ASEAN: The Meanings Behind Words


June 6, 2017

ASEAN: The Meanings Behind Words

by Bunn Nagara@www.thestar.com.my

AUGUST 8 this year is the 50th anniversary of ASEAN.

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ASEAN season is already upon us, with member nations busily hosting international seminars, workshops and conferences about the regional organisation.

Some of these events were held in close succession in Kuala Lumpur recently. As a prime mover and founding member of ASEAN, how can Malaysia and Malaysians do any less?

Chief among these was ISIS Malaysia’s Asia-Pacific Roundtable (APR), the largest annual event of its kind in the world: a Track Two (non-official conference on official security matters) convention on current regional concerns.

Anything concerning ASEAN would involve concepts, terminology and inevitable layers of diplomatic nuances behind and between them. It is an established ASEAN sub-culture.

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Thus, the first APR session saw two former ASEAN Secretaries-General on the panel concluding by looking back on the term “constructive engagement.” One of them denied a suggestion that he had coined the term.

Participants seemed to have forgotten that “constructive engagement” was the positive spin President Ronald Reagan gave to continued US dealings with Apartheid South Africa, in the face of international criticism and calls for a boycott.

Later, when Western criticism was aimed at ASEAN members for dealing with the pariah nation of military-ruled Myanmar, ASEAN leaders replied by calling it constructive engagement too. Verbal jousting runs both ways.

However, this did not sit well with a younger and more idealistic generation of ASEAN leaders at the time. A cabal of younger ministers then, including the one on the recent panel, cast around for another term.

One called for ASEAN’s “constructive intervention” in Cambodia which seemed then to have a disintegrating coalition government. It was a bit much for ASEAN’s Old Guard, strictly abiding by the principle of non-intervention.

Another ASEAN leader called instead for “constructive interactions,” which would soften the interventionist element. However, it did not seem to go anywhere. Yet another ASEAN leader advocated “flexible engagement.” But then it seemed too wobbly to be effective.

Finally, ASEAN and its leaders settled on “enhanced interaction,” which contained all the right positive notes without any conceivable setbacks. And so the work of regional diplomatic wordplay was done.

However, the situation on the ground in Myanmar, Cambodia and elsewhere remained much the same. The problems abated only with time, and with these countries’ eventual accession to ASEAN membership.

More ASEAN terminology arose from attempts to bring ASEAN to the people of south-east Asia. ASEAN’s albatross had long been the closed intergovernmental nature of its being, operating essentially for elites to sustain the status quo.

In time, a sense of ASEAN’s mortality prompted efforts to make ASEAN “people-oriented” or “people-centred.” Unfortunately, undue confusion reigned.

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A view persists that “people-oriented” came first, which then developed progressively with Malaysia’s urging into the more substantive “people-centred.” Another view presumes the opposite.

These terms originated in the recommendations of two separate panels appointed by ASEAN to provide inputs for the prospective ASEAN Charter: The Eminent Persons Group (EPG) and the High-Level Task Force (HLTF).

Some academic references add to the confusion by tracing these terms only to 2008. Others cite how several hopeful civil society groups responded positively by offering their views, but found the EPG indifferent and only the HLTF was encouraging.

A closer examination would reveal the opposite. The HLTF seemed officious while the EPG, chaired by former Malaysian Deputy Prime Minister Tun Musa Hitam, was more positive.

The result was the 2006 EPG document “Report of the Eminent Persons Group on the ASEAN Charter.” This 49-page report contains one reference to “a people-oriented ASEAN” and three subsequent references to “a people-centred organisation.”

This may have served to credit Malaysia for spearheading a humanistic approach to a new improved ASEAN. But it was also enough to worry undemocratic ASEAN regimes, only too mindful that their leaders were occupying positions that were not the will of the people.

These leaders could just about tolerate “people-oriented,” which would still mean top-down changes they could control, but “people-centred” would be too much for them. Ordinary citizens could well get the idea that they could choose their government.

Upon closer inspection, however, a serious tussle within ASEAN between the two terms did not develop into a full-blown affair. Documents such as the 2015 “Kuala Lumpur Declaration on a People-oriented and People-centred ASEAN” contain both terms.

The terms that would unite all ASEAN leaders, whether budding democrats, residual autocrats or hybrids somewhere between, relate to ASEAN’s “centrality” in occupying the “driving seat.”

This involves ASEAN’s aspirations to exert an influence outside its immediate region. Such ASEAN-led institutions as the 18-member East Asia Summit and the 27-member ASEAN Regional Forum already exist for this purpose, even when sometimes seeming rudderless.

The problem may not be in the choice of metaphors, but in what the metaphors unwittingly imply, reveal or foretell.

Centrality (leadership) may not come with being in the driving seat, and driving the vehicle may not mean deciding on the destination. This is as true of a chauffeured VIP limousine as of a common taxi or a bus.

Passengers who pay decide where they wish to go, and passengers who pay more also decide on how to get there. Not least among ASEAN’s concerns is whether member nations have sufficient economic clout to decide on the region’s destiny.

South-East Asia as a region is a subset of the larger East Asia, where major global powers roam. How do AAEAN members measure up in a time of growing interest from China, Russia, India and Japan, besides the US?

Then came a term for this region not unique to ASEAN: “arms race.” Typically, it was from conference participants unfamiliar with the region’s security situation. Government officials everywhere dislike the term either because it calls undue attention to their arms trade, with or without shady deals, or it alarms and scares off investors for fear of regional instability.

But seriously, is there an arms race in this region? There are clearly increased defence budgets for several countries, but does that necessarily amount to an “arms race”?

The same question had been asked some 25 years before with even greater intensity. And the answer, from the late Australian security specialist Prof Des Ball, was a firm no.

I then published a paper in Singapore explaining why there was no arms race here. There is still none today, not even after half a century of ASEAN – perhaps partly because of Asean.

As some conference participants explained, increased defence budgets do not equate squarely to increased arms purchases. The bulk of defence expenditures typically pay for the salaries, allowances and benefits of personnel.

A “race” is a competitive relationship between two or more players. Even when arms purchases grow, the motivation could just be having more to spend, or some threat perception or contingency – whether justified or not.

Unless and until the sole or primary motivation is to outdo the other country or countries in arms acquisitions, there is no race to speak of. There is still no reason for such a race.

Even if all the 10 ASEAN countries can put their military strength together, and double it, that would still be no match for the major global powers in East Asia.

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

 

Trump’s radical departure from postwar foreign policy


June 5, 2017

Trump’s radical departure from postwar foreign policy

by Dr. Fareed Zakaria

https://www.washingtonpost.com/opinions/trump-could-spur-the-rise-of-a-new-not-so-liberal-world-order/2017/06/01/1e9aeff2-4707-11e7-98cd-af64b4fe2dfc_story.html?utm_term=.78926a85cfb1

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The Doctrine is…screw everybody if you can while we compete when we can

We now have a Trump Doctrine, and it is, at least in its conception and initial execution, the most radical departure from a bipartisan U.S. foreign policy since 1945. In an op-ed for the Wall Street Journal, National Economic Council Director Gary Cohn and national security adviser H.R. McMaster say that President Trump has “a clear-eyed outlook that the world is not a ‘global community’ but an arena where nations, nongovernmental actors and businesses engage and compete for advantage.” The senior officials add: “Rather than deny this elemental nature of international affairs, we embrace it.” That embrace has now led the United States to withdraw from the Paris accord on climate change, signed by 194 other parties.

The “elemental” aspect of international relations has existed for millennia. The history of the human race is one of competition and conflict. U.S. foreign policy has amply reflected this feature. The United States has the world’s largest military and intelligence apparatus, troops and bases in dozens of countries around the world, and ongoing military interventions on several continents. This is not the picture of a nation unaware of political and military competition.

But in 1945, the world did change. In the wake of two of the deadliest wars in human history, with tens of millions killed and much of Europe and Asia physically devastated, the United States tried to build a new international system. It created institutions, rules and norms that would encourage countries to solve their differences peaceably — through negotiations rather than war. It forged a system in which trade and commerce would expand the world economy so that a rising tide could lift all boats. It set up mechanisms to manage global problems that no one country could solve. And it emphasized basic human rights so that there were stronger moral and legal prohibitions against dehumanizing policies such as those that led to the Holocaust.

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It didn’t work perfectly. The Soviet Union and its allies rejected many of these ideas from the start. Many developing nations adopted only some parts of the system. But Western Europe, Canada and the United States did, in fact, become an amazing zone of peace and economic, political and military cooperation. Certainly there was competition among nations, but it was managed peacefully and always with the aim of greater growth, more freedom and improved human rights.

The “West” that emerged is, in historical terms, a miracle. Europe, which had torn itself apart for hundreds of years because of the “elemental nature” of international competition, was now competing only to create better jobs and more growth, not to annex countries and subjugate populations.

This zone of peace grew over the years, first encompassing Japan and South Korea, and later a few countries in Latin America. It was always in competition and conflict with the Soviet bloc, in traditional geopolitical ways. Then in 1991, the Soviet Union collapsed and large parts of the world gravitated toward this open international order.

At the heart of the system was the United States, which had tried to create such an enterprise after World War I but failed. President Franklin D. Roosevelt, learning from those mistakes, advanced a new set of ideas as World War II was drawing to a close. This time, it worked.

Since then, every president of either party has recognized that the United States has created something unique that is a break from centuries of “elemental” international conflict. In the past two-and-a-half decades, it has tried to help incorporate hundreds of millions of people, from Mexico to Ukraine, who want to be part of this liberal — meaning free — international order.

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From the start of his political career, Trump has seemed unaware of this history and ignorant of these accomplishments. He has consistently been dismissive of the United States’ closest political, economic and moral allies. He speaks admiringly of strongmen such as Russia’s Vladimir Putin, China’s Xi Jinping, Egypt’s Abdel Fatah al-Sissi and the Philippines’ Rodrigo Duterte but critically of almost every democratic leader of Europe.

The consequences of Trump’s stance and his actions are difficult to foresee. They might result in the slow erosion of the liberal international order. They might mean the rise of a new, not-so-liberal order, championed by China and India, both of them mercantilist and nationalist countries.

But they could also result, in the long run, in the strengthening of this order, perhaps by the reemergence of Europe. Trump has brought the continent’s countries together in a way that even Putin could not. German Chancellor Angela Merkel said that Europe must look out for itself and, as if to underscore that fact, the same week welcomed the prime minister of India and the premier of China. French President Emmanuel Macron upheld Western interests and values face to face with Putin, in just the way an American president would have done in the past.

Trump might not cause the end of the Western world, but he could end the United States’ role at its center.

Trump’s Simplistic Strategy on Jihadism


May 23, 2017

Trump’s Simplistic Strategy on Jihadism

by Robin Wright

http://www.newyorker.com

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Trying to appease Saudi Arabia and the Muslim World and isolate Iran

Six days after the 9/11 attacks, in 2001, President George W. Bush went to the Islamic Center in Washington to dampen fears of a clash of civilizations between the Islamic world and the West. “The face of terror is not the true face of Islam,” he said. “Islam is peace.” Three days later, at a joint session of Congress, Bush defined the challenge from Al Qaeda in political rather than religious or cultural terms. “This is the fight of all who believe in progress and pluralism, tolerance and freedom,” he told Congress. “This will not be an age of terror. This will be an age of liberty here and across the world.” A central theme of Bush’s Presidency was fostering democracy through nation-building.

President Barack Obama’s main speech to the Islamic world, in 2009, called for a “new beginning” between Muslim and Western nations, noting “civilization’s debt to Islam.” Declaring to Cairo University students that “we also know that military power alone is not going to solve the problems,” he, too, envisioned political and economic solutions to countering extremism.

“All people yearn for certain things: the ability to speak your mind and have a say in how you are governed; confidence in the rule of law and the equal administration of justice; government that is transparent and doesn’t steal from the people; the freedom to live as you choose,” Obama said. “Those are not just American ideas, they are human rights, and that is why we will support them everywhere.” He also outlined plans to spend billions in U.S. aid to build schools and hospitals, roads and businesses, and to help those displaced by conflicts in the Islamic world.

Donald Trump took a starkly different tack during the campaign. “I think Islam hates us,” Trump told Anderson Cooper, on CNN, fourteen months ago. He told both MSNBC and Fox News that he’d be willing to close mosques in the United States.  At the Presidential debate last October, in Las Vegas, he was particularly critical of Saudi Arabia. “These are people that push gays off buildings,” he said. “These are people that kill women and treat women horribly, and yet you take their money.” He continued the theme in his first days in office, with an executive order that banned travel from seven countries (later downgraded to six) with predominantly Muslim populations. It was ruled unlawful by U.S. courts, but the Trump Administration is still appealing the decision.

On Sunday(May 21), on his first trip abroad as President, Trump tried to hit the reset button in Saudi Arabia, the birthplace of Islam. He heralded Islam as “one of the world’s great faiths,” and his visit as the beginning of “a new chapter” between the United States and the Islamic world. In a palace of dazzling opulence, he spoke to dozens of leaders assembled by the Saudis from the Arab and Muslim world. In turn, the oil-rich kingdom, which is weathering its own political and military turmoil, treated him like royalty, with billboards across the Saudi capital covered with Trump’s face.

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Trump does not the know the difference between Saudi Arabia’s Wahhabish and Iran’s Shiaism

Trump’s main message was  that Muslims must do more—much more—to fight militants who have proliferated from North Africa to South Asia since 9/11. “The nations of the Middle East cannot wait for American power to crush this enemy for them,” he said. Reading slowly off a teleprompter, Trump urged, even demanded, “Drive them out! Drive them out of your places of worship! Drive them out of your communities! Drive them out of your holy land! And drive them out of this earth!”

Some of Trump’s language about Islam was right out of the Bush-Obama playbook. “This is not a battle between different faiths, different sects, or different civilizations,” he said. “This is a battle between barbaric criminals who seek to obliterate human life and decent people, all in the name of religion.” He declared it “a battle between good and evil.”

Trump notably did not use one of his favorite terms—“radical Islamic terrorism.” His national-security adviser, H. R. McMaster, has tried to get the President to avoid using the term, at least in public. During the campaign, Trump railed against Obama for not using it—and even charged that “anyone who cannot name our enemy is not fit to lead this country.” In Riyadh, Trump’s original speech called for him, instead, to talk about “Islamist extremism.” He veered off script, however, and talked about “confronting the crisis of Islamic extremism and the Islamists and Islamic terror of all kinds.” Many Muslims are sensitive to the implication that Islam and extremism are synonymous.

Trump’s strategy differed most strikingly from Bush’s and Obama’s in its largely military approach to extremism. One of the top objectives of his maiden foreign tour is to create a coalition of Arab and Muslim countries to tackle extremism, confront Iran, and foster peace between Israel and the Palestinians. The coalition has been informally dubbed an “Arab NATO“.

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First Lady Melania Trump watches as President Donald Trump poses for photographs with leaders at Arab Islamic American Summit, at the King Abdulaziz Conference Center, Sunday, May 21, 2017, in Riyadh, Saudi Arabia. (AP Photo/Evan Vucci)

The President seems to have largely abandoned notions of promoting political openings or addressing economic grievances that have fuelled so much of the dissent and militancy, especially among Arab youth. Even oil-rich Saudi Arabia has high youth unemployment, estimated to exceed thirty per cent. The kingdom has produced thousands of jihadis who have joined both ISIS and Al Qaeda.

“We are not here to lecture,” Trump told the Muslim leaders, who were seated on throne-like leather chairs under enormous crystal chandeliers. “We are not here to tell other people how to live, what to do, who to be, or how to worship. Instead, we are here to offer partnership—based on shared interests and values—to pursue a better future for us all.”

Trump framed his counterterrorism policy in Let’s-Make-a-Deal terms: Washington will sell weaponry to the Arabs, which will in turn create defense-industry jobs in the United States. In his speech, the President digressed from the main theme to claim that his Administration has created almost a million new jobs—adding that the kingdom’s pledge to invest billions more in the United States would create thousands more new jobs.

As a candidate, Trump repeatedly complained that the United States got very little from its relationship with the kingdom. “Tell Saudi Arabia and others that we want (demand!) free oil for the next ten years or we will not protect their private Boeing 747s. Pay up!” Trump tweeted, in 2014.

That year, he also tweeted, “I just want to know how much is Saudi Arabia and others who we are helping willing to pay for our saving from total extinction. Pay up now!” In 2015, he tweeted that Saudi Arabia “must pay dearly! NO FREEBIES.”

In Riyadh, however, he bragged about the low prices his Administration was offering the Saudis. “We will be sure to help our Saudi friends to get a good deal from our great American defense companies.” His son-in-law, Jared Kushner, reportedly intervened personally with Lockheed to negotiate a better deal for the Saudis.

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Nepotism in 1600 Penn. Avenue, Washington DC

In one of his more astonishing comments, the President expressed optimism about the future of the Middle East, despite wars in Libya, Yemen, Iraq, and Syria that have killed hundreds of thousands; the greatest humanitarian and refugee crises since the Second World War; and the return of authoritarian rule—disasters which have dashed the hopes sparked by the Arab Spring.

“The potential of this region has never been greater,” Trump told the Muslim leaders assembled in Riyadh. Maybe it was the brilliant glare of the chandeliers that blinded his vision.

Robin Wright is a contributing writer for newyorker.com, and has written for the magazine since 1988. She is the author of “Rock the Casbah: Rage and Rebellion Across the Islamic World.”

The Real Crisis in North Korea–A Perspective


May 21, 2017

The Real Crisis in North Korea–A Perspective

by Gianluca Spezza

PhD candidate at the International Institute of Korean Studies, University of Central Lancashire, and founding contributor at NK News

https://www.irinnews.org/opinion/2017/05/18/real-crisis-north-korea-not-one-you%E2%80%99ve-been-hearing-about

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The Democratic People’s Republic of Korea has been in the news a lot lately, with the DPRK testing new missiles and the United States moving a naval strike group off the Korean peninsula. The commentary almost always revolves around strategic issues, especially North Korea’s nuclear programme.

In focusing so narrowly on the country’s military and its leader, Kim Jong-un, however, the debate largely overlooks the North Korean people.

This has two major implications. First, it perpetuates an image of the country that is not in line with reality. In fact, the younger Kim does not enjoy the kind of monolithic influence held by his grandfather, Kim Il-sung, or his father, Kim Jong-il. Power structures in North Korea began to disintegrate under Kim Jong-il and are now widely ramified. Security apparatuses are no longer under one single point of command; neither are military corps. This is something that the administration of US President Donald Trump seems to be oblivious to, but it should take into account when formulating policy.

Second, and most important, the world’s myopic attention to Kim Jong-un precludes recognition of the nearly 26 million people that live in the country. They represent the true issue at stake, once the current regime – which is living on borrowed time – is gone.

What do we know about DPRK and its people?

Oddly enough, since the early 1990s the international community has accumulated a larger knowledge base on North Korean society than intelligence agencies have ever had on its military. Yet, most media insist on reporting obsessively on the latter. This is shortsighted.

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The Hermit Nation–Kim and his Military Men

The questions we ought to ask instead, if we are to understand where the country is headed, are: What is the current state of North Korea? What do we know about its society and economy? What kind of country will emerge once the regime is gone?

These questions matter, because with each crisis, the possibility of regime change or collapse becomes more real. With that, the risk of a humanitarian catastrophe increases, and neither South Korea nor China are well prepared to respond.

North Korea represents an anomaly, for both aid organisations and experts of international politics. But things are changing.

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For a long time, the country may have deserved its moniker of the hermit kingdom. But today, after 22 years of humanitarian assistance and development, the DPRK is an aid-dependent country, stuck in a paradoxical situation. Its economy crashed in the mid-1990s and never recovered, while its social indicators went from good, to terrible, to decent over the last two decades.

The North Korean development indicators for children’s welfare, as well as immunisation and education, are well above countries with a much higher GDP, but the economy does not reflect this relatively healthy development status. The DPRK produces very little of value, and its people find survival in the black market rather than state-provided jobs.

North Korea, in other words, has the economy of an underdeveloped country, with levels of social development of a middle-to-high income country. It is time to take a look at the country beyond military parades.

How did North Korea get so poor?

Upon the demise of its first leader, Kim Il-sung, in 1994, the DPRK faced a combination of domestic and international factors that negatively affected all sectors of society and state institutions. External circumstances included the loss between 1991 and 1993 of its main allies and economic partners, the Soviet Union and China. In addition, in 1993, China started to demand payments at regular market rates for oil and fuel, which had until then been provided at very low prices and constituted the main source of energy for the DPRK.

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In this rapidly changing international scenario, the DPRK, which had become heavily dependent on subsided trade with its former communist partners during the Cold War, found itself with no economic safety net. At the same time, the country was hit by a series of droughts and floods, along with a sudden shortage of energy sources. This devastated an agriculture system almost entirely dependent on chemical fertilisers and mechanised irrigation.

With diminishing amounts of food, the effectiveness of the Public Distribution System that regulated the allocation of basic goods decreased gradually, forcing the population to seek alternative means of subsistence. Housewives, factory workers, doctors, nurses, teachers and students alike had to fend for themselves in order to secure food and heating material during winter.

The crisis caught many North Koreans by surprise, and it was aggravated by economic mismanagement. It should be noted that the Public Distribution System did not collapse altogether, but the degree of functioning of the system varied between different provincesBetween 1994 and 1998, GDP declined by almost half. This, in combination with the progressive dysfunction of the PDS, severely reduced access to food, medications, and primary goods, leading to a famine and to the general deterioration of the population’s ability to withstand further calamities.

The economy: China dominates

Today, it is safe to say that, in effect, China runs North Korea’s economy. Chinese currency is widely used in the unofficial markets that have mushroomed around the country since the crisis of the mid-1990s.

China gets the lion’s share of trade with North Korea and provides the bulk of its food and energy. Luxury items, if and when they manage to come into the DPRK, do so from across the border region of Yanbian or Chinese ports.

To be sure, North Korea does have a few economic niches, but these too are largely influenced by China’s presence. The DPRK’s significant mineral resources are almost exclusively exploited by Chinese companies, and Chinese visitors make for the majority of customers in North Korea’s trade fairs and Special Economic Zones.

In other words, simply by looking at the economy of North Korea, one could surmise that as long as China is there to support it, the country could muddle along with no substantial changes for a very long time. A look at North Korean social indicators, however, offers a different perspective.

Demography is destiny

The key indicators of a country’s state of health and future prospects are its social statistics, particularly those on demographics. According to combined data from the Central Bureau of Statistics in Pyongyang, the World Bank Institute, and the UN gathered in 2008, and data by UNICEF gathered in 2014, the DPRK’s average population growth rate for 1990-2004 was 0.9 percent, or equivalent to that of upper middle-income countries. The same data provide trends for 2004-2020 that place growth at 0.4 percent, or equivalent to that of high-income countries.

At the same time, North Korea’s birth rate dropped to 16 per 1,000 people in the late 2000s – the level of middle-income countries – whilst the fertility rate is slowly approaching the levels of most Western countries. It sits between parity – two children, which is the minimum requirement for a population to continue replacing itself over time – and one child or none per couple, which is deemed not enough to avoid extinction in the long run. The latter is where Germany, Italy, and most EU countries are at present.

What does this mean for the future of North Korea?

If we read population increase as an indication of economic and social stability, the DPRK looks further removed from the so-called “failed states” it is often compared to – like Somalia, Yemen, or South Sudan – which are all on the verge of famine (or, in the case of parts of South Sudan, already experiencing it). North Korea is in fact undergoing the same “cradle crisis” that characterises advanced countries, from Japan to Germany.

However, the same statistics, viewed from the standpoint of overall death rates and infant mortality rates suggest the DPRK is right there with low-income countries. Its average death rate is as high as 11 per 1,000 people, and rates of infant mortality that have not yet fully recovered from the 1990s crisis.

This has a number of implications: North Korea doesn’t have the problems that South Korea has at the moment, with an increasingly aging population placing stress on the social welfare system. As a matter of fact, the DPRK welfare system has been simply downsized and slowed to a minimum since the 1990s. Today, North Koreans live on average six to eight years less than South Koreans and about nine years less than the Japanese.

In Malthusian terms, this means that the government has less to worry about in the short-term. Considering the chronic economic stagnation, most North Koreans alive today could well get old before they even have a chance to elevate their economic status.

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At the same time, with a slow but steady recovery from the famine and the crisis of the mid-1990s, the DPRK seems to have reached a level of relative social comfort at which most middle-to-high income countries stop having enough children for the maintenance of native population. At this stage, they will slowly begin to fade out unless they adopt open immigration policies – an option that is unpopular in South Korea and Japan, and next to impossible in the DPRK.

If the trend continues – and the figures from 2008 and 2014 suggest it will – North Korea may one day run out of people to maintain its workforce. That would be one more reason for the regime to push towards reunification. While its rival state south of the demilitarised zone is also growing older, it is still twice as populous, and immensely richer by comparison. Still, if nothing changes at the economic level, any effort of reunification will require the equivalent of a mini-Marshall Plan for the entire peninsula.

This is the real North Korean conundrum: The country has faced challenges it is hard to imagine any other regime surviving: famine, floods, droughts, economic collapse, energy shortages, sanctions, and leadership changes. This has left a North Korea that is a mass of contradictions.

Few consider that the country making headlines for its nuclear technology has a basket case economy, but also one of the highest literacy rates in the world. There is no other country with such low economic indicators that can at the same time build and at test nuclear devices and achieve universal literacy, while still being aid-dependent.

Is aid the answer?

To explain the North Korean anomaly, we have to look at the nature of aid itself with three key questions: What is aid? Why is aid provided? Is it accomplishing what it is supposed to?

From an economic perspective, we can think of aid as a measure of socioeconomic welfare, like the one used for families and individuals, but on a much bigger scale. Welfare policies are supposed to work as a safety net in times of emergency – fostering growth and preventing recession when families and individuals go through hardships. At any rate, welfare is conceived to be a temporary measure and aid doesn’t come for free.

Aid represents an extension of foreign policy from donor states to recipient nations. Donors and international organisations expect recipients to correct their course and adopt policies that move them towards a free market economy, and adherence to international treaties on human rights, environmental protection and sustainability.

North Korea has become chronically dependent on aid since the mid 1990s. Yet, it has remained impervious to outside pressure for change. When it shows any degree of compliance with international norms, it does so only in fields where its interests converge with those of international organisations. Education and environmental protection are two examples.

On the other hand, North Korea has no relationship with global economic bodies like the World Trade Organization and the International Monetary Fund. It makes no concessions on the issues of nuclear proliferation and allows no inspections from human rights organisations. But its population does require foreign assistance in order to survive.

The socioeconomic emergency that swept the country between 1995 and 1999 was rooted in a combination of political, climatic, structural, and geopolitical factors. By 2005, the government declared the food emergency to be over and asked a number of NGOs – but not UN agencies – to leave. Nevertheless, the country has continued to rely on foreign assistance, just as the UN agencies at work in the DPRK kept monitoring a situation that requires periodical emergency assistance, year in-year out, in combination with development programmes.

If North Korea were a family, or an individual who has been in need of aid for 22 consecutive years, would this be considered normal? It’s unlikely. Yet, aid needs to reach the people of the DPRK on a yearly basis or a new humanitarian emergency may break out, according to the UN.

There is a consensus among humanitarians that as the North Korean people have no say on their government policies, they should not be the ones suffering the consequences. Therefore, the international community has responded with aid. However, a look at what North Korea has become since 1995 reveals that aid has not made North Korea strong enough to stand on its own.

This is the most pressing problem with North Korea, aside from its periodically aggressive military posture. The country needs aid because what once was a functioning infrastructure for a command economy, in which the state plays the primary role, has ceased to exist. More than this, it needs important economic and political reforms. Currently however, North Korean politics withhold economic restructuring and growth. At the same time, aid agencies and donors tend to look at technical issues and do not tackle the lack of political decisions that could steer the country away from perpetually looming humanitarian disasters.

 A new approach?

Aid has been invaluable in pulling the country out of the humanitarian catastrophe of the mid-1990s, and it has helped North Korea maintain decent levels in development indicators such as health and education since then on. But aid cannot help the country provide a decent standard of living on its own for its people. That can only be done through political reform.

The real political story about North Korea today is that the “Stalinist fortress” – the impenetrable polity devoted to hardline communism – is no longer Stalinist, nor a fortress. North Korea scholars and South Korean government experts concur in saying that Kim Jong-un holds a fraction of the power that his father and grandfather wielded.

The elites that have emerged from two decades of black market activity are aware that there are only a few obstacles to a reunification that could see them prosper, while lifting millions of North Koreans out of poverty. These factors are their “political guilt” (for they contributed to keeping the country in a state of repression over decades), and the risk of losing whatever wealth they have accumulated.

If the United States and South Korea could agree to leave some of these families in power, providing them amnesty, they could ask in return for a soft removal of the Kim family, and open the door for a gradual economic rebuilding of the country. Financial incentive, or the lack thereof, in North Korea is the key issue. The average annual income in North Korea is a little below $1,000. In the South, it is over $30,000. No amount of foreign aid can ever bridge this difference.

Japanese companies need to open up or shut down


May 21, 2017

Japanese companies need to open up or shut down

by  Alicia Ogawa, Columbia University

http://www.eastasiaforum.org/2017/05/16/japanese-companies-need-to-open-up-or-shut-down/

 

Image result for Open Up Japanese companies or perish

Corporate governance has long been a hot topic for investors worldwide, but it is still a new concept in Japan. The increasing number of Japanese corporate scandals points to the need for a new approach to management. Many once-prominent companies seem to be unable to adapt to the pace of global change. The domestic market no longer offers much growth potential, so Japanese firms need to actively engage with the world or perish.

There is strong global interest in Japanese corporate governance for two key reasons. First, from the point of view of investors, the fact that rates have been low or negative in virtually all major developed economies has encouraged a sharper focus on equity markets for real returns, and Japanese companies fall woefully behind their global competitors in terms of profitability.

Second, as the pace of global competition accelerates, management is under constant pressure to react quickly to changing opportunities, such as the development of new technologies or the consolidation of capacity in maturing industries. Dialogue with outsiders, from shareholders to independent directors, is a prerequisite to navigating this terrain safely.

Japanese companies are at a distinct disadvantage in this new world because of key features of their organisational structures that served them very well in the past, such as lifetime employment. Decision-making is slow and dominated by consensus-seeking groups of senior men who have never worked outside their own firms, who rarely have specialised expertise and whose loyalties are first and foremost to each other.

The first of the major traumas at Toshiba, which came to light in 2015, involved the 152 billion yen (US$1.33 billion) deliberate overstatement of earnings between 2008–2014. This scandal illuminated the unspoken trade-off inherent in a lifetime employment contract: staff must not question decisions made by top management.

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Japan is No Longer a Tiger Economy

An independent investigation into Toshiba’s overstatement of earnings revealed that no CEO during that period directly instructed anyone to falsify the accounts. Rather, there was a long-standing corporate culture which mandated that managers ‘couldn’t refuse’ the profit targets set by the CEOs, no matter how unrealistic. Nevertheless, after the first accounting scandal, Toshiba chose Shigenori Shiga as the new chairman after his predecessor resigned in disgrace. Not only was Shiga yet another lifetime company man, but a former head of Toshiba’s subsidiary Westinghouse — which is now in the process of Chapter 11 bankruptcy in the United States.

Many Japanese companies have raced to create better governance on paper — Toshiba was in fact a trailblazer in this respect, having chosen to replace a traditional Japanese system of governance with US-style executive committees, including independent directors on the board. But despite appearances, an inability to encourage and respect independent thinking has led to the collapse of the former world leader in high-tech products.

Failure by Japan’s corporations to embrace both the letter and the spirit of Prime Minster Abe’s new governance reforms will jeopardise Japan’s future prosperity. CEOs must encourage challenges by their subordinates and aggressive supervision by their independent directors.

Investors are the other key class of outsiders who need to be welcomed into the discussion. The traditional silence of friendly shareholders is yet another wall that insulates management from outside competition.

Much attention has been paid to the unwinding of friendly cross-shareholdings by banks. But most of these shares have been transferred from friendly banks to friendly corporations, who will likely never vote against management; to the Government Pension Investment Fund (GPIF), whose size makes it ill-equipped to exercise any positive influence; and to the Bank of Japan, who cannot be a force for better governance. The protection afforded by acquiescent shareholders does not seem to have changed very much.

A survey undertaken by GPIF indicated that 21 per cent of executives regarded investors’ increasing scrutiny of capital efficiency to be a positive development, while 32 per cent regarded this as a very negative trend. Clearly, Japanese managers are a long way away from being comfortable discussing fundamental strategies with investors who own shares in their firms, or with their junior staff. But they had better hurry up.

In the case of Toshiba, lawsuits have been brought by several foreign investors, the world’s largest public pension fund GPIF, and several of the largest domestic banks. Refusing dialogue with your outside stakeholders can carry a devastating price when mistakes are made. It’s better to choose an openness to new ideas and critiques from your independent board directors and your investors, and thereby reap the benefits of dynamism and sustainability.

Alicia Ogawa is Director of the Program on Corporate Governance and Stewardship at the Center on Japanese Economy and Business, Columbia Business School. 

 

The Criminal 45th POTUS?



May 17, 2017

The Criminal 45th POTUS?

http://www.nytimes.com

After the revelations of the past 24 hours, it appears that President Trump’s conduct in and around the firing of the F.B.I. Director, James Comey, may have crossed the line into criminality. The combination of what is known and what is credibly alleged would, if fully substantiated, constitute obstruction of justice. It is time for Congress and a special counsel in the executive branch to conduct objective, bipartisan inquiries into these allegations, together with the underlying matters involving Michael Flynn and Russia that gave rise to them.

First, the facts. On January 26, Sally Yates, then the acting Attorney General, informed the White House that Mr. Flynn had apparently lied about his conversations with the Russian Ambassador. The next day, President Trump hosted Mr. Comey for a private dinner, during which he allegedly asked Mr. Comey repeatedly whether he would pledge his “loyalty” to him, which Mr. Comey declined to do.

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Sally Yates–Acting Attorney-General

On February 14, the day after Mr. Flynn’s resignation as National Security Advisor, President Trump allegedly held Mr. Comey back after a meeting to say that Mr. Flynn had done nothing wrong and that, “He is a good guy. I hope you can let this go.” Mr. Comey declined to drop the investigation, going on in March to confirm before Congress that it was ongoing, and later requesting greater resources from the Department of Justice to pursue it.

Finally, on May 9, President Trump fired Mr. Comey. We were first told he did so because Mr. Comey bungled the F.B.I.’s investigation into Hillary Clinton’s email. Two days later, President Trump changed his story: “In fact, when I decided to just do it, I said to myself, I said, ‘You know, this Russia thing with Trump and Russia is a made-up story. It’s an excuse by the Democrats for having lost an election that they should have won.’” The day after that, President Trump threatened Mr. Comey on Twitter, warning him against leaking to the press.

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Any one of these facts or allegations, by itself, likely would not constitute obstruction of justice. After all, as the F.B.I. Director himself stated, the President has the undisputed power under the Constitution to hire and fire members of his administration in the normal course of government business.

But what he cannot do is exercise that power corruptly, to spare himself or those associated with him, like Mr. Flynn, from scrutiny and possible criminal liability. To do so would run afoul of a series of federal statutes that define the crime of obstruction of justice. They are variations on the theme that anyone who “corruptly” or by “any threatening letter or communication” tries “to influence, obstruct, or impede, the due administration of justice” will be subject to criminal penalties.

The operative word here is “corruptly.” It means “an improper purpose,” or one that is “evil” or “wicked.” There is no precise formula for defining it; those involved in the administration of justice must continually wrestle with its interpretation.

Here, the evidence strongly suggests that the president acted corruptly. That starts with the demand for loyalty from Mr. Comey, the account of which the White House disputes. That demand can reasonably be understood to mean that Mr. Comey should protect Trump and follow his bidding, rather than honoring his oath to follow the evidence. It is also an implicit threat: Be loyal, or you will be fired.

When Mr. Comey did not seem to take the hint, Mr. Trump made his meaning crystal-clear on February 14: Let the investigation go, and let Mr. Flynn go, too. The president denies this as well, of course, as he has denied so much else that has proven to be true. Who are we to believe: Mr. Comey, who would have no reason to accuse the President of obstruction of justice, and who has apparently preserved meticulous notes of his conversations? Or the President, who fact-checkers have demonstrated has told more lies in less time than any other modern occupant of the Oval Office?

While Mr. Trump might have been within his rights to fire Mr. Comey, this pattern of demands to protect himself and Mr. Flynn, followed by retaliation when the demands were not met, if proven, is a textbook case of wrongful conduct. Add to this the fact that Mr. Flynn was already offering testimony about the Russia connection in exchange for immunity from prosecution, and Mr. Trump’s clumsy attempt to dissemble the cause of the firing, and it is clear that a cover-up was afoot.

Finally, Mr. Trump topped things off with his tweeted threat to Mr. Comey; witness intimidation is both obstruction of justice in itself, and a free-standing statutory offense.

Taken together, this evidence is already more than sufficient to make out a prima facie case of obstruction of justice — and there are likely many more shoes to drop. Mr. Comey reportedly took notes on all of his encounters with the president. If what has emerged so far is any indication, this is unlikely to offer much comfort to Mr. Trump.

And there remains the core question of the President’s motives. Is he withholding his taxes because they show evidence of “a lot of money pouring in from Russia,” as his son once stated, or do they show no such thing, as his lawyers claim? Why is Mr. Trump so fervently protecting Mr. Flynn: out of loyalty to a friend, or because Mr. Trump fears what that friend would say if he received immunity?

We have previously called for Congress to set up an independent 9/11-style commission on the Russia and Flynn investigations, and for the Department of Justice to appoint a special prosecutor. This appointment is necessary because Congress can’t actually prosecute anyone who may have committed crimes, including obstruction of justice, in connection with the Trump-Russia matter. This week’s revelations about the president, the most powerful man in the country, emphasize the need for these independent structures to be erected and to encompass these new allegations.

At least for now, we need not address the question, fully briefed to the Supreme Court during Watergate, but never resolved, of whether a special prosecutor could indict the President; as with Nixon, the question may again be obviated by other events, like the House initiating impeachment proceedings and the President resigning.

In the meantime, the House and Senate must continue their existing investigations and expand them, with the Judiciary Committees of both bodies immediately beginning hearings into the president’s abuse of power. Congress must be prepared to follow the evidence wherever it may lead.

Richard W. Painter, a Professor at the University of Minnesota Law School, is the Vice Chairman and Norman L. Eisen is the Chairman of Citizens for Responsibility and Ethics. They were chief White House ethics lawyers for Presidents George W. Bush and Barack Obama, respectively.