Thursday, December 31, 2009

An end to the Japanese lesson - Japan's two lost decades

Japan has taught the world a great deal about coping with the financial crisis. Now the West is on its own

“NEW Year rally expected on Tokyo market next week.” That was a typically boosterish Japanese newswire headline on December 29th 1989, the day that one of the world’s biggest ever asset-price bubbles reached bursting point. Exactly 20 years later the Japanese are still paying the price for such hubris. The Nikkei 225 index, which peaked at 38,916, now languishes at just over one-quarter of that level (though once again there is talk of a New Year rally). Japan’s economy has barely grown in nominal terms after two “lost decades”, and is again suffering from deflation. Where Japan was once bearing down on America, it now feels the hot breath of China on its neck. Remember “Japan as Number One”? These days the country’s chief claim to fame is having a gross government debt burden approaching 200% of GDP.

For the Japanese this has all been deeply troubling. But in the past two years, as the Western world has faced many of the same problems that Japan has been grappling with since 1989 (the collapse of asset prices, a surge in distressed debt and a looming threat of deflation), Japan has provided some useful lessons on how governments should, and should not, tackle potentially systemic financial meltdowns.

Thanks to the precedent set by Japan, many of these lessons were quickly put into practice. Acting far more swiftly than the Japanese authorities did (the Japanese had the misfortune of having to learn through trial and error), Western policymakers provided liquidity to their banks and forced them to rebuild capital, while pumping in generous doses of fiscal stimulus to offset the collapse in private-sector demand. And like the Bank of Japan, they slashed interest rates and took extraordinary measures to try to keep credit flowing. The efficacy of these steps has led to growing optimism about the world economy.

So what is the Japanese lesson now? In many ways, the analogy is no longer terribly helpful. That is partly because the pupils are in a worse pickle than the teacher ever was. The most vulnerable countries, such as Greece, now face a risk that Japan never did: that markets will lose faith in their creditworthiness. Japan, for all its woes, has benefited from a huge pool of domestic savings and investors happier to keep their money at home than abroad. Meanwhile, the scale of the global upheaval makes Japan’s problems, which had little impact overseas and took place against a backdrop of global growth, look small by comparison. And with huge deficits in so many nations, the risk of a sudden loss of fiscal credibility is more acute than it ever was in Japan.

But there are other ways in which the pupils are in better shape. That is partly because they have less rigid systems. In the more adaptable Western economies there has been less resistance to structural changes in order to maintain productivity. There are also usually fewer political barriers to dealing with bad private-sector debts than there were in Japan. Moreover Westerners are also reaping the rewards of having acted more decisively than the Japanese did—especially when it came to pumping money into the economy and cleaning up financial balance-sheets. With fewer zombie banks, fewer signs of entrenched deflation and much earlier signs of growth, the West is in uncharted territory: it has arguably already got to a stage that Japan never really did.

Nothing more will I teach you today

That makes it very difficult to keep on drawing particular lessons from Japan’s sad plight. It does, however, still leave a general lesson common to all economic disasters: don’t be suckered by false signs of economic recovery. In Japan’s case, such hopes have led it repeatedly to tighten fiscal policy before private demand was strong enough to sustain a recovery. That entrenched deflation. Japan also left its banks too short of capital to cope with subsequent shocks.

Policymakers in the developed world still have an enormous task on their hands. Many banks have huge write-downs to make on their loans, economies are burdened with excess capacity and households’ debt levels remain high. It would be disastrous to tighten policy too soon, as Japan’s example shows. But Japan provides no useful guidance on when the right time would be. For that, there is only trial and error. And the more errors there are, the more the West’s next decade may look like Japan’s two lost ones. From the Economist.

After all, it's just another Ponzi scheme The US appears to be printing money hand over fist and cooking the books to make everything seem rosy

Note from Kerry. This editorial appeared in the Bangkok Post and although there is no Asian content, felt that the impact of what is happening with the US$ will be felt by all, especially in Asia and Australia.

The US financial and monetary authorities are running a Ponzi scheme as they scramble to delay economic catastrophe. That's the finding of Eric Sprott and David Franklin in their Sprott Asset Management LP's Markets at a Glance report, "Is it all just a Ponzi scheme?" (December 2009). The authors have detected a phantom account in the US Federal Reserve Flow of Funds Report, which camouflaged its money printing on a gigantic scale from public eyes.

In fiscal year 2009, the US added another US$1.88 trillion to its public debt. There were three main groups of buyers of US treasuries issued to finance this huge amount of deficit spending. The first group was identified as foreign and international buyers, who purchased $697.5 billion. The second group was the Federal Reserve, which bought $286 billion. By buying the US treasuries, the Fed was pursuing a quantitative easing monetary policy, or money printing, to keep both the public finances and the financial system alive. It plans to end its money-printing programme by March 2010. The third group of buyers was identified as the Household Sector, which bought Treasury securities of $528 billion in the first three-quarters of fiscal year 2009. For the whole fiscal year, this Household Sector would have bought a total of $704 billion in Treasury securities.

Sprott and Franklin were wondering who actually made up the Household Sector because, given the current economic conditions, it did not seem that the real household sector would have money at its disposal to purchase Treasury securities. As it turned out, the Federal Reserve defined the Household Sector as a "catch-all category", representing buyers left over who can't be slotted into the other group headings such as money market funds, mutual funds, life insurance companies, retirement funds, and closed-end funds, etc.

"To answer the question - who is the Household sector? They are a phantom. They don't exist. They merely serve to balance the ledger in the Federal Reserve's Flow of Funds Report," said the authors.

"Our concern now is that this is all starting to resemble one giant Ponzi scheme. We all know that the Fed has been active in the market for T-bills … It serves to remember that the whole point of selling new US Treasury bonds is to attract outside capital to finance deficits or to pay off existing debts that are maturing. We are now in a situation, however, where the Fed is printing dollars to buy Treasuries as a means of faking the Treasury's ability to attract outside capital. If our research proves anything, it's that the regular buyers of the US debt are no longer buying, and it amazes us that the US can successfully issue a record number of Treasuries in this environment without the slightest hiccup in the market."

Yes, indeed there are increasingly fewer buyers of US Treasuries. As the export-led economies and oil rich countries have less dollar revenue, they will have fewer dollars to buy US Treasuries and thus to finance the US deficit. Fears about the dollar's stability have also led sovereign wealth funds and investors to shy away from US dollar assets.

As the US government continues to rack up more debt to finance the bail-out costs and other programmes, it will accrue more debt that eventually will soak up the whole economy. Next year the US will run a deficit spending of another $2.2 trillion, compared with $1.1 trillion in 2008 and $1.88 trillion in 2009. The point is, since the US already faces difficulties in finding buyers for its Treasury securities, who will step forward as financier of the $2.2 trillion deficit next year? If there aren't enough buyers, will the Federal Reserve continue to create phantom accounts to purchase Treasury securities?

For how long will the financial markets allow the US to fake its actual financial health? We are fast approaching an end game. By The Nation, Bangkok Published on January 1, 2010

U.S. Embassy Bali Attack Warning

Bali warns of New Year terror threat

The Bali Tourism Board widely distributed this message: “The Governor of Bali Mr. Mangku Pastika wishes to share a message with all of us: ‘There is an indication of an attack to Bali tonight,’ but please don’t panic, but put your security system to full alert.” This message is shared verbatim for your information. The safety and security recommendations in our Consular Information Sheet, quoted below, remain valid.

“Indonesian police and security forces take active measures against both ongoing threats posed by terrorist cells, including Jemaah Islamiyah (JI), a U.S. government-designated terrorist organization that carried out several bombings at various times from 2002 to 2009 and outbreaks of violence elsewhere. While Indonesia’s counterterrorism efforts have been ongoing and partly successful, violent elements have demonstrated a willingness and ability to carry out deadly attacks with little or no warning. Most recently, in November 2009, unknown assailants shot at foreigners in Banda Aceh, North Sumatra, an area that was devastated by the 2004 tsunami and the scene of a long-running separatist conflict that ended in 2005. The gunfire wounded a European development worker. A house occupied by U.S. citizen teachers was targeted and hit by gunfire, but there were no U.S. citizen casualties.

In July 2009, attacks by armed assailants in Papua resulted in several deaths, including security personnel and one Australian national. Also in July, suspected JI elements bombed two Western hotels in Jakarta, killing nine Indonesians and foreigners and injuring over 50, including six U.S. citizens. U.S. citizens in Indonesia must be physically and mentally prepared to cope with future attacks even as they go about their normal daily routines.

Extremists may target both official and private interests, including hotels, clubs and shopping centers. While it may be difficult to modify one’s behavior to counter risks in a country where places in which U.S. citizens and other Westerners must congregate to live and work are well known and few in number, it is also extremely necessary. In their work and daily living activities, and while traveling, U.S. citizens should be vigilant and prudent at all times. We urge U.S. citizens to monitor local news reports, vary their routes and times, and maintain a low profile.

U.S. citizens must consider the security and safety preparedness of hotels, residences, restaurants, and entertainment or recreation venues that they frequent.”

Wednesday, December 30, 2009

No forgiveness; no quarter. Happy Christmas from China

Harsh justice in China

A SEASON of good cheer in much of the world, late December saw a typically harsh apportionment of justice by China’s legal system, and a typically rigid display of governmental indifference to foreign opinion. On Christmas Day a Beijing court sentenced Liu Xiaobo, a veteran human-rights activist, to 11 years in prison for “inciting subversion of state power”. China swatted away all criticism about this as groundless meddling in its internal affairs.

In a separate case that was not entirely an internal affair, China’s reaction was not much different. On December 21st Akmal Shaikh, a 53-year-old Briton charged with smuggling drugs, had his death sentence upheld by China’s Supreme People’s Court. Rejecting pleas for clemency from Mr Shaikh’s family, international human-rights groups, and the British government, Chinese authorities executed him by lethal injection on December 29th in the north-western region of Xinjiang, where he was first arrested in late 2007 after carrying roughly 4kg of heroin into the country.
Click here to find out more!

Family members claimed Mr Shaikh suffered from bipolar disorder, and was the victim of manipulation by the drugs traffickers who, they claimed, tricked him into carrying the contraband. British officials announced news of the execution before China did. Hours after it took place China’s foreign-ministry spokeswoman, Jiang Yu, said it would brook no outside interference in the workings of its legal system, and expressed “strong dissatisfaction and resolute opposition” to Britain’s complaints. The prime minister, Gordon Brown had said he was “appalled” and condemned the execution “in the strongest terms”. Ms Jiang said Mr Shaikh’s case was handled appropriately and all his legal rights had been honoured at trial. A day after the execution, Chinese newspapers were full of angry commentary over Britain’s attempt to intervene. Many drew comparisons to the Opium War.

Although it ended in the first known execution of a European in China since the 1950s, Mr Shaikh’s case was otherwise not unusual. According to available (and incomplete) statistics, China executed 1,700 convicts in 2008, or nearly five each day.

Neither was the harsh treatment meted out to Mr Liu unusual by Chinese standards. Criticism of the government, though always risky, is sometimes tolerated. Attempts to organise criticism, however, as Mr Liu had by helping draft a petition calling for political freedoms, are routinely met with a firm thumping. Jailed twice before for his political activities Mr Liu knew this as well as anyone. He had said he was ready to face prison again.

The document he helped write in December 2008 was called Charter 08. It soon attracted more than 300 other Chinese signatures. Its publication marked the 60th anniversary of the Universal Declaration of Human Rights. In the year since its release, thousands more have signed it.

Charter 08 calls for sweeping changes in China’s political order, including an end to limits on free expression, political activity and religious practice. It proposes drastic reforms that would dismantle one-party rule, allow public supervision of government officials, and free the army and judiciary from Communist Party control.

Mr Liu was detained just before the release of the manifesto and held for six months before charges were lodged. His sentencing came two days after a trial lasting less than three hours. The 11-year term exceeds any other known sentence for the vague crime of “inciting subversion”. Within days of the sentencing, Chinese media published a speech by a senior security official who warned of threats to China’s social stability from “hostile forces stirring up chaos” and called for “pre-emptive attacks” against them. “In the new year, there will be no relaxation of stability preservation, and no lightening of pressure on stability,” said Yang Huanning, a deputy minister of public security.

Mr Liu won supporters on the internet, a central theatre these days in the struggle for civil liberties. The authorities are moving to tighten their control there. Besides stepping up monitoring and blocking “unsuitable” web traffic, regulators have put new restrictions on the registration and operation of websites by individuals.

The founder of a web-hosting service in Beijing says that internet servers have been unceremoniously unplugged under new rules and new standards of enforcement. “For nine years I have run a successful and legal business, and now I have suddenly been told that what I do makes me a criminal.” Worried that his company may not survive, and angry about the arbitrary changes, he will not, however, circulate a protest petition—not if he is wise, that is. The Economist

Taking the Stone Age out of Afghanistan

AFGHANISTAN was not supposed to be the shambles that it is today, three decades after Russian tanks rolled in on Dec 27, 1979.

Once upon a time, its takeover in the wake of the Sept 11, 2001 attacks on the United States had the support or acquiescence of most of the world.

The consensus was based not just on ridding the country of al-Qaeda and its Stone Age keepers, the Taliban, but on guilt at having deserted the brave mujahidin, which had fought and won the last great battle of the Cold War against the Soviet Union.

Observers like Robert Fisk, so astute about Muslim anguish elsewhere, spoke too soon when they predicted defeat for the invaders on grounds of the Afghans' historic resistance to imperialism.

Certainly, the British Raj had been held at the Durand Line in the late 19th century, and the Russians evicted after a 10-year occupation by what appear to be the same guerillas who had harassed every intending conqueror since Alexander the Great.

But Kabul had fallen easily with the help of the anti-Taliban fighters of the Northern Alliance, and Osama bin Laden and his cohorts were dispersed to the warrens of Tora Bora, most likely never to abuse Afghan hospitality again.
The then British prime minister Tony Blair promised "this time we will not walk away" as the Western powers did after the Russians were beaten and their communist empire collapsed 12 years before.

Hamid Karzai arrived for the Bonn Agreement in December 2001 as the Caped Crusader in the remaking of his country from seemingly endless conflict. In that year's post-apocalyptic Christmas cheer, donors loosened purse-strings as never before. Karzai was voted president of Afghanistan in the first election in decades in 2004.

The international community knew it was on to a good thing, and saw a chance to build on the precedents of past interventions, such as Cambodia and East Timor.

Then Iraq happened. The toppling of Saddam Hussein by force under false pretences wrecked whatever unity there was in the "war on terror", poisoned the atmosphere for multilateral action, and reduced Afghanistan to a sideshow.

Along with the billions of dollars in aid, Unama (United Nations Mission in Afghanistan, with 42 nations enlisted) brought in metrics -- with which, after eight years, it can now measure the extent of the international effort's debacle.

Afghanistan ranked last but one in the UN Human Development Index 2009 survey of 182 countries. Only half of its children are in school; its life expectancy is a 43.6 years; about three-quarters of adults are illiterate.

Transparency International rated Afghanistan the world's most corrupt country after Somalia, which has no government to speak of. It produces nine-tenths of the world's illicit opium under the noses of more than 100,000 foreign troops.

Capping off a year of trial and tribulation with farce, the United Nation's Numbers 1 and 2 in Afghanistan, Kai Eide and Peter Galbraith, got into a quarrel that ended in the latter's sacking in September. Galbraith accused Eide of hushing up Karzai's alleged rigging of the election in August. Eide accused Galbraith of plotting to overthrow Karzai for someone the Americans preferred.

The election itself cannot possibly qualify as free and fair. Karzai was declared winner after a run-off failed to take place -- but only 38.7 per cent of registered Afghans voted, of whose votes a quarter was subsequently adjudged to be fraudulent.

Entire districts were disenfranchised by Taliban threats on a day when more people were killed (at least 31) than any other in 2009.

Against the bleak backdrop, the Afghan people are left with a diminishing choice of lesser evils and a stoic refusal to give up hope.

"We should not look at democracy through the prism of elections," said Wahabuddin Ra'ees, head of the political science department at the International Islamic University in Kuala Lumpur.

"If elections are to be the sole criterion for democratisation, then it will fail."

Wahabuddin, who is from Jalalabad in eastern Afghanistan, saw the best omen in a political arrangement covering the country's tribal diversity among the Hazaras, Uzbeks, Tajiks and majority Pashtuns, and its broad spectrum of allegiances, including the Taliban.

"The Americans should use the opportunity to get the Taliban involved. Given the cultural context of Afghan society, compromise can probably be reached," Wahabuddin said.

Increasingly, bringing the Taliban into the mainstream from its fastnesses in the south and east is being seen as a sine qua non of peace.

"Reconciliation" was a plank in the campaigns of all the contestants in the presidential election.

Mullah Omar, the Taliban leader, has evinced a bargaining mood, although the Saudi royal family's attempt at mediation appears to have hit a wall.

Early this month, he offered "legal guarantees" to not "meddle in the internal affairs of other countries" (that is, shelter al-Qaeda) if "foreign forces withdraw from Afghanistan".

Even the US is softening. Secretary of Defence Robert Gates has hinted at the possibility of negotiations once the Taliban "momentum" was reversed.

So will Obama's "surge" of an additional 30,000 soldiers into the country work?

"If the Afghans are not brought into the process, given the geostrategic location of Afghanistan and the major power interests, it will not be as successful as they would think," Wahabuddin said.

On the foreign presence overall, however, he was adamant.

"They should not abandon Afghanistan. They should be there, but they shouldn't dictate. They left in the 1990s, they left in the 1950s, and what did we get?"

On the contrary, public opinion across the world is swinging sharply against staying on. Yet there has been no protest in anything like the proportions of the mass demonstrations opposing the Iraq War.

If, despite all the evidence, a besieged conscience behoves the international community to make a last go of Afghanistan, it will have to be much more than a heartfelt New Year's resolution for 2010. By Kamrul Idris for New Straits Times Malaysia

Philippines Disturbing insights

THE roundtable The Times’ editors and reporters had with Vice Mayor Esmael Mangudadatu on Tuesday yielded reminders of extremely disturbing facts and insights. The most important of these were about the state of Philippine democracy and the veracity of our election process. Our banner yesterday “Mangudadatu warns of election violence” was perhaps the most topical and arresting news yielded by the roundtable.

There are at least 11 towns in Maguindanao province, the Vice Mayor credibly told us, where effective power is still in the hands of officials belonging to the Ampatuan clan or to its political network. These officials and their men are most likely to do everything they can to preserve their hold on power by being reelected or by having their candidates win in the May 2010 elections. Guided by their history and observed tendencies, they will terrorize voters and the teachers doing election-inspector work. They will take measures to cheat and make ballots and ballot boxes disappear. But their opponents will not let them get away too easily. They will put up a fight to prevent the Ampatuan clan members and allies from doing their accustomed prohibited and fraudulent acts on election day.

Unless the Commission on Elections—using properly deputized nonpartisan and neutral police and military units—places these towns under its control, violence is sure to explode in Maguindanao.

But that is not what this editorial is about.

We were more disturbed by Mr. Mangudadatu’s revelation about the true count of the population of many towns in Maguindanao province. These are again those controlled by the Ampatuan clan and their allies. These towns’ false and bloated population figures are the basis of the Comelec’s roll of registered voters.

Mr. Mangudadatu is requesting the government and the Comelec, joined by the media and independent monitors, to make a survey trip to these towns. He told us that a quick survey will immediately show that the official counts of those towns’ populations shown in the National Statistics Office’s tables cannot possibly be true. Indeed, 15 towns in Maguindanao are supposed to have populations of between 22,000 and 29,000. Fourteen have populations of between 30,000 and 41,000. Three have populations of more than 100,000. The Comelec roll of registered voters has more than 600,000 names. Mr. Mangudadatu estimates that when the voters’ rolls are cleaned there will only about 300,000 voters in the whole province.


The incorrect population count and the fraudulent Comelec list of registered voters in that province could not have come into being without the participation of regional and provincial National Statistics Office personnel and Comelec officials.

There have been questions about the inflated voters lists of the Moro areas in Mindanao. Even in the first elections after the Philippines became independent of the United States, elections in Mindanao’s Muslim majority provinces were already being described as activities in which “the birds and the bees voted.” In the last two national elections, government statistics officials did not lift a finger to help those trying to prove that the number of voters could not possibly be true.

How incorrect voters’ lists are made came to light when Comelec officials—including the former Maguindanao Comelec Supervisor Lintang Bedol—were asked to testify in a Senate investigation.

And, after the November massacre, the discovery of thousands of voters’ ID cards in Ampatuan clan hiding places suggests how flying voters, bused from town to town and precinct to precinct, provided the warm bodies of veritable actor-voters whose appearance would convince outsiders that voting did take place.
But the truth is that these were the same jeeploads, truckloads and busloads of people who went from precinct to precinct. They were allowed to vote by frightened teachers, working as the board of election inspectors, even if the voter’s IDs they presented did not have their names and pictures. But the wrong IDs did not matter anyway, because they were voting as nonexistent people named on the Comelec voters’ list.

Now, this worry of ours is not limited to the inaccuracy and fraudulence of the Comelec lists of voters in Maguindanao. We suspect that many towns in our country also have dishonest voters’ lists that are used to perpetuate the ruling dynasties in power and to deliver command votes in favor of their national candidates. This suspicion is especially pertinent not only to those Luzon, Visayas and other Mindanao provinces controlled by warlords like the Ampatuans. This suspicion also applies to provinces ruled by powerful and rich leaders who may not be as wildly trigger happy as the Ampatuans but do have lots of money and do maintain private armies or bands of enforcers.

It is probably too late to appeal to President Arroyo to do something about this problem. If she wanted to she could have moved to make these reforms in the past eight years.

But the next president of the Philippines must, as candidate Gilbert C. Teodoro has vowed to do if elected, use the might of Malacañang to dismantle private armies, to correct inaccurate population figures and to clean up fraudulent Comelec voters’ lists. The Comelec may be an independent constitutional body but in our country a president can get things done for the common good if he wants to.

In addition to being a big step in making ours a real democracy and in raising our Republic from a failed to a functioning state, having and using correct population figures are essential to sound policy- and decision-making.

ASEAN-China open free trade area to rival world's biggest

China and Southeast Asia establish the world's biggest free trade area (FTA) today, Friday, liberalising billions of dollars in goods and investments covering a market of 1.7 billion consumers. Eight years in the making, the ASEAN-China FTA will rival the European Union and the North American Free Trade Area in terms of value and surpass those markets in terms of population. Officials hope it will expand Asia's trade reach while boosting intra- regional trade that has already been expanding at 20 percent a year.

China has just overtaken the United States to become ASEAN's third largest trading partner, and will leap Japan and the EU to become "number one" within the first few years of the FTA.

Under the agreement, China and the six founding ASEAN countries -- Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand -- are to eliminate barriers to investment and tariffs on 90 percent of products. Later ASEAN members, including Vietnam and Cambodia, have until 2015 to follow suit.

The average tariff rate China charged on ASEAN goods would be cut to 0.1 percent from 9.8 percent. Average tariffs imposed on Chinese goods by ASEAN states will fall to 0.6 percent from 12.8 percent. ASEAN-China trade has exploded in the past decade, from 39.5 billion dollars in 2000 to 192.5 billion last year. At the same time, ASEAN-China trade with the rest of the world has reached 4.3 trillion dollars, or about 13.3 percent of global trade.

Sectors likely to reap the most benefits from the FTA included services, construction and infrastructure, and manufacturing. Officials said there was more to the deal than sating China's thirst for Asian raw materials like palm oil, timber and rubber, and opening up regional markets for its manufactured products, steel and textiles.

China and ASEAN countries are all export-oriented economies. A large proportion of our products target the US and EU markets... Generally neither side took the other's market as its most important target market.

Not everyone is happily singing the free-trade anthem, however. At the 11th hour, industry groups in Indonesia, Southeast Asia's biggest economy, and the Philippines are frantically pressing their governments to keep tariffs on vulnerable sectors until 2012.

These 12 sectors including textiles, petrochemicals, footwear, electronics, steel, auto parts, food and drinks, engineering services and furniture. For example, a local sack for sugar, rice and fertilizer costs about 1,600 rupiah (1.70 dollars) each. A Chinese sack costs about 800 rupiah each.

The Indonesian Footwear Association claim that Chinese firms would take their share of the Indonesian market to 60 percent from 40 percent, costing some 40,000 local jobs.

Tuesday, December 29, 2009

Australian Government Travel Warnings S.E Asian destinations



• We advise you to reconsider your need to travel to Indonesia, including Bali, at this time due to the very high threat of terrorist attack.
• On 17 July 2009, terrorists detonated bombs at the Ritz-Carlton Hotel and the JW Marriott Hotel in Jakarta. Australians were among those killed and injured.
• There is a possibility of further terrorist attacks in Jakarta and elsewhere in Indonesia, including Bali.
• Terrorists have previously attacked or planned to attack places where Westerners gather including nightclubs, bars, restaurants, hotels and airports in Bali, Jakarta and elsewhere in Indonesia. Analysts judge that these types of venues could be targeted again.
• In past years, we have received information about possible terrorist attacks in Indonesia in the Christmas and New Year period. Analysts consider that gatherings of Westerners over the Christmas and New Year holiday season may again be appealing targets for terrorists.
• We continue to receive credible information that terrorists could be planning attacks in Indonesia and that Bali remains an attractive target for terrorists.
• If you do decide to travel to Indonesia, you should exercise great care, particularly around locations that have a low level of protective security and avoid places known to be possible terrorist targets. See the Terrorism section for details.
• There were incidents of violence in Papua during the parliamentary elections in April 2009. There is a possibility of further attacks in the Papua Provinces, including attacks on infrastructure and national institutions.
• Since July 2009, there has been a series of violent attacks near the Freeport Mine in Papua. One Australian has been killed in these attacks. Further violence is likely.
• Australians should avoid all protests, demonstrations and rallies as they can turn violent.
• Reconstruction is underway in and around the city of Padang in Sumatra after a high magnitude earthquake hit this area on 30 September 2009. You should contact your tour operator to check whether tourist and transport services at your planned destination have been affected.
• We advise you to read carefully the sections on travel to Aceh, Central Sulawesi Province, Maluku, Papua and West Timor where additional safety risks exist.
• Pandemic (H1N1) 2009 has spread throughout the world. The World Health Organization (WHO) provides useful information for individuals and travellers on its website. For further information and advice to Australians, including on possible quarantine measures overseas, see our travel bulletin on Pandemic (H1N1) 2009.
• The WHO has confirmed human deaths from avian influenza in Indonesia, including Bali. The Indonesian Government has declared that rabies is present in Bali. See the Health Issues section below for advice to Australians travelling to or resident in Indonesia.


• We advise you to exercise a high degree of caution because of the high threat of terrorist attack and because of political instability in Thailand.
• Pay close attention to your personal security at all times and monitor the media for information about possible new safety or security risks.
• We continue to receive reports that terrorists may be planning attacks against a range of targets, including tourist areas and other places frequented by foreigners.
• Demonstrations can develop quickly and turn violent with little warning. In the event of protest action, disruptions could occur in Bangkok and other parts of Thailand, including to transport and other infrastructure. You should avoid demonstration sites, political rallies, military deployments and concentrations of security personnel. You should also closely monitor developments and follow any instructions issued by local authorities. If you are in an area where demonstrators are gathering, you should leave the area immediately.
• There is an ongoing border dispute between Thailand and Cambodia relating to land near the Preah Vihear temple (Khao Pra Viharn in Thai). There has been fighting between Thai and Cambodian military troops in recent years, resulting in some injuries and fatalities. Some border crossings have been closed at times and landmines have been reported. Australians are urged to be particularly vigilant if travelling to this area and to monitor local media.
• We strongly advise you not to travel at this time to the southern provinces of Yala, Pattani, Narathiwat and Songkhla or overland to and from the Malaysian border through these provinces due to high levels of ongoing violence in these regions, including terrorist attacks and bombings resulting in deaths and injuries on an almost daily basis. Since January 2004, more than 3500 people have reportedly been killed and many more injured, including a number of foreigners. If you are in these provinces, you should consider leaving.


• We advise you to exercise caution and monitor developments that might affect your safety in Malaysia because of the risk of terrorist attack.
• Pay close attention to your personal security and monitor the media for information about possible new safety or security risks.
• We strongly advise you to reconsider your need to travel to the islands, dive sites and coastal areas of Eastern Sabah because of the high threat of kidnapping by terrorists and criminals. In the past, terrorists have kidnapped foreigners from coastal areas of Eastern Sabah, the islands and surrounding waters. If you do decide to travel to this region, you should exercise extreme caution.
• If you are intending to travel overland from Malaysia to Thailand, you should also read the travel advice for Thailand which recommends that Australians do not travel to the far southern Thai provinces of Yala, Pattani, Narathiwat and Songkhla, including overland travel from and to the Malaysian border through these provinces.
• Pandemic (H1N1) 2009 has spread throughout the world. The World Health Organisation (WHO) provides useful information for individuals and travellers on its website. For further information and advice to Australians, including on possible quarantine measures overseas, see our travel bulletin on Pandemic (H1N1) 2009.


• We advise you to exercise a high degree of caution in the Philippines because of the high threat of terrorist attack and the high level of serious crime.
• Pay close attention to your personal security at all times and monitor the media for information about possible new safety or security risks.
• Terrorist attacks could occur at any time, anywhere in the Philippines, including in Manila. We continue to receive credible reports indicating terrorists are planning attacks against a range of targets in a variety of locations, including places frequented by foreigners. You should avoid places known to be terrorist targets (see the Terrorism section below).
• On 23 November 2009, at least 57 people were abducted and killed in the province of Maguindanao on the island of Mindanao in what appears to have been a politically-motivated attack.
• Violent crime is a significant problem in the Philippines (see the Crime Section below).
• We strongly advise you not to travel to Mindanao, including mainland Mindanao, the Zamboanga Peninsula and the Sulu Archipelago, due to the very high threat of terrorist attack, including kidnapping, and related counter-terrorism operations. Armed clashes between Philippine security forces and the Moro Islamic Liberation Front could occur without warning, including in central Mindanao. Attacks occurred in mid-2009 against military and civilian targets. Further attacks cannot be ruled out.
• There is a danger of kidnapping throughout the Philippines, particularly in the southern Philippines including coastal and island tourist resorts and dive sites. Terrorists have kidnapped foreigners from these areas in the past.
• The typhoon season normally runs from late May to early December. This is also the rainy season when tropical storms, flooding and landslides may occur.


• We advise you to exercise caution and monitor developments that might affect your safety in Cambodia because of the risk of civil unrest, violent criminal activity and terrorism.
• Pay close attention to your personal security and monitor the media for information about possible new safety or security risks.
• In recent years, Cambodian authorities have disrupted a number of bomb plots, including on 3 January 2009, when three improvised explosive devices were discovered in Phnom Penh.
• There is an ongoing border dispute between Cambodia and Thailand relating to land adjacent to the Preah Vihear Temple. Although military activity in the area has declined, the situation remains tense. Australians are urged to be particularly vigilant if travelling to this area and to monitor local media.
• You should avoid protests, demonstrations and political gatherings as they may turn violent.
• There have been reports of an increase in assaults and armed robberies occurring at the Riverfront area in Phnom Penh and in Sihanoukville, particularly at isolated beaches. You should exercise vigilance when travelling through this area at all times but especially after dark.
• The World Health Organization (WHO) has confirmed cases of Pandemic (H1N1) 2009 in a number of countries throughout the world, including Cambodia. For a list of these countries, visit the WHO website. For further information and advice to Australians, including on possible quarantine measures overseas, see our travel bulletin on Pandemic (H1N1) 2009.


• We advise you to exercise caution and monitor developments that might affect your safety in Laos because of the risk of civil unrest and criminal activity.
• Pay close attention to your personal security and monitor the media for information about possible new safety or security risks.
• Pandemic (H1N1) 2009 has spread throughout the world. The World Health Organisation (WHO) provides useful information for individuals and travellers on its website. For further information and advice to Australians, including on possible quarantine measures overseas, see our travel bulletin on Pandemic (H1N1) 2009.


• We advise you to exercise caution and monitor developments that might affect your safety in Vietnam because of the risk of criminal activity.
• Pay close attention to your personal security and monitor the media for information about possible new safety and security risks.
• Penalties for drug offences are severe and include the death sentence. Vietnamese authorities have announced increased security measures to combat drug trafficking. Over 20 Australians are currently serving long sentences or facing the death penalty for drug trafficking in Vietnam.
• Pandemic (H1N1) 2009 has spread throughout the world. The World Health Organisation (WHO) provides useful information for individuals and travellers on its website. For further information and advice to Australians, including on possible quarantine measures overseas, see our travel bulletin on Pandemic (H1N1) 2009.

East Timor

• We advise you to exercise a high degree of caution in East Timor because of the uncertain security situation and the possibility of civil unrest. The situation could deteriorate without warning.
• Pay close attention to your personal security at all times and monitor the media for information about possible new safety and security risks.
• You should avoid demonstrations, street rallies and public gatherings as they may turn violent.
• Medical facilities are limited and evacuation may be required in cases of serious illness or accident.
• Pandemic (H1N1) 2009 has spread throughout the world. The World Health Organization (WHO) provides useful information for individuals and travellers on its website. For further information and advice to Australians, including on possible quarantine measures overseas, see our travel bulletin on Pandemic (H1N1) 2009.
• Because of the uncertain security situation, we recommend that you register your travel and contact details with us, so we can contact you in an emergency.


• We advise you to exercise caution and monitor developments that might affect your safety in Singapore, because of the risk of terrorist attack.
• Pay close attention to your personal security and monitor the media for information about possible new safety or security risks.
• Pandemic (H1N1) 2009 has spread throughout the world. The World Health Organisation (WHO) provides useful information for individuals and travellers on its website. For further information and advice to Australians, including on possible quarantine measures overseas, see our travel bulletin on Pandemic (H1N1) 2009.


• We advise you to exercise a high degree of caution in Burma because of the uncertain security situation and possibility of civil unrest.
• Pay close attention to your personal security at all times and monitor the media for information about possible new safety or security risks.
• Be aware that protests and organising assemblies of people are illegal in Burma. You should avoid all demonstrations and street rallies as they may turn violent. You should avoid taking photographs of demonstrations, the military or police as this may not be tolerated by the Burmese authorities.
• We strongly advise you not to travel to the areas near the border with Thailand because of the risk of ethnic conflict, banditry and unmarked landmines.
• We strongly advise you not to travel to the areas adjacent to the border with China in north-eastern Shan State, in particular the Kokang Special Region/Northern Shan State Special Region 1, due to increased activity by the security forces.
• Damage caused by Tropical Cyclone Nargis in May 2008 still affects movement in the Ayeyarwady (Irrawady) Delta. Australians are encouraged to avoid unnecessary local travel in this region.
• Pandemic (H1N1) 2009 has spread throughout the world. The World Health Organisation (WHO) provides useful information for individuals and travellers on its website. For further information and advice to Australians, including on possible quarantine measures overseas, see our travel bulletin on Pandemic (H1N1) 2009.

President Obama, Push Back on China

WASHINGTON — Last week, a moderate reformist in China, Liu Xiaobo, was sentenced to 11 years in prison by the Chinese government for the mere act of organizing and signing a petition, Charter 08, calling for political reform and the basic human rights much of the world already enjoys.

The message was clear for all those who sought restraint from a newly powerful China that now sits prominently at the tables of global governance: Since you made a fuss about releasing Mr. Liu after his arrest, we will punish him even more severely. In no uncertain terms, that will let you know that not only don’t we care what you think, but we don’t have to.

Though diplomats from Germany and Australia were among the two dozen people allowed to observe the “public trial,” the fact that no one from the American Embassy was admitted should be read as a particularly clear and open challenge to the United States.

We Chinese are intimately acquainted with this authoritarian arrogance.

During the eras of Mao Zedong and Deng Xiaoping, when I was jailed for 15 years for the “heinous crime” of putting up a wall poster, the Chinese government regarded international public opinion with this same attitude. If the Chinese people saw how the government blithely dismissed the concerns of powerful foreigners, the Communist Party rulers reasoned, they would also see they had no alternative but to submit to the overbearing authority of the government.

During Jiang Zemin’s time there were some changes. In an effort to reduce international pressure and develop the economy under favorable trade conditions from the United States, the Chinese regime yielded. Among other actions, I was released from jail and deported to the United States. That resulted in a strong backlash from the hard-liners inside of the Communist Party despite the fact that, over the years, America’s huge trade deficit is what largely fueled China’s rapid growth.

Now that China’s leaders believe their prospering nation has emerged as a player in world history just as America’s prestige has been weakened by the Iraq war and the recent financial meltdown, the hard-liners have been able to wrest the upper hand once again.

No doubt there is some truth in the notion that their revived arrogance is inspired by China’s role as America’s largest creditor. Surely this is one reason China’s leadership feels free to insult President Barack Obama, as it did during his visit to China, when they blocked broad news coverage of his public speech, and when they sent lower-level officials to negotiate with him at the Copenhagen climate talks until the last minute when Prime Minister Wen Jiabao finally granted him an audience.

Their humiliation of President Obama was not personal. It served to mark China’s power on the world stage. But more importantly, as under Mao and Deng, standing up to the American superpower is meant to stem growing internal opposition and cow China’s restless people into subservience under a one-party dictatorship. This is particularly critical as greater democracy in China would expose its own economic problems.

How President Obama responds to this challenge is not just a matter of his own honor and position; it is a matter of defending the democratic value system of the West against a challenge for ideological leadership in the 21st century.

The case of Liu Xiaobo presents an opportunity for President Obama to save face and stand up to the hard-liners’ untoward arrogance. As Mr. Liu’s case is appealed to a higher court, the United States and the rest of the West should insist that his sentence be suspended. Such a strong stance will weaken the hard-liners while strengthening the voices of peaceful reform within China.

If the United States doesn’t push back, the hard-liners will push on, with negative consequences across the whole spectrum of issues, from trade and currency valuations to global security and climate change.

The United States may owe a great deal of debt to China, but it owes a greater debt to its founding principles of freedom and human rights. If the West, led by the United States, does not counterbalance China’s new might in the world order, who will?

By Wei Jingsheng, a prominent Chinese dissident who spent 18 years in Chinese prisons, now lives in exile in Washington. Global Viewpoint/Tribune Media Services

The Risks of Indonesia Falling Asleep in an Age of Spin

Not very long ago Indonesia underwent a major makeover. Forgive the journalistic license, but it was as if citizens went to bed living in the world’s third largest democracy and woke up in the world’s largest Islamic state. This came as a shock to many citizens because, since the demise of the New Order, many had understood that they had been happily living in both.

Before this first metamorphosis, Indonesia was usually described by all kinds of analysts and journalists as an emerging, middle-income, newly democratized country that was doing quite well for itself — sometimes willingly, sometimes begrudgingly — but always quietly giving itself up to democracy creep and adopting many internationally sanctioned standards on everything from food hygiene to the freedom of the press and fiscal probity. It lumbered on at its own pace, somewhat despite what was happening to its Asean and other Asian neighbors, merrily charting its own course.

So successful was this nation in keeping a low profile that for a long time, it was hardly ever mentioned in the media at all. Print, radio and TV reports occasionally lifted the lid on a political or social challenge uncovered either by democracy wallahs in the guise of corruption, less-than-stellar delivery of public goods and services, lacking human development or by disaster wallahs as a result of being prone to natural disasters or disease. Rarely was it even mentioned that the country was home to the world’s largest number of Muslims. And if it was asserted thus, the hyperbole was quickly tempered by the reality that Indonesia, then as now, has been a secular country since the defining 1960s, run on the basis of a secular constitution that upholds the value of all major religions and celebrates all religious holidays with equal gusto.

Exactly when the nation’s first transformation was secured is not clear. Was it a result of 9/11, the Bali bombings, the first or second rounds of hotel bombings, the capture of terrorists at home, or was it when homegrown news about religious extremism began to emerge? Naming a time is not so important, because, despite the journalistic license noted above, this first process of the nation’s metamorphosis actually occurred gradually, as each of the above events played out. Change really did not take place overnight; it just seemed that way. But this first metamorphosis was an omen of the more critical changes that have since taken place.

The first metamorphosis prompted news reports and other Indonesia-related research to start an “analysis” of the nation with the assertion that ours was either the country housing the world’s largest number of Muslims or the world’s largest Islamic state.

For a while simply mentioning the large numbers of Muslims in Indonesia was as far as it went. But as time went on reporting changed from emphasizing that the majority of Indonesians were Muslims and morphed into how important Islam is in Indonesia, which then became an “emergence” of the country’s Islam, which then became a “rise” of Islam in Indonesia, which then became the “dominance” of Islam in Indonesia; and now we read about the dangers and consequences of “extremism” of Islam in Indonesia. To some shocked observers, the nation had gone down a slippery slope from being defined as an emergent democracy to being a source of homegrown Islamic terrorists. Neutral religious demographics morphed over time into the demographics of religious extremism.

While it did happen over time, the speed and seeming inexorability with which this rebranding of the nation has taken place has been as difficult to fathom as the darkest oceans that surround the country.

In this rebranding process, the country has become a hideous stereotype beyond all recognition to many of its people and for many of its analysts and watchers. Some observers are creating an Indonesian monolith that, for the most part, is unrecognizable. There is less and less space left to voice other realities. Space, for instance in which to recognize that the overwhelming majority of the nation’s Muslims are far and away extremely moderate in their views and that even within the Muslim community here the richness of views on religion, culture and learning (to mention but a few areas) is as varied and attractive as an overflowing table of Padang food. There really is something for everyone here.

But this rebranding, which highlights religious demographics over democratic credentials, says as much about the re-brander as the rebranded. It would be easy to fall into the conspiracy theory that all Western (read non-Islamic) commentators on Indonesia are only out to discredit the nation because it is Islamic. This would be just another stereotype to refute. But the change in reporting on Indonesia is deliberate and real. To many commentators the nation has changed. But is this not true of the rest of the world as well?

And if the world indeed has changed everywhere, does it really matter how our nation appears to the outside world?

Further, is Islam merely more important than it has ever been here, or is Islam more important everywhere? Are journalists and other Indonesia watchers simply documenting this change? Stories about change and ensuing embattled views certainly sell better than those that document the status quo in which we all get on together. But when crude stereotypes inform these stories and nuance is lost to broad caricature, there inevitably will be consequences. At the macro level, as views toward a particular country morph, other countries and their official assistance to them can change significantly; look no further than Afghanistan, Burma, Cuba, Iran, Iraq and Libya to mention but a few.

In Indonesia this process of spin has led to a direct rise in the number of donor funds being spent on madrassas relative to other parts of the education system. Stereotypes do have policy ramifications.

Stereotypes and reputations are equally important at the micro level. In the magnificent film “Cabaret,” which documents the rise of Nazism through the songs and skits of 1930s Berlin Cabaret halls, one comes to understand how important it is for any medium to report responsibly. Not only did these songs and skits reflect civil society’s views about Jews and Nazism, they informed them too. This is no less the case for reporting in Indonesia, whatever the medium. In summary, reviewers and reporters on Indonesia need to avoid clichés and attempt to present issues in an in-depth and nuanced manner so that, in the harsh light of a new day, we wake up in the same country in which we went to sleep. From Strategic Asia a policy and business advisory consultancy promoting cooperation among Asian countries .

Monday, December 28, 2009

Blame China, not the US, for Copenhagen

If this is how China intends to use its power, then we are in trouble.

COPENHAGEN was a disaster. That much is agreed. But the truth about what happened is in danger of being lost amid the spin and inevitable recriminations. The truth is this: China wrecked the talks, intentionally humiliated US President Barack Obama, and insisted on an awful ''deal'' so Western leaders would walk away carrying the blame. I was in the room and saw it happen.

China's strategy was simple: block the open negotiations for two weeks, and then ensure that the closed-door deal made it look as if the West had failed the world's poor once again. And sure enough, the aid agencies, civil society movements and environmental groups all took the bait. The failure was ''the inevitable result of rich countries refusing adequately and fairly to shoulder their overwhelming responsibility'', said Christian Aid. ''Rich countries have bullied developing nations,'' fumed Friends of the Earth.

All very predictable, but the opposite of the truth. Even The Guardian's George Monbiot (The Age 23/12) made the mistake of singly blaming Obama. But I saw Obama fighting desperately to salvage a deal, and the Chinese delegate saying ''no'', over and over again.

Here's what actually went on as heads of state from two dozen countries met behind closed doors. Obama was at the table for several hours, sitting between Gordon Brown and Ethiopian Prime Minister Meles Zenawi. Probably only about 50 or 60 people were in the room. I was attached to a delegation whose head of state was also present for most of the time.

What I saw was profoundly shocking. Chinese Premier Wen Jinbao did not deign to attend the meetings personally, instead sending a second-tier official to sit opposite Obama. The snub was obvious and brutal, as was the practical implication: several times, the world's most powerful heads of state were forced to wait around as the Chinese delegate went off to make telephone calls to his ''superiors''.

To those who would blame Obama and rich countries in general, know this: it was China's representative who insisted that industrialised country targets, previously agreed as an 80 per cent cut by 2050, be taken out of the deal. ''Why can't we even mention our own targets?'' demanded a furious German Chancellor Angela Merkel. Kevin Rudd was annoyed enough to bang his microphone. China bet, correctly, that Obama would get the blame for the accord's lack of ambition.

China, backed at times by India, then proceeded to take out all the numbers that mattered. A 2020 peaking yearin global emissions, essential to restrain temperatures to 2 degrees, was removed and replaced by woolly language suggesting that emissions should peak ''as soon as possible''. The long-term target, of global 50 per cent cuts by 2050, was also excised. No one else, perhaps with the exception of India and Saudi Arabia, wanted this to happen. I am certain that had the Chinese not been in the room, we would have left Copenhagen with a deal that would have had champagne corks popping in every corner of the world.

China was in an extremely strong negotiating position. It didn't need a deal. Western leaders, in particular, and also presidents Lula of Brazil, Zuma of South Africa, Calderon of Mexico and others, were desperate for a positive outcome. Obama needed a strong deal perhaps more than anyone. The US had confirmed the offer of $100 billion to developing countries for adaptation, put serious cuts on the table for the first time (17 per cent below 2005 levels by 2020), and was prepared to up its offer.

Above all, Obama needed to be able to demonstrate to the Senate that he could deliver China in any global climate regulation framework, so conservative senators could not argue that US carbon cuts would further advantage Chinese industry. With mid-term elections looming, Obama knew that this would be probably the only opportunity to go to climate change talks with a strong mandate.

This further strengthened China's hand, as did the lack of civil society political pressure on either China or India. Campaign groups never blame developing countries for failure. The Indians, in particular, have become past masters at co-opting the language of equity (''equal rights to the atmosphere'') in the service of planetary suicide - and leftish campaigners and commentators are hoist with their own petard.
With the deal gutted, the heads of state session concluded with a final battle as the Chinese delegate insisted on removing the 1.5-degree target so beloved of the small island states and low-lying nations that have most to lose from rising seas. Maldives President Mohammed Nasheed, supported by British Prime Minister Brown, fought valiantly to save this crucial number. ''How can you ask my country to go extinct?'' Nasheed demanded. The Chinese delegate feigned great offence - and the number stayed, but surrounded by language that makes it all but meaningless. The deed was done.

Copenhagen was much worse than just another bad deal: it illustrated a profound shift in global geopolitics. This is fast becoming China's century, yet its leadership has displayed that multilateral environmental governance is not only not a priority, but is viewed as a hindrance to the new superpower's freedom of action.
I left Copenhagen more despondent than I have felt in a long time. After all the hope and all the hype, the mobilisation of thousands, a wave of optimism crashed against the rock of global power politics, fell back, and drained away. GUARDIAN. By Mark Lynas, author of Six Degrees: Our future on a hotter planet, is a British environmentalist who attended the summit as adviser to the Maldives President.

Rogue generals on former Thai PM Thaksin's payroll cry for final showdown

A NEW battle line has been drawn, with the sound of war drums beating, and the red shirts dancing around the bonfire. Their spirits are high, hoping that the showdown this time will be final and victorious. It does not matter to them whether there will be bloodshed or if the nation faces ruin.

The red-shirt battle cry this time came from a rogue junior Army general, and a number of retired military officers on the payroll of fugitive Thaksin Shinawatra. They don't mind being branded traitors. The tidy sum from the man in exile is considered worthwhile.

The other day, the rogue soldier, commonly known as "Seh Daeng" warned that the battle this time will be open, with advance warning when shots will be fired upon the enemy, or whoever dares to move against the joint push for power at the command of Thaksin.
"Seh Daeng", Major General Khattiya Sawasdiphol, is a self-styled warrior, seeking the full blaze of publicity. He commands a group of militia being given political indoctrination as well as basic arms training.

He brands his warriors as "Ronin", the legendary leaderless samurai warriors of ancient times, and also soldiers of King Taksin the Great, who fought to free Thailand from Burmese occupation before the Chakri Dynasty. Some of the rogue general's fighters are mere thugs with no honour and or valour. It is sheer brute force inspired by cowardice.

The warning, of course, should cause considerable unease among those who know about Seh Daeng's notoriety. His claim to fame was an ability to predict when grenades would be launched at the rallies of the People's Alliance for Democracy. He denied with a deadpan face, of course, that he had any part in the action. There was no proof, due to lukewarm investigations by law enforcement officers.

When should the mayhem and bloodletting take place? There are variations in terms of timing for the strike. Seh Daeng said it should be sometime after Valentine's Day, as instructed by Thaksin. Another ageing general said April would be judgement day, and that would be the time for Thaksin's return to triumph.

The red shirts are not quite sure. The leaders are obviously not happy that their thunder has been stolen by soldiers. That means the credit sought will be shared together with the prize for victory. The red-shirt leaders are known for their heavy campaign expenses sought from Thaksin, and they have pocketed huge chunks much, to the chagrin of other group leaders.

One of them said the showdown day had not yet been decided. It must be decided by the red shirts at a meeting. Sounding arrogant, he uttered that Thaksin was just a red-shirt member and must heed the joint decision. Such insolence could be dealt with when all political scores are settled.

What is the government doing to prevent possible chaos? Nothing yet. Army chief, General Anupong Phaochinda, reckons there will not be any trouble, and no bloodshed. At the same time, he also assured the public through a radio interview that there would not be a coup either.

Nobody is quite sure what basis the general - who is due to retire at the end of September, 2010 - used to predict what is to come, especially when the public has seen all along that nothing much has been done to subdue Seh Daeng.

No preventative measures have been meted out yet. Prime Minister Abhisit still takes things lightly, as if he bases his hopes on the readiness of the military; and he has yet to complete the appointment of a new police chief.

Everything is hanging in the balance. The red shirts and Thaksin might overestimate their potential and ability to mobilise enough support to hold massive rallies at various locations to force out the government. There is a slim chance of success as long as there is no widespread violence, and the military refuses to take action to quell the uprising.

At least, there will be some time yet - until mid-February - if the words of Thaksin and his thugs are to be believed. But this must terrify many people, especially business people, who have been disheartened by the red shirts' unending hate campaigns.

This time around, Abhisit's political future will be put on the line. If he survives with some bruises, it should be the end of Thaksin's attempt to return to power. From now on, Abhisit must prove that he is worthy enough to lead the country against the spectre of Thaksin's political cronies ousted by court decisions.

If he can prove a higher degree of leadership and take full charge, he will not fight the battle alone - failing which, he will be another part of Thailand's tragic history. By Sopon Onkgara
The Nation

Cambodia's Hun Sen's vanity is a danger to regional solidarity

As the Thai-Cambodian dispute continues, Asean may have to step in to mediate

Cambodian Prime Minister Hun Sen should know Thailand as well as anybody, having experienced and dealt with more than a dozen Thai prime ministers. He said shamelessly the other day that the Abhisit government was planning a coup to topple him. Also, that Thailand wanted to wage war on Cambodia. He cited an alleged confidential briefing paper from the Ministry of Foreign Affairs, claiming there was a Thai strategic plan against his country to unseat him. Prime Minister Abhisit Vejjajiva was quick to deny that there is any such plan.

Hun Sen should know for a fact that the person who is really capable of toppling him is his recently appointed economic adviser -Thaksin Shinawatra. In the early 1990s, everybody knew that Thaksin, as a business tycoon, was involved in a short-lived plot to dislodge Hun Sen because of a conflict of interest over mobile telephone contracts.

At the moment, both Hun Sen and Thaksin are wedded in a marriage of convenience because they can use each other. They also have a common enemy - Abhisit. But the Thaksin-Hun Sen relationship will not last. Sooner or later, it will unravel for all to see.

Abhisit is right in saying that the Cambodians will find out the truth behind a series of idiotic political conspiracies. Only a halfwit would believe the comments concocted by Pheu Thai MP Jatuporn Promphan.

When that time comes, Hun Sen will have a lot of explaining to do to his people. Obviously, at the moment, this is not possible because the media in Cambodia have been gagged by the government. Hun Sen may be riding on Thailand's back to boost his popularity, but the problem with this kind of person is that the truth will catch up to them. As Abraham Lincoln said, "You can fool all of the people some of the time, and some of the people all of the time, but you cannot fool all of the people all of the time."

Despite the ongoing political conflict, people-to-people contacts between the two countries continue without any disruption. Thai tourists have returned to Cambodia for the festive season after many tour cancellations. This is good news, as it suggests that the spitting contest between these dull politicians has a limited bearing on the people of the two kingdoms; people who have more in common than they do differences. As neighbours, the people-to-people aspect of our bilateral ties is very important. It should not be determined and shaped exclusively by our respective governments.

At the moment, any positive movement in Thai-Cambodian relations will have to wait because neither side is willing to climb down. On the Cambodian side, the stakes get higher every day, as Hun Sen has bet on Thaksin's political ascension and his promise to reward Hun Sen if he returns triumphantly to Thailand. On the Thai side, Abhisit remains firm in his position on diplomatic protocol and practice. He is likely to stay on, albeit with the threat of disturbances by the Thaksin-backed red shirts.

Indonesian President Susilo Bambang Yudhoyono, who has been briefed by the conflicting parties since mid-November, continues to monitor the current tension between the two countries He has yet to make any move to mediate in the conflict. The dispute and Hun Sen's personal involvement are an important issue that Asean, under the new chair, Vietnam, will have to discuss.

Hun Sen's growing power, as well as his arrogance, has jeopardised the regional grouping's solidarity. If Asean is really a rules-based organisation, since the Asean Charter came into force, then Hun Sen should be the first Asean leader to be reprimanded because he has thus far broken all the rules of good neighbourliness and Asean customs. Editorial, The Nation, Bangkok

Bali Update New Year

Om Swastiastu ...

For our final edition of 2009, we've got heaps of interesting and thought-provoking news for you.

Over the past days, another Japanese woman has been murdered in Kuta. Similar to the earlier case from several months earlier, police are expected to make an arrest in the case.

The government is reviewing quotas for new taxi licenses following protests by the men who drive the island's taxi armada. The two new "no-frills" Tune Hotels come in for another round of stiff criticism, this time from local parliamentarians. And, Denpasar officials estimate that 75-100 hectares of productive land is lost to residential development each year.

Someone's not listening. Despite the fact that foreigners can't buy land in Indonesia, a Russian national has lost a small fortune attempting to do just that. As a result, two Brits are in jail and a third Indonesian man is being sought by police in the continuing litany of property fraud cases in Bali.

In other news, the Bali Association of travel agents is calling for a crackdown on rogue on-line travel agencies; tourist visitors will be eligible for VAT rebates starting April 1, 2010; local efforts are underway to instill entrepreneurialism into the minds of 6,900 unemployed Bali college graduates; and Governor Pastika sees no alternative but to move ahead with flyovers to ease traffic congestion in Bali.

Don't miss reading comments from a leading Balinese religious figure calling on his fellow Balinese to modernize their religious practice in order to accommodate progress.

Hungry? Be sure to read the 2009 wrap on Bali restaurants in this week's edition.

There's information on Bali's hardworking lifeguards; details of a four-day street festival in downtown Denpasar starting today; some practical trips on traffic on New Years Eve in Kuta and the unique celebration of a "blue moon" to happen on December 31, 2009.

Om Çanti Çanti Çanti Om ...
J.M. Daniels - Bali Update
Bali Discovery Tours
For the full report go to

Recovering Aceh bites Western hand that fed it

Despite capitalist aid in the wake of the tsunami, the rulers of Banda Aceh have turned to sharia law

HERE'S a provocative thought: if it weren't for the 2004 tsunami, Western aid workers in Banda Aceh city would not be the target of politically motivated drive-by shootings, and women in West Aceh regency would be free to wear trousers.

As of Friday, any Muslim woman in the regency will be forced to change into a government-supplied long skirt if she dares step outside in tight pants. And after she takes the trousers off -- and dons a jilbab, or Muslim head scarf -- they will be publicly shredded. The new laws will add to recently enacted provincial legislation prescribing stoning as punishment for adultery or homosexual relations.

The laws have attracted scorn and support in equal measure in Indonesia, but even they are mere pointers to a climate of uncertainty far outweighing simple questions of how Aceh has gone about rebuilding since December 26, 2004, when 170,000 of the 230,000 lives lost in the tsunami were from Aceh. Billions of dollars in foreign aid were quickly pledged from across the world, a great deal of it directly to the Indonesian province. Most of those billions were well spent. A reasonable amount, including from Australia, was squandered in mismanagement and corruption.

In Banda Aceh, emergency barracks built to house the homeless are still inhabited -- not by refugees, but by hopefuls from the sticks who want to try their luck at work in the capital. For government and aid agency workers, these drifters have stories of sorrow and official bungling keeping them from homes they claim are rightfully theirs.

A good number of people, especially Indonesians and particularly Acehnese with strong business connections, profited handsomely from the aid contract money. Much of this profit was through legitimate dealings. But plenty of it was not. Critics of this have sometimes had a hard time accepting that while capitalism and democracy -- the latter having only had its birth in Indonesia with the fall of Suharto in 1998 -- go hand-in-hand, they often do so in opaque ways, and it was never going to be a simple matter of overlaying foreign business practices on an Indonesian system.

Susilo Bambang Yudhoyono, in one of the early astute appointments of his presidency, directed former mining tzar Kuntoro Mangkusubroto to oversee a new cabinet-level body, the Aceh and Nias Reconstruction and Rehabilitation Agency. The aim was not only to reduce corruption in the rebuilding effort but also to streamline the inefficient relationships between Indonesian government agencies. Dr Yudhoyono and his then-deputy, businessman Jusuf Kalla, also saw a political opportunity to end the civil war that had blighted Aceh for three decades. Dr Yudhoyono and Mr Kalla put themselves in serious consideration for the Nobel Peace Prize after an agreement to end the conflict was signed in Helsinki in 2005, leading to a self-governance deal for Aceh enjoyed by no other Indonesian province. This peace, and the political arrangements that flowed from it, would not have been possible without the tsunami.

Indeed, the man elected governor in 2006, former rebel fighter Irwandi Yusuf, was a political prisoner who escaped when the tsunami destroyed cell walls in the central Banda Aceh jail where he was held. His epic flight set him on a course that is only now being fully played out. The no-trousers edict is one of its manifestations.
Sharia has become a watchword for Acehnese identity, even if, as Singapore-based analyst Farish A. Noor warns, its gradual imposition from within is in many ways a result of Jakarta's ``complex and at times clumsy attempt to domesticate the forces of Acehnese resistance by playing the religious card''.

The shooting attacks on foreign aid workers are another manifestation of the contradictory tsunami recovery experience. Erhard Bauer, the German Red Cross chief in Indonesia, was hit three times in the stomach and arm by two motorcycle-riding gunmen as he was being driven to the airport in November. He survived. Soon afterwards, the home of the EU chief in Aceh, John Penny, was shot up while he and his wife were inside. And a month ago gunmen opened fire on the home of two Americans who lecture in English literature at Banda Aceh's Syiah Kuala University.

Mr Irwandi is furious, demanding privately that the Indonesian military, or TNI, pull its head in even as he knows full well he cannot accuse its leaders publicly. There is no direct proof that TNI elements are paying former Acehnese rebels -- many now unemployed, and looking for new direction in their lives -- to mount the attacks on foreign aid workers.

There is no proof at all; but in the view of those from the Banda Aceh intelligentsia down to taxi drivers, there is little doubt this is the TNI taking revenge on the former rebel party's almost clean sweep in the provincial elections, and showing its determination to steal things back.

``The police believe it's the military, based on ballistics tests from the bullets used,'' political analyst Fajran Zein, from the Aceh Institute, told The Australian. ``The assumption is it's intended to accelerate the departure of foreigners from Aceh.'' Indonesia's police and military have long been at each others' throats, of course, especially since the former were hived off from the military establishment in the immediate post-Suharto reforms. ``All three attacks against foreigners are linked,'' spokesman Farid Ahmad Saleh said after the third shooting. ``They were conducted by trained professionals . . . they want to terrorise foreigners working to heal Aceh.''

The rebuilding might be almost over, but by any political and civic measure, the building of Aceh has barely begun. Stephen Fitzpatrick, Jakarta Correspondent forThe Australian

The rise of the Indonesian strategic Arms industry

A few weeks ago, Indonesia’s minister of defense officiated the launching of the new Landing Platform Dock (LPD) built by PT PAL for the Indonesian Navy. It marked a new beginning for PT PAL, the largest Indonesian shipyard located in Surabaya, East Java, after having been successful in developing various non-military ships, such as 50,000 ton cargo vessels, large oil and chemical tankers and passenger ships.

In the area of military combat ships, PT PAL has successfully developed various smaller craft such as Fast Patrol Boats in different sizes.

The development of the Landing Platform Dock has been done in conjunction with similar production in Dae Sun Shipyard, Busan, South Korea, which developed two out of four LPDs for the Indonesian Ministry of Defense through the export credit extended by the Korean financial institution. The export finance was later on extended to PT PAL to develop the remaining two LPDs. PT PAL, under the technical assistance from Dae Sun, has succeeded in building the first ship, and in the process of building the second ship.

The development by PT PAL was done with several refinements in its design. The LPD built by the Korean could accommodate three helicopters in its deck, while the LPD built by PT PAL is able to accommodate five helicopters. In addition, the refinement in its shaft enabled the ships to improve the speed from 15 knots to 15.4 knots. The achievement is going to be followed by the development of Sigma Class Corvettes and also Guided Missiles Ships currently on the drawing board. Currently, the maintenance and overhaul of the Sigma Class Corvettes are also being done by PT PAL.
The two types of ships are within the capacity of PT PAL to develop.

Another ambition, which is currently enabled by the success in developing the 50,000 tons of cargo ships, is in the form of the building of Helicopter Carriers. In a later stage, PT PAL is also developing submarine building capability. The rise in the Indonesian shipyard industry is also followed by the rapid development of the Indonesian aerospace industry. Long time in neglect, the Indonesian aerospace company PT Dirgantara Indonesia (PTDI), a metamorphosis of PT. IPTN, has shown its resilience and in fact has shown significant revival.

Recently, the Korean military signed a contract ordering four CN 235-110 MPAs, turboprop aircrafts for the military patrol. The Korean military have acquired rhese aircraft before, so they have experience using the aircraft. In fact, this purchase was done after a tight tender process which involved American, Spanish and Israeli aircraft manufacturers. In addition, the Indonesian Ministry of Defense has just issued an order of three similar planes for the Indonesian Navy. These planes, as part of a planned bigger squadron, will replace the Nomad patrol aircrafts that have been planned for its retirement. PTDI also produces helicopters, including the Superpumas.

The Indonesian aerospace industry, during its hibernation period, continued its contracts with EADS in developing the wings and other parts of Airbus 380 and other types of Airbus planes. Recently, the company received an award for achieving a high-level quality requirement in supplying the components to Airbus. With such an achievement, PTDI has prepared the ground for further challenges.

Before the monetary crisis in 1998, PTDI, then named IPTN, was in the process of developing its homegrown airplanes called N250. There is a real possibility that such a plane will be revived in anticipation for the upcoming surge in short-haul flights. Further down the road the development of passenger jets are also on the drawing board. The Brazilian aircraft industry, Embraer, has been successful in developing and marketing its ERJ (Embraer Regional Jets) to the competitive markets of the US and Europe. Such an opportunity is certainly available for the kind of aircrafts developed by PTDI. Fifty- passenger aircraft are similar to the size of the famous ERJs.

Meanwhile, the Indonesian defense industry (PT PINDAD) has also succeeded in developing APCs (Armored Personnel Carrier) for the Indonesian Army. The Indonesian Ministry of Defense placed order of 154 Combat APCs that will be used by various Army Units throughout Indonesia. The APCs are similar to the French built Renault APC that has been purchased by the Indonesian Army for the peacekeeping mission in Lebanon.

It can be expected that the new capability in developing such vehicles enables the company to develop more complicated light tanks. Neighboring Malaysia has also placed an order for 40 APCs from PT PINDAD. Such order is a testimony of the quality of the product.

PT PINDAD also supplies high quality automatic rifles, pistols, grenade launchers and munitions to the Indonesian Armed Forces. The weaponry has now become the standard issue for the military and police forces in Indonesia along with the better known AK47 and M16. Recently some of its products have also been exported, including to the United States.

The rise of the three companies has emboldened the Government to balance the sourcing of Indonesia’s defense suppliers. Having been the target of a prolonged embargo by the United States, it is believed that self-sufficiency in the defense supplies becomes a necessity in the growing complexity of geopolitics. At the same time, the development of such industries will enable them to attract the skilled human resources that nowadays are scattered across the world.

What is the way forward? These strategic industries very much depend on the orders by the foreign shipping and airline companies as well as orders from within the country. In the past, as what happened with the development of the Landing Platform Docks, these companies also depend on the external finance from the Export Finance Agencies like in Korea.

The rise of the Indonesian banking system also enables banks to help extend finance for the purchase of such equipment as long as the Government is responsible for the repayments of the loans. This is basically what has happened now with all the Export Credits, because the Government is fully responsible to repay the debts to these Export Finance Agencies. With the increasing capacity of the Indonesian Government Finance, it could be expected that 10 years from now the Indonesian budget are in much greater capacity than what we have now.

Therefore, the current government can leverage that capacity by placing orders for the military equipment that can be repaid gradually over time. In addition, the government can encourage Indonesian State Owned Companies to place orders in these industries. Pertamina, the Indonesian Oil Company, has at one time purchased a 30,000 DWT oil tanker. The ship, named the Fastron, was delivered by PT PAL in 2005. Such strategic purchasing could be repeated again in the coming years. By Cyrillus Harinowo Hadiwerdoyo, Jakarta

Sunday, December 27, 2009

Disgrace - La Trobe Uni laurels ignore Indonesian James Riyadi’s criminal record

Award 'for philanthropic activities'

LA TROBE University has awarded an honorary doctorate to a controversial Indonesian tycoon convicted for making illegal donations to support former US president Bill Clinton's political campaigns. The university bestowed the honorary doctorate of letters on James Riady in September 2007 after he made donations to the university and its overseas partners totalling $800,000. La Trobe's decision has been criticised by the National Tertiary Education Union.

"Honorary degrees are for people who have made outstanding contributions. They should not be for sale to the biggest donor, particularly those with questionable backgrounds or convictions," said the union's La Trobe branch president, Virginia Mansel-Lees.

Riady has also pledged $3.5 million to a scientific facility at La Trobe. The university has yet to receive that money, but a spokesman said a $500,000 instalment was expected next month. Riady has used La Trobe's academic honour to rebuild his image over the past two years following his criminal conviction and record $US8.6 million fine for violating America's campaign finance laws in the 1990s.

A La Trobe spokesman said Riady's academic honours recognised his "considerable support for education and his philanthropic activities". His financial contributions had nothing to do with the doctorate. As the head of Indonesia's powerful Lippo Group of banking and property companies,Riady has built several schools and a university in South-East Asia in recent years.

A controversial figure and publisher of the Jakarta Globe newspaper, Riady has been in the news in Indonesia recently after one of his senior media executives, Billy Sindoro, was filmed last year handing bribes to officials of Indonesia's anti-monopoly agency, the KPPU. Sindoro was later found guilty of corruption. In the 1990s, Riady was a key figure in one of the biggest scandals of Clinton'spresidency, when it emerged his companies had given more than $US1 million to Democratic Party and Clinton campaign funds in breach of US laws that ban foreign political donations.

Riady pleaded guilty in 2001 to a felony charge and a further 86 misdemeanour charges associated with the donations made by his company Lippo Bank, according to the US Justice Department. Riady and Lippo Bank paid a $US8.61 million fine after investigators found he was reimbursing Democrat donors with foreign funds.
A close friend since Clinton's term as Arkansas governor in the 1980s, Riady made 20 visits to the White House during the Clinton presidency.

John Huang, a friend of Riady's and a former employee of Lippo Bank, was also convicted of violating the US campaign finance laws by raising money for the Democrats through shell companies reimbursed with funds from Lippo's Jakarta headquarters. Huang entered the White House more than 70 times during the Clinton presidency and in 1993 was appointed assistant deputy secretary of the US Commerce Department. Clinton came under fierce attack for his dealings with Riady and Huang, particularly as concerns emerged about their alleged links to China. A 1998 unclassified final draft of a report by a US Senate committee found Riady and his father, billionaire businessman Mochtar Riady, had "had a long-term relationship with a Chinese intelligence agency".

Riady rejected the Senate committee's finding. Huang denied any improper activity in his dealings with the Clintons. Asked if La Trobe was aware of Riady's conviction for violating US campaign finance laws, the university's spokesman said La Trobe was
"aware of his background". By RICHARD BAKER The AGE