The Year of the Demagogue: how 2016 changed Democracy


December 30, 2016

The Year of the Demagogue: how 2016 changed Democracy

by Lionel Barber–The Financial Times

https://www.ft.com/content/7e82da50-c184-11e6-9bca-2b93a6856354

From Brexit to Donald Trump, this year has seen a thundering repudiation of the status quo

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On the morning of June 21, two days before the Brexit referendum, I met David Cameron in Downing Street. During a 25-minute conversation, the Prime Minister assured me that everything would be all right on the night. I wasn’t entirely convinced.

In hindsight, Brexit defined 2016. This was the year when the unthinkable became possible, the marginal invaded the mainstream, and Donald Trump, a property tycoon and television host, was elevated to US Commander-in-Chief.

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In his memoir Present at the Creation (1969), Dean Acheson, a former US Secretary of State, describes how he and fellow “Wise Men” helped President Harry Truman to build a new liberal, rule-based order after the Second World War. It was founded on institutions: the United Nations, the IMF, the World Bank and the NATO alliance.

In 2016, as Trump dismissed NATO as “obsolete” and his consigliere Newt Gingrich described Estonia as a suburb of St Petersburg, it felt at times as if we were present at the destruction.

Acheson epitomised the East Coast establishment. He was a diplomat, lawyer and scholar — an expert, if you like. This year, the establishment was hammered, the experts humbled. Most missed Brexit. Many declared a Trump victory impossible. Michael Gove, a leading Brexiter, caught the public mood: “People in this country have had enough of experts.”’Trump won by attacking the Republican party as much as his Democratic opponent’ © Getty Images

Brexit and the Trump triumph mark a revolutionary moment. Not quite 1789 or 1989, but certainly a thundering repudiation of the status quo. Some detect echoes of the 1930s, with Trump cast as an incipient fascist.

It was a good year for strongmen: Vladimir Putin in Russia; Recep Tayyip Erdogan in Turkey; Xi Jinping, now promoted to “core” leader in China. It was an even better year for demagogues, the crowd-pleasers and rabble-rousers who feed on emotions and prejudice. In the year of the demagogue, several vied for the lead role: Nigel Farage, then Ukip leader, godfather of Brexit and Trump acolyte; Rodrigo Duterte, a brutal newcomer to power, who pledged to slaughter millions of drug addicts to clean up the Philippines; and Trump himself, who constantly marvelled at the size of his crowds.

Yet the 1930s analogy is in many ways misplaced. We are nowhere near a Great Depression. The US economy is approaching full employment. The pre-Brexit UK economy has seen employment rise by just over two million since 2010. Credit is flowing. Corporate profits are up. The trouble is that swaths of the population, often those living outside the great cities, have little sense of the economic recovery.

Real incomes in the UK have not grown for the past decade. In the US, 95 per cent of households still had incomes last year that were below those in 2007, according to the Economic Policy Institute think-tank. In Europe, unemployment in the eurozone, especially in countries such as Greece, Spain and Italy, remains high. Yet the wealth of the top one per cent (“the privileged few”, to borrow Theresa May’s mantra) has continued to rise.

Something more profound is happening in advanced democracies. The forces at work are cultural, economic, social and political, driven in part by rapid technological change. Artificial intelligence, gene editing, self-driving cars — progress on all these groundbreaking technologies accelerated in 2016. Each is massively empowering (the smartphone has given everyone a voice) but also massively disruptive (the impact of artificial intelligence on jobs has barely begun to be felt).

In political terms, Brexit and the Trump triumph highlight the decline of the party system and the end of the old left-right divide. The centre-left appears in terminal decline. This month, François Hollande, whose approval rating hit a low of 4 per cent, ruled out a second run for the Elysée. Jeremy Corbyn, the hard-left leader of the opposition Labour party, had more to say about the death of Fidel Castro than Britain departing the EU. Matteo Renzi, the centre-left reformer in Italy, lost heavily in his own referendum on constitutional reform and promptly resigned.

In 2016, we saw, finally, that this period — call it Globalisation 2.0 — is over

The Conservative or Christian Democrat centre-right fared better but remains under pressure from an anti-immigrant, nationalist fringe, from Austria to England, France, Germany, Hungary, the Netherlands and, increasingly, Poland. In 2016, we witnessed the birth of the “Fourth Way” — a new brand of politics that is nativist, protectionist and bathed in a cultural nostalgia captured by Trump’s pledge to “Make America Great Again”.

The second development is a widespread disillusion among western democracies with globalisation, the postwar phenomenon marked by three trends: the Roaring Eighties deregulation of the Reagan-Thatcher era; the 1994 Uruguay Round agreement on global trade liberalisation; and the opening of a market economy in China. The progressive abandonment of controls on capital, goods, services and labour, epitomised by the launch of the single European market and the single currency, reached its apogee in the summer of 2007. In 2016, we saw, finally, that this period — call it Globalisation 2.0 — is over.

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In the year of the demagogue, several vied for the lead role, including the Philippines’ Rodrigo Duterte’ © AFP/Getty Image

Free trade has become ever harder to sell to a public worried about job security and the competitive threat from developing countries. Trump denounced the Trans-Pacific Partnership pact between the US and 11 Pacific Rim countries, and the North American Free Trade Agreement with Canada and Mexico. Hillary Clinton, once a free trader, caved. No one countered that the US consumer, including many Trump voters, bought cheap goods at Target and Walmart thanks to efficient global supply chains and cheap labour in the developing world. Hostility to free trade was a vote winner. Only last-minute arm-twisting of the Walloon regional government in Belgium salvaged a Canada-EU trade pact seven years in the making.

Free movement is also in question. Europe has experienced mass migration on a scale not seen since the late 1940s. In 2016, the refugee flow from the Middle East and north Africa was stemmed at one end thanks to a German-brokered deal with Turkey but record numbers travelled (and drowned) on the treacherous route from the central Mediterranean to Italy. Terror attacks, notably in France, heightened public insecurity about immigrants. There was a sense governments had somehow lost control, of national borders and national identity.

This explains the power of Trump’s pledge to build a “beautiful” wall on the Mexican border, and Theresa May’s conference jibe about politically correct multiculturalism: “If you believe you are a citizen of the world, you are a citizen of nowhere.” The party faithful in Birmingham cheered but cosmopolitan London, home to hundreds of thousands of “foreigners”, including Mark Carney, the Canadian Governor of the Bank of England, was not amused.

The Brexit referendum exposed an economic gap between winners and losers of globalisation; but also a cultural divide between those comfortable with the pace of change, from technology to same-sex marriage, and those wanting to slow down the clock and rediscover their roots in ethnicity, religion or nationality.

 Leave’s slogan in the Brexit campaign, “Take Back Control”, was simple and brilliantly effective across classes and generations. Constitutionalists liked the idea of regaining sovereignty from EU institutions. Everyone liked the idea of reclaiming money from Brussels and diverting the savings to the NHS. Clamping down on immigration was a vote-winner. No matter that these claims were deeply misleading (as were Remain’s claims of imminent economic disaster in the event of a Brexit vote). Throughout the year, facts were elastic concepts.

In 2016, the world woke up to “fake news”, sponsored by political activists but also increasingly by state actors and their surrogates. The CIA accused Russia of being behind the leaking of emails from the Democratic National Committee, a shocking, brazen attempt to interfere in a US presidential election.

Trump dismissed the claims as ridiculous, as did his supporters. Throughout this political cycle, many appeared to live in a parallel universe where facts were entirely subjugated to opinion.

Scottie Nell Hughes, a Trump supporter and CNN commentator, explained: “So one thing that’s been interesting this entire campaign season to watch, is that people that say facts are facts — they’re not really facts. Everybody has a way — it’s kind of like looking at ratings, or looking at a glass of half-full water. Everybody has a way of interpreting them to be the truth or not truth. There’s no such thing, unfortunately, anymore as facts.”

Trump’s victory gives succour to the demagogues-in-waiting in 2017

Welcome to the world of post-truth politics, turbocharged by technology such as the smartphone. A single device allows individuals to project in real time an unfiltered version of the news and (often highly partisan) views across Facebook, Google and Twitter. In the US election, journalists, once enjoying a degree of trust as the filter of last resort, were howled down or singled out on Twitter as “disgusting” or “lame”.

In the UK, both Leave and Remain regularly lambasted the BBC, which tried to remain neutral. Timothy Garton Ash, the Oxford historian, warned presciently about the risks of “fairness bias”. The danger was that the BBC, in seeking to remain impartial, would fail to be informative, especially on complex economic issues. “You give equal airtime to unequal arguments, without daring to say that, on this or that point, one side has more evidence, or a significantly larger body of expert opinion, than the other,” he wrote.

The Trump campaign presented “mainstream media” with a challenge on a different scale. His demagoguery broke every taboo in the book, casting Mexicans as “rapists”, eliding the difference between traditional Muslims and radical Islamic terrorists, and threatening to jail his Democratic opponent.

The TV networks, especially Rupert Murdoch’s Fox News, gave Trump far more airtime than other candidates. “It may not be good for America, but it’s damn good for CBS,” quipped Les Moonves, head of the media group.

Trump won by attacking the Republican party as much as his Democratic opponent. He spent hardly any of his own money, less than a fraction of the Clinton campaign’s war chest. His was the triumph of the brand.

Yet Clinton was a deeply flawed candidate at a moment when Americans wanted change — not a continuation of the Obama presidency by other means or a return to the Bush or Clinton dynasties. She had sky-high negative ratings, just like Trump. She was not liked, she was not trusted, and she was evasive. “Crooked Hillary”, Trump’s signature tweet, stuck for a good reason.

In this respect, it is misleading to suggest that the typical Trump supporter was an angry white man on opioids from West Virginia. Educated people voted for Trump. Women voted for Trump. As Salena Zito wrote in The Atlantic, Trump’s supporters took him seriously but not literally. By contrast, liberals, including the media, took Trump literally but not seriously. What this ignores is the damage the tycoon may have inflicted on public trust in American democracy. He coarsened civic discourse. He declared the political system corrupt. He even cast doubt on the legitimacy of the election not once but twice, declining to confirm he would accept the result if he lost.

Yet Clinton was a deeply flawed candidate at a moment when Americans wanted change — not a continuation of the Obama presidency by other means or a return to the Bush or Clinton dynasties. She had sky-high negative ratings, just like Trump. She was not liked, she was not trusted, and she was evasive. “Crooked Hillary”, Trump’s signature tweet, stuck for a good reason.

In this respect, it is misleading to suggest that the typical Trump supporter was an angry white man on opioids from West Virginia. Educated people voted for Trump. Women voted for Trump. As Salena Zito wrote in The Atlantic, Trump’s supporters took him seriously but not literally. By contrast, liberals, including the media, took Trump literally but not seriously. What this ignores is the damage the tycoon may have inflicted on public trust in American democracy. He coarsened civic discourse. He declared the political system corrupt. He even cast doubt on the legitimacy of the election not once but twice, declining to confirm he would accept the result if he lost.

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In the late spring of 2016, I travelled to Houston, Texas, to have lunch with James Baker, a former Treasury Secretary, US Secretary of State and White House Chief of Staff under Ronald Reagan and George Bush Sr. I asked him whether America could survive a Trump presidency. “We are a country of laws, limited by bureaucracy. Presidents are not unilateral rulers,” Baker replied.

This confidence in the power of democratic institutions will be tested in the coming months. Trump wants to undo Obama’s legacy and unleash the animal spirits of American capitalism. The initial reaction in the stock market bordered on euphoric. Foreign policy is the bigger risk. Trump wants to pursue an America First foreign policy, renegotiating trade pacts and obliging allies to pay more for their collective defence. His world is about money not values: America the selfish superpower, as Robert Kagan has described it.

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Trump’s victory gives succour to the demagogues-in-waiting in 2017, notably Marine Le Pen, who will almost certainly make it through to the run-off for the French presidency. A win for Le Pen on top of Brexit would surely spell the end of the European Union. Elections in the Netherlands may also signal a shift to the right. Even in Germany, Angela Merkel, running for a fourth term, faces a challenge from the populist right in the form of Alternative für Deutschland, which will make the task of forming a ruling coalition much harder.

Trump’s foreign policy, assuming action follows words, also leaves the door wide open for the rising power of China. His abandonment of the TPP — a geopolitical building block as well as a trade pact — has unsettled Japan and Pacific neighbours. His anti-Mexican rhetoric has undermined the peso and left Latin Americans wondering whether Beijing is a safer bet. Among the Baltic states and Scandinavia, many are fretting about NATO’s defence guarantee in the face of Russian aggrandisement under Putin.

For more than two centuries, the US has served as a beacon for democratic values such as pluralism, tolerance and the rule of law. For the most part, it has been on the right side of history. In 2016, Americans for the first time voted into the White House a man with no previous government or military experience. Like Brexit, it was a high-risk gamble with utterly unpredictable consequences.

Trump’s winner-takes-all approach and his lack of respect for minority rights violates a cornerstone of democracy and free society, as set out in the 10th of the Federalist Papers written by James Madison, one of the founding fathers. His position mirrors the more extreme Brexiter demands that the “will of the people” be respected at all costs. Anyone who raises objections — the media, the opposition or, indeed, the judiciary — risks being branded “enemies of the people”.

This is not merely populism run rampant. It is a denial of politics itself, which, as the late scholar Bernard Crick reminds us, is the only alternative to government by coercion and the tyranny of the majority.

We have been warned.

Lionel Barber is the FT’s editor

Trump,Putin and Asia


December 5, 2016

Trump,Putin  and Asia

by Artyom Lukin@ Far Eastern Federal University

The US vote in favour of President-elect Donald Trump was a shock for Russian leaders, though a delightful one. According to public opinion surveys, Russia was the only country in the world that preferred Trump over Hillary Clinton. Post-election, the Kremlin argued that Trump and Putin’s views on major issues were very close and expressed cautious optimism that Russia–US relations could improve. In turn, Trump has repeatedly said that he would like ‘to get along with Russia’.

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Putin and Trump seem to have chemistry absent in the Russian leader’s relations with both current US President Barack Obama and with Hillary Clinton. Trump is a pragmatic deal-maker, not an ideologue. He is not going to call Russia out on democracy or human rights. If Clinton had won, confrontation with Russia would have continued, and may have even escalated considering that Clinton’s foreign policy entourage included many figures with strong anti-Russia and anti-Putin views. Trump does not have any preconceived notions about Russia. He is therefore more likely to succeed in making a fresh start with Moscow — or at least in avoiding dangerous clashes in places like Ukraine and Syria.

But most importantly, the  incoming Trump administration has a fairly good chance of getting along with Russia because of the president-elect’s foreign policy philosophy.

Trump is keen to scale back the United States’ international commitments in order to concentrate resources on domestic priorities. Putting the United States’ own house in order is much more important to him — and, it seems, to his supporters — than performing the role of global policeman.

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Trump’s views appear to be close to offshore balancing, a concept promoted by American realist thinkers such as Christopher Layne and Steven Walt. The offshore balancing grand strategy calls for eschewing costly onshore commitments and getting other states to do more for their own security.

Offshore balancing emphasises that the current US policy of maintaining global primacy is unsustainable because it can lead to imperial overstretch. Instead, it envisions a multipolar system in which the United States will still be the strongest player, although not a preponderant and overbearing one. Offshore balancing also stresses that the United States’ comparative strategic advantages rest in naval and air power. This is very much in line with Trump’s stated desire to build up the US naval forces.

If Trump follows at least some precepts of offshore balancing, this will relieve much of the current tensions in US–Russia relations. After all, a multi-polar world is exactly what Russia wants. Moscow may even agree to grant Washington the status of ‘first among equals’, provided Russia is given due respect as a great power. If Trump shifts military investments from the continental theatres of Europe and the Middle East toward the naval theatre of East Asia, this will only please Moscow. Historically, Russia has seen its main security concerns as lying to the west and south of its borders. The Asia Pacific is still of secondary importance.

If the Trump administration avoids lecturing Moscow on democracy (which is very likely) and strikes a grand bargain with the Kremlin on Ukraine and Syria (which is less likely but still possible), that would usher in a period of rapprochement in US–Russia relations.

But the most interesting question in all of this is: what impact will the Russian–US détente have on Russia’s ‘strategic partnership’ with China? Since 2012, ties between Moscow and Beijing have been expanding and deepening, especially in the political–military domain. Russo–Chinese alignment has mostly been driven by shared opposition to the United States, which they accuse of hegemonic pretensions and suspect of seeking to subvert their political regimes.

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Moscow’s estrangement from the West in the wake of the Ukraine crisis has made it increasingly dependent on Beijing — and deferent to Chinese interests in East Asia. But if Moscow normalises relations with Washington, it will be less interested in pursuing a far-reaching entente with China. This will remove the risk of the Asia-Pacific being divided into two camps: the Beijing–Moscow axis versus Washington and its allies. The Sino–Russian partnership will continue, but it will shed much of its current anti-US overtones, with the emphasis shifting to economics and trade. Moscow will feel less obligated to support China on contentious issues in East Asia, such as the South China Sea.

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Russia will also act as a more independent and proactive player on the Korean peninsula. It is an open secret that Moscow’s harsh protestations against the THAAD missile defence system in South Korea were caused not by immediate concerns about its impact on Russian security, but rather at the behest of Beijing. On the North Korea issue, Russia is interested in the resumption of the Six Party Talks, which may be possible if Trump decides to reopen a dialogue with Pyongyang. With relations between Beijing and Pyongyang marked by growing distrust, Russia is now the only neighbour with whom North Korea remains on more or less friendly terms, which could enable Moscow to play a mediating role.

The Trump victory will also affect Russia’s relations with Japan. The stark fact that US alliances can no longer be considered ‘ironclad’ has now been laid bare. Even though Japanese Prime Minister Shinzo Abe was the first foreign leader to be granted an audience with the president-elect, Japan is unlikely to regain full confidence in the alliance. This makes it imperative for Tokyo to look for more partners in order to hedge against a rising China. Russia is one obvious choice. After the Trump win, we may expect Prime Minister Abe to re-double his efforts to court Putin.

Artyom Lukin is Associate Professor at the School of Regional and International Studies, Far Eastern Federal University, Vladivostok.

http://www.eastasiaforum.org/2016/12/02/53330/

Congratulations to the People of Thailand


December 3, 2016

Congratulations to the People of Thailand

by AFP

Crown Prince Vajiralongkorn becomes Rama X of Thailand’s Chakri Dynasty, but will not formally be crowned until after his father’s cremation, which is expected next year.

King-Rama

Crown Prince Maha Vajiralongkorn became the King of Thailand late Thursday, opening a new chapter for the powerful monarchy in a country still mourning the death of his father.

The 64-year-old Prince inherits one of the world’s richest monarchies as well as a politically febrile nation, 50 days after King Bhumibol Adulyadej’s death.

After weeks of complex palace protocols the Prince was invited by the head of the National Legislative Assembly (NLA) to ascend the throne in an event broadcast on all Thai television channels.

“I agree to accept the wishes of the late King… for the benefit of the entire Thai people,” said Vajiralongkorn, wearing an official white tunic decorated with medals and a pink sash.

The sombre, ritual-heavy ceremony at his Bangkok palace was attended by the Chief of the NLA, junta leader Prayut Chan-O-Cha, and the powerful 96-year-old head of the privy council, Prem Tinsulanonda.

Red-jacketed courtiers looked on as a palace staff member, shuffling on his knees, presented the new King with a microphone through which he delivered his few words of acceptance.

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His Majesty King Vajiralongkorn then prostrated himself, hands pressed together in respect, to a small shrine topped by a picture of his father and mother —Her Majesty Queen Sirikit Kitiyakara.

He becomes Rama X of Thailand’s Chakri dynasty, but will not formally be crowned until after his father’s cremation, which is expected next year.

Bhumibol’s reign, which ended on October 13, spanned a tumultuous period of Thai history pockmarked by a communist insurgency, coups and street protests.

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It also saw breakneck development which has resulted in a huge wealth disparity between a Bangkok-centric elite and the rural poor.To many Thais, Bhumibol was the only consistent force in a politically combustible country, his image burnished by ritual and shielded by a harsh royal defamation law.

The United States offered its congratulations to the new King, saying it looked forward to strengthening ties with Thailand. “We offer our best wishes to his majesty and all of the Thai people,” the State Department said.

“His father, King Bhumibol, ruled the Kingdom of Thailand with vision and compassion for 70 years and was a great friend of the United States. The United States and Thailand enjoy a longstanding, strong, and multifaceted bilateral relationship, and we look forward to deepening that relationship and strengthening the bonds between our two countries and peoples going forward.”

Into the limelight

Monks chanted blessings at Buddhist temples to mark the new monarch’s ascension — an era-defining moment for most Thais who for seven decades knew only Bhumibol as their King.

His Majesty Vajiralongkorn does not yet enjoy the same level of popularity.He spends much of his time outside of the public eye, particularly in southern Germany where he owns property.

He has had three high-profile divorces, while a recent police corruption scandal linked to the family of his previous wife allowed the public a rare glimpse of palace affairs.

Thursday’s ascension ends a period of uncertainty since Bhumibol’s death prompted by the Prince’s request to delay his official proclamation so he could mourn with the Thai people.

Thailand’s constitutional monarchy has limited formal powers but it draws the loyalty of much of the kingdom’s business elite as well as a military that dominates politics through its regular coups.

Analysts say  His Majesty King Vajiralongkorn, untested until now, will have to manage competing military cliques.

In a brief televised address after the ceremony, Prime Minister Prayut Chan-O-Cha, who as army chief led the 2014 coup, praised the new King “as the head of the Thai state and heart of the Thai people.”

The Thai monarchy is protected from criticism by one of the world’s strictest lese majeste laws, carrying up to 15 years in jail for every charge of defaming the King, Queen, heir or regent.

That law makes open discussion about the Royal Family’s role all but impossible inside the Kingdom and means all media based inside the country routinely self-censor. Convictions for so-called “112” offences — named after its criminal code — have skyrocketed since the Generals seized power in 2014.

Experts say most have targeted the junta’s political opponents, many of whom support the toppled civilian government of Yingluck Shinawatra.

The emergence of Yingluck’s brother Thaksin in 2001, a vote-winning billionaire seen by many of the rural poor as their champion, prompted the recent round of political conflict. The army and royalist establishment have toppled two governments led by the siblings, accusing them of nepotism and corruption.

 

The Trump Effect and the UMNO-Red Shirt Buffoonery


November 27, 2016

The Trump Effect and the UMNO-Red Shirt Buffoonery on the Malaysian Economy

by Koon Yew Yin

http://www.freemalaysiatoday.com

 

I can see clearly that there are various push and pull forces at work in our economy. Some of these forces are linked to political ones which economists attached to banks or universities do not want to talk about publicly. But they are happy to do so privately or in coffee shops with their good friends.

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Other forces are more obvious but it is still useful to emphasise them in case they are easily forgotten.

Let me flag some of these which will be of special concern to investors in the market.Firstly, there is of course the “Trump effect”.

Readers will recall that I had predicted – contrary to many analysts – that the US stock market would head higher post-Trump. Well, for now, my prediction has proven to be correct.

One of the world’s foremost business newspapers, The Financial Times, in a lead article on November 26 noted that when Wall Street traders departed for Thanksgiving, they could celebrate a rare achievement. On Monday and Tuesday, the four most widely cited indices of US stocks — the S&P 500, the Dow Jones Industrial Average, the Nasdaq Composite and the Russell 2000 —hit all-time highs simultaneously. The last time a “grand slam” took place was on New Year’s Eve 1999, at the height of the tech bubble.

The article noted the breakthrough for stocks in the US which had moved sideways for two years since the Federal Reserve stopped its quantitative easing programme, seemed to confirm a regime change. Prompted by Donald Trump’s victory in the presidential election, the narrative has changed to preparing for an era of tax cuts, deregulation and fiscal stimulus, after eight years of markets being guided by the Fed’s historically low interest rates.

I also predicted in my article “Trump is better for business than Hillary, that the Malaysian stock market and other Asian markets will also strengthen as a result of the US economic recovery.”

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The UMNO Redshirt Buffoons

Specifically I had written: “History has shown that when the Dow goes up, almost all the stock markets in the world, including KLCI, go up.”

 Well, the second part of my prediction has still to happen.On November 10 when my article was published, the KLCI stood at 1652.74. At the close of November 25, it stood at 1627.26 – a drop of 25 points.

Of course it is much too early to say what will happen next but my prediction that our market will move in tandem with the US market – that is upwards during the next 12-18 months still stands.

There are two big dark clouds hanging over the market. One is the big black hole left by 1Malaysia Development Berhad (1MDB) which most analysts are aware of but are too afraid to talk or write about openly for fear of being branded as anti-national or taken under Sosma and put into solitary confinement.

I will not go into the size of the 1MDB financial hole but will leave it to our accounting experts to do the mathematics. My main concern is not so much the actual financial loss incurred by the government.

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CIC of the Red Shirt Buffoons

Although this will go down in history as one of the biggest scandals carried out on a nation’s financial guardians and gatekeepers, frankly the actual financial loss is really not that big and it is one which the nation’s treasury can well afford.

What we cannot afford is the loss of confidence among foreign and local investors which cannot be easily quantified. Should this lack of confidence continue, then my predicted Malaysian market upturn will be undermined.

There is a second dark cloud – and this is the Red Shirts phenomenon. We have now seen the Red Shirts political ‘mat rempits’ come to centre stage in our political life. I am not only referring to Jamal Yunos but also his supporters and leaders who are now engaging in the use of force, threats of violence and other provocative actions in Parliament, Komtar and elsewhere and aimed at whoever they see as opposed to their vision of party, racial and religious dominance.

Everyone who has access to a smartphone will have seen the behaviour of these street and parliamentary hooligans and how they are destroying the peace and harmony of the country. Well, perhaps not everyone. It seems like the country’s leaders including the Prime Minister, the entire Barisan Nasional cabinet, the Inspector-General of Police, the Attorney-General and others responsible for law and order in this country have not seen these videos.

Or if they have viewed them, they do not care.

Let me be very blunt. The business community and investors in the country – foreign and local – do not read Utusan Malaysia or any of the Malay papers. They do not listen to Radio Malaysia or view TV3.

They care about how their money and the market is affected by these thugs and hooligans. They can make up their own mind on which way our national politics is going.

And if the Red Shirts phenomenon gets worse, we can expect some of them to take out their businesses and money.

Koon Yew Yin is a retired chartered civil engineer and one of the founders of IJM Corporation Bhd and Gamuda Bhd.

 

APEC beyond economic cooperation


November 17, 2016

APEC beyond economic cooperation

by Ippei Yamazawa, Hitotsubashi University and Toshiya Takahashi, Shoin University

Brexit and refugee problems in the European Union have caused uncertainty for economic integration, but APEC’s renewed commitment to it will provide some impetus to the global economy. While APEC is regarded primarily as a diplomatic opportunity for regional leaders, APEC’s achievements, based on wide-ranging government–business collaboration, provide it with the possibility to expand its role and help nurture regional stability.

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APEC began in 1989 as a series of meetings among foreign and economic ministers in Asia and the Pacific. Invigorated by the European Single Market in 1992 and the conclusion of the GATT Uruguay round of negotiations in 1993, the United States, as APEC’s chair in 1993, created the leaders’ meeting to discuss the creation of a free trade area across Asia and the Pacific. The Bogor Declaration in 1994 set out a roadmap for trade liberalisation by 2020.

APEC’s economic integration has not made linear progress despite early high expectations. The 1995 Osaka Action Agenda, which combined voluntary trade liberalisation with facilitation and technical cooperation, provided concrete measures for achieving the Bogor Goals, but the Manila Action Plan a year later resulted in only small-scale trade liberalisation. Attempts at early voluntary sector liberalisation also failed in 1998.

In the face of the Asian financial crisis, expectations of APEC’s economic integration decreased substantially. By the 2000s the WTO’s Doha Round negotiation began, while free trade agreements proliferated across Asia.

Since then APEC has adopted a modest strategy centred on trade facilitation and technical cooperation, and economists and the media have lost their interest in its message of economic integration. Some of the member economies that were unsatisfied with voluntary liberalisation formed the P4 group, which later expanded to become the Trans-Pacific Partnership (TPP).

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But legally binding trade liberalisation did not make much progress in the 2000s. The Doha Round negotiation remains deadlocked even after its 15-year effort. The TPP was finally concluded in 2015 but its ratification has been delayed and is now in question. In the European Union, economic integration is highly developed, but opposition to its centralised decision-making and flows of labour from later-developed member countries shadow its future.

In contrast, APEC’s pragmatic and flexible approach to trade liberalisation has succeeded in areas like customs procedures, business mobility, and standards and conformance. The 2001 Shanghai APEC summit declared an intention to reduce trade transaction costs by 5 per cent in five years. This was achieved through various task forces composed of governmental officials and the business sector. The Busan APEC summit in 2005 announced another 5 per cent reduction that also succeeded.

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They fought over Trade

APEC has provided a program for economic and technical cooperation over small and medium industry development, structural adjustment and food safety that has not been achieved through other economic institutions. And it has contributed to Asia’s globalisation, starting in the 1980s and becoming the East Asian economic miracle by the 1990s. The rapid economic rise of countries like China and Vietnam can also be attributed in part to their involvement in APEC.

But APEC’s role in sustaining regional stability should be re-evaluated. Prosperity is a condition for peace. So is an increase in economic transactions. APEC has served regional peace and stability through prosperity and economic connectedness, though it does not deal with security issues directly.

APEC’s open membership worked for mitigating ideological and political dividing lines in the Asia Pacific after the end of the Cold War. Its early acceptance of ex-communist countries such as China in 1990 and Russia and Vietnam in 1998 promoted the liberalisation of their markets and opened the door to their acceptance in the WTO. Both China and Taiwan’s participation showed that APEC’s identity was beyond political confrontation.

APEC’s wide-ranging framework for talks and its flexibility in liberalising markets helps create political background for further regional cooperation. Voluntary liberalisation allows members to compromise with domestic opposition. The APEC experience shows that different positions on economic issues can be mitigated through continuing talks rather than renouncing them, and this learning can be applied to non-economic issues.

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The South China Sea

Asia and the Pacific today face military build-up and unresolved conflicts in the Korean Peninsula, the South China Sea and the East China Sea. The APEC approach to reconciling differences provides the basis for resolving security and political confrontations in the region. While it is an economic institution, these political functions — which are the product of its twenty-eight-year history — should be remembered and reinvigorated with the aim of developing a regional consensus for ‘peace by talks’.

Ippei Yamazawa is Emeritus Professor of International Economics at Hitotsubashi University, Japan.

Toshiya Takahashi is Associate Professor at Shoin University.

APEC beyond economic cooperation

New World Order under stress


November 16, 2016

New World Order under stress

by Chheang Vannarith

http://www.khemertimes.com

In a result that stunned the whole world, Donald Trump has been elected as the 45th President of the United States, defeating the more favored Democrat nominee Hillary Clinton.

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Mr. Trump’s victory signified rising nationalist populism, not only in the US, but also in other parts of the world. It also challenges the liberal world order based on democratic values, economic openness and the rules-based international economic system.

From Brexit to Mr. Trump’s victory, there is one thing in common, and that is the increasing frustration against the old establishment driven by political elites. Many wish to see a different type of leadership and are hoping for change.

We are living in a highly unpredictable and uncertain world. We need to think the unthinkable and be prepared to adapt to unexpected changes. Those who can grasp the opportunities deriving from a crisis and uncertainty will remain competitive.

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The bipolar world established after World War II was replaced by a unipolar world in which the US played a hegemonic power. However,  US power has been declining since the world economic crisis in 2008. Over the past decade, the rise of others such as China, India and Russia has challenged the global role of the US from economic to security domains.

We are now entering either a multipolar world or zero-polar world. Under the multipolar world, there are multiple actors and stakeholders working together to shape and construct global governance and order.In a zero-polar world, there will be no country taking a global leadership role. The major powers will become more nationalist and inward looking. Selfish national interests and zero-sum games will dominate international politics.

If this happens the world will become fragmented and chaotic. Global uncertainties and risks are going to rise. No country will be willing and able to take a global leadership role to maintain world peace and order.

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The US is great nation largely thanks to democratic pluralism, multiculturalism as well as an open and liberal globalization which has provided tremendous opportunities for Americans. It has successfully integrated itself into and largely benefited from the rest of the world.

Now it is different. Mr. Trump seems to be opting for a more nationalistic, protectionist and inward-looking foreign policy. His populist political rhetoric will adversely affect the liberal order created by the US seven decades ago.

Mr. Trump lacks a robust foreign policy. He seems to mainly focus on populist domestic social and economic issues. Global issues such as climate change will not be addressed effectively without a strong US leadership role.

It is predicted that the US’ global role will further decline, which in turn will create a global power vacuum and a deep hole in global governance.

China, Japan, India and Russia are expected to fill the gap and play a more proactive role in maintaining global peace and order. However, these countries are still struggling with their own domestic issues.

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Obama in Laos

In the Asia-Pacific region, the US has been the hub of regional peace and order. Since 2010, the US has introduced and implemented its “rebalance” or “pivot” to Asia in order to strengthen its alliance system, promote economic integration and deepen people-to-people
ties.

President Barack Obama has had a strong interest in promoting the US’ role in the Asia-Pacific. He has committed to strengthening an ASEAN-led regional architecture.

The US-led Trans-Pacific Partnership is a crucial US external economic policy towards Asia. However, it has an extremely low chance of ratification under the future Trump administration.
Under Mr. Trump’s leadership, the US will be less engaged in Asia.

In such a scenario, China will gain more strategic advantages in leveraging its regional influence.US allies in Asia will be forced to invest more in the defense sector in their collective deterrence strategy. Japan, South Korea and Australia will speed up their defense modernization.

The new world order as well as the Asia-Pacific order will go through critical tests, uncertain power diffusion and transition as well as a severe security environment.

As we live in a world with high uncertainty and risk, leaders need to be equipped with the capacity to think the unthinkable, have the courage to change and create a safe space for institutional innovation and transformative leadership.

It is a wake-up call for world leaders to reconstruct the world economy so it is more inclusive and sustainable. Unless fair and just industrialization, and social justice, are respected, the prospect of global disintegration and fragmentation will continue to haunt the world