17 October 2013

From Romance to Realism in U.S.-India Ties

By Richard Fontaine
October 16, 2013


Doubts about the U.S.-India relationship abound. But the strategic logic is solid.

Blink and you might have missed the U.S.-India summit earlier this month. Sitting in the Oval Office, Indian Prime Minister Manmohan Singh watched as U.S. President Barack Obama began his remarks – by talking about Syria. Later that day, the president reappeared before the press, not to tout a burgeoning partnership with New Delhi but rather to announce his telephone diplomacy with Iran and to press Congress ahead of the government shutdown.

It was an inauspicious last visit to Washington for the Indian prime minister, who will likely relinquish his post no matter which party wins parliamentary elections next spring. But it highlighted the nature of ties between the United States and India. Those relations, which are still undergirded by compelling strategic logic, have visibly evolved from romance to realism.

Romance quickened the pace of progress for a number of years. Beginning in the Clinton administration, there emerged a desire in both India and the United States to put aside decades of mutual distrust and divergent Cold War sympathies in favor of warming ties between the world’s oldest and largest democracies. The Bush administration oversaw a revolution in relations with India, carving out an exception for India in global nonproliferation rules and paving the way for international recognition of the country’s anomalous nuclear status. Military to military ties increased, trade expanded, and Indian leaders spoke of America as a “natural ally.” Obama the endorsed India’s permanent membership in the U.N. Security Council, relaxed export controls that impacted Indian entities, and restarted bilateral investment talks.

And yet, as the quiet Singh visit demonstrated, there remains today a sense that relations between the United States and India have reached a plateau, with high-level meetings producing few “deliverables” and even fewer big ideas to propel ties forward. More serious still, both Washington and New Delhi express deep-seated doubts, not only about the nature of bilateral ties but also the trajectory of Indian and American power.

Consider first American doubts about India.

Until quite recently, high economic growth rates were moving millions of Indians into the middle class, attracting foreign investment from the United States and around the world, and giving the country heft in the G20 and other economic forums. Indian leaders expressed profound confidence in their economic model, and drew a none-too-subtle distinction with China’s brand of export-led state capitalism. Yet as the economic reforms Singh helped midwife as finance minister in the early 1990s ran their course, the Indian political system has proved unable to generate successive rounds that would unleash further growth. The result has been a plunge in the rate of expansion; growth this year has slowed to four percent, less than half the rate in 2011. The rupee has lost value as well, putting upward pressure on the prices of imported goods.

The result is that American policymakers have begun to express misgivings about the economic engine of Indian power. At the same time, economic differences, rather than convergences, have characterized bilateral engagement in recent months. In the run-up to the Singh visit, a number of American businesses took out advertisements and lobbied Capitol Hill to call for “fair trade” with India and criticized India’s “buy local” rules, caps on foreign investment, inconsistent treatment of foreign patents and insufficient protection of intellectual property. Bilateral investment treaty negotiations have stalled and negotiators have not met since last year.

Don't blame it on China

Oct 17 2013


In deciding to sell two additional nuclear reactors to Pakistan, in violation of the current international guidelines on atomic commerce, China, if only inadvertently, has helped reveal the unenviable nuclear policy mess that the UPA government finds itself in.

Consider the irony: India worked hard for nearly a decade to get an exemption from the guidelines of the Nuclear Suppliers Group (NSG) in order to expand its civil nuclear programme. With strong support from its partners the United States, Russia and France India got it done in 2008. Ending India's atomic isolation a decade after it conducted nuclear tests and invited international condemnation was an extraordinary diplomatic achievement.

China, responding to the pressures from Pakistan to match India's historic civil nuclear initiative, demanded that the NSG extend a similar nuclear exemption to Pakistan. When the NSG refused, China tried to block the approval of the US-India nuclear deal. It failed again.

Six years later, India has not been able to sign a single commercial contract for the import of nuclear reactors. Pakistan, in contrast, is getting ready to construct two reactors, to be supplied and financed by China. Unlike India, Pakistan has not separated its civilian and military programmes or given any non-proliferation commitments.

Whether you like it or not, you will have to marvel at China's nuclear chutzpah. Beijing's reactor sale to Pakistan reveals three important dimensions of China's thinking. One, Beijing is determined to reassure Islamabad that their bilateral relationship remains "deeper than the Indian Ocean, higher than the Himalayas, and sweeter than honey". This is not mere rhetoric. China has demonstrated, time and again, that its ties with Pakistan have a logic of their own, unencumbered by any global norms.

Second, in disregarding the international norms, Beijing is confident that the US and Western powers will impose no costs on China. The current rules of the 46-nation NSG prohibit any nuclear commerce with Pakistan, peaceful or otherwise.

China has been party to these rules since it joined the NSG in 2004. Back then, it was agreed that the previous Chinese commitment to build a couple of reactors at Chashma was "grandfathered" from the new constraints on Chinese nuclear cooperation with Pakistan.

After 2004, China decided to build two new reactors at Chashma in Punjab (units 3 and 4). When the NSG grumbled, Beijing claimed the two new reactors at Chashma were part of the old understanding with Pakistan. Although Beijing's argument was tenuous, the NSG grudgingly accepted this and no more.

China is now at it again. Beijing plans to sell two more reactors, to be built at Karachi. Won't the NSG object? To be sure, there is some concern in the NSG about China's utter contempt for the guidelines on nuclear exports. But who would want to bell the Chinese cat? The US perhaps could, but it is too distracted to pick another quarrel with China.

Third, Beijing is also informing Delhi that despite considerable improvement in Sino-Indian relations over the last quarter of a century, there will be no change in China's long-standing policy of balancing India with strategic support, including in the field of nuclear weaponry and missiles, to Pakistan.

India has apparently lodged a formal protest against China's decision on the supply of additional nuclear reactors to Pakistan. Delhi's protests are unlikely to make any difference to Beijing. India, in fact, must prepare for worse. It is probably a matter of time before China announces the supply of a nuclear-powered submarine to Pakistan.

Ever since India's successful launch of the nuclear-powered submarine, INS Arihant, and the lease of another nuclear submarine, INS Chakra, from Russia, Pakistan has been pressing for a similar deal from China. Going by the record of China's expansive nuclear cooperation with Pakistan, it is bound to happen sooner rather than later. A nuclear submarine deal, unlike the agreement to sell nuclear reactors, will not violate the current non-proliferation regime. Even more important, such a deal might open the door to China stationing its own nuclear submarines in Pakistan and the launch of naval nuclear patrols in the Indian Ocean.

IF INDIA HAS AN ARGUMENT

Alternatives in the case for intervention

By Rudra Chaudhuri


On August 19, 2013, during a debate on the “Protection of civilians in armed conflict” at the United Nations, Asoke Kumar Mukherji — India’s permanent representative to the United Nations — argued that “the protection of civilians is primarily a national responsibility”. Hence, he continued, “contribution to national capacity building rather than intervention mechanisms should be the priority of the Security Council”. Statements such as these are hardly surprising. Indian representatives have long argued for restraint and caution in matters related to intervention. Yet, in the case of Syria, it would appear that an Indian argument for non-intervention is one shared by Western incumbents (mainly in the United Kingdom, the United States of America and France), most of whom till recently were all set to let loose the dogs of war. This, of course, does not mean that President Barack Obama, the British prime minister, David Cameron, or President François Hollande agree with, or even recognize, the tenor of India’s argumentation, but that they too realize that military intervention has limited utility.

In the case of the UK, Cameron had little choice but to place brakes on the urge for war. Surprising those at 10 Downing Street, the British parliament voted against intervention (285-272). President Hollande’s once bullish rhetoric that military action will “strike a body blow” to the Syrian regime carries little weight. Apart from the fact that the president backed down — following Britain’s inability to commit to international intervention and the US’s less-than-sure approach to the same, the French people have spoken out against the use of military force. According to one survey, 37 per cent of those polled believe that any military action will turn Syria into a hotbed for Islamists; 17 per cent are simply not convinced that the Assad regime used chemical weapons; 18 per cent argue that strikes or some form of limited intervention will only invite retaliation against French interests.

In the US, the mood for war is all that more confusing to ascertain. On September 24, during a speech at the UN general assembly, Obama made clear his intention to use the rest of his presidency to work with Iran — where President Hassan Rouhani has plainly articulated his intention to engage the US and the West more generally — and negotiate a settlement between Israel and Palestine. As for Syria, whilst the president argued that it was “an insult to human reason” to suggest that “anyone other than the regime carried out” chemical attacks, he avoided the question of the use of force in the near future. Instead, he alluded to present discussions with President Vladimir Putin to find a “diplomatic resolution”, stressing that Syria’s chemical weapons are to be first placed under international control and then “destroyed”.

To be clear, for reasons of both war fatigue (Britain and the US want nothing more than to withdraw from conflict, such as in Afghanistan) and electoral preferences (where Hollande and Cameron find themselves bound by popular and elite opinion), the fighting within Syria attracts little or no attention whatsoever. From the outset, major Western actors seem to have come around to India’s position from the start: that military intervention can do little to stem the tide. Yet, the question of intervention, or the metrics used to assess when military intervention is warranted, lingers on. On the one hand, and from an Indian point of view, back-benching the issue of intervention may well suit both bureaucrats and their political superiors. Whilst no doubt a talking point between the Indian prime minister, Manmohan Singh, and Obama during the former’s visit to Washington, there has been nothing to suggest that the question of ‘protection’ in armed conflict got a serious hearing.

THE DIFFERENT STORIES THAT STATISTICS CAN TELL

Commentarao - S.L. Rao


India has produced great statisticians, led by P.C. Mahalanobis. Their contributions to statistical sampling enabled speedy determination based on small samples, of a close approximation of gross domestic product, prices, prediction of election results and so on. Great applied economists have used statistics to gain very insightful information without counting all the numbers. All of us also tend to try and forecast future events on the basis of past statistics. Stock market players and investors are famous for speculating on future trends on the basis of past statistics and their understanding of the implications of events. Many mistakes are made because of wrong interpretation or using unrepresentative samples. Many vested interests also deliberately use statistics to mislead, confuse, and even lie. Politicians, shady entrepreneurs and investment advisors are some of them.

One example is represented by an editorial in The Economist about the latest report of the Intergovernmental Panel on Climate Change of the United Nations. Climate change forecasts are made by scientists who have studied many aspects that affect climate for years. Based on past observations over long periods, they forecast future trends. By nature, forecasts require assumptions that may be proved wrong. But factual observations cannot be ignored and have meaning for the future. Thus, global air temperatures did not rise as earlier forecasted, by 0.2 degrees per annum, for the decade since 1998. But the picture is different when a different base year is used. Basing the average on temperatures in 2000 shows that temperature rose by almost the forecast. The rise was higher than the rise in the earlier decade, the 1990s. It turns out that 1998 was an unusual year owing to the El Nino (an occasional warming of the Pacific Ocean), which boosted temperatures that year. Other such events affected some other forecasts. But the melting of the Arctic ice and the rise in sea levels is an observed fact, as are some other observations, and these have implications for climate change. However, anti-climate change groups (oil and mining companies among others) have used the more gradual warming to discredit IPCC warnings on climate change.

Politicians also selectively use statistics by changing the base year, quoting an exceptional year, calculating averages with and without exceptional years and so on to make a pre-conceived point. Thus, Narendra Modi claimed that the National Democratic Alliance government had delivered more GDP growth than the United Progressive Alliance government. He quoted a figure of 8.4 per cent GDP growth versus the recent estimates for 2012-13 of 4.5 to 5 per cent. P. Chidambaram, the finance minister, shot back that the average GDP growth over the NDA’s six-year rule was well below 8 per cent. The NDA showed 8.5 per cent only in its last year. But the UPA averaged over 8 per cent per year over its nine-year rule. Each is right in his figure. The conclusions are contradictory. Each politician picked the figure that supported his political argument.

Figures of GDP are not gospel truth; they are estimates and the estimates are corrected at least twice more before a ‘final’ figure is announced, usually in the third year. The ‘final’ figures in many cases have been very different from the earlier ‘quick’ estimates. But no one notices since the earlier figure has been repeated by so many that it is embedded in the memory.

India has a large ‘black’ economy. A considerable part of the rural economy is also outside the tax net and the markets. It has to be estimated periodically. The GDP figures, therefore, always underestimate the reality. The GDP estimates of both the actual amount and its growth rate do not catch the reality. But the media, politicians and most of us take these numbers as veritable truths. We tend to conclude that the GDP achieved in any year is because of the policies and actions of that year’s ruling government and offer credit or discredit.

New threats to security

A coordinated, holistic approach can tackle them

By Gurmeet Kanwal

EVEN as India grapples with diverse external and internal threats to its security, including a militarily assertive China and heightened Pakistan army-ISI activism on the LoC, many new challenges are emerging on the national security horizon. These are diverse in nature and could assume unmanageable proportions if left unaddressed.

The likelihood of mass migrations into India, for example from Bangladesh and Nepal, are a serious future threat as these will upset the prevailing social order. The demography of lower Assam has already changed considerably. Mass migrations will also threaten the existing food reserves and endanger food security. The nation will find it extremely difficult to cope with future failures of the monsoon and the consequent famine-like conditions that will prevail. The issue of illegal migration and the security threat posed by it has been repeatedly raised by various states sharing international borders with neighbouring countries during successive Chief Ministers' conferences on internal security and law and order.

The proliferation of small arm or light weapons in the southern Asian region has created its own dynamics of generating terror and instability. Small arms enter India from Afghanistan and Pakistan through ISI sponsorship and from the surpluses available in South East Asia, which are purchased at low cost by various insurgent outfits. Unless a concerted international effort is launched in conjunction with friendly foreign countries, the menace from small arms will continue to grow at alarming rates.

Increasing demands for electric power to meet the requirements of industry and the growing population will make energy security a primary concern. Energy security will be particularly important in future as fossil fuels will become more and more inadequate for the nation's increasing energy needs. Domestic oil production has been declining while the demand has been rising steadily. Hence, oil will continue to be a strategic resource and the security of India's oil supplies from abroad as well as that of all oil reserves and installations will need to be ensured.

The ravages of global warming and changing monsoon patterns as well as the diversion of the waters of rivers feeding the Ganges and the Brahmaputra by upper riparian states are likely to deplete India's water sources and threaten water security even as the increasing population, rapid industrialisation and the enhanced requirements of irrigation raise the demand for water.

The Energy Research Institute (TERI) has estimated that the demand for water will almost double from 564 billion cubic metres (bcum) in 1997 to 1,048 bcum in 2047. M S Menon has written: "As the population is expected to reach 1,300 million in the year 2025, the present slow progress in developing and maintaining the water resources of the country will lead to alarming situations if ameliorative actions on policy and institutional reforms are not taken now on a war-footing."

The situation will be further exacerbated when the Himalayan nation-states begin drawing more water for their own consumption. The amicable sharing of the Ganges waters by India, Bangladesh and Nepal has already been posing problems. Successive droughts have ravaged some of India's western states between 1999 and 2000 and groundwater levels are known to have fallen to extremely low levels. Pakistan is extremely unhappy with India's dam construction activities on the Chenab and the Jhelum and future plans for the diversion of waters of the Kishanganga river into the Wullar Lake. Pakistan has repeatedly sought the intervention of the World Bank that is the official adjudicator for disputes relating to the Indus Waters Treaty. Clearly, the future possibility of water wars on the Indian sub-continent cannot be ruled out.

Pakistan's mysterious menace

By Michael Kugelman 
October 14, 2013 

A curious thing happened two weeks ago in the militancy-ravaged Pakistani city of Peshawar.

An anti-terrorism court sentenced a man named Muhammad Saeed to two years in prison. His crime? Distributing pamphlets critical of the Pakistani army and election commissioner.

Pakistan is a nation where anti-state insurgents and sectarian militants murder civilians with savage regularity -- yet are rarely arrested, much less prosecuted. It's also a nation where terrorist leaderslive free and are protected by the state.

And yet Saeed received two years' imprisonment simply for passing out anti-state literature.

Stranger still, Saeed belongs to a global Islamic organization that embraces nonviolence and boasts a Pakistan-based membership numbering only in the hundreds-represented mainly,purportedly, by academics, engineers, and other seemingly innocuous educated elites.

Tellingly, in recent months other Pakistan-based members of this organization, Hizb-ut-Tahrir (HuT), have suffered fates similar to Saeed's. They've been arrested for hanging anti-government banners and handing out leaflets urging Pakistanis to boycott elections. They've even been jailed for violating the country's sedition law. Last year, the organization's spokesman in Pakistan, Naveed Butt, went missing. HuT says he was abducted by intelligence agents.

So what gives?

For starters, one can reasonably argue that HuT actually constitutes a considerable threat -- thereby justifying the draconian measures against its members.

HuT vows to overthrow, via bloodless revolution, democratic governments worldwide -- and then establish a global caliphate. This campaign is to be orchestrated not by the masses, but by educated, affluent professionals and senior-level military officers -- strategically-placed elites with the capacity and clout to effect change. HuT has launched recruitment efforts at prestigious Pakistani universities, and earlier this year, according to Pakistani and Western media reports, activists descended on a Pakistani youth leadership conference at the University of Oxford to influence the discussions and disseminate marketing materials. Officers have also reportedlybeen recruited at Britain's Sandhurst military academy.

And this recruitment strategy has apparently worked. Last year, 19 engineers, professors, and scientists were arrested in an affluent Lahore neighborhood for alleged ties to HuT. In recent years, senior military officials -- including a former Air Force base commanding officer and a Major-rank security officer for former president Pervez Musharraf -- have been arrested as well. Last year, five army officers -- including a brigadier named Ali Khan -- received jail sentences for their links to HuT. 

Another troubling aspect of HuT is its belligerent rhetoric, which belies its assurances of nonviolence. A pamphlet in Indonesia has depicted a decapitated Statue of Liberty flanked by a Manhattan skyline in flames. In Pakistan, official statements speak of "shattering the ribs" of traitors, and of military commanders leading "noble armed forces to the conquest of India."HuT's views are often indistinguishable from those of violent militant organizations -- and are quite distinct from more moderate global Islamist outfits like the Muslim Brotherhood. A recent press release, for example, blames America for last month's deadly church bombing in Peshawar, contending that Washington is "punishing" Pakistanis for refusing to support "the American occupation in Afghanistan." 

40 Percent of Afghans Don't Know Who They'll Vote for in the Next Presidential Election

October 15, 2013 


With six months until presidential elections and half the country undecided, it's officially campaign season in Afghanistan. Twenty-seven candidates have registered to be put on the ballot -- though many of these will likely be disqualified as their paperwork is reviewed. The first tracking poll, conducted by the Afghan news network TOLOnews and consulting company ATR, is already out -- and it shows that Afghans have a long way to go to make up their minds about who should succeed President Hamid Karzai.

The leading contender in the race is Abdullah Abdullah, the country's former foreign minister who ran against Karzai in 2009 but ultimately withdrew from the contest rather than force what would have been a divisive runoff election. He has the support of about 22 percent of the country, far more than any other candidate. "Abdullah's lead at this early juncture is not surprising, since he has more name recognition than others and has also spent the last few years organizing for the 2014 elections," Omar Samad, a senior Central Asia fellow at the New America Foundation and former Afghan ambassador to France and Canada, told FP, "whereas many other nominees entered the race at the last minute."

Afghans Fend Off Taliban Threat in Pivotal Year

Rod Nordland, Thom Shanker and Matthew Rosenberg
New York Times

October 16, 2013

KABUL, Afghanistan — When the Taliban announced the beginning of their spring offensive, they saw few limits to their ambitions: to kill top Afghan officials across every major ministry, to plot even more infiltration attacks against Americans and to bloody, break and drive off the Afghan security forces who were newly in charge across the country.

Now, Afghan and American officials are cautiously celebrating a deflation of the Taliban’s propaganda bubble, the militants’ goals largely unmet.

With this year’s fighting season nearly over, the officials say the good news is that the Afghan forces mostly held their own, responding to attacks well and cutting down on assassinations. But at the same time, the Afghans were unable to make significant gains and, worse, suffered such heavy casualties that some officials called the rate unsustainable.

That assessment, detailed in interviews with commanders, officials and local leaders, is an important factor in urgent efforts by the Americans and Afghans to hash out a long-term deal to support the Afghan security forces, with national elections and the Western military withdrawal looming over the coming months.

Though the Afghan forces endured, they did little to answer some persistent questions about their ability and image, including whether they can handle their own planning and logistics as American forces continue to pull back. And in the rural southern Taliban heartland, the insurgents’ continued appearance as the more credible military force away from cities added weight to theories that the Taliban could control those areas after 2014.

“What we saw this year was an insurgency unable to make a decisive blow against the A.N.S.F.,” one Pentagon official said, referring to the Afghan National Security Forces. But the official added: “The Afghans still have a lot of learning to do. They had some tough brawls, and they took substantial casualties.”

Some American and Afghan commanders characterized a kind of moral victory for the Afghan forces: they mostly survived, and they did not completely give back gains from past Western offensives.

“The Taliban’s operational directive at the start of the fighting season was to press the Afghan security forces and try to break their will,” said Col. David Lapan, a spokesman for the American military commander, Gen. Joseph F. Dunford Jr. “It’s so far been our assessment they have not succeeded in any of their stated goals.”

While the Taliban’s assassination campaign did take a toll on police officials and mostly low-level district officials, an insurgent success came late in the season — on Tuesday, when the well-regarded governor of Logar Province was killed while preparing to speak in a mosque, though the Taliban denied responsibility.

The Taliban were quick to take responsibility for many of the so-called insider attacks last year, when Afghans in uniform killed 60 members of the international military force, and vowed to intensify them this year. But with new security measures in place, there have been just 14 such killings this year.

Even the insurgents’ strategy of waging high-profile attacks against Western targets in the capital, Kabul, mostly fizzled or ended up misdirected, as in a bombing that the Taliban said had been aimed at a C.I.A. safe house but insteadkilled four at the International Organization for Migration.

“We knew going into this that the insurgency understood this would be the last fighting season before the elections of April 2014,” said one Defense Department official, who along with some other officials spoke on the condition of anonymity to discuss the Afghan forces’ progress. “They knew it was time to get creative, that if ever there was a time to make a spectacular impact or strike a decisive blow, this would be it.”

Though there was no such decisive blow, the cuts were deep.

In some areas of the south and east, most notably in the Sangin district of Helmand Province, the Taliban were able to restrict the movement of Afghan forces and inflict heavy casualties.

Just how much those casualties have increased, however, is a matter of dispute. American officials defer requests for statistics to the Afghan authorities, saying it is now their responsibility.

Islam, Islamism and Politics in Eurasia Report (IIPER)

14 October 2013

China and Central Asia After Afghanistan's 'Kabulization'

The conclusion of Afghanistan’s ‘Kabul process’ or ‘Afghanization’ will be pivotal both for the national security and economic interests of the People’s Republic of China. With the withdrawal of Western forces from Afghanistan and the West’s likely declining political and economic involvement in the region will almost certainly mean declining stability in Afghanistan and perhaps even the Talban’s return to power if all else remains as it is. Either outcome, but especially the latter, will result in greater Islamist and/or jihadist activity and political instability in Central Asia. In turn, greater instability in Central Asia could drastically impinge on key Chinese national security and economic interests in its troubled, western Muslim-dominated province, the Xinjiang Uighur Autonomous Republic (XUAR). Therefore, China is likely to play a more active role in Afghanistan and Central (and South) Asia in support of its security and economic interests. This report addresses the implications of the Western withdrawal for Chinese security and economic interests as they relate to Central Asia.

Islam, Islamism and Politics in Eurasia Report (IIPER) is a bimonthly analysis issued by the CSIS Russia and Eurasia Program. IIPER focuses on all politically relevant issues involving or bearing on Islam, Islamism, and jihadism in Russia and Eurasia writ large. The report is compiled, edited, and unless indicated otherwise, written by Gordon M. Hahn, a nonresident senior associate at CSIS.

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Regions

Oil Security and Conventional War: Lessons From a China-Taiwan Air War Scenario

A CFR Energy Report

Author: Rosemary Kelanic, Associate Director of the Institute for Security and Conflict Studies at the Elliott School of International Affairs at George Washington University

Publisher Council on Foreign Relations Press

Release Date October 2013

13 pages

In the past, conventional militaries were plagued by wartime oil shortages that severely undermined their battlefield effectiveness. But could oil shortages threaten military effectiveness in a large-scale conventional conflict today or in the future? Observers commonly assume that the amount of oil consumed today for military purposes is small compared to production and civilian demand, and thus that wartime shortages are unlikely. But this assumption has not been subject to rigorous evaluation in the unclassified literature. In this Energy Report, Rosemary Kelanic argues that it is flawed.

The Energy Report analyzes a potential air war between the People's Republic of China (PRC) and Taiwan (also known as the Republic of China or ROC)—to enhance broader knowledge about fuel requirements in wartime. Insight gained from modeling such a conflict makes it possible to provide a rough estimate of potential fuel requirements and assess whether military demand could strain countries' supplies in the present, as it did in the past. Kelanic ultimately concludes that oil and fuel supplies could become significant constraints on China and Taiwan in the event of war. She also argues that this prospect helps illuminate Chinese oil security strategies, including strategic stockpiling and efforts to diversity supply routes for imported oil.

Meet China's Beverly Hillbillies

The absurdity of the Middle Kingdom's Bentley-driving, blinged-out nouveau riche.

BY RACHEL LU 
OCTOBER 15, 2013

They have been mentioned more than 56 million times on Sina Weibo, China's Twitter. Everyone wants to be their friend, but no one likes them. They seem to be everywhere, throwing around their newly minted renminbi and well-used UnionPay debit cards; yet they are elusive and shun the media. Their love for bling has become the backbone of the global luxury goods industry, yet they are also the subject of disdain, the butt of jokes, the punching bag for that which is offensive to good taste.

They are the tuhao -- tu means dirt or uncouth; hao means splendor -- and they are the Beverly Hillbillies of China. Or something like that: A crowdsourced translation call on China's social media yielded "new money," "slumdog millionaire," the "riChinese" and "billionbilly." When English falls short, French is on hand to help: Tuhao have the artistic sensibilities of the arriviste, the social grace of the parvenu, and the spending habits of the nouveau riche.

Tuhao once meant rich landowner -- the villainous landed gentry and class enemy of communist China's proletariat -- but the term's modern revival began with a popular joke that made its rounds on Chinese social media in early September. A young man asks a Zen master, "I'm wealthy but unhappy. What should I do?" The Zen master responds, "Define 'wealthy.'" The young man answers, "I have millions in the bank and three apartments in central Beijing. Is that wealthy?" The Zen master silently holds out a hand, inspiring the young man to a realization: "Master, are you telling me that I should be thankful and give back?" The Zen master says, "No … Tuhao, can I become your friend?"

This rather lame joke struck a chord with China's middle class, a rapidly expanding group that nownumbers over 300 million. As a middle-class lifestyle grows increasingly normal, so has disdain for flaunted wealth. Many Chinese would now say they consider themselves the antithesis of tuhao -- educated, fashionable, and disdainful of conspicuous consumption. After taking office in November 2012, Chinese President Xi Jinping started cracking down on corruption in the Communist Party. Chinese officials, some of the most notorious wearers of tuhao goods, cut down on ostentatious purchases, and luxury brands suffered.

At the same time, Chinese live in a society where understanding tuhao is valuable, catering to tuhao taste is lucrative, and making tuhao friends is sensible. Multinational corporations, while wary of going against Xi's policies, understand this. Fancy a Hermès bag with the Chinese national flag on it?Done. Want to spend tens of thousands of dollars on a watch with a Chinese zodiac motif? Why, you have more than 20 to choose from.

China's Achilles' Heel in Southeast Asia


October 16, 2013


Recent commentary on US President Barack Obama's last minute cancellation of his trips to the Asia-Pacific Economic Cooperation (APEC) meeting in Bali and the East Asia Summit (EAS) in Brunei overwhelmingly reflected classical ‘zero-sum' thinking. The common reading is that the credibility of the US ‘pivot' has been further undermined, and that China used Obama's absence to boost its position with the ASEAN nations.

However, international politics hardly follows such binary dynamics. Indeed, for many reasons, Beijing's goal to bolster its position in Southeast Asia at Washington's expense is very likely to fail. First, regional leaders understand very well that one cancelled presidential trip to Southeast Asia doesn't equal a change in the US's Asia strategy. Key regional powers such as Malaysia and Indonesia acknowledged Obama's imperative to stay at home. Instead, Secretary of State John Kerry attended both meetings and delivered the key message Southeast Asian countries wanted to hear: America expects China and its neighbours to peacefully resolve their territorial disputes in the South China Sea.

Second, this message exposed China's Achilles' heel in Southeast Asia: while ASEAN claimants are eager to talk, Beijing isn't willing to compromise on its extensive territorial claims in the South China Sea. In Darussalam, China's Premier Li Keqiang not only reiterated Beijing's ‘indisputable rights' within the ‘nine-dash' line, he also warned countries not directly involved, including Australia and Japan, to stay out of the disputes. So China didn't make much progress in persuading Southeast Asian countries about its benign intentions. Put simply, its assertive behaviour in the South China Sea has caused an almost intractable trust deficit between Beijing and ASEAN countries. It also provides an avenue for external players such as India and Japan to increase their security role in Southeast Asia.

Third, the result is that some Southeast Asian nations show signs of ‘internal' and/ or ‘external balancing' behaviour against China. With mostly Russian support, Vietnam is developing the components of an ‘anti-access/ area-denial' (A2/AD) capability to offset China's impressive regional maritime build-up. After decades of preoccupation with internal security issues, the Philippines is attempting to build a ‘minimum credible defense' posture against China. Others are clearly hedging against the possibility of more tensions in the South China Sea. Singapore, for example, invited the US to forward deploy up to four Littoral Combat Ships. It's also likely to opt for the Joint Strike Fighter (JSF) as its next combat aircraft, which will only increase its defence cooperation with the US.

Fourth, interpretations that Obama's absence is evidence of a lack of commitment to the rebalance are problematic. Typically, two main arguments are advanced. The first is that Washington is too preoccupied with the Middle East and the second that the US doesn't have the money anymore to support the Pentagon's shift to the Asia-Pacific. The first claim doesn't recognise that the US still is a global power with global responsibilities-just because Obama's recent speech before the UN General Assembly had far fewer references to the Asia-Pacific than the Middle East doesn't mean the US suddenly has lost interest in Asia.

The second claim isn't convincing either. Despite pressures on the US defence budget, the Pentagon continues to shift key military systems into the Asia-Pacific region. In early October, US officials announced that the US will deploy Global Hawk UAVs to Japan at the beginning of 2014. And in 2017 the Marines will begin the deployment of F-35Bs to Japan, marking the first deployment of the Joint Strike Fighter outside the United States. Moreover, the US Marines are building a new, advanced command post on Palawan Island in the Philippines to monitor the South China Sea. The airstrip on the island will be upgraded to accommodate US strategic airlift (and potentially fighter aircraft). In other words, the Philippines are the latest step in America's strategy to enhance the Marines' rotational presence in the Asia-Pacific, significantly complicating Chinese military operational planning.

China’s Hermit Navy

By James R. Holmes
October 16, 2013

Call it the Hermit Fleet. China's navy evidently missed the part of Naval Diplomacy 101 that describes diplomacy as a mode of human interaction. No personal contact, no diplomacy. And no diplomacy means few international agreements, gains in soft power, or other good things.

The PLA Navy's appearance at Australia's International Fleet Review was perfunctory at best. The point, apparently, was to show off the destroyer Qingdao. Or, more accurately, to show off the ship's exterior surfaces. By most accounts — I didn't get to view the fleet until (harumph, harumph) a VIP harbor cruise Sunday afternoon, after the destroyer left port — she fared well in that department. Qingdao appeared tidy, rust-free and generally in shipshape. Any mariner will tell you such basics are a sign of professionalism.

But outward appearances are only part of diplomatic interchange — and not the most important part. The PLA Navy ran a severe deficit in human interaction. Crewmen were restricted to the ship for their entire, all-too-brief sojourn in port. Unlike other foreign vessels, Qingdao hosted no visitors. After arriving on Friday, with the other national contingents, she left port Sunday morning, scant hours after Saturday night's gala fireworks. (Maybe the skipper just wanted to glimpse Prince Harry, who was on hand for the spectacle, and who also skedaddled early.) The rest of the impromptu fleet remained in port all week. Needless to say, the PLA Navy went unrepresented at the Sea Power Conference — a conference devoted, ironically, to exploring the potential for naval diplomacy in Asia — that convened Monday as part of the fleet review. Nor did Chinese sailors take part in Wednesday's closing parade down George Street, Sydney's central boulevard. Etc.

While we make much of the rise of China, this is not the behavior of an aspirant to regional leadership. It betrays a shortfall in self-confidence. Confident navies exude confidence. They're unafraid to show off ships, aircraft and hardware. They also trust officers and crewmen to act as the public face of the service, and of the nation. And indeed, sailors from countries not named China mingled freely with the local citizenry — and did themselves credit in doing so. Press reports about social interactions were uniformly upbeat, as were my firsthand impressions from hours spent pounding the pavement (and not, mind you, consuming a drop of that execrable Australian wine or brew). In short, Beijing flubbed an opportunity to refurbish an image battered over the past few years — or rather, self-battered — through bellicose actions in the China seas. Instead its conduct left the impression that the navy was jittery about what officers or sailors might do if granted liberty to traipse the streets of Sydney unsupervised.

After $1B Valuation, Fake Beats Flood Chinese Wholesale Market

By J.T. Quigley
October 16, 2013

Chinese electronics wholesalers have a knack for picking up on trends and flooding the market with cheap “replicas” and shoddy knock-offs of the most popular gadgets. The candy-colored Beats by Dr. Dre headphones and are not necessarily a new addition to the world of Chinese fakes – having been spotted in street markets from Beijing to Bangkok for more than a year – but last month’s $1 billion valuation of Beats Electronics LLC has generated a spike in popularity.

“Looking at the shops in Shenzhen's Huaqiangbei commercial district – a destination for buying electronics, especially fakes – Beats by Dr. Dre are definitely hot, prominently displayed next to iPhones, Samsung gear and Nikon cameras,” reported CNN. “The counterfeit boom is fed, these days, by the rise of high-end headphones that Dr. Dre's audio products helped kickstart with the launch of Beats in 2008.”

Beats Electronics LLC is owned by former N.W.A. rapper and hip-hop producer Andre Young (aka Dr. Dre) and recording industry heavyweight Jimmy Lovine. Carlyle Group, one of the largest private equity firms in the world, invested $500 million in the company in late September, allowing it to buy back a minority stake held by HTC Corp – the smartphone maker that integrates “Beats Audio” into its high-end handsets. HTC had initially bought a 50.1 percent share in Beats Electronics LLC in 2011, but was unable to hold on with a tumbling stock price and increased competition from Apple and Samsung.

Speaking to a CNN reporter, one wholesale company spokesperson in Shenzhen said, “Business is very good. You buy cheap from me, you sell expensive in your home country, we all make a lot of money.” She added that one British businessman, intending to sell the bootleg audio equipment as the real deal, had recently placed a $50,000 order.

Last holiday season, Beats by Dr. Dre accounted for 70 percent of all high-end headphone sales in the U.S. The American headphone market is a $2.4 billion segment of the electronics industry. Beats earbuds range from $100 to $150, with the company’s over-the-ear headphones ranging from $200 to $400. Beats Electronics LLC also designs portable speakers and car audio systems.

A quick web search for “China Beats by Dre” offered numerous Chinese wholesale sites specializing in the colorful audio equipment. “DIYTrade” yielded five whole pages of counterfeit headphones with the iconic lower-case “b” logo, ranging from about $25 to $75 for copies of the top-selling Solo and Wireless models.

The same search on Alibaba, the world’s largest e-marketplace, yielded a whopping 19 pages of results. Although the Chinese shopping giant recently announced a partnership with Louis Vuitton to crack down on fake handbags, it seems that bootleg headphones are readily available. One seller was offering knock-off Beats for a mere $3.40 each – if the buyer could commit to a minimum purchase of 10,000 units. The same seller claimed to have the ability to ship 100,000 units per month.

How the 1973 Oil Embargo Saved the Planet

OPEC Gave the Rest of the World a Head Start Against Climate Change

OCTOBER 15, 2013

Gas station attendants in Portland, Oregon, November 1973. (David Falconer / EPA / U.S. National Archives)

Forty years ago this week, six Persian Gulf oil producers voted to raise their benchmark oil price by 70 percent. Over the next two months, the Arab members of the Organization of the Petroleum Exporting Countries (OPEC) cut production and stopped oil shipments to the United States and other countries that were backing Israel in the Yom Kippur War. By the time the embargo was lifted in March 1974, oil prices had stabilized at around $12 a barrel -- almost four times the pre-crisis price. In 1973, that oil shock looked like a triumph for OPEC and a calamity for the rest of the world. The OPEC states enjoyed enormous windfalls and new geopolitical influence, whereas the United States and other oil importers were hit by unprecedented fuel costs and painful recessions.

But over the last four decades, those fortunes have reversed: higher oil prices in the OPEC states have led to spiraling corruption, stagnation, and political repression. In the rest of the world, expensive oil triggered a surge of investment in alternative energy and drastic improvements in energy efficiency. The 1973 oil shock holds an even greater irony. The panic that it induced brought sweeping changes to global energy policies in the 1970s and 1980s in preparation for the imminent depletion of global oil and gas reserves, which turned out to be illusory. The effort to avoid that imaginary crisis helped the non-OPEC countries cope with a real one, leading to energy conservation and investment policies that fortuitously brought about enormous reductions in global carbon emissions. The OPEC members that created the oil crisis inadvertently gave the rest of the world a life-saving head start in the struggle to avoid, or at least mitigate, the threat of catastrophic climate change.

THE OIL BREAK

The 1973 oil crisis shocked most Americans because it was a rebuke to the growing prosperity of the postwar era, which was built on an ocean of cheap energy. Since the end of World War II, the real price of oil had steadily declined; a barrel of crude cost less in 1970 than at any time since the Great Depression. Until 1971, the U.S. government was worried more about the dangers of too much foreign oil than too little. To protect domestic oil interests, oil imports to the United States were limited by a quota system established in 1959 under President Dwight Eisenhower. Foreign leaders from oil-exporting allies such as Canada, Iran, and Venezuela lobbied the White House for permission to sell more oil to U.S. consumers.

The panic that the oil shock induced brought sweeping changes to global energy policies in the 1970s and 1980s in preparation for the imminent depletion of global oil and gas reserves, which turned out to be illusory.

In retrospect, it is easy to see the signs that global energy markets were on the cusp of a revolution. For a century, the United States had simultaneously been the world’s largest oil producer and its largest oil consumer. Until 1947, it produced more than it consumed and was a net oil exporter to the rest of the world. After 1947, the United States became a net importer as growing consumption outpaced slowing production. Despite its reliance on imports, the United States remained the pivotal actor in global petroleum markets, thanks to its policy of limiting production in the vast oil fields of East Texas. That strategy allowed the United States to function as a “swing producer,” able to boost or trim production to stabilize global supplies and prices (just as Saudi Arabia does today).

The Creeping Militarization of the Arctic

By Abhijit Singh
October 16, 2013

As stakeholders take increasingly assertive territorial postures, the regional focus turns to security.

Russia’s announcement last month that it was considering reopening a major northern naval base and resuming regular naval patrols has revived a debate over the militarization of the Arctic. In early September, a convoy of 10 Russian warships – led by missile cruiser Peter the Great and accompanied by four nuclear-powered icebreakers – completed a voyageacross the Arctic Ocean. Starting from Severomorsk near Finland, the ships travelled nearly 2000 miles, reaching Kotelny Island in the Novosibirsk Archipelago, reportedly bringing construction material and personnel needed to reconstruct the old Soviet-era naval base shut down in 1993.

The Russian decision to rebuild a naval facility in the Arctic is a not-so-tacit reminder that as the northern ice-cap melts and critical sea-routes become navigable, Arctic nations will not be able to resist the impulse of militarizing the region. In the past few years, as vast spaces in the Arctic have opened up, a scramble has ensued for the region’s undiscovered natural resources (estimated to be 30% of the world’s undiscovered natural gas and 13% of its undiscovered oil). This has, in turn, resulted in increasingly assertive territorial postures being adopted by regional stakeholders, and the gradual dominance of a security-driven discourse.

Unsurprisingly, the rising military presence in the Arctic is being increasingly justified by the need to project national influence and sustain claims over the region’s sea-lanes and natural resources. When Russian President Vladimir Putin announced the reopening of the new naval base, he noted how important is was for Russia to assert control over the operation of the Northern Sea Route (NSR). Even though he did not mention it, Putin’s interest in securing the vital sea-lane seems driven by its potential to cut the regular travel time of cargo ships from Europe to Asia by almost a third.

Military Initiatives

More importantly, the latest development has drawn critical attention to the absence of a security framework in the Arctic. Russia has, arguably, been the most militarily active Arctic state. Since 2007, when a mini-sub planted a Russian titanium flag at the base of the North Pole, the Russian Navy has maintained a strategic presence in the Arctic. Its under-sea patrol program will soon be augmented by thenew Borey class submarines based on the Barents Sea coast. Equally notable are Russia’s power-projection initiatives. In 2012, a large-scale Russian naval exercise was held in the High North that included more than 7000 personnel and about 20 naval units. During the exercise, the Northern Fleet conducted Russia’sfirst-ever amphibious landing on the Arctic archipelago of the New Siberian Islands.

This year in July, Moscow’s held a massive exercise in the Russian Far East region – reportedly the biggest “snap-drill” since the era of the Soviet Union. The exercises involved more than 160,000 servicemen, 1000 tanks, 130 planes and 70 ships, and came only a month after Russia submitted a claim to the United Nations to extend its 200-mile Exclusive Economic Zone by another 150 miles or 1.2 million square kilometers. Moscow’s “scientific evidence,” to buttress its contention of the claimed seabed being a continuation of the continental shelf, is bitterly contested by other Arctic nations.

Russia is, however, not the only country with plans to securitize the region. After assuming the presidency of the Arctic Council in May this year, Canada made clear that it will push for a change in the Council’s focus so as to seize the economic opportunities arising from the melting of the northern polar ice cap. Its follow-up plan includes initiatives to strengthen its Arctic sovereignty claims and bolster its northern military presence. Interestingly, a study by the Canadian military’s operational support command last year had recommended military outposts in the form of basic transportation hubs, after which Ottawa began seriously considering setting up small-but-permanent military presence in remote locations in the Arctic North.

What to Make of Saudi Hand-Wringing

OCTOBER 15, 2013

SUMMARY

Friction with Washington over regional developments has Riyadh concerned about its foreign policy course. But the two differ most sharply on internal not international affairs.

These are troubling and uncertain times for Saudi diplomacy. A string of regional upsets and friction with the United States has cast the kingdom into rocky, uncharted waters. Washington’s support of the Islamist government in Egypt and its response to the use of chemical weapons in Syria elicited outrage and accusations of U.S. unreliability and even betrayal from Riyadh. Then came the slight warming in U.S.-Iranian relations—highlighted by the unprecedented phone call between U.S. President Barack Obama and Iranian President Hassan Rouhani. That mild rapprochement brought to the fore an old specter: an U.S.-Iranian breakthrough that marginalizes the Gulf states and erodes their long-standing position as beneficiaries of U.S.-Iranian hostility.

On the editorial pages of Saudi newspapers, columnists have sounded familiar themes with new levels of intensity: The Gulf is being shut out of regional negotiations. The United States was duped on Syria and Iran. The Gulf needs to adopt a more muscular, unilateral approach to safeguard its own interests, and it should cultivate new security patrons to compensate for U.S. capriciousness, perfidy, and retreat from the region.

SENIOR ASSOCIATE
YBut what does this latest round of hand-wringing, protest, and introspection really mean in terms of new directions in Saudi foreign policy?

If history is any guide, Saudi Arabia, and the Gulf more generally, will continue to pursue policies that align with the broad contours of U.S. strategy—but with a creeping preference for hedging and unilateralism that will, in some cases, clash with U.S. interests. It is in the Gulf’s domestic landscape that the sharpest breaks between Saudi and U.S. views are emerging: regional tensions have enabled a harsh security campaign against a wide range of dissidents, the rise of sectarianism, and the troubling use of censorship.

A WAKE-UP CALL IN EGYPT

A key trigger for the recent round of misgivings in the Gulf was Washington’s tepid and confusing approach to the Egyptian military’s ejection of the Muslim Brotherhood government, which had been in power in Egypt since June 2012. In July 2013, General Abdel Fattah el-Sisi led a military coup that ousted Brotherhood-backed Mohamed Morsi from the presidency. At the time, the United States solicited Saudi and Emirati back-channel help in imploring Sisi to reach a peaceful compromise with Morsi, but there is ample evidence that the Gulf states were working at cross-purposes with Washington.

Riyadh’s ultimate interests lay in the unequivocal end of the Brotherhood government and the quashing of Brotherhood protests. The ruling al-Saud family fears that the Brotherhood’s ideology and political activism could animate opposition inside the kingdom and challenge Saudi Arabia’s quietist form of Salafism. In the aftermath of the Brotherhood’s ouster, King Abdullah chided U.S. policymakers for “supporting the very terrorism they call for fighting against.” Together with the United Arab Emirates and Kuwait, the kingdom quickly promised $12 billion in aid to the military regime.

In the Saudi press, commentators defended the move as being made to advance Riyadh’s overarching objective of stability in Egypt not to further an intentional campaign against the Brotherhood. Having an unstable Egypt on top of parallel crises in Bahrain, Syria, and Yemen, these voices argued, would be simply too much for the kingdom to bear. Moreover, Riyadh’s backing of Sisi was a matter of simple expediency: Saudi Arabia had a long-standing relationship with the Egyptian military, so the army was a natural partner.

According to prolific columnist Khaled al-Dakhil, Saudi aid is intended to pave the way for a resumption of Egypt’s regional role in opposing Iranian influence in Syria and Iraq. He also explained that the current military arrangement should be a transitional bridge to an Egyptian government that is even more predisposed to Saudi interests.