Sino-Japan: shelving the dispute?

TACSTRAT ANALYSIS

While China and Japan have shared a heavy history of hostility and slow progression towards mutually beneficial ventures, both the countries seem to have focused more on token gestures than concrete measures to secure healthy bilateral economic relations. By virtue of being flourishing economies, and having regional interests coinciding, it was only rational for the China and Japan to address their problems, to fix their attitudes towards each other. The zenith of Sino-Japan departure lies around the East China Sea controversy. Both states claim right to ownership of the islands on this sea. The Diaoyu/ Senkaku Islands have brought China and Japan into a bitter dispute over decades.

The Diaoyu in Chinese and Senkaku in Japanese are a tiny group islands 6.3 km² in total, consisting of eight insular formations, of which the largest is 4.3 km². None of these are inhabited without any trace of human or economic activity, and five are completely barren. Yet, despite the insignificant area, and economic worth, these islands have brought Sino-Japan ties to turbulent points, owing to strategic geographical location. Midway Taiwan and Japan, these islands are key to both China’s and Japan’s national defense. If either one secures sovereignty, the owner will enjoy military security advantage with prolonged and enlarged frontier.

Hence, given the crucial nature of the land, would either one wish to resolve this issue? We know the steps towards reconciliation. A basic understanding of international law, United Nations Convention on the Law of the Sea (UNCLOS), which came into effect in 1994, and some historical knowledge can allow resolve the conflict. Key questions need to be addressed. In 1895 when Japan claimed sovereignty were the Senkaku islands terra nullius? After Japan’s epic defeat in WWII were they returned to China? How should China’s and Japan’s boundaries of the East China Sea be demarcated under international law? But will either state want to cooperate with an external entity if losing out becomes a possibility?

Economically speaking, a continental shelf, or exclusive economic zone (EEZ), of 40,000 km² is attached to these islets. The claimant will have rights over all natural resources in this vicinity, and what is more tempting than the possibility of oil and gas reserves in the region? United Nations Economic Commission for Asia in a report released in 1968 suggested the possibility of large oil reserves in the Diaoyu/Senkaku waters. Given China’s and Japan’s insatiable thirst for energy and resources, the islands have become the source of possible military conflict. The potential defense and economic gains from their ownership have surfaced the ugly reality behind staged diplomacy.

Moreover, domestic and international politics for both will be impacted by the outcome, as both governments are involved in other island disputes. A loss here will damage credibility and may act as a negative domino effect on all other fronts.

Annexed in 1895 by Japan, till the 1960s and early ’70s when the promising prediction of hydrocarbon deposits was released, Japan and the US signed the Ryuku Reversion Agreement in 1971 to officially bestow ownership to Japan. This backdoor diplomacy was not welcome by China and Taiwan. While the US warned against any exploitation of resources, both countries decided to visit the island prop up their flags shortly after. Despite China labeling the territory sacred, Nixon in 1972 decided to ‘return’ South-Western Islands to Japan. US’ pro-Japan stance over the years has seen a neutral shift with their need to improve relations with China as a growing economy. A ‘hand-off’ policy introduced by America has kept the conflict from escalating, but has also promoted no resolution, but a mutual decision to shelve it for the future, unsuccessfully so.

A Japanese lighthouse, Chinese activists landing, renovating the lighthouse, Taiwanese boats to block renovation attempts; the islands seem to have attracted an entertaining saga of events from all three stakeholders. Japan’s decision to arrest the Chinese protestors from the no-man’s land generated criticism and concern from Beijing. Japan’s right wing group, responsible for the lighthouse (1978) rammed a bus into the Chinese consulate to protest their China’s claims.

Japan continues to protect the lighthouse in 2004 that has caused much unnecessary stir, as a remnant of their right to the islands. Tokyo’s move, according to Chinese Foreign Minister was “a serious provocation and violation of Chinese territorial sovereignty. To make matters worse Japan started exploring for natural gas in its self alleged EEZ, an area east of the median line between the two countries that China disputes Japan’s right to. But in 2005 Japan Petroleum Exploration Co. and Teikoku Oil Co began talks with the Japanese government to drill areas falling under disputed territories.

Japan and China with the island dispute have justified their respective claims to justify their own standpoints. For Japan, the sovereignty claim is premised on international law’s clause that terra nullis becomes a specific state’s territory. This is an established principal in international law, but the question is whether or not the islands were terra nullius in 1895. This claim has been contested by China, and no evidence so far has overridden Beijing’s concern. According to China certain surveys were carried out by them in the territory in 1885, proving that they were not unclaimed, but were discovered and incorporated in 1895.

While Japan argues that the dispute came to the front burner just because of the discovery of potential energy resources in the seabed around the islands, China emphasizes that the issue came to the front burner because of the U.S.-Japan Joint Statement and the Ryukyu Reversion Agreement, which illegally include China’s Diaoyu Islands in the territory to be returned to Japanese sovereignty. And Japan continuously refers to its reversion agreement with the United States to validate its sovereignty. So far the islands have been placed under the supervision of the United States, in accordance with the San Francisco Peace Treaty, giving some administrative rights to Japan under the 1971 agreement. China challenges the legitimacy of the San Francisco Treaty because neither China nor Taiwan were not signatories.

The multifaceted nature of the Diaoyu/Senkaku island dispute has complicated relations between all three states. The problems are not only defense or economy related, but the fragile mesh both states are entangled in with respect to domestic political landscape, and other island disputes. For Japan’s aggressive right giving the Senkaku up is not an option. And Chinese feel strongly about the territory in question, as it is ‘sacred’. Perhaps the initial motive by the governments to politicize the matter was to have a stronger case. But this can also backfire, as failure to secure the EEZ now will result in a negative domino effect, as the government who failed its people. The matter is politicized to the point that it has become personal.

Both governments have been at pains to downplay the issue, as neither can afford confrontation, but domestic and international political factors are beyond their immediate control. Extremists in both Japan and China are hurting the delicate diplomatic tango both countries had orchestrated successfully over the decades. While military conflict seems unlikely, despite the recent escalation of news suggesting a showdown, it is also equally unlikely for any form of resolution to be reached. For both states shelving the problem keeps their boat afloat and hence both are delaying the possibility of facing this issue. While political deadlock is difficult to break, two disputants could jointly exploit the economic resources following a model of cooperation that already exists in East Asia in the Republic of Korea-Japan Joint Development Area, for example.

Area 14/8: Who will provide affirmative action in India?

Area 14/8

Consumed with weapon purchases, maritime capabilities and external threats from China and Pakistan, India has it seems neglected to peek at the state of affairs within its own boundaries. In the past few months, multiple incidents infringing the right of freedom of speech have occurred which has prompted writer Salman Rushdie to smear India with his “cultural emergency” allegation.

Although Rushdie’s credibility is uncertain and his agenda equally debatable, his accusation rings of the truth. India’s cultural intellect, its writers, poets, film makers and artists are being censured if their opinion and expression does not conform to the mainstream perceptions of India. Recently, a Tamil film called Vishwaroopam was condemned by Muslim religious groups in Tamil Nadu since it projected Muslims in a negative light. The government decided to ban the release of the film claiming that they lacked sufficient police forces to monitor all cinema houses for riots. Vishwaroopam’s producer, Kamal Haasan was so disillusioned that he threatened to leave India for a secular state abroad. Eventually, he agreed to cut some scenes from the film.

Elsewhere, renowned sociologist, Ashis Nandy, was attacked for insulting unprivileged classes by drawing links between corruption and “other backward classes, scheduled casters and scheduled tribes” at the Jaipur Literary Festival. A case was registered against him by Rajpal Meena, Chairperson of the SC/ST Rajasthan Manch, and subsequently, he was charged with the Prevention of Atrocities Act.

The controversial Salman Rushdie also made headlines when he accused the West Bengal government of deliberately hatching a plan to prevent his participation in Kolkata Literary Meet for the promotion of his new novel, “Midnight’s Children”. Even last year, protests and death threats had compelled him to cancel his visit to the Jaipur Literature Festival.

There are many other instances where unconventional news or statements have been targeted. India ranked a shocking 140th out of 179 countries on the Press Freedom index, issued by Reporters Without Borders. Reporter Soorinje would attest to this fact. He was arrested for multiples offences including criminal conspiracy, rioting with deadly weapons and using criminal force on a woman with the intention of outraging her modesty. Soorinje’s report on an attack on a birthday celebration involving Muslims at a homestay in Mangalore had held right wing extremists Hindu Jagarana Vedike responsible. Similarly, two women were arrested in last November when they Facebook comments offended followers of Bal Thackeray.

India should not be singled out for rising social discontent over freedom of speech. There are many such cases present in modernized societies too. The real issue concerning India is why the government chooses to be a part of this oppression? This is the government which likes to highlight itself as a democratic pluralistic nation where people of different religions, ethnicities, races and social statuses reside in harmony.

The government uses the maintenance of law and order as a justification for its extreme measures. But is law and order code for protecting parties’ mandate? In West Bengal similar to Tamil Nadu, people believed extreme steps were taken by the government to prevent any ill-will with Muslim voters. Are these infringements on the freedom of speech a political game only? Politicians may indeed be using cultural intellectuals as easy targets to keep the public distracted from pressing issues like poverty and unemployment.

It may not be just that the government is afraid of extremists; it may even share the same sentiments. Many state officials include hardliners like members of the Bharatiya Janata Party( BJP) sparking suspicions about state-sponsored terrorism. India’s Home Minister admitted to the involvement of Rashtriya Swayamsevak Sangh (RSS) and BJP in promoting terrorism within the country and placing the blame on minority communities. Just recently, BJP was very vocal in banning Pakistani writers from attending a literary festival in India.

Freedom of speech is guaranteed in the Indian Constitution under Article 19. However, this freedom is subject to certain limitations such as “public order”, “decency or morality” and “security of the State”. The Supreme Court seems to be maintaining a low profile in controlling the government’s outbursts of actions. In Nandy’s case,for example, it stayed the arrest but also supported the state’s response saying that an “idea” is capable of inflicting harm.

Indian has failed to implement affirmative action. Since the government is not longer impartial, it is now up to the masses to reclaim their right to the freedom of speech.

Ready, Steady, Go! : Re-visiting the Indo-Pak arms race

Tacstrat Analysis

In a world of shrinking economies and rising deficits, it is still interesting to see India spike its defense budget by 17%. It is reportedly investing in air, naval and ground facilities like fighter planes, aircraft carriers, missiles, sub marines and helicopters.

Indian generals would support this move for various reasons. Indigenous ordnance projects for manufacturing tanks and aircrafts have been unsuccessful causing the armed forces to rely heavily on antiquated Russian artillery and weapons. As a rising Asian power, India has to compete with neighboring powers for a share in the global market and at the same time guard itself from hostile forces. Its economy has been prospering and with a strong democratic setup, India can afford to boost its defense capabilities.

Read more…

China’s ability to sustain warfare

By: Andrei Chang

Should a conflict break out across the Taiwan Strait, Taiwanese forces would face a grave shortage of ammunition after just seven days of fighting. Even though China has a much greater stockpile of ammunition than Taiwan, it would also encounter similar problems in a sustained conflict.

The PLA Air Force fleet of third generation fighters comprises 281 Su-30s, Su-27 SKs, J-11A/Bs and 64 J-10As, whereas its bomber fleet includes approximately 48 JH-7As and 117 H-6s. In full-scale warfare across the Taiwan Strait, suppose there were a loss of 20-30 combat aircraft each day, the current fleet of 344 third generation fighters in effective service in the PLAAF could sustain combat operations for only 11-17 days.

Unlike the United States and Russia, China does not yet have the capability to independently manufacture third generation fighters. For instance, in order to produce J-11B fighters, China has to rely on imports from Russia for critical subsystems including engines and infra-red search and track systems.

Furthermore, the manufacturer of J-11 serial fighters, the Shenyang Aircraft Company, has had a production capacity limited to roughly 17 aircraft each year. As for the J-10, it is widely known that production of this fighter aircraft relies heavily on the outside world, as the J-10′s AL-31FN engines are imported from Russia, and other large parts are forged following the designs of a certain Western country.

As a consequence, if a conflict broke out and a military embargo was imposed, the PLA Air Force would immediately face difficulties with its insufficient number of third generation fighters.

Taiwan’s depleted ammunition could be immediately resupplied from U.S stocks, because most of the Taiwanese ammunition is the same as that used by U.S. and Japanese forces. However, such Chinese equipment imported from Russia as the Su-30 MKK multi-role fighters, Kilo 636M submarines and S-300 PMU-2 surface-to-air missiles are not in service in Russia. Even the quantity of RVV-AE air-to-air missiles in service is quite limited in the Russian Air Force.

In terms of the production of naval battleships, almost all of China’s large-tonnage and new surface combatants rely on Russian and Ukrainian technologies, particularly the power plant systems from Ukraine.

Similar to the situation of the combat platforms, the replenishment of ammunition faces the same problems. Indeed, the PLA’s capability to resupply its ammunition, is much greater than that of Taiwan. However, under highly intense assault operations, the attrition of ammunition would also be much greater than that of the defending side.

Another problem China would face is that the PLA must rely on foreign imports for its high-performance ammunition, and a substantial portion of the critical components of China’s indigenous high-performance ammunition also has to be purchased from other countries. Moreover, as the combat platforms are mostly not standardized, once these platforms are depleted during combat operations and become quantitatively insufficient, the ammunition intended specifically for them won’t be of much use. For instance, except for the J-11Bs, all the other Su serial fighters cannot carry China-made PL-12 AAMs, while the output of J-11Bs is very limited so far.

On the other hand, the J-10A cannot be fitted with Russian-made AAMs and air-to-ground weapons. The PLA Air Force has imported at least 1,000 units of RVV-AE (R77) AAMs, which means each of the 330 third generation fighters of the Taiwanese Air Force would face attack from three R77 missiles on average.

During the Ethiopia-Eritrea air conflict from 1999 to 2000, the Su-27 and MiG-29 fighters of the two countries fired the same R-27 AAMs in large numbers, but none of them hit their targets! In the air battles, the loss of MiG-29s was mainly because they were struck by the short-range R-73 AAMs.

In 1999, when the U.S. Air Force’s F-14D fighters chased the Iraqi MiG-25s that entered the no-fly zone, the U.S. fighters fired a total of eight AIM-54C AAMs, but none of them hit their targets either. During another U.S.-Iraq air confrontation in January 1991, F-15 fighters fired a total of seven Sparrow semi-active radar guided air-to-air missiles, and once again, none of them hit their targets.

China has imported more than 1,000 H-29T ASMs and H-59T ASMs. Are these too many? Not at all. In modern air battles, the basic concept is to involve a few 10,000 air-to-ground weapons, and the effect could still be quite limited. In the case of Taiwan, mountains cover a large portion of the landscape. Moreover, in time of conflict, the problems of cover-up and camouflage have to be taken into consideration.

During the Kosovo War, large-scale air raids lasted 78 days, a total of more than 23,000 rounds of various types of ammunition were dropped, but only 3 percent of them hit the designated tank targets, according to the former Yugoslavia regime after the war.

As for the PLA Navy, it has only 14 real battleships with the capability to engage in modern maritime combat operations. Its other battleships are all useless metal scrap. These 14 ships include two 051Cs, one 051B, two 052Bs, two 052Cs, three 054As, and four 956E/EMs. During a conflict, these 14 battleships would inevitably become the prime targets of Taiwan’s air and naval firepower.

A possible outcome could be as follows: in a lasting war of attrition when the above third generation combat platforms and ammunition supplies become a serious problem, the older equipment of the Chinese military, including J-8Fs, J-7Gs and the obsolete vessels of the PLA Navy would be put to use; hence a 1970s war would be played out on a 21st century battlefield.

This proves the practicality of the Chinese military’s concept of “fighting a quick battle.” Obviously the Chinese military is well aware of the hard reality that the current international political dynamics, China’s own limited strategic oil reserves and its limited supply of advanced ammunition will not allow it to engage in a prolonged war across the Taiwan Strait.

Aisam-Bopanna border match gathering steam

Pakistan and India may see further progress in their relations as Pakistan’s tennis star Aisam-ul-Haq has requested Prime Minister Yousuf Raza Gilani to give an approval for playing “Tennis for Peace” event at the Wagah border with India.

The vice-president of the Pakistan Tennis Federation Irshad Bhatti while briefing the journalists here on Wednesday, said: “Aisam has requested Prime Minister Gilani to allow him play against Rohan Bopanna of India on the border with India to send a message of peace and harmony on both sides of the border and to the world.”

Both the neighbours have seen turbulence in their relations since the Mumbai terror attack.

However, Pakistan and India have resumed a peaceful dialogue specifically after the recent visit of PM Gilani to India where he watched the World Cup semi-final between Pakistan and India.

“The tennis court will be developed on the border of India and Pakistan and both the players will also change their sides during the exhibition match,” said Bhatti.

He said Rohan was also an international Indian tennis star and his presence alongside Aisam for bringing peace and harmony among the two nations would be of great help.

For luring international players again on Pakistans tennis courts, the PTF official pointed out: “We have requested China, Maldives, Bhutan, Bangladesh and other countries of this region to send their players for invitational tournament to be played here in few months time and we received a positive response.”

“We have ensured foolproof security to ensure that Pakistan will get an International Tennis Federation ranking event,” said the official.

Regarding the introduction of new rules in national ranking events, Bhatti said: “The semi-finals and finals of every national ranking tournament will now have five sets and the change was aimed at making the sport more competitive.”

Pak, China militaries to celebrate six decades of ties

Pakistan Observer

Beijing-China and Pakistan have planned a packed schedule of military exchanges for this year, marking the 60th anniversary of establishment of their diplomatic relations. This will include two Chinese naval visits to the Pakistani port city of Karachi in August and October and two joint military exercises, said General Khalid Shameem Wynne, Chairman of Pakistan’s Joint Chiefs of Staff Committee, in an interview. In addition to the two bilateral army and air force exercises, the two countries will also participate in a multinational naval drill next month.

“Another joint counter-terrorism exercise is set to be held in Pakistan next year,” General Wynne said in an interview published in China Daily Monday, adding the two countries are working to make it an annual event. A similar drill, led by General Wynne, was conducted in northwestern China’s Ningxia Hui autonomous region last year.

Fears grow that China is overheating

By Jamil Anderlini and Leslie Hook in Beijing, and Rahul Jacob in Hong Kong

Concerns the Chinese economy is overheating mounted after offical figures revealed the economy grew faster than expected at the end of last year and inflation remained above target.

Meanwhile, Guangdong added to the fears after China’s biggest provincial economy increased its minimum wage by 18 to 26 per cent, the second big increase in less than a year.

The national economy expanded at an annual rate of 9.8 per cent in the final quarter of 2010, and grew 10.3 per cent for the entire year.

Consumer price inflation, a growing worry for policymakers, fell to 4.6 per cent in December from a more than two-year high of 5.1 per cent the previous month.

However, analysts said the moderation was mostly due to a high base the year before, and that prices would accelerate strongly in the first quarter of this year, complicating efforts to cool the economy without triggering a sharp slowdown.

For the whole year, consumer prices rose 3.3 per cent, above Beijing’s target of 3 per cent. Food prices, the main driver of inflation, rose 7.2 per cent for the year.

“[The economic] growth figures will encourage Beijing to act more decisively on taming inflation, which means more interest rate hikes are just around the corner,” said Qu Hongbin, an economist at HSBC.

The Shanghai Composite, China’s benchmark stock market index, dropped 2.9 per cent on Thursday after release of the data increased fears of impending monetary tightening.

A combination of rising inflation, concerns about social instability and labour shortages in key industrial areas have sparked a series of minimum wage increases across China. Beijing this month increased its minimum wage by 21 per cent. The government hopes raising wages will increase domestic consumption and help it move towards a new growth model less reliant on low-cost manufacturing, exports and investment.

Geoffrey Crothall of the China Labour Bulletin, a Hong Kong-based advocacy group, said the wage hike might not be enough to ease the labour shortages in the province, which accounts for a large percentage of the world’s production of everything from mobile phones to sneakers.

“Workers are very well informed about wages in the next town and in other provinces,” he said. “Their confidence that wages will go higher is rising.”

While concerns about inflation have grown in recent months, Ma Jiantang, commissioner for the National Bureau of Statistics, said the government would control inflation this year.

“We have full confidence that we will control the price level in 2011,” said Mr Ma, adding that China’s seven consecutive years of good harvests meant food prices would be kept under control.

The government has said it would adopt a “prudent” monetary policy this year. Beijing raised the amount banks must hold on reserve with the central bank seven times over the past year and increased interest rates twice in the fourth quarter.

These attempts to rein in extraordinarily loose monetary conditions, in place since the height of the financial crisis two years ago, have only been partially successful. Last year, Chinese banks moved trillions of renminbi in loans off their balance sheets and repackaged them as wealth management products, allowing them to evade the government’s restrictive lending quotas.

On Thursday, the Chinese banking regulator ordered banks to bring an estimated Rmb1,660bn ($252bn) of such off-balance sheet loans back on to their books this year.

The government’s attempts to manage liquidity have been further complicated by non-bank lending in the economy, which regulatory authorities have great difficulty quantifying. A central bank survey released on Thursday found that total non-bank lending in China last year amounted to about Rmb240bn, or 5.6 per cent, of total loans.

However, central bank officials acknowledged that the true scale of informal and underground lending was likely much larger.

China’s economy almost certainly overtook Japan’s last year to become the world’s second-largest after the US, ending more than 40 years for Japan as number two.

Zardari’s Foreign Guards

The Times of India reports that a team of overseas (American) guards will be deployed to protect the security of Pakistani Mafioso Asif Ali Zardari.

In my opinion this will guarantee countless attempts on his life. Suddenly, aside from the people that want to see him eliminated, there will be those that will see American guards as a challenge and therefore want to prove that getting beyond them and eliminating Zardari can be done.

The question is will the assailant kill himself in the process or aim to survive and bask in the possible folk hero status. Ah, the difficult choices life presents.

Pakistan to outsource management of Pakistan Steel Mills

Pakistan is planning to outsource the management of Pakistan Steel Mills (PSM) to improve inculcate professionalism in the important organisation, which under the present management team is facing a loss running billions of rupees.

Ten international firms mostly from China, Russia and European countries have offered their services to turn PSM into a profitable organisation.

This was said by Federal Minister for Industries and Production Mir Hazar Khan Bijarani, while speaking to the media during “Malaysia -Pakistan Palm Oil Trade Fair and Seminar-2011″.

He said that the government is struggling to transform PSM into a profitable and dynamic business. Pakistan has received expression of interest (EoI) from ten leading companies from different countries, especially from Russia and China, for revitalisation and expansion of this very important national asset, while an independent international expert has been given the task to evaluate these offers.

A committee of specialists has also been formed to finalise and pursue the development plan of the PSM. He added that on completion of this process; work on first phase of its expansion of the organization would start, thereby utilising its annual production capacity of 1.5 million tonnes.

The minister, however, rejected the impression that the government was in effect privatising the organisation. He also denied giving any timeframe for the proposed outsourcing of the national asset.

“The only objective of the government was to make the organisation profitable as it was earlier,” he said, acknowledging that the government has earlier changed the board of PSM to bring some positive changes in the overall management of the organisation.

According to sources, the outsourcing of management would help alleviate the pressures that have been traditionally exerted and allow further investment and allow the institution to function in a more productive manner.

Another consideration in the decision to outsource management was the desire that PSM be run according to the rules of corporate governance.

It is worth mentioning here that PSM which remained a profitable business between the 2000 and 2008, but its performance has fallen in the last few years because of, sources insinuate, political influence and shortcomings of the management.

Despite all claims of the Pakistan People Party (PPP) led government, apparently the entire management of PSM is working on acting charge basis and compounding the poor performance of the organisation.

According to a report, the total equity of PSM has been wiped out and the losses running into more than Rs 48 billion in a period of 30 months (July 2008 to December 2010 with the debt liability standing at approximately Rs 50 billion, compared to only Rs 8.0 billion on 1 July, 2008.

U.S. Is Not Trying to Contain China, Clinton Says

The United States is not bent on containing China, Secretary of State Hillary Rodham Clinton said Friday, but the Obama administration is cultivating other allies across Asia to help it manage Beijing’s increasingly bold projection of military and economic power.

In a closely watched address delivered four days before President Hu Jintao’s scheduled state visit to Washington, Mrs. Clinton sought to balance tensions over China’s military buildup and disagreements over North Korea with the administration’s desire to work with Beijing on issues like climate change.

“Distrust lingers on both sides,” she said in her speech at the State Department.

Mrs. Clinton said that while the United States-China relationship was critically important, “there is no such thing as a G-2,” the phrase popularized by analysts who argue that Washington and Beijing, widely seen as the economic superpowers of today and tomorrow, should steer the world.

She also delivered a polite criticism of China’s human rights record that was more detailed than she had previously offered as secretary of state, citing the persecution of the pro-democracy group Charter 08 and the imprisonment of Liu Xiaobo, the political activist who was awarded the Nobel Peace Prize but whose family was blocked from attending the prize ceremony in Norway last month.

“The longer China represses freedoms,” she said, “the longer that Nobel Prize winners’ empty chairs in Oslo will remain a symbol of a great nation’s unrealized potential and unfulfilled promise.”

Mrs. Clinton’s speech – on the heels of an economic address by Treasury Secretary Timothy F. Geithner and a visit to Beijing by Defense Secretary Robert M. Gates – sets the stage for what some analysts say is the most important visit by a Chinese leader to the United States in years.

While Mr. Geithner and Mr. Gates tackled two clear irritants in the relationship – China’s undervalued currency and the increasingly defiant People’s Liberation Army – Mrs. Clinton confronted a broader set of strategic tensions, including China’s testy relations with its neighbors and its reluctance to bear down on a belligerent North Korea.

“Some in the region and some here at home see China’s growth as a threat that will lead either to cold war-style conflict or American decline,” she said. “And some in China worry that the United States is bent on containing their rise and constraining their growth – a view that is stoking a new streak of assertive Chinese nationalism. We reject those views.”

Nevertheless, Mrs. Clinton spoke at length about the administration’s work to reinforce ties with cold war allies like Japan and South Korea, to restore long-neglected relationships with countries in Southeast Asia and to court emerging powers like India.

Last July, Mrs. Clinton infuriated Chinese officials when she thrust the United States into a long-running dispute between China and its neighbors over control of some small, strategically important islands in the South China Sea. The United States, analysts said, put a spotlight on China’s bullying behavior.

“We are working to firmly embed our relationship with China within a broader regional framework, because it is inseparable from the Asia-Pacific’s web of security alliances,” she said.

To experts on China in the audience, the message was unmistakable.

“She’s saying, ‘We’re still trying to have a reciprocal relationship, but if it doesn’t work, we’re hedging our bets,’ ” said Orville Schell, who heads the Center on U.S.-China Relations at the Asia Society.

Mrs. Clinton said that China had cooperated in imposing international sanctions against Iran over its nuclear program. And she said China was finally starting to help the United States try to restrain North Korea’s behavior after the torpedoing of a South Korean warship and a deadly artillery raid.

“We fear, and have discussed this in depth with our Chinese friends, that failure to respond clearly to the sinking of a South Korea military vessel would embolden North Korea to continue on a dangerous course,” she said.

Mrs. Clinton also reinforced points made by Mr. Geithner and Mr. Gates. She said that China needed to let its currency rise more rapidly to ease the trade imbalance with the United States. And she contended that the Chinese military should be open to more extensive ties with the Pentagon to ease American concerns about its motives.

For all that, Mrs. Clinton was clearly not trying to provoke China. She spoke of global challenges, like climate change and development, in which Beijing and Washington should work together.

Mrs. Clinton’s speech inaugurated a lecture series dedicated to Richard C. Holbrooke, the hard-charging diplomat who died last month. Early in his career, he served as assistant secretary of state for East Asian and Pacific affairs, the youngest holder of that post to date.

Noting that Mr. Holbrooke had played a role in the normalization of diplomatic relations with China in 1979, Mrs. Clinton said that the relationship between the two nations had “arrived at a critical juncture.”

“It is clear that we cannot paper over the difference between our countries; nor should we try to do so,” she said. “But the future of our relationship can be strong if we each meet our responsibilities as great nations.”

Cause for thought

Anwer Mooraj

Another dreary year is coming to an end. And the future of this country looks as bleak as ever. Mr Faisal Subzwari, who is high up in the pecking order of the MQM, announced earlier this week that members of his party were resigning from ‘impotent’ ministries. Perhaps he meant ‘inept’ ministries because when it comes to spending money, they are unusually fertile. The resignation was not at all unexpected, what with the ongoing verbal sparring with the Sindh home minister. But what did take the city’s resident cynic by surprise was the rather terse news item published a fortnight ago about a delegation from the MQM calling on Pir Pagara to discuss – amazing as it may seem – the situation in the country!

Was the visit fired by an irresistible urge to ferret out the conservative mind, or a mawkish, let’s cock-a-snook intrusion into a camp that represents the quintessence of political retrogression? Or was it just an attempt to secure an ally against an intrepid foe? The pir radiates influence saturated with instant punditry. He is also the spiritual head of the Hurr tribe and is regarded as a fountain of wisdom by politicians of every persuasion. But as he represents the crystallised thinking of the feudal aristocracy, he can’t possibly speak for the poor peasants as the MQM purports to do.

This writer is not privy to what was discussed in the meeting, but it is most unlikely that the two parties touched on the real issues afflicting the country. These were identified in an excellent editorial which appeared in one of the country’s newspapers, bits and pieces of which are being reproduced from memory.

“Does a man who cannot feed his wife and children really care whether or not Mr Pervez Musharraf is tried for treason? Is a mother whose child has died of gastroenteritis likely to give much thought to the fact that American drones are killing civilians in Waziristan ?… Food inflation is forcing parents to pull their children out of school…Street crime is rampant in a country where human life is worth less than the cost of a cell phone. Yet our political leaders appear oblivious to the misery that is everywhere. They seem to have no perspective, no grip on reality…They are more concerned with political alliances than the welfare of the people.”

If the late Deng Hsaio Ping, architect of modern China, or Mr Lee Kwan Yew, father of modern Singapore, had written the editorial, they would most certainly have added that the economy in Pakistan is also up the spout. A glance at recent State Bank reports will indicate that, except for remittances from abroad, there is hardly any indicator that is showing signs of improvement. So far, there doesn’t appear to be a light at the end of the tunnel.

The writer served as executive director of the Pakistan American Cultural Center from 1990-2004 anwer.mooraj@tribune.com.pk

The Real Challenge from China: Its People, Not Its Currency

By FAREED ZAKARIA

I love the idea of bipartisanship. Just the image of Democrats and Republicans coming together makes me smile. “Finally,” I say to myself, “American government is working.” But then I look at what they actually agree on, and I begin to pine for paralysis.

Wen Jiabao

On Sept. 29, the House of Representatives passed a bill with overwhelming support from both Democrats and Republicans. It would punish China for keeping its currency undervalued by slapping tariffs on Chinese goods. Everyone seems to agree that it’s about time. But it isn’t. The bill is at best pointless posturing and at worst dangerous demagoguery. It won’t solve the problem it seeks to fix. More worrying, it is part of growing anti-Chinese sentiment in the U.S. that misses the real challenge of China’s next phase of development.

There’s no doubt that China keeps the renminbi, its currency, undervalued so it can help its manufacturers sell their toys, sweaters and electronics cheaply in foreign markets, especially the U.S. and Europe. But this is only one of a series of factors that have made China the key manufacturing base of the world. (The others include low wages, superb infrastructure, hospitality to business, compliant unions and a hard-working labor force.) A simple appreciation of the renminbi will not magically change all this.

Chinese companies make many goods for less than 25% of what they would cost to manufacture in the U.S. Making those goods 20% more expensive (because it’s reasonable to suppose that without government intervention, China’s currency would increase in value against the dollar by about 20%) won’t make American factories competitive. The most likely outcome is that it would help other low-wage economies like Vietnam, India and Bangladesh, which make many of the same goods as China. So Walmart would still stock goods at the lowest possible price, only more of them would come from Vietnam and Bangladesh. Moreover, these other countries, and many more in Asia, keep their currencies undervalued as well. As Helmut Reisen, head of research for the Development Center at the Organisation for Economic Co-operation and Development, wrote recently in an essay, “There are more than two currencies in the world.”

We’ve seen this movie before. From July 2005 to July 2008, under pressure from the U.S. government, Beijing allowed its currency to rise against the dollar by 21%. Despite that hefty increase, China’s exports to the U.S. continued to grow mightily. Of course, once the recession hit, China’s exports slowed, but not as much as those of countries that had not let their currencies rise. So even with relatively pricier goods, China did better than other exporting nations.

Look elsewhere in the past and you come to the same conclusion. In 1985 the U.S. browbeat Japan at the Plaza Accord meetings into letting the yen rise. But the subsequent 50% increase did little to make American goods more competitive. Yale University’s Stephen Roach points out that since 2002, the U.S. dollar has fallen in value by 23% against all our trading partners, and yet American exports are not booming. The U.S. imports more than it exports from 90 countries around the world. Is this because of currency manipulation by those countries, or is it more likely a result of fundamental choices we have made as a country to favor consumption over investment and manufacturing?

Coming: The New China

The real challenge we face from China is not that it will keep flooding us with cheap goods. It’s actually the opposite: China is moving up the value chain, and this could constitute the most significant new competition to the U.S. economy in the future.

For much of the past three decades, China focused its efforts on building up its physical infrastructure. It didn’t need to invest in its people; the country was aiming to produce mainly low-wage, low-margin goods. As long as its workers were cheap and worked hard, that was good enough. But the factories needed to be modern, the roads world-class, the ports vast and the airports efficient. All these were built with a speed and on a scale never before seen in human history.

Now China wants to get into higher-quality goods and services. That means the next phase of its economic development, clearly identified by government officials, requires it to invest in human capital with the same determination it used to build highways. Since 1998, Beijing has undertaken a massive expansion of education, nearly tripling the share of GDP devoted to it. In the decade since, the number of colleges in China has doubled and the number of students quintupled, going from 1 million in 1997 to 5.5 million in 2007. China has identified its nine top universities and singled them out as its version of the Ivy League. At a time when universities in Europe and state universities in the U.S. are crumbling from the impact of massive budget cuts, China is moving in exactly the opposite direction. In a speech earlier this year, Yale president Richard Levin pointed out, “This expansion in capacity is without precedent. China has built the largest higher-education sector in the world in merely a decade’s time. In fact, the increase in China’s postsecondary enrollment since the turn of the millennium exceeds the total postsecondary enrollment in the United States.”

The Benefits of Brainpower

What does this unprecedented investment in education mean for China – and for the U.S.? Nobel Prize-winning economist Robert Fogel of the University of Chicago has estimated the economic impact of well-trained workers. In the U.S., a high school-educated worker is 1.8 times as productive, and a college graduate three times as productive, as someone with a ninth-grade education. China is massively expanding its supply of high school and college graduates. And though China is still lagging far behind India in the services sector, as its students learn better English and train in technology – both of which are happening – Chinese firms will enter this vast market as well. Fogel believes that the increase in high-skilled workers will substantially boost the country’s annual growth rate for a generation, taking its GDP to an eye-popping $123 trillion by 2040. (Yes, by his estimates, in 2040 China would be the largest economy in the world by far.)

Whether or not that unimaginable number is correct – and my guess is that Fogel is much too optimistic about China’s growth – what is apparent is that China is beginning a move up the value chain into industries and jobs that were until recently considered the prerogative of the Western world. This is the real China challenge. It is not being produced by Beijing’s currency manipulation or hidden subsidies but by strategic investment and hard work. The best and most effective response to it is not threats and tariffs but deep, structural reforms and major new investments to make the U.S. economy dynamic and its workers competitive. That’s where we need bipartisan agreement. Someone? Anyone?

The Way Toward a Global ‘Reset’

By MIKHAIL GORBACHEV

In both Russia and the United States, the “reset” in U.S.-Russian relations, to which the leaders of both countries first declared their commitment more than 18 months ago, is now being assessed. Some, often for reasons of domestic politics, are trying to belittle any achievements. Others are wondering whether a new stage in the relationship has truly begun, or whether this is just another pendulum swing in a positive direction, to be followed inevitably by a swing backward.

In assessing where we are today, it is useful to look back at the history of our relations. Even more importantly, we must consider those relations in a broader context, as part of the changes in our globalized world.

In the early 1990s, Russian expectations for cooperation with the United States were so great, the mood was euphoric. Some of that euphoria was based on illusions and on an idealized view of America – a sense that was particularly widespread among the intelligentsia. Yet, those expectations also reflected a sound belief that our two nations could indeed achieve a great deal together, both in their own interests and for global benefit.

Euphoria soon gave way to disillusionment. Later in that decade, when the Russian economy was undermined by inept reforms and while millions of Russians were plunged into poverty, many Americans applauded Russia’s leaders. Many Russians could not help wondering if a weak, cornered Russia was what the United States wanted.

Also in the 1990s, NATO was expanded while the United States proclaimed its victory in the Cold War and its intention to maintain military superiority.

What, then, was the value of the pledge President Ronald Reagan made at the Geneva summit meeting in 1985, when he joined me in solemnly stating that our two nations would not seek military superiority? And how could a relationship of trust be built on the foundation set in the 1990s?

The period when the United States could regard itself as the sole remaining superpower and even a “hyperpower,” capable of creating a new kind of empire, turned out to be relatively short. The global financial crisis – which, this time, started in America itself rather than on the world’s periphery – spurred the process of global realignment in favor of new centers of power and influence. America has had to adjust to this shift, and it has not been easy.

The proposal to “reset” relations with Russia reflected the acknowledgement that previous policy had failed. It also recognized the great potential of a partnership between the two nations. Nevertheless, objections arose from the very start. Naysayers stressed that our nations were too different to be able to build a sustainable, “organic” relationship for the long term. Moreover, in both Russia and the United States it became clear that some people still believe that our countries are potential adversaries.

Neither Russia nor the United States can afford another confrontation. Though quite different, both nations are going through a transition. They are trying to build new, often unpredictable relationships with emerging powers. The European Union, too, faces this challenge – a challenge made even more difficult by problems arising from a hasty E.U. enlargement and monetary integration.

The intercontinental area from Vancouver to Vladivostok confronts many similar problems, and many shared interests are emerging. Powerful forces of mutual attraction must emerge as well. The U.S.-Russia “reset” and the declared E.U.-Russia “partnership for modernization” should mark the beginning of the road toward a new intercontinental community. Only by working together can the United States, Europe and Russia secure a position of leadership and influence in a rapidly changing global world.

Am I calling for an association of “the North” as a counterweight to “the South,” the Islamic world or perhaps China? Far from it.

Such a plan would be a recipe for a real rather than a hypothetical conflict of civilizations – something that in today’s world is totally unacceptable. In relations with other countries, we must always seek cooperation, joint problem-solving and ways to overcome difficulties – both those that have already arisen and those that are bound to arise.

The Islamic world is grappling with the challenge of adapting to the modern era while trying to protect its cultural identity and unique civilization. As part of this painful process, extremist tendencies within political Islam are opposed by moderate tendencies and regimes that are not averse to modernization and are ready for dialogue. A community of shared civilization, with common cultural roots and diverse experience interacting with the Islamic world, must be a party to such a dialogue.

Such a community could play an equally important role in a dialogue with China.

China’s political importance will undoubtedly increase with its population and economic power. This will be a serious test, for the international community as well as China, especially since the historic evolution of any nation is not always linear. There are forks in the road, when difficult decisions must be made. China, sooner or later, will face a political choice – the problem of democracy. Engagement and cooperation with a great nation that has become not just the “factory to the world” but also a giant economic and political “laboratory” will be another key task for the intercontinental community I am advocating.

How this community will emerge and what its final shape will be is still unclear. What is clear is that we must start by building a durable security architecture, first and foremost in Europe, with the United States and Russia as partners. Recent U.S. policy statements suggest that at last even American leaders recognize that security cannot be achieved unilaterally; it requires partnership.

The proposal by Russia’s president, Dmitri Medvedev, to conclude a pan-European security treaty applies to the same area, extending from North America to Europe and all of Russia.

I am convinced that in the future an intercontinental association of nations with a common destiny will emerge.

Big goals may seem overly ambitious or abstract, particularly at a time when Russia and the United States cannot agree on the issue of imported poultry despite their public commitment to a new relationship, and the European Union still denies Russian citizens visa-free travel.

Yet I am convinced that my proposal is not a pipe dream. The scale of global change is so vast, and the potential contribution of nations across the intercontinental space of Russia, Europe and North America is so enormous, that their close association should be seen as imperative. We must move from “reset” and partnership toward a reconfiguration of global political relations.

Mikhail Gorbachev was the leader of the Soviet Union from 1985 until its dissolution in 1991. He is a founding member of Green Cross International and is on its board.

Iran’s Revolutionary Guard ‘digging mass graves for US soldiers’

The Iranian Revolutionary Guard is digging mass graves for American soldiers in preparation for a war over its nuclear programme, according to a former senior commander.

By Richard Spencer

The scene in the south of Iran where hundreds of mass graves have been dug

General Hossein Moghadam, the Guard’s former deputy chief, was speaking after film footage showed strings of freshly dug graves in the south of the country.

They were close to the site of war graves for the dead of the long war between Iran and Saddam Hussein’s Iraq, which devastated the region in the 1980s.

“The mass graves that used to be for burying Saddam’s soldiers have now been prepared again for US soldiers, and this is the reason for digging this big number of graves,” Gen Moghadam told the Associated Press, which obtained the footage.

The warning is unlikely to be more than symbolic. No-one expects a land invasion, should the White House authorise a strike on nuclear facilities, while Iran has so far suggested counter-action is most likely to be aimed at American allies in the Gulf and Western bases there.

Gen Moghadam’s claims might be a sign that President Mahmoud Ahmadinejad, who is increasingly reliant on the Revolutionary Guard for political backing, is feeling the heat of international diplomatic pressure over his aggressive posture on Iran’s uranium enrichment programme.

Washington has made full use of the diplomatic victory it won in forcing through a new United Nations sanctions package, with the unexpected support of both Russia and China, in June.

Iranian businessmen both inside and outside the country say the economy is suffering, while President Ahmadinejad’s many enemies from within the ranks of his own conservative faction in the leadership are frequently outspoken on his domestic record across the board.

Last week Admiral Mike Mullen, chairman of the American joint chiefs of staffs, kept up President Barack Obama’s double-handed approach, saying that he had prepared an attack plan focusing on Iran’s nuclear plants while at the same time accepting he was unwilling to use it.

Both sides are open about the brinkmanship threats of force involve, with the wider Middle East fearing it will be sucked into open conflict. Gen Moghadam went on to say: “If the US decides to take a pre-emptive action and attack Iran, Iran will have no choice but to strike the American bases in the region.

“The heavy costs of such a war will not be just on the Islamic Republic of Iran. America and other countries should accept that this would be the start of an extensive war in the region.”

Water wars: India, China & the Great Thirst

Saira Kurup, TNN

Countries might wage wars over oil but the most valuable resource in the world is water. It’s the new oil, the colourless gold that’s at a premium because it is becoming scarce.

Today’s nightmare is that tomorrow the glass will be empty because water supplies are fast evaporating on account of population pressures, urbanization and now, climate change. No country is likely to be left untouched, but the great thirst will be felt the most in the region that has the world’s two most populous countries – India and China.

A new study says the situation will be the bleakest in the basins of major Himalayan rivers, ie our own backyards. The study by the Strategic Foresight Group (SFG), Mumbai is titled ‘The Himalayan Challenge’ and frighteningly predicts that “in the next 20 years, the four countries in the Himalayan sub-region (India, Nepal, China, Bangladesh) will face the depletion of almost 275 billion cubic metres of annual renewable water. For comparison, this is more than the total amount of water available in…Nepal at present.”

But why must this region run dry? It is fed by major rivers such as the Yangtze, Indus, Ganges and the Brahmaputra. But the problem is all of them originate in the Tibetan Plateau and will be badly affected by melting glaciers. The report says it may all end very badly because a water deficit will have a cumulative, destructive effect on agricultural production, power generation, food availability and livelihood, forcing all four countries in the sub-region to try and secure water resources. They may even look beyond their borders, leading to geo-political tension.

The point here is interesting. There are global forums that deliberate on oil prices and availability, but disputes over water are generally handled regionally or bilaterally. Sundeep Waslekar, executive director of the SFG laments the basic truth that “there are no global treaties on water. Only 17 nations (which don’t include the four aforementioned) have signed the UN convention on non-navigational uses of international water courses, 1997 (which provides a mechanism to deal with trans-border waters).”

India has bilateral agreements on water. Treaties with Nepal and Bangladesh cover development of the Mahakali river and sharing the waters of the Ganga. But New Delhi has nothing like that with Beijing. If today’s legal and policy architecture were used to deal with any future water dispute, India and China would have nothing more to look to than a couple of MoUs on sharing flood-season hydrological data on the Yarlong Tsangpo/Brahmaputra and the Sutlej/Langquin Zangbu rivers. Former water secretary Ramaswamy Iyer agrees that there is a chasm where there should be formal agreement. Until some years ago, water did not even figure in talks between India and China, he points out.

Retired Colonel P K Gautam, research fellow at the Institute for Defence Studies and Analyses, adds that “if China builds a dam on the Brahmaputra now, and we complain about lesser water flows later, it could say that India doesn’t have any projects in the northeast.”

Add to this the current problem of massive water shortages in both countries. This could force both India and China to “securitize” water sources and lead to tension. India is already worried about China’s reported plans to construct a massive 40,000 MW dam at the point where the Brahmaputra takes a U-bend to enter India. Delhi is also concerned about Beijing planning to divert Brahmaputra waters towards China’s arid north.

But B G Verghese, visiting professor at the Centre for Policy Research, says fears about the diversion of water are “highly exaggerated” because the difficult terrain makes it all but impossible to do this.

Waslekar agrees, but says that’s a reprieve that will only last 15 years at the most. He says it could be a window of opportunity, especially as “China’s attitude has changed a little bit, especially towards the Mekong river basin on which it had earlier refused to share data with other affected nations. … it is showing some kind of openness.” So should India try and make joint plans with China for hydropower development and setting up stations in glacial areas to monitor their melting?

Yes, says Gautam. “India should negotiate with China. We need data on the quantum of water flow in the Brahmaputra, on the melting of glaciers.”

The SFG report suggests creating a new regional forum, say a Himalayan rivers commission, to better manage the looming water problem. But like much else, that’s difficult in a region dominated by the trust deficit between countries. The key lies in doing something before the rivers run dry and the taps as well.