08 May 2013 | Vol. 4, № 15. From the Editor’s Desk Dear FDI supporters, Welcome to the Strategic Weekly Analysis. This week’s issue starts with an examination of Indonesian interest in purchasing Australian cattle farms to provide for growing middle class demand for beef at the expence of their policy of self-sufficiency. Still on the issue of Australian cattle export, we ask questions about the future of live exports to Egypt in the wake of the latest round of animal cruelty revelations. We investigate the new era of Australian-Indian relationship in the context of Australias relationship with both Pakistand and the United States. We analyse the recent Malaysian election and the social, economic, and political divides of the country with the new political landscape. Confrontation continues over the disputed Himalayan border between China and India, and FDI Senior Visiting Fellow Sandy Gordon investigates the consequences of the escalating tension between the two powers. In Pakistan we look at the latest decision by the judiciary to ban former president Musharraf from running in the upcoming election. Next to Iran, where questions are raised about the benefits of the latest round of talks regarding their nuclear policy. Finally, we look at Africa, where the overall well-being in both Ethiopia and Kenya are finally starting to rise, however a strategy must be implemented to ensure long-term sustainability. We also examine Chinas relationships in Africa in the light of recent criticisms from African leaders towards Beijing. We also examine the political situation in South Africa, with a new political party attempting to challenge the supremacy of the entrenched African National Conference. I trust that you will enjoy this edition of the Strategic Weekly Analysis. Major General John Hartley AO (Retd) Institute Director and CEO Future Directions International
19
Embed
From the Editor’s Desk - Future Directions Internationalfuturedirections.org.au/wp-content/uploads/2013/05/FDI...08 May 2013 | Vol. 4, 15. From the Editor’s Desk Dear FDI supporters,
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
08 May 2013 | Vol. 4, № 15.
From the Editor’s Desk
Dear FDI supporters, Welcome to the Strategic Weekly Analysis. This week’s issue starts with an examination of Indonesian interest in purchasing Australian cattle farms to provide for growing middle class demand for beef at the expence of their policy of self-sufficiency. Still on the issue of Australian cattle export, we ask questions about the future of live exports to Egypt in the wake of the latest round of animal cruelty revelations. We investigate the new era of Australian-Indian relationship in the context of Australias relationship with both Pakistand and the United States. We analyse the recent Malaysian election and the social, economic, and political divides of the country with the new political landscape. Confrontation continues over the disputed Himalayan border between China and India, and FDI Senior Visiting Fellow Sandy Gordon investigates the consequences of the escalating tension between the two powers. In Pakistan we look at the latest decision by the judiciary to ban former president Musharraf from running in the upcoming election. Next to Iran, where questions are raised about the benefits of the latest round of talks regarding their nuclear policy. Finally, we look at Africa, where the overall well-being in both Ethiopia and Kenya are finally starting to rise, however a strategy must be implemented to ensure long-term sustainability. We also examine Chinas relationships in Africa in the light of recent criticisms from African leaders towards Beijing. We also examine the political situation in South Africa, with a new political party attempting to challenge the supremacy of the entrenched African National Conference. I trust that you will enjoy this edition of the Strategic Weekly Analysis. Major General John Hartley AO (Retd) Institute Director and CEO Future Directions International
Page 2 of 19
Indonesian Interest in Australian Cattle Farms a Twist on Food
Self-Sufficiency Push
Recent interest from Indonesian public sector investors in owning and investing in
Australian cattle farms could signal that the government is compromising on its
controversial food self-sufficiency laws.
Background
A delegation of senior officials from Indonesia’s investment board, the BKPM, will visit
Australia early in June to discuss opportunities to invest in Australia’s cattle industry.
Indonesia is Australia’s main market for live cattle exports but trade relations between the
countries have been strained since June 2011 when the Australian Government suspended
live cattle trade to Indonesia, following the exposure of animal cruelty in a number of
abattoirs. The ban was lifted after a month, but Indonesia retaliated by halving Australia’s
import quota. In October 2012, the Indonesian government implemented its new Food Self-
sufficiency Law, which caused controversy both domestically and internationally as beef
prices in the country sky-rocketed.
Comment
Indonesia has implemented a number of reforms to its agricultural sector in the past decade
aimed at achieving food security, ensuring affordable prices for consumers, raising
competitiveness for agricultural products and diversifying away from carbohydrate
production towards animal-products. The new Food Law, passed in October last year, aimed
to institutionalise self-sufficiency in food production as the overarching food security policy.
This is in line with the country’s intensifying drive for economic nationalism. Article 14 of the
law states that ‘sources of food supply are from domestic production and national food
reserves’ and only ‘in the case of shortage of food supply from those two sources, food can
be fulfilled by importation, as needed.’ Amongst the objectives of the policy is a goal to
reach 90 per cent self-sufficiency in beef production by 2014. The primary mechanism to
encourage food self-sufficiency has been the tightening of import quotas for food products.
The import quota for Australian beef is 260 000 head this year, a third of its peak in 2009.
Restricting the supply of imports amidst growth in demand, has led to dramatic price rises
on the domestic market. Consumers are paying record prices for beef, almost double what
they were twelve months ago. Food prices overall have been driven up by as much as 15 per
cent. This has fed into the national inflation rate that was 5.6 per cent in March, following a
4.31 per cent increase in February. While the government claims that supply is sufficient to
feed the country, sectoral structure and distribution networks are not. The nation’s
estimated 15 million head of cattle belong to 6.4 million farmers and there is no large-scale
production.
While a policy of import restrictions can improve food self-sufficiency, it may do so at the
expense of food security. Rising domestic prices have made meat unaffordable for many of
those already vulnerable to food insecurity as a result of poverty. A preferable strategy for
raising both food self-sufficiency and food security is increasing agricultural productivity.
Page 3 of 19
Unfortunately, Indonesia’s commitment to this goal has waned in recent years. Globally, a
policy of import restrictions is harmful to more efficient competitors. Indonesia’s slashing of
import quotas has financially crippled some Australian cattle stations. The United States has
lodged a complaint against Indonesia at the World Trade Organization regarding the
practice. The Food Law has widely been considered a misstep by the Indonesian
government, which is now facing an urgent need to reduce inflationary pressures. In mid-
April, the Indonesian trade minister Gita Wirjawan ended import restrictions on horticultural
products and increased the Australian beef quota for 2013.
The government’s interest in investing in the Australian cattle industry signals a partial
retreat from the goal of domestic self-sufficiency. The inflationary implication of slashing
quotas has likely led to the realisation that the goal of achieving 90 per cent self-sufficiency
by 2014 is unattainable and counter-productive to ensuring food security. The cost of
producing a calf in Australia is a third of the cost of producing a calf in Indonesia, illustrating
the efficiency benefits of a trade-based approach to food security. However, the Indonesian
government were unsettled by the effects of the unexpected export ban in 2011 and are
eager to reduce the risk of live cattle exports being suspended again. By investing in
Australian farms, Indonesia hopes to secure its supply chain for imported beef products. It is
unclear how cattle from Indonesian-owned Australian properties would be treated under
Indonesia’s import quota structure. A statement to Indonesian media from the Minister for
State-Owned Enterprises, Dahlan Iskan, in March, implies that the government sees
investment in the Australian cattle industry to be part of the plan to meet the target of 90
per cent production self-sufficiency by 2014. If this is the case, it is a compromise on the
terms of the self-sufficiency goal, but one that may indicate a more favourable future
market for Australian live cattle exports.
Lauren Power Research Analyst Global Food and Water Crises Research Programme [email protected]
between the two. Fear of offending Pakistan has stymied closer cooperation with
India in the past. Unfortunately, due to Australia’s perceived subordination to US
policy, Australian rhetoric about balancing its relations with the two did little to
mitigate Indian views that Australia did not wish to establish an independent policy,
thus relegating Australia, by default, to the US’s pro-Pakistani tilt.
A key mistake in Australian policy, identified by Arthur Tange, was that Pakistan and
India were treated as ‘Siamese twins’ rather than distinct nations. Policy objectives
in Pakistan restrained Australia’s India policy, rather than each being considered on
their own merits. Australia has been reluctant to adopt policy stances that appear
hostile towards Pakistan, either openly or by implication. India, however, resents the
implication that it is apparently equated with Pakistan; following the US’s even-
handed strategy has not worked for Australia. As Meg Gurry has noted, the
significance of India-Pakistan relations for Australia ‘receives surprisingly little
coverage’.1 Additionally, little has been done to further India-Australia relations since
the end of the Cold War, and nothing to separate regional Australian policy interests
from US actions and rhetoric. As Gurry argues, ‘the Australia-India relationship
cannot escape the India-Pakistan relationship.’ More considered discussion is
necessary.
To persuade India that its policy is truly independent, Australia will have to convince
India that its policies on the sub-continent are not overly influenced by either the US
or Pakistan. Indeed, there is a narrow window of opportunity for Australia to assert
itself more vigorously in India’s eyes. For Australia to be seen as more than a
peripheral country, relying on its links outside the region to assert its interests, more
must be done to present Australia as independent and not beholden to external
preferences.
Recent talks over uranium exports may provide a growing momentum to India-
Australia relations, which should be capitalised upon. Moreover, Australia will chair
the next meeting of the Indian Ocean Rim Association for Regional Co-operation in
Perth this November. This is a good opportunity to try to map out a plan for
economic and security cooperation and thus help clarify Australia’s role in the
region.
US-Pakistani relations have been in decline for a number of years. As the troubles in
Afghanistan drag on, the US will be tilting more noticeably towards India in the
future and has taken visible steps in this direction since 2005. A key first step for
Australia would be to recognise that, in the future, India will be the dominant power
of the subcontinent, with regional interests to match. It will then be impossible to
1 Meg Gurry. “A delicate balance: Australia’s ‘tilt’ to Pakistan and its impact on Australia-India
relations”, Australian Journal of International Affairs. 2013; 67:2, 141-156. DOI: 10.1080/10357718.2012.750641
Page 7 of 19
maintain that India and Pakistan require equal diplomatic consideration; even today
this is tenuous. Another would be to recognise that equating Australia’s security
policy with that of the US is not to Australia’s benefit outside of the Asia-Pacific.
Deepening security and intelligence cooperation between India and the US may
carry diplomatic thorns amongst the roses. Third, counter-intuitively, Australia must
take care not to appear in lockstep with Indian and US preferences; a historic
reversal will only bring a new set of problems. Rather, Australia must navigate this
‘strategic matrix’ with greater care than in the past. This approach does not demand
much of substance from Australia, but all new trends must start somewhere.
Daniel Barnes Research Assistant Indian Ocean Research Programme
*****
Election Result Fails to Quell Political Discord in Malaysia
Traditional ethnic divisions are combining with newer ideological and geographical ones in
the wake of Malaysia’s latest general election.
Background
Despite having had several incarnations and minor compositional and name changes,
Malaysia’s ruling Barisan Nasional (BN) coalition has been in continuous power nationally
since 1957. However the recent general election, on 5 May 2013, was one of the closest yet.
Strong ethnic and religious identities have always been influential upon Malaysian politics.
Yet ideological delineations do transcend those racial identities to some extent and in some
geographical areas in particular. The narrower electoral margin predicted before the poll
saw both sides become increasingly desperate for political advantage, with some supporters
resorting to acts of violence and intimidation. The close and now disputed result may see
this worrying trend escalate still further.
Comment
Historically perpetual government victories in Malaysian general elections can be explained
by an aggregate of factors. The country has at times endured periods of ethnic unrest
between its ethnic Malay, Chinese, Indian and other populations. These ethnic identities
remain strong, with intermarriage between them still relatively rare in Malaysia. As a
coalition including Malaysia’s main ethnic Malay, Chinese and Indian representative parties,
Barisan Nasional has promoted itself as an agent for ethnic harmony in Malaysian society.
Through its strong position within the BN coalition, the United Malays National Organisation
(UMNO) has perpetuated pro-Malay affirmative action policies, a historical legacy of
colonial-era demographic upheavals, and thereby also attracted strong ethnic Malay support
for BN.
Page 8 of 19
Analysis of previous general election results reveals that the percentage of seats won by BN
has always exceeded its percentage of the vote cast, sometimes significantly. Individual
electorate “size” varies immensely. It is estimated that BN need only secure 40 per cent of
the vote cast in order to claim victory, although to be fair it has secured more than 50
percent on all but one, or possibly now two occasions. When its vote fell below 50 per cent
in the 1969 election, the then ‘Alliance Party’ still won 66 per cent of available seats. Early
indications are that BN may have narrowly failed once more to achieve over 50 per cent of
the popular vote. Conversely the opposition Pakatan Rakyat coalition appears to have
secured just over 50 per cent. Gerrymandering, deliberate or not, has thus always given the
BN coalition a strong electoral advantage.
It should therefore suffice to say that Malaysian general elections have long been more-or-
less foregone conclusions, if only in the minds of a significant proportion of the Malaysian
population as suggested by voter turnout figures. 2 In 2008 BN almost failed to claim more
than half the vote, receiving just 50.27 per cent. The closeness of this previous vote aroused
much interest among previously unregistered voters in the lead-up to this election. As
noted, this next election was the closest yet, inspiring those hoping for a change of
government. The 2008, and now particularly the 2013 result, also serve to draw attention to
the disparity between votes received and seats won. Some 3.2 million new voters have
registered to vote, out of an expected total of around 13 million in a country where voting is
non-compulsory. Closer elections are leading to increased political interest and participation,
especially among opposition supporters, which is in turn making elections even closer. BN
can no longer be confident of electoral victory as a fait accompli.
Support for BN’s pro-Malay, “positive discrimination” policies is strongest in rural, largely
ethnic-Malay constituencies, which are the core of UMNO/BN’s support base. Meanwhile
the opposition’s pledge before the recent poll to abolish these policies eroded support for
the ethnic-Indian and ethnic -Chinese based parties which also make up the BN coalition.
This was particularly the case among Chinese Malaysians whose support swung markedly to
the opposition, prompting Malaysian PM Najib Razak to label this a “Chinese Tsunami”. A
significant proportion of the urban ethnic-Malay population has also begun to shift support
towards the opposition. In fact opposition support in general has tended to be strongest in
urban areas, whilst as mention BN support is strongest in rural regions.
Ideological considerations are also becoming more influential. All things being equal this should be healthy for Malaysia’s democracy. Yet ethnic/racial identities, especially policies relating to the status of Malaysia’s ethnic communities, continue to be important issues. Continuing disparity between popular vote figures and seats won becomes all the more salient in the face of an opposition majority of the popular vote. Malaysian politics is thus riven with ethnic and ideological divisions, and a rural/urban divide continues to emerge. With an opposition pledge to challenge the election result in Malaysia’s courts, the potential for political violence has been exacerbated, not calmed, now that polls have closed. Jeff McKinnell Research Assistant Indian Ocean Research Programme
also position any future Iranian chief negotiator to take a similar role to that of Jalili, should
he be replaced after the election, subject to a change in the presidency with the approval of
Khamenei.
The decision to once again host the talks in Istanbul is worthy of note. Turkey has in recent
years been attempting to become a stronger force for mediation in the Middle East and has
played a crucial role in the nuclear talks with Iran. Istanbul seems an attractive option to
both Tehran and Brussels, based on both geography and political affiliations.
Germany has gained increased influence in ensuring that the talks with Iran proceed
smoothly and lead to a partial decrease in sanctions. Berlin and Tehran have reinforced their
economic ties recently, though Germany’s exports of wheat. In the period from July 2012 to
February 2013, Germany’s wheat exports to Iran totaled 1.024 million tonnes, a substantial
increase from 63,000 tonnes fore the same period in 2011-2012. A decrease in financial
sanctions on Iran would facilitate increased exports by Germany, a main supplier of wheat to
Iran. Incidentally, Australia could also benefit from the situation, as Iran bought 60,000
tonnes of Australian wheat on 21 March as the regime began building grain stocks due to
recent droughts.
Dialogue between the EU and Iran is unlikely to achieve anything significant in the near
future. Talks such as these have achieved little over a long time, and it is unlikely to be
different in this instance. The positive feature is that the talks do signal that discussions
between the two parties are proceeding, albiet at a slow pace.
As noted, Ashton and Jalili’s decision to once again commence talks, though not on the scale
of the P5+1, may set a precedent for future small talks. These are less likely to be subjected
to the political grandstanding that is common with certain Iranian political leaders. Jalili is
unlikely to come out of these talks with much to show for it, but may be able to demonsrate
to the Iranian public that his diplomatic skills merit a vote.
Gustavo Mendiolaza Research Analyst Indian Ocean Research Programme [email protected]
*****
A Tale of Two States: Ethiopia and Kenya Continue to Rise, but Reforms are needed to Sustain Growth
A recent study has revealed that overall well-being in sub-Saharan Africa is finally starting to rise, as a result of economic growth. While the recent findings are promising, reforms will be needed if such growth is to be sustained in the long-term.
ANC of failing to deliver basic services and infrastructure. In 2012, in the Limpopo province
the ANC government failed to provide textbooks to schools up to four months into the
school year. Mr Mokhoanatse has also criticised other political parties for not providing the
South African people with a credible alternative to the ANC.
It is possible that the foundation of SA First is a reaction to the expulsion of Mr Mokhoanatse
from the MKMVA in 2012. He was also a member of a group that took the leadership of the
MKMVA to court, accusing them of misusing its investment funds. Mr Mokhoanatse was
subsequently expelled from the MKMVA for damaging the reputation of the ANC.
The MKMVA has been quick to discredit SA First and its founders. Kebby Maphatsoe, one of
those accused by Mr Mokhoanatse of mishandling MKMVA funds, said ‘They are a
disappointment to the nation… outside of the MKMVA they are nothing.’ Mr Maphatsoe has
gone as far as accusing Mr Mokhoanatse of being a counter-revolutionary and attempting to
undermine South Africa’s liberation movement.
This is very early in the founding stages of the party. SA First has not officially announced
leadership, but it looks as if Mr Mokhoanatse and Mr Twala will be the de facto leaders of
the party for the time being. The party also has yet to register with the Independent
Electoral Commission, a crucial step in its foundation. Mr Mokhoantse has not emphasised
membership in the party, ‘We are not looking for people to join, we are looking for South
Africans to support us.’
South Africa has seen the birth of two other political parties since February 2013, when
businesswoman Mamphela Ramphele started a party called Agang. In March 2013, the
Workers and Socialist Party (WASP) was founded in reaction to the 2012 mining strikes,
which resulted in the police shooting thirty-four strikers.
The ANC has the advantage of being the party of liberation for South Africa. Carrying that
historical weight gives it formidable credibility. The ANC also enjoys a vastly larger base of
support than their primary opposition, the Democratic Alliance. While currently governing
the Western Cape Province, the DA is far from surpassing the ANC’s number of seats in
Parliament. It is possible that the younger generation of South Africans, with no memory of
apartheid in their lifetime, will be less loyal to the ANC than the previous generation.
It is unlikely that a start-up political party, such as SA First, will be able to compete with the
well-established ANC as early as the 2014 election, or even the next. Although there is
widespread dissatisfaction with the ANC, the question is how well SA First can tap into it. If it
is true that Mr Mokhoanatse sees the 12 million South Africans who did not show up to the
polls in 2009 as a constituency, he faces the challenge of trying to motivate them to vote in
2014. SA First must also quickly develop meaningful policy platforms to attract support.
Kyle Springer Research Assistant Indian Ocean Research Programme
Page 19 of 19
Any opinions or views expressed in this paper are those of the individual author, unless stated to be those of Future Directions International. Published by Future Directions International Pty Ltd. 80 Birdwood Parade, Dalkeith, WA 6009 Tel: +61 8 9389 9831 Fax: +61 8 9389 8803 E-mail: [email protected] Web: www.futuredirections.org.au
What’s Next?
May 7: In Taipei, Taiwan and Japan will hold the first meeting of a joint fishing commission created to address issues related to fishing in disputed waters in the East China Sea near the Senkaku/Diaoyu Islands.
May 8: World Economic Forum Africa will hold its summit in Cape Town with a theme of "Delivering sustainable growth."
May 9: Hezbollah chief Sheikh Hassan Nasrallah is due to give a speech addressing Hezbollah's involvement in the Syrian civil war after meeting with Iranian Supreme Leader Ayatollah Ali Khamenei in Iran.
May 10: The 15th session of India's lower house of parliament, or Lok Sabha, will conclude