Author: Renu Kohli

India’s Budget for 2010 is a demonstration of the discipline that global integration imposes upon countries. The modest contraction in the fiscal stance displays a responsible coordination of macroeconomic policies. Its overall message—serious effort at consolidating public finances—manages fiscal expectations positively. Both were necessary to contain rating hawks and reassure markets and investors—the new watchdogs of open India.

This remarkable development is significantly due to the pressures of growing economic openness. Read more…

Author: Andrei Lankov, Kookmin University and ANU

Over the past year or so, something strange has begun to happen in Pyongyang. The North Korean leadership has taken some actions that have clearly damaged the interests of the ruling clique.

The recent currency reform is the best example of self-defeating policy decisions. For years, the Pyongyang government has waged campaigns against the unofficial and semi-official markets that have played a decisive role in North Korea’s economic life since the collapse of the state-run economy in the 1990s. Read more…

Author: Scott A. Snyder, CFR

I’ve been watching North Korea ramp up efforts to attract foreign investment since Jack Pritchard and I heard last November in Pyongyang from the chairman of Pyongyang’s Foreign Investment Advisory Board a presentation of new laws that provide for repatriation of investments, tax benefits, and wages of 30 Euros/month that undercut the $57/month wage rate at the Kaesong Industrial Zone.

Although catastrophic failure of currency revaluation implemented from late November of last year has severely eroded the credibility of the government’s economic policies, there are serious efforts underway to realise new foreign investment at Rajin-Sonbong port at the northeastern tip of North Korea. Read more…

Author: Peter Yuan Cai, ANU

On January 27, the Chinese State Council announced the establishment of China’s National Energy Commission under the leadership of Premier Wen Jiabao and the vice-Premier and his heir-apparent, Li Keqiang.  This announcement came as a much-anticipated move by Beijing to coordinate and devise a comprehensive national energy policy.

The members of this commission certainly reflect that grand ambition. They are an all-star cast of the most important and influential ministers from the State Council such as that of the National Development and Reform Commission, Ministry of Finance, and Ministry of Foreign Affairs. Read more…

Author: Timo Henckel

The Australian bank guarantee (officially the ‘wholesale lending guarantee’)—effective since November 2008 to prevent local financial markets from following the rest of the world into a tailspin—is being withdrawn in April. In his announcement of the withdrawal earlier this year, Treasurer Wayne Swan argued that the need for further government guarantees had been overcome as Australian banks had successfully weathered the storm sweeping through the global credit markets.

The guarantee underwrote the large funds (well in excess of $100 billion) which Australian banks have routinely received from overseas capital and money markets and which enabled them to have loan/deposit ratios greater than 100 percent. Read more…

Author: Tobias Harris, MIT

Within a week of the formation of the first Bolshevik government, Leon Trotsky, the People’s Commissar for Foreign Affairs, went to the foreign ministry and forced the staff to open safes containing secret treaties that the Tsarist government had made with the Allied powers over the course of World War I, treaties that for the most part concerned how the Allies would divide up the territorial spoils of war.

‘Abolition of secret diplomacy,’ wrote Trotsky, ‘is the first essential of an honorable, popular, and really democratic foreign policy.’ Read more…

Author: Aidan Foster-Carter, Leeds University

The past month saw both Chairman and Premier Kim doing something almost unheard of in Pyongyang. Apparently they both said sorry, although some reports got the two muddled up.

On February 1, Rodong Sinmun, daily paper of the ruling Workers’ Party of Korea (WPK), reported Kim Jong-il as lamenting his failure to fulfil his late father Kim Il-sung’s pledge, to which he had also alluded shortly before on January 9, that all North Koreans would eat rice and meat soup (everyday fare for even the poorest South Korean, be it noted). Read more…

Author: Hal Hill, ANU

When Prime Minister Rudd talks with President Yudhoyono this week, they will be able to reflect on what a fickle, mean and unpredictable business politics is.

Four months ago, the mood in Indonesia was extremely positive: Susilo Bambang Yudhoyono (universally known as SBY) had been installed for a historic second term. He had chosen Dr Boediono, the country’s most respected technocrat, as his vice president. His Democrat Party had emerged as a major force in the DPR, the country’s parliament. Read more…

Author: Kazuhito Yamashita, RIETI

Japanese agriculture is in a free-falling decline. In the years between 1960 and 2005, the share of agricultural output in GDP dropped from 9 per cent to 1 per cent, the food self-sufficiency ratio from 79 per cent to 41 per cent, and agricultural land, indispensable for food security, from 6.09 million hectares to 4.63 million hectares.

Meanwhile, the ratio of part-time farm households, which derive more than half their income from non-farm employment, increased from 32.1 per cent to 61.7 per cent. The percentage of farmers over 65 years old also jumped from 10 per cent to 60 per cent. Read more…

Author: Suman Bery, NCAER

Investors reacted with a yawn to Friday’s budget presentation by Indian Finance Minister Pranab Mukherjee—the Mumbai market closed almost flat on the day. That was less an endorsement of the government’s reform agenda and more a sigh of relief that the Minister was prepared to reduce the fiscal deficit after two years of a major expansion.

Mr. Mukherjee mostly accepted the recent recommendations of the 13th Finance Commission, a government committee that by law recommends reforms to the president. Read more…

Author: Ross McLeod, ANU

The visit of Indonesian President, Susilo Bambang Yudhoyono (SBY) to Australia, five months into his second five-year term, provides an opportune moment to take stock of Indonesia’s progress over the last few years. Like Australia, Indonesia has performed remarkably well in the face of the global financial crisis. Its annual economic growth rate fell from about 6 to 4 per cent, but has already accelerated again to well above 5 per cent. Inflation is only about 3 per cent, and the currency is strong. The budget deficit is small and well under control, as is public debt.

A number of factors have contributed to this good performance. Read more…

Author: Peter Yuan Cai, ANU

The 2009 arrest of Rio Tinto executive Stern Hu was a watershed event in the Sino-Australian relationship. Beijing’s unexpected intervention in the name of national security demonstrates not only how grave were perceptions of its disadvantage in the iron ore trade but also the murkiness of its laws regarding state secrets and the operation of the market. Determined intrusion from Beijing, especially by the Chinese intelligence services, could only happen with the blessing of top echelons of China’s political process.

But what could have made the Chinese government take such dramatic action at such a highly sensitive time in the iron ore negotiations and given the broader global ramifications that an intervention like this would inevitably have? Read more…

Author: Sourabh Gupta, Samuels International

On February 18th, President Obama personally welcomed His Holiness the Dalai Lama to the White House, drawing the predictable ire of the Chinese leadership. As if in response, on March 1st, Beijing named its hand-picked Panchen Lama to its top political advisory body, the Chinese People’s Political Consultative Conference. In 2013, it is speculated the young lama will be elevated to the prominent political position of vice-chairmanship of the National People’s Congress. With Beijing gradually moving towards engineering a similar schism in the revered institution of the Dalai Lama by way of issuing regulations that purport to manage the reincarnation of living lamas, an altogether more purposeful negotiating approach by the Dalai Lama vis-à-vis Beijing is imperative.

Foremost in this regard is the need for His Holiness to match rhetoric with action as he goes about securing an enhanced autonomy arrangement for the Tibetan people. Read more…

Author: Peter Drsydale

The flurry of leaders’ visits — by Indonesia’s President Susilo Bambang Yudhoyono to Canberra this week and American President Barack Obama to Canberra and Jakarta a little over a week later — signals an elevation in the triangular relationship between the United States, Indonesia and Australia, not merely the growing depth of their bilateral relations. Indonesia is one of the world’s newest democracies, a secular state with a predominantly Muslim population, of immense importance to Australia and America in securing Southeast Asian stability and openness. Indonesia and Australia are members of the new G20 group and have deep and common interests in working with America to entrench the G20 as the pre-eminent and enduring forum for global economic governance. Indonesia, with its pivotal role in ASEAN, and Australia, an anchor in trans-Pacific security, are close confidants on America’s re-engagement with Asia under the Obama administration.

American conceptions of security in Asia and the Pacific do not routinely comprehend Southeast Asia. Read more…

Author: Andrew MacIntyre, ANU

Barack Obama’s upcoming visit to Indonesia and Australia is likely to be one of the less difficult and more gratifying international missions he undertakes this year. But along with the surges of goodwill that will greet him in both countries, there will also be opportunities– in partnership with Susilo Bambang Yudhoyono and Kevin Rudd – to advance significant common causes in the region and globally. And Yudhoyono’s separate bilateral visit to Canberra the week before gives added weight to the moment.

With climate change sliding down the agenda in all three countries for now, the big issue on which the three leaders will find common cause is the G20. Read more…