Food and Asian integration

The gradual integration of Asia's diverse economies will bring improvements in certain parts of their economies - and carry risks that existing disparities will widen. Food security must be at the forefront of such concerns. (August 2, 2012)


read the rest of the article at Asia Times

East Asia faces Iran sanctions dilemma

In January, I presented the difficulty that East Asian states face when balancing their economic interests in the Middle East and their political and security needs that are intrinsically tied to the US. The issues that were relevant then has remained so throughout the year - now with increased sanctions on Iran, Washington is testing the trans-Pacific ties.

United States sanctions on Iran over Tehran's nuclear program have left South Korea and Japan juggling between satisfying domestic energy demand and keeping relations with Washington sweet. Should loopholes aimed at bypassing punitive measures that are hampering economic recovery and growth close, Tokyo and Seoul will have to re-think the post-World War II trans-Pacific relationship.

read the full article at Asia Times

Korea feels housing shock

South Korea's faltering housing market threatens to undermine broad economic growth, as construction companies struggle to find work and over-indebted homeowners and high-rent tenants curb spending, putting a squeeze on small enterprises that have no exports to fill the gap.

read the full article here

Notes on starvation

Stories of famine and starvation in North Korea are making their way across world newspapers as the release of the United Nations' "Overview of Needs and Assistance" report in May coincided with new accounts of devastation in the country's grain-basket provinces. One thing is clear: North Korea is not once again falling into a food crisis - because that would imply that the country had evaded food shortage at some point in the past two decades. Based on the best estimates, the system appears to be perpetually suffering shortfalls and frequently dipping into a major humanitarian crisis whenever it is brushed by the slightest external pressure: last time it was flooding, this time drought. While the acquisition of food itself remains the key effort in allaying the issue, additional problems exist that significantly further or act as the outright cause of the crisis. Without taking a more holistic approach to this ongoing problem, the situation on the ground will not improve.

read the article here

New blog on North Korea

I am launching a new blog with my friend and analyst Scott LaFoy on the food situation in North Korea. I will continue updating this blog because I will still be writing about much more than the famine in North Korea - but for those looking for a good blog that will keep them informed about the humanitarian crisis in the DPRK, I hope you will frequent our new blog.

DPRK Food Aid Blog

Daw Aung San Suu Kyi speaks

After overseeing months of unprecedented reforms in her home country of Burma, Aung San Suu Kyi (hereafter abbreviated ASSK) went to Bangkok and spoke at the World Economic Forum on East Asia. Here are the highlights of her message to the leading members of the international community:

• The question of whether or not the breathtaking reforms have become irreversible in Burma/Myanmar remains the focus of policymakers and policy analysts - but this begs the fundamental question of what the nature of reforms are in Burma. ASSK defines reforms as improvements to the conditions of the Burmese peoples.
• There is the political aspect of the reforms, which has been the focus of the international community in the last few months - beyond releasing political prisoners and democratizing the electoral system, ASSK calls for national commitment so that all ethnic groups of the union can benefit from the changes. The friction between the ethnic groups are not unbridgeable. 
• Paralleling the political process, ASSK noted that Burma must engage in more robust economic reforms. The opinions of the entrepreneurs in Burma are that the business climate has not significantly improved - ASSK points out that economic reforms are not held up by just fiscal and monetary measures but also by judicial and legislative reforms. Rule of law is to not only protect political activist, but also to regulate business practices. Key to achieving this will be to establish an independent judicial system to administer laws justly. And so far, reforms in the Burmese judicial system has been slow in coming. 
• ASSK spoke about the critical mass of educated people (from Paul Collier) necessary to carry out changes in the country. By education ASSK refers to secondary education, not tertiary or doctoral. She believes that education will be fundamental to resolving unemployment among the youth and creating a citizenry capable of implementing the reforms. She hopes to focus on job creation and vocational training.
• According to ASSK, the biggest problem in Burma is the hopelessness born out of mass youth unemployment. Job creation therefore is both a practical necessity and one that will secure the long term well-being of the country.  
• ASSK believes that the Burmese people on the ground are ready to adopt the democratic process and sees eradicating corruption and inequality as a chief assignment.
• Burma is not yet a fully fledged democracy, ASSK admits, and the reforms are still highly dependent on the commitment of the military (she calls for cautious optimism and healthy skepticism); nonetheless, it is the Burmese government's role to assist the people empower themselves by choosing their own means of self improvement. The state must simply be capable of providing the legal and technical assistance necessary.
• ASSK asks the ASEAN countries to express what they expect of Burma by the time the country takes the presidency of the organization in 2014.

Syria and Russia

As the bloodshed in Syria gets increasingly out of hand, the international community is mounting its criticism of Vladimir Putin for abetting the Assad regime in its bloody struggle to maintain power. The United States and many of the European nations have sided with the Free Syrian Army and support the removal of President Bashar Al-Assad - meanwhile, despite the Russian commitment to Kofi Annan's Plan, Moscow's firm stance against intervention prevents further action from the West.

So why is the Kremlin so wary of putting its boots down on this clear infringement of human rights by Damascus? As I noted before in my blog post and article "The Russian Winter of Discontent," Putin has two major problems with the situation at hand - First, the erosion of Russia's ability to influence events abroad - in particular, the ability to mitigate unbridled Western actions in key regions vital to Moscow's traditional foreign policy objectives; second, the inability of the US to offer anything quid pro quo for Russia's cooperation.

If President Obama wants to change the situation at hand, then he should see to altering the standing conditions on which Moscow creates its foreign policy instead of waiting for the Kremlin to budge on the status quo.  

An Uncertain Future Together

A follow-up to the previous post (Prospects for a New Trading Bloc), I feel it is necessary to provide further analysis on the possible motives behind South Korea's acceptance of the joint declaration which underscored the possibility of forming a trilateral free trade agreement (FTA). This new position is different from the more skeptical position that South Korea took in December last year.

Looking at the timing of Seoul's negotiations with its neighbors, economic benefits from closer regional economic integration appear to be only one of the many objectives that President Lee Myungbak had under consideration. Although the finalization of the agreement between Seoul and Tokyo was recently put on hold, a bilateral agreement on sharing military intelligence and logistics was in its final stage before the trilateral negotiations began. Immediately following the summit in Beijing, South Korea approached China about establishing a similar arrangement. The timing of these meetings should be read as an expression of Seoul's foreign policy objectives.

It is likely that President Lee is attempting to achieve a definitive foreign policy victory before his term ends. The biggest challenge to Lee was not just the two North Korean attacks in 2010, but also the meek response he received from the regional powers when he sought to reprimand Pyongyang. In particular, China's lukewarm response has been blamed for encouraging North Korea to continue provocative actions along the Northern Limitation Line. Preventing future attacks will require establishing a diplomatic environment in the region that would deter North Korea from behaving belligerently - with China enthusiastic about the trilateral FTA, Seoul may be hoping to use it as leverage to more closely align Beijing to South Korea's interests.

Despite the efforts, China is unlikely to change its position on North Korea in the near future, especially when the Chinese Communist Party is preparing for its power transition later this year. Furthermore, China needs North Korea to resource the necessary raw materials for the development of the northeastern provinces.

This should also provide a stark reminder to the United States that some of South Korea's needs can only be satisfied by Chinese cooperation. Events this April proved that the United States can only do so much to convince the North Koreans not to do something. With this in mind, there is little reason to brashly pursue policy that will bring the two countries even closer together.  

Please read my article on Asia Times Online

Prospects for a New Trading Bloc

As the European Union teeters towards possible dissolution, a new trading bloc may emerge on the other side of the Eurasian landmass.

On May 12, 2012, Trade Ministers from Japan, South Korea and China agreed to propose to the leaders' summit (held in Beijing the next day on May 13, 2012) that the three countries should start FTA negotiations by the year’s end.

On the following day, Premier Wen Jiabao, PM Yoshihiko Noda, and President Lee Myungbak concluded the Fifth Trilateral Summit Meeting in Beijing and signed the Trilateral Agreement for the Promotion, Facilitation and Protection of Investment in which the three leaders pledged to work towards establishing a free trade agreement between the three countries. In a joint declaration, leaders of the three countries promised to further enhance the “future-oriented comprehensive cooperative partnership” to unleash vitality into the economic growth of the three countries, accelerate economic integration in East Asia, and facilitate economic recovery and growth in the world.

If the three countries are able to produce an exclusive free trade zone between the three countries, it will have a huge impact on the dynamic of the global market. According to the IMF, China, Japan and South Korea accounted for a combined 19.6 percent of global gross domestic product and 17.5 percent of world trade by value in 2010. In addition, the Japanese Ministry of Trade claimed that a trilateral free trade agreement would increase Japan's GDP by 0.3 percent, China's by 0.4 percent and South Korea's by 2.8 percent.

While both Premier Wen and PM Noda expressed enthusiasm for the potential trading bloc, President Lee showed a degree of reluctance during the negotiations. Many suggest that Seoul fears that a trilateral agreement will neutralize potential gains that could be gained through a bilateral FTA with China. Immediately following trilateral talks, South Korea and China held their first meeting on a bilateral FTA on Monday. Some observers say South Korea, which aims to expand its market share in China's automobile, TV, etc., intends to prioritize the bilateral negotiations over the trilateral talks. Sharing the Chinese market with Japanese corporations would not only reduce potential gains, but, according to Professor Kim Young Han, the country would also end up relying more on Japanese core components and other technology.

In addition, the domestic situation in South Korea could play a role in President Lee’s position. Following the ratification of the KORUS FTA in March, increasing number of people are voicing concerns regarding a possible FTA with Japan.

Japan would certainly greatly benefit from opening relations with both South Korea and China. According to Nomura Securities, establishing a bilateral FTA with China will raise Japan’s GDP by 0.68 percent, which is higher than the 0.35 percent growth expected with a bilateral FTA with the United States. Furthermore, the same study estimated that the trilateral FTA will boost Japan’s GDP by 0.74 percent (much higher than the Ministry of Trade estimate), exceeding the 0.54 percent increase offered by the Trans-Pacific Partnership. In a statement, PM Noda suggested that Japan would prefer to pursue both negotiations simultaneously.

From Yomiuri Shimbun Online

However, the trilateral free trade agreement will most likely not bear fruit in the near future. AEI’s Claude Barfield notes that while the ROK-PRC bilateral negotiations have placed pressure on Japan to advance negotiations, the political turmoil and uncertainty prevent Tokyo from moving forward with any regional economic integration.

China has been proposing an intra-regional free trade zone for the past decade. Several attempts at bilateral agreements have also already occurred. In 2003, Seoul and Tokyo attempted to negotiation a FTA, but broke down after the two governments were unable to resolve their differences regarding agricultural products.

Agricultural exports will undoubtedly become a focal point in negotiations between the three countries. Both Japan and South Korea maintain massive farm subsidies and high tariffs to agricultural imports. Even so, the value of Chinese agricultural exports to Japan and South Korea in 2011 was $10.99 billion and $4.17 billion respectively. A quarter of China’s agricultural exports go to Japan and South Korea, thus Beijing is actively negotiating for the reduction of tariffs. While China promises to strike a balance in exports, domestic agriculture remains an extremely sensitive issue for both Japan and South Korea.

Meanwhile, President Ma Ying-jeou suggested on May 16, 2012 that Taiwan should join the trade pact between the three countries. Alongside aspirations for the intra-regional trade bloc, Ma also reiterated his intent to join the Trans-Pacific Partnership (TPP) trade agreement within eight years and said he expected to resume negotiations on the Trade and Investment Framework Agreement (TIFA) with the US in the near future. At the same time, he pledged to complete follow-up negotiations under the cross-strait Economic Cooperation Framework Agreement (ECFA) with the PRC.

Taiwan is most likely prompted to jump start further negotiations on the ECFA and other FTAs because of the bilateral negotiations between the PRC and the ROK. Taiwanese manufacturers compete with South Korean corporations in electronics, steel, machinery, petrochemicals, plastics and textiles. Heavily dependent on exports to China, Taiwan’s competitiveness in the Chinese market relies heavily on the special economic status bestowed on Taiwanese corporations by Beijing. If South Korean firms were given a similar edge in the Chinese market, Taiwan’s industry could be under threat. Beijing has already stated that it expects the negotiations for PRC-ROK FTA to take no more than two years.

According to Liou To-hai, director of the National Chengchi University's Center for WTO Studies in Taipei, "should South Korea sign an FTA with China ahead of Taiwan and China completing agreements on trade in goods, trade in service and investment, all the dividend that Taiwan has gained from ECFA's early harvest program could be neutralized." In addition, foreign direct investment (FDI) in Taiwan would also be affected. Since the signing of the ECFA, Japanese companies have used Taiwan as a gateway into the Chinese market, but Taiwan's special role could end as Japan is likely to shift its investment to South Korea.

2013 will see several key negotiations take shape and their results will most likely establish norms in the political economy of the region for decades to come. Northeast Asia is yet unready to establish an economic zone like the European Union, but steps that Seoul, Beijing, and Tokyo (and possibly Taipei) take today will definitely set the stage for their future growth.

Putin’s Return to the Wild East

During a Russian Federation Security Council meeting in December 2006, the presidential envoy to the Russian Far East suggested creating a commission subordinate to the prime minister which would oversee all development projects in Eastern Siberia and the Russian Far East. Last month, the Economic Development Ministry drafted a bill that will establish a state corporation authorized to distribute licenses for mineral extraction in 16 administrative zones. Nicknamed the “Far Eastern Republic,” the corporation will be partially exempt from federal legislation, receive massive tax breaks, operate outside regional state control, and receive shares of other state companies as investment.

The idea behind the “Far Eastern Republic” is similar to the 2006 proposal - only this time the project is subordinate to the president who will have the power to appoint the head of the company and name the supervisory board. This constant proposal to present special economic authority to Putin (who would have been in charge of the project in 2008 as premier) represents a clear indication that Vladimir Vladimirovich is heavily invested in the development of the Far East. Indeed, he probably recognizes that domestic support for his administration rides on continued economic growth. For that to occur, Russia must tap into the vast natural resource reserves beneath its most underdeveloped regions.

Alongside exports to China, Russia has also opened up export opportunities to Japan and the Koreas. Earlier this month, Democratic Party of Japan policy chief Seiji Maehara and Alexander Medvedev, Vice President of Gazprom, agreed to study the possibility of laying a gas pipeline linking Hokkaido and Sakhalin Islands.

With all these opportunities, the biggest obstacle to Russia's development in the Far East will be the heavy handed involvement of the state in the region. The "Far Eastern Republic" is being heavily criticized by Russia's former finance minister Alexei Kudrin who recognizes that

the creation of such a market player capable of implementing any private project, considering the state's administrative resource and [special preferences], means that any other investor in this area must be aware that another player with special preferences, special administrative resources and special access to finances may come to the market at any moment

A supporter of privatization, Kudrin believes that Moscow's current policies are damaging to the investment climate in the country.

Indeed given the opportunity, enterprises in Russia appear ready to invest in assets in the Russian Far East. For example, when Vanino seaport in Khabarovsk Krai was privatized in May 2011, 73% stake in the seaport was bought for 10.8 billion rubles ($354 million) after the bid started at 934 million rubles ($30.6 million). Although the winning company is currently undergoing trial resulting from its failure to make the down payment on the seaport, it is an example of how much the assets in the Russian Far East are in demand.

The problem with privatization for the Kremlin is two things:

1. "Privatization" of the 1990s left a bad reputation for entrepreneurship; the Russian people only remember economic downfall, oligarchs and corruption - the Putin administration came to power in 2000 with the goal of cleaning up the socio-economic ramifications of the Yeltsin era, thus  openly endorsing privatization for the Far East is politically difficult
2. Privatization would mean letting go of control over major companies. This will in the short term decrease government revenue

Putin is intent on spearheading development in the Far East; however, beyond building some infrastructure in Vladivostok, the Russian state will not be able to sustain its investments in the region. President Medvedev’s administration had taken small steps towards lessening state control over energy companies, but Putin is unlikely to continue these policies with the "Far Eastern Republic."

While Putin will undoubtedly remain closely engaged in the Far East during his 6-year term, the efforts to develop the Russian Far East have already been sullied by heavy state control over the project. If Moscow desires a prosperous future for the Russian people, it really must consider a more effective and efficient means of access its mineral wealth.

Read my article on Asia Times Online

State of Play

General Martin Dempsey, the chairman of the US joint chiefs of staff, gave a presentation at the Carnegie Endowment for International Peace on May 1, 2012.

His main focus was on the method of implementing US foreign policy abroad and he underscored three elements:

• Re-balancing to the Asia-Pacific cannot be just about increasing military hardware. The “intellectual bandwidth” (i.e. the way we conceive of tactics) of policymakers must also adapt to the new era to apply "smart power."
• The US must work with others to respond to the security paradox; people live in a relatively safer era, but the capacity for individuals to commit violence has also increased in the last few decades -  contemporary threats operate in decentralized, syndicated (state, non-state, and criminal) and networked forms. In order to more effectively confront these issues on every level, the US government must not only establish inter-agency partnerships, but also network with other nations. 
• Policies must integrate new technological capabilities. Communication and cyberspace capabilities have evolved in the past decade; therefore, new strategies must likewise adapt to these new conditions to better prepare for challenges that will arise from these changes. 

According to Dempsey, this new strategic perspective targets threats that are projected to be more prominent in 2020. In particular, anti-access capabilities of rival states and belligerent actors are expected to become more refined. From carrier-killing missiles to IEDs, these new challenges reflect how the Powell Doctrine, based on wielding overwhelming force to achieve clear conventional objectives, is no longer applicable in modern strategic thinking. Focus on aerial and naval capabilities is a response to this development and will require a more efficient and targeted use of manpower and firepower.

The adaptation of these new concepts is going to be affected by the “sequestration” of the budget; therefore, Dempsey noted that specific strategic plans will not be considered until congress finalizes the budget.

Of course Dempsey made the usual caveat that these changes are not designed to be a tool for containing China. He emphasized that Washington must not fall into Thucydides' Trap where war becomes inevitable mainly because one party believes that military confrontation is inevitable.

At the same time, placing greater responsibilities and capabilities in the hands of US allies in the region could mean increasing space for a confrontation between Washington and Beijing. In particular, Japan and the Philippines are bent on deterring Chinese incursion into their (claimed) maritime territories - greater maneuver space and firepower for Manila and Tokyo open the possibility of those countries engaging in aggressive behavior that they otherwise may not have undertaken if the US was indisputably at the helm.

The policy of regional economic-defense cooperation is probably a good policy when the US is strapped for resources; however, the distribution of the security guarantees will not work unless the key issues themselves are first diffused. The US and PRC are both important to one another - a political, economic and diplomatic understanding should be reached before undertaking action that could be misinterpreted. It's still all about diplomacy.

How to tango with Pyongyang

New evidence unearthed by the North Korea International Documentation Project suggests that the 1968 hijacking of the USS Pueblo and the dramatic increase in violence between 1967 and 1968 were motivated by Pyongyang's desires to mend ties with Beijing. According to Romanian sources, Kim Il Sung believed that following Mao's anti-US strategy of opening a "second front" on the Korean Peninsula would bring much needed aid and supplies to the DPRK from the PRC.

This new interpretation of the Pueblo Crisis would remain consistent with how North Korea suddenly changed its behavior towards South Korea (despite maintaining hostile intentions) when China began its rapprochement with the US.

The new narrative of the Pueblo Crisis characterizes Pyongyang as malleable and responding to international conditions, running counter to how many have implicitly portrayed the state.

In a recent article in Foreign Affairs, Jennifer Lind forwarded three elements that facilitate North Korea's deterrent capabilities:

• unpredictability 
• the catastrophic consequences of North Korea’s collapse
• the regime’s nuclear capabilities.

While Professor Lind is correct to pin point North Korea's strengths, she provides no policy recommendation for Washington in the article because she is unconvinced of Pyongyang's responsiveness to external pressures. From Lind's perspective North Korea's history of provocations from USS Pueblo to the shelling of Yeonpyeong Island in 2010 is a single narrative of a state acting without a long-term strategy.

However, the new Romanian evidence on the Pueblo Crisis challenges this view.

If North Korea does indeed react to outside forces, then it is likely to want, first and foremost, to reduce its overwhelming insecurity. This may create an opportunity for Washington to work with - Ambassador Morton Abramowitz suggested dispatching a senior-level politician (like the VP) to negotiate trading security, recognition, etc. for Pyongyang's missiles and nukes.

Alternatively the US could do nothing and see the entire region descend into paranoia and North Korean children starve to death. Washington ought to take the step to change the region for good.

Read my slightly less hyperbolic article on Asia Times Online

Populism, internet freedoms and government spending

It's a critical year for several democracies around the world. President Sarkozy faces an uphill battle in the second round of elections; Dutch Prime Minister Mark Rutte tendered his government's resignation after failing to agree on new budget cuts; President Obama faces off Mitt Romney in the most important elections in the world; Prime Minister Noda will most likely fall victim to the split Diet this year or next; South Koreans will choose their president after the national assembly elections failed to yield a clear popular mandate for any party.

But elections in 2012 stand out from past displays of democratic principles - there appears to be a new wave of populism sweeping over the world, primarily characterized by widespread discourse regarding the role of government in the lives of the multitude.

In particular, defending the rights of individuals online has produced a political movement that will only gain greater following as US and EU policymakers continue to draft draconian measures to limit the freedom of speech. Democratization of public opinion through the medium of social networking sites has been an empowering force and the new Pirate Party seeks to "make sure that the offline civil liberties would carry over into the online world"

They have a five step plan:

1. Create Sweden’s largest youth wing of any party, giving [them] credibility enough to succeed in… 
2. The European Elections, where [they] need to beat 4% (note: [they] got 7.13%), which in turn is a stepping stone to… 
3. Getting entry in the Swedish Parliament, which would start turning things around immediately. But in order to really change European policy, [they] need to… 
4. Take about 5% in 3-4 more key parliaments in Europe, in key countries like Germany, France, or Poland, and use the combined leverage of those heavyweight parliaments to change the view on information policy across the European Union. Once that is done… 
5. The world would have to follow, since no monopolistic repression happens if Europe doesn’t agree to it – since the EU is the world’s largest economy, larger than the US.

Considering the already sizable and growing support for this movement, Pirate Parties will have a place in European Union policymaking in the near future.

Meanwhile, the looming economic crisis has European country on edge and elected officials in a quandary - governments need to pass austerity measures to safeguard the economy, yet the public rejects any budget that would scale back spending on welfare.

Just today, the Dutch government collapsed over a new austerity budget that would have brought deficits below 3% of the GDP as agreed upon in the EU fiscal pact. According to journalist Neil Clark:

The people have had enough of austerity... Holland’s GDP growth in the ten years since it’s had the Euro has just been 1.5 per cent. And they’re now being told that because of this absolutely insane fiscal pact that was agreed upon last year. It will destroy the good life that the Dutch people have been used to over the years. And unsurprisingly the Dutch are saying, it’s enough.

Indeed, decreasing government spending is politically challenging and ruinous for coalitions; however, Sweden provides a clear example of how decreased spending complemented by reduction of taxes could have a positive effect on growth.

According to Sweden's finance minister Anders Borg, Stockholm owes its success to the following policies that were unpopular at start, but proved instrumental in improving services and development

• Substantially reducing income taxes - particularly, through the introduction of earned income tax credits, for low- and middle-income earners - and reforming benefits systems. 
• Reforming the educational system and improving the situation of groups with weak employment prospects. In particular, developing schools and vocational training to better target knowledge and skills for a modern economy. 
• A strong commitment to sound public finances; a fiscal policy framework with an expenditure ceiling and a surplus target
• Pro-growth reforms including the de-regulation of markets, selling of state-owned companies, introducing competition in health care and education, abolishing of wealth and inheritance taxes.

The US Tea Party supported similar positions, but overburdened itself by unnecessarily supporting socially conservative issues and failing to come up with a clear economic plan to resolve the deficit without capsizing the entire economy. In addition, the movement seems to be losing momentum as the Republican Party fields slightly more right than it had in the past.

While policymakers in the US and EU struggle to develop sound fiscal policy for long-term growth, Argentina has fallen wayside (again) - the decision to nationalize the oil firm YPF appears to be driven more by President Kirchner's desire to pander to the public than short or long-term benefits to the country.

Competing domestic forces have always limited the number of policies that elected officials can carry out. The new element in the 21st century is the increasing power of the masses to fuel the momentum of political movements. This will produce a mixed bag of politicians: some like Anders Borg will pursue policy and allow the results to speak for themselves; others like Christina Kirchner will revert to directly appealing to the public through cheap cosmetic measures such as nationalization and bursts of public spending.

As the US presidential election approaches, it remains to be seen how each of the candidates will field their positions - and unhappy America may see both candidates buckle

We built this nation on these mountains... rivers... and dams

The importance of energy security in attaining both national security and prosperity has been pronounced since the industrial revolution. Today, as the rising cost of crude oil threatens to break the backs of the global community, debating the issues surrounding energy production, distribution and consumption has become unavoidable.

However, there is a skewed focus. Analysts have mostly focused on how the industrialized economic-core acquires fuel resources from the periphery. Little attention has been expended on how countries without a massive mineral energy reserve will cope with development and how the challenges they face may lead to wider complications.

A recent article on Asia Times Online by Eelke P Kraak, titled "Power nexus skews Kyrgyz dam demand," captured the importance of energy politics in the periphery and sketched out possible consequences of the developments in Central Asia going awry.

To briefly summarize the crucial events, Kyrgyzstan has been constructing hydroelectric dams along the Syr Darya River, which brings water from the Tian Shan Mountains to the Aral Sea. For Bishkek, the project is absolutely necessary for the establishment of a functioning economy. However, this project has instigated conflict with Uzbekistan, which requires the water from the Syr Darya for its agriculture.  And the conflict is just beginning:  the Kambarata II Dam, which was inaugurated in August of 2010, was the first of 6-8 damns planned along the Kambarata cascade on the Syr Darya-Naryn river system.

Kraak sees the Soviet legacy of forcing industrial agriculture on the Central Asian nations as the roots of the conflict.

The Kambarata cascade is by no means the first hydropower intervention in the Aral Sea basin of which the Syr Darya covers half the drainage area. Hundreds of dams have been constructed since the 1930s as well as a plethora of reservoirs, irrigation canals, and other water management structures. These developments were part of the Soviet hydropower mission, a modernisation plan that made the conquest of nature an ideological imperative. By taming the wild Syr Darya and Amu Darya Rivers, it was thought, agricultural output could be greatly increased.

Indeed, Moscow succeeded (with massive help from displaced ethnicities imprisoned in Uzbekistan) and created the "Cotton Belt" - but the consequences of this policy can literally be seen from space. The Aral Sea is on the verge of disappearing.

(Courtesy of the United Nations Environment Programme)

Kraak sees an economic solution

According to economic analysis conducted by the World Bank, a win-win solution is actually possible without the expensive construction of more dams: recognising the economic value of water allows for the optimisation of existing dam operations. Kyrgyzstan could discharge water for Uzbek irrigation in summer, in exchange for nominal payments to cover the costs of an alternative electricity supply in winter.

However, even Kraak recognizes that such a pragmatic solution would be difficult to achieve when you have domestic interests ("hydroelectric elites") that are determined to maximize its own gains via the construction of the dams.

In addition, Kraak notes that rumors suggest a Russian hand in the hydroelectricity development in Kyrgyzstan. Apparently Moscow provided large loans to Bishkek in 2009 to jump start the dam construction and many interpreted this as the Kremlin's attempt to dislodge the US from Manas airbase in Kyrgyzstan.

While I disagree with the implicit assertion that Moscow seeks a solid political hegemony in the region, Russia's vested interest in Kyrgyzstan (directly tied to its own national security) does make it difficult for the regional parties to come to a compromise.

Water sharing is a difficult issue to resolve and it's unclear if there really is a win-win solution. If hostilities over resources manifest in violence, the ramifications of such an event in an unstable and volatile region like Central Asia will be catastrophic. For Washington, attempting to bring stability to the region, poverty in Kyrgyzstan, Tajikistan and Uzbekistan acts as an obstacle that hinders statecraft and reconstruction of Afghanistan. This reflects one example of how scarcity and competition over natural resources can spill over into other vital areas of interest.

This much is clear: the increasingly self-evident nexus between energy production and food acquisition (or other agricultural products; like cotton) will be a pivotal facet of international development from now on and it will haunt both the developed and developing world. In short, scarcity in the periphery is not just the problem of the periphery alone, it's everybody's problem.

End of an Era?

Tokyo is mobilizing for the upcoming North Korean launch with forwardness and confidence that is rarely seen in Japanese foreign policy. It is very possible that this is an indicator of the changing status quo in the Asia-Pacific: Japan is breaking from its Cold War-era role as a dependent state of the United States and making it on its own.

3 days before South Korea's befuddled officials announced their possible response to the rocket, Japan insisted with vigor that it would shoot down the rocket if it strayed into Japanese airspace. This announcement is somewhat shocking when you consider Article 9 of the Japanese constitution:

ARTICLE 9. Aspiring sincerely to an international peace based on justice and order, the Japanese people forever renounce war as a sovereign right of the nation and the threat or use of force as means of settling international disputes. (2) To accomplish the aim of the preceding paragraph, land, sea, and air forces, as well as other war potential, will never be maintained. The right of belligerency of the state will not be recognized.

During the Cold War, this law and the corresponding foreign policy doctrine (The Yoshida Doctrine) presented one of the best examples of the peace dividend. Tokyo was able to rehabilitate its international status and mend relations with victims of Japanese imperialism while receiving protection from the United States. Reconstruction of a bombed-out country is much easier when the government focuses entirely on the economy.

But the maintenance of the Yoshida Doctrine was always tenuous because it was not entirely rooted in the ideals of pacifism. On the contrary, this peace-loving policy was a cold and calculated maneuver that maximized gains both domestically and abroad. PM Shigeru Yoshida was able to satisfy both the left and right by institutionalizing neutrality while de facto remaining dependent on the US military. It was a brilliant political compromise to jump-start a shamed and defeated country.

So what has changed?

A lot of people are suggesting that it's China and its claims on Senkaku that has driven the Japanese to increase its focus on the military. But threats to Japan have always been present - 30 years ago it was the Soviet Union.

If we put the world of PM Yoshida and PM Yoshihiko Noda next to each other, one crucial difference becomes very evident: the decline of the US.

Japan slowly began rearming itself in the 1990s because of demands from Washington for Tokyo to be more engaged in regional security and Japan half-heartedly went down that route. Now "regional security" is not just an ambiguous term: Japan's security doctrine has completely shifted from home island defense to far-island defense. It plans to add 2 more Hyuga-class helicopter carriers and purchase American F-35 fighters (with vertical landing and liftoff capabilities), which would effectively equip the Japanese Self-Defense Force with 4 aircraft carriers. Last year, Tokyo even removed the self-imposed ban on arms exports, making way for the military-industrial complex to grow.

What Tokyo and other governments in Asia see is the increasing powerlessness of the United States before its own massive internal problems, both political and economic. For instance, Bruce Klinger notes:

The new defense strategy could prevent the U.S. from fulfilling its existing treaty requirements. For example, the current war plan responding to a North Korean invasion (OPLAN 5027) calls for the U.S. to deploy 690,000 ground troops, 160 destroyers, and 2,000 aircraft within 90 days. Doing so would require the entire U.S. Army and Marine Corps after the budget cuts. The Obama Administration should make clear to South Korea that future U.S. force levels will not support the current war plan.

No wonder the Japanese are rearming themselves - with Asia unstable as always with North Korean provocations and Chinese assertiveness, and with the US increasingly unable to fulfill its role as defender, Tokyo sees few options outside militarization. On top of that, unlike the 1940s and 50s, the economy is fairing better than people think it is.

While policymakers in Washington cheer Japan's increasing aggressiveness, few have raised the point that Tokyo's policies may be more of an indicator of American weakness.

The implications of Japan becoming a military force in the region are grave. There are ever-increasing tensions over the South China Sea and adding more robust military players into the region may not be a good solution. In addition, North Korea's response to Tokyo's militarization could also have some serious ramifications.

All in all, Northeast Asia is in for a rocky decade.

Check out my article on Asia Times Online

Missiles, oh my!

North Korea's pronouncement that it will launch a satellite to celebrate the centennial of Kim Il Sung's birth has thrown the world into dismay. The thinly veiled decision to test its ballistic missile was even more shocking because Pyongyang had agreed to a missile test moratorium not a month before.

The timing could not have been worse for US foreign policymakers: the domestic situation in the US is fragile, weakening the resolve of Washington's close allies, while the ongoing crises in Syria and Iran continue to vie for Washington's attention. The "Leap-day Deal," the result of a year long negotiation, could have been President Obama's sole diplomatic accomplishment with humanitarian assistance rolling in (albeit late) behind IAEA inspectors and the ground works for restarting the Six-party Talks. Instead, the president's trip to Seoul for the nuclear summit was completely sullied by the foretold provocation.

So what has been the general talk on the whole crisis?

North Korea appears surprised by all the international condemnation, claiming that the launch will be for peaceful, scientific purposes. In November of 2011, Pyongyang published a white paper titled “Space Is Common Wealth of Humankind” where it claimed that space "serves as a powerful engine propelling the future development of science and technology as well as economy" and criticizing the US for "spurr[ing] the scenario for converting the space into the theatre of a war for realizing its strategy for world domination." This should have been read as a possible sign of North Korea's intent to test its ballistic missile capabilities under the guise of a satellite launch as it did in 2009.

This may have been disregarded because Washington probably assumed that Pyongyang knew that a satellite launch violates UN Security Council Resolution 1874 which banned the North Koreans from conducting anything involving their ballistic missile technology. Perhaps it should have been made more explicit.

Stephen Haggard summarized several legal issues surrounding North Korea's satellite launch and possible rationale behind Pyongyang's actions. Here are three hypotheses that he presents in why Pyongyang backed away from the deal.

• That the February 29 deal was effectively vetoed by powerful groups in the military or elsewhere; 
• That it’s all about inexperience; Kim Jung Un was sold a bill of goods by advisors who thought they could exploit the missile-satellite issue and get away with it; 
• That this was completely calculated; Kim Jong Un knew the risks but rolled the dice in an effort to have it both ways (domestic political benefits of the launch plus substantive benefits of the deal). 

With the launch most assuredly moving forward, the question now is how to move forward in this time of uncertainty.

President Obama's first plan was to rally support from the Chinese. However, despite his tacit support against the launch, Hu Jintao will probably not move to really antagonize North Korea.

Both Japan and South Korea have announced that they will intercept the rocket if it strays from its expected trajectory. Those are very serious claims considering the well-known prowess of North Korean rocket scientists in keeping their rockets in the air much less in a pre-calculated trajectory. It's good that the US government has not said anything about intercepting or striking the rocket while still on the launch pad.

The approach that appears most amenable is reengagement using assistance and economic development as carrots. Professor Michael Mazzar suggests

[A] new strategy using the twin forces — markets and information — to alter the system. The fundamental U.S. goals would be peace, stability and a gradual process of reform and evolution in the North that could eventually change the character of the regime. Unlike traditional proposals for engagement, this approach would not try to use trade and economic benefits to change the North's behavior. Instead, it would use targeted direct foreign investment, people-to-people contacts, training programs for North Korean technocrats and more to accelerate the rise of alternative power centers in the North. 

This is the safest plan for moving forward. I asserted before that leaving the North Korean masses to starve will negatively impact the long-term interests of the US. Other analysts also support the idea of proactively supporting the North Korean people to better prepare the US for North Korea's collapse. Some even consider aid to be a step towards taking down the regime. Gordon Chang believes that

Food aid, if properly monitored, can further erode regime controls on information. Foreign food monitors, present in the country to ensure no diversion of aid, give the North Korean people an opportunity to meet outsiders and thereby learn the truth about their own society and the outside world. Moreover, the presence of the monitors tests the limits of the state’s ability. There are simply not enough local minders to watch over foreign workers, doctors, and monitors. In fact, there has been unsupervised contact between foreign food monitors and North Koreans. 

There is clearly a compelling argument for continuing engagement with the North Koreans through humanitarian assistance. For its part, Pyongyang is willing to continue negotiations and have not rescinded its invitation of IAEA inspectors in the face of Washington halting the delivery aid.

The point is that there are plenty of reasons why North Korea remains antagonistic; one cannot expect two nations to build trust without first establishing diplomatic relations nor negotiate over demilitarization without a peace treaty. It's time that Washington stops allowing Pyongyang to surprise it and instead surprise the North Koreans. America needs a peace offensive.

Why we must go on... even with Pyongyang

The hard-won deal with North Korea is already in peril - Pyongyang has announced its intentions to launch a satellite to commemorate Kim Il Sung's centennial and the US sees this as a violation of the moratorium on missile testing. Nonetheless, the negotiations must go on because the opportunity is ripe to set Northeast Asia on a course for greater stability.

Evaluating the merit of the recent food-for-nukes deal has divided analysts.

In a Washington Post op-ed on March 8, Andrew Natsios censured the "Leap-day Deal" for sending a message that encourages Pyongyang to build more nukes and divert aid with impunity. Chris Nelson criticized Natsios' positions but failed to produce a defense for the deal itself.

I am in favor of the deal and here are reasons why:

The moratorium on activities at the Yongbyon nuclear facility is a great start and if the US stays in the agreement, there will be follow-up negotiations. Some analysts were critical of the fact that the deal narrowly specified the Yongbyon facility when there are probably other underground nuclear facilities. But we cannot monitor facilities that we do not know about, thus a more expansive agreement would have simply acted as a harbinger for future conflict.

Based on accounts of high-profile defectors from North Korea, it is likely that Pyongyang is actually concerned for the wellbeing of the North Korean people (in so far as not wanting them to all die) - this will bring North Korea back to the negotiating table because Washington's nutritional assistance package of 240,000 tons will not be sufficient to ensure food security through the lean months between harvests. When negotiations restart, there is room to expand upon the standing agreement.

Monitoring, which State Department officials and many analysts mention on a regular basis as a key obstacle to providing food aid, has never been a big problem - not because Pyongyang doesn't siphon off the aid that comes in the country, but because having surplus food in the market will have a positive outcome. As Chris Green assessed in his recent article on Sino-NK:

This is one oft-unspoken fact that muddies the waters of the 'aid transparency debate'; namely, that giving grain to the North Korean state ends up diluting prices in the [markets], something that is good for ordinary consumers

More importantly, it is in the moral and strategic interests of the United States to help build a North Korea that is not suffering from chronic malnutrition. The long term social consequences of exposure to starvation will prevent the North Korean people from engaging in activities that contribute to social change or effectively participate in reconstruction if the country opens up to the world. If this occurs, then the cost of reconstruction falls on South Korea and invariably the United States. Therefore, Washington should begin investing in the future that it wants to see today.

Negotiations must not only go on, but pick up the pace. As North Korea's economic and political ties with China and the Russian Federation deepen, Washington's economic importance to Pyongyang will diminish. More importantly, should Washington leave North Korea without means to better secure and distribute food, the consequences will yield an immense human cost that will continue to undermine the region's stability long into the future.

Read my full article on Asia Times

Economic Nationalism Unbound

Two things jumped out at me this week:

1) Viktor Orban has been forwarding Hungary's sovereignty as a focal point of his premiership for quite a while, but the recent denunciation of EU 'colonialism' at a rally takes the ongoing political and economic crisis to a whole new level.

Supporters of Orban demand that the EU release the funds that have been denied to Hungary due to Budapest's budget deficit - this comes after Orban was personally chastised by Brussels and Strasbourg for reining back the freedom of the press and attempting to subordinate the independent central bank under executive authority.

The consequences of living in a community of nations have dawned on the Hungarians - and the anti-Europe rhetoric from center-right Fidesz and the far-right Jobbik parties show how nationalism is still well and alive in Central Europe today.

2) I watched an animated video created by the Japanese Ministry of Agriculture, Forestry and Fisheries (MAFF) on the issue of Japanese trade and food security:

It highlighted Japan's declining domestic food production as a key problem that also created related problems in health and national security. What struck me as interesting was how the video asserts that the protein-rich western diet was causing the Japanese nation to be less healthy. The video concluded that only by returning to a traditional Japanese diet could the Japanese people build a better society (including having more children as evident at the end of the video).

While I agree with the notion that the global obsession with colossal output and consumption of meat is economically and ecologically undesirable - I was amused by the nationalistic themes embedded in the presentation. In particular, the video does not attempt to make a distinction between the cuisine and the contents of the food. For example, a hamburger is going to be distinctly western regardless of the size of the meat patty - if the problem is the over-consumption of protein, then the core of the issue is the portion size, not the way it is prepared.

These are two very interesting cases of nationalism rising to challenge the ramifications of globalization - countries are bound to have their financial and legal decisions checked by inter-regional political and economic bodies and cultures (including eating habits) are going to change. Their next steps will reveal whether we as a single global community can move forward into a new social paradigm or stagnate...

A New Hope?

As the follow-up negotiations to finalize the nutritional assistance to North Korea is taking place, several analysts have weighed in their opinions on the "Leap-day deal." Most people have taken a negative position, citing the agreement's narrow focus on the Yongbyon facility and the questionable act of using humanitarian assistance for leverage.

However, it is important to point out that the recent negotiations have produced opportunities for long-term engagement and a chance to reduce tensions in the region.

At the least, the infamous Yongbyon facility will be closed. Many point out that North Korea probably has many other underground facilities that support the nuclear weapons program, but Yongbyon is probably Pyongyang's largest and most productive enrichment site. With enough output to produce a nuclear weapon on an annual basis, closing down the facility will be a huge step forward. 

Furthermore, now that the food crisis and the nuclear issue are linked, Pyongyang will be pressed hard to make further concessions in their nuclear program in order to gain more food. Although some experts, like Marcus Noland, do not believe that Pyongyang accepted the US deal out of concern for its people, considering the socio-economic conditions, it is likely that North Korea's sudden change in position is tied to its desperation for assistance. 240,000 tons of nutritional assistance will only last so long. When the North Koreans come back for more food, more concessions may be negotiated.

These are issues that both North Koreans and Americans can potentially work together to resolve - Washington wants Pyongyang to give up its nuclear weapons and Pyongyang wants Washington to help it recover from the food crisis. Andrei Lankov is adamant that North Korea will never give up nuclear weapons, but as long as talks move in a direction that would reduce tensions and establish a firmer line of communication between Pyongyang and Washington, the current negotiations are well worth the moral and strategic risks.

Of course Washington is on a limited time frame. As North Korea's ties with Russia and China deepen, the US economic leverage over the isolated and hungry state will decrease. More importantly, the US should not delay the delivery of humanitarian assistance as to prevent further trauma on the North Korean people. Much is at stake.

US-DPRK leap?

On February 29, 2012, the DPRK and the United States simultaneously announced the results of their third exploratory talks. Both sides chose to focus on different aspects of the negotiations in their announcement, but in general, Pyongyang and Washington appear to have landed on the same page.

The agreements were surprisingly extensive, covering a moratorium on long-range missile launches, cessation of nuclear weapons tests and nuclear activities at Yongbyon and permission for IAEA inspectors to return to North Korea.

In return, the United States promised to finalize negotiations on 240,000 metric tons of nutritional aid. The addition of "nutritional assistance" in the meeting is somewhat surprising because Washington has always maintained rhetorical distance between the nuclear issue and humanitarian assistance - as many analysts suspected, the deal appears to have been reached mainly via US using humanitarian assistance as leverage.

The agreement to provide 240,000 metric tons of nutritional aid is significant because it means that the North Korean leadership was willing to concede on the issue of being given the remaining 330,000 tons of grain from the 2005 agreement. According to Marcus Noland, this concession suggests that there is an individual or group making decisive political decisions in Pyongyang, which in of itself was not a certainty after the death of Kim Jong-il.

While US negotiators were wary of making assertive comments on recommencing the Six-party Talks, the North Korean statement chose to underscore the possibility of restarting the talks, lifting sanctions and acquiring a light water reactor - clearly looking for a deal similar to the 1994 Agreed Framework.

The key area of concern here is the linkage between food aid and the nuclear issue. If this becomes the established precedence, then humanitarian assistance will be shamelessly flaunted as a political tool - and the North Koreans will have a positive incentive to engage in provocative behavior to induce food aid.

Moreover, the linkage between food and the nuclear program will create an incentive for Washington to continue the supply of aid even if the North Koreans are abusing the distribution, as long as the negotiations on the nuclear program makes progress - humanitarian assistance will be taken hostage by North Korea's willingness to talk.

The agreement specified that North Korea will halt nuclear activities at the Yongbyon nuclear facility, which leaves nuclear facilities that the US and the IAEA do not know about (if they exist) free to continue uranium enrichment. In 2010 Siegfried Hecker was shown the uranium enrichment program at Yongbyon and he was shocked to find that the facility was capable of producing a weapon's worth of highly enriched uranium every year. While this infamous facility will halt operations, just as Hecker was not expecting a massive enrichment program in 2010, we may stumble upon an underground nuclear facility in the near future. Furthermore, Pyongyang probably retains enough plutonium right now for four to twelve atomic bombs.

While the recent agreement could definitely open way for a considerable breakthrough, bringing the regional players back to Six-party Talks and forestall mass starvation in North Korea, as with all agreements with Pyongyang, this one stands on thin ice. As the moratorium does not include a specific timetable, Pyongyang may well be stalling for time and aid.

The dependency illusion

Through trial and extreme error, communism has been thoroughly discredited in the last century; however, the theory of dialectical materialism survives into the new millennium. Marx suggested that the construction of new means of production inevitably leads to internal contradictions and new epochs are created through the process of synthesizing all the existing material realities. Today, we simply replaced the idea of an inevitable communist takeover with the presumption that every country will one day adopt the liberal democratic system.

This was Francis Fukuyama's famous thesis in "The End of History?" However, the revolt against this new world order began soon after the end of the Second World War, right alongside the Cold War. This was the struggle fought via economic nationalism and competing theories of modernization, taking shape in various ideologies and political systems. Latin American economists first led the charge in the 1940s and 50s with their "Dependency Theory." The core idea forwarded the view that poor and less powerful states will be subject to the political, economic, social and cultural domination of wealthier states. Adherents of this theory chose to disengage from the dominant economic systems of their world in favor of sovereignty.

There were varying degrees (everything from import substitution to self-sufficiency), but the most radical and extensive pursuit of this stance can be seen in North Korea. North Korea rejected the idea of being subject to either American or Soviet political and economic influences. Manifestations of this appeared in Pyongyang's refusal to join COMECON and its constant pursuit of heavy industry.

However, many analysts have pushed aside indigenous North Korean desire to be independent and instead analyzed Pyongyang's policies as an attempt to maximize political capital by playing the Soviet Union against the PRC during the Sino-Soviet Split. Naturally, in the post-Soviet era, the US foreign policy makers look to China as North Korea's patron and sole hegemon. As negotiations in Beijing carry on to denuclearize North Korea, this mistaken perception of Sino-DPRK relations will prove most ineffective for the US side.

North Korea appears to be increasingly dependent on Chinese economic aid and slowly making reforms to harbor cross-border trade. Some have argued that such reforms indicate North Korea's irreversible ties to China and a physical representation of Beijing's influence over Pyongyang, almost like the economic and political relationship that the US had with Latin America. However, to characterize the Sino-DPRK relationship as a traditional core-periphery model is short sighted.

The basic assumption that North Korea's economic dependence translates to political subjugation lacks substantial warrants. Yafeng Xia, a historian specializing in the history Sino-DPRK relations, portrayed China as less of a lever and more of a hammer, meaning that Beijing can strangle/starve Pyongyang to death but lacks the tools to apply less extreme changes or bring it to submission.

On top of not wishing to upset the balance of powers,North Korea serves as an important source of raw materials for development in China's northeastern provinces.

Furthermore, with everyone expecting millions of refugees to flood across the Yalu when the state collapses, it is hard to distinguish who has leverage over whom in the current state of affairs.

There is a predominant mood of inevitability when people discuss issues related to North Korea - that it will one day collapse or that it will inevitable bow to the economic realities and give themselves to the Chinese model. However, such thoughts are presumptuous and oversimplifies how different people view themselves and the world.

Imposition of dogmatism and a self-assuredness in one's own vision of history are not new things, but we ought to have learned our lesson and become more flexible.

Read my article in the context of the US-DPRK negotiations on Asia Times

A short chronology of DPRK-US nuclear weapons negotiations 2010-12

February 2010

• U.N. political chief B. Lynn Pascoe meets with North Korea's president and foreign minister and "argue[s] strongly that the six-party talks should be resumed without preconditions or further delay."
• On February 13, North Korea's chief nuclear negotiator Kim Kye Gwan arrives in Beijing and strongly pushes for a trip to the United States in March, but the U.S. does not authorized a visa for him.
• February 15 North Korea’s nominal head of state, Kim Yong Nam, states that North Korea will end hostile relation with U.S. through dialogue and negotiations.

March 2010

• 26 March 2010, ROK Corvette Cheonan is scuttled

May 2010

• Kim Jong-Il publicly supports cooperation “towards moving for a resumption of the Six-Party process.” Meanwhile, Clinton tours Asia.

June 2010

• United States extends economic sanctions against North Korea under the UN Security Council Resolution 1874

August 2010

• Kim Jong-il expresses hopes for early resumption of six-party nuclear talks during his trip to China

November 2010

• Special Representative Stephen Bosworth travels to Beijing to discuss the DPRK’s clandestine uranium enrichment program.
• Yeonpyeong Island is shelled.

January 2011

• North Korea invites South Korea to begin negotiations on inter-Korean trade; however, Seoul makes a counteroffer to discuss the sinking of the Cheonan and the shelling of Yeonpyeongdo. Pyongyang agrees to meet in February.

February 2011

• US NGOs observe signs of a severe food crisis in parts of North Korea
• The first Inter-Korean military negotiation sine the 2010 sinking of the Cheonan starts and promptly collapses as the North Korean delegation storms out

March 2011

• The US demands a show of seriousness by the North Koreans as a prerequisite for the resumption of negotiations.

May 2011

• Special Envoy for North Korea Human Rights Ambassador Robert King and the USAID Deputy Assistant Administrator for the Office of Foreign Disaster Assistance Jon Brause travel to the Democratic People’s Republic of Korea from May 24th to 28th to explore the possibility of extending food aid.

July 2011

• Kim Kye-gwan arrives in New York on July 27, 2011 for negotiations “designed to explore the willingness of North Korea to take concrete and irreversible steps toward denuclearization.” Talks conclude without any substantive changes, but characterized as exploratory and constructive. Bosworth states that “before deciding our next steps to resume the process, the United States will consult closely with the Republic of Korea and our other partners in the six-party talks”
• South and North Korean representatives meet in Indonesia to discuss prospects for restarting the 6 party talks

August 2011

• US and the DPRK agree to discuss the search and repatriation of remains of US troops killed in North Korean territory during the Korean War
• During his meeting with President Medvedev in Ulan Ude on August 24, Kim Jong Il promised to work on introducing a moratorium on testing and spent nuclear fuel processing. Senior Washington official states that the offer was “welcome but ... insufficient” to return to the negotiating tables.

September 2011

• Top nuclear negotiators from North and South Korea meet in Beijing to discuss terms of restarting the 6 Party talks
• On September 23, North Korea expresses interest in continuing negotiations with the US in October

October 2011

• October 24, Bosworth meets with DPRK vice foreign minister Kim Kye-gwan in Geneva “to determine if North Korea is prepared to implement its obligations under UN Security Council Resolutions 1718 and 1874 and its commitments under the 2005 Joint Statement of the Six-Party Talks
• No significant breakthroughs in denuclearization negotiations. Bosworth states he is “neither optimistic nor pessimistic”
• October 26, the US government is reportedly preparing to resume food aid to North Korea, but will stagger the aid in a series of deliveries. A source close to the North tells Yonhap News that Washington plans to restart the humanitarian assistance that stalled in 2008.
• Mounting criticism that the US is coupling food aid with successful negotiations with the DPRK.

December 2011

• Kim Jong-Il dies, but Pyongyang approves the continuation of negotiations. New York channel used to continue negotiations.

February 2012

• North Korea makes a list of demands that South Korea must fulfill before resuming negotiations including the cancellation of joint American-South Korean military exercises. South Korea does not budge and the exercises are conducted on schedule
• Vice-Minister of Foreign Affairs Kim Kye Gwan leaves Pyongyang on February 21 for the 3rd round of talks with U.S. officials in Beijing.

The Russian Winter Offensive

It has been a while since I wrote an article about Russia, but with Foreign Minister Sergei Lavrov’s recent visit to Damascus and Russia’s veto at the UN Security Council to block a resolution on Syria, the Eurasian giant deserves our attention.

Many analysts question why Moscow is acting so strongly against the United States when the Obama Administration appears to have done so much to achieve a "Reset" with the Kremlin. Most prominently, Daniel Drezner compares Russia and China in his Foreign Policy article and points out how Beijing's rhetoric towards Washington is more reserved than Moscow's despite China facing more direct challenges from the United States.

But objectively speaking, the baseline presumption that there actually had been a "Reset" between the United States and the Russian Federation may be a fallacy. With Putin at the helm, the Kremlin has seen the foreign policies of the Clinton, Bush and Obama administrations, which invariably produces a long term perspective on US behavior towards Russia and actions in Russia's key areas of interest. Taking this view into account helps better explain why Moscow may not feel that Obama is all that different from Bush.

What the Russian leadership expected the “Reset” was for the United States to break from the policy of unilateralism and show “commitment to the notion that Russia can be a viable and trustworthy partner to the United States regardless of the state of Russia’s domestic affairs.” The Libya issue provides a good example of where the "Reset" failed to manifest - Russia abstained from the UN Security Council Resolution 1973 without totally rejecting it in deference to US leadership. Despite the silent understanding that the resolution should not be viewed as a green light for military intervention, NATO began air strikes on Libya. Therefore, in debating the crisis in Syria, it is only natural for Lavrov to give a firm warning to the "West" and use Russia's veto power to reject the resolution against the Assad regime. Furthermore, the criticism against Russian elections by the US State Department was not well received by the Kremlin, especially during a sensitive time for semi-democratic/semi-authoritarian regimes around the world.

What is more, Washington has nothing to bargain for. It has opted out of being an assertive negotiator or a stabilizer on the Korean Peninsula where Russia seeks stability in order to begin constructing new gas pipelines that will open way for the development of the Russian Far East. The US has not and cannot fulfill Japan's security needs, which is forcing Tokyo to reorient its military position from north against Russia to south against China (exchanging land based forces in Hokkaido for air and naval forces in the South China Sea) and leaving Russia in good position to conclude a favorable resolution on its island dispute with Japan.

Before, Russia saw the United States as a vital partner in engaging Asian countries - but with Washington forcing South Korea and Japan to reconsider their dependency on oil imports from the Middle East, Russians  can expect the East Asian economic powers to come to the Kremlin. In fact, South Korean entities have been in negotiation since 2003 to develop means to deliver gas to South Korea through North Korea - now Pyongyang has given a nod of approval and things will move along, with or without Washington.

The US-Russian friction is a reflection of Washington's massive loss of leverage over a country that had at one point desperately desired closer relations. Internal weaknesses of the Russian Federation may play a peripheral role, but obsessing over Putin's authority over the country misses the wider implications of current events.

Russia is a big country. It spans over vast territories and borders several regions where major world players have staked out their interests - Kremlin is challenged to produce a cohesive and coherent foreign policy to maximize Russia's gains. Naturally, the resulting policies are both reactive and pragmatic.

Looking at Eurasia from the perspective of those who rule over a significant portion of it seems like a good place to start for Washington if it seeks to better assert its leadership role there.

Read my full article on Asia Times.

"The concept of a dog does not bark"

We cannot recreate the past. After all, it would be impossible to maintain authenticity while being fully aware of the consequences of certain decisions. Nonetheless, toying with counter-factual scenarios and obsessively rereading the recent past are crucially important habits for attending to current social needs. By applying our current world view to our critical reading of history, we may gain valuable insight on presumptions and fallacies that may have been lost on us before.

In light of the mass public demonstrations in the United States and Europe, we must ask ourselves why so many of us have become so disenchanted with the dominant socio-economic paradigm that was so welcomed at the fall of Berlin Wall: the merger of liberal democracy and free market capitalism.

Since the phenomenon needs a starting point, one can start with the triumph of the "West" against its adversaries - and it may be useful to assess what and who the victory was against.

In the 2000s, when resurgent Moscow's foreign policy became increasingly confrontational towards the "West," many forwarded the notion that the Cold War did not end in 1989/91, it had simply gone into remission during the reconstitution of the Russian Federation. This view suggests that the Cold War was a conflict between the Soviet Union and the United States. Add China into the narrative and one creates an interpretation of the Cold War that is largely great powers-oriented.

However, this perspective fails to account for civil conflicts around the world where domestic forces co-opted major powers to achieve political objectives. The Korean War is a great example of this: the North Koreans dragged the unwilling Soviet Union and China into a bloody conflict that very quickly involved the United States, but was initially only against South Korea.

Without accounting for other nuances of Cold War history, the nature of the post-WWII period is already very complex; nonetheless, a simplified model that continues to find itself into political rhetoric is the idea that the United States and Western Europe had championed the cause of democracy/capitalism against Soviet totalitarianism/communism.

German-American social psychologist Erich Fromm took offense to this notion and stated in his afterward to Orwell's 1984 that the use of "doublespeak" and the distortion of reality were prevalent in the West as they were in the dystopic novel and behind the Iron Curtain (obviously in varying degrees, but present nonetheless).

Just as the Inquisitors who tortured their prisoners believed that they acted in the name of Christian love, the Party "rejects and vilifies every principle for which the socialist movement originally stood, and it chooses to do this in the name of socialism." Its content is reversed into its opposite, and yet people believe that the ideology means what it says. In this respect Orwell. quite obviously refers to the falsification of socialism by Russian communism, but it must be added that the West is also guilty of a similar falsification. We present our society as being one of free initiative, individualism and idealism, when in reality these are mostly words.

One needs not go far back in history to find prominent examples to support Fromm's position; the overthrow of Iran’s democratically-elected Mossadeq government through CIA support, the praise for Pinochet's Chile as a key member of the "free world" and President Reagan's assertion that Grenada posed a threat to the security of the United States are only few of the examples among many disturbing contortions of reality during the Cold War that few in the general public questioned.

At the same time there is an important truism in narrowing the conflict to one between democracy and communism. It is not possible to maintain a pluralistic society and impose an economic system based on the denial of private property because such an economic model implies involuntary expropriation. Though some will argue that the forced march to industrialization helped the Russian people defeat the Nazis (again it's hard to create a counter-factual here), there is (or rather ought to be) little opposition to the notion that the Soviet Union was a supremely flawed experiment that produced neither prosperity nor equality. On the other hand, despite all its shortcomings, the handful of non-communist countries with its imperfect democratic institutions have undoubtedly nurtured the most tolerant and progressive societies in history. While there is a long road ahead, the progress made by the "West" must also be appreciated.

Reorienting our analysis to the era of globalization, the question now becomes the extent upon which democracy and capitalism are compatible, the limits and thresholds of their cohesion in the modern community of nations.

The friction between pluralism and capitalism is more nuanced within established liberal democracies because the system more or less provides avenues for redress and maintains a system of due process. However, as politics cannot be divorced from the appropriation of public funds and ensuring the general (economic) welfare of the constituents, there is ample room for principles to be trampled for (perceived) practical solutions.

The recent financial crisis in Europe revealed many contentious areas where the democratic system was in open confrontation with economic rationality.

Take George Papandreou's socialist government in Greece. When he came into office, he pursued a more transparent and honest economic policy than his predecessors and revealed that the Greek public debt was nearly two-folds higher than previously announced. This announcement panicked creditors and loans to Greece ceased, launching a major financial crisis. Papandreou was forced to devise austerity measures to qualify for a bail-out from the European Union, an absolute necessity for the economic survival of the Greek state; yet when these essential measures were introduced to the public, discontent boiled over and bloody riots reigned over the streets of Athens.

Naturally the markets reacted badly when the Greek government initially announced that it will place the conditions imposed by the European community on a national referendum. Under pressure to accept the conditions and curtail the market devastation, the government retracted the plans for a referendum and pushed forward without public consent. Ultimately, Papandreou resigned and a new coalition government is slugging along with the massively unpopular measures.

The question is: should the Greek government NOT have sought a popular mandate for the bail-out preconditions? The European Union clearly didn't think it was necessary, but is it so outrageous to seek the approval of the very people who will be most severely affected by the new policies? In fact, to act without a popular mandate on such a major issue seems abusive.

Many Greeks legitimately have redress against slashing public welfare funds - despite portrayals of Greeks lavishing in a Mediterranean paradise with generous pensions and retirement benefits that far exceed those received by Germans, this only applies to a portion of the population. Poverty rate in Greece is very high and in particular, poverty rate among the elderly rank highest in the European Union. Indeed, the cold front blowing across Eastern Europe and the Balkans appears to be a cruel twist by nature to further degrade the well-being of those Greeks whose safety nets have only recently been slashed open.

As evident in the Greek case, loss of faith in today's economic environment could spell disaster for a whole country. Most countries are drowning in debt and require a continuous line of credit to stay afloat - that's why the slow downgrading of the credit ratings constitute a serious threat to economic stability.

So the country's first line of order is to keep risk low and ensure the creditors that its macroeconomic policies are stable - but what happens when the wishes of the people are contrary to economic rationale? Or if the people's shortsightedness and the natural inclination of politicians to hold on to power turn into a vicious cycle?

In the case of Hungary, the economic performance of the entire country pivots around the electoral cycle - politicians promising economic/market reforms, incumbent government raising public expenditure, wild policies being proposed with even wilder expectations, etc. These are all legacies of Hungary's Goulash populism, instituted in the 1960s to appease the population that was still upset about the military occupation and repression following the 1956 Revolution. Under the communist regime, this populist policy manifested itself as small openings to the West. After the collapse of the Iron Curtain, it has turned into Clientelism by various political parties. Now, Hungary under the Fidesz government has finally maxed out the patience of its creditors.

What is happening in Hungary is not the people's fault. It's a moral hazard that political players waded into and then subsequently became stuck in. Nonetheless, it's hard to break from the vicious cycle when the general public reacts so wonderfully to increased government expenditure on welfare and wages.

The public often acts irrationally - fully knowing the consequences of their collective actions, societies still jump overboard, a la the Rapa Nui of Easter Island.

If this is the case, should the governments suppress public demands and forward plans that it sees will be for the welfare of the entire country? One is reminded of Bertolt Brecht's famous quote:

...would it not be be simpler,
If the government simply dissolved the people
And elected another?

Indeed the reduction of the government's power to influence the market has been a key element of the intra-state agreements on free trade. The European Union demands that the central banks of all member states be independent and the United States forwards standardized labor regulations that many think will eventually render minimum wage laws obsolete. But are these regulations inhibiting the people's right to collectively decide how to live their lives? More importantly, what is the impact of these new socio-economic model on the essence of democracy.

These are definitely issues that require greater public attention and detail. After all, the concept of a dog does not bark; we cannot simply call our society a democratic one without exploring what that means and then applying our ideals into practice.

Hungarian Rhapsody... in blue

An atrocious article appeared on Real Clear World the other day that took me by complete surprise. I was shocked and appalled that a site which almost always maintains a compendium of insightful pieces on global issues had the audacity to carry what can only be called a testimony to shortsightedness. This particular piece by Alex Berezow sought to find the roots of Budapest's current troubles in the unfriendly disposition of the Hungarian people towards the outside world.

Never mind the fact that Europe as a whole has tilted increasingly right-wing since the financial crises, ignore the fact that Hungary's economic woes have been particularly hard on its people, forget historical lessons on how the public reacts to economic difficulties and place yourself in a vacuum - this is where Berezow begins his search for the origins of the Hungarian crisis.

Of course, I must admit that I have a soft spot for Hungary and its people - I visited the country as a child and went back to study abroad in Budapest and enjoyed my experiences there. I am certainly carrying a bias; however, Berezow's commentary blatantly ignores visible roots of the problem and dismisses the current conflict between Brussels and Budapest as a particularly Hungarian problem.

But why should people outside of Hungary and Europe care about this issue? For starters, it's an important case study of state driven economic nationalism that parallels increasing nationalist sentiments of the public - to categorize the current issue in Hungary as a unique case ignores how societies in general are susceptible to irrational behavior in times of economic hardship. It's not enough to point out these trends without delving deeper into the causes. If we gloss over these important issues when pertaining to others, how can we ever be critical of ourselves when similar problems arise in our society?

And if Hungary ends up seceding from (or thrown out of) the union, it will be a precedence for the future of the European project and a possible precursor to its dissolution, which will most definitely impact the international economy.

First the crisis itself:

The ongoing controversy surrounds Prime Minister Viktor Orban and his center-right Fidesz Party, which won two-thirds majority in the 2010 elections and thereby gained the mandate to amend the constitution without consent from the opposition. Fidesz received this overwhelming popular mandate because it promised to fix the economy, blaming much of the economic woes on the previous government under the Hungarian Socialist Party (MSZP). But promises are always easier made than carried through.

Claiming to be paving the path for economic recovery, Viktor Orban asserted the need to increase government control over Hungary's fiscal and monetary policies. Despite the fact that maintaining an independent central bank was a rule established by the European Union to ensure macroeconomic stability, Viktor Orban amended the structure of the Hungarian Central Bank to accommodate an additional vice governor who would be directly appointed by the government (recommended by the PM to the president, but a Fidesz president will never challenge a Fidesz PMs' recommendations).

In addition to the central bank, Fidesz has used its position in the parliament to increase government control over other previously autonomous institutions such as the media and the judiciary. Deterioration of the checks and balances, be it economic, political or judicial, establishes the ground works for extreme abuses of power. This is particularly disturbing because the far-right wing party Jobbik is lurking in the shadows and I shudder to think what would happen if its members were ever to join the ruling government as part of a coalition.

As the legislation on the central bank was brought before the Fidesz-controlled parliament to be rubber-stamped, the European Union Commission fiercely criticized the legislation as irresponsible and contrary to Hungary's treaty commitments with the European Union. As a serious breach of trust, it became a real possibility that Hungary may be chucked out the union. Budapest remained obstinate... meanwhile, the concerned IMF pulled the plug on the preliminary negotiations for financial assistance and forced Prime Minister Orban's hand.

Hungary chose a bad time to revolt. Orban's Thatcher moment was not to be. The Economist observed on November 26, 2011 that

When Hungary hit the rocks in 2008, the outside world was quick to help with a $20 billion package, fearing contagion to other wobbly ex-communist countries. Now the picture is different. With most ex-communist members of the European Union in better shape than old members in the south, the east European label is looking meaningless. Two of Hungary’s neighbours—Slovenia and Slovakia—are in the euro. Poland is the unquestioned diplomatic and economic heavyweight. Mr Orban looks like an oddball, and his country is now a lower priority, at a time when lenders have more urgent calls on their time and money.

Without assistance from abroad, the Hungarian economy faces downfall - and the world will hold out on assistance until Budapest repeals its recent laws. The Hungarian leadership has finally come to grips with the consequences of joining the European community: in return for increased economic contact with the continent, its political and financial decisions will be subject to review and scrutiny by other members of the community.

With its credit rating meandering in junk status, Hungary returned to the negotiating table where the IMF recommended not only reestablishing an independent central bank, but also repealing the draconian measure that forced judges into early retirement. The Hungarian side has agreed to reconsider the central bank issue, but rejected the suggestion of changing its judicial rules to satisfy the IMF and the European Union.

The political entity in power seems split on what it envisions for Hungary's future - a European Hungary or a sovereign nation that does not answer to an extra-national body.

So what is the cause of this crisis?

Only a lazy observer will trivialize the problem by merely citing attitude as the key problem.

And yet for our commentator, Alex Berezow, the heart of the problem is the Hungarian people themselves, their supposed unfriendliness and pervasive xenophobia. Berezow cites three personal examples to support this assertion - a girl's refusal to take a picture of him and his wife in front of the Hungarian parliament, a story he heard from an Irish woman about a Hungarian telling her wrong directions on purpose and a child singing what he thought to be an anti-American song. After providing these wildly random examples, he points to the rise of the ultra-nationalist party Jobbik with its racist policy proposals as a wider symptom of the same problem his fragile self experienced while visiting Budapest. He is apparently bent on trying to justify his experience in a wider context beyond a mere misunderstanding and a series of bad experiences.

He does bring attention to important issues such as the attack on the freedom of the press and abuses on the Hungarian Roma population. He even goes as far to note that the problems became more acute when Fidesz took power in 2010, but does not delve into the socio-economic conditions behind Viktor Orban's landslide victory. How did a party gain such an overwhelming level of support in a democratic society? Why was there a sudden show of support for Jobbik by a sizeable portion of the public? Have Magyars suddenly become less friendly since the 2006 elections?

Economic difficulties tend to produce mass social dissatisfaction - Note that support for the ultra-nationalist Jobbik party during the 2010 elections came largely from eastern Hungary, a historically poorer part of the country where the recent economic crises have impacted people the hardest. Hungary is not alone here, the worsening economic conditions have given ultra-nationalists throughout Europe an opportunity to promote themselves by blaming the country's problems on outsiders. "If only foreigners left, there would be more jobs and less crime..." it's a rhetoric heard often enough around the world.

We have seen the public turn towards radical choices throughout history - the most extreme example being the meteoric rise of the Nazis in Germany during the Great Depression. In fact, it is the experience of hyperinflation during the Weimar Republic (1918-1933) that has led the Federal Republic of Germany to be extremely cautious about letting other members of the European Union ride the dragon of inflationary policies because Berlin sees it as a precursor to populist demagoguery and fascism (This American Life had a really good podcast episode on the rise and fall of the Euro and the role Germany plays in the currency).

But the neo-fascists are not in power (yet) - in 2010, the Jobbik party did not manage to control a single constituency. It entered parliament for the first time based on Hungary's political system which allows proportional representation. And it's hard to imagine the people of Budapest turn to Jobbik for guidance on economic issues - but if the issue comes to asserting Hungary's political status, who knows where the votes will go.

For now, Viktor Orban's targets are internal as much as they are external - placing Fidesz loyalists or those with personal connections to the ruling party in key positions ensure long term influence in state policymaking, even if Orban leads the party to defeat in 2014.

It's too soon to really believe that Hungary has gone down the path of extremism and will be soon ruled by Jobbik. However, I forward the notion that as long as systemic economic problems plague the European Union (and therefore Hungary), Hungarians will be increasingly tempted by radical establishments. To assert that it's only Hungarians who needs to learn to "play nicely" ignores the inherent pressures facing Budapest - Europe, and in particular Germany, needs to appreciate the needs of smaller and weaker member states.

Berlin has forgotten that it was not hyperinflation that pushed people towards Nazism during the Weimar period, but rather it was the resulting economic instability and shame of defeat that made Hitler so attractive to the disgruntled and dissatisfied German public.

Yes, there is the flip side of the coin - Greeks appear unwilling to make real reforms, Italy is hopelessly in debt and Hungarians are blatantly disregarding its political obligations; however, if Europe cannot resolve these matters together without coercion and through multilateralism, then the grand vision of a united Europe was not to be.

Of course, I am not on the ground in Hungary and cannot comment with certainty on how the Hungarian people perceive themselves. So why did I write so much on this? Probably because it pissed me off that some dude got paid to run a shitty article where he complains about a bad travel experience and turns it into a wider political commentary. What a jerk.

I should have left Bugs Bunny to explain the interrelations between the member state of the European Union...