Saturday 16 Feb 2019 | 05:44 | SYDNEY
Saturday 16 Feb 2019 | 05:44 | SYDNEY

Weekend catch-up: Cyber white paper, global economy, pivot, South China Sea and more



19 April 2014 08:00

Bringing together the best longer Interpreter articles you were too busy to read this week.

Last week Bates Gill and Tom Switzer argued on The Interpreter that reports of the death of  America's Pacific pivot' are being exaggerated. This week, former head of the Office of National Assessments Geoff Miller disputed this, stating that there is indeed reason to doubt the Americans commitment to the pivot, and that 'from an Australian point of view, there may be advantages in a less than whole-hearted or fully effective US pivot to Asia':

We are of course a US ally, but we also have a strategic partnership with China. Only last week, in what seems to have been a successful visit to China, Prime Minister Abbott not only put an enormous amount of national and personal effort into strengthening our trade and investment relationship, but also made important advances in the security field. According to press reports, Mr Abbott said he was 'quite confident' of building on high-level meetings and exchanges with the PLA through 'multilateral exercises in the months and years ahead'. The first such exercise will take place in July, when China for the first time joins more than 20 other nations in aspects of the RIMPAC exercises to be held off Hawaii. In that exercise, at Beijing's request, the PLA Navy will operate under Australian command and control.

Yet at almost the same time, the Commander of the US Pacific Fleet, Admiral Harry Harris has described China as a 'destabilising influence' and accused Beijing of 'revanchist tendencies'.

The AFR's Brian Toohey, a defence specialist for many years, wrote on 5 April that 'Current US projections for a war with China envisage Australia's key contribution would be naval forces at the southern end of China's trade routes to help block the import of commodities such as Australian iron ore and natural gas'. Wouldn't be easier for us to simply not sell our resources to China, if we decided we didn't want China to have them?

But as the PM's visit showed, we do want China to have them, as we want a peaceful outcome to the re-balancing of forces in the Asia Pacific. In this context, we can welcome a US re-balancing or pivot to Asia even while we may remain somewhat sceptical about it. But we don't want the US re-balance to be over-militarised, involving alarming doctrines which have the potential to involve us through a largely unpublicised process of folding our own defence force into US military plans for the region.

Stephen Grenville this week marked a watershed moment in the global economy. Emerging and developing economies combined are now (in terms of purchasing power parity) larger than the advanced economies:

Emerging and developing economies have accounted for three-quarters of global growth since 2009 and make up two-thirds of forecast global growth.

Since mid-2011, the emerging economies in aggregate have maintained a stable pace of expansion, with minor deviations, of around 5%. The Fund forecasts this to be a touch faster during the next two years (see graph above).

Yet the Fund continues to articulate concerns about the sustainability of emerging-economy growth. IMF Managing Director Christine Lagarde told the G20 meeting in September: 'Just as some advanced economies have begun to gather momentum, many emerging markets are slowing'. The latest WEO notes that 'downside risks to growth in emerging market economies have increased even though earlier risks have partly materialized and have already resulted in downward revisions to the baseline forecasts.'

This disconnect between the Fund's down-beat words and its actual forecast figures may be coloured by its interpretation of emerging economy evolution during the past two decades.

Pakistan has once again delayed granting 'most favoured nation' trade status to India (the latter granted MFN status to Pakistan back in 1996). Reza Khan argued that this results primarily from the influence of the military in Pakistani politics:

Pakistan's military, which has directly ruled the country for nearly half of its existence and has always dominated (if not dictated) its foreign and security policies, has consistently prevented Pakistan from improving relations with Delhi, including on  trade. Pakistan's intelligentsia cite various reasons, mutually reinforcing, for Pakistani military opposition.

The foremost reason is the over-representation of Punjabis in the military. Punjabis are 57% of Pakistan's population while more than 80% personnel of the military are from the Punjab. The Punjab was one of the two provinces divided at the time of creation of India and Pakistan in 1947. Most of the Muslims killed during the mass migration of that time belonged to the Punjab, creating large-scale ill-will among the Pakistani Punjab against India. So, over-representation of the Punjabis in the military resulted in stringent anti-India policies by the military.

Another reason for the military opposition to free trade with India is its apprehensions that volume of the trade would be directly proportional to good relations between the two countries, which would reduce the importance of the military. Around 0.6 million active service and more than 0.5 million reserve military personnel consume a large portion of the country's budget and a good chunk of its GDP, preventing resources from being allocated to health, education and development. As the military has historically justified its huge size due to the security threat from India, Islamabad's good relations with India, the military leadership think, would raise demands for reducing the size of the military.

An allied reason for Pakistani military opposition to freer trade with India is that good relations would shift power over policy-making from the military to the democratic leadership and civil society.

Here's Tess Newton Cain on the role of the private sector in aid and development in the Pacific islands:

Is it good practice for private sector organisations to be given money from the aid budget in order to pursue 'for profit' activities in the hope that they will also deliver development outcomes?

Many Pacific island business already 'do' development. The terminology they use may differ from mainstream 'development speak', and the drivers of business may be different, but development objectives are most certainly achieved. Providing regular employment over a long period of time leads to improved livelihood for workers and their families, including increased access to education, health services and more.

However, it is hard to assess this impact either in any one country or across the Pacific island region. This is partly because the private sector is exactly that, private. In addition, the costs associated with collecting this information are high compared to the amount of data collected, owing to the small size of the formal business sector in each country.

Want to know why the G20 and IMF rebuffed the US last week? Mike Callaghan, the Director of the Lowy Institute's G20 Studies Centre, breaks it down:

The IMF/G20 meetings in Washington last week were not good for the US. And things may get worse.

Instead of focusing on the possibility of additional economic sanctions on Russia, which no doubt would have been the desire of the US, the headlines were 'G20 gives US ultimatum over IMF reforms'

The G20's frustration centres on US failure to ratify the IMF quota and governance reforms agreed by the G20 in 2010. While countries representing nearly 80% of IMF votes have approved the reforms, the required threshold is 85%. The US has a veto with its 16.75% shareholding and the US Congress continues to block the reforms. 

At their recent meeting, G20 finance ministers said that 'if the 2010 reforms are not ratified by year-end, we will call on the IMF to build on its existing work and develop options for next steps'. This has been interpreted as the G20 threatening to move to 'Plan B' which will by-pass the US, an approach strongly advocated by Russia

How significant are the reforms and is there a realistic 'Plan B'? Moreover, what would be the broader consequences of such a move? Or is it all a bluff?

Joe Hockey said the 2010 IMF reforms are a top priority because they would 'double the IMF's permanent resources and lead to a major realignment of voting shares'.

Our regular space analyst, Morris Jones, looks at what tensions over Ukraine mean for US-Russia space cooperation:

The Russian annexation of Crimea has brought a sharp focus on America's dependence on Russia as its only supplier of astronaut launches. Having retired the Space Shuttle in 2011, NASA must pay hefty sums to buy seats on board Russia's Soyuz spacecraft, which uses a design little changed from the 1960s.

Simply deciding not to launch astronauts is not an option, as NASA is the 'anchor tenant' in the International Space Station. For the moment, both nations seem to be working normally aboard the station, but other space projects are apparently being scaled back.

This over-dependence on Russia has highlighted another festering problem for American space flight. Nobody knows when the US will deploy another crew-carrying spacecraft, or who will do it. Rivalries between traditional US military-industrial monoliths and a new generation of start-up aerospace companies have been with us for years, but are now being elevated by geopolitical problems. The US Government has been funding the development of private cargo vehicles for the International Space Station (such as the Dragon capsule built by SpaceX, pictured above) and also hopes that private enterprise will eventually build private vehicles for astronauts. Dragon itself can be modified for this purpose (the latest launch of a SpaceX Falcon 9 rocket, which carries the Dragon capsule to orbit, wascancelled just hours agoand is now scheduled for 18 April).

Israeli-Palestinian peace talks look set to collapse. The mood in the West Bank city of Jenin, according to Lisa Main, is one of cynicism:

On a recent visit to Jenin Refugee Camp, I met one young man who still had shrapnel lodged in his stomach from the raid. He told me he's frustrated by the corruption within the Palestinian Authority (PA), and their coordination with the Israeli army. He wants peace, but doesn't have confidence in the PA to deliver it. That's not an uncommon sentiment in the West Bank.

As we talked, a younger, more sprightly local boy approached me. Probably aged 12, he eagerly declared, 'we throw stones and molotov cocktails at Israeli soldiers, they are not our partners in peace'. I asked if he wanted peace. He responded quickly and firmly, 'yes'. I then asked if he was afraid of the soldiers? 'No'. Like his friend, he couldn't see past the occupation. Few people I spoken to can. For the young boy, peace talks are an abstract concept that has failed to deliver any meaningful change in his lifetime.

Exasperated by Israel's continued settlement enterprise, President Abbas has activated his plan B. By signing onto aslew of international conventions that seem to signal a new effort to secure statehood recognition at the UN, he's laying the early groundwork for a formal complaint against Israel at the International Criminal Court. But as the Palestinian president looks to the international community, he may struggle with legitimacy back home. A mix of exhaustion and defeat now plague the Palestinians. If, in the next couple of weeks, Abbas succumbs to Israeli pressure and pauses his move at the UN, his leadership will be further doubted.

Claire Stewart, reporting from Iran, profiles the youth of Esfahan:

For many of the younger, educated Iranians, it feels like their government's ability to control Iran's propaganda is slipping as people see first hand what they are missing out on under the Islamic regime. Yet contrary to Western assumptions, it's not access to the 'excesses' of US culture that young Iranians want most. Almost universally, they hold fast to their religion. But they want the option to take a more moderate approach to its practice and implementation.

Crucially, they want an end to the power of the shadow government, run by the mullahs answerable to the Supreme Leader. But few are under any illusion about the prospects of that, particularly after the disastrous and bloody 2009 Green Revolution and the problems arising from the Arab Spring.

Esse is a carpet salesman and works in the popular tourist hub of Esfahan. He trained as an engineer but can't find work. It's a common problem for university graduates. Professional positions are scarce and usually require a friendly word in the ear of a government contact to seal the deal. Esse says most people are hoping that eventually, international sanctions will be lifted so the economy can be given breathing room. As it is, few expect a functioning relationship with the US (laughingly referred to as 'Big Boss'), despite moves by Iran Air to recommence direct flights from Tehran to Los Angeles, and the relative success of nuclear talks in Geneva late last year.

And still on the Middle East: it was reported this week that two Australian citizens were killed in a US drone strike in Yemen last November. Rodger Shanahan argued that this will open up a new debate in Australia:

Unsurprisingly, commentary is split between people who chafe about the illegality of what they consider to be 'extrajudicial killings' and those who argue that we are at war and that enemy combatants can be legitimately targeted in time of war. Then there is the argument that the number of civilians killed in such strikes actually creates more future enemies than the current enemies it removes. These are substantial issues and beyond the scope of this post. 

The Australian Government would not allow the deliberate targeting of one of its citizens by another power. That is one of the benefits of citizenship. In the court of public opinion, however, which is what most politicians are concerned about, most Australians will feel that if you are an Australian citizen and a member of a group which the Australian Government has proscribed as a terrorist organisation, then you have made a choice that brings with it certain risks. One of those risks is being killed in a drone strike targeting other members of the organisation to which you belong.

Gretta Nabbs-Keller, citing recent comments over the Natuna Islands, asked if Indonesia is shifting its South China Sea policy:

In the post-authoritarian era, Indonesian officials, like many of their Southeast Asian counterparts, have tended to self-censor when it comes to China, avoiding public criticism while benefiting from considerable Chinese largesse. This is what makes recent public comments by senior Indonesian military officers about the vulnerability of Indonesia's South China Sea-located Natuna Islands so interesting. 

Following a February 2014 trip to Beijing, for example, Indonesian Armed Forces (TNI) commander General Moeldoko signaled enhanced defence measures for the Natuna Islands. 'Since Natuna is strategically located, the increase of its forces at sea, on the ground, and in the air is necessary to anticipate any instability in the South China Sea and serve as an early warning system for Indonesia and the TNI', he explained.

Then in March, Air Commodore Fahru Zaini, based at Indonesia's Coordinating Ministry for Political, Legal and Security Affairs, publicly stated that 'China has claimed Natuna waters as their territorial waters. This dispute will have a large impact on the security of Natuna waters'. 

In June 2013, Commodore Amarullah Octavian was even more frank. In announcing that Indonesia would host 'Exercise Komodo' he explained that 'the exercise will focus on naval capabilities in disaster relief, but we will also pay attention to the aggressive stance of the Chinese government by entering the Natuna area'.

Unsurprisingly, such candid public comments by senior Indonesian military officers did not go unnoticed in the Indonesian press and scholarly community.

Matthew Linley, a professor at Nagoya University, on why Japan's most daunting challenge is population decline:

After acknowledging Japan's aging problem in his Davos speech this year, Shinzo Abe asked rhetorically, 'in such a country, where will you find those innovative and creative human resources?' He mentioned briefly how foreigners could provide 'help with housework' and 'care for the elderly' but his main argument was that more women must participate in the labour force.

But as others have argued, putting faith in a single approach will not be sufficient to deal with the magnitude of the problem (the report also indicated that the female population decreased by 0.15%). Nor will it address the imbalanced nature of Japan's population decline. While improving childcare and educational facilities may make working in cities more attractive to women (men too), policymakers outside urban areas must not only provide these basic facilities but also revive local economies with fewer workers and consumers.

So, along with economic reforms and dealing with a rising China, this report is a good reminder of perhaps the most daunting set of questions that Japanese policymakers face today: what will the country do to stop its precipitous population decline and how does the rest of the country compete with the bright lights of Tokyo?

Also on Japan, Anthony Fensom looked at the post-ICJ future of Japanese whaling:

In recent years, the nation's 'research' whaling expedition has conducted an annual, ritualistic battle in the Antarctic against environmentalists led by Sea Shepherd, with seemingly little scope for a breakthrough.

All that apparently changed on 31 March, when after nearly four years of deliberations, an International Court of Justice (ICJ) panel voted 12 votes to four in favour of Australia's argument that Japan's JARPA II research whaling program was illegal, as it failed to constitute scientific research. Has Japanese whaling finally broken the 'groundhog day' cycle?

The answer appears to be in the affirmative, despite claims to the contrary from Sea Shepherd and apparent bravado from the whalers.

According to a Fairfax report, Japan's whalers plan on returning to the Antarctic for a renewed 'research program' in 2015-16, and in compliance with the ICJ decision. Sea Shepherd's Paul Watson said the alleged plan by Japan's Institute of Cetacean Research (ICR), which contradicted Japan's official statements after the decision, showed the nation's 'history of duplicity with regard to whaling'.

Yet the evidence suggests Japan's whalers have been politically harpooned, at least for the time being.

Elliot Brennan looked at communal violence in Myanmar, which threatens to undo its political progress:

While the Myanmar Government has since re-emphasised its commitment to protecting aid workers, the problem remains that Rakhine Buddhists want Rakhine Muslims to leave. Human rights groups have been murmuring about the threat of ethnic cleansing and a government policy of persecution against the Rakhine Muslims. While this is largely uncorroborated, what is worrying is the Government's unwillingness to engage on the issue. Daw Aung San Sui Kyi has been widely criticised for her silence, but other politicians have been equally mute.

A key reason for this lack of government engagement is that many people in the country support the Rakhine Buddhists. This sentiment is exacerbated by politicians positioning themselves for the 2015 election, and by a young, newly free and inflammatory media. There is also concern that any action against the Rakhine Buddhists could provoke countrywide protests and reprisal attacks against Muslims.

And finally, here's Lowy Institute research associate Brendan Thomas-Noone on why Australia needs a white paper on cyber:

China alone is estimated to have 590 million users and India a further 151 million. These numbers will continue to grow. A 2012 Boston Consultancy Group report estimated that by 2016 China will have 'nearly 800 million internet users' and that the internet economy itself will reach a value of US$4.2 trillion in the G20 nations. The internet economy will also account for a significant part of future economic growth. The same report states that emerging nations will be 'responsible for about 34% of the overall internet economy' and that same industry will be responsible for '48% of their (future) growth.'

This increase in internet users and digital connectivity is helping to drive growth in international trade. A recent report from Brookings argued that, as the internet becomes a more important 'platform for commerce', individual buyers and sellers are using it to interact across borders in ever more sophisticated ways. A study by PayPal tracked this digital commerce and its relation to trade flows, finding that in just six surveyed markets the value of cross-border commerce was estimated at US$105 billion, and by 2018 this will increase nearly '200% to $307 billion.' The internet is also allowing large amounts of data to cross borders nearly instantaneously, which is also 'underpinning global economic integration and international trade.' Trends in the diffusion of manufacturing and the growing importance of open source design will also increase the importance of digital communication in the global economy. 

As well as purely economic considerations, a cyber white paper could address the convergence of Australia's economic and strategic interests in the digital realm. 

It is undoubtedly in Australia's national interest to see economic interdependence, international trade and communication continue to grow throughout the Indo-Pacific region and between its major powers. Open lines of digital communication are essential for financial transactions and global communication.  An unhindered global commons, which includes the sea, air, space and now cyberspace, underpin a stable strategic system, something that needs to be nurtured in a region that is rife with territorial disputes and rising defence budgets.

If open sea lines of communication are critical to Australia's economy and its national security, then we need to start thinking similarly about the internet and digital communications. 

Photo by Flickr user Ikhlasul Amal.

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