13 November 2013 | Vol. 4, № 42. From the Editor’s Desk Dear FDI supporters, Welcome to the Strategic Weekly Analysis. This week, following the recent round of P5+1 negotiations between Iran and the West, we open with a look at efforts by the Iranian leadership to attract more buyers for the country’s oil. Still in Iran, we examine the increasingly perilous water security situation confronting the country, ahead of warnings that water rationing will be imposed in the capital, Tehran. Next, the Global Food and Water Crises Research Programme investigates the activities of a coalition of developing countries led by India, China and Indonesia. The group is lobbying for increases to World Trade Organization subsidy limits to help combat food insecurity and poverty. Looking to Indonesia, we analyse the prospects for Indonesia’s successful – and evolving – democracy, in the wake of the annual Bali Democracy Forum and ahead of presidential and parliamentary elections next year. In Malaysia, we investigate the waning popularity of former Prime Minister Mahathir Mohamad, in the wake of a by- election in the opposition stronghold of Kedah. Moving to Africa, we consider the efforts of the International Criminal Court to bring to trial Kenyan President Uhuru Kenyatta and Vice-President William Ruto. Both men have been charged with crimes against humanity, related to the deaths that followed the 2007 election in that country. I trust you will enjoy this edition of the Strategic Weekly Analysis. Major General John Hartley AO (Retd) Institute Director and CEO Future Directions International *****
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13 November 2013 | Vol. 4, № 42.
From the Editor’s Desk
Dear FDI supporters,
Welcome to the Strategic Weekly
Analysis. This week, following the recent
round of P5+1 negotiations between Iran
and the West, we open with a look at
efforts by the Iranian leadership to attract
more buyers for the country’s oil.
Still in Iran, we examine the increasingly
perilous water security situation
confronting the country, ahead of
warnings that water rationing will be
imposed in the capital, Tehran.
Next, the Global Food and Water Crises
Research Programme investigates the
activities of a coalition of developing
countries led by India, China and
Indonesia. The group is lobbying for
increases to World Trade Organization
subsidy limits to help combat food
insecurity and poverty.
Looking to Indonesia, we analyse the
prospects for Indonesia’s successful – and
evolving – democracy, in the wake of the
annual Bali Democracy Forum and ahead
of presidential and parliamentary
elections next year.
In Malaysia, we investigate the waning
popularity of former Prime Minister
Mahathir Mohamad, in the wake of a by-
election in the opposition stronghold of
Kedah.
Moving to Africa, we consider the efforts
of the International Criminal Court to
bring to trial Kenyan President Uhuru
Kenyatta and Vice-President William Ruto.
Both men have been charged with crimes
against humanity, related to the deaths
that followed the 2007 election in that
country.
I trust you will enjoy this edition of the
Strategic Weekly Analysis.
Major General John Hartley AO (Retd) Institute Director and CEO Future Directions International
*****
Page 2 of 12
Iran Tries to Lessen Impact of Economic Sanctions
Iran’s recent bid to attract former oil clients could ease the pressure of the Western
economic sanctions and renew the country’s essential economic lifeline.
Background
Western sanctions, in particular the embargo on Iran’s oil and gas exports, have pressured
buyers to reduce purchases from Tehran, crippling its economy. The United States has yet to
ease its sanctions on Iran, despite being involved in discussions with Iran as part of the P5+1
talks.1 Despite some promising signs, the most recent talks in Geneva ended with no
agreement, dashing immediate hopes of ending the standoff over Iran’s controversial
nuclear programme. There are signs, however, that the latest efforts by President Hassan
Rouhani could attract former oil customers and deliver much-needed revenue to the Islamic
Republic.
Comment
Although Iran claims the fourth-largest proven oil reserves in the world, sanctions imposed
in July 2012 have taken a significant toll on the Iranian economy. In the first year of
sanctions, the country’s oil exports fell to their lowest level since 1986, when Iran was
involved in an eight-year war with Iraq. Although China, India and Japan – which together
account for half of Iran’s crude oil exports – have received a six-month exemption to import
Iranian oil, a condition of that exemption is that their imports must demonstrate an overall
gradual decline.
The reduction in exports has cost Tehran billions of dollars per month, vital to the state’s
revenue. In addition, financial sanctions have also made it difficult to repatriate from the
proceeds of the oil sales, cutting off a main source of Iranian income. In India, Japan and
South Korea, billions of Tehran’s oil money is stuck in bank accounts, held up by the
sanctions.
Of late, Rouhani has been determined to boost Iran’s primary economic lifeline. The new
president and his Cabinet have adopted measures such as offering large discounts on oil,
and, most recently, free delivery of crude to India. The Iranian Government has also put
together a new re-insurance package for refineries processing Iranian oil, offering Indian
clients a significant price discount if refiners increase purchases. While any discount on oil is
beneficial to India, its six-month exemption is up for renewal in early December and New
Delhi is likely to be hesitant to increase imports prior to a review of its waiver from the US
sanctions. India, however, has sought to pay its oil debts in rupees rather than dollars, a deal
that Tehran has not been eager to accept.
Some hope that a deal between Rouhani and the West might lead to a lifting of sanctions, as
talks between Iran and the P5+1 recommence on 20 November. If sanctions were lifted, it
would open up opportunities for international investment and the restoration of exports. It
1 The P5+1 is comprised of the United States, the United Kingdom, France, Russia, China and
Germany.
Page 3 of 12
may be difficult, however, as Iran has lost market share and that may be difficult to regain.
Higher production in the US, Saudi Arabia and Iraq has offset the loss of Iranian exports, and
crude exports from the Middle East and West Africa have largely replaced Iranian oil in the
Asian marketplace. To boost exports to pre-sanction levels, Iran would need to attract
clients other than its long-time patrons in Asia. For this reason, Rouhani and his Cabinet
have been seeking broader access to international markets. In October, ten member states
of the European Union received waivers from the sanctions. Turkey has also increased its
imports.
As talks resume later this month, Iran’s leaders strongly oppose abandoning the nuclear
programme, but it is unlikely that the United States would allow an increase in oil exports,
before Tehran accepts a series of restrictions on its nuclear activities.
Kaelin Lutz Research Assistant Indian Ocean Research Programme
*****
Water Rationing in Tehran as Iran Faces Looming Water Crisis
Water rationing may be imposed in Tehran if residents fail to reduce their water
consumption by 20 per cent following a sharp decline in annual precipitation.
Background
Reduced rainfall across Iran is leading to significant reductions in groundwater reserves and
fears a water crisis is looming. Faced with a critical shortage of water the government has
called for water conservation and greater water use efficiency nation-wide. With increased
drought events, population growth and climate change creating the “perfect storm” for
future water insecurity, greater management is required now to address declining water
availability.
Comment
In an attempt to reduce water consumption, Iran may be forced to introduce water rationing
in the capital, Tehran. Iranian Energy Minister Hamid Chitchian has announced the capital
will face water rationing and shortages if a campaign to reduce domestic water consumption
by 20 per cent fails. This follows calls from President Hassan Rouhani for a water
conservation plan to address Iran’s water shortages.
Despite imminent shortages, water use in Iran remains inefficient with domestic use 70 per
cent higher than the global average. With a national population of 75 million people, 12
million of who reside in the capital, demand for water is rapidly increasing even as major
lakes and groundwater resources begin to shrink.
Page 4 of 12
Located in one of the most arid regions in the world, Iran has an annual average
precipitation rate of 252 millimetres, approximately one third of the global average.
Estimates suggest the lower-than-average precipitation this year has caused a 30 per cent
reduction in the volume of water in dams across the country, with only five exceeding 90 per
cent capacity. According to the Institute for Forest and Pasture Research, groundwater levels
have also dropped two metres in recent years across 70 plains, accounting for as much as
100 million hectares.
Aquifer extraction through the drilling of wells is a key contributor to Iran’s dwindling water
resources. Iranian environmentalist Eskander Firouz believes Iran’s growing population and
expanding agriculture sector has led to unsustainable aquifer withdrawal. As many as
100,000 water wells are operating in Iran, many without licences or permission to do so.
Chitchian estimates at least 100 billion cubic metres of water have been extracted from
aquifers in recent years, leading to the salination of farmland wells and reduced
groundwater access.
Agriculture accounts for over 90 per cent of water use in Iran. The government’s food self-
sufficiency and agricultural development policies have contributed to the high consumption
rates of the industry and, according to Iranian ecologist Mohammad Darvish, have only led
to drastic shortages in water. One of the key sectors for Iran’s economy, water scarcity is
restricting development and increasing uncertainty in the agricultural industry.
Iran is facing an impending water crisis. Climate change, lower precipitation and population
growth are all leading to an increased demand for a dwindling supply. The government has
been constructing dams to address water shortages since the 1950s, but this will not address
the growing gap between demand and supply. Water rationing and campaigns to use water
more efficiently, as with those suggested for Tehran, are only a small part of a much larger
management redirection.
Addressing Iran’s policy on agricultural self-sufficiency is critical to effectively managing
water use in the state. Historic underinvestment and mismanagement of resources has led
to an unsustainable industry and burden on available water. Water efficiency in the industry
is also required. Modernising irrigation and closely monitoring groundwater access will only
begin to address water waste.
While the future of Iran’s water security looks grim, the recent change of government has
led many commentators to expect a change of direction for water management in the state.
President Rouhani, in his call for a national water-conservation plan said that domestic
water use needed to be reduced; the agricultural sector made more water efficient; and that
the protection of groundwater and the regulation of wells was required to begin addressing
Iran’s water shortages. Darvish believes the new Rouhani government will engage with
experts to resolve arising issues and address water management.
Sinéad Lehane Research Analyst Global Food and Water Security Research Programme [email protected]
infrastructure and subsidies, as well as organising several high profile visitors in support of
their candidate. Amongst the most active of the visitors to the district was the 88 year old
former Prime Minister, Mahathir Mohamad.
Comment
Mahathir’s son Makhriz decisively won the Kedah State elections in May 2013, having
resigned from federal parliament to lead the state branch of the UMNO party. It was highly
unlikely that this seat would have been taken by his party’s candidate, however, as the
district had been held for a long time by a popular PAS member who recently died. While
UMNO did well in the Kedah elections, the party has recently been suffering from poor
public perception nationwide, especially after the opposition credibly claimed that there was
significant rigging in the federal election. With BN holding 21 of the 36 seats in the state
assembly, why would both father and son expend a lot of political capital on a single seat? In
essence, this appears to have been a bid by Mahathir and his supporters to regain some
influence, by demonstrating that they still enjoy the support of the majority.
Though he formally stepped down as Prime Minister in 2003, Mahathir Mohamad has
continued to wield significant power behind the scenes of BN. Although he pledged to leave
politics, Mahathir quickly became involved as a consultant with several prominent Malaysian
companies and frequently wrote columns in papers, even starting his own blog. Several
members of UMNO remained loyal to Mahathir and formed a significant faction within the
party. The extent of his post-office influence can be gauged by Mahathir being credited with
helping to compel his successor, Abdullah Badawi, to resign in 2009, following frequent
public criticisms after a falling out in 2005.
In recent years, however, it has become increasingly apparent that his influence is beginning
to fade. While his son Makhriz entered politics and immediately found his way into the
forefront of UMNO, owing to his father’s name, he has struggled to go much further. In
2009, Makhriz contested the post of UMNO Youth Chief, losing to Khairy Jamaluddin, the
moderate son-in-law of Badawi. In October 2013, UMNO internal elections saw the current
Prime Minister Najib Tun Razak’s lieutenants win all the top leadership spots, despite Najib
leading the party to the closest election in Malaysian history and strong criticisms coming
from Mahathir’s supporters in the press. Following this strong endorsement of Najib, none
of Mahathir’s faction, including Makhriz, holds any significant leadership positions within
UMNO. The recent by-election result in Kedah will probably cement the growing perception
of Mahathir’s declining influence, with some local UMNO members even suggesting that his
presence actually cost votes.
With the influence of Mahathir and his conservative faction within UMNO apparently
neutralised, both UMNO and the BN have begun to take a more centrist approach. Now that
Najib has solidified his position as head of the party, with his loyal lieutenants in other
positions of power, he is unlikely to suffer the fate of his predecessor Badawi. Consequently,
he can continue with some of the tentative reforms that he began in his first term. Examples
of these reforms include removing some of the remaining colonial-era laws, increasing
governmental transparency and changing the affirmative action economic policies that
favour ethnic Malays. The recent disputed national election results will place more
Page 10 of 12
importance on pursuing these reforms, as non-ethnic Malays overwhelmingly supported the
opposition and there was public anger over alleged vote rigging and corruption. With the
internal opposition defeated for the time being, Najib will probably try to further his reforms
in an effort to win back the BN’s credibility and the support of the voters.
Stephen Westcott Research Assistant Indian Ocean Research Programme
*****
Pressure on ICC to Conduct Fair and Legitimate Trials of
Kenyan Leaders
Despite the fact that the ICC trials of President Uhuru Kenyatta and his deputy, William
Ruto, are to go ahead, questions are being raised as to how successful the prosecutions
can be and their effect on the standing of the ICC in Africa. After repeated delays and
support for both men from the African Union, pressure is building on the ICC to conduct a
fair and legitimate trial.
Background
President Uhuru Kenyatta and his deputy, William Ruto, are both to face the International
Criminal Court (ICC) on charges of crimes against humanity. The charges arose from the
post-election violence in 2007 and 2008, which the ICC claims was incited by Kenyatta and
Ruto. But there have been continued delays to the trials, fuelling speculation that both men
will attempt to avoid the ICC altogether. In addition to these delays, questions have been
raised as to who the ICC decides to bring cases against, with some African leaders claiming
that the court is actively pursuing cases against them, to serve the political interests of the
powerful.
Comment
After the election results were released at the end of December 2007, Kenya was plunged
into chaos. Mwai Kibaki was declared the winner of the election, as he narrowly defeated
Raila Odinga. Odinga immediately disputed the outcome and, as a result, supporters from
both sides engaged in violent clashes. This violence ended up claiming over 1,200 lives, as
well as forcing around 600,000 people to flee their homes. To bring a stop to the violent
protests, Kibaki and Odinga signed a power-sharing plan in February 2008. Although this did
not have an immediate effect, the violence did slowly subside.
Kibaki remained as president until Kenyatta defeated Odinga in the March 2013 election.
Just over a year before Kenyatta won that election, the ICC confirmed that he and Ruto
Page 11 of 12
would be charged as indirect perpetrators of crimes against humanity. Under the Rome
Statute, the charges include persecution, murder and the deportation or forcible transfer of
members of the population. Both men have denied the charges and have been actively
trying to avoid trial.
Even though Ruto’s trial has begun, both processes have been riddled with delays.
Kenyatta’s trial was set to start on 12 November this year, but has recently been postponed
until 5 February 2014. Kenyatta has repeatedly claimed that his trial would put a strain on
his ability to lead his country, with time being taken away from domestic affairs. His defence
lawyers have argued this point in the context of the recent siege at the Westgate shopping
centre, in Nairobi. They claimed it to be a ‘national and international crisis’, requiring the
President’s attention. While the prosecution’s lawyers denied the idea that ‘presidential
duties are a reason to delay the trial’, they have now agreed to the delay to enable them to
present witnesses in the order they wish.
President Kenyatta is not alone in believing that his trial should not take place. Rwandan
President Paul Kagame has accused the ICC of dispensing “selective” justice. Speaking at the
UN General Assembly about the impending trials of Kenyatta and Ruto, Kagame said that
‘instead of promoting justice and peace, it has undermined efforts at reconciliation and
served only to humiliate Africans and their leaders, as well as served the political interests of
the powerful’. Both men also have the support of the African Union (AU), which demanded
that their trials be deferred. The AU also stated that if this demand is not met, it would
support a trial no-show by Kenyatta.
Concerns over the trials have also been raised by a former chief prosecutor of the ICC, David
Crane. He has suggested that the ICC has ignored political realities in pursuing trials against
Kenyatta and Ruto, which he said ‘could be the beginning of a long slide into irrelevance for
international law’. After the ICC stepped in, as a last resort, to seek out those responsible for
the 2007-08 post-election unrest, prosecutor Luis Moreno-Ocampo accused both Kenyatta
and Ruto. Previously political rivals, the pair were forced together as the “coalition of the
accused”, resulting in a successful election campaign, which portrayed the ICC in a poor
light. Crane believes that, should the two accused be seen to win against the ICC, it would be
a major setback to the court’s credibility in Africa.
David Martin Research Assistant Indian Ocean Research Programme
*****
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Any opinions or views expressed in this paper are those of the individual authors, unless stated to be those of Future Directions International. Published by Future Directions International Pty Ltd. 80 Birdwood Parade, Dalkeith, WA 6009 Tel: +61 8 9389 9831 Fax: +61 8 9389 8803 E-mail: [email protected] Web: www.futuredirections.org.au
What’s Next?
British Prime Minister David Cameron will visit India and meet with his Indian counterpart, Dr Manmohan Singh, on 14 November.
The latest round of negotiations between South Korea and Indonesia for a comprehensive economic partnership agreement concludes on 15 November.
Yemeni President Abd Rabboh Mansour Hadi is on an official visit to China until 15 November.
The Bangladeshi Islamist groups, Hefazat-e-Islam and Bangladesh Tarikat Federation, are to hold rallies in the capital, Dhaka, on 15 November.
Arun K. Singh, India’s Ambassador to France, is meeting with French Overseas Territories Minister Victorin Lurel in Paris on 15 November.
The Commonwealth Heads of Government Meeting (CHOGM) will be held in the Sri Lankan capital, Colombo, from 15-17 November.
The aircraft carrier INS Vikramaditya (formerly the Russian aircraft carrier Admiral Gorshkov) will be handed over to the Indian Navy on 16 November, in a ceremony at the Sevmash military shipyard in the northern Russian city of Severodvinsk.
Malaysian Prime Minister Najib Razak will visit Bangladesh on 17 November to discuss labour export and investment issues.