by Alex Evans | May 6, 2009 | East Asia and Pacific, South Asia
As Sri Lanka’s assault on the Tamil Tigers continues, Kotare has an interesting observation on an angle of the conflict that I’d missed:
While the US is entangled in an escalating war in Afghanistan, China is quietly strengthening its strategic position in the Indian Ocean. One sign of this is the way Beijing is helping the Sri Lankan government crush the Tamil Tigers while building a port at Hambantota, on Sri Lanka’s south coast.
China’s Achilles heel is its reliance on imported oil and minerals from the Middle East and Africa, and the need to ship those resources across the Indian Ocean and through the Straits of Melaka and the South China Sea. This poses a security problem for Beijing. If China and the US went to war, say over Taiwan, the US Navy could stop the flow of oil and minerals and do real damage to the Chinese economy and war machine. Similarly, India, which has a large navy, could interdict China’s ships in the Indian Ocean.
To safeguard its shipping, China needs to be capable of projecting power into the Indian Ocean, the Middle East and Africa. From ports and airfields like Hambantota, sited along the Eurasian seaways like a ‘string of pearls’, Chinese forces could gather intelligence, protect its shipping and attack hostile navies.
by Alex Evans | May 6, 2009 | East Asia and Pacific, Economics and development, Global system
Back in March, I flagged up the significance of a proposal from Zhou Xiaochuan, China’s central bank governor, for the dollar to be replaced as the world’s reserve currency with a new, more multilateral system based on Special Drawing Rights – and noted that his proposal harked back explicitly to discussions at the Bretton Woods summit in 1944.
As Ngaire Woods points out over at the GEG blog, this is just one component of a Chinese strategy for pursuing power shift in the international monetary order. Another is the increasingly emphatic Chinese tone on the need for IMF reform – with Wen Jiabao making clear back in March that much-needed additional Chinese contributions to the IMF would be contingent on more voice for developing countries.
Now, another important plank of their reform drive has been unveiled: a new $120 billion emergency currency pool based on the existing Chiang Mai initiative. Details according to the WSJ:
The initiative aims to create a network of bilateral currency-swap arrangements among Asean and the three East Asian countries. Asean includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
Japan, South Korea and China will provide 80% of the $120 billion currency pool and Asean members the remaining 20%. Japan will contribute $38.4 billion, while China, including Hong Kong, will also offer $38.4 billion. South Korea will provide $19.2 billion. Under terms of the program, smaller Asian economies will be able to borrow larger amounts in proportion to their contributions than the more-developed economies.
As Ngaire observes, proposals in the late 1990s for a new Asian Monetary Fund were publicly torpedoed by the US, but it’s the bilateral swap arrangements that Asian nations started to agree then that have grown into the initiative announced yesterday. And, she stresses,
It is worth highlighting that while China is politely offering something to the IMF (it announced a contribution of $40 billion), it has just announced an almost equivalent contribution ($38.4 billion) to the Asian pool.
All this creates useful independence from the IMF, she continues:
…the ASEAN+3 countries have created for themselves an alternative to borrowing from the IMF. Their arrangements actually use the IMF as a monitor, but crucially guard control (within the region) over their shared reserves. It has emerged in no small part because countries in the region see the IMF as a useful but American instrument of economic coordination.
by Alex Evans | May 6, 2009 | What we're watching
[youtube]http://www.youtube.com/watch?v=D2FX9rviEhw[/youtube]
by Richard Gowan | May 5, 2009 | Off topic
From Indrani Sen at the NYT:
Swine flu, or H1N1 flu, cannot be transmitted through pork or pork products, experts and public health officials have repeatedly reassured us. Yet several countries have banned American pork, and Egypt last week culled thousands of pigs. Here in America, some consumers are steering clear of pork chops, pork commodity prices have fallen, and hog farmers’ worry that the flu will make a large dent in sales.
It’s a perfect excuse to declare my personal “Support Pork Week.” How often can one feel righteous about eating pork?
Jennifer Small, co-owner of Flying Pigs Farm in Shushan, NY, applauded my selfless decision. “That’s what I like to hear!” she told me, before laying out a slightly daunting schedule: “You can start with bacon for breakfast on day one,” she said. “Then on day two you can have a ham sandwich at lunch. Sausage and peppers and onions for dinner on day three. Then you can take the leftovers and eat them for breakfast on day four. On day five for lunch you can eat one of those awesome Vietnamese sandwiches, or even better, a Cuban sandwich from Harlem… I think a pork liver pâté as an hors d’oeuvre on day six. On day seven, if I had my way, I’d do something like proscuitto and eggs for breakfast.”
Hear, hear. Dedicated readers may recall that, back in those halcyon pre-swine-flu days, I was already preaching the joys of the Bacon Explosion, a novel BBQ recipe that could keep Jennifer Small in funds for some time. Next up, why not try a Bacon Crust Pizza?*
* Of course I know why, but it won’t give you swine flu!
by Richard Gowan | May 5, 2009 | Economics and development, Europe and Central Asia, North America, UK
An intriguing graphic from E!Sharp, the European policy magazine:
