Default image

East Asia Forum

June Inflation Jumps over High Goods Prices

The Commerce Ministry reveals that June inflation has risen by over four percent due to high food and drink prices. However, the inflation rate for the entire year is expected to be curbed at 3.2 to 3.7 percent. Commerce Ministry Permanent Secretary Yanyong Puangraj held a press conference to announce the June consumer price index or inflation rate at 112.54 points, a 4.06-percent increase year-on-year.

The tenth Shangri-La Dialogue

Author: Sheryn Lee, ANU On 4-5 June, Singapore was once again awash with security and defence buzz amid the 10 th annual International Institute of Strategic Studies’ Shangri-La Dialogue. While in previous years attention has centred on the keynote address of the US Secretary of Defence, this year’s event was dominated by a first time attendant: the Chinese Defence Minister, General Liang Guanglie. The Chinese General’s appearance heralded the strategic importance of the dialogue as a forum for the world’s leading nations. It also recognised the reality that discussions of regional defence issues and multilateral security initiatives necessitate Beijing’s participation. It seemed fitting that a dialogue that begun with the US Secretary of Defence Robert Gates’ rejection of the notion that the US is in relative decline should end with General Liang proselytising on why the region should be assured that China’s expanding military capabilities are benign. In spite of their almost boilerplate attempts to reassure, the sum effect of these statements was to throw into relief the blunt concerns of regional defence ministers regarding the negative tangent of security developments in maritime Asia. South Korean Defence Minister Kim Kwan Jin stated that Seoul would not continue to show restraint in the face of North Korean aggression, while Russian Defence Minister Sergei Ivanov claimed that the Kuril Islands were not a ‘territorial dispute’ with Japan. By turns, the Vietnamese Defence Minister confirmed the acquisition of six Kilo-class submarines, and the UK Defence Minister Liam Fox outlined ‘greater plans’ for the Five Power Defence Arrangements, with the UK and Australia to conclude a bilateral defence agreement by 2012. In contrast to China’s talk of a desire for a ‘peaceful external environment’ for its ‘peaceful development’, and the pressure it is receiving to become a ‘responsible stakeholder,’ it has done little to moderate its push for overt militarised influence. Its increased presence in the region is having a destabilising effect, not only in the case of the South China Sea, but also in regards to dealing with Pyongyang’s intransigence. Similarly, despite Secretary Gates’ rhetoric, American power in the region cannot keep up the same tempo over the long term. Fiscal constraints and continuing extra-regional demands, in particular in the Middle East, have already begun to take their toll on Washington’s military edge, as China’s modernisation of the PLA rapidly continues. These challenges are largely ignored in the official narratives from formalised settings such as the East Asia Summit (EAS), which have tended to emphasise the possibilities for cooperative responses to regional threats. Even at the Shangri-La Dialogue there was an overwhelming focus on humanitarian aid and disaster relief. There is no question that collaborative efforts in these areas are significant, but the very real elephant of traditional security challenges is being downplayed, even as it threatens to trample regional stability. The question that is seldom asked publicly is: how can the region deal with the shifting power dynamics? Many nations are taking the answer into their own hands by turning towards military modernisation programs of their own, not only to counter China’s efforts but also to prepare for a future in which Washington may not be able to play the role of ‘offshore balancer’. As such, one of the key points that arose at Shangri-La was the desire to build a security architecture robust enough to reduce the likelihood of miscalculation and misunderstanding, and deal with such challenges as negotiating multilateral binding limits on military modernisation, or committing parties to an ‘Incidents at Sea’ agreement. At this point in time, the region lacks the institutions necessary to make such actions credible. While establishing new mechanisms like the ASEAN Defence Ministers’ Meeting Plus (ADMM+) and expanding existing ones like the EAS could potentially lead to a security architecture that produces tangible results, neither approach has yet borne fruit with regards to core strategic challenges. The challenge for policymakers is to respond to this demand for an architecture commensurate with the problems of competition and robust enough to bring both the US and China together to deal honestly with their military competition while providing security for smaller regional states. Increasingly, the political and strategic barriers to this challenge appear insurmountable. The region is confronting a contradiction at the heart of multilateral discussion: while talk helps, it only does so if it is frank. Empty talk reflects insincerity, which actually exacerbates distrust amongst participants and accelerates competition. With the failure of security dialogue to achieve the level of trust required for collectiveaction, regional parties are encouraged to take a self-help approach to security by themselves or with traditional partners. As a consequence, there is a risk that the region will descend into bickering and confrontation between highly armed blocs. Rather than contributing to a balance of power, such a scenario raises the risk that certain major extra-regional players, such as the United States, may decide to cut their involvement suddenly in response to domestic and economic pressures. The potential for regional strategic instability would be significant, with conflict triggers abounding from the DMZ to the Paracel Islands. As the region faces the possibility of a conflict spiral exacerbated by distrust, the need to overcome reticence and speak bluntly about regional strategic and economic realities is paramount. Unfortunately, the opportunity for honesty passed Washington and Beijing by at Shangri-La. Sheryn Lee is a research assistant and Robert O’Neill Scholar at the Strategic & Defence Studies Centre, the Australian National University. Assessing the Trilateral Strategic Dialogue East Asia Forum dialogue ADMM+8: An acronym to watch

Regulation in the Global South: The Strictures of Geography

Author: Michael W. Dowdle Discussions and studies of regulation and governance draw their regulatory insights from the experiences of the advanced industrial economies. It is presumed that these insights, and the regulatory practices they recommend, apply with equal force to understanding the regulatory environments of other countries, such as the ‘developing’ countries of the Global South. This is not likely to be the case. The economic geography of the Global South is such that regulatory strategies that work in the industrial north can become dysfunctional when transplanted to developing countries. Our understandings of regulation and governance need to better take this into account. This is because the effectiveness of many regulatory strategies is often tied to aspects of industrial and social organisation that are themselves the product of a larger transnational geography (particularly transnational economic geography). Transnational economic geography can affect regulatory capacity in a number of ways. For example: A region’s ability to generate wealth is strongly affected by that region’s distance from its ultimate consumer centres (aka transportation costs): the more it costs to deliver regional products to their ultimate consumers, the more innately fragile and underdeveloped the economy will be; More developed economies often enjoy absolute advantage in high-wealth industries due to their external economies (agglomeration effects), while the particular comparative advantages of peripheral economies tend to focus on cutting production costs rather than on generating wealth; The psychological dynamics of transnational finance make capital innately more expensive and innately more volatile in most Global South economies. This means is that peripheral economies will be innately more volatile, innately more fragile, and innately less amenable to conditions of sustained and persistent economic growth. But many of the regulatory strategies that we use to evaluate and promote economic and legal development in the Global South are vitally dependent on the presence of an already wealthy and stable socio-economic environment. Consider, along these lines, the regulatory practices associated with what is sometimes called the modern regulatory state:  i.e., regulation that proceeds via centralised rule-making as transparently administered by independent regulatory agencies; with a regulatory focus on the ongoing monitoring of the economy rather than on controlling entry into that economy; and working in conjunction with a professionalised judicial system that is able to resolve disputes both between private actors and between private actors and public officials in a fair and transparent manner and with effective capacity for enforcement. Centralised rule-making, centralised monitoring and transparency all require a prior standardisation and stabilisation of national society, something that in the West only came about through advanced industrialisation. Independent regulatory agencies require an extensive public education system and extensive public funds to train and retain the highly professionalised workforces of lawyers, accountants, forensic investigators, and industry analysts needed to staff them, again something that in the West only became possible when industrialisation greatly increased public wealth. In sum, what today we call rule of law was actually built on top of a prior industrial development, and the vast increase in public wealth it generated — not the other way around. None of this is an argument for developmental fatalism. But it does mean that we have to be a little more nuanced in our approach to legal development. It means, for example, that in thinking about regulatory development in the Global South, we have to be cognizant of their innately different regulatory environments — environments that are likely to be innately less stable, innately less responsive to centralisation and rationalisation, with innately less access to the public and social wealth necessary to maintain a modern regulatory state. It means that we may need to start approaching issues of regulatory reforms in the Global South from the perspective of promoting actual quality of life independent of promoting economic growth (since many of the geographic factors mentioned above suggest that in peripheral economies, capacity for growth can be limited by factors that escape the reach of human intentionality). Finally, it suggests that regulation needs to be seen as being an extension of politics — and of the particular politics in which it is being inserted — and not a replacement for that politics: the patronage-based forms of institutional discipline so characteristic of developing countries, for example, can often represent very efficient and often vital governmental responses to low-wealth and innately volatile social-economic conditions. This last point suggest a final the lesson from all this: just because a particular regulatory arrangement differs that that with which we are familiar or comfortable, does not by itself mean that it is therefore dysfunctional. We ourselves may have something to learn about regulation and governance from alternative regulatory practices found in the Global South. Asia’s regulatory reawakening Korea inter pares? – South Korea on the global stage The Great Crash of 2008 and getting financial regulation right

A Korea-Japan alliance?

Author: Peter M. Beck, CFR, Keio University Korea-Japan relations have warmed considerably since President Lee Myung-bak took office, but new agreements have proven elusive. After raising the idea with hundreds of Japanese, ranging from Diet members to Okinawa pineapple farmers, I have concluded that there is no time to waste for President Lee and Prime Minister Kan Naoto to pursue a formal alliance. Overcoming centuries of animosity has proven difficult. Indeed, the shadow of history often looms over the present. Korea’s disaster team was the first foreign group to search for survivors from Japan’s devastating earthquake, but less than three weeks later, Tokyo’s release of textbooks, which insist Dok-do (a cluster of small rocky islands claimed by Japan under the name Takeshima) belongs to Japan, threw cold water on the Korean people’s outpouring of emotional and financial support for Japan. How can we resolve differing interpretations of history? The simple answer is we cannot. This year marks the 150th anniversary of the outbreak of the American Civil War, yet many white Southerners still refer to the ‘War of Northern Aggression’ and proudly fly a flag most Americans consider a symbol of racism and rebellion. The important thing is that these Southerners do not reflect the views of the vast majority of Americans. While Tokyo continues to claim Dok-do, the average Japanese just doesn’t care. Most Japanese would not be able to find the island on a map. Indeed, I could not find a single public sign in Tokyo or any other of the seven major cities I have visited concerning ‘Takeshima’. The Okinawa Visitor’s Bureau informed me that it is impossible for Japanese civilians to visit the Senkaku Islands and expressed surprise when I told them Koreans could freely visit Dok-do. The Japanese who really care about Dok-do are much more of a minority and even more powerless than those who yearn for the Confederacy. Unlike Koreans, few Japanese are willing to die for these rocks. I told my Japanese audiences that if Tokyo renounced its hopeless claim, there would be a flood of Korean goodwill. Yet, many Japanese believe this would undermine Tokyo’s claim to the Northern Territories (even though Moscow shows no intention of even discussing what it calls the Kurile Islands). Keio University’s Soeya Yoshihide argues that the real issue is Japan’s domestic politics: the right-wingers must be placated. Japanese are crazy about Korean food, dramas and Girls’ Generation, not Dok-do! Given Korea’s military control of Dok-do, Tokyo’s claim should be ignored. If mistrust should no longer be an obstacle to closer ties with Japan, then there are three good reasons for forming an alliance rather than pursuing the ad hoc military cooperation we have seen to date. For starters, China and North Korea have become increasingly belligerent.  North Korea attacked the South twice last year and China has repeatedly sent ships into waters controlled by Japan or Korea . Kim Jong-il’s unprecedented third visit to China in the past year reminds us that the two countries are locked in an ever-tightening embrace. Sadly, the Cold War is alive and well in Northeast Asia. The second reason Korea and Japan should pursue an alliance is a preoccupied and faltering United States. Thanks to George W. Bush, the US government is broke and militarily over-extended. President Obama inherited two botched wars that have cost the lives of over 6,000 US soldiers and several trillion dollars. Washington will have little choice but to demand ever-increasing contributions to the basing of an ever-decreasing number of US troops in Korea and Japan. Clinging to an increasingly tattered American skirt in the face of a rising and more threatening China will not ensure the defence of Korea or Japan. Moreover, even though Secretary of State Hillary Clinton met with her Korean and Japanese counterparts last fall in Washington, the Obama Administration has shown no interest in creating a formal structure that would institutionalize trilateral cooperation. The Clinton Administration initiated the Trilateral Cooperation and Oversight Group, but it was allowed to wither and die under President Bush. Korea and Japan will have to take matters into their own hands. Fortunately, Seoul and Tokyo have the right leaders needed to make this happen. It may be difficult to see from Seoul, but since taking power from the Liberal Democratic Party (LDP) two years ago, the Democratic Party of Japan (DPJ) has adopted a more friendly approach towards Korea. Prime Minister Kan not only apologised to Korea upon taking office, he also pledged to return the 1,205 Chosun Dynasty texts stolen during the Japanese occupation. The LDP tried to block their return, but failed. Both of the DPJ’s first two prime ministers pledged not to visit the controversial Yasukuni Shrine. The initiative to form an alliance will most likely have to come from Seoul, given that Tokyo is preoccupied with recovering from the earthquake and halting the Fukushima nuclear meltdowns. In addition, Prime Minister Kan is fighting for his political life due to the LDP’s intransigence and an insurrection within his own party. Nevertheless, the DPJ should be in power for at least another year. President Lee rightly focused on Japan’s recovery from the earthquake during his visit to Japan last week with Chinese Premier Wen Jiabao. But if he follows through with plans for an official visit later this year, he should not miss this window of opportunity. The proposals made by the Korean and Japanese defense ministers in January to improve intelligence sharing and logistical support provide a good place to start. It is high time America’s best friends in Asia became better friends with each other. Peter Beck is a Council on Foreign Relations-Hitachi Research Fellow at Keio University, Tokyo. US-Japan alliance faces a brave new world North Korea: Why is Seoul and Tokyo Cooperation Necessary? Managing the Japan-US alliance

No plan B for completing Doha

Author: Mari Pangestu, Indonesian Minister of Trade The importance of completing the Doha Development Agenda sooner rather than later goes beyond bringing gains of US$360 billion of additional trade with substantial benefits for industrialised and developing economies. As a developing country policymaker – and I believe I speak for many other developing countries – I am greatly worried about the costs and opportunity lost of not completing Doha . Food security During the 2008 food crisis, imbalances between supply and demand were partly attributed to distorted agriculture prices caused by trade-distorting export subsidies and domestic-support schemes. The agriculture package in Doha will go some way to address this . In today’s situation of high commodity prices, now is the perfect time to address the removal and elimination of such trade-distorting policies. Removing these distortions can only be achieved through multilateral negotiations, not through bilateral or regional agreements. Most importantly, the winners would be the billions of hungry and poor people all over the world; correcting the system and ensuring the future supply of food and greater price stability is very much in their interests. For example, in Indonesia a 10 per cent increase in the price of rice, without any change in income, would lead to a 1 per cent increase in poverty. Keeping protection at bay During the depth of the crisis, benign protectionism was the order of the day, according to the self-reporting surveillance mechanism established by the WTO at the request of G20 Leaders. This allowed the rebound of trade to become one of the costless ways for the global economy to recover. It is ironic that in the recovery, the latest report shows that there has been a slight increase in protectionism causing an estimated impact of 0.6 per cent to G20 exports. The main increase has been due to tariff increases, automatic licenses, and other restrictions including export restrictions. Whilst this is still ‘small’, it is nevertheless double the previous period. Restoration of the confidence in the world trading system through clear signals that we are progressing on completing the Round is crucial to keeping protectionism at bay. Developing countries such as Indonesia have a great interest in this because only the multilateral trading system will provide the fair, rules-based trading system for us to face large and more developed partners on a fair and equal standing. Bilateral and regional free trade negotiations In the ASEAN region there are already FTAs between ASEAN and all six of its dialogue partners (Australia, China, India, Japan, Korea, and New Zealand), as well as numerous other bilateral FTAs. The EU has just completed negotiations with Korea, which has put pressure for the Korea-US FTA to be ratified as soon as possible. The EU has also completed negotiations with India, and is negotiating with Singapore, Malaysia, and preparing to do so with other ASEAN countries. Recently, China, Korea and Japan announced revitalisation of their FTA initiative. Furthermore we have the Trans-Pacific Partnership initiative between eight members of APEC. It is not the bilateral and regional free trade agreements which are problematic per se; it is negotiating them in the absence of a robust WTO system — a system which is seen as meeting the needs of the current and future trade-linked issues. Bilateral and regional agreements can only work toward complementing the multilateral trading system when they are ‘WTO-plus’, not ‘WTO-instead’. The potential dampening effect on unilateral reforms The political economy of openness in trade policy and institutional reform has always functioned better within the framework of international commitments. Multilateral rules impose an important caveat on what countries can or cannot do. In a country like Indonesia this has worked to our advantage in the way we frame our reforms, and in fact has functioned in the past to put bad policies to rest. The way forward: No Plan B Despite G20 Leaders’ commitments, and all the good intentions and intensive work in Geneva that came after the push given by trade ministers during their informal meeting at Davos in January 2011, it proved impossible to arrive at a draft text by the end-of-April milestone. There remains ‘unbridgeable gaps’ in a number of main negotiating groups, namely non-agriculture market access. Given this situation, trade ministers met first during the APEC Ministers of Trade Meeting in Big Sky Montana, and then on the fringes of the OECD meeting in Paris. Fortunately all have agreed that we all remain committed to completing Doha as a single undertaking. However, there was a sense of realism as to the timing and pathways to achieve this desirable outcome in a timely way. From an Indonesian perspective, there is no ‘Plan B’. We do not support a ‘Doha Lite’, and we remain committed to a comprehensive, ambitious, and balanced package building on what we have achieved to date. After almost six years of negotiations since the key Hong Kong WTO Ministerial, I believe we are more than 50 per cent, or some would say 80 per cent, of the way done. A realistic way forward is to identify the sequence of steps that would take us to the final outcome; this is necessary to avoid the costs and lost-opportunities I outlined above. Identifying stepping stones to a final Doha Round conclusion There are areas within the negotiations that could be seen as steps toward the final package. In identifying the areas where we could find convergence, a number of priorities stand out. First and foremost are areas of negotiations that will contribute and deliver to development objectives, such as the Least Developed Countries package and/or an effective aid-for-trade, and facilitation package; this is, after all, a Development Round. Second, areas where there would be clear benefits for development and the private sector in facilitating and ensuring the benefits of trade are greater; we need stakeholders to be cheerleading the way forward. Third there could be areas where we would be able to address the food-security challenge. One could also foresee that, within each current area of negotiations, there could be items which could be wrapped up without disturbing the overall balance of elements in that particular area. It is important that we do not go into ‘new’ negotiations in identifying which areas. Looking forward Beyond talking about Doha, we must ensure continued confidence in and implementation of the rules-based, open trading system. This would mean the commitments of G20 Leaders and others on refraining from protectionism going beyond words; the good intentions need to be strengthened with commitments and actions. It also has implications for how we undertake bilateral and regional agreements; these should be done in a way that is not an alternative to, and does not detract from the multilateral trading system. We should pursue regionalism in a way which is going to contribute to and complement the system. In conclusion, we should not underestimate the costs of not doing all this. We will need to draw upon the strength of our individual and collective political commitment. We need to call on the ability of some major economies to look beyond pure national interests, and to look at the impact and costs on the global system and economy. And we need to remember that there are many countries and billions of people – many of which are impoverished – who are waiting for the Doha deliverables. Mari Pangestu is Minister of Trade for the Republic of Indonesia. An earlier version of this article was published here by VoxEU. The Doha Round’s premature obituary Ten years of Doha negotiations: Are we close to striking a deal? Doha Round: what India’s new government needs to do

No plan B for completing Doha

Author: Mari Pangestu, Indonesian Minister of Trade The importance of completing the Doha Development Agenda sooner rather than later goes beyond bringing gains of US$360 billion of additional trade with substantial benefits for industrialised and developing economies. As a developing country policymaker – and I believe I speak for many other developing countries – I am greatly worried about the costs and opportunity lost of not completing Doha . Food security During the 2008 food crisis, imbalances between supply and demand were partly attributed to distorted agriculture prices caused by trade-distorting export subsidies and domestic-support schemes. The agriculture package in Doha will go some way to address this . In today’s situation of high commodity prices, now is the perfect time to address the removal and elimination of such trade-distorting policies. Removing these distortions can only be achieved through multilateral negotiations, not through bilateral or regional agreements. Most importantly, the winners would be the billions of hungry and poor people all over the world; correcting the system and ensuring the future supply of food and greater price stability is very much in their interests. For example, in Indonesia a 10 per cent increase in the price of rice, without any change in income, would lead to a 1 per cent increase in poverty. Keeping protection at bay During the depth of the crisis, benign protectionism was the order of the day, according to the self-reporting surveillance mechanism established by the WTO at the request of G20 Leaders. This allowed the rebound of trade to become one of the costless ways for the global economy to recover. It is ironic that in the recovery, the latest report shows that there has been a slight increase in protectionism causing an estimated impact of 0.6 per cent to G20 exports. The main increase has been due to tariff increases, automatic licenses, and other restrictions including export restrictions. Whilst this is still ‘small’, it is nevertheless double the previous period. Restoration of the confidence in the world trading system through clear signals that we are progressing on completing the Round is crucial to keeping protectionism at bay. Developing countries such as Indonesia have a great interest in this because only the multilateral trading system will provide the fair, rules-based trading system for us to face large and more developed partners on a fair and equal standing. Bilateral and regional free trade negotiations In the ASEAN region there are already FTAs between ASEAN and all six of its dialogue partners (Australia, China, India, Japan, Korea, and New Zealand), as well as numerous other bilateral FTAs. The EU has just completed negotiations with Korea, which has put pressure for the Korea-US FTA to be ratified as soon as possible. The EU has also completed negotiations with India, and is negotiating with Singapore, Malaysia, and preparing to do so with other ASEAN countries. Recently, China, Korea and Japan announced revitalisation of their FTA initiative. Furthermore we have the Trans-Pacific Partnership initiative between eight members of APEC. It is not the bilateral and regional free trade agreements which are problematic per se; it is negotiating them in the absence of a robust WTO system — a system which is seen as meeting the needs of the current and future trade-linked issues. Bilateral and regional agreements can only work toward complementing the multilateral trading system when they are ‘WTO-plus’, not ‘WTO-instead’. The potential dampening effect on unilateral reforms The political economy of openness in trade policy and institutional reform has always functioned better within the framework of international commitments. Multilateral rules impose an important caveat on what countries can or cannot do. In a country like Indonesia this has worked to our advantage in the way we frame our reforms, and in fact has functioned in the past to put bad policies to rest. The way forward: No Plan B Despite G20 Leaders’ commitments, and all the good intentions and intensive work in Geneva that came after the push given by trade ministers during their informal meeting at Davos in January 2011, it proved impossible to arrive at a draft text by the end-of-April milestone. There remains ‘unbridgeable gaps’ in a number of main negotiating groups, namely non-agriculture market access. Given this situation, trade ministers met first during the APEC Ministers of Trade Meeting in Big Sky Montana, and then on the fringes of the OECD meeting in Paris. Fortunately all have agreed that we all remain committed to completing Doha as a single undertaking. However, there was a sense of realism as to the timing and pathways to achieve this desirable outcome in a timely way. From an Indonesian perspective, there is no ‘Plan B’. We do not support a ‘Doha Lite’, and we remain committed to a comprehensive, ambitious, and balanced package building on what we have achieved to date. After almost six years of negotiations since the key Hong Kong WTO Ministerial, I believe we are more than 50 per cent, or some would say 80 per cent, of the way done. A realistic way forward is to identify the sequence of steps that would take us to the final outcome; this is necessary to avoid the costs and lost-opportunities I outlined above. Identifying stepping stones to a final Doha Round conclusion There are areas within the negotiations that could be seen as steps toward the final package. In identifying the areas where we could find convergence, a number of priorities stand out. First and foremost are areas of negotiations that will contribute and deliver to development objectives, such as the Least Developed Countries package and/or an effective aid-for-trade, and facilitation package; this is, after all, a Development Round. Second, areas where there would be clear benefits for development and the private sector in facilitating and ensuring the benefits of trade are greater; we need stakeholders to be cheerleading the way forward. Third there could be areas where we would be able to address the food-security challenge. One could also foresee that, within each current area of negotiations, there could be items which could be wrapped up without disturbing the overall balance of elements in that particular area. It is important that we do not go into ‘new’ negotiations in identifying which areas. Looking forward Beyond talking about Doha, we must ensure continued confidence in and implementation of the rules-based, open trading system. This would mean the commitments of G20 Leaders and others on refraining from protectionism going beyond words; the good intentions need to be strengthened with commitments and actions. It also has implications for how we undertake bilateral and regional agreements; these should be done in a way that is not an alternative to, and does not detract from the multilateral trading system. We should pursue regionalism in a way which is going to contribute to and complement the system. In conclusion, we should not underestimate the costs of not doing all this. We will need to draw upon the strength of our individual and collective political commitment. We need to call on the ability of some major economies to look beyond pure national interests, and to look at the impact and costs on the global system and economy. And we need to remember that there are many countries and billions of people – many of which are impoverished – who are waiting for the Doha deliverables. Mari Pangestu is Minister of Trade for the Republic of Indonesia. An earlier version of this article was published here by VoxEU. The Doha Round’s premature obituary Ten years of Doha negotiations: Are we close to striking a deal? Doha Round: what India’s new government needs to do

Reimagining Chinese Indonesians in democratic Indonesia

Author: Ray Hervandi, East-West Center Indonesia’s initiation of democratic reforms in May 1998 did not portend well for Chinese Indonesians. Constituting less than 5 percent of Indonesia’s 240 million people and concentrated in urban areas, Chinese Indonesians were, at that point, still reeling from the anti-Chinese riots that had occurred just before Suharto’s fall. Scarred by years of repression and forced assimilation under Suharto, many Chinese Indonesians were uncertain — once again — about what the ‘new’ Indonesia had in store for them. Yet, the transition to an open Indonesia has also resulted in greater space to be Chinese Indonesian. Laws and regulations discriminating against Chinese Indonesians have been repealed. Chinese culture has grown visible in Indonesia. Mandarin Chinese, rarely the language of this minority in the past, evolved into a novel emblem of Chinese Indonesians’ public identity. Notwithstanding the considerably expanded toleration post-Suharto Indonesia has shown Chinese Indonesians, their delicate integration into Indonesian society is a work in progress. Failure to foster full integration would condemn Chinese Indonesians to a continued precarious existence in Indonesia and leave them vulnerable to violence at the next treacherous point in Indonesian politics. This undermines Indonesia’s ideals that celebrate all its citizens. Moreover, Chinese Indonesians’ journey of integration would remain incomplete, unless Indonesians — Chinese Indonesians included — restart a civil conversation that examines how this minority fits in Indonesia’s ongoing state- and nation-building project. In the process, this conversation will have to reconsider Chinese Indonesians’ locus in the nation. Once Chinese, Now Indonesian In the social structure of the Dutch East Indies, sojourners, and later migrants, from China occupied the middleman position that served as a buffer between the few Dutch colonials and the many indigenous peoples of the East Indies. However, political adherence of East Indies Chinese was arrayed along a wide spectrum: from devotion to Chinese nationalism in its Nationalist or Communist variants, to encouraging the preservation of the colonial status quo, to unambiguous support for the Indonesian nationalists. Indonesia’s botched coup of 1965 and the ensuing anti-Communist purges left Indonesian Chinese in an increasingly untenable position. Alleged links between China, Indonesian Communists, and ethnic Chinese communities behind the failed coup emphasized the paranoia that Indonesian Chinese are unchangingly committed to China and thus disloyal to Indonesia. The Suharto-era obsession with the so-called ‘triangular threats’ laid the foundation for anti-Chinese discrimination because, as an Indonesian expression has it, ‘once Chinese, always Chinese’. But a funny thing happened on the way to Reformasi . While the ethnic Chinese had always been under the process of acculturation in the East Indies and later Indonesia, Suharto’s policy of forced assimilation — for better or worse — decisively sped up the process that transformed Indonesian Chinese into Chinese Indonesians. Generations of young ethnic Chinese in Indonesia grew up with no real or imagined bonds with China. They spoke Indonesian or the local regional language. They embraced one of the five officially sanctioned religions of Indonesia, most likely Christianity or Buddhism. (Reform-era Indonesia eventually recognised the sixth official religion, Confucianism, in 2000.) From Olympian badminton player Susi Susanti to singer Agnes Monica, they shared in Indonesia’s national life. They came to identify Indonesia as their homeland and themselves as Indonesians. Reconstructing the Chinese Indonesian’s image Indigenous and Chinese Indonesians are not that different. Their dysfunctions are Indonesian, their challenges parallel, and their histories tightly intertwined. Consider, for example, the charge that Chinese Indonesians encourage corruption in Indonesia. In an echo of the old colonial structure, the Suharto years were infamous for the corrupt Ali-Baba partnership, which describes a nexus between the crooked indigenous official, Ali, and his greedy Chinese businessman, Baba. The ill effects of these inequitable partnerships were, however, blamed rarely on Ali, who brought political cover to the partnership, but always on Baba, who faced the heat. Or take the accusation that Chinese Indonesians arrogantly refuse to integrate into local society. In fact, palpable animosity and anti-Chinese prejudice are what leads many Chinese Indonesians to keep to themselves. As illustrated in the cases of the Javanese in Aceh, the Madurese in Central Borneo, or the Buginese on Tarakan — all cases of severe social conflict between newly arrived and local indigenous Indonesians — the perils of failed social integration confront all Indonesians. In addition, Chinese Indonesians are not, and should not be, a substantive issue in Sino-Indonesian relations. This is underlined in China’s muted and belated response to Indonesian’s anti-Chinese riots in 1998, and the relative lack of its mention during Prime Minister Wen Jiabao’s recent visit to Indonesia in April. After all, the existence of ethnic kin across international borders has aroused little suspicion of disloyalty toward, say, Malay Indonesians, despite the long and continuing history of tension between Indonesia and Malaysia. Most importantly, Chinese Indonesians’ greatest contribution to the Indonesian nation-building project might have lain in their unwitting role as Indonesia’s internal Other. Constructing a common national identity would have been much more challenging without an Other. Indonesia’s external Other clearly exists beyond the national borders. Chinese Indonesians’ role as the internal Other is, nevertheless, evident in their ascribed standing as the perennially ‘foreign’ group against whom ‘real’ indigenous Indonesians could coalesce and be contrasted. Starting the conversation Indonesia has moved on from the Suharto-era preoccupation with Communism and ethnic Chinese links to Communist China, and Chinese Indonesians continue to converge with the Indonesian mainstream. Furthermore, the issue of economic inequality in Indonesia is evolving from one that carries a stigma for Chinese Indonesians to one that all Indonesians must face, as more and more indigenous Indonesians steadily enter the middle classes. Indigenous and Chinese Indonesians have much more in common than they realize. It is now time to restart the conversation. Ray Hervandi is Project Assistant at the East-West Center in Washington and works on Southeast Asian affairs. The views expressed here are those of the author and do not necessarily reflect the policy or position of the East-West Center. The piece first appeared here , in the East-West Center’s Asia Pacific Bulletin , on May 10, 2011. Indonesia, the region and the world The taming of ethnic conflict in Indonesia Post-Mubarak Egypt: Is Indonesia the right model?