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Southeast Asia, like much of the rest of the world, is losing patience with King Dollar.
The westernization of the world’s reserve currency, as through sanctions on those deemed bad actors — such as Russia for its war in Ukraine — has pushed even the typically diplomatic Southeast Asians to warn the US of the consequences.
In a conference in Singapore on Tuesday (Jan 10), multiple former officials spoke about de-dollarisation efforts underway and what economies in the region should be doing to mitigate the risks of a still-strong dollar that’s weakened local currencies and become a tool of economic statecraft.
“The US dollar is a hex on all of us,” George Yeo, former foreign minister of Singapore, said at the conference hosted by the ISEAS-Yusof Ishak Institute. “If you weaponise the international financial system, alternatives will grow to replace it” and the US dollar will lose its advantage.
While few expect to see the end of King Dollar’s global sovereign status anytime soon, Yeo urged that the risk of it happening be taken more seriously.
“When this will happen, no one knows, but financial markets must watch it very closely,” said Yeo, who is a visiting scholar at the National University of Singapore’s Lee Kuan Yew School of Public Policy.
After gaining 6.2% in 2022, the US dollar is down 0.67% in the first several days of this year, through the end of Tuesday, according to the Bloomberg Dollar Spot Index.
Yeo noted that in times of crisis, the US dollar rises further — as with levies on Russia that have left Russian banks estranged from a network that facilitates tens of millions of transactions every day, forcing them to lean on their own, much smaller version instead. That’s put more pressure on third-party countries, too, which have to unduly rely on US dollar use.
Following on Yeo’s remarks later in the conference, former Indonesian trade minister Thomas Lembong applauded Southeast Asia's central banks that already have developed direct digital payments systems with local currencies, and encouraged officials to find more ways to avoid leaning too hard on the greenback.
“I have believed for a very long time that reserve currency diversification is absolutely critical,” said Lembong, who’s also a co-founder and managing partner at Quvat Management Pte Ltd. Supplementing US dollar use in transactions with use of the euro, renminbi, and the yen, among others, would lead to more stable liquidity, and ultimately more stable economic growth, he said.
The 10 Asean countries are just too disparate to establish a common currency as with the euro bloc. But Lembong said he was “deeply passionate” on this subject of the US dollar as a global reserve currency.
The direct digital payments systems — which have boosted local currency settlement between Malaysia, Indonesia, Singapore and Thailand — are “another great outlet for our financial infrastructure”, he said.- Bloomberg
The United States biological weapons program officially began in spring 1943 on orders from U.S. President Franklin Roosevelt. Research continued following World War II as the U.S. built up a large stockpile of biological agents and weapons. Over the course of its 27 year history, the program weaponized and stockpiled the following seven bio-agents (and pursued basic research on many more):
Personnel are working inside a
bio-lab at the US Army Medical Research Institute of Infectious
Diseases at Fort Detrick on September 26, 2002. Photo: AFP
Editor's Note:
Since the military conflict between Russia and Ukraine began, the international community has grown increasingly aware of the roles the US and NATO have played behind the crisis.
From funding biological labs to creating ethnic division and ideological confrontation around the world, from imposing sanctions on "disobedient countries" to coercing other nations to pick sides, the US has acted like a "Cold War schemer," or a "vampire" who creates "enemies" and makes fortunes from pyres of war. The Global Times is publishing a series of stories and cartoons to unveil how the US, in its superpower status, has been creating trouble in the world one crisis after another. This is the fifth installment.
After World War Two (WWII), the US ran amok around the world, leaving behind a plague of war and hatred wherever they went. Whether on the biological front or in the ideological front, the US is the top "poison disseminator."
A US army tank rolls deeper into Iraqi territory on March 23, 2003?when US forces invaded?Iraq. Photo: VCG
Mysterious bio-labs
Since conflict broke out between Russia and Ukraine, biological laboratories in Ukraine that are funded by the US caught global attention.
Russian Deputy Foreign Minister Sergey Ryabkov said on March 22 that Russia cannot tolerate the US setting up biological laboratories in Ukraine with the prospects of developing biological weapon components, TASS reported.
Earlier that month, Russian defense ministry also disclosed that US spent more than $200 million on biolaboratories in Ukraine, TASS said.
The Russian military said they had gotten hold of documents confirming that Ukraine developed a network of at least 30 biological laboratories that host extremely dangerous biological experiments, aimed at enhancing the pathogenicity of plague, anthrax, tularemia, cholera, and other lethal diseases with the help of synthetic biology. This work is funded and directly supervised by the US' Defense Threat Reduction Agency (DTRA) in the interest of the Pentagon's National Center for Medical Intelligence, according to a statement by Russian Permanent Representative to UN Vassily Nebenzia.
The Russian defense ministry said that it learned of the details regarding a project implemented at laboratories in Kiev, Kharkov, and Odessa, which studied the possibilities of spreading particularly dangerous infections through migratory birds, including the highly pathogenic H5N1 influenza (lethal to humans in 50 percent of cases) and the Newcastle disease.
As part of some other projects, bats were considered as carriers for potential biological weapon agents. Among the priorities identified are the study of bacterial and viral pathogens that can be transmitted from bats to humans: pathogens of the plague, leptospirosis, brucellosis, as well as the coronaviruses disease, and filoviruses.
The analysis of the obtained materials confirms the transfer of more than 140 containers with ectoparasites from bats from a bio-lab in Kharkov abroad, according to Nebenzia's statement.
The bio-labs in Ukraine are only a handful of the 336 biological laboratories the US reportedly funds in 30 countries around the world. Most of these labs are located in the Middle East, Southeast Asia, Africa, and along the perimeter of former USSR, according to the Russian defense ministry.
Despite covert behaviors, the dubious activities of the US' overseas bio-labs had previously been revealed.
In August 2021, a South Korean civic group sued the Fort Detrick bio-labs and the US Forces Korea (USFK) over the smuggling of toxic substances to US military bases there in violation of domestic law.
In December 2015, the South Korean Yonhap News Agency revealed that the USFK had staged 15 experiments using neutralized anthrax samples at the Yongsan Garrison in Seoul from 2009 to 2014.
US officials gave incongruous responses to the bio-lab issue since Russia disclosed relevant documents. They admitted to the existence of such labs but failed to provide substantial evidence that the programs they funded were to promote public health. Thus, it increased the world's suspicions over such labs.
Libyan protesters gather in Benghazi on March 11, 2011 as Arab Spring spread in the country. The US, the UK and France?intervened in Libya?with a bombing campaign on March 19, 2021. Photo: AFP
Creating turmoil and division
The US prides itself on being the "city upon the hill" and a "beacon of democracy." However, the history of the US was full of wars and killing. During its over 240 years of history, there were only 16 years when the US was not at war.
After the end of WWII, the US became the most powerful country in the world, however, war became an important tool for the US to maintain its own hegemony.
Data shows that from the end of WWII to 2001, the US initiated 201 of the 248 armed conflicts worldwide in 153 locations, accounting for over 80 percent of total conflicts.
The Korean War (1950-53), for example, resulted in the deaths of more than 3 million civilians and created approximately 3 million refugees, and almost all major cities in the Korean Peninsula were left in ruins.
However, the US evidently lacked self-reflection after the Korean War. Immediately after the end of the Korean War, the US intervened in Vietnam in the 1950s under the pretext of preventing the expansion of Communism in Southeast Asia. During the Vietnam War, the brutality of the US army made the war the longest and most brutal war since WWII.
The Vietnamese government estimates that as many as 2 million civilians died in the war, many of whom were slaughtered by US forces in the name of fighting Viet Cong communists.
In March 1999, under the banner of "avoiding humanitarian disaster," NATO forces led by the US openly bypassed the UN Security Council and carried out the bombing of Yugoslavia for 78 days, causing death of many innocent civilians.
After the September 11 attacks in 2001, the US first invaded Afghanistan in the name of fighting Al Qaeda and the Taliban and then launched a war in Iraq under trumped-up charges.
Over the years, the US instigated the "Arab Spring," igniting civil wars in Libya and Syria.
Since 2001, wars and military operations by the US have claimed more than 800,000 lives and displaced tens of millions of people.
"We inflated the stature of our enemies to match our need for retribution. We launched hubristic wars to remake the world and let ourselves be remade instead...We midwifed worse terrorists than those we set out to fight," New York Times columnist Michelle Goldberg wrote in September 2021, on the eve of the 20th anniversary of the 9/11 attacks.
Exporting 'democracy'
Former US president Jimmy Carter once said that the US is "the most warlike nation in the history of the world" due to a desire to impose American values on other countries.
The Cold War was, to some extent, a global confrontation born of ideological opposition. In this process, the US established its own discourse system and promoted a so-called "liberal democracy," which was the foundation of its cultural hegemony.
In his book, America's Deadliest Export: Democracy, the Truth About US Foreign Policy, and Everything Else, American diplomat William Blumm reveals the close connection between America's foreign expansion and its "democracy export."
Between 1947 and 1989, the US carried out 64 covert operations of subversion and six overt ones, wrote Lindsey O'Rourke, a political scientist at Boston College, in her book Covert Regime Change: America's Secret Cold War. Costa Rica, Guatemala, Ecuador, Bolivia, El Salvador, Grenada, Honduras, Panama, Haiti, Venezuela...Of all America's Latin American neighbors, there were few who have not faced meddling from the US.
After the end of the Cold War, the US became more unscrupulous in promoting interventionism and frequently exported "color revolutions."
A US Congressional investigation in 1976 revealed that nearly 50 percent of the 700 grants in the field of international activities by the principal foundations were funded by the CIA, Frances Stonor Saunders wrote in the book Who Paid the Piper? The CIA and the Cultural Cold War.
These foundations support elites and students from other countries to study in the US and select and support "opinion leaders" who serve the interests of the US.
The US has also long linked economic aid to the "democratic revolution" and put pressure on some developing countries through its leading international financial institutions.
Far from achieving stability and prosperity, most of the recipients of the US' version of democracy seem to be trapped in the "democratic curse" of political turmoil and national retrogression.
As Michael Parenti, an American political scientist pointed out, the US has been wearing these "democratic" glasses for years. An inexplicable sense of superiority has led the US to stand on the notion of it being the so-called "city on a hill", regarding its democracy as an "international model," an unsupported hypothesis, and point fingers at other countries. The US' enthusiasm for "democracy export" is not really about democracy, but about maintaining American hegemony.
As former US President Bill Clinton said, "defending freedom and promoting democracy in the world is not just a reflection of our deepest values. They are vital to our national interest."
Next up:
Is the US a "defender" or a "destroyer" of human rights? Who has been sacrificed on the "altar" of US-touted democracy? In our next story, we will focus on the US' vile practice of igniting war under the pretext of "human rights and democracy."
Singapore will cap the number of homes that can be developed in suburban projects as it seeks to curb the increasing trend of so-called shoebox apartments.
The government plans to limit the number of homes for apartment projects outside the city’s central area to “discourage” shoebox units, the Urban Redevelopment Authoritysaid in a statement posted on its website today. The new rules will be implemented from Nov. 4.
The island state’s population growth, scarce land and surging property values have prompted developers to shrink housing space.
Residential prices surged to a record at the end of 2011 in a city that’s about half the size of Los Angeles, and the government said in May it’s concerned that shoebox apartments are mushrooming as private home sales surged to a three-year high with record purchases of units that are smaller than 50 square meters (538 square feet).
“The new guidelines will discourage new developments consisting predominantly of ‘shoebox’ units outside the central area, but at the same time give flexibility to developers to offer a range of homes of different sizes to cater to the needs of various demographic groups and lifestyles,” according to the statement.
Shoebox units will increase more than four-fold to about 11,000 units by the end of 2015 from 2,400 at the end of last year, the authority said.
‘Almost Inhuman’
Singapore should curb the trend of shoebox apartments because they are “almost inhuman,” said Liew Mun Leong, chief executive officer of CapitaLand Ltd. (CAPL), Southeast Asia’s biggest developer. The government should intervene because these projects are “wasting” the country’s scarce land resource, he said in the interview in May.
The smaller apartments helped boost sales, comprising 2,766 units or 42 percent of the sales in the first quarter, Li Hiaw Ho, executive director at CBRE Research, said in an e-mailed statement in July.
Home sales have climbed to 12,254 units this year through June 30, according to data from the authority. Suburban projects will be the “driving force” for developers in the second half of 2012, PropNex said.
The government’s guidelines are a “welcome move” amid concerns of smaller homes dominating the suburbs, according to Jones Lang LaSalle.
Consumer Trends
“The policy itself is well thought through,” Jones Lang, a Chicago-based property brokerage, said in an e-mailed statement. “Central area, where land prices are high, is excluded thereby allowing market forces to continue to dictate the relevant housing form especially through the measures of financial affordability and equally that of consumers’ preferences and trends.”
The government doesn’t want shoebox units to form a “disproportionately large portion” of the housing supply in Singapore, the Urban Redevelopment Authority said today. Some new housing developments are made up mostly of these smaller units, sometimes as much as 80 percent of a project, it said.
A large concentration of such developments could add stress to the local road infrastructure with more units that the government had planned for, according to the statement.
Asean countries are still developing because there is still much to do, and much to learn about how to do it.
IF Asean is sometimes accused of being a talking shop, it also vividly demonstrates the value and virtues of some talking shops.
Officials’ meetings at various levels are legion, growing in number and scope over half a century until they average a few a day for every day of the year.
Between these are the summits, being more prominent in comprising heads of governments. Besides the content of the proceedings, the frequency of the summits themselves may indicate the state of the South-East Asian region.
When leaders from Indonesia, Malaysia, the Philippines, Singapore and Thailand met in Bangkok in 1967 to found Asean, that was somehow not considered a summit. So the “first” summit came only in 1976 in Bali, with the “Treaty of Amity and Cooperation in South-East Asia” and the “Declaration of Asean Concord.”
The second summit came the following year in Kuala Lumpur, coinciding with an Asean-Japan dialogue. Although this was only one year after the first, it was a whole decade after Asean’s founding and would be another full decade before the next.
The third summit (Manila, 1987) decided to hold summits every five years. By the seventh (Bandar Seri Begawan) it would be every year, then after skipping 2006 the Philippines hosted the 12th in Cebu amid local protests.
The 14th summit slated for 2008 in Thailand was postponed to early 2009 over domestic disturbances, then put off for another two months in the broken Pattaya gathering. From then on, summits would be biannual affairs.
Between and beyond the summits, whether or not local scandals and protests add to the news value of Asean gatherings, the original five member nations seem to attract more attention if not also more interest. This is anomalous since Asean membership confers equal status on all members regardless of size, age, clout or political system.
The newer members can actually be quite pivotal in their own way, as Vietnam and then Cambodia had been, and as Myanmar may be now. And several of the older members need not be particularly significant to the Asean 10 as a whole, much less beyond.
With such issues in mind, Malaysia’s Foreign Policy Studies Group last week held another roundtable conference in Kuala Lumpur on how relations between Malaysia and the CLM countries (Cambodia, Laos, Myanmar) can contribute to Asean consolidation.
An earlier roundtable comprised delegates from Indonesia, Thailand and Vietnam in assessing how their countries’ relations with Malaysia could progress in the same vein. Vietnam, as the largest and most developed of Asean’s newer CLMV members, had also introduced reforms earliest to qualify to join the earlier dialogue with some of the original members.
Other CLMV countries have progressed on other fronts on their own. It is now 20 years since Cambodia, for example, reached agreement with Malaysia on visa-free travel.
Laos is another country that Malaysia has assisted, with the establishment of bilateral relations (in 1966) even before Asean was founded. Since then, relations have flourished, particularly after Malaysia worked to welcome Vientiane into Asean.
Myanmar today is still undergoing a transition, and therefore also very much a focus of world media attention. Its people now have a greater sense of nationhood following a raft of reforms, mindful of the national interest from economic priorities to the prerogative of rejecting foreign military bases on its soil.
A Malaysian delegate said that the US, following news reports last Sunday, was now looking for a suitable site for a new “missile shield” system in the region. The US and China were the two proverbial “elephants in the room”, and the geopolitical rivalry between them very much an issue for all delegates.
No individual, organisation or country at the roundtable, whether officially or unofficially, was left undisturbed by major power rivalry contaminating the Asean region. This was the more so when preparations abroad tended to centre around a military build-up, with the US “pivot to Asia” involving stationing 60% of its military assets in the Asia-Pacific.
According to one recent analysis, at current and anticipated rates China’s economy could surpass the US’ as early as 2016, and US overall decline could become evident by 2020. Ironically, as with its former Soviet adversary before it, the decline would be underscored by excessive military expenditure and a warlike mindset.
Given these scenarios, it is important to be reminded of some pertinent underlying issues. These may be framed by some telling questions that must be asked, for which answers are vitally needed.
First, are the CLM countries necessarily more dependent on a regional superpower-as-benefactor like China economically, compared to Asean’s older and more developed members. Not so, especially when considering that the latter, with larger economies, have more at stake in dealing with a rising China.
Second, is China even likely to consider challenging US dominance in the region? Despite occasionally dire pronouncements by some there is no evidence of that, indeed quite the reverse: beyond assertions of its old maritime claims, Beijing’s relations with all countries in the region have been progressing and progressive.
US military dominance in the Asia-Pacific is often credited with keeping the regional peace, particularly in the high seas. Is this assumption merited if piracy and terrorism are not included in the calculus, since there may not be any other military force out to wreak havoc in the region post-1945?
Fourth, how much value is there still in the assumption that the US military posture is and will remain the status quo entity in the region? The status quo is helping China’s economy grow, with secure shipping and harmonious development, while the US economy is continually taxed by its large and growing military presence.
Fifth, and by extension, how much pulling power is there today in US efforts at soliciting allies? The problem with enlisting in an alliance for other countries is that to be identified as an ally of a major power is also to identify as an ally against another major power.
Dividing the region in Cold War fashion does not help anyone, and never did. To enlist with a (relatively) declining superpower creates further problems of its own for such allies.
Sixth, can China’s reported flexing of its muscles in the South China Sea and the East China Sea in any way be a show of strength? Since it only gives Beijing a negative image just as it needs to look good, without any gain in return, it is instead a point of weakness.
Seventh, can US efforts to contain China ever work? There is no shortage of instances that verify containment, a situation confirmed by official denials.
So, eighth, why try to contain China at all when in the process the US only loses goodwill before losing face? Perhaps old habits die hard, but more likely the military-industrial complex dies harder.
Smaller countries in Asean and elsewhere have much to learn from the major powers, notably the US and China. Sadly, the lessons are just as much what not to do as they are about what to do.
BEHIND THE HEADLINES By BUNN NAGARA sunday@thestar.com.my
I DON’T usually pay attention to Asean meetings as there are so many of them but the disappointing outcome of the recently concluded Asean Ministers Meeting (AMM) in Phnom Penh caught my attention.
The failure of the meeting to come up with a joint communiqué was striking even to casual observers.
The failure, the first in the bloc’s 45-year history, caused by disagreement among Asean members over the South China Sea dispute, was a worrying development that has cast doubts over its ability to speak in unison on this thorny issue.
The last thing Asean needs is to be caught in a turf war for superpowers in its own backyard.
The South China Sea, which is so crucial not only to the littoral states but to the international community at large, could well be that stage.
China has been seen by many as acting “assertively” in backing its claim of the sea and has been involved in several stand-offs with Vietnam and the Philippines, which have also reacted strongly against China in those situations.
I wonder if Malaysia, as a claimant state, should start thinking of having in place specific contingency plans to confront the kinds of situation that Vietnam and the Philippines have faced against China.
I know Malaysia enjoys close bilateral and people-to-people relations with China. Beijing has even described us as a “special friend”.
Despite this, let us be reminded that China also has deep relations with Vietnam and the Philippines.
It even has nearly inextricable economic and strategic relations with the United States, a potential adversary and with whom it has clashing interests in the sea.
I am not schooled in the fine art of international relations but I believe nations should not always think the best of others and must be prepared to face any eventuality.
In the context of the South China Sea, such eventualities should include facing potentially hostile and intrusive acts of our neighbours which can undermine our interests.
Any one of the claimant states can turn adversarial but I believe we have to pay special attention to China.
Its recent actions such as patrolling disputed waters and deploying a garrison at Sansha city to impose its jurisdiction all point towards Beijing’s readiness and resolve to assert its claims.
What would Malaysia do should we find the cables of our offshore exploration vessels cut by a Chinese vessel or if Chinese surveillance and patrol vessels appear in our Exclusive Economic Zone (EEZ), situations which Vietnam and the Philippines have faced?
I believe Malaysia should prepare contingency plans to face such situations. Merely reacting to developments in this high-stake theatre would not be good enough.
The tense situation underscores the need for a binding code to govern the behaviour of the claimants. Such a code will compel them to settle their disputes through peaceful means and using international law.
While I noticed progress between Asean and China to come up with guidelines for the Declaration of Conduct in the sea between them, they still have a long way to go before they can agree on a Code of Conduct.
On the outcome of the AMM meeting in Phnom Penh and China’s refusal to discuss disputes multilaterally, I foresee a prolonged impasse. At the rate things are going, I don’t see China changing tangent of not wanting to discuss the dispute multilaterally.
The Code of Conduct that Asean and China are working to establish would not be efficient if it did not include all the claimants. In this regard, one wonders if it would make sense to include Taiwan, which is also a claimant in the sea, to be a party to such a code.
It would not make sense to ignore this claimant in the construct of a code to govern the conduct of claimant states. What set of conduct then would Taiwan be subjected to if the Code of Conduct is agreed only between Asean and China?
Besides ensuring that everyone plays by the same rules, bringing Taiwan into the fold could help yield fresh perspectives to the discourse on disputes at sea, which to me seems to be getting nowhere.
Taiwan has much to offer in areas such as marine scientific research, fishery management/conservation, environmental protection, humanitarian assistance/disaster relief, and search and rescue.
The claimant and littoral states could tap into Taiwan’s expertise in these areas and promote cooperation, build confidence and avert further tension.
I hope my take on the subject would provide food for thought to claimant states and prompt them to set aside differences and work together towards peace.
I believe Malaysia as a claimant state should not only be steadfast in safeguarding its interests but should also show initiative to promote peace.
Malaysia can leverage its position as a founding member of Asean and as a friend to claimant states and the United States to be a voice of reason.
With the statesmanship skills of our diplomats we can help restore unity in Asean that was shaken in the aftermath of the AMM in Phnom Penh, restore confidence between Asean and China, and reassert Asean’s centrality in regional security matters.
SON OF THE SEA
Kuala Lumpur
China Pushes on the South China Sea, ASEAN Unity Collapses
China and ASEAN Much Further Apart than the Smiles Suggest
For more than two decades Beijing has pursued a consistent policy in the South China Sea composed of two main elements: gradually strengthening the country’s territorial and jurisdictional claims while at the same time endeavoring to assure Southeast Asian countries of its peaceful intentions. Recent moves by China to bolster its maritime claims have brought the first element into sharp relief, while reassurances of benign intent have, however, been in short supply. Indeed, far from assuaging Southeast Asian concerns regarding its assertive behavior, China has fuelled them by brazenly exploiting divisions within the Association of Southeast Asian Nations (ASEAN) to further its own national interests.
China Hardens Its Stance
Commentaries in China’s state-run media analyzing the South China Sea issue have become markedly less conciliatory. Opinion pieces highlight several new themes in China’s official line. One theme is that China’s territory, sovereignty as well as its maritime rights and interests increasingly are being challenged by Southeast Asian nations and Japan in the South and East China Seas. China’s response, it is argued, should be to uphold its claims more vigorously, increase its military presence in contested waters, and, if necessary, be prepared to implement coercive measures against other countries. As one commentary notes “Cooperation must be in good faith, competition must be strong, and confrontation must be resolute” (Caixin, July 13).
Another theme is that, while China has shown restraint, countries such as the Philippines and Vietnam have been pursuing provocative and illegal actions in a bid to “plunder” maritime resources such as hydrocarbons and fisheries which China regards as its own (China Daily, July 30).
A third theme is that Manila and Hanoi continue to encourage U.S. “meddling” in the South China Sea and that the United States uses the dispute as a pretext to “pivot” its military forces toward Asia (Global Times, July 11). To reverse these negative trends, Chinese commentators have urged the government to adopt more resolute measures toward disputed territories and maritime boundaries. Nationalist sentiment, they argue, demands no less.
Recent measures undertaken by the Chinese authorities do indeed suggest a more hard-line position. Ominously, some of the initiatives have included a strong military element, presumably as a warning to the other claimants that China is ready to play hardball.
Perhaps the most noteworthy attempt by China to bolster its jurisdictional claims in the South China Sea was the raising of the administrative status of Sansha from county to prefecture level in June. Sansha originally was established in 2007 as an administrative mechanism to “govern” the Paracel Islands, Macclesfield Bank and the Spratly Islands. Sansha’s elevation was an immediate response to a law passed on June 21by Vietnam’s national assembly, which reiterated Hanoi’s sovereignty claims to the Paracels and Spratlys. Both Vietnam and China protested the other’s move as a violation of their sovereignty (Bloomberg, June 21). Less than a month later, Sansha’s municipal authorities elected a mayor and three deputy mayors and China’s Central Military Commission authorized the establishment of a garrison for “managing the city’s national defense mobilization, military reserves and carrying out military operations (Xinhua, July 20).
Earlier, in late June, China’s Defense Ministry announced it had begun “combat ready” patrols in the Spratly Islands to “protect national sovereignty and [China’s] security development interests” (Reuters, June 28). Embarrassingly for the People’s Liberation Army (PLA) Navy, however, on July 13, one of its frigates ran aground on Half Moon Shoal, 70 miles west of the Philippine island of Palawan and within the Philippines 200 nautical mile exclusive economic zone (EEZ). The frigate was refloated within 24 hours, suggesting that other PLA Navy vessels were nearby when the incident occurred. These developments provide further evidence of the growing militarization of the dispute.
China also has moved to undercut the claims and commercial activities of the Philippines and Vietnam in the South China Sea in other ways.
In June, the state-run China National Offshore Oil Corporation (CNOOC) invited foreign energy companies to bid for exploration rights in nine blocks in the South China Sea. The blocks lie completely within Vietnam’s EEZ and overlap with those offered for development to foreign energy corporations by state-owned PetroVietnam. Accordingly, Hanoi vigorously protested CNOOC’s tender (Bloomberg, June 27). More importantly the blocks are located at the edge of China’s nine-dash line map and seem to support the argument that Beijing interprets the dashes as representing the outermost limits of its “historic rights” in the South China Sea. Under the 1982 United Nations Convention on the Law of the Sea (UNCLOS), however, coastal states are not entitled to “historic rights” on the high seas. It is therefore unlikely that any of the major energy giants will bid for CNOOC’s blocks—although smaller companies may do so if only to curry favor with Beijing with a view to landing more lucrative contracts down the road. If, however, exploration does move forward in any of the nine blocks, a clash between Vietnamese and Chinese coast guard vessels will become a very real possibility.
On the issue of ownership of Scarborough Shoal, scene of a tense standoff between Chinese and Philippines fishery protection vessels in May-June, China position remains uncompromising. At the annual ASEAN Regional Forum (ARF) in Phnom Penh, Cambodia in July, Chinese Foreign Minister Yang Jiechi restated China’s sovereignty claims to the shoal, rejected the notion that it was disputed and accused Manila of “making trouble” (Xinhua, July 13). According to the Philippine foreign ministry, Chinese trawlers―protected by Chinese paramilitary vessels—continue to fish in waters close to Scarborough Shoal in contravention of a bilateral accord whereby both sides agreed to withdraw their vessels [1].
Following the ARF, China kept up the pressure on the Philippines. In mid-July, it dispatched a flotilla of 30 fishing trawlers to the Spratlys escorted by the 3,000-ton fisheries administration vessel Yuzheng 310 (Xinhua, July 15). The trawlers collected coral and fished near Philippine-controlled Pag-asa Island and Chinese-controlled Mischief and Subi Reefs (Philippine Daily Inquirer, July 27). The Philippine authorities monitored the situation but took no action.
The Phnom Penh Debacle
In the past, after China has undertaken assertive actions in the South China Sea it has tried to calm Southeast Asia’s jangled nerves. At the series of ASEAN-led meetings in Phnom Penh in mid-July, however, Chinese officials offered virtually no reassurances to their Southeast Asian counterparts. Worse still, China seems to have utilized its influence with Cambodia to scupper attempts by ASEAN to address the problem, causing a breakdown in ASEAN unity.
In the final stages of the annual meeting of ASEAN foreign ministers (known as the ASEAN Ministerial Meeting or AMM), the Philippines and Vietnam wanted the final communiqué to reflect their serious concerns regarding the Scarborough Shoal incident and the CNOOC tender. They were supported by Singapore, Indonesia, Malaysia and Thailand who felt that ASEAN should speak with one voice. Cambodia—which holds the rotating chairmanship of ASEAN and has close political and economic ties with China— objected because, in the words of Foreign Minister Hor Namhong, “ASEAN cannot be used as a tribunal for bilateral disputes” (Straits Times, July 22). Attempts by Indonesian Foreign Minister Marty Natalegawa to reach a compromise on the wording were unsuccessful and for the first time in its 45-year history the AMM did not issue a final communiqué.
The fallout from the AMM was immediate and ugly. Natalegawa labelled ASEAN’s failure to reach agreement “irresponsible” and that the organization’s centrality in the building of the regional security architecture had been put at risk (Straits Times, July 16). Singapore’s Foreign Minister, K. Shanmugam described the fiasco as a “sever dent” in ASEAN’s credibility (Straits Times, July 14). Cambodia and the Philippines blamed the failure on each other. Cambodia was pilloried by the regional press for its lack of leadership and for putting its bilateral relationship with China before the overall interests of ASEAN. One analyst allegedCambodian officials had consulted with their Chinese counterparts during the final stages of talks to reach an agreement on the communiqué [2]. China’s Global Times characterized the outcome of the AMM as a victory for China, which does not think ASEAN is an appropriate venue to discuss the dispute, and a defeat for the Philippines and Vietnam (Global Times, July 16).
A few days after the AMM, Indonesian President Susilo Bambang Yudhoyono dispatched his foreign minister to five Southeast Asian capitals in an effort to restore ASEAN unity. Natalegawa’s shuttle diplomacy resulted in an ASEAN foreign minister’s statement of July 20 on “ASEAN’s Six-Point Principles on the South China Sea” [3]. The six points, however, broke no new ground and merely reaffirmed ASEAN’s bottom line consensus on the South China Sea. In response to the joint statement, China’s Foreign Ministry said it would work with ASEAN to implement the 2002 Declaration on the Conduct of Parties in the South China Sea (DoC) (Chinese Ministry of Foreign Affairs, July 21).
One of the six points calls for the early conclusion of a code of conduct (CoC) for the South China Sea, but the Phnom Penh debacle has made that target highly doubtful.
Although China agreed to discuss a CoC with ASEAN in November 2011, Beijing always has been lukewarm about such an agreement, preferring instead to focus on implementing the DoC. Undeterred, earlier this year ASEAN began drawing up guiding principles for a code and in June agreed on a set of “proposed elements.” While much of the document is standard boiler plate, there are two aspects worthy of attention.
The first is that ASEAN calls for a “comprehensive and durable” settlement of the dispute, a phrase that seems to repudiate Deng Xiaoping’s proposal that the parties should shelve their sovereignty claims and jointly develop maritime resources. Clearly, the four ASEAN claimants have rejected Deng’s formula as it would be tantamount to recognizing China’s “indisputable sovereignty” over the South China Sea atolls.
The second interesting aspect concerns mechanisms for resolving disputes arising from violations or interpretations of the proposed code. The document suggests that disputing parties turn to the 1976 Treaty of Amity and Cooperation (TAC) or dispute resolution mechanisms in UNCLOS. Neither, however, would be of much utility. While the TAC does provide for a dispute resolution mechanism in the form of an ASEAN High Council, this clause has never been invoked due to the highly politicized nature of the High Council and the fact that it cannot issue binding rulings. Moreover, although China acceded to the TAC in 2003, Beijing almost certainly would oppose discussion of the South China Sea at the High Council because it would be outnumbered 10 to 1.
UNCLOS does provide for binding dispute resolution mechanisms, including the submission of disputes to the International Court of Justice (ICJ) or the International Tribunal on the Law of the Sea (ITLOS). China always has rejected a role for the ICJ in resolving the territorial disputes in the South China Sea and, in 2006, China exercised its right to opt out of ITLOS procedures concerning maritime boundary delimitation and military activities.
On July 9, Vice Foreign Minister Fu Ying had indicated to ASEAN foreign ministers that China was willing to start talks on a CoC in September. Two days later, however, as ASEAN wrangled over their final communiqué, Foreign Minister Yang seemed to rule this out when he stated discussions could only take place “when the time was ripe” (Straits Times, July 11). At present ASEAN and China are not scheduled to hold any meetings on the CoC, though officials currently are discussing joint cooperative projects under the DoC.
If and when the two sides do sit down to discuss the CoC, it is probable that Beijing will demand all reference to dispute resolution be removed on the grounds that the proposed code is designed to manage tensions only and that the dispute can only be resolved between China and each of the other claimants on a one-on-one basis. Taken together, these developments have dimmed seriously the prospect of China and ASEAN reaching agreement on a viable code of conduct for the South China Sea any time soon. As such, the status quo will continue for the foreseeable future.
Ernest Bower, “China reveals its hand on ASEAN in Phnom Penh,” Center for Strategic and International Studies, July 20 2012.
“Statement of ASEAN Foreign Ministers on ASEAN’s Six-Point Principles on the South China Sea,” Cambodian Ministry of Foreign Affairs, July 20, 2012 http://www.mfaic.gov.kh/mofa/default.aspx?id=3206.
No one can stop China from claiming “indisputable sovereignty” over the West Philippine Sea (South China Sea)—except China itself or the authoritative power of world opinion.
Short of war, a war nobody wants or would wish, even the United States can only delay or impede the fulfillment of China’s inordinate ambition to gain sovereign control of 3 million square kilometers of this great inland sea that is also Southeast Asia’s maritime heartland.
This is the strategic context of China’s assertive ambiguity in the West Philippine Sea (South China Sea).
Just now, Beijing can only bluster and intimidate, as it probes for weaknesses in its rival claimants.
But once China can translate its economic power into military capability credible enough to challenge that of the United States—when the “time is right” in China’s terms—then the geopolitical configuration in the Asia-Pacific region will change radically.
And time and circumstances favor China. Analysts say China is likely to become the world’s largest economy in a decade or so.
If they are right, the Philippines has only 10 short years to prepare for what is likely to become an interesting Asia-Pacific future.
Long-term security
Given the constraints under which it’s working, the administration of President Benigno Aquino has so far done all that could possibly be done, in the short term, to defend our nation’s interests in the West Philippine Sea.
But in this case it’s not enough to deal with the immediate problem. Our nation’s long-term security hangs in the balance.
And to ensure our safety, we must look at the root of our nation’s security, which lies in our people—in everyone of us and nobody else.
If our country is to prevail in any challenge, if the Philippines is to become worthy of respect as a sovereign nation, we must first of all enable our people to become effective wealth creators.
We must make our country rich enough to enable us to acquire the means to defend our nation’s interests, to protect our people’s dignity and honor.
Nationhood infrastructure
To carry out the government’s strategies, policies, plans and programs to grow and develop the nation, we must strive urgently to create the four conditions necessary for growth and development.
Let us make no mistake, without these, the nation can hardly enforce its Constitution and its laws, and no development plan can succeed:
1. We must come to terms with ourselves. We must build among us the infrastructure of nationhood. We must be able to answer the basic question of who we are.
We must live the core values our forebears fought and died for: Dignity, honor, freedom, justice, self-determination, hard work, discipline, tolerance, mutual caring and compassion.
We must become a people at peace with themselves and with the world.
There is nothing our people cannot accomplish, if our identity and the goals we seek are articulated in terms of the core values taught us by our heroes and martyrs.
These core values define what is right or wrong for our people. They guide us, like our heroes and martyrs, to live only when it is right to live, and to die only when it is right to die.
2. No matter what it takes, we must end our internal wars. Our radical insurgency is kept alive by our grievous inequality and the elemental injustice of mass poverty. And both are caused by corruption and misgovernment.
The same is true of our separatist conflict in Mindanao. There popular frustrations are worsened by rivalries over land and livelihood, and the situation is complicated by ethnic and religious enmities.
3. We must complete all the land and nonland reforms we still need to do. Not only will their completion make rebellion, separatism and mutiny irrelevant but will also accelerate our nation’s growth. And, finally, it will unite our people.
4. We must transfer the power of the few over the state to the people as citizens. In the World Bank’s view, we are a country where state policies and their implementation serve not the common good but those of special interests.
The capture of the state and its regulatory agencies by vested interest groups has made our economy the least competitive among comparable economies in East Asia.
In sum, we must put our house in order. We must level our popular playing field to grow and develop the nation—and so enable our people to surmount any challenge.
No luxury of time
As we create the four conditions necessary for growth and development, we must also carry out our development plans. Given the uncertainties building up in East Asia, we do not have the luxury of time.
It is the Chinese people’s historic sense that is driving their country’s rise. They count their recovery from generations of humiliation at the hands of the great powers as lasting 150 years starting from the initial European effort to open up China around 1800.
In 1949, Mao Zedong proclaimed China had stood up. But China began to recover economically only after Deng Xiaoping’s reforms (1978). In three and a half decades, China has become the world’s second largest economy.
We, too, must tap into our people’s sense of nationality—and do no less. By creating the four conditions necessary for growth and development that I cited above, and by simultaneously carrying out the government’s development plans, we can change our country—we can modernize it without leaving anyone behind—during the next 10 years.
By that time, we will also have nurtured the inclusive institutions that will sustain our people’s capacities for wealth creation.
No primrose paths
Let us not delude ourselves. There are no short cuts—no primrose paths—to growth and development. We must never give up even if our country’s rise takes 150 years or more.
We have no choice. The alternative is too dire to contemplate.
We must work together to prevent the situation developing that reduces our country into a tributary, a vassal, a province of a great power.
Those who sacrificed and died for us and for generations yet to come will never forgive us if we fail to summon the courage and the will to take the radical steps toward the Filipino future: To deliberately put in place the four conditions necessary for growth and development without delay.
New York, Hong Kong, London...Kuala Lumpur? Malaysia is going gangbusters. Now, it must sustain the momentum.
The Southeast Asian nation is home to the world's second and third largest initial public offerings this year—the $3.3 billion listing of Felda Global Ventures5222.KU0.00% and IHH Healthcare's $2 billion IPO. Meanwhile, the benchmark KLCI hit a record Wednesday after rising almost 7% this year.
State backing for Malaysian equities is a factor. Felda's IPO was largely bought by government-backed investors such as individual Malaysian states. Mandatory retirement savings boosts domestic pension funds that typically invest a lot in the local market too.
The economy is also performing well. Unemployment is low. Inflation is benign at about 2%. Gross domestic product growth is around 5%. That is important because the Malaysian stock market is mainly comprised of domestically focused companies.
Diverse exports are also relatively robust. Commodities like palm oil, petroleum and gas make up about a quarter of exports, while electronics and manufactured goods make up the rest. HSBC notes that Malaysia's exports are down just 2% since last August, compared to a 13% aggregate decline for shipments from Singapore, Thailand, Indonesia and the Philippines.
The country's banks look healthy too. Asset quality is strong and deleveraging by European banks isn't a big threat, says Moody's. "Their claims on the Malaysian economy amount to a mere 5% of GDP," notes the rating company.
Still, there are risks that warrant caution. A prolonged slump in global trade would hurt. Net exports are equal to about 16% of GDP—much higher than the ratio for neighbors such as Indonesia and the Philippines.
Politics is a wildcard too. Prime Minister Najib Razak wants to improve infrastructure and boost investment in sectors including oil and gas and tourism. Investors must hope that agenda stays on track regardless of the outcome of an election expected by early 2013.
Much of the good news may be priced in. Malaysia's benchmark stock index trades at about 15 times current earnings. Some analysts say that is rich. Malaysia has momentum. But much now depends on domestic politics and the depth of the weakness in global trade.
China and Asean edge towards better ties, mostly because of the risk of a deteriorating relationship.
ASEAN and China made moves during the week to upgrade ties, or at least to talk about the prospect of formal deliberations to do so.
The unusually roundabout manner of this, even for Asean diplomacy, was because much of the basis for it is the highly unlikely and delicate one of contested maritime territory in the South China Sea.
All contending parties have had to tread gingerly, with fingers and toes crossed. But other events have also played a role.
Asean countries had already made clear that regardless of disputes with each other or with China, no external party should get involved. It was not difficult thus to put US diplomats on notice.
So when Secretary of State Hillary Clinton toured South-East Asia this time, with an appearance at the Asean Ministerial Meeting in Phnom Penh, she talked about economic cooperation rather than a “pivot” to “rebalance” against China. It contrasts with her last foray into this region and another Asean meeting.
However, Clinton’s office also had an official announce that the Diaoyu/Senkaku Islands claimed by both China and Japan fell under Article 5 of the US-Japan security treaty. The official declared that the uninhabited islands were under Japan’s jurisdiction, bolstering Tokyo’s claim, and that the US was thus obliged to respond in any conflict.
That made officials in Beijing jump. It also made them seem more conciliatory on the Asean front, in a set of disputes over the Spratly Islands.
China declared on Wednesday that it wanted to strengthen “communication and cooperation” with Asean members with mutual benefit all-round. On the same day at the meeting in Phnom Penh, Thailand announced that it would not allow disputes in the South China Sea to disrupt cooperation between Asean and China.
Thailand is serving as coordinator between Asean and China over the next three years. It is not among the four Asean countries that are claimants to the Spratly Islands along with China and Taiwan.
It has been 10 years since Asean and China signed the Declaration on the Code of Conduct of Parties in the South China Sea (DOC), a non-binding agreement covering “soft issues” like maritime research and environmental protection.
Since then, Asean has wanted to move on to a binding Code of Conduct for the South China Sea (COC). But while China is all for the DOC, saying that it had yet to be implemented fully, it wants to move slower on the COC.
It is still unclear how far serious talks will go in creating a new status quo for the contending claims. On present form, despite all the pleasantries and avowed goodwill, any talks at all are unlikely to achieve anything substantial.
For decades, no specific talks had even been envisaged, let alone conducted satisfactorily and concluded successfully. Now differing positions are being taken over the DOC and the COC, which does not help, amid a general feel good feeling about everyone wanting to feel better, which may not get anywhere.
Prof Zhang Yunling is director of the Centre for the Study of Global Governance at Renmin University in Beijing. The following is part of an exclusive interview he gave during a recent ISIS conference in Kuala Lumpur.
Q. China’s rise has largely been economic; how else will it express its ascendancy in the region and the world?
A. China’s rise has reshaped the region’s economic structure, which has been a very positive development. It will continue to rise, and in other aspects, as well as play an important role.
Compared to the past, there are two differences today. First, it is based on an open economic structure, with close links with other countries, not top-down but in equal partnership as in production networks.
Secondly, there is institutional development, not just gestures as with the old China. There are equal rights, equal treatment of other countries, which are rules-based and multi-layered. We are moving ahead, but it also needs time.
There is greater movement of people, through travel and tourism, and people get to know each other better. There are also more projects for (international) assistance, training and capacity-building.
There is anxiety over China’s military build-up, but it is normal for China to develop its military along with its (economic) development.
One concern is a change in the existing order because China was not a player before. Japan has historical (baggage), the US has been dominant in the past, so there should be a place for China.
Another concern is over dispute settlement: previously there has been cooperative behaviour, now there are bigger armed forces. Yet no other country has so many unsettled disputes as China on both land and sea.
>How do you see China-US ties, today’s most important trans-Pacific bilateral relationship?
This is a very complex matter for China. For others, it is about how to accept a rising China and its role in a positive way.
Germany and Japan before were not bound by factors as China is today: agreements, commitments, shared interests. How China would manage these should not cause other countries to see it as a threat; it is now in a transitional period, without much experience of it.
The US is very important to China in economic terms. So China has to carefully manage relations with the US, to avoid any possible confrontation and seek any possible cooperation.
Both countries have such a close relationship which never occurred before between a rising superpower and an existing superpower. They have to live together and work together.
US technology and its economy are still dominant and important for China. But the US sees China as a threat, and ideologically wants to see China turn into a democratic country.
The US has always tried to make China more like it over the past 100 years, but not successfully – yet it is still trying. US pressure is very clear.
China wants to have its place, and the US has to prepare for that. It is trying to contain China, so China sees this as a threat.
But it’s not a zero-sum game as with the Soviet Union, because of the close interests between the US and China. The door is open, not closed.
> What is the status of China’s proposals to promote military cooperation with South-East Asian countries?
There is now no military cooperation. We should have regular defence ministers’ consultations and exchanges of military personnel.
There should be joint maritime operations for accidents at sea, for example. Also, on non-traditional threats at sea (piracy, terrorism, human trafficking, narcotics, illegal immigration).
There have been exchanges between China and Indonesia, and cooperation between China and Malaysia in producing military equipment.
> How has China’s perception of Asean changed over the years?
China sees the Asean process positively, acknowledging Asean’s role in creating a stable and cooperative region. There is the China-Asean FTA, with other cooperative projects.
All this is quite different from the past.
China hopes Asean can play a stronger role in the region for more cooperation and institution-building. Asean needs to be more united to work cooperatively towards a real Asian century.
Asean can help create a new regional institution. Asia should be a security provider, since there has been too much reliance on outside security providers.
A US army tank rolls deeper into Iraqi territory on March 23, 2003?when US forces invaded?Iraq. Photo: VCG
Libyan protesters gather in Benghazi on March 11, 2011 as Arab Spring spread in the country. The US, the UK and France?intervened in Libya?with a bombing campaign on March 19, 2021. Photo: AFP
