Saturday, March 19, 2005

The Impact of International Trends on Burma's Change Process

Quotes of the Day:

"The shrinking financial commitment to Ukrainian democracy highlights a broader gap between rhetoric and resources among budget writers in the Bush administration and on Capitol Hill as the president vows to devote his second term to 'ending tyranny in our world,' according to budget documents, congressional critics and democracy advocates."

- Funding Scarce for Export of Democracy Outside Mideast, The Washington Post,3/18/2005

"Beijing is pushing for regional political and economic groupings it can dominate, like a proposed East Asia Community that would cut out the United States and create a global bloc to rival the European Union. It is dispersing aid and, in ways not seen before, pressing countries to fall in line on its top foreign policy priority: its claim over Taiwan."

- Across Asia, Beijing's Star Is in Ascendance, The New York Times

"China is ahead of us in planning for its energy security - India can no longerbe complacent."

- Manmohan Singh, Indian Prime Minister

This FBC Posting contains:

2). U.S. to Focus on Cuba, North Korea, Burma at Human Rights Meeting
3). Funding Scarce for Export of Democracy Outside Mideast, U.S. Effort Lags
4. Across Asia, Beijing's Star Is in Ascendance, New York Times
5. India, China locked in energy game, Asia Times (on-line)

The Impact of New Developments in International Realpolitik
on Change Process in Burma

Zarni, Free Burma Coalition

This posting contains a number of articles that indicate emerging trends in international politics and economics that deserve our attention.

When President George W. Bush declared, in his State of the Union Address this year, as his administration's paradigmatic mission 'to end Tyranny' in the world, it was elixir for the demoralized corp of Burmese democrats.

It indeed touched the cord amongst many Burmese who have as yet to be weaned off
the idea of, or more accurately, deep longing for, Bagdad-style, 'air-borne democracy' back home.

This excitement has grown even wilder when Madam Condi Rice shortlisted ourbeloved, if beleaguered, nation, for the title 'outpost of tyranny'. Nevermind that tough-talking Bush confidente overlooked conveniently other nations with comparable or worse records of rights abuses and oppression.

Longing for solidarity, material assistance and ideological support from abroad may be natural and a strategic necessity.

As early as 1770's the American revolution was helped substantively by theFrench who had much to gain from slicing a sizeable piece off the British Crown's Real Estate - the American Colonies.

But one doesn't keep the faith - faith in outside solidarity and assistance -without confronting the context- and time-specific cold facts that do notcorraborate our theories and models of change - South Africa's ANC and the Mandela story, Philippines' "People Power", Havel's 'Velvet Revolution', Timorese Independence Movement and so on.

A cursory look at relevant history may be in order.

The Burmese nationalists of the by-gone era led by Aung San in their lot with the militarist Tokyo under General Togyo in order to secure arms and training in their fight against the British rule. The Masters - as the Japanese were called by the sycophantic Burmese of the day - gave the locals more than what they asked for: they came in with the new graduates - the now mythologized Thirty Comrades - and overstayed their welcome. When the Asian masters weren't as nice as the old ones our fore-fathersflip-flopped and went back to their 'old friends'.

Further, nobody would want to root for, much less bet on, the loosing team. That's for sure.

The Chinese nationalists sought assistance from the Soviets to build theChinese internal (military strength) to fight the imperialist Japanese.

The Poles' Solidarity received millions of dollars from the Vatican in Romewhere Polish-born pope, John Paul II got his men to work with Solidarity.

And the list goes on.

Noteworthy is how the interests of a particular/local struggle and, conversely, the
status quo are alligned with those of the great powers, regional or global, against the backdrop of international REALPOLITIK where sovereign states and their shifting and/or existing power blocs protect and advance their interests, ideological/cultural, political, and economic.

In international relations, there are no free lunches. And no such things as"donors" "donor nations" "permanent friends" exist when it comes to pursuit of naked power, domination - or "influence" in its benign version - and resources in advancing their own causes, be they historical blocs or individually powerful states.

As Burmese we ignore these unpleasant, if universal realities at the risk toour country's long-term structural interests.

It is not enough to have a nation or blocs of nations prepared to table adenunciative human rights motion, in the Burmese people' behalf, at otherwise respectable international fora.

To belabor the obvious, Washington,the greatest supporter of the NLD and DawAung San Suu Kyi, is moving ahead with its new policy focus - the Middle East -for strategic reasons. The highly controversial nomination of Paul Wolfowitz, to many opponents of the Bush Administration, confirms their suspicion that Washington's game plan for the coming years include using externally fostered economic development as a way of smoking out anti-Washington extremists in Islamic societies of the Middle East.

Economics and politics go hand in hand, if they are a right mix. And the Burmese who want change ignore this inter-connectedness of the seemingly distinct realms of organized human actions at the cost of our common cause.

Activism needs to be informed by more than tear-jerking rhetoric and flag-waving, if it is to have any impact on the realities on the ground.
U.S. to Focus on Cuba, North Korea, Burma at Human Rights MeetingWill not introduce resolution on China at U.N. commission session

By Kurt PyleWashington File Staff Writer

Washington -- At this year's meeting of the United Nations Commission on Human Rights, the United States will sponsor a resolution on Cuba and co-sponsor resolutions on North Korea and Burma, senior Bush administration officials say.

Speaking at a background briefing March 18, officials said the United States is working closely with other nations and the European Union to highlight human rights issues in these countries. The annual commission meetings open in Geneva March 21.

Since 1989, the United States has annually sponsored a resolution on Cuba. U.S. officials say they will do so again this year to keep the issue of Cuba's human rights on the record and to keep the personal representative of the U.N. High Commissioner for Human Rights in place within the country.

The officials said dialogue is not a valid option for addressing Cuba's human-rights record, noting Cuba's failure to live up to a paper co-signed with Canada on human rights and the general unwillingness of Cuban officials to discuss meaningful changes.

The United States will also co-sponsor other resolutions on democratic election standards, torture, and counterterrorism policy, and might sponsor a resolution on freedom of association, with particular emphasis on labor rights.

Officials also said that the administration is watching developments regarding a potential resolution on Sudan, but would support that resolution only if it were of the same strength as U.N. Security Council actions on Sudan.

Also announced were special briefings to be held the week of March 20 for member states and nongovernmental organizations on controversial War on Terror policies regarding detainees and detainee facilities. Matthew Waxman, the deputy assistant secretary of defense for detainee affairs, will lead those briefings.

In addition, Pierre-Richard Prosper, ambassador-at-large for issues involving war crimes, will give briefings the following week to special rapporteurs, or organizational reporters, who have sought access to detainee facilities on detainment policies. The briefings will increase transparency and increase accountability, officials said.

When asked why the United States had decided not to introduce a resolution on the human-rights situation in China, the officials said that recent actions by China were part of an agreement to withhold the resolution. Those actions included: an agreement to give political prisoners the same rights to sentence reductions and paroles as other prisoners; a statement saying religious education of minors is consistent with Chinese law; an announcement of the opening of an office of the International Committee of the Red Cross in Beijing; and invitations to a number of special rapporteurs, including those on torture.

The United States would still raise the issue of Chinese human rights during proceedings, officials said.

The officials also noted the imbalance of resolutions regarding the Israeli/Palestinian situation and said they hoped recent events in the region would lead to positive developments regarding the issue.

Funding Scarce for Export of DemocracyOutside Mideast, U.S. Effort Lags

By Peter BakerWashington Post Staff WriterFriday, March 18, 2005; Page A01

In the weeks after a popular uprising toppled a corrupt government in Ukraine, President Bush hailed the so-called Orange Revolution as proof that democracy was on the march and promised $60 million to help secure it in Kiev. But Republican congressional allies balked and slashed it this week to $33.7 million.

The shrinking financial commitment to Ukrainian democracy highlights a broader gap between rhetoric and resources among budget writers in the Bush administration and on Capitol Hill as the president vows to devote his second term to "ending tyranny in our world," according to budget documents, congressional critics and democracy advocates.

The administration has pumped substantial new funds into promoting democracy in Muslim countries but virtually nowhere else in the world. The administration has cut budgets for groups struggling to build civil society and democratic institutions in Russia, Eastern Europe and Asia, even as Moscow has pulled back from democracy and governments in China, Burma, Uzbekistan and elsewhere remain among the most repressive in the world.

Funding for the National Endowment for Democracy has remained flat for the past two years except in the Middle East, while separate democracy-building programs have been slashed by 38 percent in Eastern Europe and 46 percent in the former Soviet Union during Bush's presidency. The venerable beacons of American-style democracy, Radio Free Europe/Radio Liberty and Radio Free Asia, are receiving no sizable increases.

Lorne W. Craner, who until recently was assistant secretary of state for democracy, human rights and labor, said the shifting priorities are a logical byproduct of the post-Sept. 11 world, in which fostering democracy in Muslim communities came to be seen as a means to combat terrorism.

"People in other regions for two or three years after 9/11 said, 'You're not giving us as much attention as we deserve,' and I think that was a fair critique and the reason was we were creating a whole new policy for the Middle East," Craner said. "A lot of people's time was taken up by the Middle East that, but for 9/11, would have gone to other areas. Is that a bad thing? I don't think so. Certainly I would say we needed to pay more attention to the Middle East."

The focus on Iraq, he added, will be critical to setting a role model for other regions as well. "If Iraq doesn't work," he said, "a lot of people are going to say, 'Is that what you mean by democracy?' "

But others took issue with the selective aid. "The president is not putting his money where his mouth is," said Tom Malinowski, Washington director of Human Rights Watch. While giving Bush credit for investing in democracy in the Middle East, he added, "There are just big country-by-country, region-by-region differences when it comes to the administration's commitment to democracy promotion."

"There are a number of countries that aren't getting much democracy aid," said Thomas Carothers, director of the Carnegie Endowment for International Peace's project on democracy and the rule of law. Carothers pointed to mass arrests of protesters seeking restoration of democracy in Nepal this week. "There are places like that where we're losing because they're on the edge of the world and people aren't paying attention."

Among groups that will lose out is the Asia Foundation, which works to reform legal codes, foster civil society and promote women's rights in places such as Indonesia, where it is credited with helping the transition from decades of dictatorship. The Bush budget for the 2006 fiscal year cuts the foundation's grant from $13 million to $10 million. "Any cut at that level would be very difficult for our program," said Nancy Yuan, a foundation vice president.

Also facing cuts is the Eurasia Foundation, which has been told that the final installment of a $25 million grant to set up a U.S.-European-Russian democracy program in Russia may be delayed despite President Vladimir Putin's moves to clamp down on political opposition. "We can't give up," said Charles William Maynes, president of the Eurasia Foundation. "It would be disastrous if we do."

The International Republican Institute (IRI) and the National Democratic Institute for International Affairs (NDI), the main U.S. agencies that teach political activists how to conduct fair elections, devote about half of their budgets to Iraq and the Middle East, according Craner, who is now IRI president.

Measuring how much Washington spends on democracy promotion is difficult because the money is scattered among programs and much of it is embedded in grants by the U.S. Agency for International Development. But recent trends have been clear. USAID spending on democracy and governance programs alone shot up from $671 million in 2002 to $1.2 billion in 2004, but almost all of that increase was devoted to Iraq and Afghanistan. Without those two countries, the USAID democracy spending in 2004 was $685 million, virtually unchanged from two years earlier.

Bush broadened his focus beyond the Middle East in his second inaugural address when he issued a manifesto to promote democracy around the globe, declaring it U.S. policy "to seek and support the growth of democratic movements and institutions in every nation and culture."
The budget he submitted to Congress two weeks later, however, included no huge new investment in such institutions beyond the Muslim world.

The National Endowment for Democracy, which funds the IRI, the NDI and other programs, received $80 million, twice its budget of two years ago, but the entire $40 million increase went to Bush's Middle East democracy initiative, leaving everything else flat. Voice of America received an extra $10 million, but it was devoted to expanding programs in Persian, Dari, Urdu and Pashtu aimed at non-Arabic Muslim listeners. The only other broadcasts to get major funding increases were those aimed at Cuba, which went from $27 million to $37.9 million.

At the same time, funding for the Support for East European Democracy Act was sliced by an additional $14 million, to $382 million. The largest part of this program is aimed at Serbia, still in transition from the era of Slobodan Milosevic. And funding for the Freedom Support Act focusing on Russia and 11 other former Soviet republics was slashed by $78 million, to $482 million, down from $894 million in 2002.

"The U.S. government is not well organized right now to realize the administration's rhetoric on democracy," said Jennifer Windsor, executive director of Freedom House, an organization that promotes democracy abroad.

The cuts to the Freedom Support Act have drawn criticism from Senate Foreign Relations Committee Chairman Richard G. Lugar (R-Ind.); his panel this month adopted a statement urging the administration "to consider the harm its proposed cuts in funding assistance could have on U.S. interests in stability, democracy and market reform" in the region.

The funding reductions come at a time when such programs have enjoyed successes in Georgia and Ukraine, where U.S.-trained activists helped push out unpopular governments. To help consolidate the gains, Bush attached $60 million for Ukraine to his supplemental appropriation bill funding the war in Iraq, with money earmarked to promote judicial independence, youth participation in politics, legal protections for press freedom and preparations for parliamentary elections.

But even as Bush plans to host new Ukrainian President Viktor Yushchenko, the House cut the funding request nearly in half.

Rep. Jim Kolbe (R-Ariz.), chairman of the Appropriations subcommittee on foreign operations, said he focused on programs that will help Yushchenko in the short term and promised to revisit Ukraine in upcoming budget deliberations for fiscal 2006.

"There's finite resources," Kolbe said. "There's never enough to do what you want to do, but I think we're making a good effort."

© 2005 The Washington Post Company


Across Asia, Beijing's Star Is in Ascendance

August 28, 2004 By JANE PERLEZ

NEWMAN, Australia - Chris Dunbar watched as a front-endloader carved into a 60-foot wall of iron ore glinting inthe red dirt of a vast open mine in the big sky country ofnorthwestern Australia. "This is as good as it gets," saida satisfied Mr. Dunbar, 47, a manager with more than 20years of experience.

He was boasting about the richness of the blue-black ore atthe Mount Whaleback mine, but he might as well have beenbragging about the boom that has propelled economies acrossthe Asia-Pacific region. These days, Australian engineers -like executives, merchants and manufacturers elsewhere inthe region - cannot seem to work fast enough to satisfy thehunger of their biggest new customer: China.

Not long ago Australia and China regarded each other withsuspicion. But through newfound diplomatic finesse and theseemingly irresistible lure of its long economic expansion,Beijing has skillfully turned around relations withAustralia, America's staunchest ally in the region.

The turnabout is just one sign of the broad new influenceBeijing has accumulated across the Asian Pacific withAmerican friends and foes alike. From the mines of Newman -an outpost of 3,000 in a corner of the outback - totheforests of Myanmar, the former Burma, China's rapidgrowth is sucking up resources and pulling the region'svaried economies in its wake. The effect is unlike anythingsince the rise of Japanese economic power after World WarII.
For now, China's presence mostly translates into money, andthe doors it opens. But more and more, China is leveragingits economic clout to support its political preferences.

Beijing is pushing for regional political and economicgroupings it can dominate, like a proposed East AsiaCommunity that would cut out the United States and create aglobal bloc to rival the European Union. It is dispersingaid and, in ways not seen before, pressing countries tofall in line on its top foreign policy priority: its claimover Taiwan.

China's higher profile is all the more striking, analysts,executives and diplomats say, as Washington's preoccupationwith Iraq and terrorism has left it seemingly disengagedfrom the region, which in turn has found the United Statesmore off-putting and harder to penetrate after Sept. 11.

American military supremacy remains unquestioned, regionalofficials say. But the United States appears to be on thelosing side of trade patterns. China is now South Korea'sbiggest trade partner, and two years ago Japan's importsfrom China surpassed those from the United States. Currenttrends show China is likely to top American trade withSoutheast Asia in just a few years.
China's prime minister, Wen Jiabao, as much as threw downthe gauntlet last year, saying he believed that China'strade with Southeast Asia would reach $100 billion by 2005,just shy of the $120 billion in trade the United Statesdoes with the region.

Mr. Wen's claim was no idle boast. Almost no country hasescaped the pull of China's enormous craving for trade and,above all, energy and other natural resources to fuel itsstill galloping expansion and growing consumer demand.Though the Chinese government's growth target for 2004 is 7percent, compared with 9.1 percent for 2003, few areworried about a slowdown soon.

In Thailand, where the United States maintains its secondlargest embassy, Prime Minister Thaksin Shinawatra, who isof ethnic Chinese descent, is considering building apipeline across the southern Isthmus of Kra that would giveChina quicker access to Middle East oil.

In Malaysia, where exports of gas, palm oil and midrangeelectronics to China have soared, the new prime minister,Abdullah Badawi, chose to make China his first majoroverseas visit. He was accompanied by 800 businessexecutives.

Chinese executives and diplomats, sensing the advantagethat comes with one of the world's fastest-growingeconomies, have extended their reach to the point thatChina is increasingly seen as the go-to neighbor, diplomatsand other analysts say.

Many here already contend the future belongs to China. Anew generation of political and business leaders is placingits bets now on what is nearly universally seen as China'srise - and hedging against a possible waning of Americaninfluence.

Even as America's position erodes, its policies - on Iraq,North Korea, weapons proliferation - have tended to pushChina and its neighbors together. Not least among theshared interests is a "mutual concern about theunilateralism" of current American policy, said MuhammadNoordin Sopiee, chairman of Malaysia's Institute ofStrategic and International Studies.

"They need regional friendship, we need regionalfriendship," he said of the Chinese. "They need time todevelop their economy, so do we. They need protection fromthe United States and so do we.''

"Sometimes you see the glint of steel," he added of theChinese approach, "But they hide it. They want to befriends."

An Embrace for Myanmar

China's rapid gain in influence in the Asia Pacific regionranges so broadly that it can be measured at the extremes,in countries as divergent as rich and distant Australia andimpoverished but strategically important Myanmar.

The military government of Myanmar is no favorite ofWashington. The Bush administration has tried since lastyear to use trade sanctions to coerce Myanmar's generals toshare power and release the opposition leader, Aung San SuuKyi, from house arrest. But the logic of the sanctions didnot impress even a local Burmese restaurant owner on theroad from Mandalay to China.

With ceiling fans powered by scarce electricity whirringgently, he drew a rough map of Myanmar on a bare wood tabletop for a recent visitor. India, Thailand, Laos, China, hesaid pointing to the neighbors.

"As long as China remains friendly nothing will change,"said the man, who did not want to be named for fear ofMyanmar's ruthless military intelligence service. "Chinacan provide everything the country needs from a needle to anuclear bomb."

China has in fact capsized Washington's policy with its owntrade deals, which far outweigh the value of the Americanpenalties. The State Department estimates that Myanmar lostabout $200 million in the first year of the ban on importsto the United States. At the same time, it said, tradebetween China and Myanmar amounted to about $1 billion in2003.

Here is where economic leverage translates into politicalpreference. For China, Myanmar provides is too important asa gateway to energy and other natural resources to bethrown overboard. Not only has China offset the Americansanctions and kept Myanmar afloat with easy credit andtrade, but it has taken Myanmar's military leaders underits wing.

On a visit this spring to Myanmar's capital, Yangon,formerly Rangoon, China's deputy prime minister, Wu Yi,pledged to expand trade to $1.5 billion in 2005. In July,Myanmar's new prime minister, Khin Nyunt, paid an eight-dayvisit to China, where he was treated like an old friend.
He returned with a raft of accords on railways, afertilizer factory and mine exploration, as well as $150million loan for telecommunications and a $94 millionrescheduling of debts - relatively small amounts that showhow easy it has become for China to serve as Myanmar'spatron.

Chinese officials have also been willing to finance vitalhydroelectric dam projects in the absence of lenders fromanywhere else. And they recently proposed that a pipelinebe built from Myanmar's west coast port of Sittwe toKunming, the capital of China's southwestern YunnanProvince, allowing China more direct access to Middle Eastoil.

Closer to the border, the trade is in smuggled teak, a woodprized for its beauty and durability by China's surgingfurniture manufacturers. The teak trade is as illustrativeas any of the symbiotic relationship between the Chineseand Burmese authorities.

"China needs Burma's natural resources to fuel developmenton the border and in Yunnan Province as a whole," SimonPhillips, the author of a report on the trade publishedlast year for Global Witness, a British nongovernmentalorganization, said in an interview.

After China banned logging on its side of the border in1998, Chinese companies moved their workers - tens ofthousands of them - into Myanmar, he said. With the backingof political patrons in the Myanmar military, and inseparatist militias, the loggers carried on their work with impunity.

The benefits flow both ways. The provincial government inKunming depends on the companies for revenue. On Myanmar'sside, aside from the money lavished on local Burmesepolitical patrons, there was the added advantage that theChinese built roads.

One of the most important highways that China has helpedimprove is the main artery from the border to Mandalay, theold royal capital. These days, the traffic is varied. Hugetrucks, many of them 40-year-old hulks with exposedengines, still haul outsized teak logs to China. Smallervans, piled with crates of live crabs from Myanmar's IndianOcean ports, ply a profitable 48-hour journey deliveringdelicacies for Chinese epicures.

From China, a vast assortment of cheap consumer goods forlocal markets comes down the road, particularly to Lashio.On a recent day, the city market was packed with Chineseelectronics, clothes and food.

But local people, like the restaurant owner, who havewatched the traffic flows, say they mostly go one way -into China.

"Myanmar is the resource pit of China," the restaurantowner lamented. "We send our best wood to them, our bestgems, our best fruit. What do we get? Their worst fruit andtheir cheapest products."

A Good Year for Australia

For executives at BHP Billiton, the Australian giant thatis the world's largest mining company and the operator ofthe Mount Whaleback mine, it has been a very good year.They will be the first to say that China has made all thedifference.

Profits were up nearly 80 percent, the company reported inAugust, much of the growth riding on new orders from theChinese steel mills casting girders for the skyscrapersthat dot China's urban expansion.

Chinese diplomats talk of the natural fit between the twocountries: last year China became the biggest importer ofiron ore in the world, and Australia is its second biggestproducer.

With orders from China surging, BHP Billiton executives saythey are opening mines and expanding their overburdenedrail and shipping facilities at Port Hedland, on thenorthwest coast. On a recent day, no fewer than 13 shipswaited to berth and load with ore for the 10-day journey toChina.

Doug Trotter, a project geologist who works at a new BHPBilliton mine called Area C, 100 miles east of MountWhaleback, called that kind of demand "job security."

"They originally planned that this plant would produce fourmillion tons of ore next year," he said. "Instead, weexpect to produce 20 million in 2005."

Even more of a bonanza is China's demand for natural gas,which Beijing says it will use to start replacing coal.

At Karratha, another port south of Hedland, gas from 100miles out at sea arrives through underwater pipes to beliquefied in a huge processing plant. Then, for the moment,it is pumped into a fleet of mammoth domed vessels forshipment to buyers like Japan and South Korea. China is thenewest customer.

In the richest trade deal in Australian history, sealedafter Prime Minister John Howard personally lobbiedofficials in Beijing, the Chinese agreed to buy a 25-yearsupply of liquid natural gas from the Australian companyWoodside Energy for $25 billion.

The Australians beat Qatar and Indonesia in the bidding,even though their price was higher, because they couldbetter guarantee a secure supply, said Lucio Della Martina,general manager for marketing at Woodside.

Huge as the deal was, negotiations are already under wayfor a still bigger deal - valued at $30 billion - for gasat a deposit called Gorgon, also off Western Australia.

Whether natural gas or iron ore, Australian sensitivitiesabout foreign ownership of natural resources have beenoutweighed by the sheer size of the Chinese contracts. Justas compelling is the eagerness among Chinese and Australiandiplomats and executives to lock in a mutually beneficialrelationship for the distant future.

At BHP Billiton's headquarters in downtown Perth, whererecent gifts from Chinese delegations are displayed alongside older bearings from Japan and South Korea, GraemeHunt, president of BHP Billiton's iron ore division, saidthe company had even invited Chinese mills to take a 40percent stake in another iron ore mine, at Jimblebar, 30miles east of Mount Whaleback.

The Chinese mills, he said, want a secure long-term supplyand signed on for 25 years for an estimated $9 billion ofore. A slowdown in the Chinese economy was not a worry, Mr.Hunt said.
"We're still very confident," he said. "China is the fourthlargest car producer in the world but most people stilldon't have a car. There's still a long way to go before theaverage Chinese person has all the material things oflife."

U.S. Friends Uneasy

Just how American allies weigh their strategic relationshipwith America against the economic opportunities offered byChina is fast becoming a front-burner issue. America'sfriends see a difficult balancing act ahead.

Among the most nervous is Singapore. China publicly scoldedthe new prime minister of Singapore, Lee Hsien Loong,before his inauguration in August, for visiting Taiwan,where Singapore trains its soldiers, even though hisfather, Lee Kwan Yew, had visited Taiwan many times. Chinasaid it would delay trade talks as a punishment.

The gravity of the threat was not lost on Mr. Lee. In hisfirst major speech in August, the new prime ministerhastily reaffirmed Singapore's support for a "one China"policy on Taiwan, which Beijing considers a renegadeprovince.

For his part, Mr. Howard, the conservative Australian primeminister, boasted in August that one of his "greatsuccesses" was building a "very close relationship" withChina while strengthening ties with Washington. He was proud, he said, that he had given symbolic parity toPresident Bush and the Chinese president, Hu Jintao, byarranging for them to speak on consecutive days beforeParliament last fall, where Mr. Hu was given a warmer reception.

But there is also an underlying apprehension, whichsurfaced publicly for the first time in August. TheAustralian foreign minister, Alexander Downer, saidAustralia, which has been a stalwart American ally on Iraq,would have great reservations about joining the UnitedStates if a conflict broke out over Taiwan. Mr. Howard hadto move quickly to set the record straight, dressing downhis foreign minister by saying the remarks were "completelyhypothetical."

Some in the Howard government are beginning to worry thatAustralia may not long be able to have its cake and eat ittoo when it comes to China and Taiwan.

Most countries in the region, like Thailand, are already onboard with China's claim to sovereignty over Taiwan, andsome in Australia worry that China is quickly chipping awayat the last holdouts.

In his speech to the Australian Parliament, the Chinesepresident urged Australia to help seek a solution to theTaiwan question - a point interpreted here as pressing thecountry to choose between China and the United States onthe issue.

Such crossroads loom even as the Chinese and Australianeconomies become increasingly intertwined.

Some high-level American officials warn that the UnitedStates is losing its once invulnerable position in Asia.James A. Kelly, the assistant secretary of state for EastAsia and the Pacific, in unusually blunt testimony beforeCongress in June, listed Beijing's aggressive diplomaticmoves and said they were being used to strengthen China'seconomic gains.

Even if American officials have trained most of theirenergies and attention elsewhere after 9/11, China's newgeneration of diplomats, like its ambassador to Australia,Fu Ying, are keenly attuned to the potential tug ofcompeting allegiances, and seem prepared to plug any gaps.

Mrs. Fu was sent to Canberra to lock in Australia's energyresources. She is succeeding, and noted that even while theeconomic relationship brings the two countries closer,differences remain.

"When you had this kind of relationship with Japan you werefrom the same side of the fence," she said in an interviewin an influential Australian newspaper, The Sydney MorningHerald. "No ideological barriers whatsoever. With China itis different."

"Do you understand China that well?" she asked. "And doesChina understand Australia that well?"

Those questions remain to be answered.

Asia Times - Mar 17, 2005
India, China locked in energy game
By Chietigj Bajpaee

HONG KONG - In the words of Indian Prime Minister Manmohan Singh, "China isahead of us in planning for its energy security - India can no longer be complacent." These words conveyed the sense of urgency that India holds over meeting its energy needs.

India is playing catch-up with other major players in the global energy game.This realization has not come a moment too soon, given the advent of rising oilprices, India's unprecedented growth levels, lack of energy-efficient technologies and reliance on energy-heavy industries for its development.

Power shortages and blackouts continue to plague India's major cities andundermine the confidence of investors and foreign companies operating in India.These power shortages have been fueled by a combination of burgeoning growthrates, inefficiencies by the state-run power sector and power being stolen or siphoned for votes. The growing popularity of gas-guzzling sports utility vehicles and multi-purpose vehicles in India is also placing strains on its energy needs.

India, as the world's number six energy consumer, is also in a more desperatesituation compared to its peers. For example, oil imports account fortwo-thirds of India's oil consumption, while China imports a third of its crude oil consumption. Furthermore, China's proven oil reserves stand at 18 billionbarrels, compared to 5 billion barrels in India.

Indian-owned Oil and Natural Gas Company (ONGC) has invested US$3.5 billion inoverseas exploration since 2000, while Chinese-owned China National PetroleumCorporation (CNPC) has made overseas investments of an estimated $40 billion.

Indian policymakers have initiated numerous policies to address the country'sgrowing energy needs. For example, India is pushing for the creation of 15-45days of emergency reserves in Rajkot, Mangalore and Vishakapatnam. India is also diversifying beyond oil to access other energy resources, such as nuclearpower, coal, natural gas and renewable energy resources, as well as stepping upexploration activities within its borders.

Nevertheless, for the short to medium term India will have to rely on anincreasing amount of imported oil and gas to meet its energy needs. As a result, India is stepping up energy diplomacy with states in the South Asia region, as well as states further afield in Central Asia, Russia and the MiddleEast and as far away as Latin America and Africa.

ONGC, for example, has invested in offshore gas fields in Vietnam, as well asenergy projects in Algeria, Kazakhstan, Indonesia, Venezuela, Libya and Syria,while Indian Oil Corporation is looking to invest in deepwater exploration inSri Lanka. Reliance Industries, India's largest private sector oil firm, also has stakes in an offshore field in Yemen and a liquefied natural gas project inIran, and is in talks to acquire energy assets in Nigeria, Chad, Angola,Cameroon, Congo and Gabon in Africa, as well as in South America and the MiddleEast.

However, this quest for energy security is being impeded by India's sometimestense relations with energy suppliers, energy transit countries and energycompetitors. For example, just as India and China have for centuries engaged incompetition for leadership in Asia, the developing world and status on theworld stage, so the need for energy security has now raised the possibility of further competition and confrontation in the energy sphere.

India's tense relations with Pakistan also have an added dimension with the question of a gas pipeline from Turkmenistan or Iran to India, which will have to traverse Pakistani territory. Nationalism and oil are proving to be a volatile mix. Resolving territorial disputes and improving relations withtraditional adversaries will become increasingly important for India if it isto meet its energy import needs by peaceful means.

Festering disputes

While China has either resolved or shelved its border disputes, India hasactive conflicts on almost all of its borders with neighboring states. Apart from India's poor relations with Pakistan on its western borders, the ongoing violence in India's northeast with sporadic attacks on pipelines and India'spoor relations with natural gas-rich Bangladesh and China-friendly Myanmar have prevented it from fully exploiting its proximity to a region rich in energy
resources on its eastern borders.

Frosty relations between Bangladesh and India are rooted in accusations byIndia that Bangladesh is fueling terrorist movements in India's northeast inthe presence of rising Islamic fundamentalism and anti-India sentiment inBangladesh under the Bangladesh National Party (BNP)-led coalition government,illegal migration between both states, and Bangladesh accusing India ofrerouting the Ganges and Brahmaputra river systems that traverse both states.
These disagreements have slowed the progress for discussions on a natural gaspipeline from Myanmar to India, which will have to pass through Bangladeshi territory, forcing India to look into the expensive option of creating adeep-sea pipeline through the Bay of Bengal that would bypass Bangladesh.

Disagreements have recently given way to progress as a joint statement wasissued at a meeting of the energy ministers from India, Bangladesh and Myanmarin Yangon, which agreed to the construction of a 900 kilometer gas pipeline from Myanmar's offshore Shwe field to Kolkata, passing through Myanmar's Arakanstate, the Indian states of Mizoram and Tripura, and Bangladesh.

As part of the deal, Bangladesh will also get access to the gas as well as $125million in transit fees. In exchange for agreeing to the project, Bangladesh isalso pushing for a trade and transport corridor linking Nepal and Bangladeshthrough Indian territory, as well as access to hydroelectric power generated inBhutan and Bangladesh using India's power grid.

Nevertheless, several potential glitches remain. Given that the pipeline willbe traversing insurgency-infested areas across the three states adds an elementof instability to the project. Furthermore, relations between Bangladesh andIndia remain strained, as seen most recently with Bangladesh's disappointmentto India unilaterally withdrawing from the 13th South Asian Association forRegional Cooperation (SAARC) summit, which was due to be held in Dhaka.

India cited the suspension of democracy in Nepal and the deteriorating securitysituation in Bangladesh as its reasons for withdrawing, which ultimatelyresulted in the postponement of the summit.

While India's relations with Myanmar have seen considerable improvement inrecent years, Myanmar clearly remains within the Chinese sphere of influence.India has moved from voicing its opposition to the military junta's crackdownon pro-democracy activists and the arrest of Aung San Suu Kyi, the leader ofthe National League for Democracy to a more pragmatic, non-interventionist policy. This change in policy by India has been prompted by its desire to access the region's energy resources, gain access to the vast markets ofSoutheast Asia, balance the influence of China and counter Indian insurgentgroups operating from Myanmar.

Notably, Myanmar has helped Indian security forces to crack down on northeastIndian insurgent groups on at least three occasions over the past 10 years.India's more conciliatory approach with Myanmar's military regime wasdemonstrated most recently when India became the first country to host GeneralThan Shwe, the hardline chairman of Myanmar's ruling State Peace andDevelopment Council, since the ousting of moderate premier Khin Nyunt at theend of October.

However, India's warming relationship with Myanmar is making Myanmar a potential stage for Sino-Indian energy competition. For example, China is alsoin discussions with Myanmar for a 1,250 kilometer pipeline from the deepwaterport of Sittwe in Myanmar on the Bay of Bengal coast to Kunming in Yunnanprovince.

China is also looking at the possibility of pipelines traversing Pakistani andBangladeshi territory, as part of its "string of pearls" strategy to bypass thenarrow Strait of Malacca, which experiences 40% of the world's piracy andthrough which 80% of China's oil imports flow.

Construction has recently beencompleted on a deep-sea port in Gwadar in the Pakistani province ofBalochistan, in which China has provided technical expertise and financing.
China's involvement has been fueled by the proximity of the port city to theStraits of Hormuz, through which 40% of the world's oil passes. The port wouldcompete with a port facility at Chabahar in Iran, which is being jointlydeveloped by India and Iran to access the landlocked states of Central Asia andAfghanistan. China's "string of pearls" strategy also forms part of a widerChinese policy to encircle India.

India's plans to generate hydroelectric power through damming and reroutingseveral river systems have also been delayed by changes in state and centralgovernments and disputes with upstream and downstream states such as Nepal,Bangladesh and Pakistan. Most recently, Pakistan has been pushing forinternational arbitration to resolve a dispute over the Baglihar dam, whichIndia is constructing to generate power across the Chenab river running throughKashmir. Pakistan claims this project is a violation of the 1960 Indus WaterTreaty. The dispute now threatens to derail the peace initiatives between Indiaand Pakistan.

Nevertheless, India has made significant progress in tapping into energyresources within its borders, including oil discoveries in Rajasthan byUK-based Cairn Energy and gas discoveries by India's Reliance Industries offthe coast of Andhra Pradesh in the Bay of Bengal. In August 2003, ONGC alsoannounced a deep-sea project, "Sagar Samriddhi", to look for oil and gasreserves in the Arabian Sea and the Bay of Bengal. In the past two years, Indiahas reported 21 oil and gas discoveries amounting to 800 million tons of oiland gas, although domestic oil production has still been stagnant at about 32million tons annually for the past few years.

Indo-Iranian energy cooperation

The inability to resolve the Kashmir dispute between Pakistan and India hasundermined the viability of an Iran-Pakistan-India natural gas pipeline. Amemorandum of understanding was signed between Iran and India in 1993 for a $4billion 1,700 kilometer pipeline from Iran's South Pars field with 700kilometers passing through Pakistani territory. Pakistan stands to benefit withgas to meet its own energy needs and $500 million in transit fees.

The international community has also shown growing interest in theIran-Pakistan-India pipeline, with the World Bank and Japan's Sumitomo MitsuiBanking Corporation willing to finance the project. Russia also supports theproject, although the US opposes it, instead pushing for the competingtrans-Afghan pipeline project.

However, in the presence of sporadic tensions between India and Pakistan, bothstates have often proposed separate pipeline projects with Iran, with Indiasometimes pushing for the expensive option of a deep-sea pipeline that bypassesPakistan altogether. Rising oil prices and a recent improvement inIndo-Pakistani relations following a commitment to resume a "compositedialogue" in January 2004 has revived hopes for the "peace pipeline", which hasnow become one of the confidence-building measures being pursued by both states.

Notably, Pakistan has offered security guarantees for the pipeline, vowing thatgas flow will not be "switched off", even during periods of Indo-Pak tensionsor hostilities. However, the future of the pipeline project is once again indoubt due to periodic violence across the Line of Control in Kashmir and rising tensions in Pakistan's Balochistan province, with attacks by the BalochLiberation Front on energy infrastructure.

At the beginning of 2005, India also completed a $40 billion deal with Iran toimport 7.5 million tons of liquefied natural gas annually over a 25-yearperiod, as well as obtaining stakes in the development of Iran's largestonshore oilfield, Yadavaran, as well the Jufeir oilfield. The Yahavaranoilfield is a Sino-Indian-Iranian collaboration with India holding a 20% stake,China 50% and 30% with Iran. In exchange for Iranian gas, India is investing inIran's ports and energy infrastructure. Iran and India have agreed to jointlydevelop the Iranian port at Chabahar as well as the road linking the port toAfghanistan and Central Asia, and grant India exclusive rights to the port.

Cooperation in the energy arena is mirroring relations in other arenas,including trade and military cooperation. Bilateral exchanges of defense andintelligence officials are routine and in 2003 both states conducted jointnaval exercises. These developments have not only concerned India's traditionaladversaries, China and Pakistan, but also its newly found allies, Israel andthe United States, who fear that military technology supplied to India could bediverted to Iran.

Central Asia

India is at a geographic disadvantage in Central Asia when compared to China.While China shares borders with Kazakhstan, Kyrgyzstan and Tajikistan, as wellas Russia, India does not share a land border with any of the Central Asianstates. That being said, however, India's warm relations with the Soviet Union during the Cold War have provided it with influence in Central Asia. Further,India also has its soft power to exercise, with historical links that go beyond
the Indo-Soviet Treaty of Friendship to the Mughal period and Silk Road, aswell as the popularity of Indian mass culture in the region, such as Bollywoodfilms and music.

However, the presence of two unfriendly regimes standing between India andCentral Asia has slowed the progress of Indo-Central Asian cooperation in the
economic, transportation and energy spheres. For example, progress on the $3.3billion US-backed Turkmenistan-Afghanistan-Pakistan (TAP) or Trans-Afghanpipeline that is to supply gas from the Daulatabad fields in southeastTurkmenistan has been delayed by instabilities in Afghanistan and poor Indo-Pakrelations. With the ousting of the Taliban regime in Afghanistan, theinstallment of a pro-US regime and improving Indo-Pak relations, the TAPproject is back on the table.

Nevertheless, progress has been impeded by the competing Iran-Pakistan-Indiapipeline, sporadic violence in Afghanistan, Turkmenistan's isolationism andquestions over whether Turkmenistan has sufficient gas to meet India's andPakistan's needs, given its competing energy agreements with Ukraine, Russia,Iran and its own domestic consumption needs.

India's increasing interest in Central Asia's energy resources has beenaccompanied by a growing involvement in the region's security. India hasexpanded military contacts in Central Asia, allegedly establishing a militaryand medical facility in Tajikistan. Other major world powers have followedsimilar trends. Since September 11, 2001, the US has forged closer relationswith Central Asia and established a military presence in Afghanistan,Tajikistan, Kyrgyzstan and Uzbekistan. China has led in the creation of theShanghai Cooperation Organization, which is fighting the "three evils" ofextremism, terrorism and fundamentalism and promoting greater economicintegration and development in Central Asia and China's West.

Meanwhile, Russia has reasserted its presence in Central Asia under PresidentVladimir Putin, as seen most recently with Russia becoming a member of theCentral Asian Cooperation Organization. Russia has also established a permanentmilitary presence in Tajikistan, replacing its 201st division and borderguards, who had been in the region since the 1992-1997 Tajik civil war, as wellas maintaining a military presence at Kant airbase in Kyrgyzstan.

Numerous formal and informal overlapping power blocs are emerging in theregion, which spillover into the energy arena. For example, Iran, Russia andIndia are pushing for a north-south oil and gas pipeline and transportationcorridor to link Asia with Europe, which is in competition with a US-ledinitiative to create an east-west corridor on the historic Silk Road throughBaku, Tbilisi and Ceyhan. A growing military presence in the region coupledwith increasing desperation to access the region's energy resources makesCentral Asia a stage for potential great power conflicts.

Revival of the 'strategic triangle'

India has recently stepped up efforts to access energy resources in Russia, theworld's second largest oil producer and leading gas producer. India's ONGCVidesh Ltd (OVL) holds a 20% stake in Sakhalin-1 of $1.7 billion, which is setto begin production this year eventually generating 2.3 billion barrels of oiland 17.3 trillion cubic feet of gas. India is also looking to invest in theSakhalin-3 project, which is estimated to hold 4.6 billion barrels of oil and770 billion cubic meters of gas as well as investing in the jointRussian-Kazakh Kurmangazy oilfield in the Caspian Sea.

During Putin's visit to India in December, the two countries also signed amemorandum of understanding for joint exploration and distribution of naturalgas from the Caspian basin as well as building underground gas storagefacilities in India.

The controversy over the sale of the Yugansk, which produces 60% of Yukos' oiloutput and pumps 11% of Russia's oil, has also highlighted India's growinginterest in Russian energy assets. While the mysterious buyer, Baikal FinanceGroup, ended up selling its stake in Yugansk to Rosneft in December, which hasbeen acquired by Russian state-owned Gazprom, this does not preclude thepossibility of Yukos' assets being acquired by India's ONGC. ONGC has beenconsidering a $2 billion investment for a 10-15% stake in Yugansk.

Indo-Russian energy cooperation is being further cemented by political andmilitary cooperation. Just as India increasingly relies on Russian energyresources, so it also constitutes one of the biggest buyers of Russian militaryhardware. During Indian Petroleum Minister Mani Shankar Aiyar's visit to Moscowin October 2004, he voiced similar sentiments stating that "in the firsthalf-century of Indian independence, Russia has guaranteed our territorialintegrity, and in the second half it may be able to guarantee our energysecurity".

In fact, growing Indo-Russian energy cooperation resurrects former Russianprime minister Yevgeny Primakov's idea for a strategic triangle between Russia,India and China. These states are bound together by their shared interests inthe fight against terrorism, the push for a multipolar world, and respect forthe principles of state sovereignty and non-intervention with regards to theirrespective separatist movements in Chechnya, Kashmir and Taiwan.
Now the energy sector can be added to this list of shared interests. India andChina are already collaborating in the development of the Yahavaran oil fieldin Iran and India's leading state-owned gas company, Gas Authority of IndiaLimited (GAIL), has acquired a 10% stake in China Gas Holdings. With India andChina vying for assets in Yukos, Sino-Indian-Russian collaboration in theenergy sphere could be further cemented. On December 3, during Putin's meetingwith Indian Prime Minister Manmohan Singh in New Delhi, a joint statement wasreleased which included a proposal for greater cooperation with China, statingthat "the sides express their conviction in favor of a progressive increase intrilateral cooperation, which also leads to social and economic developmentamongst the three countries".


As India has made limited progress in accessing energy resources on itsdoorsteps due to poor relations with neighboring states, it has shown a growinginterest in accessing energy resources further afield, including in Africa andLatin America. In many cases, India is vying for energy resources in some ofthe most unstable parts of the world, such as Sudan, where India has invested$1.5 billion.

In July 2004, India's OVL signed a $194 million contract with the Sudanesegovernment for the construction of a 741 kilometer petroleum product pipelinefrom Khartoum refinery to Port Sudan. Khartoum refinery is currently owned bythe Sudanese government and China's CNPC. While India has made nowhere near theprogress of China on the international energy stage, it is conceivable thatIndia could become a major player in the near future, thus bringing it intocompetition with other major energy consuming countries.

Furthermore, India's and China's attempts to engage "rogue states" such asMyanmar, Iran and Sudan in order to access their energy resources isundermining attempts by the West to isolate these regimes. The quest for energyresources on the world stage could eventually be added to the outsourcingdebate as an area of contention between India and the West.

However, conflict over increasing energy needs is not inevitable. The need toaccess energy resources on the world stage can be as much a catalyst forcooperation as it can for conflict. For example, the Iran-Pakistan-India andMyanmar-Bangladesh-India natural gas pipelines raise the stakes for regionalstates to resolve their differences.

Conversely, India's plans for generating hydroelectric power through reroutingseveral river systems adds an additional element of instability in relationsbetween India and downstream and upstream states such as Bangladesh, Nepal andPakistan.

Furthermore, the increasing interdependence between China and India as a resultof their burgeoning trade relationship reduces the possibility of conflict overenergy resources. Sino-Indian bilateral trade reached $13.6 billion in 2004,making China India's second-largest trading partner. It should be noted,however, that expanding trade relations do not necessarily preclude thepossibility of conflict, as seen by the fact that China is Japan's largesttrading partner, with trade up 26% in 2004, while relations in the politicaland security arena have continued to plummet over historical animosities andterritorial disputes rooted in nationalism and energy resources.

India faces this same volatile combination in many of its disputes withneighboring countries. Thus, the jury is still out over whether India's questfor energy security will undermine international security.

Chietigj Bajpaee is Hong Kong-based energy analyst.