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
Showing posts with label Japan. Show all posts
Showing posts with label Japan. Show all posts
Friday, July 20, 2012
Wednesday, May 16, 2012
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.
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.
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.
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| 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.
Thursday, April 12, 2012
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:
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:
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
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
Friday, March 16, 2012
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...
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...
Thursday, February 9, 2012
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.
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.
Monday, January 23, 2012
The Intractable Issue of Energy
As South Korea and Japan haggle over the most appropriate method of castigating Tehran for its nuclear program while also ensuring continued supply of petroleum from Iran, I think it's useful to recollect the insights of the late Japanese economist Wakimura Yoshitaro (1900-96). A member of the leftist economic circle, the Ouchi group, Wakimura warned that the transport of Middle Eastern oil was a potential flashpoint for global conflict. Having lost faith in the West's ability to negotiate without coercing oil producing countries, members of the Ouchi group concluded that continued dependence on oil and Japan's alliance with the United States would invariably pull them into an unwanted conflict surrounding the black gold. Their solution was for Japan to go nuclear.
Today both Seoul and Tokyo are struggling to balance their economic needs and their political allegiance to the United States. I argued in my most recent article on Asia Times Online that Washington's aggressive policies in the Middle East threatens East Asia's economic security and thus damages America's ties with its allies in the region.
Middle Eastern oil is indispensable to the global economy, but in particular to countries that rely heavily on shipping and heavy industry. South Korea and Japan both fall into this category - even though Japan developed nuclear energy after the post-war reconstruction, there are certain sectors where petroleum is irreplaceable. Part of South Korea's remarkable economic growth was based on its development of petrochemical industries, obviously an enterprise where oil is a prerequisite. Mind you, both nations are practically island nations that depend heavily on shipping for import-export. Nuclear powered container ships are still in their experimental stage.
Therefore, Washington's request to significantly reduce or ban import of oil from Iran comes as a serious blow to both Seoul and Tokyo.
Some experts in Israel have waived off concerns over loss of industrial output by suggesting that South Korea simply increase imports from other Gulf emirates. Besides, they said, diffusing Iran will help the denuclearization process in North Korea.
What's absurd about all this is how little regard these "professionals" have for the intricacies of trade and commerce. Yes, some Gulf states that have historically been terrified of Iran have offered to increase exports to South Korea. But oil from Saudi Arabia does not magically appear in your local gas station the next day - this requires more ships, rerouting of ships and funds, negotiating new deals (nearly three quarters of South Korea's imports from Iran are negotiated on a long term basis and only a quarter is bought on spot price) and dozens of other infrastructural and financial consideration have to be made.
In addition, South Korea's fiscal regime keeps the Won from being overvalued - this safety mechanism, while keeping exports relatively affordable, raises the cost of imports. Escalation of tensions in the Straits of Hormuz and the expansion of sanctions against Iran will invariably affect the market. At the end of the day, South Korean industries will be still be heavily burdened even if they are supplied from different sources.
It's contemptuous to color this as a simple process, especially when one country is bending over backwards to satisfy another's irrational fears.
Furthermore, what happens in Iran will not affect North Korea. Commercial links between the two states have already ebbed long time ago due to increased policing and oversight by the international community. North Korean missiles are no longer entering Iran, but nuclear proliferation expert Joshua Pollack noted that technology transfers have continued unabated. And why point to North Korea? It's the single greatest example of how punitive sanctions don't always work.
Meanwhile, Washington has long recognized its diminishing power in the Asia-Pacific. Obama's "pivot" seeks to reassert the importance of the United States in the region - And let's be fair, no one has forgotten about the US. After all, US security guarantees to South Korea and the Seventh Fleet stationed in Japan are considered essential facets of the two countries' defenses. At the same time, US cannot revert the confluence of time. China's industrial prowess is going to inevitably make it economically influential in the region.
The Free Trade Agreement with South Korea and the Trans Pacific Partnership with Japan are two great ways for the United States to build on existing (and still massive) trade links with its allies in East Asia. Indeed, nothing solidifies a relationship between two countries more than the transfer of goods and peoples. Add ideals and sense of familiarity - the United States is still indispensable in every way imaginable.
How do you mess this up? Force your allies to swallow bitter medicine for a sickness they don't have.
Chinese premier Wen Jiaobao stepped in with good timing and suggested taking the Iranian issue to the UN. He opposed Iran's nuclear program, but he also noted the incredible hardship that will be wrought on the world if the sanctions expanded. It's a bad day when Beijing appears like the more rational actor. Make no mistake, Seoul and Tokyo are in part holding out for China to forestall the current crisis.
If the United States truly feels as though there is a need for a strategic refocusing in the Asia-Pacific, then Washington must take into greater consideration the interests and concerns of South Korea and Japan.
In fact, an American president must learn to better empathize with countries around the world in general. Wakimura Yoshitaro believed that powerful Western nations will never negotiate with, but merely dictate to Middle Eastern countries, creating conditions for simmering anger to one day boil over and scald the rest of the world. Time for the United States to step up and prove itself to be a better country than those from another era.
Read my less rambunctious article here
Today both Seoul and Tokyo are struggling to balance their economic needs and their political allegiance to the United States. I argued in my most recent article on Asia Times Online that Washington's aggressive policies in the Middle East threatens East Asia's economic security and thus damages America's ties with its allies in the region.
Middle Eastern oil is indispensable to the global economy, but in particular to countries that rely heavily on shipping and heavy industry. South Korea and Japan both fall into this category - even though Japan developed nuclear energy after the post-war reconstruction, there are certain sectors where petroleum is irreplaceable. Part of South Korea's remarkable economic growth was based on its development of petrochemical industries, obviously an enterprise where oil is a prerequisite. Mind you, both nations are practically island nations that depend heavily on shipping for import-export. Nuclear powered container ships are still in their experimental stage.
Therefore, Washington's request to significantly reduce or ban import of oil from Iran comes as a serious blow to both Seoul and Tokyo.
Some experts in Israel have waived off concerns over loss of industrial output by suggesting that South Korea simply increase imports from other Gulf emirates. Besides, they said, diffusing Iran will help the denuclearization process in North Korea.
What's absurd about all this is how little regard these "professionals" have for the intricacies of trade and commerce. Yes, some Gulf states that have historically been terrified of Iran have offered to increase exports to South Korea. But oil from Saudi Arabia does not magically appear in your local gas station the next day - this requires more ships, rerouting of ships and funds, negotiating new deals (nearly three quarters of South Korea's imports from Iran are negotiated on a long term basis and only a quarter is bought on spot price) and dozens of other infrastructural and financial consideration have to be made.
In addition, South Korea's fiscal regime keeps the Won from being overvalued - this safety mechanism, while keeping exports relatively affordable, raises the cost of imports. Escalation of tensions in the Straits of Hormuz and the expansion of sanctions against Iran will invariably affect the market. At the end of the day, South Korean industries will be still be heavily burdened even if they are supplied from different sources.
It's contemptuous to color this as a simple process, especially when one country is bending over backwards to satisfy another's irrational fears.
Furthermore, what happens in Iran will not affect North Korea. Commercial links between the two states have already ebbed long time ago due to increased policing and oversight by the international community. North Korean missiles are no longer entering Iran, but nuclear proliferation expert Joshua Pollack noted that technology transfers have continued unabated. And why point to North Korea? It's the single greatest example of how punitive sanctions don't always work.
Meanwhile, Washington has long recognized its diminishing power in the Asia-Pacific. Obama's "pivot" seeks to reassert the importance of the United States in the region - And let's be fair, no one has forgotten about the US. After all, US security guarantees to South Korea and the Seventh Fleet stationed in Japan are considered essential facets of the two countries' defenses. At the same time, US cannot revert the confluence of time. China's industrial prowess is going to inevitably make it economically influential in the region.
The Free Trade Agreement with South Korea and the Trans Pacific Partnership with Japan are two great ways for the United States to build on existing (and still massive) trade links with its allies in East Asia. Indeed, nothing solidifies a relationship between two countries more than the transfer of goods and peoples. Add ideals and sense of familiarity - the United States is still indispensable in every way imaginable.
How do you mess this up? Force your allies to swallow bitter medicine for a sickness they don't have.
Chinese premier Wen Jiaobao stepped in with good timing and suggested taking the Iranian issue to the UN. He opposed Iran's nuclear program, but he also noted the incredible hardship that will be wrought on the world if the sanctions expanded. It's a bad day when Beijing appears like the more rational actor. Make no mistake, Seoul and Tokyo are in part holding out for China to forestall the current crisis.
If the United States truly feels as though there is a need for a strategic refocusing in the Asia-Pacific, then Washington must take into greater consideration the interests and concerns of South Korea and Japan.
In fact, an American president must learn to better empathize with countries around the world in general. Wakimura Yoshitaro believed that powerful Western nations will never negotiate with, but merely dictate to Middle Eastern countries, creating conditions for simmering anger to one day boil over and scald the rest of the world. Time for the United States to step up and prove itself to be a better country than those from another era.
Read my less rambunctious article here
Tuesday, November 29, 2011
Japan, Korea return to nationalist roots with trade pact 'reforms'
Japan and South Korea misleadingly claim that principle and the pursuit of liberal policies lie behind reform of their international trade relations. What is happening in both cases is a readjustment of outdated policy to pursue traditional statist objectives rooted in their respective identities. More than mere economic gain, economic nationalism is still very well and alive in East Asia.
You can read my full article here
You can read my full article here
Tuesday, September 6, 2011
Crouching dragon, rising sun
With the completion of its aircraft carrier, China's capacity to further up the ante in disputed East Asian waters has drastically increased. Japan's deep reach into the East China Sea, the capacity to contribute to the security of Northeast Asia, and above all an increasingly predominant political role in the region give Tokyo the power to be a natural counterweight to the growing influence of China.
You can read my full article here
You can read my full article here
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