18
Sep

India’s Soft Power Advantage

Written on September 18, 2014 by Waya Quiviger in Asia, Foreign Policy, Globalization & International Trade

India’s Soft Power Advantage

During Prime Minister Tony Abbott’s recent visit to India, he was asked to justify Australia’s signing of a deal to sell uranium to the country. In response, the prime minister said, “India threatens no one” and “is the friend to many.” This was no mere diplomatic nicety, but a carefully chosen answer based on India’s international image. It is an image that is rare amongst great powers of India’s size and strength, and will give Delhi a unique soft power advantage in the future multipolar world.

Much of the globe sees India as a relatively non-violent, tolerant and pluralistic democracy with a benign international influence. Its values are seen as largely positive.

The U.S., with its Indo-U.S. nuclear deal, accorded India special treatment in nuclear cooperation. The deal provided benefits usually reserved for Non-Proliferation Treaty (NPT) signatories. Washington justified cooperation with India by highlighting Delhi’s impeccable non-proliferation record. This stance was replicated by other states, including the Nuclear Suppliers Group (NSG) member states who allowed India’s participation in international nuclear commerce and supported the Indo-U.S. deal. The NSG decided to re-engage with India following an India-specific safeguards agreement with the International Atomic Energy Agency (IAEA). The IAEA’s Board of Governors endorsed a nuclear safeguards agreement with India by consensus that would permit Delhi to add more nuclear facilities to be placed under the IAEA safeguards framework. India did not have to have an Additional Protocol like the non-nuclear weapons states who are NPT signatories. India also received favorable treatment from Canada (which agreed to supply “dual-use items” that can be used for civilian and military applications), Japan and South Korea.

This cooperation was not merely driven by these states’ strategic relationships with the U.S. Russia has long cooperated with India on nuclear technology. Even China, as a member of the NSG, did not oppose the group’s decision on India. Today, India is the only known nuclear weapons state that is not part of the NPT but is still permitted to engage in nuclear commerce globally.  Read more…

Published in http://thediplomat.com/

17
Sep

Europe’s Messy Political Divorces

Written on September 17, 2014 by Waya Quiviger in Democracy & Human Rights, Europe, Security

Divorce among couples rarely ends without scandal, and all the more  so with divorce between states. Those splits inevitably involve political and economic hardships, mutual recriminations and a complex and painful division of property. And even once this nightmare is over, the very presence of the other party causes interminable irritation and anger.

The only example that I can recall of a civilized “state divorce” in Europe was the peaceful division of Czechoslovakia into two parts — accomplished thanks to the efforts of former Czechoslovakian President Vaclav Havel. To this day, the two “former spouses” maintain normal inter-state relations.

Divorce and separation remains a very real problem for Europe. Scotland’s agitation to leave the U.K., Catalonia’s attempts to escape the custody of Madrid and Novorossia’s bloody fight to break away from Ukraine are all ongoing issues.

And although each case is very different, they share one aspect in common: London, Madrid and Kiev are exerting great efforts to prevent those disunions. However, a strict interpretation of international law indicates that, in all three cases, those advocating separatism have every right to at least advocate their cause. In 1945, the right to self-determination was included in the United Nations Charter. Then, in 1966, this right was enshrined in the International Covenant on Economic, Social and Cultural Rights and the International Covenant on Civil and Political Rights. Still later, this right was confirmed in documents of the Organization for Security and Cooperation in Europe.

What’s more, the concept of self-determination covers a wide range of possibilities and is defined as “The establishment of a sovereign and independent state, the free association with an independent state or the emergence into any other political status freely determined by a people.” In theory, the people living in the area affected should resolve these disputes, without any outside interference. The UN Charter states that “all states shall, in accordance with the provisions of the UN Charter, encourage the right to self-determination, and shall respect that right.” The only problem is that nobody “respects” that right, much less “encourages” it.

There are several reasons for political leaders’ inability to honor their obligations, to greater or lesser degrees. First, the UN Charter also contains the contradictory principle of “the inviolability of borders” because after World War II the leading powers wanted to ensure stability by any means. Consequently, for every argument for self-determination, a persuasive counter-argument is available. The second reason is that the clause on self-determination was introduced during the collapse of the colonial system when the authors had the African states in mind. At that time, few colonial powers wanted to keep their states, and so their passage into freedom was relatively uncomplicated.

Nobody could have guessed that Scotland and Catalonia would one day invoke the same principle. There are many more examples besides those: the Ukrainian Donbass, Spain’s Basque region, Russia’s Chechnya and so on. The underlying problem with the current world order is that it has long outworn its original set of clothing and just plods on wearing the same old, uncomfortable and increasingly tattered rags. A prime example of this is the fact that the victors in World War II continue to control the UN Security Council, a completely inappropriate situation given the wealth and power of the world’s developing nations. But unfortunately, the fear of making desperately needed repairs to the structure of the UN has already led to numerous squabbles, and threatens to undermine the very foundation of the organization. Perhaps humanity will simply have to wait for another world war, after which the winners will spell out the new rules of the game for the few remaining survivors. No matter the international body, though, the world’s issues are not just about rules written on paper. The problem is the egoism that drives the world today. If not for this egoism, the Catalonians and Basques would create their own states and live in peace alongside Madrid and as a part of the European Union. Scotland would settle down. And if Kiev and Moscow had enough sense, it would avoid all this bloodshed by letting Novorossia go in whichever direction it wanted. Thus freed from that heavy burden, Kiev could finally pursue meaningful integration with Europe. However, Madrid will continue desperately clinging to Barcelona, London to Scotland and both Kiev and Moscow to the Donbass. Despite considering itself the leader of civilization, Europe has yet to learn how to formulate reasonable and sound policies. If only someone would follow the example set by Vaclav Havel.

Published on Sept. 14 by Pyotr Romanov in http://www.themoscowtimes.com/opinion/article/europes-political-divorces-are-often-messy/507012.html

16
Sep

Preventing the Next Argentina

Written on September 16, 2014 by Waya Quiviger in Americas, Financial crisis, News

Investors, bankers, government officials, and academics are all scrambling to come up with fixes in hopes of preventing another debt fiasco like that of Argentina, but it likely won’t be in place by the time the next country goes belly-up.

This week the United Nations General Assembly weighed in with a resolution that was supported by an overwhelming majority of countries. China and a coalition of developing countries put it forward, but the United States, Germany, the United Kingdom, and Japan rejected it, illustrating one of many divides holding back efforts to change the system.

Argentina went into default for the eighth time at the end of July, after U.S. courts ruled that the government couldn’t continue paying bondholders who’d struck an earlier deal to accept less money without also paying holdout creditors. But default is not the end of the story.

President Cristina Fernández de Kirchner, who says the investors who took her government to court are “vultures,” still has to find some sort of resolution. Her government tried to get bondholders to trade in their bonds under U.S. law for ones governed by local Argentine law, a move that gives the debtor government more control. An exchange would also allow Argentina to avoid the U.S. ruling, but government officials acknowledged this week that bondholders weren’t going for it. The rejection was expected because the switch would have significantly lessened investors’ bargaining power in the ongoing settlement negotiations.

Trade groups, the IMF, and now the U.N. are all trying to come up with a fix. The only problem is that they have vastly different ideas for what that should look like — making it increasingly unlikely that the chaotic current system will change in any meaningful way.

The scramble is an attempt to prevent a repeat of the chaos that erupted when a U.S. court ruled that the Argentine government couldn’t continue paying bondholders who’d struck an earlier deal to accept less money without also paying a holdout group of American investors 100 cents on the dollar. The ruling was a huge win for NML Capital, which had bought the bonds on the cheap, but infuriated Argentine officials like Kirchner.

Beyond the vitriol, the court decision brought new attention to the messy default process that’s currently in place for countries that can’t pay their debts. Fixing it is increasingly important for poverty-ridden countries like Grenada and the Democratic Republic of the Congo, both of which are fighting investors in U.S. courts who are hoping to use the NML ruling to boost their case for being paid back in full. Ukraine, whose already shaky finances have gotten even rockier during its standoff with Russia, could also need a way of persuading investors to take a “haircut.” Under the current system, that won’t be easy.

Key powers at the United Nations are hoping to make it easier. Earlier this week, the U.N. General Assembly voted to put in place a new bankruptcy procedure for indebted countries that would create a global system for arbitrating debt disputes. The resolution called for an intergovernmental framework, but didn’t detail how it would work.

“The time has come to give a legal framework to the financial system for restructuring sovereign debt that respects the majority of creditors and which allows countries to come out of crises in a sustainable manner,” Argentine Foreign Minister Hector Timerman said after the vote, according to Reuters.

The nonbinding U.N. resolution garnered 124 out of 193 votes and won support from China, which holds huge amounts of debt. Eleven countries, including the United States, voted against the measure. American officials said it would create uncertainty in markets that could make it more expensive for developing countries to borrow money.

Read more…

Published on Sept. 11 in www.foreignpolicy.com by Jamila Trindle.

15
Sep

Africa Beyond Ebola

Written on September 15, 2014 by Waya Quiviger in Africa, International Development

MADRID – Among this summer’s grave global worries, the spread of the Ebola virus has monopolized the discussion of Sub-Saharan Africa and reinvigorated hoary notions of disorder and despair – at a time when a new image of a dynamic Africa was emerging. In fact, there is still strong reason for optimism about the region’s prospects.

The Ebola outbreak overshadowed three key events affecting the region. On July 1, a major organizational restructuring at the World Bank Group was implemented. Two weeks later, the BRICS (Brazil, Russia, India, China, and South Africa) announced the establishment of the New Development Bank. And, in early August, African government and business leaders gathered in Washington, DC, for a summit that could portend transformative private investment in Africa.

Such investment is essential in a world in which net private capital flows to developing countries outstrip official development assistance by a margin of ten to one. If this is to be a turning point for Africa, rather than another false dawn, this summer must be the start of a prolonged effort to stimulate private-sector engagement.

The reorganization of the World Bank is a central part of a larger effort under its president, Jim Yong Kim, to reposition the Bank as a facilitator vis-a-vis the private sector, rather than a primary provider. From 2009 to 2013, new investment commitments by the International Finance Corporation, the World Bank’s private-sector lending arm, have risen 73%. Meanwhile, the Multilateral Investment Guarantee Agency, the Bank’s provider of political risk insurance covering investments in developing countries, has moved to expand its activities, both by broadening the types of projects that it supports and widening existing definitions to allow greater coverage.

July’s restructuring occurs within the context of these broader moves. In reorganizing the World Bank Group’s central component, the International Bank for Reconstruction and Development, Kim has adopted a management-consulting model that unites expertise with regional coverage. Seeking to eliminate the bureaucratic “silos” that have isolated regional experts from one another, 14 global practice groups in areas such as energy, water, and education have been established to bring to bear the full force of the World Bank’s considerable knowledge on projects and partnerships.

Just as the World Bank was repositioning itself, the BRICS agreed to establish their own bank. There are significant outstanding issues about how the New Development Bank will operate, but early indications suggest that infrastructure will be central to its activities, with an emphasis on Africa.

The World Bank estimates that insufficient infrastructure reduces productivity in Africa by approximately 40%. The entrance of a new player with initial authorized capital of $100 billion – along with the United States’ Power Africa program, which has garnered $26 billion in commitments since its launch last year, and the World Bank’s new Global Infrastructure Facility – promises to help ease infrastructure financing significantly.

But, as of now, the New Development Bank is little more than a statement of political solidarity, and whether it comes into existence remains to be seen. Even if it does begin to function, the BRICS lack what gives development banks, and the World Bank in particular, legitimacy and weight: a staff composed mostly of dedicated experts who are among the world’s best.

Finally, the high profile of the US-Africa Leaders Summit, with more than 40 heads of state in attendance, as well as President Barack Obama’s direct involvement, generated buzz about Africa. US businesses and investors certainly gained more awareness about Africa’s potential and a deeper understanding of the variety of investment climates throughout the continent.

But, though the summit may be called a success, its long-term implications are unclear, particularly given the uncertainty about what will follow. At the moment, there does not seem to be a plan to institutionalize the summit.

Moreover, the participation of so many heads of state overshadowed that of African business leaders. The practical connections that US companies will need when deciding whether to invest could have been cultivated on the summit’s margins, or in its aftermath, but were not. Laying a foundation for future engagement requires ongoing commitment and effort that goes beyond mere publicity.

The same could be said about the World Bank. There is much work to be done in integrating the new organizational model with existing Bank structures and practice areas. Even if this transition occurs seamlessly, the Bank faces a serious internal struggle against entrenched bureaucratic interests and a pervasive institutional mindset that is overly risk-averse and fixates on processes rather than outcomes.

In recent years, Africa, once a land of pity, has emerged as a land of opportunity. If it is to become a land of performance, the goal must be to facilitate investment, both domestic and foreign. That will demand effort and commitment; given that a stable international order increasingly depends on a prosperous and growing Africa, it is a goal that the world cannot afford to miss.

By Ana Palacio. Published on Sept. 4th in http://www.project-syndicate.org

Ana Palacio, a former Spanish foreign minister and former Senior Vice President of the World Bank, is a member of the Spanish Council of State and a visiting lecturer at Georgetown University. She is also a member of IE Business School’s International Advisory Board.

Read more at http://www.project-syndicate.org/commentary/ana-palacio-says-that-the-disease-s-outbreak-has-overshadowed-three-key-recent-events-affecting-the-region#bEyEVEZOrsR5a1MH.99

12
Sep

Cambodia’s Foreign Policy Grand Strategy

Written on September 12, 2014 by Waya Quiviger in Asia, Foreign Policy, News

Cambodia’s Foreign Policy Grand Strategy

 

The glory days of the Khmer Empire, from the 9th to the 15th century, and Angkor Wat are the pride of Cambodia. The Khmer Empire was in its time a major power in Southeast Asia in terms of military might, diplomacy and trade. Unfortunately, it did not last. The collapse of the empire combined with internal conflict signaled the beginning of the Dark Ages of Cambodia, colonization, and conflict..

Today, Cambodia is perceived as a war-torn country, one plagued by civil war, landmines, and foreign intervention. Nevertheless, with civil war at an end, the country has the potential to start of a promising new chapter, one in which it pursues its core national interests, most notably stability, sovereignty, economic development, and image building. After successful national reconciliation and regional integration, Cambodia is now well on its way to becoming a lower middle-income country with annual GDP growth of around 7 percent.

However, as the international landscape changes, for instance with the rise of China and the U.S. “rebalancing” to Asia, new regional challenges are emerging. If it is to deal successfully with these challenges and become a relevant player within the region, Cambodia must have a grand strategy for its foreign policy. According to Hal Brands, a grand strategy can be an integrated set of principles and priorities that helps a country navigate a complex and dangerous international environment to achieve its national interests.

In looking at what the Cambodian government has done with its foreign policy to date, it appears that Cambodia’s grand strategy rests on three pillars.

Asian Century

The first of those pillars we might call the “Asian Century.” Certainly, the gravity of global power has shifted to the Asia-Pacific and the 21st century is shaping up to the Asian century, with most countries in the region, such as China, India, and the ASEAN countries, among them Cambodia, enjoying strong economic growth in recent years. China, the world’s second-largest economy after the United States, is also ASEAN’s largest trading partner.

Not surprisingly, Cambodia has focused most of its diplomatic efforts on ASEAN and other ASEAN-led regional forums, such as the East Asia Summit. It has strengthened its existing diplomatic ties with major powers in the region, such as China and Japan. Cambodia upgraded its diplomatic relations with China and Japan to the level of strategic partnership in 2010 and 2013, respectively.

Recently, Cambodia has also launched a diplomatic charm offensive* targeting countries such as Belarus andAzerbaijan, hoping to promote economic and trade relations. This signals another major shift in its foreign policy, from political diplomacy to economic diplomacy.

In a regional context, ASEAN and its Dialogue Partner countries are negotiating comprehensive free trade deals, such as the Regional Comprehensive Economic Partnership (RCEP). All of these efforts are designed to reap the benefit of regional integration, and represent a golden opportunity for Cambodia to focus on the Asia-Pacific to sustain its economic growth. In the context of the Asian century, ASEAN should remain the cornerstone of Cambodia’s foreign policy. But Cambodia also needs to balance its economic, military and political interests among its immediate neighbors, China, the U.S., and ASEAN. This will need to be done with skill if Cambodia wishes to remains prosperous over the long term. Read more…

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