Wednesday, January 28, 2015

Asia-Pacific strategy launched over tea

It might have been the most significant tea party in recent times, with indications that an informal meeting between United States President Barak Obama and Indian Prime Minister Narendra Modi over tea led to the issuing of a Joint Strategic Vision for the Asia-Pacific.

It had not been planned, but when the two leaders saw that their views on the way forward for the region, and especially on the rise of China, were nearly coincidental, they decided to round off Obama’s state visit to India by going public.

Nowhere was the reaction more apparent than in Beijing. China’s state-run media tends to play down initiatives involving its potential rivals, but it has been producing a running commentary on the Obama visit, including editorials urging Modi “not to fall into the US trap”.

Beijing has been especially put out by the declaration’s references to the South China Sea which China virtually regards as its private lake. Obama and Modi called for all parties to avoid “threat or use of force” and to refer disputes to the United Nations Convention on the Law of the Sea.

China, which is facing off with several South-east Asian countries over its territorial claims, has consistently refused to involve the international arbiter, insisting that “relevant disputes should be resolved through peaceful talks and consultations” between the parties involved. However that has not stopped it unilaterally occupying islands and towing oil rigs into disputed areas.  

Commentators are claiming the Joint Strategic Vision is an historic shift in India’s long-standing policy of non-alignment, but the country has been gradually changing its stance at least since Modi’s Bharatiya Janata Party was swept to power in the May General Election, if not before.

Modi’s first state visit was to Bhutan, quickly followed by Nepal, countries on India’s northern border where Chinese influence has been growing.

His initial overtures to China itself were promising, but the Prime Minister was outraged when visits by Foreign Minister Wang Yi and President Xi Jinping virtually coincided with provocations along the disputed border between the two countries in the Ladakh region of Jammu and Kashmir.

This was followed by evidence that Chinese submarines planned to use port facilities in Sri Lanka, India’s southern neighbour, which would allow Beijing to push far into the Indian Ocean.

That threat has subsided with the election of a new, pro-Indian Government on the island, but one insider said “Modi has had enough”.

“Beijing thought it could string Modi along just as it has done with past Indian leaders and he was determined to show that was not the case,” the source said.

“I believe that was what was behind his decision to go ahead and launch the Joint Strategic Vision with Obama.”     

Sunday, January 25, 2015

Sad return to a disappearing sea

Never Go Back – it’s the title of a Lee Child thriller and advice I should probably have taken when I made a visit to what remains of the Aral Sea now shared by Kazakhstan and Uzbekistan.

It is almost 50 years since I was last there and then, while never really a sea, Aral was still the fourth largest lake in the world. My memories are of great clouds of seabirds, almost blotting out the sun, the smell of fish being landed on the quays of the busy little port of Moynaq, the dark blue waters stretching to the horizon.

In the half century since the Aral has suffered what United Nations Secretary General Ban Ki-moon has described as one of the worst environmental disasters in the planet’s history. It began when water from the two major rivers that flowed into the sea was diverted by the former Soviet Union for agricultural projects.

With a callous disregard for the environment and for those that earned their living from the Aral, Soviet scientists described the sea as a “natural mistake” which would eventually dry up through evaporation anyway, apparently ignoring the geological evidence that it had been around for at least five million years.

As a result Moynaq now sits on the edge of a dry, dusty desert, rusting remains of fishing boats and decrepit piers the only evidence that water once flowed there.

Ask the locals where the water is now and estimates vary from 60 kilometres to 150 kilometres somewhere out on the salt flats. No one really knows and no one wants to find out as a trudge across this barren moonscape, especially in the heat of summer, would be dangerous, if not deadly.

The wind whips a light dusting of salt into the air; when it blows harder the dust ends up on what agricultural land survives, poisoning it. The infant mortality rate is the highest in Uzbekistan and diseases such as cancer, tuberculosis and hepatitis are rife.

The Soviets are gone, but their legacy remains. The Aral Sea is now about 10 per cent of its original size and has split into a series of tiny stretches of water, some of them hardly more than large ponds.

In the north the Kazakhs, with help from the World Bank, are attempting some remediation with limited success, but Uzbekistan has simply continued Soviet irrigation practices to feed its cotton crops.  

There is an organisation called the International Fund for Saving the Aral Sea, but its efforts are concentrated in the north where there is some motivation for the work. In the south all is despair and hopelessness.

Perhaps it would have been better not to have returned.  



Monday, January 19, 2015

Modi: Full speed ahead on tax reform

A simpler tax system will be at the heart of a platform of reforms India’s Government will implement over the next 12 months, Prime Minister Narendra Modi has promised.

Addressing last week’s Global Business Summit in New Delhi, Modi said his Ministers were working “at top speed” to ensure international companies wanting to set up business in India had a clearer passage.

“Our complex tax system is crying out for reform…I will push through change at a fast pace,” the Prime Minister said.

“India today is a $2 trillion economy. I look forward to the day when it is $20 trillion economy.”

He said he came to office last May at a time of deep despair with mediocre growth and a record low of public confidence in government.

“We had deviated from the dream of India as a land of opportunity, but now the transition to a new age India has begun,” he said.

Outlining a program which involved reducing the fiscal deficit, damping down inflation, cutting interest rates and the long-stalled introduction of a goods and service tax, Modi said the Government’s overriding objective was to improve the welfare of the people.

A key component of this was agriculture, which was declining even though two thirds of the population still depended on it to make a living in one way or another.

“Our main goal is to raise productivity. This will require using the latest technology, increasing soil fertility, producing more and a greater variety of crops. On the output side the entire value chain will be addressed through better storage, transport and food processing linkages. We will link our farmers to global markets.”

Returning to one of his favourite themes, Modi said the boom in IT would “reform government systems, eliminate waste, increase access to government and empower citizens”.

He looked forward to the day when every village had access to broadband technology “which will transform India in a manner we cannot yet foresee”.

“Today everyone is looking towards Asia for inspiration and growth, and within Asia India is important, not just for its size, but for its democracy, its values, its core philosophy,” he said.

His optimism was echoed at the summit by Nobel Prize-winning economist Paul Krugman who said he definitely saw India as a nation of the future within Asia.

“China has shown the ability to grow faster than most nations, but when it comes to global turbulence India has shown more resilience,” he said.

“China scares me; India, on the other hand, shows great promise.” 


Thursday, January 8, 2015

A small problem in paradise

On the face of it things have never been better in the island State of Singapore. With GDP growth nudging upwards towards six per cent, inflation at 1.5 per cent and the number of its citizens living below the poverty line too small to compute, it can rightly lay claim to be East Asia’s only first world nation.

Public servants around the globe contemplating lay-offs and “doing more with less” would be interested to note that Singapore’s State employees received a year-end bonus – and if they were still dissatisfied enough to want to leave their well-paid jobs, an unemployment rate of  1.9 per cent ensures they would not have to look far to find another.

With exports at $412 billion running ahead of imports ($375 billion) and with a good balance of trading partners, things look set for another prosperous year – but are there any problems in paradise? Well according to some economists there is at least one.

They point to Singapore’s heavy reliance on services to keep the economy ticking over. These account for 73.4 per cent of its GDP, with industry making up the rest (26.6 per cent). Agriculture, despite heavy investment in cutting edge agrotechnology, does not register.

But even industry’s minor share is set to decline with news, just after Christmas, that factory output fell by 2.8 per cent in November, compared with the same month in 2013. It was the weakest showing of the year and fooled even the most pessimistic forecasts of 0.3 per cent growth.

As a result the Ministry of Trade and Industry believes the nation’s economy as a whole will grow more slowly during 2015.

Of course, as a major trading nation, Singapore cannot remain immune from the anaemic performance of most of the world’s leading economies and for the moment at least, the demand for its services – finance, insurance, transport and storage, remain strong.

A year ago, writing in Forbes Magazine, economic analyst Jesse Colombo predicted the Singapore economy was heading for an “Iceland-style meltdown”. That was fanciful; has not happened and well not happen.

However, much will depend on a continuing global recovery from the traumas of the past decade – and especially in the performance of the United States – on whether Singapore’s public servants get another Christmas present in 2015.