Author: Joel Rathus, Adelaide University
On the 3rd of May, the ASEAN + 3 Finance Minister’s Meeting (APT-FMM) met in Bali. Expectations were high that, at last, an agreement might be reached on the multilateralization of the Chiang Mai Initiatives, or CMIM. An agreement, were it reached, would allow the members of the CMI to tap a regional pool of Foreign Exchange Reserves to better fend off a financial crisis.
Yet, ever since the agreement to proceed with multilateralization was reached at the 2005 Hyderabad Conference, the CMIM has faced difficulty in reaching a decision about contribution levels. This problem was political; boiling down a simple question of whether China would succeed in persuading Japan to accept an ‘equal firsts’ solution, or whether Japan would succeed in making its case that it should to be the largest single contributor.
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Author: Tobias Harris
Surprisingly, given the howls of protest from within the LDP that greeted Suga Yoshihide’s proposal to include a ban on hereditary candidates in the party’s election manifesto, the LDP appears ready to include restrictions on political inheritances in the manifesto after Suga met with Koga Makoto, the LDP’s chief elections strategist, and Ibuki Bunmei, former LDP secretary-general and cabinet minister.
Asahi reports that the proposed restriction will take the form of a regulation that will require a retiring politician to transfer his political organization’s funds to the party upon retirement.
Given the prime minister’s opposition to the idea, I wonder whether the agreement between Suga and Koga will be enough to secure inclusion in the manifesto.
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Author: Ian Castles, Crawford School, ANU
In his review of the Australian Government’s defence white paper, Greg Sheridan, Foreign Editor of The Australian, says, ‘just for the record’, that the US economy is six times as big as China’s. He claims that the white paper’s assertion that China has the potential to overtake the US as the world’s largest economy by 2020 is ‘silly’ (‘A battle of words’, Weekend Australian, 2-3 May, p. 22).
Sheridan also claims that the use of the purchasing power parity (PPP) method to compare the relative size of economies is ‘sleight of hand’ which gives rise to a ‘statistical illusion’ and ‘a meaningless measure’.
He is wrong on all counts. Even on the discredited ‘market’ exchange rate method that he persistently champions against the unanimous advice of economic statisticians and index number theorists, the GDP of the US is now only three times as big as China’s, not six times as big (IMF, World Economic Outlook Database, April 2009).
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Authors: Hal Hill and Greg Lopez
Chaos in Thailand, a controversial new PM in Malaysia, uncertainty in the Philippines, ASEAN as an institution searching for a role in the crisis. Hal Hill and Gregore Lopez ask: how serious is the crisis in Southeast Asia?
Even though the recent East Asian Summit was aborted in dramatic circumstances, this initiative underlines the diplomatic clout of the 10-member Association of Southeast Asian Nations, ASEAN. Put bluntly, Australia would not have a seat at this table if ASEAN had not acquiesced. ASEAN will also be critical to the success of Prime Minister Rudd’s proposed Asia Pacific Community.
These countries are also hugely significant economically and socially to Australia. For example, they are a larger share of our trade, our immigrants, our international student community, our overseas travel destinations and our aid program than is the case for any other OECD member.
Se we have a vital stake in their progress and, in particular, how well they are currently managing during the global financial crisis.
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Author: Raghbendra Jha
The on-going global financial crisis (GFC) has cast a shadow over the global economy with world output and trade forecasted (by the IMF) to shrink in 2009.
In the Australia South Asia Research Centre Working Paper, ‘The Global Financial Crisis and Short run Prospects for India’, [pdf] I outline the major contours of the GFC, its evolution since the subprime mortgage crisis in 2007, its implications for India and India’s response to the crisis.
Exhibiting a strong dynamism, economic growth in India in 2007–08 was a high 9 per cent despite the fact that the sub-prime crisis had already started to impact the US and other major economies. However, growth rates dropped steadily during the first three quarters of 2008–09. Government forecasts economic growth to be 7.1 per cent during 2008–09 but the fourth quarter growth figures may be overestimates so that growth in 2008–09 may be lower.
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Author: Rajiv Kumar
I recently participated in an international conference in Tokyo on ‘Global Financial and Economic Crisis and Growth Rebalancing’, organized by the ADBI. The Conference, led by Yung Chul Park and Masahiro Kawai, generated good papers and rich discussion because of the range of expertise available.
The three questions which expectedly dominated the proceedings were:
● whether the so called ‘green shoots of spring´ herald the beginning of a full-fledged global economic recovery;
● if the recovery in advanced economies and the US will be a V, U or L shaped one; and
● if China will succeed in switching its growth drivers from external demand to domestic consumption.
On the India story, which I presented, the general agreement was that while the Indian economy is suffering a hiccup, induced by a combination of policy tightening and external shock, its medium-term growth potential at 8-9 per cent remains in place.
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Author: Stuart Harris
Taiwan has been invited by the WHO to attend the annual meeting of the World Health Assembly, its top decision making body, as an observer. Observers are able to participate in all activities along with members but have no voting rights.
This will be seen generally as an important step forward both as a contribution to the health of Taiwan’s population and as a step towards greater international participation. It reflects a degree of pragmatism by the Chinese authorities who have blocked 12 previous attempts by Taiwan to participate and it is, of course, a response to the widespread criticism China received internationally and within the region for blocking Taiwan’s attendance when the SARS epidemic was active.
It undoubtedly also reflects recognition that the cross-border transmission of diseases like swine flu could harm China.
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Author: Tobias Harris
Over the past week, we have seen more signs of the shape that international relations in East Asia will take over the coming decades.
I’ve written before about the role that middle powers — most notably Japan, Australia, South Korea, ASEAN acting as a bloc, and to a lesser extent India — will play in the East Asia balance, maneuvering between the US and China, the region’s two giants as they attempt to enmesh China in regional institutions and profit economically from its rise while cooperating with the US to hedge against a violent turn in China’s rise and to ensure that they have strategic flexibility more generally.
Prime Minister Aso Taro visited China to meet Chinese President Hu Jintao and Premier Wen Jiabao, renewing their commitment to building a ‘strategic, reciprocal relationship’ and discussing a number of urgent problems, most notably the global spread of swine flu, the ongoing global economic crisis, and North Korea’s latest turn to intransigence.
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Author: Yoichi Funabashi
As the global economic crisis tightens the future of the world, the capitalist system looks grim: major countries find their interest rates approaching zero, leaving little room for manoeuvring. Massive fiscal stimulus programs threaten to ignite inflation, higher interest rates and free fall of the US dollar.
On top of these gaping policy pitfalls, anti-globalisation sentiments will likely gain momentum, inevitably spilling over into the political realm.
The world thus faces the combined dangers of over-regulation of the market, stifled innovation, rampant protectionism and, ultimately, the erosion of the liberal international order.
Against this dire backdrop, capitalism is likely to take divergent courses in different countries. The solution to the current crisis may no longer be the earlier call for a ‘new Bretton Woods’ but closer co-ordination among the major economies.
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Author: Satish Chand
Fiji was suspended from the Pacific Islands Forum on Saturday, the 2nd of May 2009. This decision was anticipated given that the military regime in Fiji had made clear of its intention not to pay heed to the ultimatum given by the Leaders’ following their meeting in Port Moresby last January.
The decision by the Forum, while understandable, is unfortunate. Fiji was a founding member and the late Ratu Sir Kamisese Mara an instigator of South Pacific Bureau for Economic Cooperation, the predecessor to the Pacific Islands Forum. The Secretariat is located in Suva. Fiji’s suspension is evidence of the fact that the Forum family has fractured.
The political problems in Fiji are hurting. Hurting Fiji foremost, and her neighbours next. Fiji’s GDP contracted by 6.6 per cent in 2007, and was close to stagnant in 2008. Poverty in the two years since the December 2006 coup is likely to have risen by a minimum of 8 percentage points. As of 2002, some 33 per cent of the population were poor. The figures for 2009 would certainly be above 40 per cent.
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Author: Tomoko Okagaki, National Institute of Defence Studies, Japan
The study of regionalism has resurged since the 1990s, invigorated by the developments in the real life of international politics: European integration and regional arrangements in other parts of the world. In recent years, studies have included security issues, and taken a more sceptical look at the applicability of the European model to the world.
Regional cooperation in Europe is extensive in scope and intensive in formal institutions and legal norms. Formal treaties or negotiations precede increased interaction in Europe – making regionalism in Europe politics-led or policy-induced. Asian regionalism, in contrast, has been driven by informal interaction and the growth of economic transactions (through the operation of multinational corporations and Chinese networks) without policy coordination or state-based negotiation.
These differences in regional strategy are a product of several factors.
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Author: Razeen Sally
The Sri Lankan government is close to completing an emphatic military victory over the Tamil Tiger rebels. Sri Lanka’s president, Mahinda Rajapakse, must follow up his military victory with a just settlement for the Tamil minority. If not, terrorism will go underground and ethnic conflict will continue to fester. But just as importantly, Sri Lanka’s economy needs radical change. Peace and development go together.
Sri Lanka’s economy has fallen far below its potential. At independence in 1948, the country formerly known as Ceylon was at peace, had a stable parliamentary democracy and was Asia’s second-wealthiest nation. Its prospects were golden. It had a prospering plantation economy, and, by developing-country standards, a well-developed infrastructure, an efficient public administration and judiciary, and significant achievements in health and education.
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Author: Stewart Firth, ANU
Fiji’s prime minister and military commander Frank Bainimarama has given his first extended interview to the Australian media since his dramatic seizure of complete power a few weeks ago.
On April 10, following a court ruling that his 2006 military coup was illegal, he abrogated the constitution, dismissed Fiji’s entire judiciary, declared a state of emergency, ordered soldiers into Fiji’s media newsrooms as censors, and said there would be no elections until September 2014.
Pictured in The Australian newspaper with a bowl of the traditional Fijian drink kava, and surrounded by his grandchildren, Bainimarama is engaged in a public relations exercise. He has called for an immediate face-to-face meeting with the prime ministers of Australia and New Zealand, Kevin Rudd and John Key, who, he says, do not understand what he is doing for his country. They are highly unlikely to accept his invitation.
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Author: Nilan Fernando, The Asia Foundation
The civil war in Sri Lanka has taken a terrible toll. No one knows for sure how many people have died, but it is probably not an exaggeration to say that, on average, 5,000-10,000 people have died annually for the past 25 years. Most of these casualties, both Tamil and Sinhalese, have come from the ranks of the poor.
The war has triggered massive displacement and migration and the country’s demographic makeup has been altered, probably forever. For Tamils in the North, the war has been particularly disastrous.
Now, after two years of intense fighting, the 25-year-old civil conflict in Sri Lanka is reaching a climax with the government on the verge of victory. The 2002 Ceasefire Agreement between the government of Sri Lanka and the Liberation Tigers of Tamil Eelam (LTTE) unraveled in 2006 and, having largely cleared the Eastern Province of the LTTE in 2007, the government focused on winning back the Northern Province in 2008.
The last LTTE fighters and their leader, Vellupillai Prabhakaran, are now clinging to a sliver of territory on the northeast coast, hiding behind what the government and members of the international community have called a ‘human shield’ of around 100,000 Tamil civilians.
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Author: Andrew Elek
In the 21st century, economic integration means much more than ‘free trade’. Economic integration encompasses all of the ways national economies are connected in international markets, including trade in goods, services, ideas and information, along with essential and complementary international movements of people and capital and the coordination of public policies.
This market-driven integration can be accelerated by cooperation among governments to reduce the remaining impediments to international commerce.
Except for a small number of sensitive products, most goods and services face no, or very low, formal trade barriers.
These days, the problems of most concern of those engaged in international commerce are logistics, communications, especially the electronic exchange of data, coping with security concerns and coping with different regulations in other economies. There is a widespread awareness of shared potential gains from practical arrangements to reduce these costs and risks of international economic transactions. The effective constraint to designing and implementing such arrangements is the capacity to do so, rather than political will. Therefore, negotiations are not always necessary to promote mutually beneficial economic integration. Read more…
