Best of the Research
The International Crisis Group takes a close look at improving relations between India and Pakistan. Stronger economic links have bolstered moderate voices in both countries, allowing the governments to move past previously intractable issues such as Kashmir to broaden engagement in other areas. The report makes a number of recommendations for both governments on continuing to pursue this, but cautions that there are many impediments to peaceful engagement, including the possibility of another Pakistan originating terrorist attack in India.
“Within India, with suspicions of Pakistani intentions still high, Prime Minister Manmohan Singh has limited political support for talks that do not prioritise the terrorist threat. Another Mumbai-style attack by a Pakistan-based jihadi group would make such a dialogue untenable. It could also provoke a military confrontation between the two nuclear-armed neighbours,” the authors say.
Read the full report here.
China Power
The University of Washington has reportedly offered a fellowship to blind Chinese dissident Chen Guancheng, who made global headlines after escaping from house arrest to the U.S. embassy in Beijing. Chen, meanwhile, has continued to ask the Chinese authorities to let him leave the country with his family. Such enthusiasm might even be matched by Beijing – government officials have been visiting Chen in hospital and have promised to secure him a passport. Certainly, the Chen case has exposed loopholes in China’s principle of centralized governance: government officials were reportedly kept in the dark about the house arrest and inhumane conditions being imposed on Chen.
Policymakers appear to be somewhat less flexible over a spat with the Philippines in the South China Sea – China has started it first deep water oil drill in an area that is also contested by the Philippines. Beijing seems intent on standing its ground, with Vice Foreign Minister Fu Ying stating that China is ready to respond to any escalation by the Philippines. Regardless, travel agencies in China aren’t taking any chances – they’ve suspended tours to the Philippines. To top it all off, a CCTV anchor made his bid for worst-timed gaffe ever, accidentally declaring the Philippines to be an inherent part of China.
In other international news, China welcomed Francois Hollande, expressing its readiness to work with France’s newly elected president. Beijing is also said to be planning an official visit for North Korean leader Kim Jong-un. Foreign affairs (and headaches) aside, there’s been plenty to keep China’s leaders occupied, not least the problem of rising property prices, including in Hainan Province, where an influx of investment has fed booming property prices and luxury investments, sparking soaring inflation and a widening wealth gap. In Nanjing, meanwhile, ostentatious wealth has prompted anger in an original way. Residents there are fuming after a show involving a Ferrari performing stunts on the city’s ancient wall was revealed to have done what might be permanent damage to the more than 600-year-old wall.
Indian Decade
Are things looking up for India-Pakistan ties? Pakistan’s government proclaimed a “new era” in trade, granting India most favored nation status and ending export curbs. The Economist calls this the rise of a new “economic pragmatism” and urges both sides to do more to improve relations. The ICG report noted earlier we mentioned earlier offers more on this. U.S. Secretary of State Hilary Clinton was also in India this week, touring the eastern city of Kolkata and the capital New Delhi, where she discussed economic and political issues, including India’s dependence on Iranian oil.
Domestically, though, things aren’t looking so rosy. Pilots at Air India have declared a strike that has already resulted in the debt-laden airline having to cancel flights. Gujarat’s outspoken chief minister, meanwhile, has found himself in trouble this week with the Supreme Court suggesting that he could be prosecuted over the 2002 anti-Muslim riots in the state.
In other news, the Competition Commission of India has launched an anti-trust probe into Google’s advertising practices in the country, while government corruption again grabs headlines after a parliamentary report identified serious problems in the Central Drugs Standard Control Organization, the main drug regulator in India. Amongst other things, the report identified serious flaws in the drug testing process, as well as evidence of collusion between officials and major drug companies. (Compiled by Calvin Wong, Editorial Assistant).
Guns
The U.S. took another step in developing its next generation missile defense technologies, even as nations like China and Russia cry foul. Off the coast of Hawaii, Raytheon completed a successful test of its Standard Missile-3 IB. According to the firm, this new version of the SM-3 family will be adopted in both sea and land versions.
But it wasn’t only the U.S. testing missiles this week, with Pakistan announcing it has fired a short-range missile that’s capable of delivering a nuclear warhead. A statement said the Hatf III Ghaznavi, with a range of 290 kilometers, was launched at the conclusion of the annual field training exercise of Army Strategic Force Command, the Huffington Post reported. This week, Pakistan’s military also held talks with the commander of NATO-led forces in Afghanistan and Afghan Army chiefs over border security, even as the commander of Pakistan’s forces along the frontier said U.S. efforts at talking peace with insurgents in Afghanistan means Washington can’t expect Pakistan to attack all militant factions on its side of the border.
Butter
More red meat for the China bears, with slower growth across a range of April indicators. The news dashes hopes that the economy bottomed out in the first quarter. China’s central bank has responded with a 50 basis-point cut in the reserve requirement ratio. Regional great power rival India has also posted disappointing numbers, with industrial output in March actually shrinking. India’s monetary authorities have offered up a 50 basis-point cut in the repo rate. In Japan, where such supply-side fixes long ago ceased to be effective, the talk is again of currency intervention, as the yen continues to strengthen from its mid-March low. The strong yen hits the bottom line of Japan’s export engine.
Australian property prices are down 10 percent in real terms from their mid-2010 peak. Unemployment, however, surprisingly fell to 4.9 percent in April, the lowest level in a year. The Wall Street Journal argues that the headline figure is misleading, and supports the dual economy thesis.
From swamp to business-friendly dynamo, Singapore is a model for developmental economists, says The Atlantic. Could it be a model for North Korea – not such an economic dynamo – which has dispatched a delegation to Singapore and Indonesia? (Compiled by James Pach, Publisher).