Indonesia and the G20

By Sudjadnan Parnohadiningrat, WASHINGTON D.C.

During the November 2008 Summit in Washington, D.C., the leaders of advanced economies stood on an equal footing with their emerging nations’ counterparts addressing the global economic and financial issues candidly.

The deliberations yielded clear instructions to their relevant ministers and enabled officials to put flesh on the action plan to be immediately implemented to restore global confidence and generate further reforms in the world’s financial systems.

This was an unprecedented joint endeavor involving countries which represent 85 percent of the US$60 trillion global economy, 80 percent of global trade and 67 percent of the world’s population. Brazil, China, India, Indonesia, Mexico and Russia alone have a combined population of almost 3.2 billion people and a collective GDP of $8.4 trillion, or about 15 percent of the world’s GDP.

The United States has been instrumental in leading and pulling together those countries and members of the G20, yet going forward, another key factor in the equation would be President Barack Obama and his priority on the G20 process. In his campaign promises outlined in March 2008 and on several occasions lately, Obama called for an overhaul of the financial system and to establish a 21st-century regulatory system. Obama’s administration seemed to be less aligned with its European counterparts in suggesting larger European stimulus packages and on the issue of regulations and supervision for all major financial players. Obama’s participation at the April 2 Summit in London and the commitment made by Secretary of State Hillary Clinton however, have been a testimony of the present administration’s commitment to the G20 process, particularly on the need to address the present global financial crisis collectively.

For Indonesia, the main policy option will be how best to capitalize on the G20 membership in order to advance its interests, especially as it provides an avenue to engage itself with countries of the G8 as a “global steering group” on high profile and priority issues.

Many policy options preferred by developing countries have found a new channel to be advanced in the summit. Although developing countries like Indonesia have recently been more assertive in their attempt to contribute to the global policy agenda, their impact has been fairly modest. According to a study by Leonardo Martinez-Diaz of the Brookings Institution, in the eight years of G20 Finance Ministers ‘and Central Bank Governors’ meetings, the forum has mainly served as a vehicle for mobilizing support for G7 policies.

Today Indonesia stands in a unique position. It is one among the few and happens to be the only Association of Southeast Asian Nations (ASEAN) country in the G20 summit process.

Indonesia is among those that are major and middle economic and financial powers, major energy exporters and importers, major players in the global as well as regional security arena, and the major polluters of the world. Indonesia is being positioned in such a way to enable it to connect the region with, and advance its interests in, the G20 process.

Some may construe Indonesia’s membership of this new grouping as a reflection of its growing influence on the world stage. Indonesia has capitalized on a number of short-term but critically important gains for charting a strategic framework of engagement in the G20 summit. It co-chairs the G20 working group on the reform of the World Bank and other multilateral development banks.

Its activism contributes to any future decisions pertaining to larger financial access for developing economies. At the same time, it pushes for a greater voice and representation for developing economies in the functioning of the existing multilateral development banks.

Indonesia had recently shown an economic and financial trajectory which helped cushion the tremendous pressure from the global financial and economic challenges. Strenuous structural reforms to improve the investment climate, strengthen economic fundamentals and the financial sector, as well as strengthen regulatory frameworks and legal systems that have been conducted, bear its present results.

Various other measures that have been taken, such as strengthening the food-based industry, and expanding and improving the quality of health services and education, attune Indonesia to the current circumstances. An expanding middle class is developing. The steps taken, as well as the prevailing circumstances today, have ensured Indonesia fits into the dynamic of the G20 Summit.

What needs to be critically maintained is Indonesia’s participation based on its pragmatic approach; one with its meticulously set priorities of national economic and security interests.

In a grouping such as the G20, alliances will be dynamic, established and re-established constantly on issues of common interests. When, on certain issues, Indonesia needs to align or re-align with countries both within and beyond the grouping, then and only then, Indonesia will be the one who decides whether it can afford to shift alignment in order to pursue the foremost priority of its interests.

The writer is a member of the Indonesian Foreign Service. The views expressed in this article are solely the author’s personal opinions and do not necessarily represent the views of the Government of Indonesia

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Obama on Israel Gaza Conflict

By Beth Shaw

Barack Obama speaks out on the Israel Gaza conflict? No. Are you kidding!?! Of course not. Read about his reaction and the reaction of others to his reaction below.

The Middle East is exploding. I realize that’s not something that is new, but this particular war is new. Israel finally responded to the constant rocket attacks on Southern Israel by Hamas on December 27th. Last night, during the night, they pushed into Gaza on the ground with tanks and boots on the ground.

All hell has broken loose.

Hamas, predictably, carried on about how they were being picked on by Israel and boasted that they would kill every Jew in the world and renew suicide bombings. Not necessarily in that order. As Israeli troops pushed into Gaza, Hamas started crying foul and saying they never said anything bad about Israelis, they were just joking … haha …. they take it all back. Make those mean ol’ Jews go back to Israel!

Meanwhile, world leaders are weighing in. Surprisingly, even Arab nations have not run to the side of Palistine. Iran being the exception, of course. Egypt has refused to open the border between their two nations, having closed it a year or so ago because they were as tired of being beat up by Hamas as Israel was. Jordan has taken a hands off approach. The European Union has come down on the side of Israel as has California Governor Arnold Schwarzenegger! Heh! The White House has taken a hard line stance against the terrorist attacks of Hamas against Israel as part of the Global War on Terrorism.

France has condemned Israel’s self defense. But then … well … that’s France.

And so, the world looked to President-elect Barack Obama to step up to the plate to make a statement. Is he for Israel? Is he for Hamas? Will he stand by his campaign promises? Each side waits and wonders, depending on which group he was talking to and making promises to at any given time. What, what, oh what will the soon to be President do?

And there is silence.

Seriously, does this surprise anyone? This is a man who voted ‘Present’ when any controversial vote was taken during the entire time he was a Illinois State Senator and barely darkened the Halls of Congress while he was a United States Senator. Controversy obviously makes him quite uncomfortable.

You know what they say, avoiding conflict creates unavoidable conflict. Such is the case for Obama. Everyone is getting mad at him for doing nothing. I’m still surprised that his avoidance of controversial issues surprises anyone.

He has sent his people out to tell anyone asking questions that he’s observing and absorbing and studying world events. He’s pondering things. Thinking about it. Looking at it. Well, that makes me feel better! Ha! Then they tell people to back off cause he’s not President yet. Canned statement for every controversial event.

Khaled Meshaal, the leader of the Hamas Islamist movement, is furious. He says Obama didn’t hesitate to make comments about the terrorist attacks on Mumbai, India. Why then does he refuse to comment on what he views as the Israeli aggression on Gaza? He seems to view that as Obama’s support of Israel. See, when you don’t take sides, then every side thinks you are against them. This is something most of us learn on the elementary school playground. But if you are attending the most exclusive and expensive private school in the country as Obama did, I guess you don’t have to worry about playground politics.

Not to worry. Obama is out of sight during this conflict, but that doesn’t mean he’s not working. He still wants needs your money. I got an email from him just today telling me how important it was for me to donate anything I could to his ‘Obama for America’ fund. I don’t know what that fund is being used for. It might be for his offshore accounts for all I know. If you don’t want to donate to his various funds, then you can buy some Obama commemorative stuff that’s for sale everywhere.

For a man that raised more money than any presidential candidate ever, he still seems to need a lot of our money. If not in donations, then by taxing us into poverty.

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2009 strategic political, economic trends in E. Asia (Part 2 of 2)

By Jusuf Wanandi

Learning how to deal with each other as neighbors and major regional powers is critical not only for the two individual nations, but also for the broader region in general.

That is why regional cooperation institutions should assist them in finding the right modus vivendi. The role of the United States in supporting Japan is not helpful. It should be left to China and Japan to find the balance in their relationship. In the early 1990s, following the bursting of its economic bubble, Japan entered a decade-long recession and deflation — a period that was prolonged by inadequate government policies, especially in the financial and banking sector. In the past few years, the economy has started to grow again, albeit slowly.

But now, again, Japan’s economy is in recession. Although the financial sector has been notably strengthened, dependency on exports is still high and demand has already slowed, while domestic consumption has not increased. Japan still faces several economic constraints, such as demographic problems including an aging society, inadequate productivity levels, low levels of foreign direct investment, rising poverty and worsening income inequality.

These are real issues that need to be tackled. It appears that Japanese leaders have been paying a great deal of attention to foreign policy and security, as well as to social issues such as education, but have not focused enough attention on the economy — especially in terms of continuing Koizumi’s economic reforms.Moreover, Japan’s economic needs intersect with the ambitious security goals of some of the country’s recent leaders: Japan needs to be economically stronger if it is going to be able to play a bigger role in East Asia. Meanwhile, political reforms have not been moving as fast as needed, which is hampering any other reforms.In the end, the most important relationship for China is with the United States. Since the spy plane incident early in his first term, relations have been stable under President Bush. Both have tried to find common ground and expand on both security and economic ties, as well as on issues such as democracy and human rights.

The relationship between these two countries will always be one of both cooperation and competition. The intricate integration of their economies provides significant motivation for cooperation. China’s strategy not to push its own global and regional order but instead to adapt to the existing system of world governance (with a few exceptions when vital interests are involved) has greatly alleviated a lot of prejudice and misjudgment on the part of the United States (and the “West” in general).

Especially at this juncture, when the United States is under siege and has lost some soft power and ability to lead, China and East Asia in general have been farsighted and statesmanlike enough not to gloat or be arrogant regarding the mistakes of the United States. Not only is this wise, as the United States still has a lot of “power” left, but as history has shown, its political and economic system is flexible and innovative enough to be able to make corrections swiftly and come out even stronger. So the future of the United States is not completely a lost cause. After all, we are all in this financial mess together.Besides, China does not have ideas incompatible with the rest of East Asia and has in general benefited from the existing international system, despite the occasional setback. It has not always been consistent, as many interests have to be balanced simultaneously.

In the end, Japan’s leaders may be forced to take action to address problems associated with the country’s lackluster growth and aging population (much as Koizumi did with nonperforming loans) because these issues will place heavy financial pressures on voters.

Trends suggest that, in the longer term, the international system will be multipolar and see greater input and more ideas coming from East Asia and China.

How this current crisis of capitalism is ended, as dictated by the West, should be an indication of how soon this change in values and norms will happen.

East Asia and China should, as always, learn from history. Shifts of power have always been painful and many historical mistakes have been made as a result of arrogance and impatience.

We in East Asia, having always had a long historical perspective, should therefore be patient, cooperative and inclusive in all future developments of the global system of governance.

We have to be aware of our own weaknesses and deficiencies and improve on them. We should also be aware of our obligations (and rights) in this process of change in the international order. We must support a system that will bring welfare, peace and stability to East Asia.

The writer is vice chair of the Board of Trustees, CSIS Foundation, Jakarta. Source: The Jakarta Post

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Stretegic Trends in East Asia (Part 1 of 2)

by Jusuf Wanandi

Strategic trends, namely how relations among the three big powers of the region (China, Japan and the United States) will unfold, will define future developments in East Asia.

China is doing well; it hosted the Olympic Games earlier this year and the world continues to talk about the nation’s excellent achievements. Despite the global financial crisis, China is forecasting economic growth of 8 percent for next year. This is a reduction from the current 11 percent, but still a very good achievement considering the circumstances.

Yet the crisis has yet to fully unfold and the extent of its damage remains something of a mystery. For China, global funds and foreign direct investment will be limited and exports will be curtailed because of the deep recessions that developed nations are facing. That is why China’s new policies, which will encourage domestic consumption and inject money into the banking system, are very wise.

The big question for China is how to maintain economic growth, while ensuring political stability and good governance. But the real challenge is preventing future crises: How can China keep its leadership united and not only determine but also enact the right policies for its future?

This will require the support of the military and the obedience of local governments and party leaders.These are big challenges, but the Chinese leadership aptly demonstrated its ability to make positive decisions, with the support of the people, during the dramatic earthquake in Szechuan last May.

For the Chinese leadership, stability is of paramount concern. If the nation is to continue to develop so rapidly, rising demand, unemployment, poverty and inequality must be dealt with.Following several years of tension related to former Japanese prime minister Koizumi’s visit to the Yasukuni shrine (which was seen as being extremely insensitive given past imperial ambitions), China has now established more cordial relations with Japan, since, with more US$200 billion worth of bilateral trade annually, both need each other economically.

While it is true that China has not paid sufficient attention to democratic developments in Japan post-World War II and its establishment of peaceful relations in the region and around the world, Japan needs to do more to recognize its past atrocities, including the “Nanking” massacre, and the abuses of Chinese prisoners by the Group 871 in Manchuria, as well as the so-called “comfort” women, with more consistency and openness.Hopefully, a willingness to study history together and exchange large numbers of youth can slowly overcome prejudices on both sides.

Meanwhile, relations between the two peoples have become quite intense: Four million Japanese visit China annually on more than 700 flights between the two countries weekly, more than 250 cities and prefectures have sistership relations and 70,000 Chinese students currently study in Japan.The writer is vice chair of the Board of Trustees, CSIS Foundation, Jakarta.

However, China’s internal problems are huge, as Prime Minister Wen Jiabao himself admitted in a recent interview with Newsweek (Oct. 6, 2008). Poverty, a schism between coastal (urban) and inland (rural) populations, demographic and environmental problems (water, climate, desertification, energy, etc.), and how to properly govern with such rapid economic growth are all areas of concern.

They are aware of the problems. On the issue of good governance and the public sphere, they are trying a long-term, gradual approach, starting with elections in villages. The other big challenge is how to keep corruption under control. Questions have been raised as to whether efforts to stem corruption are too slow and tentative, and if the political system will allow a dramatic effort to get rid of such a systemic problem.

Rapid growth has become an important source of legitimacy for China’s now pragmatic leadership. Socialism has been practically abandoned (except rhetorically) in favor of a nationalist ideology that uses the Confucian tradition as a basis for Chinese identity.

But trust has to be created on both sides. East Asian regional cooperation organizations have been helping with this, but more could be done.

For Japan, trust will require greater transparency in Chinese policies, especially defense, along with political development toward good governance and pluralism. For China, it is Japan’s commiserations on history, especially regarding the period since 1936, that are important.

Source: The Jakarta Post

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