Guest Author: M. Govinda Rao, National Institute of Public Finance and Policy, New Delhi
Battered by the most severe crisis since the Great Depression, there were high hopes that the meeting of the 20 most powerful World leaders in London on April 2 would provide a significant impetus for reviving the world economy. Expectations were raised by the grandiose rhetoric that preceded the Summit with the Prime Minister of Great Britain characterising it as a ‘new Bretton Woods’ and a ‘global new deal’, though it was later scaled back as ‘a part of a process’.
The deal itself has produced a lot of optimism and stock markets have reacted with a sharp surge and the media has hailed the outcome as ‘the first bricks in the new world order’. In the final analysis, however, the success of the Summit depends on the way the declarations get implemented.
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Author: Tobias Harris
The Aso government and the LDP, confident due to polling numbers trending in their favor, are publicly mulling the timing of the next general election, raising the possibility that the government will not wait until the end of the current Diet term in September before calling an election.
Sankei reports that members of Aso Taro’s cabinet are celebrating the government’s new strength, insisting that the government has emerged stronger from its flirtation with single-digit public approval. Chief Cabinet Secretary Kawamura Takeo suggested that the bump in public support is a reflection of public understanding that the government is working diligently to overcome the economic crisis.
Hatoyama Kunio, the minister of internal affairs and communications, argued that the government’s fortunes are looking up because ‘the prime minister’s character is of a type whose true value takes time to be displayed and understood.’ Hatoyama foresees the government’s public approval rising above 50 per cent. (Does anyone want to take that bet?) Suga Yoshihide, the vice chairman of the LDP’s election strategy committee, said that the public is ‘losing its allergy’ to the LDP on the basis of the party’s response to the economic crisis and the North Korean missile launch.
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Author: Andrew Elek
The GATT/WTO system has been a huge success. It has created a rules-based global trading order in which most products do not face significant traditional border barriers such as tariffs and quantitative restrictions; allowing a steadily growing number of economies to trade their way out of poverty.
At the same time, the renewed pressure to look for ways to protect economies from the effects of the global financial crisis has exposed some weaknesses. While most applied rates of protection are low, there is considerable scope for WTO-consistent protectionism. Applied rates can be raised to (the sometimes much higher) bound rates and there is insufficient discipline on contingent protectionism, such as anti-dumping and trade-distorting subsidies.
In a recent article, Mattoo and Subramanian note that even a successful Doha Round will not deal with this residual uncertainty. Therefore, they have proposed a ‘crisis round of trade negotiations’, to be completed within twelve months, to address this problem.
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Author: Tobias Harris
The political system is gearing up for a debate over the government’s 15 trillion yen stimulus package that could decide the timing and the outcome of the next general election.
Kan Naoto has indicated that if the government is open to revising the plan, the DPJ will cooperate to smooth its passage. What choice does the DPJ have? Now that the LDP and the DPJ have swapped preferences regarding election timing — after years of demanding an immediate election, the DPJ has backed down due largely to Ozawa Ichiro’s struggles, and the prime minister, enjoying what could be a temporary shift in his favor, is contemplating an election sooner rather than later — the DPJ has every reason to cooperate if it means depriving the government of an issue which it can use as justification for a snap election.
Although there is some debate within the party about the right course of action, it seems likely that the DPJ will opt for this strategy, forcing Aso to decide whether he will live up to his oft-repeated commitment to putting policy and the resolution of the economic crisis before politics or whether he will opt to exploit what looks like a window of opportunity for a general election.
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Author: Brett Williams, University of Sydney
Those of us who fear that discriminatory trade agreements (‘DTAs’: some call them Preferential Trade Ageements or Free Trade Agreements) may be becoming obstacles to rather than building blocks for multilateral non-discriminatory trade liberalization have listened to the Australian government’s arguments that multilateral and bilateral liberalization are compatible with each other.
The opening of FTA negotiations with Korea ought to give us cause to reflect on the issue again.
As I have argued to the Department of Foreign Affairs and Trade, an FTA between Australia and Korea agreement would:
- make it even harder to achieve non-discriminatory multilateral trade liberalization (for example, in the Doha Round) so as to diminish the trade diversion effects of existing discriminatory trade agreements; and
- reward Korea for having played an obstructive role in the Doha Round WTO negotiations.
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Author: Tobias Harris
When Ozawa Ichiro suggested that at some unspecified point in the future the US forward-deployed forces in Japan might be reduced to the Seventh Fleet with Japan’s taking greater responsibility for its own defense, he was greeted with opprobrium from LDP and government officials, who called him naive, unrealistic, and ignorant.
Even Kevin Maher, the US consul general in Okinawa, weighed in, echoing LDP comments about Ozawa’s ignorance of the complexities of the East Asia regional security environment. Judging by the response, it appeared as if Ozawa was a dangerous radical who, if elected, would single-handedly undermine the alliance and leave Japan defenseless in a dangerous neighborhood.
After watching the response from certain corners of the Japanese establishment to North Korea’s rocket launch, when will Mr. Maher issue another warning to Japanese politicians for their dangerous rhetoric?
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Author: Sunny Tanuwidjaja, CSIS, Jakarta
The three democratic elections after the New Order era clearly attest to the changing political landscape in Indonesia. On the one hand, new parties continue to emerge. On the other hand, we observe the stagnation and steady decline of the old political parties, Golkar, Megawati’s PDI-P, and PPP, the most established Islamic party.
Take the 1999 election. The new parties, PKB (led by Gus Dur) and PAN (led by Amien Rais), were then the rising stars, garnering 19.7 per cent of the votes, and 18.3 per cent of the seats. In the 2004 election, it was another two new parties, PKS (the militant Islamic party) and the PD (established by SBY), who were on the rise. These two parties combined collected 14.7 per cent of the votes and 18.2 per cent of the seats.
The previous newcomers, PKB and PAN, stagnated. In 2009, the biggest surprise is the overwhelming rise of PD. Based on several quick counts and the official General Election Commission (KPU) count that is still in progress, PD will emerge as the largest party, garnering 20.5 per cent of the votes. Two other newcomers will also enter the parliament, and between them, Gerindra (established by Prabowo) and Hanura (formed by Wiranto), garner about 8 per cent of the vote.
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Author: Nicholas Farrelly, New Mandala
It is fair to say that Thailand’s Songkran festival—marking the traditional New Year— usually passes with a predictable mix of nation-wide chaos. Water fights, booze and huge crowds make for a heady and sometimes lethal combination, particularly on Thailand’s roads. It is a week of great frivolity and sadly for those caught up in the traffic carnage it is also a time of immense personal tragedy. In a normal year, Songkran is a mixed blessing: both happy and sad.
Songkran in 2009, which is celebrated today, 13 April, is far from normal. The government of Prime Minister Abhisit Vejjajiva had planned for a successful East Asia Summit to coincide with the traditional New Year festivities. In the Theravada Buddhist countries of Southeast Asia the annual celebration in mid-April is often called the ‘water festival’. It is a boon to tourist marketers everywhere. When Abhisit took power in December 2008, Songkran would have looked attractive as a time to host a peaceful, positive and popular get-together of ASEAN and friends.
The events of Saturday, 11 April, were not what he had in mind. The East Asia Summit venue was stormed by red-shirted anti-government protestors backed by his nemesis, deposed former Prime Minister, Thaksin Shinawatra. Responding to these unprecedented and humiliating events necessitated calling off the Summit. Delegations from across Asia were helicoptered out of the venue and sent home. From the Australian end, Prime Minister Kevin Rudd’s plane was turned around two hours out of Bangkok. In a country as ‘face’ conscious as Thailand, Prime Minister Abhisit suffered the indignity of seeing his big weekend on the global stage spoiled by a few thousand committed opponents. They literally pushed his inadequate police cordons out of the way.
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Author: Scott MacWilliam
The October 2008 decision of the Fiji High Court which provided support for the continued rule of Commodore Frank Bainimarama and the military was roundly condemned, especially by lawyers and academics. There was vociferous encouragement for a legal challenge to the country’s Appeal Court, although the capacity of members of this court to over-turn the decision and pronounce against the country’s military rulers was itself questioned.
Only a few people, including myself through this Forum, publicly warned that the legalistic condemnation was unwise. The reasoning behind the warning was that attacking the High Court’s decision in order to defend the over-turned government headed by Laisenia Qarase and the sanctity of the 1997 Constitution was not politically sound.
On April 9, 2009 the critics of the earlier judgment received what they had asked for. The Appeal Court over-turned the previous decision and advised the President to appoint an interim government. In the words of the judgment, such a government should be headed by a ‘distinguished person independent of the parties to this litigation as caretaker Prime Minister’.
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Author: Soogil Young, Chair, KOPEC, Seoul
Koreans have been shocked, and even frightened, by the severity with which the current global financial crisis has affected their economy since September last year.
The Korean stock market index (KOSPI) fell 33 per cent from mid-September to the end of November, and continued to be volatile around what turns out to have been a weak upward trend since then. The won value of the U.S. dollar hovered around 1,000 until last August and rose precipitously in the months that followed, reaching a peak level of 1,518 on November 24, and another peak level of 1,594 on March 3 this year.
The main cause of Korea’s financial turbulence has been rapid and large outflows of foreign financial capital. The foreign holdings of domestic stocks fell by 29 per cent, from 228 trillion won at the end of August, when it accounted for 31 per cent of the total value of the stock market, to 163 trillion won at the end of November last year.
Concurrent with the flight from the stock market were the difficulties the Korean banking and corporate sectors had renewing foreign loans. This was indicated by a steep rise in Korea’s CDS premium, from 116 on August 31 to 405, the highest in Asia, on December 6 last year.
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Author: Donald K. Emmerson, Southeast Asia Forum, Stanford University
There is no doubt that Indonesia’s national legislative election on 9 April showed big gains for President Susilo Bambang Yudhoyono (SBY). Yet SBY and his campaign advisers expected more. Had his Democrat Party (DP) won at least 25 per cent of the vote (rather than the estimated actual 20 per cent), the DP would have been entitled, on its own, to nominate him as a presidential candidate, and to nominate someone chosen by him as his vice-presidential candidate.
The DP is now the most successful party in the country, but its lack of an absolute majority in the next legislature will oblige it to engage in coalition politics. Had SBY’s party garnered a larger share of the 9 April vote, he would have been less obliged to entice other parties into his coalition with promises of influence over personnel. Critical upcoming decisions include not only the selection of his running mate but also, prospectively, cabinet ministers in a second Yudhoyono administration should he be re-elected later this year.
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Author: Tobias Harris
Ozawa Ichiro, marking the third anniversary of his leadership of the DPJ, gave a long (and rambling) press conference at DPJ headquarters to mark the occasion.
In the midst of Ozawa’s winding and evasive answers to questions pertaining to North Korea’s rocket launch, political strategy, the coming general election, and economic policy, it is hard to find a coherent message, which betrays a certain lack of confidence that Ozawa and the DPJ are feeling at this juncture.
For the first time in months, the DPJ is on the defensive. The momentum has shifted perceptibly. The DPJ, rather than criticizing the government from one misstep or another, is forced to defend Ozawa’s alleged misdeeds and respond to an Aso government that has appeared more vigorous of late.
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Author: James J Fox, Research School of Pacific and Asian Studies, ANU
Although polls for Indonesia’s parliamentary elections only closed late last night, quick count results indicate that Indonesia’s three large parties – President Susilo Bambang Yudhoyono’s Democrat Party, Megawati Sukarnoputri’s PDI-Perjuangan Party and Jusuf Kalla’s Golkar Party – have done better than expected. Together they may have garnered over 60 per cent, and possibly even 70 per cent, of the national vote. Earlier predictions were for only around 50 per cent of the vote.
This would leave a much smaller portion of the vote to be divided among a plethora of 35 other parties, most of whom will not obtain the 2.5 per cent minimum necessary to gain parliamentary election. Only seven or eight other parties are likely to obtain sufficient support and none are likely to poll over 8 per cent.
This will be a particular disappointment for the Islamic PKS party, whose spectacular rise in the previous 2004 election, led to the prediction of major gains in 2009. Several other Islamic-oriented Parties, PKB, PAN and PPP seem not to have done as well as PKS. Similarly the two new parties led by former generals, the Wiranto-led Hanura Party and the Prabowo Subianto-led Gerindra Party, will not achieve the success they had hoped for.
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Author: David Dollar
At the height of the recent boom the U.S. household savings rate dropped to zero: the average American family saved nothing from its annual income of more than $38,000 per person. In China, by contrast, poor rural families earning less than $200 per person save 18 percent of their meager income. This is one of the striking findings of the World Bank poverty assessment released today.
The poverty study uses a wealth of household survey and village-level data to tell a fascinating story of progress and vulnerability. The progress is remarkable: the share of the population living below the World Bank’s consumption poverty line for China declined from 65 percent at the beginning of economic reform (1981) to 4 percent in 2007. The pace of poverty reduction varied over these 26 years. One of the periods of most rapid poverty reduction has been the boom time since China joined the World Trade Organization. Poverty declined from 16 percent in 2001 to 4 percent in just six years.
This is an extract from the East Asia and Pacific on the Rise blog. To read the rest of the article, click here.
Author: Ryan Manuel
A recent article by Sun Liping has attracted considerable attention on the blogosphere (thanks to China Digital Times for the link, and initial translation. I have retranslated the text).
CDT highlighted the piece as interesting because of Sun Liping’s links with current rising star Xi Jinping: as an aside, I am somewhat sceptical about this, given that Dr. Sun is a sociology professor and Xi an engineer.
But it is the content of Sun’s article that makes it explosive. In particular, he argues that:
It is difficult to achieve the double goals of maximizing vested interests and keeping the society operating steadily…we will pay a high price in the long-term for safeguarding vested interests.
This part of his argument is a common one, and is interlinked with Sun’s broader point on the lack of social cohesion and ’society’ within China.
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