Trading standards

As Iran journeys back from isolation, Asian nations stand ready to engage

When Iran was welcomed cautiously back into the international fold in January, some were expecting a flood of suitors in front of Tehran’s door, while others thought the path back from exile might be a bit stop-start.

And while there have been business deals with some Western nations, such as France signing off an order for Airbus aircraft, it has been Asian nations that have been best-placed to improve, restore and underline trade agreements and mutual policies between themselves and the Islamic Republic.

Today, Tehran confirmed it had seen a 13% increase in oil exports to Asia, off the back of its energy market unshackling.

India and South Korea led the way in Iranian imports, picking up the slack after drops in crude purchases for China and Japan.

But even before international sanctions were relaxed earlier in the year, those four Asian countries mentioned above maintained their oil imports from Iran.

India, most of all, is brimming with infrastructure companies licking their lips at the chance to get involved in the re-opening Iran.

Its tech firms and place as the world’s biggest open-market democracy give it a unique position in the region.

And it has just announced annual growth for 2015/16 of 7.6%, outstripping the other so-called BRIC nations of Brazil, China and Russia and underlining its growing economic strength.

So with continued upward GDP expansion and the unbuttoning of business regulation in India, coupled with a change of policy towards Iran, has seen the 2014 Narendra Modi administration embed itself firmly with an old trading partner that is now seen by others in the world in a fresh light.

The times they are a-changin’

So when policies change or when governments are voted out and replaced, it is not just that specific country which sees the results internally. A new president or a lessening of sanctions can breathe new life into dusty agreements or encourage fresh engagement from different actors pursuing new angles.

Across the other side of the Pacific Ocean, the ongoing fade of the ‘pink left’ governments in Latin America has sparked possible new directions when it comes to trade.

The nascent, business-friendly presidential administration of Mauricio Macri in Argentina has been making tentative steps as an observer within the Pacific Alliance – a group of four Latin nations that is based on free-trade.

Argentina may not be a Pacific Rim country but it shows the fluidity of blocs and the alternating  popularity of regional partnerships when it comes to a change of government.

Under previous leader Cristina Fernández, protectionism was the bedrock for Argentinian trade and she called as her acolytes fellow leftists in Brazil, Venezuela, Ecuador and Bolivia.

Now the new leader wants to move his country in his preferred direction and that seems to be by nudging up to Mexico, Colombia, Peru and Chile’s integrated club.


Arab problems, Persian solutions?

Oman and Yemen share the southern coast of the Arabian Peninsula but not much else at the moment

In the latest trouble to rock Yemen, half a dozen people were killed and many others injured after security officials opened fire on a suicide car bomber which set off the device in the southern city of Aden on 28 January.

Aden has seen a spike in activity from both al-Qaeda and the so-called Islamic State in recent months, with gun and bomb attacks on the rise after the Sunni Muslim Saudi Arabia led a coalition to recapture the city from Shia Muslim rebels.

The internationally-recognised president Abd-Rabbu Mansour Hadi has managed to install himself in Yemen’s second city after he fled the capital, Sana’a.

This car bomb went off just outside the Maashiq Palace and the president was in the building – his Aden residence – at the time.

An affiliate of the so-called Islamic State claimed responsibility for the attack in a city that has descended into lawlessness.

Aden was once one of the most famous ports in the region but the former British colony is not top of many holidaymakers’ lists when it comes to visiting the area.

Hundreds of passengers sail on past the city, daunted by the pirates operating from Somali beaches and the instability brought on by the military intervention in Yemen last year.

1,500km to the north-east, Salalah is a more enticing stopping-off point for cruise liners.

The capital of Oman’s Dhofar region, the port is the centre for Arab and non-Arab visitors alike who come to experience the khalif, or monsoon.

Ringed by coconut palms that fringe the pristine beaches, Salalah and the mountains up back behind it are transformed by the annual summer rains into a verdant explosion of lush plains and rich waterfalls feeding sub-tropical banana plantations.

And, according to the Times of Oman, an Islamic tourist cruise connecting Iran and India with the Omani capital, Muscat, and Salalah is expected to be launched some time this year.

The paper was told by a representative of an Iranian shipping company that each planned cruise journey would be just over a week in length and would cater to both Iranian and Omani tourists.

The Sultan Qaboos is the supreme ruler in Oman, but he has used his consolidated power to oversee the modernisation and the opening up of the country.

Tourism is flourishing and Oman is looking to engage with actors across the region.

On 27 January, an official from an Omani sovereign wealth fund said it had signed an understanding with Khodro Industrial Group, the biggest carmaker in Iran.

That agreement would be for a $200m plant at the south-west Omani port of Duqm.

A gas pipeline between the two neighbours, who face each other across the Strait of Hormuz and the Gulf of Oman, is also a prospect now that international sanctions on Iran have been lifted.

That idea would be anathema to Saudi Arabia, the major power to the south of the Gulf, which has cut all ties with Tehran, after its embassy in Iran was attacked following the execution in Saudi Arabia of a Shia Muslim cleric.

Yet back to the south and is not all sweet dates and white sands in Oman.

The economy needs further diversification and the Sultan has to ensure that infrastructure spending is not only centred on Muscat and a couple of coastal, popular areas but reaches the mountainous and traditional interior as well.

The swelling and young population is outgrowing the number of jobs and the role of women in society can also be improved.

But there is much to celebrate in Oman at the moment and much to lament in Yemen, its struggling and unstable neighbour back down the Arabian Sea shore.

This blog will be reporting from Oman next month

Talk to the hand

There are few neighbourly relations between rival countries in Asia

What are the most successful negotiating techniques and where does face-to-face rhetoric come up short?

There are some particular cases in Asia that can show us the antagonisms and stumbling blocks in mutual talks between border rivals.

The Korean peninsula has seen its fair share of back-and-forth demands and conversations. When North Korea and South Korea get together it is normally set against a backdrop of military tensions and civil complaints. It was no different this time.

Both sides had traded artillery fire and Pyongyang put itself in a ‘quasi-state of war’. The South dusted off it border loudspeakers and blared out propaganda and K-pop over the frontier.

So when the aides came to the table to talk, it was on normal, unstable ground with a simmering strain on relations. After marathon negotiations, an agreement was reached and both sides backed down, a laudable agreement and a satisfactory temporary outcome to what had become a dangerous battle of rhetoric, music and shells.

Temporary – because these two nations still have not come to any firm peace agreement for the 1950-53 conflict. That ended in a truce, not a peace deal, and they are still technically at war.

Further west across the other side of the continent there is another infamous case of anxious neighbours. Where India and Pakistan are concerned it is no real surprise when any talks between the two rivals founder.

Constantly looking over their nervous nuclear shoulders, the two countries have once again hung up the phone – this time over peace talks which were meant to be held between the respective national security advisers.

There are examples of regional rivals across Asia and the situation around Iran is of interest. With the Saudis staring dagger-eyes across the Gulf, and the ayatollahs simply returning the glares of mutual distrust, these are two countries that do not get on.

In their positions, representing the powerbases of the two major denominations of Islam, they ought to do better as regards their dialogue duties, areas where they could be more engaged actors in regional and religious disputes.

Iran has been doing a lot of talking lately, but not with its neighbours. The six world powers that reached an agreement with the Islamic Republic over its nuclear programme have achieved a lot and have cautiously brought a pariah state in from the cold. An example to nearby nations of how to deal with a troublesome neighbour through successful, international chinwagging.

Indian summer of uncertainty

How will India make use of its month in the presidency of the UN Security Council?

India has a lot of domestic and regional defence and security issues on its plate at the moment. Bearing in mind the added responsibility of chairing the UN Security Council, Delhi has a lot to shoulder. Looking at the international situation first there is one major issue: what to do with Syria. Since the Arab League gave its first official condemnation of the ongoing repression across Syria, the Gulf Nations have been queuing up to denounce the regime and their ambassadors have been jumping on aeroplanes home.

However, India’s caution on the issue has stood out. The excitable Europeans have been at the forefront of the clamour for a condemnatory resolution, with their grouping led by the UK, France and Italy (and also this time Germany, notably ambivalent about the NATO mission in Libya). Then there are Russia and China, two heavyweight permanent members flapping their vetoes in the air as a warning. India has so far aligned itself with the Russians and Chinese, who also count current non-permanent Council member South Africa, (part of the emboldening BRICS global power bloc), amongst their ranks. The Council has so far failed to agree on a resolution and only issued a weak statement. With Arab countries of regional importance both to Syria and to India starting to turn away from Damascus, India should have something a little bit more negative to say about the terrible repression in Syria.

On the home front, a relationship that unnerves Delhi is the Sino-Pakistani one. However, it has soured somewhat with Beijing’s published fears that Muslim Uighurs from Xinjiang province have been popping over the border to Pakistan to terrorist training camps. India, the host country of the Dalai Lama and the exiled Tibetan government, is eyeing China with suspicion. Indo-Pakistani relations recently came under the spotlight after many attributed responsibility for the Mumbai bombings in July to a Pakistani group. However, Islamabad strongly condemned the attacks and many instead looked to India’s homegrown Mujahideen as the possible bombers.

A new ‘Great Game’ seems to be building slowly in India, Pakistan and China. All three have nuclear weapons and very strong armed forces. India has two eyes but must not train them in the same direction. Syria is clearly important but Delhi must deliver calm diplomacy and strong leadership in the sub-continent as well. It has the chance to be a mediator in Indo-Chinese disputes at home and international disputes via the Security Council and must use these opportunities calmly and wisely.

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.

Building the foundations

Domestic success for the BRICS countries backs up their global posturing

Following on from a recent update post about where Brazil, Russia, India, China and South Africa are on the world stage at the moment, (see ‘A fortress made of BRICS‘– 08/06/11), it is worth taking a moment to look at the foundations of their international acclaim.

This week, the Brazilian Department of Work and Business released encouraging figures showing that the economy added 252,067 net payroll jobs in May. Despite some financial woes at the start of her presidency, Dilma Rousseff is clearly focused to try to continue the boom at home that her predecessor, Luiz Inacio Lula da Silva, kick-started.

India has become a hotbed for foreign firms basing themselves in the country or outsourcing many of their operations there. This expansion of the boundaries of domestic business, be it through Indian or overseas companies, allows India to move out itself. A report by US congressman Jim McDermott last year showed how Indian firms created nearly 60,000 jobs in the States between 2004-09 in deals worth $26.5 billion.

There is no doubt that a shift in the global circles of dominance is underway. Commentators in the US believe that, despite the lack of credible Republican candidates, Barack Obama may still lose next year’s election because of one main issue: domestic economic problems. The eurozone is also worryingly wobbly. Greece has to match China’s growth just to get itself out of what is fast becoming a deepening hole from which the only exit seems to be through a door marked ‘Drachma this way’. In contrast, as the Chinese deputy bank governor said in March, his country has the ‘market depth, liquidity and safety’ to see the Chinese yuan replace the US dollar as the major world reserve currency.

It is a cycle which allows an non-stop wheel of development for the BRICS countries. Their success at home breeds success abroad and the rising powers feel confident to challenge established countries on the world stage. By ensuring domestic growth, they can back up their international vision with internal achievements.

A fortress made of BRICS

The BRICS countries are building a formidable global power base but there are still cracks in the foundations

With the addition of South Africa to the group late last year, the emerging markets bloc has expanded its reach and capability considerably. It now has fingers in pies cooking in all corners of the globe and each member-state has a rough home ‘region’ where it is the dominate force. Brazil has majority sway over Latin American affairs, China rules the construction industry in Africa and Russia has diplomatic and industrial control throughout the former Soviet Union nations. But the way they influence and react with each other – let alone other countries – is both a cause for celebration and concern.

China is the most successful of the BRICS. It competes with Brazil in Latin America and rivals South Africa throughout Africa, be it through construction contracts in Angola or oil agreements in Sudan. Its conveyor lines drive European businesses back home and its markets are being opened up to foreign firms. It is powerful militarily, diplomatically and economically. China also is skilled at both comforting and irritating rival BRICS. It is happy to let South Africa be a diplomatic voice for Africa while it maintains its industrial strength there. But it has annoyed India by cosying up to Pakistan recently with economic agreements and plans for motorways and railways between the two countries. The transport links would pass through a part of Kashmir that India sees as its own and that Islamabad ceded to Beijing in 1963.

The other powers have also tried to carve out distinct paths across the globe. Brazil is promoting itself as a leader of a new international diplomacy by flexing its negotiation muscles and by engaging with Iran and the Middle East. Russia is still sending rockets to the International Space Station and is arguably the closest of the BRICS to Europe. India is starting to move its weight in South East Asia and has belatedly broken free from its comfortable domestic engine room to engage with African nations and make its nuclear-backed voice heard. South Africa is aiming to make the continent it foots its own, at first through diplomacy (President Jacob Zuma recently met Colonel Gaddafi for talks), and later by possibly challenging China industrially.

There are many sticking points. China and India have a disputed border and Beijing is cross that Delhi lets the Dalai Lama use India as his base-in-exile. Diplomatically, Brazil and South Africa are making an impact on the world stage, while quietly letting China continue to invest in their ‘home’ regions. But while China powers on, Russia is stalling and South Africa relatively inexperienced as the baby of the club.

It is up to Brazil and India to move the BRICS on from a second-class talking-shop to the most important international alliance. An Argentine writing his doctorate on Argentina and Brazil’s economies recently told me that “Brazil is big, very big – too big in fact” and the same could be said for India. They are outgrowing their respective Latin American and sub-continental origins and it is time that they give China a rest from pace-setting. They are certainly all building themselves up quickly and strongly and the West ignores them at its peril.

Getting rough in the South China Sea

Tensions are rising across the region and politicians must keep their heads

On Saturday 30 April seven Thai soldiers were killed in a double bombing by suspected rebels. A day later insurgents shot dead two Buddhists in a drive-by in the southern region of Yala. In total, more than 4,500 people have died in the last seven years in the south of Thailand, as suspected Malay Muslim militants fight for greater autonomy. It is a number that has gone unnoticed across much of the world, in a region quietly infamous for violent but sporadic insurgency and politico-religious strains. Also calling for more devolution are Vietnam’s Hmong ethnic minority, from a mostly Christian area up in the far north-west of the country and very close to the border with Laos. A recent protest was fiercely quashed by soldiers.

Another worrying situation that has been brewing for decades between Thailand and Cambodia had its most recent twist in the story at a summit of the Association of Southeast Asian Nations (ASEAN) on Sunday 8 May. The area up for debate was the Preah Vihear temple which stands in the Dangrek mountain range that straddles the Thai-Cambodia border. In 1954, Thai troops stormed the temple but withdrew eight years later. The ancient Hindu complex then fell into the hands of the Khmer Rouge in the 1970s. And this year forces from both sides have exchanged fire, with reports suggesting that two Thai soldiers died in the incidents.

An unhelpful sideshow to the event is the fact that Thaksin Shinawatra, the former Thai prime minister who is wanted back in Bangkok on corruption charges, has been appointed as an economic adviser to the Cambodian government. Because of their reluctance to tell member-states how to run domestic affairs, the ASEAN leaders failed to come to an agreement on what to do about the temple issue. This is not surprising, however, seeing as the matter has been simmering away since France left as colonial power at the turn of the last century.

There are some positives. The ASEAN hopes to form a single economic community by 2015 and already has lots of free trade agreements in place. Indonesia is growing in stature and is taking up the role of the region’s mover and shaker on the world stage. Late last year Burma held its first national elections for 20 years.

But the Philippines is wobbling: corruption is rife and political assassinations continue. Malaysia has to take the lead on the other Indo-China nations’ religious shoot-outs. A regional stand-off would heavily affect the commercial arrangements the ASEAN has fought hard to secure. India and China stand quietly in the background and the region must be careful not to split along superpower allegiance lines. But for now, the tourists still have faith in the Thai beaches and the Indonesian surf and they must not be dissuaded from visiting the temples in the mountains as well.

Rumblings of Delhi belly

Thousands marching in cities across the country. Politicians vilified. Demands for change. While the media spotlight has been on Egypt, the public have also been on the move in India.

The clamour has been over the increasing corruption that the nation fears is infecting their politicians and business leaders. Nepotism, embezzlement and abuse of powers are all charges that have been levelled at the political class. Manmohan Singh, the prime minister, has stood firm and said he will not ‘spare’ anyone found guilty of corruption.

In December, the opposition Bharatiya Janata Party-led coalition headed a huge anti-sleaze demonstration in the capital. However the latest protests were not party-specific and it seems that the public is tired of all political corruption.

India is at an interesting global intersection at the moment and must aim publicly to clean up politics to ensure the continued smooth running of the fast-developing country. In December it signed an historic arms trade deal with Russia, deepening the ties between the two BRIC countries. It is undergoing a census of its 1.2 billion citizens. Kashmir remains a sticking-point in the region but it can provide India with a platform for reformist and more open dialogue in the future, even though it will never accept secessionist plans.

The sub-continent is in a time of trial. Pakistan, despite the exciting news for adrenaline-loving snow enthusiasts that a ski resort has opened in the Swat Valley, is nearing boiling point. The war in Afghanistan is going on inside its borders, sectarian violence is increasing and as the pressure increasing on politicians, the risks become ever more deadly.

But the Indian government ought not to discard talks with Pakistan simply because of the violence and the historic entrenchment over the area. India can continue to grow politically and this would help it grow into its shoes as the second-biggest country in the world, a role it might be able to play in the years to come on all levels – not just in terms of population.