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Tuesday 13 September 2011

A new world order emerging





CERITALAH By KARIM RASLAN newsdesk@thestar.com.my

Indonesia and Turkey – two great countries on the far reaches of the Islamic world – are benefiting from the freedom their people enjoy, boosting their international reputations.

WE HAVE seen how the Sept 11 attacks and Washing­ton’s subsequent missteps have led to a diminution of Ame­rican power and influence just as China was beginning its dramatic rise. Ten years on, the US is weighed down by debt and its failed dreams of global dominance.

Changes have also been taking place within the Muslim world. Indeed, in the aftermath of Sept 11, as well the more recent Arab Spring, the balance of power in and between these countries has shifted fundamentally.

In the past, Arab nations were considered pre-eminent. The revolutions in Algeria, Tunisia, Egypt, Bahrain and Libya have shattered the prestige of the Middle East’s autocratic rulers. The image of former Egyptian strongman Hosni Mubarak on trial has transfixed the world.

We now find ourselves asking the unimaginable – which Arab nation or kingdom will be next? Which redoubt of injustice, corruption and mismanagement will fall at the hands of its people?

As the Arab world – propelled by dramatic developments on the Internet, communications and social media – enters a period of turmoil and transition, other Muslim countries are emerging from the margins of history.

Most notable are Indonesia and Turkey, two great countries on the far reaches of the Islamic world. As fully-functioning democracies, neither need fear a repeat of the Arab Spring within their borders.

Indeed, their economies are benefiting from the freedom their people enjoy. This is boosting their international reputations while anti-reform Arab leaders appear morally bankrupt.



Indonesia has traditionally de­­ferred to Saudi Arabia, the birthplace of Islam, whose King is also the Custodian of the Two Holy Mosques. The relationship is also economic: some 1.5 million Indo­nesians work in Saudi Arabia as maids and construction workers. Indonesia is also a big importer of Saudi oil and gas.

Still, controversies over the ex­­ploitation and abuse of Indonesian migrant workers in the kingdom have soured their relationship.

The NGO Migrant Care reports that some 1,105 Indonesian workers died in Saudi Arabia from 2006 till last year. Under Saudi law, however, there’s little chance for aggrieved foreigners to seek redress.

Indonesian anger was further stoked by the execution of Ruyati Sapubi, a 54-year-old West Java­nese maid. She was convicted of murdering her Saudi employer, who she claimed was abusing her.

The mounting Indonesian anger culminated in protests in August by local activists and academics when the University of Indonesia conferred an honorary doctorate on Saudi Arabia’s King Abdullah.

The protesters complained that the award was inappropriate, given recent events and Saudi Arabia’s poor human rights record.

As Anis Hidayah, executive director of Migrant Care wrote in Kompas: “The conferral of an honorary doctorate on Abdullah is an insult to the nation, especially to the Indonesian migrant workers who have contributed to the country with their sweat and blood, often in the face of death.

“Indeed, they are more dignified and respectable than academics who have willingly sold out their integrity.”

Indonesia has thus suspended all migrant labour to Saudi Arabia until it signs an agreement on worker protection. The republic’s growing prosperity means that these shows of independence, and its determination to protect its citizens, will increase.

Meanwhile, on the far western flank of the Islamic world, Turkey is positioning itself as a regional power. Blocked in its attempts to join the European Union, Turkey has turned eastwards with great effect.

With its booming economy and dynamic society, Turkey is poised to seize a prominent role in Middle Eastern affairs – especially in the aftermath of the Arab Spring.

Ankara, for example, has demanded an apology and compensation from Israel for last year’s raid on the Gaza flotilla. With neither forthcoming, Turkey has frozen ties with the Israeli military and expelled Tel Aviv’s ambassador.

Turkish Prime Minister Recep Erdogan has also maintained an independent stance on both Libya and Syria. He insisted on joining Nato’s Libyan intervention but demanded special terms – principally that the enforcement of the no-fly zone be led by the alliance itself and not France.

The Turks are charting their own diplomatic course. They are no longer content to remain mere allies of the West, or a silent, acquiescent Middle Eastern neighbour.

Indeed, Indonesia and Turkey are bidding for leadership, not only of their respective regions but also of the Muslim world at large. As members of the G-20 Summit, they demonstrate how democratisation and liberalisation can strengthen nations.

Malaysia, for its part, is now at the crossroads. Can we embark on the more difficult, but ultimately far more rewarding, path of reform?

Whatever we choose, democracy – even in the Muslim world – is on the move everywhere. We must ask ourselves: are we to become the victims of history or its victors?

Sunday 11 September 2011

Who is America’s new enemy?





America’s new enemy?

By ANDREW SIA star2@thestar.com.my

Chris Riddell 11 Sept 2011

 It used to be the Nazis, the Soviet Union and then Osama and al-Qaeda. Now that he is dead, who will become the new enemy America focuses its energies on?

 SO what now? With Osama bin Laden dead, will his successor, Ayman al-Zawahiri, continue a new wave of terrorism against the West?

Yet a report in British newspaper The Guardian in late July indicates that most Syrian activists reject the new al-Qaeda leader. Mohammad Al-Abdallah, the spokesman of local coordination committees in Syria, said: “Zawahiri is trying to convince the world that he has supporters in Syria, which will provoke international public opinion against us and give the regime the right to commit crimes against our people.”



For Tom Engelhardt, academic, author and editor of Tomdispatch.com, al-Qaeda was a ragtag crew that engaged in some dramatic terror acts over the past 10 years but, in reality, it had limited operational capabilities, while the movements it spawned from Yemen to North Africa have proven “remarkably unimportant”. While Osama sat isolated in a Pakistan mansion, ironically, it was the Americans who did the work of creating war and chaos (and increasing people’s resentment of the United States) for Osama!

“Think of him as practising the Tao of Terrorism,” writes Engelhardt, comparing Osama to the way a tai chi master fights – not with his own minimal strength, but leveraging on his opponent’s strength, in this case, America’s massive fire power.

 
China rising: Will the United States next turn its attention to China?

And what can we hope for 10 years after 9/11?

Journalist Robert Fisk, writing in British newspaper The Independent, said, “Bin Laden told the world that he wanted to destroy the pro-Western regimes in the Arab world, the dictatorships of the Mubaraks and the Ben Alis. He wanted to create a new Islamic Caliphate. But these past few months, millions of Arab Muslims rose up and were prepared for their own martyrdom – not for Islam but for freedom and liberty and democracy. Bin Laden didn’t get rid of the tyrants. The people did. And they didn’t want a caliph.”

Jason Burke, author of The 9/11 Wars, notes that back in 2004, American intelligence agencies had foreseen “continued dominance” for many years to come. But in 2008, they judged that within a few decades the US would no longer be able to “call the shots”.

“If the years from 2004 to 2008 brought victory, then America and the West cannot afford many more victories like it,” he adds.

But in this second decade of the 21st century, will America learn the lessons of history?

Two years ago, when President Barack Obama intoned general platitudes about human rights for the Middle East in his landmark Cairo speech, his Secretary of State, Hillary Clinton, had this to say about the Egyptian dictator: “I consider President and Mrs Mubarak to be friends of my family.”

As the comedian and talk show host Jay Leno once joked, the invasion of Iraq was initially supposed to be called Operation Iraqi Liberation, until they realised that it spelt O.I.L. – and the name was then changed to Operation Iraqi Freedom.

Haroon Siddiqui, a columnist at the Toronto Star, believes that Obama has reverted to Washington’s old double standard of one law for allies, another for adversaries. And so dissidents in Iran and Syria will be cheered on and materially backed to overthrow their regimes but not the people rising up in Bahrain, Yemen, Algeria, Jordan, Oman, Morocco and Saudi Arabia.

Uri Avnery, a former Israeli Member of Parliament and author of several books about the Israeli-Palestinian conflict, reflects that the American empire always needs an antagonist, an “evil, worldwide enemy” to focus its energies on, be it the Nazis or the Soviet Union.

“The disappearance of the communist threat left a gaping void in the American psyche, which cried out to be filled. Osama bin Laden kindly offered his services as a new global enemy.

“Overnight, medieval anti-Islamic prejudices are dusted-off for display. Islam the murderous, the fanatical, the anti-freedom, anti-all-our-values. Suicide bombers, 72 virgins, jihad,” he writes in the online “political newsletter”, Counterpunch. Avnery adds that the present Islamophobia hysteria is similar to how Europeans used to demonise Jews in the past.

American civil rights lawyer, columnist and author Glenn Greenwald predicts in online news and culture website salon.com that even though US Secretary of Defence Leon Panetta has acknowledged that al-Qaeda has a grand total of “fewer than two dozen key operatives” on the entire planet, the War on Terror will be continued by trotting out more “fear-mongering propaganda” against a new alliance of villains from Somalia and Yemen – the “scariest since Marvel Comic’s Masters of Evil”.

As the future unfolds, will other villains be found to replace Osama? How about China?

John Feffer, the co-director of Foreign Policy in Focus (a project of the Washington DC-based Institute for Policy Studies), notes that perhaps the only country in the world that has benefited from the War on Terror is China.

“Beijing has watched the United States spend more than US$3tril (RM9tril) on the war on terrorism, devote its military resources to the Middle East, and neglect pretty much every other part of the globe. The United States is now mired in debt, stuck in a recession, and paralysed by partisan politics. Over that same period, meanwhile, China has quickly become the second largest economy in the world.”

What a difference a decade makes. When US President George W. Bush came into office over 10 years ago, he called Beijing a “strategic competitor” rather than a strategic partner. When a US spy plane flying off Hainan Island was involved in an accident with a Chinese plane, the Americans refused to apologise.

Ten years later, after US government debt was downgraded, we see China’s official Xinhua news agency lecturing the Americans – in English, mind you – that “the days when debt-ridden Uncle Sam could leisurely squander unlimited overseas borrowing appear to be numbered.”

In a Time magazine article in April, Admiral Mike Mullen, Chairman of the US Joint Chiefs of Staff, warned that “the single biggest threat to our national security is our debt”.

While America is still building aircraft carriers at US$15bil (RM45bil) a pop, China is developing missiles expressly designed to sink them – at a cost of US$10mil (RM30mil) each. Talk about being cost efficient. Economix, a unit of the New York Times, reveals that the US accounts for 43% of all the military spending on Earth – six times as much as China, which accounts for 7.3% of world military spending: “We’ve waged war nonstop for nearly a decade in Afghanistan against a foe with no army, no navy and no air force. We send US$1bil (RM3.02bil) destroyers to handle five Somali pirates in a fibreglass skiff.”

Yet the irony is: “(The US is) borrowing cash from China to pay for weapons that we would presumably use against it. If the Chinese want to slay us, they don’t need to attack us with their missiles. They just have to call in their loans.”

If Time’s scenario ever comes to pass, then the war on terror would be ended by Chinese financial tai chi.

Facing still more of the same - 10 years after 9/11





Facing still more of the same

Behind The Headlines By Bunn Nagara

Ten years after 9/11, little has actually changed, least of all political attitudes.

UNTIL Sept 10, 2001, the world seemed a simpler place.
In a world gone madImage by Walt Jabsco via Flickr
Terrorism was a scourge that needed to be kept in check, if not eliminated while Afghanistan was a tribal wasteland in the boondocks and the legendary graveyard of foreign empires.

Iraq was an oil-rich autocracy and established US ally against Iran but with a tendency to slip into unilateral nationalist fervour, and the United States was a neo-conservative right-wing Republican bastion huffing and puffing for something to blow at.

The next day, two planes slammed into the two towers of New York’s World Trade Center. Neither bad coincidence nor pilot error was ever an issue.

Other aircraft had been hijacked the same day, but the twin crashes at the twin towers were more dramatic and dominated headlines, sound bites, political posturing and public imagination.

As the heart of lower Manhattan seemed to dissolve in a rising mound of smoke and dust, more than just debris was in the air. It was a time of change for the US and certain parts of the world.

Suddenly, the United States had the national tendency to slip into unilateralist fervour, Afghanistan and Iraq became targets that needed to be kept in check if not eliminated, and terrorism, oil-rich autocracies and Muslim states came to be profiled as one from many a Washington desk.

The neo-conservative right-wing bastion in the White House had found a couple of things to huff and puff at. Such was its enthusiasm that it forgot how Afghanistan remained very much a graveyard of foreign empires.

The result now, a full decade later, is described in Washington circles and elsewhere as the worst US policy overreaction of the century.



Within weeks, the George W. Bush administration blamed the attacks on Osama bin Laden and his followers, collectively called “al-Qaeda” as the Arabic translation of “the base,” the name the CIA originally gave Osama’s group and training camp. Nobody had claimed responsibility for the New York attacks, and al-Qaeda soon after denied any involvement.

The Taliban government in Afghanistan was then accused of sheltering al-Qaeda, so that made it fair game for elimination. In late 2001, Afghanistan’s Taliban leaders were ousted and replaced by the Pashtun activist and CIA point man Hamid Karzai.

The Zionist neo-cons in Washington were on a roll, “regime change” was the name of the game, and they were about to aim that exuberance and momentum at another target. But for the purpose to hit home, some points still needed to be made at home.

So Iraqi President Saddam Hussein was to be the new Hitler, he trashed his country’s wealth on costly palaces, he killed many people (decades ago), and he endangered the world or at least Israel with many nasty ABC (atomic, biological, chemical) weapons.

The problem was getting enough voters in the US and the general public in ally countries to go along with the idea. Bush and his British counterpart Tony Blair then decided the latter reason was the most persuasive: that Saddam had dangerous “weapons of mass destruction” (WMDs).

This was despite UN weapons inspectors having found no Iraqi WMDs, a recent major feature in Newsweek magazine coming round to the same conclusion, and the story about secret sourcing of radioactive material for a bomb discovered as fake. What mattered more instrumentally, however, was whether the UN Security Council could be massaged into endorsing a US invasion of Iraq.

It could, China’s abstention notwithstanding. As plans for an invasion of Iraq were being drafted, the US public also needed convincing.

So there was the ruse that Saddam was linked to al-Qaeda, and al-Qaeda was responsible for all the nasty things. Meanwhile Osama, having found that such issues could really rile the world’s sole superpower, “admitted” that he was responsible for the policy panic in Washington.

Thus Saddam was eliminated and replaced by a US ally, although the vast quantities of high-grade Iraqi oil seemed more elusive. But the violence and instability in Iraq also meant China could not access the oil either.

Still, the casualty rates in terms of human lives, economic cost and national destruction and degradation continue to mount. Ten years on and with the follies rather more exposed, senior US and British officials have queued to disown any responsibility for the continuing debacle.

Errors of judgment

Early this month, former head of British intelligence service MI5, Lady Eliza Manningham-Buller, gave a BBC lecture to enumerate the multiple errors of judgment across the Atlantic at the time. Critics replied that she should have said so then, since it is now too late.

Former British foreign minister Jack Straw pleaded innocence through ignorance, saying that the Blair government at the time had been misinformed by allies, including the US. As justice minister later, Straw refused to apologise personally to an Algerian pilot whose career was ruined after Straw wrongly accused him of training a Sept 11 hijacker.

Former US vice-president Dick Cheney also released a biography focusing on that period, typically accusing others who disagreed with him at the time. Former US secretary of state and chairman of the joint chiefs of staff, Gen Colin Powell swiftly blasted him for the effort.

Powell was followed by former US secretary of state and national security adviser Dr Condoleezza Rice, who also found Cheney small-minded and mistaken. Rice should be replying more fully in her own biography later this year, so her critics should in turn be prepared.

However, the whole point of being honest, truthful and accurate should be to acknowledge past mistakes and avoid new ones. With the military occupation of Afghanistan now set to extend beyond the promised deadline, and new occupations likely in Libya if not also Syria, avoiding mistakes is not going to be easy or even possible.

Saturday 10 September 2011

9/11 American Innocence: What Really Happened to Us?





Frederick E. Allen Frederick E. Allen, Forbes Staff

September 11 and American Innocence: What Really Happened to Us?

U.S. Kills Bin Laden Evil expunged—but have we fully recovered? Image by swanksalot via Flickr

The other day at the Republican debate, Jon Huntsman said “I think we have had our innocence shattered” by what happened on September 11, 2001. On Morning Joe the journalist Tina Brown called the date “the last moment of American innocence,” and Mike Barnicle described it as “the end of our metaphorical summer as a country.”

Really? It seems as if every time disaster strikes our nation we hear that it’s the end of our innocence, but in truth there has never been an innocent time in the land of the Salem witch trials and the Boston Massacre and John Brown’s raid and our murderous Civil War and . . . well, the list goes on, right up through—not long before September 11—Monica Lewinsky and the impeachment of a president.

In fact, I’d say that if anything the opposite may be true, that a big price of September 11, beyond the lives lost, was that it may have given us a new birth of innocence, or perhaps of destructive pseudo-innocence.

17 images Gallery: 16 Ways 9/11 Changed The Way We Do Business 

Of course we were completely blameless in the hideous tragedy that befell us. We were entirely innocent in that sense of the word. When the planes struck that morning, the U.S. was, and knew it was, a beacon of freedom. We also were a prosperous land where unfettered innovativeness had by and large made every generation richer than the last. We had shown that we could achieve more than anyone else even while balancing our budgets and cutting our deficits. We felt freer, tougher, stronger, and more resilient than anybody. Then we were attacked by an enemy that was as purely evil as an enemy can be. We had done nothing to deserve the horror visited on us. We were plainly guiltless in an attack that was plainly evil. Only the most extreme, reflexive guilt-seekers could possibly find any American transgression that could begin to rationalize the attacks.



Knowing ourselves as a shining force for good and as blameless victims in what happened on September 11, maybe we let it all go to our heads a little bit. A kind of national naivete seems to have swept over us, an innocence about the consequences of our actions. President Bush told us that we were now at war, but also that we would have to make no personal sacrifices. He launched two foreign wars with no tax increases to pay for them. After the start of one of those wars went well, he appeared, in a burst of overconfidence, on an aircraft carrier under a giant banner reading MISSION ACCOMPLISHED to announce that “In the Battle of Iraq, the United States and our allies have prevailed.” Then as that battle continued, we even forgot that as a nation we had always held torture to be un-American and morally unjustifiable.

As our two new wars began to spin out of control we not only didn’t pay for them but also gave ourselves massive tax cuts and a big new unfunded Medicare entitlement at the same time. Too many of us kept buying bigger and bigger houses, and second homes, while borrowing all the money to do so, secure in our understanding that for Americans life keeps getting better and we all get richer. We cooked up reckless schemes to multiply the wealth from those homes. In other words, we appear to have forgotten, in the long shadow of September 11, that no big thing in life is easy or simple, and nothing comes without a price.

We finally began to see the price we were paying later in the decade, when the wars we had started refused to end, and the housing market crashed and bankrupted millions of Americans, and Wall Street imploded, and the economy went into its worst tailspin since the Great Depression. Finally our new age of innocence ended.

Or did it? In 2008 we rejected all our misdeeds of the previous years by voting for “hope” and “change” and giving ourselves a president who seemed to believe that any problem could be solved if everybody just agreed to be reasonable and get along. Then in 2010 we turned against that choice by electing a Congress dominated by people who seemed to believe that any problem could be solved by lowering taxes and shrinking government, period. If we had been naive through the decade of the 2000s, our naivete lived on, and it continued to get us into trouble.

If that all means that in some sense Osama Bin Laden provoked the U.S. into self-destructiveness, then in that sense he won the struggle he began on September 11. Yet the fact is that he has lost it. His poisonous cause has withered and died. The Arab world has turned definitively against him in the Arab Spring, as the rest of the world turned against him long before.

As for our own naivete, if that is what it was, maybe it is beginning to lift now, too. On September 8, 2011, that ineffectually conciliating president gave a speech presenting a raft of actions to address the ongoing jobs crisis—policies that had all won bipartisan support in the past—in which he repeatedly demanded that Congress “pass this jobs plan right away” and bluntly told the legislators to “stop the political circus.” And the leader of his opposition, the previously unyielding speaker of the House, actually said, “The proposals the president outlined tonight merit consideration.”

Might we finally be approaching the end of an age of innocence now?

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The BRICS are coming

The BRICS - Brazil, Russia, India, China and S...Image via Wikipedia



WHAT ARE WE TO DO By TAN SRI LIN SEE-YAN

THE term BRIC (Brazil, Russia, India, China) was first used in 2001 by economist Jim O'Neill (Goldman Sachs) to call attention to four rapidly rising large emerging economies considered able to play a significant role in global affairs, championing the interests of developing nations. Very much like what G-7 does for the developed world.

For years since, it was treated by investors and journalists as a shorthand for the big emerging markets. Adding South Africa to the group widens its focus to include more from outside fast-growing China and India.

The BRICs held its first summit in 2009 in Russia, discussing issues on international monetary reform, including the possibilities of a new dominant reserve regime to replace the US dollar-based system. This year, China played host and invited South Africa to join, formally naming the group BRICS. Together they exceeded three billion people, nearly 45% of the world, and about 25% of the world's 2011 gross domestic product (GDP) based on purchasing power parity.

China's total output is bigger than the other four put together. The economic clout of the BRICS is now growing as the developed world struggles to expand and pare debt. Indeed, they are starting to operate as a common bloc in the G-20, providing a counterpoint to the United States and Europe.

Building BRICS

But the group is vastly different. India, Brazil and South Africa are vibrant democracies in contrast to the more authoritarian Russia and China. They need to balance the interests of its members: three large commodity exporters and two huge commodity importers. For sure, they have to get used to obeying rules they played little part in shaping. China's economy, the world's second largest, is nearly three times the size of Brazil's, close on four times that of Russia and India, and 16 times that of South Africa.



They also differ on exchange rate policies. Brazil is vocal against China's tight management of the yuan's value, keeping its exports relatively cheap. China is becoming prominent in BRICS' trade already it is Brazil and South Africa's largest source of imports. Be that as it may, the group shares strong macroeconomic fundamentals going into 2012.

China and India will grow 8.5%-9% this year; Russia and Brazil, 4%-4.5%; and South Africa, 3.5%. Their structural budget deficits are well contained, with low debt/GDP ratios, highest being in India (68%) and South Africa (65%).

China continues to have a current balance of payments surplus (5.7% of GDP), while all the others' deficits are each less than 5%. But they share a common problem inflation: 6.5% in China, 9% in India, 9% in Russia, 7% in Brazil and 6% in South Africa. Containing inflation remains a top priority of public policy. Still, they continue to struggle to deal with this threat.

The 2nd BRICS Summit held in April 2011 reaffirmed the group's determination to transit from global pax americana to a new order in the “development of humanity.” The BRICS' emphasis on co-operation in their call for reform of the US-dollar dominated international monetary system and for tighter supervision of commodity derivatives and markets, and capital flows show the group is seeking to refrain from too much assertiveness. Still the desire to shake off the old hegemony is there; it calls for a larger role in international fora.

It condemns “the inadequacies and deficiencies” of global finance and the “excessive volatility in commodity prices.” The Sanya declaration underscored their concerns about underlying factors that fuel inflation and currency volatility in many emerging economies, as well as their strong desire to shift away from reliance on the US dollar.

“We call for more attention to the risks of massive cross-border capital flows now faced by the emerging economiesExcessive volatility in commodity prices, particularly for food and energy.”

The BRICS took a new step towards cementing their global influence by: (i) calling for a broad-based reserve currency system “providing stability and certainty”, one that is more reliable and stable; (ii) welcoming discussion about the global role of Special Drawing Rights (SDR), the International Monetary Fund (IMF)'s in-house accounting unit but a global reserve asset, and on the SDR's basket of currencies (now comprising the US dollar, the euro, yen and pound sterling); (iii) establishing mutual credit lines denominated in their home currencies among the state development banks of the group. To start the ball rolling, China Development Bank will issue loans worth 10 billion denominated in yuan this year to other BRICS nations, mostly to fund oil and gas projects; and (iv) forging a common emerging market negotiating stance on issues from climate change to world trade, and to act as a credible counterweight to the West in settings like the G-20.

BRICS & Asia

The Asian Development Bank (ADB) expects Asia to grow 7.5% this year (against 9.2% in 2010) and 7% in 2012. “If anything distinguished the region from the rest of the world, it is its strong macro fundamentals.”

However, a dark cloud in the horizon is the slowdown in exports to its traditional markets in the United States, Europe and Japan. Against this is the region's potential for rapid expansion in intra-regional trade, amid signs of rising domestic demand in Asia.

True, manufacturing and services-related activities stalled across much of the world in August, raising fears of another global downturn. True also, factory and services output throughout Asia, including China and India, slackened in August, pointing to growing evidence that weaker demand in the United States and Europe is weighing on Asia's export-driven economies.

Moreover, investor confidence dropped to the lowest in two years in September in the eurozone and the United States, and consumer confidence, already fragile, weakened further. Unfortunately, the United States' anaemic growth and Europe's worsening debt crisis have prompted governments to deepen budget cuts, undermining consumer demand and clouded growth prospects with uncertainty.

Barring a full-blown double-dip in the United States and Europe, Asia will still suffer significant bruising from deepened dashed expectations, with most of the pain centred on highly exposed nations Taiwan and South Korea. No doubt, the BRICS economies are bound to face clear challenges in responding to the angst over weakened global conditions.

Missing BRICS

O'Neill has since suggested his original four BRICs be expanded to include Turkey, Indonesia, Mexico and South Korea, to form the new “growth markets”. A fresh look is taken to measure exposure to equity markets beyond market capitalisation (GDP, corporate revenue growth and volatility of asset returns); any emerging market accounting for 1% or more of world GDP should be taken seriously. Mexico and South Korea each represented 1.6% of world GDP, Turkey, 1.2% and Indonesia, 1.1%.

Among them, I particularly favour Indonesia. Like Brazil, Indonesia's success is based on the commodities boom: gas and coal to China and India, and palm oil to the world. Investments are flowing in. With a population of 237 million (the world's largest Muslim nation), the country is in the midst of a consumer boom.

Indeed, it has the potential to become one of the world's biggest economies. But it has to get its act together. It will grow 6.2% this year (6.1% 2010) and hopefully 6.5% in 2012. South-East Asia's largest and fastest growing economy is firing on all cylinders. It is today rated a notch below investment grade and should be upgraded soon. It will become a credible 6th member of the BRICS.

What impresses is its growing middle class. World Bank puts private consumer spending at close to one-half of GDP. The middle class (disposable household income exceeding US$3,000 a year) numbered 1.6 million in 2004. Today, Japanese investment bank Nomura estimates it to be about 50 million, more than in India and larger than in any of its nine other Asean neighbours. By 2014-2015, Nomura thinks it could reach 150 million.

The country is growing so fast, especially in the urban areas, that inflation is a major political issue at 7.2% for 2011. But it's stable, bearing in mind the rupiah appreciated 5% this year. Affluent middle-class Indonesians are spending, mainly on motor cycles (eight million sold in 2010, dwarfing sales in the rest of South-East Asia), cars (750,000 in 2010) and smart phones.

Indonesia is reputed to be the world's No. 2 in Facebook members and world's No. 3 in Twitter users. But, Indonesia, to be frank, remains a difficult place to do business because of poor infrastructure (adding to production and distribution costs), and corruption (“non-transparent random regulations”). But there are signs things are changing for the better. It is still attractive to foreign investors: nowadays “if you are not here, you have to have a good reason.” Most new consumer desirables are still imported.

Wall of BRICS 

As a group, the BRICS are growing fast. China has surpassed Japan as the world's No. 2. India and Brazil are following fast behind. Catching-up is always much easier because the leader has already set the path and the pace. At some point, reliance on emerging nations as engines of growth begins to disappoint, as it becomes harder to sustain the pace. Growth will slow down (as did Europe, and Asian Tigers and Japan before them) or may even falter (as did Latin America in the 1990s).

There is a lesson from history. A recent study by three scholars Barry Eichengreen (University of California, Berkeley), Doughyun Park (ADB) and Kwanho Shin (Korea University) called the EPS study* attempted to draw potential warning signs by examining economies since 1957 whose GDP per capita (on a purchasing power parity or PPP basis) rose more than 3.5% a year for seven years, and then suffered a sharp slowdown when growth dipped precentage points or more.

The focus was on economies enjoying sustained catch-up growth. The common sense behind PPP is the same amount of money should purchase the same product in any two countries (hence, the term purchasing power parity). That is, the purchasing power of money, expressed in one currency, should change pari passu in different countries. If US$5 buys a cup of Starbucks coffee in New York and the actual cost of the same Starbucks coffee in KL is RM12, then the exchange rate should be US$1=RM2.40 according to PPP. But the actual exchange rate is close to RM3, or 20% cheaper. So, the use of PPP serves to neutralise any currency distortions.

What emerged was as follows: (i) growth slowdowns occurred when GDP per capita reached about US$16,740 per capita; and (ii) the average growth rate then falls from 5.6% per year to 2.3%. In the 1970s, growth rates in Western Europe and Japan cooled off at about the US$16,740 threshold, as did Singapore in early 1980s and South Korea and Taiwan in the late 1990s.

Thereafter, growth often continues and may even accelerate. Japan's boom lost momentum in early 1970s, then accelerated until it blew up in the 1990s. But, no one-size-fits-all depends on circumstances. When the United States passed its threshold, it kept on growing rapidly, consistent with its innovative prowess. Other risk factors matter, including openness to trade; lifting of consumption to beyond 60% of GDP; low and stable inflation; high ratio of workers to dependents. On the other hand, an under-valued exchange rate raises the risks of a slowdown.

* “When Fast Growing Economies Slow Down: International Evidence and Implications for China.” NBER, March 2011.

The EPS study does draw interesting parallels. China is destined to reach the US$16,740 GDP per capita threshold by 2015, well ahead of India and Brazil. Will it then slacken? The risk factors for China include: an ageing population, low consumption and an under-valued currency. On these alone, the study suggests high odds (over 70%) of a definite slowdown by then! But China is unique. These risks can be managed by shifting development inland, leaving the maturing urban centres room to innovate.

China is already reforming to become a more consumption-based economy, while its currency is being managed to reflect market considerations. Prompt structural reforms help cushion the effects of any slowdown. Even so, a percentage point drop in growth to 6%-7% does not sound so scary. For China, it should not really be such a big deal.

Former banker, Dr Lin is a Harvard educated economist and a British Chartered Scientist who now spends time writing, teaching & promoting the public interest. Feedback is most welcome; email: starbizweek@thestar.com.my 

Friday 9 September 2011

What Is the Chinese Dream?




What Is the Chinese Dream? -- Part II 




British Massacre - Batang Kali Victims win UK court scrutiny





Kin of Batang Kali massacre victims win UK court scrutiny  

  


KUALA LUMPUR: Family members of 24 unarmed Malaysian ethnic Chinese workers, allegedly shot dead by British troops in a massacre more than six decades ago, won a significant court battle in Britain that will give hope that the incident will be formally investigated, their lawyers said Thursday.

The British High court ruled on Aug 31 in favour of the family members for a review of a decision by the British government to refuse to investigate the massacre, in which the unarmed rubber plantation workers in Batang Kali, a remote town in Selangor state, were killed after being accused as terrorists trying to escape during the Malayan Emergency.



The court granted the judicial review as it deemed the case "raises arguable issues of importance", reported China's news agency Xinhua.

The lawyers said a full hearing would begin in early 2012.

"After decades of seeking redress for the Batang Kali massacre victims, we can now, finally, see the light of justice at the end of the tunnel," said lawyer Quek Ngee Meng, representing a victim's family.

"We do not expect the British government to reverse its stance, but it should immediately and unconditionally release all documents relating to the massacre and the aborted attempt to investigate in the past so the court that hears this case, and the public, have a complete picture," he told reporters at a press conference attended by six surviving kin of the victims, lawmakers and dozens of activists and representatives of ethnic Chinese groups. - Bernama


Malaysian Batang Kali massacre kin wins UK court scrutiny

KUALA LUMPUR, September 8 (Xinhua) -- Family members of the 24 unarmed Malaysian ethnic Chinese workers allegedly shot dead by the British troops in a massacre more than six decades ago won a significant court battle in britain that would give hope the massacre would be formally investigated, their lawyers said on Thursday.

The British High court ruled on August 31 in favour of the family members for a review to a decision by the British government refusing to investigate the massacre, where the  unarmed rubber plantation workers in Batang Kali, a remote town in Malaysia's Selangor state were killed after being accused as terrorists trying to escape during the Malayan Emergency.

The court granted the judicial review as it deemed the case " raises arguable issues of importance." The lawyers said a full hearing would begin in Spring 2012.

It will examine whether the British Secretaries of State for Defense and the Foreign and Commonwealth Office (Secretaries of State) acted lawfully when they refused to hold a public inquiry into both the killings and their coverup, and to make any form of reparation to the victims' families.



"After decades of seeking redress for the Batang Kali massacre 's victims we can now, finally, see the light of justice at the end of the tunnel," lawyer representing the victim's family, Quek Ngee Meng said.

"We do not expect the British government to reverse its stance, but it should immediately and unconditionally release all documents relating to the massacre and the aborted attempt to investigate in the past so the court that hears this case, and the public, have a complete picture," he told reporters at a press conference attended by six surviving kin of the victims, lawmakers and dozens of activists and representatives of ethnic Chinese groups.

The 24 ethnic Chinese were shot dead by the British Scots Guards in 1948, when the then-Malaya was under British colonial rule.

They were accused of being sympathizers of the communists and said to be trying to escape during the Malayan Emergency -- a guerilla war fought between the Commonwealth armed forces and the Malayan communist group.

The victims' lawyers said the British government refused to correct the records even as evidence suggested all 24 victims were innocent.

After numerous appeals to both the British and the Malaysian governments for a probe into the massacre were turned down, citing lack of evidence, family members of the victims took the case to the British court.

"For the first time after six decades, I feel a sense of closure," said Loh Ah Choy, whose uncle was killed before his eyes when he was nine.

"He was my only uncle and he deserves justice," the 70-year-old told Xinhua.

Relatives of Batang Kali massacre victims nearer to seeking justice

By MARTIN CARVALHO mart3@thestar.com.my

KUALA LUMPUR: After almost 18 years of tough challenges and extreme obstacles, relatives of the Batang Kali massacre are finally making headway in seeking justice over the killing of 24 villagers by British soldiers in 1948.

MCA Public Complaints Bureau chairman Datuk Michael Chong said the United Kingdom Legal Service Commission had granted the families financial aid to pursue their case. An appeal for aid was rejected in November.

“I am very happy. We nearly gave up as cold water was poured on us several times over the years,” he told The Star here yesterday.

“Finally, families of the victims are able to see some light to help them seek justice.”

Chong, who played a crucial role in initiating the call for a judicial review in 1993 over the Malayan Emergency massacre, said the aid came as great relief to the families.

The four claimants, Wooi Kum Thai, Loh Ah Choi, Lim Kok and Chong Hyok Keyu, faced RM480,000 in legal fees (not including RM525,000 in future cost) when their request for legal aid was turned down.

However, the commission’s Special Cost Control Review Panel allowed their appeal on April 15 and with this, the four can proceed with their case at the British courts.

Action Committee Condemning the Batang Kali Massacre coordinator Quek Ngee Meng said the panel granted the appeal as it was of the view that the claimants had a 50% to 60% chance of succeeding in their case, which is of wider public significance.

“They can now, with more certainty, resort to legal avenues to the fullest so that the truth behind the massacre can be uncovered and that the historical wrong corrected,” Quek said in a press statement issued here.

On Dec 12, 1948, in a military operation against the communist insurgents, a group of British soldiers allegedly shot dead the 24 villagers in a rubber estate near Batang Kali before setting their village on fire.

In March last year, families of the victims and several non-governmental organisations formed the action committee.

The committee submitted a petition to the British High Commission calling for an official apology, compensation for the victims’ families, and financial contribution towards the educational and cultural development of the Ulu Yam community.

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British Massacre - Batang Kali Survivors and kin seek inquiry and damages