Publication in Economics, Politics and Public Policy in East Asia and the Pacific

Aso calls for a new Japan

Author: Tobias Harris

Prime Minister Aso Taro, having had his second stimulus package pass the Diet Tuesday, appeared before the Diet on Wednesday to deliver his latest policy address.

Rhetorically, the address contains few surprises. In the opening sections, in which Mr. Aso addressed the principles behind his policies. He spoke of the “once in a century economic crisis” (although he omitted the phrase “emanating from America”). In discussing the work of building a new society and overcome Japan’s third major crisis in the past two centuries, he once again stressed the importance of the virtue of industry, of hard work. To ensure Japan’s continuing prosperity, he said, “It is necessary to build a society in which hard work is rewarded, a society in which senior citizens, the handicapped, and women find it easy to work.” The fact that he needs to group women with the elderly and the handicapped when talking about remaking the Japanese labor force speaks volumes, doesn’t it? As before, when Mr. Aso speaks of the elderly working, he speaks of it as a virtue, as opposed to something that should be kept to a minimum. Once again he gives the impression of a coach giving a pep talk to the Japanese people instead of a leader who understands the hardships his people are facing today. And as the Japanese press has noted, Mr. Aso has joined in the anti-capitalism boom, marking an “about-face from the Koizumi structural reforms.” (Of course, such talk assumes that the LDP has not already moved away from Mr. Koizumi’s agenda, which it clearly has.)

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Whalergate, or a way forward?

Author: Luke Nottage

This year, Australia Day (26th January) fell on Chinese Lunar New Year, so there were a few more events celebrating Chinese traditions as well as the ever more frequent display of Australian flags around Sydney. But the day after, the Sydney Morning Herald ran a front-page story entitled ‘Revealed: secret whale deal‘. It highlighted the Federal Government’s involvement in generating a proposal whereby:

  • Japanese whalers could hunt a regulated number of minke whales in its coastal waters, and take many more whales in the North Pacific, under the plan.
  • Japan would agree to one of two offers in exchange: either to phase out scientific whaling in the Antarctic entirely, or to impose an annual Southern Ocean limit.
  • The proposal was hammered out in secret by an International Whaling Commission drafting group of six nations, which includes Australia and Japan, at a meeting in Britain last month.

With the whaling season already underway, however, Australia’s Environment Minister insists that this is still under negotiation and that the Government remains opposed to any commercial whaling. But one NGO – the International Fund for Animal Welfare – calls this ‘Whalergate’, criticising the opaque nature of the IWC. Read more…

Obama and American global leadership

Author: Dominic Meagher

There has been much talk over the last few days suggesting that the US must adopt a modest foreign policy, that Obama will have to do less before he can do more, and that American power is in relative decline and lacks what it will take to re-shape the world.

But President Obama shows no lack of ambition in foreign affairs.

In his Inaugural Address, Obama outlined his intention to revitalize US power.

‘We understand that greatness is never given. It must be earned’ he said.

The rhetoric alone goes a substantial way to restoring America’s international reach.

‘To all the other peoples and governments who are watching today, know that America is a friend of each nation, and every man, woman and child who seeks a future of peace and dignity. And we are ready to lead once more’.
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Politics without priorities in Malaysia

Author: Gregore Lopez, ANU

Malaysia’s main challenge in 2009 will not be the global financial meltdown. Rather, it will be continued grandstanding between the ruling coalition and, since March 8th 2008, a much stronger opposition. The aftermath of March 8th, 2008 produced a lame duck Prime Minister with a lame duck government. The Prime Minister, Ahmad Badawi, instead of gracefully resigning for leading the United Front (Barisan Nasional) to its worst ever electoral results, stubbornly held on to the party presidency and Prime Ministership of the country.

However, members from within his party (United Malay National Organisation – UMNO) and the United Front were calling for his resignation. Simultaneously, the newly constituted opposition coalition – The Peoples Coalition (Pakatan Rakyat) led by the charismatic Anwar Ibrahim, was threatening to overthrow the ruling government through mass defection.

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What’s wrong with Japan’s alliance with America?

Author: Tomohiko Satake, International Relations, ANU

Tobias Harris is one of the few people who understand the reality of Japan’s security situation, without taking an alarmist posture nor being a ‘free-rider’ advocate. I especially agree with his overall message: ‘The security relationship is important, but it cannot be the whole of the US-Japan relationship’.

He argues that the US should ‘socialise’ Japan to have greater diplomatic responsibilities on regional issues, especially in dealing with Korean Peninsula, by taking advantage of its long-term relationship with Japan.

What I am concerned about, however, is that he is too pessimistic about Japan’s military involvement in the international security issues in the future. Or, as he puts it, the ‘idea of a global alliance was far-fetched and doomed to fail’.

It is true that Japan came to have a fear of entrapment by US military action because of the war in Afghanistan and Iraq. Yet, as an ally ‘dependent’ on the US, Japan’s fear of abandonment is still much greater than its fear of entrapment. Japan is still likely to try to make its contribution to US-led coalition efforts for global security more efficient so as to maintain good alliance relations with the US, although this will certainly take time. This stems not only from Japan’s fear of abandonment, but also from its ambition to be a global player, both in the region and the world. Read more…

Indonesia and Obama: thinking past the honeymoon period

Author: Alexandra Retno Wulan, CSIS, Jakarta

As the first African-American to hold the office, the inauguration of President Barack Hussein Obama is a historic moment, and the beginning of a new era for the United States.

His personal background has tied a linkage between President Obama and the world outside of the United States of America. He has raised the hopes of millions at home and abroad, including many Indonesians.

People around the globe expect that Obama will bring significant changes to the US and the rest of the world. Many Indonesians are even more optimistic that Obama will strengthen Indonesia-US bilateral relations, as he spent four years of his childhood in Indonesia.

What, exactly, does Barack Obama intend for the Indonesia-US relationship? Based on President Obama’s inaugural speech, which highlights some of his policy goals, we can expect the following.

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India faces the harsh reality

Author: Rajiv Kumar, ICRIER, New Delhi

The Paris-based International Energy Agency’s (IEA) recent report includes revised forecasts for world oil demand in 2009. IEA’s shocking estimate is that global demand for oil in 2009 will decline by half a million barrels per day (bpd) than in 2008! This is based on the IEA’s estimates that global economic growth will be a mere 1.2 per cent for all economies after being revised downwards from the nearly 3 per cent forecast earlier.

This implies that OECD economies will post a negative growth in 2009 and emerging economies are also likely to achieve only moderate GDP growth. China is expected to grow only at 6.5 per cent, the lowest rate in eight years, despite the massive stimulus that the authorities announced at the end of last year. Given the weakness in Chinese and US demand¸ global oil prices are likely to remain extremely soft this year.

What are the implications for India?

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A Chinese view of Obama’s Inaugural Address

Author: Jia Qingguo, Peking University, Beijing

The election of Barack Obama to the White House has cheered the world, caught in a cold winter and a worsening global financial crisis. People of all continents appear to have found a way to relate to him and, probably for the first time in history, warmly welcomed a newly elected American president.

In his inaugural address, President Obama did not let people down, at least in rhetoric. He began with an acknowledgement of the daunting challenges the US is facing, including a worsening economic crisis, wars in Iraq and Afghanistan, and climate change.

‘They are serious and they are many,’ he said. Instead of being cowered by these challenges, he said Americans will meet them through choosing ‘hope over fear, unity of purpose over conflict and discord.’

On the international front, Obama said that the US needs to exercise power prudently and promised to work together with other countries to cope with various global challenges. ‘With old friends and former foes, we will work tirelessly to lessen the nuclear threat, and roll back the spectre of a warming planet.’

All this sounds good and inspiring. How to address those challenges remains to be seen. In the presidential election campaign, Obama emphasized the word ‘change.’ As he comes into office, however, he may find that he does not have much room for the change he promised. Read more…

The foolish crusade against the House of Councillors

Author: Tobias Harris

In May 2008, I wrote about the creation of an LDP study group with the goal of eliminating the House of Councillors — the Diet’s upper house — and moving to a unicameral system, a proposal that I suggested was an anti-democratic temper tantrum in response to DPJ control of the upper chamber.

This proposal and its advocates, however, are still at work trying to undermine Japanese democracy. The study group is working hard to introduce a plank demanding a unicameral system into the LDP’s manifesto for the next general election. As Yamamoto Ichita, a member of the study group, explains, the proposal is not just to dissolve the upper house but to dissolve both houses and create a new unicameral legislature with significantly fewer legislators. The plan calls for the number of legislators to be cut by thirty percent and for single-member districts to give way to prefecture-wide multi-member districts. He claims it isn’t simply a response to the DPJ’s control of the upper house.

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Obama and Indonesia-US relations

Author: Jusuf Wanandi, CSIS

Congratulations to the United States. For the first time in more than 230 years of American history, an African American, Barack Obama, is installed as president of the United States. All Americans should be proud. There is so much euphoria, and so many expectations have been placed on president Obama’s shoulders. This is not only the case in the United States, but all over the world. This pressure has been building since he was elected last November.

The problems and challenges that Obama now faces – including the economic recession, wars in Iraq and Afghanistan, the Palestine-Israel conflict, Iran and North Korea’s nuclear proliferation, social security and healthcare issues — are tremendously difficult and complicated.

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India faces an ugly environment in 2009

Special Author: Suman Bery, Director of NCAER, New Delhi

The recession now present in advanced economies seems set to continue for a while yet.

The annual Neemrana conferences on the Indian economy provide a valuable opportunity to take stock of the state of the US and world economies, and the implications of global developments for the Indian economy.

The conferences are held annually at the Neemrana Fort Palace hotel in Rajasthan. They are co-hosted by NCAER and ICRIER. International (primarily US) participation is organised by the NBER, arguably America’s most respected network of academics engaged in research on issues of economic policy. The format is designed to encourage informal, off-the-record discussion on a range of current issues in economic policy.

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Caught in the middle: Obama and the ROK

Author: Chung-in Moon, Yonsei University, Seoul

East Asia is likely to draw less attention from the Obama administration given the current preoccupation with Iraq, Afghanistan and the Middle East. Nevertheless, the United States shows no sign of lessening its engagement in the region.

A prudent realism under the Obama administration will seek a more active cooperation with China, while maintaining existing bilateral alliances with Japan and South Korea. In so doing, the Obama administration is likely to seek a new regional security architecture that combines a bilateral alliance system with a multilateral security cooperation regime. We can expect the US will shift its emphasis from the logic of balance of power to that of the power of balance.

Domestic issues will be the first order of business for President Obama. However, the North Korean nuclear issue is not likely to be left idle, as Obama has defined the prevention of proliferation of weapons of mass destruction and defeating global terrorism as the twin pillars of his national security agenda. Hillary Clinton, his nominee for secretary of state, also made it clear during her Senate confirmation hearing that she will deal with the North Korean nuclear issue with urgency.

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Obama and Japan

Author: Kenji Takita, Chuo University, Tokyo

President Obama’s election was widely welcomed in Japan, by the general public as well as the power elite.

Most in Japan abhorred the Bush administration’s unilateralist foreign policy and expect the Obama administration to shift America towards a more multilateralist course. Multilateralism is closely associated with smart power. The shift towards multilateralism is likely to have two effects in implementing American foreign policy. It will go some way towards erasing the damage that the Bush Administration’s unilateralism has done to American standing. It will also make it easier to the United States to call on the assistance of other countries, especially that of allied powers.

While many Japanese welcome the Obama administration, they remain concerned about the new administration’s foreign and trade policies. For Japan these concerns focus on questions like will the Obama administration seek a resolution to the abduction issue as well as denuclearization in North Korea? Who will be America’s primary partner in East Asia? Will the administration introduce protectionist trade policies to ‘defend’ the US economy in the face of the current economic downturn?
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Vietnam: a switch from growth to stability

Special Author: Doan Hong Quang, World Bank, Vietnam

Vietnam began the year 2008 with high expectations. There was exuberance at the admission to the WTO and record growth of 8.5 per cent was recorded in 2007. The government set an even higher target in 2008, aiming for growth at 8.5-9 per cent.

Events took a seemingly unexpected turn. Signs of overheating, already evident at the end of 2007 amidst the asset bubble and rising inflation, became more and more visible towards the end of the first quarter.

The VN index lost almost 45 per cent of its value in just the first three months. The CPI was already running at 9.2 per cent for the first quarter, corresponding to a year-on-year rate of nearly 20 per cent, much higher than in neighbouring countries. Inflation rose from month to month and peaked in August, when the year-on-year rate reached 28.3 per cent.

To some extent, the price hike resulted from the surge of world prices, especially food and fuel prices. With a very open economy and a stable exchange rate, price rises in international markets were transmitted directly to domestic prices. Vietnam still maintains controls over prices of some essential goods and services, but the evidence shows that there were close correlations between the movements of international and domestic prices in controlled commodities.

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Japan’s LDP and DPF face the future

Author: Tobias Harris

The LDP and the DPJ had their annual conventions in Tokyo over the weekend, steeling their resolve for the Diet session already underway and the general election that will occur within the year.

For the second straight year, the incumbent LDP president and prime minister told the party faithful that the “responsible governing party” (how the LDP now refers to itself) faces the worst crisis it has ever faced — at the same time that Japan confronts (to use what has now become a mantra from Aso Taro and his cabinet ministers) “the worst economic crisis in one hundred years, which has emanated from America.” Mr. Aso told the convention that “only the LDP” can overcome the economic crisis, which would presumably be enough to save the party from what looks like certain electoral defeat later this year. (Interestingly, Hosoda Hiroyuki, LDP secretary-general, has criticized Mr. Aso’s frequent use of this exculpatory expression because it is too negative, arguing that it dampens consumer confidence and undermines the government’s own policies. And here I thought the problem was that by using this expression Mr. Aso was more or less ignoring discussing the crisis and therefore ignoring a serious effort to diagnose its cause and offer an appropriate and effective response…)

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