Policy uncertainty threatens trade growth, says World Bank


February 22, 2017

Policy uncertainty threatens trade growth, says World Bank

Warning on protectionism and threats to trade agreements in Trump era

https://www.ft.com/content/9d49b092-f859-11e6-9516-2d969e0d3b65

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Political uncertainty is slowing trade growth, a World Bank report has concluded, indicating that the rise of Donald Trump may already be casting a shadow over the global economy.

Major international institutions such as the IMF, the OECD and World Bank have recently upgraded their forecasts of global economic growth largely due to expectations that tax cuts, rising infrastructure spending and a wave of deregulation will boost the US economy under the new president. But the report by World Bank economists, released on Tuesday, highlights the fragile state of one historically important engine of global growth — trade.

To the extent that the policy uncertainty will remain high we should continue to expect [global] trade growth to be subdued. Michele Ruta, World Bank report co-author

The study avoids naming Mr Trump, but highlights rising protectionism and threats to unwind trade agreements — such as those made by the president. It also raises the prospect that attempts by the Trump administration to force companies to repatriate global supply chains to the US could undermine efforts to boost lagging productivity growth. To the extent that the policy uncertainty will remain high we should continue to expect [global] trade growth to be subdued Michele Ruta, World Bank report co-author International trade has been growing below historic trends for the past five years. The 1.9 per cent growth recorded in 2016, according to the team at the bank, was the slowest since the 2009 collapse in commerce that followed the global financial crisis.

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Prime Minister Justin Trudeau meets with U.S. President Donald Trump in the Oval Office at the White House–The Future of NAFTA

The team found that some of the reasons for the anaemic trade growth, which affected both developed and developing economies, were broader trends such as slow economic growth around the world and a collapse in commodity prices. But in 2016 the principal change was a surge in uncertainty about economic policy. According to the World Bank’s calculations, such uncertainty was responsible for 0.6 percentage points of the 0.8 percentage-point fall in trade growth between 2015 and 2016. The team at the bank based their figure on a study of the relationship between trade and economic policy uncertainty in 18 countries over three decades. They added they expected the impact to continue in 2017. “To the extent that the policy uncertainty will remain high we should continue to expect [global] trade growth to be subdued,” said Michele Ruta, one of the authors. The World Bank team also sought to quantify the impact of trade agreements on global trade growth. World trade grew at an annual rate of 6.53 per cent between 1995 and 2014, they calculated. Had no new members — including China — joined the World Trade Organisation or no new trade agreements been signed, international trade would have grown at just 4.76 per cent annually, they found.

One of the big consequences of the explosion in trade deals in recent decades has been the emergence of global supply chains. Such chains are widely seen by economists to have made businesses more efficient and boosted productivity. But Mr Trump and his administration have said they want to unwind those international supply chains and bring them home. “It does the American economy no long-term good to only keep the big box factories where we are now assembling ‘American’ products that are composed primarily of foreign components,” Peter Navarro, one of the president’s top trade advisers, told the Financial Times last month.

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According to the World Bank team such a move, coupled with unwinding existing trade agreements that have encouraged the establishment of international supply chains, would hurt productivity growth. “Preserving and expanding the reach of trade agreements, rather than backtracking on existing commitments, would help to sustain the growth of productivity,” the bank’s economists wrote.

Sri Lanka and China’s Indian Ocean Strategy


February 22, 2017

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Number 372 | February 21, 2017

ANALYSIS

Sri Lanka Suffers from China’s Indian Ocean Strategy

By Shiyana Gunasekara

Amidst local protests against the Chinese presence in the southern Sri Lankan town of Hambantota, Beijing insists that the town’s port project has been discussed in the “spirit of equality and mutual benefit, and follows market rules.” China’s activity in the Indian Ocean – particularly in Sri Lanka, which is a focal point in China’s One Belt One Road (OBOR) plan – appears to be predatory lending under the guise of economic development.

India needs to recalibrate its strategy towards the other South Asian countries for its own security, if not regional stability; however, Delhi has yet to offer a comparable alternative to doing business with China. Instead, India has taken its asymmetric power in the region and the de facto allegiances of its much smaller neighbors for granted.  With China’s recent track record of placing military vessels in traditionally commercial docks, India must take its role as the South Asian hegemon seriously.

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80% share of  Sri Lanka’s Hambantota Port goes to China

In October 2016, Sri Lanka’s Prime Minister Ranil Wickremesinghe announced that the China Merchants Holdings (International) Company Ltd. would hold an 80% share of the Hambantota Port in exchange for over USD $1 billion in the country’s debt.  This should be of particular concern to India, since China has used the Colombo South Container Terminal, owned by the same Chinese firm, to dock submarines, as opposed to the Sri Lanka Port Authority’s mooring designated for military vessels.  Previously, Colombo intended to hide visits of two other Chinese naval vessels from the media. With the majority of the Hambantota Port sold to China’s semi-private sector, India should be prepared for another visit by the People’s Liberation Army (PLA) Navy – perhaps for a much longer period of time.

The complete details of Chinese loans and other financial assistance have not been disclosed to the public, notably including details of the loan interest rates. China leads the country’s foreign inflows, with 98% of Chinese assistance to Sri Lanka being loans and only two percent as grants. China’s Export-Import Bank accounts for 77% of these loans, with 14% coming from the China Development Bank, and five percent from interest-free loans. China’s Export-Import Bank has notoriously given loans to countries on its OBOR initiative with strict self-serving procurement and contracting regulations: Chinese companies must be awarded the contract, both for the project itself and for procurement, and at least 50% of project procurement must be services, equipment, technology and materials from China.

Foreign direct investment and other forms of financial engagement from a G2 country to an emerging economy should be focused on market-friendly approaches to supporting economic development in the latter. Chinese investment in Sri Lanka, and other countries along China’s visionary trail would be a true boost to the local economy if the loan money were staying in the country through greater local employment and project procurement. Instead, Sri Lanka borrows money from China, which China requires to be used to contract largely state-owned Chinese companies. These companies provide salaries to Chinese employees who come to Sri Lanka to build infrastructure projects using mostly Chinese materials and technology.

The Mattala Airport and the Hambantota Port are prime examples of large-scale infrastructure projects financed by China that did not promote local economic development.These projects were purely gambles by the former Sri Lankan government, for which there was no guaranteed return on investment – a risky move for an economy coming out of an expensive three-decade war.

Sri Lanka, undergoing vast economic reforms outlined by the International Monetary Fund (IMF), might not be the only South Asian state that will have to be bailed out due to crushing Chinese-owned debt.  An IMF report on the Chinese-Pakistan Economic Corridor (CPEC), noted that import requirements of the project “will likely offset a significant share of inflows, such that the current account deficit would widen.” While the IMF acknowledges that the long run benefits may help mitigate said costs, such success is not guaranteed, as seen in Sri Lanka.  Hence Pakistan too should take into serious consideration the equity-for-debt swap that Sri Lanka was forced into due to the island nation’s ill-advised decisions and China’s over-eagerness to offer self-serving loans.

India is the largest power in South Asia in essentially every measure, and should continue to initiate deeper maritime collaborations with its neighbors for its own interests as well as for the benefit of the region. India can accomplish this goal by providing fiscal alternatives for its smaller neighbors to develop their infrastructures and human capital that are more favorable than Chinese-financed loans with unclear intentions.

China is a pragmatic power, and most likely foresaw Sri Lanka’s economic decline that resulted in Chinese ownership of the Hambantota port. China’s actions of fostering questionable loan conditions and blurring the line between commercial and military objectives do not correspond to its purported aim of establishing a positive public image. Ultimately, if China commits to increased transparency, its ambition to become a re-emerging global power will be better received.

About the Author

Shiyana Gunasekara is a masters candidate at Johns Hopkins School of Advanced International Studies focusing on international economics and Asian affairs, and was a Fulbright Scholar to Sri Lanka in 2014-2015. She can be contacted at Shiyana.Gunasekara@jhu.edu

The East-West Center promotes better relations and understanding among the people and nations of the United States, Asia, and the Pacific through cooperative study, research, and dialogue.

Established by the US Congress in 1960, the Center serves as a resource for information and analysis on critical issues of common concern, bringing people together to exchange views, build expertise, and develop policy options.

The Asia Pacific Bulletin (APB) series is produced by the East-West Center in Washington.

APB Series Editor: Dr. Satu Limaye, Director, East-West Center in Washington
APB Series Coordinator: Peter Valente, Project Assistant, East-West Center in Washington

The views expressed in this publication are those of the authors and do not necessarily reflect the policy or position of the East-West Center or any organization with which the author is affiliated.

The Kim Jong-nam Assassination: Tussle between China and North Korea


February 21, 2017

The Kim Jong-nam Assassination:Kuala Lumpur caught in an Ongoing Tussle between Beijing and Pyongyang

As dramatic and disturbing as the assassination of Kim Jong-nam is, it is simply a sideshow in the ongoing tussle between Beijing and Pyongyang. 

An uppity client state 

North Korea has long been a Chinese client state. It owes its very existence to China which also accounts for 89% of North Korea’s foreign trade. Chinese economic assistance, food aid and investments literally keep North Korea afloat.

As a client state, North Korea is expected to be mindful of China’s overall strategic interests in the region. No one, however, apparently briefed North Korea’s brash young leader about the niceties of client state behaviour. Since coming to power in 2011, Kim Jong-un’s actions have caused alarm and concern in Beijing.

His nuclear weapons programme and poorly timed missile testing threaten to upset the delicate balance of power that China is seeking to maintain in East Asia at a time when there is an unpredictable new occupant in the White House. The Chinese were also chagrined by the 2013 execution for treason of Kim’s uncle, Jang Song-thaek, who was well respected in Beijing. There were also a number of other unpleasant incidents between the two countries involving the treatment of Chinese investors and businessmen in North Korea.

More than anything else, however, a credible nuclear capability would give the North Korean dictator greater manoeuvrability vis-à-vis China and other powers, a worrying prospect for the Chinese leadership. As one Chinese professor put it, “If we choose an ally that can’t be tamed, we might become the biggest loser.”

To show its displeasure, China joined the international criticism of North Korea’s missile tests and last week rejected a shipment of coal from North Korea.

A slap in the face

Kim Jong-nam’s assassination has now plunged China-North Korea relations to a new low. It was no secret that Kim Jong-nam, the elder half-brother of Kim Jong-un, was under China’s protection, having lived in China since he fell from favour more than a decade ago. His presence in China was a constant reminder to Kim Jong-un that China had a convenient replacement, one who had perhaps a better claim to the throne as the eldest son, if he proved too unreasonable. For that reason alone, Kim Jong-nam was a marked man.

However, not even the mercurial and impulsive North Korean leader would have dared act against his half-brother while he was on Chinese soil. It would have been an insult that China would simply not have tolerated.

Malaysia, on the other hand, with its open doors, lax security and indulgent attitude towards North Korea is another story. Certainly, the North Korean leadership would not have expected that Malaysia would react the way it did. The law of unintended consequences just keeps cropping up in international affairs.

The reaction from Beijing was also not long in coming. Shortly after the assassination, China suspended all shipments of coal from North Korea until the end of the year. While the move was presented as part of China’s efforts to implement UN sanctions against North Korea, it is almost certainly a direct response to the Kim assassination in Kuala Lumpur.

As coal is North Korea’s single largest export item to China, the suspension is bound to hit the North Korean regime particularly hard. No doubt other measures are being planned as well although China is unlikely, at least at this stage, to attempt regime change in Pyongyang.

A tougher than expected response

In the immediate aftermath of the assassination, Malaysia appeared to go out of its way to avoid doing anything that would further exacerbate the situation. The Home Minister indicated that the body would, in due course, be returned to Pyongyang in accordance with international practice. He also insisted that the incident would not affect bilateral relations.

The provocative response of the North Korean Ambassador, however, appears to have stiffened Malaysia’s resolve.

In two rambling press conferences, the Ambassador accused Malaysia of a litany of offenses – colluding with his country’s enemies, scheming to implicate North Korea in the assassination, roughing up North Korean citizens and violating human rights and international law.

Failure to respond appropriately to such a provocation would have made the Malaysian government, already beset by a number of domestic scandals, look weak.

Interestingly, while the Ambassador alluded to South Korea when he accused Malaysia of colluding with “hostile forces,” his comments could apply to China as well.

Wisma Putra, which was largely silent in the early days of the drama, quickly responded by summoning the North Korean Ambassador for a dressing down. More significantly, Wisma Putra announced that Malaysia’s Ambassador in Pyongyang had been recalled for consultations – the strongest diplomatic show of displeasure short of breaking off relations.

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Recalling our Ambassador is absolutely the right thing to do given that it is now pretty clear that North Korea was complicit in the assassination. No country can look with equanimity upon such outrageous behaviour.

The North Korean Ambassador is, of course, in a very delicate situation; he has a Damocles sword hanging over him. If he is not seen to be zealous and conscientious enough in defence of the regime, he could suffer the same fate as his predecessor who found himself at the wrong end of a firing squad after being recalled from Kuala Lumpur. It is this fear of the consequences of failure, as much as anything else, that might have pushed him to the point where his actions have now done serious damage to the bilateral relations. It is hard to see him continuing in his present post for long.

Such are the perils of working in the North Korean foreign service.

Diplomatic and protocol issues

The assassination also raises interesting protocol issues. According to Satow’s Guide to Diplomatic Practice, long the go to handbook for diplomats, “If the death [of a diplomat] takes place in circumstances where ordinarily an inquest would be held, the authorities in the receiving state should if necessary be reminded that it has been general international practice not to hold an inquest where a diplomatic agent or other member of a mission dies in office, whether in inviolable premises or not.”

Some would argue, therefore, that Malaysia did not have the authority to carry out the post-mortem and that North Korea is within its rights to demand the return of Kim Jong-nam’s remains given that he was travelling on a diplomatic passport.

However, it can also be argued that although Kim Jong-nam was travelling on a diplomatic passport he was not formally accredited here and is, therefore, not subject to the same protocol.

What this means is that Malaysia has a great deal of latitude in deciding how to proceed with the case. Given that other countries – China and South Korea come to mind – also have a vested interest in the outcome, Malaysia will have to tread a careful path if it wishes to avoid being caught up in the bigger power play that is unfolding behind the scenes.

For now at least, both China and South Korea will no doubt be pleased with Malaysia’s tough stance. They will take satisfaction that the investigation has resulted in prolonged negative exposure for Pyongyang that will both further isolate and discredit the regime.

What happens now will depend, to a large degree, on how things play out between Beijing and Pyongyang. Where the remains of Kim Jong-nam finally ends up will provide interesting clues.

Malaysia, which has been increasingly deferential to China – even quietly sending back to China Muslim Uighur refugees who sought asylum in Malaysia – will likely be mindful of China’s interest in the matter.

Rethinking Malaysia-North Korea relations 

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Address: Diplomatic Enclave Munhung-dong, Taedonggang District Pyongyang …Malaysian Embassy

If nothing else, hopefully the assassination and the angry North Korean response to Kuala Lumpur’s handling of the case will prompt a reassessment of relations with Pyongyang.

For some unfathomable reason, Malaysia has had a resident diplomatic mission in Pyongyang since 2003, one of only 23 missions in the North Korean capital. Unfathomable because trade is practically non-existent (with almost zero prospects of improvement) and there are simply no bilateral issues worth talking about that would warrant the expense of a mission.

Perhaps in a desperate bid to add some substance to the relationship, both countries even explored ways to enhance tourism, never mind that North Korea is a country with no outbound tourists and only a few, possibly insane, inbound travelers.

What is more preposterous, however, was the decision some years ago to quietly take in 300 North Korean workers to work in Sarawak’s mining sector. Why Malaysia would even think of employing North Korean workers – slave labour, to all intent and purposes, toiling in a distant land to augment the regime’s scarce foreign reserves – is a mystery.

Malaysia also plays host to an approximately 1000 strong tightly knit community of North Korean businessmen, restaurant workers and other dubious ‘professionals,’ all of whom are controlled by the North Korean embassy and serve the interests of the state in one form or another.

Clearly, this is a one-sided relationship that benefits North Korea rather than Malaysia. Certainly, not many Malaysian taxpayers will lose any sleep if our mission in Pyongyang is shut for good.

 

East Asia: Trade Regime critical for Economic Stability and Political Security


East Asia: Trade Regime critical for Economic Stability and Political Security

by  EAF Editorial Group

What the Trump Administration will ultimately do to the shape of the global trade regime is difficult to foretell but there’s no question that it will change it forever, even if there is strong global push-back against Trump’s threat to unravel trade agreements and carry a protectionist stick.

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The trade regime, and the way in which it encourages open trade and international interdependence among those who sign on to its rules, is not simply an instrument of economic policy strategy that can be changed without political consequence. For most countries, and certainly those in East Asia which are so dependent on open trade to sustain their basic livelihood, the trade regime is a critical instrument of political security.

Trump has already signed executive orders to withdraw the United States from the Trans-Pacific Partnership (TPP) and renegotiate the North American Free Trade Agreement (NAFTA). What appeared noisy campaign rhetoric has been transformed into concrete action.

Trump’s withdrawal from the TPP is no big deal in itself: with the exception of what it promised in terms of liberalisation of the Japanese economy, the economic effects of the deal that was on the table were oversold. Even renegotiation of NAFTA may have more limited economic consequences than have been threatened. But these steps, together with the threat of punitive tariffs on imports from China and Mexico, plus a total retreat from multilateral or regional trade agreements, tears at the core principles upon which the US supported postwar economic order had been built.

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POTUS Donald J. Trump and China’s President Xi

Anyone who says that a switch of this magnitude and direction in the trade policy strategy of the world’s largest economy and second-largest international trader is of little consequence is seriously delusional. The old certainties that brought prosperity and a significant measure of stability to world affairs for nearly three-quarters of a century after the Second World War are under serious threat.

A world in which the defining characteristic is a lot of bilateral trade agreements rather than one in which multilateral and regional frameworks are predominant imposes costs on business and consumers alike because of the need for compliance with different rules of treatment across different trading partners. It also injects a different tone into international politics. These concerns are what motivates the argument for regional and global trade regimes that govern international flows of goods and services through unified rules and standards.

The broader the framework within which trade can take place, the greater will be the scope for division of labour and the higher the gains from international trade. Bilateral trade deals can’t replicate the gains from regional and multilateral agreement, and they will unhelpfully cut across global and regional value chains. As the largest centre of production networks, East Asia has much at stake in the push back against an open, global rules-based trading system and the regional arrangements that support it.

While the direct economic costs of Trump turning America’s back on the TPP and other measures might be relatively small, the systemic costs are much larger.

As Shiro Armstrong and Amy King write in this week’s lead essay, Trump’s executive order to withdraw the United States from the TPP agreement in the Asia Pacific ‘is a strategic turning point in the open economic order. It is a blow to furthering reform for some members, a lost opportunity for the United States to write the rules of international commerce, and more worryingly a sign of the United States turning its back on the global economic system it helped create and lead’.

How can East Asia, which includes China and Japan — the world’s largest and fourth-largest trading nations — stand against the corrosion of a global trading order that is so central to their common economic and political interests?

The economies of East Asia must, of course, stand quietly firm in global and regional forums and in all their bilateral representations to the United States against the undermining of the global trading system, giving strength to those forces in America that can help to shape much better outcomes than the present circumstances threaten. But, through their own commitment to collective liberalisation and reform, they can also help to lead the system back from the brink.

With major multilateral trade deals at the WTO now too difficult and bilaterals only able to make slow and incomplete progress towards freer markets, Armstrong and King observe, all eyes now turn to Asia’s Regional Comprehensive Economic Partnership (RCEP) agreement. It is the most important initiative on the global trade scene.

Image result for flags of asean member statesASEAN is the hub of RCEP Agreement

RCEP comprises the 10 Southeast Asian members of ASEAN as well as Australia, China, India, Japan, New Zealand and South Korea. Though, as Armstrong and King say, there are many misconceptions about the RCEP enterprise.

‘The first misconception is that RCEP is China-led. But China is a spoke and ASEAN is the hub of the arrangement. RCEP was built to consolidate ASEAN’s five separate free trade agreements with China, South Korea, Japan, India and Australia–New Zealand. And the RCEP idea and its guiding principles were crafted not in China, but in Indonesia. ASEAN centrality has ensured that RCEP has incorporated Asia’s other large power — Japan — and reflects Japanese preferences as much as those of China. Originally, China wanted to limit core membership of Asian cooperation to ASEAN plus China, Japan and South Korea. Japan wanted a larger membership, involving Australia, New Zealand and India, to help provide a counterweight to China’.

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In the end, ASEAN centrality and the interests of Australia and India in the region meant a broader and representative group ideally placed to take the lead collectively on global trade.

‘With the world trading system under threat’, as Armstrong and King conclude, ‘it is time for leaders in Asia to step up and push for opening markets and deepening reforms to enhance economic integration, not just with each other but with Europe, the United States and the rest of the world’.

*The EAF Editorial Group is composed of Peter Drysdale, Shiro Armstrong, Ben Ascione, Ryan Manuel, Amy King and Jillian Mowbray-Tsutsumi and is located in the Crawford School of Public Policy in the ANU College of Asia and the Pacific.

http://www.eastasiaforum.org/2017/02/20/east-asias-agreement-to-keep-the-world-economy-open/

De-coding New Yorker Trump in The White House


February 18, 2017

De-coding New Yorker Trump in The White House

by Bunn Nagara@www.thestar.com.my

On Wednesday, February 8, a US Navy spy plane and its Chinese counterpart each tempted fate, flying within 300m of each other over the disputed Scarborough Shoal in the South China Sea.

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Both were quad-prop surveillance aircraft on airborne patrol. The near-miss, the first this year after two incidents last year, showed the high-risk “great game” of the two major powers in this region.

US-China relations were already strained after President Donald Trump questioned Washington’s One China policy and wanted China to quit the disputed islands it already occupies ( he subsequently reaffirmed that his administration  would abide by the existing US 1-China Policy would remain much to the relief of China) .

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There was also speculation on a “trade war”. An aerial collision between their military aircraft over disputed territory would have sharpened prospects of conflict.

Within hours, Secretary of State Rex Tillerson persuaded Trump to go easy on China rather than flirt with reviewing the One China policy. The result: a long and “very cordial” phone conversation between Presidents Trump and Xi Jinping, the first after Trump’s inauguration and the second since his election. Warm mutual greetings were exchanged with mutual invitations to visit each other’s country.

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President Donald Trump and Secretary of State Rex Tillerson–Go  Easy on 1China Policy

Trump had his moment as the master of brinkmanship. Now it is Xi’s turn to shine, if he does, as a master strategist – if he is one.

China’s chances here are uncertain. It has been slow and flat-footed in the diplomatic stakes with Washington so far. In contrast, Japan and Israel moved quickly to engage Trump early. When it did not seem clear if Trump would favour Japan or Israel in any way, their leaders sought to engage him first.

Prime Ministers Shinzo Abe and Benjamin Netanyahu correctly read Trump, when reasonably managed, as a highly impressionable person with very impressionistic views. Whoever engages him first gets a head start in good relations.

Now Trump may be better disposed to Japan and Israel than he might otherwise have been. Diplomatic engagements are basically a political investment.

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Towards Better Relations with China?

But the media focus on US-China ties has obscured the poor state of US-Japan relations. Abe needs to invest in the Trump presidency.Trump had swiftly dumped the TPP that Japan was counting on. He has also accused Japan of suppressing the value of the yen and not paying enough for its own defence, while threatening Toyota with high taxes on vehicles from new Mexican plants rather than US ones.

Japanese manufacturers, including Toyota, then pledged more production, and jobs, at US plants. Abe may also want to “position” Japan favourably over China in strategic terms to Trump.

Last September, Netanyahu met Trump and Hillary Clinton separately in New York. He reportedly spent a long 90 minutes at Trump Tower.

When Trump received flak for wanting a wall on the border with Mexico, Netanyahu signalled approval by referencing his own fence projects on the borders with Egypt and Palestine. Trump duly reciprocated.

Now Israel’s barrier builder, Magal Security Systems, wants to build Trump’s wall with Mexico. Beyond just a business deal, it would be a political investment to cement Israel’s controversial schemes.

Israel’s right-wing now wants Netanyahu to drop the two-state solution altogether. But Netanyahu will not have it easy, since just days before his arrival, Trump openly opposed his settlements policy.

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Reaffirming US -Israel Relations

In September, candidate Trump used the meeting to project his image as a prospective world leader. Now Netanyahu is using Friday’s meeting with President Trump to draw dividends as Israel receives flak for illegal settlements in Palestine.

Yet, compared to other countries, the US and China have more to talk about: from economics to diplomacy to security. As two hulking, intertwined economies, and as permanent members of the UN Security Council, their range of interests and concerns is global.

Enter the low-profile second track diplomacy China has been pursuing with the US since late last year. This is led by State Councillor Yang Jiechi, an ambassador to the US before serving as Foreign Minister when Secretary of State Clinton announced the US “pivot” to Asia.

An alumnus of the London School of Economics, Yang is fluent in English and understands the US better than his contemporaries in Beijing. He is often described as China’s “top diplomat” who outranks Foreign Minister Wang Yi.

This second track is vital and befits “ChinAmerica”, ties between the two major powers that make for the world’s most important bilateral relations today. However, how far Xi or Beijing ultimately listens to Yang remains to be seen. A lacklustre first track diplomacy remains very much in evidence.

The hesitancy and passivity of Track One, notwithstanding standard shrill reactions to issues like Taiwan, seem to be a timid international response to the Trump era.

There are vocal Trump opponents, there are visible Trump supporters, and there are others like China gingerly treading water and keeping their distance. But there are also others like Japan and Israel who seize the moment without hesitation.

Much of the hesitancy seems to be caused by internal US politics rejecting someone who is wilfully politically incorrect. This sense is consistently projected by Western mainstream media, as if the issues they cover are necessarily universal.

They include Trump’s decision to scrap Obamacare, state-sponsored abortions and special toilets for transgender people. Given the extreme views at both ends, the middle way Trump prefers begins to look like moderation.

Meanwhile, an opposition-fuelled media has been tweaking news about Trump policies in an unfavourable light, carrying negative emotions with it.

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Case in point: travel restrictions into the US, pending new measures to screen out potential terrorists. What Christiane Amanpour on CNN (pic above) and some others call a “Muslim ban” is nothing of the kind.

The restrictions comprise three components suspending entry regardless of race and religion: by all refugees for four months, by Syrian passport holders indefinitely, and by passport holders of six other countries for three months.

If the restrictions are defined as a Muslim ban, they have to be definitively a ban on Muslims which they are not. Protesters argue that since the seven are Muslim-majority countries, there is a Muslim ban.

But if a majority count determines definition, then since the majority of the world’s 49 Muslim-majority countries (2010 data) are unaffected, there is no Muslim ban. How effective such restrictions can be in keeping out potential terrorists is another matter.

Protesters forget that Barack Obama had earlier listed these seven countries as being “of concern”. Trump only used the list for restrictions for a limited period.

The US has had several immigrant and citizenship restrictions going back a century. Some of these came together in the Immigration and Nationality Act (1952), parts of which remain today.

These restrictions survived Republican and Democratic administrations alike. Yet they were not controversial before, or the media did not make them appear so controversial.

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A real concern, however, is Trump’s intention to scrap the Iran nuclear deal. He and his advisers fail to realise that it is more than a nuclear deal, being also a face-saving measure for all eight signatories, including Iran.

Nobody can know if Iran ever wants to develop nuclear weapons. The only possible agreement is the present deal that puts any such plan on hold.

Undoing the deal will open a can of worms, starting with emboldening Iran’s hardliners over its moderates. Learning superpower politics on the job can be so hazardous.

Bunn Nagara is a Senior Fellow at the Institute of Strategic and International Studies (ISIS) Malaysia.

Malaysia: China, Malaysian Chinese and GE-14


February 15, 2017

Malaysia: China, Malaysian Chinese and GE-14

by Dato Dennis Ignatius@www.freemalaysiatoday.com

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Communications and Multimedia Minister Salleh Said Keruak (pictured with de facto PM Rosmah Mansor) recently offered three reasons why Barisan Nasional (BN) can expect a significant increase in support from the Chinese community at the next general elections – “the opposition’s shortcomings despite being given the opportunity; Malaysia’s good relations with China; and, the good moral politics practiced by the BN.” (Bernama, 5th February 2017)

It is an astonishing assertion to say the least. In the first place, by any reckoning, the Opposition in both Selangor and Penang has, in fact, performed far better than previous UMNO-BN governments. In a few short years, corruption and waste are significantly down; there is greater accountability and transparency and people are better off than before. And this despite the unrelenting hostility and lack of cooperation from the federal government.

The Opposition may have their shortcomings but there’s little doubt that if they ever came to power at the federal level, Malaysia would be the better for it.

As for the claim that BN practices “good moral politics,” it is so risible that it isn’t even worth a second thought.

The China card

The reference to China, on the other hand, is significant if only for the mindset it reveals. It suggests that the Minister  who is notorious when he was a Sabah state minister  considers Malaysian Chinese more parochial than patriotic, that the Chinese community will overlook the bigotry and racial prejudice perpetrated against them as well as the injustice, corruption and scandal that have blighted our nation simply because they prize good relations with China.

Acting on this belief, UMNO-BN ministers have assiduously sought to co-opt China into their elections strategy in the expectation that China’s ringing endorsement of the current Malaysian leadership will play out well with Malaysian Chinese.

At the ground level, a senior UMNO minister even went so far as to accompany the Chinese Ambassador around as the ambassador distributed Chinese government assistance to Malaysian Chinese schools, something that was always frowned upon in the past.

The MCA too appears to be counting on China’s endorsement to restore its fortunes as the party of choice for Malaysian Chinese. By setting up a PRC affairs committee and an OBOR (One Belt One Road) centre, the MCA is clearly hoping to convince Malaysian Chinese that its close relationship with China will bring huge dividends to the Malaysian Chinese community through lucrative deals, projects and other businesses.

But is relations with China a key election issue for Malaysian Chinese? Even a cursory survey of Malaysian Chinese attitudes suggests otherwise. In fact, their key concerns – security, education, tolerance and good governance – are not even on Salleh’s radar.

Security and safety

There is no doubt that Malaysian Chinese have been quite traumatized by the rising level of anti-Chinese sentiment in the country as well as the threat of racial violence.

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The Chinese Ambassador to Malaysia in Petaling Street, Kuala Lumpur (2015)

For many, the 2015 Petaling Street affair – when senior UMNO leaders shamefully stood by and did nothing even as the Red Shirts threatened a bloodbath – was a turning point; it indicated that Malaysian Chinese could no longer count on UMNO-BN for their safety and survival.

Frustrated at the lack of government action and fearful for their safety, many Malaysian Chinese, and others as well, applauded when the Chinese Ambassador finally intervened to stop things from getting out of hand.

Those who believe that China might provide some protection for Malaysian Chinese might, therefore, welcome closer relations with China; not because of any loyalty per se to their ancestral homeland but simply in the hope that it would bring a measure of stability.

Some also harbour the hope that closer relations with China might somehow forestall the growing drift towards Islamic extremism in Malaysia, another area of great concern to Malaysian Chinese as well as to other Malaysians. They reason that the more indispensable China is to Malaysia’s economic well-being and to UMNO-BN’s survival, the less UMNO would want to scare them away with any dramatic Islamisation initiatives.

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The Anti-Chinese Malays

Whether China can or will provide such a security blanket is, however, an open question. Observers have argued, for example, that the Chinese Ambassador’s intervention in the Petaling Street affair was aimed more at avoiding the kind of internal instability that could jeopardize China’s economic and political gains in the country rather than out of any particular concern for Malaysian Chinese.

Education

It is no secret that Malaysian Chinese also place a very high premium on education and the opportunities that a good education provides. It is, after all, education that transformed a ragtag bunch of largely indentured labourers into an economic powerhouse that Deputy Prime Minister Ahmad Zahid Hamidi recently described as “the group that will carry the nation forward.”

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The Deputy Prime Minister Zahid Hamidi with UMNO Racists, Noh Omar and Jamal Ikan Bakar Yunos

In this context, the Chinese school system occupies a special place in the Malaysian Chinese psyche. It is more than just education; it is about inculcating traditional values, culture and language. Its very existence is a psychological beacon of hope and comfort, an assurance that their language, culture and identity will endure.

When the Chinese school system is condemned as unconstitutional, detrimental to national integration and threatened with closure, when the Unified Examination Certificate is refused recognition, when funds are withheld, it is, rightly or wrongly, perceived as a thinly veiled attack on the Malaysian Chinese community itself.

After all, how is it justified to demand the closure of Chinese schools on the grounds of national unity when Chinese schools today are more integrated than national schools, when foreign English-medium private schools proliferate, when monoracial educational and religious institutions continue to flourish with government support?

To be sure, we have a serious national unity issue in this country that needs urgent attention. However, the way to build unity must surely be through consultation, cooperation and accommodation rather than further marginalising besieged minorities or demonising them for political expediency.

Tolerance

As well, Malaysian Chinese are deeply concerned, even grieved, over the way they have been racially harassed and taunted by many from within UMNO and PAS itself.

It hurts that even after more than a century of living in Malaysia and contributing to its development as much as anyone else, they are still considered interlopers, intruders and “pendatangs.” It hurts when they are taunted as unpatriotic, as disloyal, as ungrateful. It hurts when decades of blood, sweat and tears in the service of their nation are dismissed as irrelevant or deliberately downplayed. Or that their votes are not solicited with promises of wise policies but demanded with threats of punishment and retribution.

And it hurts when those who come from countries like Indonesia are permitted to be proud of their heritage while Malaysian Chinese must always be watchful lest they be accused of chauvinism and disloyalty.

Sure, no community is without their faults but the constant racist polemics is discouraging, discomforting and disquieting.

Good governance

Finally, there is the issue of good governance.Like other Malaysians, Malaysian Chinese are sick and tired of the corruption and abuse of power that has become commonplace in our nation today.

It was this concern that compelled thousands of them to join their fellow citizens in participating in the BERSIH rallies, despite the threats and intimidation, to press for political change, for respect for the constitution and for good and clean governance.

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Malaysian Chinese, in fact, feel insulted that politicians think they can be won over simply on the promise of good relations with China. They are, first and foremost, Malaysians and it is national issues like good governance, justice and respect for diversity that matter far more to them than relations with China.

Malaysian Chinese want what other Malaysians want

If UMNO-BN wants to win the support of Malaysian Chinese, it does not need to look to China; it simply needs to treat them with respect and dignity as fellow citizens of this nation we all call home.

In the final analysis, Malaysian Chinese want what everybody else in Malaysia so desperately wants – good governance, security, respect for our constitution and for the rights of all citizens irrespective of race or religion, and the opportunity to pursue their dreams and live in peace with their fellow citizens. And the answer to that is not found in Beijing but in Putrajaya.