Globalization and education: how much have things changed?

I was inspired – or honestly speaking, ‘triggered’ – to write this blog post in response to an op-ed post by Justin Fox in Bloomberg View about, as the title says, ‘who will get spillovers when US universities begin to lose out’. The author provided a brief overview of how Swiss universities can – at least temporarily – ‘pick up the cherries’ when Donald Trump administration’s future policies will pose challenges to the ongoing dominance of US universities. However, as constrained in terms of wording and space as the op-ed post is, the author only provided a brief comparison of both American and Swiss universities, citing presidents of the latter’s two universities (ETH Zurich and University of Zurich), who were both US-educated and had experiences working in the States.

What particularly motivated me to write this blog post was the university ranking index used by Fox in his op-ed article. Using the Shanghai-based Academic Ranking of World Universities (ARWU), which heavily emphasizes on measuring university-based research output and quality, I observed in details about changes in the ranking of universities across the world. As Fox had previously argued, as of 2016, US universities remain ‘the envy of the world’, with 15 out of the world’s best 20 and 50 out of the world’s best 100 universities based in the country. However, in spite of the ongoing dominance, this figure has showed a gradual decline from previously 17 and 54 back in 2007, or nearly a decade prior. Most of the universities that remain within the best hundred are private, bestowed with huge amounts of endowment, either from big corporations or rich alumni networks. Majority of the country’s public universities, on the other hand, continue to ‘stagnate’ due to cutbacks in expenditure and lack of research funding support.

On the other hand, universities across the Asia-Pacific region have shown a strong increase in rankings within the last decade, the largest driver by which is from China. With the exception of Japan, many countries here – in general – have seen a tremendous improvement with regard to the university rankings, mostly due to huge investments in the universities, but to some extent, also due to the declining position of several universities in the Western region, namely in North America and Europe. Here, I did a bit of research to compare and contrast the representation of regions in terms of their top educational institutions between 2007 and 2016, using the ARWU index.

The increasing mobility of capital, talents, and ideas has been particularly beneficial to Asia-Pacific region, as many top universities here seek to globalize their education outlook by hiring either US-educated or European-educated faculty members into their universities, as well as increasing collaboration with other counterparts across the region and the globe. Americas and Europe, on the other hand, have seen the numbers significantly decline, especially the former.

Let us look at the ‘top 20’ composition in the table below.

Within the last 10 years, US universities continue to dominate the top 20 ARWU list, although there was a slight decline due to increasing competition from institutions from other countries (as we can see from above, UK and Switzerland). However, the race to completely ‘drive out’ the existing education superpower remains a very long road to go – or, should I say, an implausible notion up to now; schools like Harvard, Stanford, Yale, and MIT continue to receive massive amounts of endowments, attract top-notch talents across the globe, and their global influence in many aspects (Nobel laureates, startup unicorns, research funding, huge alumni network support) remains unmatched with those in the rest of the world, and expect this to continue for decades to come.

The pattern remains pretty much unchanged when we expand the list into the ‘top 100’, as shown in another table below this sentence.

Within one decade, universities in Asia-Pacific (namely Australia, China, and Singapore) and in Western Europe (Belgium, Denmark, Netherlands, and Switzerland) began to take a small-yet-significant portion of the “top 100” ARWU list. Japan was an ‘exception’ when compared to most Asian countries, as its pattern largely echoed that of the United States; there was a significant decline in the number of top-notch universities, and when we looked further into the next two tables below – especially in the top 500, Japan’s decline is even more dramatic.

Caveat: you suspect Japan’s decline is because the ranking index is crafted from China (an arch-rival)? Not necessarily.

Expanding the list further to the top 200, I found out that the gap between countries experiencing increase and those facing decline is becoming increasingly larger.

With regard to the increase, China has experienced the biggest increase in the number of top-200 institutions, with a six-fold increase within a decade (2 in 2007 to 12 in 2016). Saudi Arabia, surprisingly, also has 2 universities within the top-200 list (from previously 0 in 2007); this may be largely thanks to the kingdom’s extremely large amount of endowments, and the existence of King Abdullah University of Science & Technology (KAUST, not to be confused with South Korea’s KAIST). South Korea has also seen its number tripling, from 1 in 2007 to 3 in 2016.

Unfortunately, the biggest “loser” in this list is once again the United States. Having 88 universities in the top-200 list in 2007, the number has since declined significantly to 71 last year. The impact of 2008-2009 financial crisis is particularly severe for public universities, and it remains reflected in the number of the institutions per se.

Lastly, let us take a final look at the ‘top-500’ list, as seen in the table attached below.

The biggest increase, once again, predominantly took place in Asia-Pacific countries, with countries that are particularly outstanding include China (a net increase of 29), Australia (a net increase of 6), Saudi Arabia (from 0 to 4), Malaysia (from 0 to 3), South Korea (8 to 11), and Iran (o to 2).

By contrast, the biggest ‘losers’ here were the United States and Japan; US has seen a net decrease of 29 universities (from 166 in 2007 to 137 in 2016), but an even more dramatic decline was in Japan, with a net loss of over half of its universities of 2007 level (from 33 that year to 16 last year, a net decrease of 17 schools, a total decline rate above 50% of its original level).

Here are several country-specific findings with regard to the ARWU ranking index:

  • China: increase in the number of Chinese universities in the top 500 list can be attributed to active efforts by Chinese government to attract overseas Chinese talents to shift research and/or other academic works back to China. However, there are a few caveats with regard to this finding worth cautioning. First, many of the overseas talents that ‘return’ to China retain their jobs overseas; this leads to the second point, by which a large proportion of them only work in the country as ‘visiting professors’, ‘visiting researchers’, or scholars employed on a work-contract basis. Do also note that many of the Chinese students aspire to go abroad to study, the most popular destination by which remains the United States. Refer to a working paper by David Zweig and Huiyao Wang (2012) about efforts by Chinese government to recruit overseas Chinese talents, as well as findings by Institute of International Education (IIE) about the composition of international students in the US.
  • United States: Cutbacks in public funding for public universities has largely declined within the last decade, regardless of whoever is in the presidency (be it Bush Jr., Obama, or even Trump). On the other hand, endowments to private universities, particularly top-notch ones, continue to increase (except on 2016 fiscal year, by which most universities show a significant decline). Still, several public universities continue to show strong performance within the same time period, such as UC Berkeley, UC Los Angeles (UCLA), UC San Diego (UCSD), University of Colorado – Boulder, UT Austin, Ohio State University (OSU), Pennsylvania State University (PSU), University of Minnesota, etc.
  • Japan: the country, ironically, is in a rather “sorry state” in terms of its relative performance compared to other countries in Asia. Although Japanese universities continue to churn out innovations and remains dominant in terms of number of Nobel laureates, this shows no impact on the improvement of the universities within ARWU list. One reason, according to Times Higher Education and Japanese education consulting firm Benesse, is the high degree of insularity among Japanese universities: resistance to opening-up under globalization and the limited interaction between Japanese scholars and academic communities across the globe may help explain why the stagnation continues.
  • South Korea: the country continues to ‘shine’ in terms of its research output and technological innovation, and is increasingly active in pioneering international collaboration between Korean and other universities across the globe, with a particular emphasis on Asia and the United States. However, as economic growth slows down, many university graduates have simultaneously struggled to find jobs in the country, particularly as the economy remains dominated by large-scale business holdings (chaebol), and entrepreneurial culture has yet to fully challenge the former’s influence.
  • Saudi Arabia: on one hand, it is a good thing to have some universities within the top-500 list (4 institutions), but their contribution to structural reforms within the country remains notoriously inadequate. Unemployment rate among the youth remains staggeringly high (around 30%), opportunities for social and economic mobility remain largely closed for minority groups (especially female), and the country continues to primarily rely on foreign expertise for academic and research activities (one example? Simply look at faculty list for King Abdullah University of Science & Technology).
  • Malaysia: the country showed up on the ‘top-500’ list, but it continues to struggle in reversing the brain drain, by which Malaysia has been among the worst affected countries. Low wages for prospective graduates, as well as ‘positive-discrimination’ approaches by the government that continues to favor majority ethnic Malays in university admissions, are two factors that continue to push Malaysian talents to pursue education overseas. This is made all the worse with the ongoing currency depreciation it has faced in the last 2 years. Many of my Malaysian friends also share such experiences with me regarding their motivations in studying abroad.
  • Indonesia: none of the universities in my home country appeared in the list up to now. Although this is only in ARWU index, the fact that no institutions show up is such a disappointment.

Conclusion: while the United States continues to remain dominant with regard to their education system, and is expected to remain preeminent for decades to come, its primacy is gradually being challenged with the rise of universities outside North America, particularly in the Asia-Pacific region. With globalization, the increasing mobility of talents, capital, and ideas across the globe will enable such educational spillover to continue taking place worldwide, especially with US-educated graduates either working in the States or taking up their career opportunities back in their home countries. It is also the same wave of globalization that will continue to motivate the best and the brightest across the world to come to US – and now an increasing number of alternatives in Western Europe and Asia – to pursue higher education. The monopoly remains largely concentrated in the Western world, but other regions (most importantly, Asia) are challenging up their domination.

Bonus: Times Higher Education releases what it calls 53 ‘international powerhouse’ universities, or those with very high research output and citation scores that can match the existing ‘superpowers’ like Ivy League schools or Oxbridge. It is not necessarily ‘global’, however, as 45 of these ‘powerhouses’ are still concentrated in the Western region (31 in North America, 14 in Europe), with the other 8 located in Asia-Pacific region. You can view the full list of these universities in the picture below.

Summary of the 53 universities based on countries they are located:

 

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Reality check: a Donald Trump presidency

random-trump-drawing

I even doubt if the Donald Trump character that I drew here had, if any, any bits or pieces that look like Donald Trump at all.

The reality is, prepared or not, like it or not, there are strong odds that Donald Trump – everything you associate with The Apprentice, ugly oranges, strange hair, tweets that look like one generated by a bot, and all his dangerous wordings and thinking – can become the leader of the most influential global power, or the so-called ‘Free World’, within less than 3 days. It’s never been this close, it’s never been this unbelievable, and it’s never been this ridiculous. Even his pussy-gate, which had led many people to believe that he is finished even before the electoral race commences after the Access Hollywood leaks about his lewd conversation with Billy Bush, does not dampen the support from his electoral base in a long run.

Nate Silver (statistician, data journalist, founder of FiveThirtyEight) upped the odds of Donald Trump beating Hillary Clinton from previously the 13% to 18% range to now over 35%. The ‘firewall states’ – so sacrosanct for Clinton’s electoral-college attainment that they appear almost impenetrable – now began to look vulnerable. All of a sudden, the prospect of a guy that appeared more like a 3-year-old toddler dressed in a 70-year-old costume leading the world’s largest economy, most outspent armed forces, and biggest nuclear arsenal is looking more like a possible reality. You thought this looked like an AI-scripted plot gone badly awry, but welcome to the reality. And soon, pretty likely, we will have a presidential version of The Apprentice, this time just much scarier. So much so that Economist Intelligence Unit (EIU) has considered a Trump presidency as one of ‘major global risks’.

Prediction is a horrible job, because indeed, nobody really knows what will actually happen in the future. Nate Silver may try out his best using statistical analysis and polling aggregation, but even this is prone to measurement errors, this time simply because there are so many third-party and ‘undecided’ voters who can produce massive swings, either in favor of Hillary Clinton or Donald Trump. For now, it is obvious that Clinton has more paths to secure at least 270 electoral colleges (out of 538), but so much stuff can happen within the next 3 days that any scenarios, regardless how insane and crazy they are (just like Trump’s candidacy itself), can actually occur.

In this blog post, I will do that horrible job, and I caution that much of the assertion may remain false, all using the current degree of knowledge that I know about Trump’s words, statements, and ideas. Watching all the three presidential debates may make you question whether you are watching a celebrity gossip battle or a high school bully taunting the ‘good one’ on class monitor selection, but I will try to use some of the ideas that he uttered, compare them with the reality, as well as how he relates with the Republican Party in general. Truth be told, he has had a very uneasy, love-hate relationship with GOP, and this may significantly impact his presidency (if he wins).

Here we begin:

Immigration

The ‘I’ word now looks more like a derogatory term thanks to his bombastic rhetoric about, well, immigration. Looking at the way he perceives of Mexicans and Muslims, there is a strong likelihood that a Trump administration’s immigration policy will be extremely tough, especially on people originating from either Latin America or Muslim-majority countries. Deportation of illegal immigrants will be commonplace, considering that the United States has more than 12 million unregistered ‘aliens’. There is also a strong likelihood that he will stop receiving Syrian refugees (while the top three countries of origin of refugees in the US are from Myanmar, Democratic Republic of the Congo, and Somalia), but the likelihood that he will stop all refugee flows coming to the country is very small. Nonetheless, immigration flows to the US, by and large, will remain largely unaffected, given that the country remains competitive in terms of attracting talents from all across the globe. However, one caveat is that a Trump administration will strictly tighten visa and immigration requirements for people coming to either visit, study, or reside in the country for quite some time, which can have a dampening economic effect.

Chances of clash with the Congress on this issue: 50:50

Economy

A Trump administration is likely to go huge on investment in infrastructure as a ‘massive stimulus package’, which it promises to be between US$500 billion and US$1 trillion. Construction-related industries will likely to see a boom, should his plan be realized. The problem, nevertheless, is that he will go into conflict with his fellow Republicans in the Congress (if he considers himself so) because of the latter’s belief in ‘small government’. This, I predict, will be a significant point of contention between President Trump and Congressional Republicans.

Chances of clash with the Congress on this issue: high

But, his proposed tax cuts will be largely favored by many businesses, although the consequence would be to deepen current account deficit that US has been faced with for a very long time. The previous Obama administration has managed to reduce the deficit from a record of US$1.4 trillion in 2009 to US$0.4 trillion in 2016 fiscal year, but even such accord can be at stake when his tax cuts are enacted. With mounting debts (over US$20 trillion) and multiple postponements on debt ceiling, plus his infrastructure stimulus plan, a Trump administration will have two options: go for the rational option (that is to borrow more from either China, Japan, or Middle Eastern oil-rich countries), or go nuts (manage the economy like Trump did to many of his defaulted businesses). Even if he opts the latter path, the question is now whether he can affect – let alone coerce – the Federal Reserve to implement his policy ideas of doing ‘massive haircuts’ for US dollar. If that happens, United States is officially a banana republic, and the entire global economy will go bananas too.

Chances of clash with the Congress on this issue: low

Here comes the free trade. Trump has repeatedly stated that he vows to withdraw from Trans-Pacific Partnership (TPP), to end US membership in World Trade Organization (WTO – which US ironically was the founder itself), and to impose 45% import tariffs on Chinese products, as well as to tear the entire NAFTA agreement with Canada and Mexico. This comes, all in all, when so many of Trump’s signature products are actually manufactured from overseas. Still, even we are supposedly not surprised to hear statements like these. This is the era of globalization, and any single product you purchase can have different parts assembled in different countries. But with the politics going extremely toxic on globalization and trade, we all hear cries of protectionism being voiced out.

I predict what happens next is otherwise. A Trump administration is likely to massively expand United States free trade agenda, because either Trump thinks on almost anything as a businessperson, that when there is something that can be traded, then there’s a chance you can strike a deal, or because there would be intensely huge pressure from the US Chamber of Commerce and other business associations that can lobby and influence the Congress, so much so that Trump is forced to make a compromise. Whether it will be bilateral free trade agreements, it remains to be seen. Regarding TPP, and to a lesser extent, TTIP, it is quite likely that President Trump will force all the participating countries to return to negotiation tables to extract further concessions regarding the issue of currency manipulation (when almost every country does it), although many leaders in TPP countries have repeatedly stated that there will be ‘no more rooms for further negotiation’ (by the way, the trade deal was signed in New Zealand in February this year). There is a quite limited chance TPP will be passed, given the bars set by the administration will be extremely difficult to accomplish, and negotiations can even end up in collapse.

Warning: the odds of a global recession also increase significantly given the massive deficits and/or significant debt accumulation resulting from his policies, and the biggest victims would be the middle and working classes.

Chances of clash with the Congress on this issue: 50:50

Great Wall 2.0

His idea of ‘building borders’ will be highly unlikely to materialize; the fact is, much of the US-Mexican border currently has been sealed with wired fences and literal border walls, with frequent patrols by border guards, and to some extent, even drone surveillance. Trump administration will face increasing pressure from Native American reservation groups, environmentalists, as well as Hispanic communities. It is also quite likely that any of these social movements can start a long-term occupation of any portions of the border in order to resist his government, and the response is potentially brutal (as you can see with the militarization of police and their responses on Dakota Access pipeline protests).

Chances of clash with the Congress on this issue: 50: 50

Supreme Court

I am almost certain that with the Republicans expected to retain their control of the House of Representatives (and quite possibly the Senate as well), both President Trump and the Congress will appoint right-wing justices into the Supreme Court. Many issues, such as same-sex marriage, Citizens United, and especially abortion, will see their progress being put at stake. There is even the possibility of shrinking the Supreme Court (as of now, there are 9 justices, but with the death of Antonin Scalia early this year, the existing number is 8, so many issues remain tied).

Chances of clash with the Congress on this issue: low

Climate Change

There are two possible scenarios, both good and bad, occurring in Donald Trump administration. If his tax cut plans are applied to all sectors (assume ceteris paribus), there is a possible boom in renewable energy industries, probably because he simply does not care too much about it. On the other hand, there is also a quite big likelihood that he will reduce spending on environment-related agencies, or possibly defund them, or even disband them. Agencies like Environmental Protection Agency (EPA) will likely to see their responsibilities and authority largely reduced. Fracking practices, especially in natural gas, will remain in place, and quite likely expand should the tax cuts be applied to oil and gas-related industries altogether.

Chances of clash with the Congress on this issue: low

Science & Technology

Trump administration will likely make a compromise on H1B visa, or what Michio Kaku called as ‘genius visa’, which allows talented individuals all around the world to live for a certain period of time working in the United States. It is quite possible that a lot of the efforts will be put in developing the country’s space industry, mostly by working with the existing private space exploration companies, such as SpaceX. Development in science and technology will remain largely unaffected, except that much of the focus will still go on defense-related areas.

Chances of clash with the Congress on this issue: low

Foreign Policy

Here comes the longest part. To make long short, I’ll just outline them, one issue per each paragraph, below.

Russia: President Trump will likely align closely with Vladimir Putin (BFFs?)

NATO: The structure of the defense organization will remain in place, but with Trump cozying up to Putin, NATO will increasingly look like a ‘paper tiger’. Almost no attention will be paid on the conflict in Eastern Ukraine

Syria: President Trump may possibly end support on moderate rebel forces operating in the war-torn country, and shift their focus to indirectly support Bashar al-Assad, instead, with the major aim of ‘wiping out ISIS’

Iraq: He may not really ‘take the oil’, but Iraq may align itself more closely with either China (thanks to One Belt One Road initiative, in which Iraq is listed as part of it) or Russia (for weapons)

Afghanistan: There remains uncertainty whether Trump administration will retain American forces in the country, but if they do, the country will increasingly bandwagon to China to help stabilizing the country

Nuclear weapons: Although Trump once repeatedly asked ‘why can’t we use nuclear weapons?’, as long as he cozies up to Putin, the strange ‘equilibrium’ should remain in place

Saudi Arabia: With United States-Saudi Arabia relations already severely strained under Obama administration (Iran nuclear deal, 9/11 bill, threats of selling off US$750 billion in American assets), and President Trump increasingly reluctant to protect the country, it is highly likely the country will build its own nuclear bombs, especially to anticipate the expiry of the Iran nuclear deal

Iran: If Trump abrogates the nuclear deal, tensions will significantly increase in Middle East, and Russia may possibly oppose US move (but Saudi Arabia will be quite happy to hear about it)

China: The country may receive a huge boost with a Trump presidency, given that his campaign rhetoric regarding China, so far, is mostly about economy. He did not raise questions about Taiwan, human rights, Tibet, or Xinjiang, and pretty likely he will never raise any of them. Indeed, with the administration significantly reducing their leadership roles in international order, China, as the world’s second largest economy, will fill out the vacuum. Many neighboring countries will have to reluctantly bandwagon with China, given their current dilemma of having China as the largest trading partners, but in critical necessity of US to provide them security assurances

US alliance in Asia: Obviously, the decades-old US alliance system in Asia will be at stake. Countries that may worry the most are Japan and South Korea, which have relied on American nuclear umbrella to ensure their survival in the last six decades. With Trump administration reducing their commitment, these two countries will be faced with a huge dilemma. Japan’s effort to pass constitutional referendum to recreate an armed force were hampered by massive protests, while South Korea’s more eagerness to build nuclear weapons may anger not only North Korea, but also China, its largest trading partner. With ongoing anemic economic growth, it is quite likely that the two countries will bandwagon further with China, given their high dependence on exports to support growth

Populists in Europe: Trump’s victory, correlated or not, will likely provide a major boost for the populists in many European countries. We’ll see how things roll out in the upcoming 2017 elections in France and Germany; the closest one is to see the second run-off of presidential election in Austria scheduled to be held by the end of this year

Mexico: US relationship with Mexico under Trump administration will be largely uneasy, and any friction can bring Mexico into economic recession (United States accounts for more than half of Mexico’s annual trade volumes)

Southeast Asia: Trump’s commitment to Southeast Asia will drastically decline, unlike Obama’s overtures

South China Sea: Let alone South China Sea (the biggest winner will be China). Expect countries like Malaysia and the Philippines to bandwagon further with China, which they now do. Vietnam, having a more negative sentiment towards China rather than US in spite of the devastating war, will be forced to rely further on ASEAN, whose solidarity has been in question

India: President Trump will likely align very closely with PM Narendra Modi (perhaps Trump will learn some Hindi too, with terrible accent)

Dictators: The fact that he described Vladimir Putin as ‘great leader’ and had met with Egyptian president Abdel Fattah el-Sisi may indicate that he will be very pragmatic in befriending any leaders, regardless of the fact whether they are democrats or dictators. By the way, US foreign policy has had a long history of supporting authoritarian leaders, so this will be hardly a surprise

*****

While this may be a brief glimpse of what a President Trump can potentially do, I caution that there are also ‘plot twists’: some of his plans may not work out, and there is a pretty high chance he won’t even be the president for a full four-year term up to 2020. Think of these scenarios:

  • Trump commits a scandal when he is a president
  • Trump’s ongoing lawsuits and trial proceedings result in his impeachment (especially if Republicans begin to abandon him when the wrongdoings are so severe)
  • Trump is in feud with his vice president, Mike Pence, and there have been rumors about their own discord even during the election season
  • Trump falls ill due to ‘too much stress’, and announces resignation
  • Trump falls ill and needs to be hospitalized ‘for quite some time’
  • Trump conflicts with the GOP, and the latter thinks of strategies to begin impeaching him

Still, remember, nobody – let alone I myself – bears assurances whether these predictions will work out or not. He may try to temper himself, or that he may go on with all the big pushes. I am talking about what Trump may do, simply from a rational assessment basis. Things may go wrong, and things may go right.

I only hope your vote on November 8 can make the difference. Good luck, the world.

Reality check: ASEAN Economic Community

ASEAN economic community

 

By December 31, 2015, ASEAN (or for those outside Southeast Asia, known as Association of South East Asian Nations) has officially entered a new phase of its region-based integration with the launching of ASEAN Economic Community, or AEC in short. With that new precedent established, the 10-country association will become a single-market base, integrating a combined population that is projected to surpass 640 million by the end of 2016, with total GDP output approaching 3 trillion US$. The launching of AEC will enable near-limitless intra-ASEAN capital, human, investment, talent, and social mobility. People from all ASEAN member-states will soon be faced with intense competition with the free inflows and outflows of goods, services, labor, capital, and almost everything within the region.

Heck, a lot of my close friends I personally asked had not even the slightest idea what ASEAN Economic Community is.

If you look at all these numbers and figures (640 million people, middle-class population of over 100 million, 3 trillion US$ of GDP output, over 1.5 trillion US$ in goods and services exports and another 1.3 trillion US$ in imports), they are sexy. Indeed, these figures make the notion of AEC so sexy and attracting, particularly for multinational corporations seeking to invest in this region as labor costs remain lower than those in China. But, hold a second, why the heck do a lot of people here seem not attracted to this idea of ‘economic integration’? Even more people out there, I bet, would think of a cow playing a piano when imagining the impacts of this agreement.

Beforehand, we need to unmask the uneasy reality being faced by ASEAN in facing this brand-new world of free trade agreements, economic unions, customs unions, and so much other stuff you may think they are a series of one-off talk shows.

We have been so integrated economically, but separated culturally and socially.

Even before the implementation of AEC, ASEAN has signed lots (and damn lots) of trade agreements, mostly with our own neighbors. China, Japan, South Korea, India, Australia, and New Zealand have attested to such cooperation, and European Union (to a lesser extent also including Gulf Cooperation Council) are hastening up negotiations for the completion of another round of FTA – albeit EU is pursuing the negotiation with individual states. The implementation of ASEAN Free Trade Area, or AFTA, has also eliminated most existing trade barriers, in this regard the imposition of tariffs. All ASEAN countries have reported the rate of tariff elimination at above 95%, with the exception that some non-tariff barriers remain. And what about Myanmar, our ‘friend’ that just (supposedly, maybe?) became a democracy after November 2015 election? Economic reforms beginning in 2011 have resulted in Singapore and Thailand becoming the largest foreign investors in the country, but to which extent the economy will further open up remains another question worthy of further scrutiny.

The table below provides the data regarding ASEAN member-states, as cited from MIT’s damn-pretty data-visualization website Atlas of Economic Complexity:

 

ASEAN export-import

By the way, never mind with the fact that most Southeast Asian countries look up to the world’s biggest panda for trade (at least for now, as China is Asia’s biggest economy currently), with the exception of Brunei, which exports bulk of its oil to Japan, and Laos, which has Thailand as its ‘friendlier’ partner. One obvious indication with such pattern is the increasing Asian-centric nature of these countries’ trading activities. If you dig more data from the Atlas, especially with regard to ASEAN member-states, one major thing you observe is the overwhelming domination of Asian (and fellow ASEAN) countries taking huge portions of their trading volume.

Nevertheless, the inconvenient truth is that we remain ‘separated’ culturally and socially. Never mind with the fact that intra-ASEAN migration is of a huge and tremendous scale, especially if you try to consider these figures below (data obtained by UN International Migration 2013 report):

  • More than 3.7 million foreign migrants residing in Thailand originate from Myanmar, Laos, and Cambodia, overwhelmingly employed in low-paying jobs, particularly in construction, farming, and fishing industries
  • Over 1 million Indonesians are currently staying in Malaysia (mostly to work as domestic helpers or factory workers), but many unofficial estimates put the figure between 2.5 and 3 million people instead, due to the possibility that a lot of them ‘overstay’
  • Almost 1 million Malaysians are currently in Singapore, coming in and out of Johor Bahru on a daily basis, mostly for work

Or consider these news samples, based on what I obtained and summarized from mainstream media:

  • People in Yangon (capital of Myanmar) protest against death-sentence verdicts against two Myanmar nationals charged of first-degree murder in Thailand they possibly didn’t commit
  • Discrimination, at a lower level, continues for ethnic Vietnamese living in Cambodia
  • More than 150,000 Cambodian migrants rushed home in the aftermath of 2014 May coup in Bangkok, for fear of military persecution
  • Thousands of Rohingya (a Muslim ethnic group from Myanmar) refugees were stranded in seas as Indonesia, Malaysia, and Thailand refused to grant them protection, only to be resettled after months of intense negotiation between the countries
  • Potential future standoff by Sulu insurgents (from the Philippines) in Sabah State, Malaysia (located in Borneo Island)

Without trying to provide further explanations, I suppose I have given enough examples to highlight the problems with regard to our concept of integration. No?

Another problem is our extremely huge economic discrepancies within ASEAN member-states. Seriously.

Consider another table below for your reference. Do notice, for the fourth column, that I input ‘4 US$ a day’ as a threshold, largely following the guidelines set by World Bank and also Japan’s Ministry of International Trade and Industry (for the latter, the reason is you know why) to differentiate those as ‘lower-middle-class and above’ and ‘low-income and poor’.

ASEAN middle class

With such extremities occurring if comparing these countries, it is worth questioning the viability of socio-economic integration of communities representing a huge array of income strata, particularly when everyone is entering the AEC era, as the leaders always like to envision. Then there comes the gap in the quality of manpower. A large proportion of population, especially in countries with GDP per capita below 10,000 US$ per year, are deprived of access to education due to poverty and many other reasons, and of course this is a legitimate reason to worry about. How will people compete on a level playing field if the resources provided to them are not even on their own level playing field? While unfortunately this is the underlying reality that shapes the contemporary world (and we can’t deny that fact), it takes a massive investment to equip individuals in these countries with sufficient capacity to compete against each other, and the amount itelf is of a no-joke hold-no-breath size; McKinsey Global Institute, the world’s most optimistic consulting firm (I guess), forecasts that ASEAN member-states have to spend upwards to 3.3 trillion US$, from 2015 up to 2030, to totally upgrade their infrastructure, especially in education. Where on earth are they going to get the money? While asking for international aid sounds more like an off-sounding joke, the only possible models that can be envisioned are either public-private partnership (PPP) or simply total liberalization that will enable inflows of foreign direct investment (FDI).

Even in terms of political orientation, each ASEAN country is completely ‘unique’ on its own.

If one has to look at it from a very truthful, and I could say somewhat inconvenient, language, the unique ‘selling point’ of ASEAN lies in its all-inclusive spectrum of political orientation. It has 1 absolute monarchy (Brunei), 2 military dictatorships (Thailand and Myanmar, so long as the junta doesn’t permit Aung San Suu Kyi to become the president), 2 Communist countries (Laos and Vietnam, but the latter has better political space than China), 3 semi-democracies (Cambodia, Malaysia, and Singapore, which have continuously been ruled by the same ruling party), and 2 ‘problematic’ democracies (Indonesia and Philippines, which are still struggling to control corruption and cronyism).

And in recent years, there have been concerns by academics whether many countries are actually deteriorating in terms of quality of democracy. While I’m not to subscribe to the belief that democracy is a panacea or a cure-all, the major advantage of democracy is it allows freedom to voice dissenting opinions on existing issues. But that’s it. Numerous research works in political science, mind you, have warned the public that rule of law has absolutely nothing to do with the fact if a country is a democracy or a dictatorship. And even in terms of rule of law, most Southeast Asian countries are lagging behind (except Singapore). Indeed, corruption and abuse of power have been deeply entrenched as a kind of ‘inalienable’ mindset among a large proportion of population in those countries.

Even then we still intensely debate and struggle to define what is corruption, which has only been constrained to these two actions: either you bribe or are bribed, or that you steal state assets. But what about these possibilities:

  • Because you are close to people with influential political power, you can monopolize an economic sector, depriving other more capable players of equal opportunity to compete. Is that not corruption?
  • Major corporations donate to political parties financial support so that they can win election. Is that not corruption? (okay, some consider this lobbying, but still, you know what I mean)
  • Political parties, especially ruling regimes, create ‘linked companies’ as their major source of revenue, controlling various economic sectors. Some consider this a legitimate way of earning money and lessening dependence on private donors, but again, is that not corruption?

This is the big Achilles’ heel that almost all ASEAN countries are being faced with. How will there be a level playing field if one side endorses one thing more than the other? One can talk about the concept of ‘single market base’, but with governments sometimes going to all available means to protect their cash cows, is that not killing competition? Is that not corruption?

But the most challenging aspect is their solidarity in international issues, especially those that carry significant stakes to ASEAN. Did anyone still remember the failure in 2012 ASEAN Summit in Phnom Penh, Cambodia? If not familiar, this is the brief explanation: all the 10 countries failed to deliver a major communique about their stance on South China Seas, which are currently being disputed between China, Taiwan, Brunei, Malaysia, Philippines, and Vietnam. Even to deliver only a unified response ended up as a major fiasco! While further communication has been done and some ‘unified messages’ have been crafted, there remains an aura of uneasiness among those countries in responding to this issue, which has been their biggest major international challenge. Still, given the huge socioeconomic gaps that become internal problems in those countries, to some extent we also have to understand why these countries fail to show unity when presented with some crucial issues.

And there is another table that I have obtained from The Economist, Transparency International, and Freedom House. While the ranks may be somewhat subjective and disputed, at least they offer a general overview of the current sociopolitical situation in these Southeast Asian countries. For more examples, I would encourage you to look them up by yourself (as too many examples will render this blog post more like a ranting essay):

ASEAN political quality

This is the reason why the real ASEAN Economic Community will only be felt in a longer future to come, given the existing obstacles. Despite such reality, still, the initiative has been launched, and even with that celebration merely in name one has to start preparing oneself to face future challenges. While red tape will still exist, companies will face less restriction in investing in these emerging markets. A large population still below middle-class status will experience upward social mobility with closer economic cooperation. Furthermore, with mega-regional free trade agreements such as TPP already reached and soon to be ratified, as well as negotiations in RCEP that will also be completed in the near future, by which most ASEAN member-states are participating, this is the huge opportunity (altogether with its underlying risks) that the countries must adapt with in order to succeed in the long run. Now, the challenge with AEC is how long it will take for the entire bloc to achieve the envisioned integration, and truth be told, the path towards that vision will not be as easy as we imagine.

And yes, my friends already knew about this initiative, anyway.

Reality check: economy of China

china

First thing first: no countries can grow at a double-digit pace forever.

China, the world’s second largest economic power, seemed to (probably) have learned hard lessons from the recent stock crash that is taking place in the last two months: there are no expected circumstances. No matter how many trillions of dollars the government has been pumping in to support the ailing stock market indices, the money is still lost. And now, more than 5 trillion US$ (pretty much the annual output of Japan’s economy) have all but evaporated from the country’s stock markets in Shanghai and Shenzhen.

The recent crash sparked numerous discussions worldwide about the real situation happening in China’s economy. Google ‘China economy’, and most likely the keywords are overwhelmingly negative; many users even question if the economy is none other than a ‘gigantic Ponzi scheme’. And what makes economic risks in 2015 particularly very distinct – and also unprecedented – from the previous crises in 1998 and 2008 are that the problems are three-fold:

  1. There is uncertainty among US Federal Reserve whether to increase interest rates or not – the first time since 2006. Given that the central bank has pumped more than 4 trillion US$ from 2008 up to the end of 2013 into global financial markets, US economic recovery gradually reverses the quantitative-easing policy, posing countries with massive short-term capital inflows at significant risks.
  2. China’s economic slowing-down ‘exacerbates’ the matter. As the world and China increasingly co-depend on each other – especially in international trade, any economic problems inside the country will translate as bigger problems for global economy as well. If, in case, US Federal Reserve decides to increase the interest rates, this will impose increasing burdens for, plainly speaking, a whole lot of people worldwide – especially companies with bonds and debts denominated in US dollars.
  3. The slowing global economy also pushes commodity prices to unprecedentedly low levels; oil prices continue to linger between 38 and 40 US$ per barrel, the lowest since 2009. Dozens of currencies depending on oil incomes have seen their values significantly decline (Nigerian naira, Saudi Arabian riyal, Malaysian ringgit, Zambian kwacha being the biggest casualties), and in fact, most of the currencies whose commodity exports depend on China’s economy are actually plummeting in values.

Given the tendencies for mass media to make any stories overblown, let us do some reality checks on what is actually happening with Chinese economy in brief points below. Some are indeed alarming, but others may be more soothing, so a delicate balance of views has to be considered. These are the things we need to know:

Soothing: China is different from Greece, and its manufacturing output remains huge

With the country expected to have domestic output at over 11 trillion US$ this year, industry-related sectors account for approximately 45% of the GDP composition, slightly larger than those provided by services-related economies. Even though labor costs are increasing very rapidly in recent years (hint: GDP per capita was already 7,500 US$ last year), China’s manufacturing output remains huge, particularly in coastal regions. Initially, there were worries that Greece’s rejection of financial bailouts would result in a blow on Euro values, and therefore spell a trouble in global economy, until China’s stock market crash took its turn as another headline.

Alarming: China has a bad-debt problem

On paper, and on most statistics offered by CIA World Databook, IMF, and World Bank, China’s external debt and public level debts stand at approximately 25-35% of total GDP. But there is one huge caution: debts generated through ‘shadow banking’ (financial institutions that are not listed in the government records) are not counted in the process, and that is an alarming sign. In fact, much of this debt, whether clean or not, is mostly used to fund projects that turn out to resemble more like ‘white elephants’, say, ghost cities. While estimates provide that the actual debt-to-GDP level for China is more than 280% (which may be true), we truly have no idea how much debt the country has accumulated since the beginning of economic reforms in the last almost four decades.

Alarming-soothing: Some portions of these ‘bad-debt’ amount are actually overwritten

Accounting, no matter how tedious it is, sometimes can have its own magicians. This is particularly the case for Chinese state-owned enterprises that build numerous projects overseas – and end up losing money. The question is, do they actually lose the money, or does the money go ‘somewhere else’? Another controversy is overstating debt amount in order to reduce taxes paid, or even to avoid paying taxes at all. While there has been little research about this area, more works need to be done in the future to understand further about such accounting magic tricks.

Still, we don’t actually know how much China owes the world, and most importantly, its own people.

Soothing: Even at an annualized growth rate of 7% this year, China already ‘grows pretty fast’

Even both President Xi Jinping and Prime Minister Li Keqiang acknowledge that fact. The premier, in particular, emphasized that the economy has entered a new normal, and the world has to accept the reality that China, indeed, can not grow at an astronomical pace forever. With increasing labor costs, China will have to move its factories, one by one, to other emerging markets, and upgrade its economic composition to be based more on services and domestic consumption. China’s appetite for natural resources is also gradually declining, and indeed, the slowing economic growth should be a positive thing to celebrate for environmentalists: they are doing really hard to reduce emissions of carbon dioxide, one side effect resulting from the country’s rapid-fire growth in the last 30 years.

Furthermore, with growth rate at 7% this year, China actually still increases 700-800 billion US$ to its annual output, and that quadruples the amount of real GDP produced by India in 2015, for the first time ever the fastest-growing economy in Asia (with an annualized growth rate at 7.5%).

Alarming: Nobody really knows how the government measures economic growth rate

On theory, economic growth is measured through increase in inflation-adjusted market value of the goods and services produced within a certain time period (usually one year). The real problem here, nonetheless, is not about the definition, but WHAT classifies (or constitutes) as the components of growth by the government. Building buildings is one thing, but do they house people? That’s another thing worth concerning about.

Alarming-number two: China’s gross fixed capital formation is actually increasing, not declining

To get you acquainted with this economic term, gross fixed capital formation is, in simple terms, ‘investment’. Something that requires us to spend money in building fixed assets, such as factories, houses, equipment, infrastructure, or anything that can’t be moved (but destructible). While it is necessary to increase the percentage of gross fixed investment at times of rapid economic growth, no economies can incrementally add up the figures forever. There is always laws of diminishing returns: if you invest too much, you end up losing money. And that is what China is actually experiencing.

In 2008, during the height of global financial crisis, China’s GFCI was already approximately 40% of the country’s GDP, among the world’s highest. The almost 600-billion-dollar stimulus package introduced in 2009, intended to boost domestic consumption to support economic growth, was ironically channeled to numerous investment projects instead, many of which are simply unprofitable. That’s why one sees empty cities, little-used highways, and losses-generating projects overseas, when in fact many people in China are still struggling to gain access to basic infrastructure, particularly in hinterland areas. By 2012, the gross fixed investment was already 46%, and it is estimated that by this year, the rate is approaching 50%, an increasingly unhealthy level.

Soothing: ‘stock market crash’ may be an overblown title

Even until mid-2014, the average indices for Shanghai Stock Exchange remained below 2,000. It was only after Chinese government decided to allow financial liberalization that tens of millions of investors, many of whom used financial loans, placed them on companies’ stock prices. In less than one year, the scores shot up to more than 5,500, an astronomical pace so markedly Chinese form of ‘rapid-fire growth’, that when it dropped starting from June, it dropped catastrophically.

Yes, the stock indices are now below 3,000, but honestly speaking, that is still significantly more than the indices were last year. While government intervention was, admittedly, very heavy, including ‘persuading’ (or forcing?) managers of companies and state-owned enterprises to buy up stocks to withhold the drop in stock prices, that couldn’t do much to reduce the impact. After all, stock index is one unpredictable thing by its own. If the government is committed to financial liberalization, the government should regulate investors so as not to excessively use loans to buy stocks, but not to withhold the drop in stock prices.

Alarming: China’s currency depreciation is not going to help its exports

Shortly after the ‘stock market crash’ and the resulting free-fall of currencies worldwide, China’s central bank took an unexpected turn it has barely done since early 2010s: devaluating the yuan at over 3%. It sends even further shrills to currencies worldwide, delivering a dramatic drop for currencies whose exports increasingly rely on China’s economic strength, such as Taiwanese dollar, South Korean won, Indonesian rupiah, and South African rand.

Even the bank’s recipe-as-usual policy to reduce currency values to boost export is already an outdated move given the changing face of global economy today: China has had more trade agreements in 2015 than it was back in 2008, when their trade policies back then were largely protectionist. While it will increase its export volume, it will not be significant. The most important thing, instead, is to focus on its own 1.4 billion people as potential consumers, and that is where Chinese government needs to pay attention to.

Furthermore, China also ‘suffers another blow’ after surrendering the ‘fastest-growing economy in Asia’ title to India: it now relinquishes the ‘world’s largest trade-surplus’ title to Germany; while China records the volume a little above 200 billion US$ in 2014, Germany put in more than 270 billion US$ in the same year. German model of capitalism, which focuses on ‘hidden champions’ and mittelstand, is slowly winning.

 

BONUS: Oliver Wyman, a respected consultancy firm, has previously forecast that a ‘2015 financial disaster’ will occur back in 2011, and now, what currently happens largely echoes what the analysts had predicted 4 years earlier. Read the full report, and understand things better, by clicking on the link here.

Burma, Cuba, and Iran: the pros and cons of Obama’s rapprochement

deal with it

 

 

2015 has been a big year in Obama’s administration, one that ultimately will shape his presidential legacy. While he did not do so well on the first term, and even on the first half of his second term (thanks to the government shutdown in 2013 and intense bipartisan politics being played in the Congress), his performance became hugely bolstered through the passage of fast-track authority, which enables the administration to finish Trans-Pacific Partnership (TPP) before 2017 and other proposed mega-regional free trade agreements in the future, as well as the improvement in relations with countries formerly dubbed as ‘sponsors of terrorism’ – while not being hypocritical that US does have its own particular record – and in this specific case, Burma (or Myanmar, you name it), Cuba, and Iran. I will not talk so much about other foreign policy accomplishments that he had done in his presidential period, but these three countries, oftentimes tied together in almost any media report as ‘centerpieces’ in his foreign-policy rapprochement, deserve some particular attention. While Obama’s efforts, which emphasize diplomacy and compromise rather than the overt use of military force, have won plaudits, there are always concerns about what these countries, upon the re-engagement, are doing, and will possibly do, in the present and in the future. In all Polyannaist terms, nonetheless, we do really expect – while keeping our realist mindset on track – that the ‘opening’ of these countries will also lead to the betterment in the surrounding regions, and the world.

 

BURMA

myanmar

Source (for all map images): Lonely Planet

Population: 60 million (almost), GDP (nominal): 60-65 billion US$ (2014)

Pros: since the limited reforms introduced in 2011 by the quasi-civilian president Thein Sein, sanctions have been gradually lifted the country has managed to attract more foreign direct investment from numerous Asian countries (other than the long-standing investor China), such as India, Thailand, Singapore, Japan, European Union, and obviously, from United States. Tens of billions of dollars have been poured in various industrial projects, while construction boom, mostly focused on high-rise buildings, is currently taking place in major cities, particularly in Yangon. For all the doubts among much of the international communities, World Economic Forum did even organize an investment summit in early 2013. Middle class is emerging in major cities, an important component in the country’s path towards eventual democratization. Hundreds of political prisoners are also since then released from prisons, and political participation is also turning into a more competitive arena as well, with numerous parties now participating in the country’s parliament based in Naypyidaw.

Cons: human rights abuses continue to take place, and the notoriety surrounding the country’s treatment of ethnic Rohingyas, as evident in the massive refugee crisis occurring in the seas between Indonesia, Malaysia, and Thailand. The government continues to deny the citizenship status of the whole ethnic group, numbered at over 1.7 million strong. Other than Rohingyas, the government remains in belligerence with several ethnic-based insurgency groups in the border, particularly those near India and China (some of the peace accords struck with them in 2012 and 2013 failed). There are also concerns that the political reforms seemingly stall, with the latest regulation reserving 25% of the parliament seats to the armed forces, while a presidential candidate has to secure more than 75% of parliamentary support, an obstruction to the country’s most leading politician, Aung San Suu Kyi, to contest the electoral race scheduled to take place in October this year. It is obviously undeniable, in fact, that she can not become a candidate, but whether the next president will proceed with the ongoing reforms remains a big question that has to be solved.

Obama’s visits to the country: 2012 and 2014

 

CUBA

cuba

Population: over 10 million, GDP (nominal): 80 billion US$ (2014)

Pros: relations between United States and Cuba in 20th century were mostly characterized by Cold War conflicts, and CIA’s numberless covert plans to assassinate Fidel Castro, the country’s leading political figure, until his replacement by his brother, Raul, in 2008. Limited reforms have been introduced since then, most astonishingly, the layoff of over 500,000 public employees in 2010 (which indirectly also led to the growth of entrepreneurs). The rapprochement, initiated in May 2012 as part of a ‘spy swap’ program, had since become a wide-ranging thaw among the two countries, culminating with the December 2014 meetings between Raul and Obama, assisted by Pope Francis. Bilateral meetings between Raul and Obama continued further with Organization of the American States (OAS) Summit in Panama City in April 2015, which, for the first time, oversaw the handshaking between the two leaders.

Cooperation among the two countries extends not only among the leaders, but also in people-to-people level. Cuban medical researchers, which ‘doctor diplomacy’ is widely utilized in Cuban foreign policy, have pioneered a medical breakthrough in cure of cancer, and the cooperation has recently begun between the countries’ scientists. The re-opening of US embassy in Havana last week, as one expects, will push American businesses and tourists, gradually, to invest and interact with the locals living in the country in the future. Furthermore, the country can advance even further in its ‘doctor diplomacy’ strategy, now already dispatching more than 40,000 medical experts across the developing world.

Cons: two major takes. Firstly, US has continued to retain the notorious Guantanamo Bay prison, where the infamous CIA rendition program is still taking place there. Further negotiations between Washington and Havana have to be conducted in order to solve this decades-old, lingering problem. Another concern is the extent to which Cuba, still ruled by one-party regime, will introduce its political reforms, and also allowing more competitive political atmosphere. Such political opening will take years, if not decades; if reforms go too fast, a political crisis will be a real, legitimate threat. Gradual phases of tutelage will be a more recommended pattern to guide the country’s path towards political openness, and that will be left to his successors in 2018 (the time Raul resigns, as he will be 87 years old afterwards).

Obama’s visits to the country: zero

 

 

IRAN

iran

Population: 80 million, GDP (nominal): 400-500 billion US$ (2014)

Pros: the nuclear deal, eventually achieved two weeks ago, was another highlighted achievement that Obama had achieved in his administration after over 6 years of uneasy numerous processes of negotiation, together with European Union, IAEA, China, and Russia. The deal itself will require Iran to highly limit (but not completely freeze) the nuclear program, obligate the country to open up for inspections by IAEA, as well as provide progress reports, up for international joint reviews, for a period of 10 years. While the accord was achieved ‘not with trust, but through verification’, the deal will enable the gradual lifting of economic sanctions that have crippled the country for almost one decade, potentially adding an annual oil revenue of more than 100 billion US$ that Tehran critically needs to support the long-term development. Still, a complete normalization of US-Iran relations will not be expected in a short term period, somehow.

Cons: There remains this question of regional rivalry between Iran and Saudi Arabia, two long-time arch-enemies, in Middle East. The two countries have played proxy wars and conflicts in Syria, Yemen, Lebanon, Iraq, and in numerous other Shia-Sunni conflicts across the region. Unlike the two countries above, Tehran plays a powerful influence in Middle East. It continues to retain support to Bashar al-Assad regime in Damascus (and most recently, a new law has been signed in Tehran to authorize 1 billion US$ of financial support to the beleaguered country annually), while the civil war in Yemen, despite the truce, has not led to a full pause. There remains doubt, also, of what will happen once the deal expires in 2025; such uncertainty will have a major implication on global geopolitics in the decades to come, especially when one expects Iran to be economically and politically in even stronger position than now. An Iran-Saudi rapprochement, possibly brokered by Washington, will have to be attempted in a few years to come to prevent a larger regional conflict to take place.

Obama’s visits to the country: zero

 

As much as these efforts have resulted in significantly positive impacts on US relations with the world in the second decade of 21st century, these deals also carry Obama’s name in a huge stake in the long-term future. What if the direction becomes worse rather than better? There is too much one can hardly speculate, even in the 10 years of time; this also carries an important question, furthermore, of what the future US presidents will relate to these countries in a post-Obama setting. Will the presidents maintain the ‘diplomacy-first’ strategy, or will the stance become much harder and more hawkish? In such situations of fixed uncertainties, wisdom will be the sole guidance one has to employ to understand the problems, and proactively solve them. For all the flaws that have occurred, at least, engagement is the continuous form of remedy in international relations that Obama has exercised (so far).

 

 

 

 

2014: year in review (by countries, part 3)

2014

 

This is the last article from the series reviewing events that have taken place across different countries this year. Now the last day in 2014, my only expectation towards 2015 is a better year ahead, albeit some difficulties, and some challenges, accumulated from past mistakes, will continue to befall us.

As I forgot to include Hong Kong and Mexico in the first two parts, I’ll just put them here.

 

Hong Kong – if this semi-autonomous region of 7.2 million people used to be known rather for dim sum, skyscrapers, action films, and Jackie Chan, now Hong Kong filled international headlines in 2014 with ‘protests’ being the most popular keyword. Triggered largely in part due to the latest decision by China’s National People’s Congress Standing Committee in having to screen out candidates in the upcoming 2017 Chief Executive election, which would be the first direct election in Hong Kong, this marked what had been more than two decades of impatience Hong Kong public has been faced in gaining universal suffrage. While the city has achieved monumental economic success since 1970s, the most crucial issues that have never been addressed are the worsening social inequality (Hong Kong is ranked the worst among developed regions’ Gini index, now reaching a staggering level of almost 0.56), astronomical home prices which most people can hardly afford, increasing living costs with low social safety nets, as well as erosion of freedom of expression, by which Hong Kong’s rank, according to Freedom House, has fallen drastically from among the top 15 in 2004 to now 61 a decade after.

But Hong Kong also inspired the world what ‘civil disobedience’ truly meant. Despite several scuffles (mostly infiltrated by certain elements), no buildings were damaged (except the Legislative Councils headquarters’ front window), no cars were burned, and life goes on fairly normal on most parts of the city. People helped each other, students continued to do their homework and studied at night, some set up medical clinics, and others even assisted in trash collection and recycling activities. There is hardly any place doing a civilized protest as Hong Kong has shown.

Mexico – this country of 115 million has long been faced with a massive drug war, having seen more than 100,000 people killed by both security forces and similarly heavily-armed drug cartels, but the forced disappearances of 43 university students, and their subsequent killings, marks the climax of this war, with millions of civilians coming out to the streets to protest both the government and drug lords, who have remained somewhat hypocritical and vicious in this matter. The murder started with student protests in Iguala, by which local police responded with mass suppression, and the subsequent kidnapping of 43 students. Nonetheless, having handed them down to drug lords instead to prosecutor’s office, and having these people brutally murdered, mutilated, and their body remains completely burned, this became what triggered the people to really show their anger. Such tragedy deals another further blow to the country’s current president, Enrique Pena Nieto, who has long been criticized for being hypocritical and not doing enough to solve many of Mexico’s crucial issues.

Pakistan – three gargantuan events have shaken this country throughout the year. Firstly, there’s this mass protest known as Azadi March, by which millions of people again went to the streets to demand an end to the country’s first democratically-elected government, led by Nawaz Sharif. Nonetheless, there remained suspicions that these protests were actually organized by certain elements with close ties to intelligence and military forces, notoriously known to have been partially infiltrated by several Taliban movements. The military itself had previously been in charge of the country’s leadership for decades, the climax of which was the ascendancy of Pervez Musharraf into the power, ending in 2008 after mass protests led by civilians. This march, for the first time, becomes a major test to Sharif’s government to which extent he could balance fragile relations between the authority, critically needing the support of security forces, and the military themselves.

Another one was Nobel Peace Prize jointly awarded to both Malala Yousafzai and Kailash Satyarthi, both hailing from cognate countries long involved in decades-old conflicts over numerous issues: Pakistan and India. Both of them were actively involved in advocacy towards children’s rights and education, and had faced formidable obstacles in their respective home countries. No matter how often the two nations clash, it was hoped the shared visions of Malala and Kailash could inspire both people to appreciate each other much better.

But the last one remains what becomes the most tragic closing event for the country’s 2014. Taliban, known for always targeting military forces and intelligence services, this time targeted a school attended by innocent kids. More than 150 people, mostly students, were brutally murdered by the ambush led by Taliban forces in Peshawar, leading to huge civilian protests, and a harsh crackdown by Pakistani government into the militants. While it is deplorable to see how US drones continuously invade civilian places – further encouraging Taliban to conduct more attacks, robbing the lives of innocent kids, dreaming hard of a better future, is another useless eye for an eye.

Qatar – other than Al Jazeera as its global media outlet, the country has faced another international scrutiny in regard to alleged abuse of migrant workers in this oil-and-gas-rich tiny Gulf state. With population of migrant workers 1.7 million strong, or 75% of its whole population, how the country handles these people remains a question, especially as Qatar has been selected for 2022 World Cup, with a fantastically planned expenditure of 220 billion US$. It is estimated that among 1.7 million foreign workers residing in this country, majority of them do not have enough social protection from the respective government. What those people will experience in the years to come until 2022 remains a huge stake for Qatar’s credibility, nonetheless.

Russia – first, the world was surprised by how ‘unusual’ Winter Olympics had been, as shown by how the 50-billion-dollar project in Sochi turned into a completely gargantuan white elephant. Many stadiums ended up in decrepitude, hotels were largely unfurnished, and the city turned up pretty merely throughout the Olympics’ season, only to subsequently end up neglected much of the time afterwards.

After Sochi, Kremlin once again shook the world with its subsequent annexation of Crimea Peninsula in Ukraine, a Russian-dominant territory Soviet Union once awarded to the latter back in 1950s. As though not done with Crimea, Moscow continued to silently support pro-Russian separatists in East Ukraine, particularly in Donetsk, once one of the country’s most important industrial cities, now turning into a war zone. More than 4,000 people had been killed in the conflict lasting more than 9 months, and it is not expected the conflict will end anytime soon.

Sanctions and a drastic drop in oil prices themselves, again, give this country a hard slap. Ruble values have sharply declined by more than 70%, the worst performing this year, excluding the estimated capital flight at more than 130 billion US$ this year. Foreign exchange reserves, meanwhile, have evaporated almost 50%, leaving the country with less than 200 billion US$ to anticipate the crisis. Worst, Russia’s oil revenues will drop between 90 and 140 billion US$ this year, making 2014 the worst year for this country of 142 million after 1998.

Next year, former Soviet states like Estonia and Kazakhstan will have to be very careful of their giant neighbor.

South Korea – the sinking of MV Sewol became an international spotlight. Over 300 high school students out of 460 people on board a passenger ship heading to Jeju Island were killed as the ship perished at sea, and the reason was what gave the public enough outrage to be expressed at the national government, currently led by President Park Geun-hye: the ship itself has exceeded its sailing age, and there is certain extent of negligence by ship crew when the accident happened. This accident prompted a suicide case by the students’ vice principal, resignation by prime minister, and the subsequent disbandment of the country’s transport safety commission. Also, what was highlighted here is the continued issue of corruption, as well as collusion of power between government and major corporations controlling a large share of the country’s economy.

Another controversial issue is the widespread violence experienced by many servicemen during military service, as recently illustrated by the mass shooting in a military base by one of them.

Sudan / South Sudan – the world’s newest sovereign state faces a devastating civil conflict that had killed thousands of people since last year, driven largely in part by former vice president Riek Machar’s rebellion attempt against the government currently led by Salva Kiir. Millions of people were internally displaced, and governmental functions were mostly paralyzed. Nonetheless, despite infrequent coverage of these two countries, they remain widely discussed within international relations discourse given the influence of the soon-to-be superpower: China. Having staked out many oil and gas possessions in both countries, it is highly important for Beijing to create an uneasy counterpoise and political compromise between them, while also ensuring internal security in South Sudan to not interfere with their extraction activities. This country, in many geopolitical estimates, will become a ‘knot’ in determining of how Chinese foreign policy will transform in the years to come.

Syria – the country’s civil war, which has killed over 200,000 people within 3 years, doesn’t show any signs of abating. The nation remains largely divided, with Bashar al-Assad’s government still having a stronghold in the largely Southern part, while much of the North has fallen to both various rebel groups (often clashing against each other and against the government) and ISIS. Thousands of civilians, former government troops, and various tribal fighters have fallen victim to the savagery displayed by the Islamic State, and with the reluctance of both Assad’s government and rebelling coalitions to dialogue, despite an attempted peace talk brokered by Russia, it is expected that the country’s civil war will not subside anytime soon, even in two or three years to come.

Taiwan – 2014 was particularly not a really good year for this island country. In March, most of the central government was paralyzed by the largest mass protest ever organized since the 1990 democratization, with hundred thousands of students occupying Legislative Yuan’s headquarters in Taipei for nearly one month. This protest was largely triggered by China-Taiwan trade agreements, which many feared would give Beijing a stronger economic leverage towards the country’s survival. With bilateral trade between both countries surpassing 170 billion US$, or 30% of Taiwan’s overall annual volume, and Taiwan’s largest corporations benefiting the most, much of the public is concerned how this free trade policy will determine the country’s long-term existence.

Two more disasters befell Taiwan, with a plane crash in Penghu Islands, and a massive gas pipe explosion in Kaohsiung, devastating several parts and many buildings across the city. Ma Ying-jeou’s administration faced another major blow with the ruling party Kuomintang’s massive defeat in this year’s municipal elections, driven largely in part by public’s increasing dissatisfaction towards the government.

By 2016, with a presidential election already scheduled, this is going to determine the future direction Taiwan will go towards.

Thailand – for the umpteenth time (after nearly 20 times of coup d’etat since early 1930s), Thailand effectively becomes a military junta again, a consequence of lengthy political fights between kingdom-supported military, urban middle-class, and farmers plus rural villagers, who mostly support Thaksin Shinawatra and his associates. To make a long story short, the military junta will not end anytime soon, unless steps have been taken to reconcile both the royalists and the villagers (which so far hasn’t seen any concrete results).

Turkey – When Russia has Putin, Turkey has Erdogan. The mass protests originating from Istanbul’s Taksim Square, which later spread into the entire country last year, failed to overthrow Recep Tayyip Erdogan’s government; instead, it gave him further legitimacy to alter the current state of Turkey. Beforehand a three-term prime minister, previously hailed for his successful economic transformation of this country of 70 million, Erdogan has been increasingly faced with scandals involving his inner circles, and his increasingly conservative, and oftentimes iconoclastic, views about Islam and the world. This year, Erdogan is sworn in as the country’s president, eliminating the position of ‘prime minister’. Now being head of state and head of government, with numerous cash-draining, oftentimes ‘white elephant’ projects across the country (including a brand-new one-billion-dollar presidential palace in Ankara), the leader is getting more unpopular across much of the country’s youth.

Ukraine – situated in between European Union and Russia, Ukraine remains in difficult position. Much of the nation was fractured with mass protests taking place from November 2013, which ended with a street battle in February this year. While much of the country demand a complete integration with EU, many important elements within the country also want closer ties with Russia, enticed by Soviet-era stability. The protests, later known as Euromaidan, ended up with a bloodshed killing more than 100 people, and the subsequent escape of Viktor Yanukovich, the country’s deposed pro-Russia president.

Nonetheless, the protests ended up exacerbating the current situation in Ukraine, with many of the pro-Russian civilians taking up weapons and declaring their own republics across much of the Eastern part. The country itself was also faced with another threat on its Western part: Moldova, its neighboring state, served as a Moscow-supported bulwark against Kiev. Crimea and Donetsk has been taken, much of the country remains under war, and worse still, an airliner was bombed.

The current government led by Petro Poroshenko (known as the Ukraine’s Chocolate King) has also been faced with internal infighting within the parliament, giving this conflict an uncertainty when it will end.

United Kingdom –  It’s good that Scotland didn’t split up from the country; otherwise UK would have to rename itself, change its flag, and worse, other constituent countries like Wales and Northern Ireland will possibly follow the same way had Scotland chosen to declare independence.

United States – the world’s largest superpower faces its own largest racial tensions since 1960s, with the shooting of Michael Brown in Ferguson, Missouri, prompting large-scale protests nationwide, and subsequent acts of rioting and looting in several towns across the States. A few other African-Americans were also shot down by police, but this also fuels debates whether the police are getting increasingly militarized, or the Blacks are really trying to attack them.

The Republicans’ success in taking control of US Senate gives another blow for Obama’s administration, especially after the last year’s government shutdown in regard to endless debates about Obamacare and other proposed policies that didn’t get passed. With two years left for President Obama, there won’t be much left for him to accomplish given the latter’s strong control of the Senate.

Nonetheless, there’s good news aside: economic recovery has shown its outcome, now at a level of 4%, the highest since Clinton’s era. With Europe still at its teeters, China facing a gradual slowdown, and Japan entering recession, US is now driving the world’s economic growth again for the first time (albeit not so in long term, as long as economic reforms are not activated).

Venezuela – with Hugo Chavez passing away, people once put another populist hope on his former vice president, Nicolas Maduro. It turned out to be wrong: economy remains at a dismal level, and with oil prices further dropping, revenues are increasingly small. Despite Venezuela’s status as currently the world’s largest holder of oil reserves, much of the population remains chronically poor, crime rate remains among the world’s highest (nearly similar to that of war-ravaged nations), and state-organized violence remains dominant in suppressing freedom of expression. Worse, with Maduro’s limited capability in handling the country’s issues, all these invoked massive anger from much of the populace. The country experienced mass protests when hundred thousands of people went to the streets, demanding his resignation.

More than 40 people were shot to death, including former pageants (pageants are the most popular figures in Venezuela, sometimes comparable to government leaders), and Maduro remains in power.

 

 

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Starting from next year, 2015, I will not frequently update this blog anymore, given that there are several things I have had commitment to do so, but this doesn’t spell an end to it (even though there were quite some moments I was considering to simply terminate this blog). It’s just that there are some adjustments I have to do with my schedule, so I hope you, readers, can understand that. I wish you all the best luck ahead, and I’ll see you in 2015.

2014: year in review (by countries, part 2)

2014

 

This is the continuation of previous post I published yesterday. Here are a few more countries under the spotlight this year:

 

Iraq – this country has long been notoriously associated with sectarian strife, the failed US invasions, and right now, a seemingly new synonym is ironically added into once was an influential power in Middle East a millennium ago: ISIS. Since its advent in the middle of this year, this organization, led by a former CIA informant (ha!), has committed numerous atrocities against religious and ethnic minorities across much of the country, most notably Christians and Yazidis. Excluding their poor public-relations exercise by means of decapitation, which, as horrendous as it seems, still continues to entice thousands of foreigners across the whole world to join this movement.

With the Iraqi Army still in partial disarray due to internal conflicts, who else remains in charge of limiting ISIS’s movements? Big kudos to Peshmerga, the army for Iraqi Kurdistan, an autonomous region in northern Iraq. While the Army’s offensive has been largely limited (and some even escape), the Peshmerga fighters remain fiercely committed to defending their region, and more generally, the country as a whole, despite the frequent fracas between Baghdad and Erbil (capital of Iraqi Kurdistan) in regard to oil production sharing contracts.

Iran – it has been an uneasy year for President Hassan Rouhani, as nuclear deals with Western countries remain largely in limbo. But one piece of slightly good news abounds: Iran has, for the first time since Ahmadinejad era, achieved positive economic growth, albeit small compared to most emerging markets. With GDP growth estimated at 2%, no matter how small it is, Iran is expected to move slowly into better direction in the years to come.

The big concern that matters, as of my opinion, is the limited freedom of expression that prevails.

Israel / Palestine – “An eye for an eye makes the whole world blind.” Gandhi’s quote resonates very obviously in terms of how these two countries relate to each other. A few Israeli teenagers were kidnapped and murdered, followed by a retaliation by which a Palestinian child was done so in similar manner. And huge conflicts, due in part to deep scars that remain in both governments, reverberated again, as history has taught. More than 2,000 Palestinian civilians were killed during an offensive by Israeli military in August this year. But is Israel the sole culprit in this conflict? What about Hamas, notoriously known for exploiting civilian places like schools and hospitals to launch unending attacks to Israel? With now Israel dominated by hard-line Zionists, and Palestine partially under control of hard-line leaders as well, the doors towards negotiation and dialogues will not be achievable in the near future.

A piece of good news that remains largely overlooked in this conflict zone: start-ups, mostly in software development and creative products, in both countries are flourishing, and more European countries are recognizing Palestine as a sovereign state.

Japan – Shinzo Abe was reelected as Prime Minister of Japan in a somewhat risky bet he placed in this year’s general election, as his Abenomics was showing failure. In short term, his quantitative easing policy has pumped over trillions of dollars into the market, therefore stimulating exports growth, abundant cash, as well as inflation, the word first time appearing in the news after more than 20 years experiencing continuous periods of deflation. Nonetheless, with Abe’s introduction of consumption tax at 8%, this deals a catastrophic blow for his ambitious initiative intended to revive Japanese economic miracle. With GDP contracting this quarter, the country unofficially enters its recession again. Even his ‘Womenomics’ program, aimed to increase female participation in leadership seats across Japan’s corporations and organizations into 30%, will be hardly achievable in this decade.

In 2015, challenges will not be even easier for Abe, as a whole range of issues will soon face his administration. Revision of US-drafted post-war constitution has attracted massive opposition from largely Japanese public, still traumatized by the deadly repercussions of World War II, even though Japan will never become a militarist power again, given the country’s increasing demographic pressure. His plans to restart nuclear power plants, ratify the controversial Trans-Pacific Partnership (TPP), pass national secrecy laws, and handle Japan’s fragile relations with China similarly encounter big resistance from much of the Japanese population as well. 2014-2018 will not be a smooth path for Abe, were he to continue his tenure.

Libya – the country remains largely fractured three years after Muammar Qaddafi was overthrown and brutally murdered by opposition forces in a NATO-led civil war that destroyed Libya in 2011. Some militants have previously formed their own ‘governorate’ in the country’s eastern part, only to face another armed resistance from other fighters, while several ISIS sympathizers have begun to infiltrate the country’s security. Even with Libya’s riches stored abroad (the country’s sovereign wealth fund reaches a staggering amount of 120 billion US$, but mostly in bank accounts in Switzerland, notorious for their secrecy laws), the money can hardly be used for Libyan public, given that much of the money remains under control of Qaddafi’s relatives, many of whom had escaped abroad (except for his son, Saif al-Islam, who may possibly face death sentence).

Malaysia – 2014 is the most disastrous year for the country’s aviation industry, as three airliners belonging to its most reliable carriers, Malaysia Airlines and Air Asia, perished this year. The most puzzling of which was Malaysia Airlines Flight 370, a scheduled flight between Kuala Lumpur and Beijing that ended up nowhere. After almost 10 months of investigation, involving hundreds of rescue ships and even war ships from more than 27 countries, not even the slightest trace of the plane can be found. The plane was presumed, as by Malaysian Prime Minister Najib Razak, to have ‘ended up somewhere in Indian Ocean’. This makes the search efforts even riskier, given that much of Indian Ocean’s terrains remain largely unmapped, some of which may have depth over 6,000 meters. Four months after this tragedy, Malaysia Airlines Flight 17 again became a tragedy, as pro-Russian separatists in Ukraine mistook it as ‘Ukrainian military transport plane’ and shot it down. 239 people in MH370 had never been found, while 298 people in MH17 were instantly killed by the missile launched by the separatists.

And this Sunday, Air Asia, long notable as Asia’s largest low-cost carrier with great safety records, faced its first major crisis with the disappearance of its plane in Air Asia Flight QZ 8501, flying from Surabaya, Indonesia’s second largest city, to Singapore. 162 passengers and crew were inside the plane, which remains missing as of this hour.

However, other than aviation disasters, Malaysia faces another major issue in regard to the country’s increasing authoritarian rule, as Najib’s administration restarted decades-old sedition laws, used only during British colonial rule, to detain political opponents without prior permission from judiciary powers, including Anwar Ibrahim, the most outspoken. The country also faces ethnic and religious tumults, as Christians are no longer allowed to use ‘Allah’ in their sermons, and more pro-Malay policies at the expense of Chinese and Indian minorities, many of whom have increasingly emigrated abroad.

Myanmar – the country doesn’t experience much progress in democratic transition, as one-fourth of the national parliament remains solely reserved for military. Even the constitution itself requires a law to be approved by more than three-fourths of the entire members, something which can be easily aborted by the powerful military members.

How the country handles its ethnic minorities will remain a concern to be observed in 2015 and years to come, most commonly illustrated by the country’s failure to relate with Muslim Rohingya minorities, many of whom have fled abroad to avoid persecution by ultra-nationalist Buddhists.

One thing almost for sure: in next year’s 2015 election, there is large probability Aung San Suu Kyi will not become the country’s president, given many of the current constitution’s limitations.

Nigeria – Africa’s most populated country faces its major crisis when Boko Haram, an Islamist movement affiliated with Al-Qaeda in northern Nigeria, kidnapped more than 200 schoolgirls, sparking an international campaign to free them. However, the kidnapping itself is not the mere problem the Goodluck Jonathan’s administration is being faced with. Continuous suicide-bomb attacks have killed over thousands of civilians in many parts across the country, prompting military operations to capture those involved.

Nonetheless, there remains some good news that is worthy of international attention. The country, given its proximity to Guinea, Liberia, and Sierra Leone, was once thought as a potential ‘bomb’ for Ebola epidemic to turn itself into a pandemic, given the country’s population that now reaches 170 million, as well as high density, low sanitation, acute poverty, and little awareness about cleanliness. However, within months, less than two dozens of cases took place across the whole country, with the number of mortality countable by fingers. This is something seemingly impossible for many experts, but Nigeria, given the national unity in facing this crisis, has proven to the world that no matter how problematic things seem to be, they can resolve it successfully.

And Nigeria’s GDP has for the first time surpassed that of South Africa, therefore becoming Africa’s largest economy. While oil and gas revenues remain the largest source for government budget (and often corrupted), Nigerian economy has been more diversified in recent years.

North Korea – other than the Kim-Obama fracas about naughty comedy ‘The Interview’ and the subsequent Sony hacking attacks that follow (which may possibly be conducted by third parties using North Korean IP addresses), the country is not as isolated as people perceive anymore. Over hundred thousands of Chinese tourists are now visiting North Korea every year, followed by a large flow of cash from China, its principal ally, largely driven by informal economy that the country is mostly depending upon. As economy has collapsed, majority of the North Koreans have now turned into either smuggling or small trade, and the country’s unofficial currencies are either US dollar, euro, or Chinese yuan (South Korean won is not allowed).

The purge, and eventual execution, of Jang Song-thaek remains a proof, however, that Kim Jong-un can be as ruthless as his grandfather and father were (Jang was his uncle, and a sort of ‘intermediary’ between North Korea and China in terms of economic, trade, and investment relations).

 

(wait for part 3)