Wednesday, September 30, 2015

Rani Mullen and Cody Poplin on the Battle for Access and Influence in the Indo-Pacific

Good piece in Foreign Affairs titled The New Great Game - A Battle for Access and Influence in the Indo-Pacific by Rani D. Mullen (Associate Professor in the Government Department at the College of William and Mary, Virginia and Director of the Indian Development Cooperation Research (IDCR) at the Centre for Policy Research, New Delhi, India) and Cody Poplin (Research Assistant at the Brookings Institution in Washington, D.C. and an Associated Editor of Lawfare).
Huge stakes are involved. Trade, energy, and geostrategic imperatives are driving both Chinese and Indian ambitions. Between the Indian and Pacific Oceans lies the main choke point of world commerce, the Malacca Strait. Today, more than half of the world’s container traffic and one-third of all maritime traffic crosses the Indian Ocean and passes through this point and into the South China Sea. To understand the scale, consider that roughly two-thirds of South Korea’s energy supplies, nearly 60 percent of Japan’s energy supplies, and 80 percent of China’s crude oil imports arrive over this maritime route. Meanwhile, 75 percent of India’s energy supplies cross the Indian Ocean.
China has long felt trapped by what national strategists have termed the “Malacca Dilemma”—that China’s access to the greater Indo-Pacific is limited to one main pass and that, to reach that pass, its ships have to travel over the South China Sea, which is a mess of overlapping territorial claims from countries in the region. And so over the last decade, China has sought to secure its access to the critical sea lanes, including by creating artificial islands with airfields in the South China Sea [6] and declaring an expansive and novel Exclusive Economic Zone—one that is far larger and includes far more prerogatives than permitted under The United Nations Convention on the Law of the Sea—over the area. From this perspective, Chinese Vice Admiral Yuan Yubai’s recent, and rather incendiary, declaration that the South China Sea “belongs to China” makes strategic sense: It is after all their path to the greater Indo-Pacific.
Plenty of ink has been spilled over the South China Sea, and appropriately so. But the South China Sea is just an example of a larger game that is already underway.
Along with creating routes to and around Malacca, China has provided soft loans to Bangladesh, Pakistan, Myanmar (also called Burma), and Sri Lanka for everything from highways, to power plants, to seaports. All of this has been part of China’s Maritime Silk Road strategy, which is meant to bind countries in the Bay of Bengal and the Indian Ocean closer to the Chinese economy as well as to build trade routes from China through their territory to the Indian Ocean, which would allow China to avoid the Malacca bottleneck. Yet this approach has been hurt by China’s more muscular activities in the South China Sea, which have scared the country’s smaller neighbors into closer alliances with India, Japan, and the United States.
As China has become more assertive, India has focused on its own rapidly growing need for access to critical sea lines and opportunities for trade and investment. In 2011, maritime trade constituted close to 41 percent of India’s overall GDP; the figure reached 45 percent in 2015. India now imports about three-fourths of its oil through the Indian Ocean. India fears that China, relying on its alliance with Pakistan, might encircle India on land and at sea. For Indian strategists, it doesn’t seem far-fetched that China would use its increased maritime capability to create a zone of naval exclusion that stretches from the South China Sea to the Persian Gulf.
To counter such encroachment, India, which was the largest recipient of global foreign aid until the early 1990s, has started to dole money out. The country now has more than $12 billion in open lines of credit and dozens of major development projects in foreign countries. Although Indian aid equals just a fraction of Chinese aid in the region, India hopes to use its funding, increased trade focus, military diplomacy, and cultural ties—its so-called Act East policy—to maintain and expand its leverage over the Indian Ocean Rim states to preclude a more permanent Chinese presence in those waters.
This, in a nutshell, is the New Great Game [7].


My personal view is that Sri Lanka will favour China's influence as the resentment in Colombo towards New Delhi is palpable, the United States will tilt towards India for balance of power reasons in reaction to the Asian hegemon and the fact that it is angry over relentless Chinese cyber-attacks and bluster and India will lever a more assertive and muscular Japan since the Abe government  has renounced the pacifism that it embraced post World War II. Any Indian attempt to increase its profile be it through soft or hard power will be dependent upon who is in power in New Delhi. It is not a coincidence that the Indian state has hit beneath its weight for much of its existence thanks to those who have governed it at the national level.

Friday, September 18, 2015

Towards a Muscular Japan

In July of 2013 I wrote

Shinz┼Ź Abe's landslide victory provided him with the mandate he truly craves. No, it isn't about implementing Abenomics and its three arrows for economics has never been Abe's passion, it is about restoring Japan to its glory as a muscular and militarized nation.

(From: Executing China's String of Pearls Strategy)

Now this:

Following boisterous confrontations in the Diet and more than three days of public protest, the Upper House finally enacted two divisive security laws early Saturday that will mark a significant departure from Japan’s postwar pacifism.
Enacting the contentious laws was one of Prime Minister Shinzo Abe’s long-held ambitions. His goal was to find a way to remove some of the key legal restrictions that the war-renouncing Constitution imposes on the Self-Defense Forces during overseas missions in order to strengthen Japan’s all-important military alliance with the United States.
Given the ruling coalition’s strength in both chambers of the Diet, the opposition camp was essentially powerless to stop him. It was thus reduced to obstructing the voting procedures and tapping public frustration with the legislation in hopes of rallying widespread resistance.
Abe’s team submitted the two bills to the Diet in May. Since then, more than 200 hours have been spent deliberating the legislation.
The Upper House’s final plenary session was called late Friday night as the opposition camp, led by the Democratic Party of Japan, delayed Diet procedures in protest by submitting no-confidence and censure motions against Abe’s Cabinet ministers in both chambers.
According to opinion polls, a majority of the public opposes the legislation and many think the government’s efforts to explain it fell short.
A poll by the daily Asahi Shimbun from Sept. 12 to 13 found that 54 percent of the 1,994 respondents oppose the bills and 29 percent support them.
One of them amends 10 existing security-related laws to lift various SDF restrictions, including Article 9’s long-standing ban on collective self-defense.
The other creates a new permanent law that allows Japan to deploy the SDF overseas to provide logistic support for United Nations-authorized military operations involving a foreign or multinational force.
Lifting the ban on collective self-defense, or the right to defend an ally under armed attack even if Japan itself is not, was long considered banned by war-renouncing Article 9 of the Constitution. So instead of formally amending the Constitution, which was considered politically unfeasible, Abe simply had the government’s long-standing interpretation of Article 9 altered to allow collective defense.
Source: Tha Japan Times

Yoshida, Reiji, and Mizuho Aoki. "Diet Enacts Security Laws, Marking Japan’s Departure from Pacifism." The Japan Times, September 19, 2015, Http:// ed., National / Politics sec. Accessed September 18, 2015.

Tuesday, September 15, 2015

"Failure to launch" aka "no rate normalization"

From the Wall Street Journal

The chart illustrates how central banks have retraced their rate hikes. The challenge to those those espousing the exclusivity of monetary policy --conventional or otherwise-- is how much monetary tightening can the an economy take at any given point in its business cycle, particularly in a world where rates are close to the nominal zero lower bound.