The China Backlash

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US President Donald Trump’s headline-grabbing trade war with China should not obscure a broader pushback against the country’s mercantilist trade, investment, and lending practices. In fact, China’s free ride could be coming to an end.

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BRAHMA CHELLANEY, a column internationally syndicated by Project Syndicate

On a recent official visit to China, Malaysian Prime Minister Mahathir Mohamad criticized his host country’s use of major infrastructure projects – and difficult-to-repay loans – to assert its influence over smaller countries. While Mahathir’s warnings in Beijing against “a new version of colonialism” stood out for their boldness, they reflect a broader pushback against China’s mercantilist trade, investment, and lending practices.

Since 2013, under the umbrella of its “Belt and Road Initiative,” China has been funding and implementing large infrastructure projects in countries around the world, in order to help align their interests with its own, gain a political foothold in strategic locations, and export its industrial surpluses. By keeping bidding on BRI projects closed and opaque, China often massively inflates their value, leaving countries struggling to repay their debts.

Once countries become ensnared in China’s debt traps, they can end up being forced into even worse deals to compensate their creditor for lack of repayment. Most notably, last December, Sri Lanka was compelled to transfer the Chinese-built strategic port of Hambantota to China on a 99-year, colonial-style lease, because it could longer afford its debt payments.

Sri Lanka’s experience was a wake-up call for other countries with outsize debts to China. Fearing that they, too, could lose strategic assets, they are now attempting to scrap, scale back, or renegotiate their deals. Mahathir, who previously cleared the way for Chinese investment in Malaysia, ended his trip to Beijing by canceling Chinese projects worth almost $23 billion.

Countries as diverse as Bangladesh, Hungary, and Tanzania have also canceled or scaled back BRI projects. Myanmar, hoping to secure needed infrastructure without becoming caught up in a Chinese debt trap, has used the threat of cancellation to negotiate a reduction in the cost of its planned Kyaukpyu port from $7.3 billion to $1.3 billion.

Even China’s closest partners are now wary of the BRI. In Pakistan, which has long worked with China to contain India and is the largest recipient of BRI financing, the new military-backed government has sought to review or renegotiate projects in response to a worsening debt crisis. In Cambodia, another leading recipient of Chinese loans, fears of effectively becoming a Chinese colony are on the rise.

The backlash against China can be seen elsewhere, too. The recent annual Pacific Islands Forum meeting was one of the most contentious in its history. Chinese policies in the region, together with the Chinese delegation leader’s behavior at the event itself, drove the president of Nauru – the world’s smallest republic, with just 11,000 inhabitants – to condemn China’s “arrogant” presence in the South Pacific. China cannot, he declared, “dictate things to us.”

When it comes to trade, US President Donald Trump’s escalating trade war with China is grabbing headlines, but Trump is far from alone in criticizing China. With policies ranging from export subsidies and nontariff barriers to intellectual-property piracy and tilting the domestic market in favor of Chinese companies, China represents, in the words of Harvard’s Graham Allison, the “most protectionist, mercantilist, and predatory major economy in the world.”

As the largest merchandise exporter in the world, China is many countries’ biggest trading partner. Beijing has leveraged this role by employing trade to punish those that refuse to toe its line, including by imposing import bans on specific products, halting strategic exports (such as rare-earth minerals), cutting off tourism from China, and encouraging domestic consumer boycotts or protests against foreign businesses.

The fact is that China has grown strong and rich by flouting international trade rules. But now its chickens are coming home to roost, with a growing number of countries imposing antidumping or punitive duties on Chinese goods. And as countries worry about China bending them to its will by luring them into debt traps, it is no longer smooth sailing for the BRI.

Beyond Trump’s tariffs, the European Union has filed a complaint with the World Trade Organization about China’s practices of forcing technology transfer as a condition of market access. China’s export subsidies and other trade-distorting practices are set to encounter greater international resistance. Under WTO rules, countries may impose tariffs on subsidized goods from overseas that harm domestic industries.

Now, Chinese President Xi Jinping finds himself not only defending the BRI, his signature foreign-policy initiative, but also confronting domestic criticism, however muted, for flaunting China’s global ambitions and thereby inviting a US-led international backlash. Xi has discarded one of former Chinese strongman Deng Xiaoping’s most famous dicta: “Hide your strength, bide your time.” Instead, Xi has chosen to pursue an unabashedly aggressive strategy that has many asking whether China is emerging as a new kind of imperialist power.

International trade has afforded China enormous benefits, enabling the country to become the world’s second-largest economy, while lifting hundreds of millions of people out of poverty. The country cannot afford to lose those benefits to an international backlash against its unfair trade and investment practices.

China’s reliance on large trade surpluses and foreign-exchange reserves to fund the expansion of its global footprint makes it all the more vulnerable to the current pushback. In fact, even if China shifts its strategy and adheres to international rules, its trade surplus and foreign-currency reserves will be affected. In short, whichever path it chooses, China’s free ride could be coming to an end.

© Project Syndicate, 2018.

Beijing loses a battle in the Maldives — but the fight for influence goes on

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China may be down in the Maldives, but it’s not out

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India must challenge China to help the Maldives retain strategic autonomy. (Source photo by Reuters)

Brahma Chellaney, Nikkei Asian Review

The Indian Ocean nation of the Maldives, comprising 1,190 coral atolls, has been roiled by a deepening national crisis since its first democratically-elected president was forced to resign at gunpoint in 2012.

This week’s surprise defeat of authoritarian President Abdulla Yameen in a national election opens the path to stability and reconciliation under the leadership of the winning opposition candidate Ibrahim Mohamed Solih.

Yameen’s defeat, despite the jailing of opponents and Supreme Court justices and efforts to manipulate the election, shows how autocrats can be swept out of office by a voters’ backlash. And that even in a country with weak democratic traditions.

The Maldives follows Malaysia, where, in May, Prime Minister Najib Razak was voted out and now faces corruption charges under his 93-year-old successor, Mahathir Mohamad. Sri Lanka’s voters in 2015 similarly ended the quasi-dictatorship of President Mahinda Rajapaksa, who curtailed media freedom.

In all three states, China’s shadow loomed large. Yameen signed major financing and investment deals with China and, like Najib and Rajapaksa, is alleged by his opponents to have received Chinese funds for his reelection bid.

While Malaysian investigators are probing whether China helped bankroll Najib’s reelection bid, The New York Times reported in June that the state-run China Harbor Engineering Company allegedly gave $7.6 million for Rajapaksa’s campaign. Rajapaksa and CHEC have denied the claim, but new president Maithripala Sirisena’s government has called for an investigation.

China, Yameen’s main defender, capitalized on its support to expand its influence in the strategic Maldivian archipelago. Yameen, for his part, felt emboldened by Chinese support to crack down on the opposition and undermine national institutions, including the judiciary and the election commission.

With barely 450,000 citizens, the Maldives is tiny but sits astride critical shipping lanes, making it vital to security in the Indian Ocean. Yameen’s rout thus is a setback to China’s maritime ambitions and political influence, and a victory for grass roots democratic forces.

At a time when Beijing is beginning to encounter a wider pushback against its Belt and Road Initiative — an influence-building infrastructure program that can ensnare vulnerable countries in debt traps — the Maldives represents the latest case of a democratic election upending China’s plans. BRI could face speed bumps even in China’s close ally, Pakistan, where the new, cash-strapped government has instituted a review of Chinese projects.

China, however, can take comfort from the formation of a friendly, democratically elected communist government in the Himalayan state of Nepal. In a demonstration of autocratic China’s ability to exploit the openness of a democracy, it helped unite warring communist factions in Nepal and funded their election campaign.

In the Maldives, pressure from democratic powers, including the specter of an Indian military intervention, played a role in the outcome. The U.S. had warned of “appropriate measures” and the European Union had threatened sanctions if the vote was not free and fair. And when Yameen hesitated to concede defeat, Washington demanded he “respect the will of the people,” while India sought to present a fait accompli by being first to congratulate his opponent, Solih. (In the previous election in 2013, Yameen got the Supreme Court to annul the result after he trailed his opponent, forcing fresh polls which he dubiously won.)

India has traditionally viewed the Maldives as in its sphere of influence. So as China began eroding Indian influence by backing Yameen from 2013, concern grew in New Delhi that Beijing could turn one of the unpopulated Maldivian islands it had leased into a naval base, completing a strategic encirclement of India.

Among the islands China has acquired is Feydhoo Finolhu, for which it paid $4 million, less than the cost of a luxury apartment in Hong Kong; another island, the 7km-long Kalhufahalufushi, came even cheaper. China has revealed its strategic intentions by sending frigates to the Maldives.

After Yameen in February declared a state of emergency and jailed Supreme Court justices for quashing convictions against nine jailed or exiled opposition figures, India came under pressure, including from the Maldivian opposition, to intervene militarily, as it did once before – in 1988 when it foiled an attempted coup. The Indian intervention helped President Maumoon Abdul Gayoom to perpetuate his soft autocracy for another two decades.

An intervention this year, however, would have been dicey, not least because no legitimate authority had invited India to send in forces. The intervention could have provoked a nationalistic backlash and strengthened Islamist forces in the Maldives, which has supplied the world’s highest per capita number of foreign fighters to terrorist groups in Syria and Iraq. By correctly erring on the side of caution, India aided this week’s electoral outcome.

The restoration of full democracy in the Maldives, like in Malaysia, bucks an international trend: The global spread of democracy has largely stalled, with liberal forces unable to gain ground in the face of both tightly centralized political systems (as in China) and a revival of authoritarianism (as in Russia). While democracy has become the norm in large parts of Europe, very few Asian states are true democracies.

The return of democracy to the Maldives is especially remarkable as the country has been under authoritarianism for 50 of the 53 years since gaining independence from Britain in 1965. Yameen’s five-year rule marked a shift to hard authoritarianism, with that lurch being accompanied by the rising power of Islamists.

In the latest election, Yameen chose as his running mate a Muslim preacher with close ties to Saudi groups and got support from Jamiyyath Salaf. This extremist organization was one of the Islamist groups behind the 2012 museum attack that erased evidence of the country’s pre-Islamic past by destroying priceless Buddhist and Hindu statues.

The triumph of democratic forces, however, cannot mask the tough challenges that await Yameen’s successor, Solih, including on how to deal with Islamist power and service Chinese debt (which currently equals more than a quarter of the country’s gross domestic product). One key question is whether the Maldives will be able to pull back from the brink of a Chinese debt trap (by emulating the example set by Mahathir, who has canceled Chinese projects) or whether it is so indebted – as Sri Lanka is — that it will remain under Beijing’s sway.

China invested heavily in Sri Lanka during the rule of Rajapaksa, whom it shielded at the United Nations from allegations of war crimes. Sirisena sought to extricate Sri Lanka from the Chinese debt trap, including suspending work on major projects. But it was too late: Saddled with debts his government could not repay, Sirisena was forced to accept Chinese demands, including restarting suspended projects and handing the strategic Hambantota port to China on a 99-year lease.

Under Solih, even without new contracts, the Maldives’ debt to China will rise because of the Chinese projects already initiated. Beijing will court Solih — to be sworn in on Nov. 17 — just as it has wooed Sirisena, who has disclosed that China has “gifted” him $300 million “for any project of my wish,” besides constructing South Asia’s largest kidney hospital in his home district.

To reclaim its influence in the Maldives, India will have to do more than help strengthen the restored democracy; it must assist the new government in infrastructure development and meeting its foreign debt obligations, including by extending low-interest loans to pay off Chinese credits. Escaping debt entrapment is vital for the Maldives to retain strategic autonomy.

Brahma Chellaney is a geostrategist and the author, most recently, of the award-winning “Water, Peace, and War.”

© Nikkei Asian Review, 2018.

India fumbles against a rogue neighbour

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Brahma Chellaney, Mail Today

pakistani-flag-reuetrsPakistan has turned into the Mecca of international terrorism even as its new prime minister, Imran “Taliban” Khan, has promised to make his country a Medina-like welfare state. Pakistan, however, is battling a deepening financial crisis, largely exacerbated by its “all-weather” ally, China. Beijing has imposed unfair deals on, and stepped up capital-goods exports to, Pakistan under its so-called Belt and Road Initiative.

The military-manipulated election that brought Khan to power, instead of providing much-needed stability to Pakistan, is likely to inject more turmoil. A supporter of the military-backed jihadists and a religious zealot himself, Khan in February married his burqa-clad “spiritual guide”, who now also serves as his political guide.

The Pakistani military has waged an undeclared war against India since the 1980s. But now that an internationally isolated Pakistan, with its economy in dire straits, is seeking an international bailout package, the military generals there, for tactical reasons, want “peace” talks with India while remaining engaged in aggression. Through such talks, they also wish to legitimize the government they helped to install.

Yet this is exactly what Prime Minister Narendra Modi risked doing by initially agreeing to a bilateral foreign ministers’ meeting. The meeting, on the sidelines of the UN general assembly, would have represented the first high-level contact between India and Pakistan since early 2016, when talks were suspended after the Pakistan-scripted terrorist attack on the Pathankot air force base. Despite frequent terrorist outrages, such a meeting would have signalled a thaw in Indo-Pakistan relations. Fortunately, the Modi government had the good sense to reverse its decision.

It should not be forgotten that another BJP prime minister, Atal Bihari Vajpayee, legitimized General Pervez Musharraf’s military rule by inviting him out of the blue to a summit in Agra. That summit went badly, but Musharraf came out the clear winner.

The Modi government initially agreed to the foreign ministers’ meeting just after the Pakistani army killed an Indian soldier by sniper fire and then slit his throat and mutilated his body. In fact, such was the bad optics that India was playing a cricket match with Pakistan in Dubai on the day the Pakistani savagery was first reported. Worse still, the timing of the Indian announcement to hold the meeting sent out an unfortunate message — that India, instead of being outraged over the mutilation, was rewarding Pakistan with bilateral discussions. That message was reinforced in the immediate aftermath by the abduction and killing of three cops in Jammu and Kashmir by Pakistan-backed terrorists.

To its credit, the Modi government took barely 24 hours to correct its mistake and scrap the foreign ministers’ meeting. Strong reaction on social media played a role in the quick reversal. But it is apparent that the original decision in favour of the meeting was taken without careful thought. There was no consideration of the fact that such talks would not only be futile but also amount to India playing into Pakistan’s hands.

Indeed, no sooner had India reversed its decision than Imran Khan sought to mock Modi by referring to “small men holding big offices” — a statement that effectively closes the door to any senior-level bilateral talks in the coming months. That reference might more aptly apply to Khan himself. After all, Khan (the Pakistani military’s newest puppet) has long been ridiculed as “Im the Dim” for his lack of intelligence.

Still, the fact is that incompetent officials in New Delhi have seriously embarrassed India through their flip-flop and provided new grist to the Pakistani propaganda mill. For example, the ministry of external affairs cited Pakistan’s glorification of terrorists through new postage stamps as one of the provocations for the Indian U-turn, although these stamps were released before Khan took office.

It is an open secret that Washington has sought to persuade New Delhi to engage with Islamabad. America has stepped up its effort to end its longest-ever war by clinching a peace deal with the Afghan Taliban, for which it needs the Pakistani military’s help. India, in its first bilateral engagement with the Imran Khan government, convened a meeting of the Permanent Indus Commission in Lahore at the end of last month, although the meeting was not due until March 2019. The Commission’s meeting, however, attracted little attention in India.

The Modi government’s meandering Pakistan policy is also apparent from another volte-face: It hastily permitted and then, after Khan’s mocking statement, postponed a tour of inspection of new Indian projects on River Chenab by Pakistan’s Indus commissioner and two other officials. In September 2016, Modi had vowed that, “Blood and water cannot flow together”. But two years later, instead of action, visible backsliding is evident. The Indus Waters Treaty remains the world’s most generous water-sharing pact. India, however, remains reluctant to leverage this treaty to tame a scofflaw neighbour.

Successive Indian governments have failed to develop a clear strategy to deal with Pakistan. The Modi government has finally realized what was well known — that “Pakistan will not mend its ways”. It’s better late than never. It has also acknowledged that talks with Pakistan would be “meaningless”, given “the evil agenda of Pakistan” and the “true face” of the Imran Khan government. Can we now hope that India would develop consistency, clarity and courage in its Pakistan policy and fashion a coherent strategy to contain a rogue neighbour?

Brahma Chellaney is a geostrategist and author.

China expands its control in South China Sea

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Filipino activists rally outside the Chinese Consulate in Manila in February to protest Beijing’s continued reclamation activities in the South China Sea. © Reuters

BY BRAHMA CHELLANEY, The Japan Times, September 18, 2018

As China consolidates its hold in South China Sea and wields its military, economic and diplomatic leverage, smaller countries see no credible option but to work with Beijing, even if that means furthering Chinese objectives. Manila, for example, seems willing to accede to Beijing’s demand for joint development of hydrocarbon resources in the Philippines’ own exclusive economic zone.

The plain fact is that U.S. inaction under successive administrations has allowed China to gain effective control over a strategic sea that is more than twice the size of the Gulf of Mexico and 50 percent bigger than the Mediterranean Sea. Australia’s Kevin Rudd, who is still fending off accusations that he was “a slavish pro-China prime minister,” has acknowledged that “Chinese policy has not yet been challenged in the South China Sea by the United States to any significant extent.”

The U.S., even at the risk of fostering Philippine helplessness against Chinese expansionism, has refused to clarify whether its 1951 Mutual Defense Treaty with Manila would apply to an attack on Philippine troops or vessels in the South China Sea. This refusal stands in contrast to Washington’s commitment to the defense of the Japanese-administered but Chinese-claimed Senkaku Islands in the East China Sea. U.S. President Donald Trump, in his joint statement with Prime Minister Shinzo Abe in April, said that “Article 5 of the U.S.-Japan Treaty of Mutual Cooperation and Security covers the Senkaku Islands.”

In the South China Sea, China has astounded the world with the speed and scale of its creation of artificial islands and military infrastructure. The first Chinese dredger arrived in the region in December 2013. Less than five years later, China has largely completed building most of its forward military bases. It is now ramping up its military assets in the South China Sea.

Yet China has incurred no international costs for pushing its borders far out into international waters. In fact, China stepped up the expansion of its frontiers after an international arbitration tribunal invalidated its expansive claims in the South China Sea through a 2016 ruling in a case instituted by the Philippines.

U.S. Defense Secretary Jim Mattis recently called out China for its “intimidation and coercion” of smaller nations in the region. His criticism of the Chinese strategy in the South China Sea followed American action to disinvite China from this summer’s Rim of the Pacific maritime exercise, known as RIMPAC.

This might suggest that the U.S. is taking a tough line. In reality, America’s response to China’s expansionism in the South China Sea has remained muted. The U.S. has focused its concern merely on safeguarding freedom of navigation through the South China Sea.

In fact, the U.S. has refused to take sides in the territorial disputes between China and the other claimant-states in the South China Sea. The Trump administration stayed silent even when Chinese military threats forced Vietnam in March, for the second time in less than nine months, to halt oil and gas drilling on its own continental shelf.

The U.S. has similarly stayed neutral on disputes elsewhere between China and its neighbors. For example, President Barack Obama publicly said that “we don’t take a position on the sovereignty of the Senkaku Islands” and advised Tokyo and Beijing to sort out their dispute peacefully. This line has not changed under Trump, despite his reassurance that the Japan-U.S. security treaty covers the Senkakus.

Growing Asian anxieties over China have helped the U.S. to return to Asia’s center-stage by strengthening old alliances, such as with Japan, South Korea and Singapore, and building new strategic partnerships with India, Vietnam and Indonesia. It has also befriended the former pariah state of Myanmar.

Yet, despite this diplomatic windfall, the U.S. has been reluctant to draw a line on Beijing’s salami-style actions to change facts on the ground.

To be sure, the Trump-led U.S. has stepped up the so-called freedom of navigation operations in the South China Sea. But these operations neither reassure the smaller states nor deter China, whose actions continue to violate the United Nations Convention on the Law of the Sea, or UNCLOS.

In the East China Sea, China established an air-defense identification zone (ADIZ) in 2013 covering territories, like the Senkakus, that it claims but does not control. This action set a dangerous precedent in international relations.

In the South China Sea, rather than openly declare an ADIZ, China will likely seek to enforce one by gradually establishing concentric circles of air control — but only after it has deployed sufficient military assets there and further consolidated its hold.

It has already set up an interconnected array of radar, electronic-attack facilities, missile batteries and airfields on the disputed Spratly Islands. And by turning artificial islands into military bases, it has virtually established permanent aircraft carriers whose role extends to the Indian Ocean and the western Pacific.

China’s strategy poses a serious challenge to its neighbors, which face a deepening dilemma over how to deal with its creeping aggression.

The U.S., while seeking to protect its military freedom of navigation in the South China Sea, has effectively turned a blind eye to the broader Chinese assault on the freedom of the seas, including restricting the rights of other states to natural resources on their own continental shelves.

Unless the U.S. shifts its focus from freedom of navigation to freedom of the seas, China will have its way, including forcing its smaller neighbors to share their legitimate resources with it.

The Philippines, for example, is at serious risk of wilting under Chinese pressure. Prevented by Chinese military threats from tapping energy resources in an area of seabed known as Reed Bank, which is located close the Philippine coast, Manila seems willing to enter into a deal with Beijing to equally share the output from a joint gas project there.

Under the international arbitration ruling, the Philippines have exclusive rights to Reed Bank. But with China trashing the ruling in the absence of an international enforcement mechanism, the message to Manila is that might makes right.

Left with no other option, Manila appears ready to offer Beijing half of the gas production, but no sovereign rights. The logic behind such a prospective offer is that any Western oil giant, if it developed Reed Bank, would take about 50 percent of the output as its share. So the choice is between a Western oil company like Exxon Mobil and a Chinese state-run giant, such as the China National Offshore Oil Corp.

But such a Philippine deal would encourage China to seek similar concessions with other claimant-states, effectively blocking out Western oil firms from the South China Sea.

Make no mistake: Chinese territorial and maritime revisionism has made the South China Sea the world’s most critical hot spot. In fact, the South China Sea has become central to the wider geopolitics, balance of power and maritime order.

Brahma Chellaney is a geostrategist and the author of nine books, including the award-winning “Water: Asia’s New Battleground.”

© The Japan Times, 2018.

India’s Indus leverage

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India must assert its full rights under the Indus Waters Treaty to leverage the pact and halt Pakistan’s undeclared war against it through terrorist proxies.

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Brahma Chellaney, The Hindustan Times

In foreign policy, it is important for national leadership to choose its rhetoric carefully and back its words with at least modest action. Words not backed by any action can undermine a country’s credibility and perhaps even its deterrence.

When Prime Minister Narendra Modi raised the Balochistan issue in his Independence Day speech in 2016, he seemed to signal an important Indian policy shift. At least that is how his reference to Balochistan was widely interpreted. But since then, India has been totally silent on the issue, although Balochistan — Pakistan’s Achilles heel — threatens to become the new East Pakistan because of military killings and mass graves. India has even denied visas to some exiled Baloch activists.

Take another key issue: the Indus Waters Treaty (IWT). In 1960, in the naïve hope that water largesse would yield peace, India gifted the bulk of the Indus system’s waters — and the largest three of its six rivers — to Pakistan under the IWT. The Indus treaty remains a colossus on the world stage: It is by far the world’s most generous water pact, both in terms of the downstream country’s share of the waters (80.52%) and the aggregate volume of average yearly flows reserved for it (167.2 billion cubic metres). Still, an ungrateful Pakistan has waged covert or overt aggression almost continuously and is now using the IWT itself as a stick to beat India with, including by contriving water disputes and internationalizing them as part of a “water war” strategy.

Against this background, Modi raised the hope that India would finally revisit the IWT, by seizing on the Pakistan Senate’s unanimous March 2016 resolution calling for the treaty’s re-evaluation. Indeed, while chairing a September 2016 internal meeting on the IWT, Modi warned that, “Blood and water cannot flow together”. Setting in motion the treaty’s reappraisal, an inter-ministerial committee of secretaries was established, and officials said that India would now assert all its rights under the IWT, including fully utilizing its share of the allotted waters and expediting its long-delayed hydropower projects.

But two years later, India, alas, appears to have returned to the former state of affairs. The committee of secretaries, headed by the PM’s principal secretary, has fallen by the wayside. Apart from completing the small, 330-megawatt Kishenganga project after 11 years, India has shown little urgency on Indus Basin water projects. Even as Punjab and other states bitterly feud over water, India’s failure to adequately harness the resources of the three smaller rivers reserved for it results in Pakistan receiving substantial bonus waters. Just these extra outflows to Pakistan are many times greater yearly than the total volumes under the Israeli-Jordanian water arrangement.

India’s zigzag policy is most apparent from the recent meeting of the Permanent Indus Commission (PIC). The IWT calls for the PIC to meet at least once a year. The previous PIC meeting, like the one before it, was convened after almost 12 months — on March 29-30 this year. The next meeting was not due until 2019, yet India held a fresh PIC meeting just five months later.

The recent August 29-30 meeting, held in Lahore, marked the first bilateral engagement since the new military-backed Imran Khan government took office in Pakistan. With Pakistan’s international isolation deepening and its economy in dire straits, the military there is tactically seeking “peace” talks with India while still employing terrorists in a proxy war. Through such talks, it also hopes to legitimize the government it helped install through a manipulated election. But with India’s own elections approaching, talks with Pakistan will be politically risky for the ruling BJP.

The PIC discussions — and a prospective foreign ministers’ meeting in New York — illustrate how Modi’s government is seeking to engage Islamabad in other ways. In fact, India has given permission to Pakistan’s Indus commissioner and two other officials to shortly begin a tour of inspection of Indian projects in Jammu and Kashmir and elsewhere. In the past, such a tour has been used to collect new information so as to mount objections to Indian projects. In keeping with its broader strategy to foment discontent and violence in J&K, Pakistan seeks to deny J&K people the limited water benefits permissible under the IWT.

While the US has dumped international pacts at will (from the Anti-Ballistic Missile Treaty to the Kyoto and Paris accords), India still clings to the world’s most-lopsided water treaty, adhering to its finer details, even as Pakistan refuses to honour the terms of the central treaty governing bilateral relations — the 1972 Simla peace pact. Pakistan also flouts its commitment to prevent its territory from being used for cross-border terrorism. The Indus may be Pakistan’s jugular vein, yet a visionless and water-stressed India has let the IWT hang from its neck like the proverbial albatross. Make no mistake: Only by asserting its Indus leverage can India hope to end Pakistan’s unconventional war.

Brahma Chellaney is a geostrategist and author.

© The Hindustan Times, 2018.

Nepal’s communist challenge to India

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Communist-ruled Nepal’s troubling tilt toward China — as exemplified by latest developments — is a reminder of the costs India is incurring for its blunder in engineering the ouster of Nepal’s constitutional monarchy and inadvertently paving the path to communist domination.

Brahma Chellaney, DailyO

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Nepal is a state symbiotically tied to India. Yet today it has an openly pro-China communist government that is hostile to India. The number of communist-ruled countries in the world increased by one to six earlier this year when landlocked Nepal joined China, Cuba, Laos, North Korea and Vietnam.

Despite Prime Minister Narendra Modi’s efforts to woo him, Nepal’s new prime minister, Khadga Prasad Oli, persists with his troubling tilt toward China.

Consider the latest two reminders of Oli’s approach: His government has pulled out of the first ever anti-terror military exercises being held from September 10 in Pune under the auspices of the grouping known as the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation, or BIMSTEC; and it has implemented a transit transport agreement with China mainly to undercut India’s leverage.

Nepal, a member of BIMSTEC along with India, Thailand, Myanmar, Bangladesh, Bhutan and Sri Lanka, had initially agreed to send a platoon-size army contingent to participate in the “Milex 2018” exercises, which were mentioned by Modi in his address to the recent BIMSTEC summit in Kathmandu. Nepal also had agreed to send its army chief, General Purna Chandra Thapa, to the Milex 2018 closing ceremony.

But it reversed its decisions after a backlash from the increasingly powerful pro-China lobby, largely represented by the ruling Nepal Communist Party (NCP). Instead, in a symbolic gesture, Nepal has sent three observers to the week-long exercises.

The Oli government, in effect, delivered a diplomatic snub to India. This is reinforced by the fact that Nepal, while shunning participation in Milex 2018, is joining China in military exercises also focused on counter-terror operations. The China-sponsored September 17-28 exercises will commence in Chengdu (capital of Sichuan province) a day after the Pune drill concludes.

The BIMSTEC summit represented Modi’s fourth visit to Nepal in four years. No other Indian prime minister has lavished such attention on Nepal. In fact, Modi was the first Indian PM to visit Nepal in 17 years.

But no sooner had Modi returned home from his latest Nepal visit than Oli’s government signed a protocol implementing the Nepal-China Transit Transport Agreement (TTA). Under the TTA, Nepal can trade with third countries through China’s Shenzen, Lianyungang, Zhanjiang and Tianjin seaports. It will also have access to the Shigatse, Lhasa and Lanzhou land ports.

The TTA looks good only on paper. Nepal’s dependency on Indian ports arises from geography. While Kolkata is 933 kilometres away, the nearest Chinese seaport for Nepal is at a distance of 3,300 kilometres.

In implementing the TTA, Nepal is not seeking to replace India with China for transit transport. Rather, the intent of the Oli government is to try and blunt India’s natural-geographic advantage and undermine its transit clout. Through this accord, it hopes to preclude another crippling Indo-Nepalese border blockade by Nepal’s Indian-supported Madhesi (plains people) activists.

In May this year, after Nepal’s communist government took office, Modi paid an official visit to that Himalayan nation. In contrast to China’s efforts to muscle its way into Nepal, Modi’s well-received visit sought to emphasize India’s historically close cultural, religious and people-to-people relations with that nation.

From starting his visit at Janakpur — where, according to the Ramayana, Lord Rama wed Sita — to offering prayers at Kathmandu’s Pashupatinath Temple (the oldest and holiest Shiva temple in Nepal) and at the iconic Muktinath Temple (sacred to both Hindus and Buddhists), Modi sought to project India’s soft power to counter China’s hard power. The launch of an Indo-Nepal bus service from Janakpur (Sita’s hometown) to Ayodhya (her abode after marriage) underscored the historically strong cultural ties between the two countries.

But just five days after Modi returned home, a new unified communist party, the Nepal Communist Party (NCP), was launched with China’s support through the merger of Oli’s Marxist-Leninist Party and the Maoist group. The merger of the two main communist groups into one party came about three months after they jointly came to power. Beijing first midwifed the birth of the unified communist party and then applauded the development, saying that, “China supports the country in choosing the social system and development path that suits its national realities”.

In fact, the peaceful victory of the Nepali communists has helped to obscure their violent past. Oli spent years in jail in the 1970s and 1980s, as a communist guerrilla, for waging war against the state. Nepal’s establishment of multiparty democracy within the framework of a constitutional monarchy in 1990 opened up political space for Maoists and Oli’s party. The Maoists launched a bloody insurrection in 1996 with the aim of overthrowing the monarchy through a “people’s revolution”.

A decade later, India brokered a peace accord that ended the protracted war between Maoists and government forces in Nepal. But to meet the Maoists’ main demand, Indian Prime Minister Manmohan Singh’s government — dependent on the support of communists who had links with the Nepali communists — engineered the abolition of the constitutional monarchy.

This blunder, which paved the way for the communists to eventually gain political ascendancy, will continue to impose serious costs on India for years to come. The Nepali Maoists secured the monarchy’s overthrow not through their violent “revolution” but with the direct help of their supposed ideological foe, India, which to this day remains haunted, paradoxically, by its own Maoist scourge.

India helped turn Nepal from a Hindu kingdom to a communist-ruled, China-leaning state, seriously undercutting its own traditional influence there.

Today, with the new unified communist party dominating all state institutions, Beijing is actively working to bring Nepal within its orbit. In fact, before Nepal’s elections, Beijing reportedly persuaded the divided communists to form a coalition and helped fund their campaign.

Most communist parties, including the Chinese Communist Party, gained power by violent means. Of the six communist-ruled countries currently in the world, Nepal boasts the only democratically elected communist government.

Yet the key question is whether Nepal’s communist government will sustain democracy or gradually smother democracy. Will it follow the example of Czechoslovakia, which came under communist sway following national elections in 1946? By 1948, the Czechoslovak communists gained full control of the government and set out to stifle democracy.

Nepal’s PM, dubbed “Oily Oli” by his critics, has already started undermining the independence of his country’s institutions and stacking them with his own loyalists. The communists have almost two-thirds majority in Parliament and governments in six of the country’s seven provinces. Card-holding communists now hold all the constitutional and other key positions, with efforts under way to emasculate institutions — from the judiciary to the election commission.

If this assault continues, Nepal will be emulating the trajectory of how Czechoslovakia became a single-party state. In fact, a weak opposition, a pliant judiciary and an overbearing executive are already creating conditions in Nepal for creeping authoritarianism to set in.

Nepal’s internal developments directly impinge on Indian security. India and Nepal, after all, share one of the world’s most-open borders that permits passport-free passage. China’s increasing penetration of Nepal also carries major implications for India’s security.

India must end its kid-glove treatment of the communists in power in Nepal and consider them as a force inimical to its interests. New Delhi must disabuse the Nepali communists of their notion that they can sustain their hostility toward India without incurring any costs.

Brahma Chellaney is a geostrategist and the author of nine books, including the award-winning “Water: Asia’s New Battleground.”

A shadow over the ‘two-plus-two’ meeting

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Brahma Chellaney, The Hindustan Times, September 4, 2018

The US has emerged as India’s most important partner. The inaugural India-US “two-plus-two” ministerial dialogue will help highlight the growing convergence of their interests in the Indo-Pacific region. However, in India’s neighbourhood, Washington and New Delhi are still not on the same page.

For example, after gratuitously assassinating the third consecutive chief of the Pakistani Taliban this summer to please Pakistan’s military generals, the US held face-to-face talks with the Pakistan-backed Afghan Taliban in Qatar. While the Pakistani Taliban is the Pakistan military’s nemesis, the Afghan Taliban is America’s main battlefield foe in Afghanistan, yet the group is still missing from the US list of foreign terrorist organizations.

More broadly, the US and India have become key partners in seeking to create a free, open and democratic-led Indo-Pacific. The critical missing link in this strategy, however, is the South China Sea, which connects the Indian and Pacific oceans. US reluctance to impose tangible costs on China’s continued expansionism in the South China Sea has emboldened Chinese inroads in the Indian Ocean.

One issue likely to figure prominently in the two-plus-two meeting is how India has emerged as a prime victim of two new sets of US economic sanctions — on Iran and on Russia. The new sanctions directly impinge on India, a longstanding significant buyer of Russian weapons and the second-largest importer of Iranian oil after China.

The twin US pressures on energy and defence fronts have made India acutely aware of the risks of aligning itself closer with Washington. After ensnaring India in its Iran and Russia sanctions, Washington has sought to save the promising Indo-US strategic partnership by throwing in concessions. In reality, the concessions are intended as tools of leverage.

For example, the Pentagon’s top Asia official, characterizing Indian media reports as “misleading”, has made it clear that India can expect no waiver from Russia-related sanctions if it signs major new defence deals with Moscow. The congressional waiver crimps India’s leeway with its stringent conditions, including a six-monthly presidential certification specifying the other side’s active steps to cut its inventory of Russian military hardware.

On the Iran-related sanctions, no waiver for India is still in sight. With global shipping operators already pulling back from Iran business and oil prices rising, India’s energy-import bill is increasing. US sanctions threaten to affect even India’s Pakistan-bypassing transportation corridor to Afghanistan via Iran, including the Chabahar port project.

The Trump administration is clearly seeking to influence India’s arms-procurement and energy-import policies. This is in keeping with its increasing unilateralism, including dictating terms to allies and friends. Canada, for example, has been warned to accept US’s terms or face exclusion from the new NAFTA. Japan is buying a $2.1 billion US missile-defence system, not because it can effectively protect it from missile attacks, but because of US pressure to buy more American military hardware.

Washington is similarly pressuring New Delhi to buy more American weapons, although the US has already emerged as the largest arms seller to India. But, while the US basically sells defensive military systems, Russia has armed India with offensive weapons, including a nuclear-powered submarine and an aircraft carrier. Washington is also seeking to sell more oil and gas to India, besides pressing it to switch imports from Iran to Saudi Arabia and other US allies. However, next-door Iran, offering discounted pricing, will remain critical to India’s energy- diversification strategy.

Meanwhile, the US — after its success in getting India to accept a logistics assistance pact, which includes access to designated Indian military sites — has pushed for India to endorse the Communications Compatibility and Security Agreement (COMCASA), which the Indian armed forces initially feared could compromise their network. India, instead of leveraging its ties with Washington, appears set to announce at least an in-principle agreement on a modified COMCASA during the two-plus-two meeting, if not sign it.

Why is it that, in the run-up to any important summit or high-level meeting, India agrees to make a key concession to the other side? And why is that the other side doesn’t feel similarly pressured to make a concession to India? Isn’t reciprocity the first principle of diplomacy? Before finalizing COMCASA, India should clinch some major defence deals with Russia, including for the S-400 system, so as to test the US response. Instead, it is concluding new defence deals with the US.

The US and India will remain close friends. Washington, however, must fully address Indian concerns over the extraterritorial effects of its new Iran and Russia sanctions. Make no mistake: Washington has introduced a major irritant in the bilateral relationship that the twice-postponed two-plus-two dialogue cannot purge.

Brahma Chellaney is a geostrategist and author.

© The Hindustan Times, 2018.

A Global Environmental Threat Made in China

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From large-scale dam-building to unbridled resource-exploitation, human activity is causing serious damage to Himalayan ecosystems. While all the countries in the region are culpable to some extent, none is doing as much harm as China.

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BRAHMA CHELLANEY, a column internationally syndicated by Project Syndicate

Asia’s future is inextricably tied to the Himalayas, the world’s tallest mountain range and the source of the water-stressed continent’s major river systems. Yet reckless national projects are straining the region’s fragile ecosystems, resulting in a mounting security threat that extends beyond Asia.

With elevations rising dramatically from less than 500 meters (1,640 feet) to over 8,000 meters, the Himalayas are home to ecosystems ranging from high-altitude alluvial grasslands and subtropical broadleaf forests to conifer forests and alpine meadows. Stretching from Myanmar to the Hindu-Kush watershed of Central Asia, the Himalayas play a central role in driving Asia’s hydrological cycle and weather and climate patterns, including triggering the annual summer monsoons. Its 18,000 high-altitude glaciers store massive amounts of freshwater and serve in winter as the world’s second-largest heat sink after Antarctica, thus helping to moderate the global climate. In summer, however, the Himalayas turn into a heat source that draws the monsoonal currents from the oceans into the Asian hinterland.

The Himalayas are now subject to accelerated glacial thaw, climatic instability, and biodiversity loss. Five rivers originating on the Great Himalayan Massif – the Yangtze, the Indus, the Mekong, the Salween, and the Ganges – rank among the world’s ten most endangered rivers.

From large-scale dam construction to the unbridled exploitation of natural resources, human activity is clearly to blame for these potentially devastating changes to the Himalayan ecosystems. While all the countries in the region are culpable to some extent, none is doing as much harm as China.

Unconstrained by the kinds of grassroots activism seen in, say, democratic India, China has used massive, but often opaque, construction projects to bend nature to its will and trumpet its rise as a great power. This includes a globally unmatched inter-river and inter-basin water-transfer infrastructure with the capacity to move over ten billion cubic meters (13 billion cubic yards) through 16,000 kilometers (9,940 miles) of canals.

China’s reengineering of natural river flows through damming – one-fifth of the country’s rivers now have less water flowing through them each year than is diverted to reservoirs – has already degraded riparian ecosystems and caused 350 large lakes to disappear. With these water-diverting projects increasingly focused on international, rather than internal, rivers – in particular those in the Tibetan Plateau, which covers nearly three-quarters of the Himalayan glacier area – the environmental threat extends far beyond China’s borders.

And dams are just the beginning. The Tibetan Plateau is also the subject of Chinese geo-engineering experiments, which aim to induce rain in its arid north and northwest. (Rain in Tibet is concentrated in its Himalayan region.) Such activities threaten to suck moisture from other regions, potentially affecting Asia’s monsoons. Ominously, such experiments are an extension of the Chinese military’s weather-modification program.

Moreover, as if to substantiate the Chinese name for Tibet, Xizang(“Western Treasure Land”), China is draining mineral resources from this ecologically fragile but resource-rich plateau, without regard for the consequences. Already, copper mine tailings are polluting waters in a Himalayan region sacred to Tibetans, which they call Pemako (“Hidden Lotus Land”), where the world’s highest-altitude major river, the Brahmaputra (Yarlung Tsangpo to Tibetans), curves around the Himalayas before entering India.

Last fall, the once-pristine Siang – the Brahmaputra’s main artery – suddenly turned blackish gray as it entered India, potentially because of China’s upstream tunneling, mining, or damming activity. To be sure, the Chinese government claimed that an earthquake that struck southeastern Tibet in mid-November “might have led to the turbidity” in the river waters. But the water had become unfit for human consumption long before the quake.

In any case, China is not letting up. It has, for example, eagerly launched large-scale operations to mine precious minerals like gold and silver in a disputed area of the eastern Himalayas that it seized from India in a 1959 armed clash.

Meanwhile, China’s bottled-water industry – the world’s largest – is siphoning “premium drinking water” from the Himalayas’ already-stressed glaciers, particularly those in the eastern Himalayas, where accelerated melting of snow and ice fields is already conspicuous. Unsurprisingly, this is causing biodiversity loss and impairment of ecosystem services.

Across the Himalayas, scientists report large-scale deforestation, high rates of loss of genetic variability, and species extinction in the highlands. The Tibetan Plateau, for its part, is warming at almost three times the average global rate. This holds environmental implications that extend far beyond Asia.

The towering Himalayan Highlands, particularly Tibet, influence the Northern Hemisphere’s atmospheric-circulation system, which helps to transport warm air from the equator toward the poles, sustaining a variety of climate zones along the way. In other words, Himalayan ecosystem impairment will likely affect European and North American climatic patterns.

Halting rampant environmental degradation in the Himalayas is now urgent, and it is possible only through cooperation among all members of the Himalayan basin community, from the lower Mekong River region and China to the countries of southern Asia. To bring about such cooperation, however, the entire international community will have to apply pressure to rein in China’s reckless environmental impairment, which is by far the greatest source of risk.

Brahma Chellaney, Professor of Strategic Studies at the New Delhi-based Center for Policy Research and Fellow at the Robert Bosch Academy in Berlin, is the author of nine books, including Asian Juggernaut, Water: Asia’s New Battleground, and Water, Peace, and War: Confronting the Global Water Crisis.

© Project Syndicate, 2018.

Divided Asean spins its wheels as great powers become back-seat drivers

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Brahma Chellaney says recent multilateral discussions in Singapore did little to advance preventive diplomacy or conflict resolution.

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Brahma Chellaney, South China Morning Post

Despite its lack of cohesiveness and geopolitical heft, the 10-member Association of Southeast Asian Nations likes to be in the driver’s seat even on initiatives that extend beyond its region. But having placed itself at the wheel, Asean usually needs instructions from back-seat drivers on how to proceed and where to go.

One such example is the Asean Regional Forum, which provides a setting for annual ministerial discussions on peace and security issues across the Asia-Pacific. Established in 1994, it draws together 27 member-states, including key players such as the United States, China, India, Japan, Russia, Australia and the two Koreas.

The forum’s latest discussions were held this month along with three other meetings – the 18-nation East Asia Summit (whose membership extends from the US and New Zealand to India and Russia), the Asean Plus Three (China, Japan and South Korea) and Asean’s own annual ministerial discussions. These meetings, all at foreign minister level and held in rapid succession in Singapore, advertised the vaunted “centrality” of Asean, which represents a strategic region connecting the Pacific and Indian oceans.

But as Asean increasingly seeks to play an extra-regional role, its project to build a robust Southeast Asian community appears to have lost momentum. Indeed, its internal challenges are mounting.

The association has not been able to moderate great-power competition in its own region. Rival Chinese and US pressures on Asean have actually crimped its room to manoeuvre.

More fundamentally, the Asean-centred extra-regional initiatives, characterised by consensual decision making and minimal institutionalisation, serve mainly as “talk shops” for confidence building and improved cooperation. Like in Asean itself, the politics of lowest common denominator tends to prevail.

Consequently, these forums have not moved to preventive diplomacy or conflict resolution. They have also not been able to tangibly contribute to building a rules-based order or rein in aggressive unilateralism by their own members like China, the US and Russia.

Despite their limitations, the forums are seen by members as offering good value for promoting their foreign policy objectives and for making progress towards an Asia-Pacific security, political and economic architecture.

The latest spate of multilateral discussions in Singapore focused on issues ranging from North Korea’s denuclearisation – with US Secretary of State Mike Pompeo urging all states to “strictly enforce all sanctions” on Pyongyang – to the impending Regional Comprehensive Economic Partnership agreement, which would create the world’s largest trading bloc.

The discussions helped underscore the competing geopolitical interests at play. China, which views the US-led strategy for a “free and open Indo-Pacific” region as directed at it, mocked Pompeo’s separate announcements of US$113 million and US$300 million in funding for economic and security cooperation in the Indo-Pacific, respectively.

China’s state media compared these “paltry” US commitments with Beijing’s planned investment of US$900 billion in its “Belt and Road Initiative”, and Chinese Foreign Minister Wang Yi took a dig at Pompeo, saying: “The US is the sole superpower in today’s world, with a GDP totalling US$16 trillion. So when I first heard this figure of US$113 million I thought I heard wrong.”

The highlight of the Singapore meetings, however, was the announcement by China and Asean that they had agreed on a draft document that will serve as a basis for further negotiations for a code of conduct in the South China Sea, one of the world’s busiest waterways.

A code was mandated by the 2002 Declaration on the Conduct of Parties in the South China Sea, which exhorted all parties “to exercise self-restraint” with regard to “activities that would complicate or escalate disputes”. But that appeal was essentially ignored by China, which in recent years has fundamentally changed the status quo in the South China Sea in its favour, without incurring any international costs.

Sixteen years after that declaration, just a draft to negotiate a code of conduct has been announced. By the time the actual code emerges, China would have fully consolidated its control in the South China Sea, with the code only serving to reinforce the new reality. This explains why Beijing has delayed a code of conduct while it presses ahead in the South China Sea with frenzied construction and militarisation.

Today, the South China Sea has emerged as Asean’s Achilles’ heel, with the association’s failure to take a unified stance serving to aid Beijing’s divide-and-rule strategy. China has used inducement and coercion to split Asean and try to dictate terms to it.

The rift between pro-China Asean members and the rest has now become difficult to set right. By conveying disunity and weakness, Asean has emboldened China’s territorial and maritime revisionism, which, in turn, has made the South China Sea the world’s most critical hotspot.

Against this background, the much-hyped announcement of a single draft document for future negotiations, with Singaporean Foreign Minister Vivian Balakrishnan hailing it as “yet another milestone in the code of conduct process”, was just the latest example of how Asean has been playing right into China’s hands.

In fact, that announcement came soon after the second anniversary of the landmark ruling of an international arbitral tribunal, which knocked the bottom out of China’s grandiose territorial claims in the South China Sea. Since that ruling, which is now part of international law, China has only accelerated its expansionism, as if it is working to make the verdict totally meaningless.

This is a reminder that international law by itself is no answer to China’s expansionism. There needs to be a concerted international campaign to pressure and shame China. If Southeast Asia, a region of nearly 640 million people, is coerced into accepting Chinese hegemony, it will have a cascading geopolitical impact across the Indo-Pacific.

Yet, as if to advertise Asean’s inherent weakness, a meeting of its foreign ministers held just after the international tribunal’s ruling failed to issue even an agreed statement.

Asean was established in 1967 during the height of the cold war as a five-nation political organisation to help combat the potential threat of communist insurgencies in the region. At the time, the authoritarian-leaning, pro-capitalist governments of its founding members – Indonesia, Malaysia, Philippines, Singapore and Thailand – were facing internal and external threats. After the cold war ended, Asean expanded to cover much of Southeast Asia, from Myanmar to its former foe Vietnam.

Since then, the triumphs of an expanded Asean have largely been in the economic area. Politically, of course, Asean has been able to build greater interstate cooperation and stability in Southeast Asia, while collectively turning its members into a force to reckon with in international relations. This is no mean achievement.

Today, however, Asean’s challenges are being compounded by the widening gap between economics and politics in Southeast Asia. The region is integrating economically, with its economic vibrancy on open display. But its political diversity and divisions have exacerbated in the absence of common political norms.

This has raised questions about Asean’s capacity to safeguard peace and security in its own region. Such concerns have been heightened by the lack of an effective response to Myanmar’s Rohingya crisis, despite its transnational effects. Asean is also struggling to cope with other pressing regional problems – from human rights abuses in some member-states and transnational human trafficking to the degradation of coastal and other marine ecosystems.

In fact, Asean has left itself little room for reflection and reform by elaborately staging its summits and foreign-minister meetings in conjunction with the extra-regional initiatives that bring leaders of outside powers. This not only allows outsiders to press their own objectives but also keeps the focus on larger international issues, with Asean notionally in the driver’s seat.

As Asean seeks to enlarge its extra-regional profile, its “centrality” in broader initiatives is exacting an increasing price internally and laying bare its limitations. Its internal stasis underscores the imperative for it to reform and become a more cohesive, dynamic and result-oriented institution that helps underpin a stable rules-based order in Southeast Asia.

Brahma Chellaney is a geostrategist and the author of nine books, including the award-winning “Water: Asia’s New Battleground”.

© South China Morning Post, 2018.

U.S. injects new irritant in ties with India

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Brahma Chellaney, Mail Today

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U.S. President Donald Trump’s first round of Iran-related sanctions has come into force this week, with no waiver for India in sight as yet. The U.S. Congress has passed legislation granting India a waiver from its new Russia-centred sanctions, but the waiver is conditional and contingent upon a periodic, six-monthly presidential certification. The Indian media highlighted the passing of the waiver legislation but not the conditions it incorporated.

India, as a longstanding significant buyer of Russian weapons and the second-largest importer of Iranian oil after China, is a major victim of the new U.S. sanctions. By implicitly mounting two-pronged pressure on New Delhi on energy and defence fronts, Washington has injected a major new irritant in the bilateral relationship, as if to underscore the risks for India of pursuing a foreign policy too closely aligned with America.

By slapping a nation with punitive sanctions, the U.S. seeks to block trade and financial activities with that country even by other states. Such extraterritorial sanctions — which it euphemistically labels “secondary” sanctions — run counter to international law. Yet the U.S. uses its unmatched power to turn national actions into global measures.

As the world’s reserve currency that greases the wheels of the global financial system, the U.S. dollar arms America with tremendous leverage, making U.S. sanctions the most powerful in the world. Most international transactions, from banking to oil, are conducted in U.S. dollars.

Today, however, the U.S. faces a major test to effectively enforce its new extraterritorial sanctions relating to Iran, a Trump obsession, and Russia, which still evokes bipartisan hostility in Washington although Russia’s economy has shrunk to one-tenth the size of China’s and its military spending to one-fifth of China’s.

Trump’s sanctions aimed at throttling the Iranian economy after his unilateral withdrawal from the multilateral Iran nuclear deal have prompted calls for defiance even in Europe. The new Russia sanctions, however, were initiated by Congress, which passed a law to compel the Trump administration to act against Moscow. Known as Countering America’s Adversaries Through Sanctions Act, or CAATSA, the law uses the sanctions threat to wean countries off their craving for Russian weapons so as to boost America’s own arms sales.

The U.S. is already the world’s leading exporter of weapons by far. Another paradox is that the U.S. has overtaken Russia as the top arms seller to India. But while Russia has transferred to India offensive weapons, including a nuclear-powered submarine (INS Chakra) and an aircraft carrier (INS Vikramaditya), the U.S. has been selling defensive military systems to India, such as the P-8I maritime surveillance aircraft and the C-17 Globemaster III and C-130J Super Hercules military transport planes. India cannot snap its defence ties with Moscow for another reason: It relies on Russian spare parts for maintenance of its Russian-made hardware, some of Soviet origin.

While the CAATSA waiver will allow India to go ahead with the pending purchase from Russia of the interceptor-based S-400 Triumf air and anti-missile defence system, future Indian imports from Russia are likely to face U.S. scrutiny. In fact, the waiver legislation mandates that India, Vietnam and Indonesia — the three countries granted waivers from the CAATSA sanctions — demonstrate that each is significantly reducing dependence on Russian arms or significantly increasing cooperation with the U.S.

The congressional intent was clearly to leverage the waiver. For example, a presidential certification must specify the active steps each nation is taking or planning to cut its inventory of Russian hardware. Such a reporting requirement, by shining a spotlight on India’s arms inventory, promises to act as an irritant in the bilateral relationship. Washington is also stepping up pressure on India to sign the Communications Compatibility and Security Agreement (COMCASA), which the Indian military fears could compromise its network.

The reason why only India, Indonesia and Vietnam were granted waivers is that the U.S. is trying to sway these three into its orbit. In the case of Turkey, a NATO member that, like India, is buying the S-400, Congress is threatening reprisals against Ankara. U.S. pressure on India, Indonesia and Vietnam, however, is unlikely to fully dissipate because no blanket waivers have been granted.

Meanwhile, through its Iran-related sanctions, the U.S. is likely to influence the energy-import policy of India, which currently imports more than three-fourth of its crude oil requirements. According to the International Energy Agency, India is set to emerge as the fastest-growing crude consumer in the world by 2040. Washington is seeking to sell more oil and gas to India and also encouraging it to switch imports from Iran to Saudi Arabia and other U.S. allies.

Next-door Iran, however, has long been a major oil supplier to India. It will remain important for India’s energy-import diversification strategy. U.S. sanctions, however, threaten to affect even New Delhi’s political cooperation with Tehran, including impeding India’s Pakistan-bypassing transportation corridor to Afghanistan via Iran. India has invested in modernizing the Chabahar Port. As the top U.S. general in Afghanistan acknowledged last year, “Iranian-Indian-Afghan cooperation over the Chabahar Port presents great economic potential” for landlocked Afghanistan, which has had to depend on a hostile Pakistan for access to a port.

By making India a key target of the extraterritorial effects of its sanctions on Iran and Russia, and then dangling concessions as favours, the U.S. is doing a disservice to its goal of making the Indo-U.S. strategic partnership a linchpin of its larger strategy to build a free, open and democratic-led Indo-Pacific region. Its actions compound India’s foreign-policy challenges, including how to balance the relationships with various key players.

Brahma Chellaney is a geostrategist and the author.

© Mail Today, 2018.