost five years to complete, at a cost of 7 billion reais (3.7 billion U.S. dollars).
Editor: Du
Emergency meeting on Lehman rescue resumes
By JEANNINE AVERSA, AP Economics Writer
1 hour, 18 minutes ago
WASHINGTON - With the global financial system holding its collective breath, the U.S. government scrambled Saturday to help devise a rescue for Lehman Brothers and restore confidence in Wall Street and the American financial structure.
An official from the Federal Reserve Bank of New York, who asked not to be named due to the sensitivity of the talks, said deliberations have resumed with leading Wall Street executives and top U.S. financial officials.
They include Treasury Secretary Henry Paulson, Timothy Geithner, president of the New York Fed, and Securities and Exchange Commission Chairman Christopher Cox. They were meeting on the heels of an emergency session convened Friday night by Geithner — the Fed's point person on financial crises.
Participants in Saturday's discussions also include executives from Goldman Sachs, JPMorgan Chase, Morgan Stanley, Citigroup and Merrill Lynch.
Federal Reserve Chairman Ben Bernanke is actively engaged in the deliberations but wasn't in attendance.
Fed and Treasury officials are aiming to engineer a private-sector rescue for the troubled firm that doesn't involve government money. Options include selling Lehman outright or breaking it up into pieces to be sold to private firms.
Potential buyers could include Bank of America Corp., Britain's Barclay's Plc, Japan's Nomura Securities, France's BNP Paribas and Deutsche Bank AG. All have declined to comment.
Global fears intensified Saturday that the collapse of the country's fourth-largest investment bank would stagger markets and undercut confidence in the U.S. financial system.
U.S. regulators face growing pressure from abroad to find a way out ahead of Monday's reopening of Asian markets. Germany's Finance Minister Peer Steinbrueck urged that a resolution be found before then, warning ominously, "the news that is coming out of the U.S. is bad."
Lehman Brothers Holdings Inc. put itself on the block earlier this week. Bad bets on real-estate holdings — which have factored into bank failures and taken out other financial companies — have thrust the 158-year-old firm in peril. Its stock has been hammered and it has been dogged by growing doubts about whether other financial institutions would continue to do business with it.
Russia tries to raise oil production By CATRINA STEWART, Associated Press Writer
Fri Sep 12, 4:12 PM ET
MOSCOW - Home to abundant oil reserves, Russia rarely worried about where the next barrel would come from — until now.
With analysts expecting production to fall this year for the first time in a decade, Russian companies are pushing to find new oil in remote regions such as the Arctic Shelf and East Siberia — but their efforts are hampered by crippling taxes that give the government much of the recent gains from high oil prices.
The Kremlin is now apparently considering tax cuts aimed at letting companies keep enough of the country's windfall from higher oil prices to invest in exploration — on top of cuts earlier this year that analysts and industry executives said they didn't go far enough. Russia's oil industry is calling for $16.3 billion in further breaks from next year.
The prospering energy industry in Russia has been crucial to the career of Prime Minister Vladimir Putin, who as president oversaw an eight-year, oil-fueled economic boom which improved the lives of many ordinary Russians and helped restore national self-confidence.
Declining oil production is bad news for a resource-based economy where revenues from the oil industry account for about 25 percent of GDP — and undermines Russia's efforts to position itself as an influential guarantor of global energy supplies, providing as it does some 30 percent of Europe's oil imports.
"The Kremlin was very uncomfortable seeing the declining production curve," said Artyem Konchin, an oil and gas analyst at UnicreditAton. "If the Kremlin wants to position itself as an energy superpower — and a place where reserves are abundant, or at least available — a decline in production is detrimental to this message."
Oil production reached 9.87 million barrels per day last year, a 2.3 percent rise. It is down 0.5 percent in the first eight months of the year. While the Energy Ministry is sticking with its forecast of 1 percent production growth this year, analysts expect production to decline by up to 0.5 percent — its first decline in 10 years — followed by a rebound next year, as the already approved tax cuts take effect.
Older fields — located mainly in western Siberia — are nearing maturity, and there are few huge new developments coming onstream to drive production in the next few years, say analysts. Costly exploration is badly needed in areas such as East Siberia and the Arctic Shelf.
Rosneft — the country's largest oil producer — said last week it would delay the launch of its giant Vankor project and trimmed its production forecasts for the year, further blows to the Ministry's estimates. And according to data from Uralsib bank, Surgutneftegaz and Sibneft — a unit of Gazpromneft — both have seen falling output in recent months, while another big oil concern, Lukoil, is roughly flat.
"I am worried about the projects... You need to invest in them, and for that you have to find cash. To find cash, you have to get it from your own earnings, or debt. And the debt market is very bad right now ... So where exactly are you going to find this cash?" said Victor Mishnyakov, an oil and gas analyst at UralSib bank.
Earlier in the year, the government approved tax breaks for new fields in remote areas, and raised the tax-free threshold to $15 per barrel from $9. The changes — which are estimated to save the industry $5 billion annually — come into effect next year. There is an ongoing debate within the government about going further, with the Finance Ministry urging fiscal restraint and the Economy Ministry pushing for cuts and growth.
In a recent interview in New York, OAO Lukoil deputy vice president Andrei Gaidamaka told The Associated Press that the taxes have a direct impact on their ability to plow money back into new projects. The government at present takes about $70 of the revenue in taxes from every $100 barrel sold, he said. The approved cuts will on their own give Lukoil a further $2 billion-$3 billion in pretax profits annually.
"We are very different from most of our international competitors," he said. "We are way more competitive on the cost side, but we still have lower profitability due to the high tax burden."
The oil windfall tax has served the government well, helping it amass $174 billion in a "rainy-day" fund, split off in February into a reserve fund and a national welfare fund. But with oil prices powering through to unprecedented heights earlier this summer, touching $147 per barrel in July, the energy companies have seen little of the benefits.
The proposed tax cuts are as yet unspecified, but potentially include raising the tax-free threshold from $15 per barrel to $25, said Deputy Energy Minister Stanislav Svetlitsky recently.
A debilitating dispute at Anglo-Russian joint venture TNK-BP, in large part resolved, has also stoked concerns. The company reassigned 148 technical specialists from the country earlier this year amid visa difficulties and litigation.
In July, chief operating officer Tim Summers said the Russian shareholders' desire to cut capital expenditure by $900 million in 2008 could wipe up to 1 million tons to 5 million tons from the company's output over the next 12 months.
Where once it was common practice for Russian investors to whisk cash out of the company via dividends, analysts say that practice is changing in the domestic oil industry, given the massive investment needs.
"If you take money out of the investment cashflow, you will probably face declining production," said Konchin.
___
AP Business Writer Stevenson Jacobs contributed to this report from New York.
China Suspends Officials in Mine Disaster
By JASON LEOW
September 13, 2008; Page A8
BEIJING -- Chinese authorities have suspended local officials and detained executives of an illegal iron-ore mine where a drainage pond caused a deadly mudslide this week, as the country continues to struggle with the human cost of its rapid industrialization.
Reuters
The mother of Huang Fuxuan (center) was among the victim of a mudslide near an illegal mine.
The death toll in Monday's disaster rose Friday to 178, with possibly more people buried in the sea of mud, which covered 74 acres. Officials say initial findings indicate heavy rains, which broke a retaining wall at a waste dump operated by Tashan Mining Co., eventually caused the landslide.
According to state media, the sludge and liquid iron-ore waste buried an outdoor market and a village of 1,300 residents. Rescue work is continuing, but an official at the Xiangfen disaster relief center said Friday that the rainy season made rescue efforts more complicated.
This is the fourth mining-related disaster in less than two weeks, illustrating the deadly nature of China's mining industry. Despite years of safety campaigns and efforts to upgrade worker safety, many companies disregard safety standards, especially in the mining business.
Iron ore is in short supply in China, which imports about half its demand. That has spurred thousands of small-scale Chinese operators to open ore mines, which operate illegally but often are tolerated by local officials. Though iron-ore prices have come down recently, they hit a record high earlier this year.
State media said Thursday China has more than 9,000 mine waste dumps, and more than half operate without safety licenses. Tashan Mining itself didn't renew its production-safety license after it expired in 2006, and its mining license also had expired last year, state media reported.
Thirteen company officials, including the mine owner and senior managers, have been arrested, according to state media and Wang Quanmin, a spokesman from the Linfen municipal government that administers Xiangfen. Mr. Wang also said several local officials, including a party chief and the Xiangfen work safety bureau chief, have been suspended from their duties.
It isn't clear what will happen to those found guilty of mismanaging the mine or whether the culprits will be executed, as often happens when Chinese authorities want to warn others after a high profile case. A spokeswoman from the State Administration of Work Safety said an investigation is continuing and that those responsible will be "punished in line with the relevant laws."
-- Bai Lin in Shanghai contributed to this article.
Write to Jason Leow at jason.leow@wsj.com
Flaws appear in the Middle Kingdom’s economic miracle
http://business.timesonline.co.uk/tol/business/markets/china/article4744096.ece
September 13, 2008
Flaws appear in the Middle Kingdom’s economic miracle
The storm clouds are gathering as the seemingly unstoppable juggernaut of double-digit Chinese growth starts to slow downLeo Lewis
If you picked up a cigarette lighter anywhere in the world, there is an 80 per cent chance that it was made in Wenzhou. And if your job was at a cigarette lighter factory in Wenzhou, there is an 80 per cent chance that you are now unemployed. Anywhere else, such a decline in a local industry would be considered catastrophic, but this sprawling industrial city has always taken a brutally capitalist view of life.
Seen from the gates of the 100 lighter factories in Wenzhou that are still running, the 600-odd that have fallen silent in the past 18 months were simply the unlucky ones. The people of Wenzhou realised that, beyond lighters, there are bigger, darker clouds gathering over the Middle Kingdom. The raging debate is: how big, how dark and how badly will they hit property prices?
Choosing the perfect proxy for Chinese growth has never been straightforward, but there are plenty of metrics to suggest that what was once a seemingly unstoppable generator of growth has begun to slow. Electricity production, for example, had risen at 12 per cent for the past two years, but it fell to single digits in July.
Evidence more recent and more striking came in the form of industrial production growth. It plunged to a six-year low in August. Of course, Glenn Maguire, Société Générale’s chief Asia economist, said, the Olympics and the forced closures of many factories and coal-fired power plants that were made while the Games were under way were behind that fall, but while industrial production is not collapsing, he said, it is tracking exports into softer territory.
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Chinese bank becomes world's most profitable
China faces economic reckoning after Games
Other economists share the view that although the slowdown of the United States and Europe will do plenty of harm to China’s exports, its economy will not follow theirs into the abyss. Downturns in America and Europe will turn consumers towards cheaper, Chinese-made goods and even last year, when export growth was supercharged, net exports (exports minus imports) accounted for only 16 per cent of nominal GDP growth.
What will happen, though, is that last year’s 11.9 per cent GDP growth will probably be replaced by something around 9 per cent this year and 8 per cent next year. Although that would still leave the Chinese growth story looking impressive against most developed and developing economies, it will mark a psychological turning point. For both Chinese and many outside investors in China, double-digit growth has become something of an article of faith – “evidence” that the titanic Chinese numbers game is as good as it looks on paper.
The Beijing Olympics, and the organisers’ obsessive pursuit of records for size, expense and grandeur, was a key ritual of that faith. However, for both Chinese and international investors – and for the Communist Party policymakers 1,300 miles away in Beijing – Wenzhou’s lighter crisis encapsulates many of the doubts and worries now swirling around the country’s economic juggernaut. It also goes a long way, analysts say, to explaining the 65 per cent plunge in Shanghai-listed stocks since their peak last October and the marked absence of any rally before, during or after the Games.
It could also come to explain a vicious shakedown of property prices, which Nicole Wong, a CLSA analyst, believes may be in line for a 20 to 30 per cent correction. It is speculators from Wenzhou who have now begun to bale out of properties bought in Hong Kong and Shanghai. Having been among the first to feel the wealth effect of China’s growth, they are leading a flight from property because they cannot meet payments on what they bought at the top of the market.
Paul Cavey, Macquarie’s China economist, believes that any looming crisis in the property sector would trigger a response by the authorities in Beijing, given the central importance of construction to Chinese GDP.
There is much anecdotal evidence that China’s property market could turn very nasty, a misery that could rapidly transmit itself to the banking sector as a vast nonperforming loan build-up. Early buyers of apartments in Hangzhou trashed the offices of a developer because it had started to offer discounts to later buyers. In Hunan, 10,000 people rioted over an alleged property fraud scheme. There has already been a sharp rise in mortgage defaults in Shenzhen and Guangzhou provinces and other examples of people “walking away” from mortgages and forfeiting their deposits rather than watch their property fall into negative equity.
It all hinges, economists say, on how quickly unemployment emerges from any export-led downturn. Like so many facets of China’s export-emphasised, lower-tech industrial base, the Wenzhou lighter plants have been hit by rougher terms of trade and an unexpectedly fierce squeeze on margins. They also expose China’s still relatively low position on the so-called “value chain” of increasing technological prowess that Beijing is so desperate should propel industry along.
The zinc alloy and copper used to make lighters have doubled and tripled respectively in price since 2005. The combination of huge – some economists believe dangerously “malin-vested” – factory production capacity and ferocious competition means that the costs cannot be passed to customers. Profits of some lighter manufacturers in Wenzhou have taken 70 per cent maulings since last year.
Jim Walker, the managing director of Asianomics, believes that China’s potential downfall may lie in the extent to which it has too long allowed capital to be mispriced. It has done this, he argues, by regulating retail lending rates, manipulating the renminbi exchange rate and overt interference in market pricing mechanisms for key factors such as energy and food. When that is shaken down, the global effects will be far-reaching.
Although global commodity and energy prices are tumbling fast, their nearly vertical ascent earlier this year unravelled the mathematics of perhaps tens of billions of dollars of capital expenditure and capacity expansion. Business models that reaped bundles of cash with zinc at 8,000 yuan (£655) per tonne stop being viable at 20,000 yuan per tonne. The same appears to be true of energy. The cost of sending a container of goods from China to the West Coast of the United States is now about $8,000 (£4,475), 160 per cent higher than it was eight years ago when American manufacturers were making their decisions to outsource production to China.
To make matters worse, the factories of Wenzhou have had to respond, along with industry across China, to robust consumer price inflation. For the Government, the 6.3 per cent level reached over the summer was a politically unacceptable figure demanding policy response; for factory bosses, even the August rate of 4.9 per cent means wage rises and yet more pressure on already shrinking margins.
Added to that pressure is the effect of the new Employment Contract Law, which went into effect this year and was designed to offer greater government protection to workers. Most analysts believe that the impact so far has been negligible, especially in the sweatshops feeding the clothing industry. However, the knock-on effect, said Andy Rothman, of CLSA, has been significant: workers now fight for their rights in a way that they did not before.
According to lawyers in Shanghai, labour disputes there in the past eight months are up by 115 per cent on the same period last year. Only a quarter of those cases ended in victory for plaintiffs, but smaller companies – particularly export processors – are running scared. Many, fearing litigation under the new law, have moved to grant minimum wages that previously they might have got away without paying.
A more unsettling question on labour may be the future of Chinese labour productivity. Recently published research suggests that across manufacturing – private and state-owned – annual productivity grew at a huge 20.4 per cent a year between 1995 and 2003.
According to Pieter Bottelier, a China economist at Johns Hopkins University, the significance of that may have been missed by most analysts. It was this unprecedented and still unique productivity growth profile that allowed China’s manufacturers to reduce export prices, gain market share, increase profits and pay rapidly rising real wages – all at the same time. What is still not known is where productivity has gone since 2003. Professor Bottelier assumes that it will have slowed, placing yet more squeeze on margins.
If, as many suspect, the margin squeeze is hurting corporate China – some estimate that 67,000 companies have failed so far this year – how Beijing attacks this will be perhaps the biggest test it has faced in two decades.
Mr Walker said: “The capital mispricing mistakes are about to be exposed. They will turn out to be more extensive than the housing market debacle that characterises the US.”
Japan's general election may be held late October:
report Fri Sep 12, 11:59 PM ET
TOKYO (AFP) - Japan's ruling coalition is considering bringing forward general elections to October 26, a newspaper said Saturday.
The coalition, led by the Liberal Democratic Party (LDP), had originally considered holding the next election on November 9 to allow sufficient time to prepare for the campaign, the Yomiuri Shimbun said.
The LDP is to hold its presidential election on September 22 to replace Prime Minister Yasuo Fukuda, who announced his resignation earlier this month. A new LDP leader will secure the nation's premiership.
October 26 emerged as the favourite date because the coalition wants to use the momentum from the LDP election, the mass-circulation daily said, quoting coalition sources.
A final decision on a general election date will be made by the new LDP president. Taro Aso, a conservative former foreign minister, is the favourite.
Russia pulls troops out of Georgian port Poti
Moscow - Russia has withdrawn its last troops from the Georgian port of Poti, reports said Saturday. Russian television showed the troops dismantling checkpoints at the Black Sea port before leaving in trucks. Around 150 Russian soldiers and ten tanks had been stationed in Poti, locals said.
On Monday French President Nicolas Sarkozy, the current holder of the EU's rotating presidency, brokered in Moscow a deal to end Russia's current military occupation of Georgia.
Under the deal, Russia was to pull its troops out of Poti by September 15 and retreat from undisputed parts of Georgia within 10 days. At least 200 EU observers are to be in position by October 1 at the latest.
Russia Stock Market Fall Is Said to Imperil Oil Boom
By ANDREW E. KRAMER
Published: September 12, 2008
MOSCOW — Rattled by falling oil prices and the war in Georgia, Russia’s stock market has slumped so severely that it now threatens the country’s oil-fueled boom of recent years, economists say.
The benchmark RTS index has lost 46 percent of its value since its peak in May, representing a paper loss of about $700 billion for Russian companies. Much of that decline has come since the war in Georgia and the subsequent war of words with the United States and Europe that unsettled foreign investors, who began withdrawing capital.
On Friday the RTS, which peaked in May at 2,487, rebounded slightly, rising 3.36 percent to close at 1,342. The country’s other main stock exchange, the MICEX, was rose 6 percent on Friday, after weeks of heavy losses.
While initially seen as a problem confined to the Russian stock market, which is volatile in the best of times, the drop in share prices is now spilling over to the real economy. Companies that had pledged shares as collateral for loans, for example, are now facing margin calls, bankers in Moscow say.
“It’s a classic squeeze,” said Roland Nash, chief strategist for Renaissance Capital in Moscow.
The underlying problem for the Russian stock market is that about 80 percent of the shares are in companies exporting commodities with a history of boom-bust cycles. Additionally, the risk premium for investing in Russia has risen with the war.
It is unclear which problem caused more damage. In one indication that Russian politics lubricated the market slide here, however, investors have pulled nearly $5 billion this year from emerging market funds with a heavy Russia weighting, according to EPFR Global, a company that tracks fund flows. By comparison, investments in Middle East and African funds, which are also seen as dependent on commodity prices, have risen this year.
The decline has elicited a response from officials here that economists described as panicky, including a number of plans that would have seemed inconceivable a few months ago.
For next year, Russian officials are projecting federal revenue growth of 1.8 percent, compared with an estimated 13.8 percent this year. Just in the last week, the value of Russia’s hard currency reserves has dropped $8.9 billion. The ruble is down 6 percent since the war in Georgia.
“The government and central bank need to do all they can to ensure inflow of additional financial resources into the financial market,” President Dmitri A. Medvedev said Thursday. “This is absolutely obvious, and this must be done for sure.”
The finance minister, Aleksei L. Kudrin, who had opposed investing any of Russia’s $573 billion in hard currency reserves in the domestic market during a milder correction a year ago, this week approved of the idea. Mr. Kudrin added Thursday that the government might also tap money in the state pension fund to invest in equities.
In a stop-gap measure, the Central Bank has injected more than $11 billion into the Russian banking system and is intervening to halt the daily decline in the ruble’s exchange rate with the dollar. Investors, however, remained skeptical.
“Going forward, one of the big issues that people have with the Russian market is too much state ownership, too much manipulation,” Rory MacFarquhar, an economist for Goldman Sachs in Moscow, said in a telephone interview. “Nobody is going to believe that is not politicized.”
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Russia' military riddles with weakness
A member of a Russian tank crew surveys the terrain last month during the Russian invasion of Georgia. The Soviet-designed T-72 tanks that rolled into Georgia were prone to breaking down and are considered several rungs below American battle tanks.
Russia's military is riddled with weakness. Its equipment is outdated. Its technology is decades behind the West. And its capacity for battlefield...
By Tom Lasseter
McClatchy Newspapers
BELA SZANDELSZKY / AP
Related
Russian economy isn't in great shape, either
MOSCOW — Russia's military is riddled with weakness. Its equipment is outdated. Its technology is decades behind the West. And its capacity for battlefield communications and intelligence gathering is terrible.
In short, Russia has a mid- to late-20th century military in a 21st-century world.
That and more were revealed during Russia's war with U.S.-backed Georgia last month, when its troops routed the small Georgian army but looked woefully short of the fighting power of nations like the United States.
And to top things off, Russia's economy has recently been slammed by the double whammy of a plummeting stock market and falling currency as the effects of the global economic crunch were compounded by worried Western investors withdrawing billions of dollars in the aftermath of the Georgian war.
Instead of pausing, the Kremlin has charged ahead, warning and threatening the United States and its allies at every turn. Brushing aside American predictions that Moscow would isolate itself from the world by invading Georgia, the Kremlin last week announced joint training exercises with Venezuela — where President Hugo Chávez is an avowed foe of U.S. policy abroad.
News on Wednesday that two nuclear-capable Russian bombers, reportedly without nuclear weapons, had landed in Venezuela punctuated both the uncertainty and the gravity of the situation: Was this just a posturing by Moscow leaders, or is the Kremlin signaling it is willing to risk a fight despite its obvious weaknesses?
Prime Minister Vladimir Putin has publicly said he has no desire for conflict. Russian generals under his government's command, meanwhile, have said they might target U.S. missile defense shield sites in Europe with ballistic missiles.
Russia observers differ on the implications of the standoff.
Vladimir Dvorkin, a retired Russian major general who ran a premier military think tank from 1993 to 2001, said the maneuvers by the United States and Russia after the Georgian war have been political posturing, and the idea that Russia and the West would get into an armed confrontation is "absurd."
Some pro-Western analysts, however, say Russian leadership is testing how far it can go in reclaiming parts of the former Soviet Union, or at least weakening Western influence in the region, at a time when the United States is perceived as being weak and Europe divided.
During the fighting in Georgia, Russian officers in the field frequently relied on cellphones or old radios, and they were unable to establish tactical command centers close to the front. The air force and ground forces were badly out of sync, and some soldiers complained to reporters that they hadn't eaten in a few days.
Their American counterparts would have been able to quickly establish satellite uplinks, visual feeds from unmanned aerial drones — which the Russians weren't able to use at all — and real-time communications among all branches of the military.
The Soviet-designed T-72 tanks that rolled into Georgia were prone to breaking down and are considered several rungs below American battle tanks.
"Military equipment is very old, and at the same time it's absolutely clear that Russia has no resources to change it," said Alexander Goltz, a military analyst in Moscow. "For all of the '90s, we had no money to produce new military equipment ... the whole chain of subcontractors was destroyed."
But former military officers, and officials connected with the Kremlin, emphasize that Russia is in the same league as America when it comes to nuclear missile stockpiles.
Pavel Zolotarev, a retired Russian major general and deputy director of a government-funded institute that studies the United States and Canada, reminded a reporter of nuclear realities.
"An army is made up of different kinds of forces," Zolotarev said. "If we compare the nuclear forces of these two sides, then we have parity. We can destroy each other five or six times."
Amid the heated words, it's important to step back and see Russia for what it really is, said Robert Hunter, the U.S. ambassador to NATO under President Clinton and now a senior adviser at the RAND Corp.
"I don't believe that Russia is a great power again. ... Russia is Saudi Arabia with trees," Hunter said. "In reality, Russia is a second-rate military power and will be for some time."
Russian forces leave
Georgian port city
TBILISI, Georgia — Russian forces pulled out of the Black Sea port of Poti today and appeared to be preparing to withdraw from other positions in western Georgia weeks, eyewitnesses and officials said.
An Associated Press television crew saw Russian soldiers packing military trucks at a post by the Black Sea shore near the Abkhazia region before dawn.
Russian forces left the two posts they had maintained on the outskirts of Poti, one by a bridge on a main road leading into the city and one a few miles from Georgia's main port, Interior Ministry official Shota Utiashvili said.
"Russian forces have withdrawn completely from Poti," Utiashvili said.
The Associated Press
Copyright © 2008 The Seattle Times Company
Bush: Rescue teams ready to help after Ike
The Associated PressPublished: September 13, 2008
WASHINGTON: Rescue teams were poised to move in and help tens of thousands of people who decided not to evacuate before Hurricane Ike struck, President Bush said Saturday.
"The storm has yet to pass and I know there are people concerned about their lives," Bush said from the South Lawn of the White House after he participated in video conference with Homeland Security Secretary Michael Chertoff and David Paulison, head of the Federal Emergency Management Agency.
"Some people didn't evacuate when asked," Bush said about the tens of thousands of people in Texas and Louisiana who may have to be rescued. "I've been briefed on the rescue teams there in the area. They're prepared to move as soon as weather conditions permit. Obviously, people on the ground there are sensitive to helping people and are fully prepared to do so."
Ike ravaged southeast Texas early Saturday, battering the coast with driving rain and high wind. Thousands of homes and government buildings are flooded, roads are washed out, nearly 3 million people lost power and several fires burned unabated.
"As this massive storm moves through the Gulf Coast, people in that area can rest assured that the American people will be praying for them and will be ready to help once this storm moves on," Bush said.
Today in Americas
Los Angeles trains collide, causing 'carnage'Hurricane Ike lashes Texas coastlineChile's precocious teens cast aside sexual taboos
Though roughly 1 million people fled coastal communities, authorities in four counties alone said roughly 140,000 ignored mandatory evacuation orders and stayed behind. Other counties were unable to provide numbers but officials said they were concerned that many decided to brave deadly conditions rather than flee.
The eye of the hurricane missed the center of Houston, as well as the largest concentrations of oil and gas refineries. Still, retail gasoline prices jumped Saturday based on Ike's collision with the region, which accounts for about one-fifth of the nation's petroleum refining capacity. Some refineries, even if they were not damaged, may remain shuttered for days.
Gas prices nationwide rose nearly 6 cents a gallon to $3.733, according to auto club AAA, the Oil Price Information Service and Wright Express. Ike disrupted supply at the wholesale level in the Gulf Coast, where prices struck $4.85 a gallon Friday.
The price spike is expected to result in higher prices at gas pumps across broad swaths of the nation as the gasoline makes it way from the wholesale market to retailers.
The Environmental Protection Agency temporarily has waived certain gasoline requirements for nearly a dozen states that are dependent on supplies from the Gulf Coast. The action means that the states temporarily do not have to use less-polluting blends of gasoline, making it easier for them to use foreign imports on the U.S. market.
"In the meantime, the Department of Energy and state authorities will be monitoring a gasoline crisis so consumers are not being gouged," Bush said.
Implications of Suu Kyi’s refusal to meet Gambari…
http://aussgworldpolitics.wordpress.com/2008/09/12/implications-of-suu-kyis-refusal-to-meet-gambari/
Implications of Suu Kyi’s refusal to meet Gambari…
Posted by Charles on September 12, 2008
Any wonder why the Nobel Peace Prize Laureate has chosen not to meet up with UN envoy, Ibrahim Gambari?
According to Kyaw Zwa Moe, in Irrawaddy’s, ‘The UN’s Dangerous Detour‘, the UN has been bending itself over backwards in promoting the interests of the military junta and its ‘road map’ to democracy. He wrote, it ‘was more than a disappointment: it was a disgrace’. The writer also added that Gambari was pushing for a nation-wide 2010 elections, which was originally part of the junta’s ‘road map’. The envoy further assured that the UN would monitor this election to ensure that it is conducted in a ‘free and fair’ manner.
The problem with trying to conduct a future election is three-fold.
However, even before we consider that prospect, the envoy should be dutifully reminded that the National League for Democracy (NLD) had already won the polls fair and square back in 1991. They were prevented from forming a civilian government by the junta which has thus far, shown no remorse and has continued with its repressive rule.
This view is supported by an Irrawaddy editorial, ‘The UN Must Set the Agenda’, which noted that humanitarian aid being delivered to victims of Cyclone Nargis faced tremendous difficulties, which ‘can be traced directly to local bureaucratic hurdles or military interference by the regime’.
Therefore, given the junta’s dodgy previous and current track record, what makes the UN confident that the former would not resort to similar tricks if they are to lose again the next round?
Moreover, even if they are to win, the UN can never guarantee that the elections will be free and fair. This is because the country is currently under military rule which translates into the denial of freedom of expression. This will indirectly impact and obstruct opposition politicians from free and fair campaigning. Any results that are to materialise will likely be heavily prejudiced towards the status quo.
Lastly, the NLD was supposed to form the government back in 1991, which has yet to materialise. If the UN are to disregard the results of that election, then it is effectively delegitimising itself as a impartial world body by ignoring the democratic wishes of the Burmese.
Now that Suu Kyi has refused to meet Gambari, the secretary general, Ban Ki- Moon, is sticking to his guns. He claims that Gambari’s visit was not futile and that progress can be made despite the odds. The Secretary General is naive in making such a statement because he should know that any negotiations without Suu Kyi is basically meaningless.
Such a move by Suu Kyi has various implications not just for developments in Burma, but also the UN.
First, the UN is losing its hold as an impartial mediator. Worse, it is seen as powerless in its role as a negotiator because it can no longer get NLD and Suu Kyi onto the negotiating table.
While the current deadlock may appear to be at a disadvantage for NLD , it may not necessarily be so. By downplaying the UN’s role, the supporting function of ASEAN and neighbouring countries that are propping up the junta, is also henceforth, reduced. The ‘road map’ adovcated by the junta cannot proceed under a disguise of having the support of these actors.
Hopefully, the UN will be forced to consider taking a stronger stance against the junta. Not only should the UN demand for more human rights improvements, it should also adopt harsher language, not just against the junta, but also on corporations and countries that are supporting the latter.
This entry was posted on September 12, 2008 at 10:23 pm and is filed under Politics (Asia). Tagged: Burma, UN. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.
SELF-STYLED INDIAN MUJAHIDEEN STRIKES IN NEW DELHI
http://intellibriefs.blogspot.com/
September 13, 2008
SELF-STYLED INDIAN MUJAHIDEEN STRIKES IN NEW DELHI
B.RAMAN
The so-called Indian Mujahideen (IM) has once again, through an E-mail sent to some media offices, claimed the responsibility for a series of five explosions in three crowded market places of New Delhi between 6-45 PM and 7 PM on September 13,2008. At least nine persons are reported to have been killed and many injured. The message is reported to have been sent five minutes before the explosions took place. It speaks of nine Improvised Explosive Devices (IEDs) planted in different places. Five of these have exploded. Three are reported to have been detected by the police before the explosion could take place. One remains unaccounted for.
2.One has to await details of evidence regarding the IEDs before one could comment on their similarity,if any, with the earlier blasts in three cities of Uttar Pradesh last November, in Jaipur in May and in Bangalore and Ahmedabad in July, but the means of communication used to claim responsibility for the blasts and to provide authenticity of the claim are the same.The use of E-mails signed by similar kuniyats (assumed names such as al-Hindi or al-Arabi) and similar-sounding E-mail addresses indicate the same organisation has been responsible.
3. It is already quite clear that a wide area pan-Indian network of terrorists has come up in our midst and has managed to train a number of Indian Muslims not only in assembling IEDs, but also in clandestine methods of operation and communication. From what one heard of the contents of the message from the IM about the New Delhi blasts, there is an element of bravado in it. It taunts the security experts for not being able to establish who are behind these messages. It shows a certain confidence that the police are not yet on the trail of those sending these messages.
4. The success of the UP Police in identifying some of those involved in the blasts of last November did not prevent the blasts that followed in other cities. Similarly, the success of the Ahmedabad and Jaipur Police in arresting many of those responsible for the blasts in their cities has not come in the way of the successful strike in New Delhi.
5. Normally, timely preventive intelligence comes either from intercepts of communications and/or penetration of the terrorist organisations. The IM has apparently been using the Internet for its internal communications and not telephones. If so, this highlights our inadequacies in intercepting Internet communications. Since we still do not know the identity and organisational structure of the IM, penetrating it would have been understandably difficult. We were presuming before the UP blasts of last November that all terrorist strikes must be the work of the Pakistan-based Lashkar-e-Toiba (LET) or the Pakistan/Bangladesh based Harkat-ul-Jihad-al-Islami (HUJI). Since November last, we have been focussing on the Students Islamic Movement of India (SIMI). It is possible that elements from all these organisations are involved. It is equally possible that there are other Indian Muslim elements who had not come to the notice of the police earlier/. It is important to keep an open mind and establish the composition and structure of the IM. Only then penetration would be possible.
6.Preventive intelligence also comes fom the thorough interrogation of those arrested in connection with the previous blasts. All the arrests made so far, whether in UP or Jaipur or Ahmedabad , were mainly of those involved in those blasts. They apparently did not enable us to identify and arrest those trained with a capability for assembling IEDS, but who had not yet participated in any terrorist strike.
7. It should be apparent by now firstly, that we have only identified the tip of the jihadi iceberg in our midst. The iceberg itself remains unexposed. Secondly, we have not yet been able to identify the command and control of the IM. Thirdly, like Al Qaeda, the IM is divided into a number of autonomous cells each capable of operating independently without being affected by the identification and neutralisation of the cells involved in previous blasts.
8. All these years, our focus was on the training camps for jihadi terrorists in Pakistan and Bangladesh. Interrogation of those arrested since the beginning of this year has brought out that many training camps had been held in different parts of India by the SIMI. We were apparently oblivious of the details of these camps and the identities of those trained. It is important to have a common investigation cell for the whole of India to identify the various elements involved in this wide area network and neutralise them. Piecemeal investigation in different States ruled by different political parties each with its own partisan perception and agenda will result in our continuing to bleed at the hands of this network (13-9-08)
(The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For Topical Studies, Chennai. E-mail: seventyone2@gmail.com )
Posted by Naxal Watch at 8:48 AM 0 comments Links to this post
China’s naval ambitions
http://intellibriefs.blogspot.com/2008/09/chinas-naval-ambitions.html
Second chance at command of the oceans
Le Monde diplomatique.
Five hundred years ago the obvious contender for dominance of the world’s oceans was the Chinese imperial exploration fleet, which was technologically centuries ahead of all its rivals. But the emperor decided to turn the nation’s back on the sea. The Chinese will not make the same mistake twice
By Olivier Zajec
In 2006 China Central Television showed a documentary series, Daguo Jueqi (The rise of great powers) (1), which was immediately successful. It included interviews with historians and international leaders and was considered accurate enough to be bought by the History Channel and broadcast in the United States. The 12 50-minute episodes explained how the Portuguese, Spanish, Dutch, French, British, German, Japanese, Russian and American empires rose, prospered and fell. The man behind the idea, Beijing university professor Qian Chengdan, understands its popular appeal in his own country: “It’s because China, the Chinese people, the Chinese race, has been revitalised and is once again on the world stage” (2).
Daguo Jueqi looks at the maritime achievements of the major powers in their rise to global dominance. Whatever the population, size or territory of the originating country, its strategy was always to open to the outside world, control the principal sea lanes and deep-water bases, and master technology, naval action and influence. Those are the Chinese government’s new priorities, laid down in the 2000 Maritime High Technology Plan and the parallel rise of the People’s Liberation Army Navy (PLAN).
Pragmatism and diplomacy
The documentary broke with decades of Chinese Communist Party historical ideology and revealed China’s current pragmatism as that of a rising power intent on avoiding the arrogant blindness that left it in a long period of weakness in the 19th century. To influence the world in a “harmonious and peaceful” manner (two key words used in current policy), to open China to the world – and the world to China – appears to be Hu Jintao’s present creed. In an unprecedented effort of naval diplomacy in 2007, Chinese warships visited French, Australian, Japanese, Singaporean, Spanish and US ports and took part in joint manoeuvres against the threat of piracy.
China’s soft-power ambitions should be put in perspective against the regional backdrop. There are also two major issues. One concerns China’s territorial claims on Taiwan and the extent of Chinese territorial waters in its exclusive economic zone (EEZ). If China were to satisfy these ambitions it would gain free access to vast areas of the Pacific Ocean and Southeast Asian sea lanes beyond the Indochinese peninsula. The second issue, now that China has become the world’s second oil importer, is the protection of its energy corridors. The territorial issue will be a determining factor for the present. Beijing has succeeded in settling land border disputes with 13 of its neighbours in a friendly manner (3). Only two neighbours oppose China openly: Bhutan and India. But, according to Loïc Frouart, of the French defence ministry’s strategic affairs delegation, “those 14,500 km of maritime borders represent many possibilities for potential crisis or friction. There are many unresolved conflicts” (4). China is claiming full sovereignty over 4m sq km of water.
The Chinese authorities would like to regain their hold on Taiwan “by force if necessary”. That remains the official stance, although the election in Taiwan of Ma Ying-jeou’s Kuomintang party has reduced tensions on both sides of the straits. Along with the rapid rise of the Chinese navy and the decline, however relative, in the tonnage difference with the US navy, China is using psychological as well as military means to accompany the developments that will lead to the peaceful return of Taiwan. That involves both dissuasion and enticement. The missiles aimed at the island, and the US attitude to them, prevent Taiwan from declaring independence, while the growing economic interdependence between Taiwan and the mainland is preparing citizens for a possible Hong Kong transfer.
However, Taiwan is not the only stone in China’s vast game of maritime Go. China is also in conflict with Japan over the Diaoyu Islands (Senkaku in Japanese) near Okinawa, which house a US military base. Tokyo insists that its EEZ extends 450 km to the west of the archipelago, which Beijing contests by claiming the entire continental plateau that extends its own territory into the East China Sea. It is no coincidence that this area contains a potential 200bn cubic metres of natural gas. China is also in conflict with Taiwan, Vietnam, the Philippines, Malaysia, Brunei and Indonesia over the Spratly Islands (Nansha in Chinese) and the Pratas archipelago (Dongsha), and with Vietnam and Taiwan over the Paracel Islands (Xisha). China is contesting maritime borders in Japan and Vietnam and disputing fishing quotas with South Korea, Japan, Vietnam and the Philippines.
Longstanding naval ambitions
We tend to forget that China has always been active in the region. In the 1950s the Chinese navy took back most of the small coastal islands controlled by Chiang Kai Shek’s nationalists. In 1974 it took advantage of South Vietnam’s defeat to occupy the Paracel Islands, and in 1988 seized the Fiery Cross reef close to the Spratly archipelago from the Vietnamese. All the countries in the region, once vassals and tributaries of the Middle Kingdom, fear Beijing’s naval ambitions.
In the 1980s the important feature of Admiral Liu Huaqing’s maritime strategy (5), before oil or fishing in the South China Seas, was to secure access to the high seas for the Chinese fleet. China needed to impose its presence to the west of a “green sea line” from Japan to Malaysia via Taiwan and the Philippines. The main contender is the Japanese navy, which China has already tested by repeated submarine incursions (including an incident with a Chinese nuclear submarine in 2004).
Now Beijing is attempting to break through this line and pass through the shallow waters of the East and South China Seas into the “blue water line” of a second basin from Japan to Indonesia via Guam, the US military air and navy hub in the West Pacific. The main obstacle to the projection of Chinese naval power as far as the deep blue line (patrolled by the US Seventh Fleet) is Taiwan. In January 2008 the Taiwanese minister of defence, Ko Chen-heng, denounced the Chinese navy’s activities in the Bashi Channel, a communications bottleneck between Taiwan and the Philippines.
Once Chinese has solved its deep-water access, the navy will be able to devote more time to securing Southeast Asia’s four energy corridors. The first carries oil tankers of under 100,000 tonnes from Africa and the Middle East to the South China Sea via the Straits of Malacca. The second takes giant oil tankers from the same production areas through the Sundra and Gaspar Straits (6), while the third leads from South America through Filipino waters.
The fourth is an alternative route from the Middle East and Africa between the Straits of Lombok and Macassar, the Philippines and the West Pacific before reaching Chinese ports. Malacca is the main stranglehold, with 80% of Chinese oil imports passing through the straits, making China vulnerable in conflict. It is diversifying its access by developing the rail networks connecting Asean (Association of Southeast Asian Nations) nations, finalising the direct Chinese-Burmese pipeline between Sittwe and Kunming (7), assisting in the development of offshore natural gas production capacity in Southeast Asia (especially in Burma and Thailand), and even considering the construction of a canal across the Kra isthmus in southern Thailand, in a region threatened by separatist insurgencies.
Pearl necklace strategy
These projects are difficult and will only partly reduce China’s dependence on the corridors. The need to secure them against piracy and the ambitions (real or imaginary) of the US, Japan and India, has led China to reinforce its deep-water naval strategy. Beijing is building a “pearl necklace” of permanent Chinese bases along the shores of the Indian Ocean and the maritime routes to Malacca: Marao in the Maldives, Coco island in Burma, Chittagong in Bangladesh and Gwadar in Pakistan, while waiting to create coastal bases in Africa, now open to Chinese investment. China has no shortage of workers or funds to organise and maintain operational bases in allied countries. It even offers ships to those countries to protect their offshore oil (8).
Apart from the US, which believes the Pacific will be a major strategic area for the next 50 years, China has two serious rivals: India and Japan. India and China, the two largest countries in demographic terms, have long been wary of each other – not least, in India’s view, because China supports Pakistan over Kashmir and continues to supply Islamabad with weapons. India aspires to the same status as China (a regional power with a global vocation) and has maritime ambitions to match. Its fleet is growing and its stated strategic goal is to make the Indian Ocean its own sea. Beijing’s pearl necklace strategy is an intrusion.
To stake its claim, India is building two aircraft carriers, the first of which should be operational in 2010, while a third, second-hand from Russia, is being overhauled. India’s submarine fleet uses French technology (Scorpène submarines) of a superior quality to the Chinese equivalent. The two countries are in a mutual observation phase and studiously avoid any conflict. There has been recent progress in relations between the two navies and joint manoeuvres since the countries signed a strategic partnership in April 2005.
Sino-Japanese relations have been through a tense period. The Japanese fleet is powerful and more modern than the Chinese, and has taken part in joint manoeuvres with the US navy for years. But the conflict over the Senkaku Islands revealed a nervous country, encumbered by its post-second world war pacifist constitution, now criticised by a nationalist faction. Japan is undecided as to how to handle China. Nor are Japan and India alone in their concerns about Chinese pressure. Smaller countries such as Malaysia, Indonesia and Singapore are rapidly strengthening and modernising their own fleets. They are afraid that, with the US bogged down in Iraq and Afghanistan, the Chinese will hold sway in the region, and a passing situation may become permanent.
Shipyards work overtime
Chinese shipyards are seizing the opportunity and working flat out from the Yellow Sea to the South China Sea. The naval bases, river ports, sea walls, protected submarine bases (including the new Sanya nuclear base on Hainan Island) are growing and modernising as befits a nation in economic boom, whose foreign trade depends 90% on sea routes. In 2006 China’s sea-related industries accounted for 10% of GDP and seven of the world’s 20 leading ports were Chinese. Chinese efforts have civilian as well as military goals. Along with the naval construction, the maritime high technology plan is financing parallel projects to consolidate the fleet’s autonomy, such as a satellite-based geopositioning system called Beidou, maritime surveillance systems and more shipyards.
In 1995 China became the world’s third civilian shipbuilder after Japan and Korea and is catching up fast. With its two gigantic enterprises, China State Shipbuilding Corporation and China Shipbuilding Industry Corporation, China stands every chance of becoming the world’s largest shipbuilder by 2020. The Chinese national plan does not distinguish between civilian and military vessels and both are built in the same shipyards.
World tonnage ranking
The world’s eight leading naval fleets Tonnes
United States 2,900,000
Russia 1,100,000
China 850,000
United Kingdom 470,000
Japan 432,000
France 307,000
India 240,000
Italy 143,000
(Source: Annuaire des Flottes de Combat, 2008)
China’s fifth national defence white paper in 2006 (9) provided a framework for the maritime awareness that emerged in the early 1990s. It transferred priority from the army, which traditionally held pride of place, to the navy and air force. The CCP’s Central Committee and its powerful Central Military Commission, now have many more naval and air force officers (10). In 2007 these were nearly 25% of the military elite, compared with 14% in 1992.
No expense has been spared. China’s three fleets (the East Sea Fleet headquartered in Shanghai, the South Sea Fleet based in Zhanjiang and the North Sea Fleet in Qingdao), each have their own naval airbase with bombers and fighter planes. More modern systems have been delivered, such as the Luyang anti-aircraft destroyers, or the locally built Ma’anshan frigate, successor to the Jiangwei of the 1990s. China had more than 500 coastal patrol boats at the end of the 1970s; half remain in use today but the deep-water fleet has increased to 60 vessels (11).
A considerable effort has also been made in amphibious vessels with some hundred ships under construction to make Chinese ambitions in the Spratly Islands or Taiwan a reality. Minesweepers, ballistic missile patrol ships and new oil tankers are also on order. There is no shortage of foreign help, from Australian wave-piercing catamarans, to Russian Sovremenny destroyers and Kilo submarines, Italian and French combat systems and Dutch naval guns. China imports, copies, adapts and often, to the surprise of its suppliers, improves, the equipment it wants. In some areas such as electronic warfare, or the most efficient engines and onboard combat systems, China depends on foreign, especially Russian, supplies.
Key role of submarines
Submarines play a key part in China’s global maritime programme. Despite persistent rumours concerning the refurbishing of the Varyag, bought from the Russians and in a shipyard for years, China does not have a single aircraft carrier, and only modern submarines could hope to dissuade the US Seventh Fleet which still guards Taiwan from its bases in Guam, Japan and South Korea. The Chinese fleet is reputed to have five fast-attack nuclear-powered submarines (SSNs) and one ballistic missile submarine (SLBN) reputed to carry between 12 and 16 nuclear missiles with a range of 3,500km. It has 30 diesel-electric submarines and more than 20 other submersibles are under construction.
The US Seventh Fleet is concerned by this arsenal and admirals are petitioning Congress and the White House, claiming that the Chinese submarine fleet will exceed the number of US ships in the Pacific by 2020. Influential people, such as US Congressman Duncan Hunter (12), have recently raised the issue. Chinese SSNs carried out more patrols in 2007 than in the preceding five years. These concerns are reflected in the Pentagon’s annual report on the strength of the Chinese military (13) but they need to be placed in perspective. No one really knows what the performance of the best Chinese submarines may be, and it is possibly poor.
The US navy has 53 modern SSNs, twice the number of any other nation, as well as 12 of the world’s 15 aircraft carriers, and an unrivalled anti-submarine air fleet. The last issue of the US publication Quadrennial Defence Review (14) is more subdued in tone and discusses cooperation rather than confrontation. The situation in the South China Sea is not a declared arms race but a variable geometry opposition between the Indian, US, Australian and Japanese fleets, and the Chinese and Pakistani fleets.
China’s maritime ambitions are the result of the frustration of a nation that should have gained world dominance during its first globalisation 500 years ago, but was usurped by western barbarians. China had mastered astronomic observation-based navigation and the compass, had invented the anchor, the printing of marine navigation charts, the capstan, the adjustable centre-board, and was probably building giant multi-mast ships with pivotable rigging (15). Their junks had watertight compartments and stern-mounted rudders. All these were innovations that would be perfected by the West and used to humiliate China.
During the Ming dynasty (1358-1644), China turned away from the high seas and its great 15th century expeditions, in the most amazing of which the eunuch-admiral Zhang He had led the emperor’s 300-strong fleet to explore the world’s oceans (16). Building ocean-going vessels became punishable by death. That mistake has been taken on board and the glories of the maritime past are now cherished. The official website for promoting China’s presence in Africa tells the story of Mwamaka Shariff Lali, a young woman from Lamu Island, Kenya – where Ming dynasty porcelain shards are built in to local constructions – who is, by oral tradition and appearance, a descendent of Chinese sailors shipwrecked on the island before China withdrew from the oceans. She was offered a free place at a Chinese university and invited to celebrate “Zheng He navigation day” in Jiangsu province, the departure point for the imperial fleet (17).
The US has increased initiatives for exchange and cooperation with the Indian and Japanese navies as well as the Chinese, in an attempt to control its massive expansion as best it can. The most recent US gambit was the 2007 Global Maritime Partnership Initiative, under which each ally, including China, was invited to contribute to a thousand-ship fleet to combat piracy. Yang Yi, the director of the National Defence University’s institute for strategic studies, was not convinced that China would accept such a proposition before identifying ulterior motives and longterm implications (18).
China wants to prevent anything from stealing its second chance in history to emerge as a global and sovereign maritime power. China has not forgotten the Opium War, nor the sack of the Summer Palace (19), and will no longer tolerate threats or constraints. It is taking precautions. Even though it is still a long way from surpassing the dominant US navy, it is guided by history and each new naval accomplishment acquires a symbolic value. In 1989 the first PLAN ship to visit the US was a training vessel. It was called the Zhang He.
Translated by Krystyna Horko
Olivier Zajec is a researcher at the Compagnie européenne d’intelligence stratégique (CEIS) in Paris
(1) See the home page for the series (in Chinese) on http://finance.cctv.com/special/C16 ...
(2) Joseph Kahn, “China, shy giant, shows signs of shedding its false modesty”, The New York Times, 9 December 2006.
(3) Afghanistan, Burma, Bhutan, North Korea, Kazakhstan, Kyrgyzstan, Laos, Mongolia, Nepal, Pakistan, Russia, Tajikistan, Vietnam.
(4) La Revue de défense nationale et de sécurité collective, Paris, May 2007.
(5) Liu Huaqing was also the first chief naval commander to make an official visit to the US in 1985.
(6) The Sundra Strait is between the Indonesian islands of Java and Sumatra, while the Gaspar Strait separates Bangka and Belitung islands, also in Indonesia.
(7) Sittwe is on the west coast of Burma and Kunming is a river port in Yunnan province, south China.
(8) In October 2007 China supplied Cambodia with nine patrol boats to protect its oil installations in the Gulf of Thailand. See Defense News, International Edition, Springfield (Virginia), 18 February 2008.
(9) The first Chinese white paper was published in 1998.
(10) See Li Cheng and Scott W Harold, “China’s new military elite”, China Security, vol 3, no 4,Washington, Autumn 2007.
(11) A ship is considered ocean-going from 2,000 tonnes.
(12) Duncan Hunter is a Republican Congressman (California) who regularly defends US industry and defence budgets.
(13) See www.defenselink.mil/pubs/pdfs/ 07052.... Many American and European analysts have condemned the alarmist tone of the report, without however, denying Chinese advances.
(14) The Quadrennial Defence Review (QDR) published by US Department of Defence, describes US defence strategy over a 20-year period and is updated every four years.
(15) UCLA Centre for Chinese Studies, www.international.ucla.edu/chi na
(16) Admiral Zheng He made seven sea voyages between 1405 and 1433. See Attilio Jesus, “China’s empire of exploration ”, Le Monde diplomatique, English edition, September 2005.
(17) The Chinafrique website, in English, French and Chinese, provides other edifying articles, such as “The Chinese Prime Minister shakes the hands of African AIDS patients”, “The happy life of a Congolese in Beijing”, “China has made me rich”, “Friendship first, trade second”, “China could never be labelled neo-colonial”, etc.
(18) China Security, op cit.
(19) The two Opium Wars, for the purpose of imposing the drug on China, were first led by the British alone (1839-1842) and then by a Franco-British alliance (1858-1860), which resulted in the sack of the emperor’s Summer Palace in October 1860. See Victor Hugo’s letter to Captain Butler reproduced in the Unesco Courier, November 1985.
Posted by Naxal Watch at 6:59 AM
Nuclear India must end its China-bashing
http://www.defence.pk/forums/strategic-geopolitical-issues/14118-nuclear-india-must-end-its-china-bashing.html
By Joe Leahy
Published: September 10 2008 19:17 | Last updated: September 10 2008 19:17
India’s success last week at the Nuclear Suppliers Group meeting in Vienna unleashed a wave of nationalist chest-beating greater even than a few weeks earlier when Abhinav Bindra, a shooter, became the nation’s first individual to win an Olympic gold medal.
The nation’s cable news channels dropped their usual fare of gory crime stories and political corruption scandals to provide blanket coverage of the intricate negotiations with the NSG, which eventually agreed to lift a global ban on nuclear trade with India, ending the country’s decades of nuclear pariah status.
But the media celebrations had an ugly side – China-bashing. Perceptions that Beijing had tried to block the deal from behind the scenes sparked outrage among commentators, who suspected China was championing the interests of its ally and India’s nuclear-armed rival, Pakistan.
“It is in times of adversity that one learns who one’s friends are,” the Indian Express wrote in a piece lambasting China. The main business daily, The Economic Times, went further. “Slimy dragon wants deal for mother of proliferators,” it said, referring to perceptions that China might call for an NSG waiver for Pakistan as well.
Rather than crowing about getting one up on the Chinese “dragon” and Islamabad, this should be a time of introspection for India. When the celebrations had died down, Mr Bindra’s medal prompted soul-searching on why the world’s second most populous nation had only just won its first individual Olympic gold. So, too, the nuclear deal should set Indians thinking about why their government has taken this long to tackle energy security, probably the country’s most critical long-term strategic challenge.
From the beginning, India’s civilian nuclear deal with the US has been as much about India’s arrival on the geopolitical grand stage as it has been about atomic energy. Not only does the NSG waiver allow India to emerge from the diplomatic nuclear winter stemming from its refusal to sign the nuclear non-proliferation treaty; it also gives it a seat at the elite club of nations that governs the use of the world’s most powerful technology.
The road to nuclear acceptance has been a long one for India since the deal was first proposed by the US and India in 2005. Prime Minister Manmohan Singh had to brave a parliamentary vote of confidence to get the deal past domestic sceptics who believed it would compromise the nation’s sovereignty.
Next followed negotiations with the International Atomic Energy Agency on safeguards to ensure India’s intentions were peaceful. Then the US applied on India’s behalf to the 45-nation NSG to lift the ban on nuclear trade with New Delhi even though it has not signed the NPT and an agreement banning nuclear tests. Even now, the deal is not fully done. The Bush administration in its dying days must still win congressional approval for the pact.
The deal has been perceived in many quarters as good for India because it has got away without signing the NPT. But critics argue that it is a complex beast that brings India under the sphere of influence of the US in ways that New Delhi could find uncomfortable in the future.
Marie-Carine Lall, a south Asia specialist at the Institute of Education, University of London, argues that there is a dangerous gap between New Delhi and Washington in their views of what the deal means. The US sees it as bringing a maverick India into the non-proliferation framework. It also wants to use India as a counterweight to China and win Indian support for US objectives in the Middle East. India believes the deal will give it access not only to nuclear material and knowhow but also to sensitive technologies beyond the atomic arena. India also wants US support against the Pakistan-China axis, while maintaining independence in foreign policy. Professor Lall says tension may arise if the US tries to use its new nuclear partnership with India to put pressure on New Delhi on issues to do with Iran, for instance.
Despite the deal’s weaknesses, it is not as though India had much choice. India does not produce enough uranium to feed its existing reactors, let alone future capacity, and it imports about three-quarters of its crude oil, mostly from the Middle East. “We are 70 per cent dependent on Gulf oil and we don’t even have strategic reserves,” complained ambassador V.K. Grover, a member of the National Security Advisory Board.
India has been a laggard in securing alternative energy resources overseas. In the past four years, Oil and Natural Gas Corporation, the state oil giant, has gone on a shopping spree. But, in countries from Burma to Angola, the Chinese have mostly got there first. The civilian nuclear deal will not solve this problem overnight. Nuclear energy accounts for barely 3 per cent of India’s power capacity now and it will take a generation to increase this to anything meaningful. But it does send a signal that India is finally getting more serious about solving its looming energy security crisis. If the US Congress approves the nuclear deal, India will be able to claim it now has a powerful friend to lend a hand in this quest.
As for China, Yang Jiechi, the foreign minister, declared his surprise at the accusations in the Indian media, saying Beijing played merely a “constructive” role in negotiations at the NSG. After all, why should Beijing be overly concerned about competition over energy from India when at this point, as at the Olympics, it is winning all the gold medals?
joseph.leahy@ftbombay.com
FT.com / Comment & analysis / Comment - Nuclear India must end its China-bashing
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