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08 May 2013 | Vol. 4, № 15.
From the Editor’s Desk
Dear FDI supporters, Welcome to the Strategic Weekly Analysis. This week’s issue starts with an examination of Indonesian interest in purchasing Australian cattle farms to provide for growing middle class demand for beef at the expence of their policy of self-sufficiency. Still on the issue of Australian cattle export, we ask questions about the future of live exports to Egypt in the wake of the latest round of animal cruelty revelations. We investigate the new era of Australian-Indian relationship in the context of Australias relationship with both Pakistand and the United States. We analyse the recent Malaysian election and the social, economic, and political divides of the country with the new political landscape. Confrontation continues over the disputed Himalayan border between China and India, and FDI Senior Visiting Fellow Sandy Gordon investigates the consequences of the escalating tension between the two powers. In Pakistan we look at the latest decision by the judiciary to ban former president Musharraf from running in the upcoming election. Next to Iran, where questions are raised about the benefits of the latest round of talks regarding their nuclear policy. Finally, we look at Africa, where the overall well-being in both Ethiopia and Kenya are finally starting to rise, however a strategy must be implemented to ensure long-term sustainability. We also examine Chinas relationships in Africa in the light of recent criticisms from African leaders towards Beijing. We also examine the political situation in South Africa, with a new political party attempting to challenge the supremacy of the entrenched African National Conference. I trust that you will enjoy this edition of the Strategic Weekly Analysis. Major General John Hartley AO (Retd) Institute Director and CEO Future Directions International
Page 2 of 19
Indonesian Interest in Australian Cattle Farms a Twist on Food
Self-Sufficiency Push
Recent interest from Indonesian public sector investors in owning and investing in
Australian cattle farms could signal that the government is compromising on its
controversial food self-sufficiency laws.
Background
A delegation of senior officials from Indonesia’s investment board, the BKPM, will visit
Australia early in June to discuss opportunities to invest in Australia’s cattle industry.
Indonesia is Australia’s main market for live cattle exports but trade relations between the
countries have been strained since June 2011 when the Australian Government suspended
live cattle trade to Indonesia, following the exposure of animal cruelty in a number of
abattoirs. The ban was lifted after a month, but Indonesia retaliated by halving Australia’s
import quota. In October 2012, the Indonesian government implemented its new Food Self-
sufficiency Law, which caused controversy both domestically and internationally as beef
prices in the country sky-rocketed.
Comment
Indonesia has implemented a number of reforms to its agricultural sector in the past decade
aimed at achieving food security, ensuring affordable prices for consumers, raising
competitiveness for agricultural products and diversifying away from carbohydrate
production towards animal-products. The new Food Law, passed in October last year, aimed
to institutionalise self-sufficiency in food production as the overarching food security policy.
This is in line with the country’s intensifying drive for economic nationalism. Article 14 of the
law states that ‘sources of food supply are from domestic production and national food
reserves’ and only ‘in the case of shortage of food supply from those two sources, food can
be fulfilled by importation, as needed.’ Amongst the objectives of the policy is a goal to
reach 90 per cent self-sufficiency in beef production by 2014. The primary mechanism to
encourage food self-sufficiency has been the tightening of import quotas for food products.
The import quota for Australian beef is 260 000 head this year, a third of its peak in 2009.
Restricting the supply of imports amidst growth in demand, has led to dramatic price rises
on the domestic market. Consumers are paying record prices for beef, almost double what
they were twelve months ago. Food prices overall have been driven up by as much as 15 per
cent. This has fed into the national inflation rate that was 5.6 per cent in March, following a
4.31 per cent increase in February. While the government claims that supply is sufficient to
feed the country, sectoral structure and distribution networks are not. The nation’s
estimated 15 million head of cattle belong to 6.4 million farmers and there is no large-scale
production.
While a policy of import restrictions can improve food self-sufficiency, it may do so at the
expense of food security. Rising domestic prices have made meat unaffordable for many of
those already vulnerable to food insecurity as a result of poverty. A preferable strategy for
raising both food self-sufficiency and food security is increasing agricultural productivity.
Page 3 of 19
Unfortunately, Indonesia’s commitment to this goal has waned in recent years. Globally, a
policy of import restrictions is harmful to more efficient competitors. Indonesia’s slashing of
import quotas has financially crippled some Australian cattle stations. The United States has
lodged a complaint against Indonesia at the World Trade Organization regarding the
practice. The Food Law has widely been considered a misstep by the Indonesian
government, which is now facing an urgent need to reduce inflationary pressures. In mid-
April, the Indonesian trade minister Gita Wirjawan ended import restrictions on horticultural
products and increased the Australian beef quota for 2013.
The government’s interest in investing in the Australian cattle industry signals a partial
retreat from the goal of domestic self-sufficiency. The inflationary implication of slashing
quotas has likely led to the realisation that the goal of achieving 90 per cent self-sufficiency
by 2014 is unattainable and counter-productive to ensuring food security. The cost of
producing a calf in Australia is a third of the cost of producing a calf in Indonesia, illustrating
the efficiency benefits of a trade-based approach to food security. However, the Indonesian
government were unsettled by the effects of the unexpected export ban in 2011 and are
eager to reduce the risk of live cattle exports being suspended again. By investing in
Australian farms, Indonesia hopes to secure its supply chain for imported beef products. It is
unclear how cattle from Indonesian-owned Australian properties would be treated under
Indonesia’s import quota structure. A statement to Indonesian media from the Minister for
State-Owned Enterprises, Dahlan Iskan, in March, implies that the government sees
investment in the Australian cattle industry to be part of the plan to meet the target of 90
per cent production self-sufficiency by 2014. If this is the case, it is a compromise on the
terms of the self-sufficiency goal, but one that may indicate a more favourable future
market for Australian live cattle exports.
Lauren Power Research Analyst Global Food and Water Crises Research Programme [email protected]
*****
Page 4 of 19
Egyptian cruelty case shows live exports issue is far from
being resolved
Live animal exports to the Middle East have long been a contentious issue for the public
image of the Australian agricultural sector. Now, in light of recently released footage from
abattoir in Egypt showing animal cruelty involved in Halal slaughter, Australian cattle
exports to the country have been suspended.
Background
In a video produced by Animals Australia, several processes involving vicious, cruel and
clumsy slaughter of injured animals were filmed in an Egyptian abattoir. Released on
Monday, the Australia Livestock Exporters’ Council immediately suspended exports until
evidence is produced that Egyptian facilities comply with international animal welfare
guidelines. Animals Australia is a not-for-profit organisation based in Victoria aimed at
promoting community awareness and facilitating advocacy against cruelty towards animals.
Comment
The issue of live animal, especially cattle, exports to predominantly Middle Eastern, Muslim
nations has long been a contentious issue for the Australian agricultural sector. The rationale
behind such exports, the practice of ‘Halal’ slaughtering of animals in qualifying abattoirs,
has often stood in stark contrast to industry best-practice standards. In many cases, the final
‘product’ does not even technically qualify as ‘Halal’, in one case, where after having its
throat cut incorrectly, an animal escapes from its hoist, and walks around until it dies from
blood loss.
Footage shot by Egyptian meat workers in such abattoirs, and released by not-for-profit
organisation Animals Australia demonstrates regular practices such as stabbing animals
repeatedly, including in the eyes. In other related footage, shot at a different Australian
approved abattoir in Sokhna, animals are confined in poorly fitting restraint boxes, held
upside down, and choked while their throats are cut. All while fully conscious.
This isn’t the first time exports to Egypt have been suspended. In 2006 evidence emerged of
a similar culture of animal cruelty, in particular the unnecessary cutting of tendons during
the processing of animals. Trade was resumed three years ago. In fact this process has been
stuck in a loop for the last 20 years, where exports will be suspended in the wake of negative
publicity, and resumed sometime later with little or no change in policy, practices, or
publicity.
Agriculture minister Joe Ludwig defends Australia’s live animal export trade, saying that the
existing system is adequate in dealing with the investigation of complaints involving animal
cruelty. The live export sector earned $996.5 million in 2009, and is responsible for the
employment of around 10 000 people in rural and regional Australia. Nationals senate leader
Barnaby Joyce has stated that once Australian cattle are sold, rights, and by implication,
responsibility for them, are forfeited.
Page 5 of 19
After the most recent live export scandal, involving extensive cruelty towards Australian
animals by the world’s largest Muslim nation Indonesia, the Australian industry standard
SCAS (Supply Chain Assurance System) was established, where Australian exporters remain
responsible for their animals after they land overseas. The Department of Agriculture,
Fisheries and Forestry states that Australia leads the world in animal welfare practices, and
that the Australian Government does not tolerate cruelty towards animals and will not
compromise on animal welfare standards.
The recently released footage has highlighted the continuing problems associated with
Australian Live Exports. The Australian Government holds the requisite political authority,
and more importantly capacity, to facilitate and enforce changes to trade practices, but has
fallen short over the last two decades. The missing element, it seems, is the political will to
do anything about a moral dilemma that boils down to compromising Australian principles
for the sake of a multi-million dollar export market.
Tom Davy Research Manager Global Food and Water Security Research Programme [email protected]
*****
The US Alliance and Australian Policy Towards The
Subcontinent
As India-Australia bilateral relations warm, a more independent policy stance on
Australia’s relations with the Subcontinent should be clarified. India must be
convinced that Australia’s policies are not unduly impacted by fears of offending
Pakistan, or falling out of step with the United States.
Background
India has long considered Australia’s policy towards the subcontinent as ‘tilted’
favourably towards Pakistan. This is largely due to Indian views of Australia’s
subordination to US policy preferences; consequently, the US’s historically strong
relationship with Pakistan has impacted upon India-Australia relations.
Comment
In the past, India considered that Australia did not have an independent voice on
regional matters, largely mirroring US policy preferences and rhetoric during the
Cold War and after. This perception was exacerbated by missed opportunities to
forge closer ties during significant events, such as the 1962 India-China border war. A
common theme is the impact of the enmity between India and Pakistan over
disputes such as Kashmir, and the need for Australia to maintain ‘a delicate balance’
Page 6 of 19
between the two. Fear of offending Pakistan has stymied closer cooperation with
India in the past. Unfortunately, due to Australia’s perceived subordination to US
policy, Australian rhetoric about balancing its relations with the two did little to
mitigate Indian views that Australia did not wish to establish an independent policy,
thus relegating Australia, by default, to the US’s pro-Pakistani tilt.
A key mistake in Australian policy, identified by Arthur Tange, was that Pakistan and
India were treated as ‘Siamese twins’ rather than distinct nations. Policy objectives
in Pakistan restrained Australia’s India policy, rather than each being considered on
their own merits. Australia has been reluctant to adopt policy stances that appear
hostile towards Pakistan, either openly or by implication. India, however, resents the
implication that it is apparently equated with Pakistan; following the US’s even-
handed strategy has not worked for Australia. As Meg Gurry has noted, the
significance of India-Pakistan relations for Australia ‘receives surprisingly little
coverage’.1 Additionally, little has been done to further India-Australia relations since
the end of the Cold War, and nothing to separate regional Australian policy interests
from US actions and rhetoric. As Gurry argues, ‘the Australia-India relationship
cannot escape the India-Pakistan relationship.’ More considered discussion is
necessary.
To persuade India that its policy is truly independent, Australia will have to convince
India that its policies on the sub-continent are not overly influenced by either the US
or Pakistan. Indeed, there is a narrow window of opportunity for Australia to assert
itself more vigorously in India’s eyes. For Australia to be seen as more than a
peripheral country, relying on its links outside the region to assert its interests, more
must be done to present Australia as independent and not beholden to external
preferences.
Recent talks over uranium exports may provide a growing momentum to India-
Australia relations, which should be capitalised upon. Moreover, Australia will chair
the next meeting of the Indian Ocean Rim Association for Regional Co-operation in
Perth this November. This is a good opportunity to try to map out a plan for
economic and security cooperation and thus help clarify Australia’s role in the
region.
US-Pakistani relations have been in decline for a number of years. As the troubles in
Afghanistan drag on, the US will be tilting more noticeably towards India in the
future and has taken visible steps in this direction since 2005. A key first step for
Australia would be to recognise that, in the future, India will be the dominant power
of the subcontinent, with regional interests to match. It will then be impossible to
1 Meg Gurry. “A delicate balance: Australia’s ‘tilt’ to Pakistan and its impact on Australia-India
relations”, Australian Journal of International Affairs. 2013; 67:2, 141-156. DOI: 10.1080/10357718.2012.750641
Page 7 of 19
maintain that India and Pakistan require equal diplomatic consideration; even today
this is tenuous. Another would be to recognise that equating Australia’s security
policy with that of the US is not to Australia’s benefit outside of the Asia-Pacific.
Deepening security and intelligence cooperation between India and the US may
carry diplomatic thorns amongst the roses. Third, counter-intuitively, Australia must
take care not to appear in lockstep with Indian and US preferences; a historic
reversal will only bring a new set of problems. Rather, Australia must navigate this
‘strategic matrix’ with greater care than in the past. This approach does not demand
much of substance from Australia, but all new trends must start somewhere.
Daniel Barnes Research Assistant Indian Ocean Research Programme
*****
Election Result Fails to Quell Political Discord in Malaysia
Traditional ethnic divisions are combining with newer ideological and geographical ones in
the wake of Malaysia’s latest general election.
Background
Despite having had several incarnations and minor compositional and name changes,
Malaysia’s ruling Barisan Nasional (BN) coalition has been in continuous power nationally
since 1957. However the recent general election, on 5 May 2013, was one of the closest yet.
Strong ethnic and religious identities have always been influential upon Malaysian politics.
Yet ideological delineations do transcend those racial identities to some extent and in some
geographical areas in particular. The narrower electoral margin predicted before the poll
saw both sides become increasingly desperate for political advantage, with some supporters
resorting to acts of violence and intimidation. The close and now disputed result may see
this worrying trend escalate still further.
Comment
Historically perpetual government victories in Malaysian general elections can be explained
by an aggregate of factors. The country has at times endured periods of ethnic unrest
between its ethnic Malay, Chinese, Indian and other populations. These ethnic identities
remain strong, with intermarriage between them still relatively rare in Malaysia. As a
coalition including Malaysia’s main ethnic Malay, Chinese and Indian representative parties,
Barisan Nasional has promoted itself as an agent for ethnic harmony in Malaysian society.
Through its strong position within the BN coalition, the United Malays National Organisation
(UMNO) has perpetuated pro-Malay affirmative action policies, a historical legacy of
colonial-era demographic upheavals, and thereby also attracted strong ethnic Malay support
for BN.
Page 8 of 19
Analysis of previous general election results reveals that the percentage of seats won by BN
has always exceeded its percentage of the vote cast, sometimes significantly. Individual
electorate “size” varies immensely. It is estimated that BN need only secure 40 per cent of
the vote cast in order to claim victory, although to be fair it has secured more than 50
percent on all but one, or possibly now two occasions. When its vote fell below 50 per cent
in the 1969 election, the then ‘Alliance Party’ still won 66 per cent of available seats. Early
indications are that BN may have narrowly failed once more to achieve over 50 per cent of
the popular vote. Conversely the opposition Pakatan Rakyat coalition appears to have
secured just over 50 per cent. Gerrymandering, deliberate or not, has thus always given the
BN coalition a strong electoral advantage.
It should therefore suffice to say that Malaysian general elections have long been more-or-
less foregone conclusions, if only in the minds of a significant proportion of the Malaysian
population as suggested by voter turnout figures. 2 In 2008 BN almost failed to claim more
than half the vote, receiving just 50.27 per cent. The closeness of this previous vote aroused
much interest among previously unregistered voters in the lead-up to this election. As
noted, this next election was the closest yet, inspiring those hoping for a change of
government. The 2008, and now particularly the 2013 result, also serve to draw attention to
the disparity between votes received and seats won. Some 3.2 million new voters have
registered to vote, out of an expected total of around 13 million in a country where voting is
non-compulsory. Closer elections are leading to increased political interest and participation,
especially among opposition supporters, which is in turn making elections even closer. BN
can no longer be confident of electoral victory as a fait accompli.
Support for BN’s pro-Malay, “positive discrimination” policies is strongest in rural, largely
ethnic-Malay constituencies, which are the core of UMNO/BN’s support base. Meanwhile
the opposition’s pledge before the recent poll to abolish these policies eroded support for
the ethnic-Indian and ethnic -Chinese based parties which also make up the BN coalition.
This was particularly the case among Chinese Malaysians whose support swung markedly to
the opposition, prompting Malaysian PM Najib Razak to label this a “Chinese Tsunami”. A
significant proportion of the urban ethnic-Malay population has also begun to shift support
towards the opposition. In fact opposition support in general has tended to be strongest in
urban areas, whilst as mention BN support is strongest in rural regions.
Ideological considerations are also becoming more influential. All things being equal this should be healthy for Malaysia’s democracy. Yet ethnic/racial identities, especially policies relating to the status of Malaysia’s ethnic communities, continue to be important issues. Continuing disparity between popular vote figures and seats won becomes all the more salient in the face of an opposition majority of the popular vote. Malaysian politics is thus riven with ethnic and ideological divisions, and a rural/urban divide continues to emerge. With an opposition pledge to challenge the election result in Malaysia’s courts, the potential for political violence has been exacerbated, not calmed, now that polls have closed. Jeff McKinnell Research Assistant Indian Ocean Research Programme
2 http://www.idea.int/vt/countryview.cfm?CountryCode=MY#__topdoc
Page 9 of 19
*****
India-China Border Tension and Nuclear Posturing
The recent standoff between India and China has wider implications than just a run-of-the-
mill incident between the two countries
Background
The standoff between China and India in Ladakh has been resolved, at least for now. After
China set up five tents for 40 personnel 19 km inside what India regards as the line of
control, India set up similar tents facing them. Both lots of tents are now to be removed, but
it is still unclear whether India is to remove any of its structures at Fukche and Chumar, as
demanded by the Chinese.
Comment
The Chinese withdrawal only occurred after India had hardened its position on the
impending visit of Indian foreign Minister Salman Kurshid to Beijing on 9 May and the
reciprocal visit of Chinese Premier Li Keqiang to New Delhi on 20th May. The Indian
government was forced to take a stand by the strong public reaction to what was perceived
to be a weak-kneed response to the Chinese ‘incursions’. A disturbing feature of the incident
was the way it was politicised by both sides, thus risking the protagonists being ‘locked in’ to
their respective positions.
Analysts in New Delhi have been arguing for some time that China has adopted a tactic of
creeping encroachment, taking a bit of territory here, a bit there, and turning what it keeps
into reality on the ground. But even so, the Indians were surprised by the strength of the
Chinese action and its occurrence on the eve of the two scheduled visits. The most widely
accepted interpretation is that the hard line approach had something to do President Xi’s
attempts to build his credibility with the military.
An interesting, and possibly connected, side development was that two weeks after the
Chinese set up their tents, The Times of India reported a very strong statement by the
convenor of India’s National Security Advisory Board, Shyam Saran, directed at Pakistan’s
nuclear policies. Saran reportedly said that India would respond massively to any nuclear
strike and that “the label on a nuclear weapon used for attacking India, strategic or tactical,
is irrelevant from the Indian perspective.”
The statement refers to Pakistan’s reported development of tactical nuclear weapons.
According to Pakistan’s own statements, these weapons are designed to deter or interdict
an Indian conventional strike. Unlike India, Pakistan does not have a ‘no-first use’ doctrine.
The nuclear threshold in South Asia is thus significantly lowered both by the presence of
tactical weapons and Pakistan’s stated doctrine on their use.
Also, as pointed out by veteran commentator Manoj Joshi in the 2 June 2011 issue of India
Today, such tactical weapons would be deployed at army corps level and would
Page 10 of 19
consequently be far more decentralised than strategic weapons. The danger that they may
fall into the wrong hands, including terrorist hands, is thus greatly increased. But Pakistan
has claimed to have such weapons since 2011, so why has the Indian warning come now,
and why so strident?
The plutonium used by Pakistan to miniaturise nuclear weapons is derived from the
unsafeguarded nuclear reactors built by China and now operational at Khusab. The
launchers and missile technology are also likely to have been developed from Chinese
originals. The design of Pakistan’s strategic weapons came from China, but it is unknown
whether the design of its tactical weapons is indigenous or Chinese.
The statement by Saran could also be seen in the context of their intended use by Pakistan
against any implementation of the Indian ‘Cold Start’ doctrine – a doctrine of a limited strike
on Pakistan in the event of a Pakistan-sponsored terrorist attack on India. In the aftermath
of the attacks on Mumbai of 26 November 2008, India felt unable to use Cold Start. After
those attacks, China took up a threatening position to deter any strike by India on Pakistan
using Cold Start. India was also constrained by Pakistan’s nuclear umbrella – a point of even
greater salience now, given its development of tactical weapons.
Indian commentators will now be waiting to see what India actually gave up to achieve its
deal with China on the Ladakh border. New Delhi’s agreement to remove the Indian tents
has already been criticised, on the grounds that they will be removed from what is clearly
Indian territory. If it also agreed to remove structures in Fukche or Chumar, the criticism will
become even more strident and commentators will point out that this will only encourage
future bad behaviour by China.
More broadly, the settlement on the India-China border may help propagate a more
reasonable image of China in relation to Beijing’s other disputes, over the Senkaku-Diaoyu
Islands and the East and South China Seas.
Sandy Gordon
Senior Visiting Fellow
*****
Banning Musharraf Highlights Continuing Challenges in
Pakistan
The Peshawar High Court’s decision to bar Musharraf from contesting elections, represents
attempts to bring others to account. Although the Court will face substantial challenges,
this is a positive development ahead of Pakistan’s upcoming election.
Background
In the latest development in the former President’s disastrous return to Pakistan, Pervez
Musharraf has been barred for life from contesting any election. The Peshawar High Court
took the decision on the basis that Musharraf had twice abrogated the Constitution, and
Page 11 of 19
therefore could be charged with high treason. The court is also seeking to make possible the
prosecution of others who have taken orders from dictators.
Comment
The decision against Musharraf, taken by the High Court, reflects a continuing trend towards
political accountability, that has become evident in the lead up to the upcoming historic May
11 elections. The Court took the decision on the basis that the former ruler abrogated the
Constitution on two occasions: when coming to power through a coup in 1999, and when
declaring the Emergency in 2007. Musharraf is facing justice for his authoritarian moments.
Wider measures to discourage undemocratic rule, however, will face significant challenges,
due to the substantial numbers of those who could be implicated.
Musharraf received a lukewarm reception upon his return to Pakistan in March, after four
years of self-imposed exile. He was subjected to death threats from the Pakistani Taliban
and threats of arrest from the government. His election hopes now over, he remains under
house arrest for the detention of judges and two murders in 2007, including that of Benazir
Bhutto, for which he has been put on judicial remand.
The High Court has directed Parliament to revise the constitution, to make it clear that
anyone who obeys orders from a dictator would be guilty of high treason. The relevant
clause in the Constitution currently states that any person aiding or abetting the abrogation
or suspension of the constitution can be found guilty of high treason. Any parliamentarian or
executive found to be guilty of this would lose their position. If Parliament fails to make this
revision, the Court has said it intends to make a wider interpretation of the current
provision.
Lawyers representing Musharraf have argued that the nation’s judges themselves could be
found guilty of such a charge. Numerous judges have taken their oath under Provisional
Constitutional Orders, which have been used to suspend the nation’s Constitution during
military rule. Consequently, they can also be accused of abrogating the Constitution.
Musharraf declared a Provisional Constitutional Order on two of the occasions referred to by
the Court, in 1999 and 2007. On each occasion, the reaction of judges was divisive. Some
took the oath, while others refused. Those who refused were removed from office.
While Musharraf’s counsel is making these claims with the purpose of discrediting the
bench, they do highlight important implications. While the Court may have had close
associates of Musharraf in mind, others are potentially implicated in abrogation of the
Constitution. The number of judiciary members who could stand accused of aiding in the
abrogation of the Constitution on these grounds, is likely to be substantial. Additionally,
members of the armed forces and legislators could also be accused.
This decision reflects an increasing assertiveness by the judiciary. This is the first occasion
that a judgement of this nature has been made by a court against a leader who came to
power through a military coup; there have been several. On this basis, lawyers representing
Musharraf have accused the judiciary of discrimination. Additionally, elements of the
military are likely to be concerned about the decision, as it threatens the political role the
armed forces have played on several occasions.
Page 12 of 19
Attempts to prosecute those who have been involved in the abrogation of the constitution
in the past will be difficult, due to the large numbers of those potentially implicated. What
the latest developments in the Musharraf experience do represent is the increasingly
successful attempts to consolidate democracy in Pakistan, by deterring future dictators and
reducing the military’s political role.
James Davies
Research Assistant
Indian Ocean Research Programme
*****
Why Now? Upcoming Nuclear Talks with Iran
Though nothing of significance may occur during a meeting of the European Union and
Iranian chief negotiators on 15 May, it does set the stage for future progress.
Background
Catherine Ashton, chief European Union nuclear negotiator with Iran, announced on 2 May,
that new talks will be held with Iran on 15 May. The announcement by Ashton of a meeting
with Iran’s chief nuclear negotiator Saeed Jalili in Istanbul raises a significant question: Why
now? With Iranian presidential elections expected on14 June, what can be accomplished
through the recently announced talks?
Comment
The announcement of the talks to be held on 15 May between Ashton and Jalili was
unexpected. The last round of talks, held on 5-6 April, failed to produce any breakthroughs.
Despite this, the failed meeting did achieve some progress in that the EU, the US, and Iran
put realistic offerings on the table. Unlike previous meetings when Tehran called off the
meeting because of unrealistic demands, the talks were fruitful in that they provided a
framework for future negotiations and compromises by both parties.
After the deadlock at the 5-6 April talks, it was expected that any future meetings would
have to be shelved until after the Iranian presidential elections in June this year.
Consequently,, the announcement by Ashton regarding new talks is a bit of a surprise, given
the current complexity of Iranian domestic politics, vis a vis, the Iranian presidential
elections this June. Dr Jalili, who is meeting with Ashton, is an Iranian presidential candidate
who has deep connections with the main religious authority, Supreme Leader Ali Khamenei.
His decision to engage in talks with the EU chief negotiator may stem from both political
reasons and personal ambition.
The decision by Ashton to engage in talks so close to the Iranian presidential election, is
designed to ensure continuity with the Iranian regime. By establishing a regular dialogue
with Tehran, the EUcan build on diplomatic efforts to understand where the “red lines” are,
and what incentives can be offered without significantly compromising its position. It will
Page 13 of 19
also position any future Iranian chief negotiator to take a similar role to that of Jalili, should
he be replaced after the election, subject to a change in the presidency with the approval of
Khamenei.
The decision to once again host the talks in Istanbul is worthy of note. Turkey has in recent
years been attempting to become a stronger force for mediation in the Middle East and has
played a crucial role in the nuclear talks with Iran. Istanbul seems an attractive option to
both Tehran and Brussels, based on both geography and political affiliations.
Germany has gained increased influence in ensuring that the talks with Iran proceed
smoothly and lead to a partial decrease in sanctions. Berlin and Tehran have reinforced their
economic ties recently, though Germany’s exports of wheat. In the period from July 2012 to
February 2013, Germany’s wheat exports to Iran totaled 1.024 million tonnes, a substantial
increase from 63,000 tonnes fore the same period in 2011-2012. A decrease in financial
sanctions on Iran would facilitate increased exports by Germany, a main supplier of wheat to
Iran. Incidentally, Australia could also benefit from the situation, as Iran bought 60,000
tonnes of Australian wheat on 21 March as the regime began building grain stocks due to
recent droughts.
Dialogue between the EU and Iran is unlikely to achieve anything significant in the near
future. Talks such as these have achieved little over a long time, and it is unlikely to be
different in this instance. The positive feature is that the talks do signal that discussions
between the two parties are proceeding, albiet at a slow pace.
As noted, Ashton and Jalili’s decision to once again commence talks, though not on the scale
of the P5+1, may set a precedent for future small talks. These are less likely to be subjected
to the political grandstanding that is common with certain Iranian political leaders. Jalili is
unlikely to come out of these talks with much to show for it, but may be able to demonsrate
to the Iranian public that his diplomatic skills merit a vote.
Gustavo Mendiolaza Research Analyst Indian Ocean Research Programme [email protected]
*****
A Tale of Two States: Ethiopia and Kenya Continue to Rise, but Reforms are needed to Sustain Growth
A recent study has revealed that overall well-being in sub-Saharan Africa is finally starting to rise, as a result of economic growth. While the recent findings are promising, reforms will be needed if such growth is to be sustained in the long-term.
Background
Page 14 of 19
A new study by the Boston Consulting Group (BCG) has revealed that impressive economic
growth in Sub-Saharan Africa is finally leading to increased well-being and socio-economic
development. In particular, well-being in Ethiopia and Kenya, two of Africa’s development
stars, has markedly improved. But while the two states continue to rise, despite their
different economic and development models, reforms are needed if their growth is to be
sustained.
Analysis
Though Sub-Saharan African countries have typically lagged behind other countries in
transforming wealth into well-being, this trend is beginning to change. Widely considered
the poorest region in the world, recently its thriving economic growth and lasting peace has
seen well-being levels surge.
Ethiopia, one of the poorest countries in the world, led the pack in advancing its levels of
well-being. Those gains can largely be attributed to improvements in healthcare, following a
20 year development strategy implemented in the 1990s. Importantly, services for the 85
per cent of Ethiopians living in rural areas have been significantly improved, leading to a
reduction in infant mortality rates and a three and a half year increase in life expectancy.
Indeed, Ethiopia has recently made more progress in healthcare than any other country in
the world.
But Ethiopia’s dramatic ascent is not merely a result of the remarkable progress of its health
system. Its economy has improved too. Starting from a low base, Addis Ababa says its
economy has grown at around 11 per cent a year in the past nine years. Experts remain wary
of such claims, figuring its growth rate is closer to the Sub-Saharan average of five or six per
cent. Even so, such numbers are still impressive. Notably, its agricultural industry, which
accounts for 46 per cent of its GDP and 80 per cent of all employment, has significant room
for expansion and should ensure short- to medium-term growth.
Beyond this, however, Ethiopia’s development looks increasingly unsustainable. It can no
longer afford to keep a large workforce in agriculture, given that its population has doubled
with every generation. Unsurprisingly, land plots are quickly shrinking. As the BCG study
warned, ‘landlocked countries are predominantly agricultural nations… they are less likely to
trade extensively, and they often struggle for growth’. The challenge for Ethiopia, therefore,
will be to diversify its economy. To do this, it must move a substantial part of its population
to the cities and attract foreign investment. If not, it may well hit a wall. ‘The model is now
unsustainable,’ one expert recently told The Economist.
Yet its economic model, much of which is borrowed from China, remains suspicious of
markets and foreign investment. Foreign exchange controls keep out much-needed imports
and the government still controls the lion’s share of commerce; about 80 per cent of private
businesses belong to groups controlled by state loyalists.
State control and high levels of inflation have scared foreign investors, even though many
see Ethiopia as potentially Africa’s fourth largest economy, after South Africa, Nigeria and
Angola. In the long-term, Addis Ababa will need to promote urbanisation and the private
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and secondary sectors. This would generate new jobs, bring down family sizes and go some
way towards building sustainable growth.
Neighbouring Kenya, meanwhile, is much closer to a Western model of capitalism. Since of
the adoption of wide-ranging economic reforms in 2002, the government sector has grown
smaller and foreign investment has been encouraged. By most accounts, the results have
been striking. Kenya has enjoyed growth of around 5-7 per cent, on par with what many see
as Ethiopia’s actual rate, while companies such as Google, Nokia, Microsoft and IBM have all
invested millions.
This has made it one of the leaders in technology in Africa, with new technology firms
popping up in west Nairobi, an area dubbed “Silicon Savannah”. This development is not
entirely surprising; coastal nations, unlike Ethiopia, are far more exposed to international
influence and commerce.
But like Ethiopia, Kenya has its problems. Rates of crime and corruption remain high and
food and water are still scarce in many parts of the country. Worryingly for Nairobi,
unemployment is at unacceptably high levels, with some figures putting it as high as 40 per
cent. Moreover, a third of its 35 million people are young and an estimated 80 per cent of
them lack employable skills. Without better education opportunities and employment
prospects, many youths are becoming disaffected. Long-term, these trends must be
reversed if economic growth is to be sustained.
Given such challenges, observers remain sceptical about the so-called “Rise of Africa”.
Despite impressive growth and a rise in living standards in Sub-Saharan Africa, smart
economic policies and reforms will be needed if those trends are to be sustained. Then,
perhaps, the continent may finally enjoy the future it deserves.
Andrew Manners
Research Analyst
Indian Ocean Research Programme
*****
Beijing May Need New Template for African Relations after
President’s China Critique
Criticism from the leader of a successful African country may result in a more nuanced
approach in China’s African relationship. If Beijing is better able to demonstrate the
benefits of its presence in Africa that would go a long way towards countering perceptions
among locals of being disadvantaged.
Background
Page 16 of 19
After the President of Botswana, Lieutenant-General Seretse Khama Ian Khama, launched a
scathing attack on Chinese businesses in his country in February 2013, China’s new
ambassador is working to mend bridges with this resource-rich country. President Khama’s
criticism comes ahead of ahead of plans to export Botswana’s, as yet untapped, coal
reserves to Indian Ocean ports in Mozambique. The President also criticised Chinese
immigration. Coming from a country that is an African success story, these controversial
comments are a rare high-level indication of growing dissatisfaction about China’s presence
on the continent. As perceptions of locals being disadvantaged build, China will find itself
having to do more to win public support than undertaking the high-profile construction
projects it has so far favoured.
Comment
Speaking to Business Day, President Khama blamed the power shortages experienced across
Botswana on the Chinese contractors responsible for the delayed expansion of the
Morupule B power station. Saying that ‘we have had some bad experiences with Chinese
companies in this country’, President Khama went on to say that Botswana would now ‘…be
totally self-sufficient if we hadn’t been let down by the Chinese. Those generation plants at
Morupule B should have all been up and running by the end of last year – but only one of
the four is operating’. According to Khama, that is due in large part to poor quality
workmanship and his government has ‘started really tightening up on the way Chinese
companies deliver on government contracts’ and that ‘we are going to be looking very
carefully at any company that originates from China in providing
construction services of any nature’.
Botswana has estimated coal reserves of around 212 billion
tonnes, waiting to be tapped. Development of those reserves,
however, will require large-scale infrastructure projects to
transport the coal to ports in Mozambique. Botswana offers a
potentially lucrative market, but one which is seemingly no longer
rolling out the welcome mat to Chinese businesses.
President Khama also highlighted perceptions in Africa that locals
are missing out on employment opportunities to Chinese
immigrants. According to the president, what he sees as too high
a level of Chinese migration has resulted in locals missing out on
jobs: ‘We accept China’s goods. But they don’t have to export
their population to sell us those goods. That we can quite ably do. They will crowd us out.’
President Khama’s controversial remarks nonetheless reflect a growing sense of unease in
Africa that China’s “no strings” assistance is not without a price. If it is to address such
perceptions – regardless of their validity or otherwise – China will find that it will have to do
more than provide the high-profile projects such as highways, government buildings and
sports stadiums that have been its main contributions until now. Africa may therefore come
to see a greater Chinese focus on “soft power” projects at a grassroots level, such as the
provision of basic services in villages, than has been the case in the past.
Page 17 of 19
In the case of Botswana, however, a prosperous, peaceable, well-governed democracy,
more nuanced approaches will be called for. Confirming that, China’s new ambassador to
the country, Mr Zheng Zhuqiang spoke of his intention to work with the Botswana
Parliament to improve the bilateral relationship. Exactly what that might mean is unclear,
but it does signify a change of tack in China’s African relations. If successful, it will be
another way in which Botswana is able to act as a role model for other developing countries;
for China, it could well provide a very useful template for its dealings elsewhere on the
continent.
Leighton G. Luke Research Manager FDI Indian Ocean Research Programme [email protected]
*****
South Africa: New Political Party Challenges African National
Congress
Disgruntled former members of the African National Congress have formed a new political
party. Although there is much dissatisfaction with the ANC, it is unlikely that the new party
will be able to compete with it.
Background
South Africa First, a new political party, has been formed by expelled members of the ANC.
Eddie Mokhoanatse, an ousted member of the ANC and its associated organisation, the
uMkhonto we Sizwe Military Veterans Association (MKMVA), announced on 27 April 2013
that SA First would be a coalition driven by civic society organisations and individuals. South
Africa has an election due in 2014 and senior leaders in the ANC party are outraged. Will SA
First be able to compete with the established ANC, which has dominated South African
politics since the end of the apartheid era?
Comment
The founders of SA First, Mr Mokhoanatse and another former ANC member, Mr Lucky
Twala, believe the ANC has strayed too far from its founding principles. Mr Mokhoanatse
and Mr Twala cast their foundation of the party as an attempt to form a viable alternative to
the ANC. According to the Mail & Guardian, one of the party’s aims is to ‘reclaim space for
private citizens and enable them to participate in influencing public discourse and shape the
future of the country.’ Mr Mokhoanatse has hinted he will target the 12 million eligible
voters who did not show up to the polls in the 2009 election, as potential supporters.
The party’s rhetoric is harshly critical of the ANC. SA First accuses the ANC government of an
inability to confront endemic socio-economic problems in South Africa. It also accuses the
Page 18 of 19
ANC of failing to deliver basic services and infrastructure. In 2012, in the Limpopo province
the ANC government failed to provide textbooks to schools up to four months into the
school year. Mr Mokhoanatse has also criticised other political parties for not providing the
South African people with a credible alternative to the ANC.
It is possible that the foundation of SA First is a reaction to the expulsion of Mr Mokhoanatse
from the MKMVA in 2012. He was also a member of a group that took the leadership of the
MKMVA to court, accusing them of misusing its investment funds. Mr Mokhoanatse was
subsequently expelled from the MKMVA for damaging the reputation of the ANC.
The MKMVA has been quick to discredit SA First and its founders. Kebby Maphatsoe, one of
those accused by Mr Mokhoanatse of mishandling MKMVA funds, said ‘They are a
disappointment to the nation… outside of the MKMVA they are nothing.’ Mr Maphatsoe has
gone as far as accusing Mr Mokhoanatse of being a counter-revolutionary and attempting to
undermine South Africa’s liberation movement.
This is very early in the founding stages of the party. SA First has not officially announced
leadership, but it looks as if Mr Mokhoanatse and Mr Twala will be the de facto leaders of
the party for the time being. The party also has yet to register with the Independent
Electoral Commission, a crucial step in its foundation. Mr Mokhoantse has not emphasised
membership in the party, ‘We are not looking for people to join, we are looking for South
Africans to support us.’
South Africa has seen the birth of two other political parties since February 2013, when
businesswoman Mamphela Ramphele started a party called Agang. In March 2013, the
Workers and Socialist Party (WASP) was founded in reaction to the 2012 mining strikes,
which resulted in the police shooting thirty-four strikers.
The ANC has the advantage of being the party of liberation for South Africa. Carrying that
historical weight gives it formidable credibility. The ANC also enjoys a vastly larger base of
support than their primary opposition, the Democratic Alliance. While currently governing
the Western Cape Province, the DA is far from surpassing the ANC’s number of seats in
Parliament. It is possible that the younger generation of South Africans, with no memory of
apartheid in their lifetime, will be less loyal to the ANC than the previous generation.
It is unlikely that a start-up political party, such as SA First, will be able to compete with the
well-established ANC as early as the 2014 election, or even the next. Although there is
widespread dissatisfaction with the ANC, the question is how well SA First can tap into it. If it
is true that Mr Mokhoanatse sees the 12 million South Africans who did not show up to the
polls in 2009 as a constituency, he faces the challenge of trying to motivate them to vote in
2014. SA First must also quickly develop meaningful policy platforms to attract support.
Kyle Springer Research Assistant Indian Ocean Research Programme
Page 19 of 19
Any opinions or views expressed in this paper are those of the individual author, unless stated to be those of Future Directions International. Published by Future Directions International Pty Ltd. 80 Birdwood Parade, Dalkeith, WA 6009 Tel: +61 8 9389 9831 Fax: +61 8 9389 8803 E-mail: [email protected] Web: www.futuredirections.org.au
What’s Next?
May 7: In Taipei, Taiwan and Japan will hold the first meeting of a joint fishing commission created to address issues related to fishing in disputed waters in the East China Sea near the Senkaku/Diaoyu Islands.
May 8: World Economic Forum Africa will hold its summit in Cape Town with a theme of "Delivering sustainable growth."
May 9: Hezbollah chief Sheikh Hassan Nasrallah is due to give a speech addressing Hezbollah's involvement in the Syrian civil war after meeting with Iranian Supreme Leader Ayatollah Ali Khamenei in Iran.
May 10: The 15th session of India's lower house of parliament, or Lok Sabha, will conclude
May 11: Pakistan will hold general elections.
