An Asian situation

It is eyes on Asia and eyes on those who are thinking about Asia

On Sunday 4 September, China will host its first G20 summit of leading nations (and only the second to be held in Asia) and the spotlight will fall across the region.

President Xi Jinping will want to make a good show of it. The worries over China’s volatile markets that sent jitters across the world earlier in the year remain. The fears over slowing growth in the world’s second-biggest economy have not gone away.

The start of next week will also see legislative elections in Hong Kong amid bubbling unease in the special administrative region over Beijing’s influence and oversight.

There will be lots of Asian leaders at the G20 summit from South Korea’s female president Park Geun-hye to Indonesia’s charismatic Joki Widodo. Someone who has been feeling the pressure is Japanese prime minister Shinzo Abe, whose latest economic stimuli are failing to impress the markets.

China has also invited the Thai and Singaporean prime ministers and Bounnhang Vorachith, the Laotian president, who is the current head of the Association of South East Asian Nations.

Outgoing US president Barack Obama will be saying his farewells at his last G20 get-together. During his tenure he made much of what he called his “pivot to Asia”. Will this ‘pivot’ survive after the November presidential election in the United States?

If she wins, will Obama’s Democrat colleague Hillary Clinton row back from this position, maintain the policy or enhance it? If Republican challenger Donald Trump takes the White House, how will or should Asian countries react?

When it comes to hardline leaders – and going by much of his recent rhetoric around illegal immigrants, many Americans expect Mr Trump to be exactly that sort of commander-in-chief – the new president of the Philippines appears to be heading up the Asian contenders at the moment.

Rodrigo Duterte revels in the high bombast of fiery speeches – take his threat to pull out of the United Nations, for example – but he is delivering on a promise to crack down on drug gangs. In fact, more than 700 people have died in police operations this summer, and the public are roaring their approval in high ratings for the new leader.

There are also continuing tensions between several countries over who owns which reefs and islets in the South China Sea but Beijing will want to avoid such cartographical arguments as the cream of international leaders touch down on Sunday.

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Time to retake the Latin exam

The British government shows some determination to address its lack of commitment to Latin America

They say Latin is a dead language. Sometimes it seems that many in different British governments have believed Latin America is dead too. The visit of the British Minister for Latin America to Bolivia from 26-27 July went almost unnoticed in the UK press. The BBC had one online page of coverage of the trip; a YouTube video Jeremy Browne, the Liberal Democrat MP with responsibility for Latin America, put online had only been viewed 42 times by the time this blog was published.

In November, the Foreign Secretary made this speech about the relationship between the UK and Latin America. He was right that Britons have played a role in forging Brazilian and Uruguayan independence and being the first European nation to recognise Mexico. Welshmen took football to Argentina. Cornishmen helped develop the Mexican silver mines.

But it seems that there has been an invisible colonial barrier barring the UK from closer relations with the region; a whispered admission that this was Spain and Portugal’s domain. Africa and the sub-continent have received far greater attention from the UK, mainly owing to the colonial links. Millions across India, Pakistan and sub-Saharan Africa speak English. Charities and aid workers regularly channel their efforts (rightfully) on the many social, political and medical needs of these nations but Latin America also needs support. And the UK can help the region in a different way.

It need not abandon Uganda or Bangladesh but the old colonial frontiers that stood are long gone. New-age imperialism is booming. China has already muscled in on the old UK ground: Beijing is a massive investor in many African countries now, often exchanging construction workers and architects for coal. India is turning into a global power capable of looking after itself. South Africa has now joined Brazil, Russia, India and China in their strong, emerging-powers BRICS bloc.

Latin America is full of successful, healthy and democratic countries. Mexico, Argentina and Brazil are in the G20. The region does not need stabilising support but it would welcome closer trade and investment links. As Mr Hague noted in his speech “We export over three times more to Ireland than we do to the whole of Latin America”. That needs addressing fast. China is becoming the dominant power in Africa. As Brazil outgrows Latin America and sets its sights on global ambitions, the UK would do worse then re-focusing a little of its ring-fenced international development budget and a lot of its trade desires on Latin America.

Who’s your international money on?

Emerging markets have wasted their chance to come together to challenge Europe over IMF leadership

Even if Agustín Carstens is selected by the International Monetary Fund by the end of the month to become the organisation’s new chief, the celebrations would be muted. Developing countries would have been able to hold a louder party if they had rallied around a single candidate.

In the shortlist run-off the IMF is considering at the moment, Christine Lagarde holds all the aces. Amongst the cards in the French Finance Minister’s hand are the fact that she has a steady domestic economic record; she has been at the heart of the EU as it has tried to stabilise itself; and she is a woman. Mr Carstens has a reputation as a pragmatist and is currently the governor of Mexico’s central bank. He is also in a strong position as he is from a country that is outside the cosy club of economically powerful nations but still inside the wider G20 grouping.

This battle could be billed as a ‘First Division Lagarde v Second Division Carstens’ match. The leading First Division sides have all leant their support to the fellow top-flighter but, crucially, other teams in the lower leagues have not be able to decide whom to back. And even now that Mr Carstens has been selected for the play-off final he is short on patronage. He has had a lot of training and experience but this is a fight in which the judges concentrate on the strength and number of your seconds and supporters outside the ring, rather than simply the calibre of the pugilist in the ring.

Mr Carstens should be able to land a few punches on Madame Lagarde. She is representing the eurozone, an economic region plagued by budget deficits, cross-border bailouts and raging disagreements over defaulting and restructuring. But so far she has used her nous and charm and been able to dodge the weak attempted jabs. Mr Carstens would be in a much stronger position if developing nations had whole-heartedly plumped for him in the first place.

Dominique Strauss-Kahn, (a man from the cosy club), has been unceremoniously dumped from the throne of the world’s piggy-bank and this is a chance to engineer a shift away from what has been perceived as the natural order of things – having a European leading the IMF. This ought to be an opportunity to deliver a positive window to the emerging markets from which they could challenge other nepotistic hierarchies, (such as always having an American run the World Bank), but the lack of organisation points towards a defeat.

Getting away from it all in Asia

At a time of problematic politics on both sides of the pond, what will the impact be of Obama’s visit to South Asia and David Cameron’s trip to the Far East?

The coalition government in the UK has spent much of the last few weeks swinging the cutting axe at nearly every government department and it appears that now Cameron and his Liberal Democrat allies are for now, at least, having a change of scene. The one facing them at home is hostile and on 10 November thousands of students demonstrated violently in central London against the proposed rise in university tuition fees. Public reaction has also been negative to funding slashing of child benefit, housing benefit and the defence budget. The Church of England has raised concern over the impact on the poor from the specific benefit reduction and reorganisation that has been planned.

But Cameron and his coalition colleagues have been sipping wine and trying to secure trade deals on the other side of the world. They are not running away directly but the change of scene at a time of political unrest may well allow them a period of reflection to consider their changes. They can also catch their breath; the Government’s reforms have been rolled out continuously since the general election.

A couple of countries to the south, this week Barack Obama has chosen to spend the aftermath of the Democrats’ painful losses at the mid-term elections on 2 November meeting his old school-teachers in Indonesia. As the Tea Party basks in the glow of election success, Obama has been wooing Indonesia in a similar way to the way he courted the Muslim world in 2009.

Indonesia stands at a crossroads, geopolitically: it is the largest Muslim majority nation in the world and a massive regional player for ASEAN. It has large sway in its region through its seat on the G20 and in that sense is similar to Brazil as the most important partner in a regional club. The administration in Jakarta needs to ensure that its leadership does not become confused or stall as other local players look up to the major power and faltering on its part could lead to introversion and a failure to keep up with the interchanging pace of foreign policy discussion.

This latest outreach to the Muslim world by the US President seems to be an attempt to move policy discussion into the international sphere after such devastation domestically. Cameron and Obama are now moving on to the G20 and with the Cancun climate change summit coming up next month, both leaders will probably be quietly hopeful that they can ride out the current waves of protest and election defeat overseas.