Published daily by the Lowy Institute

Weekend catch-up: Korea talks, Macron’s horse, Ciobo uncorks, and more

The week that was on The Interpreter.

Sunrise in Seoul, January 2018 (Photo: Republic of Korea/Flickr)
Sunrise in Seoul, January 2018 (Photo: Republic of Korea/Flickr)
Published 20 Jan 2018 

By John Gooding, Digital Editor at the Lowy Institute and Associate Editor at The Interpreter.

This week, following recent talks, North and South Korea announced that they would attend the Winter Olympics opening ceremony under one flag and combine their women's ice hockey teams. Khang Vu on the test the truce poses to the USSouth Korea relationship:

North Korea’s history of reneging on its word should serve as a constant reminder for Moon that temporary inter-Korean engagement does not guarantee long-term success. The current 'Olympic truce' is certainly a welcome start to a reduction of tension on the Peninsula after a turbulent year, but its significance depends much on Pyongyang’s sincerity.

Frances Kitt explored China's support for inter-Korean talks:

By supporting inter-Korean dialogue, China can drive a wedge in the South KoreaUS alliance, increasing tension between Trump and Moon. By supporting Kim Jong-un’s olive branch to the South and Moon’s eagerness to engage, Beijing is also showing support for measures that could ease UN sanctions, reduce pressure on Pyongyang to denuclearise, and frustrate Washington’s strategy of ‘strategic strangulation’.

French President Emmanuel Macron's trip to China earlier this month reflected his ambitions for both Chinese engagement and, perhaps, his establishment as the pre-eminent voice of Europe, wrote Laure Deron:

In May 2017 Macron was elected to the presidency at 39 years of age, which leaves him plenty of time to contemplate even higher ambitions in future, including, perhaps, a pan-European role for himself.

The news that US President Donald Trump plans to attend the World Economic Forum makes for an odd mirroring of China's Xi Jinping's actions, argued Greg Earl:

The two main self-styled challengers to the half century–old Washington Consensus both find it necessary to put their alternative visions to the annual cocktail party of globalisation's economic elite. This suggests that the basic ideas underlying the Bretton Woods system of institutional globalisation still have considerable attraction.

Japanese Prime Minister Shinzo Abe faces a suite of challenges across the board in 2018, argued Donna Weeks:

The backdrop to 2018 in Japan will be the 150th anniversary of the Meiji Restoration, recognised as the time when a ‘closed’ Japan first opened to the West. As with most narratives of nation-forging identities, the Meiji Restoration has its supporters and detractors. The debate will continue through the year. Abe sees himself increasingly as a latter-day Meiji figure ready to restore Japan to its former greatness, although what that means for the nation and for regional relations is unclear.

Malcolm Cook on how the Philippines' Rodrigo Duterte is changing the presidency more than it is changing him:

The checks and balances that are supposed to constrain and channel executive power are being left unchecked and unbalanced. And the most fundamental change to the Philippine political system desired by Duterte  replacement of the current constitution with federalism  is only starting to take vague form on the horizon.

The political trait of declaring military victory before you have actually achieved it has been continued by Russia's Vladimir Putin, noted Rodger Shanahan:

With drone attacks and Russian support of a Syrian offensive into the last of the rebel-held provinces, it appears that Putin’s claim of victory has been somewhat premature.

The Indian National Congress's new leader, Rahul Gandhi, faced his first test in the Gujarat state elections. Priya Chacko:

The Congress initially gained its dominance in Indian politics by building a decentralised structure of strong state party units that was genuinely inclusive of diverse interests at a grass-roots level. It is this Congress legacy, rather than the Nehru–Gandhi dynasty, that the party should aim to restore.

The 1992 destruction of a mosque in Uttar Pradesh continues to divide India, wrote Murali Krishnan:

It was a moment that stained the nation’s politics, shaking the secular foundation of modern India and marking a ‘rightward’ shift towards a greater Hindu ‘majoritarianism’. 

Hussain Nadim on the US decision to cut military aid to Pakistan over its toleration and occasional support of terrorism:

The US aid freeze to Pakistan is likely to further push Pakistan towards China, yet still not to a point where it would end its cooperation with the US. Washington will remain a preferred ally. If a decade of humiliation by the US hasn’t forced Pakistan to cut back on its cooperation, it is highly unlikely that a little more humiliation under Trump would change anything.

Social strains, the complex legal and political situation, and a fragile economy recovering from a drop in commodity prices all might prompt instability in New Caledonia as the independence referendum approaches, argued Alexandre Dayant:

For Australia and New Zealand, the French territory is of strategic importance. Over the past few years, China has been increasing its engagement with the region.

Should future circumstances compel Australia to acquire nuclear weapons as a deterrence, an indigenous program would face a host of challenges; weapons sharing, however, might prove a viable alternative. Peter Layton:

Nuclear sharing is an old idea worth considering as the future becomes less certain and potentially darker.

Trade Minister Steven Ciobo has said Canada's last-minute TPP no-show and Australia's complaint against Canada at the WTO are 'unrelated', but is that really the case? Mike Callaghan:

Given Australia's severe disappointment and annoyance over Canadian Prime Minister Justin Trudeau's last-minute snub of other TPP leaders when he failed to show up to what was expected to be a signing ceremony, Ciobo probably had no hesitation, and some satisfaction, in lodging a WTO complaint against Canada.

Finally, Stephen Grenville concluded his three-part series on rethinking macroeconomics with an analysis of how the financial sector has been misunderstood on both a micro and macro level:

Standard economics says that markets have strong self-equilibrating processes: a fall in price encourages greater demand, thereby supporting prices. In textbooks, demand curves slope downwards. Aren’t markets like a marble in the bottom of a bowl, quickly returning to normal after being disturbed?

But in financial markets, investors’ common response to a price fall is to sell rather than buy, sending prices down further. Momentum traders, portfolio managers with fixed mandates, and even the risk-reducing rules imposed by the regulators all serve to give financial markets an unstable dynamic. These processes reverse eventually, but in the meantime collateral is inadequate, lenders call for more margin, and sound balance sheets can be in deep trouble.

You may also be interested in