Author: Hadi Soesastro, CSIS, Indonesia

East Asian members of the G20 must participate strategically in this emerging global forum. They need to make sure that the G20 can produce policies and actions that will help bring the global economy out of the current crisis as soon as possible. Existing international institutions have been helpless in dealing with the issues the world now confronts and are in dire need of major reforms. There is now no better forum than G20. Essentially, it will act as a ‘steering committee for the world economy’, as Barry Eichengreen aptly said of the G20, and this forum should now replace the G7 or G8 for good.

Yet the G20 is still very fragile. In part, this is due to its ad hoc nature. But it also suffers from problems of legitimacy in respect of how its membership is being determined. The problem has deepened with the inclusion of a few additional participants at the coming London Summit: why they and not others? The European members of the G20 are facing the greatest challenge from fellow Europeans on this issue although the EU already has a seat at the table. 

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Author: Alexandra Retno Wulan, CSIS, Jakarta

As the first African-American to hold the office, the inauguration of President Barack Hussein Obama is a historic moment, and the beginning of a new era for the United States.

His personal background has tied a linkage between President Obama and the world outside of the United States of America. He has raised the hopes of millions at home and abroad, including many Indonesians.

People around the globe expect that Obama will bring significant changes to the US and the rest of the world. Many Indonesians are even more optimistic that Obama will strengthen Indonesia-US bilateral relations, as he spent four years of his childhood in Indonesia.

What, exactly, does Barack Obama intend for the Indonesia-US relationship? Based on President Obama’s inaugural speech, which highlights some of his policy goals, we can expect the following.

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Author: Jusuf Wanandi, CSIS

Congratulations to the United States. For the first time in more than 230 years of American history, an African American, Barack Obama, is installed as president of the United States. All Americans should be proud. There is so much euphoria, and so many expectations have been placed on president Obama’s shoulders. This is not only the case in the United States, but all over the world. This pressure has been building since he was elected last November.

The problems and challenges that Obama now faces – including the economic recession, wars in Iraq and Afghanistan, the Palestine-Israel conflict, Iran and North Korea’s nuclear proliferation, social security and healthcare issues — are tremendously difficult and complicated.

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Special Author: Hadi Soesastro, Centre for Strategic and International Studies, Jakarta

Indonesia entered 2008 on a note of optimism. In the previous year, the economy grew by 6.3 per cent, better than its neighbours (with the exception of Vietnam and China). The government aimed at achieving 6.5 per cent growth in 2008. While, at the end of 2008, there are a great many anxieties about the impact of the global financial crisis on Indonesia and the region, the latest estimates suggest that Indonesia could still grow by 6 per cent in 2008. It could end up being a star performer in the region. This, the minimum growth rate to produce sufficient jobs, may be difficult to maintain in 2009.

Indonesia is an open economy, and must remain open. Although its banking system is much stronger than a decade ago, the economy remains vulnerable to a sudden halt and reversal of external financial flows.

Fortunately, the country faces this economic challenge with a much improved political situation at home. In 2008, Indonesia is entitled to celebrate a decade of democratization. It has undergone a remarkable political transformation. It successfully conducted democratic elections in 1999 and 2004 at the national level and, since 2005, has seen over 450 local elections take place without major incident. The fourth most populous country, home to the world’s largest Muslim community can also pride itself on being the world’s third largest democracy. Read more…

Author: Hadi Soesastro

In East Asia, Korea was the first to be hit by the global crisis. A report by Citibank in early October 2008 showed that the Korean economy was the most vulnerable to external financial shocks in the region, in terms of both the risk of sudden stop and the risk of sudden reversal of financial flows.

Having experienced the 1997-98 financial crisis, the region has established a currency swap arrangement, known as the Chiang Mai Initiative (CMI), to help each other in the eventuality of another such crisis. Eight years have elapsed, and a crisis is looming, but what remains uncertain is how these arrangements can be invoked and what would trigger their use. Korea has not even attempted to make use of the CMI to prevent a crisis from unfolding. Under the CMI, Korea can exchange a mere $17 billion with Japan and China, and perhaps hardly anything significant with the other ASEAN countries. In view of the magnitude of the potential problem, the size of the CMI is too small. The reality is that the CMI is still ‘an initiative’.

Instead, Korea’s President turned directly to Japan and China. In early October, he proposed a trilateral meeting of finance ministers of the three countries to coordinate policies to cope with the global financial crisis. He also proposed the holding of a summit among the three countries on the crisis, suggesting that ‘the three countries can wisely overcome the financial crisis if they join forces’. The most concrete and immediate swap of any significant amount ($30 billion) was provided to Korea by the US Federal Reserve. Read more…

Author: Hadi Soesastro

G20 countries must exercise leadership to wrap-up the Doha Round, fight unemployment with macroeconomic policies and strengthen safety nets to minimize calls for protection. A fund should also be created to assist emerging and developing countries in undertaking counter- cyclical fiscal measures. Regional surveillance processes, as in the 1997 Asian Crisis, could help support politically difficult policy measures.

Protectionist pressures around the world are on the rise. G20 leaders have made a strong commitment to maintaining an open global economy and to resisting the temptation to resort to protection in these difficult times. Yet one participant at the G20 Summit argued for an extensive increase in the common external tariffs of the regional trade arrangement it is a party to.

This sort of protectionism can be contagious. To halt this, world leaders should take three steps.

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Author: Rizal Sukma, CSIS Indonesia

Despite clear and loud evidence to the contrary, officials from ASEAN continue to engage in the habit of deceiving themselves by believing that the ASEAN Charter — now fully ratified by all 10 member states — will automatically create a new ASEAN.

A long-serving assistant to ASEAN Secretary-General Termsak Chalermpalanupap maintained that once the charter goes into force next month, ASEAN will soon turn into a new organization. He believes the charter will turn ASEAN into a rules-based and people-oriented organization. He is also convinced that with the charter, ASEAN is ‘now changing into a new mode, into community building’.

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Author: Jusuf Wanandi, vice chair of the board of trustees, CSIS Foundation, Jakarta.

After six months of heated debate in the House of Representatives’ Committee I for foreign relations, defense and information, the Indonesian Parliament has ratified the ASEAN Charter.

Its endorsement was accompanied by a formal interpretation of several elements of the charter contained in the addendum to the ratification law. It stipulated that the charter has to reflect the ‘ideals of ASEAN’, specifically with regard to: the improvement and protection of human rights through an effective ASEAN human rights body; the institution of sanctions, including freezing of membership in cases of serious non-compliance and obstruction of the charter by members; and greater public involvement in ASEAN’s activities.

These points also have been strongly advocated by civil society groups (especially human rights bodies and scholars), who want them to be proposed as amendments to the charter as soon as possible. And that is also the parliament’s wish with the addendum to the ratification law. Read more…

Author: Hadi Soesastro

Australian critics of Prime Minister Rudd’s Asia Pacific Community initiative have got it wrong about the idea not being well thought out. Kevin Rudd’s initiative should be seen as an invitation to other leaders, policy makers, and thinkers in the region to join…in a serious discussion about how best the Asia Pacific region could be organized. If Rudd had come up with a fully-baked proposal, the exercise could be self-defeating. Evolving regionalism in Asia Pacific requires that all parties concerned should have an active part in the process, especially in the shaping of a new vision for the region… Indonesia should support Rudd’s initiative and the process of deliberations that will follow from it.

The new architecture can be built two main pillars. The one pillar is that of a revitalized APEC with a strong ASEAN Plus Three (APT) as its core in East Asia. This forms the economic pillar of the regional architecture. The immediate question is how to involve India in this process. The other, political security, pillar is that of a transformed East Asia Summit (EAS) that is supported by the ASEAN Regional Forum (ARF) at the working level. . . The EAS is already proclaimed as a leaders-led forum to discuss strategic issues. Indonesia needs to make sure that the EAS functions as such. My full piece is below

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