Friday, September 14, 2007

Indonesian International Role: Weighing its Potential Assets

By Perry PADA


There have been many gloomy predictions and worst case scenario assumptions made by many ´analysts’ for Indonesia’s future since the economic crisis in 1997, the fall of Soeharto in 1998 and the new initiation of democratic elections in 1999. To the contrary, Indonesia is currently putting all of its efforts to upgrading its national development record while improving its role in the international arena. It is unquestioned that between 1999 and 2004 the country faced its most difficult domestic challenges as it initiated its reforms. Beginning with 2004 up to the present, the new administration, began its domestic democratically rooted capacity building, fulfilled its international obligations while simultaneously improving its international image.

The new face of Indonesia in international relations demonstrates the effectiveness of its fledgling democracy. For others, Indonesia has politically remained a volatile country that at any time can erupt into social unrest thereby jeopardizing the political stability of the nation. The reason behind this pessimism is clear and simple; the democratic foundation remains weak. For socialist critiques, Indonesian democracy is baseless since it is not developed from the grass roots of society but is merely the changing of the ruling regime. Regimes come and go, with various small policy changes but the people remain as huge spectators. At this stage, I have assumed that economy and education are likely the most crucial sectors for Indonesia to maintain its democratic stability while prudently achieving its national goals.
The above briefly stated assumption will further links domestic sources to the development of the nation’s international relations. The main theme of this short essay is to demonstrate that Indonesia’s ability to successfully overcome its domestic challenges clears the way for its new international role. The fall of authoritarianism and its replacement with representative democracy, and all that entails, is the key to this new international profile

Domestic Sketch

Domestically, the current Indonesian Administration has a positive image due to its successful and peaceful political transformation from military authoritarianism to a civilian regime. Indonesia has been claimed as the third largest democratic country in the world due to its successful national, provincial and municipal elections. Since the wind of reformation has blown for merely nine years the democratic restructuring of state institutions, most especially the military has been arduous, but worth the price as the country no longer carries a negative Human Rights burden. The residual human rights issues in East Timor and Aceh have been peacefully managed and solved. The latter has actually augmented Indonesia’s image in the eyes of international society.

Unlike in the era of the authoritarian regime when the parliament merely functioned as a rubber stamp body of the executive, the present Indonesian parliament has emerged as a powerful body in its own right. The most convincing illustration of this was the successful dismissal of President Gus dur. The Parliament may be seen by some as a super body but it has clearly demonstrated its role as a check on Executive power.

Another crucial domestic element is that Indonesia is the largest Muslim democracy in the world – and has developed a unique political and societal model that does not confront its religious minorities without turning them – or the majority - into extremists. Religious tensions occasionally flare – but at the very local level which is not unique to Indonesia. It is an excellent national asset with an accommodating Islam which potentially can have an impact on other Moslem societies.

International “growing” Profile

Indonesia’s geopolitical position is crucial to the stability of the ASEAN region. It has good relationships with its neighbors and has no outstanding regional or international security issues while actively involved in a modest way contributing to the solution of regional issues. Yes, there is some conflict of interests between and among its neighbors particularly on the border issue but they had been solving peacefully within the spirit of ASEAN.

Internationally, Indonesia is a founding father of the non aligned movement, therefore has a non-partisan, relatively independent view on many issues. It is a pillar of the group of 77 at the United Nation General Assembly, and generates much support from its members its potential relations with many developing countries, especially in Africa needs much attention in the present and future.

On the issue of the Islam, it is clear that the Muslim world is currently facing an unprecedented crisis, most evident with the lack of progress in the Middle East. The opposition, or lack of understanding, of the western world, leaves little space for moderate Muslims to have their views heard as they attempt to resist extremist tendencies that are finding an increasing resonance among a population that sees no alternative model.

Concerning the issue of combating terrorism Indonesia stands firm in its commitment to eliminating it in all forms. It has directly suffered from it in recent times. Indonesia had just recovered from the first terrorist attack on Bali Island three years ago, when in October terrorists struck Bali again. The success of Indonesian security organizations to track down the most dangerous terrorist in Southeast Asia, Dr. Azahari, was hailed by many countries. Indonesia through international cooperation has been working together to build capacity and capability through the sharing of technology, know-how, and intelligence information in the fight against terrorism.

In terms of international support, Indonesia has been the beneficiary of wide-spread support during its Post-Tsunami recovery. It enjoys a tremendous ‘sympathy capital’ on four continents. Relations with the western world are excellent, and also served for conflict resolution: the peaceful solution and reconstruction found for Aceh benefited from the 200 million euros donated by European and other countries. But as opposed to other Asian countries, Indonesia has no post-colonization traumas and/or specific affinities with any European countries – and no member of the P5, in particular.

Indonesia has a traditionally close relationship to China, and mutual understanding of the problems faced by such sizeable, multi-ethnic countries, and the risks posed by separatist tendencies. Economic/financial cooperation is also mutually benefiting. China is currently the engine driving the world economy. And it is the second largest external holder of the US Federal Bonds after Japan, therefore largely controlling the ‘dollar economy’ and a major countries’ stability. On China, Indonesia understands Chinese concerns of economic growth and the social transformation implied. With 9, 8 percent growth per year and 1, 2 trillion USD national reserve and the GDP around 3 billion USD, China is certainly becoming a locomotive engine of the emerging Asia pacific era. Indonesia should position itself to benefit from China’s achievements.

Due to its Muslim majority Indonesia is a perfect partner for the United States in search of a moderator capable of acting as a good will broker with Muslim societies. A recent visit of the Foreign Minister of USA to Indonesia had shown a good improvement of Indonesian links with the United States and can lead to a bigger role in the Middle East peace process. The resumption of Indonesia – USA bilateral defense cooperation is a clear good mark of this improved relationship. The recent visit of the British Prime Minister to Muslim institutions in Indonesia was also a clear indication that Indonesia remains a reference in balancing religious issues with temperance.

Indonesia relation with Russia now is at its peak. Russia now has the world's second-largest foreign currency reserves after China because of soaring prices for its vast stores of oil and natural gas. Just recently, Russian President Vladimir Putin witnessed the signing of a $1 billion arms deal, helping Indonesia to support its defence and military. "The visit opens a new era for Russian and Indonesian relations. With Russia almost out of its transition phase after the collapse of the Soviet Union, it is essential that it seeks to foster an alliance with Indonesia if it wants to balance the U.S.," said Hariyadi Wirawan, an international relations expert at the University of Indonesia (direct quoted from The Jakarta Post). To this point, Dr. Sam Noumoff, my academic supervisor from McGill University added that the relation with Russia is a positive development in Indonesia’s foreign policy of balancing external sources. The central advantage raised is the prospect of a technology transfer. The details of this are of critical importance.

At the United Nations itself, Indonesia now is a non permanent member of the Security Council. A quite reputable achievement since Indonesia will also impact the discussion on many important issues within this high body of the UN. In many important events, Indonesia has always kept a low profile but without disengaging from its responsibility. For instance, Indonesia has increased its military participation to peacekeeping operations, serving with notable success in Africa in particular. Now Indonesia is actively involved in the Lebanon peace keeping force. In terms of UN Staff, as opposed to other Asian countries, including India and Thailand, Indonesia does not have an over-representation in terms of UN staff – Indonesia is actually below its quota.

While it is yet to be tested in real circumstances, given the above sketch, it is largely dependent on Indonesia to make its diplomacy effectively and efficiently by making accurate calculations, weighing its strength and weakness prior to its action. It would be more effective if Indonesia enhance its relationship with a potential giant economy in its Asian circle. A lot of work remains, but we are clearly heading to the excellent point.

Cascais, Lisbon, September 2007.

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Wednesday, September 12, 2007

The Israel Lobby in U.S. Strategy

By George Friedman

U.S. President George W. Bush made an appearance in Iraq's restive Anbar province on Sept. 3 -- in part to tout the success of the military surge there ahead of the presentation in Washington of the Petraeus report. For the next month or two, the battle over Iraq will be waged in Washington -- and one country will come up over and over again, from any number of directions: Israel. Israel will be invoked as an ally in the war on terrorism -- the reason the United States is in the war in the first place. Some will say that Israel maneuvered the United States into Iraq to serve its own purposes. Some will say it orchestrated 9/11 for its own ends. Others will say that, had the United States supported Israel more resolutely, there would not have been a 9/11.

There is probably no relationship on which people have more diverging views than on that between the United States and Israel. Therefore, since it is going to be invoked in the coming weeks -- and Bush is taking a fairly irrelevant pause at the Asia-Pacific Economic Cooperation summit in Australia -- this is an opportune time to consider the geopolitics of the U.S.-Israeli relationship.

Let's begin with some obvious political points. There is a relatively small Jewish community in the United States, though its political influence is magnified by its strategic location in critical states such as New York and the fact that it is more actively involved in politics than some other ethnic groups.

The Jewish community, as tends to be the case with groups, is deeply divided on many issues. It tends to be united on one issue -- Israel -- but not with the same intensity as in the past, nor with even a semblance of agreement on the specifics. The American Jewish community is as divided as the Israeli Jewish community, with a large segment of people who don't much care thrown in. At the same time, this community donates large sums of money to American and Israeli organizations, including groups that lobby on behalf of Israeli issues in Washington. These lobbying entities lean toward the right wing of Israel's political spectrum, in large part because the Israeli right has tended to govern in the past generation and these groups tend to follow the dominant Israeli strand. It also is because American Jews who contribute to Israel lobby organizations lean right in both Israeli and American politics.

The Israel lobby, which has a great deal of money and experience, is extremely influential in Washington. For decades now, it has done a good job of ensuring that Israeli interests are attended to in Washington, and certainly on some issues it has skewed U.S. policy on the Middle East. There are Jews who practice being shocked at this assertion, but they must not be taken seriously. They know better, which is why they donate money. Others pretend to be shocked at the idea of a lobbyist influencing U.S. policy on the Middle East, but they also need not be taken seriously, because they are trying to influence Washington as well, though they are not as successful. Obviously there is an influential Israel lobby in Washington.

There are, however, two important questions. The first is whether this is in any way unique. Is a strong Israel lobby an unprecedented intrusion into foreign policy? The key question, though, is whether Israeli interests diverge from U.S. interests to the extent that the Israel lobby is taking U.S. foreign policy in directions it wouldn't go otherwise, in directions that counter the U.S. national interest.

Begin with the first question. Prior to both World wars there was extensive debate on whether the United States should intervene in the war. In both cases, the British government lobbied extensively for U.S. intervention on behalf of the United Kingdom. The British made two arguments. The first was that the United States shared a heritage with England -- code for the idea that white Anglo-Saxon Protestants should stand with white Anglo-Saxon Protestants. The second was that there was a fundamental political affinity between British and U.S. democracy and that it was in the U.S. interest to protect British democracy from German authoritarianism.

Many Americans, including President Franklin Roosevelt, believed both arguments. The British lobby was quite powerful. There was a German lobby as well, but it lacked the numbers, the money and the traditions to draw on.

From a geopolitical point of view, both arguments were weak. The United States and the United Kingdom not only were separate countries, they had fought some bitter wars over the question. As for political institutions, geopolitics, as a method, is fairly insensitive to the moral claims of regimes. It works on the basis of interest. On that basis, an intervention on behalf of the United Kingdom in both wars made sense because it provided a relatively low-cost way of preventing Germany from dominating Europe and challenging American sea power. In the end, it wasn't the lobbying interest, massive though it was, but geopolitical necessity that drove U.S. intervention.

The second question, then, is: Has the Israel lobby caused the United States to act in ways that contravene U.S. interests? For example, by getting the United States to support Israel, did it turn the Arab world against the Americans? Did it support Israeli repression of Palestinians, and thereby generate an Islamist radicalism that led to 9/11? Did it manipulate U.S. policy on Iraq so that the United States invaded Iraq on behalf of Israel? These allegations have all been made. If true, they are very serious charges.

It is important to remember that U.S.-Israeli ties were not extraordinarily close prior to 1967. President Harry Truman recognized Israel, but the United States had not provided major military aid and support. Israel, always in need of an outside supply of weapons, first depended on the Soviet Union, which shipped weapons to Israel via Czechoslovakia. When the Soviets realized that Israeli socialists were anti-Soviet as well, they dropped Israel. Israel's next patron was France. France was fighting to hold on to Algeria and maintain its influence in Lebanon and Syria, both former French protectorates. The French saw Israel as a natural ally. It was France that really created the Israeli air force and provided the first technology for Israeli nuclear weapons.

The United States was actively hostile to Israel during this period. In 1956, following Gamal Abdul Nasser's seizure of power in Egypt, Cairo nationalized the Suez Canal. Without the canal, the British Empire was finished, and ultimately the French were as well. The United Kingdom and France worked secretly with Israel, and Israel invaded the Sinai. Then, in order to protect the Suez Canal from an Israeli-Egyptian war, a Franco-British force parachuted in to seize the canal. President Dwight Eisenhower forced the British and French to withdraw -- as well as the Israelis. U.S.-Israeli relations remained chilly for quite a while.

The break point with France came in 1967. The Israelis, under pressure from Egypt, decided to invade Egypt, Jordan and Syria -- ignoring French President Charles de Gaulle's demand that they not do so. As a result, France broke its alignment with Israel. This was the critical moment in U.S.-Israeli relations. Israel needed a source of weaponry as its national security needs vastly outstripped its industrial base. It was at this point that the Israel lobby in the United States became critical. Israel wanted a relationship with the United States and the Israel lobby brought tremendous pressure to bear, picturing Israel as a heroic, embattled democracy, surrounded by bloodthirsty neighbors, badly needing U.S. help. President Lyndon B. Johnson, bogged down in Vietnam and wanting to shore up his base, saw a popular cause in Israel and tilted toward it.

But there were critical strategic issues as well. Syria and Iraq had both shifted into the pro-Soviet camp, as had Egypt. Some have argued that, had the United States not supported Israel, this would not have happened. This, however, runs in the face of history. It was the United States that forced the Israelis out of the Sinai in 1956, but the Egyptians moved into the Soviet camp anyway. The argument that it was uncritical support for Israel that caused anti-Americanism in the Arab world doesn't hold water. The Egyptians became anti-American in spite of an essentially anti-Israeli position in 1956. By 1957 Egypt was a Soviet ally.

The Americans ultimately tilted toward Israel because of this, not the other way around. Egypt was not only providing the Soviets with naval and air bases, but also was running covert operations in the Arabian Peninsula to bring down the conservative sheikhdoms there, including Saudi Arabia's. The Soviets were seen as using Egypt as a base of operations against the United States. Syria was seen as another dangerous radical power, along with Iraq. The defense of the Arabian Peninsula from radical, pro-Soviet Arab movements, as well as the defense of Jordan, became a central interest of the United States.

Israel was seen as contributing by threatening the security of both Egypt and Syria. The Saudi fear of the Palestine Liberation Organization (PLO) was palpable. Riyadh saw the Soviet-inspired liberation movements as threatening Saudi Arabia's survival. Israel was engaged in a covert war against the PLO and related groups, and that was exactly what the Saudis wanted from the late 1960s until the early 1980s. Israel's covert capability against the PLO, coupled with its overt military power against Egypt and Syria, was very much in the American interest and that of its Arab allies. It was a low-cost solution to some very difficult strategic problems at a time when the United States was either in Vietnam or recovering from the war.

The occupation of the Sinai, the West Bank and the Golan Heights in 1967 was not in the U.S. interest. The United States wanted Israel to carry out its mission against Soviet-backed paramilitaries and tie down Egypt and Syria, but the occupation was not seen as part of that mission. The Israelis initially expected to convert their occupation of the territories into a peace treaty, but that only happened, much later, with Egypt. At the Khartoum summit in 1967, the Arabs delivered the famous three noes: No negotiation. No recognition. No peace. Israel became an occupying power. It has never found its balance.

The claim has been made that if the United States forced the Israelis out of the West Bank and Gaza, then it would receive credit and peace would follow. There are three problems with that theory. First, the Israelis did not occupy these areas prior to 1967 and there was no peace. Second, groups such as Hamas and Hezbollah have said that a withdrawal would not end the state of war with Israel. And therefore, third, the withdrawal would create friction with Israel without any clear payoff from the Arabs.

It must be remembered that Egypt and Jordan have both signed peace treaties with Israel and seem not to care one whit about the Palestinians. The Saudis have never risked a thing for the Palestinians, nor have the Iranians. The Syrians have, but they are far more interested in investing in Beirut hotels than in invading Israel. No Arab state is interested in the Palestinians, except for those that are actively hostile. There is Arab and Islamic public opinion and nonstate organizations, but none would be satisfied with Israeli withdrawal. They want Israel destroyed. Even if the United States withdrew all support for Israel, however, Israel would not be destroyed. The radical Arabs do not want withdrawal; they want destruction. And the moderate Arabs don't care about the Palestinians beyond rhetoric.

Now we get to the heart of the matter. If the United States broke ties with Israel, would the U.S. geopolitical position be improved? In other words, if it broke with Israel, would Iran or al Qaeda come to view the United States in a different way? Critics of the Israel lobby argue that, except for U.S. support for Israel, the United States would have better relations in the Muslim world, and would not be targeted by al Qaeda or threatened by Iran. In other words, except for the Israel lobby's influence, the United States would be much more secure.

Al Qaeda does not see Israel by itself as its central problem. Its goal is the resurrection of the caliphate -- and it sees U.S. support for Muslim regimes as the central problem. If the United States abandoned Israel, al Qaeda would still confront U.S. support for countries such as Egypt, Saudi Arabia and Pakistan. For al Qaeda, Israel is an important issue, but for the United States to soothe al Qaeda, it would have to abandon not only Israel, but its non-Islamist allies in the Middle East.

As for Iran, the Iranian rhetoric, as we have said, has never been matched by action. During the Iran-Iraq War, the Iranian military purchased weapons and parts from the Israelis. It was more delighted than anyone when Israel destroyed the Iraqi nuclear reactor in 1981. Iran's problem with the United States is its presence in Iraq, its naval presence in the Persian Gulf and its support for the Kurds. If Israel disappeared from the face of the Earth, Iran's problems would remain the same.

It has been said that the Israelis inspired the U.S. invasion of Iraq. There is no doubt that Israel was pleased when, after 9/11, the United States saw itself as an anti-Islamist power. Let us remind our more creative readers, however, that benefiting from something does not mean you caused it. However, it has never been clear that the Israelis were all that enthusiastic about invading Iraq. Neoconservative Jews like Paul Wolfowitz were enthusiastic, as were non-Jews like Dick Cheney. But the Israeli view of a U.S. invasion of Iraq was at most mixed, and to some extent dubious. The Israelis liked the Iran-Iraq balance of power and were close allies of Turkey, which certainly opposed the invasion. The claim that Israel supported the invasion comes from those who mistake neoconservatives, many of whom are Jews who support Israel, with Israeli foreign policy, which was much more nuanced than the neoconservatives. The Israelis were not at all clear about what the Americans were doing in Iraq, but they were in no position to complain.

Israeli-U.S. relations have gone through three phases. From 1948 to 1967, the United States supported Israel's right to exist but was not its patron. In the 1967-1991 period, the Israelis were a key American asset in the Cold War. From 1991 to the present, the relationship has remained close but it is not pivotal to either country. Washington cannot help Israel with Hezbollah or Hamas. The Israelis cannot help the United States in Iraq or Afghanistan. If the relationship were severed, it would have remarkably little impact on either country -- though keeping the relationship is more valuable than severing it.

To sum up: There is a powerful Jewish, pro-Israel lobby in Washington, though it was not very successful in the first 20 years or so of Israel's history. When U.S. policy toward Israel swung in 1967 it had far more to do with geopolitical interests than with lobbying. The United States needed help with Egypt and Syria and Israel could provide it. Lobbying appeared to be the key, but it wasn't; geopolitical necessity was. Egypt was anti-American even when the United States was anti-Israeli. Al Qaeda would be anti-American even if the United States were anti-Israel. Rhetoric aside, Iran has never taken direct action against Israel and has much more important things on its plate.

Portraying the Israel lobby as super-powerful behooves two groups: Critics of U.S. Middle Eastern policy and the Israel lobby itself. Critics get to say the U.S. relationship with Israel is the result of manipulation and corruption. Thus, they get to avoid discussing the actual history of Israel, the United States and the Middle East. The lobby benefits from having robust power because one of its jobs is to raise funds -- and the image of a killer lobby opens a lot more pocketbooks than does the idea that both Israel and the United States are simply pursuing their geopolitical interests and that things would go on pretty much the same even without slick lobbying.

The great irony is that the critics of U.S. policy and the Israel lobby both want to believe in the same myth -- that great powers can be manipulated to harm themselves by crafty politicians. The British didn't get the United States into the world wars, and the Israelis aren't maneuvering the Americans into being pro-Israel. Beyond its ability to exert itself on small things, the Israel lobby is powerful in influencing Washington to do what it is going to do anyway. What happens next in Iraq is not up to the Israel lobby -- though it and the Saudi Embassy have a different story.

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Monday, September 10, 2007

Russia, Indonesia Set $1 Billion Arms Deal, Moscow Seen Trying to Boost Clout in Asia

By Peter Finn
Washington Post Foreign Service
Friday, September 7, 2007; Page A14

MOSCOW, Sept. 6 -- During a one-day visit to Indonesia on Thursday, President Vladimir Putin witnessed the signing of a $1 billion arms deal that many analysts here see as part of a broader Russian effort to restore diplomatic and military clout in the Asia-Pacific region and make some money, as well.

Indonesia, which until 2005 was under a U.S. arms embargo because of human rights abuses, will purchase Russian tanks, military helicopters and submarines. Last month, Russia said it would sell six fighter jets to Indonesia, the world's most populous Muslim nation, as part of the deal.

"The deals signed in Indonesia are part of a Kremlin strategy to expand its influence in Asia and the Middle East," said Alexei Makarkin, an analyst at the Center for Political Technologies in Moscow. "Russia is trying to pursue a multipolar policy in the world and considers itself to be one of its poles."

But unlike the former Soviet Union, he added, today's Kremlin is willing to ship arms only "to those countries who can pay."

Russia is helping Indonesia do that by providing a $1 billion line of credit, repayable over 15 years. Weighed down with foreign debt in the 1990s, Russia now has the world's second-largest foreign currency reserves after China because of soaring prices for its vast stores of oil and natural gas.
"We agreed to develop our cooperation in energy, mining, aviation and the telecommunications sector," said Putin, who stopped in the Indonesian capital, Jakarta, on his way to the Asia-Pacific Economic Cooperation summit in Australia. "There's also a good perspective in defense and military."

For Indonesia, the country's defense minister said, the deal comes with none of the strings that encumber similar purchases from the United States and Western Europe.

"Requirements for purchasing arms from Western countries are complicated, with preconditions attached, such as human rights, accountability, not to mention licensing," Juwono Sudarsono told reporters in Jakarta. "In our past experience with Britain, we were not allowed to use Scorpion tanks in Aceh, even though we were facing armed separatists."

In 2005, a peace agreement between rebels and the government ended three decades of conflict in that province. Since the lifting of the U.S. embargo later that year, Indonesia has mostly obtained spare parts and technical support from the United States, once its primary arms supplier.

Sudarsono said Thursday that he was glad to be able to "reduce dependence on the United States."

Under Putin, Russia has become determined to project its military, diplomatic and energy power into the Pacific, an area it neglected after the fall of the Soviet Union. Besides the arms deal, Russian companies have signed billions of dollars worth of deals in the mining and energy sectors with Indonesian companies, Russian officials said.

This year, Putin signed a $200 billion, seven-year rearmament plan for Russia's military. The package includes money for the Pacific Fleet, a major Pacific submarine base and new land- and sea-based intercontinental missiles. Last month, Russia resumed global patrols by its long-range strategic bombers, sending two of them far across Pacific Ocean waters to the vicinity of Guam island, site of a major U.S. base.

On Thursday, Britain and Norway scrambled jets to trail Russian bombers conducting the new patrols. The Russian Defense Ministry described the flights by eight strategic bombers as a "routine exercise" and said that although the aircraft had encountered planes from NATO countries, there were "no incidents."

Last month, Russia conducted a joint military exercise with China, one of its major arms customers. And it has made or is negotiating other arms deals across Asia, including with India, Malaysia, Burma and Vietnam.

Some observers remain skeptical that Russia will become a major competitor of the United States and, increasingly, China for influence in the region.

"In my view, what is happening is that when certain rough edges appear in relations between the USA and such countries as Malaysia or Indonesia, Russia immediately makes an attempt to squeeze in and fill this gap," said Alexander Golts, a military analyst and journalist in Moscow. "Its policy is developing these kind of niches. But we can hardly talk about any serious influence."

After a meeting, Putin and Indonesian President Susilo Bambang Yudhoyono said they had discussed Iraq, North Korea and Iran, among other subjects, and they obliquely criticized the Bush administration's approach to global issues.

"The two presidents strongly believe that international and regional conflicts . . . should be settled by peaceful means," they said in a joint statement. "The use of force is admissible as the last resort and only in accordance with the United Nations charter."

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Sunday, September 09, 2007

APEC: The Price of Success

By Bart Mongoven

Leaders of governments representing nearly 60 percent of the world's economy are meeting this week at the annual Asia-Pacific Economic Cooperation (APEC) summit in Sydney, Australia. Despite APEC's growing clout, however, the summit is getting little attention from the world's leading nongovernmental organizations (NGOs) and international institutions -- groups that have major stakes in the event's outcome.

It is becoming a cliche to say that the Atlantic no longer is the center of the world, but few major global policy institutions appear ready to grasp what it means for the Pacific Rim to be the Atlantic's replacement. This is evident in the fact that NGOs and international institutions still pay more attention to meetings of the G-8, World Trade Organization (WTO), World Bank and most other major global institutions than they pay to APEC. What these organizations, and others focused on the development of global public policies, are missing is that many of the most important rules for global commerce are being developed quietly at APEC. The question is whether they will figure this out before they have missed a critical time in the development of global policies.

APEC, founded in 1989 to promote free trade, is an organization of 21 Pacific Rim countries, including the three largest economies in the world: the United States, China and Japan. The organization, however, has faced criticism in recent years from those, especially business leaders, who say it is not fulfilling its mission. The critics say APEC once focused on big issues such as economics and trade but now also discusses a raft of security, political and policy issues.

In fact, this criticism is the price of success. APEC is more important now than ever, and though its role in some realms remains modest -- security is the most glaring example -- in other areas it is emerging as the global decision-making body. To that extent, APEC's growing power is most clearly on display when it tackles issues such as climate change and consumer product safety.

APEC's Growing Importance

At the time of its founding, at Australia's urging, APEC was seen as Australia and New Zealand's answer to the ongoing talks on the North American Free Trade Agreement and the creation of the European Union. Back then, the Pacific Rim was responsible for less than 50 percent of global gross domestic product (GDP), so APEC was widely seen as a small, but possibly important, trade bloc.

As Asia grew, so did APEC's importance. Its 1993 meeting served as a springboard for stalled global free trade talks, bringing together representatives from large industrialized countries such as the United States and Japan, large developing countries such as China and South Korea and a host of smaller developing countries. In 1994, the members pledged to work toward an APEC-wide free trade area. This pledge, the Bogor Goals, remains an ongoing concern, though progress on it has slowed.

Efforts toward an APEC-wide free trade area have stalled for a number of reasons, beginning with the Asian financial crisis of 1997 and the resulting U.S. disinterest in the region. The rise of China in the following years led to a re-engagement by the United States, although many Pacific countries now fear the United States uses APEC as a bulwark against successful regional economic integration.

Even as free trade talks have slowed, however, the region's global economic importance has grown. Thus, decisions made by APEC members have global consequences for commerce. This power has led to an increased focus on developing common languages and rules, which tends to overshadow the slow work toward trade integration.

APEC and Climate Change

APEC's power to set global public policy is most clearly evident in its role in the climate change negotiations. APEC climate talks, which have been going on for more than a year, are designed more to make a statement than to develop a specific policy -- though the statement APEC makes in the coming 12 months will dictate the future of global climate negotiations.

APEC's importance has grown because a new international climate treaty, to replace the Kyoto Protocol, is inevitable. In the United States, the political winds have changed and the next presidential administration will oversee a national climate policy. For the United States to meet whatever climate policy emerges, it will need to take part in an international regime -- one that offers a robust emissions-trading mechanism. For a number of reasons, the United States has not joined the existing Kyoto-based system. Instead, it envisions a Pacific-focused international climate regime, one that uses the APEC countries as its base.

The Sydney APEC summit will offer the first glimpse of U.S. President George W. Bush's proposed climate regime. It will likely include binding emissions-reduction targets for every signatory. The emissions reductions likely will be framed in terms of emissions per unit of GDP, with the objective being to promote economic growth that is less carbon-intensive than it otherwise would be. It also is likely to call for a continuation of the emissions trading system and Clean Development Mechanism developed under Kyoto. By defining the emissions cap in terms of growth and by keeping a clean development mechanism, the agreement would address the complaint by developing countries that climate change policies are a way for industrial giants to force poor countries to pay equally for damage done primarily by industrialized countries.

The APEC agreement on climate change is a severe challenge to the Kyoto Protocol and to the European Union, which favors Kyoto and envisions a new follow-on agreement that serves European needs specifically. However, other than Indonesia and occasionally Japan, APEC countries are not especially fond of the Kyoto Protocol, so the perpetuation of Kyoto is not a particularly popular idea. Furthermore, in the wake of Russian threats to shut off oil and natural gas to EU countries, the union needs to spur development of alternative energy paths far more than it needs the perfect climate pact. In the final analysis, the European Union is being forced by geopolitics to cut emissions, and it does not want to lose its competitiveness to countries whose emissions are not bound by international agreements. Therefore, it can least afford for there not to be a deal -- but the other countries necessary to make the system work do not approve of what the union is selling.

In the eyes of environmentalists, the only reason a Pacific-based climate system can effectively counter Kyoto is that the Pacific Rim is the center of global greenhouse gas emissions, so if avoiding disastrous climate change requires reducing carbon emissions, the APEC nations must be involved. More than two-thirds of the world's greenhouse gas emissions come from APEC nations. The world's leading carbon emitter, China, has an economy that (reportedly) is growing at 10 percent per year. The second leading emitter, the United States, has slower growth, but it has grown far more quickly since Kyoto was signed than has Europe, Japan or most other major greenhouse gas-emitting nations.

Product Safety

Another major APEC issue is product safety. The APEC draft on the issue was released the same day that toymaker Mattel announced a recall of an additional 800,000 toys manufactured in China, citing fears of lead in the paint used. The past two months have seen a number of scares about China's food and consumer products, and even Beijing is beginning to search for ways to solve the quality assurance problems. Other major manufacturers of consumer products in Asia are likely sighing in relief that China is the target because their manufacturers face many of the same problems as their Chinese counterparts -- primarily personal alliances that cement business relationships rather than competition on price and safety. In other words, although the world's attention is on Chinese goods, products from Vietnam, Cambodia and Indonesia likely have similar problems.

So the question for each of the major manufacturing countries is how to dramatically improve quality assurance while maintaining a level playing field in terms of costs. The APEC secretariat, multinational companies and some APEC governments see international standards as the answer to food and product safety, meaning either a regional quality assurance standard or a regional commitment to follow global standards. At APEC, the heads of state will agree on the creation of an APEC-wide "food safety cooperation forum" that will harmonize food safety with global standards, such as those offered by the International Organization for Standardization (ISO)'s ISO-22000 and the Codex Alimentarius Commission. Presumably, this forum will be designed to help both national regulators and corporations in the APEC region apply international standards to their operations. It likely will also help establish best practices for regulators working at points of export and import to help find flaws or safety hazards in goods.

The Power of Size

APEC is responsible for more than half of the world's global exports. China has surpassed Germany as the world's leading exporter, while the United States is the world's third-largest. Food exports from Asia remain slight -- the United States imported only $8 billion in food from China in 2006 -- but the percentage of consumer products made in Asia is tremendous. While Asian governments have largely ignored ISO and Codex until recently, how Asian manufacturers and auditors interpret these standards will determine what these standards really mean.

Similarly, because it is the center of greenhouse gas emissions growth -- and because China has said it will not take part in a Kyoto system that requires emissions reductions but hinted it would join a U.S.-centered system -- opposition to the APEC climate process has been mild.

Still, it is unclear from either rhetoric or behind-the-scenes activity whether the major players in product safety debates or climate change advocacy understand the depth and breadth of the Pacific Rim's power. NGOs of all stripes have tickets and hotel rooms reserved for the November meeting in Bali, Indonesia, where the next treaty within the Kyoto system will be discussed. Few mention APEC or the successor meeting in September in Washington, hosted by Bush.

Similarly, while people are well aware that Chinese products are to blame for various scares in consumer products, few are calling for increased attention to Codex and ISO. Instead, they halfheartedly hope Beijing and Hanoi can develop better regulations to ensure safety.

APEC and the WTO

Finally, a side note in the documents being signed in Sydney is the vow by the various governments to continue to press for both an acceleration of the Doha round of WTO negotiations and for the continued work toward an APEC free trade pact. APEC agreed in 1994 to work toward the development of a free trade zone. While the move toward this has been slowed by the dramatic increase in the seriousness of APEC's role in the world, the mission continues.

Nothing makes this clearer than APEC's standing opposition to India's membership in the organization. The countries active in APEC view India as a major impediment to progress toward free trade, since India's government has long stood for economic nationalism and protection of indigenous industries. As much as APEC would benefit from the economic heft India would add, it is not worth the pain. It is clear, then, that as long as APEC keeps India out, the members still intend to follow through on the plan to create a free trade agreement.

The other issues being discussed in Sydney should highlight the message an APEC free trade zone would send to Europe and India. APEC's share of global output could reach 65 percent within 10 years, and it could create an economy that could easily exist without the rest of the world. As with climate change, the European Union might find that it needs the Pacific far more than the Pacific needs Europe. The region is becoming the most important place for trade and commercial policy development, and APEC is currently acting as the venue where this power is most clearly expressed. Before APEC can reach its full potential, however, its Asian members must begin to trust that the primary reason for U.S. involvement is not to hold back Asian integration. If the trust issue is resolved, Asian nations could see that the power they gain through policy and economic alliances with the United States makes continued pursuit of APEC's long-term goals a worthwhile gamble.

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