Fortnightly Review & Analysis – ASEAN, Indo-Pacific, East Asia, Japan & China (Vol 1 Issue IX)

(October 16-31, 2016)

ASEAN

Daw Aung San Suu Kyi Visits India

Daw Aung San Suu Kyi, State Counsellor visited to India from October 17-19, 2016. Earlier, the State Counsellor had participated in the BRICS-BIMSTEC Outreach Summit in Goa on October 16. She was accorded a ceremonial welcome at the forecourt of the Rashtrapati Bhavan on October 18, 2016. The Prime Minister hosted a lunch in her honour. Smt Sushma Swaraj, External Affairs Minister of India, had a meeting with State Counsellor Daw Aung San Suu Kyi. The fact that she was accorded welcome like a visiting Head of State underlines the importance India attaches with its growing relationship with Myanmar. Further, in August this year Myanmar President U Htin Kyaw in August 2016 had also visited India thus strengthening the bilateral ties between the two nations.

India expressed support for the efforts of the State Counsellor for the economic and social development of the country, especially in the creation of livelihood, capacity building, reconstruction of roads, provision of power, education facilities and health infrastructure that would contribute to progress and prosperity of the people of Myanmar. It was also agreed that areas for cooperation identified during the visit to India of Myanmar President U Htin Kyaw would be fast-tracked for implementation.

During the interaction both the leaders said that the fight against terrorism should target terrorists, and hold to account terror organisations and states that encourage, support or finance terrorism in any way. Prime Minister Modi announced India’s cooperation programme with Myanmar under neighbourhood first policy, which will support Myanmar in its comprehensive development. During the summit, both the countries agreed on security coordination in border areas and being sensitive to each other’s strategic interests. India reaffirmed its commitment to assist Myanmar’s efforts for strengthening democratic institutions and to support the 21st Century Panglong peace process

Myanmar Peace Process: Aung San Suu Kyi’s Approach

Suu Kyi has given out a seven point policy guidelines for concluding the peace process. It includes review of the political dialogue framework and its amendment. Thereafter, the third step would be convening of the Union Peace Conference—the 21st century Panglong in accordance with the amended and approved political dialogue framework. The fourth step would be the signing of union agreement— the 21st century Panglong Conference Agreement based on the results of the 21st Century Panglong Conference. Fifth step would be to amend the constitution in accordance with the union agreement and approval of the amended constitution. Sixth step would be holding of multi-party general elections in accordance with the amended and approved constitution. The last and seventh step would be to build a democratic federal union in accordance with the results of the multi-party democracy general elections. However, there are many impediments and obstacles in achieving peace and reconciliation; the approach of military to the peace process being the major one. It is difficult to say how military would be brought around to share the same perspective as Suu Kyi.

Britain and ASEAN Community after Brexit

After the formal decision to come out of EU, the UK is looking towards ASEAN region as an opportunity for growth. Due to its exit from EU, the UK lost its prospect of preferential access to the European market. The consistent growth of 4% - 5% of ASEAN economies is considered to be a favorable business environment for Britain. The collective growth rate of ASEAN Economic Community touching nearly 8% and is seen as a good prospect in a world economy of anemic growth. There is a possibility of Prime Minister Theresa may visit ASEAN soon. It is likely that the UK government would initiate negotiations on UK-ASEAN Free Trade Agreement. Though, the UK enjoys good relations with ASEAN; however, its dilemma of half Brexit or hard Brexit is adding to complexities. For Britain it is necessary to develop a strong economic relationship with ASEAN which requires a consistent strategy, suitable framework and strong governmental support. Also, the ASEAN nations would be more inclined to establish strong economic relations with European Community to get greater access to the European market.

Singapore ASEAN cyber cooperation

Singapore has taken a cyber diplomacy initiative by building an alliance with other countries, both to swop expertise, such as the latest in attack methods, and to regularly exercise and test its defences. Singapore's Cyber Security Agency (CSA) has signed bilateral cyber agreements with five countries: France, the United Kingdom, India, the Netherlands and the United States.

It will enable the region to drive and take ownership of the cyber security agenda of ASEAN community. More specifically, the program will provide the resources to broaden the scope of capacity building activities and better hone technical skills and incident response. It strongly underscores the committed cooperative approach of Singapore towards the comprehensive development of the region.

Indo-Pacific

Trouble in the Bab-el Mandeb

The Straits of Bab-el-Mandeb is a strategic waterway which connects the Red Sea to the Gulf of Aden and more importantly is the access to and from the Suez Canal. This area has witnessed two attacks on merchant ships in the past week. The tanker Galicia Spirit experienced a suspected piracy attack whilst off the coast of Yemen on Oct 25 which was soon followed by an attack on the chemical product tanker Melati Satu on 27 Oct 16. Both the ships were attacked with Rocket Propelled Grenades (RPG) and small arms fire. Both ships raised distress calls which were answered by warships in the vicinity, a Djiboutian ship in the case of the Galicia Spirit and a Saudi ship in the case of Melati Satu. The warships escorted the vessels for the remainder of the voyage.

These attacks follow the earlier attacks on the USS Mason between 10 – 15 Oct 16 and that on the Swift, a ship leased by the United Arab Emirates for rendering humanitarian assistance in Yemen, on 01 Oct 16. While the Houthis had claimed responsibility for the attack on the UAE ship, they had denied the same on the US Navy warship. The US Navy also carried out retaliatory missile attacks on the radar site that had aided the Houthi missile attacks. There has also been no statement from the Yemeni rebels on the recent attacks on the merchant ships. Speculation is therefore rife as to whether these attacks were carried out by the rebels or pirates.

Notwithstanding the origin of these attacks, they remain a worrying sign of the civil war that has seized Yemen, which stands at a crucial location in the International Shipping Lanes (ISL). The spillover of the civil war into the maritime realm is an avoidable situation for the international maritime fraternity which has just managed to control the piracy in the Gulf of Aden and Somalia. Containing the spillover, especially by Saudi Arabia and Iran, two of the key players along with the US will be urgently required to avoid disruption of traffic in this vital waterway which can otherwise have a debilitating effect on trade in the entire region.

Temporary Peace in the Scarborough Shoal?

China has scaled down its presence at the disputed Scarborough Shoal and has not interfered with Filipino fishermen, according to the Philippine president's security adviser. Chinese ships were still present but had not blocked Filipino boats at the Scarborough shoal. The Chinese foreign ministry spokeswoman Hua Chunying told reporters in Beijing her government made “proper arrangements” after President Duterte expressed concern about access to the shoal.Hua said the issue had been handled “based on the friendship between China and the Philippines.”

China's blockade of this prime fishing spot since 2012 and similar actions at Mischief Reef and the Second Thomas Shoal had prompted the previous Philippine government to file a case against China in the Permanent Court of Arbitration at The Hague in 2013. The tribunal's award in July this year, which China has refused to acknowledge, declared the shoal a traditional fishing ground that Chinese, Philippine and Vietnamese could all exploit. It also invalidated China's claims to most of the South China Sea. Last week, Filipino fishermen began returning from the shoal with plenty of catch. The Chinese relaxation of their hold on Scarborough Shoal comes days after President Duterte’s recent return from his state visit to Beijing.

The relaxation of the Chinese stance does not imply any change in their legal stand vis-à-vis the Scarborough Shoal or the South China Sea. This was made amply clear when Hua Chunying told the same reporters that "the jurisdiction status will not change." The current softening of the stand is obviously intended to soothe ruffled feathers in the light of the conciliatory moves made by the Filipino President. The move also suits the present situation where the current Philippines President is attempting to draw away from the American umbrella and chart an independent course. While these moves will not provide a final solution to the dispute, any calming of the situation is welcome in this volatile region.

The Philippines President Rodrigo Duterte’s Visit to China

Philippines President, Rodrigo Duterte made his maiden visit to China from 18-21 October 2016. He was accompanied by a delegation of over 300 companies from the Philippines. The visit comes against the backdrop of deteriorating China-Philippines relation due to the Permanent Court Arbitration judgment. The South China Sea (SCS) arbitration case was filed unilaterally by the previous Filipino President Benigno S. Aquino III. During the visit he made an important statement wherein he declared, “separation” from the US. This announcement was essentially to show that the Philippines will now follow an independent foreign Policy under the new government.

During the visit, China and the Philippines signed 13 bilateral cooperation agreements. Under the agreement China promised to give the Philippines 100 m RMB, for “implementing projects to strengthen its war on illegal drugs and in law enforcement security cooperation between these two countries”. A MOU was signed on the establishment of a Joint Coastal Guard Committee on Maritime Cooperation. This hints that the two countries will start cooperation on maritime affairs. The other agreements were on Economic and Technical Cooperation, MOUs on the developing cooperation on production capacity and investment, developing Transportation Infrastructure Cooperation list, Strengthening Trade Investment and Economic Cooperation, Development Plan for Economic Cooperation and Supporting Conduct of Feasibility Studies for Major Projects. Action Plans on Agriculture Cooperation (2017-2019), News Information Exchange Training and for Other Purposes, and Cooperation on Animal and Plant Inspection and Quarantine were also worked out.

Both the leaders agreed to resume direct talks on the SCS. Earlier, Benigno S. Aquino III had cut off bilateral discussions on the SCS after China seized the Scarborough Shoal and drove Philippines fishermen from it. However, the date and time of the talks were not decided. Apart from this, the two countries also agreed to resume Foreign Ministry Consultations, Consular Consultations, Joint Commission on Economic and Trade Cooperation, Annual Defense Security Talks, Joint Committee on Agriculture, Joint Committee on Science and Technology and other bilateral dialogue mechanisms.

Japan

Prime Minister's visit to Japan for the Annual Summit Meeting

Prime Minister Narendra Modi will visit Japan during 11-12 November 2016. This will be the third annual summit meeting between PM Modi and PM Abe. During PM Modi’s visit in 2014 to Japan, the relationship was upgraded to a ‘Special Strategic and Global Partnership’. At the last summit meeting in December 2015 in New Delhi, PM Modi and PM Abe called their countries relationship one with the largest potential for growth and outlined a vision of working together for peace and prosperity in the Indo-Pacific region and the world.

Both nations want to strengthen the partnership in areas of infrastructure, security, defence, tourism, manufacturing, high technology, transportation systems, civil nuclear energy, space and terrorism. Signing of the civil nuclear deal which has been pending clearance from the Japanese side will be keenly awaited by Indian side. The critical importance of the sea lanes of communications in the South China Sea for regional energy security, trade and commerce and China’s growing assertiveness in the region will also come under scrutiny during discussions. Japan regularly participates in the trilateral Malabar Exercises that would create stronger capabilities to deal with maritime challenges in the Indo-Pacific region and is may seek India’s help and support in maintaining and alleviating regional maritime security.

Economic collaboration forms an important part of the relationship. The India-Japan Business Cooperation Committee meeting was held in New Delhi on 24 October. Amitabh Kant, CEO, NITI Aayog, urged Japanese companies to move into the Indian market as the process of infrastructure creation and reforms were creating ample opportunities for investment, consistency in governance and clarity of policy and taxation reforms to improve manufacturing competitiveness in States. The Secretary, Department of Industrial Policy and Promotion emphasized that the Goods & Services Tax which will be operational from April 2017 would create a level playing field for manufacturers in States, speed up the movement of goods and bring greater predictability in assured transportation that will reduce cost of holding inventories. Kenji Hiramatsu, Ambassador of Japan to India, expressed hope that the Indian Government would continue to strive for improving the business environment and told Japanese companies that this was the most opportune time for them to capture the visible potential that is emerging in India. Truly, the relationship has largest potential for growth provided declared intentions are converted into reality with earnestness.

China

India-China Joint Military Exercise

The second joint exercise titled ‘Sino-India Cooperation 2016’ was held on 19-20 October 2016 in the East Ladakh and Kashmir regions. It involved border troops of the two countries. The Indian team was led by Brigadier R S Raman and that of Chinese was led by Sr. Col Fan Jun. The thrust of the day long exercise was on Humanitarian Aid and Disaster Relief (HADR) wherein a fictitious situation of earthquake striking an Indian Border village was painted. Thereafter, both the teams jointly carried out rescue operations, evacuation and rendering of medical assistance. The first joint exercise was held on 06 February 2016 in the area of Border Personnel Meeting Hut at Chushul Garrison of East Ladakh along with Chinese troops of Moldo Garrison. Both the exercises were held as a part of Border Defence Cooperation Agreement, 2013.

These are tactical joint activities which supplement the larger scheduled ‘ Hand in Hand” exercise. The last one was held in Chengdu 4-14 November 2013. Overall, the joint military exercises aims at strengthening the mutual understanding, peace and stability in border regions. These have also increased the level of trust and cooperation between the two border guarding forces along the LAC in the Eastern Ladakh. Such exercises help in creating a positive atmosphere for bilateral diplomacy.

Sixth Plenary Session of 18^th CPC Central Committee

The 6^th Plenum of 18^th Communist Party of China (CPC) Central Committee was held from 24-27 October 2016. It was attended by 197 full members and 151 alternate members under the Chairmanship of President Xi Jinping. The Party released a communiqué detailing its approval of two new sets of regulation aiming to root out evils such as corruption, dishonesty and flattery and “unrestricted power or any unsupervised Party members.” The document also appealed for the Party to “closely unite around the CPC Central Committee with Comrade Xi Jinping as the core”. At the same time, the communiqué also emphasised the importance of collective leadership. It states the system “must always be followed and should not be violated by any organisation or individual under any circumstance or for any reason.”

It was Deng Xiaoping who coined the phrase “core leader”. Until now, only three leaders have been conferred with the title: Mao Zedong, Deng Xiaoping and Jiang Zemin. The term implies that the leader has almost absolute authority and should not be questioned. In China, such titles are a powerful political currency. The title “core leader” has important connotations for Xi’s position before the 19th party congress that will be held in 2017.

Taiwan

Taiwanese Cabinet to set up 18 Southbound Policy Platforms

In a recent development, with regard to the New Southbound Policy, the Economics Minister Lee Chih-Kung, proposed to establish platforms per country included in the policy to help businesses and investors. Each country would also form the subject of regular risk assessments. The new government has set up Southward Policy office under former Foreign Minister James Huang, but it was later folded into the Executive Yuan. The government has offered financial assistance to Taiwanese companies that are venturing into the target countries.

President Tsai Ing-wen in her inaugural speech has said that the initiative is designed to “bid farewell to our past overreliance on a single market”, the obvious reference being to China. The guidelines of the policy were already approved by the Tsai Ing-wen on 15 June 2016. Apart from diversifying its trade, the other agenda of the Tsai Ing-wen administration has been to “pivot from China”. Hence, the Southbound Policy essentially stands from moving away from China. It was initiated by the Taiwanese president Lee Teng-hui as a “Go South” policy that urged Taiwanese businessmen to invest in Southeast Asian countries. However, after the 1997 Asian Financial Crisis, the government was bit skeptical to invest in these countries. After this the scope of the policy was expanded to include other countries of which India is the most important one. Recently, leading Taiwanese company Foxconn has invested USD 5 billion in a manufacturing plant a research and development center in the Indian state of Maharashtra.