The world’s rapidly changing geopolitical, economic and social landscape demands that this year’s G20 Summit be different from previous years.

The last 12 months have witnessed the Japanese triple disaster, the Middle Eastern and North African ‘Arab Spring’, nuclear-powered North Korea’s leadership succession to a 27-year-old, Western condemnation of the Iranian nuclear power program, and the shift of US military strategy to the Asia Pacific. Popular movements saw national leaders from Europe (including Italy, Greece, Portugal, Ireland and Spain) to the Middle East and North Africa (Libya, Tunisia and Egypt) toppled from power. Tensions rose between old-power G7 nations and rising-power BRICS countries over currency and trade, the South China Sea, bans on Iranian oil, and most recently, the Syrian regime. Many countries resorted to rising protectionism through tit-for-tat strategies, while the WTO Doha Round has remained stalled. Competition in the food and energy sectors has become increasingly intense. And the US presidential election and the leadership change in China later this year could further add to global uncertainty. All this while prolonged economic turbulence emanating from the euro zone threatens to devastate global economic growth.

With so little space to move and so little time to spare, what can this year’s G20 do differently?

Broadly speaking, the agenda must be continuous, implementable and focused if it is to deliver concrete outcomes. Previous commitments by G20 leaders, while promoting win–win strategies for the international community, have lacked focus and practical implementation plans.

With so much global social unrest and economic turmoil threatening political and social stability, social safety net programs should be prioritised. In particular, the Social Protection Floor, endorsed by G20 leaders last year, must be made central to the coming G20 Summit. The plan must act to attenuate the adverse impacts of the global recession and to maintain social cohesion. Meanwhile, the Multi-Year Action Plan on Development (2010) and recommendations from the G20 Employment Task Force must also be consistently enforced.

Judging by the Finance Ministers’ and Central Bank Governors’ Deputies Meeting in January, there are four key issues that may help shape the G20 Summit’s agenda: IMF quota and voting reforms, financial-sector reforms, commodity and derivatives markets, and disaster-recovery management.

First, the IMF quota and voting reforms will see emerging-market and under-represented countries receive higher shares. With the emerging countries’ share of the global economy rising, IMF quota and voting changes will better represent the new global economic landscape. The IMF’s plan to expand its war chest and increase its firepower is an opportunity for emerging markets to play a contributive role in this new landscape.

Second, although emerging countries have ostensibly committed to financial regulatory reform, including Basel III, scepticism continues to exist. But it is essential that the G20’s developing-economy members overcome this to adopt a strong position on financial regulatory reform, moving beyond the excuse that such measures are for more-developed economies only. There are clearly flaws in the current financial system, and developing economies should not be passive, but active, reformers.

Ways to better connect financial and real sectors must also be discussed. If left unaddressed, such a disconnect may increase scepticism over market capitalism, globalisation, financial greed and inequality — which could ultimately trigger more social unrest.

Third, the co-chairing of a commodity- and derivatives-market working group by Indonesia and the UK is a positive step. Indonesia is an emerging economy with an under-developed derivatives market and volatile commodity prices, partly due to derivatives trading on commodities. By pushing for regulated commodity and derivatives markets, Indonesia would be a counterbalance to the UK. This is the sort of ‘balancing’ agenda needed at the G20 level — one that strikes a compromise between developed and developing economies.

Fourth, disaster-recovery management will benefit many G20 members, including Japan, Indonesia, Australia and the US — all located in disaster-prone areas. Here there is room for alignment with regional initiatives. APEC, which includes nine G20 members, has initiated the APEC High-Level Policy Dialogue on Disaster Resiliency (2011) and the APEC Trade Recovery Programme. The East Asia Summit, encompassing seven G20 members, has also initiated the Practical Approach to Enhance Regional Cooperation on Disaster Rapid Response (2011). This includes efforts to improve efficiency for visa applications, customs, quarantine issues and bureaucratic impediments to disaster-relief efforts, including NGO assistance. The G20 may also contribute to the financial aspects of disaster-recovery management.

With only seven months of preparation time since meeting in Cannes, the G20 Summit in June must ensure the continuity of its agenda, but also recognise the current economic recession. Social protection plans to prevent more political and social instability, and genuine progress toward financial regulatory reform are priorities that should be addressed at the coming summit. Meanwhile, emerging countries should become more active, rather than passive, reformers.

Maria Monica Wihardja is a researcher at the Centre for Strategic and International Studies, Jakarta, and a lecturer at the Department of Economics, University of Indonesia. She is currently on leave to work as a consultant at Bank Indonesia.

1. Will Asia step up to the global challenges of 2012?
2. 2011 East Asia Summit: New members, challenges and opportunities
3. Kim Jong-un’s regime: facing up to domestic challenges, China and the US

Having ruled Japan for the better half of a century, it is no surprise that the Liberal Democratic Party (LDP) has found it difficult to adapt to its role as Japan’s major opposition party.

But with the prospect of further political gridlock, it may be time for the LDP to reconsider its strategy.

At the LDP National Convention last month, Sadakazu Tanigaki, the party’s president, criticised Prime Minister Yoshihiko Noda and his Democratic Party of Japan (DPJ) for their handling of the Fukushima nuclear disaster, and labelled the proposed increase in Japan’s consumption tax rate ‘an empty cheat’. In order to return the LDP to power, Tanigaki has also vowed to pressure Noda to dissolve the lower house and call a snap election.

This uncompromising stance is largely in line with the obstructionist attitude adopted by the LDP when Noda’s predecessor, Naoto Kan, was in power, and is likely to continue throughout Noda’s term. Given that the government lacks an upper-house majority, the LDP can effectively block any of the government’s bills, but there are several reasons why this strategy is unlikely to pay strong electoral dividends in the long run.

First, Noda’s major policy agenda is ambitious in scope. He has proposed bills to raise the consumption tax rate from 5 per cent to 10 per cent by 2015, reform independent administrative institutions, reduce the salaries of government employees and advance Japan’s position in the Trans-Pacific Partnership (TPP) negotiations. Regardless of whether it can be achieved, Noda’s vow to break with ‘the politics that can’t decide’ and push forward with reform clearly puts the LDP on the defensive. Tanigaki has repeatedly warned that ‘Japan could experience an irreversible national crisis’ in pursuing Noda’s policies. But his party’s unwillingness to reach a compromise with the government exposes the LDP to criticisms of not acting in the national interest. If the prospect of a national crisis does not spur the LDP to enter negotiations with the government over the consumption tax, then what will?

Second, a number of Noda’s policies were either previously supported by the LDP, or overlap with the party’s traditional support base. Tanigaki has rejected talks with the ruling party on the grounds that there is no mention of the proposed consumption tax increase in the DPJ’s 2009 manifesto, but the LDP strongly pushed for the very same proposal in the 2010 House of Councillors election. Further, the DPJ’s support for Japan’s entry into the TPP negotiations, comprehensive reform of the social security system and the reduction of government employees’ wages leaves little room for the LDP to carve out a viable policy alternative. If the DPJ now represents the party of fiscal austerity, trade liberalisation and administrative reform, where exactly does the LDP fit into Japan’s party system, and how can it distinguish itself from the ruling party?

Third, despite declining electoral support for Noda’s cabinet, the LDP has failed to make the most of recent political events and increase its own standing. According to a recent Yomiuri Shimbun poll, support for the DPJ has risen from 22 per cent to 25 per cent, while the LDP’s popularity fell from 19 per cent to 17 per cent. Although one would expect the opposition to benefit in light of the planned austerity measures, this has not been the case; however unpopular a tax increase might be, 73 per cent of respondents still agree that the LDP-Komeito coalition should participate in policy deliberations with the government. It might seem obvious, but opposition for opposition’s sake is unlikely to return the LDP to power.

But with Tanigaki at the helm, the LDP’s current strategy of obstruction may be the best the party can hope for. Tanigaki’s term as LDP president expires in September (while Noda can delay calling an election until August next year). So failure to force an early election may seriously undermine Tanigaki’s prospects for re-election as party president, particularly as the current LDP secretary-general, Nobuteru Ishihara, has expressed interest in replacing Tanigaki.

Failure to match Noda’s policy agenda with sensible counter-proposals, added to the LDP’s refusal to debate the government’s key initiatives, may only further weaken the LDP’s electoral position at a time when smaller opposition parties are merging and forging new cooperative strategies in order to court the conservative vote. The People’s New Party and Stand Up Japan! have agreed to launch a new political party in March with Tokyo’s governor, Shintaro Ishihara. And Your Party, a centre-right party made up of former LDP members, also announced that it will be cooperating with Osaka’s increasingly popular mayor, Toru Hashimoto, and his party (Osaka Restoration Association) in the next election.

Still, a much larger problem is that for the LDP to only engage in policy-based discussions once in power belies the opposition’s role in a parliamentary system. It also offers little hope for the majority of Japan’s independent voters that the current LDP would govern any differently from the LDP that lost in the general election of 2009.

Kevin Placek is a recent graduate of the University of Melbourne, where he completed a Master of International Relations specialising in Japanese prime-ministerial politics.

1. The next Democratic Party of Japan prime minister
2. The Democratic Party of Japan’s credibility crisis
3. Japan must support liberal international order

This year presents a new set of challenges for Chinese energy endeavours, and nowhere more so than in oil.

Despite analysts bemoaning China’s ‘cavalier’ approach to risk as it strikes upstream deals in exotic locations, Beijing always knew it would have to cash in some of its chips when geopolitical cards were put on the table. And while some of the bigger cards will be called this year, other options will open up for China — and not where most people would commonly think.

Beijing’s biggest problem for 2012 is Iran. US and EU pressure is mounting via sanctions as rapidly as the Iranian bluster over the Strait of Hormuz is pushing benchmark prices higher. The structural hedge currently being played out in Tehran is the fight for nuclear enrichment against the threat of a major oil price spike. The game will keep being played until someone makes a wrong — or rash — move. Forget Beijing buckling to Western pressure over sanctions — what matters here is the regional dynamics of the Middle East. Unless China can convince the bulk of Middle Eastern producers that its close ties with Iran can help constrain Tehran’s nuclear ambitions, China’s core suppliers in the Gulf will call time on Iran and expect Beijing to comply accordingly. If Iran thinks Saudi Arabia is already tightening the screw by covering prospective Persian supply gaps, it will be turned even harder when the Saudis withhold oil from global markets to force assertive international action on Iran. As painful as this reality is for China, it knows that Arab output will always trump Persian production; of China’s 5.5mb/d of imports in 2011, 2.3mb/d were source from Saudi Arabia, Iraq, the UAE and Kuwait, with Iran only accounting for 550,000b/d. ‘Chirabia’ rather than ‘Chiran’ is the key relationship Beijing needs to get right.

Uncertainties surrounding Iraq also feed into the regional dynamics. Baghdad has little political glue to hold the country together following the US withdrawal. Oil has been at the epicentre of secessionist Kurdish claims. And Sunni–Shia schisms remain ingrained as Baghdad’s core weakness — and these schisms will continue to grow as external power vacuums unfold. The upshot is that regional players will use Iraq to advance their own ambitions, which in turn points toward the real interest for Iran. Disrupting Iraq to buy more nuclear time would do far more harm to the US’s international credibility — and presidential election campaigns — than short-term blockages from the Strait of Hormuz.

This is all bad news for China. Beijing’s overriding energy interests are to secure and maintain steady energy supplies to fuel the Chinese economy and to keep benchmark prices within a ‘stable range’. Even if suspicion over Iranian nuclear weapons had not been raised and uncertainties surrounding Iraq’s future were not a concern, the Arab Spring and prospective ‘Eurasian and African Summers’ pose major questions as to whether China is prepared to do the heavy lifting required to keep global hydrocarbon provisions online. Beijing needs to get its strategy right so that its political risks abroad do not translate into political instability at home.

At the very least, Beijing should start reflecting upon which energy policies to keep and which to trade in at ‘reasonable energy prices’. This logic should not only apply to key producers like Iran, but also to more marginal players in Central and Eastern Africa, not to mention the Gulf of Guinea reserves. China cannot fill all these geopolitical gaps overnight, which means the global power transition from West to East will be intrinsically fraught for energy.

But it will not be all bad news for Beijing in 2012. Political risk — or rather a lack thereof — holds the key for China’s bright future; despite endless hype over US energy independence, China’s energy aces will be found in the Americas this year (most notably Canada, the US and Latin America), and the reason for this is simple. American markets like the colour of Beijing’s money and have the infrastructure in place to harness reserves and investment to ramp up production. True, issues of ‘resource nationalism’, ‘tax hikes’ and ‘fiscal fiddles’ will flare up from time to time in these more mature markets, but they will not be in the same ballpark as problems in the Middle East, West Africa or Central Asia. The prospect of state implosion (or explosion) in these regions will clearly have dramatic implications for global energy provision.

China’s strategic play should therefore see Beijing hedging its stakes in the global energy system by buying into the Americas. Beijing is well aware that it needs to invest geopolitically to secure supplies from some of the world’s key energy producers — and that this will remain a long-term project. Investing in the Americas now, will come in handy for China later, when the truly serious energy bets are cashed in — namely, the US ceding ground in the Middle East in return for Chinese concessions handed back in the Americas. As this ‘neat’ division of hydrocarbon labour plays out, China must be ready to take up the security slack. The year 2012 will thus provide some painful, but very valuable, lessons for China as to how an Asian hydrocarbon century will pan out.

Matthew Hulbert is Lead Analyst at the European Energy Review, Amsterdam.

1. Threat to Asia’s energy security
2. Common ground in US-China energy relations
3. Dealing with China’s energy and resource insecurities – Weekly editorial

Malaysians expressed a collective sigh of relief when Opposition Leader Anwar Ibrahim was acquitted of sodomy charges in early January.

Their groan of dismay over the prosecution’s subsequent decision to appeal was equally palpable.

For most Malaysians, despite being divided in their opinions of Anwar, the acquittal marked a chance to move away from the sleazy politics that has long dominated daily life. Now, they expect more of the same. Aware of public exasperation, Prime Minister Najib Razak was quick to seize on the not guilty verdict as proof of his ‘reformist’ agenda and Malaysia’s supposedly independent judiciary. But the appeal leaves him stranded, inclined to delay calling a general election, and acutely aware that he is under threat as much from within his own ranks as from the opposition. It seems likely that Najib will win the next election, but unless he scores big — which seems unlikely — his leadership could be at risk.

The old guard in Najib’s United Malays National Organisation (UMNO), the core of the Barisan Nasional coalition government, has been trying to have Anwar convicted of sexual misconduct for more than 13 years. His first sodomy trial in the late 1990s was regarded as a miscarriage of justice, and the recently completed second trial was just as dubious, according to international legal and human rights organisations. Kuala Lumpur has a thriving gay club scene and nightlife, and the police — to their credit — do not hound homosexuals. But Anwar was hauled into court twice on a charge of ‘carnal intercourse against the order of nature’, which carries a maximum sentence of 20 years imprisonment.

The government’s deliberate targeting of Anwar is obvious. His arrest in 2008 came soon after he led a revitalised opposition to unprecedented gains in a general election, depriving the UMNO-led Barisan Nasional of its usual two-thirds majority in parliament. Subsequently, Anwar has spent much of the past three years caught up defending himself in the sodomy trial, when he might have otherwise engaged in consolidating the opposition coalition.

Despite, or perhaps because of, these efforts, the trial has become a liability for Najib. The value in distracting Anwar and trying to knock him out politically has been offset by the damage to Najib’s reputation as a putative reformer. Conscious that the long-term electoral trend is running against the ruling coalition, which has held power since independence in 1957, Najib has positioned himself as an agent of change, who is in touch with Malaysia’s younger generation. He has attempted to roll back unpopular elements of an affirmative action program designed to benefit the country’s majority ethnic Malay community, liberalise press restrictions and replace controversial security laws, including detention without trial. Still, Najib is yet to convert the rhetoric of reform into reality, which he must do to win back the alienated centre of Malaysian politics, where cynicism and anger run deep.

Najib is encountering entrenched opposition within UMNO, particularly from conservatives who favour continued Malay privileges and the flow of patronage to the party faithful. These older UMNO Malays and their supporters in the business world and bureaucracy — especially the police and prosecutors — strongly objected to Anwar being freed and lobbied hard and successfully for the appeal. In the end, Najib will lose the most. It seems he failed to stand up to these factions — again — and lost the public relations gains from Anwar’s acquittal.

The loss of the momentum that Anwar’s freedom initially gave Najib may persuade him to wait until later this year to call an election, which must be held by March 2013. Najib must gamble that the electoral climate will improve by this time. But the economy could slow and more political scandals could emerge — rampant corruption involving UMNO politicians has already hurt his government.

Free to campaign, Anwar will lift the spirits of the three-party opposition Pakatan Rakyat coalition. But he is looking and sounding tired, and his own People’s Justice Party is rife with factionalism and squabbling. Although Anwar said recently: ‘My gut tells me we will win [the election]’, most analysts believe he will fall short, even if not by much.

While the opposition will surely live to fight another day, Najib may not have it so easy, even if he wins. Only the recovery of a two-thirds parliamentary majority will ensure his continued leadership of UMNO and Malaysia. Failing this, Najib could face pressure to step aside if he loses more seats, a fate that befell Abdullah Badawi, his predecessor.

Barry Wain is Writer-in-Residence at the Institute of Southeast Asian Studies, Singapore.

1. A low note for Malaysia as Anwar trial starts
2. Malaysia’s politics post-Anwar Ibrahim
3. Politics without priorities in Malaysia

The death of Kim Jong-il, though not entirely unexpected given the state of his health following a debilitating stroke in August 2008, has had a powerful psychological impact both domestically and globally.

His death leaves a huge vacuum not only in the North Korean psyche, but in the system that he embodied.

As North Korea comes to grips with his death, the new government headed by Kim Jong-un — Kim Jong-il’s youngest son and successor — must begin navigating the grave challenges that North Korea faces at home and abroad.

The Kim Jong-un regime now stands at a crossroads, and the country’s future depends on whether it looks to the past or to the future in searching for the solutions to its enormous and pressing problems.

Perhaps the most serious challenge facing the new regime is the ongoing, deep-rooted economic problems that have led to chronic energy and food shortages. While North Korea rebounded from economic collapse in the late 1990s, its economy continues to be grossly insufficient in meeting the people’s basic needs. With a quarter of its population starving, the regime presides over a country where the lives of ordinary people are consumed by an ongoing struggle for subsistence.

Private markets sprang up during the 1990s as a mechanism to cope with the food shortage caused by the collapse of the Public Distribution System, and were it not for these markets, the suffering of the people would be even worse today. To make up for the shortfall of its moribund economy, North Korea is still dependent on external food and energy aid, of which China remains the majority provider.

The North Korean regime can continue to muddle through by restricting private markets and foreign investment while relying on external aid to keep the economy afloat. Or it can address the root cause of the economic problems by fundamentally changing its system through reform and opening up to foreign trade and investment. As this is the only way the regime can resolve its economic problems over the long term, the policy of muddling through will exacerbate the suffering and continue to erode the regime’s legitimacy.

The second challenge is the ongoing nuclear conflict. In the face of growing external pressure to abandon its nuclear program, North Korea has upped the ante over the past few years by engaging in ever-more serious provocations. These include conducting nuclear and missile tests in 2009; the sinking of a South Korean warship, Cheonan, in March 2010 (killing 46); and the artillery shelling of Yeonpyeong Island in November 2010 (killing four including two civilians).

These provocations are intended to escalate tension in order to break the deadlock pervading the Six-Party Talks, as well as to bolster the legitimacy of the regime and the leadership succession. But they have led to growing confrontation among all parties to the talks, and this, in turn, has increased the danger of the situation spiralling out of control into a wider conflict on the Korean Peninsula.

As such, the North Korean regime is faced with another stark choice. It can continue to muddle through by fostering conflict and tension in order to neutralise external pressure on North Korea to abandon its nuclear program, thus raising the stakes on the Korean Peninsula to an intolerably dangerous level. Or it can make a strategic choice to give up its nuclear program in return for economic aid, diplomatic ties and security guarantees, laying a solid foundation for creating a viable and secure North Korean state.

Lastly, the regime is faced with the North Korean people’s increased exposure to the outside world. Through a variety of channels — such as cross-border traffic with China, foreign radio broadcasts, expatriate North Korean communities, increasing access to mobile phones and a greater availability of foreign DVDs — the once hermetically sealed society is slowly being pried open. As North Koreans become more knowledgeable about the outside world, the more dissatisfied they will become with their own lives and the North Korean state. The regime can continue its futile effort to control information, or it can harness the increasing flow of information to help develop the country as part of a broader effort to open up North Korean society to the outside world.

While the death of an important historical figure usually marks the end of one era and the beginning of a new one, the death of Kim Jong-il has only increased the urgent need for his successor to make difficult choices. Either the regime must be willing to take the country in a new and bold direction or it must suffer the consequences of maintaining an unsustainable status quo.

Steven Kim is Professor at the Asia-Pacific Center for Security Studies, Honolulu.

1. North Korea: Kim Jong-il snubs Jimmy Carter in lead up to succession
2. North Korea: strategic thinking, strategic response
3. North Korea’s succession gets twisted

As bright as the future may seem for China, crucial reforms are needed in order to maintain its current rate of economic growth and prevent the Chinese economy from falling over like a house of cards.

Some of the most imminent challenges that China faces in the near future include environmental pollution, income inequality, uneven development between rural and coastal areas, and a risky financial system. The central government has already identified these problems, and reforms are now in place — including those contained within China’s twelfth five-year plan announced in March 2011. But widespread corruption continues to undermine the effectiveness of any potential reform.

China’s domestic wealth has increased dramatically. But for some, the limits of transformative growth already seem to have been reached. Even conservative estimates suggest that the 54 million people currently unable to find work will remain in this position for at least another four years. China also runs on a risky financial system. Its banks are hiding piles of non-performing loans — piles built on the prediction that growth will continue to increase indefinitely. Income disparity, unbalanced growth and the need to reform the financial system were issues the IMF emphasised in their Chinese sustainability report. China also faces a grim battle against pollution. The price of rapid economic development is high; water, soil and air contamination puts the health of countless people at risk.

With the Twelfth Five-Year Plan, the Chinese government is setting out an ambitious proposal to put more money in the pockets of the poor and provide incentives to increase domestic consumption. It is also addressing economic restructuring, and tackling pollution by conserving energy and cleaning up the environment.

But corruption has the power to essentially nullify the government’s reform efforts. It is hindering development in remote areas and marginalising the poor. Often, money tagged for environmental programs disappears without making any noticeable impact. Corrupt officials are also obstructing individuals and groups reporting on pollution, and state-owned commercial banks are at the disposal of bureaucrats who exploit their position to benefit themselves. Above all, the biggest danger of corruption is that it undermines the very legitimacy of the government and key reformers.

One of Hu Jintao’s first addresses to party leaders in 2012 included an order to fight harder against corruption. The fight is crucial, but a poor record of success gives little reason for optimism. There are different views on why this battle is not being won. While some say it comes hand in hand with the benefits of an otherwise successful system, others say it is the legacy of extreme poverty during the Cultural Revolution. And others just believe it to be a part of Chinese culture. Be that as it may, the corrosive effects of corruption on government reforms, the economy and the reputation of the party are undeniable.

China’s previous efforts to curb corruption have focused on toughening related penalties, even resorting to capital punishment. But this approach has proved unsuccessful. Rather, transparency and public accountability are more effective in fighting corruption. And while China’s authoritarian leadership provided fast and comprehensive reforms, which turned the impoverished state into a superpower, accountability has little place within authoritarian regimes. This is why reform in China is so difficult.

China does not have to become a Western-style democracy; it should find a way to implement the idea of public accountability within its own system to allow for public scrutiny and expose corruption where it thrives. Channels that encourage credible and accurate reporting without fear of being labelled ‘anti-government’ have to be built. China will need to implement these reforms without forgoing the very characteristics that allowed for its economic development.

Failure to effectively curb corruption risks widespread public dismay with the country’s political leadership. Corruption is skimming away the resources allocated for China’s urgently needed reforms, and while it may not be the country’s biggest problem, it is seriously hindering efforts to tackle more-imminent ones. Consequently, success in curbing corruption is vital not only for China but also for the rest of an increasingly China-dependent world.

Michel May is a MEXT scholar and a Masters student in international relations and Asia-Pacific studies at the Graduate School of Asia-Pacific Studies, Waseda University.

1. Indian corruption: Time to fight back
2. Markets and corruption in Indonesia
3. Vietnam’s endless corruption campaign

After North Korea tested its Taepodong I missile in 1998 over Japanese airspace, Japan made the decision to develop its ballistic missile defence (BMD) system in cooperation with the US.

The system comprises a mid-course phase (upper-tier) Standard Missile 3 Bloc IA system loaded onto four Aegis ships, and a 16-unit terminal phase (lower-tier) Patriot PAC-3 defence system, which has been deployed to four sites on Japanese soil.

The Japanese government has put forward several reasons for establishing its own missile defence system. First, the significant international proliferation of ballistic missiles and weapons of mass destruction (WMD) represents an emerging threat. Second, Japan currently has no system that can defend its territory and people in the case of a ballistic missile attack, and there is currently no viable alternative to missile shield systems such as the BMD system. Third, the government has claimed that Japan’s missile program is purely for defensive purposes, emphasising that the BMD system will not pose any threat to other states due to its defensive posture in line with Japan’s senshu boei (exclusively defence-oriented defence) policy.

Aside from these three considerations, some have argued that the development of a BMD system will promote defence and security cooperation with the US, while others contend the system’s development will have positive spin-off effects for the Japanese economy.

Whatever the justifications, Japan’s strong bureaucracy is the most significant factor promoting the country’s BMD program. It has played a key role in maintaining the long-term consistency of the government’s policy toward BMD throughout Japan’s frequent regime transitions. More specifically, the government’s long-term position on the BMD program can be attributed to Japan’s security policy-making process, in which bureaucrats from the Ministry of Defence (MOD) and Ministry of Foreign Affairs take charge in making concrete decisions and crafting policy. The government maintains that the missile defence issue is an operational-level matter in the MOD and Self-Defence Forces, and thus claims it is not necessary to consult the Diet or seek its approval.

Still, there are numerous debates in Japan centring on the BMD program. The first debate focuses on interpretations of the Japanese constitution’s article 9 peace clause. The Japanese government currently interprets the constitution as prohibiting Japan’s participation in ‘collective self-defence’ and justifies the maintenance of the Self-Defence Forces by limiting their mandate to ‘individual self-defence’. The most obvious scenario of ‘collective self-defence’ would be Japan participating in US military operations abroad as an ally. The second debate centres on the possibility of Japan transferring its BMD technology to South Korea or Taiwan, potentially violating the Three Principles on Arms Export, which prohibits the export of weapons. And the third debate centres on the deployment of an upper-tier defence system and its potential to violate the 1969 Diet resolution on the peaceful use of outer space.

In any case, these inhibiting factors will not slow down the momentum toward building missile shields, especially with Japan’s formidable bureaucracy throwing its weight behind the project. Developing the cutting-edge technology necessary for the BMD program also requires significant financial resources, and it appears that not even the economy’s long-term stagnation or the 2011 disasters are stalling the development of Japan’s BMD program.

Despite the government’s claim to possess only self-defence-oriented intentions, its BMD program could be considered an offensive ‘double-edged sword’. That is, the development of Japan’s BMD program may still be seen as a threat to neighbouring states and cause a regional arms race that could lead to conflict. Also, because Japan and the US are close allies, critics may connect Japan’s BMD system with the offensive capabilities of the US, thus building on the impression that combined Japanese and US forces could constitute a significant war-fighting capability in the region. The Chinese government has repeatedly objected to the BMD program, which it regards as a revival of Japanese militarism and as part of the strategic enlargement of US forces in East Asia.

But Japan’s BMD system could potentially lead to regional arms control and possibly nuclear disarmament if neighbouring states trust that it is a logical continuation of Japan’s senshu boei (exclusively defence-oriented defence) policy. To promote this perception, Japan must make a careful distinction between offence and defence, and clearly emphasise the program’s defence-oriented intentions. Japan should also promote its cooperation with the US as a means to move toward a global reduction of offensive weapons, including nuclear weapons. And finally, Japan should take the lead in establishing a global arms control regime that emphasises defence. Australia should be a significant partner in this, as it too is an important ally of both the US and Japan, having cooperated with the US in its missile defence program and deepened its security cooperation with Japan.

Norifumi Namatame is Visiting Fellow at the Australian National University, and Associate Professor at Tohoku Fukushi University, Japan.

1. Japan eventually gets its wish on NK missile launch
2. China’s new anti-ship missile: a Pacific nightmare for the US?
3. What the new Hatoyama government means for the US-Japan alliance

Malaysia recently soared into the headlines after Opposition Leader Anwar Ibrahim was acquitted of sodomy charges — although the prosecution has already filed for appeal.

The case is entirely political and reflects the government’s willingness to use the judiciary for political ends. Malaysia is set to enter the most competitive elections it has ever faced — likely to be held before June or else pushed off until 2013 — and each side has a fighting chance to win.

Malaysian politics is dirty. Murder, sodomy, secret trysts, sex videos and conspiracy are all commonplace, and corruption scandals occur regularly. Both sides wallow in this political gutter, each trying to darken the reputation of the other, and not fully appreciating how much the system as a whole has been damaged. The acquittal provided the government with an opportunity to take the high road and move away from this negative approach to politics. Instead, it opted to appeal — despite the shabbiness of the evidence.

Concerns are now focusing on the integrity of the electoral process. The government is mooting reforms but the problems are vast, from the administrative neutrality to vote buying. As the system becomes more competitive, political institutions involved in anti-corruption and the rule of law have increasingly been compromised, with the government putting pressure on institutions such as the civil service to toe the line.

The upcoming election will revolve around the two leaders tapping into their own popularity bases, as politics in Malaysia is highly personalised. Both men have been damaged by character assassinations, and will have to work hard to win support. The test now is whether either candidate will move beyond a largely self-centred campaign and articulate the solutions his leadership can offer. The country’s problems are well known — including the need for economic reform and improved race relations, coupled with growing inequality — but, sadly, the policy options each side promise to pursue are unclear.

Anwar Ibrahim’s strength has been his charisma, and he succeeded in consolidating his support base through martyr politics. Nevertheless, Anwar’s reputation suffered during the trial, and he has a long road ahead to win over new supporters — especially in rural areas, where the government media remains dominant.

On the other hand, Prime Minister Najib Razak faces a trust deficit, which seems to be growing at the same rate as the inconsistencies in his reform policies. It remains unclear what he stands for, and his reliance on handouts to woo voters reflects weakness, not strength.

Malaysian politics is also highly polarised. Both sides can expect support from around 35 per cent of the electorate, with the remaining third in the middle. But in keeping their primary support bases happy, Malaysia’s leaders have alienated the center — and a strategy aimed at the middle ground risks alienating the base. To win the upcoming election, both leaders will need to meet the expectations of their support bases, while simultaneously reaching out to those who are ambivalent, tired of over-politicking and looking for more than negativity.

Najib in particular faces the challenge of preserving the loyalty of his own base, as many are resistant to change and adopt reactionary racial positions. They expect Najib to protect their interests, and have shown in recent years that they will remove any leader who fails their expectations. Najib’s attempts to reach the middle ground — in areas of political reform and ethnic relations — compromise the support of his base. He now has limited political space and the result has been inconsistency. In contrast, Anwar has more of an advantage in reaching out to the middle ground due to the fact that his support base wants change. Yet, he too, has to manage the growing anger of his supporters.

In this complicated terrain ethnic politics remain alive and well. Malaysia has three interconnected inter-ethnic dynamics. The first involves race relations between Malays and non-Malay minorities. Then there is the issue of religion, especially relations between Muslims and other religions. Finally, there is the issue of moderates and more extreme views of race and religion in the Malay community. Each of these has become more difficult to manage since the 2008 elections when Najib’s National Front lost its two-thirds hold on seats, and in some instances has led to acts of violence, such as the church bombings in January 2010.

Navigating these divisions is not easy, and the contenders for power ultimately need to include all Malaysians. For Najib, the challenge is to reach out to non-Malays as his coalition has lost the legitimacy to represent them. For Anwar, the challenge is to show that his coalition can represent the positions of different ethnic groups, while also incorporating the country’s Islamists. Especially challenging for both men is how to accommodate more extreme perspectives within a moderate framework, to move Malaysian politics from negativity and anger towards more inclusion and hope.

Bridget Welsh is Associate Professor of Political Science at Singapore Management University.

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As developed countries struggle to recover after the global recession and try to confront the looming sovereign debt crisis in Europe, big emerging markets are now driving global growth.

Given the slow down in developed countries, emerging economies are trying to boost domestic demand to sustain growth — and this is particularly the case in China. But in recent months these developing economies have started to feel the pressure from the slowdown in the West, leading the G20 to put global growth high on its agenda.

Emerging economies have managed to keep up their growth rates and exports, and have thus experienced a trade surplus, while developed countries are facing huge trade deficits and have come to favour protectionism. The importance of recovering growth and jobs in the US, for example, and efforts to sustain export-led growth in China are now creating trade and currency friction between these two countries. For several decades there has also been a consistent increase in the trade deficit between the two — in favour of China — and this imbalance reached over US$200 billion per annum in 2010. The US kept quiet over this for a long time, as the trade deficit helped contain inflation due to cheap imports from China, and the unemployment level was still manageable. But as soon as the US realised this trade friction with China was affecting employment and there was no level playing field for its domestic industries, the Americans resorted to protectionism.

A major allegation against China is that its exchange rate is fixed and is not allowed to appreciate — all in the name of stability. As a result, China’s currency is undervalued, making its exports particularly competitive in the international market. The US has adopted several measures to counter the growth of Chinese exports and boost its own domestic economy. First, it has upped the number of anti-dumping cases against China. And second, the US government passed legislation to punish Chinese exports, as it believes that China is heavily subsidising its export items to the US. There have also been instances of tariff hikes on several import items from China.

The currency friction between China and other developed and developing economies is a matter of concern for the G20. China and the US are not only the world’s biggest economies, but they are highly dependent on each other for their growth — and of course the rest of the world also depends on them. China has nearly US$1.5 trillion worth of dollar-denominated assets, and it will be problematic for the US if China stops buying US government bonds. The US is equally dependent on China for its exports of primary commodities such as meat and fruit, and many US companies are based in China in the hope that domestic demand will rise and they will make profits. But Chinese domestic demand is still largely suppressed, meaning the US is not able to obtain sufficient market access. Meanwhile, China depends largely on the US market to sell its labour-intensive manufactured items. Nearly five per cent of China’s GDP comes from exports to the US. So, the trade friction continues.

The world’s two largest economies must work together toward solving this trade friction and to help avoid a currency war. China must allow its currency to be market determined, while the US must do away with its harsh protectionist measures.

India is an active member of the G20 and works alongside China and other developing countries on major international issues, including the restructuring of global financial architecture, and achieving progress on climate change and the Millennium Development Goals. India is aware the trade and currency friction between the US and China will not only hurt the G20’s agenda and the world economy, but will also affect its own future growth prospects. The US and China are India’s major trading partners, and any slowdown in these two countries would affect India as well. So Delhi has been opposing any protectionist measures adopted by developed countries, and pushing for market reforms by phasing out wasteful and distorting subsidies in countries like China.

India also understands the impact of China’s undervalued currency on its exports and expects China to understand the fair principles of trade. India believes there are bigger and more pressing problems that need the attention of the G20. Its member countries need to focus on solving the European debt crisis, help countries resolve trade and currency friction and give fresh impetus to the Doha Round. Against this backdrop, India needs to play a proactive role in the G20 to make it an effective body for dealing with these issues.

Dr Geethanjali Nataraj is a Fellow at the National Council of Applied Economic Research, India.

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While the Indian car sector is travelling in the fast lane, road and public transport projects have not kept pace. Indians bought about 2.5 million cars last year, worth US$30 billion, while another half a million were exported.

This year, assuming that car-loan rates decline and the economy improves, the market could grow by 10 to 12 per cent — and even if rates remain static, the car market will still grow by 5 to 7 per cent. But even these figures pale in comparison to the 30 per cent growth experienced in 2010, at which time interest rates were lower and the economy was booming, and the double-digit annual sales throughout the 2000s. No wonder global automakers scrambled to attend the 2012 Delhi Auto Expo earlier this year, where some 60 new models were launched.

Significantly, almost all cars sold in the country are now ‘made in India’, meaning they use between 70 and 98 per cent Indian components. The logic is simple: the more ‘Indian’ the car is, the cheaper it becomes, partly because it is cheap to manufacture cars in India, and partly because the tax structure is skewed in favour of domestic manufacturing. Economic analyst Jayanta Roy Chowdhury has argued that this is the result of shrewd planning by Indian policy makers, who in the 1990s lured global automakers to India with the bait of its huge domestic market, but cleverly brought in a tax structure that discourages imports of built-up and knocked-down car kits.

This policy brought automotive majors like General Motors, Honda, Mercedes Benz, Audi and the now-defunct Daewoo to India. These firms all made huge investments in setting up factories and developing Indian vendors who could eventually make quality spare parts. Thanks to this policy, India’s automotive industry today is worth an estimated US$35 billion and provides direct and indirect employment to over 13 million people.

India emerged as Asia’s fourth-largest exporter of passenger cars in 2009, behind Japan, South Korea and Thailand. It is estimated that India could be making five million cars by 2015, or seven million by 2020.

But even after taking into account a commensurately higher number of exports,  most of these cars will still likely be driving on Indian roads. This raises an inevitable question: are there enough roads in India to take these vehicles?

While the automotive industry is booming, road and transport projects have not kept pace. Outside of the few key highways and roads in major cities, many Indians still commute using lanes and unpaved roads. The boom in the automotive sector is the direct consequence of poor public-transport infrastructure that has not kept up with India’s rapid urbanisation.

The national capital is the best example of how road and transport projects are now trying to keep up with the booming automotive industry. Ravaged and resurrected over centuries and sitting over the ruins of seven earlier cities, New Delhi has found its face changed in the last decade by railway engineer Elattuvalapil Sreedharan. New Delhi first came to realise its need for a mass rapid transit system in the early 1970s, but the ‘transport lobby’ of influential politicians caused delays. Many plans, studies and committees chased this for a full 25 years before the Delhi Metro Rail Corporation (DMRC) was formed. The lessons learnt from building the first metro helped Sreedharan build the DMRC from scratch. He demitted office last year after a 14-year stint, having changed the very definition of public transport in India.

At least 26 cities — including Chennai, Hyderabad and Bangalore — are now planning new metro systems. And Mumbai, perhaps the most congested and difficult to build, is already in the construction stage.

These metro systems are a great improvement and the visitor has a choice now: take a limousine or ride the swank Metro. But there is little doubt that investment in India’s public-transport infrastructure must continue to be expanded and gear up a notch if it is to keep pace with the booming automotive sector and help serve the country’s vast population.

Mahendra Ved is a New Delhi-based writer and columnist.

An earlier version of this article was originally published here in the New Strait Times.

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