VIF News Digest: Far East including Japan, the Koreas, Indo-Pacific, Australia, Taiwan and ASEAN (Vol 2 Issue I)

December 1-January 15, 2018

ASEAN

$1 Billion Credit for ASEAN Connectivity Projects

While addressing the Association of South Asian Nations (ASEAN)-India Connectivity Summit jointly organized by the Confederation of Indian Industry (CII) and ASEAN India Centre on December 11, Union Minister Nitin Gadkari mentioned that India had proposed a $1 billion line of credit to promote sea, air and road connectivity projects with ASEAN. Apart from this, India has set up a project development fund of $77 million to develop manufacturing hubs in Cambodia, Laos, Myanmar and Vietnam, he said, the ASEAN India maritime transport cooperation agreement is being negotiated and an Asian India civil aviation task force has been established to see optimization of air connectivity. The minister said that ASEAN and India have also agreed to establish a maritime transport working group among India, Myanmar, Thailand, Cambodia and Vietnam to examine the feasibility of shipping networks. Asserting that connectivity is the pathway to shared prosperity, he said better connectivity is the core factor for strengthening ASEAN-India relations. "Connectivity projects such as the India-Myanmar-Thailand Trilateral Highway (TH), extension of TH to Cambodia, Laos and Vietnam Kaladan Multimodal Transit Transport Project are being planned and at different stages of implementation," he said.

India is already working with Myanmar in the areas of border area development, capacity building, infrastructure development, connectivity projects and institutional development. Stressing on augmentation of international connectivity, the minister said that for the 2,000 km ‘Bharat Mala’ project to connect India's major highway corridors to international trade points, an outlay of Rs. 25,000 crore are earmarked. This will facilitate export/import trade with Nepal, Bhutan, Bangladesh and Myanmar. About BBIN (Bangladesh, Bhutan, India, and Nepal) Motor Vehicles Agreement, Gadkari said action has been initiated for implementation of BBIN Motor Vehicle Agreement (MVA) by Bangladesh, India and Nepal.

Sushma Swaraj’s Three Country Tour in Southeast Asia

In the run-up to the forthcoming ASEAN-India Commemorative Summit, which marks 25 years of the establishment of the Dialogue Partnership between India and ASEAN, External Affairs Minister Sushma Swaraj undertook her first visit of the year to three southeast Asian countries — Thailand, Indonesia and Singapore — from January 4 to 8. Her three-nation visit was the part of New Delhi's efforts to hold bilateral interactions in various sectors with the countries of South East Asian region within the framework of India's Act East Policy. During her visit, Swaraj addressed the Indian diaspora at the ASEAN-India Pravasi Bharatiya Divas (PBD) in Singapore and reaffirmed India's commitment to the ASEAN. The ASEAN is India's 4th largest trading partner, accounting for 10.2 percent of its total trade. India is the ASEAN's 7th largest trading partner.

Cambodia

2nd LMC Leaders Meeting: Environmentalists Rraise huge Concerns

Leaders from the six countries through which the Mekong flows met in Phnom Penh, Cambodia on January 10 to finalize a draft of a five-year development plan for the river. But environmental groups have expressed concern over what it could mean for Southeast Asia’s longest waterway. A huge economic resource for the region, it provides livelihoods for an estimated 60 million people living in the lower Mekong basin where it nurtures one of the world’s most fertile areas for agriculture and fishing. Most experts agree that controlling the waterway means controlling much of the economy of Southeast Asia. As a result, observers have said that it has the potential to become the biggest flashpoint between China and ASEAN after the South China Sea.

Beijing established the Lancang-Mekong Cooperation (LMC) in 2015. It was seen by many as a rival organization to the long-standing Mekong River Commission (MRC), which has been around in various guises for more than 60 years. Its members are the same as those of the LMC, except for China and Myanmar. Beijing has already studded the Mekong’s upper reaches with six dams and is investing in more than half of the 11 dams planned further south, according to International Rivers. Environmental groups warn the blockages pose a grave threat to fish habitats by disrupting migrations and the flow of key nutrients and sediment – not to mention displacing tens of thousands of people with flooding.

Thailand

EU to resume Political Contact ‘at all levels’ with Thailand

The European Union (EU) will resume political contact "at all levels" with Thailand, its foreign affairs council said on December 11, after putting relations on hold following a 2014 coup by the Thai military. The EU is Thailand's third trade partner after China and Japan. Thailand is the EU's third-largest trading partner in the ASEAN. "The Council decided to resume political contacts at all levels with Thailand in order to facilitate meaningful dialogue on issues of mutual importance, including on human rights and fundamental freedoms, and the road towards democracy," the EU's Foreign Affairs Council said in a statement. In June 2014, the EU said it would keep its relations with Thailand under review and put on hold the signing of a Partnership and Cooperation Agreement (PCA), which was aimed at closer economic and political ties with Thailand. The signing of a PCA and talks on EU-Thailand Free Trade Agreement (FTA) could resume with a democratically elected civilian government under the new Constitution, the statement said.

Philippines

Duterte gets Congress to extend Martial Law

Philippine President Rodrigo Duterte asked Congress on December 11 to extend the martial law he declared in the country's south by one year to ensure the "total eradication" of pro-Islamic State group extremists, warning they plan more uprisings after an unsuccessful but disastrous siege of Marawi city. An overwhelming majority of the Senate and House of Representatives in joint session on December 13 voted to extend martial law in Mindanao until December 31, 2018. A total of 240 lawmakers present voted in favor of the request of Duterte, while 27 voted against it. Duterte said the remaining militants still hope to establish a caliphate in the Philippines and Southeast Asia after government forces killed more than 900 fighters and quelled the five-month Marawi siege in October. Left-wing and pro-democracy groups have protested Duterte's imposition of martial law because of human rights concerns, but the Supreme Court has upheld its legality.

Malaysia

Malaysia's 92 year old Former PM Returns to Politics

Malaysia’s opposition alliance has named 92-year-old former Prime Minister Mahathir Mohamad as its prime ministerial candidate for upcoming general elections to boost its chances of wrestling power from a coalition that has ruled since independence. The announcement on January 8 by the four-party ‘Hope Alliance’ puts an end to squabbling over the thorny issue and is seen as a major show of unity ahead of polls that must be held by August but are widely expected in the second quarter. Prime Minister Najib Razak has clung to power despite an epic corruption scandal that involved hundreds of millions of dollars passing through his bank accounts. Support for his ruling National Front coalition has dwindled in the last two elections. In 2013, the coalition lost the national popular vote for the first time to the opposition. Analysts said the opposition still faces an uphill battle due to party infighting, unfavorable electoral boundary changes and strong support for the government from rural ethnic Malays.

Japan

EU, Japan Conclude world’s largest Free Trade Agreement

The EU and Japan concluded negotiations on a free trade deal to create the world's largest open economic area, signaling their rejection of the more protectionist stance of US President Donald Trump. The two parties, who agreed the outlines of a deal in July, said on December 8 negotiators had now finished a legal text that would open up trade for economies making up about 30 percent of global output. The deal, combining the 28-nation bloc and the world's third largest economy, will remove EU tariffs of 10 percent on Japanese cars and the 3 percent rate typically applied to car parts. For the EU, it will scrap Japanese duties of some 30 percent on EU cheese and 15 percent on wines as well as allowing it to increase its beef and pork exports and gain access to large public tenders in Japan.

Japan to acquire Air-Launched Missiles able to strike North Korea

Japan will acquire medium-range, air-launched cruise missiles, capable of striking North Korea under a controversial purchase of what will become the longest-range munitions of a country that has renounced the right to wage war. Defense Minister Itsunori Onodera did not refer to North Korea when announcing the planned acquisition and said the new missiles would be for defense, with Japan still relying on the US to strike any enemy bases. "We are planning to introduce the JSM (Joint Strike Missile) that will be mounted on the F-35A (stealth fighter) as 'stand-off' missiles that can be fired beyond the range of enemy threats," Onodera told a news conference. Japan is also looking to mount Lockheed Martin Corp.'s extended-range Joint Air-to-Surface Standoff Missile (JASSM-ER) on its F-15 fighters, he said. The JSM, designed by Norway's Kongsberg defense & Aerospace, has a range of 500 km. The JASSM-ER can hit targets 1,000 km away. Japan's missile force has been limited to anti-aircraft and anti-ship munitions with ranges of less than 300 km.

MSDF patrolling Yellow Sea to stop Smuggling to North Korea

Japanese Maritime Self-Defense Force (MSDF) vessels have been patrolling international waters off the Korean Peninsula since late last year to thwart attempts by North Korea to evade international sanctions. Their primary task is to foil efforts by North Korea to acquire refined petroleum products from foreign cargo carriers in the Yellow Sea as well as the Sea of Japan. The UN imposed sanctions against exports of oil and oil-related products to North Korea for its nuclear and missile development programs. It is the first involvement by MSDF vessels in efforts to bolster the effectiveness of UN sanctions. China is strongly opposed to MSDF vessels operating in the Yellow Sea that rings its eastern coastline, but the Japanese government decided the patrols were necessary to ensure that the embargo remains watertight. The MSDF monitors the movement of foreign ships and shares that information with the US. However, the MSDF vessels are not authorized to forcibly inspect suspect ships. Under the UN Security Council resolution, member nations are requested to inspect ships if they are suspected of transporting banned items.

Japan says China sent Nuclear-Powered Submarine to Disputed Isles

A Chinese naval submarine detected in waters near Japanese-controlled islands in the East China Sea last week was a nuclear-powered attack submarine, Japanese Defense Minister Itsunori Onodera said on January 15. The Shang-class submarine was detected on January 11 while submerged just outside Japanese territorial waters near the Senkaku Islands (Diaoyu Islands). Tokyo filed a protest with Beijing, which also claims the islands, saying the submarine’s presence raised bilateral tensions. According to the Japanese Defense Ministry, the Shang-class (Type 093) is a new type of attack submarine equipped with ship-to-ship missiles that have a maximum firing range of 40 kilometers as well as torpedoes. A Defense Ministry source speculated that China may have sent the submarine to test the Japanese MSDF’s patrolling capabilities.

Japan approves Missile Defense System amid North Korean Threat

On December 19, Japan's Cabinet approved a plan to buy two ‘Aegis Ashore’ systems to add to Japan's current two-step missile defense systems with hope of being in operation by 2023. "North Korea's nuclear and missile development has become a greater and more imminent threat for Japan's national security, and we need to drastically improve our ballistic missile defense capability to protect Japan continuously and sustainably," a statement issued by the Cabinet said. As per Japanese defense officials, the Terminal High-Altitude Area Defense, or THAAD setup comes with 48 missiles and 9 mobile launch pads, priced about $1.1 billion, and Japan would need at least six of those to defend the country. In comparison, two Aegis Ashore units could cover Japan entirely by using advanced missile interceptors and would cost around 200 billion yen ($1.8 billion), though exact figures were not released. Further, the Aegis Ashore will also be compatible with the ship-based Aegis systems that are on four Japanese destroyers and also could work with SM-6 interceptors capable of shooting down cruise missiles, defense officials said. The US has installed the land-fixed Aegis in Romania and Poland, and Japan will be a third to host the system.

Japan eyes Cruise Missile Defense System to counter China

With an eye on China, the government is considering expanding its capabilities to intercept not only ballistic missiles but cruise missiles under the nation's new defense program guidelines. The plan is expected to bring Tokyo and Washington even more closely together under the envisaged missile defense system, or the Integrated Air and Missile Defense (IAMD), laid out by the US military. “(The move) is partly intended to bolster Japan’s defenses against North Korea’s ballistic missiles, but the real aim of introducing the IAMD is to counter China, which has been upgrading a number of its missiles,” said a senior official with the Self-Defense Forces. But some government officials expressed concerns that joining the IAMD could violate the principle of the nation’s pacifist Constitution. Prime Minister Abe signaled the need for a sweeping overhaul of the existing defense program guidelines during a speech on December 15. The revision of the National Defense Program Guidelines is expected at the end of next year.

Discussions on to make Izumo a Flattop Aircraft Carrier

Several high-ranking Defense Ministry officials said that consideration was being given to converting the Izumo, which is already Japan's largest destroyer, with a length of 248 meters and a horizontal flight deck like those on aircraft carriers. When the Izumo was added to the MSDF fleet in 2015, Air Self Defense Force (ASDF) officers asked that consideration be given to acquiring F-35Bs for use on the vessel, which would make it the only aircraft carrier in the fleet. However, that discussion did not proceed because of concerns that it would conflict with Japan's defense policy stance. But with Defense Ministry officials now reviewing the National Defense Program Guidelines and compiling a new Mid-Term Defense Program by the end of 2018, discussion again extended to the possibility of retrofitting the Izumo. One possibility of refitting the Izumo would be to increase the heat resistance of its flight deck to allow the F-35Bs to land vertically on the carrier. The new plan would also include the ASDF purchasing F-35Bs for the carrier.

Russia Opposes Japan's Decision to Deploy ‘Aegis Ashore’

On December 28, Russian Foreign Ministry spokeswoman Maria Zakharova stated that the decision by Japan to deploy Aegis Ashore (a US missile defense system) will damage Moscow's relations with Tokyo and was a breach by Washington of a landmark arms control treaty. Japan formally decided in December that it would expand its ballistic missile defense system with US-made ground-based Aegis radar stations and interceptors in response to a growing threat from North Korean rockets. "Actions like these are in direct contradiction to the priority of building military and political trust between Russia and Japan, and, unfortunately, will impact in a negative way on the whole atmosphere in bilateral relations, including negotiations over the peace treaty problem," Zakharova told a weekly briefing. Russia and Japan never formally ended their hostilities after World War II because of a dispute over a chain of islands in the Pacific. Russian President Putin too mentioned in November 2017 that concluding a peace treaty between Russia and Japan would involve Moscow examining how it could be affected by Tokyo's security commitments to its allies.

Japan pushes for march Signing of TPP 11

The Japanese Government is working to have a retooled version of the Trans-Pacific Partnership (TPP), the multilateral trade and investment agreement abandoned by the US, signed by early March 2018. But labour rights and other issues remain sticking points to the 11-member TPP taking effect in 2019 as hoped. Chief TPP negotiators from the 11 remaining member nations will meet in Japan in late January 2018 to confirm details of the pact. Then comes translating the text into members' various languages and conducting legal reviews in each nation, after which Tokyo envisions moving toward signing a final agreement in late February or early March. After that, the trade deal enters the ratification stage in each country. TPP and the Japan-EU free trade agreement will increase real gross domestic product by an estimated 13 trillion yen ($114 billion) and create 752,000 jobs by boosting exports and investment in Japan as per Japanese government sources (mentioned in December 2017).

Nearly half of Japan's major Firms using or planning to Use AI: Survey

Almost half of 121 major Japanese companies recently surveyed by the Mainichi Shimbun said they have already introduced or plan to introduce artificial intelligence (AI) into some of their operations. The survey, which comes as experts predict the replacement of some human work with AI, was conducted in December last year, along with questions on Japan's economic outlook. 33 companies, or 27 percent of the firms surveyed, said they had already replaced a portion of their business operations conventionally carried out by humans with AI, and planned to expand the use of such technology. 24 firms said they had concrete plans to introduce AI. Combined, these two groups account for 47 percent of the 121 companies. Another 24 firms, or 20 percent, said they had had experience using AI in their operations.

Japan tells Pakistan not to be 'Loophole' in North Korea Sanctions

Japanese Foreign Minister Taro Kono told his Pakistani counterpart Khawaja Asif in Islamabad on January 5 that South Asian countries must not be "loopholes" for UN sanctions against North Korea. Asif responded that Pakistan is striving to fully implement the relevant UN Security Council resolutions against Pyongyang and wants to cooperate with Japan in the matter, according to a Japanese Foreign Ministry statement. Pakistan, itself a known nuclear-armed state, maintains friendly relations with North Korea. According to the ministry, Kono also stressed the importance of Pakistan taking positive steps on the Comprehensive Nuclear Test Ban Treaty and the proposed Fissile Material Cut-off Treaty (FMCT). Kono also met Pakistani Prime Minister Shahid Abbasi and Chief of Army Staff General Qamar Javed Bajwa. Kono's visit to Pakistan is the first by a Japanese foreign minister in roughly nine years, the ministry said.

Japan floats Business Aid idea for China's Belt and Road Plan

The Japanese government has drawn up guidelines encouraging Japanese firms to cooperate in China's "One Belt, One Road" economic-zone initiative as per a report in the Mainichi Shimbun. However, there has also been a sense of caution on the Japanese side concerning the initiative -- with certain voices in the business world such as a manufacturing sector executive stating, "The extent to which we should get involved, and carry out investment, is unclear."

Therefore, in response to such concerns, it was deemed necessary that the Japanese government clarify the exact fields and conditions regarding its request for Japanese involvement. Consequently, the prime minister's office and four government ministries - the Ministry of Foreign Affairs, the Finance Ministry, the Ministry of Economy, Trade and Industry and the Ministry of Land, Infrastructure, Transport and Tourism - came up with the specific guidelines in late November. The specific fields of cooperation laid out in the guidelines are: Driving cooperation in the field of energy conversation and the environment; advancement in industry; and distribution of goods between Asia and Europe. In addition, the development and management of solar-power generation, wind-power generation and gas or coal-fired power generation have also been listed as enterprises that will be focused on. However, certain projects that could be exploited for military purposes, such as port maintenance, are not being encouraged.

Korean Peninsula

North Korea

US seeks to find Convergence with China on North Korea

At the 2017 Atlantic Council-Korea Foundation Forum on December 12 in Washington, Tillerson in his remarks mentioned that, "we simply cannot accept a nuclear-armed North Korea," noting that Trump has been putting more pressure on China to cut off its oil supply to the North even as Beijing has backed and implemented recent UN sanctions against its wayward ally. "We have had conversations (with the Chinese) that if something happened, and we had to go across a line, we have given the Chinese assurances we would go back and retreat back to the south of the 38th parallel when whatever the conditions that caused that to happen," Tillerson said. "That is our commitment we made to them."

White House Hails Drop in Chinese Trade with North Korea

President Donald Trump’s “administration is pleased that China is sharply reducing its trade with North Korea,” the White House said in a statement. “This action supports the US-led global effort to apply maximum pressure until the North Korean regime ends its illicit programs, changes its behavior and moves toward denuclearization of the Korean peninsula.” China’s imports from North Korea plunged in December to the lowest level in dollar terms since at least the start of 2014, with trade curbed by UN sanctions aimed at persuading North Korea to abandon its ballistic missile and nuclear weapons programs. For 2017, China’s imports from North Korea dropped 33 per cent to US$1.72 billion, the lowest value in at least four years with an 81.6 per cent in December. However, exports to the country rose 8.3 per cent to US$3.34 billion.

North Korea may prepare Nuclear Test

North Korea has stepped up tunneling at its main nuclear test site, a US think tank, ‘38North’ said, even as tensions cool on the peninsula following the resumption of long-stalled inter-Korean dialogue. Satellite images showed increased activity at the Punggye-ri site, with mining carts and personnel frequently visible, and excavation waste piles growing. “These activities underscore North Korea’s continued efforts to maintain the Punggye-ri site’s potential for future nuclear testing,” 38North website said. The last five of Pyongyang’s six nuclear tests have been carried out under Mount Mantap at Punggye-ri in the country’s northwest, all of them at the North Tunnel. After a series of small earthquakes in the area, 38North said last October that the site may be suffering from the geological condition “Tired Mountain Syndrome”.

Restoration of cross-border Communication Channels

North and South Korea reopened about 30 landlines connecting their liaison offices at Panmunjeom to discuss high-level talks in preparation for North Korea's participation in the Pyongyang Winter Olympics. The communication channel at Panmunjeom is mainly for non-military purposes and is separate from six suspended military hotlines that connect the two sides. Each land line at Panmunjeom was set up for a different purpose of discussion, such as issues on high-level talks, the Red Cross, maritime affairs, aviation and now-closed Gaeseong Industrial Complex (GIC) in North Korea. The Kim regime unilaterally blocked all Panmunjeom dialogue channels in February 2016, after the Park Geun-hye administration decided to pull South Korean firms out of the GIC in response to North Korea's ballistic missile provocations. The two Koreas had run three undersea cables each in the East and West seas - one for telephone, one for fax and the remaining ones for backup. The cables in the East Sea went out of operation in 2008 after South Korea scrapped the joint tour project to Mount Geumgang in North Korea. The cables in the West Sea were set up to better control visitors to the inter-Korean factory zone in Gaeseong. They were shut down in February 2016.

No US Military Action during Inter-Korean Talks: Trump

US President Donald Trump confirmed that there will be no military action by his country against North Korea as long as the two Koreas are engaged in talks, according to Korean Blue House on January 11. Trump said this during a phone call with President Moon Jae-in the previous night, a day after the North and South held their first high-level talks in almost two years to discuss Pyongyang's participation in the Pyongyang Winter Olympics and other issues. In the 30-minute phone conversation, the US president dismissed speculation about possible military action against the North.

Two Koreas begin high-level Talks on Winter Olympics, Ties

South and North Korea began their first formal talks on January 9 to discuss the North's potential participation in the Pyongyang Winter Olympics in the South next month and how to improve their long-stalled ties. The high-level talks started at the truce village of Panmunjom in the border area, according to Seoul's unification ministry. The meeting came after North Korean leader Kim Jong-un extended a rare rapprochement to Seoul in his New Year's Day message. He said he was willing to send a delegation to the Olympics and said the country was open for dialogue.

North Korea accepted Seoul's dialogue offer on January 5 after the South and the US agreed to postpone military drills until after the Olympics. Pyongyang said it would not discuss its nuclear weapons with Seoul because they were only aimed at the US, not its “brethren” in South Korea, nor Russia or China, showing that a diplomatic breakthrough remained far off.

China and Russia’s Absence looms over Canada Meeting on North Korea

Foreign ministers from around 20 nations will gather on January 16 to discuss how to curb North Korea’s nuclear ambitions through diplomatic and financial pressure, but China (also Russia), seen as a key player in any long-term solution, will be absent. The meeting primarily groups those nations that sent troops to the Korean war of 1950-53, when China fought alongside the North. Beijing condemned the gathering. The Vancouver meeting, co-hosted by Canada and the US, comes amid signs that tensions on the peninsula have eased, at least temporarily. North and South Korea held talks for the first time in two years recently and Pyongyang says it will send athletes across the border to the Pyongyang Winter Olympics. But the US and others say the international community must look at ways of expanding a broad range of sanctions aimed at North Korea’s nuclear program.

South Korea

SIPRI: South Korea's Arms Sales record High

South Korea's arms sales hit record levels last year, pushed by the continuous military threat from North Korea, complicated relations with China and a government decision to increase domestic arms production. The Stockholm International Peace Research Institute, or SIPRI, reported that arms sales by South Korean companies included in its latest study of the world's 100 largest arms producers stood at $8.4 billion in 2016, up 21 percent from the previous year. The figure covers only those South Korean companies ranked in the study, not the country's entire defense industry. SIPRI researcher Aude Fleurant said Seoul has been developing its own arms production since the 1970s to reduce dependency on foreign suppliers because of "threat perception in the region," and the results are now being seen. SIPRI's report, published on December 11, said the world's 100 biggest armaments groups sold weapons and weapons systems worth $375 billion in 2016, up 2 percent from 2015.

President Moon’s maiden Visit to China

President Moon Jae In made his maiden visit to China from December 13-16 in an effort to restore ties damaged by Beijing-imposed boycotts targeting group tours to South Korea, K-pop and South Korean companies operating in China. He was accompanied by a huge 260-strong business delegation. Moon and Xi Jinping reached an agreement on four principles for peace and security on the Korean Peninsula. The four principles include the unacceptability of war, a firm commitment to the Peninsula’s denuclearization, peaceful resolution of the North Korean issue through dialogue and negotiation, and improved inter-Korean relations. The summit also encouraged recovery in South Korea-China economic relations, which had deteriorated over the THAAD missile defense system. In his introductory remarks at the summit, Xi alluded to the issue only indirectly – saying relations had “undergone regression for reasons everyone is aware of” – while refraining from provoking Seoul by specifically mentioning THAAD or the “three no’s” (no additional THAAD deployments, no participation in US-led missile defense, and no three-way military alliance with the US and Japan).