Philippine-PRC Spratly Islands Spat + PR Spin

In politics, joining up seemingly unrelated issues is a frequent occurrence. Sometimes it goes by the name horse-trading, other times logrolling. Whatever it's called, there's no escaping it. A few months ago I penned a feature for LSE IDEAS that neatly encapsulates my ideas about China's territorial conflicts with its Southeast Asian neighbours over islands in the South China Sea. So many months after that Hillary Clinton-fuelled diplomatic row, we have another one on our hands. Last week, a Philippine-flagged vessel it calls a seismic surveillance ship was confronted by Chinese vessels in these troubled waters. The PRC calls the surrounding islands Nansha, while the Philippines calls them the Kalayaan ("freedom") islands. In geographic terms, the Red Bank where the incident took place shows you the vastness of China's claim given how much nearer it is to the Philippines (see map point). Feeling aggrieved, the Philippine armed forces scrambled a few planes and boats to look into what was going on, but the Chinese boats had already left the scene when they got there:

Two Chinese Navy gunboats reportedly harassed a vessel owned by the Department of Energy (DOE) that was conducting maritime research off the disputed Spratly Islands last Wednesday. Armed Forces Western Command (Westcom) commander Lt. Gen. Juancho Sabban confirmed that the Air Force deployed bombers and an Islander reconnaissance aircraft while the Navy dispatched three vessels to intercept the two Chinese vessels. “But they did not catch the Chinese vessels that already left when the planes arrived. The DOE ship just resumed their research in the area,” Sabban said in a telephone interview.

Sabban said the incident occurred at around 9:30 a.m. in the vicinity of Reed Bank, 250 kilometers west of Palawan. He said Reed Bank is well within Philippine territory and Navy gunboats were deployed to secure the DOE [Department of Energy] research vessel M/V Venture...

Initial exploration of the Reed Bank by the DOE revealed that the area contains about 3.4 trillion cubic feet of natural gas and 440 million barrels of oil. Sabban said two white Chinese gunboats with the markings No. 71 and No. 75 tried to drive away the DOE research vessel from Reed Bank. The Navy and the Air Force reported that the two Chinese vessels conducted a side-by-side maneuver, virtually “sandwiching” the DOE research vessel, prompting its alarmed personnel to radio for help.

The incident also prompted the Philippine government to file a protest with the PRC:

Manila has filed a formal protest with Beijing after two Chinese patrol boats allegedly harassed a government-authorized seismic survey ship near the disputed Spratly Islands "We have already brought the matter up [with China]. We handed them a protest [letter] on the incident," President Benigno S. C. Aquino III told reporters in an interview after attending a multisectoral dialogue here.

Mr. Aquino also said the country will send to Beijing an expert on the issue to discuss the matter. Pending resolution of the issue, he said a Philippine Coast Guard vessel has been deployed to the area to assist the survey ship. "The Coast Guard ship will ensure that our rights are protected by making sure that this survey ship [authorized] by our government would finish its job," said the President.

The Chinese embassy got a ring from the president's office shortly thereafter:

Meanwhile, "peaceful negotiations" are the way to "solve the dispute, if there is indeed a dispute" over the incident last March 2, said Ethan Y. Sun, deputy chief of political section and spokesperson of the Embassy of the People’s Republic of China in Manila. Mr. Sun said China has always been "committed to maintaining the peace and stability in the South China Sea...If there is dispute between China and the Philippines, this should be made up by peaceful bilateral negotiations," said Mr. Sun in an interview on Friday.

"Aggressive" is not a word he would use to describe any of the recent the actions from the Chinese and the Philippines side, as "it does nothing beneficial to peace and stability in the region." Nevertheless, he maintained that "ever since ancient times, China has indisputable sovereignty over Nansha Islands and their adjacent waters." Nansha is the Chinese name for the Spratlys.

China, Mr. Sun added, has been consistent in upholding the Declaration on the Conduct of Parties in the South China Sea [signed in 2002]. He reiterated a statement made by the Department of Foreign Affairs that the lines of communication between the Philippines and China remain open.

A consideration is that Chinese Ambassador to the Philippines Liu Jianchao will likely return to Manila next week from an annual home office reporting to discuss the matter with the government. "Sometimes it is necessary and more than appropriate to have a high-level exchange," Mr. Sun said.

And now for the joining up of issues. It is well-known that 8 million Filipinos are economic migrants working abroad. As it so happens, some of them just happened to work in Libya. The Philippine press has been critical of what it perceives to be slow government evacuation of its nationals from Libya. While visiting the China Daily, still our favourite official publication, I came across an article which boasts of how China is facilitating the evacuation of other countries' expatriates. As you would expect, including those of the Philippines:

China, in conducting its largest overseas evacuation, helped more than 1,100 foreigners leave Libya over the past two weeks, transporting them on chartered Greek vessels, said China's Ambassador to Greece Luo Linquan. Calling it an act of humanitarianism, Luo said the foreigners were mainly from Greece, Italy, Poland, Bangladesh, the Philippines and Vietnam. A total of 35,860 Chinese citizens had been evacuated from Libya as of Wednesday night, according to the Foreign Ministry. Of these, 20,745 had already returned to China, Vice-Foreign Minister Song Tao said...

Once the maritime evacuation commenced on Feb 22, three Greek ships undertook six voyages from the Cretian capital, Heraklion, to Benghazi and Misurata, two port cities in eastern and western Libya. By Wednesday, more than 13,000 Chinese citizens had been transported to Crete. So far, eight chartered flights have been arranged to take Chinese citizens home...

On the morning of Feb 22, the Chinese government leased two Greek ships to sail to Libya and the vessels departed at 6:50 pm that same day. "The efficiency was unimaginable," as in normal circumstances the process should take days, said Luo.

These seemingly unrelated but ultimately linked occurrences demonstrate a couple of things. First, China would waste the Philippines if hostilities broke out given the former's vastly superior resources. Second, China is still canny in using other diplomatic avenues to win over Philippine friends such as by helping the evacuation of RP nationals from Libya. Third, the Spratly islands issue is not yet out of the limelight, though you'd wish they'd come up with a lasting diplomatic solution sooner or later.

BTW: There is video footage available of the Philippines' modest installation in the disputed islands.

UPDATE: The Philippines is thinking of sending an envoy to China to discuss things. The Reed Bank itself is not being contested according to reports, but the waters in which the incident took place are, hence the entanglement.

US Air Force Tanker Wars: Boeing Upends EADS

Here is another instance where waving the red, white, and blue seems to have paid off for an American firm. I have made a lengthy earlier post on US Air Force efforts to replace it ancient, 50-some-year-old fleet of KC-135 air refuelling tankers. To make a long story short, the world's two largest purveyors of commercial jets, Boeing and EADS (the parent company of Airbus), have played rough in pursuit of the lucrative $35 billion contract.

Round one of the bidding process went to Boeing in 2003, but it turned out that Boeing's former CFO promised the concerned Air Force procurement officer a lucrative job afterwards, resulting in both being sent to jail and the reopening of the bidding process. Round two then went to EADS in conjunction with its then-US partner Northrop Grumman. Understandably, this result provoked a political backlash Stateside, with Boeing and many self-serving politicians claiming a compromise of national security and a loss of jobs by buying jets from the European consortium (nevermind that Europeans are American allies last I checked and that EADS had a US partner).

EADS has since continued pursuing the DoD contract alone. Meanwhile, Boeing has stepped up the "Buy American" angle while also claiming unfairness in the bidding process...and has now won. However, EADS may yet contest this result, further delaying the replacement of ancient aircraft. Meanwhile the rationale for the winning bid was as follows:

"Boeing was a clear winner," Deputy Defense Secretary William J. Lynn III said at a brief Pentagon news conference announcing the decision. The first 18 of 179 planes, to be called KC-46A tankers, are to be delivered by 2017. Considerations in the award, Lynn said, were "warfighting requirements, price and life-cycle costs." He and Air Force Secretary Michael Donley emphasized that both manufacturers had demonstrated they could deliver on 372 requirements specified in the contract.

"What that means is that, in the end, Boeing won on price," said Loren B. Thompson, a defense policy analyst for the Arlington-based Lexington Institute. "Price consists of the cost of producing the plane, plus the cost of operating it over 30 years. The Airbus plane is so much bigger and burned over a ton more fuel per flight hour...Multiply that by 179 planes, times 30 years of service life and it becomes very big," Thompson said.

"These are fixed-price contracts," Donley said. The decision "reflects our efforts to deliver better value to the warfighter...in a budget process that we realize is not going to give us more money every year."

The Europeans are understandably crestfallen, as are politicians from states that lost out in producing the EADS tanker:

But the decision to award the work to Chicago-based Boeing disappointed the European Aeronautic Defence and Space company (Eads) and Germany which had made a rival bid. They vowed to discuss the decision with the US military. Their disappointment was shared by workers in America's Gulf coast and Alabama, where Eads hoped to assemble its aircraft at a former military base in Mobile...

Politicians from Alabama suggested politics played a role. "I'm disappointed but not surprised," Senator Richard Shelby said. "Only Chicago politics could tip the scales in favour of Boeing's inferior plane. Eads clearly offers the more capable aircraft." Chicago is the political home of President Barack Obama, while his new chief of staff, William M Daley, resigned last month from the Boeing board where he had served since 2006. The White House said Mr Daley had no role in the decision.

Representative Jo Bonner vowed to get a full account of why Eads lost out. "This competition has been challenged before and it's not unlikely it will be challenged again," he said. Mr Lynn said the losing bidder could appeal, but believed there was no grounds for protest. Eads chairman in North America Ralph D Crosby Jnr said: "This is a disappointing turn of events, and we look forward to discussing with the USAF how it arrived at this conclusion."

In true American fashion, they've already held victory parades in honour of Boeing vanquishing EADS. Boeing surely can't stop gloating. Nor did it appear to spare any expense with the online propaganda. Still, it ain't over till it's over as EADS may mount a challenge. Given the history of this transatlantic trade dispute, maybe those KC-135s will be in the air after China has overtaken the US as the world's largest economy ;-)

Bad Timing: PM Cameron in Mideast Selling Arms

The British press is having a field day with the coalition government's apparent delay in retrieving its citizens from Libya. Delay aside, let's say there are a lot of incidents suggesting the government was caught unawares. Foreign Secretary William Hague made a gaffe a few days ago in suggesting Moammar Qadhafi was on his way to Venezuela to join his good friend Hugo Chavez. Meanwhile, Deputy PM Nick Clegg forgot he was in charge while Cameron was away on...an interesting business trip.

As it turns out, part of the reason for the slack government response has been PM David Cameron being away on business in the Middle East. Among the wares he was hawking on behalf of British industrialists included, er, weaponry. While the UK decries what's happening in Libya with the ruling Qadhafi clan in last stand mode, it's probable that arms the current government continued to sell to Libya figure into Qadhafi's current repression. From Defence Management [!]:

Prime Minister David Cameron has defended the decision to bring arms industry representatives with him on a trade mission to the Middle East. Cameron has been criticised for taking BAE Systems chief executive Ian King and representatives of Thales, Qinetiq and Rolls-Royce on his current Middle East trade mission. Weapons sold by the UK had reportedly been used to suppress civilians in Libya and other countries affected by civil unrest in recent weeks.

Speaking in Kuwait, Cameron said: "A properly regulated trade in defence is nothing we should be ashamed of.,,The fact that there are British defence companies on this visit – BAE, Thales and others – is perfectly right in this regard...We have probably the toughest set of export rules probably anywhere in the world. It is obviously difficult to get it right on every occasion."

Defence Secretary Liam Fox earlier said the UK should get "a healthy slice" of arms exports in the Middle East within certain ethical limits.Speaking after a speech at thinktank Civitas, Fox said that there were always a "great deal of unknowns" and that each export should be dealt with on "a case-by-case basis."

"We have to recognise that countries have a right of self-defence and not all of them have a defence industry so they will always buy externally," he said. "I want to make sure the United Kingdom - within the limits that we set ourselves ethically on defence exports - is getting a healthy slice of that."

The New Statesman juxtaposes matters thusly:

In his speech to the Kuwaiti National Assembly on 22 February, David Cameron appeared to acknowledge the limits of the policy so far when he declared that "denying people their basic rights does not preserve stability, rather the reverse". But the Prime Minister's laudable words were undermined by his decision to travel to the region with eight of Britain's leading arms manufacturers [out of 30 concerns]. To his critics, Mr Cameron replied: "A properly regulated trade in defence is nothing we should be ashamed of." Yet the presence of Gerald Howarth, a defence minister, at an arms fair in Abu Dhabi - where British companies sold tear gas, stun grenades and rubber bullets for the purposes of "crowd control" - was something to be ashamed of. Rather than delaying action until the moment governments open fire on their own people, as happened in Bahrain and Libya, ministers should declare an immediate arms embargo.

Talk about corporate social responsibility issues galore. It's a hard decision to make on several levels. Defence industries provide employment. Oftentimes, they also lie at the forefront of research and development that are crucial to enhancing much-ballyhooed international competitiveness. How do you channel these two positively without selling these wares to such regimes? This balancing act is certainly a difficult one.

UPDATE: Sarkozy too was keen on selling arms to Libya.

Yanqui Protectionism: CFIUS, Huawei, and 3Leaf

Here's another entry in the seemingly non-stop catalogue of US-China dustups. Given America's chronic external deficit, it must attract at least an equivalent amount of capital inflows to compensate. To date, the Chinese have been willing to purchase US Treasuries (perhaps more reluctantly in recent years). However a natural misgiving given the rock-bottom near-zero interest rate policy (ZIRP) being pursued Stateside is that the yields China receives may not adequately compensate for the risk China takes. First, there are local grumbles that so much money is better spent at home where many problems alike poverty and pollution remain endemic. Parking huge sums of money in the US has dubious moral consequences, and domestic unrest can be a manifestation.

Second, there is the valid complaint that while the US is perfectly willing to let China buy Treasuries of dubious worth, it generally doesn't allow it to purchase more valuable parts of America such as its enterprises. On the balance sheet, China can purchase US debt--no problem--but not much equity by owning businesses that have the potential to create large revenue streams for the Chinese unlike Treasuries with their miserly yields. The reason? To me, it's always been naked protectionism. For obvious reasons, Chinese firms have been keenest on purchasing US firms with technological know-how. However, the US government has always baulked under "security" grounds via the Commission on Foreign Investment in the US (CFIUS), a multi-agency body headed by the Treasury.

Hence, there are two asymmetries at work. China can buy lots of America's debt but not equity (or ownership) in America. Also, while US firms have been (usually) welcome to invest in China, the obverse does not neccessarily hold--especially for Chinese technology firms.

I have made many posts [1, 2, 3, 4] on the Chinese telecoms gear manufacturer Huawei being--let's be honest here--harassed by American authorities. There's a longstanding insinuation that Huawei is affiliated with the Red Army. Insofar as it's a claim Huawei has not wholly refuted, it's given the Chinese concern endless grief. As it turns out, Huawei tried a somewhat different tack in approaching yet another US technology outfit. Assets of privately-held 3Leaf Systems (no relation to 3Com which Huawei famously tried to purchase before) were bought on the sly without informing CFIUS. Let's just say CFIUS was not very happy about this after finding out. Recent news suggests government pressure [surprise!] has resulted in Huawei's hand being forced into divestiture:

China's Huawei said it would back away from its acquisition of U.S. server technology company 3Leaf's assets, bowing to pressure from a U.S. government panel that had suggested it should divest the assets. The U.S. government has been concerned about Huawei, China's largest telecommunications equipment maker, for years because of uncertainty over its relationship with the Chinese government. Huawei was founded by a People's Liberation Army soldier, and opponents say it retains links with China's security services. Huawei has denied the links.

Huawei bought certain 3Leaf assets for $2 million last May but did not file with the Committee on Foreign Investment in the United States (CFIUS), which reviews deal for possible national security implications, until November. According to Huawei, CFIUS suggested that the Chinese company voluntarily divest the assets.

As recently as February 14, Huawei said it would wait for a decision from the White House rather than divest. Now it has changed its course. "This was a difficult decision, however we have decided to accept the recommendation of CFIUS to withdraw our application to acquire specific assets of 3Leaf," Huawei said in a statement issued late on Friday night in the United States.

"Huawei will remain committed to long-term investment in the United States. The significant impact and attention that this transaction has caused were not what we intended. Rather, our intention was to go through all the procedures to reveal the truth about Huawei."

Huawei is the world's No. 3 mobile gear maker behind Ericsson and Nokia Siemens Networks, which is a joint venture of Nokia and Siemens. Alleged links with China's security services, which Huawei has denied, have torpedoed its U.S. deals in the past. The company gave up a bid for 3Com in 2008 due to security concerns. In 2010, a group of Republican lawmakers raised national security concerns about Huawei's bid to supply mobile telecommunications equipment to Sprint Nextel Corp.

Meanwhile, China's Ministry of Commerce flags up the obvious:

China's Ministry of Commerce (MOC) said Monday it regrets Huawei Technologies Co.'s withdrawal of its agreement to buy the assets of 3Leaf Systems while under pressure from a U.S. panel. The MOC said in a statement on its website that it hopes "relevant parties" in the United States would "abandon prejudice, avoid protectionist measures and treat properly investments from China and other countries" with a fair, just and open attitude.

The MOC statement came after the Committee on Foreign Investment in the United States (CFIUS) last week recommended opposing the Chinese telecommunications equipment manufacturer's agreement to acquire assets and technology from 3Leaf Systems, on "national security" concerns.

In the statement, the MOC called Huawei's planned acquisition of 3Leaf's technological assets "a normal business move" based upon market economy rules and its own development needs...In recent years, some relevant parties in the United States have used various reasons, such as national security, to hamper Chinese firms' trade and investment activities in the United States," the MOC statement said, adding: "Such obstructions have already had an impact on the Sino-U.S. economic and trade cooperation."

"We believe an open, just and transparent trade and investment environment is good for economic growth for both China and the Untied States and can help facilitate the world economic recovery," the MOC statement said.

Free trade as core American policy? Yeah, right.

Climate Apartheid? The India-Bangladesh Superfence

My friend came to me, with sadness in his eyes
He told me that he wanted help
Before his country dies

And so begin the lyrics to "Bangla Desh" from George Harrison's Concert for Bangla Desh held on 1 August 1971 in Madison Square Garden. Well before we had Sir Bono and Sir Bob Geldof, Live Aid and Live 8, we had the late, great Beatle setting the template for all there was to follow. This forerunner of all benefit concerts was held to support the victims of the 12 November 1970 Bhola cyclone in which an estimated 300,000 lost their lives in the region then called East Pakistan--today's Bangladesh. Just as Pakistan emerged from India, so did Bangladesh in turn emerge from Pakistan, declaring independence on 26 March 1971. It was a very difficult time for Bangladesh to say the least as it faced both the aftermath of a devastating natural calamity and the teething woes of becoming a nation--hence the lyrics above.

Now, politics on the Indian subcontinent are usually as contentious as they are interesting. Back then, Pakistan tried hard to keep Bangladesh from becoming a country, and India offered support. Among other things, India opened its border with East Pakistan to help refugees from the disaster cope. Unfortunately, environmental pressures on Bangladesh have hardly ebbed in the intervening years. Obviously, it hasn't gained any elevation while global warming has taken further effect. What more if sea levels continue to rise? With a population of over 160 million, Bangladesh is far from a tiny country population-wise.

The Commonwealth Secretariat has a new publication called Global: the international briefing that looks at global policy issues from the perspective of member states in the British Commonwealth. I highly recommend Robin Cohen's essay on why migration is a boon to globalization, though there are obviously strong interests opposed to it. In particular, the border between Bangladesh and India has become more fractious. To those following migration issues, such episodes are unsurprising given that about half of migration is, contrary to popular perception, South-South or between developing countries. I was thus struck by Cohen's description of a massive fence India is putting up:

As for South–South migration, there remain many tensions and important fault lines. The data are disputed, but there are probably about 3.5 million people born in Bangladesh living in India, with 1 million born in India and living in Bangladesh. With the Ganges Delta prone to periodic flooding, further population movements from Bangladesh to India are likely, but are inhibited by an Indian-built fence, stretching for nearly 4,100 km.

2011 is 40 years after 1971, and let's just say that the Indians are no longer as welcoming of Bangladeshis pouring over their borders. Moreover, even the effects of a major cyclone are time-bound, while permanently higher sea levels aren't. It's a security issue, they say. Aside from preventing those affected by flooding to seek refuge in neighbouring India, Brad Adams of Human Rights Watch asserts that Indian border guards have been overzealous while this massive fenestration project has become underway:

Do good fences make good neighbours? Not along the India-Bangladesh border. Here, India has almost finished building a 2,000km fence. Where once people on both sides were part of a greater Bengal, now India has put up a "keep out" sign to stop illegal immigration, smuggling and infiltration by anti-government militants.

This might seem unexceptional in a world increasingly hostile to migration. But to police the border, India's Border Security Force (BSF), has carried out a shoot-to-kill policy – even on unarmed local villagers. The toll has been huge. Over the past 10 years Indian security forces have killed almost 1,000 people, mostly Bangladeshis, turning the border area into a south Asian killing fields. No one has been prosecuted for any of these killings, in spite of evidence in many cases that makes it clear the killings were in cold blood against unarmed and defenceless local residents.

Shockingly, some Indian officials endorse shooting people who attempt to cross the border illegally, even if they are unarmed. Almost as shocking is the lack of interest in these killings by foreign governments who claim to be concerned with human rights. A single killing by US law enforcement along the Mexican border makes headlines. The killing of large numbers of villagers by Indian forces has been almost entirely ignored.

It gives one reason to pause about the consequences of global warming if the threats identified are real. Not being a climate change denier (or a deficit denier for that matter; these paleolithic tendencies tend to run together), the prospect is scary indeed. It pits higher-lying areas against adjacent lower-lying ones in a manner that seems not to build on the goodwill evident in past times, like say 1971. While the Guardian op-ed may overstate shootings on the border, the likelihood of rising sea levels and the continuing construction of this fence do not bode well for relations on the Indian subcontinent concerning borders. Also consider the economic effects of artificial separation.

Since George Harrison is no longer with us, perhaps it's up to his forebears to draw attention to a worthy cause. Is it climate apartheid, then? If migration restrictions increase further, I doubt whether this instance will be an isolated one, sadly.

Thinktank Titans: Chatham House at 90; CFR at 88

For you international relations junkies out there, the Royal Institute of International Affairs (Chatham House) recently held its 90th anniversary event here in London. In the United States, the Council on Foreign Relations (CFR) came into being shortly thereafter in 1922. Both are the product of the same idea. Aside from Chatham House Director Robin Niblett, CFR President Richard Haass was invited to participate. The podcast is available from Chatham House and traces the history of these two notable thinktanks:

In 1919, British and American delegates to the Paris Peace Conference conceived the idea of an Anglo-American Institute of foreign affairs to study international problems with a view to preventing future wars. In the event, the British Institute of International Affairs was founded in London in July 1920 and received its Royal Charter in 1922 to become the Royal Institute of International Affairs. American delegates developed the Council on Foreign Relations in New York as a sister institute and both are now among the world's leading international affairs think-tanks.

This special members event to mark the founding of the Chatham House in 1920 will assess how both Chatham House and the Council on Foreign Relations have evolved over the past 90 years in order to live up to the goals of their founders. Dr Haass and Dr Niblett will also discuss the key themes of international affairs for the future that are driving the two institutes' current research agendas.

Lobotomarkets, Korea and the US Dollar Edition

As 2008 demonstrated, there is little rhyme or reason to financial markets. Today, however, I must being your attention to an example of the seeming brainlessness of foreign exchange markets that defies explanation. Literally, forex is a lobotomarket. When a lobotomy is performed, you just don't know how the patient (victim?) will respond. In the current situation, the operation in question was the recent fatal attack by North Korea on South Korea. While certainly a headline-grabbing event, I am utterly bemused by the subsequent response from the foreign exchange market. In particular, the US dollar has rather inexplicably strengthened. Here is a typical explanation care of Reuters:

The euro languished at two month lows early in Asia on Wednesday, threatening to deepen its losses, while the euro zone debt crisis and heightened tensions in the Korean Pennisular helped underpin the dollar.

Longtime readers know that I am perma-bearish on the US dollar. Notably, there have been occasional dead cat bounces: whenever the Eurozone is in trouble such as now, for instance, or when repatriation flows back to the US increase given "political risk" abroad. Clearly, we have both at the moment with the troubles of Ireland and the Koreas resuming intramural proceedings. However, it's odd that other currencies besides the euro--not all of them, mind you--have followed it down (for now).

Simply put, forex dunderheads, why exactly would European countries--or many others for that matter--be at greater downside risk than the US from North Korean attack?

• The United States, not Europe, has nearly 30,000 troops stationed in South Korea;
• The United States, not Europe, is immediately obliged to defend South Korea in the event that war resumes on the Korean peninsula;
• The United States, not Europe, most strenuously raises the hermit kingdom's ire over nuclear weapons development;
• The United States, not Europe, has a massive Pacific Fleet whose main objective is to keep open the flow of commerce in the Asia-Pacific.

If full-scale hostilities emerge, the one on the hook for expending much blood and treasure should be clear to all:

OPLAN 5027-00

According to the 04 December 2000 South Korean Defense Ministry White Paper, the United States would deploy up to 690,000 troops on the Korean peninsula if a new war breaks out. The United States apparently had considerably increased the number of troops that would be deployed in any new Korean conflict. The figure had risen from 480,000 in plans made in the early 1990s and 630,000 in the mid-1990s. The latest Time Phased Forces Deployment Data for any contingency on the Korean Peninsula is comprised of 690,000 troops, 160 Navy ships and 1,600 aircraft deployed from the U.S. within 90 days.

So why would the currency of a country that's deeply involved in East Asia's security architecture be less vulnerable to recent events than that of an economic union that isn't? The commitments being touted above make Iraq and Afghanistan look like walks in the park; that much is obvious. Beats me, pal. Then again, if logic dictated forex movements, I'd be a wealth man instead of a mere blogger, right?

Cam Ranh Bay, Now Open for Business

Here's another story that has failed to get much play in Western media for one reason or another. Being a Southeast Asia scholar, however, I believe that I should point out its implications. I probably needn't explain the importance of Cam Ranh Bay in the Asia-Pacific (above is a picture of it in its Soviet-era prime). This Vietnamese port has been a gateway to Indochina in particular and Southeast Asia in general for centuries. Very recently, the Vietnamese government declared that it would reopen Cam Ranh Bay for business to undertake ship repairs and other services to passing vessels--both commercial and military [1, 2, 3, 4, 5]. The timing, of course, is suspicious since it coincides with Vietnam's contretemps with China over the South China Sea that it's been more vocal about this year as the rotating chair of the Association of Southeast Asian Nations (ASEAN). See my previous scribblings on the curious efforts of the US to re-involve itself in Southeast Asia via the South China Sea issue [1, 2]

To make a long story short: the ostensibly "commercial" motives in opening Cam Ranh Bay for business since it fell into disuse when the Russians left in 2002 need to be considered in light of emerging security concerns about a more assertive China. Among ASEAN members, Vietnam has the most strained relations with China--especially over Vietnam's invasion of Cambodia and China striking back when the Khmer Rouge was still a PRC client.

For kicks, let's try a different Q&A format. The answers are mine:

1. What is Vietnam’s plan to reconstruct Cam Ranh Bay? Does Vietnam indeed have an economic stake in reopening this port?

The Vietnamese leadership has not established a definite plan yet. Instead, they are signalling their intention to create a maritime service centre at Cam Ranh Bay to provide repair and maintenance services to both commercial and naval vessels. Also, they want to create shopping opportunities onshore catering to crews of passing ships. Cam Ranh Bay is a fine deepwater port, and so Vietnam has naturally considered its use for commercial purposes. A notable regional example of a former US naval installation being converted for commercial purposes is the Subic Bay Freeport in the Philippines. Plans to reconstruct Cam Ranh Bay may lead it in this direction.

2. Why is Vietnam's motive in reviving Cam Ranh Bay?

Overall, there are two likely reasons. The first is the one mentioned above of it being an excellent deepwater port with revenue-generating possibilities given its prime location near commercial sea lanes traversing the South China Sea. The second relates to Vietnam’s interest in limiting perceived Chinese aggression over contending claims to islands in the South China Sea. If Cam Ranh Bay becomes established as a regular port of call for vessels of different naval powers--including China--then Vietnam may feel more secure. For instance, having American or Russian vessels regularly use these facilities can remind China that Vietnam has increasingly good relations with other powers. Vietnam itself has limited naval capabilities compared to China’s.

3. It seems there is a great opportunity for Russia to come back to Vietnam. It is said Vietnam will hire Russian consultants and buy Russian technology for the new repair facilities in Cam Ranh Bay. What is Russian interest in this region now?

The Russians left Cam Ranh Bay in 2002 prior to completing the 25-year lease Vietnam had given Russia in 1979. Vietnam tried to raise the rent charged to the Russians and this action hastened the Russian withdrawal. Now in better financial condition than in 2002 due to the elevated energy prices, Russia is said to express interest in using Cam Ranh Bay as a staging area for combating maritime piracy in the Horn of Africa as opposed to any geopolitical interest. However, the Vietnamese indicate that they will not tolerate use of the port for military purposes. The Russian Pacific Fleet has not seen major upgrades in recent years, suggesting that re-establishing a visible regional presence is not a key Russian objective at the current time.

4. How has the Vietnam/Russia relationship fared in the recent years? What will Vietnam get from its cooperation with Russia?

Russia left Cam Ranh Bay in 2002. Prior to their departure, however, the Soviet Union was an important benefactor of the Vietnamese. It was with Soviet support that Vietnam was able to maintain its presence after the invasion of Cambodia from 1979 to 1989. However, the collapse of the Soviet Union meant that it could no longer afford to keep funding Vietnam. Additional pressure was applied when the Chinese made Vietnam’s withdrawal from Cambodia a precondition for normalizing PRC relations with the Soviet Union.

Today, the Vietnamese and the Russians maintain cordial relations. Stated plans to refurbish Cam Ranh Bay for commercial purposes will be primarily economic in nature such as providing jobs to the Vietnamese.

5. This time around, Vietnam does not say it will rent the bay to any individual country. Do you think it is a ploy towards multilateral diplomacy and to make sure Vietnam can get benefits from several powers include the US and Russia?

Vietnam would create a serious political problem for itself and ASEAN if it were to lease Cam Ranh Bay to a foreign power. Like all ASEAN members, Vietnam is a signatory to ASEAN’s Treaty of Amity and Cooperation (TAC) that emphasizes principles of non-interference. Additionally, all ten ASEAN members have signed the Southeast Asia Nuclear Weapon Free Zone (SEANWFZ) treaty that came into effect in 1997. Among other things, SEANWFZ bans stationing of nuclear devices in member states. Still, as I mentioned as a response to the second question, Vietnam may be more comfortable welcoming the presence of other power’s vessels to counteract China’s increasingly sophisticated naval capabilities.

6. Cam Ranh Bay has been a very attractive place for major powers for a long time. What makes it so important in politic and military strategy? How do you evaluate Vietnam's role in Southeast Asia against the backdrop of current regional and global geopolitics?

Cam Ranh Bay’s features as a deepwater bay with a 14-meter deep harbour make it very attractive since it can easily accommodate large vessels. Its strategic position at the heart of sea lanes in the South China Sea also make it very attractive. Accordingly, many foreign powers—the French, the Japanese, the Americans, and the Russians—have used it as a key staging area to facilitate their interests in Indochina and Southeast Asia more generally.

Vietnam’s role in Southeast Asia—particularly ASEAN—has been growing since joining the organization in 1995. As the current rotating chair of ASEAN (which changes annually), Vietnam has been very active in bringing up its interests this year. With regard to China, these include territorial disputes in the South China Sea as well as Chinese construction of dams upstream on the Mekong River that poses difficulties for countries lying downstream like Vietnam.

Ratko Tales + IMF is America's Stooge, Kosovo Ed

Something that I enjoy at the LSE is attending presentations I know relatively little about. To paraphrase a certain song, I need to know a little bit about a lot of things lest I blog about the same topics over and over again. Variety is the spice of life. At LSE IDEAS, we have just held the well-received launch event of our sister Balkan International Affairs programme featuring Serbian Foreign Affairs Minister Vuk Jeremić and his Bulgarian counterpart Nickolay Evtimov Mladenov. This is a post in two parts:

I. When I last wrote about Serbia in these parts, I was planning my adventure to aid Serbia's EU accession by going on "Ratko Hunt 2010." Strangely enough, I've had no takers despite bounties worth millions of euros for his capture (since you'd probably wind up dead as a doorknob prior to enjoying any fruits of your mercenary work). That is, one of the preconditions for Serbia's process of joining the EU, among other things, is handing over the remaining one of the big three war criminals to the war crimes tribunal in the Hague. With Ratko still at large and rumoured to move around freely in Belgrade, let's just say things are not going swimmingly. Slobodan Milosevic is dead and gone, while Radovan Karazdic has long since been corralled. This, of course, leaves Ratko Mladic somewhere out there:

Serbia is still not co-operating fully with the United Nations war crimes tribunal in the hunt for fugitive former general Ratko Mladic, the chief prosecutor said yesterday, a key condition for eventual EU membership. Serbia’s past inability or unwillingness to find Mladic has long delayed its progress towards the EU, deterring foreign investment and diminishing EU accession funds. A UN war crimes court has indicted Mladic for genocide in the 1995 massacre of 8,000 Muslims in the Bosnian town of Srebrenica and the 1992-1995 siege of Sarajevo.

“While recognising a number of people are really doing an excellent job, we say at the same time there is room for improvement and in a number of areas, more can be done, and in a more professional way,” said Serge Brammertz, the chief UN war crimes prosecutor. In October, EU foreign ministers asked the bloc’s executive commission to consider starting entry talks with Serbia, but warned Belgrade any further progress would depend on its full co-operation with the war crimes tribunal. Mr Brammertz said he would send his latest six-month report on Serbia’s efforts to apprehend Mladic to the UN tomorrow, and the Security Council would discuss it on December 6th.

The bottom line for this story? Serbia's efforts towards joining the EU are lagging behind those of other former Yugoslavian entities:

The Mladic issue is the most prominent factor that has left Serbia lagging behind many other former Yugoslav republics. Slovenia is already an EU member; Croatia is close; and both Macedonia and Montenegro are further along than Belgrade. Even Albania, the region’s most isolated state under communism, is ahead of Belgrade. Only Bosnia and Kosovo, which remain international protectorates, trail Serbia in progress towards the EU.

II. And here's another titbit I picked up that I missed earlier. The matter of Kosovo being recognized as a nation is one of the remaining free-for-alls in terms of acknowledging new states. During the presentation there were some fireworks in store when a representative from Kosovo's consulate in London had a beef about the generally upbeat talk by the Serbian foreign minister. Let's just say they have...unresolved grievances. The UN will probably not recognize Kosovo as a nation after it declared independence in 2008 for as long as China and Russia remain in the P5. After all, they still have major issues with the way Western powers intervened.

As it stands, about a third of UN members recognize Kosovo, while two-thirds don't. Let's just say its membership in international organizations remains, erm, skimpy. Fascinatingly, however, I overlooked (sorry about this) Kosovo formally being made a member of the IMF at midyear 2009. As if we needed more proof that the IMF is an American bootlicker camp, well here you go:

Kosovo said the International Monetary Fund voted to accept it as a member, an important step in the former Serbian province's efforts to secure global recognition as an independent state -- and international aid. Kosovo's bid was actively opposed by Russia and Serbia, Russian and U.S. officials said. Serbia, for instance, wrote to all of the IMF's 185 members, asking them to reject Kosovo's bid. The fledgling Balkan nation of some two million unilaterally declared independence from Serbia in February 2008.

The U.S., France, Germany and the U.K. pressed for Kosovo's IMF membership. But admitting Kosovo has been a contentious issue at the IMF, a body that likes to work by consensus. Kosovo's deputy foreign minister, Vlora Qitaku, said Tuesday that -- as required -- a vote by more than half the IMF's member countries had produced a majority in favor of Kosovo's membership. IMF officials declined to comment Tuesday, because the results hadn't yet been made public.

The issue was pushed ahead partly by the weakness of Eastern Europe in the global crisis, as one economy after the other was forced to call for IMF aid. Pressure grew to bring Kosovo under the IMF umbrella so it could make sure of the same resource. Kosovo is widely expected to ask the IMF for financing.

Because the IMF is an international club, joining also is an important step on an arduous road to acceptance as a member of the international community, say government officials in Kosovo. A spokesman for the government said it expects to join the World Bank in early June, after a similar vote.

Other would-be nations have found the going tough as they sought membership in international bodies. Taiwan was booted out of the IMF in 1980 when China was admitted, and it hasn't applied to return since. Unlike Kosovo, Taiwan isn't recognized by the U.S. and most other major nations as a fully independent state, and an IMF application would be unlikely to succeed.

Unlike the United Nations, the World Trade Organization and some other international groups, the IMF's weighted-majority voting rules allowed Kosovo to join over the objections from Serbia, Russia and other countries that don't recognize Kosovo's independence. So far, 58 of the U.N.'s 192 member states have recognized Kosovo's independence.

Bratislav Grubacic, a veteran political analyst in Belgrade, said Serbia realized it wouldn't be able to block Kosovo's IMF membership and is focusing more on blocking Kosovo from the U.N. Serbia effectively lost Kosovo in 1999, after its troops were driven out of the mainly ethnic Albanian enclave by an extensive bombardment by the U.S.-led North Atlantic Treaty Organization.

Serbian officials couldn't be reached to comment Tuesday evening. A Russian official in Washington said Tuesday that Russia was against Kosovo's IMF admission. Russia has opposed Kosovo's independence bid, saying it breached international laws guaranteeing territorial sovereignty and that it would create a precedent for other breakaway regions. Russia has since recognized the breakaway enclaves of South Ossetia and Abkhazia in neighboring Georgia...

Kosovo's future prospects for joining the European Union, which its government wants to do, are uncertain, as that requires unanimity. Five of the EU's member states -- Greece, Cyprus, Spain, Romania and Slovakia -- don't recognize Kosovo.

Would Kosovo have squeaked into the IMF had voting reform been in progress prior to Kosovo's bid for membership? It's an interesting question. Note that Kosovo was cleared to join the World Bank at roughly the same time with the sponsorship of a certain North American nation.

Huawei, ZTE, and American 'National Security' BS

It is said that patriotism is the last refuge of a scoundrel. In the realm of investment and trade, you can translate the same idea into two forms of action. First, you can dissuade foreign ownership of local firms by citing "national security" grounds. The United States has done this repeatedly to China among others. Notably for today's story, US lawmakers effectively discouraged Chinese telecommunications equipment manufacturer Huawei from acquiring 3Com over--you guessed it--national security grounds. Huawei's Chief Marketing Officer Xu Zhijun was dead honest in his appraisal in calling US objections "bulls--t." (Eventually, Hewlett-Packard purchased 3Com in April 2010.)

Apparently, the troubles of Huawei Stateside don't end there. Just a few days ago, the Wall Street Journal reported that US telecom service provider Sprint Nextel is being discouraged from procuring equipment from Huawei and ZTE Corp. over [surprise!] national security grounds. Some things never of out of fashion in Washington:

Sprint Nextel Corp. is excluding Chinese telecommunications-equipment makers Huawei Technologies Ltd. and ZTE Corp. from a contract worth billions of dollars largely because of national security concerns in Washington, according to people familiar with the matter. The Defense Department and some U.S. lawmakers have been increasingly concerned about the two companies' ties to the Chinese government and military, and the security implications of letting their equipment into critical U.S. infrastructure. Some officials argue China's military could use Huawei or ZTE equipment to disrupt or intercept American communications.

The Obama administration has also weighed in on the matter. Commerce Secretary Gary Locke called Sprint Chief Executive Dan Hesse this week to discuss concerns about awarding the work to a Chinese firm, but didn't ask Sprint to exclude the Chinese suppliers, according to an administration official familiar with the conversation. Mr. Hesse declined to comment.

The rejection by Sprint is the latest defeat for Chinese companies seeking to break into the big leagues of U.S. phone companies. Huawei and ZTE lost out even though they submitted bids that were lower than those of their three competitors, Alcatel-Lucent SA, Telefon L.M. Ericsson of Sweden and South Korea's Samsung Electronics Co., said a person familiar with the matter...

Aside from Sprint Nextel primarily being a civilian customer base, the reasons for excluding the Chinese firms over such grounds is doubly dubious since other countries (with the notable exception of India) have not expressed similar qualms. Moreover, they've both taken pains to ensure such ugliness didn't ensue this time around by taking US partners to allay security concerns. To no avail, apparently:

The Defense Department wouldn't discuss Huawei or ZTE, but in a statement said, "DoD is very concerned about China's emerging cyber capabilities and any potential vulnerability within or threat to DoD networks."

Spokespeople for Sprint and ZTE declined to comment. Huawei had no immediate comment. Both Huawei, which was started by a former Chinese military officer, and ZTE, which was founded by state-run companies, have said their equipment doesn't pose a threat to U.S. security and is used by carriers in Europe and parts of Asia...

Huawei had worked hard to win the Sprint contract, and sought out a U.S. partner to allay security concerns. It teamed up on its bid with a consulting company founded by a former vice chairman of the U.S. Joint Chiefs of Staff, William Owens. Amerilink Telecom Corp. was set up in Sprint's hometown of Overland Park, Kan., and hired former Sprint executives. It also appointed former congressional and defense officials to its board.

Sprint initially planned to award three suppliers with a piece of the contract. But it is now renegotiating with two finalists, Samsung and Alcatel-Lucent, in the hopes that the companies will submit a lower bid now that they have a larger piece of the work, said one of the people familiar with the matter.

Sprint's rejection of Huawei and ZTE is the latest sign the efforts of U.S. officials to block Chinese gear makers from entering the U.S. are gaining sway. Earlier this year, U.S. lawmakers inserted a provision in the Senate's National Defense Authorization Act at the request of the Defense Department that would give military agencies new power to force technology vendors to exclude subcontractors or suppliers that the government deems a security risk. While not targeted specifically at Huawei, the provision could affect the company as well as other Chinese suppliers.

In August, eight U.S. senators sent a letter to the administration expressing concern that if a deal with Sprint moved forward, Huawei could gain access to critical U.S. telecom infrastructure and undermine national security. Last month, four U.S. lawmakers sent another letter to the Federal Communications Commission, asking the agency to consider restrictions that would make it harder for Huawei and ZTE to do business in the U.S.

The October letter says Chinese telecom-gear makers are potentially subject to "significant influence by the Chinese military which may create an opportunity for manipulation of switches, routers, or software embedded in American telecommunications network so that communications can be disrupted, intercepted, tampered with, or purposely misrouted." ZTE said at the time the letter was a mischaracterization of the company and Huawei said it has no current ties to the Chinese government or military.

I don't suppose such actions ease China-US tensions, do they? It certainly doesn't look like "free trade" to me.

Obama Kisses Up to ASEAN

In case you missed it, President Obama met with ASEAN leaders in New York just yesterday. What are notable to me are that (1) in approaching ASEAN as a whole, the US is bashing Myanmar less and less on human rights grounds; (2) Obama didn't emphasize the South China Sea so much--though he maintained the hypocrisy of referring to "international law" it hasn't signed; and (3) he pledges to visit Indonesia again after failing to do so three times before. The read-out of his working lunch meeting with ASEAN bigwigs is posted on the White House website for what it's worth; what follow are the key bullet points...

• The United States acceded to the ASEAN Treaty of Amity and Cooperation in July 2009.
• At the invitation of the ASEAN states, the United States will participate in the East Asia Summit comprised of ASEAN and eight other prominent countries in the Asia Pacific region [ASEAN-10 + China, Japan, South Korea, Australia, New Zealand, India, Russia & USA]
• Secretary Clinton will initiate U.S. participation in the East Asia Summit by attending its meeting in Hanoi on October 30, 2010.
• President Obama will attend the East Asia Summit meeting in Jakarta in 2011.
• The President will also visit Indonesia in November 2010 [one hopes he'll finally come after already striking out here].
• Secretary Gates will attend the first ASEAN-hosted meeting of Asia Pacific region Defense Ministers in Hanoi in October 2010.
• The President has nominated the first-ever resident U.S. Ambassador to ASEAN.

PRC & Japan Tussle Over the Senkaku Islands

A few weeks ago, I presented my analysis of the supposed troubles brewing between China and various Southeast Asian nations claiming dominion over islands in the South China Sea. Note, however, that the Paracels and Spratly are not the only islands China is contesting. Alike those in the South China Sea, the Senkaku islands which Japan took possession of from China are said to contain plentiful energy reserves despite also being quite inhospitable. Recently, another mini-drama occurred as a Chinese fishing boat and Japanese coast guard vessels collided in the Senkaku islands last Wednesday. Since then, both countries have engaged in diplomatic tussles.

It is interesting to look at how relations between these two countries are changing in light of recent events. Not only has China just overtaken Japan as the world's second largest economy, but Japan is also becoming more vocal over business conditions in China. The high politics of security are inextricably intertwined with the low politics of economic concerns:

China calls them the Diaoyutai, Japan the Senkaku. In both languages, the name means "fishing islands," but these days the rocky, uninhabited islands are better known for discord. Over the past week, the pattern has repeated itself as ties between Japan and China have grown strained over a Sept. 8 collision between a Chinese fishing boat and two Japanese coast guard vessels near the disputed Pacific islands.

Japan's coast guard released the 14-member crew on Monday, China's state-run Xinhua news service reported, but captain Zhan Qixiong and the boat remain in Japanese custody. While Japan maintains that it is handling the situation according to its laws, China has denounced Japanese plans to investigate the collision. Beijing Foreign Ministry spokeswoman Jiang Yu said on Sept. 9 that "Japan's so-called evidence-taking is illegal, invalid and in vain.

The Chinese government summoned the Japanese ambassador, Uichiro Niwa, on Sept. 12 for the fourth time since the collision. The ambassador met with state councilor Dai Bingguo, the highest-ranking Chinese official so far to protest the handling of the incident with the Japanese government. Dai told the ambassador that Japan should find a "wise political resolution," according to Chinese state press.

Japan took control of the islands, which are northeast of Taiwan, after the Sino-Japanese war of 1895 and has administered them since the 1970s, when the U.S. ended its post–World War II control. But China has reiterated claims going back several centuries to when the location of the islands was first recorded. Taiwan also lays claim to the islands.

Since the latest dispute, China has postponed a meeting with Japan aimed at resolving overlapping claims to natural-gas deposits in the area. The potential for vast oil and gas reserves near the uninhabited islands is a key source of the conflict over them. The 1982 U.N. Convention on the Law of the Sea offers conflicting instructions as to who is entitled to energy rights in the region, giving both sides a claim based on how they define their exclusive economic zones. China argues that its zone extends to the edge of the continental shelf, while Japan says that it should stop at the midpoint between the two nations.

So far the Chinese government has played up its response to the incident, and state-run media outlets have provided detailed coverage. Chinese protesters held a brief demonstration outside the Japanese embassy in Beijing on Wednesday. Their event was small and subdued, nothing like in 2005, when anger over Japanese textbook revisions led to huge demonstrations across China and attempts by protesters to storm the Japanese embassy in Beijing. The authorities are clearly wary of a repeat of that unrest, and a large police presence remains outside the embassy.

Taiwan also says these islands are theirs, and protesters were out in force over alleged Japanese expansion of their claims.

While China (like much of Southeast Asia) has legitimate historical grievances to pick with Japan, what's interesting is how much manoeuvring room the Communist leadership gives its citizens venting anger against Japan. In Asia, folks have very long memories. All the same, while Japan sometimes serves as a convenient scapegoat or safety valve, intense pressure may result in anger being directed at the burghers of Beijing themselves. It's always a balancing act, and certainly Japan provokes China every once in a while to, ah, test the waters.

Battle Rejoined on Climate Causing African Wars

While the publication Nature usually features stuff that interests research scientists rather than social scientists, this news item may be of interest to IPE followers as well. Two years ago, there was a well-publicized book called Climate Wars: The Fight for Survival as the World Overheats that made exactly the case that climate change triggered conflicts. In line with this idea, the economist Marshall Burke and his colleagues at UC Berkeley empirically investigated the relationship between indicators of climate change and conflict. Here is the abstract of their downloadable paper from last year:

Armed conflict within nations has had disastrous humanitarian consequences throughout much of the world. Here we undertake the first comprehensive examination of whether global climate change will exacerbate armed conflict in sub-Saharan Africa. We find strong historical linkages between civil war and temperature on the continent, with warmer years leading to significant increases in the likelihood of war. When combined with climate model projections of future temperature trends, this historical response to temperature suggests a roughly 60% increase in armed conflict incidence by 2030, or an additional 390,000 battle deaths if future wars are as deadly as recent wars. Our results suggest an urgent need to reform African governments' and foreign aid donors' policies to deal with rising temperatures.

So far, the pop notion of climate change triggering conflict is given some empirical support. However, a newer paper by Norwegian political scientist Halvarg Buhaug of the Peace Research Institute finds otherwise. Here's the abstract from his likewise downloadable paper in which he says climate is not to blame for Africa's civil wars:

Vocal actors within policy and practice contend that environmental variability and shocks, such as drought and prolonged heat waves, drive civil wars in Africa. Recently, a widely publicized scientific article appears to substantiate this claim. This paper investigates the empirical foundation for the claimed relationship in detail. Using a host of different model specifications and alternative measures of drought, heat, and civil war, the paper concludes that climate variability is a poor predictor of armed conflict. Instead, African civil wars can be explained by generic structural and contextual conditions: prevalent ethno-political exclusion, poor national economy, and the collapse of the Cold War system.

Which is correct? Beats me, pal. I haven't had the time to look over the methods and whatnot to form an opinion like, say, the one which made dubious claims that IMF structural adjustment caused tuberculosis deaths in Eastern Europe. As with many of these econometric studies, there are definitional issues: On the independent variable side, what constitutes an incident of climate change? On the independent variable side, what constitutes and incident of civil war? In its writeup Nature starts off with the later study...

But is there real proof of a link between climate change and civil war — particularly in crisis-ridden parts of Africa — as many have claimed?

No, says Halvard Buhaug, a political scientist with the Peace Research Institute Oslo in Norway. In research published today in Proceedings of the National Academy of Sciences1, he finds virtually no correlation between climate-change indicators such as temperature and rainfall variability and the frequency of civil wars over the past 50 years in sub-Saharan Africa — arguably the part of the world that is socially and environmentally most vulnerable to climate change. "The primary causes of civil war are political, not environmental," says Buhaug.

The analysis challenges a study published last year that claimed to have found a causal connection between climate warming and civil violence in Africa. Marshall Burke, an economist at the University of California, Berkeley, and colleagues, reported a strong historical relationship between temperature and the incidence of civil war. They found that the likelihood of armed conflict across the continent rose by around 50% in unusually warm years during 1981-20022. Projected future warming threatens to offset the positive effects of democratization and eradicating poverty in Africa, they warned.

...before discussing quarrels on method mentioned above:

The two rival groups are now disputing the validity of each other's findings.

Buhaug says that Burke's study may have been skewed by the choice of climate data sets, and by their narrow definition of 'civil war' as any year that saw more than 1,000 fatalities from intra-national conflict. The definition is at odds with conventional measures of civil war in the academic literature, says Buhaug: "If a conflict lasts for 10 years, but in only 3 of them the death toll exceeds 1,000, [Burke et al] may code it as three different wars...You'd really like to apply as many complementary definitions as possible before proclaiming a robust correlation with climate change," Buhaug adds.

Burke maintains that his findings are robust, and counters that Buhaug has cherry-picked his data sets to support his hypothesis. "Although we have enjoyed discussing it with him, we definitely do not agree with Halvard on this," says Burke. "There are legitimate disagreements about which data to use, [but] basically we think he's made some serious econometric mistakes that undermine his results. He does not do a credible job of controlling for other things beyond climate that might be going on."

Buhaug disagrees vigorously. "If they accuse me of highlighting data sets in favour of my hypothesis, then this applies tenfold more to their own paper."

I think regression models are too blunt a tool for answering this question. Disaggregating political and social variables was already hard enough before they threw ecological ones into the picture. Interaction effects, anyone? Judgement will inevitably play a role as this issue will become an increasingly more important one in national, regional, and international policy circles. Stata may help, but it isn't a substitute for clear-headed thinking.

Blairzai, Londonistan & Run on Largest Afghan Bank

Ah, the bank run--your quintessential Anglo-Saxon imagery for the new millennium. It should be plenty obvious by now that the best way to run your country into the ground is to Be Just Like America. Today, I will talk about two countries that, in their inimitable ways, have fallen under hard times for doing so. Let me first begin with the poodle of America, Tony Blair [yip-yip]. To me and many Britons, he is a reprehensible character who heaped a lot of misery unto Britain by following Bush 43 blindly (and obediently) into parts of the world where its history has been chequered, to say the least. It has literally been reliving a nightmare thanks to this twosome. Why on Earth would one expect Bush 43 to succeed where the might of the British Empire failed? It boggles the mind.

In his new autobiography which I most definitely will not buy unlike that of his infinitely more colourful and non-po-faced New Labour contemporary Lord Mandelson (who typical American yokels are largely unaware of but that's another story), Blair talks a lot about these matters. Below are some excerpts taken from his book on the matter of Afghanistan. Make of it what you will:

What is the nature of the threat? It does not derive from something we have done; there was no sense in which the West sought a confrontation. This is essential to the argument. The attacks of Sept. 11 came to most of our citizens as a shock that was utterly unforeseen. Countries like America and Britain were not singling out Muslims for unfair treatment; and insofar as Muslims were caught up in generalized racism towards those of a different race or color, such attitudes were on the way out, not the way in.

The extremism we fear is a strain within Islam. It is wholly contrary to the proper teaching of Islam, but it can't be denied that its practitioners act with reference to their religion. I feel we too often shy away from this assertion, as if it stigmatizes all Muslims. But if it is true—and it is—it has to be faced, not just because it is true, but because otherwise we don't analyze the problem or attain the solution properly. If it is a strain within Islam, the answer lies, in part at the very least, also within Islam. The eradication of that strain can be affected by what we outside Islam do; but it can only be actually eliminated by those within Islam.

Here is where the root of the problem lies. The extremists are small in number, but their narrative—which sees Islam as the victim of a scornful West externally, and an insufficiently religious leadership internally—has a far bigger hold. Indeed, such is the hold that much of the current political leadership feels impelled to go along with this narrative for fear of losing support.

This is a situation with practical consequences. Iraq and Afghanistan are seen as the West's battles. With a few notable distinctions, this is not perceived as a struggle for the heart and soul of Islam. Yet the outcome is surely vastly determinative of such a struggle.

As I see it, the problem with Blair's analysis is that he too earnestly buys into the neconservative version of the freedom 'n' growth shtick plied by America since time immemorial. During the cold war, the United States supported tyrants the world over who claimed to be avowed foes of communism. It was an easy ploy for financial support when America actually had some money to pass around. Nowadays, the labels affixed to the parties involved are somewhat different but the game remains the same. Instead of "fighting communism," opportunists the world over have happily taken money from Uncle Sam in the name of "fighting terrorism." And instead of getting America's money, they now get money America borrows from somebody else.

Hence, we have another cautionary tale today. Instead of following America's example of developing financial WMD alike the British, the Afghans have more earnestly copied the Yankee example of coziness among political and business elites. Like cold warriors before him propped up by America, Hamid Karzai has managed to parrot the freedom 'n' growth line while placing cronies in high places. One of them just happened to be his brother, who in turn found a place at Afghanistan's largest bank. Due to--how do I describe them--irregularities at Kabul Bank, regular folks are fleeing more quickly than you can say "Northern Rock" or "AIG":

Afghans continued pulling money from their country's largest bank Saturday as Afghan central bank officials, aided by American experts, explored ways to stabilize the ailing lender with deep ties to President Hamid Karzai's administration, weighing the possibility of an Afghan-financed bailout.

Averting the failure of Kabul Bank has become a top priority for U.S. and Afghan officials, who fear the possible political and economic crisis that could result. Even with the bank still solvent, U.S. officials are concerned that its woes, brought on by allegations of corruption and insider dealing, are going to further setback faltering Western efforts to restore confidence in President Karzai's administration, a pillar of the allied strategy for beating back the Taliban.

Hours after dozens of branches of Kabul Bank closed following the first business day since the Islamic weekend, there was no word from Afghanistan's central bank or the lender's management on how much money had been withdrawn Saturday. Senior Afghan officials and one of the bank's major shareholders said the pace of withdrawals had slowed Saturday, compared with the rush to pull out money late last week. Finance Minister Omar Zakhilwal said the Afghan government Saturday transferred $100 million dollars to the bank to cover salaries for about 250,000 soldiers, police and teachers, who are paid through accounts at the lender.

Another senior Afghan official said the central bank was working with U.S. experts, Kabul Bank's management and its major shareholders on plans to aid the lender should it falter. The official said an "intervention" by the Afghan government was "a possibility." He declined to elaborate but did say Kabul Bank hadn't yet run out of cash. The U.S. says it will not finance a rescue of Kabul Bank. "No U.S. taxpayer funds will be used to support Kabul Bank," said a spokeswoman for the U.S. Treasury, Marti Adams.[Read: covert financial support is likelier to be used if need be.]

But some U.S. officials say the fragile state of Afghanistan's finances—-it collected less than $1 billion in revenue last year is dependent on donor nations for most of its annual budget—-could result in U.S. and other donor funds indirectly assisting an Afghan government bailout the bank. Pay for Afghan soldiers and police, for example, comes from the U.S. and is funneled through the Afghan government.

Scenes at many branches of Kabul Bank in the Afghan capital—long lines at the entrances giving way to packed lobbies inside—suggested that the run on the bank didn't subside Saturday. At some locations, people waited for hours only to be told that the branch had run out cash, a situation that may have kept withdrawals down Saturday. The problem appeared particularly acute for those holding accounts in U.S. dollars as opposed to afghanis, the local currency...

Kabul Bank's woes first became public late Tuesday, when word leaked out that Afghanistan's central bank had forced out the lender's chairman and chief executive—-its two biggest shareholders—-amid allegations they made hundreds of millions of dollars in sometimes clandestine loans to themselves and Afghan government insiders.

Kabul Bank's former chairman, Sherkhan Farnood, used bank money to buy more than $150 million in properties in Dubai in his and his wife's name. Large loans were given to powerful Afghans, including brothers of President Karzai and First Vice President Muhammad Fahim. U.S. officials say the bank used one of Afghanistan's traditional hawala money transfer outfits to move hundreds of millions of dollars out of the country in an apparent attempt to avoid detection, though it is not clear what the money was then used for.

Afghan and U.S. officials say the problems at the bank came to light because of an intensifying feud between its major shareholders, especially Mr. Farnood, and Khalilullah Fruzi, the former chief executive. On Wednesday and Thursday, panicked depositors withdrew almost $180 million, more than a third of the $500 million the bank had on hand before the onset of the crisis. The bank was closed on Friday, the Muslim day of rest, and reopened Saturday.

And then we get to la famiglia Karzai:

Mahmud Karzai, the president's brother and third-largest shareholder with a 7% stake, says the lender's assets are roughly equal to the $1.3 billion in deposits it held before last week. He said the situation was stabilizing and shareholders were to meet with central bank officials on Sunday. It isn't clear if Kabul Bank's assets—-mostly loans and property—-are easily recoverable. If the pace of withdrawals hasn't slowed, the bank could run out of cash in the next few days, despite its relatively large cash reserves.

U.S. officials fear that even the hint of failure at Kabul Bank, the largest of Afghanistan's 10 private banks, could prove dangerously destabilizing. More than a quarter of a million soldiers, police and teachers are paid their salaries through the bank, and the Afghan government keeps many of its accounts there.

A U.S. military officer said the allied mission to train Afghan soldiers and police was trying to come up with alternate ways to pay the Afghan security forces if electronically transferring the funds through the bank ceased to be an option...More broadly, U.S. and Western officials are concerned the crisis will further set back their faltering efforts to restore confidence in President Karzai's administration, a pillar of the allied strategy for beating back the Taliban.

Already, many Afghans view the crisis at the bank as just the latest sign of officially sanctioned corruption. "The president and his brothers and their friends were playing around with all our money," said Daoud Afzal, 30 years old, who owns a construction company. He said he had $100,000—his life savings—deposited at Kabul Bank but didn't know if he would get it back. "No one can trust this government," he said.

To keep negative sentiments from spreading, U.S. and other Western officials say they are pressing the Afghan government to quickly start investigating the allegations of corruption and financial impropriety that led to the management shake-up.

Afghan officials say they will take whatever steps are necessary to restore confidence, although they have so far avoided public talk of an investigation. "From our side, we have to be very careful how we handle this so we don't add to the confusion and chaos," said Mr. Zakhilwal, the finance minister. He blamed the run on Kabul Bank on "alarmist" foreign media reports, a common refrain from Afghan officials in recent days...

The Afghan government says it will guarantee all of Kabul Bank's deposits. President Karzai said Thursday that his administration could use Afghanistan's hard currency reserves of about $4.8 billion to protect depositors. But it isn't clear how readily available that money is and whether the government has the legal authority to use it to secure the accounts of private citizens.

Here's the question for you, Tony Blair: In the final analysis, was Karzai really a significant improvement over the Taliban? Some people just drank too much of Bush's Kool Aid.

Hillary C, Here's the Score on the South China Sea

I honestly wish this story would have gone away by now but it hasn't. It's rather annoying that those with few qualifications to comment on the matter keep blabbing away without shedding new light on the matter. To me, the worst offender is the Economist. Currently ranked first and fourth among the most read features are slanted pieces about "Strategic Jousting Between China and America: Testing the Waters" and "They [The Americans] Have Returned." As you will read below, however, there is much that has been left out by this often-belligerent publication that, among other things, cheered on that stunningly successful exercise in freedom-and-growth promotion, the invasion of Iraq.

So, the IPE Zone is now compelled to, ah, wade into these troubled waters to set the record straight on important points of discussion. During the last ASEAN Regional Forum (ARF) meeting in Hanoi, Vietnam, US Secretary of State Hillary Clinton raised a ruckus by declaring "The United States has a national interest in freedom of navigation, open access to Asia’s maritime commons and respect for international law in the South China Sea," and it seeks "a collaborative diplomatic process by all claimants for resolving the various territorial disputes without coercion."

The US sees raising the matter as safeguarding its interests in keeping these important trade routes open, while China believes it to be interference in its internal affairs since these longstanding territorial disputes are between it and Brunei, Malaysia, the Philippines, Taiwan--with regard to the Paracels--and Vietnam. (Note that Taiwan is not a member of ARF which discusses security matters in the Asia-Pacific.) Since Vietnam is currently the rotating chair of ASEAN, the now-famous gathering where Missus Clinton raised her voice occurred in Hanoi and ended on 23 July. By doing so, the US is supposedly checking Chinese aggression against comparatively small Southeast Asian states. And so it is that assorted blowhards started applauding Clinton's action. Gordon "The Coming Collapse of China" Chang (we're still waiting, bub) weighed in. Always looking for a China menace-style angle, American media similarly paints a fairly sensationalist picture of what's going on. A geographically challenged hack even considers Australia as part of Southeast Asia while depicting a regional arms race.

Coming from a country contesting claims with China and having looked at this issue in some detail as part of my research into regional economic integration, let me offer salient points for consideration Western media and the Americanized blogosphere often miss:

1. Military exercises between the US Navy and ASEAN states have been boringly common--even so during the Bush 43 era. I refer to the annual Cooperation Afloat Readiness and Training (CARAT) annual naval exercises conducted between the US and Brunei, Cambodia, Indonesia, Malaysia, the Philippines, Singapore and Thailand--7 out of 10 ASEAN members. Additionally, the Philippines and US have conducted more of these exercises in the wake of the global war on terror. (Some obscure publication called the China Daily has even dutifully reported on these exercises all these years unlike much of Western media who've suddenly discovered that, gee, military exercises are happening in Southeast Asia...with the US Navy!)

What of the other ASEAN members? Laos is landlocked, while Myanmar and the US are famously at loggerheads. Regarding the emergence of US-Vietnam naval exercises, perhaps this little-known incident called the Vietnam War may have put off the latter's participation for some time? Give me a break.

2. Consider the implications of the China-ASEAN FTA. The economic subtext is of China rapidly leaving the US behind (together with its mighty exports) in trade volume terms with ASEAN. Having surpassed the US as ASEAN's third largest trading partner, the China-ASEAN Free Trade Agreement (CAFTA) is providing ever-closer trade ties in a manner of speaking. Running interference in the security realm to distract from closer Sino-ASEAN economic cooperation may be part of America's ploy, but it certainly doesn't seem to be deterring it. I am far from alone in saying the US is being left behind.

While the Western media was whipping itself into a frenzy of its own making these past few days, Vietnamese state media dutifully reported with no histrionics that Vietnamese officials representing ASEAN were in bordering Guangxi province working on further enhancing the so far successful trade pact. It's a strange world we're in, but state media often paints a more honest picture insofar as their portrayals will almost never clash with sanctioned views.

3. In 2002, China and ASEAN countries making claims on islands in the area concluded the Declaration on the Conduct of Parties in the South China Sea. There is nothing to suggest that China is keen on using force to seize these islands, or that even more far-fetched, ASEAN countries will do so. They have stuck to the text and are in talks to make these arrangements more concrete.

4. It's pretty rich for the US to butt into this dispute citing "international law" as a justification when it's not even a signatory to the UN Convention on the Law of the Sea (UNCLOS) that governs these matters. It's a long story why the US hasn't ratified the convention, but let's just say it's even less keen on abiding by "international law" than China is as evidenced by its refusal to sign UNCLOS. Like in many other fields of international interest, America is hypocritical and two-faced when it redounds to its benefit. By citing "international law" that it hasn't even signed on to as a basis for sorting out this dispute, it's characteristic American bluster--all mouth, no trousers.

5. The ideal outcome would be to refer the matter to the International Court of Justice (ICJ) for arbitration. Again, this part is tricky. The countries involved have differing interpretations of their Exclusive Economic Zones (EEZs) under UNCLOS which they all have signed on to unlike the US. China's claim is, to put in mildly, fairly expansive as it covers both the entirety of the Paracels and the Spratlys. Our Indonesian colleagues have tried to act as arbiters to settle these matters once and for all as (genuinely) disinterested observers, but to no avail.

Hence, the best way to adjudicate this dispute would be to refer it to the ICJ in the Hague, the UN court that deals with territorial disputes, over the interpretation of UNCLOS. For understandable reasons, China will probably be the most reluctant party to submit to third-party proceedings given past precedents. But hey, I guess it's better than the US which can't even refer such matters to the ICJ.

6. PRC Foreign Minister Yang Jiechi and his staff are no slouches when it comes to training in diplomacy. In contrast to negative portrayals by Western media, Chinese officials are quite cosmopolitan and well-schooled. Again, Yang Jiechi is an LSE alum and an honorary fellow at our institution. Meanwhile, we at LSE IDEAS regularly interact with foreign ministry officials since we run a collaborative programme with them in conjunction with the Foreign and Commonwealth Office (FCO).

7. Vietnam did not spring a surprise on China at the ARF with US help but has long since signalled its intention to bring this matter up as current ASEAN chair. This obscure news outlet, a certain BBC, had a pretty detailed discussion of Vietnam's intentions to do so in, er, April 2010. It's certainly Vietnam's right to bring the matter up, and the US calculated that its interests were better served by backing Vietnam. At any rate, ASEAN members are not quite happy with US military vessels traversing what they believe are their waters willy-nilly.

8. China is loathe to contest US naval dominance directly as it is a waste of money. While it may be spending more on military hardware, it pales in comparison to that spent by the US. Instead, it is drawing up plans for extensive land routes that cannot be as easily disrupted. Revisit my recent post on how China is keen on establishing rail links to South and West Asia via a new Silk Road. The point is, there are no mammoth George Washington-sized vessels that will be patrolling overland routes (or disrupting them if push comes to shove). Unlike aircraft carriers, destroyers, or frigates, this kind of expenditure is directly conducive to building infrastructure and trade ties.

9. At the gathering, participants including China concluded by resolving to continue discussions on the matter. This is perhaps the most galling bit: China did not object to participating in further dialogue over the matter which was already underway to begin with. From the statement at the end of the meeting:

The Ministers stressed the importance of maintaining peace and stability in the South China Sea. The Ministers reaffirmed the continuing importance of the Declaration on the Conduct of Parties in the South China Sea (DOC) of 2002 as a milestone document between ASEAN Member States and China, embodying their collective commitment to ensuring the peaceful resolution of disputes in the area. They stressed that the Declaration has been effective in building mutual trust and confidence that will help maintain peace and stability in the region. The Ministers encouraged efforts towards the full implementation of the Declaration and the eventual conclusion of a Regional Code of Conduct in the South China Sea (COC).

They encouraged the continued exercise of self-restraint by all the parties concerned and the promotion of confidence-building measures in this area and welcomed their commitment to resolving disputes in the South China Sea by peaceful means in conformity with the spirit of the DOC and recognised principles of international law, including the United Nations Convention on the Law of the Sea (UNCLOS 1982). In this regard, they welcomed the reconvening of the ASEAN - China Joint Working Group on the Implementation of the DOC in Viet Nam in April 2010 and the schedule to hold the next Joint Working Group Meeting in China before the end of 2010.

If you're further interesting in the history of this ongoing story, particularly between China and Vietnam (the most contentious Sino-ASEAN relationship) and between China and the Philippines, Japan Focus has an informative article that details most of the surrounding controversies.

Bottom line: the media frenzy over Clinton's visit is largely manufactured. Not only is America not a party to the dispute, but its offer to act as a mediator on various claims based on "international law" is also disingenuous given that it is not a signatory to UNCLOS. Other than perhaps acting as a convenient spoiler--a certain conflict leads me to believe the Vietnamese know how to handle proto-crusaders--the US has little to offer in resolving these territorial disputes. Whether in cyberspace or the South China Sea, American protestations are usually of the nudge-nudge, wink-wink sort.

For the reasons given above, I'll leave the warmongering to the Economist.